Zhejiang NHU Co., Ltd.2021 Annual Report
April 2022
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Section I Important Notes, Contents, and DefinitionsThe Board of Directors and its members, Board of Supervisors and its members,and senior executives of the Company hereby guarantee that the informationpresented in this annual report is authentic, accurate, complete and free of falserecords, misleading statements or material omissions, and they will bearindividual and joint liabilities for such information.胡柏藩 (Hu Baifan), the Company’s legal representative, 石观群 (ShiGuanqun), the officer in charge of accounting, and 王晓碧 (Wang Xiaobi), thehead of accounting department hereby declare that they guarantee the financialstatements in this annual report are authentic, accurate and complete.All members of the Board of Directors have attended the meeting of the Boardof Directors for deliberation of this annual report.The future plan and other forward-looking information disclosed in this annualreport shall not be regarded as a commitment to investors. We kindly remindinvestors of all possible risks in investments.We draw your attention to item “XI. Outlook for the future development of theCompany” under “Section III Management Discussion and Analysis”, whichexplicitly states the possible risks in business operation and countermeasuresthereon.Profit distribution proposal deliberated and approved by the meeting of theBoard of Directors is as follows: Temporarily based on total shares of2,563,842,524 shares [Note] as of March 31, 2022, the Company intends todistribute cash dividend of 7 yuan (tax included) and no bonus shares per 10shares to all shareholders, and to distribute 2 shares per 10 shares by convertingcapital reserve to all shareholders.
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Note: As of March 31, 2022, the Company’s share capital totaled 2,578,394,760 shares,including repurchased share of 14,552,236 shares. According to the “Rules on ShareRepurchase of Listed Companies”, shares in the special account for repurchase of listedcompanies carry no right of profit distribution and conversion of capital reserve into sharecapital.
If the Company’s total share capital changes due to the conversion of convertiblebonds, share repurchase, exercise of equity incentives, refinancing and listing ofnew shares, etc. before the implementation of the profit distribution proposal,the total distribution will be adjusted accordingly based on the same distributionratio.
This Annual Report is an English translation of the Chinese Annual Report. In case the English version does not conform to theChinese version, the Chinese version prevails.
Contents
Section I Important Notes, Contents, and Definitions ...... 1
Section II Company Profile and Key Financial Indicators ...... 5
Section III Management Discussion and Analysis ...... 9
Section IV Corporate Governance ...... 36
Section V Environmental and Social Responsibilities ...... 52
Section VI Significant Events ...... 57
Section VII Movements in Shares and Conditions of Shareholders ...... 66
Section VIII Preferred Shares ...... 74
Section IX Bonds ...... 75
Section X Financial Report ...... 76
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Documents Available for Reference
I. Financial statements signed and sealed by the Company’s legal representative, officer in charge of accounting,and head of accounting department;II. The original auditor’s report with the seal of the accounting firm and the signature and seal of the certifiedpublic accountants;III. Originals of all the Company’s documents and announcements published on newspapers designated by theChina Securities Regulatory Commission during the reporting period;IV. Other documents for reference.
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Definitions
| Abbreviations | Refers to | Contents of definitions |
| The Company, NHU | Refers to | ZHEJIANG NHU CO., LTD. |
| CSRC | Refers to | China Securities Regulatory Commission |
| CSRC, Zhejiang Office | Refers to | China Securities Regulatory Commission, Zhejiang Office |
| PPS | Refers to | Polyphenylene sulfide |
| PPA | Refers to | Poly phthalamide |
| VOC | Refers to | Volatile organic compound |
| NH-acid | Refers to | Taurine |
| HSE | Refers to | Healthy and safe environment |
| FV | Refers to | Vitamin B5 |
| CNAS | Refers to | China National Accreditation Service for Conformity Assessment |
| DSC | Refers to | Differential Scanning Calorimetry |
| ARC | Refers to | Accelerating ratecalori meter |
| RC1e | Refers to | Reaction calorimeter |
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Section II Company Profile and Key Financial IndicatorsI. Company profile
| Stock abbreviation | NHU | Stock code | 002001 |
| Stock Exchange | Shenzhen Stock Exchange | ||
| Company Name in Chinese | 浙江新和成股份有限公司 | ||
| Company Abbreviation in Chinese | 新和成 | ||
| Company name in foreign language (if any) | ZHEJIANG NHU CO., LTD. | ||
| Company Abbreviation in foreign language (if any) | NHU | ||
| Legal representative | Hu Baifan | ||
| Registered address | No.418 Xinchang Dadao West Road, Qixing Sub-district, Xinchang County, Zhejiang Province, China | ||
| Postal code of registered address | 312500 | ||
| Historical changes of registered address | On May 28, the Company’s registered address was changed from No.4 Jiangbei Road, Yulin Sub-district, Xinchang County, Zhejiang Province, China to No.418 Xinchang Dadao West Road, Qixing Sub-district, Xinchang County, Zhejiang Province, China | ||
| Office address | No.418 Xinchang Dadao West Road, Qixing Sub-district, Xinchang County, Zhejiang Province, China | ||
| Postal code of office address | 312500 | ||
| Official website | http://www.cnhu.com | ||
| 002001@cnhu.com | |||
II. Contact information
| Items | Board secretary | Securities affairs representative |
| Name | Shi Guanqun | 曾淑颖 (Zeng Shuying) |
| Contact address | No.418 Xinchang Dadao West Road, Qixing Sub-district, Xinchang County, Zhejiang Province, China | No.418 Xinchang Dadao West Road, Qixing Sub-district, Xinchang County, Zhejiang Province, China |
| Tel. | +86 575 86017157 | +86 575 86017157 |
| Fax | +86 575 86125377 | +86 575 86125377 |
| E-mail address | sgq@cnhu.com | 002001@cnhu.com |
III. Information disclosure and location
| Stock exchange website where the Company discloses the annual report | Shenzhen Stock Exchange: http://www.szse.cn |
| Medias and websites with which the Company discloses the annual report | Securities Times, Shanghai Securities News, China Securities Journal Giant Tide Information Network: www.cninfo.com.cn |
| Site where the annual report was prepared and completed | Securities Department of the Company |
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IV. Change of registration
| Unified social credit code | 91330000712560575G |
| Changes of main business scope since listing (if any) | None |
| Changes of holding shareholders (if any) | None |
V. Other relevant information
Accounting firm engaged by the Company
| Name | Pan-China Certified Public Accountants LLP |
| Office address | Resources Building, 1366 Qianjiang Road, Jianggan District, Hangzhou 310020, China |
| Certified Public Accountants | 滕培彬 (Teng Peibin), 朱丽丽 (Zhu Lili) |
The sponsor institution engaged by the Company, which performed the duty of continuous guidance and supervision during thereporting period
□ Applicable √ Not Applicable
The financial advisor engaged by the Company, who performed the duty of continuous guidance and supervision during the reportingperiod
□ Applicable √ Not Applicable
VI. Key accounting data and financial indicatorsWhether the Company needs to perform retroactive adjustment or restatement on financial data of prior years
√ Yes □ No
Reason for retroactive adjustment or restatementOther reasons
| Items | Year 2021 | Year 2020 | YoY growth rate | Year 2019 | ||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Operating revenue (yuan) | 14,797,989,091.20 | 10,314,084,354.21 | 10,314,084,354.21 | 43.47% | 7,660,412,519.26 | 7,660,412,519.26 |
| Net profit attributable to shareholders of listed company (yuan) | 4,324,150,263.31 | 3,563,759,939.48 | 3,563,759,939.48 | 21.34% | 2,165,282,489.11 | 2,165,282,489.11 |
| Net profit attributable to shareholders of listed company after deducting non-recurring profit or loss (yuan) | 4,147,933,364.84 | 3,410,367,513.01 | 3,410,367,513.01 | 21.63% | 1,934,679,280.23 | 1,934,679,280.23 |
| Net cash flows from operating activities (yuan) | 5,837,878,051.57 | 3,122,807,363.21 | 3,122,807,363.21 | 86.94% | 2,106,765,618.26 | 2,106,765,618.26 |
| Basic EPS (yuan/share) | 1.68 | 1.66 | 1.38 | 21.74% | 1.01 | 0.84 |
| Diluted EPS (yuan/share) | 1.68 | 1.66 | 1.38 | 21.74% | 1.01 | 0.84 |
| Weighted average ROE | 21.07% | 19.63% | 19.63% | Increased by 1.44 percentage points | 13.20% | 13.20% |
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| Items | Dec. 31, 2021 | Dec. 31, 2020 | YoY growth rate | Dec. 31, 2019 | ||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Total assets (yuan) | 34,692,165,111.88 | 30,897,007,799.54 | 30,897,007,799.54 | 12.28% | 28,723,817,186.44 | 28,723,817,186.44 |
| Net assets attributable to shareholders of listed company (yuan) | 21,799,977,645.94 | 19,336,254,922.95 | 19,336,254,922.95 | 12.74% | 17,010,913,336.77 | 17,010,913,336.77 |
Note: After the implementation of the Company’s 2020 profit distribution plan, its share capital was increased from 2,148,662,300shares to 2,578,394,760 shares. The above EPS of the comparative period was recalculated based on the adjusted share capital.VII. Differences in accounting data under Chinese accounting standards and overseasaccounting standards
1. Difference in net profit and net assets in financial statements disclosed respectively under IFRSStandards and Chinese accounting standards
□ Applicable √ Not Applicable
The Company has no difference in net profit or net assets in financial statements disclosed respectively under IFRS Standards andChinese accounting standards.
2. Difference in net profit and net assets in financial statements disclosed respectively under overseasaccounting standards and Chinese accounting standards
□ Applicable √ Not Applicable
The Company has no difference in net profit or net assets in financial statements disclosed respectively under overseas accountingstandards and Chinese accounting standards.
VIII. Key financial indicators by quarter
Unit: RMB Yuan
| Items | First quarter | Second quarter | Third quarter | Fourth quarter |
| Operating revenue | 3,743,831,818.61 | 3,510,389,819.40 | 3,262,074,936.89 | 4,281,692,516.30 |
| Net profit attributable to shareholders of listed company | 1,136,774,983.04 | 1,271,724,150.46 | 957,591,164.57 | 958,059,965.24 |
| Net profit attributable to shareholders of listed company after deducting non-recurring profit or loss | 1,090,734,420.46 | 1,188,720,235.17 | 922,007,774.31 | 946,470,934.90 |
| Net cash flows from operating activities | 1,076,704,398.64 | 1,194,453,083.13 | 1,559,667,008.75 | 2,263,200,889.07 |
Is there any significant difference between the above financial indicators or their totals and the correspondent financial indicatorsdisclosed in quarterly or semi-annual reports?
□ Yes √ No
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IX. Non-recurring profit or loss
√ Applicable □ Not Applicable
Unit: RMB Yuan
| Items | Year 2021 | Year 2020 | Year 2019 | Remarks |
| Gains or losses on disposal of non-current assets, including write-off of provision for impairment | -61,427,624.58 | -37,808,614.38 | 31,242,497.42 | |
| Government grants included in profit or loss (excluding those closely related to operating activities of the Company, satisfying government policies and regulations, and continuously enjoyed with certain quantity or quota based on certain standards) | 151,398,630.02 | 125,612,538.90 | 89,067,069.07 | |
| Gains or losses on assets consigned to the third party for investment or management | 57,777,633.53 | 106,249,559.87 | 154,280,805.13 | |
| Net profit or loss on subsidiaries acquired through business combination under common control from the beginning of the period to the combination date | -4,136,941.61 | -3,333,716.78 | ||
| Gains or losses on changes in fair value of held-for-trading financial assets and held-for-trading financial liabilities, and investment income from disposal of held-for-trading financial assets and held-for-trading financial liabilities, excluding those arising from hedging business related to operating activities | 48,751,702.84 | 6,293,430.49 | -8,720,482.58 | |
| Other non-operating revenue or expenditures | 8,727,858.40 | -11,107,533.03 | 4,462,321.94 | |
| Less: Enterprise income tax affected | 28,969,203.00 | 31,786,463.26 | 36,378,554.21 | |
| Non-controlling interest affected (after tax) | 42,098.74 | -76,449.49 | 16,731.11 | |
| Total | 176,216,898.47 | 153,392,426.47 | 230,603,208.88 | -- |
Remarks on other profit or loss satisfying the definition of non-recurring profit or loss:
□ Applicable √ Not Applicable
The Company has no other profit or loss satisfying the definition of non-recurring profit or loss.Remarks on defining non-recurring profit or loss listed in the “Interpretation Pronouncement on Information Disclosure Criteria forPublic Companies No. 1 – Non-Recurring Profit or Loss” as recurring profit or loss
□ Applicable √ Not Applicable
The Company has no situation of defining non-recurring profit or loss listed in the “Interpretation Pronouncement on InformationDisclosure Criteria for Public Companies No. 1 – Non-Recurring Profit or Loss” as recurring profit or loss.
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Section III Management Discussion and AnalysisI. The industry in which the Company operates during the reporting periodThe Company mainly operates in the fine chemical industry. Relying on the two core platforms of chemical and biology, it producesvarious functional chemicals, including nutrition, flavor and fragrance, new materials, and APIs. It has broad prospects in the future.Nutrition: With the growth and aging of the global population, the improvement of people’s living standards and their increasedawareness of health, the demand for nutrition and health services and products keeps growing. The global nutrition marketrepresented by vitamins and methionine maintains steady growth. Vitamins are trace organic substances essential to humans andanimals. The market demand mainly comes from the downstream feed, food, medicine and other fields. The overall demand isgrowing steadily at a low speed. The supply concentration is high, and the market price has long-term cyclical fluctuations. As thelargest producer of vitamins, China produced about 0.40 million tons of vitamins in 2021, a year-on-year increase of 3.70%,accounting for 81.80%
of global production. In 2021, the domestic downstream market demand grew steadily, and the vitaminmarket was relatively prosperous. As the first-limiting amino acid of non-grain protein, methionine has great economical effects onpoultry, dairy cows, pigs and aquaculture. In 2021, the global production of feed amino acids (lysine, methionine, threonine andtryptophan) totaled around 5.62 million tons, with a slight increase from the same period last year. The total output of feedmethionine in China was around 3.44 million tons, at a year-on-year increase of 9.90%. In 2021, the global DL-methionine 99%production capacity was around 2.03 million tons, with a slight increase over the same period of last year, while the domesticmethionine production capacity was around 0.48 million tons, at a year-on-year increase of 13.10%. The global increase inmethionine mainly came from China. The global output was around 1.60 million tons, at a year-on-year increase of 3.00%, and thedomestic output was around 0.37 million tons, at a year-on-year increase of 22.90%, accounting for 23% of the global output, with anincrease of 5 percentage points from last year. The global demand was around 1.50 million tons, with a year-on-year increase of
3.40%, and the domestic demand was around 0.39 million tons, with a year-on-year increase of 11.40%. In the recent five years, thedevelopment of China’s methionine industry has accelerated, as a result, the production capacity and supply have tilted to thedomestic market
. With the continuous recovery of the global economy and the rapid economic development of emerging countries,the demand for meat has grown steadily, which leads to the steady growth of the global feed production. As a result, the demand formethionine is significantly increased.Flavor and fragrance: After centuries of development, the global flavor and fragrance industry has gone through the era of the originof fragrance, the era of bulk fragrance, the era of high-end fragrance, and the era of oligopoly
. The global market size has exceededUSD 30.00 billion and has been growing at a compound growth rate of 4%
in recent years. In 2021, the market size of flavor andfragrance was estimated to be around USD 29.00 billion, and is expected to reach USD 37.30 billion in 2026, with a compoundgrowth rate of 5.10%
. The growth of the flavor and fragrance market is mainly supported by the growing populations of emergingeconomies, such as China, India, Indonesia, South Korea, Brazil and South Africa. The industry is expected to continue to growsteadily in the future, and its future development prospects are promising.
The “2021 Vitamin Market Annual Analysis Report” by BOYAR
The “2021 Amino Acid Market Annual Analysis Report” by BOYAR
The “Analysis Report on China's Flavor and Fragrance Industry in 2021 - Industry Status Quo and Future Planning Analysis” byInsight and Info
Data from IAL Consulting Agency
MARKET and MARKEThttps://www.marketsandmarkets.com/Market-Reports/flavors-fragrance-market-175163912.html#utm_source=Email&utm_medium=Mailgun-CH
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New polymer materials: The “Guidelines under 14
th
Five-Year Plan and Vision for 2035” issued by the central government in 2020pointed out that it is necessary to vigorously develop strategic emerging industries, accelerate the growth of a new generation ofinformation technology, biotechnology, new energy, new materials, high-end equipment, new energy vehicles, green environmentalprotection, aerospace, marine equipment etc. According to the China Petroleum and Chemical Industry Federation, the value ofglobal output of new chemical materials in 2019 reached USD 370.00 billion, and is expected to reach USD 480.00 billion by 2025,with a compound growth rate of 4.40% from 2019 to 2025. From an international perspective, as a strategic and fundamental industry,the development of the new material industry has become an important symbol for measuring the economic and technologicalstrength of a country or region. Under the background of a new round of scientific and technological revolution and industrialrevolution, new technologies and new industries continue to generate huge demand for new materials. Breakthroughs in new materialtechnologies and emergence of new materials and new substance structures continually increasing the supplies. The global newmaterial industry is on the track of rapid growth.From a domestic perspective, China is experiencing a period of strategic transformation, and the strategic demand for new materialsis more prominent, providing a rare historical opportunity for the development of the new material industry. However, in the R&Dand production of advanced and high-end materials, there are still problems such as lack of innovation lack of coordination betweeninnovation chain and industrial chain, lack of a risk-proof system covering the innovation chain, industrial chain and supply chain,etc., which fails to fully satisfy the needs of China’s economy and social development. China still has a long way to go in the road ofnew materials6. Benefiting from the huge domestic demand, the rapid development of new technologies and the support of nationalpolicies, some products broke through the key technology barriers, which provides us with a broad space for growth.APIs: API is the pillar industry of the domestic pharmaceutical industry and one of the key industries supported by government. Atpresent, China is the world’s largest producer and exporter of APIs. Due to the supply imbalance caused by the pandemic and otherfactors, some European and American countries are also advocating to engaging in the API manufacturing, but it is foreseeable that inthe wave of market globalization, the production advantages of APIs will still be concentrated in emerging countries such as China.China is a major producer and exporter of bulk APIs, and its production technology has reached the international advanced level.Most of the APIs are exported to foreign countries for processing into characteristic APIs and preparations. Due to the uncertaintycaused by the global Covid-19 pandemic, the export of major API producing countries such as India and Italy is under pressure. AsAPIs are rigid demand, Chinese API companies have certain advantages in the global competition.Challenges always come with opportunities. We all know that China announced that it would reach carbon peak by 2030 and becarbon neutral by 2060 (known as double carbon target 3060). To reach the target, China is making solid progress to control the totalvolume and intensity of carbon emissions. The National Development and Reform Commission issued the Plan for Improving theDual Control System of Energy Consumption Intensity and Total Volume, proposing to improve the dual control system, with a focuson the control of fossil energy consumption. The Comprehensive Work Plan on Energy Saving and Emission Reduction under the
thFive-Year Plan proposes that by 2025, the national energy consumption per unit of GDP shall be reduced by 13.50% comparedwith 2020. Affected by the “double carbon target and dual control system”, the procurement of basic chemical raw materials faceschallenges of rising cost, limited procurement channels, etc. The Company also faces challenges in project approval and powersupply. In the future, the Company will ensure the supply of raw materials and inventory reserves by developing more qualifiedsuppliers and choosing more green and sustainable products as raw materials. Besides, the Company insists on technologicaltransformation and equipment innovation, strengthens end-of-line management, to achieve energy conservation and emissionreductions.
“The 14
th
Five-Year Plan for the Development of New Materials Industry in Zhejiang Province”
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II. The main business of the Company during the reporting periodThe Company is a national high-tech company mainly engaged in the production and sales of nutrition, flavor and fragrance, newpolymer materials, and APIs. It focuses on fine chemicals, adheres to the concept of innovation-led development andcompetition-driven growth, and continuously develops various functional chemicals based on the two core platforms of chemical andbiology, providing value-added services and solutions to customers in more than 100 countries and regions around the world. Itcontinuously improves the quality of human life with high-quality, healthy and green products, and creates sustainable value forstakeholders. With leading technology, scientific management and sincere service, the Company has become one of the four majorworld vitamin manufacturers, one of the top 100 national fine chemical companies, one of the top 10 companies in China’s light ofindustry fragrance and a well-known special engineering plastics manufacturer.
1. Main products and applications
Nutrition: The Company’s vitamin products, as the main business, have a substantial market share, with a prominent position in theindustry and obvious brand advantages. It is in a leading position in both domestic and overseas markets. Its main products includevitamin E, vitamin A, vitamin C, methionine, vitamin D3, biotin, coenzyme Q10, carotenoids, etc. They are mainly used in feedadditives and nutrition supplements of food, beverages, health food, etc. The Company actively implements the serialized anddifferentiated development of nutrition, and continuously improves the competitiveness of its products by optimizing the processingline and tackling key issues. In addition, through internal integration and external cooperation, it embraces the ideology of opencooperation. It actively deploys cutting-edge biotechnology, and builds the Company’s “Bio+” platform. During the reporting period,for the Company’s second phase of methionine 250,000 tons/year project, 100,000-ton equipment was running steadily, with cost andquality continuously improved, and the 150,000-ton equipment was constructed according to schedule, and the overall process wasunder control.Flavor and fragrance: At present, the main fragrance products target the global market, in which, the products are competitive, with ahigh market share and relatively stable market structure. The main products include linalool, citral, and cis-3-hexenol series, andmethyl dihydrojasmonate, raspberry ketone and ligustral, which are widely used in personal care, cosmetic and food fields. Relyingon the two major technology platforms of chemical synthesis and biological fermentation, the Company continuously enriches thevarieties of fragrance products to meet the changing market demands. During the reporting period, the project with an annual outputof 5,000 tons of menthol was constructed on schedule, and the project progress was under control.New polymer materials: The Company focuses on the development of high molecular polymers and key intermediates, andappropriately develops downstream applications of materials according to the principles of integration and serialization. The entireindustry chain of PPS from raw materials to high molecular polymers, then through modifying processing to special fibers hasenabled the Company as the only company in China that can stably produce fiber grade, injection molding grade, extrusion grade andcoating grade PPS. The main products include PPS and PPA. They are mainly used in electronic and electrical, automotive,environmental protection, etc. During the reporting period, the third-phase project with an annual output of 7,000 tons of PPS was putinto construction.APIs: The main products are concentrated in the series of vitamins and antibiotics. The main products include moxifloxacinhydrochloride, vitamin A, vitamin D3, etc., which are mainly used as active pharmaceutical ingredients for processing and producingpharmaceutical preparations.
2. Main business models
(1) Procurement model
The Company has always been adhering to the procurement principle of “fairness, transparency and optimal cost”, and adopts acombination of long-term strategic cooperation and open competitive procurement, and makes best use of market trend analysis, toensure the stable supply of the Company’s strategic materials. The Company pays attention to source procurement, and continuously
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promotes the removal of intermediate links in the supply chain to reduce procurement costs; the Company implements transparentprocurement, and launches information systems such as procurement platform, supplier and bidding management system, etc. tomake the procurement process more transparent, standardized and efficient, which promotes the healthy development of the supplychain and reduces costs and increases efficiency for the Company’s operations.
(2) Production model
The Company has always been adhering to the production strategy based on the principle of “production and sales coordination,efficient operation, excellent quality, and cost leadership”. The Company maintained a balance between production and salesthrough analysis of changes in market demands, effective response to repeated epidemic waves and dual-control power cuts, andreasonable production plans. In addition, the Company keeps innovating the production model, digging out internal potentials, andoptimizing the production process, in order to promote safe, green, standardized and efficient production, and continuously improvethe competitiveness of its products.
(3) Sales model
The Company has always been adhering to the “customer-centric, market-oriented” sales strategy. It divides business lines by productapplication fields, and establishes a sales model that suits market needs according to market characteristics and industry practices.Most of the Company’s sales are achieved through direct sales. By doing so, it establishes long-term and stable strategic cooperativerelationships with end customers to create greater value for them. Meanwhile, it also selects excellent agents or distributors fordistribution. By doing so, it services customers indirectly based on market and customer features.
3. Key performance drivers
The Company has built four modern industrial bases across the country. It adheres to the development strategy of integration,serialization and synergy, and insists on innovation-driven. Relying on the solid foundation of fine chemical industry, it focuses on“chemical+” and “biology+” to form NHU featured R&D models with industrial clusters, and technology and industry platformsinterdependent. Not only can its products connect basic chemical raw materials in the upstream, but also extend to specialintermediates, nutrition, flavor and fragrance, new polymer materials, and APIs in the downstream. It has formed a product networkstructure to resist risks and respond to market emergencies.During the reporting period, in the face of the raging Covid-19 epidemic and the more complex international economic situation, theCompany coordinated the epidemic control and business development, actively responded to market changes, adjusted salesstrategies, strengthened supply chain scheduling, and reasonably arranged production plans to ensure its product supply, and strive tocreate value for customers and the society. Moreover, the Company continued to increase investment in R&D and technologicalupgrading. The development and construction of new projects and new products were carried out in an orderly manner, whereas therefined operation of existing products promoted the sales price and quantity, which promoted the Company’s sales performance. Theimprovement of the Company’s performance was in line with the development pattern of the industry.During the reporting period, the Company’s main business and its business model remained unchanged.
III. Core competitiveness analysisSince its establishment, the Company has focused on fine chemicals, and adhered to innovation-driven development. Throughdecades of development, it has gradually formed an industrial system with nutrition, flavor and fragrance, new polymer materials andAPIs as its main business. The market share of its main products is among the top tier in the world market. The Company’s corecompetitiveness lies in its cooperate culture, R&D, management, talent and brand.
1. Corporate culture
Adhering to the enterprise objective of “creating wealth, employees success, and benefit the society”, core values of “new, harmony,union”, business philosophy of “create wealth, balanced and sustainable”, and enterprise spirit of “ realism, innovation, high-quality
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and efficiency”, the Company innovates its operation, and continuously improves management, to ensure the steady development.Under the guidance of the “teacher culture”, the Company pursues high-quality and sustainable development, creates spiritual wealthand material wealth, provides a platform and opportunity for employees to develop and realize life value, and contributes to socialinnovation development, green development and shared development. During the reporting period, the Company deepened culturalpublicity and implementation, organized corporate culture lectures, strengthened the integration of corporate culture and management,carried out reflection activities on execution and talent training, and promoted the improvement of management capabilities.
2. R&D
Adhering to the R&D philosophy of “demand-orientated, internal integration and external cooperation”, the Company investedgreatly in R&D activities. The R&D investments accounted for more than 5% of the operating revenue for many years in a row. It hasbuilt the innovative R&D system spanning from basic research, engineering development, process optimization to productapplication development. With its focus on the development of common, critical and forward-looking technologies in the chemicalsindustry, the Company has developed and mastered a number of key technologies that have a strategic impact on economicdevelopment and has promoted the transformation and upgrading of the industry. The Company cooperates closely with famousresearch institutes and universities at home and abroad, such as Zhejiang University, Chinese Academy of Sciences, JiangnanUniversity, China Agricultural University, Zhejiang University of Technology, CysBio biotechnology company of Denmark, andorganizes and utilizes global basic scientific research resources to jointly develop forward-looking studies and application fieldresearches on chemicals. As the core of the Company’s technology innovation, the Company’s research institute has biomedicallaboratories, supercritical reaction laboratories, engineering equipment research centers and other laboratories, equipped with 600MNMR with cryoprobes and other world-leading scientific research instruments and equipment. Its achievements of domestic leadingtechnologies such as supercritical reaction, high vacuum distillation, and continuous reaction have made it a nationally recognizedenterprise technology center, national post-doctoral scientific research workstation, and national model academician and expertworkstation. During the reporting period, the Company’s key R&D projects were steadily implemented as planned, and theinnovation achievements were recognized by the society. The project of “Key Innovation and Industrialization Technology forTailoring Supported Catalysts in the Micro-nano Dimension “ won the first prize of Zhejiang Province Technology Invention Awardof 2020. Intellectual property work was continuously progressed forward, and 88 patents were authorized. The full-process patentlayout of key products was completed.
3. Production management
The Company has always been adhering to the production strategy based on the principle of “production and sales coordination,efficient operation, excellent quality, and cost leadership” and the HSE guideline of “safety first, green development, fullparticipation, and continuous improvement”. The Company takes planning as the goal, cost management as the main line, andmaximizing company benefits as the principle for the allocation of resources. Through oriented management and the cyclic operationof planning, organization, implementation and control of the operation process, the Company continuously strengthens the level ofcost control. Meanwhile, it also improves the level of digitalization and intelligence. Through process reform, efficient managementand intelligent operation, it promotes the continuous improvement of management efficiency. In addition, the Company is committedto the development of green chemicals, vigorously promotes clean production, recyclable economy and 7S on-site management, andadopts an environmental governance model that focuses on source control and final disposal. It is determined to take the road ofsustainable development.
4. Process and equipment
The Company values highly the effective combination of process and equipment. It has a process and equipment research institute,and cooperates with famous engineering companies and scientific research institutes at home and abroad. Through the introduction,digestion, absorption and re-innovation of advanced technologies, the Company improves the overall level of its process andequipment. The Company is dedicated to the R&D of process and equipment towards larger scale, better airtightness, greatercontinuity, and higher level of automation, aiming to save energy and reduce emissions, to improve productivity and product quality,
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to increase the intrinsic safety of production process, to lower production costs, and to improve the level of automation. Currently, theCompany has developed various efficient reaction and separation platforms including continuous reaction, high vacuum distillation,continuous extraction, continuous crystallization, efficient filtration, simulated moving bed separation, microchannel andmicro-interface reaction with respect to specific processes, and remarkable results have been achieved in continuous transformationof reaction, vapor-liquid-solid heterogeneous reaction, and separation of air sensitive and heat sensitive materials through continuousimprovement of large-size equipment.
5. Talent
The Company has always been adhering to the management concept of “standardization and efficiency” and the employment conceptof “valuing both integrity and talent, and matching people with right positions”, and has created a pioneering, innovative, pragmaticand efficient talent team and a long-term, stable and excellent management team with a high sense of responsibility, which promotesthe Company’s sustained, healthy and rapid development. The Company continues to strengthen the construction of the talent supplychain. It continuously improves the talent training system, strengthens the training of “management talents, skilled talents,international talents, core technical talents, and leadership talents”, systematically cultivates and reserves university graduates,introduces various professionals, and continues to promote the training and reserve of senior talents. It also promotes the rotationtraining in zigzag and cross-sequence pattern, in order to promote the integration of management and profession, and to build a teamwith a balanced talent structure. During the reporting period, the Company was awarded the national advanced entity for professionaland technical talents, and its post-doctoral research workstation was granted the qualification of independently recruitingpost-doctors.
6. Brand
The Company follows the “integrity first” guideline, and has always regarded serving customers and creating industry value withcustomers as the goal of the Company. Through technological innovation, the Company continuously provides customers with safeand high-quality products, as well as efficient and satisfactory services. After years of development and accumulation, the Companyhas been awarded many honorary titles in the global fine chemical industry, such as one of top ten feed additive brands in China, oneof the largest vitamin feed additive companies in China, etc. Good reputation in market has laid a solid foundation for the Company’shealthy and long-term development.IV. Main business analysis
1. Introduction
Please refer to item “II. The main business of the Company during the reporting period” under “Section III Management Discussionand Analysis” for details.2．Revenue and cost
(1) Operating revenue
Unit: RMB Yuan
| Items | Year 2021 | Year 2020 | YoY growth rate | ||
| Amount | % to total | Amount | % to total | ||
| Total | 14,797,989,091.20 | 100% | 10,314,084,354.21 | 100% | 43.47% |
| By industry | |||||
| Pharmaceutical chemicals | 13,786,221,640.74 | 93.16% | 9,513,390,811.51 | 92.24% | 44.91% |
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| Items | Year 2021 | Year 2020 | YoY growth rate | ||
| Amount | % to total | Amount | % to total | ||
| Others | 1,011,767,450.46 | 6.84% | 800,693,542.70 | 7.76% | 26.36% |
| By product | |||||
| Nutrition | 11,127,987,778.92 | 75.20% | 7,152,084,881.08 | 69.34% | 55.59% |
| Flavor and fragrance | 2,238,700,529.12 | 15.13% | 1,955,729,401.52 | 18.96% | 14.47% |
| New polymer materials | 873,994,673.98 | 5.90% | 722,638,797.47 | 7.01% | 20.94% |
| Others | 557,306,109.18 | 3.77% | 483,631,274.14 | 4.69% | 15.23% |
| By region | |||||
| Domestic sales | 7,123,812,423.17 | 48.14% | 4,536,018,908.08 | 43.98% | 57.05% |
| Overseas sales | 7,674,176,668.03 | 51.86% | 5,778,065,446.13 | 56.02% | 32.82% |
| By sales model | |||||
| Direct sales | 11,477,870,900.52 | 77.56% | 8,167,791,726.07 | 79.19% | 40.53% |
| Agent sales | 3,320,118,190.68 | 22.44% | 2,146,292,628.14 | 20.81% | 54.69% |
(2) Industries, products and regions that account for more than 10% of the total operating revenue oroperating profit
√ Applicable □ Not Applicable
Unit: RMB Yuan
| Items | Operating revenue | Operating cost | Gross rate | Growth rate of operating revenue | Growth rate of operating cost | Growth rate of gross rate |
| By industry | ||||||
| Pharmaceutical chemicals | 13,786,221,640.74 | 7,524,635,557.32 | 45.42% | 44.91% | 78.62% | Decreased by 10.30% |
| Others | 1,011,767,450.46 | 687,657,388.95 | 32.03% | 26.36% | 33.64% | Decreased by 3.71% |
| By product | ||||||
| Nutrition | 11,127,987,778.92 | 5,893,700,909.97 | 47.04% | 55.59% | 95.20% | Decreased by 10.74% |
| Flavor and fragrance | 2,238,700,529.12 | 1,295,613,509.31 | 42.13% | 14.47% | 48.78% | Decreased by 13.34% |
| By region | ||||||
| Domestic sales | 7,123,812,423.17 | 4,304,266,719.31 | 39.58% | 57.05% | 88.37% | Decreased by 10.04% |
| Overseas sales | 7,674,176,668.03 | 3,908,026,226.96 | 49.08% | 32.82% | 60.02% | Decreased by 8.65% |
In case the statistical caliber of the Company’s main business data was adjusted during the reporting period, the Company’s mainbusiness data of the preceding period adjusted according to the caliber at the end of the period shall be indicated
□ Applicable √ Not Applicable
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(3) Whether the Company’s goods sales income is greater than service income
√ Yes □ No
| By industry | Items | Unit | Year 2021 | Year 2020 | YoY growth rate |
| Pharmaceutical chemicals | Sales | Tons | 560,201.79 | 241,247.40 | 132.21% |
| Production | Tons | 581,022.52 | 255,477.31 | 127.43% | |
| Stock | Tons | 55,141.48 | 34,320.75 | 60.67% | |
| Others | Sales | Tons | 20,323.14 | 17,519.90 | 16.00% |
| Production | Tons | 18,857.92 | 18,059.16 | 4.42% | |
| Stock | Tons | 2,848.33 | 4,313.55 | -33.97% |
Remarks on reason for relevant data with absolute growth rate over 30%
√ Applicable □ Not Applicable
a. The YoY growth rates of sales, production and stock of chemical industry were over 30%, mainly due to the
joint effect of following factors: a. Increased downstream demand for products such as vitamin E andmethionine; and b. increased production of amino acid productsb. The YoY growth rate of stock of others was under -30%, mainly due to decrease in stock of PPS productswhose sales increased with growing market demand.
(4) The performance of major sales contracts and major purchase contracts signed by the Company duringthe reporting period
□ Applicable √ Not Applicable
(5) Composition of operating cost
By industry and product
Unit: RMB Yuan
| By industry | Items | Year 2021 | Year 2020 | YoY growth rate | ||
| Amount | % to total | Amount | % to total | |||
| Chemical industry | Cost of main operations | 7,438,277,802.68 | 90.57% | 4,152,975,659.63 | 87.85% | 79.11% |
| Others | Cost of main operations | 686,701,505.46 | 8.36% | 512,070,058.95 | 10.83% | 34.10% |
Unit: RMB Yuan
| By product | Items | Year 2021 | Year 2020 | YoY growth rate | ||
| Amount | % to total | Amount | % to total | |||
| Nutrition | Cost of main operations | 5,810,172,906.75 | 70.75% | 2,959,568,683.97 | 62.61% | 96.32% |
| Flavor and fragrance | Cost of main operations | 1,292,783,757.89 | 15.74% | 869,842,533.19 | 18.40% | 48.62% |
| New materials | Cost of main operations | 592,371,747.63 | 7.21% | 445,892,384.85 | 9.43% | 32.85% |
| Others | Cost of main operations | 429,650,895.87 | 5.23% | 389,742,116.57 | 8.24% | 10.24% |
RemarksNone.
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(6) Whether the consolidation scope has changed during the reporting period
√ Yes □ No
| Entities | Equity acquisition method |
| 浙江新和成尼龙材料有限公司 (Zhejiang NHU Nylon Materials Co., Ltd.*) | Investment and establishment |
NHU Singapore PTE. LTD.
| NHU Singapore PTE. LTD. | Investment and establishment |
(7) Significant changes or adjustments to the Company’s business, products or services during thereporting period
□ Applicable √ Not Applicable
(8) Major customers and major suppliers
Major customers
| Total sales amount (yuan) of top 5 customers | 2,631,845,264.42 |
| Proportion to the total balance of annual sales amount (%) | 17.79% |
| Proportion of related party transaction to the total balance of annual sales amount (%) | 0.00% |
Top 5 customers
| No. | Customers | Sales amount (yuan) | Proportion to the total balance of sales amount (%) |
| 1 | Client A | 1,090,633,930.45 | 7.37% |
| 2 | Client B | 553,597,741.99 | 3.74% |
| 3 | Client C | 417,521,095.52 | 2.83% |
| 4 | Client D | 353,717,339.50 | 2.39% |
| 5 | Client E | 216,375,156.96 | 1.46% |
| Total | -- | 2,631,845,264.42 | 17.79% |
Remarks on other information of major customers
□ Applicable √ Not Applicable
Major suppliers
| Total purchase amount (yuan) of top 5 suppliers | 927,110,934.55 |
| Proportion to the total balance of annual purchase amount (%) | 11.47% |
| Proportion of related party transaction to the total balance of annual purchase amount (%) | 0.00% |
Top 5 suppliers
| No. | Suppliers | Purchase amount (yuan) | Proportion to the total balance of purchase amount (%) |
| 1 | Supplier A | 270,477,214.33 | 3.35% |
| 2 | Supplier B | 189,798,840.70 | 2.35% |
| 3 | Supplier C | 187,488,797.04 | 2.32% |
*The English name is for identification purpose only.
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| No. | Suppliers | Purchase amount (yuan) | Proportion to the total balance of purchase amount (%) |
| 4 | Supplier D | 148,816,101.63 | 1.84% |
| 5 | Supplier E | 130,529,980.85 | 1.61% |
| Total | -- | 927,110,934.55 | 11.47% |
Remarks on other information of major suppliers
□ Applicable √ Not Applicable
3. Expenses
Unit: RMB Yuan
| Items | Year 2021 | Year 2020 | YoY growth rate | Remarks on significant changes |
| Selling expenses | 107,037,085.96 | 312,957,940.58 | -65.80% | It was mainly due to freight and insurance fees included in operating cost under the revised revenue standard during the reporting period. |
| Administrative expenses | 423,584,417.67 | 422,853,851.25 | 0.17% | |
| Financial expenses | 269,968,353.24 | 304,543,014.49 | -11.35% | |
| R&D expenses | 782,661,708.54 | 545,562,375.72 | 43.46% |
It was mainly due to increase ofremuneration of R&D department anddirect input materials into its projectsduring the reporting period.
4. R&D input
√ Applicable □ Not Applicable
| Main R&D projects | Purposes | Progress | Targets to be fulfilled | Expected effect on the Company’s future development |
| Development on synthetic process of NH acid products | To develop new products, so as to realize mass production of NH acid with competitive cost | Under construction | To realize mass production of NH acid with competitive cost | It is expected to enrich the product chain and the industrial chain of the Company and improve the comprehensive competitiveness. |
| Joint production period of caronic anhydride and vince lactam | To develop a preparation method for medical intermediates | Under construction | To realize industrialization of caronic anhydride and vince lactam production |
It is expected to extend theindustrial chain layout,enhance the Company’sability in the field of API, andprotect human life and health.
| R&D of new synthesis process of menthol | To develop new menthol products and realize industrialization of menthol | Under construction | To realize industrialization of menthol | It is expected to realize the localization of menthol products, enhance the Company’s position in the field of fragrances, and promote the upgrading of domestic nursing, food industry, pharmacy and other downstream industries. |
| Research on the process of FV products | To develop new FV products, realize industrialization of FV products and further enrich the product chain of the Company | The pilot-scale experiment is completed | To prepare FV products with continuous process or partial continuous process | It is expected to further enhance the Company’s overall position and impact resistance in the vitamin market. |
| Innovation and industrialization of synthetic process of | To research on and develop synthetic process of perfluorohexyl octane | The pilot-scale experiment is completed | To research and develop synthetic process of perfluorohexyl octane and | It is expected to expand API businesses of the Company, and improve the |
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| Main R&D projects | Purposes | Progress | Targets to be fulfilled | Expected effect on the Company’s future development |
| halothane series eye medicine | and perfluorobutyl pentane, and conduct magnification design and debugging | perfluorobutyl pentane, conduct magnification design and debugging, and expand business cooperation relationships | competitiveness. | |
| Development of liquid methionine products | To broaden the market, develop new liquid methionine products, and realize the industrialization of liquid methionine products | Under pilot-scale experiment | To realize the industrialization of liquid methionine products | It is expected to enrich the Company’s product categories, form industrial complementarity with solid methionine products, and meet the differentiated needs of customers. |
| Preparation of adiponitrile by butadiene method and its industrialization | Chemical synthesis of adiponitrile and its industrialization | Under pilot-scale experiment | R&D of adiponitrile product technology and realization of production technology localization of adiponitrile product | It is expected to help the Company break through the technical barrier of adiponitrile, become the first domestic company to master this technology, break the monopoly of foreign companies, and promote the development of domestic related industries |
| Precise development and industrial application of high-performance hydrogenation catalyst | To research on the precise design, synthesis and mechanism of high-performance selective hydrogenation catalysts for selective hydrogenation of unsaturated ketone and triple bond involving chemical synthesis of vitamin E and vitamin A, and to realize its industrial application | During its application in mass production | To realize the Company’s precise regulation of nano-metal in hydrogenation catalyst, and significantly improve activity, selectivity and stability of catalysts | It is expected to enhance the comprehensive competitiveness of products |
| Research on the development and application of high-safety nutrient products | To develop high- safety fat-soluble vitamin and carotenoid preparations and research on the effect and mechanism of their application in downstream premix, feeds and animals (in vitro and in vivo). | During its application in mass production | To research on the application effect of newly developed ethoxyquinoline-free vitamin and carotenoid preparation products in premix and feeds, and their bioutilization effect in different animal fields. Establish feed processing platform and breeding test base for pilot-scale experiments, so as to evaluate the application effect of high-safety vitamin and carotenoid. | It is expected to improve the Company’s independent research and development level in the development and application of pharmaceutical products, so as to lay a solid product foundation for consolidation of the European feed products market. |
| Research on drug quality standards and technical services for analysis and testing | To establish relevant standards and detection methods for synthetic intermediates; to carry out research on preparation, separation and purification of trace impurities, determine impurity structure, etc. | As the Company has obtained the CNAS laboratory accreditation certificate, it is currently able to support the research on analytical technologies inside and outside the Company. | To provide analytical technology services for enterprises, establish analytical technology development, and assist in products development | It is expected to provide a full range of analysis and testing services for the Company’s innovation of products and technologies, and help solve key technical problems in production and in the R&D process. |
| Research on safety risk of fine chemical reaction | Establish safety assessment laboratory which is equipped with calorimetry equipment | Safety and environmental protection laboratory is established, which | To improve the safety assurance technology of chemical production and storage process. To carry out | It is expected to improve the essential safety level of enterprises and effectively prevent accidents. |
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| Main R&D projects | Purposes | Progress | Targets to be fulfilled | Expected effect on the Company’s future development |
| (DSC, ARC, RC1e, etc.) and analysts, carry out kinetic and thermodynamic analysis on related materials and chemical reaction process, and when necessary, carry out amplification and debugging procedures on corresponding processes | enables the issue of process safety evaluation report that meets the requirements of safety supervision department. | process optimization for the relatively-high risks of the process, so as to essentially reduce the risk of the reaction process. | ||
| Research on development and application of crystallization technology | To systematically research on the influencing factors of each product in the crystallization process, find out the optimal crystallization process parameter, realize the controllability of crystal products in aspects including particle size distribution, appearance, crystal shape, and solve actual production problems through production debugging in the workshop | The Company is able to conduct analysis and research on crystallization thermodynamics, kinetics and polycrystal type, and has development ability of cooling and other three crystallization processes as well as the development ability of continuous crystallization process. | To systematically research on the crystallization process of existing and developing products, and support to solve practical production problems. | It is expected to achieve product quality improvement through the innovation and development of crystallization process, so as to meet the needs of different customers and Improve the market competitiveness of products. |
| Research on strain development and modification | To research on the strain transformation of the Company’s existing products | The Company has formed the ability of strain modification | To research on strain modification of the existing products, so as to improve the competitiveness of product process | It is expected to continuously improve the process competitiveness of existing products, so as to improve the Company’s position in the fermentation industry |
Details of R&D personnel
| Items | Year 2021 | Year 2020 | Percentage of change |
| Number of R&D personnel (persons) | 2,368 | 1,962 | 20.69% |
| % to total employees | 21.92% | 19.43% | Increased by 2.49 percentage points |
| Educational background structure | —— | —— | —— |
| Doctor | 58 | 38 | 52.63% |
| Master | 605 | 484 | 25.00% |
| Bachelor | 1,189 | 971 | 22.45% |
| Junior college | 367 | 326 | 12.58% |
| Technical secondary school, high school and below | 149 | 143 | 4.20% |
| Total | 2,368 | 1,962 | 20.69% |
| Age structure | —— | —— | —— |
| Below 30 years old | 1,169 | 907 | 28.89% |
| 30-40 years old | 894 | 819 | 9.16% |
| Over 40 years old | 305 | 236 | 29.24% |
| Total | 2,368 | 1,962 | 20.69% |
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Details of R&D input
| Items | Year 2021 | Year 2020 | Percentage of change |
| R&D input amount (yuan) | 782,661,708.54 | 545,562,375.72 | 43.46% |
| % to total operating revenue | 5.29% | 5.29% | 0.00% |
| Capitalized amount (yuan) | 0.00 | 0.00 | 0.00% |
| % to total R&D input | 0.00% | 0.00% | 0.00% |
Reason for significant changes in structure of the Company’s R&D personnel and the effect
□ Applicable √ Not Applicable
Reason for significant changes in the proportion of total R&D input to operating revenue compared to the preceding period
□ Applicable √ Not Applicable
Reason for significant changes in capitalization rate of R&D input and remarks on the reasonability
□ Applicable √ Not Applicable
5. Cash flows
Unit: RMB Yuan
| Items | Year 2021 | Year 2020 | YoY growth rate |
| Subtotal of cash inflows from operating activities | 15,585,137,046.52 | 10,804,599,576.68 | 44.25% |
| Subtotal of cash outflows from operating activities | 9, 747,258,994.95 | 7,681,792,213.47 | 26.89% |
| Net cash flows from operating activities | 5,837,878,051.57 | 3,122,807,363.21 | 86.94% |
| Subtotal of cash inflows from investing activities | 1,969,695,872.13 | 4,068,475,319.50 | -51.59% |
| Subtotal of cash outflows from investing activities | 5, 361,464,680.21 | 4,262,105,699.60 | 25.79% |
| Net cash flows from investing activities | -3, 391,768,808.08 | -193,630,380.10 | -1,651.67% |
| Subtotal of cash inflows from financing activities | 7,383,209,509.05 | 7,470,348,792.97 | -1.17% |
| Subtotal of cash outflows from financing activities | 8,727,832,760.73 | 8,846,567,487.61 | -1.34% |
| Net cash flows from financing activities | -1,344,623,251.68 | -1,376,218,694.64 | 2.30% |
| Net increase of cash and cash equivalents | 1,045,230,762.14 | 1,455,748,960.67 | -28.20% |
Remarks on main factors leading to the significant changes in growth rates of relevant data
√ Applicable □ Not Applicable
The YoY growth rate of net cash flows from operating activities was 86.94%, which was mainly due to increase of sales during thereporting period leading to increase of collection of relevant payments for goods.The YoY growth rate of net cash flows from investing activities was -1,651.67%, which was mainly due to decrease of financialproducts arising from redemption upon maturity, and increase of cash payment for construction in progress during the reportingperiod.The YoY growth rate of cash and cash equivalents was -28.20%, which was mainly due to decrease of financial products arising fromredemption upon maturity, and increase of cash payment for construction in progress during the reporting period.
Page 22 of 175
Remarks on reason for significant difference between net cash flows from operating activities during the reporting period and netprofit of the current period
□ Applicable √ Not Applicable
V. Non-main business analysis
√ Applicable □ Not Applicable
Unit: RMB Yuan
| Items | Amount | % to total profit before tax | Reason for balance | Whether has continuity |
| Investment income | 127,969,715.41 | 2.54% | It was mainly due to gains on financial products and profit generated by the associates during the reporting period. | No |
| Gains on changes in fair value | 37,863,705.44 | 0.75% | It was mainly due to changes in fair value of forward foreign exchange settlement during the reporting period. | No |
| Credit impairment loss | -50,043,349.49 | -0.99% | It was mainly due to bad debts accrued in accounts receivable. | No |
| Assets impairment loss | -54,250,408.9 | -1.08% | It was mainly due to losses arising from provision for impairment made on each asset in accordance with assets impairment principles. | No |
| Gains on asset disposal | -1,544,436.08 | -0.03% | It was mainly due to disposal of fixed assets. | No |
| Non-operating revenue | 12,287,842.84 | 0.24% | It was mainly due to indemnity income. | No |
| Non-operating expenditures | 64,603,824.24 | 1.28% | It was mainly due to gains on retirement of assets and donation expenditures during the reporting period. | No |
| Other income | 152,380,704.67 | 3.03% | It was mainly due to government grants received during the reporting period. | No |
VI. Assets and liabilities analysis
1. Significant changes in asset composition
Unit: RMB Yuan
| Items | Dec. 31, 2021 | Jan. 1, 2021 | Percentage of change | Remarks on significant changes | ||
| Amount | % to total | Amount | % to total | |||
| Cash and bank balances | 5,952,909,626.94 | 17.16% | 4,927,657,236.24 | 15.95% | 1.21% | |
| Held-for trading financial assets | 1,250,736,359.24 | 3.61% | 852,227,964.70 | 2.76% | 0.85% | |
| Accounts receivable | 2,755,168,573.14 | 7.94% | 1,930,930,930.01 | 6.25% | 1.69% | |
| Inventories | 3,193,657,367.16 | 9.21% | 3,117,042,558.78 | 10.09% | -0.88% | |
| Other current assets | 895,782,268.87 | 2.58% | 1,777,569,473.96 | 5.75% | -3.17% | |
| Long-term equity investments | 351,327,625.75 | 1.01% | 343,378,891.18 | 1.11% | -0.10% | |
| Fixed assets | 14,318,919,487.82 | 41.27% | 13,914,151,215.54 | 45.03% | -3.76% | |
| Construction in progress | 2,984,835,072.82 | 8.60% | 1,325,545,420.56 | 4.29% | 4.31% | |
| Right-of-use assets | 3,123,637.11 | 0.01% | 3,113,997.88 | 0.01% | 0.00% | |
| Short-term borrowings | 1,403,332,827.92 | 4.05% | 2,363,525,192.53 | 7.65% | -3.60% | |
Page 23 of 175
| Items | Dec. 31, 2021 | Jan. 1, 2021 | Percentage of change | Remarks on significant changes | ||
| Amount | % to total | Amount | % to total | |||
| Contract liabilities | 61,135,258.36 | 0.18% | 56,302,537.11 | 0.18% | 0.00% | |
| Non-current liabilities to be due within one year | 2,029,499,509.43 | 5.85% | 1,275,980,921.58 | 4.13% | 1.72% | |
| Long-term borrowings | 5,148,811,786.49 | 14.84% | 4,136,875,354.33 | 13.39% | 1.45% | |
| Lease liabilities | 2,936,868.15 | 0.01% | 3,021,369.62 | 0.01% | 0.00% | |
Proportion of foreign assets to total assets is comparatively high
□ Applicable √ Not Applicable
2. Assets and liabilities at fair value
√ Applicable □ Not Applicable
Unit: RMB Yuan
| Items | Opening balance | Gains on changes in fair value | Accumulated changes in fair value included in equity | Provision for impairment made in the current period | Amount purchased during the reporting period | Amount sold during the reporting period | Other changes | Closing balance |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (derivative financial assets excluded) | 850,000,000.00 | 1,250,000,000.00 | 850,000,000.00 | 1,250,000,000.00 | ||||
| 2. Derivative financial assets | 2,227,964.70 | -1,491,605.46 | 736,359.24 | |||||
| Subtotal of financial assets | 852,227,964.70 | -1,491,605.46 | 1,250,000,000.00 | 850,000,000.00 | 1,250,736,359.24 | |||
| Total | 852,227,964.70 | -1,491,605.46 | 1,250,000,000.00 | 850,000,000.00 | 1,250,736,359.24 | |||
| Financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||
Remarks on other changesWhether the Company has significant changes in measurement attributes of main assets during the reporting period
□ Yes √ No
3. Restrictions on assets as of the end of the reporting period
(1) Closing of cash and bank balances included deposits of 238,372,088.71 yuan pledged and not on demand for payments, whichwas with use restrictions.
(2) Closing balance of receivables financing included 131,943,711.14 yuan pledged for bank acceptance and not on demand forpayments, which was with use restrictions.
(3) Closing balance of notes receivable included 236,268,835.12 yuan pledged for bank acceptance and not on demand for payment,which was with use restrictions.
(4) Closing carrying amount of fixed assets included 79,957,441.31 yuan mortgaged to the bank for borrowings, which was with userestrictions.
(5) Closing carrying amount of intangible assets included 9,463,498.51 yuan mortgaged to the bank for borrowings, which was withuse restrictions.
Page 24 of 175
VII. Investment status analysis
1. Overall information
√ Applicable □ Not Applicable
| Investments during the reporting period (yuan) | Investments of the preceding period (yuan) | Percentage of change |
| 2,489,162,047.36 | 1,677,781,310.34 | 48.36% |
2. Significant equity investments made during the reporting period
□ Applicable √ Not Applicable
3. Significant non-equity investments in progress during the reporting period
□ Applicable √ Not Applicable
4. Investments in financial assets
(1) investments in securities
□ Applicable √ Not Applicable
There is no investment in securities during the reporting period.
