Chairman’s StatementsLooking back on 2022, we may find that the external environment remained severe, the international situation waschanging constantly, the geopolitical conditions in the world were very complex, and the global economy was facingsignificant downward pressures. Under the disturbance of multiple unfavorable factors, the business operation of theCompany faced a critical test, and the petrochemical chemical fiber industry that the Company had been engaged in alsoexperienced a huge challenge. Only after polishing can a piece of jade be finer. Facing this harsh test, all persons ofHengyi Petrochemical were full of confidence, worked together to overcome the difficulties and demonstrated highbusiness vitality and development resilience, so that the Company can steadily enter the next stage of development.
Guided by the strategy, we have significant advantagesThis year, we continued implementing the strategic deployment of "refinery, polyester and polyamide industries" withoutwavering. The Phase I of the refining-petrochemical project in Brunei was operated steadily, and won the ChinaConstruction Engineering Luban Prize. It was hailed by the People's Daily as a model for building an Asia-Pacificcommunity with a shared future. The investment and construction of the 1.2-mtpa Caprolactam-Polyamide Integrationand Supporting Project have been started in China, and the 500,000-tpa New-type Functional Fiber Project wassuccessfully put into production; the production capacity of differentiated high-end polyester products was graduallyreleased, and the integration advantages of the whole industrial chain were prominent, laying a solid foundation for thehigh-quality development of Hengyi.
Based on the R&D, we are empowered by innovationIn 2022, the Company continued adhering to the innovation-driven development. With our long-term and unremittingefforts and down-to-earth attitude, the Company achieved significant technological development results this year: Thegreen and environmentally-friendly polyester product "Eticont" achieved large-scale production; the production of flame-retardant and antibacterial products steadily increased; the development of functional composite materials, such ascationic dyeable fiber, was taking shape and gradually advancing industrialization. Besides, the Company continueddeveloping and researching cutting-edge processes and technologies in caprolactam, polyamide and other fields, and ourproducts continued moving towards high-end and differentiation, adding brightness to the innovative development ofHengyi.
Digital-intelligence integration improving the quality and efficiency
This year, the Company continued focusing on the transformation of industry digitization, networking and intelligence,and the construction of the visualized "Hengyi Brain" Phase II project was being orderly promoted; besides, on the basisof building the first polyester factory with full-process intelligent storage and transportation system in China, theCompany further promoted the application of the equipment management system, and thus the overall level of intelligenceof the Company rose again accordingly. With the introduction and optimization of the automated and intelligentequipment, the labor costs were reduced and the overall operational efficiency was significantly improved, enhancing thesustainability of the development of the Company.
The continuous share repurchases give us confidence
This year, based on our current favorable business background and the expected continuous growth with the projectproduction in the future, we continued firmly implementing our repurchase plan. Up to now, Hengyi Petrochemical hasaccumulated a repurchase amount of approximately RMB 2.034 billion through the third-phase repurchase plan. Thecontinuous share repurchase plan not only injected a shot of energy into the market, but also gave us confidence in thefuture development of Hengyi.
The cold winter is passing, and the warm spring is coming. With the gradual release of the effects of national economicstabilization policies, our confidence in the market has been significantly boosted, the downstream consumer demand isgradually recovering, and positive signals of a rebound in the petrochemical and chemical fiber industry have emerged.The climate is extremely cold, but the verdant pine trees have not withered, and the vast blue sea is even clearer. The testof the cold winter makes all Hengyi people more confident that the future is foreseeable. We will continue maintainingour composure, take the initiative, and firmly grasp the next important opportunity to face and overcome difficulties,demonstrate high business vitality and development resilience, steadily entering the next stage of development of theCompany.In 2023, we will follow the spirit of the 20
thNational Congress of the CPC, continue to fully leverage the advantages ofupstream and downstream industry integration, and strive to build the Company into a source and a leading place for newtechnologies and products, further enhancing the profitability and risk resistance ability of the Company. The Companywill further increase investment in R&D, adhere to the guidance of "green manufacturing" and "circular economy", andcontinue to focus on high-end and differentiated product development and achievement transformation of three majorthemes, i.e., green environmental protection, functional, and bio-based, so as to accumulate energy for the technological
innovation and development of Hengyi, striving to achieve the transformation from an "Industrial Hengyi" to a"Technological Hengyi".Facing the whole country and the world, Hengyi has always been rooted in China. Following the “headquarters + scientificresearch + base" trinity model, we have been actively creating one platform, two centers, and six bases, and building amarket pattern that "backing on the Yangtze River Delta, the Pearl River Delta, and the Bohai Bay, and facing the bluesea", striving to create high-quality development models. The year of 2023 is the tenth anniversary of the "the Belt andRoad" initiative. The Company will continue to actively respond to the "the Belt and Road" initiative, steadily improvethe operating efficiency of the Brunei Phase I Project, and accelerate the construction of the Brunei Phase II Project, beinga firm practitioner of the "double cycle" development strategy.We will do our best every day and all the way, and we believe there will be more beautiful scenery ahead. Nowadays, thepain and haze brought about by the external environment are dissipating, and the dawn of hope is now in sight. We willcontinue to maintain our strategic composure, seize the industrial opportunities of new technologies and products,embrace new changes, achieve new leaps, and draw a new high-quality development blueprint for Hengyi Petrochemicalwith a forward-looking vision, rock-solid confidence, fearless courage, and seize every moment! Let’s strive to createnew and greater value for our country, our society, our shareholders, and our employees!
President:
April 19, 2023
Section I Important Notes, Contents and DefinitionsThe Board of Directors (BOD), Board of Supervisors (BOS), directors,supervisors and senior managers of the Company guarantee that the contents ofthe 2022 Annual Report (hereinafter referred to as "the Report") are true,accurate and complete, free of false records, misleading statements or majoromissions, and that they shall bear relevant individual and joint and several legalliabilities.The financial statements of the Report have been audited by ZhongxinghuaCertified Public Accountants LLP, and a standard unqualified audit report hasbeen issued.Qiu Yibo, the head of the Company, Fang Xianshui, the person in charge of theaccounting work, and Yu Zhicheng, the head of the accounting body (accountantin charge), declared that they would ensure the truthfulness, accuracy andcompleteness of the financial statements in this Annual Report. We would ensurethe truthfulness, accuracy and completeness of the financial statements in thisAnnual Report.The Report has been reviewed and approved at the twenty-eighth meeting of theeleventh session of the BOD of the Company. All directors have attended theBoard meeting at which this Report was considered.According to the plan of the Company, no cash dividends or bonus shares will bedistributed, and no public reserve funds will be converted into share capital.
Forward-looking statements such as future plans, development strategies,industry discussions and prospects involved in this Report do not constitute thesubstantive commitment of the Company to investors, and investors are advisedto pay attention to investment risks. For possible risks in the operation anddevelopment of the Company, please refer to (II) "Possible Risks andCountermeasures in the Future" of “XI. Prospects for the Future Development ofthe Company" under "Section III Management Discussion and Analysis".
Contents
Section I Important Notes, Contents and Definitions ...... 5
Section II Company Profile and Main Financial Indicators ...... 12
Section III Management Discussion and Analysis ...... 19
Section IV Corporate Governance ...... 124
Section V Environmental and Social Responsibilities ...... 166
Section VI Important Matters ...... 189
Section VII Changes in Shares and Shareholders ...... 220
Section VIII Preference Shares ...... 233
Section IX Bonds ...... 234
Section X Financial Report ...... 244
List of Documents for Reference
1. Accounting statements signed and stamped by the legal representative, the financial principaland the head of the accounting body;
2. The original audit report stamped by the accounting firm and signed and stamped by the certifiedpublic accountant;
3. All original documents and original announcements of the Company publicly disclosed on thewebsite designated by CSRC during the current period.
Definitions
| Item | Refers to | Definition |
| Hengyi Petrochemical/Company/the Company | Refers to | Hengyi Petrochemical Co., Ltd. |
| SZSE/the Exchange | Refers to | Shenzhen Stock Exchange |
| Hengyi Group | Refers to | Zhejiang Hengyi Group Co., Ltd. |
| Hengyi Limited | Refers to | Zhejiang Hengyi Petrochemical Co., Ltd. |
| Hengyi Brunei | Refers to | Hengyi Industries Sdn. Bhd. |
| Zhejiang Yisheng | Refers to | Zhejiang Yisheng Petrochemical Co., Ltd. |
| Yisheng New Materials | Refers to | Zhejiang Yisheng New Materials Co., Ltd. |
| Yisheng Dahua | Refers to | Yisheng Dahua Petrochemical Co., Ltd. |
| Hainan Yisheng | Refers to | Hainan Yisheng Petrochemical Co., Ltd. |
| Hengyi Polymer | Refers to | Zhejiang Hengyi Polymer Co., Ltd. |
| Hengyi High-Tech | Refers to | Zhejiang Hengyi High-Tech Materials Co., Ltd. |
| Haining New Materials | Refers to | Haining Hengyi New Materials Co., Ltd. |
| Haining Thermal Power | Refers to | Haining Hengyi Thermal Power Co., Ltd. |
| Taicang Yifeng | Refers to | Taicang Yifeng Chemical Fiber Co., Ltd. |
| Jiaxing Yipeng | Refers to | Jiaxing Yipeng Chemical Fiber Co., Ltd. |
| Shuangtu New Materials | Refers to | Zhejiang Shuangtu New Materials Co., Ltd. |
| Hangzhou Yichen | Refers to | Hangzhou Yichen Chemical Fiber Co., Ltd. |
| Suqian Yida | Refers to | Suqian Yida New Materials Co., Ltd. |
| Ningbo Hengyi Trading | Refers to | Ningbo Hengyi Trading Co., Ltd. |
| Item | Refers to | Definition |
| Hong Kong Yisheng | Refers to | Hong Kong Yisheng Co., Ltd. |
| Hengyi Singapore | Refers to | Hengyi Industries International (Singapore) Co., Ltd. |
| Hangzhou Yijing | Refers to | Hangzhou Yijing Chemical Fiber Co., Ltd. |
| Hengyi Caprolactam | Refers to | Zhejiang Baling Hengyi Caprolactam Co., Ltd. |
| China Zheshang Bank | Refers to | China Zheshang Bank Co., Ltd. |
| Yisheng Investment | Refers to | Dalian Yisheng Investment Co., Ltd. |
| Hong Kong Tianyi | Refers to | Hong Kong Tianyi International Holding Co., Ltd. |
| Hengyi Investment | Refers to | Hangzhou Hengyi Investment Co., Ltd. |
| Hengqi Environmental Protection | Refers to | Haining Hengqi Environmental Protection Technology Co., Ltd. |
| Hengyi Polyamide | Refers to | Zhejiang Hengyi Polyamide Co., Ltd. |
| Brunei Project, PMB Petrochemical Project | Refers to | The petrochemical project invested and constructed by the Company in Brunei |
| PX | Refers to | Paraxylene, a colorless and transparent liquid. It is used to produce plastics, polyester fibers and films. |
| PTA | Refers to | Purified terephthalic acid, mainly used to produce PET, can also be made into engineering polyester plastics, and be used as the raw material of plasticizer and dye intermediate. |
| PIA | Refers to | Isophthalic acid, mainly used in the production of alkyd resin, unsaturated polyester resin and other polymers and plasticizers, as well as in the production of film finishers, coatings, polyester fiber dyeing modifiers and medicines. |
| MEG | Refers to | Ethylene glycol, mainly used to produce polyester fiber, antifreeze, unsaturated polyester resin, lubricant, plasticizers, nonionic surfactant and explosives, etc. |
| PET and polyester | Refers to |
Polyethylene terephthalate. It is a fiber-formingpolymer made from PTA and MEG through directesterification and continuous polycondensation
| Item | Refers to | Definition |
| reaction. | ||
| POY | Refers to | Polyester pre-oriented yarn or partially oriented yarn |
| FDY | Refers to | Fully drawn yarn or polyester drawn yarn |
| DTY | Refers to | Drawn textured yarn, also known as polyester textured yarn |
| CPL | Refers to | Caprolactam, mainly used to produce polyamide fiber, engineering plastics, plastic film, etc. It is widely used in industrial and civil fields. |
| Differentiated yarn | Refers to | A variety that is innovative in technology or performance or has some characteristics that is different from traditional yarns. |
| RMB 1 and RMB 10,000 | Refers to | RMB 1 and RMB 10,000 |
| Reporting period / during the reporting period / this reporting period | Refers to | From January 1, 2022 to December 31, 2022 |
| End of reporting period/end of the current reporting period | Refers to | As of December 31, 2022 |
Section II Company Profile and Main Financial Indicators
I. Company Profile
| Stock abbreviation | Hengyi Petrochemical | Stock code | 000703 |
| Stock abbreviation before the change (if any) | None | ||
| Stock Exchange | Shenzhen Stock Exchange | ||
| Chinese name | 恒逸石化股份有限公司 | ||
| Chinese abbreviation | 恒逸石化 | ||
| Foreign name (if any) | HENGYI PETROCHEMICAL CO., LTD. | ||
| Foreign abbreviation (if any) | HYPC | ||
| Legal representative | Qiu Yibo | ||
| Registered address | 4/F, Building 2, International Science and Technology Park, No. 5 Zhongma Avenue, China-Malaysia Qinzhou Industrial Park, Qinzhou Port Area, China (Guangxi) Pilot Free Trade Zone | ||
| Postal code of the registered address | 535000 | ||
| Change history of the Company’s registered address | The original registered address of the Company, No. G, F7, Haifu Building, No. 16 West Beihai Avenue, Beihai City, Guangxi Zhuang Autonomous Region, was changed to current registered address of the Company in August 2022. | ||
| Office address | Building 3, Hengyi Nan’an Mingzhu, 260 North Shixin Road, Xiaoshan District, Hangzhou City, Zhejiang Province | ||
| Postal code of the office address | 311215 | ||
| Company website | http://www.hengyishihua.com | ||
| hysh@hengyi.com | |||
II. Contact Person and Contact Information
| Secretary of the BOD | Securities Representative | |
| Name | Zheng Xingang | Chen Shasha |
| Contact address | BOD Office, 16/F, Building 3, Nan’an Mingzhu, No. 260 North Shixin Road, Xiaoshan District, Hangzhou City, Zhejiang Province | BOD Office, 16/F, Building 3, Nan’an Mingzhu, No. 260 North Shixin Road, Xiaoshan District, Hangzhou City, Zhejiang Province |
| Tel | (0571) 83871991 | (0571) 83871991 |
| Fax | (0571) 83871992 | (0571) 83871992 |
| hysh@hengyi.com | hysh@hengyi.com |
III. Information Disclosure and Place of Preparation
| The website of the Stock Exchange where the Company discloses the Annual Report | Shenzhen Stock Exchange: http://www.szse.cn |
| Name and website of the media through which the Company discloses the Annual Report | China Securities Journal, STCN, Shanghai Securities News and Securities Daily; CNINFO: http://www.cninfo.com.cn |
| Place where the Company’s Annual Report is prepared | Office of the BOD of Hengyi Petrochemical Co., Ltd. |
IV. Registration Changes
| Unified Social Credit Code | 9145050019822966X4 |
| Changes in the Company’s main business since listing (if any) | No changes |
| Previous changes of controlling shareholders (if any) | No changes |
V. Other Relevant InformationAccounting firm engaged by the Company
| Name of accounting firm | Zhongxinghua Certified Public Accountants LLP |
| Office address of accounting | 20/F, Tower B, Lize SOHO, 20 Lize Road, Fengtai District, |
| firm | Beijing |
| Name of signing accountants | Liu Hongyue, Wang Guohai |
Sponsor institutions engaged by the Company to perform continuous supervision dutiesduring the reporting period
| Name of sponsor institution | Office address of sponsor institution | Name of sponsor representative | Continuous supervision period |
| CITIC Securities Co., Ltd. | 48 Liangmaqiao Road, Chaoyang District, Beijing | Mao Zongxuan and Zhu Wei | January 2022 to December 2022 |
Financial consultants engaged by the Company to perform continuous supervision dutiesduring the reporting period
□ Applicable ?Not applicable
VI. Main Accounting Data and Financial IndicatorsWhether the Company needs to retroactively adjust or restate the accounting data of previousyears?Yes □ NoReason for retrospective adjustment or restatementChanges in accounting policies
| 2022 | 2021 | Increase/decrease of this year over the previous year | 2020 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Operating income (RMB) | 152,050,274,944.64 | 128,979,539,693.27 | 129,666,931,795.26 | 17.26% | 86,429,630,191.87 | 86,429,630,191.87 |
| Net profit attributable to shareholders of listed companies (RMB) | -1,079,547,699.72 | 3,408,043,143.47 | 3,378,328,289.28 | -131.96% | 3,071,998,839.75 | 3,071,998,839.75 |
| Net profit after deducting non-recurring profits and losses attributable to shareholders of listed companies (RMB) | -1,092,334,520.95 | 2,758,543,282.50 | 2,728,828,428.31 | -140.03% | 2,479,101,027.63 | 2,479,101,027.63 |
| Net cash flow from operating activities (RMB) | 2,705,533,483.36 | 7,754,871,519.56 | 7,720,521,139.40 | -64.96% | 5,013,772,777.95 | 5,013,772,777.95 |
| Basic earnings per share (RMB/share) | -0.30 | 0.94 | 0.93 | -132.26% | 0.83 | 0.83 |
| Diluted earnings per share (RMB/share) | -0.30 | 0.91 | 0.90 | -133.33% | 0.83 | 0.83 |
| Weighted average ROE | -4.31% | 13.56% | 13.45% | -17.76% | 12.56% | 12.56% |
| End of 2022 | End of 2021 | Increase/decrease at the end of this year over the end of the previous year | End of 2020 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Total assets (RMB) | 111,964,797,711.33 | 105,548,909,472.93 | 105,514,058,363.19 | 6.11% | 92,260,268,155.54 | 92,685,505,184.24 |
| Net assets attributable to shareholders of listed companies (RMB) | 25,446,694,059.09 | 25,896,860,136.22 | 25,863,447,788.06 | -1.61% | 24,006,633,612.78 | 24,006,633,612.78 |
Main reasons for changes in accounting policiesOn December 30, 2021, the Ministry of Finance issued Interpretation No. 15 of the AccountingStandards for Business Enterprises. According to the interpretation requirements, the content under“Accounting treatment for the sale of products or by-products produced by an enterprise before thefixed assets reach the intended usable state" was implemented from January 1, 2022, and retrospectiveadjustments were made to the trial sales that occurred between the beginning of the earliest period
presented in the financial statements and the implementation date of this interpretation.The Company’s net profit before and after deducting non-recurring profits and losses in theprevious three fiscal years is negative, and the audit report of the latest year shows that theCompany’s going concern ability is uncertain.
□Yes ?No
The lower of net profit before and after deducting non-recurring profits and losses is negative.
| Item | 2022 | 2021 | Remarks |
| Operating income (RMB) | 152,050,274,944.64 | 129,666,931,795.26 | / |
| Amount deducted from the operating income (RMB) | 1,034,447,991.65 | 1,349,634,365.69 | / |
| Amount after the deduction from the operating income (RMB) | 151,015,826,952.99 | 128,317,297,429.57 | / |
VII. Differences between accounting data under the domestic and foreign accountingstandards
1. Differences in the net profit and net assets in the financial statements which are presentedconcurrently in accordance with international accounting standards and the accountingstandards of China
□ Applicable ?Not applicable
There are no differences in the net profit and net assets in the financial statements which are presentedconcurrently in accordance with international accounting standards and the accounting standards ofChina during the reporting period.
2. Differences in the net profit and net assets in the financial statements which are presentedconcurrently in accordance with foreign accounting standards and the accounting standards ofChina
□ Applicable ?Not applicable
There are no differences in the net profit and net assets in the financial statements which are presentedconcurrently in accordance with foreign accounting standards and the accounting standards of China
during the reporting period.VIII. Quarterly main financial indicators
Currency unit: RMB
| First quarter | Second quarter | Third quarter | Fourth quarter | |
| Operating income | 33,252,703,014.35 | 46,551,958,652.09 | 43,511,638,340.48 | 28,733,974,937.72 |
| Net profit attributable to shareholders of listed companies | 732,204,352.08 | 1,081,182,221.86 | -496,074,241.58 | -2,396,860,032.08 |
| Net profit after deducting non-recurring profits and losses attributable to shareholders of listed companies | 670,677,786.49 | 1,181,319,420.97 | -463,524,733.65 | -2,480,806,994.76 |
| Net cash flow from operating activities | -3,801,157,548.89 | -1,985,208,857.06 | 2,012,007,811.44 | 6,479,892,077.87 |
Whether the aforesaid financial indicators or their sum are significantly different from thefinancial indicators related to the quarterly and semi-annual reports disclosed by the Company
□Yes ?No
IX. Non-recurring profit and loss items and amounts
Currency unit: RMB
| Item | Amount in 2022 | Amount in 2021 | Amount in 2020 | Notes |
| Profit or loss from disposal of non-current assets (including the write-off portion of provided asset impairment reserves) | 128,936,835.05 | -12,534,455.04 | -6,741,262.61 | |
| Tax refund or exemption approved ultra vires or without any formal approval | 24,841,218.44 | 15,609,249.33 | 12,921,483.38 | |
| Government grants recorded into current profits and losses (except for those that are closely related to the normal business operation of the Company, in line with national policies, and are continuously enjoyed on a fixed quota or a quantitative basis) | 179,870,984.15 | 277,839,245.44 | 318,607,292.74 | |
| Current net profit or loss from subsidiaries formed by business merger under common control, from the | 0.00 | 0.00 | 19,376,584.76 |
| period-beginning to the merger date | ||||
| The profit or loss arising from the fair value changes of held-for-trading financial assets and held-for-trading financial liabilities, as well as investment gains received from the disposal of held-for-trading financial assets, held-for-trading financial liabilities and financial assets available for sale, except for effective hedging transactions that are related to the normal business operations of the Company | -448,914,776.35 | 480,727,659.11 | 487,752,983.95 | |
| Reversal of impairment reserves for receivables that are separately tested for impairment | 0.00 | 309,000.00 | 0.00 | |
| Profits or losses from entrusted loans | 48,520,852.95 | 49,567,383.65 | 41,586,615.56 | |
| Income from custodian fees obtained from entrusted operation | 1,698,113.19 | 1,698,113.20 | 1,698,113.20 | |
| Other non-operating income and expense in addition to the above | 612,146.73 | 13,359,433.22 | -6,299,334.89 | |
| Other profit or loss items that meet the definition of non-recurring profit and loss | 17,898,857.26 | 0.00 | 2,595,730.83 | |
| Minus: Income tax influence amount | 91,691,403.61 | 38,805,031.16 | 215,685,156.22 | |
| Influenced amount of the minority shareholders’ equity (after-tax) | -151,013,993.42 | 138,270,736.78 | 62,915,238.58 | |
| Total | 12,786,821.23 | 649,499,860.97 | 592,897,812.12 | -- |
Details of other profit or loss items that meet the definition of non-recurring profit and loss:
□ Applicable ?Not applicable
The Company does not have any other profit or loss items that meet the definition of non-recurringprofit and loss.Cases of defining the non-recurring profit and loss items as recurring profit and loss items,which are enumerated in the Explanatory Announcement No. 1 on Information Disclosure ofCompanies That Offer Securities to the Public -- Non-recurring Profits and Losses
□ Applicable ?Not applicable
There was no case of defining any non-recurring profit and loss items as recurring profit and lossitems, which are enumerated in the Explanatory Announcement No. 1 on Information Disclosure ofCompanies That Offer Securities to the Public -- Non-recurring Profits and Losses.
Section III Management Discussion and AnalysisI. Main business of the Company and the industry in which the Company is engaged duringthe reporting periodThe Company shall comply with the disclosure requirements for petrochemical industryspecified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen StockExchange - Industry Information Disclosure(I) OverviewHengyi Petrochemical (stock code: 000703) is committed to developing into a leading domestic andworld-class refining - chemical engineering - chemical fiber private multinational industrial group.We have been making continuous efforts to enhance the comprehensive competitiveness through"upstream and downstream collaboration, domestic and international linkage, and software andhardware supports". Under the guidance of the development strategy of "refinery, polyester andpolyamide industries", the Company, relying on the Brunei Project as the fulcrum, has acceleratedthe pace of internationalization, completed the "last mile" of the whole industrial chain from oilrefining to chemical fiber, achieved a columnar industrial structure integrating the upstream,midstream and downstream industrial chains, created a unique "polyester + polyamide" double-fiberdriving mode among domestic counterparts, and formed a "petrochemical +" multi-level and three-dimensional industrial layout with petrochemical industry chain as the core business, supply chainservice business as the growth business, and differentiated fiber products and application of industrialintelligent technology as the emerging business.
1. Overview of petrochemical chemical fiber business
(1) The world’s leading group in the integration of “refining - petrochemical - chemical fiber”industrial chainDuring the reporting period, the Company closely focused on the strategic development policy of"consolidating, highlighting, and enhancing the competitiveness of the main business”, the
Company's unique industrial layout of "refinery, polyester and polyamide industries" was furtherimproved, and the Hengyi Brunei Phase I Project was operated efficiently, continuously improvingthe business level; the Company continued filling the gap in domestic chemical products, breakingthe monopoly of foreign chemical fiber technology, and improving the industrial layout of domesticsubstitution and self-sufficiency; the caprolactam-based synthetic ammonia project of the joint-stockcompany was completed and put into operation, effectively replenishing the downstream industrialchain of aromatics, reducing production costs, and enabling the Company to obtain lastingcompetitiveness.During the reporting period, the Company continuously extended the petrochemical industry chain,enriched product categories and further improved product structure, which effectively consolidatedthe core competitiveness of the main business, strengthened the profitability of products andimproved the ability to resist market risks. The Company's main products include gasoline, diesel oil,jet fuel and other product oils; light chemical oil, liquefied petroleum gas (LPG), paraxylene (PX),benzene, purified terephthalic acid (PTA), caprolactam (CPL) and other petrochemical products;polyester bottle flakes and other packaging products, as well as polyester pre-oriented yarn (POY),polyester drawn yarn (FDY), polyester textured yarn (DTY), polyester staple fiber, polyester (PET)flakes and other polyester products. The products are widely used to meet the rigid needs related tonational economy and people's livelihood, and meet people's yearning for a better life.
Note: Polyamide flakes are products operated by Hengyi Group, the controlling shareholder.As of the disclosure date of this report, the Company's designed crude oil processing capacity was 8mtpa; the PTA production capacity of shareholding and joint-stock companies was 19 mtpa; the PIAproduction capacity was 300,000 tpa; the polymer production capacity of shareholding and joint-stock companies was 10.765 mtpa, among which the production capacity of polyester fiber was 8.065mtpa, that of polyester bottle flakes (including RPET bottle flakes) was 2.7 mtpa, and that of
Figure 1 The petrochemical and chemical fiber industry chain in which the Company isengaged
PetroleumProductOil
Refining-petrochemical integration
OlefinsOil refiningAromatics
GasolineDieselJet FuelPropyleneEthylene
Paraxylene
(PX)
Benzene
Petrochemical
PolypropylenePolyethylene
Ethylene Glycol
(MEG)
Purified terephthalic
acid (PTA)
Caprolactam (CPL)
Polyester
industry chain
Polyethylene terephthalate (PET)
Polyamide
(PA)Bottle flake
Polyamide
flake
Polyester fully
drawn yarn (FDY)
Polyamide
industry chain
Chemical fiber
Polyester partiallyoriented yarn (POY)
Polyester staplefiber
Polyester drawn
textured yarn (DTY)
Weaving fields (such as textiles,garments and home textiles)
Business in ChinaBusiness in BruneiBusiness in futureDownstream products
PetroleumProductOil
Refining-petrochemical integration
OlefinsOil refiningAromatics
GasolineDieselJet FuelPropyleneEthylene
Paraxylene
(PX)
Benzene
Petrochemical
PolypropylenePolyethylene
Ethylene Glycol
(MEG)
Purified terephthalic
acid (PTA)
Caprolactam (CPL)
Polyester
industry chain
Polyethylene terephthalate (PET)
Polyamide
(PA)Bottle flake
Polyamide
flake
Polyester fully
drawn yarn (FDY)
Polyamide
industry chain
Chemical fiber
Polyester partiallyoriented yarn (POY)
Polyester staplefiber
Polyester drawn
textured yarn (DTY)
Weaving fields (such as textiles,garments and home textiles)
Business in ChinaBusiness in BruneiBusiness in futureDownstream products
caprolactam (CPL) was 400,000 tpa, ranking among the top of the industry.
Note:
1) Polyester fiber products include POY, FDY, DTY, staple fiber and flake products.
2) This table is the actual production capacity table of the Company in the reporting period.
During the reporting period, the Company continued to attach importance to investment in R&D ofnew products, actively responded to the “carbon peaking and carbon neutrality” strategy, and adheredto the guidance of "green manufacturing" and "circular economy". In polyester business, it continuedto carry out product development and achievement transformation around the three major themes ofgreen environmental protection, function and bio-based. Internally, the Company optimized its salessystem, actively grasped market demand, and fully tapped and reasonably guided customer demandsthrough the organic linkage of R&D, production and sales. Externally, the Company, throughcooperation with colleges and universities, built an "industry-university-research" school-enterpriseecology and realized effective exploration in basic materials research support and cutting-edge keytechnologies.During the reporting period, the Company adopted a multi-path, multi-echelon and multi-scenario
| Table 1 Production Capacity of Main Products of the Company (10,000 tpa) | |
| Product | Production capacity |
| Chemical products | 265 |
| Product oil | 565 |
| PTA | 1,900 |
| PIA | 30 |
| Polyester fiber products | 806.5 |
| PET bottle flakes(including RPET) | 270 |
| Caprolactam | 40 |
R&D system. Through technical research, the Company quickly opened up the regenerated finedenier fiber market and was well received by customers. The environment-friendly "Eticont" seriesproducts were also recognized by more and more customers, and the sales volume continued to rise.The flame-retardant fibers continued to maintain a strong market share among domestic flame-retardant products. The project of "Green Manufacturing of TiO2 Dulling Agent for Polyamide andComplete Technology for Industrial Application of Fully Dulling Polyamide" made breakthroughprogress, taking the lead in achieving domestic application. In the field of differentiated products, thedevelopment of functional composite materials, such as antibacterial and cationic dyes, was takingshape, and the industrialization of these materials was gradually being promoted, with the technicallevel reaching international leading levels. In addition, the Company was also focusing on promotingthe R&D process of gas phase rearrangement, synthetic ammonia, hydrogen peroxide and othertechnologies.During the reporting period, the Brunei Project of the Company, as an important product oilproduction base in Southeast Asia, seized the historic development opportunities in Southeast Asiaand followed the fluctuation trend of crack spread of product oil in the Singapore market. In themarket where the crack spread of jet fuel was weaker than diesel, the jet fuel production capacity wasduly converted into diesel production capacity, and the output ratio of gasoline and PX was flexiblyadjusted to achieve maximum benefits.
(2) Company products that promote national economic development and improve people'sbetter livesThe Company's terminal sales products mainly include product oil, such as gasoline, diesel oil andjet fuel, as well as polyester products such as polyester bottle flakes, polyester fully drawn yarn andpolyester staple fiber, which are widely used to meet the rigid needs related to national economy andpeople's livelihood. Among the products, the product oil such as gasoline, diesel oil and jet fuelprovides energy for automobiles, ships, and aircraft and other vehicles and corresponding equipment;polyester bottle flakes are widely used in fields such as food packaging and medical materialproduction, e.g., the demand for PET bottle-grade product in livelihood industries such as beverages,dairy products, edible oils, and seasonings has maintained steady growth, and its share in emerging
application fields such as alcohol, daily chemicals, electronic products, and medical products israpidly increasing; polyester fully drawn yarn includes POY, FDY, and DTY, mainly used in isolationmaterials such as clothing and protective clothing, and it can also be used for industrial purposes suchas webbing, zippers, tents, automotive interiors, and mask cords. FDY products of the Company canbe used as medical and other materials to meet the increasing demand of downstream customers formedical supplies raw materials; polyester staple fibers can be widely used in fields such as yarns,nonwovens, and filling materials. Among them, nonwoven fabrics can be used as raw materials forthe production of face masks, and downstream disinfectant wipes and disposable protective productsand other health fields.
2. Overview of “petrochemical +” business
(1) Supply chain service business is conducive to improving product operation capability and
Figure 2 Features and Application Fields of Main Products of the Company
ProductsPXProductOilPTA
PIA
POY
FDY
DTY
CPLPET staplefiberPET flakesPET bottleflakes
Application fieldsA type of hydrocarbon, colorless transparent liquid. It can be used in manyfields. It is the main raw material for the production of PTA and is also usedto make synthetic plastics, drugs, pesticides etc.
Mainly used as fuel of various fuel-fired power equipment and heating
supply. Used as fuel for automobiles, motorcycles, speedboats, helicopters,agricultural and forestry aircraft, motor vehicles with diesel engine (including
trains), vessels and diesel boilers.Mainly used for producing polyester products, and is widely used for allnational economy aspects, such as clothing, decoration, electronics andconstruction. 75% of PTA is used for polyester fiber, 20% for bottle gradepolyester and 5% for film polyester (mainly for civil use in the downstream).
PIA is a white crystalline powder or acicular crystal used to produce alkydresins, unsaturated polyester resins and other high polymers and plasticizers.It is also used to make film finishers, coatings, polyester fiber dyeing
modifiers and medicines.Used for DTY and fiber products with special styles
reprocessing production. It is widely used inclothing and industrial fields.Directly used for weaving and for production ofgarment and decorative fabrics. It is widely used in
clothing and industrial fields, and also used asisolation material for protective suits and other
protective products.It is directly used for weaving and is widely used in
clothing and industrial fields, garment fabrics andlining materials.It is mainly used to produce polyamide fibers,engineering plastics and plastic films; widely usedin industrial and civil fields.Mainly used to produce yarns, nonwovens andfilling materials. The non-woven fabric can be used
as a raw material for the production of face masks
and the downstream disinfectant wipes and
disposable protective products.Widely used for indirect spinning. They can beused to produce textile materials such as yarns
and staple fibers, and also for strip casting toproduce plastics and other products.Mainly used as food packaging (including coke
bottle, beverage bottles, water bottles and oil
bottle.
ProductsPXProductOilPTA
PIA
POY
FDY
DTY
CPLPET staplefiberPET flakesPET bottleflakes
Application fieldsA type of hydrocarbon, colorless transparent liquid. It can be used in manyfields. It is the main raw material for the production of PTA and is also usedto make synthetic plastics, drugs, pesticides etc.
Mainly used as fuel of various fuel-fired power equipment and heating
supply. Used as fuel for automobiles, motorcycles, speedboats, helicopters,agricultural and forestry aircraft, motor vehicles with diesel engine (including
trains), vessels and diesel boilers.Mainly used for producing polyester products, and is widely used for allnational economy aspects, such as clothing, decoration, electronics andconstruction. 75% of PTA is used for polyester fiber, 20% for bottle gradepolyester and 5% for film polyester (mainly for civil use in the downstream).
PIA is a white crystalline powder or acicular crystal used to produce alkydresins, unsaturated polyester resins and other high polymers and plasticizers.It is also used to make film finishers, coatings, polyester fiber dyeing
modifiers and medicines.Used for DTY and fiber products with special styles
reprocessing production. It is widely used inclothing and industrial fields.Directly used for weaving and for production ofgarment and decorative fabrics. It is widely used in
clothing and industrial fields, and also used asisolation material for protective suits and other
protective products.It is directly used for weaving and is widely used in
clothing and industrial fields, garment fabrics andlining materials.It is mainly used to produce polyamide fibers,engineering plastics and plastic films; widely usedin industrial and civil fields.Mainly used to produce yarns, nonwovens andfilling materials. The non-woven fabric can be used
as a raw material for the production of face masks
and the downstream disinfectant wipes and
disposable protective products.Widely used for indirect spinning. They can beused to produce textile materials such as yarns
and staple fibers, and also for strip casting toproduce plastics and other products.Mainly used as food packaging (including coke
bottle, beverage bottles, water bottles and oil
bottle.
enhancing value-added servicesIn recent years, against the backdrop of significant uncertainty and severe challenges in the externalenvironment, the Company has steadfastly pursued and built a resilient and stable supply chainindustry system, promoting the stable and healthy development of the industry, as well as the greenand low-carbon transformation of the industry. The Company has been continuously strengtheningthe supply chain cooperation and service management capabilities, actively carrying outcomprehensive distribution services for raw materials and products, with Hengyi Micro Mall andmarketing supply chain system as the core online, and logistics business as the support offline, torealize effective integration of online and offline services. Among them, the Intelligent LogisticsManagement Platform (HTTMS) is one of the functionalized applications of Hengyi Micro Mall. Itcollaborated with supporting services such as price inquiry, quick order placement, marketinformation, and financial services, seeing a sustained explosive growth in the trading volume.Besides, the Company has been innovating in its unique omni-channel logistics control system andbuilding a third-party logistics transportation platform.In terms of digital development, the Company has been continuously promoting intelligentmanagement, strengthening the construction of digital factories, and actively exploring flexible andpersonalized customization of production through “big data” means, creating a flexible, controllable,and efficient supply chain and industry chain system.With the continuous and stable operation of the Brunei Project, the Company has actively conductedsupporting shipping business, accelerated the implementation of integrated management of supplychain services, formed a plant-product-warehouse-logistics-customer intelligent supply chain closed-loop system, and led the upgrading of intelligent supply chain services in the industry.
(2) Long-term equity investment income improves the Company profitsChina Zheshang Bank Co., Ltd, established in 2004, is one of the 12 national joint-stock commercialbanks approved by the China Banking and Insurance Regulatory Commission. The Bank was listedon the Main Board of the Stock Exchange of Hong Kong on March 30, 2016 and on Shanghai StockExchange on November 26, 2019, becoming an "A+H" listed bank. At present, the Bank hasdeveloped into a high-quality commercial bank featuring solid foundation, excellent benefits, rapid
growth and well-established risk control. With the completion of the "A+H" layout, China ZheshangBank will accelerate its future growth. The Company will further optimize the strategic layout andcontinuously create value for shareholders through the growth premium of China Zheshang Bank.According to the 2022 Annual Report released by China Zheshang Bank, in 2022, the Bank achievedan operating income of RMB 61.085 billion and net profit attributable to shareholders of RMB 13.618billion. As of the end of December 2022, the total assets of the Bank were RMB 2,62 trillion, anincrease of 14.66% over the end of the previous year. Guided by the vision "to be a first-classcommercial bank", and focusing on the “two most” general goal and the management principle of“scaling up, adjusting structure, controlling risks, and creating benefits”, China Zheshang Bank hascreated a new situation of five business segments (i.e. big retail, big company, big investment bank,big asset management and big cross-border business)advancing together to serve the real economy toa new stage.(II) Industries involvedHengyi Petrochemical is engaged in the petrochemical and chemical fiber industry. Its raw materialscome from petroleum or corresponding chemicals cracked by petroleum. The downstream demandsfor terminal products are closely related to the basic necessities of ordinary people. Important factorsaffecting the industry mainly include crude oil price fluctuation, downstream demand, productioncapacity supply and matching of upstream and downstream industry chains.
1. Refining and petrochemical business: Relying on the competitive advantage of China-Brunei location, the Company explored the refining and petrochemical market potential inSoutheast Asia
(1) Under the unpredictable international situation, the overall price of crude oil fluctuated inan inverted "V" shapeSince 2022, we have seen the increase in international geopolitical conflicts, the frequent adjustmentsin OPEC+ countries’ crude oil production, the reduction in Russian crude oil production, and theweak performance in US crude oil production. At the same time, the recovery of international crudeoil demand was below the expectations, coupled with expectations of the Federal Reserve's interestrate hike, which led to a slowdown in overseas economic growth and continuous fluctuations in global
oil prices, presenting an overall "V" trend.In the first half of 2022, under the influence of factors such as geopolitical risk premium and consumerresilience, the international crude oil price trend was strong; in the second half of the same year, dueto macroeconomic pressures on the demand side, crude oil prices fell again, seeking a rebalancingbetween the low supply and the weak demand.In terms of the supply, OPEC+ countries gradually relaxed the production in the first three quartersof 2022 to meet the constantly recovering demand for crude oil. However, after experiencing a rapiddecline in oil prices in the second half of 2022, OPEC+ countries have been reducing the productionof crude oil since October 2022. In April 2023, preventive measures were taken to support the stabilityof the oil market, and multiple oil producing countries announced further production reduction. FromMay 2023 to the end of 2023, countries including Russia will have a cumulative reduction of over
1.6 million barrels per day, accounting for approximately 1.5% of global crude oil production.Considering OPEC+ countries’ unexpected production reduction, and the US’s limited crude oilproduction and the possibility for replenishing strategic reserves, oil supply may continue to be tight,leading to an upward shift in the range of oil price fluctuations.In terms of the demand, IEA predicts that global oil demand will increase by 2 million barrels per dayin 2023, reaching a record high of 101.9 million barrels per day. Driven by China's economic recovery,the Asia-Pacific region will play a major role in driving the demand growth, and reopening borderswill bring a significant increase in the demand for jet fuel.
(2) With the global tight supply of product oil, the Southeast Asian product oil marketcontinued to maintain a prosperous patternFrom the perspective of the demand side, in 2022, multiple Southeast Asian countries such asIndonesia, Malaysia, and Singapore actively resumed work and production, leading to a recovery ofdemands in the Southeast Asian product oil market. Compared with the oversupply of domesticproduct oil, the Southeast Asian product oil market had a larger gap. Although Southeast Asia hasabundant oil and gas resources, it is the world's largest net import market for product oil due toinsufficient infrastructure investment. Besides, Australia also needed to import product oil. In addition,with the implementation of the new IMO standard in 2020, the demand for low-sulfur fuel oil has
risen. Singapore is a major shipping base. As some marine diesel (MGO) has been required to replacemarine fuel oil, the demand for diesel in Southeast Asia is expected to continue to increase.From the perspective of the supply side, due to the early construction of some refinery facilities inSoutheast Asia and the outdated technology, poor management, heavy government subsidy burden,as well as the impact of public health events, according to Platts (Platts Energy Consulting Platform)data, from 2020 to 2023, energy refining facilities with a total production capacity of more than 30million tons were withdrawn from the market in Southeast Asia and Australia due to public healthevents and energy structure transformation; and, in the future, the supply of new production capacityin Southeast Asia will be insufficient. 2022 has become a cut-off period for production capacitysupply in Southeast Asian refineries. Due to various factors such as public health events and funding,the production capacity deployment in Southeast Asian refineries will also be delayed or postponedto varying degrees in 2023.According to IEA data, the production capacity of refineries which announced to be shut downglobally from 2020 to 2026 reached 3.6 million barrels per day. According to BP statistics, in 2021,refineries in Europe, the United States, Australia and other regions experienced a wave of shutdowns,resulting in a decrease in production capacity of 25.68 mtpa, 10.06 mtpa, and 11 mtpa, respectively.The growth rate of new global refining capacity has been declining for two consecutive years. In 2021,the global refinery capacity decreased by 20.89 mtpa year-on-year, marking the first net decline inproduction capacity in the past 30 years. However, in 2022, refineries’ profits rose to historical highs,and the operating rates of overseas refineries have basically rebounded to high levels. Some newrefineries in China and the Middle East have been put into operation, and the global refining capacityhas increased by approximately 1.98 million barrels per day; however, this still cannot make up forthe supply and demand gap caused by the reduced production capacity.Besides, in the context of carbon neutrality and carbon peaking policies, refining and petrochemicalenterprises were not willing to expand their refineries and capital expenditure plans tended to becautious, and thus the refinery production capacity growth will be limited in the future. In addition,under the influence of geopolitics, the global product oil market supply has been significantlytightened, exacerbating the tight supply situation of Southeast Asian product oil market, which is
difficult to be alleviated in the medium to long term.Against the backdrop of undersupply, the Southeast Asian product oil market will maintain aprosperous pattern.
As the profit vane of refineries in Southeast Asia, from the perspective of the crack spread of productoil in the Singapore market since 2019, the crack spread of refined product oil was at the lowest levelin history in 2020. With the improvement of the external environment in Southeast Asia in 2021,market demand was gradually picked up, and the crack spread of product oil continued to recover. Inthe first half of 2022, under the influence of multiple factors such as the sharp rise in crude oil prices,the tight supply of product oil, and the increase in oil demands brought about by the economic
Figure 3 Crack Spread of Product Oil in Southeast Asia in Recent YearsJanuary 2019January 2020January 2021January 2022January 2023
Gasoline
| January 2019January 2020January 2021January 2022January 2023Gasoline | |
| January 2019January 2020January 2021January 2022January 2023Diesel | |
| Data source: Platts Platform | ||
recovery in Southeast Asia, the crack spread of product oil in Singapore continued to rise. However,since the second half of the year, under multiple pressures such as weak demand and price fluctuations,the price difference of product oil has significantly decreased. Since 2023, the gasoline pricedifference has significantly improved month on month, while the diesel price difference remains at ahigh level. The profitability of Brunei Refinery is expected to remain stable.
2. PTA business: Exports were steadily increasing, and the profitability of the Company wasbeing stabilizedIn 2022, PTA prices showed a fluctuating upward trend overall due to the interactive effects of costand supply and demand. In the first half of 2022, due to multiple sets of PTA devices entering annualmaintenance ahead of schedule, the industrial operating rate decreased year-on-year. Coupled withcontract reductions from mainstream suppliers and staged supply-demand mismatches and otherfactors, PTA prices continued to rise. In the second half of the year, PTA spot prices rebounded froma high level due to bearish factors such as the volatility and decline of crude oil prices and the linkageof bulk commodities. Afterwards, the tight supply and demand of PX constrained the downstreamPTA construction; coupled with the recovery of market consumer confidence at the end of 2022, PTAspot prices rebounded accordingly.In terms of the supply, according to CCF data, in 2022, due to the lack of new PTA production capacityin foreign countries, the delay in the production schedule of JBF in India, and much more devicemaintenance in other regions of Asia in 2022, the operating rate in South Korea and Taiwan remainedat 50-80%, and in some time periods it was 30-40% (excluding IPA devices). Especially in the secondhalf of 2022, device maintenance significantly increased, and some devices extended theirmaintenance cycles for several months. On the other hand, in terms of the demand, due to the fairoverseas demand, the polyester facilities in India and Turkey operated at a high level in the first halfof the year, and the gap between overseas PTA supply and demand was large, driving China's PTAexports to increase significantly. According to statistics from Longzhong Information, in 2022,China's PTA export volume reached 3.4467 mtpa, with an increase of 33.85% year-on-year.According to the estimated external demand situation, the export volume will still remain high in2023, and the domestic PTA price advantage will continue. Coupled with the gradual withdrawal of
foreign competitive devices from the market, there will be a possibility of forcing foreign PTA devicesto reduce production and increase production in the domestic market, thereby expanding China'sexport volume.
3. Polyester business: The inflection point of downstream demand has emerged, and themarket confidence is expected to be enhanced continuously with macroeconomic boostingmeasuresSince 2022, the chemical fiber industry has faced complex and severe domestic and internationalsituations and multiple factors, and its operations have generally been under pressure. Under thepressure of high inventory and weak demand, the average operating load of the chemical fiberindustry has significantly decreased compared with that in 2021, with the profitability of the industrystill under pressure. However, under the central government’s overall strategy of "seeking progresswhile maintaining stability" for economic work, the overall operation of the textile and chemical fiberindustry tended to be stable. With the gradual recovery of China's macro economy, the productionand operation situation of the chemical fiber industry is expected to continue to improve in 2023.
(1) Slow release of new production capacity, sustained recovery in downstream demands, andfurther optimization of competition orderIn recent years, China's polyester industry has gradually entered a stage of large-scale and integrateddevelopment. The whole industry is currently facing a pattern of continuous improvement in theconcentration ratio of production capacity, constant strength of industry leaders, and continuousextension of the industrial chain to the upstream raw material end.From the perspective of the supply side, due to the dual-carbon policy and equipment supply issuesetc., the growth rate of new polyester production capacity has slowed down from 2021 and thissituation continued in the future. According to CCF statistics, the withdrawn capacity of polyesterfully drawn yarn in 2022 was 1.8 mtpa, while the actual increase in net production capacity was only
2.7%. Besides, polyester factories with old and backward devices and without ability of technologicalinnovation also gradually withdrew from the industry competition. In the future, the backwardproduction capacity will be further cleared, the industry access threshold will be further increased,the market concentration ratio of polyester industry will be further optimized, and the development
environment will become more benign.For the demand side, as domestic consumption gradually recovers, downstream demand for textilesand clothing has been rebounding. According to data from the National Bureau of Statistics, the percapita disposable income of Chinese residents in 2022 was RMB 36,883, with an increase of 5.0%compared with that in the previous year. With price factors excluded, the actual increase was 2.9%.The median per capita disposable income of Chinese residents was RMB 31,370, with an increase of
4.7%. According to the permanent residence, the per capita disposable income of urban residents wasRMB 49,283, with an increase of 3.9% compared with that in the previous year. With price factorsexcluded, the actual increase was 1.9%. The median per capita disposable income of urban residentswas RMB 45,123, with an increase of 3.7%. The per capita disposable income of rural residents wasRMB 20,133, with an increase of 6.3% compared with that in the previous year. With price factorsexcluded, the actual increase was 4.2%. The median per capita disposable income of rural residentswas RMB 17,734, with an increase of 4.9%. The improvement of residents' consumption capacity haspromoted the increase of terminal consumption expenditure in textile clothing and apparel industry.In the future, with the continuous driving of domestic demands for real estate, automobiles, tourism,and exports, the demand for the polyester industry will continue to maintain a healthy and stablegrowth.
(2) Active building of a high-end, intelligent, and green modern chemical fiber industryDuring the 14
thFive-Year Plan period, China established itself in a new stage of development,implemented new development concepts, and constructed a new development pattern, puttingforward higher requirements for the high-quality development of the chemical fiber industry. In 2022,the Ministry of Industry and Information Technology and the Development and Reform Commissionjointly issued the Guiding Opinions on the High-quality Development of the Chemical Fiber Industry,proposing a series of high-quality development goals to guide the chemical fiber industry in buildinga high-end, intelligent, and green modern industrial system and comprehensively building a strongchemical fiber country. Faced with the new development situation, the chemical fiber industryfocused on researching and developing new technologies to promote the entire industry towards high-end, intelligent, and green development. In terms of digital transformation and upgrading, leading
polyester enterprises have established an Industrial Internet Platform System based on the wholepolyester fiber industrial chain, involving PTA, polyester, spinning and trade, developed data-drivenintelligent control technology for the whole process of efficient fiber production, realized large-scaleflexible green production, and high-value efficient fine management.
(3) The supply of raw materials is loose and the profits of the upstream and downstreamindustrial chains are expected to shift to the polyester endFrom the perspective of the structure of upstream and downstream industrial chains, according toCCF statistics, it is expected that the new production capacity of domestic PX and PTA will be 5.6mtpa and 15.2 mtpa respectively in 2023, with a year-on-year growth of 14% and 20% respectively.The growth rate of production capacity is higher than that of the downstream polyester productioncapacity, which is conducive to the transfer of profits of the industrial chain to the downstreampolyester end. In addition, MEG production capacity will still be continuously expanded, andintegration and coal production capacity will continue to be invested. According to CCF statistics, itis expected that new domestic and international production capacity will be 3.65 mtpa in 2023, witha growth rate of approximately 11.3%. The continuous loose supply of polyester raw materials willbe conducive to the transfer of profits from the upstream and downstream industrial chains to thedownstream polyester end.
(4) Exports of polyester bottle flakes to overseas and strong consumer demands in new fieldsIn recent years, the demand for polyester bottle flakes in China has grown faster than the productiongrowth rate. In terms of overseas export, due to the advantages of distance, sea freight and relativelyfew anti-dumping duties of Asian countries, Asian countries currently account for a large proportionof exporting countries. China's prominent production position, coupled with the fact that overseaspolyester bottle flake factories have successively stopped production or encountered some financialproblems in recent years, even with the existence of anti-dumping policies, China's polyester productsalso have strong advantages in both price and quality, and the overseas demand for export willcontinue to increase rapidly. According to ICIS research, in the first half of 2022, the volume of bottleflake products imported from China by the Middle East and Latin America increased significantly.They then achieved exports to European and American countries through regional exchanges. Some
countries that originally imported bottle flake products from the United States, such as Colombia,also began to import bottle flake products from China due to the tight supply of the United States.According to customs data statistics, the export volume of polyester bottle flakes in China increasedby 36% year-on-year in 2021; in 2022, the export volume increased by 35.68% year-on-year, reaching4,314,300 tons.In terms of the downstream demand side of emerging fields, in addition to the good performance ofthe traditional soft drink market, the application of bottle flakes in the fresh e-commerce field,household disinfection and sterilization and other daily chemical fields, as well as in new fields suchas environmental protection flooring and optical film, is also developing rapidly, driving thecontinuous growth of bottle flake demands. Currently, the total production capacity of polyester bottleflakes (including RPET bottle flakes) of the shareholding and joint-stock companies has ranked firstin the country, and the prosperity of the bottle flake industry has become a new growth point for theCompany's profit contribution.(III) Position of each business segment of the CompanyBeing deeply involved in the fields of petrochemical and chemical fiber, the Company has beendeveloped into a private multinational leading enterprise in China that integrates refining andpetrochemical with chemical fiber. As the only private large refining and petrochemical enterprisewith a refinery located overseas, the Company has the largest single overseas project invested byprivate enterprises. In the future, with the completion and operation of the Brunei Phase II Project ofthe Company, the Company is expected to usher in new opportunities for development.
1. Refining and petrochemical business
According to Platts data, as of December 31, 2022, the production capacity of Southeast Asianrefineries was approximately 271 mtpa. The new production capacity of Southeast Asian refineriesin 2022 was approximately 3 mtpa, which was basically a bottleneck-free expansion. Due to goodprofits in 2022, there were no new or existing production capacity, but it is still lower than the 278mtpa in 2020. Among them, the production capacity of the Hengyi Brunei Phase I Project accountsfor 3% of the total production capacity of the Company.The Hengyi Brunei Phase I Project introduced the world's largest single series aromatics complex and
the sixth flexicoking process unit in the world, which have lower production cost per unit of product,are cleaner and more environmentally-friendly, and boast obvious late-mover advantages. After thecompletion of the Brunei Phase II Project, under the overall transformation and upgrading trend ofthe petrochemical industry, the advantages of refining-petrochemical integration will further reducecosts and increase efficiency for the Company. In addition, due to the limited investment of newrefining and petrochemical production capacity in Southeast Asian countries in the future, and thefact that Southeast Asia itself has a gap in product oil, it is expected that the supply and demand willcontinue to be tight in the future, and the Brunei project is expected to be greatly benefited.