(2) Investments in derivatives
√ Applicable □ Not Applicable
Unit: RMB 0,000 yuan
| Counterparty | Related party relationship | Whether related party transaction | Categories of derivative investments | Initial investments | Date of commencement | Date of termination | Opening balance | Amount purchased during the reporting period | Amount sold during the reporting period | Provision for impairment (if any) | Closing balance | Proportion of investments to net assets | Profit or loss during the reporting period |
| Bank | Non-related party | No | Structured forward contracts | 9,753.7 | 7/20/2020 | 2/24/2021 | 2,459.6 | 2,459.6 | 27.8 | ||||
| Bank | Non-related party | No | Forward contracts | 4,802.49 | 12/15/2020 | 3/25/2021 | 4,802.49 | 4,802.49 | 144.94 | ||||
| Bank | Non-related party | No | Structured forward contracts | 19,803 | 12/22/2020 | 3/25/2021 | 19,803 | 19,803 | -26.56 | ||||
| Bank | Non-related party | No | Structured forward contracts | 19,686.44 | 12/30/2020 | 2/22/2021 | 13,116.48 | 13,116.48 | 0 | ||||
| Bank | Non-related party | No | Structured forward contracts | 15,744.4 | 12/30/2020 | 1/25/2021 | 10,487.2 | 10,487.2 | 0 | ||||
| Bank | Non-related party | No | Structured forward contracts | 9,840.25 | 12/30/2020 | 1/25/2021 | 6,554.5 | 6,554.5 | 0 | ||||
| Bank | Non-related party | No | Structured forward contracts | 39,361.13 | 1/6/2021 | 1/19/2021 | 39,361.13 | 39,361.13 | 9.93 | ||||
| Bank | Non-related party | No | Structured forward contracts | 9,251.42 | 2/9/2021 | 2/18/2021 | 9,251.42 | 9,251.42 | 2.76 | ||||
| Bank | Non-related party | No | Structured forward contracts | 3,186.36 | 1/8/2021 | 2/22/2021 | 3,186.36 | 3,186.36 | 14.72 |
Page 25 of 175
| Counterparty | Related party relationship | Whether related party transaction | Categories of derivative investments | Initial investments | Date of commencement | Date of termination | Opening balance | Amount purchased during the reporting period | Amount sold during the reporting period | Provision for impairment (if any) | Closing balance | Proportion of investments to net assets | Profit or loss during the reporting period |
| Bank | Non-related party | No | Structured forward contracts | 41,085 | 1/8/2021 | 3/26/2021 | 41,085 | 41,085 | 121.16 | ||||
| Bank | Non-related party | No | Forward contracts | 12,923.7 | 1/13/2021 | 1/25/2021 | 12,923.7 | 12,923.7 | -4.9 | ||||
| Bank | Non-related party | No | Forward contracts | 8,768.32 | 1/13/2021 | 3/26/2021 | 8,768.32 | 8,768.32 | 19.2 | ||||
| Bank | Non-related party | No | Forward contracts | 7,117 | 1/14/2021 | 1/29/2021 | 7,117 | 7,117 | 24.86 | ||||
| Bank | Non-related party | No | Structured forward contracts | 32,624 | 1/28/2021 | 3/25/2021 | 32,624 | 32,624 | 119.51 | ||||
| Bank | Non-related party | No | Structured forward contracts | 25,468 | 1/28/2021 | 5/25/2021 | 25,468 | 25,468 | 243.99 | ||||
| Bank | Non-related party | No | Structured forward contracts | 32,516 | 2/5/2021 | 3/26/2021 | 32,516 | 32,516 | 32.8 | ||||
| Bank | Non-related party | No | Structured forward contracts | 19,485 | 2/19/2021 | 3/15/2021 | 19,485 | 19,485 | 36.6 | ||||
| Bank | Non-related party | No | Forward contracts | 12,625.6 | 2/23/2021 | 4/26/2021 | 12,625.6 | 12,625.6 | 213.3 | ||||
| Bank | Non-related party | No | Forward contracts | 38,986.4 | 2/26/2021 | 5/17/2021 | 38,986.4 | 38,986.4 | 60.67 | ||||
| Bank | Non-related party | No | Forward contracts | 13,088.15 | 3/8/2021 | 5/25/2021 | 13,088.15 | 13,088.15 | 122.14 | ||||
| Bank | Non-related party | No | Forward contracts | 3,293.25 | 4/1/2021 | 4/26/2021 | 3,293.25 | 3,293.25 | 55.17 | ||||
| Bank | Non-related party | No | Forward contracts | 3,293.8 | 4/1/2021 | 4/26/2021 | 3,293.8 | 3,293.8 | 55.72 | ||||
| Bank | Non-related party | No | Forward contracts | 17,233.23 | 4/7/2021 | 8/25/2021 | 17,233.23 | 17,233.23 | 201.67 | ||||
| Bank | Non-related party | No | Forward contracts | 3,117.63 | 4/9/2021 | 4/26/2021 | 3,117.63 | 3,117.63 | -11.25 | ||||
| Bank | Non-related party | No | Forward contracts | 9,431.22 | 4/19/2021 | 6/25/2021 | 9,431.22 | 9,431.22 | 129.22 | ||||
| Bank | Non-related party | No | Forward contracts | 12,948 | 4/30/2021 | 5/25/2021 | 12,948 | 12,948 | 168 | ||||
| Bank | Non-related party | No | Structured forward contracts | 16,246.8 | 4/30/2021 | 7/26/2021 | 16,246.8 | 16,246.8 | 123.2 | ||||
| Bank | Non-related party | No | Forward contracts | 19,397.1 | 5/13/2021 | 7/26/2021 | 19,397.1 | 19,397.1 | 92.58 | ||||
| Bank | Non-related party | No | Forward contracts | 15,812.5 | 5/18/2021 | 11/22/2021 | 15,812.5 | 15,812.5 | 779.39 | ||||
| Bank | Non-related party | No | Forward contracts | 12,815 | 6/4/2021 | 6/25/2021 | 12,815 | 12,815 | -66.8 | ||||
| Bank | Non-related party | No | Forward contracts | 19,270.25 | 6/7/2021 | 7/26/2021 | 19,270.25 | 19,270.25 | -111.78 | ||||
| Bank | Non-related party | No | Forward contracts | 1,553.69 | 6/15/2021 | 6/25/2021 | 1,553.69 | 1,553.69 | 17.65 | ||||
| Bank | Non-related party | No | Forward contracts | 5,448.24 | 6/15/2021 | 7/26/2021 | 5,448.24 | 5,448.24 | 114.02 | ||||
| Bank | Non-related party | No | Forward contracts | 19,290.9 | 6/17/2021 | 6/25/2021 | 19,290.9 | 19,290.9 | -31.87 | ||||
| Bank | Non-related party | No | Forward contracts | 4,527.6 | 6/22/2021 | 6/25/2021 | 4,527.6 | 4,527.6 | 18.97 | ||||
| Bank | Non-related party | No | Forward contracts | 6,175.4 | 6/30/2021 | 8/25/2021 | 6,175.4 | 6,175.4 | 98.39 | ||||
| Bank | Non-related party | No | Structured forward contracts | 8,410.93 | 7/14/2021 | 7/21/2021 | 8,410.93 | 8,410.93 | 2.14 | ||||
| Bank | Non-related party | No | Forward contracts | 6,154.8 | 7/2/2021 | 8/25/2021 | 6,154.8 | 6,154.8 | 75.42 | ||||
| Bank | Non-related party | No | Forward contracts | 40,329.3 | 7/7/2021 | 9/24/2021 | 40,329.3 | 40,329.3 | 266.61 | ||||
| Bank | Non-related party | No | Forward contracts | 7,776.91 | 7/8/2021 | 7/29/2021 | 7,776.91 | 7,776.91 | 27.6 | ||||
| Bank | Non-related party | No | Forward contracts | 4,573.64 | 7/22/2021 | 7/28/2021 | 4,573.64 | 4,573.64 | -17.5 | ||||
| Bank | Non-related party | No | Forward contracts | 13,037.2 | 7/27/2021 | 8/25/2021 | 13,037.2 | 13,037.2 | 113.47 |
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| Counterparty | Related party relationship | Whether related party transaction | Categories of derivative investments | Initial investments | Date of commencement | Date of termination | Opening balance | Amount purchased during the reporting period | Amount sold during the reporting period | Provision for impairment (if any) | Closing balance | Proportion of investments to net assets | Profit or loss during the reporting period |
| Bank | Non-related party | No | Forward contracts | 9,738.34 | 8/10/2021 | 8/27/2021 | 9,738.34 | 9,738.34 | 39.64 | ||||
| Bank | Non-related party | No | Forward contracts | 3,247.25 | 8/19/2021 | 8/25/2021 | 3,247.25 | 3,247.25 | 16.33 | ||||
| Bank | Non-related party | No | Forward contracts | 15,301.4 | 8/16/2021 | 10/22/2021 | 15,301.4 | 15,301.4 | 292.5 | ||||
| Bank | Non-related party | No | Forward contracts | 3,813.49 | 8/30/2021 | 8/31/2021 | 3,813.49 | 3,813.49 | 7.14 | ||||
| Bank | Non-related party | No | Forward contracts | 3,850.25 | 9/7/2021 | 10/27/2021 | 3,850.25 | 3,850.25 | 158.95 | ||||
| Bank | Non-related party | No | Forward contracts | 10,353.85 | 9/28/2021 | 10/22/2021 | 10,353.85 | 10,353.85 | 121.32 | ||||
| Bank | Non-related party | No | Forward contracts | 6,476.25 | 9/30/2021 | 10/22/2021 | 6,476.25 | 6,476.25 | 70.2 | ||||
| Bank | Non-related party | No | Forward contracts | 2,247.69 | 10/19/2021 | 11/24/2021 | 2,247.69 | 2,247.69 | 100.08 | ||||
| Bank | Non-related party | No | Forward contracts | 10,470.6 | 10/25/2021 | 12/27/2021 | 10,470.6 | 10,470.6 | 423.33 | ||||
| Bank | Non-related party | No | Forward contracts | 743.18 | 10/25/2021 | 10/26/2021 | 743.18 | 743.18 | 5.14 | ||||
| Bank | Non-related party | No | Forward contracts | 3,201.65 | 11/5/2021 | 11/23/2021 | 3,201.65 | 3,201.65 | 17.13 | ||||
| Bank | Non-related party | No | Forward contracts | 12,801.5 | 11/5/2021 | 12/23/2021 | 12,801.5 | 12,801.5 | 69.41 | ||||
| Bank | Non-related party | No | Forward contracts | 1,921.69 | 11/11/2021 | 11/24/2021 | 1,921.69 | 1,921.69 | 9.34 | ||||
| Bank | Non-related party | No | Structured forward contracts | 26,270.5 | 11/19/2021 | 11/23/2022 | 26,270.5 | 12,870.5 | 13,400 | 0.62% | 128.13 | ||
| Bank | Non-related party | No | Forward contracts | 3,615.1 | 11/30/2021 | 12/23/2021 | 3,615.1 | 3,615.1 | 16.32 | ||||
| Bank | Non-related party | No | Forward contracts | 6,376.62 | 12/2/2021 | 12/27/2021 | 6,376.62 | 6,376.62 | 18.11 | ||||
| Bank | Non-related party | No | Forward contracts | 22,427.09 | 12/9/2021 | 3/24/2022 | 22,427.09 | 6,477.54 | 15,949.55 | 0.73% | 73.89 | ||
| Bank | Non-related party | No | Forward contracts | 3,193.15 | 12/10/2021 | 12/23/2021 | 3,193.15 | 3,193.15 | 14.59 | ||||
| Bank | Non-related party | No | Forward contracts | 10,835.78 | 12/17/2021 | 12/30/2021 | 10,835.78 | 10,835.78 | 30.68 | ||||
| Total | 783,139.13 | -- | -- | 57,223.27 | 703,508.85 | 731,382.57 | 29,349.55 | 1.35% | 4,875.17 | ||||
| Fund source | Self-owned fund | ||||||||||||
| Conditions of involved lawsuits (if applicable) | None | ||||||||||||
| Disclosure date of the Board of Directors announcement for the approval of derivatives investment (if any) | March 31, 2021 | ||||||||||||
| Disclosure date of the general meeting of shareholders announcement for the approval of derivatives investment (if any) | Not Applicable | ||||||||||||
| Remarks on risk analysis and control measures for holding derivative positions during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | In order to prevent exchange rate risks, the Company and its subsidiaries carried out derivative instrument businesses. The Company and its subsidiaries strictly implemented the Management Measures on Foreign Exchange Hedging Business. | ||||||||||||
| In the case of changes in market prices or fair value of invested derivatives during the reporting period, the analysis on fair value of derivatives shall disclose the specific methods for their uses, and the setting of relevant assumptions and parameters | Floating income from changes in fair value of the invested derivatives amounted to 9.37 million yuan at the beginning of the reporting period; floating income from changes in fair value of the invested derivatives amounted to 37.86 million yuan at the end of the reporting period. | ||||||||||||
| Remarks on whether there were significant changes in the accounting policies and specific accounting principles for the Company’s derivatives during the reporting period compared to the previous reporting period | Not Applicable | ||||||||||||
| Special opinions of independent directors on the Company’s derivatives investment and risk control | The Company has formulated the Management Measures on Foreign Exchange Hedging Business to strengthen internal control, implement risk prevention measures, improve the level of operation and management, and formulate specific operating procedures for foreign exchange hedging business. The Company has performed analysis on the feasibility of carrying out foreign exchange hedging business, which indicated that in general, it is feasible to carry out foreign exchange hedging, for it can effectively reduce the risk of exchange rate fluctuations, and help stabilize the profit level. The contents of and review procedures for the event comply with relevant laws, regulations, normative documents, the Articles of Association, etc., and would not damage the interests of the Company and other shareholders. We all agree that the Company shall carry out foreign exchange hedging business this time. | ||||||||||||
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5. Use of raised funds
√ Applicable □ Not Applicable
(1) Overall use of raised funds
√ Applicable □ Not Applicable
Unit: RMB 0,000 yuan
| Year of fund-raising | Way of fund-raising | Total amount raised | Amount used in the current period | Accumulated amount of raised funds used | Total raised funds with changes in uses during the reporting period | Accumulated amount of raised funds with changes in uses during the reporting period | Proportion of raised funds with changes in uses to total raised funds | Total raised funds not yet used | Purposes of raised funds not yet used and the whereabouts | Raised funds being idle for over two years |
| Year 2017 | Private placement of shares | 486,707.55 | 43,721.70 | 208,744.63 | 0 | 0 | 0.00% | 277,962.92 | Deposited in special accounts for raised funds, used to purchase bank financial products, deposited as structured deposits | 0 |
| Total | -- | 486,707.55 | 43,721.70 | 208,744.63 | 0 | 0 | 0.00% | 277,962.92 | -- | 0 |
| Remarks on overall use of raised funds | ||||||||||
| The Company’s raised funds used in previous years amounted to 1,650.23 million yuan, the net amount of interest on cash in bank received in previous years less handling charges amounted to 48.53 million yuan, gains on financial products and structured deposits received in previous years amounted to 429.13 million yuan, and the net expenditure on financial products and structured deposits purchased in previous years amounted to 3,550.00 million yuan; the raised funds actually used in 2021 amounted to 437.22 million yuan, the net amount of interest on cash in bank received in 2021 less handling charges amounted to 3.22 million yuan, gains on financial products and structured deposits received in 2021 amounted to 145.53 million yuan, and the net recovery from financial products and structured deposits purchased in 2021 amounted to 1,100.00 million yuan; the accumulated amount of the raised funds used amounted to 2,087.45 million yuan, the accumulated net amount of interest on cash in bank received less handling charges amounted to 51.75 million yuan, the accumulated amount of gains on financial products and structured deposits received amounted to 574.66 million yuan, and net expenditure on financial products and structured deposits purchased amounted to 2,450.00 million yuan. As of December 31, 2021, the balance of the special account for raised funds amounted to 956.03 million yuan (including the net amount of interest on cash in bank less handling charges, gains on financial products and structured deposits received on an accumulated basis). | ||||||||||
(2) Committed projects with raised funds
√ Applicable □ Not Applicable
Unit: RMB 0,000 yuan
| Committed investment projects and over-raised funds whereabouts | Whether changed (including partial changed) | Total committed investment in raised funds | Total amount after adjustment (1) | Input during the reporting period | Accumulated input as of the period end (2) | Investment progress as of the period end (3)=(2)/(1) | Date of reaching designed usable conditions | Benefit realized in the reporting period | Whether the expected benefit is reached | Whether there was significant changes in feasibility of the project |
| Committed investment projects | ||||||||||
| Methionine project with annual output of 0.25 million tons | No | 486,707.55 | 486,707.55 | 43,721.7 | 208,744.63 | 42.89% | Partially reached the designed usable conditions | 34,677.91 | Yes | No |
| Subtotal | -- | 486,707.55 | 486,707.55 | 43,721.7 | 208,744.63 | -- | -- | 34,677.91 | -- | -- |
| Over-raised funds whereabouts | ||||||||||
| No | ||||||||||
| Total | -- | 486,707.55 | 486,707.55 | 43,721.7 | 208,744.63 | -- | -- | 34,677.91 | -- | -- |
| Conditions of and reasons for not meeting the planned schedule or estimated | Pursuant to the results deliberated and approved by the eighth meeting of the eighth session of Board of Directors and the seventh meeting of the eighth session of the Board of Supervisors dated October 27, 2021, the Company intended to adjust the date when the methionine project with annual output of 0.25 million tons reaches the designed usable conditions from the originally planned | |||||||||
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| revenue (by specific project) | December 2021 to June 2023, with other contents remaining unchanged. Main reasons: Due to the impact of the COVID-19 and the macro economy, the construction progress of the project’s infrastructure has been delayed, the procurement and delivery time of some equipment and materials has been extended, the installation and commissioning of equipment has been delayed, and the overall progress of the investment projects with raised funds has slowed down, which jointly resulted in the postponement of delivery of the projects. Currently, the 100,000-ton production line of the project has been completed and is in normal operation, and the 150,000-ton production line is under construction. |
| Remarks on significant changes in feasibility of projects | None. |
| Amount, purposes and progress of use of over-raised funds | Not Applicable |
| Changes in implementation locations of investment projects with raised funds | Not Applicable |
| Adjustment on the implementation method of investment projects with raised funds | Not Applicable |
| Preliminary investment and replacement of investment projects with raised funds | Applicable |
| Preliminary investment amounted to 36.06 million yuan, and the replacement of raised funds is completed. | |
| Temporary replenishment of working capital with idle raised funds | Not Applicable |
| Amount of and reasons for the balance of raised funds in the implementation of projects | Not Applicable |
| Uses and whereabouts of unused raised funds | Deposited in special accounts for raised funds, used to purchase bank financial products, deposited as structured deposits |
| Problems or other situations in the use and disclosure of raised funds | None. |
(3) Change of projects with raised funds
□ Applicable √ Not Applicable
There is no change of projects with raised funds during the reporting period.VIII. Sale of major assets and equities
1. Sale of major assets
□ Applicable √ Not Applicable
There is no sale of major assets during the reporting period.
2. Significant sale of equities
□ Applicable √ Not Applicable
There is no sale of major equities during the reporting period.
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IX. Major entities controlled or invested by the Company
√ Applicable □ Not Applicable
Major subsidiaries and investees with influence on net profit of the Company over 10% (inclusive)
Unit: RMB Yuan
| Entities | Categories | Major businesses | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| 山东新和成维生素有限公司(Shandong NHU Vitamins Co., Ltd.*) | Subsidiary | Production and sales of feed additives | 500 million yuan | 3,507,972,008.78 | 1,992,132,835.76 | 2,625,693,553.55 | 1,211,515,560.60 | 1,042,888,638.98 |
| 上虞新和成生物化工有限公司(Shangyu NHU Bio-Chem Co., Ltd.*) | Subsidiary | Production and sales of feed additives | 50 million yuan | 4,913,490,480.90 | 3,400,763,066.05 | 2,002,380,570.38 | 967,077,107.49 | 833,335,883.42 |
| 山东新和成药业有限公司(Shandong NHU Pharmaceutical Co., Ltd.*) | Subsidiary | Production and sales of fragrances | 586 million yuan | 2,953,376,286.76 | 2,434,882,978.21 | 2,625,306,028.72 | 842,187,235.59 | 690,705,685.57 |
| 山东新和成氨基酸有限公司(Shandong NHU Amino-acids Co., Ltd.*) | Subsidiary | Production and sales of methionine | 930 million yuan | 5,979,372,615.23 | 4,723,128,397.93 | 2,876,669,426.09 | 737,319,015.03 | 647,803,095.88 |
Remarks on major holding investeesThe Company’s methionine project with annual output of 250,000 tons included the 100,000-ton equipment officially put intooperation in October 2020. In 2021, the production and sales of methionine was increased compared to the preceding period, and thesales revenue and net profit of Shandong NHU Amino-acids Co., Ltd. was increased compared to the preceding period.Details of acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not Applicable
| Subsidiaries | Method for acquisition and disposal of subsidiaries during the reporting period | Effect on the overall production, operation and performance |
| Zhejiang NHU Nylon Materials Co., Ltd. | Investment and establishment | No significant effect at the beginning of the period. |
| NHU Singapore PTE. LTD. | Investment and establishment | No significant effect at the beginning of the period. |
X. Structured entities controlled by the Company
□ Applicable √ Not Applicable
XI. Outlook for the future development of the Company
1. The Company’s development strategy
The Company will consistently adhere to the development strategy of integration, serialization and synergy, adhere to the strategicplatforms of “chemical+” and “biology+”, improve the application research and application service capabilities, and focus on mainbusinesses including nutrition, flavor and fragrance, and new polymer materials and APIs, insist on innovation-driven, developvarious functional chemicals, strengthen the construction of technology platforms and industrial platforms, and strengthen theintroduction and cooperation of advanced equipment. Relying on four modern production bases respectively in Zhejiang Xinchang,Zhejiang Shangyu, Shandong Weifang and Heilongjiang Suihua, the Company will work to realize the extension of the industrial
*The English names are for identification purpose only.
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chain and promote the sustainable and high-quality development. Meanwhile, it will actively seek opportunities for its functionalchemicals in strategic emerging industries such as the plant protection industry, new energy industry, energy conservation andenvironmental protection industry, and information industry.
(1) It will continue to expand and strengthen the nutrition business. On the basis of integration and market synergy, it will maintainthe competitiveness of existing products, meanwhile rapidly develop strategic products, continuously enrich product categories, andimprove the comprehensive competitiveness of products.
(2) It will develop wider and deeper in flavor and fragrance business, which currently is mainly linalool, citral, and cis-3-hexenolseries, and will be gradually developed into a more diversified products structure. New products will be more integrated, serializedand synergistic, so as to realize the functionalization and differentiation of products. Through internal integration and externalcooperation, the Company will continue to optimize its products, building the core competitiveness of products.
(3) It will continue its development in new material business. The new material business is the Company’s future pillar industry. TheCompany insists on cost-leading, integrated and serialized development, and focuses on the development of large polymer productsand key intermediates. It will moderately develop downstream application to enhance market competitiveness and industry position.
(4) It will focus on making more special and refined APIs. Taking its existing advantages in industrial supporting system, it willintegrate company resources, plan and build a professional base, increase the research and application of new products, newtechnologies and new equipment in the field of APIs, actively promoting the core competitiveness of existing products and theexpansion of emerging markets.
2. Business plan of the Company
In 2022, the Company will follow the guideline of “development guided by strategy, green and intelligent operation, strengtheningfunctional management, and improving business performance”, and closely focus on the strategic planning goals. It will work hard toexpand new product markets, release existing product stocks, implement strategic projects, and improve management efficiency. TheCompany will unite every force to ensure its steady development, with key focus on the following work.
(1) It will strengthen strategic leadership, improve strategic management, promote the implementation of strategic projects, andimprove product layout. Following the strategic goals and annual business plans, it will implement the whole-process management ofstrategic projects; following the requirements of strategic planning, and the development strategy of integration, serialization andsynergy, it will take the opportunity to break through the technology bottleneck, and accelerate the implementation of new strategicprojects with focus on the progress of major projects.
(2) It will keep on innovation and create new advantages for development. Based on the platforms of “chemical+” and “biology+”, itwill increase the introduction of talents and technologies, explore forward-looking industries, and promote the R&D and reserve ofgreen safety technology. It will integrate product research, technical research, scale-up design and production debugging moreclosely to improve product promotion efficiency, and continue to enhance the capacity building of scientific research platforms, inorder to assist the efficient implementation of technology R&D, pilot verification, scale-up design, and technical transformationprojects. It will strengthen intellectual property risk avoidance and response, and better the patent layout of new strategic products.
(3) It will focus on green and low-carbon development, and promote the establishment of an energy and carbon resource managementsystem. It will comprehensively analyze the far-reaching impact of the double carbon target on production and operation, apply fordevelopment quota, and comprehensively promote the construction of an energy management system. It will strengthen the researchon the trend of macro policies, continue to improve the carbon emission control system, and promote the implementation of theconcept of green development.
(4) It will deepen the empowerment of digital intelligence and promote the transformation of traditional management to intelligentoperation. Based on the pilot experience of digital projects, it will realize the promotion and further application of intelligent factory
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systems. It will also promote the construction of data governance system and intelligent manufacturing system, and gradually realizethe transformation from traditional production to intelligent operation.
(5) It will strengthen functional management and improve management level. Using digital management as the powerful tool, it willmake the best use of the functional departments, and strengthen system construction and standard setting. It will continuouslyimprove the management level, and at the same time improve the operating risk management and control, so as to ensure thesustainable and healthy development of the Company.
3. Possible risks
(1) Macroeconomic risks
Affected by the complex and volatile international environment and the recurrence of the global Covid-19 pandemic, the globaleconomy is facing many uncertainties. The Company will pay close attention to the evolution of the pandemic and its impact on themacroeconomy and the industry, actively respond to the impact of the pandemic, so as to ensure the steady development.
(2) Industry and market competition risks
The Company is facing peer competition in both domestic and international markets. The development of new technologies by itscompetitors will not only impact the market, but also challenge the Company’s market position in the industry. In the future, theCompany will continuously enhance its R&D and innovation capabilities, improve its technology, strengthen cost control, andimprove the competitiveness in the industry.
(3) Risks of raw material price fluctuation
As cost of raw materials accounts for a relatively high proportion of the total cost, the price fluctuations caused by thesupply-demand imbalance of raw material will have an impact on the Company’s profit. In the future, the Company will reduce theadverse impact of raw material price fluctuations through market research and judgment, establishing strategic partnership withsuppliers, and improving the utilization rate of raw materials.
(4) Exchange rate and trade risks
The Company’s sales revenue and profitability will be affected by trade barriers and exchange rate fluctuations caused by the tradefriction between China and US and the international political and economic instability. In the future, the Company will take targetedmeasures to tackle changes in the international market, cement its position in the international market and explore new economicgrowth points, so as to achieve steady growth in business performance.
(5) Risks of changes in environmental protection policies
With the increased social awareness of environmental protection, the promotion of the ecological civilization construction of the CPCCentral Committee, and the strategic goal of “carbon emission peak and carbon neutrality”, the requirements for energy conservation,emission reduction, safety and environmental protection in the chemical and pharmaceutical manufacturing industry in which theCompany operates are stricter than before. The Company will operate with higher standards and explore more environmentallyfriendly ways of production to achieve sustainable development.
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XII. Researches, communications, and interviews received by the Company during thereporting period
√ Applicable □ Not Applicable
| Date of reception | Reception site | Way of reception | Type of visitor | Visitors | Major contents of conversation and information provided | Index for basic information of the investigation |
| April 9, 2021 | Not applicable | Others | Others | Investors who attended the Company’s online annual performance presentation in 2020 | Answer questions from investors | Please refer to the Investor Relations Activities Record Sheet as at April 9, 2021 published at the website http://irm.cninfo.com.cn/ssessgs/S002001 for details. |
| April 21, 2021 | Meeting room of the Company | Field research | Institution | 1. 睿郡资产 Wisdomshire Asset (刘力 Liu Li); 2. 中信资管 Citic Asset Management (罗四维 Luo Siwei); 3. 长江证券Changjiang Securities (张俊 Zhang Jun & 马太 Ma Tai); 4. 中信产业基金Citic PE (李国洪 Li Guohong); 5. 招商证券China Merchants Securities (曹承安 Cao Chengan); 6. 天风证券 TF Securities (李辉 Li Hui); 7. 申万宏源 Shenwan Hongyuan Securities (宋涛 Song Tao & 胡双 Hu Shuang); 8. 敦和投资DH Investment (梁作强 Liang Zuoqiang); 9. 中信证券 Citic Securities (赵芳芳 Zhao Fangfang & 李鸿钊 Li Hongzhao）10. 华泰资产 Huatai Asset Management (杨林夕 Yang Linxi); 11. 开源证券 Kaiyuan Securities (吉金 Ji Jin & 金益腾 Jin Yiteng）12. 锐意资本 Brilland Capital (肖辉 Xiao Hui); 13. 鹏泰投资 Pengtai Investment (祝凯伦Zhu Kailun); 14. 睿远基金 Foresight Fund (钟明Zhong Ming); 15. 国盛证券 Guosheng Securities (杜鹏 Du Peng); 16. 中银国际 BOC International (余嫄嫄Yu Yuanyuan); 17. 国信证券 Guosen Securities (张玮航Zhang Weihang); 18. 中泰化工 Zhongtai Chemical (夏文奇Xia Wenqi); 19. 光大证券 Everbright Securities (吴裕Wu Yu); 20. 中金公司CICC (肖亚平Xiao Yaping); 21虢盛资本 GS Capital (李飞翔Li Feixiang); 22. 瑞银资管 UBS Asset Management (陈梅清Chen Meiqing); 23. 华宝投资 Hwabao Investment (董书成Dong Shucheng); 24. 华安基金 HuaAn Funds (张瑞 Zhang Rui); 25. 华泰保兴 Huatai Baoxing Fund Management (黄佳丽 Huang Jiali); 26. 博道基金Broad Fund (王伟淼 Wang Jiamiao); 27. 浙商基金Zheshang Fund (景徽 Jing Hui); 28. 建信基金 CCB Principal Asset Management (刘克飞 Liu Kefei); 29. 交银施罗德 Bocom Schroders (张明晓 Zhang Mingxiao); 30. 永禧投资 Winshero Investment (王超 Wang Chao); 31. 和谐汇一 Visione Asset (赵辰 Zhao Chen); 32. 兴业证券 Industrial Securities (刘梦岚 Liu Menglan); 33. 阳光资管 Sunshine Asset Management (马敦超Ma Dunchao); 34. 星石投资 StarRock Investment (向仕杰Xiang Shijie); 35. 中再资产 China Re Asset (孙博睿Sun Borui); 36. 遂玖投资 Suijiu Investment (吕连杰Lyu Lianjie); 37. 安信证券 Essence Securities (黄翔 Huang Xiang); 38. 兴银基金 Xingyin Fund (袁作栋 Yuan Zuodong); 39. 塔基资产 Tagee Asset Management (魏博 Weibo); 40. 重阳投资 Chongyang Investment (贺建青 He Jiaqing); 41. 东方证券 Orient Securities (袁帅 Yuan Shuai); 42. 山东明湖投资 Shandong Minghu Investment (王东民 Wang Dongmin); 43. 深圳正圆投资 Zhengyuan Investment (张萍 Zhang Ping); 44. 洪仁投资 Hongren Investment | Introduce the operating conditions of the Company and answer questions from investors | Please refer to the Investor Relations Activities Record Sheet as at April 21, 2021 published at the website http://irm.cninfo.com.cn/ssessgs/S002001 for details. |
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| Date of reception | Reception site | Way of reception | Type of visitor | Visitors | Major contents of conversation and information provided | Index for basic information of the investigation |
| (张凯驰 Zhang Kaichi); 45. 大众进出口 Dazhong Import and Export (戚昕 Qi Xin); 46. 北京鸿澄投资 HC Capital (陈骞 Chen Qian); 47. 环懿投资 Universal Wisdom Investment (杨伟 Yang Wei); 48. 沣京资本 Funding Capital Management (李正强 Li Zhengqiang); 49. 明世伙伴基金 DIB Asset Management (霍霄 Huo Xiao & 胡彧 Hu Yu); 50. 德淞咨询 Desong Consulting (邬欣雷 Wu Xinlei); 51. 汇丰前海 HSBC Qianhai Securities (沈科 Shen Ke); 52. 深圳红筹投资 Hongchou Investment (王羽 Wang Yu); 53. Citic Securities (刘沛显 Liu Peixian); 54. 中国人寿 China Life (吴颖 Wu Ying); 55. 北京磐沣 Beijing Panfeng Investment Management (杨涛 Yang Tao); 56. 乐中投资 Lezhong Investment Management (程勇 Cheng Yong & 朱韫智 Zhu Yunzhi); 57. 李焕玲 Li Huanling, etc. | ||||||
| July 1, 2021 | Meeting room of the Company | Field research | Institution | 1. TF Securities (Li Hui); 2. Wisdomshire Asset (Liu Li); 3. CICC (Xiao Yaping); 4. Orient Securities (Yuan Shuai); 5. 明泽投资 Mingze Capital (常先通 Chang Xiantong & 韩玉玲 Han Yuling); 6. 盘京投资 Panjing Investment (张奇 Zhang Qi); 7. 长城证券 Great Wall Securities (张玉龙 Zhang Yulong); 8. 胜帮投资 Shengbang Investment (刘倩倩 Liu Qianqian & 黄杰 Huang Jie); 9. 华安证券 HuaAn Securities (王强峰 Wang Qiangfeng); 10. Chongyang Investment (贺建青 He Jianqing); 11. 景林资产 Greenwoods Asset (蒋文超 Jiang Wenchao); 12. 华夏基金 China Asset Management (杨晋 Yang Jin); 13. 兴银理财 Xingyin Fund Management (陈亚龙 Chen Yalong); 14. 海螺创投 Conch Venture Capital (陆陈伟 Lu Chenwei); 15. 国海富兰克林 Franklin Templeton Sealand Fund (徐荔蓉 Xu Lirong & 张琼刚 Xhang Qionggang & 杜飞 Du Fei & 刘晓 Liu Xiao & 刘磊 Liu Lei) | Introduce the operating conditions of the Company and answer questions from investors | Please refer to the Investor Relations Activities Record Sheet as at July 1, 2021 published at the website http://irm.cninfo.com.cn/ssessgs/S002001 for details. |
| September 14, 2021 | Others | Telephone communication | Institution | 1. Centerline Investment Management (BenXu); 2. Fenghe Asia F&H Fund Management (叶涛 Ye Tao); 3. 同犇资管 Tongben Investment (何先畅 He Xianchang); 4. 湘禾投资 Xiang He Capital (罗林 Luo Lin); 5. TX Capital (Edward Choi); 6. 兴聚资管 Xingju Asset Management (刘力 Liu Li); 7. 和聚投资 Heju Investment (麦土荣 Mai Turong); 8. 楹联基金 Yinglian Fund (应振洲Ying Zhenzhou); 9. 大成基金 Dacheng Fund (廖书迪 Liao Shudi); 10. 涌峰资管 Topfund Investment Management (李莉芳 Li Lifanng); 11. 淡水泉 Springs Capital (王凡 Wang Fan); 12. Chongyang Investment (贺建青 He Jianqing); 13. 东方基金 Orient Fund Management (房建威 Fang Jianwei); 14. 宸鑫资管 Chenxin Asset Management (施雨辰 Shi Yuchen); 15. 睿石投资 Cityreits Investment Management (才典 Cai Dian); 16. 锐意资管 Brilliant Asset Management (Xiao Hui); 17. 东吴基金 Soochow Asset Management (徐嶒 Xu Ceng); 18. 行健资管 Zeal Asset Management (张韬 Zhang Tao); 19. 富国基金 Fullgoal Fund Management (沈衡 Shen Heng); 20. Hongchou Investment (唐亮Tang Liang); 21. 广发基金 GF Fund Management (王琪 Wang Qi); 22. 金之灏基金 J.Z.H. Fund (陈飞云 Chen Feiyun); 23. 国投瑞银基金 UBS SDIC Fund Management (马少章 Ma Shaozhang); 24. 武当资管 Wudang Asset Management (汪平 Wang Ping); 25. 杭州昊晟投资 Hangzhou Haosheng Investment Management (吕露 Lyu Lu); 26. 熙山资管 Xishan Investment Management (余继刚 Yu Jigang); 27. 恒安保险 HengAn Insurance (斯华 | Introduce the operating conditions of the Company and answer questions from investors | Please refer to the Investor Relations Activities Record Sheet as at September 14, 2021 published at the website http://irm.cninfo.com.cn/ssessgs/S002001 for details. |
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| Date of reception | Reception site | Way of reception | Type of visitor | Visitors | Major contents of conversation and information provided | Index for basic information of the investigation |
| 景 Si Huajing); 28. 太平基金 Taiping Fund Management (Xia Wenqi); 29. 华宝基金 Hwabao WP Fund Management (Dong Shucheng); 30. 太平养老 Taiping Pension (姚宏福 Yao Hongfu & 庄晋 Zhuang Jin); 31. 华杉瑞联基金 Huashan Ruilian Fund (田春姝 Tian Chunshu); 32. 泰康资管 Taikang Asset Management (刘忠卫 Liu Zhongwei); 33. 华商基金 Huashang Fund Management (黄露禾 He Luhe); 34. 泰信基金 First-trust Fund Management (刘雨馨 Liu Yuxin); 35. Huatai Asset Management (Yang Linxi); 36. TF Securities (Li Hui); 37. 万联证券 Wanlian Securities (高翔 Gao Xiang); 38. 慎知资管 ShenZhi Asset (陈增博 ChenZengbo); 39. 交银基金 BoCom Schroders Fund (张明晓 Zhang Mingxiao); 40. 昭融匯利 Top Aplpha Investment (李智慧 Li Zhihui); 41. 景顺长城基金 Invesco Great Wall Fund Management (高田昊 Gao Tianhao); 42. 兴全基金 AEGON-INDUSTRIAL Fund (徐留明 Xu Liuming); 43. 和德资管 Hede Asset Management (张特 Zhang Te); 44. 磐耀资管 Panyao Capital (葛立法Ge Lifa); 45. 莲盛投资Liansheng Investment Management (肖耀勃Xiao Yaobo); 46. Sunshine Asset Management (黄抒雁 Huang Shuyan & 马敦超 Ma Dunchao); 47. 诺安基金 Lion fund (赵森 Zhao Sen); 48. 谦信投资 Kenshin Capital (宋喆 Song Zhe); 49. 银华基金股份 Yinhua Fund Management (罗婷 Luo Ting); 50. 鹏华基金 Penghua Fund Management (丁冯佳 Ding Fengjia & 谢书英 Xie Shuying); 51. 前海人寿 Foresea Life (贾宇博 Jia Yubo); 52. 英睿财富 Yingrui Fortune (张丹阳 Zhang Danyang); 53. 长信基金 Chang Xin Asset Management (唐卓菁 Tang Zhuojing); 54. 瑞民资管 Rui Min Fund (匡立春 Kuang Lichun & 黄晓坤 Huang Xiaokun); 55. Foresight Fund (朱璘); 56. 旌安资管 Jingan Investment (李泽恺 Li Zekai); 57. 百勋资管 Baixun Investment (陈卿云 Chen Qingyun); 58. 巽升资管 Xuncent Asset (沈杰 Shen Jie); 59. 保银资管 Pinpoint Asset Management (林建军 Lin Jianjun); 60. 英睿资管 Enreach International Capital Management (马智琴 Ma Zhiqin); 61. 呈瑞资管 Crassets Investment (刘青林 Liu Qinglin); 62. 中农理财 CHAMPGC Asset Management (公晓晖Gong Xiaohui); 63. 复霈资管 Fupei Investment (韩守晖 Han Shouhui); 64. 中国人保 PICC (曾沭崴 Zeng Shuwei); 65. 名禹资管公司 Mingyu Fund (王友红 Wang Youhong); 66. Citic Asset Management (杨大志 Yang Dazhi); 67. 摩根士丹利 Morgan Stanley (吕洪良 Lyu Hongliang); 68. 兴业资管 Industrial Asset Management (陈亚龙 Chen Yalong & 庄伟彬 Zhuang Weibin); 69. 银河基金 Galaxy Asset Management (石磊 Shi Lei & 姚雯薏 Yao Wenyi & 祝建辉 Zhu Jianhui); 70. 汇添富基金 China Universal Asset Management (谭志强 Tan Zhiqiang & 林小伟 Lin Xiaowei); 71. 精至资产 Finest Asset Management (黄登峰 Huang Dengfeng & 杨文凡 Yang Wenfan & 陈鸿 Chen Hong） | ||||||
| November 17, 2021 | Meeting room of the Company | Field research | Institution | 1. Shenwan Hongyuan Securities (宋涛 Song Tao & 胡双 Hu Shuang); 2. 东北证券 Northeast Securities (陈俊杰 Chen Junjie & 伍豪 Wu Hao); 3. 南方基金 Southern Fund (郑勇 Zheng Yong); 4. 瑞民投资 Rui Min Investment (黄晓坤 Huang Xiaokun & 匡立春 Kuang Lichun); 5. 财通证券 Caitong Securities (朱乾栋 Zhu Qiandong); 6. Winshero Investment (王超 Wang Chao); 7. TF | Introduce the operating conditions of the Company and answer questions from investors | Please refer to the Investor Relations Activities Record Sheet as at November 17, 2021 published at the website http://irm.cninfo.com.cn/ssessgs/S0020 |
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| Date of reception | Reception site | Way of reception | Type of visitor | Visitors | Major contents of conversation and information provided | Index for basic information of the investigation |
| Securities (Li Hui); 8. 精致投资 Finest Investment (Chen Hong & Huang Dengfeng); 9. 浙商证券 Zheshang Securities (Zhang Yulong); 10. Orient Securities (Yuan Shuai); 11. Kaiyuan Securities (Jin Yiteng & Jijin); 12. Hwabao Investment (Dong Shucheng & 杨奇 Yang Qi); 13. 弘毅远方 Hony Horizon Fund (黄振东 Huang Zhendong); 14. Hongchou Investment (王羽 Wang Yu); 15. 正心谷 Loyal Valley Capital (施航 Shi Hang); 16. 胜邦投资 Shenbon Enterprise Investment (刘倩倩 Liu Qianqian); 17. Changjiang Securities (张俊 Zhang Jun); 18. 申万研究所 SWS Research (余玉君 Yu Yujun & 张静含 Zhang Jinghan); 19. 申万投资 SWS Investment (袁鹏 Yuan Peng); 20. 银叶投资 Silver Leaf Investments (李悦 Li Yue); 21. Everbright Securities (赵乃迪 Zhao Naidi & 周家诺 Zhou Jianuo & 蔡嘉豪 Cai Jiahao) | 01 for details. |
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Section IV Corporate Governance
I. Basic information
During the reporting period, the Company further improved its corporate governance structure and internal control system,strengthened its information disclosure management, actively carried out investor relations management and constantly promoted itscorporate governance in strict accordance with the “Company Law of the People’s Republic of China”, the “Securities Law of thePeople’s Republic of China” and relevant laws, regulations and regulatory documents of CSRC and the Shenzhen Stock Exchange.
1. About shareholders and general meetings: The Company convenes and holds general meetings in accordance with therequirements of the “Rules for General Meetings of Listed Companies” and its “Rules of Procedure of General Meetings”, treats allshareholders equally, ensures that all shareholders, especially small and medium-sized shareholders, have equal status and fullyexercise their rights, and ensures that all shareholders have the legal rights to information, participation and voting on significantevents.
2. About relationship between the controlling shareholder and the Company: The Company has independent business andself-management ability. The Company’s controlling shareholder strictly regulates its own behavior, exercises the rights of investorthrough general meetings, and does not directly or indirectly interfere with the decision-making and operation activities of theCompany beyond the general meetings. The related party transactions between the Company and the controlling shareholder are onan arm’s length basis, while these two are independent of each other in personnel, property, finance, organization and business, andthe Company’s Board of Directors, Board of Supervisors and internal organizations can operate independently.
3. About directors and the Board of Directors: The Company elects directors and engages independent directors in strict accordancewith the selection and appointment procedures as stipulated in the “Company Law” and the “Articles of Association”. The board sizeand composition meet the requirements of laws and regulations. In accordance with the “Rules of Procedure of the Board ofDirectors” and other rules, all directors can seriously attend board meetings, faithfully perform their duties for the interests of theCompany and all shareholders, actively participate in relevant training, learn relevant laws and regulations, and promote thestandardized operation and scientific decision-making of the Board of Directors. The meeting procedures of the Board of Directorscomply with legal requirements, the minutes are complete and true, and the disclosure of information related to the meetings is timely,accurate and sufficient.
4. About supervisors and the Board of Supervisors: The Company’s Board of Supervisors strictly implements relevant provisions ofthe “Company Law” and the “Articles of Association”, and its size and composition meet the requirements of laws and regulations.Under the principle of being responsible to all shareholders, especially small and medium-sized shareholders, the Board ofSupervisors perform their duties conscientiously, conducts supervision on the Company’s financial position, significant events,related party transactions as well as the legality and compliance of directors and other senior executives in the performance of theirduties, and expresses opinions independently in accordance with the “Rules of Procedure of the Board of Supervisors” and otherrules.
5. About performance evaluation and incentive and restraint mechanism: The Company’s performance evaluation and incentivemechanism is fair and transparent, and the emoluments of directors, supervisors and senior executives are based on the Company’sperformance and individual performance; the appointment of senior executives strictly follows the “Articles of Association” andrelevant laws and regulations.
6. About information disclosure and transparency: The Company designates the secretary of the Board of Directors to be responsiblefor information disclosure and receiving visits and inquiries from shareholders, and designates Securities Times, Shanghai SecuritiesNews, China Securities Journal, and Cninfo (http://www.cninfo .com.cn) as the designated newspapers and websites for the
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Company’s information disclosure; Complying with relevant laws and regulations and the requirements of the Company’s“Information Disclosure Management System”, the Company discloses relevant information in a true, accurate, complete and timelymanner to ensure that all shareholders have equal access to information.
7. About stakeholders: the Company can fully respect and safeguard the legitimate rights and interests of stakeholders, realize thecoordination and balance of interests among shareholders, employees, society and other parties, and jointly promote the sustainableand healthy development of the Company.
Whether there is a significant difference between the actual situation of corporate governance and laws, administrative regulationsand rules on the governance of listed companies issued by the CSRC
□ Yes √ No
There is no significant difference between the actual situation of corporate governance and laws, administrative regulations and ruleson the governance of listed companies issued by the CSRC.II. The Company’s efforts in ensuring the independence of its assets, personnel, finance,organization, business, etc. from the controlling shareholder and actual controller
During the reporting period, the Company and the controlling shareholder were completely separated in terms of business, personnel,assets, finance, organization, etc. With stable production and operation, complete internal organization, the Company was able tooperate independently and in a standardized manner.
1. Independence of business
The Company operates independently under a complete business structure, and has no business in horizontal competition with that ofthe controlling shareholder. The controlling shareholder does not directly or indirectly interfere with the Company’s businessoperations.
2. Independence of personnel
The Company’s labor, personnel and remuneration management are completely independent. The Company has entered into laborcontracts with employees, and formulated a strict labor system such as employment, assessment, promotion, training, etc. Allemployees are paid by the Company. All senior executives work full-time and receive emoluments from the Company, and do nothold any administrative positions concurrently in the controlling shareholder and its subordinate entities.
3. Independence of assets
The Company has an independent and complete production, supply, sales system and supporting facilities, and has independentindustrial property rights, trademarks, non-patented technologies and other intangible assets.
4. Independence of finance
The Company has an independent financial and accounting department, and has established an independent accounting system andfinancial management system to makes financial decisions independently. The Company opens bank accounts and pays taxesindependently.
5. Independence of organization
The Company’s organization is independent from the controlling shareholder. The Company has established a relatively soundorganizational structure, and has established decision-making and supervision institutions such as the general meeting of shareholders,the Board of Directors, the Board of Supervisors, etc. The Company set up the Board Office, Audit Department, FinancialDepartment, Securities Department, President’s Office, Human Resources Department, Production and Operation Department, HSEManagement Department, Engineering Equipment Management Department, Logistics Department, Marketing Service Department,Science and Technology Cooperation Department, Intellectual Property Department, Research Institute and other functionaldepartments. The aforementioned institutions and functional departments operate independently, and there is no situation where the
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controlling shareholder’s institutions act on behalf of the Company.III. Horizontal competition
□ Applicable √ Not applicable
IV. Annual general meeting and extraordinary general meetings held during the reportingperiod
1. General meeting of shareholders
| Session | Type of meetings | Proportion of participating investors | Meeting date | Disclosure date | Resolutions |
| General meeting of shareholders of 2020 | Annual general meeting of shareholders | 54.00% | April 21, 2021 | April 22, 2021 | 10 proposals including the “Annual Work Report of the Board of Directors of 2020” were deliberated and approved. Please refer to Announcement No. 2021-019 disclosed on http://www.cninfo.com.cn for details. |
2. Preference shareholders with restored voting rights request to convene an extraordinary general meeting
□ Applicable √ Not applicable
V. Directors, supervisors and senior executives
1. Basic information
| Name | Position | Status | Gender | Age | Commencement date of service | Termination date of service | Number of shares held at the beginning of the period (shares) | number of shares increased in the current period (shares) | number of shares decreased in the current period (shares) | Other increase/ decrease (shares) | Number of shares held at the end of the period (shares) | Reasons for increase or decrease |
| Hu Baifan | Chairman | Incumbent | Male | 60 | 2/26/1999 | 9/15/2023 | 9,667,915 | 1,000 | 0 | 1,933,583 | 11,602,498 | Conversion of capital reserve into share capital |
| 胡柏剡 (Hu Baishan) | Vice Chairman, President | Incumbent | Male | 55 | 2/26/1999 | 9/15/2023 | 10,136,062 | 0 | 0 | 2,027,212 | 12,163,274 | Conversion of capital reserve into share capital |
| Shi Guanqun | Director, Vice President, CFO, Secretary of the Board | Incumbent | Male | 51 | 2/26/1999 | 9/15/2023 | 7,276,277 | 0 | 0 | 1,455,255 | 8,731,532 | Conversion of capital reserve into share capital |
| 王学闻 (Wang Xuewen) | Director, Vice President | Incumbent | Male | 53 | 2/26/1999 | 9/15/2023 | 6,165,230 | 0 | 0 | 1,233,046 | 7,398,276 | Conversion of capital reserve into share capital |
| 王正江 (Wang Zhengjiang) | Director | Incumbent | Male | 53 | 4/12/2008 | 9/15/2023 | 318,750 | 0 | 0 | 63,750 | 382,500 | Conversion of capital reserve into share capital |
| 周贵阳 (Zhou Guiyang) | Director | Incumbent | Male | 47 | 4/20/2011 | 9/15/2023 | 114,752 | 0 | 0 | 22,950 | 137,702 | Conversion of capital reserve into share capital |
| 俞柏金 (Yu Baijin) | Director | Incumbent | Male | 55 | 9/15/2020 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 | |
| 黄灿 (Huang Can) | Independent Director | Incumbent | Male | 43 | 7/12/2017 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 | |
| 金赞芳 (Jin Zanfang) | Independent Director | Incumbent | Female | 46 | 7/12/2017 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 | |
| 朱剑敏 (Zhu Jianmin) | Independent Director | Incumbent | Female | 58 | 7/12/2017 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 | |
| 季建阳 (Ji Jianyang) | Independent Director | Incumbent | Male | 43 | 9/15/2020 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 |
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| Name | Position | Status | Gender | Age | Commencement date of service | Termination date of service | Number of shares held at the beginning of the period (shares) | number of shares increased in the current period (shares) | number of shares decreased in the current period (shares) | Other increase/ decrease (shares) | Number of shares held at the end of the period (shares) | Reasons for increase or decrease |
| 石方彬 (Shi Fangbin) | Chairman of the Board of Supervisors | Incumbent | Female | 46 | 9/15/2020 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 | |
| 吕国锋 (Lyu Guofeng) | Supervisor | Incumbent | Male | 50 | 9/15/2020 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 | |
| 俞宏伟 (Yu Hongwei) | Supervisor | Incumbent | Male | 51 | 9/15/2020 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 | |
| 严宏岳 (Yan Hongyue) | Supervisor | Incumbent | Male | 52 | 9/15/2020 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 | |
| 陈召峰 (Chen Zhaofeng) | Supervisor | Incumbent | Male | 45 | 9/15/2020 | 9/15/2023 | 0 | 0 | 0 | 0 | 0 | |
| 郑根土 (Zheng Gentu) | Vice President | Incumbent | Male | 60 | 9/29/2018 | 1/31/2022 | 0 | 0 | 0 | 0 | 0 | |
| Total | -- | -- | -- | -- | -- | -- | 33,678,986 | 1,000 | 0 | 6,735,796 | 40,415,782 | -- |
Whether there was any resignation of directors and supervisors and dismissal of senior executives during the reporting period
□ Yes √ No
Changes of directors, supervisors and senior executives
□ Applicable √ Not applicable
2. Profiles of directors, supervisors and senior executives
Professional background, work experience and main responsibilities of the current directors, supervisors and senior executivesHu Baifan (Graduate, Senior Economist) currently serves as the Chairman of the Company. He used to work in Xinchang DashijuVocational Middle School.Hu Baishan (EMBA of Zhejiang University, Senior Engineer) currently serves as the Vice Chairman and President of the Company.He used to be the Deputy General Manager of the Company.Shi Guanqun (Accountant) currently serves as the Director, Vice President, Secretary of the Board of Directors and CFO of theCompany. He used to be the manager of the Financial Department of the Company.Wang Xuewen (majoring in business management at China Textile University) currently serves as the Director and Vice President ofthe Company, and the General Manager of the Nutrition Business Department. He used to be the manager of the Company’s supplyand marketing company.Wang Zhengjiang (Master’s degree, Senior Engineer) currently serves as the Director of the Company, General Manager ofMethionine Business Department, and the General Manager of Shandong NHU Amino-acids Co., Ltd. He used to be the manager ofShangyu NHU Bio-Chem Co., Ltd.Zhou Guiyang (Bachelor’s degree) currently serves as the Director of the Company and General Manager of 浙江新和成特种材料有限公司 (Zhejiang NHU Special Materials Co., Ltd.
?). He used to be the Deputy General Manager of Shangyu NHU Bio-ChemCo., Ltd.Yu Baijin (Bachelor’s degree) currently serves as the Director of the Company and General Manager of 黑龙江新和成生物科技有限公司 (Heilongjiang NHU Biotechnology Co., Ltd.
*
). He used to be the Chairman of 浙江广义实业有限公司 (Zhejiang GuangyiIndustrial Co., Ltd.
*) and 浙江新柴集团有限公司 (Zhejiang Xinchai Group Co., Ltd.
*
).Huang Can (Doctor of Management, Independent Director) is a professor of Zhejiang University. He currently serves as the
?
The English names are for identification purpose only.
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Independent Director of 浙江运达风电股份有限公司 (Zhejiang Windey Co., Ltd.
*) and 甘肃上峰水泥股份有限公司 (GansuShangfeng Cement Co., Ltd.
*).Jin Zanfang (Doctor of Environmental Engineering, Independent Director) is a professor of Zhejiang University of Technology. Shecurrently serves as the Independent Director of 浙江菲达环保科技股份有限公司 (Zhejiang Feida Environmental Science &Technology Co., Ltd.
?) and 浙江景兴纸业股份有限公司 (Zhejiang Jingxing Paper Joint Stock Co., Ltd.
*).Zhu Jianmin (Master’s degree, Independent Director) currently serves as the Deputy General Manager and CFO of 每日互动股份有限公司 (Merit Interactive Co., Ltd.
*).Ji Jianyang (Master’s degree, Independent Director) currently serves as the Partner of 北京观韬中茂（杭州）律师事务所 (BeijingGuantao Zhongmao (Hangzhou) Law Firm
*) and the Independent Director of 浙江金固股份有限公司 (Zhejiang Jingu Co., Ltd.
*
)Shi Fangbin (Bachelor’s degree) currently serves as the Chairman of the Company’s Board of Supervisors, and CFO of 新和成控股集团有限公司 (NHU Holding Group Co., Ltd.
*
). She used to be the Director of Financial Department, Director of AuditDepartment and Director of Board Office of the Company.Lyu Guofeng (Master’s degree) currently serves as the Supervisor of the Company, General Manager of Fragrance BusinessDepartment and General Manager of Shandong NHU Pharmaceutical Co., Ltd. He used to be the General Manager of ShangyuProduction Area of Nutrition Business Department.Yu Hongwei (Bachelor’s degree) currently serves as the Supervisor of the Company, General Manager of Shandong Industrial Parkand General Manager of Shandong NHU Vitamins Co., Ltd. and 山东新和成精化科技有限公司 (Shandong NHU Fine ChemicalScience and Technology Co., Ltd.
*). He used to be the Deputy Chief Engineer of 浙江巨化集团有限公司 (Zhejiang Juhua GroupCo., Ltd.