2. PTA business
According to CCF data, as of December 31, 2022, the existing domestic PTA production capacitybase was adjusted to 71.44 million tons. As one of the leading enterprises in PTA industry, theCompany has strategically arranged four PTA bases in Dalian of Liaoning Province, Ningbo ofZhejiang Province and Yangpu of Hainan Province along the coastline from north to south. The totalPTA production capacity of shareholding and joint-stock companies was about 19 mtpa, ranking thefirst in the world, and the Company becomes the world's largest manufacturer of purified terephthalicacid (PTA) In addition, according to CCF data, as of December 31, 2022, the national PIA productioncapacity was about 550,000 tpa, and the Company's PIA production capacity was 300,000 tpa,accounting for about 54.55% of the national total.
3. Polyester business
According to CCF data, most of the polyester production capacity is concentrated in the Asia-Pacificregion, and China has been the world's largest textile producer and exporter. As of December 31, 2022,China's total polymer production capacity reached 70.64 mtpa, with a year-on-year growth of 7.75%,of which the production capacity of polyester fully drawn yarn was 38.31 mtpa, that of polyesterstaple fiber was 9 mtpa and that of polyester bottle flakes was 12.31 mtpa. The polymer productioncapacity of shareholding and joint-stock companies of the Company was 10.765 mtpa, among whichthe production capacity of polyester bottle flakes (including RPET) was 2.7 mtpa, and that ofpolyester fiber consisted of 6.445 mtpa of fully drawn yarn, 880,000 tpa of staple fiber and 740,000tpa of PET flakes. The polymer production capacity of shareholding and joint-stock companies ranked
the first in the world. The Company has continuously increased the proportion of differentiatedchemical fiber varieties and focused on promoting differentiated fully drawn yarn products. Inaddition, the Company has been accelerating the promotion of a green and environmentally-friendlynew product - "Eticont", leading the technological progress of the chemical fiber industry.II. Main business model, process flow and performance drivers of the company during thereporting periodThe Company shall comply with the disclosure requirements for petrochemical industryspecified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen StockExchange - Industry Information Disclosure(I) Business model
1. Procurement model
The Company mainly purchases raw materials through direct negotiation with manufacturers ortraders. It selects competitive suppliers to establish long-term and stable cooperative relations, on thebasis of which it decides the transaction price according to market conditions. The Company adoptsa centralized procurement strategy, integrating resources from Brunei and domestic operatingsuppliers and increasing resource sharing efforts, so as to enhance the Company's own bargainingpower.The raw materials required for production of the Company are mainly purchased from majorpetrochemical products and crude oil suppliers at home and abroad. When selecting raw materialsuppliers, the Company first considers the quality of their products and the stability of supply. Whileensuring the above, the Company will also give priority to suppliers with competitive prices to reduceproduction costs. The Company will sign annual supply contracts with major suppliers, regarding thesupply in the relevant year of their products to the Company in accordance with international ordomestic market prices at the time of actual supply as per the quantity agreed in the contracts.The main procurement process for auxiliary materials is basically the same as that for raw materials.
2. Production model
For polyester products, the Company arranges production mainly according to the production plan
formulated in advance. In specific implementation, the annual production plan will be subdividedinto monthly production plan, and then the Production Department will make necessary adjustmentsto the monthly production plan according to the market feedback and change information providedby the Sales Department before finalizing the monthly production plan and arranging production.The Company's product oil and chemical products (PX, benzene, etc.) are mainly produced by HengyiBrunei. Usually, it will adjust the process and parameters to control the output of specific products,such as product oil and chemical products, according to the market demand.The Company's PTA products are mainly produced by Zhejiang Yisheng. Usually, it will adjust theload level of production unit to control PTA output according to the market demand.
3. Sales model
The Company’s product oils are mainly sold to Brunei, other Southeast Asian countries and Australia.PTA and polyester products are mainly sold in the domestic market, covering more than 20 provincesand regions in China. Most products are sold directly to customers through the Company's SalesDepartment, and only a small number of products are sold through distributors.
(1) Sales model of product oil and chemical products (PX, benzene, etc.)The Company's product oil and chemical products are mainly produced by Hengyi Brunei. Amongthem, the main customers of chemical products are PTA manufacturers downstream of the Company'sindustry chain, and the settlement mode usually adopts wire transfer and letter of credit, etc. Productoil is mainly sold to Brunei, other Southeast Asian countries and Australia. When selling to localenterprises in Brunei, the Company usually signs sales contracts directly and the settlement mode isletter of credit. The Company's sales to other Southeast Asian countries and Australia are mainlythrough Singapore Commodity Exchange. Sales contracts are directly entered into with customersand the settlement mode is letter of credit.
(2) Sales model of PTA products
The Company’s PTA products are generally sold by direct sales, that is, the Company will directlysign purchase and sale contracts with downstream polyester manufacturers or large traders, agreeingon the purchase quantity and price within a certain period. After receiving the payment for goodsfrom customers, the products are delivered directly from the Company's warehouse. The settlement
mode for sales of PTA products is “payment before delivery”, or “collect on delivery”, usually bywire transfer, acceptance draft or letter of credit.
(3) Sales model of polyester fiber products
The main customers of the Company's polyester fiber products are textile enterprises, includingelastomer enterprises, garment fabric manufacturers, bag fabric manufacturers, home decorationfabric manufacturers, etc. These customers are mainly concentrated in the areas of Jiangsu andZhejiang as well as Shanghai. The Company generally adopts direct sales, and directly concludessales contracts with customers. The settlement mode is usually “payment before delivery”, or “collecton delivery”.
4. Business model of supply chain service business
The Company's supply chain service business mainly includes trade business and supporting logisticsrelated services.
(1) Trading business
Petrochemical industry is a cyclical industry. On the one hand, the supply side of raw materials issusceptible to factors such as upstream suppliers' production capacity, operation stability of the plantand start-up time of the new plant. On the demand side, especially in the downstream polyesterbusiness, sales have typical seasonal characteristics. Meanwhile, chemical raw materials and finishedproducts are very dependent on the stability of port facilities and international logistics transportation.On the other hand, the prices of products in the petrochemical industry chain are affected by the priceof terminal crude oil, showing wide fluctuations. Therefore, in order to ensure production andoperation, strengthen supply chain stability and reduce the risk of price fluctuation, petrochemicalenterprises need to smooth supply and demand and hedge risks through trade business in procurementand sales.Since 2022, the production capacity release in the industry has been uncertain. The quarantine andlockdown measures in various regions have led to the instability of logistics supply. In addition, thesharp shock of oil prices has increased the uncertainty of supply and demand in the industry, whichfurther drives the urgent need of enterprises to hedge supply risks through trade management. In tradebusiness, the Company always adheres to the principle of “serving the main business”. The trading
varieties focus on the primary business and core products, mainly PTA and MEG. Among them, PTAbelongs to the finished products of the Company’s PTA business segment, and PTA and MEG arealso important raw materials of polyester business, which shows that the Company uses its tradingbusiness to stabilize supply chain and hedge against price volatility.
(2) Supporting logistics related services
The Company’s logistics sector provides transportation services of raw materials and products forupstream and downstream industries of Hengyi Petrochemical. Its business covers three aspects ofraw materials transportation, product transportation and foreign trade transportation. It is deeplyrooted in China and gradually going abroad, and the business scope involves international shippingand land transportation. The main business model is as follows:
1) Transportation of raw materials mainly serves the production plants within the Company system,through the land transport of self-own vehicles and third-party land transport, inland river shipping,etc.
2) Transportation of products mainly used for the Company to sell the Company's business ordersand organize the third-party logistics company to transport the products. The transportation businesssettlement is carried out by Hengyi Logistics.
3) Foreign trade transportation mainly through Hengyi Logistics, under collaboration with the salescompany of the Company and cooperation with third-party shipping companies or freight forwardingcompanies, to carry out container transportation business by means of bidding. Transportation modesinclude sea-rail combined transport, sea-river combined transport, direct transport, etc.
4) International transportation mainly serves Brunei PMB Petrochemical Project, most of which areoperated by Hengyi Logistics and its overseas subsidiaries. The imported crude oil and coal, exportedproduct oil and benzene and other products of the PMB Project are transported by spot charteringwith the fleet capacity of a third-party ship-owner in the market. For the transportation of chemicalPX, due to the relatively stable ports and batch volume of upstream and downstream routes, MRchemical fleet will be rented for transportation during the self-construction period. For some LPG gasproducts, a mixture of the above two modes is adopted to achieve the goal of safe transportation.
(II) Process flow charts of main products
1. Production flow of product oil/chemical products
The production flow of the Company’s product oil/chemical products includes atmosphericdistillation, vacuum distillation, hydrocracking, flexicoking, catalytic cracking and alkylation, etc.
Atmospheric Distillation Unit
Vacuum DistillationUnitLight ends recoveryKerosene
Hydrotreating
DieselHydrotreating
Overhead gas
Kerosene
Diesel
FlexicokingHydrocracking
Atmospheric 4
th
line
Productpurification
Coker liquefied
gasSulfur-bearingliquefied gas
Pre-
hydrogenation
Naphtha
ReformingPSA
Gas from lowpressure separatorHydrogen
ReformingHydrogenRefined naphtha
Coker gas oilHeavynaphtha
Gasfractionation
Light NaphthaIsomerization
AromaticscomplexCracking liquefied gasLiquefied refinery gasReforming liquefied gas
Light naphtha
LightnaphthaReformate
Sulfur RecoveryComplex
Sulfur (solid& liquid)
Flexible gas(fuel gas)PropyleneLiquefiedPetroleum GasLPGIso-butane
Gasolinecomponent C7+non-aromatic
Gasolinecomponentisomerized oil
Gasolinecomponentisopentane
gasoline
Raffinate
oilJet fuelBenzene
Methylbenzene
PX
Heavy aromatics
Diesel
Coker gasoline and diesel
Vacuum gas oil
Vacuum
residue
Sour water
Sour gas
Naphtha
2. PTA preparation process
The specific PTA process flow can be divided into oxidation unit and refining unit:
(1) Oxidation unit
The specific flow chart of oxidation unit is as follows:
Air compressorSteam turbineExpander
Feed mixture
Oxidation
reactor
Level-4condensation
High pressure
absorber
Post oxidation reactorCondenser Tail gas drying
Solvent recovery
and dehydration
Primary crystallizerSecond crystallizerVacuum filter
TA binCTA dryer
Condenser
Residueevaporator
Recovery andhydrolysis of
methyl acetate
Catalyst
recoveryMother
liquor
Acetic acid
storage
By-product
steam
Supplementing
acetic acid
Steam
PX
Co，Mn
Acetic acid
storage
PTA pressure
filter mother
liquor
Wastewater
treatment
(2) Refining unit
The flow chart of refining unit is as follows:
CTA bin
SlurrypreparationBooster pump
Solventtank
Sundyne pump
Preheater
Hydrogenation
reactorHydrogencompression
Level-5crystallization
Pressure
filtering
Re-beating
Vacuum filterPTA drying
PTA batch bin
Mother liquor
flashing
PTA bin
H2
To mother-liquorsolid recovery
Packaging
Desalted
water
Flash-off steam
Recycling
solvent
Desalted
water
3. Polyester esterification polycondensation process
In the process of polyester esterification, the raw material PTA, ethylene glycol and catalyst solutionare continuously sent into the slurry preparation tank according to the specified proportion. After theyenter the esterification reactor, the esterification rate can reach about 95%-96% by controlling thereaction temperature at an appropriate level. By means of gear pump discharging and pressurization,the polyester melt produced from esterified materials after prepolycondensation and finalpolycondensation is filtered by melt filter, and is distributed through a specially designed meltdistribution system. Part of it is sent to the spinning device for melt direct spinning, and the other partis sent to the flake production system for ribbon casting and pelletizing.The specific flow chart of polyester esterification, polycondensation and other reactions is as follows:
PTA storeFeed EG tank
Slurry allocation tank
First esterification reactor
Second esterification reactor
Prepolycondensation reactor
Prepolymer filter
Final polycondensation reactor
Melt filtering and conveyingDirectly to spinningworkshop
Ribboncasting
Dust
Catalyst
Ethylene glycolexhaust gas
Ethylene glycol
exhaust gas
Condens
er
Processfractionating
column
Condenser
EG jet pump
Condenser
Ethylene glycolliquid seal trough
Liquid ring pump
Underwaterpelletizing
Flake dryingPackaging
PET caput-heels and waste flakes
EG
Exhaust gas is incinerated in
a heat medium furnaceOligomer residue
Recycle EG to slurry allocation tank
Condensatecollecting tank
Strippingtower
Sewage
treatment station
Residue
Residue
Esterificationwastewater
Exhaust gas is burned in athermal furnace
Heavy component
Ethylene glycol/acetaldehyde exhaust gas
4. Production flow of POY/FDY
The production process of POY and that of FDY are basically the same. The polyester melt isconnected and transported to the device from the outlet of the melt distribution valve of the polyester
device, and then is divided into two systems through the melt three-way valve. On the way, it ispressurized by the melt booster pump, and then sent to the melt distribution valve after cooling-downby the melt cooler. The polyester melt from the melt distribution system enters the spinning chamberinsulated by steam phase heat medium at a certain temperature and is delivered to the spinningassembly after metering by a metering pump. The melt pipe is equipped with a freezing valve toensure that the spinning position can be independently started and stopped. After the melt is filteredand pressed by the filter layer again in the spinning assembly, it is ejected from the spinneret in a thinstream and solidified into yarns under the condition of constant temperature and humidity. The yarnis oiled by the tanker, and then through the network nozzles, it is rolled into a yarn tube in the windingmachine. POY and FDY products were prepared under high speed winding ranging from 2,500m/minto 5,100m/min.
Polyester melt
Boosterpump
Melt cooler
Melt distribution
valve
Static mixerMetering pump
Spinning
assembly
Oil + waterBlending
OilCooling (ringblowing, side
blowing)
Oilingdevice
Spinningchannel
Network
nozzle
Draw-off
godet
Heating
roller
POY windingFDY winding
Packaging
check
Dyeing
Delivery
Oil dripping fluid
Oil exhaust gas
Oil exhaust gas
5. Production flow of DTY
The POY yarn on the yarn tube rack is wound into a DTY yarn tube and becomes a finished productafter it passes through yarn guide, feeding roller, texturing heater, cooling, drafting, false twister,feeding roller in the middle, network, heater, delivery roller and oil roller.
POY yarns
Originalfilament rack
Upper rollerfeeding
Upper heater
(texturing heater)
Cooling
Drafting andfalse twistingOil exhaust gas
Middle roller
Network
Lower heater
(setting heater)
Lower rollerOiling
Winding and
forming
Grading and
packaging
DTY oil
DeliveryWaste yarn
6. Production flow of staple fiber
Polyester staple fiber is a kind of fiber that is transported to the spinning machine through melt, spuninto shape, cut into fibers of different lengths after drafting, crimping and heat setting, and thenpacked into individual packages. The main process includes melt conveying, spinning, cooling,winding, tube falling, bundling, drafting, tension heat setting, folding, crimping, cutting andpackaging.
Polyester meltBooster pump Melt coolerStatic mixer
Metering pumpSpinning assemblyAir coolingSpinning oilSpinning oilDraggerFeeding machine Relaxation heat setting
ReciprocatingengineBundlingYarn guideImpregnating tankFirst drafterDraft bath Second drafterSteam heater
FoldingmachineThird drafterSpray oilingTension heat settingTension machineSteam preheaterCrimping machineFiber-spreading machine
Yarn guideDrag tension machine
Cutting off Packaging
Polyester staple fiber
7. Production flow of bottle flakes
The production process of bottle flakes, i.e. bottle grade flakes, is composed of two parts: meltpolymerization + solid phase polymerization. The main process of melt polymerization consists ofpulping, esterification, polycondensation, and dicing, and is basically the same as that of fiberpolymerization. The difference lies in that IPA, stabilizer and toner are added in the formula of bottleflakes. The main process of solid phase polymerization is crystallization, preheating, reaction, andcooling.
Productpackaging
Flake cooling
Solid phase polycondensationreaction
Preheating Crystallization
Basic flake conveyingDemineralized waterCropping DryingWater filtrationPolycondensation reaction
EsterificationreactionSlurry
preparation
Auxiliarysolution
Vacuum system
EG distillation
Nitrogen
IPAPTA
(III) Main performance drivers
1. Actively promoting the transformation and implementation of scientific researchachievements, ushering in a new era of green developmentThe Company strengthened the independent R&D efforts, fully leveraged the technologicaladvantages in R&D, continued carrying out R&D of high-end polyester chemical fiber products andgreen products, co-built research institutes, joint laboratories and other platforms with first-classuniversities, completed the mechanism of "industry, academia, research, and application", acceleratedthe transformation of scientific and technological achievements into industries, and comprehensivelypromoted the transformation from “Industrial Hengyi" to “Technological Hengyi", continuouslyenhancing the contribution of scientific research and technological innovation to the Company's mainbusiness.During the reporting period, the production and quality of the Company's green and environmentally-friendly polyester product "Eticont" continued to be improved, achieving the industrialization of anew generation of green, healthy, and environmentally-friendly polyester fibers, ushering in a newera of green development for polyester fibers. In the field of differentiated products, the developmentof functional composite materials of the Company, such as antibacterial and cationic dyes, has beentaking shape and gradually advancing to industrialization.
2. Seize the prosperity cycle of Southeast Asian product oil market and efficiently running theBrunei Phase I ProjectIn 2022, the economy of Southeast Asia rebounded rapidly, and the demand for product oil receivedstrong support. Besides, due to the continuous withdrawal of outdated production capacity and thecomprehensive influence of geopolitical factors, the supply pattern of product oil continued to betight. Against the backdrop of supply shortage, the Southeast Asian product oil market maintained aprosperous pattern, driving Brunei Refinery's profitability to improve.Brunei Phase I Project has a crude oil processing capacity of 8 mtpa. Since the commercial operationstarted, the project has been operating at full capacity and can be increased to 110% or more accordingto market conditions. During the reporting period, the Company quickly adjusted the product structurebased on the product profitability, fully ensuring the optimal profitability of the project. While
ensuring the efficient operation of the Brunei Phase I Project, the Company has been fully promotingthe construction of the Brunei Phase II Project. After the completion of the Brunei Phase II Project, anew “olefin-polyolefin" industrial chain will be added, which is conducive to improving the refining-petrochemical integration of the Brunei Project, further enhancing the advantages of collaborativeoperation between upstream and downstream industries, and improving the overall profitability ofthe Company.
3. Flexibly adjusting the product structure to increase the proportion of high value-addedproductsClosely following the fluctuations in the crack spread of product oil in the Singapore market, theBrunei Project purchased more suitable types of raw materials for processing, reduced productioncosts, and timely adjusted the production proportion of products. In the market situation where thecrack spread of jet fuel was weaker than that of diesel, the project promptly converted jet fuel intodiesel, striving to maximize profits. In addition, the production capacity of PTA and PIA of theCompany could also be flexibly converted according to market conditions, effectively improving theutilization of capacities and the added value of products. Bottle flakes, due to their high transparencyand good glossiness, could increase the added value of packaged goods, which is beneficial forincreasing product premium rates and is highly favored by downstream manufacturers. As of the endof the reporting period, the Company has a production capacity of 2.7 mtpa of polyester bottle flakes(including RPET), with a large profit margin.
4. Continuously advancing key projects and strengthening the integrated industrial chainthrough cohesionThe Company has been developed into a leading global enterprise that integrates the industrial "crudeoil - PX - PTA polyester" chain with the "crude oil - benzene CPL - polyamide” chain, continuouslyextends the petrochemical industrial chain, enriches product types, and further improves productstructure, effectively consolidating the core competitiveness of the main business and enhancing theability to resist market risks.During the reporting period, 1.1 mtpa New Environment-friendly Differentiated Fiber Project, 1.2mtpa Caprolactam-Polyamide Industry Integration and Supporting Project, the Brunei Phase II
Project and other projects under construction of the Company were orderly promoted; in addition, the
2.5 mtpa purified terephthalic acid (PTA) engineering project and 1.8 million mtpa functionalmaterials project of joint venture Hainan Yisheng have also been actively advancing. After thecompletion and operation of the projects under construction, the Company's performance is expectedto further enhanced, so as to improve the Company's market share in the fields of staple fiber andbottle flakes, etc., effectively strengthen the downstream industrial chain, and fully leverage theunique advantages driven by both polyester and polyamide businesses, further enhancing theadvantages of a balanced and integrated industrial chain that highly matches the upstream anddownstream.
5. Building a self-owned logistics system to assist in the coordinated development of upstreamand downstream industriesIn order to meet the needs of business growth and production safety, the Company was vigorouslybuilding a logistics system, creating its own transportation fleet of ships and that of trucks, so as toenhance the competitiveness of the Company's main business and stabilize the supply of raw materials,assisting in stable production capacity at home and abroad. The Company was developing digitallogistics, creating a TMS system that combines internal standardized management, information dataexchange with upstream and downstream factories, and online control of vehicle and road operationsafety, so as to reduce manual operations and improve accuracy while standardizing processes. Theindustrial layout of "petrochemical + logistics" can reduce the logistics costs of internal raw materialsand products, better achieve upstream and downstream collaboration, and provide strong supports forthe development of the main business, comprehensively enhancing comprehensive competitiveness.Procurement mode of main raw materials
Currency unit: RMB
| Main raw materials | Procurement model | Percentage of total amount of purchase | Has the settlement method changed significantly? | Average price in the first half of the year | Average price in the second half of the year |
| Crude oil | Purchasing | 30.84% | No | 5,442.68 | 5,223.07 |
| inquiry | |||||
| PX | Purchasing inquiry | 10.89% | No | 7,479.70 | 7,559.86 |
| MEG | Purchasing inquiry | 5.59% | No | 4,406.42 | 3,670.69 |
Reasons for the significant change in the prices of raw materials compared with the previousreporting periodDuring the reporting period, there were significant changes in the raw material prices of the Companycompared with that in the previous reporting period, mainly due to the escalation of the geopoliticalsituation and fluctuations in global crude oil inventory and supply. In 2022, crude oil prices showedan overall upward trend, with an increase in the first half of the year and a decrease in the second half.According to CCF data, the average price of WTI crude oil in 2022 increased by 38.73% comparedwith that in 2021, and the price of Brent crude oil increased by 39.65%. At the same time, the rise incrude oil price also lifted the prices of downstream products in the industrial chain such as PX.The purchase price of energy accounts for more than 30% of the total production cost
□ Applicable ?Not applicable
Reasons for significant changes in major energy types
□ Applicable ?Not applicable
Main production technologies
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| Gasoline | Mass production | Multiple persons | Introduction and innovation | Advanced equipment and technology, high production capacity, low costs of raw materials and transportation, and high level of eco-friendliness |
| Diesel | Mass production | Multiple persons | Introduction and innovation | Advanced equipment and technology, high production capacity, low costs of raw materials and transportation, and high level of eco-friendliness |
| Kerosene | Mass production | Multiple persons | Introduction and innovation | Advanced equipment and technology, high production capacity, low costs of raw materials and transportation, and high level of eco-friendliness |
| Paraxylene | Mass | Multiple | Introduction | Advanced equipment and technology, high production |
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| production | persons | and innovation | capacity, low costs of raw materials and transportation, high product purity, and long operating cycle of the plant | |
| Benzene | Mass production | Multiple persons | Introduction and innovation | Advanced equipment and technology, high production capacity, low costs of raw materials and transportation, high product purity, and long operating cycle of the plant |
| Purified terephthalic acid | Mass production | Multiple persons | Introduction and innovation | High production capacity, low investment, low energy consumption, convenient transportation and high level of eco-friendliness |
| Polyester | Mass production | Multiple persons | Introduction and innovation | Short process, high production capacity, low consumption of raw materials and public works, etc. |
| Polyester | Mass production | Multiple persons | Introduction and innovation | The third and fourth monomers are added into the polymerization reaction system, and a special equipment structure is adopted. Through esterification, prepolycondensation and final polycondensation reaction, low-temperature dyeable cationic polyester is prepared, lowering the cost of subsequent dyeing and reducing environmental pollution. Additives such as compound stabilizers are used to increase the melting point and improve the heat resistance of melts, while increasing the whiteness and improving the hue and heat resistance of the products. |
| Polyester | Mass production | Multiple persons | Introduction and innovation | No dulling agent is added in the polymerization process to produce super bright polyester products to meet the needs of different customers with low production costs |
| Polyester | Mass production | Multiple persons | Introduction and innovation | By adding dulling agents in the polymerization process to produce full dull polyester products, the problem of low filter life due to the increase of dulling agents is solved and energy consumption is reduced. |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | By optimizing the design of the reactor structure and adding titanium-based catalysts instead of antimony-based catalysts, the catalyst is uniformly dispersed in the material, and an environmentally-friendly antimony-free polyester product is produced, realizing a high level of eco-friendliness. |
| Polyester | Mass production | Multiple persons | Introduction and innovation | The masterbatch preparation process has been improved, the types and proportions of silver-based antibacterial agent, PBT powder mixture and dispersant have been studied, and the optimal proportions of the three have been determined. The antibacterial masterbatch has been prepared by melt blending and extrusion with outstanding features. |
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | Maximum output, highest conversion rate and lowest energy consumption are realized |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | By tapping the potential of equipment, the effect of increasing production and efficiency has been achieved without increasing investment |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | Through recycling, energy waste is reduced and energy utilization rate is improved; by continuously introducing energy-saving technologies, production costs have been reduced. |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | It extends the filter service life, reduces labor waste, and saves packaging costs, bringing considerable economic benefits to the Company |
| Polyester | Wide range of applications | Multiple persons | Introduction and innovation | Through modification during the polymerization reaction, the fluidity and ductility of the polyester melt are improved. With the same polymerization residence time, the intrinsic viscosity of the product is higher than that of the conventional polyester, and the processing performance of the melt is also improved. A utility model patent has been granted for this technology. The patent number is ZL201120219233.4. |
| Polymerization | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the Company has successfully developed and produced titanium dioxide for polyamide, and completed independent production and supply of auxiliary materials to replace imports. |
| Polymerization | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the Company has successfully developed and produced titanium dioxide for polyamide, and completed independent production and supply of auxiliary materials to replace imports. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Using advanced AI technology, the Company can automatically monitor the spinning process, and detect and deal with abnormalities in a timely manner, thereby improving the product quality and production efficiency and reducing the cost |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Using advanced AI technology, the Company can automatically inspect the appearance defects of fully drawn yarn rolls, thereby improving the production efficiency and reducing the cost |
| Spinning | Wide range of | Multiple | Introduction | Using advanced automation technology, the Company realizes the automation of the production process, greatly |
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| applications | persons | and innovation | reducing manual operations, improving the production efficiency and reducing the cost | |
| Spinning | Mass production | Multiple persons | Introduction and innovation | Using advanced technology, the Company shortens the process flow and increases the production capacity and degree of differentiation, maintaining stable product quality with low utility costs |
| Spinning | Mass production | Multiple persons | Introduction and innovation | Using the melt direct spinning POY→DTY process route, the melt is ejected from the independently designed "straight-line"-shaped spinneret hole, and then cooled, oiled, rolled and spun into flat special-shaped POY yarns. POY yarns are then textured into flat DTY polyester fully drawn yarn, which feature lower bulk density, lighter weight and softer fabric feel. |
| Spinning | Mass production | Multiple persons | Introduction and innovation | Using the melt direct spinning POY→DTY process route, the melt is ejected from the independently designed "cross"-shaped spinneret hole, and then cooled, oiled, rolled and spun into cross-shaped POY yarns. POY yarns are then textured into cross DTY polyester fully drawn yarn, which feature lower bulk density, lighter weight, better air permeability and softer fabric feel. |
| Spinning | Mass production | Multiple persons | Introduction and innovation | Using the melt direct spinning PDY process route, the melt is ejected from the independently designed "tree"- or "star"-shaped and other special-shaped spinneret holes, and then cooled, oiled, rolled and spun into "tree"- or "star"-shaped and other special-shaped FDY yarns. This type of polyester fully drawn yarn features lower bulk density, lighter weight, special luster, and softer fabric feel. |
| Spinning | Mass production | Multiple persons | Introduction and innovation | The functional self-heating masterbatch is added to produce the functional hollow polyester fiber. It can be used as the "core layer" of the heat retaining and comfortable composite fiber, with double heat retaining effects. A utility model patent has been granted for this technology. The patent number is ZL201410481816.0. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation |
With the use of advanced equipment and processtechnology, short process, high degree of automation, andlow manufacturing cost are achieved.
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Through technical improvement, the manual operation cycle is extended, the product quality stability is improved, and the resource consumption and cost are reduced |
| Spinning | Wide range of | Multiple persons | Introduction and innovation | By installing in-line addition equipment, dynamic and static mixing equipment, oiling nozzles, winders, etc. on the melt direct spinning line, the existing equipment has |
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| applications | been transformed and upgraded, enabling the polyester melt direct spinning line to produce differentiated and high-end products. It solves the challenge of using the large-capacity polyester plant to produce functional differentiated chemical fibers of multiple varieties in small batches. Functional modified fibers are produced, including colored, flame-retardant, antibacterial and full dull fibers. | |||
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | The self-owned technology of the Company is applied to the production of flame-retardant polyester. Single-component spinning or composite spinning technology is used to produce single-component or two-component sheath-core composite flame-retardant and anti-dripping POY-DTY polyester fully drawn yarn. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the Company produces polyester and polyamide, SPH, sea-island, cationic dyed polyester and other composite yarns to meet the high-end market demand |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the Company produces differentiated and functional products such as HOY and medium-strength yarns for segment markets, meeting the needs of specific users |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | In the spinning process, the non-contact heating method is adopted to reduce the friction and heating of the yarns during processing to avoid the production of broken yarns. Low-temperature stretching deformation-high-temperature setting are adopted and appropriate tangle jets are used to reasonably control the tangle air pressure bundling performance and other production processes to produce ideal fully-drawn yarns (FDY) similar to the products of parallel drafting machines. A utility model patent has been granted for this technology. The patent number is ZL200810059725.2. |
| Spinning | Wide range of applications | Multiple persons | Independent R&D | Through independent R&D, the Company produces oils suitable for the spinning process to improve the processing performance of the product, so that the weaving process can proceed smoothly and the product quality is excellent. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | By using the programmable controller (PLC), the composite yarn is stretched in multiple stages, and the order of the stretching ratio of each stage can be changed as needed within the range, so that the composite yarn has different structural densities, resulting in the difference in color absorption and dyeing rates, and realizing multiple colors after dyeing. It has brought significant economic |
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| and social benefits. A utility model patent has been granted for this technology. The patent number is ZL200710070581.6. | ||||
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | The graphene masterbatch and PET flakes are blended and spun into yarns. A spinneret with a 4C aperture is used to prepare hollow graphene polyester fiber POY, and the fluffy curl of the polyester fiber is further improved in the subsequent texturing process. This gives the polyester fiber the features of heat retaining and light weight in addition to the functionality of graphene, expanding its application prospect of graphene in the field of textiles. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | The antimony-free polyester melt is produced by adding a titanium-based catalyst to polyester to instead of antimony-based catalysis, and then antimony-free staple fibers and fully drawn yarns are produced through a spinning process, featuring high environment-friendliness. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | By spinning and winding a bunch of POY and a bunch of FDY, a new type of polyester/polyester composite yarn is made, and it can be used for weaving high-grade artificial silk clothing fabrics and home textile fabrics, which has the advantages of rich hand feel, anti-wrinkle property and good drapability. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the spinning oil for FDY has been successfully prepared to replace imported oils. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | The antimony-free polyester melt is produced by adding a titanium-based catalyst to polyester to instead of antimony-based catalysis, and then antimony-free staple fibers and fully drawn yarns are produced through a spinning process, featuring high environment-friendliness. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | By spinning and winding a bunch of POY and a bunch of FDY, a new type of polyester/polyester composite yarn is made, and it can be used for weaving high-grade artificial silk clothing fabrics and home textile fabrics, which has the advantages of rich hand feel, anti-wrinkle property and good drapability. |
| Spinning | Wide range of applications | Multiple persons | Introduction and innovation | Through independent R&D, the spinning oil for FDY has been successfully prepared to replace imported oils. |
| Texturing | Mass production | Multiple persons | Introduction and innovation | By controlling the temperature of false twisting deformation, the linen type is achieved, which not only has the style of natural linen fibers, but also has the stiffness of |
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| artificial linen fibers. | ||||
| Texturing | Mass production | Multiple persons | Introduction and innovation | The airflow through the tangle jet is closed intermittently, and a variety of polyester POY yarns of different colors are composited through false twisting deformation to produce a fancy composite polyester yarn interleaved with fluffy non-intermingled low-stretch fiber and intermingled blended fiber. Colored polyester POY is used to produce the colored composite yarn directly by texturing, eliminating the complicated downstream dyeing process, reducing the cost of the product, simplifying the process and lessening the pollution to the environment |
| Texturing | Mass production | Multiple persons | Introduction and innovation | A double-solenoid valve opening and closing logic design is adopted. The two solenoid valves arranged in parallel or series are designed with a reasonable opening and closing logic to jointly control them to realize intermittent switching of the tangle jet airflow and the intelligent design of polyester fancy composite yarn tangling points. At the same time, it reduces the frequency of use of a single solenoid valve to prevent overheating damage to a single solenoid valve, effectively improving the efficiency of texturing. |
| Texturing | Mass production | Multiple persons | Introduction and innovation | The Company has a more mature technology for producing products with a monofil fineness of 0.5-1.0dpf, which provides technical support and experience accumulation for the development of finer products. Through the supporting of pre- and post-spinning equipment, the Company realizes independent R&D. At present, the Company's production technology of ultra-fine fibers of less than 0.5dpf is mature, the quality is stable, and relevant production conditions are available. They are mainly used for producing high-grade fabrics and decorative fabrics. |
| Texturing | Mass production | Multiple persons | Introduction and innovation | In pre-spinning, the third monomer is introduced into the reaction system to prepare low-temperature dyeable cationic POY, which is matched with post-spinning and texturing to prepare DTY products, thereby reducing the cost of subsequent dyeing and environmental pollution. |
| Texturing | Mass production | Multiple persons | Introduction and innovation | The technology is independently researched and developed by the Company. Nubby products are produced under special process conditions such as stretching temperature and stretching ratio. With the characteristics of cotton and linen fabrics, they are widely used in summer cotton and linen fabrics and popular in the market. |
| Texturing | Mass | Multiple | Introduction | Composite yarns are made by processing two or more |
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| production | persons | and innovation | fibers. The processed products have the characteristics of various fibers, such as fabric cotton feel, softness and breathability, and different patterns of dyeing. Examples include FDY-DTY composite yarn, high- and low-viscosity composite yarn, cationic dyed polyester compound, etc. This product is widely used in high-end fabrics, and the market demand is great | |
| Texturing | Mass production | Multiple persons | Introduction and innovation | The special-shaped section of the spinning spinneret produces polyester fibers with different sections, which improves the capillary effect of the fibers in the fabric, so that sweat can quickly migrate to the surface of the fabric and disperse due to the effects of wicking, diffusion and transmission, achieving the purpose of moisture conductivity and fast drying, and improving the moisture permeability of polyester fabrics |
| Texturing | Mass production | Multiple persons | Introduction and innovation | By producing the S+Z products on a twin-strand machine, the torques of the two yarns cancel each other after stranding, resulting in a torque-free product. This technology has the advantages of flat surface, easy weaving, rich hand feel, and even dyeing. In particular, it shows good effect in oxford fabric, so it is very suitable for high-end decorative fabrics |
| Texturing | Wide range of applications | Multiple persons | Introduction and innovation | Using the production technology of wool-like fibers, POY yarns are drawn and falsely twisted on the DTY machine, and then compounded with DTY of the PTT component. The PTT fiber floats on the surface of the yarn and exerts its excellent wearing performance. The high-shrinkage modified PET fiber is placed in the inner layer of the yarn to exert its rigid supporting effect and bring out a stronger sense of uprightness. A utility model patent has been granted for this technology. The patent number is ZL201010174972.4. |
| Texturing | Wide range of applications | Multiple persons | Introduction and innovation | The false-twisting texturing technology is used to produce polyester fully drawn yarn with good hollowness and clear profiled outline, and high requirements for conformal properties such as profile degree and hollowness |
| Texturing | Wide range of applications | Multiple persons | Introduction and innovation | The technology is independently developed by the Company and is used to process DTY of various colors such as black, red, gray, and yellow. The color is uniform and not easy to fade in daily use. No dyeing is required after weaving, and the yarn is mostly used for making special-purpose fabrics. |
| Multifunctional polyester bottle | Leading in China | Multiple persons | Introduction and innovation | The core technology of this product is the current international advanced high-temperature crystallization |
| Main products | Stage of production technology | Core technical personnel | Patented technology | Advantage in product R&D |
| flakes | and solid-phase polycondensation process with short process and low energy consumption. The comprehensive energy consumption per unit of product has reached the leading level in China |
Production capacity of main productsPlease refer to I. Major businesses engaged in by the Company during the reporting period ofSection III, Business Summary of the Company.Product categories of major chemical parks
| Major chemical parks | Main product categories |
| PMB Industrial Park | Gasoline, diesel, jet fuel, PX, and benzene |
| Linjiang High-tech Industrial Park | Flake, staple fiber, POY, and FDY |
| Haining Economic Development Zone (Jianshan New District) | Flake, POY, FDY, and DTY |
| Suqian High-tech Industrial Development Zone | Flake and staple fiber |
| Jiaxing Xiuzhou High-tech Industrial Development Zone | Flake, POY, and FDY |
| Shaxi Town Industrial Park | Flake and POY |
| Ningbo Petrochemical Economic and Technological Development Zone | PTA |
| Dalian Economic and Technological Development Zone | PTA and bottle flake |
| Yangpu Economic Development Zone | PTA and bottle flake |
EIA approvals being applied for or newly obtained during the reporting period
□ Applicable ?Not applicable
Unusual suspension of production of the listed company during the reporting period
□ Applicable ?Not applicable
Relevant approvals, permits, qualifications and validity periodsMainly including: Production Safety Permit, Emission Permit, and Cargo Transportation Permit.Engaged in petroleum processing and petroleum trading.
| SN | Holder | Certificate name | Certificate No. | Issuer | Validity period |
| 1 | Zhejiang Yisheng | Emission Permit | 91330200744973411W001W | Beilun Branch of Ningbo Municipal Ecology and Environment Bureau | December 15, 2026 |
| 2 | Zhejiang Yisheng | Radiation Safety Permit | ZHFZ No. B2005 | Department of Ecology and Environment of Zhejiang Province | November 17, 2024 |
| 3 | Zhejiang Yisheng | Production Safety Permit | (ZJ) WHAXZZ (2019)-B-1448 | Department of Emergency Management of Zhejiang Province | January 03, 2025 |
| 4 | Hengyi Limited | Emission Permit | 91330000765215943G001Y | Hangzhou Municipal Ecology and Environment Bureau | August 27, 2023 |
| 5 | Hengyi Limited | Work Safety Standardization Level-3 Enterprise (Textile) | Hangzhou AQBFZⅢ202100807 | Hangzhou Municipal Bureau of Emergency Management | 2023.08 |
| 6 | Hengyi High-Tech | Emission Permit | 913301006680033406001Q | Hangzhou Municipal Ecology and Environment Bureau | November 25, 2026 |
| 7 | Hengyi High-Tech | Work Safety Standardization Level-3 Enterprise (Textile) | HZ AQBFZⅢ201900974 | Hangzhou Municipal Bureau of Emergency Management | January 2023 |
| 8 | Hengyi Polymer | Emission Permit | 913301097245283880001P | Hangzhou Municipal Ecology and Environment Bureau | November 2, 2026 |
| SN | Holder | Certificate name | Certificate No. | Issuer | Validity period |
| 9 | Hengyi Polymer | Radiation Safety Permit | ZHFZ No. A2255 | Department of Ecology and Environment of Zhejiang Province | September 19, 2024 |
| 10 | Hengyi Polymer | Work Safety Standardization Level-3 Enterprise (Textile) | Hangzhou AQBFZⅢ202100038 | Hangzhou Municipal Bureau of Emergency Management | April 2023 |
| 11 | Jiaxing Yipeng | Emission Permit | 91330411MA28BLMY30001V | Jiaxing Ecology and Environment Bureau | December 1, 2023 |
| 12 | Jiaxing Yipeng | Port Operations Permit of People's Republic of China | (ZJNH) GJZ (1265) | Jiaxing Municipal Port and Shipping Administration | March 11, 2023 |
| 13 | Jiaxing Yipeng | Jiaxing Inland Port Shoreline Use Registration Certificate | JNHAZ No. (1265) | Jiaxing Municipal Port and Shipping Administration | March 11, 2054 |
| 14 | Jiaxing Yipeng | Water Use Permit | QS (JXNS) Z (2019) No. 007 | Xiuzhou District Agriculture, Rural and Water Resources Bureau of Jiaxing City | November 12, 2023 |
| 15 | Taicang Yifeng | Emission Permit | 91320585MA1P1GPBXM001V | Suzhou Municipal Ecology and Environment Bureau | December 30, 2027 |
| 16 | Shuangtu New Materials | Emission Permit | 91330100566050736P001Y | Hangzhou Municipal Ecology and Environment Bureau | November 26, 2026 |
| 17 | Shuangtu New Materials | Radiation Safety Permit | ZHFZ No. A3048 | Department of Ecology and Environment of Zhejiang Province | December 26, 2023 |
| 18 | Shuangtu New Materials | Work Safety Standardization Level-3 Enterprise (Textile) | Hangzhou AQBFZⅢ202101128 | Hangzhou Municipal Bureau of Emergency Management | October 2023 |
| 19 | Fujian Yijin | Emission Permit | 91350582MA31G07Q8C001V | Quanzhou Municipal Ecology | April 7, 2026 |
| SN | Holder | Certificate name | Certificate No. | Issuer | Validity period |
| and Environment Bureau | |||||
| 20 | Suqian Yida | Emission Permit | 91321311MA1UXUC8XJ001R | Suqian Ecology and Environment Bureau | July 18, 2026 |
| 21 | Suqian Yida | Radiation Safety Permit | SHFZ No. 0199 | Suqian Ecology and Environment Bureau | January 12, 2027 |
| 22 | Haining Thermal Power | Emission Permit | 91330481MA29HXML34001R | Jiaxing Ecology and Environment Bureau | July 22, 2025 |
| 23 | Haining New Materials | Emission Permit | 91330481MA29HRX724001V | Jiaxing Ecology and Environment Bureau | July 27, 2023 |
| 24 | Zhejiang Hengyi Engineering | Special Equipment Production License | TS3833335-2024 | Zhejiang Provincial Administration for Market Regulation | April 1, 2024 |
| 25 | Zhejiang Hengyi Engineering | Construction Enterprise Qualification Certificate | D333903322 | Hangzhou Urban and Rural Construction Committee | December 31, 2023 |
| 26 | Zhejiang Hengyi Logistics | Road Transport Operations Permit of People's Republic of China | ZJYGXKHZ No. 330109186475 | Hangzhou Municipal Transportation Bureau | August 31, 2025 |
| 27 | Ningbo Hengyi Trading | Hazardous Chemicals Operations Permit | YLAJ (2022) 0085 | Beilun District Branch of Bureau of Emergency Management of Ningbo | November 25, 2024 |
| 28 | Shaoxing Hengyi Logistics | Road Transport Operations Permit of People's Republic of China | ZJYGXKSZ No. 330621104701 | Shaoxing Keqiao District Transportation Bureau | April 12, 2031 |
| 29 | Hengyi Logistics | Work Safety Standardization Level-1 Enterprise (Road Transport) | 2018-01-101490 | Ministry of Transport of the People's Republic of China | January 9, 2024 |
| 30 | Hangzhou Yijing | Emission Permit | 91330109MA28M4DD8Y001P | Hangzhou Municipal Ecology and Environment Bureau | November 4, 2026 |
| SN | Holder | Certificate name | Certificate No. | Issuer | Validity period |
| 31 | Hangzhou Yijing | Radiation Safety Permit | ZHFZ No. A2259 | Department of Ecology and Environment of Zhejiang Province | May 22, 2027 |
| 32 | Hangzhou Yijing | Work Safety Standardization Level-3 Enterprise (Textile) | Hangzhou AQBFZⅢ2019 | Hangzhou Municipal Bureau of Emergency Management | January 2023 |
| 33 | Hengyi Caprolactam | Production Safety Permit | (ZJ) WHAXZZ (2019)-A-2191 | Department of Emergency Management of Zhejiang Province | December 5, 2023 |
| 34 | Hengyi Caprolactam | Radiation Safety Permit | ZHFZ No. A3044 | Department of Ecology and Environment of Zhejiang Province | January 16, 2027 |
| 31 | Hengyi Caprolactam | Work Safety Standardization Level-2 Enterprise (Hazardous Chemicals) | Zhejiang AQBWH Ⅱ202100002 | Department of Emergency Management of Zhejiang Province | June 2023 |
Engaged in petroleum processing and petroleum trading?Yes □ NoEngaged in fertilizer industry
□Yes ?No
Engaged in pesticide industry
□Yes ?No
Engaged in chlor-alkali and soda ash industry
□Yes ?No
III. Analysis of core competitiveness
1. Leading international industrial strategy by adhering to industrial business andhighlighting main businessFocusing on the strategic policy of “consolidating, highlighting and optimizing the competitiveness
of main business”, the Company takes the lead in applying polyester melt direct spinning technology,large-scale PTA technology and high-end green caprolactam technology, and optimizes and expandsthe terminal production capacity of chemical fiber industry through mergers and acquisitions torealize the grafting of its advantages in petrochemical and chemical fiber industry; and substantiallyimproves the technology level and competitiveness in the above-mentioned fields of industry to boostthe high-quality development of petrochemical and chemical fiber industry.Following the “headquarters + scientific research + base" trinity model, the Company has beenactively creating one platform, two centers, and six bases, and build a market pattern that "backs onthe Yangtze River Delta, the Pearl River Delta, and the Bohai Bay, and faces the blue sea", steadilyoperating to help accelerate the cycle, and comprehensively enhancing the development momentumof the Company. The Company took the lead in overseas layout of the Brunei Project to respond tothe "the Belt and Road" policy, seize the development opportunities of the Southeast Asian market,and realize the international layout and operation of the industry, which helped the Company completethe integration of the vertical industrial chain to solve the bottleneck of raw materials. The BruneiProject is the first large-scale overseas petrochemical project that fully implements Chinese standards,the largest foreign direct investment project in Brunei and the largest overseas investment project ofChinese private enterprises so far, and has been listed in the first batch of key construction projectsunder the "the Belt and Road” initiative.
2. High-end R&D advantages by focusing on innovation and environmental protectionThe Company has long been focusing on R&D and application of high-end technologies and productsin the field of petrochemical and chemical fibers. Relying on the university-enterprise platform, theCompany has established its leading position in technology and a product portfolio featuring"diversification, serialization, quality, and uniqueness". Through comprehensive R&D of newproducts and technologies related to the whole industry chain, the Company realizes full-process,flexible development of high-tech products (technologies) and transformation of scientific andtechnological achievements, and the technology level is industry-leading.The Hengyi Research Institute, a subsidiary of the Company, is committed to the R&D of advancedmaterials and green chemicals, actively enhances the Company’s ability to lead innovation, and takes
the initiative to assume the main responsibility for the transformation of scientific and technologicalachievements, the launch of new products on the market, and the realization of economic benefits toaccelerate the implementation of technological achievements.The Company adheres to the concept of green and environmentally-friendly development,transforming technological advantages into sustainable development momentum. The Companyfocuses on the recycling of polyester throughout its life cycle, breaking through existing technicaldifficulties and realizing high-quality recycling of polyester. Through independent projectestablishment and R&D, the Company has produced safe, high-quality and environment-friendlygreen polyester products, launched the self-developed green polyester product "Eticont", andprepared high-performance polyester from bio-based materials. By promoting green manufacturing,the environmental pollution caused by production has been effectively reduced, and the green loopof textile life cycle has been realized.
3. Advantages of vertical balance and intensive development in large-scale layoutThe Company has been developed into a global leader integrating the industrial chain of "PX-Polyester" with that of "Benzene-Polyamide”. Through the construction of upstream refineriesoverseas, the expansion of midstream and downstream enterprises in China, the implementation ofmergers and acquisitions and restructuring and other differentiated development models, theCompany has built a "columnar" balanced and integrated industrial chain covering "crude oil -aromatics - PTA - polyester" and "crude oil - benzene - CPL - polyamide". The Company coordinatedthe matching of upstream, mid-stream and downstream raw materials, and has achieved balanced andcoordinated development of the entire industry chain from unique large-scale refining andpetrochemical industry to supporting PX, PTA, and polyester (PET) production capacities. After theBrunei Phase II Project is completed and put into operation, a new "olefin - polyolefin" industrialchain will be formed, which will improve the intensification, large-scale operation and integrationlevel of the Brunei Refining and Petrochemical Project, is conducive to the integrated, globalized andbalanced synergistic operation of the Company's products, equipment and utilities, and will helpenhance the Company's sustainable profitability and anti-risk ability.The Company's production capacity ranks among the top of the industry, with obvious scale
advantages. Currently, the refining and petrochemical design capacity of the Company is 8 mtpa, thePTA production capacity of shareholding and joint-stock companies is 19 mtpa, the polymerproduction capacity of shareholding and joint-stock companies is 10.765 mtpa, the caprolactamproduction capacity is 400,000 tpa, and the production capacities of both PTA and polymer ofshareholding and joint-stock companies rank first in the world. The Company has been continuouslyupgrading and optimizing the industrial model, consolidating and expanding the production capacityadvantages of each link, advancing the quantitative change of the Company's operation scale and thequalitative change of the business structure, and promotes the investment and application of large-scale equipment and energy-saving and consumption-reducing technologies. The Company'sadvantage in scale promotes the stability of production plant operation, improves product quality andproduction efficiency, and greatly reduces the unit investment cost and unit energy consumption,giving the Company a significant advantage in unit manufacturing cost in the industry. Besides, thelarge-scale procurement enables the Company to form strong operational capabilities and obtainadvantageous prices, saving procurement costs and providing a strong guarantee for the profitabilityof final products.
4. Intelligent operation advantages of digital-intelligence integration and efficient operationThe Company has established the "Petrochemical + Industrial Internet" information strategy topromote the deep integration of new-gen information and communication technologies and thepetrochemical manufacturing industry and drive the digitalization, networking and intelligentdevelopment of the chemical fiber manufacturing industry, so as to realize the highly coordinatedoperation of the whole industrial chain. As a leading enterprise in the industry, the Company hasactively been building digital workshops and intelligent factories, and has built the first polyesterfactory in China equipped with a full process intelligent storage and transportation system; hascreatively proposed a single-spindle data flow system, achieving data-driven production operationsand operational management; has independently developed a cloud-table finished product storagesystem to achieve efficient logistics operation and automatic quality control of products in theworkshop warehouse, achieving process optimization, information sharing, and efficiencyimprovement among various production processes; and, has been promoting information
interconnection between intelligent manufacturing devices such as automatic winding, automaticpackaging, intelligent appearance inspection, AGV cars, robots, and three-dimensional warehouses.The Company has pioneered a full-life product quality traceability system and a smart sales supplychain system in the industry, and independently developed a visual "Hengyi Brain" to assist themanagement personnel of the Company in achieving digital management.The Company has innovated customer service ecosystem and a chemical fiber supply chain platformintegrating micro mall, supply chain finance, warehousing and logistics. Externally, it combinesInternet marketing and customer social experience management, providing various services includingindependent order placement, supply chain support, data display through the whole process of sales,and multi-dimensional portraits; internally, it realizes data sharing among various business systems,improves the efficiency of data interaction, eliminates barriers to information flow, and forms aclosed-loop process for supply chain operations such as sales, collection, scheduling, delivery,dispatching, shipment, and invoicing.Besides, keeping in mind the aim of becoming a leader in the Internet of chemical fiber industry, theCompany gives full play to its own supply chain supporting strength, actively builds an industryecosystem, and strives to create an industrial platform of "online trading + online finance +warehousing and logistics" to provide various digital solutions such as digital management, intelligentmanufacturing, online trading, logistics services, market analysis, production, supply and marketingsynergy, and supply chain finance, deeply empowering the development of the chemical fiber industry.
5. Professional talent advantages of being rooted in China and having a global perspectiveLearning the advanced domestic and foreign organizational management experience, the Companyhas established a sound internal system to further optimize its organizational structure, continuouslyimprove its organizational management and operation efficiency, and bring into play the advantagesof scale synergy.The Company has created an international, specialized, and professional management and operationteam, providing strong supports for the high-quality development of the Company. The Company hasattached great importance to talent introduction and cultivation, including strengthening theconstruction of management and technical talent teams, actively introducing senior management and
technical talents from both domestic and foreign sources through various channels, and improvingthe internal talent cultivation model by combining industry, academia, research, and application,providing employees with a good career development channel. The Brunei Project of the Companyhas been steadily improving the localization level of employees, vigorously supporting the growth oflocal youth in Brunei, achieving win-win talent cooperation.In terms of employee incentive, in addition to providing employees with competitive remunerationand incentive mechanisms in the industry, the Company has implemented two phases of restrictedstock incentive plans, four phases of employee stock ownership plans and two phases of sharerepurchase plans to reserve for the subsequent employee stock ownership plans or stock incentiveplans since 2015, which has fully mobilized the enthusiasm of employees and effectively attractedmore high-caliber talents. Through the establishment of the long-term development sharingmechanism, the sense of belonging and cohesion of employees is effectively enhanced, which laysthe talent foundation for the Company's long-term development.IV. Analysis of main business
1. Overview
In 2022, in the face of complex and severe domestic and international situations, increasingly fiercemarket competition, and industry landscape, the Company withstood the pressures and successfullycompleted the tasks and goals set at the beginning of the year. All employees worked together toachieve steady production and improved quality and efficiency by optimizing production organization,implementing refined business measures, advocating cost reduction and energy conservation, andstrengthening risk control. At the end of the reporting period, the Company realized operating incomeof RMB 152.05 billion. The net profit attributable to shareholders of the listed company was RMB -
1.080 billion; the total assets of the Company was RMB 111.965 billion, and the net assets attributableto shareholders of the listed company was RMB 25.447 billion; the basic earnings per share was RMB-0.30 /share, and the weighted average net return on assets was -4.31%. During the reporting period,the Company implemented the dividend distribution plan for 2021, distributing cash dividend totalingRMB 717 million, which accounted for 21.05% of the Company's net profit attributable to the parent
company in 2021.During the reporting period, the Company implemented the third-phase share repurchase plan. As ofMarch 31, 2023, the cumulative number of shares repurchased by the Company reached 122,499,800,which accounted for 3.34% of the total share capital of the Company, and the total amount paid wasapproximately RMB 900 million. With the first- and second-phase share repurchases of RMB 510million and RMB 624 million, as of the end of 2022, the cumulative repurchase amount of HengyiPetrochemical reached about RMB 2.034 billion. The third-phase share repurchase plan once againinjected a shot of energy in the market, demonstrating the Company's confidence in futuredevelopment.