*).Yan Hongyue (Bachelor’s degree) currently serves as the Supervisor of the Company and General Manager of Xinchang Base. Heused to be the General Manager of Shandong NHU Vitamins Co., Ltd., Assistant to General Manager and Deputy General Managerof Shandong NHU Pharmaceutical Co., Ltd.Chen Zhaofeng (Master’s degree) currently serves as the Supervisor of the Company and Executive Deputy General Manager ofHeilongjiang NHU Biotechnology Co., Ltd. He used to be the Workshop Director of the Company.Zheng Gentu (Master’s degree) currently serves as the Assistant to President of the Company. He used to be the Director and GeneralManager of 浙江开尔新材料股份有限公司 (Zhejiang Kaier New Materials Co., Ltd.
*).Directors, supervisors and senior executives that serve in shareholders
√ Applicable □ Not applicable
| Name of persons | Name of shareholders | Position in shareholders | Commencement date of service | Termination date of service | Whether receive emoluments and allowances from shareholders |
| Hu Baifan | NHU Holding Group Co., Ltd. | Chairman, General Manager | 11/11/2011 | 11/26/2023 | No |
| Hu Baishan | NHU Holding Group Co., Ltd. | Director | 11/11/2011 | 11/26/2023 | No |
| Shi Guanqun | NHU Holding Group Co., Ltd. | Director | 11/11/2011 | 11/26/2023 | No |
| Wang Xuewen | NHU Holding Group Co., Ltd. | Director | 11/11/2011 | 11/26/2023 | No |
?The English names are for identification purpose only.
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| Name of persons | Name of shareholders | Position in shareholders | Commencement date of service | Termination date of service | Whether receive emoluments and allowances from shareholders |
| Shi Fangbin | NHU Holding Group Co., Ltd. | CFO | 9/15/2020 | 11/26/2023 | Yes |
| Remarks | None | ||||
Directors, supervisors and senior executives that serve in other entities
√ Applicable □ Not applicable
| Name of persons | Name of other entities | Position in other entities | Commencement date of service | Termination date of service | Whether receive emoluments and allowances from other entities |
| Hu Baifan | 浙江耕读投资有限公司 (Zhejiang Gengdu Investment Co., Ltd.?) | Executive Director and General Manager | 9/4/2015 | To date | No |
| Hu Baifan | 新昌县和丽投资有限公司 (Xinchang Heli Investment Co., Ltd.*) | Director | 1/3/2017 | To date | No |
| Hu Baifan | 安丰创业投资有限公司 (Safe & Rich Venture Capital Co., Ltd.*) | Director | 2/28/2008 | To date | No |
| Hu Baifan | 杭州通衡浙商投资管理有限公司 (THE Investment Management Co., Ltd.*) | Director | 9/21/2015 | To date | No |
| Hu Baifan | 新昌勤进投资有限公司 (Xinchang Qinjin Investment Co., Ltd.*) | Chairman and General Manager | 6/10/2015 | To date | No |
| Hu Baifan | 浙江新昌农村商业银行股份有限公司 (Xinchang Rural Commercial Bank Co., Ltd.*) | Director | 1/26/2005 | To date | No |
| Hu Baifan | 杭州福膜新材料科技股份有限公司 (Hangzhou Foremost Material Technology Co., Ltd.*) | Director | 10/29/2019 | 10/28/2022 | No |
| Hu Baifan | 北京福元医药股份有限公司 (Beijing Winsunny Pharmaceutical Co., Ltd.*) | Director | 5/16/2019 | 5/15/2022 | No |
| Hu Baifan | 绍兴越秀教育发展有限公司 (Shaoxing Yuexiu Education Development Co., Ltd.*) | Chairman and General Manager | 12/5/2016 | 6/9/2023 | No |
| Hu Baifan | 浙江汇贤创业投资有限公司 (Zhejiang Huixian Venture Capital Co., Ltd.*) | Executive Director | 3/16/2017 | To date | No |
| Hu Baifan | 浙江和丰投资有限公司 (Zhejiang Hefeng Investment Co., Ltd.*) | Executive Director | 4/20/2018 | To date | No |
| Hu Baifan | 北京和成地产控股有限公司 (NHU Real Estate Holding Co., Ltd.*) | Director | 12/2/2010 | 3/19/2023 | No |
| Hu Baifan | 新昌县和成置业有限公司 (Xinchang County NHU Real Estate Co., Ltd.*) | Director | 3/20/2017 | To date | No |
| Hu Baishan | 浙江新赛科药业有限公司 (Zhejiang Second Pharma Co., Ltd.*) | Director | 9/15/2017 | 12/20/2024 | No |
| Hu Baishan | Shaoxing Yuexiu Education Development Co., Ltd. | Director | 12/5/2016 | To date | No |
| Shi Guanqun | Xinchang Heli Investment Co., | Chairman | 11/30/2012 | To date | No |
?The English names are for identification purpose only.
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| Name of persons | Name of other entities | Position in other entities | Commencement date of service | Termination date of service | Whether receive emoluments and allowances from other entities |
| Ltd. | |||||
| Shi Guanqun | Xinchang Qinjin Investment Co., Ltd. | Director | 6/10/2015 | To date | No |
| Shi Guanqun | Shaoxing Yuexiu Education Development Co., Ltd. | Director | 12/5/2016 | To date | No |
| Shi Guanqun | NHU Real Estate Holding Co., Ltd. | Director | 12/2/2010 | 3/19/2023 | No |
| Shi Guanqun | 浙江璟实置业有限公司 (Zhejiang Jingshi Real Estate Co., Ltd.*) | Director | 9/22/2020 | 9/21/2023 | No |
| Shi Guanqun | 浙江德力装备有限公司 (Zhejiang Deli Equipment Co., Ltd.*) | Director | 10/24/2016 | 10/27/2024 | No |
| Shi Guanqun | Beijing Winsunny Pharmaceutical Co., Ltd. | Director | 5/16/2019 | 5/15/2022 | No |
| Shi Guanqun | Xinchang County NHU Real Estate Co., Ltd. | Director | 3/20/2017 | To date | No |
| Zhou Guiyang | 帝斯曼新和成工程材料（浙江）有限公司 (DSM NHU Engineering Materials (Zhejiang) Co., Ltd.*) | Vice Chairman | 1/7/2016 | To date | No |
| Zhou Guiyang | 浙江赛亚化工材料有限公司 (Zhejiang Saiya Chemical Materials Co., Ltd.*) | Director | 1/3/2017 | 5/7/2023 | No |
| Huang Can | Gansu Shangfeng Cement Co., Ltd. | Independent Director | 5/7/2019 | 5/5/2022 | Yes |
| Huang Can | Zhejiang Windey Co., Ltd. | Independent Director | 5/12/2016 | 5/12/2022 | Yes |
| Jin Zanfang | Zhejiang Jingxing Paper Joint Stock Co., Ltd. | Independent Director | 6/19/2017 | 9/29/2023 | Yes |
| Jin Zanfang | Zhejiang Feida Environmental Science & Technology Co., Ltd. | Independent Director | 6/8/2018 | 9/10/2024 | Yes |
| Ji Jianyang | Zhejiang Jingu Co., Ltd. | Independent Director | 10/16/2020 | 10/16/2023 | Yes |
| Ji Jianyang | 浙江丰立智能科技股份有限公司 (Zhejiang Fore Intelligent Technology Co., Ltd.*) | Independent Director | 12/15/2020 | 12/15/2023 | Yes |
| Ji Jianyang | 浙江优全护理用品科技股份有限公司 (Zhejiang Uniquality Care Products Technology Co., Ltd.*) | Independent Director | 3/3/2020 | 11/15/2024 | Yes |
| Zhu Jianmin | Merit Interactive Co., Ltd. | Deputy General Manager, CFO | 6/22/2016 | 5/30/2022 | Yes |
| Shi Fangbin | Zhejiang Jingshi Real Estate Co., Ltd. | Chairman | 9/22/2020 | 9/21/2023 | No |
| Shi Fangbin | DSM NHU Engineering Materials (Zhejiang) Co., Ltd. | Supervisor | 1/7/2016 | To date | No |
| Shi Fangbin | Zhejiang Saiya Chemical Materials Co., Ltd. | Supervisor | 1/3/2017 | 5/7/2023 | No |
| Shi Fangbin | Zhejiang Second Pharma Co., Ltd. | Supervisor | 12/21/2012 | 12/21/2021 | No |
| Shi Fangbin | 绍兴璟和酒店管理有限公司 (Shaoxing Jinghe Hotel Management Co., Ltd.?) | Director | 5/27/2021 | 5/26/2024 | No |
| Shi Fangbin | Zhejiang Deli Equipment Co., Ltd. | Director | 10/28/2021 | 10/27/2024 | No |
?
The English names are for identification purpose only.
Page 43 of 175
Penalties imposed by securities regulators on current and outgoing directors, supervisors and senior executives of the Company in thepast three years
√ Applicable □ Not applicable
Please refer to item “XII. Penalties and rectification” under “Section VI Significant Events” for details.
3. Emoluments of directors, supervisors and senior executives
Decision-making procedure, basis for determination and actual payment of emoluments of directors, supervisors and seniorexecutivesDecision-making procedure: According to the standards stipulated by the Company’s unified remuneration management system, theemoluments of the Company’s directors, supervisors and senior executives are determined based on the result of the regularassessment under the Company’s performance appraisal mechanism. The allowance standard for independent directors shall bedeliberated and decided by the general meeting of shareholders.Basis for determination: Emoluments of directors, supervisors and senior executives are determined based on the Company’s resultsof operations and performance appraisal indicators.Emoluments of directors, supervisors and senior executives during the reporting period
Unit: RMB 0,000 yuan
| Name | Position | Gender | Age | Status | Total pre-tax emoluments received from the Company | Whether receive emoluments from related parties of the Company |
| Hu Baifan | Chairman | Male | 60 | Incumbent | 647.48 | No |
| Hu Baishan | Vice Chairman, President | Male | 55 | Incumbent | 388.60 | No |
| Shi Guanqun | Director, Vice President, CFO, Secretary of the Board | Male | 51 | Incumbent | 186.45 | No |
| Wang Xuewen | Director, Vice President | Male | 53 | Incumbent | 285.26 | No |
| Wang Zhengjiang | Director | Male | 53 | Incumbent | 245.92 | No |
| Zhou Guiyang | Director | Male | 47 | Incumbent | 110.25 | No |
| Yu Baijin | Director | Male | 55 | Incumbent | 141.82 | No |
| Huang Can | Independent Director | Male | 43 | Incumbent | 10 | No |
| Jin Zanfang | Independent Director | Female | 46 | Incumbent | 10 | No |
| Zhu Jianmin | Independent Director | Female | 58 | Incumbent | 10 | No |
| Ji Jianyang | Independent Director | Male | 43 | Incumbent | 10 | No |
| Shi Fangbin | Chairman of the Board of Supervisor | Female | 46 | Incumbent | 0 | Yes |
| Lu Guofeng | Supervisor | Male | 50 | Incumbent | 114.52 | No |
| Yu Hongwei | Supervisor | Male | 51 | Incumbent | 167.43 | No |
| Yan Hongyue | Supervisor | Male | 52 | Incumbent | 121.20 | No |
| Chen Zhaofeng | Supervisor | Male | 45 | Incumbent | 69.38 | No |
| Zheng Gentu | Vice President | Male | 60 | Incumbent | 118.94 | No |
| Total | -- | -- | -- | -- | 2,637.25 | -- |
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VI. Directors’ performance of duties during the reporting period
1. Meetings of the Board of Directors during the reporting period
| Session | Meeting date | Disclosure date | Resolutions |
| The fifth meeting of the eighth session of Board of Directors | 3/29/2021 | 3/31/2021 | 19 proposals including the “Annual Work Report of the Board of Directors of 2020” were deliberated and approved. Please refer to Announcement No. 2021-005 disclosed on http://www.cninfo.com.cn for details. |
| The sixth meeting of the eighth session of Board of Directors | 4/27/2021 | N/A | The “First Quarterly Report of 2021” was deliberated and approved. |
| The seventh meeting of the eighth session of Board of Directors | 8/18/2021 | 8/20/2021 | 4 proposals including the “Semi-annual Report of Board of Directors of 2020 and Summary” were deliberated and approved. Please refer to Announcement No. 2021-023 disclosed on http://www.cninfo.com.cn for details. |
| The eighth meeting of the eighth session of Board of Directors | 10/27/2021 | 10/29/2021 | 4 proposals including the “Third Quarterly Report of 2021” were deliberated and approved. Please refer to Announcement No. 2021-032 disclosed on http://www.cninfo.com.cn for details. |
| The ninth meeting of the eighth session of Board of Directors | 12/24/2021 | 12/27/2021 | 3 proposals including the “Proposal on Foreign Investments and Signing of Letter of Intent for Cooperative Joint Venture” were deliberated and approved. Please refer to Announcement No. 2021-039 disclosed on http://www.cninfo.com.cn for details. |
2. Directors’ attendance at meetings of the Board of Directors and general meetings of shareholders
| Directors’ attendance at meetings of the Board of Directors and general meetings of shareholders | |||||||
| Name of directors | Number of board meetings to be present during the reporting period | Number of board meetings attended on site | Number of board meetings attended through audio visual means | Number of board meetings attended by proxy | Number of absences from board meetings | Whether directors failed to attend two consecutive board meetings in person | Number of general meetings attended |
| Hu Baifan | 5 | 5 | 0 | 0 | 0 | No | 1 |
| Hu Baishan | 5 | 5 | 0 | 0 | 0 | No | 1 |
| Shi Guanqun | 5 | 5 | 0 | 0 | 0 | No | 1 |
| Wang Xuewen | 5 | 5 | 0 | 0 | 0 | No | 1 |
| Wang Zhengjiang | 5 | 1 | 4 | 0 | 0 | No | 0 |
| Zhou Guiyang | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Yu Baijin | 5 | 1 | 4 | 0 | 0 | No | 0 |
| Huang Can | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Jin Zanfang | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Zhu Jianmin | 5 | 1 | 4 | 0 | 0 | No | 0 |
| Ji Jianyang | 5 | 1 | 4 | 0 | 0 | No | 0 |
Remarks on failure to attend two consecutive board meetings in personN/A
3. Directors’ objections to relevant matters of the Company
Whether directors have raised objections to relevant matters of the Company
□ Yes √ No
Directors have not raised any objections to relevant matters of the Company during the reporting period.
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4. Other remarks on directors’ performance of duties
Whether the directors’ recommendation on the Company were adopted
√ Yes □ No
Remarks on directors’ recommendation on the Company adopted or not adoptedDuring the reporting period, the directors, in strict accordance with the “Articles of Association”, “Rules of Procedures of the Boardof Directors” and relevant laws and regulations, actively attended board meetings and general meetings, performed their duties withdiligence, put forward relevant opinions on significant governance and operation decisions in accordance with the actual situation ofthe Company, formed unanimous opinions after full communication and discussion, and resolutely supervised and promoted theimplementation of the resolutions made by the Board of Directors to ensure scientific, timely and efficient decision-making andsafeguard the legitimate rights and interests of the Company and all shareholders.VII. Special committees under the Board of Directors during the reporting period
| Name of committees | Members | Number of meetings held | Meeting date | Content of meeting | Important comments and suggestions made | Other performance of duties | Details of dispute (if any) |
| The eighth session of Remuneration and Assessment Committee | Ji Jianyang, Hu Baishan, Huang Can, Zhu Jianmin, Shi Guanqun | 1 | 4/7/2021 | The “Remuneration Plan of NHU Management Team for the Term from 2021 to 2023” was deliberated and approved. | |||
| The eighth session of Audit Committee | Zhu Jianmin, Jin Zanfang, Shi Guanqun | 3 | 4/20/2021 | 3 proposals including “Summary of Internal Audit for the First Quarter of 2021 and Work Plan for the Second Quarter of 2021”, “Report on Special Audit of the Deposit and Use of Raised Funds from January to March 2021” and “First Quarterly Report of 2021” were deliberated and approved. | |||
| 8/12/2021 | 3 proposals including “Summary of Internal Audit for the Half Year of 2021 and Work Plan for the Third Quarter of 2021”, “Report on Special Audit of the Deposit and Use of Raised Funds for the Half Year of 2021” and “Semi-annual Report of 2021” were deliberated and approved. | ||||||
| 10/21/2021 | 3 proposals including “Summary of Internal Audit for the Third Quarter of 2021 and Work Plan for the Fourth Quarter of 2021”, “Report on Special Audit of the Deposit and Use of Raised Funds from January to September 2021” and “Third Quarterly Report of 2021” were deliberated and approved. |
VIII. Work of the Board of SupervisorsWhether the Board of Supervisors found any risks in the Company during its supervisory activities in the reporting period
□ Yes √ No
The Board of Supervisors has no objection to the supervised matters during the reporting period.
IX. Employees
1. Number of employees, professional workforce and education level
| Number of active employees of the parent company at the end of the reporting period | 1,845 |
| Number of active employees of major subsidiaries at the end of the reporting period | 8,960 |
| Total number of active employees at the end of the reporting period | 10,805 |
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| Total number of employees receiving remuneration in the current period | 10,805 |
| Number of retired cadres and employees whose expenses borne by the parent company and major subsidiaries | 0 |
| Professional workforce | |
| Categories | Number |
| Production staff | 7,288 |
| Sales staff | 142 |
| Technical staff | 2,368 |
| Finance staff | 103 |
| Administrative staff | 904 |
| Total | 10,805 |
| Education level | |
| Categories | Number |
| Doctoral degree | 65 |
| Master’s degree | 854 |
| Bachelor’s degree | 3,085 |
| Associate degree | 3,866 |
| High school education, secondary vocational school education or below | 2,935 |
| Total | 10,805 |
2. Remuneration policy
The Company formulates the “Remuneration Management System” in accordance with the “Labor Law of the People’s Republic ofChina” and relevant laws and regulations to provide competitive remunerations. A remuneration package is mainly composed of basesalary, performance-based pay and benefits. The Company also offers employee incentives including incremental rewards, specialcontribution rewards, incentives during the tenure, and additional rewards for high performance beyond expectations. The Companypays five insurances and a housing fund, and continuously improves employee satisfaction and loyalty.
3. Training program
With the strategic goal of “building a highland of talents”, the Company takes supporting business development as the starting pointand job-based talent standards as the direction to promote various types of talent training in an orderly manner. It launches leadershiptraining courses for middle level, high level and grassroots management cadres to effectively improve the management ability andquality of management cadres. It also launches professional ability development classes related to equipment, HSE and R&D tostrengthen technical staff skills. For new staff, the Company offers induction training to enhance their cultural identities andprofessional abilities. It organizes on-the-job training, skill level training, certification training for special equipment and special typeof work to ensure that employees meet all regulations and skill requirements. The Company makes efforts to cultivate 5 types oftalents: international talents, leadership talents, management talents, core technical talents and core skill talents. On the one hand, itfurther improves the development and utilization of internal lecturer resources and absorbs internal excellent experiences andpractices for a better enterprise succession; On the other hand, it combines “inviting in” and “going out” to establish a cooperationmechanism for training talents at different levels and expand their thinking and vision through external training, exchange withadvanced enterprises, study tours, etc. The Company aims to make each employee get the opportunity to learn and the platform togrow, so that they can fulfill themselves and achieve personal growth along with the Company. Talents are the most valuable,sustainable and competitive strategic resources of the Company.
4. Labor outsourcing
□ Applicable √ Not applicable
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X. Profit distribution and conversion of capital reserve into share capital
Profit distribution policy during the reporting period, especially the establishment, implementation or adjustment of cash dividendpolicy
√ Applicable □ Not applicable
Pursuant to the 2020 profit distribution plan deliberated and approved by the general meeting of 2020 date April 21, 2021, based ontotal shares of 2,148,662,300 shares as of December 31, 2020, the Company distributed cash dividend of 7.00 yuan (tax included) per10 shares and distributed 2 shares per 10 shares by converting capital reserve to all shareholders. Such plan had been completed onMay 19, 2021.
| Special remarks on cash dividend policy | |
| Whether it complies with the Articles of Association or the resolution of the general meeting: | Yes |
| Whether the criteria and proportion of dividends are clear and unambiguous: | Yes |
| Whether relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether the independent directors have performed their duties and responsibilities and played their due roles: | Yes |
| Whether small and medium-sized shareholders have adequate opportunities to express their opinions and demands, and whether their legitimate rights and interests are adequately protected: | Yes |
| In case of changes or adjustments of the cash dividend policy, whether the conditions and procedures are compliant and transparent: | N/A |
The Company is profitable during the reporting period and the parent company’s profit available for distribution is positive but nocash dividend distribution plan has been proposed
□ Applicable √ Not applicable
Profit distribution and conversion of capital reserve into share capital during the reporting period
√ Applicable □ Not applicable
| Number of bonus shares for every 10 shares (shares) | 0 |
| Dividends for every 10 shares (yuan) (tax included) | 7.00 |
| Number of shares increased for every 10 shares (shares) | 2 |
| Equity base for distribution proposal (shares) | 2,563,842,524 |
| Amount of cash dividends (yuan) (tax included) | 1,794,689,766.80 |
| Amount of cash dividends by other methods (such as share repurchase) (yuan) | 320,360,784.48 |
| Total cash dividends (including those by other methods) (yuan) | 2,115,050,551.28 |
| Profit available for distribution (yuan) | 5,886,750,011.71 |
| Proportion of total cash dividends (including those by other methods) to total profit distribution | 100% |
| Details on cash dividend | |
| If the Company is in growth stage and there are major capital expenditure arrangements, the proportion of cash dividends in this profit distribution shall be at least 20%. | |
| Details on proposals on profit distribution or conversion of capital reserve into share capital | |
| Temporarily based on total shares of 2,563,842,524 shares [Note] as at March 31, 2022, the Company intends to distribute cash dividend of 7 yuan (tax included) and no bonus shares per 10 shares to all shareholders, and to distribute 2 shares per 10 shares by converting capital reserve to all shareholders. | |
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XI. Implementation of equity incentive plans, employee stock ownership plans or otheremployee incentive programs
√ Applicable □ Not applicable
1. Equity incentive
Not applicable.Equity incentives received by directors and senior executives of the Company
□ Applicable √ Not applicable
Assessment mechanism and incentives for senior executivesNot applicable.
2. Implementation of employee stock ownership plans
√ Applicable □ Not applicable
All active employee stock ownership plans during the reporting period
Note: As of March 31, 2022, the Company’s share capital totaled 2,578,394,760 shares, including repurchased share of 14,552,236shares. According to the “Rules on Share Repurchase of Listed Companies”, shares in the special account for repurchase of listedcompanies carry no right of profit distribution and conversion of capital reserve into share capital.If the Company’s total share capital was changed due to the conversion of convertible bonds into shares, share repurchase, equityincentive exercise, refinancing and issuing new shares to the public before the implementation of the distribution plan, the totaldistribution amount shall be adjusted with distribution proportion unchanged.
Scope of employees
| Scope of employees | Number of employees | Total shares held | Changes | Proportion to total share capital of the Company | Sources of fund to implement the plan |
| Directors, supervisors, senior executives of the Company, and regular employees of the Company and its holding subsidiaries or wholly-owned subsidiaries who meet the criteria | 681 | 10,131,522 | N/A | 0.39% | Legal remuneration of the employees, self-raised funds and other methods permitted by laws and administrative regulations |
Shareholdings of directors, supervisors and senior executives in the employee stock ownership plan during the reporting period
| Name | Position | Number of shares held at the beginning of the reporting period | Number of shares held at the end of the reporting period | Proportion to total share capital of the Company |
| Hu Baishan, Shi Guanqun, Wang Xuewen, Wang Zhengjiang, Zhou Guiyang, Yu Baijin, Shi Fangbin, Lyu Guofeng, Yu Hongwei, Yan Hongyue, Chen Zhaofeng, Zheng Gentu | Directors, supervisors and senior executives | 257,455 | 1,334,431 | 0.05% |
Changes in asset management agency during the reporting period
□ Applicable √ Not applicable
Changes in equity during the reporting period due to disposal of shares by holders, etc.
□ Applicable √ Not applicable
Exercise of shareholders’ rights during the reporting periodPursuant to the “Third Phase of Employee Stock Ownership Plan (Draft)”, such plan voluntarily waives the voting rights of holdingshares in the general meeting of the Company, while shares acquired through the employee stock ownership plan carry no voting
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rights in the general meeting. During the reporting period, the employee stock ownership plan did not exercise the voting rights ofholding shares in the general meeting, but still enjoyed the right to profit distribution.Other relevant situations and remarks of the employee stock ownership plan during the reporting period
□ Applicable √ Not applicable
Change in membership of the management committee of employee stock ownership plan
√ Applicable □ Not applicable
Pursuant to the second meeting of holders of the third phase of employee stock ownership plan in manner of voting bycorrespondence dated June 9, 2021, Mr. 邱金倬 (Qiu Jinzhuo) was elected as a member of the management committee of the thirdphase of employee stock ownership plan and together with Ms. 张丽英 (Zhang Liying), Mr. 董小方 (Dong Xiaofang), Mr. 张广利 (Zhang Guangli) and Ms. 张莉瑾 (Zhang Lijin), who were elected at the first meeting of holders, formed the managementcommittee, with the duration of such plan as the term of office.Financial impact of employee stock ownership plan on the Company in the reporting period and related accounting treatments
□ Applicable √ Not applicable
Termination of employee stock ownership plan during the reporting period
□ Applicable √ Not applicable
Other remarks
1. On May 19, 2021, the Company implemented the annual equity distribution of 2020, and the shares held by the third phase ofemployee stock ownership plan were transferred from 8,442,935 shares to 10,131,522 shares after the transfer, with the proportion tototal share capital of the Company unchanged.
2. The number of shares held by directors, supervisors and senior executives in the employee stock ownership plan is measured basedon the proportion of shares of holders to the total shares of the employee stock ownership plan.
3. Other employee incentive programs
□ Applicable √ Not applicable
XII. Construction and implementation of internal control system during the reporting period
1. Construction and implementation of internal control system
The Company has established a sound internal control system under continuous improvement and enhancement in accordance withthe “Basic Standard for Enterprise Internal Control” and its accompanying guidelines to adapt to the dynamic external environmentand internal management requirements. The Company’s internal controls can cover the major aspects of operation and management,and the design of these controls is sound and reasonable. The internal controls are effectively executed and there is no materialomission.During the reporting period, the Company improved its own system construction and optimized the existing internal controlmanagement system on a continuous basis, so as to strengthen each internal control process; it improved the internal control processmanual, incorporated the content of enterprise internal control risk prevention, division of responsibility and authority, assignment oftask matters, etc. into the internal control process description, covering the work process design of 17 types of internal controls(including funds, procurement, inventories, sales, fixed assets, engineering projects, etc.). It also assessed the potential risks to ensurethe effective operation of the internal control system.
2. Details on material deficiencies in internal control identified during the reporting period
□ Yes √ No
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XIII. Management control in subsidiaries during the reporting period
| Name of subsidiaries | Integration plan | Progress of integration | Problems encountered in integration | Solutions adopted | Progress of solutions | Follow-up solutions |
| Zhejiang NHU Nylon Materials Co., Ltd. | N/A | N/A | N/A | N/A | N/A | N/A |
| NHU Singapore PTE. LTD. | N/A | N/A | N/A | N/A | N/A | N/A |
IV. Internal control self-assessment report or auditor’s report on internal control
1. Internal control self-assessment report
| Date of report | April 15, 2022 | |
| Full text of report | Please refer to the “Internal Control Self-Assessment Report of 2021 of Zhejiang NHU Co., Ltd.” disclosed on http://www.cninfo.com.cn on April 15, 2022 for details. | |
| Proportion of the total assets of entities included in the assessment scope to the total assets in the Company’s consolidated financial statements | 100.00% | |
| Proportion of the operating revenue of entities included in the assessment scope to the operating revenue in the Company’s consolidated financial statements | 100.00% | |
| Criteria for identifying deficiencies | ||
| Categories | Financial reporting | Non-financial reporting |
| Qualitative criteria | Indicators of material deficiencies in financial reporting include: 1) fraud by directors, supervisors and senior executives; 2) correction of published financial reports by the Company; 3) discovery by the auditor of a material misstatement in the current financial report that was not detected by internal control in the course of operation; and 4) ineffective monitoring of internal control by the Company. Indicators of significant deficiencies in financial reporting include: 1) failure to select and apply accounting policies in accordance with CASBEs; 2) failure to establish anti-fraud procedures and controls; and 3) individual or multiple deficiencies in the financial reporting process that, although not meeting the criteria for determining a significant deficiency, affect the objective of integrity and accuracy. General deficiencies in financial reporting are control deficiencies other than the above-mentioned material and significant deficiencies. | The following circumstances are identified as indicators of material deficiencies, while others are respectively identified as indicators of significant deficiencies or general deficiencies according to the degree of impact: 1) lack of democratic or scientific decision-making procedures, leading to decision-making errors; 2) violation of laws and regulations, such as environmental pollution, failure to report or disclose information in accordance with regulations; 3) loss of executives or technical personnel in key positions; 4) internal control evaluation stating that material or significant deficiencies have not been rectified; 5) lack of system control or systemic failure in important businesses. |
| Quantitative criteria | The Company uses 5% of profit before tax as the overall materiality of the financial statements. A material deficiency is identified when the potential misstatement is greater than or equal to the overall materiality. A significant deficiency is identified when the potential misstatement is less than the overall materiality but greater than or equal to 20% of the overall materiality. A general deficiency is identified When the potential misstatement is less than 20% of the overall materiality. | The Company uses 5% of profit before tax as the overall materiality of the financial statements. A material deficiency is identified when the potential misstatement is greater than or equal to the overall materiality. A significant deficiency is identified when the potential misstatement is less than the overall materiality but greater than or equal to 20% of the overall materiality. A general deficiency is identified when the potential misstatement is less than 20% of the overall materiality. |
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| Number of material deficiencies in internal control over financial reporting | 0 |
| Number of material deficiencies in internal control over non-financial reporting | 0 |
| Number of significant deficiencies in internal control over financial reporting | 0 |
| Number of significant deficiencies in internal control over non-financial reporting | 0 |
2. Auditor’s report on internal control
□ Applicable √ Not applicable
XV. Self-examination and rectification concerning the special action of corporate governance
Not applicable.
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Section V Environmental and Social ResponsibilitiesI. Major environmental issues
Whether the Company and its subsidiaries belong to the key pollutant discharging units announced by departments of environmentalprotection administration
√ Yes □ No
| Name | Name of main pollutants and pollutant characteristics1 | Discharge method | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration | Executive pollutant discharge standard | Total amount of discharge | Total verified amount of discharge | Excessive discharge or not |
| The Company | COD | Sewer connection | 1 | Plant area | 147mg/L | 500mg/L | 16.7t | ≤189.5t/a | No |
| The Company | NH3-N | Sewer connection | 1 | Plant area | 1.7mg/L | 35mg/L | 0.22t | ≤13.28t/a | No |
| The Company | SO? | Filtered discharge | 1 | Plant area | 4mg/m3 | 50mg/m3 | 0.1t | ≤8.612t/a | No |
| The Company | NOx | Filtered discharge | 1 | Plant area | 36mg/m3 | 50mg/m3 | 0.7t | ≤28t/a | No |
| Shangyu NHU Bio-Chem Co., Ltd. | COD | Sewer connection | 1 | Plant area | 286.291mg/L | 500mg/L | 222.11t | ≤447.4t/a | No |
| Shangyu NHU Bio-Chem Co., Ltd. | NH3-N | Sewer connection | 1 | Plant area | 19.706mg/L | 35mg/L | 15.288t | ≤31.318t/a | No |
| Shangyu NHU Bio-Chem Co., Ltd. | TN | Sewer connection | 1 | Plant area | 32.022mg/L | 70mg/L | 24.843t | ≤62.637t/a | No |
| Shangyu NHU Bio-Chem Co., Ltd. | NOx | Filtered discharge | 1 | Plant area | 25.16mg/m? | 200mg/m? | 10.751t | ≤12.96t/a | No |
| Shangyu NHU Bio-Chem Co., Ltd. | VOC | Filtered discharge | 1 | Plant area | 31.4mg/m3 | 100mg/m3 | 13.417t | ≤217.182t/a | No |
| 浙江新和成药业有限公司 (Zhejiang NHU Pharmaceutical Co., Ltd.2) | COD | Sewer connection | 1 | Plant area | 286.291mg/L | 500mg/L | 145.336t | ≤292.37t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | NH3-N | Sewer connection | 1 | Plant area | 19.706mg/L | 35mg/L | 10.006t | ≤20.467t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | TN | Sewer connection | 1 | Plant area | 32.022mg/L | 70mg/L | 16.254t | ≤40.932t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | VOC | Filtered discharge | 2 | Plant area | 10.7mg/m? | 100mg/m? | 5.786t | ≤167.9t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | NOx | Filtered discharge | 1 | Plant area | 31.26mg/m? | 200mg/m? | 4.105t | ≤8.64t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | NOx | Filtered discharge | 1 | Plant area | 50.21mg/m? | 300mg/m? | 20.544t | ≤28.08t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | NOx | Filtered discharge | 1 | Plant area | 34.533mg/m? | 50mg/m? | 4.257t | ≤65.85t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | SO? | Filtered discharge | 1 | Plant area | 0.22mg/m? | 200mg/m? | 0.029t | ≤0.039t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | SO? | Filtered discharge | 1 | Plant area | 3.515mg/m? | 50mg/m? | 1.438t | ≤37.94t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | SO? | Filtered discharge | 1 | Plant area | 2.652mg/m? | 200mg/m? | 0.327t | ≤91.42t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | PM | Filtered discharge | 1 | Plant area | 1.34mg/m? | 15mg/m? | 0.176t | ≤0.304t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | PM | Filtered discharge | 1 | Plant area | 2mg/m? | 30mg/m? | 0.817t | ≤8.42t/a | No |
| Zhejiang NHU Pharmaceutical Co., Ltd. | PM | Filtered discharge | 1 | Plant area | 2.701mg/m? | 20mg/m? | 0.333t | ≤77.597t/a | No |
| Zhejiang NHU Special Materials Co., Ltd. | PM | Filtered discharge | 2 | Plant area | 3.1mg/m? | 5mg/m? | 0.710t | ≤17.73t/a | No |
| Zhejiang NHU Special Materials Co., Ltd. | SO? | Filtered discharge | 2 | Plant area | 5mg/m? | 35mg/m? | 1.430t | ≤67.92t/a | No |
| Zhejiang NHU Special Materials Co., Ltd. | NOx | Filtered discharge | 2 | Plant area | 26.8mg/m? | 50mg/m? | 8.555t | ≤83.28t/a | No |
| Zhejiang NHU Special Materials Co., Ltd. | VOC | Filtered discharge | 1 | Plant area | 7mg/m? | 60mg/m? | 1.212t | ≤69.72t/a | No |
| Zhejiang NHU Special Materials Co., Ltd. | COD | Sewer connection | 1 | Plant area | 270mg/L | 500mg/L | 84.478t | ≤182.1t/a | No |
COD, NH3-N, SO?, NOx, TN, VOC, PM and TP stand for chemical oxygen demand, ammonia nitrogen, sulfur dioxide, nitrogenoxides, total nitrogen, volatile organic compound, particulate matter and total phosphorus, respectively.
The English name is for identification purpose only.
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| Name | Name of main pollutants and pollutant characteristics1 | Discharge method | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration | Executive pollutant discharge standard | Total amount of discharge | Total verified amount of discharge | Excessive discharge or not |
| Zhejiang NHU Special Materials Co., Ltd. | NH3-N | Sewer connection | 1 | Plant area | 18mg/L | 35mg/L | 5.632t | ≤12.747t/a | No |
| Zhejiang NHU Special Materials Co., Ltd. | TN | Sewer connection | 1 | Plant area | 33mg/L | 70mg/L | 10.325t | ≤25.494t/a | No |
| Shandong NHU Pharmaceutical Co., Ltd. | PM | Filtered discharge | 5 | Plant area | 1.37mg/m? | 10mg/m? | 1.413t | ≤5.761t/a | No |
| Shandong NHU Pharmaceutical Co., Ltd. | SO? | Filtered discharge | 4 | Plant area | 0.073mg/m? | 50mg/m? | 1.193t | ≤4.006t/a | No |
| Shandong NHU Pharmaceutical Co., Ltd. | NOx | Filtered discharge | 5 | Plant area | 12.1mg/m? | 100mg/m? | 9.349t | ≤75.513t/a | No |
| Shandong NHU Pharmaceutical Co., Ltd. | VOC | Filtered discharge | 3 | Plant area | 16.3mg/m? | 60mg/m? | 6.02t | ≤28.481t/a | No |
| Shandong NHU Pharmaceutical Co., Ltd. | COD | Sewer connection | 1 | Plant area | 591mg/L | 1000mg/L | 275t | ≤599.43t/a | No |
| Shandong NHU Pharmaceutical Co., Ltd. | NH3-N | Sewer connection | 1 | Plant area | 18.7mg/L | 100mg/L | 8.17t | ≤59.95t/a | No |
| Shandong NHU Pharmaceutical Co., Ltd. | TN | Sewer connection | 1 | Plant area | 40.4mg/L | 120mg/L | 18.4t | ≤72.07t/a | No |
| 山东新和成药业有限公司热电分公司 (Thermal Power Branch of Shandong NHU Pharmaceutical Co., Ltd.?) | PM | Filtered discharge | 1 | Plant area | 0.62mg/m? | 5mg/m? | 1.82t | ≤10.51t/a | No |
| Thermal Power Branch of Shandong NHU Pharmaceutical Co., Ltd. | SO? | Filtered discharge | 1 | Plant area | 9.52mg/m? | 35mg/m? | 25t | ≤73.61t/a | No |
| Thermal Power Branch of Shandong NHU Pharmaceutical Co., Ltd. | NOx | Filtered discharge | 1 | Plant area | 22.7mg/m? | 50mg/m? | 62.1t | ≤105.16t/a | No |
| Shandong NHU Amino-acids Co., Ltd. | SO? | Filtered discharge | 4 | Plant area | 5.1975mg/m? | 50mg/m? | 10.916t | ≤92.59t/a | No |
| Shandong NHU Amino-acids Co., Ltd. | NOx | Filtered discharge | 3 | Plant area | 40.03mg/m? | 100mg/m? | 47.743t | ≤230.77t/a | No |
| Shandong NHU Amino-acids Co., Ltd. | PM | Filtered discharge | 5 | Plant area | 1.77mg/m? | 10mg/m? | 2.16t | ≤21.19t/a | No |
| Shandong NHU Amino-acids Co., Ltd. | VOC | Filtered discharge | 4 | Plant area | 7.76mg/m? | 60mg/m? | 42.64t | ≤123.27t/a | No |
| Shandong NHU Amino-acids Co., Ltd. | VOC | Unorganized | / | Plant area | / | / | / | / | No |
| Shandong NHU Amino-acids Co., Ltd. | COD | Sewer connection | 1 | Plant area | 417mg/L | 1000mg/L | 176.69t | ≤592.22t/a | No |
| Shandong NHU Amino-acids Co., Ltd. | NH3-N | Sewer connection | 1 | Plant area | 7.73mg/L | 100mg/L | 3.2t | ≤59.222t/a | No |
| Shandong NHU Amino-acids Co., Ltd. | TN | Sewer connection | 1 | Plant area | 50.33mg/L | 120mg/L | 21.6t | ≤70.38t/a | No |
| Shandong NHU Vitamins Co., Ltd. | VOC | Filtered discharge | 3 | Plant area | 2.15mg/m? | 60mg/m? | 1.08t | ≤173.53t/a | No |
| Shandong NHU Vitamins Co., Ltd. | VOC | Unorganized | / | Plant area | / | / | 1.08t | ≤173.53t/a | No |
| Shandong NHU Vitamins Co., Ltd. | SO? | Filtered discharge | 2 | Plant area | 22.51mg/m? | 50mg/m? | 4.81t | ≤50.65t/a | No |
| Shandong NHU Vitamins Co., Ltd. | NOx | Filtered discharge | 4 | Plant area | 51.96mg/m? | 100mg/m? | 28.15t | ≤73.66t/a | No |
| Shandong NHU Vitamins Co., Ltd. | PM | Filtered discharge | 5 | Plant area | 1.88mg/m? | 10mg/m? | 0.946t | ≤7.42t/a | No |
| Shandong NHU Vitamins Co., Ltd. | COD | Sewer connection | 1 | Plant area | 348mg/L | 2000mg/L | 108.105t | ≤1140t/a | No |
| Shandong NHU Vitamins Co., Ltd. | NH3-N | Sewer connection | 1 | Plant area | 21.6mg/L | 100mg/L | 4.948t | ≤57t/a | No |
| Shandong NHU Vitamins Co., Ltd. | TN | Sewer connection | 1 | Plant area | 69.6mg/L | 120mg/L | 16.638t | ≤68.4t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | PM | Filtered discharge | 2 | Plant area | 11.8mg/m? | 30mg/m? | 7.46t | ≤43.812t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | PM | Filtered discharge | 4 | Plant area | 27.57mg/m? | 200mg/m? | 7.46t | ≤43.812t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | PM | Filtered discharge | 1 | Plant area | 41.67mg/m? | 120mg/m? | 7.46t | ≤43.812t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | SO? | Filtered discharge | 2 | Plant area | 22.1mg/m? | 200mg/m? | 28.617t | ≤142.33t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | SO? | Filtered discharge | 4 | Plant area | 167.47mg/m? | 850mg/m? | 28.617t | ≤142.33t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | SO? | Filtered discharge | 1 | Plant area | 67.3mg/m? | 550mg/m? | 28.617t | ≤142.33t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | NOx | Filtered discharge | 1 | Plant area | 57.04mg/m? | 250mg/m? | 28.4t | ≤99.11t/a | No |
?
The English name is for identification purpose only.
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| Name | Name of main pollutants and pollutant characteristics1 | Discharge method | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration | Executive pollutant discharge standard | Total amount of discharge | Total verified amount of discharge | Excessive discharge or not |
| Heilongjiang NHU Biotechnology Co., Ltd. | NOx | Filtered discharge | 1 | Plant area | 82.03mg/m? | 200mg/m? | 28.4t | ≤99.11t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | NOx | Filtered discharge | 5 | Plant area | 73.66mg/m? | 240mg/m? | 28.4t | ≤99.11t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | VOC | Filtered discharge | 1 | Plant area | 41.64mg/m? | 150mg/m? | 11.089t | ≤118.8t/a | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | COD | Sewer connection | 1 | Plant area | 143.88mg/L | 350mg/L | 587.723t | / | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | NH3-N | Sewer connection | 1 | Plant area | 6.85mg/L | 35mg/m? | 14.494t | / | No |
| Heilongjiang NHU Biotechnology Co., Ltd. | TP | Sewer connection | 1 | Plant area | 2.92mg/L | 50mg/L | 8.958t | / | No |
Construction and operation of pollution prevention and control facilitiesThe Company has established the environmental protection concept of green development: 1. Introducing the concept of greenchemistry, developing and producing products that are more environment-friendly. 2. Transferring from support-orientation toresponsibility-orientation, to conduct source reduction, process control and end-of-pipe treatment properly. 3. Pursuing reduction,recycling and harmlessness to create ecological factories, and realize the harmonious development of man and nature.Wastewater treatment: The Company has a complete sewage treatment system, with a wastewater collection system for productionsewage, domestic sewage, initial rainwater and accident water to separate the clean water and rainwater from the sewage. The wastepool is sealed with a cover, and all the waste gases are effectively collected and eventually incinerated, which effectively reduces theemission of waste gas.Waste gas treatment: The Company adopts the self-developed nitrogen sealing system to effectively reduce the waste gas emission; ituses different pretreatment technologies according to the composition and nature of different waste gases, and introduces advancedforeign waste gas treatment devices to strengthen its waste gas treatment capacity. The Company carries out regular waste gas leakdetection and repair (LDAR) every year to effectively supervise and reduce unorganized waste gases. The Company activelyupgrades coal-fired thermal oil furnaces via the “coal to gas” conversion, introduces natural gas boilers, carries out low-NOxtransformation, and adds SNCR denitrification facilities to the terminal to actively carry out NOx treatment. The Company operatesand maintains the facilities of odor evaluation system, focuses all monitoring points and monitoring data on a daily basis, conductstrend analysis, tracking feedback on the reasons for data exceeding the standard in a timely manner, so as to basically realize that theodor can be warned, traced and evaluated.Solid waste disposal: The Company has a standardized temporary storage warehouse for hazardous wastes and hazardous wasteincineration devices. The solid wastes entrusted for external treatment are transferred in strict accordance with the “ManagementMeasures for the Transfer of Hazardous Wastes Using Quintuplicate Vouchers” and entrusted to qualified units for treatment.Noise prevention and control: The Company chooses low-noise equipment, and adopts the noise reduction measures of foundationdamping for the equipment that does not need to be fixed. In addition to taking foundation damping for air compressors, blowers andvarious pumps, the Company also installs additional soundproof covers around the noise sources for sound insulation.Emergency management: The Company installs online waste gas monitors around the plant boundary to monitor the environment ofthe plant boundary in real time. It introduces VOC online monitors to monitor the gas emission data in real time and uploads thedetection data to the monitoring platform. It monitors the waste water emission index in real time by waste water online monitoringsystem of “one enterprise one pipe” and upload it to the Bureau of Ecology and Environment. It introduces domestic first-classelevated flare technology to specifically deal with abnormal waste gas in the production process. It also introduces domesticfirst-class leak stoppage technology under pressure to reduce the abnormal leakage of pipelines, valves, flanges and tanks to theminimum, thus reducing the environmental impact caused by a large number of leaks.
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Environmental impact assessment (EIA) of construction projects and other administrative permits forenvironmental protectionOn November 16, 2021, Shandong NHU Amino-acids Co., Ltd. obtained the EIA approval for the “Methionine Industry ChainExtension Project with Annual Output of 0.25 million Tons” with the document numbered Wei Huan Shen Zi [2021] B16.On December 13, 2021, Shandong NHU Amino-acids Co., Ltd. reapplied for a pollutant discharge permit, which related to a newproject of the “Methionine Industry Chain Extension Project with Annual Output of 0.25 million Tons”.Heilongjiang NHU Biotechnology Co., Ltd. finished the environmental protection acceptance for the completion of part of thesecond phase project of Heilongjiang Suihua NHU Biological Fermentation Industrial Park.On April 8, 2021, Shandong NHU Pharmaceutical Co., Ltd. passed the verification, assessment and acceptance of cleaner productionand received the government document of approval.On August 8, 2021, Shandong NHU Vitamins Co., Ltd. obtained the record-filing receipt of the “Post-Evaluation Report on theWaste Incinerators of Waste Gas, Wastewater, and Solid Waste” with the document numbered Wei Bin Huan Ping Bei An [2021] 1.On August 11, 2021, Shandong NHU Vitamins Co., Ltd. reapplied for a pollutant discharge permit and a hazardous waste license.On December 25, 2021, Shandong NHU Vitamins Co., Ltd. passed the preparation of cleaner production assessment report.Environmental emergency response planIn accordance with the “Administrative Measures for the Record-filing of Environmental Emergency Response Plans of Enterprisesand Public Institutions (Trial)”, Shandong NHU Pharmaceutical Co., Ltd. formulated the “Environmental Emergency Response Planof Shandong NHU Pharmaceutical Co., Ltd.” based on its actual situation, and filed and submitted to Weifang Bureau of Ecologyand Environment, Binhai Sub-bureau in May 2021, obtaining the record-filing receipt numbered 370703-2021-046-H.On December 10, 2021, Shandong NHU Vitamins Co., Ltd. obtaining the record-filing receipt numbered 370-703-2021-150-M forits environmental emergency response plan.Heilongjiang NHU Biotechnology Co., Ltd. completed the revision of the “Environmental Emergency Response Plan ofHeilongjiang NHU Biotechnology Co., Ltd.” according to the construction and commissioning of new projects in a timely manner,and filed and submitted to Suihua Bureau of Ecology and Environment in April 2021, obtaining the record-filing receipt numbered231200-2021-001-H.Environmental self-monitoring programThe Company has strong pollutant discharge monitoring and management abilities, and it can inform the departments ofenvironmental protection administration and the public of monitoring information in a timely manner. The Company has developed aself-testing program, which covers the indicators of organized waste gas, unorganized waste gas, groundwater, etc. Meanwhile, theCompany has entrusted a third-party testing agency to perform regular monitoring.The Company has disclosed its environmental information on the platforms of environmental information management system of keyprovincial and municipal pollutant discharging units in strict accordance with requirements at national, provincial, municipal andcounty levels on enterprise environmental information disclosure.Administrative penalties for environmental problems during the reporting period
| Name | Reasons for punishment | Violations | Results of punishment | Impact on the production and operation of the Company | Rectification measures of the Company |
| N/A | N/A | N/A | N/A | N/A | N/A |
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Other environmental information that should be disclosedNone.Measures taken to reduce carbon dioxide emissions during the reporting period and their effects
√ Applicable □ Not applicable
The Company reduces the proportion of purchased steam by using scraps and other wastes to produce steam by itself; it improves theenergy recovery efficiency through the steam boiler waste heat recovery project; the Company adopts carbon dioxide emissions per10,000 yuan of output value as the significant indicator of processing route of new products and environmental feasibility assessment,applies green technology in the research and development of new products, and improves atomic efficiency, so as to reduce carbondioxide emissions from raw material consumption at source.Other information related to environmental protectionNone.II. Social responsibilities
Please refer to the announcement disclosed on http://www.cninfo.com.cn on April 15, 2022 for the full text of the “SocialResponsibility Report of 2021”.
III. Details on consolidating poverty alleviation achievements and promoting rural vitalizationNone.
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Section VI Significant EventsI. Commitment performance
1. Commitment performance fulfilled during the reporting period and not fulfilled as of the end of the reporting period byparties related to commitments including the actual controller of the Company, shareholders, related parties, acquirers andthe Company
√ Applicable □ Not Applicable
| Commitments | Parties making commitments | Types of commitments | Content of commitments | Time of commitment | Term of commitment | Performance |
| Commitments to shares reform | None | None | None | None | None | |
| Commitments made in reports on acquisition and changes in equity | None | None | None | None | None | |
| Commitments made in asset restructuring | None | None | None | None | None | |
| Commitments made in IPO or refinancing | NHU Holding Group Co., Ltd. and 张平一 (Zhang Pingyi), 石程 (Shi Cheng), 袁益中 (Yuan Yizhong), Hu Baishan, Shi Guanqun, Wang Xuewen, 崔欣荣 (Cui Xinrong), 王旭林 (Wang Xulin) | Commitments on horizontal competition, related party transactions and occupation of funds | The signing of “Commitment on No Engagement in Horizontal Competition” and commitments on no engagement in business activities result in horizontal competition with operations of the Company after listing | June 25, 2004 | Long-term | Strictly performed |
| Hu Baifan; Hu Baishan; Guanqun; Wang Xuewen; Cui Xinrong; Wang Zhengjiang; Zhou Guiyang | The Company’s directors, senior executives committed to perform their duties faithfully and diligently to safeguard the legitimate rights and interests of the Company and shareholders, and make the following commitments in accordance with the relevant provisions of the CSRC for the full performance of measures on filling immediate returns: 1. not to transfer benefits to other entities or individuals without compensation or on unfair terms, and not to use other means to harm benefits of the Company; 2. to impose restrictions on duty consumption of member of the Board of Directors and senior executives; 3. not to use assets of the Company to engage in investment or consumption activities not related to duty performance; 4. to link remuneration | January 12, 2017 | Long-term | Strictly performed |
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2. Realization of profit forecasts for the Company’s assets or projects and its reasons if there are profit forecasts for assets orprojects and the reporting period is still in the profit forecast period
□ Applicable √ Not Applicable
II. Non-operating occupation of funds over listed companies by controlling shareholders andother related parties
□ Applicable √ Not Applicable
There is no non-operating occupation of funds over listed companies by controlling shareholders and other related parties during thereporting period.III. Illegal external guarantees
□ Applicable √ Not Applicable
There is no illegal external guarantee during the reporting period.IV. Explanations by the Board of Directors on the latest “Modified Auditor’s Report”
□ Applicable √ Not Applicable
| system formulated by the Board of Directors or remuneration committee to the implementation of measures on filling immediate returns; 5. to link vesting conditions of equity incentive to be published in the future to the implementation of measures on filling immediate returns. | ||||||
| Hu Baifan; NHU Holding Group Co., Ltd. | Not to interfere in the Company’s business and management activities in excess of authority; not to encroach on benefits of the Company; to perform measures on filling immediate returns in a practical way. | January 12, 2017 | Long-term | Strictly performed | ||
| Commitments to equity incentive | None | None | None | None | None | |
| Other commitments to minority shareholders of the Company | None | None | None | None | None | |
| Whether commitments are performed on time | Yes | |||||
| If commitment performance is not fulfilled on time, please explain detailed reasons for it and the next work plans. | Not applicable | |||||
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V. Statements by the Board of Directors, the Board of Supervisors and independent directors(if applicable) on the “Modified Auditor’s Report” issued by the accounting firm during thereporting period
□ Applicable √ Not Applicable
VI. Changes of accounting policies and estimates or significant accounting error correctioncompared to the financial reports in the previous year
√ Applicable □ Not Applicable
The Company has adopted the “CASBE 21 – Leases” revised by the Ministry of Finance (the “revised lease standard”) since January1, 2021. Pursuant to regulations on convergence between original and revised standards, no adjustment shall be made on comparableinformation, and the cumulative impact arising from adoption on the adopting date shall be retrospectively adjusted into retainedearnings and other related financial statement items at the beginning of the reporting period. Please refer to item “V. Significantaccounting policies and estimates” under “Section X Financial Report” for details.
VII. Changes in the scope of consolidated financial statements compared to the financialreports in the previous year
√ Applicable □ Not Applicable
Please refer to item “IV (6) Whether the consolidation scope has changed during the reporting period” under “Section IIIManagement Discussion and Analysis” for details.VIII. Engagement and dismissal of accounting firmsDomestic accounting firms engaged currently
| Name | Pan-China Certified Public Accountants LLP |
| Remuneration (thousand yuan) | 2,100.00 (tax included) |
| Continuous years for audit services | 21 years |
| Certified Public Accountants | Teng Peibin, Zhu Lili |
| Certified Public Accountants’ continuous years for audit services | 2 years for Teng Peibin and 1 year for Zhu Lili |
Whether to engage another accounting firm instead in the current period
□ Yes √ No
Engagement of accounting firms, financial advisors or sponsors for audit of internal controls
□ Applicable √ Not Applicable
IX. Delisting after disclosure of the annual report
□ Applicable √ Not Applicable
X. Matters related to bankruptcy and restructuring
□ Applicable √ Not Applicable
There are no matters related to bankruptcy and restructuring during the reporting period.
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XI. Significant lawsuits and arbitration
□ Applicable √ Not Applicable
There is no significant lawsuit and arbitration during the reporting period.XII. Penalties and rectification
√ Applicable □ Not Applicable
| Name | Position | Causes | Types of investigation and penalties | Conclusions (if any) | Disclosure date | Disclosure reference |
| Zhu Jianmin | Independent director | An employee surnamed Li of Merit Interactive Co., Ltd. falsified several sales contracts and related settlement documents between the company and its customers by forging seals. Merit Interactive Co., Ltd. failed to timely discover the falsity of the above contracts and businesses, recognized the related sales revenues and prepare financial statements accordingly, resulting in false recording of its Third Quarterly Report and Annual Report of 2019, First Quarterly Report, Semi-Annual Report, and Third Quarterly Report of 2020. Merit Interactive Co., Ltd. was suspected of violating laws and regulations in information disclosure and was investigated by CSRC. Zhu Jianmin, an independent director of the Company, was the then deputy general manager and chief financial officer of Merit Interactive Co., Ltd. | Filed for investigation or administrative penalties by CSRC | On October 18, 2021, CSRC, Zhejiang Office issued the “Written Decision of Administrative Penalty” ([2021] No.19) and considered Li Li, the then-manager of data enhancement department of Internet service business group of Merit Interactive Co., Ltd. falsified several sales contracts and related settlement documents between the company and its customers by forging seals. Merit Interactive Co., Ltd. failed to timely discover the falsity of the above contracts and businesses, recognized the related sales revenues and prepare financial statements accordingly, resulting in false recording of its Third Quarterly Report and Annual Report of 2019, First Quarterly Report, Semi-Annual Report, and Third Quarterly Report of 2020.. The action of Merit Interactive Co., Ltd. mentioned above violated article 63 of the 2005 Securities Law and paragraph 2 of article 78 of the 2019 Securities Law, which constituted a violation of information disclosure under paragraph 2 of article 197 of the 2019 Securities Law. Zhu Jianmin the then deputy general manager and chief financial officer who was in charge of financial work, failed to ensure the truthfulness, accuracy and completeness of the company’s information disclosure and was the person in charge directly responsible for the information disclosure violation. Zhu Jianmin was given a warning and fined RMB 800,000 yuan according to paragraph 2 of article 197 of the 2019 Securities Law. | Not applicable | Not applicable |
XIII. Integrity of the Company, its controlling shareholders and the actual controller
□ Applicable √ Not Applicable
XIV. Significant related party transactions
1. Related party transactions relevant to daily operations
□ Applicable √ Not Applicable
There is no related party transaction relevant to daily operations during the reporting period.
2. Related party transactions in purchase or sale of assets or equities
□ Applicable √ Not Applicable
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There is no related party transaction in purchase or sale of assets or equities during the reporting period.
3. Related party transactions in joint external investments
□ Applicable √ Not Applicable
There is no related party transaction in joint external investments during the reporting period.
4. Related party creditor’s rights and debts
□ Applicable √ Not Applicable
There is no related creditor’s rights or debts during the reporting period.
5. Transactions with related financial companies
□ Applicable √ Not Applicable
There is no business of deposits, loans, credit granting or other financial businesses between the Company and its related financialcompanies.
6. Transactions between financial companies controlled by the Company and the Company’s related parties
□ Applicable √ Not Applicable
There is no business of deposits, loans, credit granting or other financial businesses between financial companies controlled by theCompany and the Company’s related parties.
7. Other significant related party transactions
□ Applicable √ Not Applicable
There is no other significant related party transaction during the reporting period.XV. Significant contracts and performance
1. Matters of trusteeship, contracting and leases
(1) Trusteeship
□ Applicable √ Not Applicable
There is no trusteeship during the reporting period.
(2) Contracting
□ Applicable √ Not Applicable
There is no contracting during the reporting period.
(3) Leases
□ Applicable √ Not Applicable
There is no lease during the reporting period.
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2. Significant guarantees
√ Applicable □ Not Applicable
Unit: RMB 0,000 yuan
| External guarantees by the Company and its subsidiaries to third parties (guarantees to subsidiaries are excluded) | ||||||||||
| Guaranteed parties | Announcement date of disclosure of amount guaranteed | Amount guaranteed | Actual commencement date | Actual amount guaranteed | Types of guarantees | Collaterals (if any) | Counter guarantees (if any) | Period of guarantee | Whether the guarantee is mature | Whether guarantee for related parties |
| Total amount of guarantees approved during the reporting period (A1) | 0 | Total amount actually guaranteed during the reporting period (A2) | 0 | |||||||
| Total amount of guarantees approved at the end of the reporting period (A3) | 0 | Total amount actually guaranteed at the end of the reporting period (A4) | 0 | |||||||
| The Company’s guarantees to subsidiaries | ||||||||||
| Guaranteed parties | Announcement date of disclosure of amount guaranteed | Amount guaranteed | Actual commencement date | Actual amount guaranteed | Types of guarantees | Collaterals (if any) | Counter guarantees (if any) | Period of guarantee | Whether the guarantee is mature | Whether guarantee for related parties |
| NHU (Hong Kong) Trading Co., Ltd. | 12/28/2018 | 123,000 | 5/14/2019 | 9,563.55 | Joint and several liability guarantee | 5/14/2019 - 5/13/2021 | Yes | No | ||
| Heilongjiang NHU Biotechnology Co., Ltd. | 12/28/2018 | 200,000 | 6/24/2019 | 200,000 | Joint and several liability guarantee | 6/24/2019 - 12/31/2023 | No | No | ||
| Shandong NHU Vitamins Co., Ltd. | 12/28/2018 | 90,000 | 11/29/2019 | 50,000 | Joint and several liability guarantee | 11/29/2019 - 12/21/2023 | No | No | ||
| Shangyu NHU Bio-Chem Co., Ltd. | 12/28/2018 | 17,000 | 2/28/2020 | 17,000 | Joint and several liability guarantee | 2/28/2020 - 2/27/2021 | Yes | No | ||
| Zhejiang NHU Imports & Exports Co., Ltd. | 5/21/2020 | 15,000 | 6/30/2020 | 10,000 | Joint and several liability guarantee | 6/30/2020 - 9/13/2021 | Yes | No | ||
| Shandong NHU Pharmaceutical Co., Ltd. | 5/21/2020 | 20,000 | 6/22/2020 | 10,000 | Joint and several liability guarantee | 6/22/2020 - 6/21/2021 | Yes | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 5/21/2020 | 120,000 | 7/15/2020 | 7,219.72 | Joint and several liability guarantee | 7/15/2020 - 6/18/2021 | Yes | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 5/21/2020 | 120,000 | 7/30/2020 | 7,219.72 | Joint and several liability guarantee | 7/30/2020 - 7/14/2021 | Yes | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 5/21/2020 | 120,000 | 9/7/2020 | 51,005.6 | Joint and several liability guarantee | 9/7/2020 - 9/7/2023 | No | No | ||
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| NHU (Hong Kong) Trading Co., Ltd. | 5/21/2020 | 120,000 | 9/22/2020 | 54.77 | Joint and several liability guarantee | 9/22/2020 - 1/10/2021 | Yes | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 5/21/2020 | 120,000 | 9/24/2020 | 5,100.56 | Joint and several liability guarantee | 9/24/2020 - 5/21/2021 | Yes | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 5/21/2020 | 120,000 | 12/31/2020 | 92.83 | Joint and several liability guarantee | 12/31/2020 - 5/20/2021 | Yes | No | ||
| Shandong NHU Fine Chemical Science and Technology Co., Ltd. | 5/21/2020 | 50,000 | 3/24/2021 | 50,000 | Joint and several liability guarantee | 3/24/2021 - 12/25/2025 | No | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 5/21/2020 | 120,000 | 4/6/2021 | 82.06 | Joint and several liability guarantee | 4/6/2021 - 7/30/2021 | Yes | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 4/21/2021 | 120,000 | 6/18/2021 | 7,219.72 | Joint and several liability guarantee | 6/18/2021 - 6/17/2022 | No | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 4/21/2021 | 120,000 | 6/21/2021 | 64.74 | Joint and several liability guarantee | 6/21/2021 - 10/30/2021 | Yes | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 4/21/2021 | 120,000 | 7/16/2021 | 7,219.72 | Joint and several liability guarantee | 7/16/2021 - 7/14/2022 | No | No | ||
| Heilongjiang NHU Biotechnology Co., Ltd. | 4/21/2021 | 40,000 | 8/26/2021 | 37,000 | Joint and several liability guarantee | 8/26/2021 - 12/21/2025 | No | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 4/21/2021 | 120,000 | 9/8/2021 | 78.26 | Joint and several liability guarantee | 9/8/2021 - 1/30/2022 | No | No | ||
| Zhejiang NHU Imports & Exports Co., Ltd. | 4/21/2021 | 10,000 | 9/22/2021 | 10,000 | Joint and several liability guarantee | 9/22/2021 - 5/31/2022 | No | No | ||
| NHU (Hong Kong) Trading Co., Ltd. | 4/21/2021 | 120,000 | 12/9/2021 | 60.73 | Joint and several liability guarantee | 12/9/2021 - 5/30/2022 | No | No | ||
| 新昌新和成维生素有限公司(Xinchang NHU Vitamins Co., Ltd.*) | 4/21/2021 | 40,000 | 12/16/2021 | 29,000 | Joint and several liability guarantee | 12/16/2021 - 12/25/2026 | No | No | ||
| Total amount of guarantees approved for subsidiaries during the reporting period (B1) | 455,000 | Total amount actually guaranteed for subsidiaries during the reporting period (B2) | 140,725.23 | |||||||
| Total amount of guarantees approved for subsidiaries at the | 806,005.6 | Total amount actually guaranteed for subsidiaries at the end of the reporting period | 441,584.03 | |||||||
*
The English name is for identification purpose only.
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| end of the reporting period (B3) | (B4) | |||||||||
| Guarantees by subsidiaries to subsidiaries | ||||||||||
| Guaranteed parties | Announcement date of disclosure of amount guaranteed | Amount guaranteed | Actual commencement date | Amount actually guaranteed | Types of guarantees | Collaterals (if any) | Counter guarantee (if any) | Period of guarantee | Whether the guarantee is mature | Whether guarantee for related parties |
| Total amount of guarantees approved for subsidiaries during the reporting period (C1) | 0 | Total amount actually guaranteed for subsidiaries during the reporting period (C2) | 0 | |||||||
| Total amount of guarantees approved for subsidiaries at the end of the reporting period (C3) | 0 | Total amount actually guaranteed for subsidiaries at the end of the reporting period (C4) | 0 | |||||||
| Total amount guaranteed by the Company (namely sum of the above three items) | ||||||||||
| Total amount of guarantees approved during the reporting period (A1+B1+C1) | 455,000 | Total amount actually guaranteed during the reporting period (A2+B2+C2) | 140,725.23 | |||||||
| Total amount of guarantees approved at the end of the reporting period (A3+B3+C3) | 806,005.6 | Total amount actually guaranteed at the end of the reporting period (A4+B4+C4) | 441,584.03 | |||||||
| Proportion of the amount actually guaranteed (A4+B4+C4) to net assets of the Company | 20.26% | |||||||||
| Including: | ||||||||||
| Balance of guarantees for shareholders, the actual controller and its related parties (D) | 0 | |||||||||
| Balance of debt guarantee directly or indirectly for guaranteed parties with debt to asset ratio exceeding 70% (E) | 362,584.03 | |||||||||
| The amount of the total amount guaranteed exceeding 50% of net assets (F) | 0 | |||||||||
| Total amount guaranteed of three items above (D+E+F) | 362,584.03 | |||||||||
| Remarks on unexpired guarantee contracts with guarantee liabilities incurred or evidence indicating the possibility of undertaking joint liquidation liabilities during the reporting period (if applicable) | None | |||||||||
| Remarks on external guarantee in violation of provisions (if applicable) | None | |||||||||
3. Entrusted cash assets management
(1) Entrusted financing
√ Applicable □ Not Applicable
Entrusted financing during the reporting period
Unit: RMB 0,000 yuan
| Types | Source of entrusted funds | Entrusted amount | Unexpired balance | Amount overdue and not recovered | Impairment amount accrued for financial products overdue and not recovered |
| Bank financial products | Raised funds | 362,000 | 245,000 | 0 | 0 |
| Total | 362,000 | 245,000 | 0 | 0 | |
High-risk entrusted financial products with individual significant amount or low security and poor liquidity
□ Applicable √ Not Applicable
When the principal of entrusted financial products is expected to be irrevocable or there are other conditions result in impairment ofentrusted financial products
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□ Applicable √ Not Applicable
(2) Entrusted loans
□ Applicable √ Not Applicable
There is no entrusted loan during the reporting period.
4. Other significant contracts
□ Applicable √ Not Applicable
There is no other significant contract during the reporting period.XVI. Other significant events
√ Applicable □ Not Applicable
Pursuant to the “Proposal on Share Repurchase” deliberated and approved by the seventh meeting of the eighth session of the Boardof Directors dated August 18, 2021, the Company was agreed to repurchase part of public shares through centralized biddingtransactions with self-owned funds for the purpose of equity incentive plan or employee stock ownership plan. The repurchaseamount in this time ranged from 300.00 million yuan (inclusive) to 600.00 million yuan (inclusive), and the price should not exceed
41.00 yuan (inclusive) per share. The specific amount of shares to be repurchased and the proportion to the total shares are subject tothe amount of shares actually repurchased at the expiration of the repurchase period. The implementation period of share repurchaseshould not exceed 12 months since the approval date of general meeting of shareholders. As of December 28, 2021, the Company hasrepurchased 10,988,369 shares through centralized bidding transactions using special securities account for repurchase, accountingfor 0.4262% of total shares. The highest price of shares was 30.03 yuan per share while the lowest price was 26.15 yuan per share,and the accumulated transaction amount was 320,335,151.32 yuan (transaction fees excluded). Such repurchase complied withrelevant laws and regulations, as well as the repurchase plan of the Company. Please refer to relevant announcements published in themedia designated by the Company or the website http://www.cninfo.com.cn for details.
XVII. Significant events of subsidiaries of the Company
□ Applicable √ Not Applicable
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Section VII Movements in Shares and Conditions of Shareholders
I. Movements in shares
1. Details
Unit: Shares
| Items | Before | Movements | After | ||||||
| Quantity | % to total | Issue of new shares | Bonus shares | Reserve transferred to shares | Others | Subtotal | Quantity | % to total | |
| I. Restricted shares | 27,821,505 | 1.29% | 5,051,846 | -2,561,517 | 2,490,329 | 30,311,834 | 1.18% | ||
| 1. Held by other domestic parties | 27,821,505 | 1.29% | 5,051,846 | -2,561,517 | 2,490,329 | 30,311,834 | 1.18% | ||
| Including: Held by domestic legal persons | 27,821,505 | 1.29% | 5,051,846 | -2,561,517 | 2,490,329 | 30,311,834 | 1.18% | ||
| II. Unrestricted shares | 2,120,840,795 | 98.71% | 424,680,614 | 2,561,517 | 427,242,131 | 2,548,082,926 | 98.82% | ||
| 1. RMB ordinary shares | 2,120,840,795 | 98.71% | 424,680,614 | 2,561,517 | 427,242,131 | 2,548,082,926 | 98.82% | ||
| III. Total | 2,148,662,300 | 100.00% | 429,732,460 | 0 | 429,732,460 | 2,578,394,760 | 100.00% | ||
Reason for movements
√ Applicable □ Not Applicable
1. On March 15, 2021, non-restricted shares were increased by 2,562,267 shares in total due to unlocking of the restricted shares heldby the former seventh-session director Cui Xinrong and the former supervisor Ye Yueheng, Qiu Jinzhuo, 梁晓东 (Liang Xiaodong),who had left their post for over six months.
2. Pursuant to the “Proposal on Equity Allocation Plan of 2020”, based on total shares of 2,148,662,300 shares as at May 19, 2021,the Company increased 429,732,460 shares at 2 shares per 10 shares by converting capital reserve to all shareholders. After theincrease, the total share capital amounted to 2,578,394,760 shares.
3. On July 15, 2021, the Chairman of the Board Hu Baifan increased his shares by 1,000 shares, including restricted shares of 750shares.
Approval on movements in shares
√ Applicable □ Not Applicable
Pursuant to the “Proposal on Profit Distribution Plan of 2020” deliberated and approved by the general meeting of 2020, theCompany was permitted to increase 429,732,460 shares at 4 shares per 10 shares by converting capital reserve to all shareholders.After the increase, the total share capital amounted to 2,578,394,760 yuan.Transfer of shares
□ Applicable √ Not Applicable
Effect of movements in shares on financial indicators of preceding year and preceding period such as basic EPS and diluted EPS, netassets per share attributable to shareholders of ordinary shares
√ Applicable □ Not Applicable
Please refer to item “VI. Key accounting data and financial indicators” under “Section II Company Profile and Key FinancialIndicators” for details.
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Other contents the Company considered as necessary or securities regulatory institutions required disclosure
□ Applicable √ Not applicable
2. Movement in restricted shares
√ Applicable □ Not applicable
Unit: Shares
| Shareholders | Opening balance | Increase | Decrease due to unlocking | Closing balance | Reason for restriction | Date of unlocking |
| Cui Xinrong | 2,083,962 | 2,083,962 | 0 | 100% locked up since the executive had left the post for six months | 3/15/2021 | |
| Ye Yueheng | 191,250 | 191,250 | 0 | 100% locked up since the executive had left the post for six months | 3/15/2021 | |
| Qiu Jinzhuo | 95,805 | 95,805 | 0 | 100% locked up since the executive had left the post for six months | 3/15/2021 | |
| Liang Xiaodong | 191,250 | 191,250 | 0 | 100% locked up since the executive had left the post for six months | 3/15/2021 | |
| Hu Baifan | 7,250,936 | 1,450,937 | 0 | 8,701,873 | Locked up for the shares are held by the executive | 75% of total shares held by the executive are locked up on an annual basis. |
| Hu Baishan | 7,602,046 | 1,520,409 | 0 | 9,122,455 | Locked up for the shares are held by the executive | 75% of total shares held by the executive are locked up on an annual basis. |
| Shi Guanqun | 5,457,208 | 1,091,441 | 0 | 6,548,649 | Locked up for the shares are held by the executive | 75% of total shares held by the executive are locked up on an annual basis. |
| Wang Xuewen | 4,623,922 | 924,785 | 0 | 5,548,707 | Locked up for the shares are held by the executive | 75% of total shares held by the executive are locked up on an annual basis. |
| Wang Zhengjiang | 239,062 | 47,812 | 0 | 286,874 | Locked up for the shares are held by the executive | 75% of total shares held by the executive are locked up on an annual basis. |
| Zhou Guiyang | 86,064 | 17,212 | 0 | 103,276 | Locked up for the shares are held by the executive | 75% of total shares held by the executive are locked up on an annual basis. |
| Total | 27,821,505 | 5,052,596 | 2,562,267 | 30,311,834 | -- | -- |
II. Issuance and listing of securities
1. Issuance of securities (preferred shares excluded) within the reporting period
□ Applicable √ Not Applicable
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2. Movements in total shares of the Company and structure of shareholders, movements in structure ofassets and liabilities of the Company
√ Applicable □ Not Applicable
Pursuant to the “Proposal on Equity Allocation Plan of 2020”, based on total shares of 2,148,662,300 shares as at May 19, 2021, theCompany increased 429,732,460 shares at 2 shares per 10 shares by converting capital reserve to all shareholders. After the increase,the total share capital amounted to 2,578,394,760 shares.
3. Existing shares held by internal employees
□ Applicable √ Not Applicable
III. Shareholders and actual controllers
1. Number of shareholders of the Company and their shareholding conditions
Unit: Shares
| Total shareholders of ordinary shares at the end of the reporting period | 78,234 | Total shareholders at the month end prior to the disclosure date of annual report | 64,016 | Total shareholders of preferred shares with voting rights restored at the end of the reporting period (if any) | 0 | Total shareholders of preferred shares with voting rights restored at the month end prior to the disclosure date of annual report (if any) | 0 | |
| Shareholders with holding proportion over 5% or the top 10 shareholders with largest holding proportions | ||||||||
| Shareholders | Nature of shareholders | Holding proportion | Quantity of shares at the end of the reporting period | Movements during the reporting period | Quantity of restricted shares | Quantity of unrestricted shares | Shares pledged, marked or frozen | |
| Condition | Quantity | |||||||
| NHU Holding Group Co., Ltd. | Domestic non-state-owned legal person | 48.55% | 1,251,903,644 | 208,650,607 | 0 | 1,251,903,644 | ||
| Hong Kong Securities Clearing Company Limited | Overseas legal person | 2.87% | 73,893,329 | 16,341,514 | 0 | 73,893,329 | ||
| 上海重阳战略投资有限公司(Shanghai Chongyang Strategic Investment Co., Ltd.*) － Chongyang Strategic Huizhi Fund | Others | 1.75% | 45,060,167 | 10,480,229 | 0 | 45,060,167 | ||
| National Social Security Fund No.112 Portfolio | Others | 1.08% | 27,786,092 | 17,596,993 | 0 | 27,786,092 | ||
| National Social Security Fund No.503 Portfolio | Others | 0.78% | 20,000,000 | 2,999,986 | 0 | 20,000,000 | ||
*
The English name is for identification purpose only.
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| Kuwait Investment Authority | Overseas legal person | 0.59% | 15,318,702 | 15,318,702 | 0 | 15,318,702 | |||||
| Shanghai Chongyang Strategic Investment Co., Ltd. － Chongyang Strategic Qizhou Fund | Others | 0.51% | 13,164,209 | 7,664,109 | 0 | 13,164,209 | |||||
| Hu Baishan | Domestic natural person | 0.47% | 12,163,274 | 2,027,212 | 9,122,455 | 3,040,819 | |||||
| 北京源峰私募基金管理合伙企业(有限合伙) (Beijing Yuanfeng Private Equity Fund Management Partnership (LP)*) － Yuanfeng Value Private Equity Investment Fund | Others | 0.46% | 11,977,187 | -7,012,634 | 0 | 11,977,187 | |||||
| 重阳集团有限公司 (Chongyang Group Co., Ltd.*) | Domestic non-state-owned legal person | 0.45% | 11,635,159 | 1,939,193 | 0 | 11,635,159 | |||||
| Strategic investors or ordinary legal persons that became one of the top 10 shareholders due to the allotment of new shares | Shanghai Chongyang Strategic Investment Co., Ltd. － Chongyang Strategic Huizhi Fund became one of the top 10 shareholders due to its participation in private placement of shares in 2017. | ||||||||||
| Remarks on relationships or concerted action of the above shareholders | The above shareholder Hu Baishan is the director of NHU Holding Group Co., Ltd. The Company does not know whether other shareholders have relationships and whether they are persons acting in concert as defined in “Administration of the Takeover of Listed Companies Procedures”. | ||||||||||
| Remarks on proxy voting and waiver of voting right of the above shareholders | None | ||||||||||
| Special remarks on top 10 shareholders with special repurchase accounts (if any) | Not applicable | ||||||||||
| Top 10 shareholders with unrestricted shares | |||||||||||
| Shareholders | Quantity of unrestricted shares at the end of the reporting period | Category of shares | |||||||||
| Category | Quantity | ||||||||||
| NHU Holding Group Co., Ltd. | 1,251,903,644 | RMB ordinary shares | 1,251,903,644 | ||||||||
| Hong Kong Securities Clearing Company Limited | 73,893,329 | RMB ordinary shares | 73,893,329 | ||||||||
| Shanghai Chongyang Strategic Investment Co., Ltd. － Chongyang Strategic Huizhi Fund | 45,060,167 | RMB ordinary shares | 45,060,167 | ||||||||
| National Social Security Fund No.112 Portfolio | 27,786,092 | RMB ordinary shares | 27,786,092 | ||||||||
| National Social Security Fund No.503 Portfolio | 20,000,000 | RMB ordinary shares | 20,000,000 | ||||||||
| Kuwait Investment Authority | 15,318,702 | RMB ordinary shares | 15,318,702 | ||||||||
| Shanghai Chongyang Strategic Investment Co., Ltd. － Chongyang Strategic Qizhou Fund | 13,164,209 | RMB ordinary shares | 13,164,209 | ||||||||
*
The English names are for identification purpose only.
Page 70 of 175
| Beijing Yuanfeng Private Equity Fund Management Partnership (LP) － Yuanfeng Value Private Equity Investment Fund | 11,977,187 | RMB ordinary shares | 11,977,187 |
| Chongyang Group Co., Ltd. | 11,635,159 | RMB ordinary shares | 11,635,159 |
| The Company－Employee stock ownership plan phase III | 10,131,522 | RMB ordinary shares | 10,131,522 |
| Remarks on proxy voting and waiver of voting right of the above shareholders | The above shareholder Hu Baishan is the director of NHU Holding Group Co., Ltd. The Company does not know whether other shareholders have relationships and whether they are persons acting in concert as defined in “Administration of the Takeover of Listed Companies Procedures”. | ||
| Remarks on top 10 shareholders of ordinary shares participating in securities margin trading (if any) | Shanghai Chongyang Strategic Investment Co., Ltd. － Chongyang Strategic Huizhi Fund holds 45,060,106 shares through client account of collateral securities for margin trading of 国泰君安证券股份有限公司 (Guotai Junan Securities Co., Ltd.*); Shanghai Chongyang Strategic Investment Co., Ltd. － Chongyang Strategic Qizhou Fund holds 13,164,133 shares through client account of collateral securities for margin trading of 国金证券股份有限公司 (Sinolink Securities Co., Ltd.*); Beijing Yuanfeng Private Equity Fund Management Partnership (LP) －Yuanfeng Value Private Equity Investment Fund holds 5,988,587 shares through client account of collateral securities for margin trading of 华泰证券股份有限公司 (Huatai Securities Co., Ltd.*); Chongyang Group Co., Ltd. holds 11,634,955 shares through client account of collateral securities for margin trading of 招商证券股份有限公司 (China Merchants Securities Co., Ltd.*). | ||
Note: The Company’s special securities account for repurchase is attributable to the top 10 shareholders with largest balances inunrestricted shares, who however did not participate in the presentation of such balances.Did the top 10 shareholders of ordinary shares and the top 10 shareholders of unrestricted ordinary shares perform agreed repurchasetransaction during the reporting period?
□ Yes √ No
The top 10 shareholders of ordinary shares and the top 10 shareholders of unrestricted ordinary shares did not perform agreedrepurchase transaction during the reporting period.
2. Controlling shareholders
Nature of shareholders: Natural person holdingCategory of shareholders: Legal person
| Holding shareholders | Legal representative/ Head of the entity | Date of establishment | Unified social credit code | Main business scope |
| NHU Holding Group Co., Ltd. | Hu Baifan | 2/14/1989 | 91330624146424869T | Industrial investments, goods import and export; production and sales of chemical products, pharmaceutical intermediates, chemical materials |
| Equity conditions of other domestic and overseas listed companies that the holding shareholders control or participate in during the reporting period | Not applicable | |||
Changes of holding shareholders during the reporting period
□ Applicable √ Not applicable
The Company has no changes of holding shareholders during the reporting period.
*The English names are for identification purpose only.
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3. Actual controllers and persons acting in concert
Nature of actual controller: Domestic natural personsCategory of actual controller: Natural persons
| Actual controller | Relationship with the actual controller | Nationality | Whether has permanent residence in other countries or regions |
| Hu Baifan | Self | China | No |
| Hu Baishan | Person acting in concert (including the following forms: agreement, relatives, common control) | China | No |
| Main occupation and position | Mr. Hu Baifan, Chairman of the Board, is a Chinese born in 1962, who has no permanent residence in foreign countries or regions. He has a master’s degree in Business Administration of Zhejiang University, and he is Senior Economist, Member of the Communist Party of China. He also serves as the Chairman of NHU Holding Group Co., Ltd. and its holding subsidiary Shaoxing Yuexiu Education Development Co., Ltd., and Director of NHU Real Estate Holding Co., Ltd. Mr. Hu Baishan, Vice Chairman and President, is a Chinese born in 1967, who has no permanent residence in foreign countries or regions. He has a master’s degree in EMBA program of Zhejiang University, and he is Senior Engineer, Member of the Communist Party of China. He also serves as the Director of NHU Holding Group Co., Ltd. and Shaoxing Yuexiu Education Development Co., Ltd. | ||
| Domestic and oversea listed companies once been under their control within a decade | No | ||
Changes of actual controller within the reporting period
□ Applicable √ Not applicable
The Company has no changes in actual controller within the reporting period.
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Block diagram of title and control relationships between the Company and the actual controller
Whether the actual controller controls the Company through trust or other asset management methods
□ Applicable √ Not applicable
4. Whether the quantity of accumulated pledged shares of the Company held by the controllingshareholders or the largest shareholder and his person acting in concert accounts for over 80% of totalshares of the Company held by them
□ Applicable √ Not applicable
5. Other legal person shareholders with holding proportion over 10%
□ Applicable √ Not applicable
6. Decrease in holding proportion of restricted shares of controlling shareholders, actual controllers,reorganizing parties and other undertaking entities
□ Applicable √ Not applicable
IV. Actual implementation of share repurchase during the reporting periodActual progress of share repurchase
√ Applicable □ Not applicable
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| Date of proposal disclosure | Quantity of shares to be repurchased | % to total | Amount of shares to be repurchased | Repurchase period | Purposes | Quantity of repurchased shares (unit: shares) | Proportion of repurchased shares to the underlying shares involved in the equity incentive plan (if any) |
| 8/24/2021 | 7,317,073 shares - 14,634,146 shares | 0.28% - 0.57% | RMB 300 million - 600 million | 8/18/2021 - 8/17/2022 | The shares are to be repurchased for equity incentive plan or employee stock ownership plan. If the Company fails to utilize the shares within 36 months since the repurchase for the above purposes, the unused portion will be cancelled. | 10,988,369 | Not applicable |
Implementation progress of shareholding reduction for shares repurchased through centralized bidding
□ Applicable √ Not applicable
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Section VIII Preferred Shares
□ Applicable √ Not applicable
The Company has no preferred shares during the reporting period.
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Section IX Bonds
□ Applicable √ Not applicable
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Section X Financial Report
I. Auditor’s Report
| Audit Opinion | Standard unqualified opinion |
| Date of Auditor’s Report | April 13, 2022 |
| Accounting Firm | Pan-China Certified Public Accountants LLP |
| Number of Auditor’s Report | PCCPAAR [2022] No. 2358 |
| Signatory Certified Public Accountants | Teng Peibin, Zhu Lili |
Auditor’s ReportTo the Shareholders of Zhejiang NHU Co., Ltd.:
I. Audit OpinionWe have audited the accompanying financial statements of Zhejiang NHU Co., Ltd. (the “Company”), which comprise theconsolidated and parent company balance sheets as at December 31, 2021, the consolidated and parent company income statements,the consolidated and parent company cash flow statements, and the consolidated and parent company statements of changes in equityfor the year then ended, as well as notes to financial statements.In our opinion, the attached financial statements present fairly, in all material respects, the financial position of the Company as atDecember 31, 2021, and of its financial performance and its cash flows for the year then ended in accordance with China AccountingStandards for Business Enterprises.II. Basis for Audit OpinionWe conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those standards are furtherdescribed in the Certified Public Accountant’s Responsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilledother ethical responsibilities. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, andin forming our opinion thereon, and we do not express a separate opinion on these matters.(I) Revenue recognition
1. Key audit matters
Please refer to item V 20, VII 39 and XV 1 of this section for details.The Company is mainly engaged in manufacturing and sales of nutrition, flavor and fragrance, new polymer materials, etc. In 2021,the operating revenue amounted to 14,797.99 million yuan.Pursuant to sales contracts between the Company and its customers, sales of products are performance obligations satisfied at a pointin time. Revenue from domestic sales is recognized when the Company has delivered goods to the customer as agreed by contractand has obtained delivery note signed by the customer, and the Company has collected the payments or has obtained the right to thepayments, and related economic benefits are highly probable to flow to the Company. Revenue from overseas sales is recognized
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when the Company has declared goods to the customs based on contractual agreements and has obtained a bill of lading, and theCompany has collected the payments or has obtained the right to the payments, and related economic benefits are highly probable toflow to the Company. Real estate sales are performance obligations satisfied at a point in time. Revenue from real estate sales isrecognized when the Company has delivered house property to the customer as agreed by contract and has obtained the acceptancereceipts signed by the customer, and the Company has collected the payments or has obtained the right to the payments, and relatedeconomic benefits are highly probable to flow to the Company.As operating revenue is one of the key performance indicators of the Company, there might be inherent risks that the Company’smanagement (the “Management”) adopts inappropriate revenue recognition to achieve specific goals or expectations, we haveidentified revenue recognition as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for revenue recognition are as follows:
(1) We obtained understandings of key internal controls related to revenue recognition, assessed the design of these controls,determined whether they had been executed, and tested the effectiveness of the operation;
(2) We checked sale contracts, obtained understandings of main contractual terms or conditions, and assessed whether the revenuerecognition method was appropriate;
(3) We performed analysis procedure on operating revenue and gross margin by month, product, client, etc., so as to identify whetherthere are significant or abnormal fluctuations and find out the reason of fluctuations;
(4) For revenue from domestic sales, we checked supporting documents related to revenue recognition by sampling method,including sales contracts, sales invoices, delivery lists, shipping documents, client acceptance receipts, etc.; for revenue fromoverseas sales, we obtained information from Electron Port and checked it with accounting records, and checked supportingdocuments including sales contracts, bills of clearance, waybills, sales invoices, etc. by sampling method;
(5) We performed confirmation procedures on current sales amount by sampling method in combination with confirmation procedureof accounts receivable;
(6) We performed cut-off tests on the operating revenue recognized around the balance sheet date, and assessed whether the operatingrevenue was recognized in the appropriate period; and
(7) We checked whether information related to operating revenue had been presented appropriately in the financial statements.(II) Existence and integrity of cash and bank balances
1. Key audit matters
Please refer to item VII 1 of this section for details.At the balance sheet date, the Company’s cash and bank balances amounted to 5,952.91 million yuan, which is one of the main assetsof the Company. As the amount of cash and bank balances is significant, the existence and integrity of cash and bank balances havesignificant influence on financial statements, we have identified existence and integrity of cash and bank balances as a key auditmatter.
2. Responsive audit procedures
Our main audit procedures for existence and integrity of cash and bank balances are as follows:
(1) We obtained understandings of key internal controls related to management of cash and bank balances, assessed the design ofthese controls, determined whether they had been executed, and tested the effectiveness of the operation;
(2) We checked integrity of bank accounts in combination with detail tests based on “List of Opened Bank Settlement Accounts”obtained;
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(3) We obtained and checked bank statements and bank reconciliation statements, and performed confirmation procedures on balanceof bank accounts;
(4) We checked bank statements and bank journals, performed bidirectional tests on bank statements of significant accounts, andchecked the transactions with large amounts;
(5) We checked the original documents of time deposit, and checked whether cash and bank balances have been pledged incombination with enterprise credit reports;
(6) We reviewed interest income, and checked whether interest income was consistent with the amount of cash and bank balances;and
(7) We checked whether information related to cash and bank balances had been presented appropriately in the financial statements.(III) Recognition and measurement of fixed assets and construction in progress
1. Key audit matters
Please refer to item V 13, 14, VII 12 and 13 of this section for details.As of December 31, 2021, the Company’s carrying amount of fixed assets and construction in progress totals 17,303.75 million yuan,which is one of the major assets of the Company.Recognition and measurement of fixed assets and construction in progress involves significant judgement of the Managementincluding the determination of capitalization criteria for expenditures, time point of construction in progress transferred to fixedassets and the beginning of depreciation, estimation on economic useful lives and residual value of fixed assets, etc.As the amount of carrying amount of fixed assets and construction in progress is significant, and reasonableness of judgementmentioned above has significant influence on financial statements, we have identified recognition and measurement of fixed assetsand construction in progress as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for recognition and measurement of fixed assets and construction in progress are as follows:
(1) We obtained understandings of key internal controls related to fixed assets and construction in progress, assessed the design ofthese controls, determined whether they had been executed, and tested the effectiveness of the operation;
(2) We checked the accuracy of capitalization amount in combination with the audit of bank borrowings;
(3) We checked acceptance reports related to construction projects or project progress reports, payment documents of constructionschedule payments, etc. by sampling method, and decided whether the time point of construction in progress transferred to fixedassets was reasonable;
(4) We checked purchase invoices, insurance policy of sales contracts, delivery lists etc. of fixed assets such as outsourcingmachinery, and reviewed the accuracy of their costs;
(5) We obtained supporting documents related to construction in progress increased in the current period, including projectapplication, construction loan contracts, construction contracts, invoices, purchase application for construction materials, paymentbills, manufacturing agreements etc., and checked whether their costs and accounting treatment were correct;
(6) We assessed the reasonableness of economic useful lives and residual value of fixed assets estimated by the Management incombination with conditions of the industry; and
(7) We checked whether information related to fixed assets and construction in progress had been presented appropriately in thefinancial statements.
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IV. Other Information
The Management is responsible for the other information. The other information comprises the information included in theCompany’s annual report, but does not include the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are requiredto report that fact. We have nothing to report in this regard.V. Responsibilities of the Management and Those Charged with Governance for the Financial StatementsThe Management is responsible for preparing and presenting fairly the financial statements in accordance with China AccountingStandards for Business Enterprises, as well as designing, implementing and maintaining internal control relevant to the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the Management is responsible for assessing the Company’s ability to continue as a goingconcern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless theManagement either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI. Certified Public Accountant’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with China Standards on Auditing will always detecta material misstatement when it exists. Misstatement can arise from fraud or error and are considered material if, individually or inthe aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financialstatements.We exercise professional judgment and maintain professional skepticism throughout the audit performed in accordance with ChinaStandards on Auditing. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks, 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 is higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by the Management.(IV) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and, based on the auditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attentionin our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
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opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.(V) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements representthe underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities withinthe Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain sole responsibility for our audit opinion.We communicate with those charged with governance regarding the planned audit scope, time schedule and significant audit findings,including any deficiencies in internal control of concern that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regardingindependence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.From the matters communicated with those charged with governance, we determine those matters that were of most significance inthe audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
II. Financial statementsThe monetary unit of the financial statements is Renminbi (RMB) Yuan.
1. Consolidated balance sheet
Prepared by Zhejiang NHU Co., Ltd.
December 31, 2021
Unit: RMB Yuan
| Items | December 31, 2021 | December 31, 2020 |
| Current assets: | ||
| Cash and bank balances | 5,952,909,626.94 | 4,927,657,236.24 |
| Settlement funds | ||
| Loans to other banks | ||
| Held-for-trading financial assets | 1,250,736,359.24 | 852,227,964.70 |
| Derivative financial assets | ||
| Notes receivable | 349,145,316.03 | 332,064,366.59 |
| Accounts receivable | 2,755,168,573.14 | 1,930,930,930.01 |
| Receivables financing | 182,891,179.65 | 295,393,346.17 |
| Advances paid | 78,969,960.60 | 116,063,557.59 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance reserve receivable | ||
| Other receivables | 254,497,248.13 | 178,610,951.64 |
| Including: Interest receivable |
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| Items | December 31, 2021 | December 31, 2020 |
| Dividend receivable | 7,159,278.00 | |
| Financial assets under reverse repo | ||
| Inventories | 3,193,657,367.16 | 3,117,042,558.78 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 895,782,268.87 | 1,777,569,473.96 |
| Total current assets | 14,913,757,899.76 | 13,527,560,385.68 |
| Non-current assets: | ||
| Loans and advances | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 351,327,625.75 | 343,378,891.18 |
| Other equity instrument investments | 22,998,147.55 | 22,998,147.55 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 14,318,919,487.82 | 13,914,151,215.54 |
| Construction in progress | 2,984,835,072.82 | 1,325,545,420.56 |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | 3,123,637.11 | |
| Intangible assets | 1,521,729,757.66 | 1,407,067,129.87 |
| Development expenditures | ||
| Goodwill | ||
| Long-term prepayments | 18,591,707.06 | 13,369,412.48 |
| Deferred tax assets | 55,805,191.95 | 65,143,706.00 |
| Other non-current assets | 501,076,584.40 | 277,793,490.68 |
| Total non-current assets | 19,778,407,212.12 | 17,369,447,413.86 |
| Total assets | 34,692,165,111.88 | 30,897,007,799.54 |
| Current liabilities: | ||
| Short-term borrowings | 1,403,332,827.92 | 2,363,525,192.53 |
| Central bank loans | ||
| Loans from other banks | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 694,124,946.73 | 497,644,517.23 |
| Accounts payable | 1,435,966,427.76 | 1,463,728,316.04 |
| Advances received | ||
| Contract liabilities | 61,135,258.36 | 56,302,537.11 |
| Financial liabilities under repo | ||
| Absorbing deposit and interbank deposit |
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| Items | December 31, 2021 | December 31, 2020 |
| Deposit for agency security transaction | ||
| Deposit for agency security underwriting | ||
| Employee benefits payable | 370,609,333.07 | 322,646,061.45 |
| Taxes and rates payable | 420,743,262.69 | 268,864,472.38 |
| Other payables | 56,712,103.36 | 129,839,228.89 |
| Including: Interest payable | ||
| Dividend payable | ||
| Handling fee and commission payable | ||
| Reinsurance accounts payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 2,029,499,509.43 | 1,275,888,293.32 |
| Other current liabilities | 5,133,310.10 | 4,956,463.49 |
| Total current liabilities | 6,477,256,979.42 | 6,383,395,082.44 |
| Non-current liabilities: | ||
| Insurance policy reserve | ||
| Long-term borrowings | 5,148,811,786.49 | 4,136,875,354.33 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 2,936,868.15 | |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 1,063,699,676.16 | 873,066,181.34 |
| Deferred tax liabilities | 135,751,304.31 | 99,839,731.45 |
| Other non-current liabilities | ||
| Total non-current liabilities | 6,351,199,635.11 | 5,109,781,267.12 |
| Total liabilities | 12,828,456,614.53 | 11,493,176,349.56 |
| Equity: | ||
| Share capital | 2,578,394,760.00 | 2,148,662,300.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 4,121,063,080.96 | 4,560,522,556.84 |
| Less: Treasury shares | 320,360,784.48 | |
| Other comprehensive income | -1,614,172.31 | 27,803,829.31 |
| Special reserve | 12,692,218.51 | 9,550,346.85 |
| Surplus reserve | 1,289,197,380.00 | 1,074,331,150.00 |
| General risk reserve | ||
| Undistributed profit | 14,120,605,163.26 | 11,515,384,739.95 |
| Total equity attributable to the parent company | 21,799,977,645.94 | 19,336,254,922.95 |
| Non-controlling interest | 63,730,851.41 | 67,576,527.03 |
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| Items | December 31, 2021 | December 31, 2020 |
| Total equity | 21,863,708,497.35 | 19,403,831,449.98 |
| Total liabilities & equity | 34,692,165,111.88 | 30,897,007,799.54 |
Legal representative: Hu Baifan Officer in charge of accounting: Shi Guanqun Head of accounting department: Wang Xiaobi
2. Parent company balance sheet
Unit: RMB Yuan
| Items | December 31, 2021 | December 31, 2020 |
| Current assets: | ||
| Cash and bank balances | 4,319,521,960.26 | 2,790,740,377.97 |
| Held-for-trading financial assets | 200,000,000.00 | 851,949,945.63 |
| Derivative financial assets | ||
| Notes receivable | 349,145,316.03 | 332,064,366.59 |
| Accounts receivable | 746,349,980.29 | 704,086,691.03 |
| Receivables financing | ||
| Advances paid | 203,802,390.93 | 1,631,550.49 |
| Other receivables | 3,095,039,415.47 | 4,247,680,763.92 |
| Including: Interest receivable | ||
| Dividend receivable | 7,159,278.00 | |
| Inventories | 442,360,365.52 | 566,205,506.19 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 552,376,721.31 | 552,859,738.36 |
| Total current assets | 9,908,596,149.81 | 10,047,218,940.18 |
| Non-current assets: | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 8,054,952,017.02 | 6,372,637,172.92 |
| Other equity instrument investments | 22,998,147.55 | 22,998,147.55 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 674,187,271.03 | 737,784,631.31 |
| Construction in progress | 1,396,104.03 | |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | 2,952,929.08 | |
| Intangible assets | 113,952,307.99 | 105,425,506.93 |
| Development expenditures | ||
| Goodwill | ||
| Long-term prepayments | 4,266,859.15 | 5,919,401.23 |
| Deferred tax assets | 33,889,948.73 | 42,345,228.44 |
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| Items | December 31, 2021 | December 31, 2020 |
| Other non-current assets | 2,311,441.46 | 7,202,988.32 |
| Total non-current assets | 8,910,907,026.04 | 7,294,313,076.70 |
| Total assets | 18,819,503,175.85 | 17,341,532,016.88 |
| Current liabilities: | ||
| Short-term borrowings | 582,373,105.49 | 1,243,628,965.48 |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 464,150,033.90 | 155,953,161.50 |
| Accounts payable | 84,472,375.02 | 100,374,347.92 |
| Advances received | ||
| Contract liabilities | 13,839,278.19 | 8,494,783.78 |
| Employee benefits payable | 88,415,827.18 | 82,688,797.50 |
| Taxes and rates payable | 60,253,580.60 | 33,578,246.55 |
| Other payables | 15,631,151.00 | 15,543,517.50 |
| Including: Interest payable | ||
| Dividend payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 1,238,333,387.67 | 635,930,890.44 |
| Other current liabilities | 1,799,106.15 | 1,104,321.89 |
| Total current liabilities | 2,549,267,845.20 | 2,277,297,032.56 |
| Non-current liabilities: | ||
| Long-term borrowings | 2,935,717,876.76 | 2,209,521,076.40 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 2,924,244.46 | |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 15,164,020.12 | 18,884,041.56 |
| Deferred tax liabilities | 20,547,468.08 | 13,011,703.03 |
| Other non-current liabilities | ||
| Total non-current liabilities | 2,974,353,609.42 | 2,241,416,820.99 |
| Total liabilities | 5,523,621,454.62 | 4,518,713,853.55 |
| Equity: | ||
| Share capital | 2,578,394,760.00 | 2,148,662,300.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 3,861,393,399.57 | 4,300,852,875.45 |
| Less: Treasury shares | 320,360,784.48 | |
| Other comprehensive income | 506,954.43 | 506,954.43 |
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| Items | December 31, 2021 | December 31, 2020 |
| Special reserve | ||
| Surplus reserve | 1,289,197,380.00 | 1,074,331,150.00 |
| Undistributed profit | 5,886,750,011.71 | 5,298,464,883.45 |
| Total equity | 13,295,881,721.23 | 12,822,818,163.33 |
| Total liabilities & equity | 18,819,503,175.85 | 17,341,532,016.88 |
3. Consolidated income statement
Unit: RMB Yuan
| Items | Year 2021 | Year 2020 |
| I. Total operating revenue | 14,797,989,091.20 | 10,314,084,354.21 |
| Including: Operating revenue | 14,797,989,091.20 | 10,314,084,354.21 |
| Interest income | ||
| Premiums earned | ||
| Revenue from handling charges and commission | ||
| II. Total operating cost | 9,927,169,339.91 | 6,427,974,430.00 |
| Including: Operating cost | 8,212,292,946.27 | 4,727,264,003.94 |
| Interest expenses | ||
| Handling charges and commission expenditures | ||
| Surrender value | ||
| Net payment of insurance claims | ||
| Net provision of insurance policy reserve | ||
| Premium bonus expenditures | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 131,624,828.23 | 114,793,244.02 |
| Selling expenses | 107,037,085.96 | 312,957,940.58 |
| Administrative expenses | 423,584,417.67 | 422,853,851.25 |
| R&D expenses | 782,661,708.54 | 545,562,375.72 |
| Financial expenses | 269,968,353.24 | 304,543,014.49 |
| Including: Interest expenses | 337,753,271.80 | 249,052,551.92 |
| Interest income | 164,418,967.90 | 42,376,836.40 |
| Add: Other income | 152,380,704.67 | 121,321,220.19 |
| Investment income (or less: losses) | 127,969,715.41 | 160,154,552.44 |
| Including: Investment income from associates and joint ventures | 59,304,344.04 | 57,689,812.69 |
| Gains from derecognition of financial assets at amortized cost | ||
| Gains on foreign exchange (or less: losses) | ||
| Gains on net exposure to hedging risk (or less: losses) | ||
| Gains on changes in fair value (or less: losses) | 37,863,705.44 | 9,369,917.28 |
| Credit impairment loss | -50,043,349.49 | -4,095,147.32 |
| Assets impairment loss | -54,250,408.90 | -12,369,945.69 |
| Gains on asset disposal (or less: losses) | -1,544,436.08 | 3,744,385.58 |
| III. Operating profit (or less: losses) | 5,083,195,682.34 | 4,164,234,906.69 |
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| Items | Year 2021 | Year 2020 |
| Add: Non-operating revenue | 12,287,842.84 | 1,942,296.14 |
| Less: Non-operating expenditures | 64,603,824.24 | 56,285,459.79 |
| IV. Profit before tax (or less: total loss) | 5,030,879,700.94 | 4,109,891,743.04 |
| Less: Income tax | 690,514,446.51 | 532,664,232.53 |
| V. Net profit (or less: net loss) | 4,340,365,254.43 | 3,577,227,510.51 |
| (I) Categorized by the continuity of operations | ||
| 1. Net profit from continuing operations (or less: net loss) | 4,340,365,254.43 | 3,577,227,510.51 |
| 2. Net profit from discontinued operations (or less: net loss) | ||
| (II) Categorized by the portion of equity ownership | ||
| 1. Net profit attributable to owners of parent company | 4,324,150,263.31 | 3,563,759,939.48 |
| 2. Net profit attributable to non-controlling shareholders | 16,214,991.12 | 13,467,571.03 |
| VI. Other comprehensive income after tax | -37,096,882.86 | -8,335,210.90 |
| Items attributable to the owners of the parent company | -29,418,001.62 | -9,962,055.86 |
| (I) Not to be reclassified subsequently to profit or loss | ||
| 1. Changes in remeasurement on the net defined benefit plan | ||
| 2. Items under equity method that will not be reclassified to profit or loss | ||
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of own credit risk | ||
| 5. Others | ||
| (II) To be reclassified subsequently to profit or loss | -29,418,001.62 | -9,962,055.86 |
| 1. Items under equity method that may be reclassified to profit or loss | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Profit or loss from reclassification of financial assets into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserve | ||
| 6. Translation reserve | -29,418,001.62 | -9,962,055.86 |
| 7. Others | ||
| Items attributable to non-controlling shareholders | -7,678,881.24 | 1,626,844.96 |
| VII. Total comprehensive income | 4,303,268,371.57 | 3,568,892,299.61 |
| Items attributable to the owners of the parent company | 4,294,732,261.69 | 3,553,797,883.62 |
| Items attributable to non-controlling shareholders | 8,536,109.88 | 15,094,415.99 |
| VIII. Earnings per share (EPS): | ||
| (I) Basic EPS (yuan per share) | 1.68 | 1.38 |
| (II) Diluted EPS (yuan per share) | 1.68 | 1.38 |
Net profit realized by the combined party in business combination under common control before the business combination in thecurrent period was 0.00 yuan, and net profit realized by the combined party in the previous period was 0.00 yuan.Legal representative: Hu Baifan Officer in charge of accounting: Shi Guanqun Head of accounting department: Wang Xiaobi
Page 87 of 175
4. Parent company income statement
Unit: RMB Yuan
| Items | Year 2021 | Year 2020 |
| I. Operating revenue | 4,554,078,901.38 | 3,914,694,978.67 |
| Less: Operating cost | 3,235,286,634.28 | 2,520,745,377.84 |
| Taxes and surcharges | 28,779,899.07 | 23,325,274.17 |
| Selling expenses | 26,691,429.90 | 34,157,186.47 |
| Administrative expenses | 154,022,840.72 | 138,393,238.02 |
| R&D expenses | 216,563,446.14 | 185,233,909.72 |
| Financial expenses | 45,975,949.63 | 151,091,514.33 |
| Including: Interest expenses | 179,393,799.37 | 153,182,358.41 |
| Interest income | 144,933,772.10 | 25,270,283.02 |
| Add: Other income | 43,875,430.64 | 39,377,993.84 |
| Investment income (or less: losses) | 1,535,436,661.17 | 1,278,065,859.75 |
| Including: Investment income from associates and joint ventures | 60,097,137.98 | 57,147,042.17 |
| Gains from derecognition of financial assets at amortized cost | ||
| Gains on net exposure to hedging risk (or less: losses) | ||
| Gains on changes in fair value (or less: losses) | 11,815,408.19 | 926,797.97 |
| Credit impairment loss | 58,950,663.78 | -2,985,835.52 |
| Assets impairment loss | -52,176,656.64 | -8,731,005.06 |
| Gains on asset disposal (or less: losses) | -1,332,803.02 | -23,489.80 |
| II. Operating profit (or less: losses) | 2,443,327,405.76 | 2,168,378,799.30 |
| Add: Non-operating revenue | 5,010,140.26 | 32,523.34 |
| Less: Non-operating expenditures | 1,500,375.08 | 4,064,208.41 |
| III. Profit before tax (or less: total loss) | 2,446,837,170.94 | 2,164,347,114.23 |
| Less: Income tax | 139,622,202.68 | 157,078,255.68 |
| IV. Net profit (or less: net loss) | 2,307,214,968.26 | 2,007,268,858.55 |
| (I) Net profit from continuing operations (or less: net loss) | 2,307,214,968.26 | 2,007,268,858.55 |
| (II) Net profit from discontinued operations (or less: net loss) | ||
| V. Other comprehensive income after tax | ||
| (I) Not to be reclassified subsequently to profit or loss | ||
| 1. Changes in remeasurement on the net defined benefit plan | ||
| 2. Items under equity method that will not be reclassified to profit or loss | ||
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of own credit risk | ||
| 5. Others | ||
| (II) To be reclassified subsequently to profit or loss | ||
| 1. Items under equity method that may be reclassified to profit or loss | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Profit or loss from reclassification of financial |
Page 88 of 175
| Items | Year 2021 | Year 2020 |
| assets into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserve | ||
| 6. Translation reserve | ||
| 7. Others | ||
| VI. Total comprehensive income | 2,307,214,968.26 | 2,007,268,858.55 |
| VII. Earnings per share (EPS): | ||
| (I) Basic EPS (yuan per share) | ||
| (II) Diluted EPS (yuan per share) |
5. Consolidated cash flow statement
Unit: RMB Yuan
| Items | Year 2021 | Year 2020 |
| I. Cash flows from operating activities: | ||
| Cash receipts from sale of goods or rendering of services | 14,128,039,148.63 | 9,963,208,363.11 |
| Net increase of client deposit and interbank deposit | ||
| Net increase of central bank loans | ||
| Net increase of loans from other financial institutions | ||
| Cash receipts from original insurance contract premium | ||
| Net cash receipts from reinsurance | ||
| Net increase of policy-holder deposit and investment | ||
| Cash receipts from interest, handling charges and commission | ||
| Net increase of loans from others | ||
| Net increase of repurchase | ||
| Net cash receipts from agency security transaction | ||
| Receipts of tax refund | 917,132,022.82 | 636,725,260.98 |
| Other cash receipts related to operating activities | 539,965,875.07 | 204,665,952.59 |
| Subtotal of cash inflows from operating activities | 15,585,137,046.52 | 10,804,599,576.68 |
| Cash payments for goods purchased and services received | 7,309,063,593.18 | 5,456,523,584.87 |
| Net increase of loans and advances to clients | ||
| Net increase of central bank deposit and interbank deposit | ||
| Cash payments for insurance indemnities of original insurance contracts | ||
| Net increase of loans to others | ||
| Cash payments for interest, handling charges and commission | ||
| Cash payments for policy bonus | ||
| Cash paid to and on behalf of employees | 1,345,745,150.27 | 1,036,396,136.99 |
| Cash payments for taxes and rates | 783,199,680.00 | 712,390,345.50 |
| Other cash payments related to operating activities | 309,250,571.50 | 476,482,146.11 |
| Subtotal of cash outflows from operating activities | 9,747,258,994.95 | 7,681,792,213.47 |
| Net cash flows from operating activities | 5,837,878,051.57 | 3,122,807,363.21 |
Page 89 of 175
| Items | Year 2021 | Year 2020 |
| II. Cash flows from investing activities: | ||
| Cash receipts from withdrawal of investments | 2,273,784.59 | |
| Cash receipts from investment income | 145,185,573.83 | 136,028,766.52 |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 24,510,298.30 | 56,302,768.39 |
| Net cash receipts from the disposal of subsidiaries & other business units | ||
| Other cash receipts related to investing activities | 1,800,000,000.00 | 3,873,870,000.00 |
| Subtotal of cash inflows from investing activities | 1,969,695,872.13 | 4,068,475,319.50 |
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 3,472,724,469.42 | 2,352,928,950.30 |
| Cash payments for investments | 83,904,479.79 | 19,705,719.78 |
| Net increase of pledged borrowings | ||
| Net cash payments for the acquisition of subsidiaries & other business units | 74,433,508.94 | |
| Other cash payments related to investing activities | 1,804,835,731.00 | 1,815,037,520.58 |
| Subtotal of cash outflows from investing activities | 5,361,464,680.21 | 4,262,105,699.60 |
| Net cash flows from investing activities | -3,391,768,808.08 | -193,630,380.10 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | ||
| Including: Cash received by subsidiaries from non-controlling shareholders as investments | ||
| Cash receipts from borrowings | 7,383,209,509.05 | 7,379,136,085.77 |
| Other cash receipts related to financing activities | 91,212,707.20 | |
| Subtotal of cash inflows from financing activities | 7,383,209,509.05 | 7,470,348,792.97 |
| Cash payments for the repayment of borrowings | 6,557,328,243.08 | 7,441,048,519.96 |
| Cash payments for distribution of dividends or profits and for interest expenses | 1,841,063,211.24 | 1,375,494,130.75 |
| Including: Cash paid by subsidiaries to non-controlling shareholders as dividend or profit | 12,381,785.50 | |
| Other cash payments related to financing activities | 329,441,306.41 | 30,024,836.90 |
| Subtotal of cash outflows from financing activities | 8,727,832,760.73 | 8,846,567,487.61 |
| Net cash flows from financing activities | -1,344,623,251.68 | -1,376,218,694.64 |
| IV. Effect of foreign exchange rate changes on cash & cash equivalents | -56,255,229.67 | -97,209,327.80 |
| V. Net increase in cash and cash equivalents | 1,045,230,762.14 | 1,455,748,960.67 |
| Add: Opening balance of cash and cash equivalents | 4,669,306,776.09 | 3,213,557,815.42 |
| VI. Closing balance of cash and cash equivalents | 5,714,537,538.23 | 4,669,306,776.09 |
6. Parent company cash flow statement
Unit: RMB Yuan
| Items | Year 2021 | Year 2020 |
| I. Cash flows from operating activities: | ||
| Cash receipts from sale of goods and rendering of services | 5,109,886,806.38 | 4,271,109,080.89 |
| Receipts of tax refund | 79,006,050.97 | 90,400,700.96 |
| Other cash receipts related to operating activities | 196,474,615.50 | 67,743,551.55 |
| Subtotal of cash inflows from operating activities | 5,385,367,472.85 | 4,429,253,333.40 |
Page 90 of 175
| Items | Year 2021 | Year 2020 |
| Cash payments for goods purchased and services received | 3,268,785,597.91 | 3,459,364,445.85 |
| Cash paid to and on behalf of employees | 281,446,896.19 | 235,542,732.63 |
| Cash payments for taxes and rates | 129,270,605.04 | 198,675,951.59 |
| Other cash payments related to operating activities | 114,356,348.57 | 107,913,610.24 |
| Subtotal of cash outflows from operating activities | 3,793,859,447.71 | 4,001,496,740.31 |
| Net cash flows from operating activities | 1,591,508,025.14 | 427,756,593.09 |
| II. Cash flows from investing activities: | ||
| Cash receipts from withdrawal of investments | 2,182,000.00 | |
| Cash receipts from investment income | 1,382,569,901.85 | 1,066,822,932.23 |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 2,862,302.06 | 4,525,917.26 |
| Net cash receipts from the disposal of subsidiaries & other business units | ||
| Other cash receipts related to investing activities | 2,974,222,044.69 | 4,421,643,617.82 |
| Subtotal of cash inflows from investing activities | 4,359,654,248.60 | 5,495,174,467.31 |
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 45,427,101.23 | 72,488,934.93 |
| Cash payments for investments | 1,672,800,000.00 | 943,000,000.00 |
| Net cash payments for the acquisition of subsidiaries & other business units | ||
| Other cash payments related to investing activities | 1,286,337,315.10 | 2,187,072,657.51 |
| Subtotal of cash outflows from investing activities | 3,004,564,416.33 | 3,202,561,592.44 |
| Net cash flows from investing activities | 1,355,089,832.27 | 2,292,612,874.87 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | ||
| Cash receipts from borrowings | 4,449,379,400.00 | 3,601,191,700.00 |
| Other cash receipts related to financing activities | 50,000,000.00 | |
| Subtotal of cash inflows from financing activities | 4,449,379,400.00 | 3,651,191,700.00 |
| Cash payments for the repayment of borrowings | 3,772,893,927.30 | 3,850,779,227.27 |
| Cash payments for distribution of dividends or profits and for interest expenses | 1,686,503,402.65 | 1,241,069,586.61 |
| Other cash payments related to financing activities | 324,177,230.24 | 5,739,388.60 |
| Subtotal of cash outflows from financing activities | 5,783,574,560.19 | 5,097,588,202.48 |
| Net cash flows from financing activities | -1,334,195,160.19 | -1,446,396,502.48 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | -13,812,643.89 | -20,646,627.52 |
| V. Net increase in cash and cash equivalents | 1,598,590,053.33 | 1,253,326,337.96 |
| Add: Opening balance of cash and cash equivalents | 2,593,272,980.50 | 1,339,946,642.54 |
| VI. Closing balance of cash and cash equivalents | 4,191,863,033.83 | 2,593,272,980.50 |
Page 91 of 175
7. Consolidated statement of changes in equity
Current period cumulative
Unit: RMB Yuan
| Items | Year 2021 | ||||||||||||||
| Equity attributable to parent company | Non-controlling interest | Total equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Subtotal | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of prior year | 2,148,662,300.00 | 4,560,522,556.84 | 27,803,829.31 | 9,550,346.85 | 1,074,331,150.00 | 11,515,384,739.95 | 19,336,254,922.95 | 67,576,527.03 | 19,403,831,449.98 | ||||||
Add: Cumulative changes of accounting policies
| Add: Cumulative changes of accounting policies | |||||||||||||||
| Error correction of prior period |
Business combination under common control
| Business combination under common control | |||||||||||||||
| Others |
II. Balance at the beginning of current year
| II. Balance at the beginning of current year | 2,148,662,300.00 | 4,560,522,556.84 | 27,803,829.31 | 9,550,346.85 | 1,074,331,150.00 | 11,515,384,739.95 | 19,336,254,922.95 | 67,576,527.03 | 19,403,831,449.98 | ||||||