(1) The Company seized opportunities in the Southeast Asian market to achieve high-qualityoperationsDuring the reporting period, international oil prices fluctuated sharply, resulting in a significantincrease in overall costs and a decline in efficiency. In the first half of 2022, affected by theinternational turmoil and tight supply pattern, the Southeast Asian product oil market ushered in aboom cycle, with the crack spread of product oil rising across the industry, and the price differenceof product oil hitting a historic high. However, after entering the second half of the year, due to theimpact of the low consumption season and the Federal Reserve's interest rate hike, the correspondingproduct price difference in the Brunei refining and petrochemical business has fallen, and the costsfor the Company's production and operation have significantly increased. Throughout the year,although the average price difference has expanded, it has not covered the overall cost increase causedby the rise in oil prices, resulting in a year-on-year decline in the benefits of the Brunei Project.During the reporting period, in order to maintain stable production and operation of the Brunei Project,the Company took measures to actively respond to fluctuations in crude oil prices and product pricedifferences, e.g., purchased various types of crude oil raw materials suitable for the Company'sprocessing, reduced upstream costs, and closely followed market changes in the product structure.Besides, the Company also made reasonable adjustments to the production of chemical light oil,gasoline, diesel, jet fuel, benzene, and PX products, with clean oil accounting for one-third of thetotal production capacity, and aromatics (Benzene and PX) and diesel accounting for one-third
respectively, striving to maximize the operational benefits of the Brunei Project. During the reportingperiod, the Brunei Project had been operating efficiently. It mainly produced production oil productssuch as diesel, gasoline, chemical light oil, and liquefied gas, and chemicals such as PX and benzene.The outputs of the two categories were 6.4225 mtpa and 2.0239 mtpa, the sales volumes were 6.3912mtpa and 2.0179 mtpa, and the sales revenues (sales amounts) were RMB 41.531 billion and RMB
8.599 billion respectively. The products further promoted the global popularity of the brand "Hengyi",and the improvement of vertical industrial chain integration enhanced the Company's competitiveness.As of the disclosure date of this Report, the advantages of international operations of the HengyiBrunei Project have more prominent, including:
(1) In the medium to long term, the Southeast Asian product oil market will have a strong demandwhile the supply remains tight, and the Company's Brunei Refinery is expected to continue to bebenefited.
(2) The powerful support of China and Brunei will provide the Company with long-term taxincentives and other favorable policies.??Brunei has a stable political situation and the project meets Brunei's 2035 Vision and promotesthe economic growth of the Belt and Road Initiative countries;??The project is not restricted by trade barriers and belongs to the ASEAN Free Trade Area; theimport and export of products are duty-free;??The overall tax burden is obviously reduced. Brunei does not levy personal income tax, businesstax, payroll tax, production tax and export tax. The project has received eleven years of tax exemptionand export enterprise discounts from pioneer enterprises, and can enjoy a longer-term of enterpriseincome tax reduction and exemption.??The project is in line with the "Belt and Road Initiative" strategy, and the syndicated loans are ofnational strategic support.
(3) The plant is stable, operates at high load, and the industrial chain is integrated and stable.??The project is closer to the crude oil supply place and Singapore's crude oil trade market, boastingconvenient crude oil procurement and lower logistics cost;??The product oil produced by the project is sold to Southeast Asia and Australia, which has strong
demand; Brunei Project has a short sales radius and low logistics cost;??All chemical products are digested downstream of the own industrial chain to realize theintegrated operation of the industrial chain.
(4) The cost advantage is significant, and the cost of energy transportation is reduced.??The project is fully equipped with power generation units, and thus the cost advantage of utilitiesis evident;??The main production plants, such as Hydrocracking, Reforming and PX units, adopt the latestadvanced technology, which has the technical characteristics of low operating cost, high productconversion rate, etc., thus reducing the production cost of PX;??The low-temperature heat reuse technology is adopted with waste heat used for seawaterdesalination, which reduces the operation cost of seawater desalination and the comprehensive energyconsumption index of PX production;??Residual oil is treated with the latest flexicoking process, which can be continuously producedand reduce labor cost; by-product fuel gas reduces fuel cost; compared with the traditional process,closed production of the plant is more environmentally friendly and harmless treatment of residualoil is realized;??The liquid phase diesel hydrogenation technology can meet the new international diesel standard,and at the same time reduce the unit investment and operation energy consumption.??Brunei has a mild climate all year round and no natural disasters. As a rich oil-producing country,Brunei has abundant oil and gas resources, which can provide some crude oil and reduce the logisticscost of crude oil.Hengyi (Brunei) PMB Petrochemical Project, as the first overseas large-scale petrochemical projectof the Company that fully implements Chinese standards, is the first private refining-petrochemicalproject for the Company to realize the international layout of production capacity and practice "theBelt and Road" initiative, and it has received unanimous supports from both China and Bruneigovernments. In 2022, the project won the Award for China Construction Engineering - the highestaward in the Chinese construction industry, the "Luban Prize", which promoted the coordinateddevelopment of Brunei and self-development of the Company and was highly praised by government
media.At present, all work in the Brunei Phase II Project is being carried out in an orderly manner, and theconstruction work such as embankment reclamation is underway. After the completion, the BruneiPhase II Project will help the Company further reduce production costs, stabilize raw material supply,and optimize product structure, playing an integrated and collaborative operation role. In combinationwith the geographical advantage, i.e., the project is located in the hinterland of the Southeast Asianproduct oil demand market, the overall profitability of the Company is expected to be improvedcontinuously. In addition, the project will further promote the employment in Brunei, assist inindustrial upgrading, and achieve diversified economic development.
(2) With the increased sales volume and expanded market, the polyester leader welcomed arecoveryIn the first half of 2022, under the influence of various factors such as international geopolitics, energyprices continued to rise, and overseas inflation continued to ferment, resulting in a sharp increase inthe cost of polyester raw materials; in the second half of the year, as the tightened US monetary policyand the Federal Reserve’s interest rate hikes, domestic and foreign demand continued to weaken.Under the dual suppression of high costs of the upstream and low demand of the downstream,polyester product prices fell and product benefits were compressed.In 2023, the Company will continue to optimize the customer structure in the field of fully drawnyarn production, especially increasing the expansion of customers with high-quality requirements andhigh added-value; and, consolidate the existing market share and maintain the core market of theoriginal Hengyi system. In terms of staple fiber, the Company will rely on innovation in sales modelsto develop personalized procurement models for each customer and to increase sales. In terms offlakes, the Company will focus on expanding customers with semi-gloss additives and expandingcustomers with glossy films and industrial yarn. With the increase in industry operating rates and theboost in demand during traditional peak seasons, it is expected to drive the recovery of the polyesterindustrial chain, and the polyester efficiency is expected to be stabilized and to rebound in 2023.
(3) Continuously emerging scientific research and innovation achievements promoted theupgrading of Hengyi products
During the reporting period, the Company invested approximately RMB 688 million in R&D. As ofDecember 31, 2022, the Company has applied for a total of 511 patents, including 310 authorizedpatents, among which there are 203 authorized invention patents and 107 authorized utility modelpatents; Currently, 123 patents are being processed; participated in the formulation of 34 standards,including 10 national standards, 18 industry standards, and 6 group standards (including associations).During the reporting period, the Company actively responded to the national "carbon peaking andcarbon neutrality" strategy, adhered to the guidance of "green manufacturing" and "circular economy",arranged the recycling of waste textiles in the medium and long term, and upgraded the R&D towardshigh end and differentiation. Among them, flame-retardant and antibacterial products were in aleading position in the country, and the production capacity continued to increase; bio-based PLO,PPS, PPET, and FDC patents ranked among the top in China, with more prominent barrier advantages;the application and development of the bio-based PTT elastic memory fiber series products have beencompleted and industrialized, greatly reducing production costs and improving market competitiveadvantages.The Company realized the industrialization of melt direct spinning antimony-free polyester fullydrawn yarn, and large-scale production of environmentally-friendly polyester product "Eticont",which is widely used in facial mask, baby clothes, etc., realizing full industrialization and varietycoverage. The development of functional composite materials, such as antibacterial and cationic dyes,was taking shape, and the industrialization of these materials was gradually being promoted, with thetechnical level reaching international leading levels.In order to further improve R&D conditions, the Company has invested in the construction of theHengyi Global Innovation Center in Hangzhou, which is used for R&D of future advancedtechnologies, and has established a joint R&D platform with Zhejiang University, DonghuaUniversity, and Nanjing University of Technology to build a new technology innovation system thatcombines industry, academia, research, and application, so as to promote the collaborative innovationbetween schools and enterprises, provide innovation impetus for the long-term development of theCompany, and continue to collaborate with multiple well-known universities. Besides, the Companyalso collaborated with research institutions and well-known domestic and foreign enterprises to form
a comprehensive scientific and technological innovation mechanism that combines industry,academia, research, and application to effectively achieve the sharing and complementarity oftechnological innovation resources, so as to rapidly improve the Company's technological innovationability, scientific research level, and market response ability.
(4) The Company promoted the digital transformation strategy and made fruitfulachievements in intelligent transformationUnder the strategy of "Petrochemical + Industrial Internet”, the Company actively carried outindustrial digital transformation, promoted the deep integration of new-gen information andcommunication technologies and the petrochemical manufacturing industry, diving the digitalization,networking and intelligent development of the chemical fiber manufacturing industry. The Companyhas been focusing on building a visual "Hengyi Brain". The construction of Phase II was beingsteadily advanced, and a chemical fiber supply chain platform integrating the Micro Mall, supplychain finance, warehousing and logistics was under construction. Besides, the Company hascreatively proposed the concept of “single-spindle data flow” to strengthen the construction of digitalinfrastructure, striving to promote the digital transformation and upgrading of enterprises andpromoting high-quality business development of the Company.In order to promote intelligent transformation, the Company has built the first domestic polyesterfactory with a full process intelligent storage and transportation system. In 2022, the equipmentmanagement system began to be promoted and applied, and the level of intelligence has significantlyimproved. The Company also introduced automated and intelligent equipment such as intelligentappearance inspection and automatic packaging lines to reduce labor costs and improve workefficiency. The subsidiary Haining Hengyi New Materials has built the first digital black-light factoryin the industry, of which the degree of automation is as high as 95% and the overall efficiency reaches92% or above. It achieved transparency in production information and rapidly promoted thedigitalization and intelligence process of the enterprise, and was awarded the title of "2022 BestPractice in Intelligent Manufacturing in China" by www.e-works.net.cn.
2. Revenue and cost
(1) Composition of operating income
Currency unit: RMB
| 2022 | 2021 | Year-on-year increase/decrease | |||
| Amount | Percentage in operating income | Amount | Percentage in operating income | ||
| Total operating income | 152,050,274,944.64 | 100% | 129,666,931,795.26 | 100% | 17.26% |
| By industry | |||||
| Petrochemical industry | 59,269,682,296.57 | 38.98% | 36,094,837,257.96 | 27.84% | 64.21% |
| Chemical fiber industry | 46,316,793,158.99 | 30.46% | 45,814,836,579.30 | 35.33% | 1.10% |
| Supply chain services | 46,463,799,489.08 | 30.56% | 47,757,257,958.00 | 36.83% | -2.71% |
| By product | |||||
| Refinery products | 41,531,346,473.30 | 27.31% | 24,081,670,289.03 | 18.57% | 72.46% |
| Chemical products | 8,599,075,610.04 | 5.66% | 4,553,199,820.35 | 3.51% | 88.86% |
| PTA | 8,966,680,849.79 | 5.90% | 6,388,792,085.43 | 4.93% | 40.35% |
| PIA | 172,579,363.44 | 0.11% | 1,071,175,063.15 | 0.83% | -83.89% |
| Polyester yarn | 41,123,434,064.32 | 27.05% | 41,337,835,963.34 | 31.88% | -0.52% |
| Flake | 5,193,359,094.67 | 3.42% | 4,477,000,615.96 | 3.45% | 16.00% |
| Supply chain services | 46,463,799,489.08 | 30.56% | 47,757,257,958.00 | 36.83% | -2.71% |
| By region | |||||
| Domestic | 98,119,165,712.07 | 64.53% | 96,384,470,426.22 | 74.33% | 1.80% |
| Overseas | 53,931,109,232.57 | 35.47% | 33,282,461,369.04 | 25.67% | 62.04% |
| By sales model | |||||
| Direct sales | 150,056,276,149.80 | 98.69% | 127,962,603,313.47 | 98.69% | 17.27% |
| Distribution | 1,993,998,794.84 | 1.31% | 1,704,328,481.79 | 1.31% | 17.00% |
(2) Industries, products, regions, and sales models that account for more than 10% of theCompany's operating income or profitThe Company shall comply with the disclosure requirements for petrochemical industryspecified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen StockExchange - Industry Information Disclosure
Currency unit: RMB
| Operating income | Operating cost | Gross profit margin | Increase or decrease in operating income compared with the same period of the previous year | Increase or decrease in operating cost compared with the same period of the previous year | Increase or decrease in gross profit margin compared with the same period of previous year | |
| By industry | ||||||
| Petrochemical industry | 59,269,682,296.57 | 56,742,187,026.59 | 4.26% | 64.21% | 68.70% | -2.55% |
| Chemical fiber industry | 46,316,793,158.99 | 45,630,114,979.64 | 1.48% | 1.10% | 9.46% | -7.53% |
| Supply chain services | 46,463,799,489.08 | 46,143,208,516.15 | 0.69% | -2.71% | -1.83% | -0.89% |
| By product | ||||||
| Refinery products | 41,531,346,473.30 | 39,071,409,441.34 | 5.92% | 72.46% | 68.33% | 2.31% |
| Chemical products | 8,599,075,610.04 | 8,376,249,628.83 | 2.59% | 88.86% | 137.61% | -19.99% |
| PTA | 8,966,680,849.79 | 9,088,501,918.59 | -1.36% | 40.35% | 49.13% | -5.97% |
| PIA | 172,579,363.44 | 206,026,037.83 | -19.38% | -83.89% | -74.37% | -44.34% |
| Polyester yarn | 41,123,434,064.32 | 40,586,001,652.13 | 1.31% | -0.52% | 8.40% | -8.11% |
| Flake | 5,193,359,094.67 | 5,044,113,327.51 | 2.87% | 16.00% | 18.83% | -2.32% |
| Supply chain services | 46,463,799,489.08 | 46,143,208,516.15 | 0.69% | -2.71% | -1.83% | -0.89% |
| By region | ||||||
| Domestic | 98,119,165,712.07 | 97,404,511,107.95 | 0.73% | 1.80% | 6.91% | -4.75% |
| Overseas | 53,931,109,232.57 | 51,110,999,414.43 | 5.23% | 62.04% | 63.70% | -0.96% |
The Company's main business data in the year adjusted according to the caliber at the end ofthe reporting period as the statistical caliber of the Company's main business data wasadjusted during the reporting period
□ Applicable ?Not applicable
Currency unit: RMB
| Product name | Production capacity (10,000 tons) | Sales volume (10,000 tons) | Income realized | Price trend during the reporting period | Reason for change |
| Refinery products | 642.25 | 639.12 | 41,531,346,473.30 | First up and then down; overall up | Market reasons |
| Polyester yarn | 608.50 | 603.47 | 41,123,434,064.32 | First up and then down; overall stable |
The operating income or net profit generated by overseas business accounts for more than 10%of the audited operating income or net profit of the Company in the latest fiscal year
| Name of overseas business | Operation status | Impact of tax policies on overseas business during the reporting period | Company's response |
| Brunei Project | Stable operation under high load | The overall tax burden during the reporting period was low, because Brunei does not levy personal income tax, business tax, salary tax, production tax and export tax. A local pioneer enterprise certificate and an export enterprise certificate have been issued for the project, so it can enjoy a long-term corporate income tax exemption. | Both China and Brunei provided powerful support. The project enjoyed long-term tax incentives and other favorable policies. |
(3) Whether the Company's income from product sales is greater than its income from laborservices
| Industry | Item | Unit | 2022 | 2021 | Year-on-year increase/decrease |
| Refinery products | Sales volume | 10,000 tons | 639.12 | 589.78 | 8.37% |
| production volume | 10,000 tons | 642.25 | 587.17 | 9.38% | |
| Inventory | 10,000 tons | 14.73 | 11.60 | 26.98% | |
| Chemical products | Sales volume | 10,000 tons | 201.79 | 211.37 | -4.53% |
| production volume | 10,000 tons | 202.39 | 208.38 | -2.87% | |
| Inventory | 10,000 tons | 8.80 | 8.20 | 7.32% | |
| PTA | Sales volume | 10,000 tons | 286.27 | 450.39 | -36.44% |
| production volume | 10,000 tons | 285.13 | 451.19 | -36.80% | |
| Inventory | 10,000 tons | 1.97 | 3.11 | -36.66% | |
| PIA | Sales volume | 10,000 tons | 2.11 | 15.67 | -86.53% |
| production volume | 10,000 tons | 1.07 | 13.56 | -92.11% | |
| Inventory | 10,000 tons | 0.01 | 1.05 | -99.05% | |
| Polyester products | Sales volume | 10,000 tons | 684.97 | 740.69 | -7.52% |
| production volume | 10,000 tons | 692.19 | 723.38 | -4.31% |
| Inventory | 10,000 tons | 52.47 | 45.25 | 15.96% |
Description of the reasons for the year-on-year change of more than 30% in relevant dataDuring the reporting period, the production and sales of PIA and PTA have changed by more than 30%compared with the same period of previous year, mainly because the joint impact of the shutdown formaintenance and production reduction of the Company, resulting in a decrease in operating load.
(4) Performance of the major sales contracts and major purchase contracts entered into by theCompany as of the Reporting Date
□ Applicable ?Not applicable
(5) Composition of operating cost
By industry and productProduct Classification of Hengyi Brunei
Currency unit: RMB
| Industry | Item | 2022 | 2021 | Year-on-year increase/decrease | ||
| Amount | Percentage in operating cost | Amount | Percentage in operating cost | |||
| Refinery products | Raw materials | 37,827,012,569.00 | 96.82% | 22,068,840,115.45 | 95.08% | 71.40% |
| Energy | 425,050,466.17 | 1.09% | 435,640,277.36 | 1.88% | -2.43% | |
| Depreciation and others | 819,346,406.17 | 2.09% | 707,213,095.03 | 3.04% | 15.86% | |
| Total | 39,071,409,441.34 | 100.00% | 23,211,693,487.84 | 100.00% | 68.33% | |
| Chemical products | Raw materials | 7,647,487,621.92 | 91.30% | 3,229,472,939.74 | 91.61% | 136.80% |
| Energy | 500,515,083.07 | 5.98% | 162,281,960.64 | 4.60% | 208.42% | |
| Depreciation and others | 228,246,923.84 | 2.72% | 133,393,061.60 | 3.79% | 71.11% |
| Total | 8,376,249,628.83 | 100.00% | 3,525,147,961.98 | 100.00% | 137.61% |
By domestic industry and product
Currency unit: RMB
| Product | Item | 2022 | 2021 | Year-on-year increase/decrease | ||
| Amount | Percentage in operating cost | Amount | Percentage in operating cost | |||
| PIA products | Raw materials | 144,253,439.63 | 70.02% | 589,219,138.02 | 73.31% | -75.52% |
| Energy | 16,491,918.19 | 8.00% | 64,929,361.11 | 8.08% | -74.60% | |
| Depreciation and others | 45,280,680.01 | 21.98% | 149,632,383.00 | 18.61% | -69.74% | |
| Total | 206,026,037.83 | 100.00% | 803,780,882.13 | 100.00% | -74.37% | |
| PTA products | Raw materials | 8,104,904,977.86 | 89.18% | 5,337,995,524.43 | 87.59% | 51.83% |
| Energy | 263,544,052.57 | 2.90% | 207,810,074.87 | 3.41% | 26.82% | |
| Depreciation and others | 720,052,888.16 | 7.92% | 548,579,521.79 | 9.00% | 31.26% | |
| Total | 9,088,501,918.59 | 100.00% | 6,094,385,121.09 | 100.00% | 49.13% | |
| Polyester products | Raw materials | 37,624,877,259.76 | 82.46% | 33,887,658,918.72 | 81.29% | 11.03% |
| Energy | 3,093,599,154.96 | 6.78% | 2,601,291,569.11 | 6.24% | 18.93% | |
| Depreciation and others | 4,911,638,564.92 | 10.76% | 5,198,414,401.73 | 12.47% | -5.52% | |
| Total | 45,630,114,979.64 | 100.00% | 41,687,364,889.56 | 100.00% | 9.46% | |
Notes
(6) Whether there was any change in the scope of consolidation during the reporting periodA total of 48 subsidiaries were included in the scope of consolidation in FY2022. For details, pleaserefer to Note VIII "Equity in Other Entities” in "Section X, Financial Report". Compared with theprevious year, 5 subsidiaries were included in and 1 excluded from the Company's consolidationscope in this fiscal year. For details, please refer to Note VII "Changes in the Scope ofConsolidation” in "Section X, Financial Report".
(7) Significant changes or adjustments in the Company's business, products or servicesduring the reporting period
□ Applicable ?Not applicable
(8) Major customers and suppliers
Major customers
| Total sales amount of the top five customers (RMB) | 28,299,442,006.78 |
| Percentage of the total sales amount of the top five customers in total annual sales amount | 18.61% |
| Percentage of sales amount of related parties among the top five customers in total annual sales amount | 0.00% |
Top 5 customers
| SN | Customer name | Sales amount (RMB) | Percentage in total annual sales amount |
| 1 | Customer 1 | 8,498,995,728.05 | 5.59% |
| 2 | Customer 2 | 7,995,935,856.45 | 5.26% |
| 3 | Customer 3 | 4,418,284,215.90 | 2.91% |
| 4 | Customer 4 | 3,841,798,920.42 | 2.53% |
| 5 | Customer 5 | 3,544,427,285.95 | 2.33% |
| Total | -- | 28,299,442,006.77 | 18.61% |
Other information about major customers
□ Applicable ?Not applicable
Major suppliers
| Total purchase amount of top five suppliers (RMB) | 44,379,336,725.33 |
| Percentage of the total purchase amount of the top five suppliers in the total annual purchase amount | 29.88% |
| Percentage of purchase amount of related parties among the top five suppliers in total annual sales amount | 15.32% |
Top 5 suppliers
| SN | Supplier name | Purchase amount (RMB) | Percentage in total annual purchase amount |
| 1 | Supplier 1 | 22,348,038,778.91 | 15.05% |
| 2 | Supplier 2 | 6,987,350,219.75 | 4.70% |
| 3 | Supplier 3 | 6,396,317,334.53 | 4.31% |
| 4 | Supplier 4 | 5,251,769,399.49 | 3.54% |
| 5 | Supplier 5 | 3,395,860,992.62 | 2.29% |
| Total | -- | 44,379,336,725.30 | 29.88% |
Other information about major suppliers
□ Applicable ?Not applicable
3. Expenses
Currency unit: RMB
| 2022 | 2021 | Year-on-year increase/dec | Description of major changes |
| rease | ||||
| Selling expenses | 247,443,749.81 | 228,081,384.04 | 8.49% | / |
| Administration expenses | 1,084,986,983.70 | 1,087,267,658.53 | -0.21% | / |
| Financial expenses | 2,787,697,495.20 | 2,133,576,548.94 | 30.66% | The main reasons include: the rise in crude oil prices, which has driven the rise in the prices of various raw and auxiliary materials in the industrial chain; the demand for daily working capital of the Company increased; the borrowing scale increased. |
| R&D expenses | 668,706,028.57 | 686,980,217.98 | -2.66% | / |
4. R&D investment
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| R&D of preparation technology of polyester titanium-based polycondensation catalyst | To improve and optimize the preparation process of titanium-based polyester catalyst to produce titanium-based PET flakes with excellent performance and good hue, and then conduct spinning and post-processing as needed to produce heavy metal-free titanium-based polyester products. | Completed and industrialized | To meet the standards of high-quality PET flakes and fibers produced by large-scale production lines with the PET flakes produced with the titanium-based catalyst developed. | By further optimizing the catalyst preparation process and polymerization process to improve product quality, the project has high eco-friendliness value and social significance. |
| Research and application development of bio-based PTT elastic shape memory fiber series | To break the monopoly of foreign enterprises, reduce the raw material cost of downstream textile enterprises, and facilitate the promotion and application of bio-based PTT textile materials. | Completed and industrialized | To form a complete set of key preparation technologies for the development and production of PTT and composite yarns, and establish stable mass production of bio-based PTT flake series. | It has high application value and prospects, and will greatly reduce production costs and improve the competitive advantage in the market. |
| R&D of key technologies for intelligent temperature-regulating fiber melt-spinning forming | Intelligent temperature-regulating fiber is a new type of fiber with bi-directional temperature regulation function. This type of textile can regulate the temperature fluctuations within a certain temperature range for the space between the human body and the environment, avoiding discomforts caused by large temperature fluctuations and making people feel more comfortable and be healthy. | Completed and industrialized | To prepare phase-change temperature-regulating functional masterbatch to form a mature set of key technologies for preparing intelligent temperature-regulating fibers. The raw material loss during the production process is low, and the resulting fabric has functions such as energy storage and temperature regulation, anti-static, cool body feel, good elasticity, moisture absorption and breathability. | It will expand the market of functional fiber products and enhance the competitiveness of the Company. |
| R&D of low-melting-point PET flake | To solve the problems that the current low-melting polyester produced has a low melting point, resulting in no crystallinity or low | Low-melting-point PET flakes have been | To form a mature technology for producing and processing low-melting- | It will greatly improve the flame retardancy of flakes, and is of great significance to expansion of the market of |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| preparation process | crystallinity of polymers, and it is difficult to achieve industrialized mass production. | produced and samples sent to customers for trial | point PET flakes | the Company's differentiated products. |
| R&D of key technology of antistatic modified polyester staple fiber | To solve the problems of high price, limited specification options, and great susceptibility to environmental humidity on the antistatic polyester products on the market. | Antistatic modified polyester staple fibers have been produced and samples sent to customers for trial | To form a mature technology for producing and processing antistatic modified polyester staple fibers | The project will produce antistatic staple fibers, expand the market of the Company's product, and enhance the Company's competitiveness |
| R&D of highly hygroscopic and dyeable microcrystalline cellulose modified polyester fiber | To complete the polymer modification by adding cellulose microcrystalline slurry in situ, so that the modified polyester fiber has moisture wicking and anti-static effects. | Related technologies have been extended to mass production to realize the industrialization of products. |
To form a mature technology forproducing and processing highlyhygroscopic and dyeable microcrystallinecellulose modified polyester fibers.