| III. Current period increase (or less: decrease) | 429,732,460.00 | -439,459,475.88 | 320,360,784.48 | -29,418,001.62 | 3,141,871.66 | 214,866,230.00 | 2,605,220,423.31 | 2,463,722,722.99 | -3,845,675.62 | 2,459,877,047.37 |
(I) Total comprehensive income
| (I) Total comprehensive income | -29,418,001.62 | 4,324,150,263.31 | 4,294,732,261.69 | 8,536,109.88 | 4,303,268,371.57 | ||||||||||
| (II) Capital contributed or withdrawn by owners | 320,360,784.48 | -320,360,784.48 | -320,360,784.48 |
1. Ordinary shares contributed by owners
| 1. Ordinary shares contributed by owners |
2. Capital contributed by holders of other equity
instruments
| 2. Capital contributed by holders of other equity instruments | |||||||||||||||
| 3. Amount of share-based payment included in equity | |||||||||||||||
| 4. Others | 320,360,784.48 | -320,360,784.48 | -320,360,784.48 |
(III) Profit distribution
| (III) Profit distribution | 214,866,230.00 | -1,718,929,840.00 | -1,504,063,610.00 | -12,381,785.50 | -1,516,445,395.50 | ||||||||||
| 1. Appropriation of surplus reserve | 214,866,230.00 | -214,866,230.00 |
2. Appropriation of general risk reserve
| 2. Appropriation of general risk reserve | |||||||||||||||
| 3. Appropriation of profit to owners | -1,504,063,610.00 | -1,504,063,610.00 | -12,381,785.50 | -1,516,445,395.50 | |||||||||||
| 4. Others |
(IV) Internal carry-over within equity
| (IV) Internal carry-over within equity | 429,732,460.00 | -429,732,460.00 | |||||||||||||
| 1. Transfer of capital reserve to capital | 429,732,460.00 | -429,732,460.00 |
2. Transfer of surplus reserve to capital
| 2. Transfer of surplus reserve to capital | |||||||||||||||
| 3. Surplus reserve to cover losses |
4. Changes in defined benefit plan carried over to
retained earnings
| 4. Changes in defined benefit plan carried over to retained earnings | |||||||||||||||
| 5. Other comprehensive income carried over to retained earnings |
6. Others
| 6. Others | |||||||||||||||
| (V) Special reserve | 3,141,871.66 | 3,141,871.66 | 3,141,871.66 |
1. Appropriation of current period
| 1. Appropriation of current period | 27,879,615.83 | 27,879,615.83 | 27,879,615.83 | ||||||||||||
| 2. Application of current period | -24,737,744.17 | -24,737,744.17 | -24,737,744.17 |
(VI) Others
| (VI) Others | -9,727,015.88 | -9,727,015.88 | -9,727,015.88 | ||||||||||||
| IV. Balance at the end of current period | 2,578,394,760.00 | 4,121,063,080.96 | 320,360,784.48 | -1,614,172.31 | 12,692,218.51 | 1,289,197,380.00 | 14,120,605,163.26 | 21,799,977,645.94 | 63,730,851.41 | 21,863,708,497.35 |
Page 92 of 175
Preceding period comparative
Unit: RMB Yuan
| Items | Year 2020 | ||||||||||||||
| Equity attributable to parent company | |||||||||||||||
| Non-controlling interest | Total equity | ||||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Subtotal | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of prior year | 2,148,662,300.00 | 4,709,068,757.66 | 37,765,885.17 | 5,337,505.56 | 951,844,916.62 | 9,158,233,971.76 | 17,010,913,336.77 | 52,482,111.04 | 17,063,395,447.81 | ||||||
Add: Cumulative changes of accounting policies
| Add: Cumulative changes of accounting policies | |||||||||||||||
| Error correction of prior period |
Business combination under common control
| Business combination under common control | |||||||||||||||
| Others |
II. Balance at the beginning of current year
| II. Balance at the beginning of current year | 2,148,662,300.00 | 4,709,068,757.66 | 37,765,885.17 | 5,337,505.56 | 951,844,916.62 | 9,158,233,971.76 | 17,010,913,336.77 | 52,482,111.04 | 17,063,395,447.81 | ||||||
| III. Current period increase (or less: decrease) | -148,546,200.82 | -9,962,055.86 | 4,212,841.29 | 122,486,233.38 | 2,357,150,768.19 | 2,325,341,586.18 | 15,094,415.99 | 2,340,436,002.17 |
(I) Total comprehensive income
| (I) Total comprehensive income | -9,962,055.86 | 3,563,759,939.48 | 3,553,797,883.62 | 15,094,415.99 | 3,568,892,299.61 | ||||||||||
| (II) Capital contributed or withdrawn by owners |
1. Ordinary shares contributed by owners
| 1. Ordinary shares contributed by owners | |||||||||||||||
| 2. Capital contributed by holders of other equity instruments |
3. Amount of share-based payment included in equity
| 3. Amount of share-based payment included in equity | |||||||||||||||
| 4. Others |
(III) Profit distribution
| (III) Profit distribution | 122,486,233.38 | -1,196,817,383.38 | -1,074,331,150.00 | -1,074,331,150.00 | |||||||||||
| 1. Appropriation of surplus reserve | 122,486,233.38 | -122,486,233.38 |
2. Appropriation of general risk reserve
| 2. Appropriation of general risk reserve | |||||||||||||||
| 3. Appropriation of profit to owners | -1,074,331,150.00 | -1,074,331,150.00 | -1,074,331,150.00 | ||||||||||||
| 4. Others |
(IV) Internal carry-over within equity
| (IV) Internal carry-over within equity | |||||||||||||||
| 1. Transfer of capital reserve to capital |
2. Transfer of surplus reserve to capital
| 2. Transfer of surplus reserve to capital | |||||||||||||||
| 3. Surplus reserve to cover losses | |||||||||||||||
| 4. Changes in defined benefit plan carried over to retained earnings | |||||||||||||||
| 5. Other comprehensive income carried over to retained earnings |
6. Others
| 6. Others | |||||||||||||||
| (V) Special reserve | 4,212,841.29 | 4,212,841.29 | 4,212,841.29 |
1. Appropriation of current period
| 1. Appropriation of current period | 13,350,385.03 | 13,350,385.03 | 13,350,385.03 | ||||||||||||
| 2. Application of current period | -9,137,543.74 | -9,137,543.74 | -9,137,543.74 |
(VI) Others
| (VI) Others | -148,546,200.82 | -9,791,787.91 | -158,337,988.73 | -158,337,988.73 | |||||||||||
| IV. Balance at the end of current period | 2,148,662,300.00 | 4,560,522,556.84 | 27,803,829.31 | 9,550,346.85 | 1,074,331,150.00 | 11,515,384,739.95 | 19,336,254,922.95 | 67,576,527.03 | 19,403,831,449.98 |
Page 93 of 175
8. Parent company statements of changes in equity
Current period cumulative
Unit: RMB Yuan
| Items | Year 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total equity | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
I. Balance at the end of prior year
| I. Balance at the end of prior year | 2,148,662,300.00 | 4,300,852,875.45 | 506,954.43 | 1,074,331,150.00 | 5,298,464,883.45 | 12,822,818,163.33 | ||||||
| Add: Cumulative changes of accounting policies |
Error correction of prior period
| Error correction of prior period | ||||||||||||
| Others |
II. Balance at the beginning of current year
| II. Balance at the beginning of current year | 2,148,662,300.00 | 4,300,852,875.45 | 506,954.43 | 1,074,331,150.00 | 5,298,464,883.45 | 12,822,818,163.33 |
III. Current period increase (or less: decrease)
| III. Current period increase (or less: decrease) | 429,732,460.00 | -439,459,475.88 | 320,360,784.48 | 214,866,230.00 | 588,285,128.26 | 473,063,557.90 | ||||||
| (I) Total comprehensive income | 2,307,214,968.26 | 2,307,214,968.26 |
(II) Capital contributed or withdrawn by owners
| (II) Capital contributed or withdrawn by owners | 320,360,784.48 | -320,360,784.48 |
1. Ordinary shares contributed by owners
| 1. Ordinary shares contributed by owners | ||||||||||||
| 2. Capital contributed by holders of other equity instruments |
3. Amount of share-based payment included in equity
| 3. Amount of share-based payment included in equity | ||||||||||||
| 4. Others | 320,360,784.48 | -320,360,784.48 |
(III) Profit distribution
| (III) Profit distribution | 214,866,230.00 | -1,718,929,840.00 | -1,504,063,610.00 |
1. Appropriation of surplus reserve
| 1. Appropriation of surplus reserve | 214,866,230.00 | -214,866,230.00 | ||||||||||
| 2. Appropriation of profit to owners | -1,504,063,610.00 | -1,504,063,610.00 |
3. Others
| 3. Others |
(IV) Internal carry-over within equity
| (IV) Internal carry-over within equity | 429,732,460.00 | -429,732,460.00 | ||||||||||
| 1. Transfer of capital reserve to capital | 429,732,460.00 | -429,732,460.00 |
2. Transfer of surplus reserve to capital
| 2. Transfer of surplus reserve to capital | ||||||||||||
| 3. Surplus reserve to cover losses |
4. Changes in defined benefit plan carried over to retained
earnings
| 4. Changes in defined benefit plan carried over to retained earnings | ||||||||||||
| 5. Other comprehensive income carried over to retained earnings |
6. Others
| 6. Others | ||||||||||||
| (V) Special reserve |
1. Appropriation of current period
| 1. Appropriation of current period |
2. Application of current period
| 2. Application of current period | ||||||||||||
| (VI) Others | -9,727,015.88 | -9,727,015.88 |
IV. Balance at the end of current period
| IV. Balance at the end of current period | 2,578,394,760.00 | 3,861,393,399.57 | 320,360,784.48 | 506,954.43 | 1,289,197,380.00 | 5,886,750,011.71 | 13,295,881,721.23 |
Page 94 of 175
Preceding period comparative
Unit: RMB Yuan
| Items | Year 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total equity | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
I. Balance at the end of prior year
| I. Balance at the end of prior year | 2,148,662,300.00 | 4,300,852,875.45 | 506,954.43 | 951,844,916.62 | 4,488,013,408.28 | 11,889,880,454.78 | ||||||
| Add: Cumulative changes of accounting policies |
Error correction of prior period
| Error correction of prior period |
Others
| Others | ||||||||||||
| II. Balance at the beginning of current year | 2,148,662,300.00 | 4,300,852,875.45 | 506,954.43 | 951,844,916.62 | 4,488,013,408.28 | 11,889,880,454.78 |
III. Current period increase (or less: decrease)
| III. Current period increase (or less: decrease) | 122,486,233.38 | 810,451,475.17 | 932,937,708.55 | |||||||||
| (I) Total comprehensive income | 2,007,268,858.55 | 2,007,268,858.55 |
(II) Capital contributed or withdrawn by owners
| (II) Capital contributed or withdrawn by owners |
1. Ordinary shares contributed by owners
| 1. Ordinary shares contributed by owners | ||||||||||||
| 2. Capital contributed by holders of other equity instruments |
3. Amount of share-based payment included in equity
| 3. Amount of share-based payment included in equity | ||||||||||||
| 4. Others |
(III) Profit distribution
| (III) Profit distribution | 122,486,233.38 | -1,196,817,383.38 | -1,074,331,150.00 |
1. Appropriation of surplus reserve
| 1. Appropriation of surplus reserve | 122,486,233.38 | -122,486,233.38 | ||||||||||
| 2. Appropriation of profit to owners | -1,074,331,150.00 | -1,074,331,150.00 |
3. Others
| 3. Others |
(IV) Internal carry-over within equity
| (IV) Internal carry-over within equity | ||||||||||||
| 1. Transfer of capital reserve to capital |
2. Transfer of surplus reserve to capital
| 2. Transfer of surplus reserve to capital |
3. Surplus reserve to cover losses
| 3. Surplus reserve to cover losses | ||||||||||||
| 4. Changes in defined benefit plan carried over to retained earnings | ||||||||||||
| 5. Other comprehensive income carried over to retained earnings |
6. Others
| 6. Others | ||||||||||||
| (V) Special reserve |
1. Appropriation of current period
| 1. Appropriation of current period |
2. Application of current period
| 2. Application of current period | ||||||||||||
| (VI) Others |
IV. Balance at the end of current period
| IV. Balance at the end of current period | 2,148,662,300.00 | 4,300,852,875.45 | 506,954.43 | 1,074,331,150.00 | 5,298,464,883.45 | 12,822,818,163.33 |
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III. Company profile
Zhejiang NHU Co., Ltd. (the “Company”) was jointly established by 新昌县合成化工厂 (Xinchang County Synthetic ChemicalPlant?
, renamed as NHU Holding Group Co., Ltd. on November 17, 2009) and 9 natural persons including Zhang Pingyi, YuanYizhong, Shi Cheng, Hu Baishan, Shi Guanqun, Wang Xuewen, 石三夫 (Shi Sanfu), Cui Xinrong, and Wang Xulin under thedocument of approval numbered Zhe Zheng Wei [1999] 9 issued by the former Securities Commission of the People’s Governmentof Zhejiang Province. Headquartered in Shaoxing City, Zhejiang Province, the Company was registered at Zhejiang Administrationfor Industry and Commerce on April 5, 1999. Currently, the Company holds a business license with unified social credit code of91330000712560575G, with registered capital of 2,578,394,760.00 yuan, total share of 2,578,394,760 shares (each with par value ofone yuan), of which, 30,311,834 shares are restricted outstanding shares, and 2,548,082,926 shares are unrestricted outstandingshares. The Company’s shares were listed on Shenzhen Stock Exchange on June 25, 2004.The Company belongs to pharmaceutical manufacturing industry and is mainly engaged in manufacturing and sales of nutrition,flavor and fragrance, and new polymer materials. The Company’s main products are nutrition, flavor and fragrance, and new polymermaterials.The financial statements were approved and authorized for issue by the tenth meeting of the eighth session of the Board of Directorsdated April 13, 2022.The Company has brought 24 subsidiaries including Xinchang NHU Vitamins Co., Ltd., Zhejiang NHU Import & Export Co., Ltd.,浙江维尔新动物营养保健品有限公司 (Zhejiang Vityesun Animal Nutrition and Health Co., Ltd.
*
), etc. into the consolidationscope. Please refer to item VIII and IX of this section for details.
IV. Preparation basis of the financial statements
1. Preparation basis
The financial statements have been prepared on the basis of going concern.
2. The ability to continue as a going concern
The Company has no events or conditions that may cast significant doubts upon the Company’s ability to continue as a going concernwithin the 12 months after the balance sheet date.
V. Significant accounting policies and estimatesNote to specific accounting policies and estimates: The Company has set up accounting policies and estimates on transactions orevents such as impairment of financial instruments, depreciation of fixed assets, depreciation of right-of-use assets, amortization ofintangible assets, and revenue recognition, etc. based on the Company’s actual production and operation features.
1. Statement of compliance
The financial statements have been prepared in accordance with the requirements of China Accounting Standards for BusinessEnterprises (CASBEs), and present truly and completely the financial position, results of operations and cash flows of the Company.
2. Accounting period
The accounting year of the Company runs from January 1 to December 31 under the Gregorian calendar.
?The English names are for identification purpose only.
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3. Operating cycle
Except for the real estate industry, the Company has a relatively short operating cycle for its business, an asset or a liability isclassified as current if it is expected to be realized or due within 12 months. The operating cycle for real estate industry starts fromthe development of property and ends at sales, which normally extends over 12 months and is subject to specific projects, therefore,an asset or a liability is classified as current if it is expected to be realized or due within such operating cycle.
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (RMB) Yuan, while the functional currency ofsubsidiaries engaged in overseas operations including NHU (Hong Kong) Trading Co., Ltd., NHU Europe GmbH and NHUSingapore PTE. LTD. is the currency of the primary economic environment in which they operate.
5. Accounting treatments of business combination under and not under common control
1. Accounting treatment of business combination under common control
Assets and liabilities arising from business combination are measured at carrying amount of the combined party included in theconsolidated financial statements of the ultimate controlling party at the combination date. Difference between carrying amount ofthe equity of the combined party included in the consolidated financial statements of the ultimate controlling party and that of thecombination consideration or total par value of shares issued is adjusted to capital reserve, if the balance of capital reserve isinsufficient to offset, any excess is adjusted to retained earnings.
2. Accounting treatment of business combination not under common control
When combination cost is in excess of the fair value of identifiable net assets obtained from the acquiree at the acquisition date, theexcess is recognized as goodwill; otherwise, the fair value of identifiable assets, liabilities and contingent liabilities, and themeasurement of the combination cost are reviewed, then the difference is recognized in profit or loss.
6. Compilation method of consolidated financial statements
The parent company brings all its controlled subsidiaries into the consolidation scope. The consolidated financial statements arecompiled by the parent company according to “CASBE 33 – Consolidated Financial Statements”, based on relevant information andthe financial statements of the parent company and its subsidiaries.
7. Recognition criteria of cash and cash equivalents
Cash as presented in cash flow statement refers to cash on hand and deposit on demand for payment. Cash equivalents refer toshort-term, highly liquid investments that can be readily converted to cash and that are subject to an insignificant risk of changes invalue.
8. Foreign currency translation
1. Translation of transactions denominated in foreign currency
Transactions denominated in foreign currency are translated into RMB yuan at the approximate exchange rate similar to the spotexchange rate at the transaction date at initial recognition. At the balance sheet date, monetary items denominated in foreign currencyare translated at the spot exchange rate at the balance sheet date with difference, except for those arising from the principal andinterest of exclusive borrowings eligible for capitalization, included in profit or loss; non-cash items carried at historical costs aretranslated at the approximate exchange rate similar to the spot exchange rate at the transaction date, with the RMB amountsunchanged; non-cash items carried at fair value in foreign currency are translated at the spot exchange rate at the date when the fairvalue was determined, with difference included in profit or loss or other comprehensive income.
2. Translation of financial statements measured in foreign currency
The assets and liabilities in the balance sheet are translated into RMB at the spot rate at the balance sheet date; the equity items, otherthan undistributed profit, are translated at the spot rate at the transaction date; the revenues and expenses in the income statement are
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translated into RMB at the approximate exchange rate similar to the spot exchange rate at the transaction date. The difference arisingfrom the aforementioned foreign currency translation is included in other comprehensive income.
9. Financial instruments
1. Classification of financial assets and financial liabilities
Financial assets are classified into the following three categories when initially recognized: (1) financial assets at amortized cost; (2)financial assets at fair value through other comprehensive income; (3) financial assets at fair value through profit or loss.Financial liabilities are classified into the following four categories when initially recognized: (1) financial liabilities at fair valuethrough profit or loss; (2) financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or whenthe continuing involvement approach applies; (3) financial guarantee contracts not fall within the above categories (1) and (2), andcommitments to provide a loan at a below-market interest rate, which do not fall within the above category (1); (4) financialliabilities at amortized cost.
2. Recognition criteria, measurement method and derecognition condition of financial assets and financial liabilities
(1) Recognition criteria and measurement method of financial assets and financial liabilities
When the Company becomes a party to a financial instrument, it is recognized as a financial asset or financial liability. The financialassets and financial liabilities initially recognized by the Company are measured at fair value; for the financial assets and liabilities atfair value through profit or loss, the transaction expenses thereof are directly included in profit or loss; for other categories offinancial assets and financial liabilities, the transaction expenses thereof are included into the initially recognized amount. However,at initial recognition, for accounts receivable that do not contain a significant financing component or in circumstances where theCompany does not consider the financing components in contracts within one year, the Company measures the transaction price inaccordance with “CASBE 14 – Revenues”.
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized cost
The Company measures its financial assets at the amortized costs using effective interest method. Gains or losses on financial assetsthat are measured at amortized cost and are not part of hedging relationships shall be included into profit or loss when the financialassets are derecognized, reclassified, amortized using effective interest method or recognized with impairment loss.
2) Debt instrument investments at fair value through other comprehensive income
The Company measures its debt instrument investments at fair value. Interests, impairment gains or losses, and gains and losses onforeign exchange that calculated using effective interest method shall be included into profit or loss, while other gains or losses areincluded into other comprehensive income. Accumulated gains or losses that initially recognized as other comprehensive incomeshould be transferred out into profit or loss when the financial assets are derecognized.
3) Equity instrument investments at fair value through other comprehensive income
The Company measures its equity instrument investments at fair value. Dividends obtained (other than those as part of investmentcost recovery) shall be included into profit or loss, while other gains or losses are included into other comprehensive income.Accumulated gains or losses that initially recognized as other comprehensive income should be transferred out into retained earningswhen the financial assets are derecognized.
4) Financial assets at fair value through profit or loss
The Company measures its financial assets at fair value. Gains or losses arising from changes in fair value (including interests anddividends) shall be included into profit or loss, except for financial assets that are part of hedging relationships.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities (including derivatives that are
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liabilities) and financial liabilities designated as at fair value through profit or loss. The Company measures such kind of liabilities atfair value. The amount of changes in the fair value of the financial liabilities that are attributable to changes in the Company’s owncredit risk shall be included into other comprehensive income, unless such treatment would create or enlarge accounting mismatchesin profit or loss. Other gains or losses on those financial liabilities (including interests, changes in fair value that are attributable toreasons other than changes in the Company’s own credit risk) shall be included into profit or loss, except for financial liabilities thatare part of hedging relationships. Accumulated gains or losses that originally recognized as other comprehensive income should betransferred out into retained earnings when the financial liabilities are derecognized.
2) Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuinginvolvement approach appliesThe Company measures its financial liabilities in accordance with “CASBE 23 – Transfer of Financial Assets”.
3) Financial guarantee contracts not fall within the above categories 1) and 2), and commitments to provide a loan at a below-marketinterest rate, which do not fall within the above category 1)The Company measures its financial liabilities at the higher of: a. the amount of loss allowances in accordance with impairmentrequirements of financial instruments; b. the amount initially recognized less the amount of accumulated amortization recognized inaccordance with “CASBE 14 – Revenues”.
4) Financial liabilities at amortized cost
The Company measures its financial liabilities at amortized cost using effective interest method. Gains or losses on financialliabilities that are measured at amortized cost and are not part of hedging relationships shall be included into profit or loss when thefinancial liabilities are derecognized and amortized using effective interest method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
a. the contractual rights to the cash flows from the financial assets expire; orb. the financial assets have been transferred and the transfer qualifies for derecognition in accordance with “CASBE 23 – Transfer ofFinancial Assets”.
2) Only when the underlying present obligations of a financial liability are relieved totally or partly may the financial liability bederecognized accordingly.
3. Recognition criteria and measurement method of financial assets transfer
Where the Company has transferred substantially all of the risks and rewards related to the ownership of the financial asset, itderecognizes the financial asset, and any right or liability arising from such transfer is recognized independently as an asset or aliability. If it retained substantially all of the risks and rewards related to the ownership of the financial asset, it continues recognizingthe financial asset. Where the Company does not transfer or retain substantially all of the risks and rewards related to the ownershipof a financial asset, it is dealt with according to the circumstances as follows respectively: (1) if the Company does not retain itscontrol over the financial asset, it derecognizes the financial asset, and any right or liability arising from such transfer is recognizedindependently as an asset or a liability; (2) if the Company retains its control over the financial asset, according to the extent of itscontinuing involvement in the transferred financial asset, it recognizes the related financial asset and recognizes the relevant liabilityaccordingly.If the transfer of an entire financial asset satisfies the conditions for derecognition, the difference between the amounts of thefollowing two items is included in profit or loss: (1) the carrying amount of the transferred financial asset as of the date ofderecognition; (2) the sum of consideration received from the transfer of the financial asset, and the accumulative amount of thechanges of the fair value originally included in other comprehensive income proportionate to the transferred financial asset (financialassets transferred refer to debt instrument investments at fair value through other comprehensive income). If the transfer of financial
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asset partially satisfies the conditions to derecognition, the entire carrying amount of the transferred financial asset is, between theportion which is derecognized and the portion which is not, apportioned according to their respective relative fair value, and thedifference between the amounts of the following two items is included into profit or loss: (1) the carrying amount of the portionwhich is derecognized; (2) the sum of consideration of the portion which is derecognized, and the portion of the accumulativeamount of the changes in the fair value originally included in other comprehensive income which is corresponding to the portionwhich is derecognized (financial assets transferred refer to debt instrument investments at fair value through other comprehensiveincome).
4. Fair value determination method of financial assets and liabilities
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data and information areavailable to measure fair value. The inputs to valuation techniques used to measure fair value are arranged in the following hierarchyand used accordingly:
(1) Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company can access at themeasurement date.
(2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, eitherdirectly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets; quoted prices foridentical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the assetor liability, for example, interest rates and yield curves observable at commonly quoted intervals; market-corroborated inputs;
(3) Level 3 inputs are unobservable inputs for the asset or liability. Level 3 inputs include interest rate that is not observable andcannot be corroborated by observable market data at commonly quoted intervals, historical volatility, future cash flows to be paid tofulfill the disposal obligation assumed in business combination, financial forecast developed using the Company’s own data, etc.
5. Impairment of financial instruments
(1) Measurement and accounting treatment
The Company, on the basis of expected credit loss, recognizes loss allowances of financial assets at amortized cost, debt instrumentinvestments at fair value through other comprehensive income, contract assets, leases receivable, loan commitments other thanfinancial liabilities at fair value through profit or loss, financial guarantee contracts not belong to financial liabilities at fair valuethrough profit or loss or financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or whenthe continuing involvement approach applies.Expected credit losses refer to the weighted average of credit losses with the respective risks of a default occurring as the weights.Credit loss refers to the difference between all contractual cash flows that are due to the Company in accordance with the contractand all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate.Among which, purchased or originated credit-impaired financial assets are discounted at the credit-adjusted effective interest rate.At the balance sheet date, the Company shall only recognize the cumulative changes in the lifetime expected credit losses since initialrecognition as a loss allowance for purchased or originated credit-impaired financial assets.For leases receivable, and accounts receivable and contract assets resulting from transactions regulated in “CASBE 14 – Revenues”,the Company chooses simplified approach to measure the loss allowance at an amount equal to lifetime expected credit losses.For financial assets other than the above, on each balance sheet date, the Company shall assess whether the credit risk on thefinancial instrument has increased significantly since initial recognition. The Company shall measure the loss allowance for thefinancial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument hasincreased significantly since initial recognition; otherwise, the Company shall measure the loss allowance for that financialinstrument at an amount equal to 12-month expected credit loss.
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Considering reasonable and supportable forward-looking information, the Company compares the risk of a default occurring on thefinancial instrument as at the balance sheet date with the risk of a default occurring on the financial instrument as at the date of initialrecognition, so as to assess whether the credit risk on the financial instrument has increased significantly since initial recognition.The Company may assume that the credit risk on a financial instrument has not increased significantly since initial recognition if thefinancial instrument is determined to have relatively low credit risk at the balance sheet date.The Company shall estimate expected credit risk and measure expected credit losses on an individual or a collective basis. When theCompany adopts the collective basis, financial instruments are grouped with similar credit risk features.The Company shall remeasure expected credit loss on each balance sheet date, and increased or reversed amounts of loss allowancearising therefrom shall be included into profit or loss as impairment losses or gains. For a financial asset measured at amortized cost,the loss allowance reduces the carrying amount of such financial asset presented in the balance sheet; for a debt investment measuredat fair value through other comprehensive income, the loss allowance shall be recognized in other comprehensive income and shallnot reduce the carrying amount of such financial asset.
(2) Financial instruments with expected credit risk assessed and expected credit losses measured on a collective basis
| Items | Basis for determination of portfolio | Method for measuring expected credit loss |
| Other receivables – Portfolio grouped with export tax refund receivable | Nature of receivables | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and 12-month or lifetime expected credit loss rate. |
| Other receivables – Portfolio grouped with VAT refund receivable | ||
| Other receivables – Portfolio grouped with land bond receivable | ||
| Other receivables – Portfolio grouped with deposits receivable from customs and tax authorities | ||
| Other receivables – Portfolio grouped with ages | Ages |
(3) Accounts receivable and contract assets with expected credit losses measured on a collective basis
1) Specific portfolios and method for measuring expected credit loss
| Items | Basis for determination of portfolio | Method for measuring expected credit loss |
| Bank acceptance receivable | Type of notes | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and lifetime expected credit loss rate. |
| Trade acceptance receivable | ||
| Accounts receivable – Portfolio grouped with ages | Ages | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company prepares the comparison table of ages and lifetime expected credit loss rate of accounts receivable, so as to calculate expected credit loss. |
2) Accounts receivable – comparison table of ages and lifetime expected credit loss rate of portfolio grouped with ages
| Ages | Expected credit loss rate (%) |
| Within 1 year (inclusive, the same hereinafter) | 5 |
| 1-2 years | 20 |
| 2-3 years | 80 |
| Over 3 years | 100 |
6. Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not offset. However, the Company
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offsets a financial asset and a financial liability and presents the net amount in the balance sheet when, and only when, the Company:
(1) currently has a legally enforceable right to set off the recognized amounts; and (2) intends either to settle on a net basis, or torealize the asset and settle the liability simultaneously.For a transfer of a financial asset that does not qualify for derecognition, the Company does not offset the transferred asset and theassociated liability.
10. Inventories
1. Classification of inventories
Inventories include finished goods or goods held for sale in the ordinary course of business, work in process in the process ofproduction, materials or supplies, etc. to be consumed in the production process or in the rendering of services.
2. Accounting method for dispatching inventories:
Inventories dispatched from storage are accounted for with weighted average method at the end of each month.
3. Basis for determining net realizable value
At the balance sheet date, inventories are measured at the lower of cost and net realizable value; provisions for inventory write-downare made on the excess of its cost over the net realizable value. The net realizable value of inventories held for sale is determinedbased on the amount of the estimated selling price less the estimated selling expenses and relevant taxes and surcharges in theordinary course of business; the net realizable value of materials to be processed is determined based on the amount of the estimatedselling price less the estimated costs of completion, selling expenses and relevant taxes and surcharges in the ordinary course ofbusiness; at the balance sheet date, when only part of the same item of inventories have agreed price, their net realizable value aredetermined separately and are compared with their costs to set the provision for inventory write-down to be made or reversed.
4. Inventory system
Perpetual inventory method is adopted.
5. Amortization method of low-value consumables and packages
(1) Low-value consumables
Low-value consumables are amortized with one-off method.
(2) Packages
Packages are amortized with one-off method.
11. Contract assets, contract liabilities
The Company presents contract assets or contract liabilities in the balance sheet based on the relationship between its performanceobligations and customers’ payments. Contract assets and contract liabilities under the same contract shall offset each other and bepresented on a net basis.The Company presents an unconditional right to consideration (i.e., only the passage of time is required before the consideration isdue) as a receivable, and presents a right to consideration in exchange for goods that it has transferred to a customer (which isconditional on something other than the passage of time) as a contract asset.The Company presents an obligation to transfer goods to a customer for which the Company has received consideration (or theamount is due) from the customer as a contract liability.
12. Long-term equity investments
1. Judgment of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevantactivities require the unanimous consent of the parties sharing control. Significant influence is the power to participate in the
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financial and operating policy decisions of the investee but is not control or joint control of these policies.
2. Determination of investment cost
(1) For business combination under common control, if the consideration of the combining party is that it makes payment in cash,transfers non-cash assets, assumes its liabilities or issues equity securities, on the date of combination, it regards the share of thecarrying amount of the equity of the combined party included in the consolidated financial statements of the ultimate controllingparty as the initial cost of the investment. The difference between the initial cost of the long-term equity investments and the carryingamount of the combination consideration paid or the par value of shares issued offsets capital reserve; if the balance of capital reserveis insufficient to offset, any excess is adjusted to retained earnings.When long-term equity investments are obtained through business combination under common control achieved in stages, theCompany determines whether it is a “bundled transaction”. If it is a “bundled transaction”, stages as a whole are considered as onetransaction in accounting treatment. If it is not a “bundled transaction”, on the date of combination, investment cost is initiallyrecognized at the share of the carrying amount of net assets of the combined party included the consolidated financial statements ofthe ultimate controlling party. The difference between the initial investment cost of long-term equity investments at the acquisitiondate and the carrying amount of the previously held long-term equity investments plus the carrying amount of the consideration paidfor the newly acquired equity is adjusted to capital reserve; if the balance of capital reserve is insufficient to offset, any excess isadjusted to retained earnings.
(2) For business combination not under common control, investment cost is initially recognized at the acquisition-date fair value ofconsiderations paid.When long-term equity investments are obtained through business combination not under common control achieved in stages, theCompany determined whether they are stand-alone financial statements or consolidated financial statements in accounting treatment:
1) In the case of stand-alone financial statements, investment cost is initially recognized at the carrying amount of the previously heldlong-term equity investments plus the carrying amount of the consideration paid for the newly acquired equity.
2) In the case of consolidated financial statements, the Company determines whether it is a “bundled transaction”. If it is a “bundledtransaction”, stages as a whole are considered as one transaction in accounting treatment. If it is not a “bundled transaction”, thecarrying amount of the acquirer’s previously held equity interest in the acquiree is remeasured at the acquisition-date fair value, andthe difference between the fair value and the carrying amount is recognized in investment income; when the acquirer’s previouslyheld equity interest in the acquiree involves other comprehensive income under equity method, the related other comprehensiveincome is reclassified as income for the acquisition period, excluding other comprehensive income arising from changes in netliabilities or assets from remeasurement of defined benefit plan of the acquiree.
(3) Long-term equity investments obtained through ways other than business combination: the initial cost of a long-term equityinvestment obtained by making payment in cash is the purchase cost which is actually paid; that obtained on the basis of issuingequity securities is the fair value of the equity securities issued; that obtained through debt restructuring is determined according to“CASBE 12 – Debt Restructuring”; and that obtained through non-cash assets exchange is determined according to “CASBE 7 –Non-cash Assets Exchange”.
3. Subsequent measurement and recognition method of profit or loss
For long-term equity investments with control relationship, it is accounted for with cost method; for long-term equity investmentswith joint control or significant influence relationship, it is accounted for with equity method.
4. Disposal of a subsidiary in stages resulting in the Company’s loss of control
(1) Stand-alone financial statements
The difference between the carrying amount of the disposed equity and the consideration obtained thereof is recognized in profit orloss. If the disposal does not result in the Company’s loss of significant influence or joint control, the remained equity is accounted
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for with equity method; however, if the disposal results in the Company’s loss of control, joint control, or significant influence, theremained equity is accounted for according to “CASBE 22 – Financial Instruments: Recognition and Measurement”.
(2) Consolidated financial statements
1) Disposal of a subsidiary in stages not qualified as “bundled transaction” resulting in the Company’s loss of controlBefore the Company’s loss of control, the difference between the disposal consideration and the proportionate share of net assets inthe disposed subsidiary from acquisition date or combination date to the disposal date is adjusted to capital reserve (capital premium),if the balance of capital reserve is insufficient to offset, any excess is adjusted to retained earnings.When the Company loses control, the remained equity is remeasured at the loss-of-control-date fair value. The aggregated value ofdisposal consideration and the fair value of the remained equity, less the share of net assets in the disposed subsidiary held before thedisposal from the acquisition date or combination date to the disposal date is recognized in investment income in the period when theCompany loses control over such subsidiary, and meanwhile goodwill is offset correspondingly. Other comprehensive income relatedto equity investments in former subsidiary is reclassified as investment income upon the Company’s loss of control.
2) Disposal of a subsidiary in stages qualified as “bundled transaction” resulting in the Company’s loss of controlIn case of “bundled transaction”, stages as a whole are considered as one transaction resulting in loss of control in accountingtreatment. However, before the Company loses control, the difference between the disposal consideration at each stage and theproportionate share of net assets in the disposed subsidiary is recognized as other comprehensive income at the consolidated financialstatements and reclassified as profit or loss in the period when the Company loses control over such subsidiary.
13. Fixed assets
(1) Recognition principles
Fixed assets are tangible assets held for use in the production of goods or rendering of services, for rental to others, or foradministrative purposes, and expected to be used during more than one accounting year. Fixed assets are recognized if, and only if, itis probable that future economic benefits associated with the assets will flow to the Company and the cost of the assets can bemeasured reliably.
(2) Depreciation method
| Categories | Depreciation method | Useful life (years) | Residual value proportion (%) | Annual depreciation rate (%) |
| Buildings and structures | Straight-line method | 7-35 | 5 | 13.57-2.71 |
| General equipment | Straight-line method | 5-10 | 5 | 19.00-9.50 |
| Special equipment | Straight-line method | 5-15 | 5 | 19.00-6.33 |
| Transport facilities | Straight-line method | 5-7 | 5 | 19.00-13.57 |
(3) Recognition basis, measurement and depreciation method of fixed assets leased in finance leases
None.
14. Construction in progress
1. Construction in progress is recognized if, and only if, it is probable that future economic benefits associated with the item will flowto the Company, and the cost of the item can be measured reliably. Construction in progress is measured at the actual cost incurred toreach its designed usable conditions.
2. Construction in progress is transferred into fixed assets at its actual cost when it reaches the designed usable conditions. When theauditing of the construction in progress was not finished while reaching the designed usable conditions, it is transferred to fixedassets using estimated value first, and then adjusted accordingly when the actual cost is settled, but the accumulated depreciation isnot to be adjusted retrospectively.
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15. Borrowing costs
1. Recognition principle of borrowing costs capitalization
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and construction or production ofassets eligible for capitalization, it is capitalized and included in the costs of relevant assets; other borrowing costs are recognized asexpenses on the basis of the actual amount incurred, and are included in profit or loss.
2. Borrowing costs capitalization period
(1) The borrowing costs are not capitalized unless the following requirements are all met: 1) the asset disbursements have alreadyincurred; 2) the borrowing costs have already incurred; and 3) the acquisition and construction or production activities which arenecessary to prepare the asset for its intended use or sale have already started.
(2) Suspension of capitalization: where the acquisition and construction or production of a qualified asset is interrupted abnormallyand the interruption period lasts for more than 3 months, the capitalization of the borrowing costs is suspended; the borrowing costsincurred during such period are recognized as expenses, and are included in profit or loss, till the acquisition and construction orproduction of the asset restarts.
(3) Ceasing of capitalization: when the qualified asset under acquisition and construction or production is ready for the intended useor sale, the capitalization of the borrowing costs is ceased.
3. Capitalization rate and capitalized amount of borrowing costs
For borrowings exclusively for the acquisition and construction or production of assets eligible for capitalization, theto-be-capitalized amount of interests is determined in light of the actual interest expenses incurred (including amortization ofpremium or discount based on effective interest method) of the special borrowings in the current period less the interest income onthe unused borrowings as a deposit in the bank or as a temporary investment; where a general borrowing is used for the acquisitionand construction or production of assets eligible for capitalization, the Company calculates and determines the to-be-capitalizedamount of interests on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulativeasset disbursements less the general borrowing by the capitalization rate of the general borrowing used.
16. Intangible assets
(1) Measurement method, useful lives and impairment test
1. Intangible assets include land use right, patent right, non-patented technology, etc. The initial measurement of intangible assets isbased on its cost.
2. For intangible assets with finite useful lives, their amortization amounts are amortized within their useful lives systematically andreasonably, if it is unable to determine the expected realization pattern reliably, intangible assets are amortized by the straight-linemethod with details as follows:
| Items | Amortization period (years) |
| Land use right | 50, 70 |
| Software | 10 |
| Patent right | 10 |
| Non-patented technology | 15 |
(2) Accounting policies on internal R&D expenditures
Expenditures on the research phase of an internal project are recognized as profit or loss when they are incurred. An intangible assetarising from the development phase of an internal project is recognized if the Company can demonstrate all of the followings: (1) thetechnical feasibility of completing the intangible asset so that it will be available for use or sale; (2) its intention to complete theintangible asset and use or sell it; (3) how the intangible asset will generate probable future economic benefits, among other things,
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the Company can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is tobe used internally, the usefulness of the intangible asset; (4) the availability of adequate technical, financial and other resources tocomplete the development and to use or sell the intangible asset; and (5) its ability to measure reliably the expenditure attributable tothe intangible asset during its development.
17. Impairment of part of long-term assets
For long-term assets such as long-term equity investments, fixed assets, construction in progress, right-of-use assets, intangible assetswith finite useful lives, etc., if at the balance sheet date there is indication of impairment, the recoverable amount is to be estimated.For goodwill recognized in business combination and intangible assets with indefinite useful lives, no matter whether there isindication of impairment, impairment test is performed annually. Impairment test on goodwill is performed on related asset group orasset group portfolio.When the recoverable amount of such long-term assets is lower than their carrying amount, the difference is recognized as provisionfor assets impairment through profit or loss.
18. Long-term prepayments
Long-term prepayments are expenses that have been recognized but with amortization period over one year (excluding one year).They are recorded with actual cost, and evenly amortized within the beneficiary period or stipulated period. If items of long-termprepayments fail to be beneficial to the following accounting periods, residual values of such items are included in profit or loss.
19. Employee benefits
(1) Employee benefits include short-term employee benefits, post-employment benefits, termination benefitsand other long-term employee benefits.
(2) Short-term employee benefits
The Company recognizes, in the accounting period in which an employee provides service, short-term employee benefits actuallyincurred as liabilities, with a corresponding charge to profit or loss or the cost of a relevant asset.
(3) Post-employment benefits
The Company classifies post-employment benefit plans as either defined contribution plans or defined benefit plans.
(1) The Company recognizes in the accounting period in which an employee provides service the contribution payable to a definedcontribution plan as a liability, with a corresponding charge to profit or loss or the cost of a relevant asset.
(2) Accounting treatment by the Company for defined benefit plan usually involves the following steps:
1) In accordance with the projected unit credit method, using unbiased and mutually compatible actuarial assumptions to estimaterelated demographic variables and financial variables, measure the obligations under the defined benefit plan, and determine theperiods to which the obligations are attributed. Meanwhile, the Company discounts obligations under the defined benefit plan todetermine the present value of the defined benefit plan obligations and the current service cost;
2) When a defined benefit plan has assets, the Company recognizes the deficit or surplus by deducting the fair value of definedbenefit plan assets from the present value of the defined benefit plan obligation as a net defined benefit plan liability or net definedbenefit plan asset. When a defined benefit plan has a surplus, the Company measures the net defined benefit plan asset at the lower ofthe surplus in the defined benefit plan and the asset ceiling;
3) At the end of the period, the Company recognizes the following components of employee benefits cost arising from definedbenefit plan: a. service cost; b. net interest on the net defined benefit plan liability (asset); and c. changes as a result ofremeasurement of the net defined benefit liability (asset). Item a and item b are recognized in profit or loss or the cost of a relevantasset. Item c is recognized in other comprehensive income and is not to be reclassified subsequently to profit or loss. However, the
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Company may transfer those amounts recognized in other comprehensive income within equity.
(4) Termination benefits
Termination benefits provided to employees are recognized as an employee benefit liability for termination benefits, with acorresponding charge to profit or loss at the earlier of the following dates: a. when the Company cannot unilaterally withdraw theoffer of termination benefits because of an employment termination plan or a curtailment proposal; or b. when the Companyrecognizes cost or expenses related to a restructuring that involves the payment of termination benefits.
(5) Other long-term employee benefits
When other long-term employee benefits provided to the employees satisfied the conditions for classifying as a defined contributionplan, those benefits are accounted for in accordance with the requirements relating to defined contribution plan, while other benefitsare accounted for in accordance with the requirements relating to defined benefit plan. The Company recognizes the cost of employeebenefits arising from other long-term employee benefits as the followings: a. service cost; b. net interest on the net liability or netassets of other long-term employee benefits; and c. changes as a result of remeasurement of the net liability or net assets of otherlong-term employee benefits. As a practical expedient, the net total of the aforesaid amounts is recognized in profit or loss orincluded in the cost of a relevant asset.
20. Revenue
Accounting policies on revenue recognition and measurement
1. Revenue recognition principles
At contract inception, the Company shall assess the contracts and shall identify each performance obligation in the contracts, anddetermine whether the performance obligation should be satisfied over time or at a point in time.The Company satisfies a performance obligation over time if one of the following criteria is met, otherwise, the performanceobligation is satisfied at a point in time: (1) the customer simultaneously receives and consumes the economic benefits provided bythe Company’s performance as the Company performs; (2) the customer can control goods as they are created by the Company’sperformance; (3) goods created during the Company’s performance have irreplaceable uses and the Company has an enforceableright to the payments for performance completed to date during the whole contract period.For each performance obligation satisfied over time, the Company shall recognize revenue over time by measuring the progresstowards complete satisfaction of that performance obligation. In the circumstance that the progress cannot be measured reasonably,but the costs incurred in satisfying the performance obligation are expected to be recovered, the Company shall recognize revenueonly to the extent of the costs incurred until it can reasonably measure the progress. For each performance obligation satisfied at apoint in time, the Company shall recognize revenue at the time point that the customer obtains control of relevant goods or services.To determine whether the customer has obtained control of goods, the Company shall consider the following indications: (1) theCompany has a present right to payment for the goods, i.e., the customer is presently obliged to pay for the goods; (2) the Companyhas transferred the legal title of the goods to the customer, i.e., the customer has legal title to the goods; (3) the Company hastransferred physical possession of the goods to the customer, i.e., the customer has physically possessed the goods; (4) the Companyhas transferred significant risks and rewards of ownership of the goods to the customer, i.e., the customer has obtained significantrisks and rewards of ownership of the goods; (5) the customer has accepted the goods; (6) other evidence indicating the customer hasobtained control over the goods.
2. Revenue measurement principle
(1) Revenue is measured at the amount of the transaction price that is allocated to each performance obligation. The transaction priceis the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to acustomer, excluding amounts collected on behalf of third parties and those expected to be refunded to the customer.
(2) If the consideration promised in a contract includes a variable amount, the Company shall confirm the best estimate of variable
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consideration at expected value or the most likely amount. However, the transaction price that includes the amount of variableconsideration only to the extent that it is high probable that a significant reversal in the amount of cumulative revenue recognizedwill not occur when the uncertainty associated with the variable consideration is subsequently resolved.
(3) In the circumstance that the contract contains a significant financing component, the Company shall determine the transactionprice based on the price that a customer would have paid for if the customer had paid cash for obtaining control over those goods orservices. The difference between the transaction price and the amount of promised consideration is amortized under effective interestmethod over contractual period. The effects of a significant financing component shall not be considered if the Company expects, atthe contract inception, that the period between when the customer obtains control over goods or services and when the customer paysconsideration will be one year or less.
(4) For contracts containing two or more performance obligations, the Company shall determine the stand-alone selling price atcontract inception of the distinct good underlying each performance obligation and allocate the transaction price to each performanceobligation on a relative stand-alone selling price basis.
3. Revenue recognition method
(1) Revenue from sales of products
The Company’s main products are nutrition, flavor and fragrance, new polymer materials, etc. Sales of products are performanceobligations satisfied at a point in time. Revenue from domestic sales is recognized when the Company has delivered goods to thecustomer as agreed by contract and has obtained delivery note signed by the customer, and the Company has collected the paymentsor has obtained the right to the payments, and related economic benefits are highly probable to flow to the Company. Revenue fromoverseas sales is recognized when the Company has declared goods to the customs based on contractual agreements and has obtaineda bill of lading, and the Company has collected the payments or has obtained the right to the payments, and related economic benefitsare highly probable to flow to the Company.
(2) Revenue from real estate sales
Real estate sales are performance obligations satisfied at a point in time. Revenue from real estate sales is recognized when theCompany has delivered properties to the customer as agreed by contract and has obtained the client acceptance receipts signed by thecustomer, and the Company has collected the payments or has obtained the right to the payments, and related economic benefits arehighly probable to flow to the Company.Differences in accounting policies on revenue recognition due to the adoption of different business models for similar businessesNone.
21. Government grants
1. Government grants shall be recognized if, and only if, the following conditions are all met: (1) the Company will comply with theconditions attaching to the grants; (2) the grants will be received. Monetary government grants are measured at the amount receivedor receivable. Non-monetary government grants are measured at fair value, and can be measured at nominal amount in thecircumstance that fair value cannot be assessed.
2. Government grants related to assets
Government grants related to assets are government grants with which the Company constructs or otherwise acquires long-termassets under requirements of government. In the circumstances that there is no specific government requirement, the Company shalldetermine based on the primary condition to acquire the grants, and government grants related to assets are government grants whoseprimary condition is to construct or otherwise acquire long-term assets. They offset carrying amount of relevant assets, or they arerecognized as deferred income. If recognized as deferred income, they are included in profit or loss on a systematic basis over theuseful lives of the relevant assets. Those measured at notional amount are directly included into profit or loss. For assets sold,transferred, disposed or damaged within the useful lives, balance of unamortized deferred income is transferred into profit or loss of
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the period in which the disposal occurred.
3. Government grants related to income
Government grants related to income are government grants other than those related to assets. For government grants that containboth parts related to assets and parts related to income, in which those two parts are blurred, they are thus collectively classified asgovernment grants related to income. For government grants related to income used for compensating the related future cost,expenses or losses, they are recognized as deferred income and included in profit or loss or used to offset relevant cost during theperiod in which the relevant cost, expenses or losses are recognized; for government grants related to income used for compensatingthe related cost, expenses or losses incurred to the Company, they are directly included in profit or loss or used to offset relevant cost.
4. Government grants related to the ordinary course of business shall be included into other income or used to offset relevant costbased on business nature, while those not related to the ordinary course of business shall be included into non-operating revenue orexpenditures.
5. Policy interest subvention
(1) In the circumstance that government appropriates interest subvention to lending bank, who provides loans for the Company with apolicy subsidised interest rate, borrowings are carried at the amount received, with relevant borrowings cost computed based on theprincipal and the policy subsidised interest rate.
(2) In the circumstance that government directly appropriates interest subvention to the Company, the subsidised interest shall offsetrelevant borrowing cost.
22. Deferred tax assets/Deferred tax liabilities
1. Deferred tax assets or deferred tax liabilities are calculated and recognized based on the difference between the carrying amountand tax base of assets and liabilities (and the difference of the carrying amount and tax base of items not recognized as assets andliabilities but with their tax base being able to be determined according to tax laws) and in accordance with the tax rate applicable tothe period during which the assets are expected to be recovered or the liabilities are expected to be settled.
2. A deferred tax asset is recognized to the extent of the amount of the taxable income, which is most likely to obtain and which canbe deducted from the deductible temporary difference. At the balance sheet date, if there is any exact evidence that it is probable thatfuture taxable income will be available against which deductible temporary differences can be utilized, the deferred tax assetsunrecognized in prior periods are recognized.
3. At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carrying amount of a deferred tax asset isreduced to the extent that it is no longer probable that sufficient taxable income will be available to allow the benefit of the deferredtax asset to be utilized. Such reduction is subsequently reversed to the extent that it becomes probable that sufficient taxable incomewill be available.
4. The income tax and deferred tax for the period are treated as income tax expenses or income through profit or loss, excluding thosearising from the following circumstances: (1) business combination; and (2) the transactions or items directly recognized in equity.
23. Leases
(1) Operating lease
1. The Company as lessee
At the commencement date, the Company recognizes a lease that has a lease term of 12 months or less as a short-term lease, whichshall not contain a purchase option; the Company recognizes a lease as a lease of a low-value asset if the underlying asset is of lowvalue when it is new. If the Company subleases an asset, or expects to sublease an asset, the head lease does not qualify as a lease ofa low-value asset.
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For all short-term leases and leases of low-value assets, lease payments are recognized as cost or profit or loss with straight-linemethod/unit-of-production method over the lease term.Apart from the above-mentioned short-term leases and leases of low-value assets with simplified approach, the Company recognizesright-of-use assets and lease liabilities at the commencement date.
(1) Right-of-use assets
The right-of-use asset is measured at cost and the cost shall comprise: 1) the amount of the initial measurement of the lease liability;
2) any lease payments made at or before the commencement date, less any lease incentives received; 3) any initial direct costsincurred by the lessee; and 4) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset,restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of thelease.The Company depreciates the right-of-use asset using the straight-line method/unit-of-production method. If it is reasonable to becertain that the ownership of the underlying asset can be acquired by the end of the lease term, the Company depreciates theright-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Companydepreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset orthe end of the lease term.
(2) Lease liability
At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid atthat date, discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the Company’s incrementalborrowing rate shall be used. Unrecognized financing expenses, calculated at the difference between the lease payment and itspresent value, are recognized as interest expenses over the lease term using the discount rate which has been used to determine thepresent value of lease payment and included in profit or loss. Variable lease payments not included in the measurement of leaseliabilities are included in profit or loss in the periods in which they are incurred.After the commencement date, if there is a change in the following items: a. actual fixed payments; b. amounts expected to bepayable under residual value guarantees; c. an index or a rate used to determine lease payments; d. assessment result or exercise ofpurchase option, extension option or termination option., the Company remeasures the lease liability based on the present value oflease payments after changes, and adjusts the carrying amount of the right-of-use asset accordingly. If the carrying amount of theright-of-use asset is reduced to zero but there shall be a further reduction in the lease liability, the remaining amount shall berecognized into profit or loss.
2. The Company as lessor
At the commencement date, the Company classifies a lease as a finance lease if it transfers substantially all the risks and rewardsincidental to ownership of an underlying asset. Otherwise, it is classified as an operating lease.Operating leaseLease receipts are recognized as lease income with straight-line method/unit-of-production method over the lease term. Initial directcosts incurred shall be capitalized, amortized on the same basis as the recognition of lease income, and included into profit or loss byinstallments. Variable lease payments related to operating lease which are not included in the lease payment are charged as profit orloss in the periods in which they are incurred.
24. Work safety fund
The Company accrues work safety fund in accordance with the “Circular on Management Measures on the Accrual and Use of WorkSafety Fund” numbered Cai Qi [2012] 16 by Ministry of Finance and State Administration of Work Safety. Standard work safetyfund is included in the cost or current profit or loss, meanwhile accounted for under “special reserve”. When work safety fund is usedas an expense, it is to offset special reserve directly. When work safety fund is qualified to be included in the cost of fixed assets, it is
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accounted for under “construction in progress” and transferred to fixed assets when related safety projects reach the designed usefulconditions; meanwhile, the cost included in fixed assets is to offset “special reserve”, and accumulated depreciation shall berecognized at the same amount. Such fixed assets shall not be depreciated in future periods.
25. Segment reporting
Operating segments are determined based on the structure of the Company’s internal organization, management requirements andinternal reporting system. An operating segment is a component of the Company:
1. that engages in business activities from which it may earn revenues and incur expenses;
2. whose financial performance is regularly reviewed by the Management to make decisions about resource to be allocated to thesegment and to assess its performance; and
3. for which accounting information regarding financial position, financial performance and cash flows is available through analysis.
26.Accounting treatment related to share repurchase
When the Company repurchases its shares for the purpose of reducing its registered capital or rewarding its employees, if thepurchased shares are to be kept as treasury shares, the treasury shares are recorded at the cash distributed to existing shareholders forrepurchase; if the purchased shares are to be retired, the difference between the total par value of shares retired and the cashdistributed to existing shareholders for repurchase is to reduce capital reserve, or retained earnings when the capital reserve is notenough to reduce. If the Company repurchases vested equity instruments in equity-settled share-based payment transactions withemployees, cost of treasury shares granted to employees and capital reserve (other capital reserve) accumulated within the vestingperiod are to be written off on the payment made to employees, with a corresponding adjustment in capital reserve (share premium).
27. Significant changes in accounting policies and estimates
(1) Significant changes in accounting policies
√ Applicable □ Not Applicable
| Contents and reasons | Approval process | Remarks |
| The Company has adopted the “CASBE 21 – Leases” revised by the Ministry of Finance (the “revised lease standard”) since January 1, 2021. Pursuant to regulations on convergence between original and revised standards, no adjustment shall be made on comparable information, and the difference arising from adoption on the first adoption date shall be retrospectively adjusted into retained earnings and other comprehensive income at the beginning of the reporting period. | N/A | Please refer to Announcement No. 2021-027 disclosed on www.cninfo.com.cn on August 20, 2021 for details. |
Changes in accounting policies arising from changes in CASBEs
1. The Company has adopted revised lease standard since January 1, 2021 (the “first adoption date”).
1) For the contract existed prior to the first adoption date, the Company does not reassess whether it is, or contains, a lease.
2) For lease contracts with the Company as lessee, the cumulative effect arising from adoption of the revised lease standard at thefirst adoption date shall be retrospectively adjusted into retained earnings and other related financial statement items at the beginningof the reporting period, and no adjustment shall be made on comparable information. The specific treatments are as follows:
For operating leases prior to the first adoption date, the Company measures lease liabilities at the present value of remaining leasepayments, which are discounted using the incremental borrowing rate at the first adoption date, and measures right-of-use assets atthe amount equivalent to lease liabilities through necessary adjustments based on prepaid leasing fees at the first adoption date.At the first adoption date, pursuant to section V (17) of this section, the Company performs impairment test on right-of-use assets andconducts corresponding accounting treatments.
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a. Main effects on the financial statements as at January 1, 2021 due to the adoption of the revised lease standard are as follows:
Unit: RMB Yuan
| Items | Consolidated balance sheet | ||
| Dec. 31, 2020 | Effect due to revised lease standard | Jan. 1, 2021 | |
| Right-of-use assets | 3,113,997.88 | 3,113,997.88 | |
Non-current liabilities due within oneyear
| Non-current liabilities due within one year | 1,275,888,293.32 | 92,628.26 | 1,275,980,921.58 |
| Lease liabilities | 3,021,369.62 | 3,021,369.62 |
Unit: RMB Yuan
| Items | Parent company balance sheet | ||
| Dec. 31, 2020 | Effect due to revised lease standard | Jan. 1, 2021 | |
| Right-of-use assets | 3,113,997.88 | 3,113,997.88 | |
| Non-current liabilities due within one year | 635,930,890.44 | 92,628.26 | 636,023,518.70 |
| Lease liabilities | 3,021,369.62 | 3,021,369.62 | |
The weighted average of the Company’s incremental borrowing rates used for lease liabilities included in the balance sheet at thefirst adoption date is 4.75%.b. Simplified approach is adopted for operating leases prior to the first adoption date.a) For lease contracts completed within 12 months after the first adoption date, the Company adopts a simplified approach and doesnot recognize right-of-use assets and lease liabilities;b) The Company applies a single discount rate to a portfolio of leases with similar characteristics when measuring lease liabilities;The adoption of the above simplified approach has no significant effect on the Company’s financial statements.
3) For lease contracts in which the Company as the lessor, the revised lease standard is adopted since the first adoption date.
2. The Company has adopted the “Interpretation of China Accounting Standards for Business Enterprises No. 14” issued by theMinistry of Finance in 2021 since January 26, 2021. Such change in accounting policies has no impact on the Company’s financialstatements.
3. The Company has adopted the regulations about disclosure of centralized fund management in the “Interpretation of ChinaAccounting Standards for Business Enterprises No. 15” issued by the Ministry of Finance since December 31, 2021. Such change inaccounting policies has no impact on the Company’s financial statements.
(2) Significant changes in accounting estimates
□ Applicable √ Not Applicable
(3) Details on financial statement items at the beginning of the period adjusted due to the first adoption ofthe revised lease standard in 2021
√ Applicable □ Not Applicable
Whether it is necessary to adjust the opening balance of balance sheet items
√ Yes □ No
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Consolidated balance sheet
Unit: RMB Yuan
| Items | December 31, 2020 | January 1, 2021 | Adjustments |
| Current assets: | |||
| Cash and bank balances | 4,927,657,236.24 | 4,927,657,236.24 | |
| Settlement funds | |||
| Loans to other banks | |||
| Held-for-trading financial assets | 852,227,964.70 | 852,227,964.70 | |
| Derivative financial assets | |||
| Notes receivable | 332,064,366.59 | 332,064,366.59 | |
| Accounts receivable | 1,930,930,930.01 | 1,930,930,930.01 | |
| Receivables financing | 295,393,346.17 | 295,393,346.17 | |
| Advances paid | 116,063,557.59 | 116,063,557.59 | |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance reserve receivable | |||
| Other receivables | 178,610,951.64 | 178,610,951.64 | |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Financial assets under reverse repo | |||
| Inventories | 3,117,042,558.78 | 3,117,042,558.78 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 1,777,569,473.96 | 1,777,569,473.96 | |
| Total current assets | 13,527,560,385.68 | 13,527,560,385.68 | |
| Non-current assets: | |||
| Loans and advances | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 343,378,891.18 | 343,378,891.18 | |
| Other equity instrument investments | 22,998,147.55 | 22,998,147.55 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 13,914,151,215.54 | 13,914,151,215.54 | |
| Construction in progress | 1,325,545,420.56 | 1,325,545,420.56 | |
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | 3,113,997.88 | 3,113,997.88 | |
| Intangible assets | 1,407,067,129.87 | 1,407,067,129.87 | |
| Development expenditures | |||
| Goodwill |
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| Items | December 31, 2020 | January 1, 2021 | Adjustments |
| Long-term prepayments | 13,369,412.48 | 13,369,412.48 | |
| Deferred tax assets | 65,143,706.00 | 65,143,706.00 | |
| Other non-current assets | 277,793,490.68 | 277,793,490.68 | |
| Total non-current assets | 17,369,447,413.86 | 17,372,561,411.74 | 3,113,997.88 |
| Total assets | 30,897,007,799.54 | 30,900,121,797.42 | 3,113,997.88 |
| Current liabilities: | |||
| Short-term borrowings | 2,363,525,192.53 | 2,363,525,192.53 | |
| Central bank loans | |||
| Loans from other banks | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 497,644,517.23 | 497,644,517.23 | |
| Accounts payable | 1,463,728,316.04 | 1,463,728,316.04 | |
| Advances received | |||
| Contract liabilities | 56,302,537.11 | 56,302,537.11 | |
| Financial liabilities under repo | |||
| Absorbing deposit and interbank deposit | |||
| Deposit for agency security transaction | |||
| Deposit for agency security underwriting | |||
| Employee benefits payable | 322,646,061.45 | 322,646,061.45 | |
| Taxes and rates payable | 268,864,472.38 | 268,864,472.38 | |
| Other payables | 129,839,228.89 | 129,839,228.89 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Handling fee and commission payable | |||
| Reinsurance accounts payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 1,275,888,293.32 | 1,275,980,921.58 | 92,628.26 |
| Other current liabilities | 4,956,463.49 | 4,956,463.49 | |
| Total current liabilities | 6,383,395,082.44 | 6,383,487,710.70 | |
| Non-current liabilities: | |||
| Insurance policy reserve | |||
| Long-term borrowings | 4,136,875,354.33 | 4,136,875,354.33 | |
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 3,021,369.62 | 3,021,369.62 | |
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 873,066,181.34 | 873,066,181.34 |
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| Items | December 31, 2020 | January 1, 2021 | Adjustments |
| Deferred tax liabilities | 99,839,731.45 | 99,839,731.45 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 5,109,781,267.12 | 5,112,802,636.74 | 3,021,369.62 |
| Total liabilities | 11,493,176,349.56 | 11,496,290,347.44 | 3,113,997.88 |
| Equity: | |||
| Share capital | 2,148,662,300.00 | 2,148,662,300.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 4,560,522,556.84 | 4,560,522,556.84 | |
| Less: Treasury shares | |||
| Other comprehensive income | 27,803,829.31 | 27,803,829.31 | |
| Special reserve | 9,550,346.85 | 9,550,346.85 | |
| Surplus reserve | 1,074,331,150.00 | 1,074,331,150.00 | |
| General risk reserve | |||
| Undistributed profit | 11,515,384,739.95 | 11,515,384,739.95 | |
| Total equity attributable to the parent company | 19,336,254,922.95 | 19,336,254,922.95 | |
| Non-controlling interest | 67,576,527.03 | 67,576,527.03 | |
| Total equity | 19,403,831,449.98 | 19,403,831,449.98 | |
| Total liabilities & equity | 30,897,007,799.54 | 30,900,121,797.42 | 3,113,997.88 |
Remarks on adjustmentsPursuant to the “CASBE 21 – Leases” issued by the Ministry of Finance in 2018 (Cai Kuai [2018] No. 35), the Company has adoptedthe revised lease standard since January 1, 2021 and makes adjustments on related financial statement items.Parent company balance sheet
Unit: RMB Yuan
| Items | December 31, 2020 | January 1, 2021 | Adjustments |
| Current assets: | |||
| Cash and bank balances | 2,790,740,377.97 | 2,790,740,377.97 | |
| Held-for-trading financial assets | 851,949,945.63 | 851,949,945.63 | |
| Derivative financial assets | |||
| Notes receivable | 332,064,366.59 | 332,064,366.59 | |
| Accounts receivable | 704,086,691.03 | 704,086,691.03 | |
| Receivables financing | |||
| Advances paid | 1,631,550.49 | 1,631,550.49 | |
| Other receivables | 4,247,680,763.92 | 4,247,680,763.92 | |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Inventories | 566,205,506.19 | 566,205,506.19 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year |
Page 116 of 175
| Items | December 31, 2020 | January 1, 2021 | Adjustments |
| Other current assets | 552,859,738.36 | 552,859,738.36 | |
| Total current assets | 10,047,218,940.18 | 10,047,218,940.18 | |
| Non-current assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 6,372,637,172.92 | 6,372,637,172.92 | |
| Other equity instrument investments | 22,998,147.55 | 22,998,147.55 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 737,784,631.31 | 737,784,631.31 | |
| Construction in progress | |||
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | 3,113,997.88 | 3,113,997.88 | |
| Intangible assets | 105,425,506.93 | 105,425,506.93 | |
| Development expenditures | |||
| Goodwill | |||
| Long-term prepayments | 5,919,401.23 | 5,919,401.23 | |
| Deferred tax assets | 42,345,228.44 | 42,345,228.44 | |
| Other non-current assets | 7,202,988.32 | 7,202,988.32 | |
| Total non-current assets | 7,294,313,076.70 | 7,297,427,074.58 | 3,113,997.88 |
| Total assets | 17,341,532,016.88 | 17,344,646,014.76 | 3,113,997.88 |
| Current liabilities: | |||
| Short-term borrowings | 1,243,628,965.48 | 1,243,628,965.48 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 155,953,161.50 | 155,953,161.50 | |
| Accounts payable | 100,374,347.92 | 100,374,347.92 | |
| Advances received | |||
| Contract liabilities | 8,494,783.78 | 8,494,783.78 | |
| Employee benefits payable | 82,688,797.50 | 82,688,797.50 | |
| Taxes and rates payable | 33,578,246.55 | 33,578,246.55 | |
| Other payables | 15,543,517.50 | 15,543,517.50 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 635,930,890.44 | 636,023,518.70 | 92,628.26 |
| Other current liabilities | 1,104,321.89 | 1,104,321.89 | |
| Total current liabilities | 2,277,297,032.56 | 2,277,389,660.82 | |
| Non-current liabilities: | |||
| Long-term borrowings | 2,209,521,076.40 | 2,209,521,076.40 |
Page 117 of 175
| Items | December 31, 2020 | January 1, 2021 | Adjustments |
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 3,021,369.62 | 3,021,369.62 | |
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 18,884,041.56 | 18,884,041.56 | |
| Deferred tax liabilities | 13,011,703.03 | 13,011,703.03 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 2,241,416,820.99 | 2,244,438,190.61 | 3,021,369.62 |
| Total liabilities | 4,518,713,853.55 | 4,521,827,851.43 | 3,113,997.88 |
| Equity: | |||
| Share capital | 2,148,662,300.00 | 2,148,662,300.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 4,300,852,875.45 | 4,300,852,875.45 | |
| Less: Treasury shares | |||
| Other comprehensive income | 506,954.43 | 506,954.43 | |
| Special reserve | |||
| Surplus reserve | 1,074,331,150.00 | 1,074,331,150.00 | |
| Undistributed profit | 5,298,464,883.45 | 5,298,464,883.45 | |
| Total equity | 12,822,818,163.33 | 12,822,818,163.33 | |
| Total liabilities & equity | 17,341,532,016.88 | 17,344,646,014.76 | 3,113,997.88 |
Remarks on adjustmentsPursuant to the “CASBE 21 – Leases” issued by the Ministry of Finance in 2018 (Cai Kuai [2018] No. 35), the Company has adoptedthe revised lease standard since January 1, 2021 and makes adjustments on related financial statement items.
(4) Remarks on retrospective adjustments on comparable information of prior period due to the firstadoption of the revised lease standard in 2021
□ Applicable √ Not Applicable
Page 118 of 175
VI. Taxes
1. Main taxes and tax rates
| Taxes | Tax bases | Tax rates |
| Value-added tax (VAT) | The output tax calculated based on the revenue from sales of goods or rendering of services in accordance with the tax law, net of the input tax that is allowed to be deducted in the current period | 13%, 9%, 6%, 5% and 19%; export goods enjoy the “exemption, credit and refund” policy and the refund rate ranges from 0% to 13%; the subsidiary Zhejiang NHU Import & Export Co., Ltd. enjoys the “refund upon collection” policy and the refund rate ranges from 0% to 13%. |
| Land appreciation tax | The incremental amount arising from the transfer of state-owned land use right and the buildings and structures that are constructed on the land | A four-grade progressive tax system is adopted. The rates are: 30% for appreciated value not over 50% of total deductible amount; 40% for appreciated value over 50% but not over 100% of total deductible amount; 50% for appreciated value over 100% but not over 200% of total deductible amount; and 60% for appreciated value over 200% of total deductible amount. |
| Housing property tax | For housing property levied on the basis of price, housing property tax is levied at the rate of 1.2% of the balance after deducting 30% of the cost; for housing property levied on the basis of rent, housing property tax is levied at the rate of 12% of rent revenue. | 1.2%, 12% |
| Urban maintenance and construction tax | Turnover tax actually paid | 5%, 7% |
| Education surcharge | Turnover tax actually paid | 3% |
| Local education surcharge | Turnover tax actually paid | 2% |
| Solidarity surcharge [Note] | Income tax payable | 5.50% |
| Trade tax [Note] | Taxable income | 13.30% |
| Enterprise income tax | Taxable income | 15%, 17%, 25% |
Note: The subsidiaries NHU EUROPE GmbH, NHU PERFORMANCE MATERIALS GMBH and Bardoterminal GmbH are subjectto these rates.Different enterprise income tax rates applicable to different taxpayers:
| Taxpayers | Income tax rate |
| The Company | 15% |
| Shangyu NHU Bio-Chem Co., Ltd. | 15% |
| Shandong NHU Pharmaceutical Co., Ltd. | 15% |
| Shandong NHU Vitamins Co., Ltd. | 15% |
| Shandong NHU Amino-acids Co., Ltd. | 15% |
| Zhejiang NHU Special Materials Co., Ltd. | 15% |
| Heilongjiang NHU Biotechnology Co., Ltd. | 15% |
| NHU EUROPE GmbH | 15% |
| NHU PERFORMANCE MATERIALS GMBH | 15% |
| Bardoterminal GmbH | 15% |
| NHU Singapore PTE. LTD. | 17% |
| Taxpayers other than the above-mentioned | 25% |
Page 119 of 175
2. Tax preferential policies
According to the Hi-Tech Enterprise Certificate (GR202033003531) issued by Zhejiang Provincial Department of Science andTechnology, Zhejiang Provincial Department of Finance and Zhejiang Provincial Tax Service, State Taxation Administration (STA),the Company is accredited as a hi-tech enterprise and entitled to enjoy the tax preferential policy from 2020 to 2022. It is subject tothe rate of 15% for enterprise income tax in 2021.According to the Hi-Tech Enterprise Certificate (GR201933005736) issued by Zhejiang Provincial Department of Science andTechnology, Zhejiang Provincial Department of Finance and Zhejiang Provincial Tax Service, STA, the subsidiary Shangyu NHUBio-Chem Co., Ltd. is accredited as a hi-tech enterprise and entitled to enjoy the tax preferential policy from 2019 to 2021. It issubject to the rate of 15% for enterprise income tax in 2021.According to the Hi-Tech Enterprise Certificate (GR202037001084) issued by Department of Science and Technology of ShandongProvince, Shandong Provincial Department of Finance and Shandong Provincial Tax Service, STA, the subsidiary Shandong NHUPharmaceutical Co., Ltd. is accredited as a hi-tech enterprise and entitled to enjoy the tax preferential policy from 2020 to 2022. It issubject to the rate of 15% for enterprise income tax in 2021.According to the Hi-Tech Enterprise Certificate (GR202037000197) issued by Department of Science and Technology of ShandongProvince, Shandong Provincial Department of Finance and Shandong Provincial Tax Service, STA, the subsidiary Shandong NHUVitamins Co., Ltd. is accredited as a hi-tech enterprise and entitled to enjoy the tax preferential policy from 2020 to 2022. It issubject to the rate of 15% for enterprise income tax in 2021.According to the Hi-Tech Enterprise Certificate (GR202137000086) issued by Department of Science and Technology of ShandongProvince, Shandong Provincial Department of Finance and Shandong Provincial Tax Service, STA, the subsidiary Shandong NHUAmino Acid Co., Ltd. is accredited as a hi-tech enterprise and entitled to enjoy the tax preferential policy from 2021 to 2023. It issubject to the rate of 15% for enterprise income tax in 2021.According to the Hi-Tech Enterprise Certificate (GR202133008939) issued by Zhejiang Provincial Department of Science andTechnology, Zhejiang Provincial Department of Finance and Zhejiang Provincial Tax Service, STA, the subsidiary Zhejiang NHUSpecial Materials Co., Ltd. is accredited as a hi-tech enterprise and entitled to enjoy the tax preferential policy from 2021 to 2023. Itis subject to the rate of 15% for enterprise income tax in 2021.According to the Hi-Tech Enterprise Certificate (GR202123000560) issued by Heilongjiang Provincial Department of Science andTechnology, Heilongjiang Provincial Department of Finance and Heilongjiang Provincial Tax Service, STA, the subsidiaryHeilongjiang NHU Biotechnology Co., Ltd. is accredited as a hi-tech enterprise and entitled to enjoy the tax preferential policy from2021 to 2023. It is subject to the rate of 15% for enterprise income tax in 2021.
VII. Notes to items of consolidated financial statements
1. Cash and bank balances
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Cash on hand | 14,537.85 | 10,735.55 |
| Cash in bank | 5,684,842,466.04 | 4,669,296,040.54 |
| Other cash and bank balances | 268,052,623.05 | 258,350,460.15 |
| Total | 5,952,909,626.94 | 4,927,657,236.24 |
| Including: Deposited overseas | 38,739,302.11 | 21,518,199.53 |
Page 120 of 175
Other remarks
(1) Other cash and bank balances
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Deposit for bank acceptance | 149,724,511.46 | 233,849,274.66 |
| Deposit for letters of credit | 86,212,564.30 | 23,350,000.00 |
| Deposit for engineering labor costs | 1,654,664.15 | 741,108.87 |
| Deposit for construction safety | 405,056.50 | 404,076.62 |
| Deposit for ETC | 16,500.00 | 6,000.00 |
| Deposit for water fees | 358,792.30 | |
| Deposited investment fund | 29,680,534.34 | |
| Subtotal | 268,052,623.05 | 258,350,460.15 |
2. Held-for-trading financial assets
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Financial assets at fair value through profit or loss | 1,250,736,359.24 | 852,227,964.70 |
| Including: Financial products with guaranteed principal and floating income | 1,250,000,000.00 | 850,000,000.00 |
| Derivative financial assets | 736,359.24 | 2,227,964.70 |
| Total | 1,250,736,359.24 | 852,227,964.70 |
3. Notes receivable
(1) Details on categories
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Bank acceptance | 349,145,316.03 | 332,064,366.59 |
| Total | 349,145,316.03 | 332,064,366.59 |
Unit: RMB Yuan
| Categories | Closing balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion | ||
| Including: | |||||
| Notes receivable with provision for bad debts made on a collective basis | 349,145,316.03 | 100.00% | 349,145,316.03 | ||
| Including: | |||||
| Bank acceptance | 349,145,316.03 | 100.00% | 349,145,316.03 | ||
| Total | 349,145,316.03 | 100.00% | 349,145,316.03 | ||
Page 121 of 175
(Continued)
| Categories | Opening balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion | ||
| Including: | |||||
| Notes receivable with provision for bad debts made on a collective basis | 332,064,366.59 | 100.00% | 332,064,366.59 | ||
| Including: | |||||
| Bank acceptance | 332,064,366.59 | 100.00% | 332,064,366.59 | ||
| Total | 332,064,366.59 | 100.00% | 332,064,366.59 | ||
(2) Pledged notes at the balance sheet date
Unit: RMB Yuan
| Items | Closing balance of pledged notes |
| Bank acceptance | 236,268,835.12 |
| Total | 236,268,835.12 |
(3) Endorsed or discounted but undue notes at the balance sheet date
Unit: RMB Yuan
| Items | Closing balance derecognized | Closing balance not yet derecognized |
| Bank acceptance | 3,050,000.00 | |
| Total | 3,050,000.00 |
Due to the fact that the acceptor of bank acceptance is commercial bank, which is of high credit level, there is very little possibility offailure in recoverability when it is due. Based on this fact, the Company derecognized the endorsed or discounted bank acceptance.However, if any bank acceptance is not recoverable when it is due, the Company still holds joint liability on such acceptance,according to the China Commercial Instrument Law.
4. Accounts receivable
(1) Details on categories
Unit: RMB Yuan
| Categories | Closing balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion | ||
| Including: | |||||
| Accounts receivable with provision for bad debts made on a collective basis | 2,902,396,632.04 | 100.00% | 147,228,058.90 | 5.07% | 2,755,168,573.14 |
| Total | 2,902,396,632.04 | 100.00% | 147,228,058.90 | 5.07% | 2,755,168,573.14 |
Page 122 of 175
(Continued)
| Categories | Opening balance | ||||
| Book balance | Provision for bad debts | Carrying amount | |||
| Amount | % to total | Amount | Provision proportion | ||
| Including: | |||||
| Accounts receivable with provision for bad debts made on a collective basis | 2,037,464,941.46 | 100.00% | 106,534,011.45 | 5.23% | 1,930,930,930.01 |
| Total | 2,037,464,941.46 | 100.00% | 106,534,011.45 | 5.23% | 1,930,930,930.01 |
Accounts receivable with provision for bad debts made on a collective basis using age analysis method
Unit: RMB Yuan
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion | |
| Within 1 year | 2,899,884,561.24 | 144,994,228.10 | 5.00% |
| 1-2 years | 297,000.00 | 59,400.00 | 20.00% |
| 2-3 years | 203,200.00 | 162,560.00 | 80.00% |
| Over 3 years | 2,011,870.80 | 2,011,870.80 | 100.00% |
| Total | 2,902,396,632.04 | 147,228,058.90 | -- |
Ages analysis:
Unit: RMB Yuan
| Ages | Book balance |
| Within 1 year (inclusive) | 2,899,884,561.24 |
| 1-2 years | 297,000.00 |
| 2-3 years | 203,200.00 |
| Over 3 years | 2,011,870.80 |
| 3-4 years | 286,550.00 |
| 4-5 years | 165,790.00 |
| Over 5 years | 1,559,530.80 |
| Total | 2,902,396,632.04 |
(2) Provisions made, collected or reversed in the current period
Provisions made in the current period:
Unit: RMB Yuan
| Categories | Opening balance | Increase/Decrease | Closing balance | |||
| Accrual | Recovery/ Reversal | Write-off | Others | |||
| Provision made on a collective basis | 106,534,011.45 | 40,694,047.45 | 147,228,058.90 | |||
(3) Details of the top 5 debtors with largest balances
Unit: RMB Yuan
| Debtors | Closing balance | Proportion to the total balance of receivables (%) | Closing balance of provision for bad debts |
| Client A | 388,004,290.79 | 13.37% | 19,400,214.54 |
| Client B | 313,899,385.63 | 10.82% | 15,694,969.28 |
| Client C | 226,272,072.97 | 7.80% | 11,313,603.65 |
Page 123 of 175
| Debtors | Closing balance | Proportion to the total balance of receivables (%) | Closing balance of provision for bad debts |
| Client D | 122,191,892.27 | 4.21% | 6,109,594.61 |
| Client E | 83,097,860.00 | 2.86% | 4,154,893.00 |
| Total | 1,133,465,501.66 | 39.06% |
5. Receivables financing
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Bank acceptance | 182,891,179.65 | 295,393,346.17 |
| Total | 182,891,179.65 | 295,393,346.17 |
Current increase/decrease and changes in fair value
√ Applicable □ Not applicable
Unit: RMB Yuan
| Items | Closing balance | |||||
| Initial cost | Interest adjustment | Interest accrued | Changes in fair value | Carrying amount | Provision for impairment | |
| Bank acceptance | 182,891,179.65 | 182,891,179.65 | ||||
| Total | 182,891,179.65 | 182,891,179.65 | ||||
(Continued)
Unit: RMB Yuan
| Items | Opening balance | |||||
| Initial cost | Interest adjustment | Interest accrued | Changes in fair value | Carrying amount | Provision for impairment | |
| Bank acceptance | 295,393,346.17 | 295,393,346.17 | ||||
| Total | 295,393,346.17 | 295,393,346.17 | ||||
Other remarks:
(1) Pledged notes at the balance sheet date
Unit: RMB Yuan
| Items | Closing balance of pledged notes |
| Bank acceptance | 131,943,711.14 |
| Subtotal | 131,943,711.14 |
(2) Endorsed or discounted but undue notes at the balance sheet date
Unit: RMB Yuan
| Items | Closing balance derecognized |
| Bank acceptance | 794,114,911.13 |
| Subtotal | 794,114,911.13 |
Due to the fact that the acceptor of bank acceptance is commercial bank, which is of high credit level, there is very little possibility offailure in recoverability when it is due. Based on this fact, the Company derecognized the endorsed or discounted bank acceptance.However, if any bank acceptance is not recoverable when it is due, the Company still holds joint liability on such acceptance,according to the China Commercial Instrument Law.
Page 124 of 175
6. Advances paid
(1) Age analysis
Unit: RMB Yuan
| Ages | Closing balance | Opening balance | ||
| Amount | % to total | Amount | % to total | |
| Within 1 year | 78,853,695.19 | 99.85% | 115,835,410.14 | 99.81% |
| 1-2 years | 109,065.41 | 0.14% | 108,449.06 | 0.09% |
| 2-3 years | 7,200.00 | 0.01% | 34,278.04 | 0.03% |
| Over 3 years | 85,420.35 | 0.07% | ||
| Total | 78,969,960.60 | -- | 116,063,557.59 | -- |
(2) Details of the top 5 debtors with largest balances
Unit: RMB Yuan
| Debtors | Book balance | Proportion to the total balance of advances paid (%) |
| Supplier A | 16,704,666.71 | 21.15 |
| Supplier B | 10,560,902.65 | 13.37 |
| Supplier C | 6,461,700.00 | 8.18 |
| Supplier D | 5,237,238.93 | 6.63 |
| Supplier E | 5,002,888.54 | 6.34 |
| Subtotal | 43,967,396.83 | 55.67 |
7. Other receivables
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Dividend receivable | 7,159,278.00 | |
| Other receivables | 247,337,970.13 | 178,610,951.64 |
| Total | 254,497,248.13 | 178,610,951.64 |
(1) Dividend receivable
Unit: RMB Yuan
| Items/Investees | Closing balance | Opening balance |
| 浙江春晖环保能源股份有限公司 (Zhejiang Chunhui Environmental Protection Energy Co., Ltd.*) | 7,159,278.00 | 0.00 |
| Total | 7,159,278.00 | 0.00 |
(2) Other receivables
1) Categorized by nature
Unit: RMB Yuan
| Nature of receivables | Closing book balance | Opening book balance |
| Security deposits | 136,459,247.48 | 126,960,566.33 |
| Export tax refund | 69,372,321.60 | 51,751,067.61 |
*
The English name is for identification purpose only.
Page 125 of 175
| Nature of receivables | Closing book balance | Opening book balance |
| Receivables of returned equipment | 45,213,200.00 | |
| Refundable VAT | 3,310,397.40 | 2,139,904.45 |
| Employee petty cash | 5,688,937.00 | 4,764,737.00 |
| Temporary advance payment receivable | 2,456,748.36 | 2,470,070.51 |
| Others | 653,640.31 | 584,839.49 |
| Total | 263,154,492.15 | 188,671,185.39 |
2) Provision for bad debts
Unit: RMB Yuan
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| 12?month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Opening balance | 573,660.51 | 1,522,658.59 | 7,963,914.65 | 10,060,233.75 |
| Opening balance in the current period | ||||
| --Transferred to phase II | -179,053.77 | 179,053.77 | ||
| --Transferred to phase III | -1,075,165.33 | 1,075,165.33 | ||
| Provision made in the current period | 2,521,270.72 | 89,668.05 | 3,145,349.50 | 5,756,288.27 |
| Closing balance | 2,915,877.46 | 716,215.08 | 12,184,429.48 | 15,816,522.02 |
Significant changes in book balance of other receivables with changes in provision for bad debts:
□ Applicable √ Not applicable
Ages analysis
Unit: RMB Yuan
| Ages | Book balance |
| Within 1 year (inclusive) | 139,999,021.92 |
| 1-2 years | 3,581,075.41 |
| 2-3 years | 10,375,826.67 |
| Over 3 years | 109,198,568.15 |
| 3-4 years | 6,990,477.95 |
| 4-5 years | 227,173.58 |
| Over 5 years | 101,980,916.62 |
| Total | 263,154,492.15 |
3) Provisions made, collected or reversed in the current period
Provisions made in the current period:
Unit: RMB Yuan
| Categories | Opening balance | Increase/Decrease | Closing balance | |||
| Accrual | Recovery/ Reversal | Write-off | Others | |||
| Provision made on a collective basis | 10,060,233.75 | 5,756,288.27 | 15,816,522.02 | |||
| Total | 10,060,233.75 | 5,756,288.27 | 15,816,522.02 | |||
Page 126 of 175
4) Details of the top 5 debtors with largest balances
Unit: RMB Yuan
| Debtors | Nature of receivables | Book balance | Ages | Proportion to the total balance of other receivables (%) | Provision for bad debts |
| Weifang Municipal Bureau of Land and Resource, Binhai District Branch | Security deposits | 97,900,000.00 | Over 3 years | 37.20% | |
| State Taxation Administration (Export tax refund receivable) | Export tax refund | 69,372,321.60 | Within 1 year | 26.36% | |
| 无锡华光锅炉股份有限公司 (Wuxi Huaguang Boiler Co., Ltd.*) | Receivables of returned equipment | 17,280,000.00 | Within 1 year | 6.57% | 864,000.00 |
| Suihua Municipal Labor Security Supervision Detachment | Security deposits | 400,000.00 | 1-2 years | 3.84% | 9,188,392.42 |
| Security deposits | 3,000,490.53 | 2-3 years | |||
| Security deposits | 6,708,000.00 | Over 3 years | |||
| 杭州汽轮机股份有限公司 (Hangzhou Steam Turbine Co., Ltd.*) | Receivables of returned equipment | 7,440,000.00 | Within 1 year | 2.83% | 372,000.00 |
| Total | -- | 202,100,812.13 | -- | 76.80% | 10,424,392.42 |
8. Inventories
(1) Details on categories
Unit: RMB Yuan
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for inventory write-down/ Provision for impairment of cost to fulfill a contract | Carrying amount | Book balance | Provision for inventory write-down/ Provision for impairment of cost to fulfill a contract | Carrying amount | |
| Raw materials | 456,431,898.77 | 653,463.45 | 455,778,435.32 | 558,843,825.21 | 986,354.24 | 557,857,470.97 |
| Work in process | 1,008,021,313.66 | 1,008,021,313.66 | 820,838,241.10 | 820,838,241.10 | ||
| Goods on hand | 1,247,338,255.71 | 14,685,437.55 | 1,232,652,818.16 | 1,201,225,837.45 | 10,578,367.06 | 1,190,647,470.39 |
| Development cost | 197,045,414.10 | 197,045,414.10 | 294,084,933.10 | 294,084,933.10 | ||
| Developed products | 122,679,279.65 | 122,679,279.65 | 129,785,192.22 | 129,785,192.22 | ||
| Goods dispatched | 88,307,137.99 | 88,307,137.99 | 50,257,257.15 | 50,257,257.15 | ||
| Materials on consignment for further processing | 4,102,415.43 | 4,102,415.43 | 4,033,866.34 | 4,033,866.34 | ||
| Packages | 14,276,697.20 | 14,276,697.20 | 15,062,156.67 | 15,062,156.67 | ||
| Low-value consumables | 70,793,855.65 | 70,793,855.65 | 54,475,970.84 | 54,475,970.84 | ||
| Total | 3,208,996,268.16 | 15,338,901.00 | 3,193,657,367.16 | 3,128,607,280.08 | 11,564,721.30 | 3,117,042,558.78 |
*The English names are for identification purpose only.
Page 127 of 175
(2) Inventories – Development cost
Unit: RMB Yuan
| Items | Estimated total investment | Opening balance | Closing balance |
| Boao NHU Resort | 550 million | 33,575,305.88 | 33,723,820.73 |
| Weifang NHU Town Phase II | 398.53 million | 260,509,627.22 | 163,321,593.67 |
| Subtotal | 294,084,933.10 | 197,045,414.40 |
(3) Inventories – Developed products
Unit: RMB Yuan
| Items | Date of completion | Opening balance | Increase | Decrease | Closing balance |
| Boao NHU Resort Center | Dec. 2014 | 129,785,192.22 | 7,151,804.33 | 14,257,716.90 | 122,679,279.65 |
| Subtotal | 129,785,192.22 | 7,151,804.33 | 14,257,716.90 | 122,679,279.65 |
(4) Provision for inventory write-down and provision for impairment of cost to fulfill a contract
Unit: RMB Yuan
| Items | Opening balance | Increase | Decrease | Closing balance | ||
| Accrual | Others | Recovery/ Reversal | Others | |||
| Raw materials | 986,354.24 | 332,890.79 | 653,463.45 | |||
| Goods on hand | 10,578,367.06 | 25,275,549.36 | 21,168,478.87 | 14,685,437.55 | ||
| Total | 11,564,721.30 | 25,275,549.36 | 21,501,369.66 | 15,338,901.00 | ||
Determination basis of net realizable value and reasons for the reversal or write-off of provision for inventory write-down
| Items | Determination basis of net realizable value | Reasons for write-off of provision for inventory write-down |
| Raw materials | Estimated selling price of relevant finished goods less cost to be incurred upon completion, estimated selling expenses, and relevant taxes and surcharges. | Inventories with provision for inventory write-down made at the beginning of period were used or sold in the current period. |
| Goods on hand | Estimated selling price of relevant finished goods less estimated selling expenses, and relevant taxes and surcharges. | Inventories with provision for inventory write-down made at the beginning of period were sold in the current period. |
9. Other current assets
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Bank financial products and structured deposits | 550,000,000.00 | 950,000,000.00 |
| Prepaid VAT or input VAT to be credited | 336,963,113.65 | 817,273,751.05 |
| Prepaid enterprise income tax | 5,070,275.22 | 5,193,417.21 |
| Prepaid insurance premiums | 3,727,306.74 | 5,056,905.47 |
| Prepaid housing rents | 12,335.78 | |
| Prepaid urban maintenance and construction tax | 10,786.63 | 16,532.22 |
| Prepaid education surcharge | 6,472.01 | 9,919.36 |
| Prepaid local education surcharge | 4,314.62 | 6,612.87 |
| Total | 895,782,268.87 | 1,777,569,473.96 |
Page 128 of 175
10. Long-term equity investments
Unit: RMB Yuan
| Investees | Opening carrying amount | Increase/Decrease | Closing carrying amount | Closing balance of provision for impairment | |||||||
| Investments increased | Investments decreased | Investment income/losses recognized under equity method | Adjustment in other comprehensive income | Changes in other equity | Cash dividend/ Profit declared for distribution | Provision for impairment | Others | ||||
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Zhejiang Chunhui Environmental Protection Energy Co., Ltd. | 199,358,330.80 | 60,097,137.98 | -9,727,015.88 | 40,855,278.00 | 208,873,174.90 | ||||||
| Zhejiang Saiya Chemical Materials Co., Ltd. | 98,309,710.69 | 5,533,827.30 | 54,679.83 | 103,898,217.82 | |||||||
| Zhejiang sanbo polymer Co., Ltd | |||||||||||
| DSM NHU Engineering Materials (Zhejiang) Co., Ltd. | |||||||||||
| 山东滨安职业培训学校有限公司 (Shandong Bin’an Vocational Training School Co., Ltd.*) [Note] | 6,391,064.12 | -495,463.27 | 5,895,600.85 | ||||||||
| CysBio ApS | 39,319,785.57 | -5,831,157.97 | -827,995.42 | 32,660,632.18 | |||||||
| Subtotal | 343,378,891.18 | 59,304,344.04 | -9,727,015.88 | 40,855,278.00 | -773,315.59 | 351,327,625.75 | |||||
| Total | 343,378,891.18 | 59,304,344.04 | -9,727,015.88 | 40,855,278.00 | -773,315.59 | 351,327,625.75 | |||||
Other remarks:
Note: It was formerly named as 山东滨安科技有限公司 (Shandong Bin’an Technology Co., Ltd.
*), and was renamed as ShandongBin’an Vocational Training School Co., Ltd. on December 15, 2021.
11. Other equity instrument investments
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Zhejiang Second Pharma Co., Ltd. | 7,790,147.55 | 7,790,147.55 |
| 上海联创永津股权投资企业(有限合伙) (Shanghai NewMargin Yongjin Eqiuty Enterprise (LP)*) | 15,208,000.00 | 15,208,000.00 |
| Total | 22,998,147.55 | 22,998,147.55 |
12. Fixed assets
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Fixed assets | 14,318,919,487.82 | 13,914,151,215.54 |
| Total | 14,318,919,487.82 | 13,914,151,215.54 |
(1) Details
Unit: RMB Yuan
| Items | Buildings and structures | Generali equipment | Special equipment | Transport facilities | Total |
| I. Cost: | |||||
| 1. Opening balance | 5,471,048,302.28 | 148,005,902.83 | 12,294,355,532.66 | 25,738,968.49 | 17,939,148,706.26 |
| 2. Increase | 836,601,746.21 | 41,934,813.54 | 769,353,236.08 | 1,122,543.76 | 1,649,012,339.59 |
| (1) Acquisition | 285,687,891.98 | 34,246,572.27 | 325,846,946.66 | 1,115,685.35 | 646,897,096.26 |
| (2) Transferred in | 294,766,526.21 | 7,688,241.27 | 443,506,289.42 | 6,858.41 | 745,967,915.31 |
*
The English names are for identification purpose only.
Page 129 of 175
| Items | Buildings and structures | Generali equipment | Special equipment | Transport facilities | Total |
| from construction in progress | |||||
| (3) Transferred in from inventories | 256,147,328.02 | 256,147,328.02 | |||
| 3. Decrease | 14,245,770.31 | 4,030,191.07 | 103,102,272.08 | 1,768,165.93 | 123,146,399.39 |
| (1) Disposal/ Scrapping | 14,245,770.31 | 4,030,191.07 | 103,102,272.08 | 1,768,165.93 | 123,146,399.39 |
| 4. Closing balance | 6,293,404,278.18 | 185,910,525.30 | 12,960,606,496.66 | 25,093,346.32 | 19,465,014,646.46 |
| II. Accumulated depreciation | |||||
| 1. Opening balance | 522,190,479.09 | 84,230,573.73 | 3,401,522,313.16 | 16,291,440.70 | 4,024,234,806.68 |
| 2. Increase | 163,902,276.56 | 18,682,829.26 | 1,002,411,067.77 | 1,993,170.08 | 1,186,989,343.67 |
| (1) Accrual | 163,902,276.56 | 18,682,829.26 | 1,002,411,067.77 | 1,993,170.08 | 1,186,989,343.67 |
| 3. Decrease | 5,313,720.12 | 3,774,660.44 | 84,623,998.89 | 1,143,718.22 | 94,856,097.67 |
| (1) Disposal/ Scrapping | 5,313,720.12 | 3,774,660.44 | 84,623,998.89 | 1,143,718.22 | 94,856,097.67 |
| 4. Closing balance | 680,779,035.53 | 99,138,742.55 | 4,319,309,382.04 | 17,140,892.56 | 5,116,368,052.68 |
| III. Provision for impairment | |||||
| 1. Opening balance | 16,110.64 | 1,141.64 | 729,136.75 | 16,295.01 | 762,684.04 |
| 2. Increase | 20,964,371.17 | 22,419.03 | 7,988,069.34 | 28,974,859.54 | |
| (1) Accrual | 20,964,371.17 | 22,419.03 | 7,988,069.34 | 28,974,859.54 | |
| 3. Decrease | 10,437.62 | 10,437.62 | |||
| (1) Disposal/ Scrapping | 10,437.62 | 10,437.62 | |||
| 4. Closing balance | 20,980,481.81 | 23,560.67 | 8,706,768.47 | 16,295.01 | 29,727,105.96 |
| IV. Carrying amount | |||||
| 1. Closing balance | 5,591,644,760.84 | 86,748,222.08 | 8,632,590,346.15 | 7,936,158.75 | 14,318,919,487.82 |
| 2. Opening balance | 4,948,841,712.55 | 63,774,187.46 | 8,892,104,082.75 | 9,431,232.78 | 13,914,151,215.54 |
(2) Fixed assets temporarily idle
Unit: RMB Yuan
| Items | Cost | Accumulated depreciation | Provision for impairment | Carrying amount | Remarks |
| Buildings and structures | 47,473,208.51 | 26,497,772.70 | 20,975,435.81 | ||
| General equipment | 3,238,827.27 | 2,524,446.75 | 22,419.03 | 691,961.49 | |
| Special equipment | 251,479,852.63 | 220,109,064.98 | 8,488,091.95 | 22,882,695.70 | |
| Subtotal | 302,191,888.41 | 249,131,284.43 | 29,485,946.79 | 23,574,657.19 |
(3) Fixed assets leased out under operating leases
Unit: RMB Yuan
| Items | Closing carrying amount |
| Buildings and structures | 24,307,887.52 |
| Subtotal | 24,307,887.52 |
Page 130 of 175
(4) Fixed assets with certificate of titles being unsettled
Unit: RMB Yuan
| Items | Carrying amount | Reasons for unsettlement |
| Buildings and structures | 1,250,034,807.78 | Relevant procedures have not yet been completed. |
| Subtotal | 1,250,034,807.78 |
13. Construction in progress
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Construction in progress | 2,984,835,072.82 | 1,325,545,420.56 |
| Total | 2,984,835,072.82 | 1,325,545,420.56 |
(1) Details
Unit: RMB Yuan
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Shandong Industrial Park Project phase I | 30,856,442.13 | 30,856,442.13 | 4,682,266.37 | 4,682,266.37 | ||
| Hongweisu project | 367,528,650.61 | 367,528,650.61 | 125,379,657.49 | 125,379,657.49 | ||
| Auxiliary materials supporting project of Heilongjiang NHU Biological Fermentation Industrial Park | 62,373,927.07 | 62,373,927.07 | ||||
| Heilongjiang Xinhao Project phase II | 83,453,010.80 | 83,453,010.80 | 24,493,344.31 | 24,493,344.31 | ||
| Methionine project with annual output of 0.25 million tons | 90,355,454.04 | 90,355,454.04 | 16,754,982.19 | 16,754,982.19 | ||
| Shandong Industrial Park 615 Project | 215,871,416.04 | 215,871,416.04 | ||||
| Shandong Industrial Park 617A Project | 1,718,828.38 | 1,718,828.38 | 71,756,558.71 | 71,756,558.71 | ||
| Shandong Industrial Park 603 Project | 47,927,444.49 | 47,927,444.49 | ||||
| Shandong Industrial Park MH Project | 16,423,904.95 | 16,423,904.95 | ||||
| Shangyu Industrial Park PPS Project | 341,096,363.93 | 341,096,363.93 | 43,358,686.84 | 43,358,686.84 | ||
| Shandong Industrial Park TMB Project | 1,173,527,758.16 | 1,173,527,758.16 | 448,565,055.49 | 448,565,055.49 | ||
| Renovation and upgrading project of biochemical workshop | 58,503,795.45 | 58,503,795.45 | ||||
| Daming Life and Health Industry Project | 228,847,778.44 | 228,847,778.44 | ||||
| Shandong Industrial Park 603 project phase II | 3,019,859.02 | 3,019,859.02 | ||||
| 616 Joint Production Project | 393,488,496.81 | 393,488,496.81 | ||||
| Other piecemeal projects | 270,942,430.50 | 270,942,430.50 | 189,454,381.16 | 189,454,381.16 | ||
| Total | 2,984,835,072.82 | 2,984,835,072.82 | 1,325,545,420.56 | 1,325,545,420.56 | ||
Page 131 of 175
(2) Changes in significant projects
Unit: RMB Yuan
| Projects | Budgets | Opening balance | Increase | Transferred to fixed assets | Other decrease | Closing balance | Accumulated input to budget | Completion percentage | Accumulated amount of borrowing cost capitalization | Including: Amount of borrowing cost capitalization in current period | Annual capitalization rate | Fund source |
| Shandong Industrial Park Project phase I | 311,600.00 | 4,682,266.37 | 35,283,588.83 | 7,833,859.50 | 1,275,553.57 | 30,856,442.13 | 84.71% | 99.00% | 87,993,003.25 | Others | ||
| Hongweisu project | 47,822.98 | 125,379,657.49 | 242,148,993.12 | 367,528,650.61 | 76.85% | 80.00% | 1,840,275.00 | 1,840,275.00 | 4.05% | Others | ||
| Auxiliary materials supporting project of Heilongjiang NHU Biological Fermentation Industrial Park | 8,739.61 | 62,373,927.07 | 13,054,460.73 | 75,428,387.80 | 86.31% | 100.00% | Others | |||||
| Heilongjiang Xinhao Project phase II | 10,746.25 | 24,493,344.31 | 58,959,666.49 | 83,453,010.80 | 77.66% | 80.00% | Others | |||||
| Methionine project with annual output of 0.25 million tons | 536,984.22 | 16,754,982.19 | 80,293,926.62 | 6,693,454.77 | 90,355,454.04 | 38.86% | 45.00% | Raised funds | ||||
| Shandong Industrial Park 615 Project [Note 1] | 215,871,416.04 | 215,871,416.04 | Others | |||||||||
| Shandong Industrial Park 617A Project | 8,500.00 | 71,756,558.71 | 1,718,828.38 | 58,322,544.91 | 13,434,013.80 | 1,718,828.38 | 86.44% | 90.00% | Others | |||
| Shandong Industrial Park 603 Project | 9,728.03 | 47,927,444.49 | 47,391,517.14 | 95,318,961.63 | 97.99% | 100.00% | Others | |||||
| Shandong Industrial Park MH Project [Note 2] | 16,423,904.95 | 16,423,904.95 | Others | |||||||||
| Shangyu Industrial Park PPS Project | 70,900.00 | 43,358,686.84 | 297,737,677.09 | 341,096,363.93 | 48.11% | 50.00% | Others | |||||
| Shandong Industrial Park TMB Project | 123,160.59 | 448,565,055.49 | 741,286,863.95 | 16,324,161.28 | 1,173,527,758.16 | 96.61% | 100.00% | 7,718,970.51 | 7,718,970.51 | 4.28% | Others | |
| Renovation and upgrading project of biochemical workshop | 6,911.00 | 58,503,795.45 | 6,289,505.68 | 64,793,301.13 | 93.75% | 100.00% | Others | |||||
| Daming Life and Health Industry Project | 45,772.07 | 228,847,778.44 | 228,847,778.44 | 63.75% | 80.00% | Others | ||||||
| Shandong Industrial Park 603 Project phase II | 8,983.60 | 3,019,859.02 | 3,019,859.02 | 3.36% | 5.00% | Others | ||||||
| 616 Joint Production Project | 77,213.69 | 393,488,496.81 | 393,488,496.81 | 50.96% | 55.00% | Others | ||||||
| Total | 1,267,062.04 | 1,136,091,039.40 | 2,149,521,162.30 | 324,714,671.02 | 247,004,888.36 | 2,713,892,642.32 | -- | -- | 97,552,248.76 | 9,559,245.51 | -- |
Note 1: Shandong Industrial Park 615 Project cannot reach the designed usable conditions due to changes of planning. In the currentperiod, equipment available for use amounting to 160,764,472.56 yuan was transferred into 616 Joint Production Project, assetsamounting to 2,787,450.02 yuan were disposed, and the remaining part amounting to 52,319,493.46 yuan was retired.Note 2: Shandong Industrial Park MH Project was included into 616 Joint Production Project for accounting after the latter wasestablished.
Page 132 of 175
14. Right-of-use assets
Unit: RMB Yuan
| Items | Buildings and structures | Total |
| I. Cost | ||
| 1. Opening balance | 3,113,997.88 | 3,113,997.88 |
| 2. Increase | 292,642.27 | 292,642.27 |
| (1) Leased in | 292,642.27 | 292,642.27 |
| 3. Decrease | ||
| 4. Closing balance | 3,406,640.15 | 3,406,640.15 |
| II. Accumulated depreciation | ||
| 1. Opening balance | ||
| 2. Increase | 283,003.04 | 283,003.04 |
| (1) Accrual | 283,003.04 | 283,003.04 |
| 3. Decrease | ||
| 4. Closing balance | 283,003.04 | 283,003.04 |
| III. Carrying amount | ||
| 1. Closing balance | 3,123,637.11 | 3,123,637.11 |
| 2. Opening balance | 3,113,997.88 | 3,113,997.88 |
Note: Please refer to item V 27 (1) of this section for details on the difference between the opening balance and the closing balance ofthe preceding period (i.e. December 31, 2020).
15. Intangible assets
(1) Details
Unit: RMB Yuan
| Items | Land use right | Patent right | Non-patented technology | Software | Total |
| I. Cost | |||||
| 1. Opening balance | 1,535,867,143.93 | 15,634,893.87 | 1,880,000.00 | 24,620,367.22 | 1,578,002,405.02 |
| 2. Increase | 135,472,652.16 | 12,444,620.84 | 470,000.00 | 1,176,700.46 | 149,563,973.46 |
| (1) Acquisition | 135,472,652.16 | 12,444,620.84 | 470,000.00 | 1,176,700.46 | 149,563,973.46 |
| 3. Closing balance | 1,671,339,796.09 | 28,079,514.71 | 2,350,000.00 | 25,797,067.68 | 1,727,566,378.48 |
| II. Accumulated amortization | |||||
| 1. Opening balance | 156,112,743.86 | 1,297,796.00 | 41,777.78 | 13,482,957.51 | 170,935,275.15 |
| 2. Increase | 31,271,003.28 | 1,586,615.16 | 167,111.10 | 1,876,616.13 | 34,901,345.67 |
| (1) Accrual | 31,271,003.28 | 1,586,615.16 | 167,111.10 | 1,876,616.13 | 34,901,345.67 |
| 3. Closing balance | 187,383,747.14 | 2,884,411.16 | 208,888.88 | 15,359,573.64 | 205,836,620.82 |
| III. Carrying amount | - | ||||
| 1. Closing balance | 1,483,956,048.95 | 25,195,103.55 | 2,141,111.12 | 10,437,494.04 | 1,521,729,757.66 |
| 2. Opening balance | 1,379,754,400.07 | 14,337,097.87 | 1,838,222.22 | 11,137,409.71 | 1,407,067,129.87 |
At the balance sheet date, intangible assets formed through internal research and development account for 0.00% of total intangibleassets.