| The project will expand the market of the Company's products and is of great significance to the development of the chemical fiber industry. | ||||
| R&D of hydrophilic and dyeable polyester fiber | To produce a hydrophilic polyester fiber through secondary esterification by endcapping sorbitol, followed by polycondensation and melt spinning, which can effectively improve the hydrophilicity and flammability of the polyester fiber. | Related technologies have been extended to mass production to realize the industrialization of products. | To form a mature technology for producing and processing hydrophilic and dyeable polyester fibers. | The project will expand the market of the Company's products and is of great significance to the development of the polyester industry. |
| R&D of melt direct spinning | To develop the product by adding a new composite flame-retardant agent during the | The project has passed the pilot | To form a mature technology for producing and processing flame-retardant | The project will improve the hygroscopic effect of fiber, improve the wearing |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| flame-retardant polyester fiber | spinning process. Various properties of the new composite flame-retardant agent will bring many excellent properties to the flame-retardant polyester fiber compared with conventional flame-retardant polyester fiber. | test and is transferred for industrialization test. | polyester fibers that can be directly spun. | performance of polyester fiber, greatly improve the coloring performance, reduce the dyeing temperature and save energy. |
| R&D of polyester elastomeric yarn integrating heat retention and self-heating effects | To solve the problem that the heat retention and self-heating effects of fibers on the current market cannot be integrated, and propose a process for producing heat retaining and self-heating fibers. | Related technologies have been extended to mass production to realize the industrialization of products. | To explore and master the core technology for the preparation of heat retaining and self-heating polyester elastomeric yarn through a series of R&D work, enable the relevant functional indicators of the prepared heat retaining and self-heating fibers to meet the testing standards, and realize the transformation of the project results. | The development of heat retaining and self-heating fibers will enrich our range of differentiated chemical fibers, enhance the competitive advantage of our products, improve the Company's reputation in the industry, and also help promote the development of the entire sector of functional fiber. |
| R&D and industrial demonstration project of efficient preparation technology of polymer-grade 2,5-furandicarboxylic acid | To carry out systematic chemical engineering basic research on three key aspects of the industrial preparation technology of high-purity FDCA: fructose dehydration, HMF oxidation and FDCA refining; to screen efficient "catalytic + solvent" system for dehydration reaction to find the technical key to HMF preparation with high selectivity; to optimize HMF oxidation process conditions, hydrogenation catalyst carriers and catalytically active components, and break through the core technology of FDCA refining; to establish a mathematical model through determination of basic data, carry out process simulation calculation, propose process flow, and compile process package and industrial design to obtain an industrially | The project has been established and is under implementation | To form a complete industrial preparation technology for producing polymer-grade FDCA through the R&D and industrial implementation of this project. | The implementation of this project will realize the industrialization of bio-based furandicarboxylic acid monomer, provide necessary monomer raw materials for producing high-performance bio-based polyamide and polyester materials, help promote the development of renewable resources and technologies in China, and provide an alternative technological route for China's "carbon peaking and carbon neutrality". It is of great significance for cultivating strategic emerging bio-industries and breaking the bottleneck constraints of resources and environment in economic development. |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| implementable polymer-grade FDCA preparation technology. | ||||
| R&D of high-performance bio-based polyamide | This project applies bio-based monomers to carry out polymerization and modification research on semi-aromatic bio-based and aliphatic bio-based polyamides, develop high-temperature resistant material bio-based polyamides, establish a thousand-ton high-temperature resistant bio-based polyamide polymerization device, and carry out application research on bio-based polyamides in the electronic, electrical, and automotive industries. | The project has been established and is under implementation | To explore the influence of types and contents of bio-based monomers, catalysts, and impurities on polymerization reactions, study the kinetics and thermodynamics of polymerization reactions, and clarify the mechanism by which the heterocyclic structure of bio-based polyamides affects the formation and crystallization behavior of hydrogen bonds; to develop large-scale and continuous salt forming technology and online multi-parameter salt quality control technology, develop efficient mass transfer and heat transfer continuous polymerization technology and key equipment, and achieve stable production of bio-based polyamides; to determine the composite technology of reinforcement and polyamide matrix and the evolution law of condensed state structure, laying the foundation for the development of key production technologies for high-temperature resistant bio-based polyamide and modified resin; to establish a demonstration line for continuous polymerization of 1,000-ton bio-based polyamides. | This project will enhance the competitiveness of enterprises and promote the R&D and preparation technology of bio-based high-temperature resistant polyamides in national strategic emerging industries such as electronics, electronics, and automobiles. |
| Green synthesis and efficient catalyst | The research and production of bio-based monomer raw materials is a key point for promoting the large-scale industrial | The project has been established and is under | To conduct in-depth research on the liquid-phase catalytic oxidation process of HMF and its derivatives to produce | The unique properties of FDCA polyester make it important for applications in bottles, membranes, fibers, and |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| development of bio-based furandicarboxylic acid (FDCA) polyester | application of bio-based plastics, and it urgently needs to be taken seriously. The 14th Five-Year Plan for Key R&D in China also clearly prioritizes the development of bio-based polymer materials, with independent innovation as the core, and focuses on the development of low-cost bio-based monomers, polymers, and back-end applications throughout the entire industrial chain, addressing the issues of high cost of bio-based polymer materials and limited number of high-performance engineering plastic grades. | implementation | FDCA, and obtain kilogram-grade FDCA products, opening up the entire process route of preparing FDCA from fructose. | engineering plastics. In the future, the demand for FDCA polyester will reach 10 mtpa, and the market prospects are very broad. Enterprise profits are expected to be further improved. |
| Key technologies for efficient antibacterial polyester in-situ polymerization and composite high-speed spinning | In the spreading process of pathogenic bacteria, textiles are one of the main carriers, while ordinary textiles cannot resist most pathogenic bacteria. The environment they are used in, including humidity, temperature, sweat stains, and oils, can become a source of nutrition for the survival and reproduction of various bacteria. Especially with the continuous expansion of textiles in public places, the harm of pathogenic bacteria breeding and cross infection to human health is even more difficult to estimate. Textiles have become an important medium for the spread of pathogenic bacteria, and giving them antibacterial functions has also received increasing attentions. The development of long-lasting antibacterial functional fibers is of great significance. | The project has been established and is under implementation | To develop key technologies for efficient in-situ polymerization and composite high-speed spinning of antibacterial polyester based on technological breakthroughs, and develop high-quality antibacterial functional polyester and fiber products, so as to achieve stable mass production and ensure that the overall technical level of the project can reach a leading level in China. | Application scenarios of this product: Sanitary materials, high-performance home textiles, sportswear, automotive interiors, and ultra clean work clothes and other fields, to meet people's demand for "hygiene and health". The prospects for technological application and industrialization are promising, with significant practical significance and significant social benefits. |
| R&D of TiO2 | Due to the technical difficulties in production, | Industrialization | To develop a mature set of domestically | The product can achieve the performance |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| localization technology and device project | the supply of titanium dioxide for polyamide 6 extinction is mainly monopolized by Germany's Sachtleben Chemie GmbH. Not only is the price high, but also the supply cycle is long, which is prone to accidents, making the Company's production in a passive situation. Therefore, on the basis of domestic titanium dioxide, modification is carried out to make it close to or even reach the performance of titanium dioxide products used in the extinction of Sachtleben polyamide, thereby achieving the goal of partially or completely replacing imported titanium dioxide used in the extinction of polyamide. | and stable mass production are achieved. The products are promoted and applied in the market. | produced TiO2 production technology and equipment, to produce polyamide specific titanium dioxide by combining developed organic modification processes, so as to meet the requirements of production equipment and processes for titanium dioxide. | of Sachtleben polyamide extinction titanium dioxide product and replace imported polyamide extinction titanium dioxide. This is of great significance for the Company to master the core technology, reduce production costs, improve supply and demand conditions, and even promote the development of the entire industry. |
| Copolymerized polyester amide (PET-PA6)/PA6 parallel composite crimped elastic fibers | By utilizing the thermodynamic performance differences between PET and PA6, to achieve the effect of three-dimensional crimping and that of elasticity and moisture absorption. However, due to the poor compatibility between PET and PA, it is not possible to achieve functional integration between them. Therefore, the composite compatibility problem of polyester and polyamide cannot be solved for a long time and cannot be industrialized. In order to solve the compatibility problem of PET and PA6 composite spinning, this project proposes a preparation method for copolymerized polyester amide. | Related technologies have been extended to mass production to realize the industrialization of products. | To produce composite crimped elastic fibers to solve the compatibility problem between polyester and nylon, avoid high-temperature degradation of nylon chain segments, reduce by-products, low thermal degradation, good product color, and good performance. | Copolyesteramide flakes improve the compatibility between polyester and polyamide due to the regular molecular structure and hydrophilicity of conventional polyester products. Their composite crimped elastic fibers have excellent elasticity, can increase the added value of products, and have broad application prospects. |
| R&D of polyamide ester synthesis and | Polyester fiber is the world's largest synthetic fiber, with a wide fabric that is not easily wrinkled and has low production costs. | The project has passed the pilot test and is | To form a mature process production technology for synthesizing polyamide ester and comfort fibers with excellent | The fabric is quite wide and not prone to wrinkles, moisture absorption and breathability, anti-pilling, and easy to dye. |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| comfort fibers | However, it also has disadvantages such as poor moisture absorption and insufficient softness of the fabric. Polyamide, due to the hydrophilic groups in its molecules, has good moisture absorption and soft fabric, but it also has disadvantages such as low modulus and poor dimensional stability. After comparison, it was found that the advantages and disadvantages of them can complement each other. Polyamide ester fibers refer to fibers containing both ester and amide groups in their molecules. They possess some excellent properties of polyester and polyamide, and their softness and comfort are similar to those of cotton fibers. Therefore, it is necessary to develop a polyamide ester synthetic and comfort fiber for this purpose. | transferred for industrialization test. The series of products of this project are promoted and applied in the market. | moisture absorption performance and good comfort of the produced fabric, so as to achieve functional upgrading of polyester fibers. | It will have broad application prospects in sports, denim, business leisure, work clothes and other clothing fields, expanding the differentiated polyester product market of the Company and improving the economic benefits of the Company. |
| R&D of key technology of antistatic modified polyester staple fiber | The project adopts fiber-forming polymer grafting technology. By adding aluminum-doped zinc oxide (AZO) conductive powder and hydrophilic molecular segments (PEE) to PET polyester, more water in the environment can be absorbed, causing a reduction in electrostatic charge accumulation on the polymer surface, effectively achieving uniform dispersion and grafting of AZO and hydrophilic PEE segments, and improving the antistatic properties of the co-polyester. | The project has been established and is under implementation | To complete all the development plan tasks under the project, and form a mature technology for producing and processing antistatic modified polyester staple fiber; to make full use of the Company's existing equipment, technologies and related supporting conditions to successfully realize the transformation of the project's achievements and industrial production. | The development and enrichment of the Company's differentiated polyester fiber product range will broaden the market of the Company's products, and will be of great significance to the development of the polyester chemical fiber industry. |
| R&D of cationic dyed polyester two-color composite | This is to develop a two-color wool-like polyester fiber. After the fabric woven with the composite fiber is processed and dyed, it will not only have obvious contraction effect, but | The project has passed the pilot test and is transferred for | To complete all the planned tasks under the project, and form a mature technology for producing and processing cationic dyed polyester two-color composite | The development of the Company's differentiated polyester fiber product range will broaden the market and improved the Company's economic |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| wool-like polyester fiber | also show two colors prominently. After the fabric is sanded, the fibers are not easy to fall, and feel thicker and plump like real wool. | industrialization test. The series of products of this project are promoted and applied in the market. | wool-like polyester fiber; to make full use of the Company's existing equipment, technologies and related supporting conditions to successfully realize the transformation of the project's achievements and industrial production. | benefits. |
| R&D of in-line addition full dull rabbit hair-like fiber | To improve the beauty and comfort of clothing, further raise the grade of polyester products, and enhance product competitiveness and the Company’s profitability; to reduce pollutant emissions in the downstream dyeing and finishing process, improve the level of eco-friendliness, and achieve economic benefits for the Company and the society. | Industrialization and stable mass production are achieved. The products are promoted and applied in the market. | Independent R&D is carried out for this project. Dull black masterbatches are added to the Company's existing semi-dull PET flakes for melt spinning. The technical focus is on the design and manufacture of special-shaped spinnerets, the precise control of dull black masterbatch addition amount and the development of spinning and drafting process for full dull rabbit hair-like black silk. | The development of the Company's differentiated polyester fiber product range will broaden the market and improved the Company's economic benefits. |
| R&D of HOY hollow curly wool-like fiber | To develop a hollow curly wool-like fiber based on HOY yarn, with comfortable wool feel, warmth and breathability, to be used for making Altai, small teddy velvet, big teddy velvet, wheat ear, granular cashmere, etc. | Industrialization and stable mass production are achieved. The products are promoted and applied in the market. | To complete all the planned tasks under the project, and form a mature technology for producing and processing HOY hollow curly wool-like fiber. to make full use of the Company's existing equipment, technologies and related supporting conditions to successfully realize the transformation of the project's achievements and industrial production. | Highly oriented yarn (HOY) is also known as fully oriented yarn. One-step high-speed spinning process is adopted. Compared with FDY and DT technologies, this technology eliminates the need for drafting components or drafting equipment. After the polymer is melt-sprayed, cooled and cured and oiled, it can be wound into polyester fully drawn yarn directly used for weaving. Therefore, the total equipment cost is low. HOY production features high efficiency, simple process, low energy consumption and equipment investment. Meanwhile, the |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| product is dyeable, the fiber feels soft, and the velvet made is desirable. It can be used to make various high-grade clothing fabrics and decorative fabrics, showing good prospects for development in the field of chemical fiber. | ||||
| R&D of flame-retardant cationic polyester fiber | In view of the future development direction and market demand of flame-retardant polyester fibers and based on the R&D and production of flame-retardant polyester fibers, this project is implemented to study the feasibility of producing flame-retardant high-shrinkage fiber, flame-retardant cationic dyeable fiber and other composite functional polyester fibers, and launch high-quality functional composite flame-retardant polyester fibers | It has passed the pilot test and is transferred for industrialization test to achieve stable mass production and promotion | To determine a technical scheme for producing flame-retardant cationic polyester and flame-retardant high-shrinkage polyester, and prepare flame-retardant cationic PET flakes and flame-retardant high-shrinkage PET flakes; to research and confirm the spinning process and produce flame-retardant cationic PET flakes and flame-retardant high-shrinkage PET flakes that meet customer needs. The technology is owned by the Company, and the Company's existing equipment, technology and related supporting conditions are fully used. The Company has completed the lab test and pilot test and will provide technical support for industrialization | It will enrich the Company's differentiated product range, increase the market share, and achieve better economic benefits |
| R&D of high brightness polyester prepared by transesterification | To improve the blending performance of PET and inorganic filler melt, so as to enhance the transparency of PET materials | Completed and industrialized | To achieve good hydrophilicity of the product and greatly improve the transparency of polyester, while keeping the conventional properties of polyester basically unchanged, and providing good spinning processing performance. | It will increase the added value of the Company's products, meet the needs of downstream customers, and is of great significance for the sustainable development of the Company. |
| R&D of environmentall | To study the flake crystallization ability, drying process, sheath-core composite plate | It has passed the pilot test and is | To complete all the planned tasks under the project, and form a mature technology | The low-melting-point polyester sheath-core composite fiber will partially melt |
| Name of major R&D projects | Project purpose | Project progress | Intended goal | Expected impact on the future development of the Company |
| y-friendly antimony-free low-melting-point polyester sheath-core composite fiber | design, composite spinning process, etc. by screening out antimony-free low-melting-point PET flakes that meet the spinning requirements, form a complete technology for producing antimony-free low-melting-point polyester sheath-core composite fiber, and successfully realize the transformation and industrial production of the project | transferred for industrialization test to achieve stable mass production and promotion | for producing and processing antimony-free low-melting-point polyester sheath-core composite fiber; to make full use of the Company's existing equipment, technologies and related supporting conditions to successfully realize the transformation of the project's achievements and industrial production. | and bond with other materials. It features environment-friendliness, safety, and high bonding strength, and has broad development prospects. The implementation of this project and product promotion will further increase the market share of differentiated polyester fibers, thereby enhancing the Company's economic benefits |
R&D personnel
| 2022 | 2021 | Change ratio | |
| Number of R&D staff (person) | 1065 | 643 | 65.63% |
| Percentage of R&D personnel | 6.81% | 3.82% | 2.99% |
| Educational background of R&D personnel | —— | —— | —— |
| PhD | 69 | 33 | 109.09% |
| Master | 118 | 52 | 126.92% |
| Bachelor | 335 | 149 | 124.83% |
| Junior college degree | 314 | 192 | 63.54% |
| High school and below | 229 | 217 | 5.53% |
| Age of R&D personnel | —— | —— | —— |
| Under 30 | 457 | 241 | 89.63% |
| 30~40 | 373 | 247 | 51.01% |
| 40~50 | 166 | 117 | 41.88% |
| 50~60 | 64 | 36 | 77.78% |
| 60 and above | 5 | 2 | 150.00% |
R&D investment
| 2022 | 2021 | Change ratio | |
| R&D investment amount (RMB) | 688,229,267.31 | 691,226,781.85 | -0.43% |
| R&D investment as a percentage of operating | 0.45% | 0.53% | -0.08% |
| income | |||
| Capitalized R&D investment (RMB) | 19,523,238.74 | 4,246,563.87 | 359.74% |
| Capitalized R&D investment as a percentage of R&D investment | 2.84% | 0.61% | 2.23% |
Reasons for and effects of significant changes in the composition of R&D personnel
□ Applicable ?Not applicable
Reasons for the significant changes in the percentage of total R&D investment in operatingincome compared with the previous year
□ Applicable ?Not applicable
Reasons for the substantial changes in the capitalization rate of R&D investment andDescription of their reasonableness
□ Applicable ?Not applicable
5. Cash flow
Currency unit: RMB
| Item | 2022 | 2021 | Year-on-year increase/decrease |
| Subtotal of cash inflows from operating activities | 162,080,383,545.53 | 137,940,305,883.49 | 17.50% |
| Subtotal of cash outflows from operating activities | 159,374,850,062.17 | 130,219,784,744.09 | 22.39% |
| Net cash flow from operating activities | 2,705,533,483.36 | 7,720,521,139.40 | -64.96% |
| Subtotal of cash inflows from investing activities | 2,401,958,320.75 | 2,597,646,523.70 | -7.53% |
| Subtotal of cash outflows from investing activities | 4,528,249,402.63 | 10,115,000,453.57 | -55.23% |
| Net cash flows from investing activities | -2,126,291,081.88 | -7,517,353,929.87 | 71.71% |
| Subtotal of cash inflows from financing activities | 67,702,995,578.82 | 47,569,372,668.77 | 42.32% |
| Subtotal of cash outflows from financing activities | 66,030,295,613.61 | 44,628,796,599.91 | 47.95% |
| Net cash flows from financing activities | 1,672,699,965.21 | 2,940,576,068.86 | -43.12% |
| Net increase in cash and cash equivalents | 2,689,332,661.19 | 3,058,411,003.67 | -12.07% |
Description of the main factors influencing significant year-on-year changes in relevant data
1) The decrease in net cash flow generated from operating activities is mainly attributable to variousfactors such as international geopolitical and domestic demand contraction in 2022, resulting in asignificant decline in the operating efficiency of the Company compared with that in the same periodof previous year.
2) The increase of net cash flow generated from investment activities is mainly attributable to adecrease in the new construction projects of the Company and a decrease in cash outflows frominvestment activities.
3) The decrease of net cash flow generated from financing activities is mainly attributable to anincrease in the Company’s debt repayment in current period and an increase in cash outflows fromfinancing activities.Description of the reasons for the significant difference between the net cash flows generatedby the Company's operating activities and the net profit of the year during the reporting periodFor details, please refer to the supplementary information in the cash flow statement in the Company'sannual audit report.V. Analysis of non-main business
Currency unit: RMB
| Amount | Percentage of total profit | Reasons | Sustainable or not | |
| Investment income | 745,260,076.32 | 67.19% | It was mainly attributable to the provision of the investment income of subsidiaries from the main business. | Yes |
| Profits and losses from changes in fair value | -211,436,484.36 | -19.06% | It was mainly attributable to changes in fair value of foreign exchange and commodity derivatives during the reporting period | No |
| Assets impairment loss | -368,677,441.03 | -33.24% | It was mainly attributable to the Company's provision of inventory depreciation reserves | No |
| Non-operating income | 14,943,253.23 | 1.35% | It was mainly attributable to the compensation and fine income during the reporting period, and governmental subsidies irrelevant to daily enterprise activities | No |
| Non-operating expenses | 20,261,590.79 | 1.83% | It was mainly attributable to external donations and fixed asset retirement losses during the reporting period | No |
VI. Analysis of assets and liabilities
1. Significant changes in asset composition
Currency unit: RMB
| End of 2022 | Early 2022 | Proportion increase or decrease | Description of major changes | |||
| Amount | Percentage in total assets | Amount | Percentage in total assets | |||
| Monetary funds | 17,358,475,538.50 | 15.50% | 14,322,716,793.82 | 13.57% | 1.93% | |
| Accounts receivable | 6,857,913,648.22 | 6.13% | 6,436,842,058.88 | 6.10% | 0.03% | |
| Inventory | 14,083,484,571.18 | 12.58% | 12,145,955,534.77 | 11.51% | 1.07% | |
| Long-term equity investments | 12,831,505,320.53 | 11.46% | 12,085,626,559.38 | 11.45% | 0.01% | |
| Fixed assets | 47,466,461,676.63 | 42.39% | 46,102,729,538.71 | 43.69% | -1.30% | |
| Construction in progress | 3,751,889,400.94 | 3.35% | 3,875,588,007.79 | 3.67% | -0.32% | |
| Right-of-use assets | 430,002,663.24 | 0.38% | 411,032,649.33 | 0.39% | -0.01% | |
| Short-term loans | 37,875,833,338.09 | 33.83% | 33,778,694,677.24 | 32.01% | 1.82% | |
| Contract liabilities | 989,622,772.97 | 0.88% | 1,723,901,780.92 | 1.63% | -0.75% | |
| Long-term loans | 16,107,140,036.35 | 14.39% | 15,996,229,686.31 | 15.16% | -0.77% | |
| Lease liabilities | 431,285,378.29 | 0.39% | 380,145,523.29 | 0.36% | 0.03% |
High proportion of foreign assets
| Specific content of assets | Reason | Asset size | Location | Operation mode | Controls to ensure asset security | Income status | Proportion of overseas assets in the Company's net assets | Whether there is significant risk of impairment |
| Subsidiaries controlled by the Company | Overseas investment | USD 6870.8773 million | Hong Kong/Brunei/Singapore | Built by the Company | Strengthen the parent Company's management control over overseas subsidiaries | Good | 188.05% | No |
| Other information | None | |||||||
2. Assets and liabilities measured at fair value
Currency unit: RMB
| Item | Beginning balance | Ending balance |
| Financial assets | ||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 388,958,054.67 | 251,021,508.33 |
| 2. Derivative financial assets | 0.00 | 1,872,460.80 |
| 3. Investment in other equity instruments | 5,600,000.00 | 5,600,000.00 |
| Subtotal of financial assets | 394,558,054.67 | 258,493,969.13 |
| financial liabilities | 25,375,802.83 | 62,965,410.64 |
Other changesWhether the measurement attributes of the Company's main assets changed significantlyduring the reporting period
□Yes ?No
3. Restricted asset rights as of the end of the reporting period
| Item | Ending book value of the year | Reason for restriction |
| Monetary funds | 4,424,405,925.47 | Margin |
| Notes receivable | 53,822,104.39 | Pledge to open acceptance bills |
| Long-term equity investments | 5,928,738,265.27 | Mortgage loan |
| Fixed assets | 21,934,801,647.52 | Sale and leaseback financial leases and mortgage loan |
| Intangible assets | 781,335,552.81 | Mortgage loan and financial lease guarantee |
| Inventory | 2,550,641,487.83 | Mortgage loan |
| Total | 35,673,744,983.29 | -- |
VII. Analysis of investment status
1. General situation
| Investment amount during the reporting period (RMB) | Investment amount in the same period of previous year (RMB) | Range of change |
| 5,186,854,861.36 | 5,315,505,561.36 | -2.42% |
2. Significant equity investments acquired during the reporting period
□ Applicable ?Not applicable
3. Significant non-equity investments in progress during the reporting period
Currency unit: RMB
| Project name | Investment method | Whether it is fixed asset investment | Industry involved in the project | Amount invested during the reporting period | Cumulative actual investment amount as of the end of the reporting period | Sources of funds | Project progress | Disclosure date (if any) | Disclosure index (if any) |
| Brunei Phase II Project | Built by the Company | Yes | Petrochemical industry | 508,247,308.49 | 2,079,913,992.24 | Self-raised funds and loans | 2.35% | September 16, 2020 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1208444483&announcementTime=2020-09-16 |
| Suqian Yida New Environment-friendly Differentiated Fiber Project | Built by the Company | Yes | Chemical fiber industry | 391,874,017.27 | 521,514,887.05 | Self-raised funds and loans | 13.71% | June 1, 2021 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1210132115&announcementTime=2021-06-01 |
| The 1.2 mtpa Caprolactam-Polyamide Industry Integration and Supporting Project | Built by the Company | Yes | petrochemical chemical fiber industry | 122,120,259.75 | 143,465,895.02 | Self-funded | 1.36% | January 22, 2022 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1212243026&announcementTime=2022-01-22 |
| Total | -- | -- | -- | 1,022,241,585.51 | 2,744,894,774.31 | -- | -- | -- | -- |
4. Investment in financial assets
(1) Investment in securities
The Company's made no investment in securities in the reporting period.