Page 133 of 175
(2) Land use right with certificate of titles being unsettled
Unit: RMB Yuan
| Items | Carrying amount | Reasons for unsettlement |
| Land use right | 135,590,077.30 | Relevant procedures have not yet been completed. |
| Subtotal | 135,590,077.30 |
16. Goodwill
(1) Cost
Unit: RMB Yuan
| Investees or events resulting in goodwill | Opening balance | Increase | Decrease | Closing balance | ||
| Business combination | Translation reserve | Disposal | Translation reserve | |||
| Bardoterminal GmbH | 2,307,297.60 | 231,534.80 | 2,075,762.80 | |||
| Total | 2,307,297.60 | 231,534.80 | 2,075,762.80 | |||
(2) Provision for impairment
Unit: RMB Yuan
| Investees or events resulting in goodwill | Opening balance | Increase | Decrease | Closing balance | ||
| Accrual | Translation reserve | Disposal | Translation reserve | |||
| Bardoterminal GmbH | 2,307,297.60 | 231,534.80 | 2,075,762.80 | |||
| Total | 2,307,297.60 | 231,534.80 | 2,075,762.80 | |||
Note: Current decrease refers to translation reserve.
17. Long-term prepayments
Unit: RMB Yuan
| Items | Opening balance | Increase | Amortization | Other decrease | Closing balance |
| Decoration fees | 13,230,866.20 | 925,144.78 | 3,777,100.31 | 10,378,910.67 | |
| Site leveling fees | 48,664.80 | 16,221.60 | 32,443.20 | ||
| Afforestation fees | 89,881.48 | 89,881.48 | |||
| Catalysts | 9,499,764.99 | 1,319,411.80 | 8,180,353.19 | ||
| Total | 13,369,412.48 | 10,424,909.77 | 5,202,615.19 | 18,591,707.06 |
18. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets before offset
Unit: RMB Yuan
| Items | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for impairment of assets | 65,402,828.30 | 11,004,917.24 | 41,096,831.73 | 6,778,514.76 |
| Unrealized profit from internal transactions | 116,662,766.83 | 17,499,415.02 | 180,352,009.29 | 28,516,508.65 |
| Deferred income | 143,266,156.26 | 21,489,923.45 | 132,441,298.90 | 19,866,194.83 |
Page 134 of 175
| Items | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Difference in depreciation of fixed assets | 38,739,574.92 | 5,810,936.24 | 66,549,918.38 | 9,982,487.76 |
| Total | 364,071,326.31 | 55,805,191.95 | 420,440,058.30 | 65,143,706.00 |
(2) Deferred tax liabilities before offset
Unit: RMB Yuan
| Items | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Difference due to one-off pre-tax deduction of fixed assets | 513,284,381.91 | 89,042,045.24 | 391,333,594.21 | 71,800,274.33 |
| Profit before tax of NHU (Hong Kong) Trading Co., Ltd. | 311,395,060.48 | 46,709,259.07 | 184,979,768.52 | 27,746,965.28 |
| Changes in fair value of held-for-trading financial instruments, derivative financial instruments | 1,949,945.63 | 292,491.84 | ||
| Total | 824,679,442.39 | 135,751,304.31 | 578,263,308.36 | 99,839,731.45 |
(3) Deferred tax assets or liabilities after offset
Unit: RMB Yuan
| Items | Closing balance of deferred tax assets offset by deferred tax liabilities | Closing balance of deferred tax assets/ liabilities after offset | Opening balance of deferred tax assets offset by deferred tax liabilities | Opening balance of deferred tax assets/ liabilities after offset |
| Deferred tax assets | 55,805,191.95 | 65,143,706.00 | ||
| Deferred tax liabilities | 135,751,304.31 | 99,839,731.45 |
(4) Details of unrecognized deferred tax assets
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Deductible temporary difference | 381,427,135.81 | 253,988,934.04 |
| Deductible losses | 976,794,270.71 | 428,660,231.59 |
| Total | 1,358,221,406.52 | 682,649,165.63 |
(5) Maturity years of deductible losses of unrecognized deferred tax assets
Unit: RMB Yuan
| Maturity years | Closing balance | Opening balance | Remarks |
| Year 2026 | 3,312,384.19 | 3,312,384.19 | |
| Year 2027 | 11,527,268.52 | 11,527,269.04 | |
| Year 2028 | 38,888,442.26 | 38,888,442.26 | |
| Year 2029 | 104,197,877.04 | 104,129,305.33 | |
| Year 2030 | 260,165,696.64 | 270,802,830.77 | |
| Year 2031 | 558,702,602.06 | ||
| Total | 976,794,270.71 | 428,660,231.59 | -- |
Page 135 of 175
19. Other non-current assets
Unit: RMB Yuan
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Pollution emission trading fees | 1,611,305.24 | 1,611,305.24 | 14,447,447.94 | 14,447,447.94 | ||
| Payments for coal quota | 65,896,000.00 | 65,896,000.00 | 68,296,000.00 | 68,296,000.00 | ||
| Prepayments for long-term assets | 433,569,279.16 | 433,569,279.16 | 195,050,042.74 | 195,050,042.74 | ||
| Total | 501,076,584.40 | 501,076,584.40 | 277,793,490.68 | 277,793,490.68 | ||
20. Short-term borrowings
(1) Details on categories
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Guaranteed borrowings | 10,013,902.78 | |
| Credit borrowings | 1,383,332,827.92 | 2,225,474,073.09 |
| Credit and pledged borrowings | 100,000,000.00 | |
| Pledged and guaranteed borrowings | 28,037,216.66 | |
| Credit and guaranteed borrowings | 20,000,000.00 | |
| Total | 1,403,332,827.92 | 2,363,525,192.53 |
21. Notes payable
Unit: RMB Yuan
| Categories | Closing balance | Opening balance |
| Bank acceptance | 694,124,946.73 | 497,644,517.23 |
| Total | 694,124,946.73 | 497,644,517.23 |
22. Accounts payable
(1) Details
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Materials and labor costs | 658,235,707.69 | 567,395,890.15 |
| Payments for engineering and equipment | 777,730,720.07 | 896,332,425.89 |
| Total | 1,435,966,427.76 | 1,463,728,316.04 |
23. Contract liabilities
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Payments for goods received in advance | 61,135,258.36 | 56,302,537.11 |
| Total | 61,135,258.36 | 56,302,537.11 |
Page 136 of 175
24. Employee benefits payable
(1) Details
Unit: RMB Yuan
| Items | Opening balance | Increase | Decrease | Closing balance |
| I. Short-term employee benefits | 322,646,061.45 | 1,424,679,325.78 | 1,376,716,054.16 | 370,609,333.07 |
| II. Post-employment benefits – defined contribution plan | 76,328,654.93 | 76,328,654.93 | ||
| Total | 322,646,061.45 | 1,501,007,980.71 | 1,453,044,709.09 | 370,609,333.07 |
(2) Details of short-term employee benefits
Unit: RMB Yuan
| Items | Opening balance | Increase | Decrease | Closing balance |
| 1. Wage, bonus, allowance and subsidy | 259,201,281.23 | 1,248,471,547.31 | 1,190,271,242.90 | 317,401,585.64 |
| 2. Employee welfare fund | 82,518,675.71 | 82,518,675.71 | ||
| 3. Social insurance premium | 43,165,402.73 | 43,165,402.73 | ||
| Including: Medicare premium | 38,047,525.90 | 38,047,525.90 | ||
| Occupational injuries premium | 2,948,069.88 | 2,948,069.88 | ||
| Maternity premium | 2,169,806.95 | 2,169,806.95 | ||
| 4. Housing provident fund | 41,250,117.58 | 41,250,117.58 | ||
| 5. Trade union fund and employee education fund | 63,444,780.22 | 9,273,582.45 | 19,510,615.24 | 53,207,747.43 |
| Total | 322,646,061.45 | 1,424,679,325.78 | 1,376,716,054.16 | 370,609,333.07 |
(3) Details of defined contribution plan
Unit: RMB Yuan
| Items | Opening balance | Increase | Decrease | Closing balance |
| 1. Basic endowment insurance premium | 73,480,864.56 | 73,480,864.56 | ||
| 2. Unemployment insurance premium | 2,847,790.37 | 2,847,790.37 | ||
| Total | 76,328,654.93 | 76,328,654.93 |
25. Taxes and rates payable
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| VAT | 45,928,799.96 | 30,247,041.09 |
| Enterprise income tax | 324,899,257.88 | 197,310,396.17 |
| Individual income tax withheld for tax authorities | 3,749,309.86 | 1,951,726.31 |
| Urban maintenance and construction tax | 3,686,070.96 | 1,971,609.80 |
| Land appreciation tax | 15,244,826.82 | 14,519,045.43 |
| Housing property tax | 15,577,742.83 | 13,209,123.23 |
| Land use tax | 8,351,133.07 | 8,067,682.42 |
| Education surcharge (local education surcharge) | 3,273,420.39 | 1,537,328.96 |
| Stamp duty | 32,700.92 | 7,902.60 |
| Local water conservancy construction fund | 39,142.74 |
Page 137 of 175
| Items | Closing balance | Opening balance |
| Environmental protection tax | 3,473.63 | |
| Total | 420,743,262.69 | 268,864,472.38 |
26. Other payables
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Other payables | 56,712,103.36 | 129,839,228.89 |
| Total | 56,712,103.36 | 129,839,228.89 |
1) Categorized by nature
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Security deposits | 32,961,596.12 | 23,102,033.05 |
| Temporary receipts payable | 11,425,312.83 | 9,575,676.08 |
| Earnest money for housing purchase (Boao NHU Resort Center) | 100,000.00 | 1,893,256.00 |
| Payments for equity transfer | 83,904,479.79 | |
| Call loans | 3,243,666.67 | |
| Others | 12,225,194.41 | 8,120,117.30 |
| Total | 56,712,103.36 | 129,839,228.89 |
27. Non-current liabilities due within one year
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Long-term borrowings due within one year | 2,029,254,131.97 | 1,275,888,293.32 |
| Lease liabilities due within one year | 245,377.46 | 92,628.26 |
| Total | 2,029,499,509.43 | 1,275,980,921.58 |
Note: Please refer to item V 27 of this section for details on the difference between the opening balance and the closing balance of thepreceding period (i.e. December 31, 2020).
28. Other current liabilities
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Output VAT to be recognized | 5,133,310.10 | 4,956,463.49 |
| Total | 5,133,310.10 | 4,956,463.49 |
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29. Long-term borrowings
(1) Categories
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Mortgaged borrowings | 37,669,008.56 | 49,635,844.80 |
| Guaranteed borrowings | 945,155,611.12 | 1,175,331,152.79 |
| Credit borrowings | 4,165,987,166.81 | 2,911,908,356.74 |
| Total | 5,148,811,786.49 | 4,136,875,354.33 |
30. Lease liabilities
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Unpaid lease payments | 4,331,618.17 | 4,557,047.64 |
| Less: Unrealized financing expenses | 1,394,750.02 | 1,535,678.02 |
| Total | 2,936,868.15 | 3,021,369.62 |
Note: Please refer to item V 27 of this section for details on the difference between the opening balance and the closing balance of thepreceding period (i.e. December 31, 2020).
31. Deferred income
Unit: RMB Yuan
| Items | Opening balance | Increase | Decrease | Closing balance | Reasons for balance |
| Government grants | 873,066,181.34 | 275,798,900.00 | 85,165,405.18 | 1,063,699,676.16 | The Company received government grants related to assets, which were amortized based on the depreciation progress of corresponding assets. |
| Total | 873,066,181.34 | 275,798,900.00 | 85,165,405.18 | 1,063,699,676.16 | -- |
Details of government grants
Unit: RMB Yuan
| Items | Opening balance | Increase | Grants included into non-operating revenue | Grants included into other income | Grants offsetting relevant cost | Other changes | Closing balance | Related to assets/income |
| Special funds for Biological Fermentation Industrial Park Project | 476,914,860.00 | 49,336,020.00 | 427,578,840.00 | Related to assets | ||||
| Special funds for enterprise development (Shandong Vitamins) | 84,635,251.75 | 9,672,600.20 | 74,962,651.55 | Related to assets | ||||
| Special funds for joint production project of Xinhao Thermal Power | 35,547,916.69 | 3,774,999.96 | 31,772,916.73 | Related to assets | ||||
| Technical renovation for green deep processing of 2019 | 34,260,000.00 | 34,260,000.00 | Related to assets | |||||
| Special funds for enterprise development (Amino Acid) | 38,950,549.48 | 8,000,000.00 | 1,145,604.36 | 45,804,945.12 | Related to assets | |||
| Subsidies for land leveling of Shandong | 29,026,913.28 | 718,189.44 | 28,308,723.84 | Related to assets | ||||
| Enterprise development funds of Shandong | 19,285,039.00 | 437,814.12 | 18,847,224.88 | Related to assets |
Page 139 of 175
| Items | Opening balance | Increase | Grants included into non-operating revenue | Grants included into other income | Grants offsetting relevant cost | Other changes | Closing balance | Related to assets/income |
| PPS construction project with annual output of 10,000 tons | 13,238,499.92 | 1,826,000.04 | 11,412,499.88 | Related to assets | ||||
| Subsidies for PPS resin with annual output of 5,000 tons and PPS composite materials with annual output of 6,000 tons | 11,400,000.00 | 2,850,000.00 | 8,550,000.00 | Related to assets | ||||
| Enterprise development funds of Advanced Manufacturing Industrial Park | 8,690,037.83 | 198,251.76 | 8,491,786.07 | Related to assets | ||||
| Effective industrial input expansion of 2016 | 7,022,400.00 | 957,600.00 | 6,064,800.00 | Related to assets | ||||
| Funds for key thematic projects of industrial revitalization and technical renovation of 2012 | 5,351,785.70 | 1,427,142.84 | 3,924,642.86 | Related to assets | ||||
| Fiscal subsidies for low-rent housing | 6,339,417.24 | 240,857.16 | 6,098,560.08 | Related to assets | ||||
| Subsidies from land transfer fees of Shandong dormitory | 5,123,252.66 | 250,231.57 | 4,873,021.09 | Related to assets | ||||
| Subsidies for inputs in biochemical infrastructure of Shangyu | 4,898,735.72 | 317,771.88 | 4,580,963.84 | Related to assets | ||||
| Construction project of public testing service platform | 4,000,000.00 | 999,999.96 | 3,000,000.04 | Related to assets | ||||
| Subsidies for infrastructure supporting fees | 8,275,875.00 | 797,625.00 | 7,478,250.00 | Related to assets | ||||
| Compensation for resource conservation and environmental protection projects of 2017 | 3,840,000.00 | 480,000.00 | 3,360,000.00 | Related to assets | ||||
| Subsidies for new materials, land and infrastructure construction | 3,242,880.00 | 810,720.00 | 2,432,160.00 | Related to assets | ||||
| Special fiscal funds for revitalization of the substantial economy (transformation of traditional industries) of 2017 | 2,679,299.82 | 539,228.52 | 2,140,071.30 | Related to assets | ||||
| Subsidies for RTO Project | 1,666,666.86 | 399,999.96 | 1,266,666.90 | Related to assets | ||||
| Special subsidies for development of marine economy of 2017 | 2,000,000.00 | 2,000,000.00 | Related to assets | |||||
| Special subsidies for high-quality development of manufacturing industry | 2,109,286.90 | 304,957.20 | 1,804,329.70 | Related to assets | ||||
| Enterprise development fund (Shandong Fine Chemical) | 52,224,561.00 | 52,224,561.00 | Related to assets | |||||
| Special funds for Taishan industry leading talents | 7,400,000.00 | 7,400,000.00 | Related to assets | |||||
| Food security control and emergency facilities project | 25,080,000.00 | 209,000.00 | 24,871,000.00 | Related to assets | ||||
| Policy incentives for industrial production projects of 2020 | 25,000,000.00 | 786,778.65 | 24,213,221.35 | Related to assets | ||||
| Special funds for Heilongjiang Biological Fermentation Industrial Park Project | 111,810,000.00 | 111,810,000.00 | Related to assets | |||||
| Incentives for enterprises settling in Industrial Collaborative Innovation Center by Hangzhou Bay Shangyu Economic and Technological Development Zone | 27,728,800.00 | 3,473,383.27 | 24,255,416.73 | Related to assets | ||||
| Subsidies for upgrading coal-fired boilers of 2017 | 260,000.00 | 37,142.88 | 222,857.12 | Related to assets | ||||
| Subsidies for low-nitrogen transformation of gas-fired boilers of Xinchang County | 495,000.00 | 29,464.25 | 465,535.75 | Related to assets | ||||
| Special funds for technical renovation | 20,500,000.00 | 330,396.63 | 20,169,603.37 | Related to assets | ||||
| Incentives for investment promotion | 25,000,000.00 | 17,858.29 | 24,982,141.71 | Related to assets |
Page 140 of 175
| Items | Opening balance | Increase | Grants included into non-operating revenue | Grants included into other income | Grants offsetting relevant cost | Other changes | Closing balance | Related to assets/income |
| Special fiscal supporting funds for high-quality development (investment projects) of manufacturing industry of Xinchang County of 2021 | 4,875,100.00 | 4,875,100.00 | Related to assets | |||||
| Special funds for supporting advanced manufacturing industry and modern service industry | 19,650,000.00 | 19,650,000.00 | Related to assets | |||||
| Other piecemeal subsidies | 12,342,952.49 | 2,795,767.24 | 9,547,185.25 | Related to assets | ||||
| Total | 873,066,181.34 | 275,798,900.00 | 85,165,405.18 | 1,063,699,676.16 |
Note: Please refer to item VII 59 of this section for details on government grants included in profit or loss.
32. Share capital
Unit: RMB Yuan
| Items | Opening balance | Movements | Closing balance | ||||
| Issue of new shares | Bonus shares | Reserve transferred to shares | Others | Subtotal | |||
| Total shares | 2,148,662,300.00 | 429,732,460.00 | 429,732,460.00 | 2,578,394,760.00 | |||
Other remarks, including remarks on current movements and reasons for movements:
Pursuant to the 2020 profit distribution plan deliberated and approved by the general meeting of 2020, based on total shares of2,148,662,300 shares as at December 31, 2020, the Company increased shares at 2 shares per 10 shares by converting capital reserveto all shareholders. After the increase, the total share capital amounted to 2,578,394,760 yuan. Such capital increase had beenverified by Pan-China Certified Public Accountants LLP, and a Capital Verification Report numbered PCCPACVR [2021] 234 wasissued thereon.
33. Capital reserve
Unit: RMB Yuan
| Items | Opening balance | Increase | Decrease | Closing balance |
| Share/capital premium | 4,277,237,673.92 | 429,732,460.00 | 3,847,505,213.92 | |
| Other capital reserve | 283,284,882.92 | 9,727,015.88 | 273,557,867.04 | |
| Total | 4,560,522,556.84 | 439,459,475.88 | 4,121,063,080.96 |
Other remarks, including remarks on current movements and reasons for movements:
Current decrease of capital premium (share premium) was due to conversion of capital reserve to share capital. Please refer to itemVII 32 of this section for details. Current decrease of other capital reserve was due to changes in the Company’s proportionate sharein net assets of the associate Zhejiang Chunhui Environmental Protection Energy Co., Ltd. arising from capital increase made byindividual investors.
34. Treasury shares
Unit: RMB Yuan
| Items | Opening balance | Increase | Decrease | Closing balance |
| Treasury shares | 320,360,784.48 | 320,360,784.48 | ||
| Total | 320,360,784.48 | 320,360,784.48 |
Other remarks, including remarks on current movements and reasons for movements:
Page 141 of 175
Current increase of treasury shares was due to the repurchase of public shares by the Company for the purpose of equity incentiveplan and employee stock ownership plan.
35 Other comprehensive income (OCI)
Unit: RMB Yuan
| Items | Opening balance | Current period cumulative | Closing balance | |||||
| Current period cumulative before income tax | Less: OCI previously recognized but transferred to profit or loss in current period | Less: OCI previously recognized but transferred to retained earnings in current period | Less: Income tax | Attributable to parent company | Attributable to non-controlling shareholders | |||
| Items not to be reclassified subsequently to profit or loss | 27,803,829.31 | -37,096,882.86 | -29,418,001.62 | -7,678,881.24 | -1,614,172.31 | |||
| Including: Other comprehensive income to be transferred to profit or loss under equity method | 506,954.43 | 506,954.43 | ||||||
| Translation reserves | 27,296,874.88 | -37,096,882.86 | -29,418,001.62 | -7,678,881.24 | -2,121,126.74 | |||
| Total | 27,803,829.31 | -37,096,882.86 | -29,418,001.62 | -7,678,881.24 | -1,614,172.31 | |||
36. Special reserve
Unit: RMB Yuan
| Items | Opening balance | Increase | Decrease | Closing balance |
| Work safety fund | 9,550,346.85 | 27,879,615.83 | 24,737,744.17 | 12,692,218.51 |
| Total | 9,550,346.85 | 27,879,615.83 | 24,737,744.17 | 12,692,218.51 |
37. Surplus reserve
Unit: RMB Yuan
| Items | Opening balance | Increase | Decrease | Closing balance |
| Statutory surplus reserve | 1,074,331,150.00 | 214,866,230.00 | 1,289,197,380.00 | |
| Total | 1,074,331,150.00 | 214,866,230.00 | 1,289,197,380.00 |
Other remarks, including remarks on current movements and reasons for movements:
Current increase was due to the appropriation of statutory surplus reserve at 10% of the net profit generated by the parent company,which may cease when the appropriation of statutory surplus reserve is accumulated up to 50% of the registered capital.
38. Undistributed profit
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Opening balance | 11,515,384,739.95 | 9,158,233,971.76 |
| Add: Net profit attributable to owners of the parent company | 4,324,150,263.31 | 3,563,759,939.48 |
| Less: Appropriation of statutory surplus reserve | 214,866,230.00 | 122,486,233.38 |
| Dividend payable on ordinary shares | 1,504,063,610.00 | 1,074,331,150.00 |
| Others | 9,791,787.91 | |
| Closing balance | 14,120,605,163.26 | 11,515,384,739.95 |
Page 142 of 175
Other remarks:
Pursuant to the 2020 profit distribution plan deliberated and approved by the general meeting of 2020, based on total shares of2,148,662,300 shares as of December 31, 2020, the Company distributed cash dividend of 7.00 yuan (tax included) per 10 shares toall shareholders. Cash dividend distributed totaled 1,504,063,610.00 yuan.
39. Operating revenue/Operating cost
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative | ||
| Revenue | Cost | Revenue | Cost | |
| Main operations | 14,647,980,675.91 | 8,124,979,308.14 | 10,230,925,578.36 | 4,665,045,718.58 |
| Other operations | 150,008,415.29 | 87,313,638.13 | 83,158,775.85 | 62,218,285.36 |
| Total | 14,797,989,091.20 | 8,212,292,946.27 | 10,314,084,354.21 | 4,727,264,003.94 |
| Including: Revenue from contracts with customers | 14,795,863,202.58 | 8,211,656,091.12 | 10,313,379,331.85 | 4,726,763,036.02 |
Whether the lower of audited net profit before deducting non-recurring profit or loss and that after deducting non-recurring profit orloss is negative?
□ Yes √ No
Details of revenue:
Unit: RMB Yuan
| Categories of contracts | Total |
| By operating region | |
| Including: Domestic | 7,121,686,534.55 |
| Overseas | 7,674,176,668.03 |
| Subtotal | 14,795,863,202.58 |
| By product | |
| Including: Nutrition | 11,127,987,778.92 |
| Flavor and fragrance | 2,238,700,529.12 |
| New materials | 873,994,673.98 |
| Others | 555,180,220.56 |
| Subtotal | 14,795,863,202.58 |
| By revenue recognition time | |
| Including: Goods (transferred at a point in time) | 14,795,863,202.58 |
| Subtotal | 14,795,863,202.58 |
| By sales channel | |
| Including: Direct sales | 11,475,745,011.90 |
| Agent sales | 3,320,118,190.68 |
| Subtotal | 14,795,863,202.58 |
Information related to performance obligations:
None.Information related to transaction price allocated to the remaining performance obligations:
As of December 31, 2021, revenue corresponding to performance obligations for which the Company has entered into contracts but
Page 143 of 175
not yet performed or fulfilled amounted to 3,023,570,072.19 yuan, of which, 3,023,570,072.19 yuan is expected to be recognized asrevenue in 2022.
40. Taxes and surcharges
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Urban maintenance and construction tax | 30,312,419.65 | 29,198,412.36 |
| Education surcharge (local education surcharge) | 27,571,975.04 | 26,384,789.31 |
| Land appreciation tax | 1,487,064.65 | 569,089.05 |
| Stamp duty | 5,571,964.17 | 3,803,865.23 |
| Housing property tax | 36,023,723.71 | 25,702,227.37 |
| Land use tax | 29,553,065.04 | 28,110,810.83 |
| Vehicle and vessel use tax | 35,481.54 | 32,998.67 |
| Environmental protection tax | 1,069,134.43 | 991,051.20 |
| Total | 131,624,828.23 | 114,793,244.02 |
41. Selling expenses
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Handling charges, freight and insurance fees | 200,763,871.66 | |
| Sales commission and customs declaration charges | 15,913,870.35 | 37,778,102.90 |
| Advertising and promotion expenses, business entertainment expenses | 8,131,154.24 | 7,330,825.13 |
| Employee benefits | 57,976,469.34 | 48,690,106.45 |
| Office expenses, business traveling expenses | 15,428,583.10 | 11,621,637.87 |
| Others | 9,587,008.93 | 6,773,396.57 |
| Total | 107,037,085.96 | 312,957,940.58 |
42. Administrative expenses
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Employee benefits | 201,712,221.78 | 214,752,624.21 |
| Office expenses, business traveling expenses | 59,903,319.54 | 63,620,806.74 |
| Taxes | 9,628,608.33 | 9,282,039.35 |
| Depreciation, amortization of intangible assets | 88,011,620.25 | 64,923,789.85 |
| Business entertainment expenses | 21,149,038.92 | 17,678,602.63 |
| Insurance premiums | 15,035,969.98 | 10,758,291.77 |
| Consulting fees | 15,521,872.12 | 13,253,853.76 |
| Others | 12,621,766.75 | 28,583,842.94 |
| Total | 423,584,417.67 | 422,853,851.25 |
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43. R&D expenses
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Direct input | 291,075,726.28 | 183,593,482.21 |
| Employee benefits | 344,464,922.47 | 257,824,436.43 |
| Depreciation, amortization of intangible assets | 51,416,050.04 | 38,566,126.15 |
| Office expenses, business traveling expenses | 47,138,539.85 | 18,739,316.57 |
| Outsourcing expenses | 24,718,470.93 | 23,824,873.91 |
| Others | 23,847,998.97 | 23,014,140.45 |
| Total | 782,661,708.54 | 545,562,375.72 |
44. Financial expenses
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Interest expenses | 337,753,271.80 | 249,052,551.92 |
| Less: Interest income | 164,418,967.90 | 42,376,836.40 |
| Losses on foreign exchange (or less: gains) | 86,391,384.65 | 82,411,129.59 |
| Others | 10,242,664.69 | 15,456,169.38 |
| Total | 269,968,353.24 | 304,543,014.49 |
45. Other income
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Government grants related to assets [Note] | 85,165,405.18 | 46,559,530.37 |
| Government grants related to income [Note] | 66,054,648.19 | 73,856,347.35 |
| Refund of handling fees for withholding individual income tax | 1,160,651.30 | 905,342.47 |
| Total | 152,380,704.67 | 121,321,220.19 |
Note: Please refer to item VII 59 of this section for details on government grants included in other income.
46. Investment income
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Investment income from long-term equity investments under equity method | 59,304,344.04 | 57,689,812.69 |
| Investment income from disposal of financial instruments | 10,887,997.40 | -3,076,486.79 |
| Including: Financial assets classified as at fair value through profit or loss | 12,582,646.77 | 1,211,398.15 |
| Financial liabilities classified as at fair value through profit or loss | -1,694,649.37 | -4,287,884.94 |
| Interest income from discounted notes | -259.56 | -708,333.33 |
| Investment income from bank financial products and structured deposits | 57,777,633.53 | 106,249,559.87 |
| Total | 127,969,715.41 | 160,154,552.44 |
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47. Gains on changes in fair value
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Held-for-trading financial assets | 39,426,345.82 | 11,724,972.46 |
| Including: Gains on changes in fair value arising from financial assets classified as at fair value through profit or loss | 39,426,345.82 | 11,724,972.46 |
| Held-for-trading financial liabilities | -1,562,640.38 | -2,355,055.18 |
| Including: Gains on changes in fair value arising from financial liabilities classified as at fair value through profit or loss | -1,562,640.38 | -2,355,055.18 |
| Total | 37,863,705.44 | 9,369,917.28 |
48. Credit impairment loss
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Bad debts | -50,043,349.49 | -4,095,147.32 |
| Total | -50,043,349.49 | -4,095,147.32 |
49. Assets impairment loss
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Inventory write-down loss | -25,275,549.36 | -12,369,945.69 |
| Impairment loss of fixed asset | -28,974,859.54 | |
| Total | -54,250,408.90 | -12,369,945.69 |
50. Gains on asset disposal
Unit: RMB Yuan
| Sources | Current period cumulative | Preceding period comparative |
| Gains on disposal of non-current assets | -1,544,436.08 | 3,744,385.58 |
| Total | -1,544,436.08 | 3,744,385.58 |
51. Non-operating revenue
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative | Amount included in non-recurring profit or loss |
| Indemnity income | 11,227,600.39 | 1,148,712.35 | 11,227,600.39 |
| Gains on damage or retirement of non-current assets | 12,775.00 | 12,775.00 | |
| Others | 1,047,467.45 | 793,583.79 | 1,047,467.45 |
| Total | 12,287,842.84 | 1,942,296.14 | 12,287,842.84 |
Page 146 of 175
52. Non-operating expenditures
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative | Amount included in non-recurring profit or loss |
| Donation expenditures | 2,003,374.90 | 12,025,637.84 | 2,003,374.90 |
| Losses on damage or retirement of non-current assets [Note] | 59,895,963.50 | 41,552,999.96 | 59,895,963.50 |
| Local water conservancy construction fund | 703,398.76 | ||
| Others | 2,704,485.84 | 2,003,423.23 | 2,704,485.84 |
| Total | 64,603,824.24 | 56,285,459.79 | 64,603,824.24 |
Note: It included 52,319,493.46 yuan as losses on scrapping of construction in progress, as Shandong Industrial Park 615 Projectcannot reach the designed usable conditions due to changes of planning.
53. Income tax expenses
(1) Details
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Current period income tax expenses | 645,264,359.60 | 513,114,239.32 |
| Deferred income tax expenses | 45,250,086.91 | 19,549,993.21 |
| Total | 690,514,446.51 | 532,664,232.53 |
(2) Reconciliation of accounting profit to income tax expenses
Unit: RMB Yuan
| Items | Current period cumulative |
| Profit before tax | 5,030,879,700.94 |
| Income tax expenses based on statutory/applicable tax rate | 754,631,955.14 |
| Effect of different tax rate applicable to subsidiaries | -5,052,076.69 |
| Effect of prior income tax reconciliation | -2,381,352.00 |
| Effect of non-taxable income | -9,720,778.97 |
| Effect of non-deductible costs, expenses and losses | 9,378,437.39 |
| Effect of utilization of deductible losses not previously recognized as deferred tax assets | -5,790,832.98 |
| Effect of deducible temporary differences or deductible losses not recognized as deferred tax assets in the current period | 71,388,881.46 |
| Tax deduction of investments in special equipment for environmental protection, energy and water conservation and safety production purposes | -4,481,359.34 |
| Effect of tax rate changes on opening balance of deferred tax assets/liabilities | 946,543.44 |
| Effect of extra deduction of R&D expenses | -118,404,970.94 |
| Income tax expenses | 690,514,446.51 |
54. Other comprehensive income
Please refer to item VII 35 of this section for details.
Page 147 of 175
55. Notes to items of the cash flow statement
(1) Other cash receipts related to operating activities
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Interest income from cash in bank | 164,418,967.90 | 42,376,836.40 |
| Receipt of government grants | 335,719,965.91 | 139,491,325.41 |
| Recovery of temporary borrowings and security deposits | 10,265,762.72 | 9,519,261.10 |
| Receipt of temporary receipts payable | 4,711,009.18 | 2,511,261.50 |
| Other receipts and net current accounts | 24,850,169.36 | 10,767,268.18 |
| Total | 539,965,875.07 | 204,665,952.59 |
(2) Other cash payments related to operating activities
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| R&D expenditures in the form of cash | 95,705,009.75 | 65,578,330.93 |
| Handling charges, freight and insurance fees | 199,589,254.76 | |
| Office expenses and business traveling expenses | 107,041,859.39 | 75,242,444.61 |
| Advertising and promotion expenses, business entertainment expenses | 29,280,193.16 | 25,009,427.76 |
| Sales commission and customs declaration charges | 15,913,870.35 | 37,778,102.90 |
| Insurance expenses | 13,706,371.25 | 11,366,760.02 |
| Consulting fees | 15,521,872.12 | 13,253,853.76 |
| Other payments and net current accounts | 32,081,395.48 | 48,663,971.37 |
| Total | 309,250,571.50 | 476,482,146.11 |
(3) Other cash receipts related to investing activities
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Redemption of financial products | 1,800,000,000.00 | 3,850,000,000.00 |
| Recovery of deposits for contingent options | 4,780,000.00 | |
| Recovery of land bond | 19,090,000.00 | |
| Total | 1,800,000,000.00 | 3,873,870,000.00 |
(4) Other cash payments related to investing activities
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Payments for losses on forward foreign exchange settlement | 15,037,520.58 | |
| Payments for purchase of financial products and structured deposits | 1,800,000,000.00 | 1,800,000,000.00 |
| Payments for land bond | 4,835,731.00 | |
| Total | 1,804,835,731.00 | 1,815,037,520.58 |
Page 148 of 175
(5) Other cash receipts related to financing activities
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Recovery of cash and bank balances pledged for borrowings | 85,412,707.20 | |
| Recovery of swap margin for borrowing interest | 2,800,000.00 | |
| Receipt of call loans | 3,000,000.00 | |
| Total | 91,212,707.20 |
(6) Other cash payments related to financing activities
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Payments for bank financing handling charges | 3,786,203.45 | 4,555,462.31 |
| Payments of handling charges for issuing letters of guarantee for borrowings | 1,600,495.28 | 3,152,912.84 |
| Repayments of principal and interest of leases | 389,323.20 | |
| Repurchase of treasury shares | 320,360,784.48 | |
| Repayments of call loans and interest | 3,304,500.00 | 22,184,386.28 |
| Payments of guarantee fees | 132,075.47 | |
| Total | 329,441,306.41 | 30,024,836.90 |
56. Supplement information to the cash flow statement
(1) Supplement information to the cash flow statement
Unit: RMB Yuan
| Supplement information | Current period cumulative | Preceding period comparative |
| 1. Reconciliation of net profit to cash flows from operating activities: | -- | -- |
| Net profit | 4,340,365,254.43 | 3,577,227,510.51 |
| Add: Provision for assets impairment loss | 104,293,758.39 | -16,465,093.01 |
| Depreciation of fixed assets, oil and gas assets, productive biological assets | 1,186,989,343.67 | 831,274,849.16 |
| Depreciation of right-of-use assets | 283,003.04 | |
| Amortization of intangible assets | 34,901,345.67 | 32,642,629.85 |
| Amortization of long-term prepayments | 5,202,615.19 | 1,695,355.76 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (Less: gains) | 1,544,436.08 | -3,744,385.58 |
| Fixed assets retirement loss (Less: gains) | 59,883,188.50 | 41,552,999.96 |
| Losses on changes in fair value (Less: gains) | -37,863,705.44 | -9,369,917.28 |
| Financial expenses (Less: gains) | 338,987,833.23 | 343,115,287.01 |
| Investment losses (Less: gains) | -127,969,715.41 | -160,154,552.44 |
| Decrease of deferred tax assets (Less: increase) | 9,338,514.05 | -1,019,795.07 |
| Increase of deferred tax liabilities (Less: decrease) | 35,911,572.86 | 20,569,788.28 |
| Decrease of inventories (Less: increase) | -358,037,685.76 | -960,709,136.37 |
Page 149 of 175
| Supplement information | Current period cumulative | Preceding period comparative |
| Decrease of operating receivables (Less: increase) | -520,188,422.82 | -614,676,296.13 |
| Increase of operating payables (Less: decrease) | 761,094,844.23 | 36,655,277.27 |
| Others | 3,141,871.66 | 4,212,841.29 |
| Net cash flows from operating activities | 5,837,878,051.57 | 3,122,807,363.21 |
| 2. Significant investing and financing activities not related to cash receipts and payments: | -- | -- |
| Conversion of debt into capital | ||
| Convertible bonds due within one year | ||
| Fixed assets leased in under finance leases | ||
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Cash at the end of the period | 5,714,537,538.23 | 4,669,306,776.09 |
| Less: Cash at the beginning of the period | 4,669,306,776.09 | 3,213,557,815.42 |
| Add: Cash equivalents at the end of the period | ||
| Less: Cash equivalents at the beginning of the period | ||
| Net increase of cash and cash equivalents | 1,045,230,762.14 | 1,455,748,960.67 |
(2) Composition of cash and cash equivalents
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| I. Cash | 5,714,537,538.23 | 4,669,306,776.09 |
| Including: Cash on hand | 14,537.85 | 10,735.55 |
| Cash in bank on demand for payment | 5,684,842,466.04 | 4,669,296,040.54 |
| Other cash and bank balances on demand for payment | 29,680,534.34 | |
| II. Cash and cash equivalents at the end of the period | 5,714,537,538.23 | 4,669,306,776.09 |
Remarks:
Closing balance of cash and bank balances amounted to 5,952,909,626.94 yuan, including deposit for bank acceptance of149,724,511.46 yuan, deposit for letters of credit of 86,212,564.30 yuan, deposit for engineering labor costs of 1,654,664.15 yuan,deposit for ETC of 16,500.00 yuan, deposit for water fees of 358,792.30 yuan and deposit for construction safety of 405,056.50 yuan,which was not cash and cash equivalents.Opening balance of cash and bank balances amounted to 4,927,657,236.24 yuan, including deposit for bank acceptance of233,849,274.66 yuan, deposit for letters of credit of 23,350,000.00 yuan, deposit for engineering labor costs of 741,108.87 yuan,deposit for ETC of 6,000.00 yuan and deposit for construction safety of 404,076.62 yuan, which was not cash and cash equivalents.
Page 150 of 175
57. Assets with title or use right restrictions
Unit: RMB Yuan
| Items | Closing carrying amount | Reasons for restrictions |
| Cash and bank balances | 238,372,088.71 | Please refer to supplement information to the cash flow statement of this section for details. |
| Notes receivable | 236,268,835.12 | Please refer to notes to notes receivable of this section for details. |
| Fixed assets | 79,957,441.31 | Mortgaged for bank borrowings. |
| Intangible assets | 9,463,498.51 | Mortgaged for bank borrowings. |
| Receivables financing | 131,943,711.14 | Please refer to notes to receivables financing of this section for details. |
| Total | 696,005,574.79 | -- |
58. Monetary items in foreign currencies
(1) Details
Unit: RMB Yuan
| Items | Closing balance in foreign currencies | Exchange rate | RMB equivalent at the end of the period |
| Cash and bank balances | -- | -- | 555,718,818.48 |
| Including: USD | 75,657,949.45 | 6.3757 | 482,372,388.31 |
| EUR | 7,437,675.19 | 7.2197 | 53,697,783.57 |
| HKD | 1,378,911.45 | 0.8176 | 1,127,398.00 |
| JPY | 333,610,456.00 | 0.0554 | 18,482,019.26 |
| SGD | 8,315.00 | 4.7179 | 39,229.34 |
| Accounts receivable | -- | -- | 2,076,349,690.20 |
| Including: USD | 289,293,258.85 | 6.3757 | 1,844,447,030.45 |
| EUR | 32,120,816.62 | 7.2197 | 231,902,659.75 |
| Other receivables | 5,793,484.57 | ||
| Including: EUR | 798,865.14 | 7.2197 | 5,767,566.65 |
| HKD | 31,700.00 | 0.8176 | 25,917.92 |
| Short-term borrowings | 434,229,656.08 | ||
| Including: EUR | 60,145,110.75 | 7.2197 | 434,229,656.08 |
| Accounts payable | 35,195,736.73 | ||
| Including: USD | 109,474.60 | 6.3757 | 697,977.21 |
| EUR | 4,778,281.58 | 7.2197 | 34,497,759.52 |
| Other payables | 9,990,081.52 | ||
| Including: USD | 1,528,509.72 | 6.3757 | 9,745,319.42 |
| EUR | 31,020.10 | 7.2197 | 223,955.82 |
| HKD | 25,448.00 | 0.8176 | 20,806.28 |
| Long-term borrowings | 37,669,008.56 | ||
| Including: EUR | 5,217,531.00 | 7.2197 | 37,669,008.56 |
| Non-current liabilities due within one year | 7,091,159.85 | ||
| Including: EUR | 961,662.00 | 7.2197 | 6,942,911.14 |
| HKD | 181,321.81 | 0.8176 | 148,248.71 |
Page 151 of 175
(2) Remarks on overseas operations. For significant overseas operating entities, their main operating places,functional currencies and adoption basis shall be disclosed. Reasons for any changes in functional currencyshall also be disclosed.
√ Applicable □ Not applicable
NHU EUROPE GmbH is a holding subsidiary of the subsidiary NHU (Hong Kong) Trading Co., Ltd. with the holding proportion of51%; NHU Performance Materials GmbH is a wholly-owned subsidiary of the subsidiary NHU (Hong Kong) Trading Co., Ltd.;Bardoterminal GmbH is a wholly-owned subsidiary of NHU EUROPE GmbH. The above three entities are all located in Luneburg,Germany, with EUR as functional currency. NHU Singapore PTE. LTD. is a wholly-owned subsidiary of the Company. It is locatedin Singapore, with SGD as functional currency.
59. Government grants
(1) Government grants related to assets
Unit: RMB Yuan
| Items | Opening balance of deferred income | Increase | Amortization | Closing balance of deferred income | Amortization presented under | Remarks |
| Special funds for Biological Fermentation Industrial Park Project | 476,914,860.00 | 49,336,020.00 | 427,578,840.00 | Other income | Pursuant to the document numbered Sui Jing Kai Guan [2018] 55 |
Special funds forenterprise development(Shandong Vitamins)
| Special funds for enterprise development (Shandong Vitamins) | 84,635,251.75 | 9,672,600.20 | 74,962,651.55 | Other income | ||
| Special funds for joint production project of Xinhao Thermal Power | 35,547,916.69 | 3,774,999.96 | 31,772,916.73 | Other income | Pursuant to the document numbered Sui Jing Kai Guan Wei Han [2018] 123 | |
| Technical renovation for green deep processing of 2019 | 34,260,000.00 | 34,260,000.00 | Other income | Pursuant to the document numbered Zhe Fa Gai Mi [2019] 127 | ||
| Special funds for enterprise development (Amino Acid) | 38,950,549.48 | 8,000,000.00 | 1,145,604.36 | 45,804,945.12 | Other income | Pursuant to the documents numbered Wei Bin Cai Zhi Zi [2018] 40 and Wei Bin Cai Jin Yu [2021] 44 |
| Subsidies for land leveling of Shandong | 29,026,913.28 | 718,189.44 | 28,308,723.84 | Other income |
Enterprise developmentfunds of Shandong
| Enterprise development funds of Shandong | 19,285,039.00 | 437,814.12 | 18,847,224.88 | Other income | Pursuant to the documents numbered Wei Bin Cai Zhi Zi [2014] 513, Wei Bin Cai Zhi Zi [2016] 194 and Wei Bin Cai Zhi Zi [2017] 307 | |
| PPS construction project with annual output of 10,000 tons | 13,238,499.92 | 1,826,000.04 | 11,412,499.88 | Other income | ||
| Subsidies for PPS resin with annual output of 5,000 tons and PPS composite materials with annual output of 6,000 tons | 11,400,000.00 | 2,850,000.00 | 8,550,000.00 | Other income |
Page 152 of 175
| Items | Opening balance of deferred income | Increase | Amortization | Closing balance of deferred income | Amortization presented under | Remarks |
| Enterprise development funds of Advanced Manufacturing Industrial Park | 8,690,037.83 | 198,251.76 | 8,491,786.07 | Other income | ||
| Effective industrial input expansion of 2016 | 7,022,400.00 | 957,600.00 | 6,064,800.00 | Other income | ||
| Funds for key thematic projects of industrial revitalization and technical renovation of 2012 | 5,351,785.70 | 1,427,142.84 | 3,924,642.86 | Other income | Special funds for new cephalosporin antibiotics project with annual output of 10 tons according to the document numbered Zhe Cai Qi [2012] 276 issued by Department of Finance of Zhejiang Province and Economy and Informatization Commission of Zhejiang Province | |
| Fiscal subsidies for low-rent housing | 6,339,417.24 | 240,857.16 | 6,098,560.08 | Other income | ||
| Subsidies from land transfer fees of Shandong dormitory | 5,123,252.66 | 250,231.57 | 4,873,021.09 | Other income | ||
| Subsidies for inputs in biochemical infrastructure of Shangyu | 4,898,735.72 | 317,771.88 | 4,580,963.84 | Other income | ||
| Construction project of public testing service platform | 4,000,000.00 | 999,999.96 | 3,000,000.04 | Other income |
Subsidies for infrastructuresupporting fees
| Subsidies for infrastructure supporting fees | 8,275,875.00 | 797,625.00 | 7,478,250.00 | Other income | ||
| Compensation for resource conservation and environmental protection projects of 2017 | 3,840,000.00 | 480,000.00 | 3,360,000.00 | Other income | ||
| Subsidies for new materials, land and infrastructure construction | 3,242,880.00 | 810,720.00 | 2,432,160.00 | Other income | ||
| Special fiscal funds for revitalization of the substantial economy (transformation of traditional industries) of 2017 | 2,679,299.82 | 539,228.52 | 2,140,071.30 | Other income | Pursuant to the document numbered Xin Cai Qi [2019] 151 | |
| Subsidies for RTO Project | 1,666,666.86 | 399,999.96 | 1,266,666.90 | Other income | Pursuant to the document numbered Wei Cai Qi Zhi [2014] 207 | |
| Special subsidies for development of marine economy of 2017 | 2,000,000.00 | 2,000,000.00 | Pursuant to the document numbered Shang Yu Cai Jian [2018] 12 | |||
| Special subsidies for high-quality development of manufacturing industry | 2,109,286.90 | 304,957.20 | 1,804,329.70 | Other income | Pursuant to the document numbered Xin Jing Xin [2020] 79 | |
| Enterprise development fund (Shandong Fine Chemical) | 52,224,561.00 | 52,224,561.00 | Pursuant to the document numbered Wei Bin Cai Zhi Zi |
Page 153 of 175
| Items | Opening balance of deferred income | Increase | Amortization | Closing balance of deferred income | Amortization presented under | Remarks |
| [2020] 34 | ||||||
| Special funds for Taishan industry leading talents project | 7,400,000.00 | 7,400,000.00 | Pursuant to the documents numbered Lu Zheng Ban Zi [2021] 13, Lu Zu Zi [2021] 24, Wei Bin Cai Xing Zhi Zi [2021] 1, and Wei Cai Xing Zhi [2021] 16 | |||
| Food security control and emergency facilities project – investment plan within budget of the central government of 2020 | 25,080,000.00 | 209,000.00 | 24,871,000.00 | Other income | Pursuant to the document numbered Hei Fa Gai Tou Zi [2020] 542 | |
| Policy incentives for industrial production projects of 2020 | 25,000,000.00 | 786,778.65 | 24,213,221.35 | Other income | Pursuant to the document numbered Hei Cai Zhi (Chan Ye) [2020] 558 | |
| Special funds for Heilongjiang Biological Fermentation Industrial Park Project | 111,810,000.00 | 111,810,000.00 | ||||
| Incentives for enterprises settling in Industrial Collaborative Innovation Center by Hangzhou Bay Shangyu Economic and Technological Development Zone | 27,728,800.00 | 3,473,383.27 | 24,255,416.73 | Other income | ||
| Subsidies for upgrading coal-fired boilers of 2017 | 260,000.00 | 37,142.88 | 222,857.12 | Other income | Pursuant to the document numbered Xin Cai Jian [2018] 204 | |
| Subsidies for low-nitrogen transformation of gas-fired boilers of Xinchang County | 495,000.00 | 29,464.25 | 465,535.75 | Other income | Pursuant to the document numbered Xin Huan Yu [2018] 25 |
Special funds for technicalrenovation
| Special funds for technical renovation | 20,500,000.00 | 330,396.63 | 20,169,603.37 | Other income | ||
| Incentives for investment promotion | 25,000,000.00 | 17,858.29 | 24,982,141.71 | Other income | Pursuant to the document numbered Wei Bin Cai Gong Zhi Zi [2021] 14 | |
| Special fiscal supporting funds for high-quality development (investment projects) of manufacturing industry of Xinchang County of 2021 | 4,875,100.00 | 4,875,100.00 | Other income | Pursuant to the document numbered Xin Jing Xin [2021] 50 | ||
| Special investment plan within budget of the central government for supporting advanced manufacturing industry and modern service of 2021 | 19,650,000.00 | 19,650,000.00 | Other income | Pursuant to the document numbered Fa Gai Tou Zi [2021] 1117 | ||
| Other piecemeal subsidies - investment plan within budget of the central government of 2020 | 12,342,952.49 | 2,795,767.24 | 9,547,185.25 | Other income |
Page 154 of 175
| Items | Opening balance of deferred income | Increase | Amortization | Closing balance of deferred income | Amortization presented under | Remarks |
| Subtotal | 873,066,181.34 | 275,798,900.00 | 85,165,405.18 | 1,063,699,676.16 |
(2) Government grants related to income and used to compensate incurred relevant costs, expenses or losses
Unit: RMB Yuan
| Items | Amount | Presented under | Remarks |
| Government reward | 18,306,370.00 | Other income | Related to income |
| Other subsidies | 38,268,540.45 | Other income | Related to income |
| Special subsidies | 9,479,737.74 | Other income | Related to income |
| Subtotal | 66,054,648.19 |
(3) Fiscal interest subvention
Unit: RMB Yuan
| Items | Opening balance of deferred income | Increase | Amounts carried forward | Closing balance of deferred income | Amounts carried forward presented under | Remarks |
| Fiscal interest subvention | 178,576.65 | 178,576.65 | Financial expenses | |||
| Subtotal | 178,576.65 | 178,576.65 |
(4) In the current period, government grants included into profit or loss totaled 151,398,630.02 yuan.
VIII. Changes in the consolidation scope
1. Changes in the consolidation scope due to other reasons
Unit: RMB Yuan
| Companies | Equity acquisition method | Equity acquisition date | Capital contribution | Capital contribution proportion (%) |
| Zhejiang NHU Nylon Materials Co., Ltd. | Establishment | November 9, 2021 | ||
| NHU Singapore PTE. LTD. | Establishment | November 6, 2021 | 12,800,000.00 | 100.00% |
IX. Interest in other entities
1. Interest in subsidiaries
(1) Composition of the group
| Subsidiaries | Main operating place | Place of registration | Business nature | Holding proportion (%) | Acquisition method | |
| Direct | Indirect | |||||
| Shangyu NHU Bio-Chem Co., Ltd. | Shangyu, Zhejiang | Shangyu, Zhejiang | Manufacturing | 100.00% | Establishment | |
| Shandong NHU Pharmaceutical Co., Ltd. | Weifang, Shandong | Weifang, Shandong | Manufacturing | 100.00% | Establishment | |
| NHU (Hong Kong) Trading Co., Ltd. | Hong Kong, China | Hong Kong, China | Commerce | 100.00% | Establishment | |
| Zhejiang NHU Special Materials Co., Ltd. | Shangyu, Zhejiang | Shangyu, Zhejiang | Manufacturing | 100.00% | Establishment | |
| Shandong NHU Amino-acids Co., Ltd. | Weifang, Shandong | Weifang, Shandong | Manufacturing | 100.00% | Establishment | |
| NHU EUROPE GmbH | Luneburg, Germany | Luneburg, Germany | Trade | 51% [Note 1] | Establishment | |
Page 155 of 175
| Subsidiaries | Main operating place | Place of registration | Business nature | Holding proportion (%) | Acquisition method | |
| Direct | Indirect | |||||
| 山东新和成控股有限公司 (Shandong NHU Holdings Co., Ltd.*) | Weifang, Shandong | Weifang, Shandong | Service | 100.00% | Establishment | |
| Shandong NHU Vitamins Co., Ltd. | Weifang, Shandong | Weifang, Shandong | Manufacturing | 100.00% [Note 2] | Establishment | |
| Heilongjiang NHU Biotechnology Co., Ltd. | Suihua, Heilongjiang | Suihua, Heilongjiang | Manufacturing | 100.00% | Establishment | |
| NHU Singapore PTE. LTD. | Singapore | Singapore | Trade | 100.00% | Establishment | |
Remarks on inconsistency between holding proportion and voting rights proportion in subsidiaries:
Note 1: The Company holds shares through NHU (Hong Kong) Trading Co., Ltd.Note 2: The Company holds shares through Shandong NHU Holdings Co., Ltd.
(2) Significant not wholly-owned subsidiaries
Unit: RMB Yuan
| Subsidiaries | Holding proportion of non-controlling shareholders | Non-controlling shareholders’ profit or loss | Dividend declared to non-controlling shareholders | Closing balance of non-controlling interest |
| NHU EUROPE GmbH | 49.00% | 16,214,991.12 | 12,381,785.50 | 63,730,851.41 |
(3) Main financial information of significant not wholly-owned subsidiaries
Unit: RMB Yuan
| Subsidiaries | Closing balance | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| NHU EUROPE GmbH | 860,365,259.01 | 95,891,993.02 | 956,257,252.03 | 788,525,281.39 | 37,669,008.56 | 826,194,289.95 |
(Continued)
| Subsidiaries | Opening balance | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| NHU EUROPE GmbH | 557,333,673.19 | 109,005,921.19 | 666,339,594.38 | 478,792,469.90 | 49,635,844.80 | 528,428,314.70 |
Unit: RMB Yuan
| Subsidiaries | Current period cumulative | Preceding period comparative | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| NHU EUROPE GmbH | 1,655,950,052.91 | 33,091,818.61 | -7,679,716.03 | 72,448,446.07 | 1,695,307,096.25 | 27,484,838.84 | 30,804,930.61 | 27,888,174.39 |
*
The English name is for identification purpose only.
Page 156 of 175
2. Interest in joint venture or associates
(1) Significant joint ventures or associates
| Joint ventures or associates | Main operating place | Place of registration | Business nature | Holding proportion (%) | Accounting treatment on investments in joint ventures or associates | |
| Direct | Indirect | |||||
| Zhejiang Chunhui Environmental Protection Energy Co., Ltd. | Shangyu, Zhejiang | Shangyu, Zhejiang | Manufacturing | 34.0918% | Equity method | |
| DSM NHU Engineering Materials (Zhejiang) Co., Ltd. | Shangyu, Zhejiang | Shangyu, Zhejiang | Manufacturing | 40.00% | Equity method | |
| Zhejiang Saiya Chemical Materials Co., Ltd. | Shangyu, Zhejiang | Shangyu, Zhejiang | Manufacturing | 49.00% | Equity method | |
(2) Main financial information of significant joint ventures
Unit: RMB Yuan
| Items | Closing balance/Current period cumulative | Opening balance/Preceding period comparative | ||||
| Zhejiang Chunhui Environmental Protection Energy Co., Ltd. | DSM NHU Engineering Materials (Zhejiang) Co., Ltd. | Zhejiang Saiya Chemical Materials Co., Ltd. | Zhejiang Chunhui Environmental Protection Energy Co., Ltd. | DSM NHU Engineering Materials (Zhejiang) Co., Ltd. | Zhejiang Saiya Chemical Materials Co., Ltd. | |
| Current assets | 293,596,545.38 | 68,240,155.87 | 71,896,100.56 | 315,880,629.16 | 46,855,677.24 | 45,646,530.22 |
| Non-current assets | 559,076,086.33 | 13,956,368.94 | 157,938,616.58 | 455,644,920.86 | 14,760,235.10 | 175,471,429.07 |
| Total assets | 852,672,631.71 | 82,196,524.81 | 229,834,717.14 | 771,525,550.02 | 61,615,912.34 | 221,117,959.29 |
| Current liabilities | 199,269,854.33 | 97,736,253.17 | 15,537,056.20 | 167,519,267.96 | 74,217,481.09 | 19,238,056.31 |
| Non-current liabilities | 40,724,142.33 | 2,459,280.00 | 22,544,241.63 | 2,804,190.00 | ||
| Total liabilities | 239,993,996.66 | 97,736,253.17 | 17,996,336.20 | 190,063,509.59 | 74,217,481.09 | 22,042,246.31 |
| Equity attributable to shareholders of parent company | 612,678,635.05 | -15,539,728.36 | 211,838,380.94 | 581,462,040.43 | -12,601,568.75 | 199,075,712.98 |
| Proportionate share in net assets | 208,873,174.90 | -6,215,891.34 | 103,800,806.66 | 199,358,330.80 | -5,040,627.50 | 97,547,099.36 |
| - Goodwill | 762,611.33 | 762,611.33 | ||||
| - Unrealized profit in internal trading | 665,200.17 | |||||
| Accumulated unrecognized losses | -6,215,891.34 | -5,040,627.50 | ||||
| Carrying amount of investments in associates | 208,873,174.90 | 103,898,217.82 | 199,358,330.80 | 98,309,710.69 | ||
| Operating revenue | 474,138,506.11 | 112,672,114.30 | 248,551,895.41 | 311,051,317.66 | 53,650,355.15 | 176,311,795.62 |
| Net profit | 163,208,658.71 | -2,938,159.61 | 11,439,773.30 | 174,601,374.25 | -14,922,845.82 | 4,781,275.08 |
| Total comprehensive income | 163,208,658.71 | -2,938,159.61 | 11,439,773.30 | 174,601,374.25 | -14,922,845.82 | 4,781,275.08 |
| Dividend from associates received in the current period | 40,855,278.00 | 12,960,000.00 | ||||
(3) Aggregated financial information of insignificant joint ventures and associates
Unit: RMB Yuan
| Closing balance/ Current period cumulative | Opening balance/ Preceding period comparative | |
| Joint ventures: | -- | -- |
| Proportionate shares in the following items | -- | -- |
| Associates: | -- | -- |
| Total carrying amount of investments | 38,556,233.03 | 45,710,849.69 |
| Proportionate shares in the following items | -- | -- |
| -- Net profit | -4,562,583.45 | -889,348.68 |
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| Closing balance/ Current period cumulative | Opening balance/ Preceding period comparative | |
| -- Total comprehensive income | -4,562,583.45 | -889,348.68 |
X. Risks related to financial instruments
In risk management, the Company aims to seek the appropriate balance between the risks and benefits from its use of financialinstruments and to mitigate the adverse effects that the risks of financial instruments have on the Company’s financial performance,so as to maximize the profits of shareholders and other equity investors. Based on such risk management objectives, the Company’srisk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits andcontrols, and to monitor risks and adherence to limits on a timely and reliable basis.The Company has exposure to the following risks from its use of financial instruments, which mainly include: credit risk, liquidityrisk, and market risk. The Management has deliberated and approved policies concerning such risks, and details are:
(I) Credit riskCredit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge anobligation.
1. Credit risk management practice
(1) Evaluation method of credit risk
At each balance sheet date, the Company assesses whether the credit risk on a financial instrument has increased significantly sinceinitial recognition. When assessing whether the credit risk has increased significantly since initial recognition, the Company takesinto account reasonable and supportable information, which is available without undue cost or effort, including qualitative andquantitative analysis based on historical data, external credit risk rating, and forward-looking information. The Company determinesthe changes in default risk of financial instruments during the estimated lifetime through comparison of the default risk at the balancesheet date and the initial recognition date, on an individual basis or a collective basis.The Company considers the credit risk on a financial instrument has increased significantly when one or more of the followingqualitative and quantitative standards are met:
1) Quantitative standard mainly relates to the scenario in which, at the balance sheet date, the probability of default in the remaininglifetime has risen by more than a certain percentage compared with the initial recognition;
2) Qualitative standard mainly relates to significant adverse changes in the debtor’s operation or financial position, present orexpected changes in technology, market, economy or legal environment that will have significant adverse impact on the debtor’srepayment ability.
(2) Definition of default and credit-impaired assets
A financial instrument is defined as defaulted when one or more following events have occurred, of which the standard is consistentwith that for credit-impairment:
1) significant financial difficulty of the debtor;
2) a breach of binding clause of contract;
3) it is very likely that the debtor will enter bankruptcy or other financial reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the debtor’s financial difficulty, having granted to thedebtor a concession(s) that the creditor would not otherwise consider.
2. Measurement of expected credit losses
The key factors in the measurement of expected credit loss include the probability of default, loss rate of default, and exposure to
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default risk. The Company develops a model of the probability of default, loss rate of default, and exposure to default risk on thebasis of quantitative analysis of historical data (e.g. counterparty rating, guarantee measures and collateral type, payment method,etc.) and forward-looking information.
3. Please refer to item VII 4 and 7 of this section for details on the reconciliation table of opening balance and closing balance ofprovision for losses of financial instrument.
4. Exposure to credit risk and concentration of credit risk
The Company’s credit risk is primarily attributable to cash and bank balances and receivables. In order to control such risks, theCompany has taken the following measures:
(1) Cash and bank balances
The Company deposits its bank balances and other cash and bank balances in financial institutions with relatively high credit levels,hence, its credit risk is relatively low.
(2) Receivables
The Company performs credit assessment on customers using credit settlement on a continuous basis. The Company selects credibleand well-reputed customers based on credit assessment result, and conducts ongoing monitoring on balance of receivables, to avoidsignificant risks in bad debts.As the Company only conducts business with credible and well-reputed third parties, collateral is not required from customers. TheCompany manages credit risk aggregated by customers. As of December 31, 2021, the Company has certain concentration of creditrisk, and 39.06 % (December 31, 2020: 35.19%) of the total accounts receivable was due from the five largest customers of theCompany. The Company held no collateral or other credit enhancement on balance of receivables.The maximum amount of exposure to credit risk of the Company is the carrying amount of each financial asset at the balance sheet.
(II) Liquidity riskLiquidity risk is the risk that the Company may encounter deficiency of funds in meeting obligations associated with cash or otherfinancial assets settlement, which is possibly attributable to failure in selling financial assets at fair value on a timely basis, or failurein collecting liabilities from counterparties of contracts, or early redemption of debts, or failure in achieving estimated cash flows.In order to control such risk, the Company comprehensively utilized financing tools such as notes settlement, bank borrowings, etc.and adopts long-term and short-term financing methods to optimize financing structures, and finally maintains a balance betweenfinancing sustainability and flexibility. The Company has obtained credit limit from several commercial banks to meet workingcapital requirements and expenditures.Financial liabilities classified based on remaining time period till maturity
Unit: RMB Yuan
| Items | Closing balance | ||||
| Carrying amount | Contract amount not yet discounted | Within 1 year | 1-3 years | Over 3 years | |
| Bank borrowings | 8,581,398,746.38 | 9,052,182,029.59 | 3,703,590,391.97 | 4,728,643,204.24 | 619,948,433.38 |
| Notes payable | 694,124,946.73 | 694,124,946.73 | 694,124,946.73 | ||
| Accounts payable | 1,435,966,427.76 | 1,435,966,427.76 | 1,435,966,427.76 | ||
| Other payables | 56,712,103.36 | 56,712,103.36 | 56,712,103.36 | ||
| Lease liabilities | 3,182,245.62 | 4,721,702.39 | 402,749.99 | 476,190.48 | 3,842,761.92 |
| Subtotal | 10,771,384,469.85 | 11,243,707,209.83 | 5,890,796,619.81 | 4,729,119,394.72 | 623,791,195.30 |
Page 159 of 175
(Continued)
Unit: RMB Yuan
| Items | December 31, 2020 | ||||
| Carrying amount | Contract amount not yet discounted | Within 1 year | 1-3 years | Over 3 years | |
| Bank borrowings | 7,776,288,840.18 | 8,221,866,812.16 | 3,874,954,917.32 | 4,176,224,771.56 | 170,687,123.28 |
| Notes payable | 497,644,517.23 | 497,644,517.23 | 497,644,517.23 | ||
| Accounts payable | 1,463,728,316.04 | 1,463,728,316.04 | 1,463,728,316.04 | ||
| Other payables | 129,839,228.89 | 129,839,228.89 | 129,839,228.89 | ||
Lease liabilities
| Lease liabilities | |||||
| Subtotal | 9,867,500,902.34 | 10,313,078,874.32 | 5,966,166,979.48 | 4,176,224,771.56 | 170,687,123.28 |
(III) Market risk
Market risk is the risk that the Company may encounter fluctuation in fair value or future cash flows of financial instruments due tochanges in market price. Market risk mainly includes interest risk and foreign currency risk.
1. Interest risk
Interest risk is the risk that an enterprise may encounter fluctuation in fair value or future cash flows of financial instruments due tochanges in market interest. The Company’s fair value interest risks arise from fixed-rate financial instruments, while the cash flowinterest risks arise from floating-rate financial instruments. The Company determines the proportion of fixed-rate financialinstruments and floating-rate financial instruments based on the market environment, and maintains a proper financial instrumentsportfolio through regular review and monitoring. The Company’s interest risk in cash flows relates mainly to bank borrowings withfloating interest rate.As of December 31, 2021, balance of borrowings with interest accrued at floating interest rate totaled 8,581,398,746.38 yuan(December 31, 2020: 7,776,288,840.18 yuan). If interest rates had been 50 basis points higher/lower and all other variables were heldconstant, the Company’s profit before tax and equity will not be significantly affected.
2. Foreign currency risk
Foreign currency risk is the risk arising from changes in fair value or future cash flows of financial instrument resulted from changesin exchange rate. The Company’s foreign currency risk relates mainly to foreign currency monetary assets and liabilities. Whenshort-term imbalance occurred to foreign currency assets and liabilities, the Company may trade foreign currency at market exchangerate when necessary, in order to maintain the net risk exposure within an acceptable level.Please refer to item VII 58 of the notes to the financial statements for details on foreign currency financial assets and liabilities at theend of the period.
XI. Fair value disclosure
1. Details of fair value of assets and liabilities at fair value at the balance sheet date
Unit: RMB Yuan
| Items | Fair value as at the balance sheet date | |||
| Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total | |
| I. Recurring fair value measurement | -- | -- | -- | -- |
| 1. Held-for-trading financial assets and other non-current financial assets | 736,359.24 | 1,250,000,000.00 | 1,250,736,359.24 | |
| Financial assets classified as at fair value through profit or loss | 736,359.24 | 1,250,000,000.00 | 1,250,736,359.24 | |
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| Items | Fair value as at the balance sheet date | |||
| Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total | |
| Financial products with guaranteed principal and floating income | 1,250,000,000.00 | 1,250,000,000.00 | ||
| Derivative financial assets | 736,359.24 | 736,359.24 | ||
| 2. Receivables financing | 182,891,179.65 | 182,891,179.65 | ||
| 3. Other equity instrument investments | 22,998,147.55 | 22,998,147.55 | ||
| Total liabilities at recurring fair value measurement | 736,359.24 | 1,455,889,327.20 | 1,456,625,686.44 | |
2. Qualitative and quantitative information of valuation technique(s) and key input(s) for level 2 fair valueat recurring and non-recurring fair measurement
Fair value was determined at forward exchange rate published by 中国银行股份有限公司 (Bank of China Limited
*
) at the balancesheet date.
3. Qualitative and quantitative information of valuation technique(s) and key input(s) for level 3 fair valueat recurring and non-recurring fair measurement
1. Fair value of short-term financial products with guaranteed principal and floating income and structured deposits was determinedbased on their par value.
2. Fair value of bank acceptance was determined based on its par value.
3. As there is no significant change in the operating environment, operating condition and financial position of the invested entitiesZhejiang Second Pharma Co., Ltd. and Shanghai NewMargin Yongjin Eqiuty Enterprise (LP), the Company took investment cost asthe reasonable estimation of fair value.
XII. Related parties and related party transactions
1. Parent company
| Parent company | Place of registration | Business nature | Registered capital | Holding proportion over the Company | Voting right proportion over the Company |
| NHU Holding Group Co., Ltd. | Xinchang, Zhejiang | Manufacturing | 120.00 million | 48.55% | 48.55% |
Remarks on the parent companyThe Company’s ultimate controlling party is the natural person Hu Baifan.
2. Subsidiaries of the Company
Please refer to item IX 1 of the notes to the financial statements for details on the Company’s subsidiaries.
3. Joint ventures and associates of the Company
Please refer to item IX 2 of the notes to the financial statements for details on the Company’s significant joint ventures andassociates.
*The English name is for identification purpose only.
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4. Other related parties of the Company
| Related parties | Relationships with the Company |
| 大连保税区新旅程国际贸易有限公司 (Synchem International Co., Ltd.*) [Note] | Its shareholder is the actual controller of the Company |
| 北京福元医药股份有限公司 (Beijing Winsunny Pharmaceutical Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| 浙江爱生药业有限公司 (Zhejiang Asen Pharmaceutical Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| 新昌县禾春绿化有限公司 (Xinchang County Hechun Greening Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| Zhejiang Deli Equipment Co., Ltd. | Controlled by NHU Holding Group Co., Ltd. |
| 福元药业有限公司 (Front Pharmaceutical PLC.*) | Controlled by NHU Holding Group Co., Ltd. |
| Xinchang County NHU Real Estate Co., Ltd. | Controlled by NHU Holding Group Co., Ltd. |
| 绥化和成置业有限公司 (Suihua NHU Real Estate Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| 潍坊和成置业有限公司 (Weifang NHU Real Estate Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| 琼海和悦物业服务有限公司 (Qionghai Heyue Property Services Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| 琼海博鳌和悦酒店管理有限公司 (Qionghai Boao Holliyard Hotel Management Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| 绍兴和悦物业服务有限公司 (Shaoxing Heyue Property Services Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| 绍兴上虞和成置业有限公司 (Shaoxing Shangyu NHU Real Estate Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| 上海纳岩新材料科技有限公司 (Shanghai Rossence Advanced Material Technology Co., Ltd.*) | Controlled by NHU Holding Group Co., Ltd. |
| Zhejiang Jingshi Real Estate Co., Ltd. | Controlled by NHU Holding Group Co., Ltd. |
| Shaoxing Yuexiu Education Development Co., Ltd. | Controlled by NHU Holding Group Co., Ltd. |
| 浙江越秀外国语学院 (Zhejiang Yuexiu University of Foreign Languages*) | Controlled by NHU Holding Group Co., Ltd. |
| 绍兴福膜新材料有限公司 (Shaoxing Formost Material Co., Ltd.*) | Its shareholder is the actual controller of the Company |
| 黑龙江昊天玉米开发有限公司 (Heilongjiang Haotian Corn Development Co., Ltd.*) | Non-controlling shareholders of subsidiaries |
Other remarksNote: On November 4, 2021, the entity controlled by the actual controller of the Company withdrew from Synchem International Co.,Ltd.As Client C holds 25% equity of NHU Europe GmbH, the holding subsidiary of the Company’s subsidiary NHU (Hong Kong)Trading Co., Ltd., the Company discloses transactions between Client C and NHU Europe GmbH as well as balances in related partytransactions for the sake of prudence.
5. Related party transactions
(1) Purchase and sale of goods, rendering and receiving of services
Purchase of goods and receiving of services
Unit: RMB Yuan
| Related parties | Content of transaction | Current period cumulative | Transaction limit approved | Whether exceeds transaction limit | Preceding period comparative |
| Zhejiang Deli Equipment Co., Ltd. | Purchase of goods | 91,325,844.40 | 90,000,000.00 | Yes | 55,382,554.92 |
| Receiving of services | 84,619.46 | 4,424.78 | |||
| Zhejiang Chunhui | Purchase of steam | 69,512,700.69 | 70,200,000.00 | No | 59,039,785.77 |
*The English names are for identification purpose only.
Page 162 of 175
| Related parties | Content of transaction | Current period cumulative | Transaction limit approved | Whether exceeds transaction limit | Preceding period comparative |
| Environmental Protection Energy Co., Ltd. | Waste disposal service fees | 229,665.43 | 133,030.80 | ||
| Zhejiang Saiya Chemical Materials Co., Ltd. | Purchase of goods | 173,706,742.56 | 175,000,000.00 | No | 142,845,498.21 |
| Zhejiang Asen Pharmaceutical Co., Ltd. | Purchase of goods | 2,035,921.32 | 2,039,879.70 | ||
| Xinchang County Hechun Greening Co., Ltd. | Purchase of goods | 7,990,317.44 | 13,670,000.00 | No | 11,980,644.40 |
| Qionghai Boao Holliyard Hotel Management Co., Ltd. | Catering and accommodation services | 123,967.00 | 99,630.00 | ||
| Qionghai Heyue Property Services Co., Ltd. | Property management | 653,877.42 | 816,689.09 | ||
| Shaoxing Heyue Property Services Co., Ltd. | Property management | 375,868.30 | 225,748.73 | ||
| Xinchang County NHU Real Estate Co., Ltd. | Catering and accommodation services | 1,000,524.16 | 937,487.04 | ||
| Heilongjiang Haotian Corn Development Co., Ltd. | Purchase of goods | 1,123,079.89 | |||
| Shaoxing Shangyu NHU Real Estate Co., Ltd. | Maintenance funds | 644,538.00 | 982,207.96 | ||
| Shandong Bin’an Vocational Training School Co., Ltd. | Receiving of services | 1,512,911.01 | |||
| Shaoxing Yuexiu Education Development Co., Ltd. | Receiving of services | 4,561.63 | |||
| 长白山保护开发区和悦酒店管理有限公司 (Changbai Mountain Protection and Development Zone Heyue Hotel Management Co., Ltd.*) | Catering and accommodation services | 140,000.00 | |||
| Zhejiang Yuexiu University of Foreign Languages | Receiving of services | 24,733.44 | |||
| Subtotal | 350,489,872.15 | 348,870,000.00 | 274,487,581.40 |
Sale of goods and rendering of services
Unit: RMB Yuan
| Related parties | Content of transaction | Current period cumulative | Preceding period comparative |
| Synchem International Co., Ltd. | Pharmaceutical intermediates | 164,095,134.62 | 113,624,941.20 |
| Front Pharmaceutical PLC. | Test fees | 203,097.35 | |
| Beijing Winsunny Pharmaceutical Co., Ltd. | Test fees | 141,509.43 | 6,018.87 |
| Zhejiang Asen Pharmaceutical Co., Ltd. | Pharmaceutical intermediates, test fees | 476,759.56 | 566,371.68 |
| Zhejiang Deli Equipment Co., Ltd. | Scrapped materials | 117,269.93 | |
| DSM NHU Engineering Materials (Zhejiang) Co., Ltd. | New materials | 78,620,470.09 | 39,183,650.98 |
| Hazardous waste disposal fees | 6,914.41 | ||
| Labor costs, etc. | 64,377.36 | 575.22 | |
| Utilities fees | 1,139,072.54 | 609,215.80 | |
| Shandong Bin’an Vocational Training School Co., Ltd. | Scrapped materials | 20,609.89 | |
| Management service fees | 226,415.09 | ||
| Heilongjiang Haotian Corn Development Co., Ltd. | Raw materials | 258,816.65 | |
| Thermal power | 237,532.11 |
*
The English name is for identification purpose only.
Page 163 of 175
| Related parties | Content of transaction | Current period cumulative | Preceding period comparative |
| Glucose mother solution | 1,371,282.65 | ||
| Shaoxing Formost Material Co., Ltd. | Utilities fees | 15,976.75 | |
| New materials | 11,221.23 | ||
| Shanghai Rossence Advanced Material Technology Co., Ltd. | Composite materials | 534,513.28 | |
| Total | 246,482,912.92 | 155,048,833.77 |
(2) Related party leases
The Company as the lessor:
Unit: RMB Yuan
| Lessees | Types of assets leased | Lease income recognized in the current period | Lease income recognized in preceding period |
| Qionghai Boao Holliyard Hotel Management Co., Ltd. | Land use right and buildings | 60,000.00 | |
| Zhejiang Deli Equipment Co., Ltd. | Land use right and buildings | 77,064.23 | 31,192.66 |
| DSM NHU Engineering Materials (Zhejiang) Co., Ltd. | Land use right and buildings | 601,412.47 | 384,481.07 |
| NHU Holding Group Co., Ltd. | Land use right and buildings | 16,513.76 | 27,522.94 |
| Weifang NHU Real Estate Co., Ltd. | Land use right and buildings | 21,428.57 | |
| Zhejiang Jingshi Real Estate Co., Ltd. | Land use right and buildings | 41,100.92 |
The Company as the lessee:
Unit: RMB Yuan
| Lessors | Types of assets leased | Lease expenses recognized in the current period | Lease expenses recognized in preceding period |
| NHU Holding Group Co., Ltd. | Land use right and buildings | 1,712,675.89 | 1,811,812.80 |
(3) Related party guarantees
The Company as guaranteed parties
Unit: RMB Yuan
| Guarantors | Amount guaranteed | Commencement date | Maturity date | Whether the guarantee is mature |
| NHU Holding Group Co., Ltd. | 500,000,000.00 | January 23, 2019 | December 21, 2023 | No |
| 200,000,000.00 | July 31, 2020 | July 18, 2022 | No | |
| 200,000,000.00 | July 31, 2020 | June 15, 2022 | No | |
| 300,000,000.00 | November 17, 2020 | November 16, 2022 | No | |
| 500,000,000.00 | December 3, 2020 | September 21, 2025 | No | |
| 200,000,000.00 | January 20, 2021 | January 19, 2023 | No | |
| 100,000,000.00 | April 14, 2021 | April 12, 2023 | No | |
| Subtotal | 2,000,000,000.00 |
(4) Key management’s emoluments
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Key management’s emoluments | 26,372,671.30 | 18,690,000.00 |
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(5) Other related party transactions
1. Call loans from related parties
At the beginning of the period, the Company shall pay Weifang NHU Real Estate Co., Ltd. principal of 3,000,000.00 yuan andinterest of 243,666.67 yuan. According to the agreed interest rate, the Company shall pay fund occupation fees of 60,833.33 yuan inthe current period. As of December 31, 2021, both the principal and interest have been settled.
2. Purchase of fixed assets
(1) The Company’s subsidiary Shangyu NHU Bio-Chem Co., Ltd. purchased commercial housing totaling 46,009,338.00 yuan fromShaoxing Shangyu NHU Real Estate Co., Ltd. to provide and improve accommodation for employees. The above assets had beenassessed by 坤元资产评估有限公司 (Canwin CPVs Ltd.
*
) and an Asset Appraisal Report (CWAAR [2020] No. 449) was issuedthereon. The entity paid 27,605,603.00 yuan in 2020, and paid 18,403,735.00 yuan as well as supplementary payments for differenceof dormitory area of 635,800.46 yuan in 2021. As of the balance sheet date, the commercial housing has been delivered to the entity.
(2) The Company’s subsidiary Zhejiang NHU Pharmaceutical Co., Ltd. purchased commercial housing totaling 46,005,580.00 yuanfrom Shaoxing Shangyu NHU Real Estate Co., Ltd. to provide and improve accommodation for employees. The above assets hadbeen assessed by Canwin CPVs Ltd. and an Asset Appraisal Report (CWAAR [2020] No. 447) was issued thereon. The entity paid27,603,348.00 yuan in 2020, and paid 18,402,232.00 yuan as well as supplementary payments for difference of dormitory area of701,325.61 yuan in 2021. As of the balance sheet date, the commercial housing has been delivered to the entity.
(3) The Company’s subsidiary Zhejiang NHU Special Materials Co., Ltd. purchased commercial housing totaling 76,324,329.00yuan from Shaoxing Shangyu NHU Real Estate Co., Ltd. to provide and improve accommodation for employees. The above assetshad been assessed by Canwin CPVs Ltd. and an Asset Appraisal Report (CWAAR [2020] No. 448) was issued thereon. The entitypaid 45,794,597.00 yuan in 2020, and paid 30,529,732.00 yuan in 2021. As of the balance sheet date, the commercial housing hasbeen delivered to the entity.
(4) The Company’s subsidiary Heilongjiang NHU Biotechnology Co., Ltd. purchased commercial housing, parking spots, etc.totaling 10,559,633.00 yuan to provide and improve accommodation for employees. The above assets had been assessed by CanwinCPVs Ltd. and an Asset Appraisal Report (CWAAR [2020] No. 450) was issued thereon. As of the balance sheet date, thecommercial housing and parking spots have been delivered to the entity.
3. Others
(1) Owners of 博鳌度假中心公寓 (Boao Resort Center Apartment
*
) entrusted serviced apartments to Qionghai Boao HolliyardHotel Management Co., Ltd. for operation and management.
(2) In the current period, NHU EUROPE GmbH sold products amounting to 110,207,977.84 yuan to Client C. At the end of theperiod, balance of accounts receivable amounted to 6,343,958.26 yuan.
*The English names are for identification purpose only.
Page 165 of 175
6. Balance due to or from related parties
(1) Balance due from related parties
Unit: RMB Yuan
| Items | Related parties | Closing balance | Opening balance | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Accounts receivable | Synchem International Co., Ltd. | 27,012,516.04 | 1,350,625.80 | 24,564,693.12 | 1,228,234.66 |
| DSM NHU Engineering Materials (Zhejiang) Co., Ltd. | 26,166,564.42 | 1,308,328.22 | 18,972,791.53 | 948,639.58 | |
| Subtotal | 53,179,080.46 | 2,658,954.02 | 43,537,484.65 | 2,176,874.24 | |
| Other receivables | Zhejiang Chunhui Environmental Protection Energy Co., Ltd. | 20,000.00 | 1,000.00 | 80,000.00 | 80,000.00 |
| DSM NHU Engineering Materials (Zhejiang) Co., Ltd. | 18,862.50 | 943.13 | |||
| Subtotal | 38,862.50 | 1,943.13 | 80,000.00 | 80,000.00 | |
| Other non-current assets | Shaoxing Shangyu NHU Real Estate Co., Ltd. | 101,003,548.00 | |||
| Zhejiang Deli Equipment Co., Ltd. | 45,362,374.00 | ||||
| Subtotal | 45,362,374.00 | 101,003,548.00 | |||
(2) Balance due to related parties
Unit: RMB Yuan
| Items | Related parties | Closing book balance | Opening book balance |
| Accounts payable | Zhejiang Deli Equipment Co., Ltd. | 29,272,703.74 | 7,314,438.78 |
| Zhejiang Chunhui Environmental Protection Energy Co., Ltd. | 5,185,881.68 | 7,449,905.70 | |
| Zhejiang Saiya Chemical Materials Co., Ltd. | 2,640,661.94 | 115.04 | |
| Xinchang County Hechun Greening Co., Ltd. | 1,943,036.80 | ||
| Suihua NHU Real Estate Co., Ltd. | 10,374,865.03 | ||
| Zhejiang Second Pharma Co., Ltd. | 6,408.00 | ||
| Qionghai Heyue Property Services Co., Ltd. | 300,000.00 | ||
| Subtotal | 37,405,655.36 | 27,082,361.35 | |
| Contract liabilities | Zhejiang Deli Equipment Co., Ltd. | 13,009.64 | 13,009.64 |
| Zhejiang Asen Pharmaceutical Co., Ltd. | 1,858.41 | ||
| Subtotal | 13,009.64 | 14,868.05 | |
| Other payables | Zhejiang Deli Equipment Co., Ltd. | 443,500.00 | 3,500.00 |
| Xinchang County Hechun Greening Co., Ltd. | 13,102.77 | 480.00 | |
| Weifang NHU Real Estate Co., Ltd. | 87,148,146.46 | ||
| Subtotal | 456,602.77 | 87,152,126.46 | |
| Other current liabilities | Zhejiang Deli Equipment Co., Ltd. | 1,691.25 |
Page 166 of 175
| Items | Related parties | Closing book balance | Opening book balance |
| Subtotal | 1,691.25 |
XIII. Commitments and contingencies
1. Significant commitments
Significant commitments as at the balance sheet date(I) Significant commitments
1. Forward exchange settlement contracts
Pursuant to “ISDA 2002 MASTER AGREEMENT” entered into between the Company and Bank of China (Hong Kong) Limited, asof December 31, 2021, details of the Company’s unsettled forward exchange settlement contracts are as follows:
| Currencies | Nominal amount | Agreed exchange rate | Settlement date |
| EUR | 2,000,000.00 | 7.2010 | January 20, 2022 |
| 5,000,000.00 | 7.2415 | January 20, 2022 | |
| 2,000,000.00 | 7.2420 | January 20, 2022 | |
| 3,000,000.00 | 7.2640 | February 22, 2022 | |
| 5,000,000.00 | 7.2520 | February 22, 2022 | |
| 5,000,000.00 | 7.2700 | March 24, 2022 | |
| Subtotal | 22,000,000.00 |
2. Letters of guarantee issued but undue
As of December 31, 2021, the undue letters of guarantee issued by the Company and its subsidiaries are as follows:
| Issuing banks | Applicants | Type of L/G | Amount | Conditions for issuing |
| 中国银行股份有限公司新昌支行 (Bank of China Limited Xinchang Sub-branch*) | The Company | Performance guarantee | USD 122,750.00 | Occupying credit line |
| Performance guarantee | USD 95,260.00 | Occupying credit line | ||
| 汇丰银行（中国）有限公司杭州分行 (HSBC Bank (China) Company Limited Hangzhou Branch*) | The Company | |||
| Financing guarantee | EUR 10,000,000.00 | Occupying credit line | ||
| Financing guarantee | EUR 10,000,000.00 | Occupying credit line |
3. Letters of credit issued but undue
As of December 31, 2021, the undue letters of credit issued by the Company and its subsidiaries are as follows:
| Issuing banks | Applicants | Balance of L/C | Conditions |
Bank of China Limited XinchangSub-branch
| Bank of China Limited Xinchang Sub-branch | The Company | USD 28,790.70 | Occupying credit line |
| USD 29,189.70 | Occupying credit line | ||
| USD 226,620.60 | Occupying credit line | ||
| USD 11,286.00 | Occupying credit line | ||
| 招商银行股份有限公司杭州分行 (China Merchants Bank Co., Ltd. Hangzhou Branch*) | The Company | 130,000,000.00 | Occupying credit line |
| Bank of China Limited Xinchang Sub-branch | Zhejiang NHU Import & Export Co., Ltd. | USD 294,000.00 | Occupying credit line |
| 中国建设银行股份有限公司潍坊滨海支行 (China Construction Bank Corporation Weifang Binhai Sub-branch*) | Shandong NHU Pharmaceutical Co., Ltd. | EUR 1,096,000.00 | Occupying credit line |
| USD 77,400.00 | Occupying credit line |
*
The English names are for identification purpose only.
Page 167 of 175
| Issuing banks | Applicants | Balance of L/C | Conditions |
| 中国银行潍坊滨海支行 (Bank of China Limited Weifang Binhai Sub-branch*) | Shandong NHU Amino-acids Co., Ltd. | EUR 1,855,000.00 | Deposit of 14,942,418.00 yuan |
| EUR 1,501,150.00 | Deposit of 12,000,000.00 yuan | ||
| 中国银行股份有限公司上虞支行 (Bank of China Limited Shangyu Sub-branch*) | Zhejiang NHU Special Materials Co., Ltd. | ||
| JPY 220,000,000.00 | Deposit of JPY 220,000,000.00 | ||
| JPY 2,696,400.00 | Deposit of JPY 2,696,400.00 | ||
| USD 62,900.00 | Deposit of USD 62,900.00 | ||
| USD 461,580.00 | Deposit of USD 461,580.00 | ||
| USD 6,522,499.20 | Deposit of USD 6,522,499.20 | ||
| 交通银行绍兴新昌支行 (Bank of Communications Co., Ltd. Shaoxing Xinchang Sub-branch*) | The Company | CNY 20,000,000.00 | Deposit of 2,000,000.00 yuan |
4. The “notes pool” business
Pursuant to the “Notes Pool Service Agreement on Yuntong Account of Bank of Communications” entered into between theCompany and 交通银行股份有限公司 (Bank of Communications Co., Ltd.
*
), the Company pledged and endorsed bank acceptanceto the depositary bank, forming a pledged notes pool; the Company also opened a notes pool deposit account to provide guarantee forthe credit granted under the note pledge and to deposit the pledged bank acceptance for payments. The available credit line for pledgeis the sum of pledged notes and the actual balance of deposit account less pledged notes used. As stipulated in the agreement, the sumof pledged notes and the balance of deposit account shall not be less than the pledged amount used for issuing notes. Pursuant to the“Notes Pool Cooperation Agreement” entered into among the Company, its subsidiaries Shangyu NHU Bio-Chem Co., Ltd., ZhejiangNHU Pharmaceutical Co., Ltd., Zhejiang NHU Special Materials Co., Ltd., 绍兴裕辰新材料有限公司 (Shaoxing Yuchen NewMaterials Co., Ltd.
*), Shandong NHU Pharmaceutical Co., Ltd., Shandong NHU Vitamins Co., Ltd., Shandong NHU Amino-acidsCo., Ltd., Heilongjiang NHU Biotechnology Co., Ltd., Shandong NHU Fine Chemical Science and Technology Co., Ltd., 黑龙江新昊热电有限公司 (Heilongjiang Xinhao Thermal Power Co., Ltd.
*), Xinchang NHU Vitamins Co., Ltd., Zhejiang Vityesun AnimalNutrition and Health Co., Ltd. and 浙商银行股份有限公司 (China Zheshang Bank Co., Ltd.
*), the Company pledged assets pool ornotes pool for guarantee, and opened a notes deposit account to pay deposits at a certain percentage, with no specific agreement onthe amount of deposits. As of December 31, 2021, balance of pledged bank acceptance amounted to 368,212,546.26 yuan, deposits ofnotes pool in China Zheshang Bank Co., Ltd. amounted to 102,061,887.99 yuan.
5. Besides the aforementioned events and assets with title or use right restrictions as stated in this section, the Company has no othersignificant commitments to be disclosed as of the balance sheet date.(II) As of the balance sheet date, the Company has no significant contingencies to be disclosed.
XIV. Events after the balance sheet date
1. Profit distribution
Unit: RMB Yuan
| Profit or dividend planned to be distributed | 1,794,689,766.80 |
| Profit or dividend approved to be distributed | 1,794,689,766.80 |
2. Others
As of the date of approval for issuing the financial statements, the Company has no other significant events after the balance sheetdate to be disclosed.
*
The English names are for identification purpose only
Page 168 of 175
XV. Other significant events
1. Segment information
(1) Identification basis and accounting policies for reportable segments
Reportable segments are identified according to the structure of the Company’s internal organization, management requirements andinternal reporting system, and based on business segments. Assets and liabilities shared by different segments are allocated amongsegments proportionate to their respective sizes.
(2) Financial information of reportable segments
Unit: RMB Yuan
| Items | Pharmaceutical chemicals | Others | Inter-segment offsetting | Total |
| Revenue from main operations | 13,849,752,754.47 | 1,102,338,139.50 | 304,110,218.06 | 14,647,980,675.91 |
| Cost of main operations | 7,602,032,783.42 | 827,056,742.78 | 304,110,218.06 | 8,124,979,308.14 |
| Total assets | 33,053,825,742.39 | 2,566,771,327.95 | 928,431,958.46 | 34,692,165,111.88 |
| Total liabilities | 12,515,959,435.08 | 1,240,929,137.91 | 928,431,958.46 | 12,828,456,614.53 |
2. Leases
1. The Company as lessee
(1) Please refer to item VII 14 of this section for details on right-of-use assets.
(2) Please refer to item V 23 of this section for details on the Company’s accounting policies on short-term leases and leases forwhich the underlying asset is of low value. The amounts of short-term leases and low-value asset leases included into profit or lossare as follows:
Unit: RMB Yuan
| Items | Current period cumulative |
| Expense relating to short-term leases | 1,841,763.55 |
| Total | 1,841,763.55 |
(3) Profit or loss and cash flows related to leases
Unit: RMB Yuan
| Items | Current period cumulative |
| Interest expenses on lease liabilities | 153,023.91 |
| Total cash outflows related to leases | 2,323,174.93 |
(4) Please refer to item X of this section for details on maturity analysis of lease payments and related liquidity risk management.
2. The Company as lessor
Operating lease
(1) Lease income
Unit: RMB Yuan
| Items | Current period cumulative |
| Lease income | 2,125,888.62 |
(2) Assets leased out under operating leases
Please refer to item VII 12 of this section for details on fixed assets leased out under operating leases.
Page 169 of 175
(3) Undiscounted lease payments to be received arising from non-cancellable leases based on the lease contract signed with lessee
Unit: RMB Yuan
| Remaining years | Closing balance |
| Within 1 year | 833,000.00 |
| 1-2 years | 696,000.00 |
| 2-3 years | 310,000.00 |
| Total | 1,839,000.00 |
3. Others
(I) Employee stock ownership planPursuant to proposals related to employee stock ownership plan including the “Third Phase of Employee Stock Ownership Plan(Draft) of Zhejiang NHU Co., Ltd. and Summary” deliberated and approved by the third meeting of the eighth session of Board ofDirectors and the second meeting of the eighth session of the Board of Supervisors dated October 26, 2020 and the secondextraordinary general meeting of 2020 dated November 11, 2020, the Company was agreed to implement the third phase of employeestock ownership plan.Purchase of the Company’s shares totaling 8,442,935 shares in the third phase of employee stock ownership plan was finished onFebruary 26, 2021 through bidding in secondary market, accounting for 0.39% of total shares, with transaction amount totaling303,710,918.74 yuan and average transaction price of 35.97 yuan per share. On May 19, 2021, holding shares in the third phase ofemployee stock ownership plan increased to 10,131,522 shares after the Company’s annual equity distribution of 2020, accountingfor 0.39% of total current shares. As regulated by the third phase of employee stock ownership plan, lock-up period of shares in theemployee stock ownership plan covers 12 months since the announcement date of purchase completion (i.e., from February 27, 2021to February 26, 2022). Therefore, the lock-up period has expired on February 26, 2022. The duration of employee stock ownershipplan shall not exceed 24 months since the approval date of general meeting of shareholders (i.e., from November 11, 2020 toNovember 11, 2022).(II) Progress of share repurchasePursuant to the “Proposal on Share Repurchase” deliberated and approved by the seventh meeting of the eighth session of the Boardof Directors dated August 18, 2021, the Company was agreed to repurchase part of public shares through centralized biddingtransactions with self-owned funds for the purpose of equity incentive plan or employee stock ownership plan. The repurchaseamount in this time ranged from 300.00 million yuan (inclusive) to 600.00 million yuan (inclusive), and the price should not exceed
41.00 yuan (inclusive) per share.
As of December 31, 2021, the Company has repurchased 10,988,369 shares through centralized bidding transactions using specialsecurities account for repurchase, accounting for 0.4262% of total shares. The highest price of shares was 30.03 yuan per share whilethe lowest price was 26.15 yuan per share, and the accumulated transaction amount was 320,335,151.32 yuan (transaction feesexcluded). Such repurchase complied with relevant laws and regulations, as well as the repurchase plan of the Company.(III) Foreign investments and signing of letters of intent on cooperative joint venturePursuant to the “Proposal on Foreign Investments and Signing of Letter of Intent on Cooperative Joint Venture” deliberated andapproved by the ninth meeting of the eighth session of Board of Directors dated December 24, 2021, the Company was agreed to signthe “Letter of Intent on Cooperative Joint Venture” with 中国石油化工股份有限公司镇海炼化分公司 (Sinopec Zhenhai Refining& Chemical Company
*
, hereinafter referred to as “ZRCC”) to jointly establish a joint venture as the implementing subject of amethionine production facility, with total investment amount of 3.00 billion yuan.
*
The English name is for identification purpose only.
Page 170 of 175
The Company and ZRCC jointly invested a methionine production facility in Zhenhai District, Ningbo City with estimated totalinvestment amount of 3.00 billion yuan. The joint venture they jointly established is responsible for production and sales ofmethionine products. The registered capital of the joint venture accounts for 30% of the total investment amount, which iscontributed in the form of cash. The holding proportion of both parties is tentatively set at 50%. The Board of Directors of the jointventure consists of 4 directors, with each party having the right to appoint two directors. The management personnel of the jointventure shall consist of personnel from the Company and ZRCC.(IV) Purchase of financial products using raised fundsPursuant to the “Proposal on Using Part of Idle Raised Funds for Cash Management” deliberated and approved by the generalmeeting of 2020 dated April 21, 2021, the Company was agreed to use idle raised funds not exceeding 3.57 billion yuan (inclusive) topurchase short-term principal-guaranteed financial products with high security and liquidity for a period not exceeding 12 monthsfrom the date of approval by the general meeting of 2020 to the date of the general meeting of 2021 on a rolling basis, on the premisethat the investment projects of raised funds are not influenced. As of December 31, 2021, the actual balance of financial products andstructured deposits purchased using idle raised funds amounted to 2.45 billion yuan.
XVI. Notes to main items of parent company financial statements
1. Accounts receivable
(1) Details on categories
Unit: RMB Yuan
| Categories | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |||||
| Amount | % to total | Amount | Provision proportion | Amount | % to total | Amount | Provision proportion | |||
| Including: | ||||||||||
| Receivables with provision made on a collective basis | 785,631,558.20 | 100.00% | 39,281,577.91 | 5.00% | 746,349,980.29 | 741,143,885.29 | 100.00% | 37,057,194.26 | 5.00% | 704,086,691.03 |
| Total | 785,631,558.20 | 100.00% | 39,281,577.91 | 5.00% | 746,349,980.29 | 741,143,885.29 | 100.00% | 37,057,194.26 | 5.00% | 704,086,691.03 |
Provision made on a collective basis using age analysis method
Unit: RMB Yuan
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion | |
| Within 1 year | 785,631,558.20 | 39,281,577.91 | 5.00% |
| Total | 785,631,558.20 | 39,281,577.91 | -- |
Age analysis
Unit: RMB Yuan
| Ages | Book balance |
| Within 1 year (inclusive) | 785,631,558.20 |
| Total | 785,631,558.20 |
Page 171 of 175
(2) Provisions made, collected or reversed in the current period
Provisions made in the current period:
Unit: RMB Yuan
| Categories | Opening balance | Increase/Decrease | Closing balance | |||
| Accrual | Recovery/ Reversal | Write-off | Others | |||
| Provision made on a collective basis | 37,057,194.26 | 2,224,383.65 | 39,281,577.91 | |||
| Total | 37,057,194.26 | 2,224,383.65 | 39,281,577.91 | |||
(3) Details of the top 5 debtors with largest balances
Unit: RMB Yuan
| Debtors | Book balance | Proportion to the total balance of accounts receivable (%) | Provision for bad debts |
| Client 1 | 533,759,020.53 | 67.94% | 26,687,951.03 |
| Client 2 | 66,425,426.16 | 8.46% | 3,321,271.31 |
| Client 3 | 30,027,727.46 | 3.82% | 1,501,386.37 |
| Client 4 | 25,492,000.00 | 3.24% | 1,274,600.00 |
| Client 5 | 10,874,000.00 | 1.38% | 543,700.00 |
| Total | 666,578,174.15 | 84.84% | -- |
2. Other receivables
Unit: RMB Yuan
| Items | Closing balance | Opening balance |
| Dividend receivable | 7,159,278.00 | |
| Other receivables | 3,087,880,137.47 | 4,247,680,763.92 |
| Total | 3,095,039,415.47 | 4,247,680,763.92 |
(1) Dividend receivable
1) Details on categories
Unit: RMB Yuan
| Items/Investees | Closing balance | Opening balance |
| Zhejiang Chunhui Environmental Protection Energy Co., Ltd. | 7,159,278.00 | |
| Total | 7,159,278.00 |
(2) Other receivables
1) Categorized by nature
Unit: RMB Yuan
| Nature of receivables | Closing book balance | Opening book balance |
| Security deposits | 100,300,037.50 | 98,617,037.50 |
| Export tax refund | 10,812,822.80 | 2,982,236.49 |
| Employee petty cash | 3,148,937.00 | 3,754,737.00 |
| Temporary advance payment receivable | 178,933.01 | 178,933.01 |
| Call loans | 3,131,287,854.18 | 4,361,194,541.67 |
| Others | 495,303.74 | 472,076.44 |
Page 172 of 175
| Nature of receivables | Closing book balance | Opening book balance |
| Total | 3,246,223,888.23 | 4,467,199,562.11 |
2) Provision for bad debts
Unit: RMB Yuan
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| 12?month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Opening balance | 218,136,891.03 | 546,150.58 | 835,756.58 | 219,518,798.19 |
| Opening balance in the current period | —— | —— | —— | —— |
| --Transferred to phase II | -32,913.50 | 32,913.50 | ||
| --Transferred to phase III | -151,437.98 | 151,437.98 | ||
| Provision made in the current period | -61,341,384.86 | -295,972.10 | 462,309.53 | -61,175,047.43 |
| Closing balance | 156,762,592.67 | 131,654.00 | 1,449,504.09 | 158,343,750.76 |
Significant changes in book balance of other receivables with changes in provision for bad debts:
□ Applicable √ Not applicable
Age analysis
Unit: RMB Yuan
| Ages | Book balance |
| Within 1 year (inclusive) | 3,146,064,676.16 |
| 1-2 years | 658,270.00 |
| 2-3 years | 757,189.90 |
| Over 3 years | 98,743,752.17 |
| 3-4 years | 64,977.95 |
| 4-5 years | 126,657.60 |
| Over 5 years | 98,552,116.62 |
| Total | 3,246,223,888.23 |
3) Provisions made, collected or reversed in the current period
Provisions made in the current period:
Unit: RMB Yuan
| Categories | Opening balance | Increase/Decrease | Closing balance | |||
| Accrual | Recovery/Reversal | Write-off | Others | |||
| Portfolio grouped by ages | 219,518,798.19 | 61,175,047.43 | 158,343,750.76 | |||
| Total | 219,518,798.19 | 61,175,047.43 | 158,343,750.76 | |||
4) Details of the top 5 debtors with largest balances
Unit: RMB Yuan
| Debtors | Nature of receivables | Book balance | Ages | Proportion to the total balance of other receivables (%) | Provision for bad debts |
| Heilongjiang NHU Biotechnology Co., Ltd. | Call loans | 759,064,539.08 | Within 1 year | 23.38% | 37,953,226.95 |
| Shandong NHU Fine Chemical Science and Technology Co., Ltd. | Call loans | 527,873,315.10 | Within 1 year | 16.26% | 26,393,665.76 |
Page 173 of 175
| Debtors | Nature of receivables | Book balance | Ages | Proportion to the total balance of other receivables (%) | Provision for bad debts |
| Shandong NHU Amino-acids Co., Ltd. | Call loans | 500,000,000.00 | Within 1 year | 15.40% | 25,000,000.00 |
| Shandong NHU Vitamins Co., Ltd. | Call loans | 393,000,000.00 | Within 1 year | 12.11% | 19,650,000.00 |
| Zhejiang NHU Special Materials Co., Ltd. | Call loans | 367,000,000.00 | Within 1 year | 11.31% | 18,350,000.00 |
| Total | -- | 2,546,937,854.18 | -- | 78.46% | 127,346,892.71 |
3. Long-term equity investments
Unit: RMB Yuan
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Investments in subsidiaries | 7,846,078,842.12 | 7,846,078,842.12 | 6,173,278,842.12 | 6,173,278,842.12 | ||
| Investments in associates and joint ventures | 208,873,174.90 | 208,873,174.90 | 199,358,330.80 | 199,358,330.80 | ||
| Total | 8,054,952,017.02 | 8,054,952,017.02 | 6,372,637,172.92 | 6,372,637,172.92 | ||
(1) Investments in subsidiaries
Unit: RMB Yuan
| Investees | Opening carrying amount | Increase/Decrease | Closing carrying amount | Closing balance of provision for impairment | |||
| Investments increased | Investments decreased | Provision for impairment | Others | ||||
| Xinchang NHU Vitamins Co., Ltd. | 49,407,990.15 | 100,000,000.00 | 149,407,990.15 | ||||
| Zhejiang NHU Import & Export Co., Ltd. | 13,500,000.00 | 13,500,000.00 | |||||
| 琼海博鳌丽都置业有限公司 (Qionghai Boao Lidu Real Estate Co., Ltd.*) | 54,020,492.00 | 54,020,492.00 | |||||
| Zhejiang Vityesun Animal Nutrition and Health Co., Ltd. | 5,000,000.00 | 5,000,000.00 | |||||
| Shangyu NHU Bio-Chem Co., Ltd. | 414,100,091.44 | 414,100,091.44 | |||||
| NHU (Hong Kong) Trading Co., Ltd. | 16,406,160.00 | 16,406,160.00 | |||||
| Zhejiang NHU Pharmaceutical Co., Ltd. | 480,000,000.00 | 480,000,000.00 | |||||
| Zhejiang NHU Special Materials Co., Ltd. | 554,844,108.53 | 554,844,108.53 | |||||
*
The English name is for identification purpose only.
Page 174 of 175
| Investees | Opening carrying amount | Increase/Decrease | Closing carrying amount | Closing balance of provision for impairment | |||
| Investments increased | Investments decreased | Provision for impairment | Others | ||||
| Shandong NHU Amino-acids Co., Ltd. | 2,900,000,000.00 | 1,000,000,000.00 | 3,900,000,000.00 | ||||
| Shandong NHU Holdings Co., Ltd. | 786,000,000.00 | 586,000,000.00 | 200,000,000.00 | ||||
| Heilongjiang NHU Biotechnology Co., Ltd. | 900,000,000.00 | 400,000,000.00 | 1,300,000,000.00 | ||||
| Shandong NHU Pharmaceutical Co., Ltd. | 586,000,000.00 | 586,000,000.00 | |||||
| Shandong NHU Fine Chemical Science and Technology Co., Ltd. | 160,000,000.00 | 160,000,000.00 | |||||
| Zhejiang NHU Nylon Materials Co., Ltd. | |||||||
| NHU Singapore PTE. LTD. | 12,800,000.00 | 12,800,000.00 | |||||
| Total | 6,173,278,842.12 | 2,258,800,000.00 | 586,000,000.00 | 7,846,078,842.12 | |||
(2) Investments in associates and joint ventures
Unit: RMB Yuan
| Investees | Opening carrying amount | Increase/Decrease | Closing carrying amount | Closing balance of provision for impairment | |||||||
| Investments increased | Investments decreased | Investment income recognized under equity method | Adjustment in other comprehensive income | Changes in other equity | Cash dividend/ Profit declared for distribution | Provision for impairment | Others | ||||
| I. Associates | |||||||||||
| Zhejiang Chunhui Environmental Protection Energy Co., Ltd. | 199,358,330.80 | 60,097,137.98 | -9,727,015.88 | 40,855,278.00 | 208,873,174.90 | ||||||
| Zhejiang Sanpo Polymer Co., Ltd. | |||||||||||
| Subtotal | 199,358,330.80 | 60,097,137.98 | -9,727,015.88 | 40,855,278.00 | 208,873,174.90 | ||||||
| Total | 199,358,330.80 | 60,097,137.98 | -9,727,015.88 | 40,855,278.00 | 208,873,174.90 | ||||||
4. Operating revenue/Operating cost
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative | ||
| Revenue | Cost | Revenue | Cost | |
| Main operations | 4,490,464,824.38 | 3,190,769,298.95 | 3,894,400,776.08 | 2,510,546,533.77 |
| Other operations | 63,614,077.00 | 44,517,335.33 | 20,294,202.59 | 10,198,844.07 |
| Total | 4,554,078,901.38 | 3,235,286,634.28 | 3,914,694,978.67 | 2,520,745,377.84 |
| Including: Revenue from contracts with customers | 4,550,933,427.10 | 3,233,713,897.14 | 3,911,746,924.63 | 2,519,286,947.15 |
Page 175 of 175
Details of revenue
Unit: RMB Yuan
| Categories of contracts | Total |
| By operating region | |
| Including: Domestic | 2,323,586,403.31 |
| Overseas | 2,227,347,023.79 |
| Subtotal | 4,550,933,427.10 |
| By product | |
| Including: Nutrition | 4,490,464,824.38 |
| Others | 60,468,602.72 |
| Subtotal | 4,550,933,427.10 |
| By revenue recognition time | |
| Including: Transferred at a point in time | 4,550,933,427.10 |
| Subtotal | 4,550,933,427.10 |
Information related to performance obligations:
None.Information related to transaction price allocated to the remaining performance obligations:
As of December 31, 2021, revenue corresponding to performance obligations for which the Company has entered into contracts butnot yet performed or fulfilled amounted to 616,538,878.73 yuan, of which, 616,538,878.73 yuan is expected to be recognized asrevenue in 2022.
5. Investment income
Unit: RMB Yuan
| Items | Current period cumulative | Preceding period comparative |
| Investment income from long-term equity investments under equity method | 60,097,137.98 | 57,147,047.58 |
| Investment income from long-term equity investments under cost method | 1,289,000,000.00 | 955,025,000.00 |
| Investment income from disposal of financial instruments | 384,955.72 | 2,417,028.91 |
| Including: Financial assets classified as at fair value through profit or loss | 1,292,607.39 | 2,911,524.03 |
| Financial liabilities classified as at fair value through profit or loss | -907,651.67 | -494,495.12 |
| Interest income from call loans | 142,819,103.02 | 172,513,666.92 |
| Investment income from bank financial products and structured deposits | 43,135,464.45 | 90,963,116.34 |
| Total | 1,535,436,661.17 | 1,278,065,859.75 |
Page 176 of 175
XVII. Supplementary information
1. Schedule of non-recurring profit or loss
√ Applicable □ Not applicable
Unit: RMB Yuan
| Items | Amount | Remarks |
| Gains on disposal of non-current assets | -61,427,624.58 | |
| Government grants included in profit or loss (excluding those closely related to operating activities of the Company, satisfying government policies and regulations, and continuously enjoyed with certain quantity or quota based on certain standards) | 151,398,630.02 | |
| Gains on assets consigned to the third party for investment or management | 57,777,633.53 | |
| Gains or losses on changes in fair value of held-for-trading financial assets and held-for-trading financial liabilities, and investment income from disposal of held-for-trading financial assets and held-for-trading financial liabilities, excluding those arising from hedging business related to operating activities | 48,751,702.84 | |
| Other non-operating revenue or expenditures | 8,727,858.40 | |
| Less: Enterprise income tax affected | 28,969,203.00 | |
| Non-controlling interest affected | 42,098.74 | |
| Total | 176,216,898.47 | -- |
Remarks on other profit or loss satisfying the definition of non-recurring profit or loss:
□ Applicable √ Not applicable
The Company has no other profit or loss satisfying the definition of non-recurring profit or loss.Remarks on defining non-recurring profit or loss listed in the “Interpretation Pronouncement on Information Disclosure Criteria forPublic Companies No. 1 – Non-Recurring Profit or Loss” as recurring profit or loss
□ Applicable √ Not applicable
2. ROE and EPS
| Profit of the reporting period | Weighted average ROE (%) | EPS (yuan/share) | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to shareholders of ordinary shares | 21.07% | 1.68 | 1.68 |
| Net profit attributable to shareholders of ordinary shares after deducting non-recurring profit or loss | 20.21% | 1.61 | 1.61 |
3. Differences in accounting data under Chinese accounting standards and overseas accounting standards
(1) Difference in net profit and net assets in financial statements disclosed respectively under IFRSStandards and Chinese accounting standards
□ Applicable √ Not applicable
(2) Difference in net profit and net assets in financial statements disclosed respectively under overseasaccounting standards and Chinese accounting standards
□ Applicable √ Not applicable