(2) Investment in derivatives
1) Investments in derivatives for hedging purposes during the reporting period
Currency unit: RMB 10,000
| Type of Hedging Investment | Beginning investment amount | Profits and losses from changes in fair value in the reporting period | Accumulated fair value changes recognized in equity | Ending amount | Ending investment amount as a percentage of the Company's net assets at the end of the reporting period |
| Foreign exchange hedging | 0 | -437 | -589 | -1,165 | -0.05% |
| Commodity hedging | 38,729 | -20,707 | -223 | 20,158 | 0.79% |
| Total | 38,729 | -21,144 | -812 | 18,993 | 0.75% |
| Explanation on whether there is any significant change in the accounting policy and specific principles of accounting for hedging business of the Company in the reporting period compared with that in the previous reporting period | No. The Company accounted for the hedging investment carried out in accordance with the relevant provisions of the Ministry of Finance's Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises No. 24 - Hedging, Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments and relevant guidelines to reflect the relevant items of the balance sheet and profit and loss statement. | ||||
| Explanation on actual profit or loss in the reporting period | During this reporting period, the actual profit and loss amount was RMB -448.91 million, of which the profit and loss from changes in fair value was RMB -211.44 million, and the investment income was RMB -237.47 million. | ||||
| Explanation on hedging effects | The profits and losses generated from the Company's hedging tools can offset the value changes of the hedged items, and the hedging business has a good hedging effect. | ||||
| Source of funding for investments in derivatives | Self-owned funds | ||||
| Risk analysis and description of control measures for derivatives positions during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, and legal risk) | 1. Market risks When the market changes drastically, the Company may not be able to fully lock in the price of raw materials or products, thereby resulting in losses. 2. Liquidity risks Commodity hedging transactions are ordered within the authority specified in the Company's Management System for Commodity Derivatives Transactions. If the market fluctuates drastically, losses may be caused by forced liquidation of positions due to lack of time for margin replenishment. 3. Operational risks As futures and forward transactions are highly specialized and complex, unexpected losses may be caused due to defects in information systems or internal controls. 4. Credit risks When the price fluctuates greatly to the disadvantage of the counterparty, the counterparty may violate the relevant provisions of the contract and cancel the contract, resulting in losses to the Company. 5. Legal risks Due to changes in relevant legal systems or violations of relevant legal systems by the counterparty, the contract may not be executed normally, resulting in losses to the Company. Risk control measures taken by the Company: The BOD of the Company has reviewed and approved the Management System for Foreign Exchange Derivatives Transactions and the Management System for Commodity Derivatives Transactions, which stipulate that the Company engages in hedging investment business with the main purpose of hedging, and speculation and arbitrage transactions are prohibited. The systems clearly stipulate the principles of the Company's business operations, approval authority, internal audit process, responsible departments and responsible persons, information isolation measures, internal risk reporting system and risk handling procedures, which are in line with the relevant requirements of regulatory authorities and meet the needs of actual operations. The specified risk control measures are practical and effective. |
| Changes in market price or air value of products involved in invested derivatives during the reporting period; the analysis of the fair value of derivatives shall disclose the specific methods used and the setting of relevant assumptions and parameters | The Company's hedging investment was priced at fair value, and forward foreign exchange was basically determined according to the price provided by or obtained from banks, the Reuters system and other pricing service agencies. The Company conducted fair value measurement and confirmation every month; the transaction price of futures was the fair price. |
| Involvement in lawsuits (if applicable) | None |
| Date of disclosure of announcement of the BOD for approval of derivatives investment (if any) | January 22, 2022 |
| Date of disclosure of announcement of shareholders meeting for approval of derivatives investment (if any) | February 15, 2022 |
The Company shall comply with the disclosure requirements for petrochemical industryspecified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen StockExchange - Industry Information DisclosureDuring the reporting period, the Company carried out hedging investment for the purpose ofreasonably avoiding the risk of price and exchange rate fluctuations of raw materials and finishedproducts, reducing the impact of price and exchange rate fluctuations of raw materials and finishedproducts on the normal operation of the Company, and ensuring the stable operation and sustainableprofitability of the Company. The commodities involved in the hedging transactions included rawmaterials, finished products, and foreign exchange related to the Company's production and operation.
2) Investments in derivatives for speculative purposes during the reporting period
□ Applicable ?Not applicable
There were no investments in derivatives for speculative purposes during the reporting period
| Special opinions of independent directors on the Company's derivatives investment and risk control | The hedging investment carried out by the Company for the purpose of hedging was closely related to the Company's daily business needs and complied with relevant laws and regulations. The Company formulated the Management System for Foreign Exchange Derivatives Transactions and the Management System for Commodity Derivatives Transactions, which have strengthened the Company’s risk management and control abilities and improved the Company's ability to withstand market risks, causing no damage to the interests of the Company and all shareholders. |
5. Use of raised funds
(1) Overall use of raised funds
Currency unit: RMB 10,000
| Year of fund raising | Mode of fund raising | Total funds raised | Total amount of raised funds used in this period | Total amount of raised funds used cumulatively | Total amount of raised funds with changed usage during the reporting period | Cumulative total amount of raised funds with changed usage | Proportion of cumulative total amount of raised funds with changed usage | Total amount of raised funds not yet used | Usage and destination of raised funds not yet used | Amount of raised funds idle for more than two years |
| 2019 | Issue of shares to purchase assets and raise supporting funds | 291,091.12 | 0 | 288,785.36 | 0 | 156,300 | 53.69% | 0 | On April 25, 2022, the seventeenth meeting of the eleventh session of the BOD of the Company reviewed and approved the Proposal on Closing Investment Projects with Raised Funds and Permanently Replenishing Working Capital with Surplus Raised Funds, agreeing to permanently supplement the working capital with the balance of supporting funds from share issuance by the Company in 2019. As of December 31, 2022, the Company has permanently replenished RMB 18.3541 million, with the remaining RMB 25.2216 million not replenished or transferred out. | 0 |
| 2020 | Public issuance of convertible corporate bonds in 2020 | 198,737.74 | 0 | 198,737.74 | 0 | 0 | 0.00% | 0 | / | 0 |
| 2022 | Public issuance of convertible corporate | 298,367.92 | 127,694.64 | 127,694.64 | 0 | 0 | 0.00% | 170,673.28 | As of December 31, 2022, the unused raised funds amounted to RMB 1706.7328 million, of which RMB 1.5 billion had not yet been returned as temporary supplementary working | 0 |
| bonds in 2022 | capital due. The balance of the Company's raised funds special account was RMB 209.2097 million (including RMB 108,500 of unpaid issuance fees). | |||||||||
| Total | -- | 788,196.78 | 127,694.64 | 615,217.74 | 0 | 156,300 | 19.83% | 170,673.28 | -- | 0 |
| General description of the use of raised funds | ||||||||||
| 1. As approved by the [2018] No. 1937 CSRC Permit issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company raised a total of RMB 2,949,999,987.00 through non-public issuance of 213,768,115 ordinary shares (A shares) to eligible investors, which was verified by Ruihua Certified Public Accountants (Special General Partnership). After deducting the broker’s underwriting fees and related issuance expenses, the actual net amount of funds raised was RMB 2,910,911,218.99. As of December 31, 2022, the Company has used RMB 2887.8536 million from the funds. 2. As approved by the [2020] No. 522 CSRC Permit issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company publicly issued 20 million convertible corporate bonds to eligible investors, each with a face value of RMB 100. The total issuance amount was RMB 2 billion, the conversion price was RMB 11.50 per share, and the bonds were listed on the Shenzhen Stock Exchange on November 16, 2020. The total amount of funds raised from the public issuance of convertible corporate bonds was RMB 2 billion. After deducting the underwriting and recommendation fees excluding taxes and related issuance fees, the actual net amount of funds raised was RMB 1,987.3774 million, all of which will be used for the "1 mtpa intelligent differentiated eco-friendliness functional fiber construction project" implemented by Haining Hengyi New Materials Co., Ltd. 3. As approved by CSRC Permit [2022] No. 565 issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company publicly issued 30 million convertible corporate bonds to eligible investors, each with a face value of RMB 100. The total issuance amount was RMB 3 billion, the conversion price was RMB 10.50 per share, and the bonds were listed on the Shenzhen Stock Exchange on August 11, 2022. The total amount of funds raised from the public issuance of convertible corporate bonds was RMB 3 billion. After deducting the underwriting and recommendation fees excluding taxes and related issuance fees, the actual net amount of funds raised was RMB 2983.6792 million. As of December 31, 2022, the Company has used RMB 1276.9464 million from the funds. | ||||||||||
(2) Projects for committed investment with raised funds
Currency unit: RMB 10,000
| Projects for committed investment and investment direction of over-raised funds | Whether the project has been changed (or partially changed) | Total committed investment of raised funds | Adjusted total investment amount (1) | Amount invested during the reporting period | Cumulative investment amount as of the end of the period (2) | Investment progress as of the end of the period (3)=(2)/(1) | Date when the project reaches its scheduled availability date | Benefits realized during the reporting period | Whether the expected benefits are achieved | Whether there is a significant change in the feasibility of the project |
| Projects for committed investment | ||||||||||
| Brunei PMB Petrochemical Project | No | No more than 376,562.33 | 376,562.33 | 0 | 377,633.81 | 100.28% | November 2019 | $9,711.32 | No | No |
| 500,000 tpa differentiated functional fiber upgrading and transformation project | No | No more than 93,500 | 93,500 | 0 | 93,647.49 | 100.16% | August 2020 | -12,458.8 | No | No |
| Intelligent upgrading and transformation project | No | No more than 28,170 | 28,170 | 0 | 25,621.7 | 90.95% | August 2020 | Not applicable | Not applicable | No |
| Differentiated chemical fiber energy saving and consumption reduction upgrading and transformation project | No | No more than 8,500 | 8,500 | 0 | 8,399.34 | 98.82% | May 2019 | Not applicable | Not applicable | No |
| 250,000 tpa environmentally-friendly functional fiber upgrading and transformation project | Yes | No more than 141,500 | 416.05 | 0 | 416.05 | 100.00% | Not applicable | Not applicable | Not applicable | Yes |
| Intelligent upgrading and transformation project | Yes | No more than 20,500 | 5,283.95 | 0 | 3,406.99 | 64.48% | Not applicable | Not applicable | Not applicable | Yes |
| 1 mtpa intelligent environmentally-friendly functional fiber construction project | No | No more than 200,000 | 200,000 | 0 | 198,737.74 | 99.37% | 2020 and June 2022 | -53,097.45 | Not applicable | No |
| 500,000 tpa New-type Functional fiber technological transformation projects | No | No more than 70,000 | 70,000 | 33,398.74 | 33,398.74 | 47.71% | January and August 2021 | -17,701.35 | No | No |
| 1.1 mtpa New Environment-friendly Differentiated Fiber Project | No | No more than 230,000 | 230,000 | 94,295.9 | 94,295.9 | 41.00% | Not applicable | Not applicable | Not applicable | No |
| Subtotal of committed investment for the projects | -- | No more than 1,168,732.33 | 1,012,432.33 | 127,694.64 | 835,557.76 | -- | -- | / | -- | -- |
| Investment direction of over-raised funds | ||||||||||
| None | ||||||||||
| Total | -- | No more than 1,168,732.33 | 1,012,432.33 | 127,694.64 | 835,557.76 | -- | -- | / | -- | -- |
| Description of the situation and reasons why the planned progress and expected benefits have not been achieved by projects (including the reason for selecting "not applicable" for "whether the expected benefits have been achieved") | Brunei PMB Petrochemical Project Due to significant fluctuations in crude oil and product prices during the reporting period, the project benefits did not meet expectations Other projects: Due to significant fluctuations in raw material prices and the weak downstream demand, some project benefits did not meet expectations | |||||||||
| Description of significant changes in project feasibility | Not applicable | |||||||||
| Amount, purpose and progress of use of over-raised funds | Not applicable | |||||||||
| Change of location for implementation of projects for committed investment | Not applicable | |||||||||
| Adjustment of implementation mode of projects for committed investment | Not applicable | |||||||||
| Preliminary investment and replacement of projects for committed investment | 1. On February 2, 2019, the twenty-fourth meeting of the tenth session of the BOD of the Company reviewed and approved the Proposal on Using Raised Funds to Replace Self-raised Funds and Intermediary Fees and Related Taxes Pre-paid for Relevant Investment Projects, agreeing to use RMB 1,147,288,319.73 from the raised funds to replace the self-raised funds and the intermediary fees and related taxes that had been paid for relevant investment projects, of which the self-raised funds that had been invested in the projects were RMB 1,141,188,319.73 and the intermediary fees and related taxes paid in advance by the Company with its own funds were RMB 6,100,000.00. On June 18, 2019, the thirtieth meeting of the tenth session of the BOD of the Company reviewed and approved the Proposal on Using Raised Funds to Replace Self-raised Funds Pre-paid for Relevant Investment Projects, agreeing to use RMB 331,666,503.97 from the raised funds to replace the self-raised funds that had been paid for relevant investment projects 2. According to the Proposal on the Company's Public Issuance of Convertible Corporate Bonds reviewed and approved at the twenty-ninth meeting of the tenth session of the BOD on April 25, 2019 and the 2018 Annual General Meeting of Shareholders on May 9, 2019, it is agreed that if the Company has invested self-raised funds in the construction of the above projects first before the funds raised from the issuance of convertible corporate bonds are in place, the funds can be replaced in accordance with the procedures prescribed by relevant laws and | |||||||||
| regulations after the funds raised are available. As of October 23, 2020, the Company had invested RMB 4,606,157,244.19 in the above-mentioned project with self-raised funds. After deducting the supporting fund of RMB 756,000,000.00 raised by the Company on January 30, 2019 through the non-public issuance of RMB ordinary shares to specific objects for the construction of the 1 mtpa intelligent environment-friendly functional fiber construction project, the remaining amount was RMB 3,850,157,244.19. The Company decided to replace its own funds, RMB 1,987,377,358.49, invested in the project with the raised funds. As of December 31, 2022, the Company has replaced the self-raised funds invested in advance of RMB 1,987,377,358.49. 3. According to the resolution of the tenth meeting of the eleventh session of the BOD on May 31, 2021, and the Proposal on the Company's Public Issuance of Convertible Corporate Bonds reviewed and approved at the third Extraordinary General Meeting (EGM) of Shareholders 2021 on June 16, 2021, it is agreed that if the Company has invested self-raised funds in the construction of the above projects first before the funds raised from the issuance of convertible corporate bonds are in place, the funds can be replaced in accordance with the procedures prescribed by relevant laws and regulations after the funds raised are available. As of July 28, 2022, the Company has invested RMB 1,042,688,264.58 in the above-mentioned raised funds investment project with self-raised funds in advance, and has made the advance payment of intermediary fees and related taxes of RMB 1,550,000.00 with self-owned funds. After the review of the BOD of the Company, it was decided to replace the self-raised funds invested in the raised funds investment project with the raised funds, with an amount of RMB 1,042,688,264.58, and to replace the self-raised funds with the raised funds for the paid issuance fees, with an amount of RMB 1,462,264.15 (excluding tax). As of December 31, 2022, the Company has replaced the self-raised funds invested in advance of RMB 1,044,150,528.73. | |
| Temporary replenishment of working capital with idle raised funds | As of December 31, 2022, the Company has temporarily replenished its working capital with idle raised funds of RMB 1.5 billion, and there is no situation where any fund has not been returned upon maturity. |
| Amount and reasons for the balance of raised funds in project implementation | Due to the long payment cycle of contract payments agreed with some suppliers, the Company will continue to make relevant payments as agreed in the contract after the project is completed. |
| Usage and destination of unused raised funds | On April 25, 2022, the seventeenth meeting of the eleventh session of the BOD of the Company reviewed and approved the Proposal on Closing Investment Projects with Raised Funds and Permanently Replenishing Working Capital with Surplus Raised Funds, agreeing to permanently supplement the working capital with the balance of supporting funds from share issuance by the Company in 2019. As of December 31, 2022, the Company has permanently replenished RMB 18.3541 million, with the remaining RMB 25.2216 million not replenished or transferred out. As of December 31, 2022, the unused amount of funds raised from the public issuance of convertible corporate bonds in 2022 was RMB 1,706.7328 million, of which RMB 1.5 billion had not yet been returned as temporary supplementary working capital due. The balance of the Company's raised funds special account was RMB 209.2097 million (including RMB 108,500 of unpaid issuance fees). |
| Problems or other situations in the use and disclosure of raised funds | Not applicable |
(3) Changes of projects for investment with raised funds
During the reporting period, there was no change of the projects for investment with raised funds.VIII. Sales of major assets and equity
1. Sales of major assets
□ Applicable ?Not applicable
2. Sales of major equity
| Counterparty | Sold equity | Date of sale | Transaction price (RMB 10,000) | Net profit contributed by the equity to the listed | Impact of the sale on the Company | Net profit contributed by the equity sale to the | Pricing principle of equity disposal | Whether it is a related-party transaction | Relationship with counterparty | Whether the equity involved has been fully transfer | Whether it is implemented as planned; if not, explain the | Disclosure date | Disclosure index |
| company from the beginning of current period to the date of sale (RMB 10,000) | listed company as a percentage of the total net profit | red | reasons and the measures the Company has taken | ||||||||||
| Hangzhou Chenhao Textile Finishing Co., Ltd. | Hangzhou Jingxin Supply Chain Management Co., Ltd. | September 26, 2022 | 29,400 | 65.51 | None | 17.23% | To be negotiated and determined based on the value evaluated by a third party | No | Non-related party | Yes | Yes |
IX. Analysis of major subsidiaries and JV companiesMajor subsidiaries and JV companies with an impact of 10% or more on the net profit of theCompany
Currency unit: RMB 10,000
| Company name | Type of company | Main business | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| Hengyi Brunei | Subsidiary | Refining and petrochemical | USD 1.0309 billion | 4,675,858.29 | 1,000,800.15 | 5,631,775.07 | 65,304.93 | 65,336.76 |
| Zhejiang Yisheng | Subsidiary | PTA and PIA | USD 514.4471 million | 1,876,955.57 | 893,494.69 | 2,138,615.21 | -15,767.22 | -17,193.75 |
| Hainan Yisheng | JV company | PTA and bottle flake | 458,000 | 1,234,567.09 | 642,597.75 | 2,271,698.29 | 121,806.70 | 104,001.29 |
| Yisheng Investment | JV company | PTA and bottle flake | 201,800 | 1,753,393.73 | 763,653.88 | 2,974,782.89 | 32,849.78 | 40,524.44 |
| Yisheng New Materials | JV company | Production and sales of PTA | 300,000 | 1,228,897.79 | 286,002.94 | 3,370,855.32 | -33,559.80 | -25,199.76 |
| Hengyi Limited | Subsidiary | DTY | 300,000 | 3,630,936.24 | 832,947.39 | 6,800,415.00 | 28,911.14 | 29,805.95 |
| Hengyi High-Tech | Subsidiary | PET flakes, POY, etc. | 275,725 | 1,071,883.91 | 443,671.20 | 977,880.38 | -3,159.94 | 1,781.81 |
| Haining New Materials | Subsidiary | PET flakes, POY, etc. | 328,500 | 973,324.61 | 277,953.42 | 918,957.43 | -58,513.84 | -54,815.87 |
| Shuangtu New Materials | Subsidiary | POY, FDY, and flakes | 60,000 | 519,583.00 | 212,555.37 | 605,398.89 | -11,702.25 | -10,008.43 |
| Jiaxing Yipeng | Subsidiary | FDY | 300,000 | 535,337.15 | 268,126.74 | 480,326.41 | -20,648.27 | -18,629.96 |
| Hong Kong Tianyi | Subsidiary | Investment and trade | USD 1.5095 billion | 1,397,336.09 | 1,122,629.30 | 740,213.39 | 33,599.29 | 33,599.29 |
| China Zheshang Bank | JV company | Finance | 2,126,870 | 262,193,000 | 16,593,000 | 6,108,500 | 1,584,700 | 1,398,900 |
Acquisition and disposal of subsidiaries during the reporting period
| Company name | Methods of acquiring and disposing of subsidiaries during the reporting period |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Disposal |
| Guangxi Free Trade Zone Yihai Port Co., Ltd. | Establishment |
| Hangzhou Lanxing Chemical Fiber Oiling Agent Co., Ltd. | Establishment |
| Lianyungang Junbo Shengda Logistics Co., Ltd. | Establishment |
| Suqian Hengyuan Thermal Energy Co., Ltd. | Establishment |
| Suqian Huida Port Co., Ltd. | Establishment |
Description of major subsidiaries and JV companies
(1) Hengyi Brunei
The Company holds 70% of the shares of Hengyi Industries Sdn. Bhd. through Hong Kong TianyiInternational Holding Co., Ltd. Hengyi Brunei has a registered capital of USD 1.0309 billion, and thescope of business covers: Petroleum refining and petrochemical.
(2) Zhejiang Yisheng
The Company holds 70% of the shares of Zhejiang Yisheng Petrochemical Co., Ltd. through ZhejiangHengyi Petrochemical Co., Ltd. Zhejiang Yisheng has a registered capital of USD 514.4471 million,and the scope of business covers: production of chemical products (excluding chemical productssubject to license); manufacture of basic chemical raw materials (excluding chemical products subjectto license, such as hazardous chemicals); manufacture of synthetic fibers; sales of chemical products(excluding chemical products subject to license); sales of synthetic materials; sales of synthetic fibers;sales of new membrane materials; sales of petroleum products (excluding hazardous chemicals);general cargo warehousing services (excluding hazardous chemicals and other items subject to licenseand approval); technology services, technology development, technology consulting, technologyexchange, technology transfer, technology promotion; technology import and export; goods import
and export; import and export agency (except for business subject to approval according to law, otherbusiness activities can be carried out independently and legally with the business license). TheCompany currently has three large PTA production lines, with a PTA production capacity of 5 mtpaand a PIA production capacity of 300,000 tpa.
(3) Yisheng Investment
The Company holds 30% of the shares of Dalian Yisheng Investment Co., Ltd. through ZhejiangHengyi Petrochemical Co., Ltd. Scope of Business: Project investment, domestic general trade,import and export of goods, technology import and export, and trade intermediary agency. (Exceptfor business prohibited by laws and administrative regulations, business restricted by laws andadministrative regulations can be operated only after obtaining corresponding permit). (Businessactivities subject to approval according to laws can be carried out only after by relevant departments.)The legal representative is Li Shuirong, and the registered capital is RMB 2.018 billion.
(4) Hainan Yisheng
The Company holds 50% of the shares of Hainan Yisheng Petrochemical Co., Ltd. through ZhejiangHengyi Petrochemical Co., Ltd. Hainan Yisheng has a registered capital of RMB 4.58 billion. Thescope of business: production, processing, wholesale and retail of purified terephthalic acid, PETflakes, polyester bottle flakes, polyester staple fibers, POY yarns, FDY yarns, crude cobalt oxide andmanganese oxide, and chemical fiber raw materials; purchase and sales of paraxylene (PX), aceticacid, and ethylene glycol; self-supporting and acting as an agent for the import and export of variousgoods and technologies; terminal facilities operation, general cargo handling service in the terminalarea, terminal tugboat operation, ship service, fresh water supply for ships, collection of shippollutants (including oily sewage, residual oil, tank washing water, domestic sewage and garbage),and supply of oil containment boom.
(5) Yisheng New Materials
The Company holds 49% of the shares of Zhejiang Yisheng New Materials Co., Ltd. throughZhejiang Hengyi Petrochemical Co., Ltd. The scope of business: import and export of technologies;import and export of goods; import and export of agency (Business activities subject to approvalaccording to laws can be carried out only after approved by relevant departments. Specific business
activities are subject to the approval results). General business: Sales of new membrane materials;sales of synthetic materials; sales of chemical products (excluding chemical products subject tolicense); sales of petroleum products (excluding hazardous chemicals); production of chemicalproducts (excluding chemical products subject to license); manufacturing of synthetic materials(excluding hazardous chemicals); technical services, technical development, technical consultation,technical exchange, technology transfer, and technology promotion (except for business subject toapproval according to laws, business activities shall be carried out independently and legally with thebusiness license). The legal representative is Xu Baoyue, and the registered capital is RMB 3 billion.
(6) Hengyi Limited
The Company directly holds 99.72% of the shares (actually enjoys 100% of the rights) of ZhejiangHengyi Petrochemical Co., Ltd. Hengyi Limited has a registered capital of RMB 3 billion. The scopeof business: production, processing and sales of chemical fibers and chemical raw materials(excluding hazardous chemicals); import and export.
(7) Haining New Materials
The Company holds 100% of the shares of Haining Hengyi New Materials Co., Ltd. through ZhejiangHengyi Petrochemical Co., Ltd., and the registered capital of Haining New Materials is RMB 3.285billion. Scope of Business of Haining New Materials: Manufacturing, processing, and wholesale ofdifferentiated chemical fibers, PET flakes, POY yarns, FDY yarns, and chemical fiber raw materials;export of the company’s own products and technologies; import of raw and auxiliary materials,mechanical equipment, and spare parts required for production of the company; warehousemanagement.
(8) Hengyi High-Tech
The Company holds 90.67% of the shares of Zhejiang Hengyi High-Tech Materials Co., Ltd. throughZhejiang Hengyi Petrochemical Co., Ltd. Hengyi High-Tech has a registered capital of RMB 2.75725billion, and the scope of business covers: production, processing and sales of PET flakes, POY yarns,FDY yarns, and chemical fiber raw materials; export of the company’s own products and technologiesand import of self-use products and technologies (except for those that are prohibited or restrictedaccording to national laws and regulations); all other legal business not subject to approval.
(9) Shuangtu New Materials
The Company holds 100% of the shares of Zhejiang Shuangtu New Materials Co., Ltd., and theregistered capital of Shuangtu New Materials is RMB 600 million. Scope of Business: Generalbusiness: general business: production of chemical products (excluding chemical products subject tolicense); sales of chemical products (excluding chemical products subject to license); sales ofsynthetic fibers; synthetic fiber manufacturing; sales of synthetic materials; manufacture of syntheticmaterials (excluding hazardous chemicals) (except for business subject to approval according to law,other business activities can be carried out independently and legally with the business license).Licensed business: import and export of goods; import and export of technologies (Business activitiessubject to approval according to law can only be carried out after approved by relevant departments.Specific business activities are subject to the approval results). The main products are FDY, POY andfiber grade PET flakes.
(10) Jiaxing Yipeng
The Company holds 100% of the shares of Jiaxing Yipeng Chemical Fiber Co., Ltd. Jiaxing Yipenghas a registered capital of RMB 3 billion, and the scope of business covers: manufacture, processingand sales of PET flakes and FDY fully drawn yarns; sales of chemical fiber raw materials; import andexport of goods. (excluding hazardous chemicals). The main products are FDY and fiber grade PETflakes.
(11) Hong Kong Tianyi
The Company holds 100% of the shares of Hong Kong Tianyi International Holding Co., Ltd. throughZhejiang Hengyi Petrochemical Co., Ltd. The registered capital of Hong Kong Tianyi is USD 1.5095billion, and its business scope involves investment and trading.
(12) China Zheshang Bank
The Company holds a total of 748,069,283 shares of China Zheshang Bank Co., Ltd. through itssubsidiary Zhejiang Hengyi Petrochemical Co., Ltd. and its indirect subsidiary Zhejiang HengyiHigh-Tech Materials Co., Ltd., accounting for 3.52% of the total share capital of China ZheshangBank. Scope of Business: financial business (For details, please refer to the approval of the ChinaBanking and Insurance Regulatory Commission). Established in 2004, the company is one of the 12
national joint-stock commercial banks approved by the China Banking and Insurance RegulatoryCommission. China Zheshang Bank was listed on the main board of the Hong Kong Stock Exchangeon March 30, 2016 (stock code: 02016.HK) and on the Shanghai Stock Exchange on November 26,2019 (stock code: 601916.SH.X. Information on structured entities controlled by the Company
□ Applicable ?Not applicable
XI. Prospects for the future development of the CompanyIn 2023, the Company will continue to closely focus on the strategic development policy of"consolidating, highlighting and enhancing the competitiveness of our main business", realizeresource sharing, systematically build upstream and downstream synergy, consolidate integrationadvantages, enhance domestic and overseas linkage, improve the "polyester + polyamide"-drivenindustry chain, deepen the "petrochemical +" multi-layered and multi-dimensional industrial layout,enhance the overall competitiveness, and build the Company into one of the leading internationalchemical groups.(I) Strategic prospects for the development of the CompanyIn 2023, the Company actively will adapt to economic changes, reshape the entrepreneurial passion,and strictly adhere to the two bottom lines of legality, compliance, and production safety. TheCompany will adhere to the unchanged industrial strategic direction, continue to consolidate,highlight, and optimize the core competitiveness of the main business, increase scientific researchand innovation to improve product quality, improve operational efficiency, expand and strengthen thepetrochemical and chemical fiber industrial chain, improve the “polyester + polyamide"-drivenindustrial chain, and deepen the multi-level and three-dimensional industrial layout of"petrochemical+". In the future, the Company will focus on consolidating the "petrochemical+"industrial layout of the petrochemical industry, petrochemical trade, and petrochemical finance.Through continuous R&D investment, the Company will increase the development of differentiatedproducts, leverage internal and external resources, achieve resource sharing and industrial
coordination, and comprehensively enhance comprehensive competitiveness, striving to become aninternational first-class and influential petrochemical industry group.(II) Prospects for the industrial development of the CompanySee I. Industrial situation of the Company during the reporting period (II) - industrial situation(III) Business strategy of the Company for 2023The Company will continue to increase investments in scientific and technological R&D based onthe requirements of high-quality development in the new era and the new pattern of industrialdevelopment, guided by "green manufacturing" and "circular economy", and improve the conversionefficiency of new materials and technologies; continuously promote the planning and construction ofthe Company's key strategic projects, enhance the Company's sustained profitability and riskresistance ability; deepen the digital transformation strategy to meet the growing demand forintelligent logistics technology; optimize the grassroots organizational model, continuously improvethe efficiency and efficiency of human resource allocation, and accumulate momentum for theCompany to achieve sustainable development.
1. Move forward with cohesion, steadily operate existing production capacity and promotethe construction of major projectsIn 2023, the Company will continue to operate domestic PTA and polyester related productioncapacity safely and steadily, promote the stable construction of projects under construction such asQinzhou "1.2 mtpa Caprolactam-Polyamide Industry Integration and Supporting Project" and Suqian"1.1 mtpa New Environment-friendly Differentiated Fiber Project", and continue to steadily promotethe construction of Brunei Phase II Project.After the completion of the Brunei Phase II Project, it will further increase the Company's marketshare, thicken the profits, and bring new growth and synergy. The newly added “olefin-polyolefin"industrial chain will be conducive to the Company's further improvement of industrial chainintegration and scale advantages, reducing product production costs, ensuring the stability of rawmaterial supply, and enhancing the Company's sustained profitability and risk resistance.
2. Realize fine management for long-cycle, stable, safe and full-load operation and optimal
scalability of equipment to ensure smooth production of the Brunei ProjectThe Company will continue to do a good job in the production and operation of the Phase I of therefining-petrochemical project in Brunei, always put safety and environmental protection work at thetop of the refinery operation, adhere to the principle of "affordable, stable, and long-term" deviceoperation, and continue to maintain good HSE performance. Besides, based on the actual operatingcharacteristics of the equipment, the Company will take "short, flat, and fast" technical renovationmeasures and further improve and optimize the entire factory's processing process, so as to effectivelyensure the production safety, production capacity improvement, process optimization, and costreduction and efficiency increase of the equipment of the Phase I Project.In 2023, in order to comprehensively improve the safety performance and efficiency creation abilityof production equipment, further optimize product structure, reduce comprehensive energy andmaterial consumption in the production process, and enhance the comprehensive profitability of therefining-petrochemical project in Brunei, in accordance with industry practices and the characteristicsof production equipment in petrochemical enterprises and based on the changing trends of productoil and chemical market conditions, the Company will implement routine maintenance improvementand technical renovation work for the PMB Petrochemical Project in Brunei. The routine maintenanceimprovement and technical renovation plan is a routine arrangement made by the managementpersonnel of the Company and Brunei Company, which is conducive to the improvement ofproduction and operation. After the completion of this maintenance improvement and technicalrenovation, the efficiency creation ability of the production equipment will be further enhanced,product quality, production efficiency and operational efficiency will be improved, which isconducive to the sustainable operation of the refining-petrochemical project in Brunei in the future.In the future, the Company will adhere to the principle of "market orientation, benefit orientation, andserving for production", focus on the process control for incoming raw materials, the production ofproducts, the blending and transportation, and the sales and delivery, and timely solve any conflictsin production, transportation, and sales, ensuring the smooth implementation of production and salesplans.
3. Increase efforts to drive innovation, focus on R&D innovation, and promote achievement
transformationIn 2023, the Company has begun to enter the forefront of industry technology in some advantageousareas. Next, it will continue to leverage the independent innovation spirit of the research institute,increase R&D investment, and continue to focus on product development and fruit transformationaround three major themes: green environmental protection, functional, and bio-based types. TheCompany will continuously increase the promotion of "Eticont" products, increase the promotion andapplication of environmentally-friendly polyester technology and product sales, and successfullycomplete the trial spinning, trial use, production stability evaluation, and customer trial evaluation ofthe developed titanium catalyst; increase the development scale and promote industrialization offunctional composite materials such as antibacterial, cationic dyeable, and flame-retardant materials.Besides, the Company will focus on promoting the R&D process of technologies such as gas phaserearrangement, synthetic ammonia, hydrogen peroxide, chemical fiber oils, and polyamide specifictitanium dioxide, promoting the high-quality development of the green petrochemical industry.Furthermore, by leveraging the functional positioning and advantages of linkage with universities andresearch institutes, the Company will participate in basic research through various forms and channels,carry out scientific and technological cooperation in the front-end, promote applicationimplementation in the back-end, and create a flexible mechanism with strong R&D motivation, highconversion efficiency, and smooth management operation, so as to continuously promote thegeneration of new achievements, promote their transformation, and actively play a role in back-endinnovation. The Company will build a multi-agent collaborative innovation ecosystem that integratestechnological innovation, application demonstration, talent cultivation, model innovation, andbusiness integration. The Company will closely focus on the industrial layout, aim at the world'sscientific and technological frontier, gather global innovation resources, cultivate high-end innovationachievements, build a world-class R&D base for refining-petrochemical integration key commontechnologies and high-end chemical products, and will be committed to the R&D of green chemicalsand advanced materials, becoming the technology leader of the whole industry.
4. Strengthen the digital-intelligence integration technologies to promote the construction ofinformation operation standardization system
Based on a digital intelligent factory, the Company is accelerating the construction of a standardizedinformation operation system. In 2023, the Company will continue to consolidate and improve theservice experience of Hengyi Brain, establish a comprehensive application based on AI technologyfor continuous upgrading, and provide the Company's senior management with a scientific decision-making system that integrates production and sales; realize online management of information assets,operation knowledge base, and system operation configuration, as well as online display and analysisof operation data; improve the construction of information infrastructure, promote the value miningof production and operation big data, establish the construction of daily operation standardizationsystem, and realize the digital transformation development of traditional industries.Besides, with the growing demand of the petrochemical industry for intelligent logistics technology,the Company will focus on building an efficient MES system to achieve the consistency andinterconnection of the data of the entire factory, and constantly improve and upgrade the chemicalfiber industrial Internet platform, which is a trinity of "online transaction + online finance +warehousing logistics", so as to effectively reduce the logistics costs of the Company's internal rawmaterials and products, achieve upstream and downstream collaboration, and provide a strong boostfor the development of the main industry, comprehensively enhancing comprehensivecompetitiveness of the Company.
5. Improve corporate governance to help achieve strategic goalsIn 2023, the Company will take the opportunity of the change of the Board of Director and the BOSto increase organizational change efforts, create a management team that matches the Company'sstrategy, stimulate the vitality of the organization and mechanisms, carry forward the guiding spiritof hard work and entrepreneurship, maximize the enthusiasm and creativity of employees, andpromote their active contributions to the Company. The Company will continue to strengthen theconstruction of talent echelons, normalize the promotion of stable frontline work, and increaseemployees' sense of belonging and stimulate the internal power of the enterprise by continuouslyimproving systems and the policy transparency, and enhancing the grassroot atmosphere.
6. Improve the management system to continuously improve the operational efficiencyIn 2023, the Company will continue to establish and improve an advanced operational management
system, continuously improve production organization efficiency and operational managementperformance, actively promote the construction of a lean production system, strengthen the awarenessof cost reduction and efficiency increase among all employees from top to bottom, deeply implementcost reduction and control throughout the entire process, all elements, and all aspects, establish ascientific and efficient management system, and further refine the management of procurement costs,production costs, operational costs, etc., effectively reducing various costs and expenses of theCompany, achieving collaborative improvement in operational efficiency, and ensuring the sustained,stable, and healthy development of the Company.(IV) Risks faced by the Company and countermeasures
1. Macroeconomic risks
The Company is engaged in the production and sales of petrochemical and polyester chemical fiberproducts. The petrochemical and polyester fiber industry is closely related to the development of theworld economy and China's economy, and people's livelihood. The product prices and sales areaffected by macroeconomic fluctuations and changes in supply and demand. With the acceleration ofeconomic globalization and integration, national macro-control and cyclical fluctuations of the worldeconomy will have an impact on the development of the industry. If the global economic growthslows down or declines, it will directly have a direct impact on the Company's business, operatingresults and financial position end demand.
2. Safety and environmentally-friendly production risks
As the awareness of eco-friendliness increases and the government's environmentally-friendlyrequirements become stricter, the Company strictly implements the Production Safety Law of thePeople's Republic of China, Environmental Protection Law of the People's Republic of China andother relevant laws and regulations to ensure safe and environmentally-friendly production, andearnestly fulfills our social responsibility. Since the operation of the main production entity, no majorsafety and eco-friendliness incidents have occurred. With the expansion of the Company's productionscale and the extension of the industry chain, preventing safety and eco-friendliness accidents hasbecome the focus of the Company's operation and management.In order to reduce industrial safety and environmental production risks, the Company strengthens
subsequent investment in eco-friendliness, including but not limited to the purchase and update ofequipment and facilities, the construction and implementation of organizational systems, etc. TheCompany will actively carry out safety standardization and acceptance work in accordance with thearrangements for the construction of Class 1, 2, and 3 national safety standards, and focus on buildinga safety standard management system. The Company will implement the dual-prevention workmechanism combining safety risk classification and control and hidden danger investigation andmanagement, strengthen safety training, increase safety investment, practice the strategy ofpromoting safety based on science and technology, promptly remove safety and eco-friendlinesshazards, and eliminate all possibilities of major accidents.
3. Risk of significant fluctuations of crude oil price
In 2023, the United States imposed restrictions on Russia's crude oil exports, and OPEC countriesresponded by reducing production. Crude oil prices may fluctuate significantly with the internationalsituation, geopolitics, and other factors. More than 80% of the cost of the industrial chain where theCompany is located is determined by upstream raw materials. Fluctuations in crude oil prices willaffect the price fluctuations of various products in the industrial chain, exacerbating the uncertaintyof raw material costs and operating costs, as well as the accompanying increase in sales risks andfluctuations in enterprise benefits. The Company will continue to optimize the inventory strategy toreduce the adverse impact of product price fluctuations in the industry chain on the Company’soperations as a result of crude oil price fluctuations.
4. Environmental protection risks
The production and operation of the Company must comply with multiple environmental protectionlaws and regulations related to air, water quality, waste disposal, and public health and safety, obtainrelevant environmental protection permits, and accept inspections from relevant nationalenvironmental protection departments. In recent years, the Company has invested a large amount offunds and technical strength in the transformation of environmental protection equipment andproduction processes, and has treated and discharged pollutants in accordance with nationalenvironmental protection requirements. However, with the promotion of vertical integration of theindustrial chain of listed companies, the expansion of production scale, and the possibility of stricter
environmental protection standards and broader and stricter pollution control measures beingimplemented in China or Brunei in the future, the Company's environmental protection costs andmanagement difficulties will also increase.
XII. Reception of research, communication, interview and other activities during the reporting period
| Time | Location | Reception method | Visitor type | Visitor | Main content of communication and information provided | Index of basic facts of research |
| February 28, 2022 | The Company’s meeting room | Field research | Institution | Five institutions including Guosen Securities and Springs Capital | Company operation and industry development trend | Record Form of 2022 Hengyi Petrochemicals’ Investor Relation Activities as of March 1, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: 2022年2月28日恒逸石化调研活动信息.pdf (cninfo.com.cn) |
| March 10, 2022 | The Company’s meeting room | Field research | Institution | One institution, i.e., CITIC Securities | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of March 11, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: Hengyi Petrochemical: 2022年3月10日恒逸石化调研活动信息.pdf (cninfo.com.cn) |
| April 26-27, 2022 | Teleconference | Telephone communication | Institution | 93 institutions including Shenwan Hongyuan and TF Securities | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of April 27, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: Hengyi Petrochemical: 2022年4月27日恒逸石化调研活动信息.pdf (cninfo.com.cn) |
| May 6, 2022 | Teleconference | Others | Institutions and individuals | Investors who participated in the Company's 2021 annual results briefing | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of May 7, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: Hengyi Petrochemical: 2022年5月7日恒逸石化调研活动信息.pdf (cninfo.com.cn) |
| June 15, 2022 | The Company’s meeting room | Telephone communication | Institution | 12 institutions including Haitong Securities and Haitong International | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of June 15, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: 000703恒逸石化调研活动信息20220615.pdf (cninfo.com.cn) |
| June 17, 2022 | The Company’s meeting room | Telephone communication | Institution | Three institutions including HSBC Qianhai Securities | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of June 17, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: 000703恒逸石化调研活动信息20220617.pdf (cninfo.com.cn) |
| July 8, 2022 | The Company’s | Field research | Institution | 25 institutions including | Company operation and industry | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of July 11, 2022 on SZSE (cninfo.com.cn): Hengyi |
| Time | Location | Reception method | Visitor type | Visitor | Main content of communication and information provided | Index of basic facts of research |
| meeting room | Northeast Securities | development trend | Petrochemical: 000703恒逸石化调研活动信息20220708.pdf (cninfo.com.cn) | |||
| July 20, 2022 | p5w.net "Investor Relations Interactive Platform" | Others | Institutions and individuals | Investors who participated in the online roadshow for the issuance of convertible bonds of the Company | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of July 20, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: 000703恒逸石化调研活动信息20220720.pdf (cninfo.com.cn) |
| August 23-24, 2022 | Teleconference | Telephone communication | Institution | 157 institutions including CITIC Securities and TF Securities | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of August 24, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: 000703恒逸石化调研活动信息20220824.pdf (cninfo.com.cn) |
| August 30, 2022 | p5w.net "Investor Relations Interactive Platform" | Others | Institutions and individuals | Investors who participated in the Company's 2022 semi-annual results briefing | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of August 31, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: Hengyi Petrochemical: 2022年8月31日恒逸石化调研活动信息.pdf (cninfo.com.cn) |
| October 28, 2022 | Teleconference | Telephone communication | Institution | 157 institutions including CITIC Securities and Shenwan Hongyuan Securities | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of October 31, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: 000703恒逸石化调研活动信息20221031.pdf (cninfo.com.cn) |
| November 10, 2022 | The Company’s meeting room | Field research | Institution | 10 institutions including CITIC Securities | Company operation and industry development trend | Record Form of Hengyi Petrochemical’s Investor Relation Activities as of November 11, 2022 on SZSE (cninfo.com.cn): Hengyi Petrochemical: 000703恒逸石化调研活动信息20221111.pdf (cninfo.com.cn) |
Section IV Corporate Governance
I. Basic status of corporate governanceDuring the reporting period, the Company strictly complied with the Company Law, Securities Law,Code of Corporate Governance for Listed Companies in China, Rules Governing the Listing of Shareson Shenzhen Stock Exchange, Shenzhen Stock Exchange Self-Regulatory Guidelines for ListedCompanies No. 1 - Standardized Operation of Listed Companies on the Main Board and otherrelevant laws and regulations. Based on the actual situation of the Company, we continuouslyimproved and enhanced the standardized operation of corporate governance, and established a soundinternal management and control system to regulate the operation of the Company. The Company'sinternal control system has been increasingly improved, and the standardization level of governancehas been continuously increased.
1. Shareholders and shareholders' general meetings
During the reporting period, the Company strictly complied with laws and regulations, and convenedand held shareholders' general meetings in a standardized manner. The convening and holdingprocedures of the shareholders' general meetings, the qualifications of the persons attending theshareholders' general meetings, the voting procedures and voting results of the shareholders' generalmeetings all complied with the Company Law, Rules for the Shareholders' Meetings of ListedCompanies and other laws and regulations and the Company's Rules of Procedure for the GeneralMeeting of Shareholders, which ensured that all shareholders, especially minority shareholders, couldfully exercise their rights. The Company's shareholders' general meetings during the reporting periodwere convened by the BOD, and lawyers were engaged to witness the meetings on site, ensuring thelegality of the meeting convening, holding and voting procedures, and safeguarding the legitimaterights and interests of the Company and shareholders.
2. The Company and the controlling shareholder
The Company is completely independent from the controlling shareholder and its subsidiaries interms of business, personnel, assets, organization, and finance. The Company has independent andcomplete business and the ability to operate independently. The Company's BOD, BOS and internal
organizations operate independently. The controlling shareholder of the Company can strictlyregulate its behavior. Major decisions of the Company were made by the shareholders’ generalmeetings in accordance with the law. The controlling shareholder exercised its shareholder rights inaccordance with the law, and did not directly or indirectly interfere with the decision-making andoperating activities of the Company beyond the shareholders’ general meetings of the Company.
3. Directors and the BOD
The Company elected directors in strict accordance with the selection and appointment proceduresstipulated in the Company Law and the Articles of Association of the Company. The number andcomposition of the BOD of the Company met the requirements of laws and regulations. All directorsof the Company could carry out their work in accordance with the Rules of Procedure of the BOD,attend the board meetings and shareholders' general meetings on time with a conscientious andresponsible attitude, faithfully perform their duties in the interests of the Company and allshareholders, actively participate in training on relevant knowledge, study relevant laws andregulations, and promote the standardized operation and scientific decision-making of the BOD. Theindependent directors of the Company could perform their duties independently in accordance withthe corresponding rules and regulations, without being influenced by the actual controller of theCompany or other units or persons that have an interest in the Company.During the reporting period, the procedures of the meetings of the BOD of the Company were incompliance with relevant regulations, the minutes of the meeting were complete and true, and thedisclosure of relevant information at the meetings was timely, accurate and adequate. The BOD ofthe Company set up four special committees, namely the Remuneration Assessment and NominationCommittee, the Risk Control Committee, the Audit Committee and the Strategy and InvestmentCommittee, which have played an important role in promoting the standardized operation and healthydevelopment of the Company.
4. Supervisors and the BOS
The Company's BOS consists of three supervisors, one of whom is an employee representative. Thenumber and personnel of the Company's BOS met the requirements of relevant laws and regulationsand the Company's Articles of Association. All the supervisors of the Company could perform theirduties conscientiously in accordance with the requirements of the Company's Rules of Procedure ofthe BOS and other relevant regulations, attend the shareholders’ general meeting, attend the meetings
of the BOD as nonvoting delegates, convene the meetings of the BOS according to the prescribedprocedures, diligently and conscientiously supervise the legality and compliance of the Company'sfinancial situation, directors and senior executives, and safeguard the legitimate rights and interestsof the Company and its shareholders.
5. Stakeholders
The Company fully respected and safeguarded the legitimate rights and interests of relevantstakeholders to achieve a win-win situation for customers, suppliers, employees, shareholders andother stakeholders and jointly promote the Company's sustainable and steady development.
6. Information disclosure and transparency
The Company strictly followed the requirements of relevant laws and regulations as well as theInformation Disclosure Management System and the Investor Relations Management System toconscientiously fulfill our information disclosure obligations, disclose the Company's operation andmanagement and matters that have significant impact on the Company in a true, accurate, completeand timely manner, coordinate the relationship between the Company and investors, receive investors’visits, and answer investors’ inquiries. The Company's designated newspapers and websites such asSTCN, China Securities Journal, Shanghai Securities News, Securities Daily and CNINFO(http://www.cninfo.com.cn) for the Company's information disclosure.
7. Performance evaluation and incentive and restraint mechanismsThe Company is gradually improving and establishing fair and transparent performance evaluationstandards and incentive and restraint mechanisms for directors, supervisors and senior executives.The appointment of senior executives of the Company was open and transparent, in line with lawsand regulations.Whether there is any material difference between the actual situation of corporate governanceof the Company and the laws, administrative regulations and the rules on the governance oflisted companies issued by the China Securities Regulatory Commission
□Yes ?No
There is no material difference between the actual situation of corporate governance of the Companyand laws, administrative regulations and the rules on the governance of listed companies issued bythe China Securities Regulatory Commission.
II. Independence of the Company in guaranteeing the Company's assets, personnel, finance,organization, and business relative to the controlling shareholder and actual controllerThe Company carried out operations in strict accordance with the Company Law, Articles ofAssociation and other laws, regulations and rules, established a sound corporate governance structureof the Company, and maintained independent from the controlling shareholder in terms of business,personnel, assets, organization, and finance. The Company has an independent and complete businesssystem and the ability to operate independently.
1. Business: The Company has an independent and complete supply, R&D, production and salessystem, has the ability to operate independently in the market, conduct business, accounting anddecision-making, assume responsibilities and risks independently, and does not rely on the controllingshareholder or other any related parties.
2. Personnel: The Company has formed a complete system for labor, personnel and salarymanagement, and an independent human resources management department to manage labor,personnel and salary independently of the controlling shareholder. The Company has an independentworkforce. The Company's directors, supervisors and senior executives are legally elected inaccordance with the Company Law, Articles of Association and other relevant laws, regulations andrules. The Company's senior executives all work in the Company and receive remuneration, and donot hold any positions other than directors and supervisors in the controlling shareholder and itssubsidiaries.
3. Assets: The Company has a clear property relationship with the controlling shareholder, andindependently owns complete legal person assets, production and supporting facilities, land, plant,machinery and equipment related to production and operation, as well as ownership and right to useof trademarks, patents and non-patented technologies. The Company has full control over all assets,and its assets and funds are not occupied by the controlling shareholder to the detriment of theinterests of the Company.
4. Organization: The Company established a sound organizational system to meets its ownproduction and operation needs. The functional departments operate independently and smoothly,and there is no subordination relationship between the controlling shareholder and the functionaldepartments.
5. Finance: The Company has an independent financial and accounting department equipped withfull-time financial personnel. The Company established an independent accounting system and astandardized financial management system, and financial decisions were made independently. TheCompany opened an independent bank account to independently make tax declarations and performtax obligations in accordance with the law. There is no shared bank account or mixed tax paymentwith the controlling shareholder.III. Competition in the same industry
□ Applicable ?Not applicable
IV. Information on the annual general meeting and extraordinary general meetings of shareholders held in the reporting period
1. Annual general meeting of shareholders held during the reporting period
| Session of meeting | Type of meeting | Percentage of investors | Date of meeting | Disclosure date | Resolutions |
| First Extraordinary General Meeting of Shareholders in 2022 | Extraordinary general meeting of shareholders | 49.002% | January 17, 2022 | January 18, 2022 | 1. Reviewed and approved the Proposal on Changing the Scope of Business of the Company and Amendment of the Articles of Association; |
| The second Extraordinary General Meeting of Shareholders in 2022 | Extraordinary general meeting of shareholders | 42.853% | February 14, 2022 | February 15, 2022 | 1. Reviewed and approved the Proposal on the Estimated Amount of Daily Related-party Transactions in 2022; 2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its Controlled Subsidiaries and Mutual Insurance Amount between Controlled Subsidiaries in 2022; 3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business in 2022; 4. Reviewed and approved the Proposal on Carrying out Commodity Hedging Business in 2022; 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by the Controlling Shareholder and Related-party Transactions; 6. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's Directors, Supervisors and Senior Executives; 7. Reviewed and approved the Proposal on the Subsidiary’s Investment and Construction of the 1.2 mtpa Caprolactam-Polyamide Industry Integration and Supporting Project; 8. Reviewed and approved the Proposal on Guarantee Provision to Hainan |
| Session of meeting | Type of meeting | Percentage of investors | Date of meeting | Disclosure date | Resolutions |
| Yisheng Petrochemical Co., Ltd. and related-party transactions. | |||||
| 2021 Annual General Meeting of Shareholders | Annual general meeting of shareholders | 52.644% | May 17, 2022 | May 18, 2022 | 1. Reviewed and approved the Proposal on the "Annual Report 2021" and Its Summary; 2. Reviewed and approved the Work Report of the BOD for the Year 2021; 3. Reviewed and approved the Work Report of the BOS for the Year 2021; 4. Reviewed and approved the Report on the Financial Accounts for the Year 2021; 5. Reviewed and approved the Proposal on Profit Distribution of the Company for the Year 2021; 6. Reviewed and approved the Self-Evaluation of Internal Control for the Year 2021; 7. Reviewed and approved the Proposal on the Annual Deposit and Use of Raised Funds in 2021; 8. Reviewed and approved the Proposal on Renewal of the Appointment of the Accounting Firm; 9. Reviewed and approved the Proposal on Addition of Daily Related-party Transactions for the Year 2022; 10. Reviewed and approved the Proposal on Extending the Validity Period of the Resolution of the Shareholders' Meeting on the Public Issuance of Convertible Corporate Bonds; 11. Reviewed and approved the Proposal on Submission to the General Meeting of Shareholders to Extend the Validity Period of Authorizing the BOD to Handle Specific Matters Regarding the Company’s Public Offering of Convertible Corporate Bonds. |
| The Third Extraordinary General Meeting of | Extraordinary general | 48.98% | August 15, | August 16, | 1. Reviewed and approved the Proposal on Changing the Registered Address and |
| Session of meeting | Type of meeting | Percentage of investors | Date of meeting | Disclosure date | Resolutions |
| Shareholders in 2022 | meeting of shareholders | 2022 | 2022 | Amending the Articles of Association of the Company | |
| The Forth Extraordinary General Meeting of Shareholders in 2022 | Extraordinary general meeting of shareholders | 51.58% | November 14, 2022 | November 15, 2022 | 2. Reviewed and approved the Proposal on Providing Affiliated Entrusted Loans to a JV Company - Yisheng New Materials. |
| The Fifth Extraordinary General Meeting of Shareholders in 2022 | Extraordinary general meeting of shareholders | 51.444% | December 22, 2022 | December 23, 2022 | 1. Reviewed and approved the Proposal on the Estimated Amount of Daily Related-party Transactions in 2023; 2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its Controlled Subsidiaries and Mutual Insurance Amount between Controlled Subsidiaries in 2023; 3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business in 2023; 4. Reviewed and approved the Proposal on Carrying out Commodity Hedging Business in 2023; 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by the Controlling Shareholder and Related-party Transactions; 6. Reviewed and approved the Proposal on Guarantee Provision to Hainan Yisheng Petrochemical Co., Ltd. and related-party transactions; 7. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's Directors, Supervisors and Senior Executives; 8. Reviewed and approved the Proposal on Electing Company Directors; 9. Reviewed and approved the Proposal on Increasing the Expected Amount of Daily Related-party Transactions for 2022 and Adjusting the Implementation Entities of related-party transactions; |
2. The preference shareholders whose voting rights have been restored request the convening of an extraordinary general meeting
□ Applicable ?Not applicable
V. Directors, supervisors and senior executives
1. Basic information
| Name | Title | Employment status | Gender | Age | Start date of term | End date of term | Number of shares held at the beginning of the period (shares) | Stock options | Number of restricted shares granted (shares) | Increase of shares in current period (shares) | Decrease of shares in current period (shares) | Other changes (shares) | Number of shares held at the end of the period (shares) | Reasons for increase or decrease of shares |
| Qiu Yibo | President and CEO | Current | Male | 36 | May 15, 2015 | September 13, 2023 | 1,365,000 | 1,365,000 | ||||||
| Fang Xianshui | Vice President and Financial Director | Current | Male | 59 | May 16, 2011 | September 13, 2023 | 4,777,500 | 4,777,500 | ||||||
| Ni Defeng | Director | Current | Male | 45 | August 25, 2017 | September 13, 2023 | 6,051,500 | 6,051,500 | ||||||
| Lou Jianchang | Director, Vice President | Current | Male | 61 | September 14, 2021 | September 13, 2023 | 0 | 0 | ||||||
| Mao Ying | Director, Financial Director, Vice President | Then | Female | 42 | September 14, 2021 | December 6, 2022 | 0 | 0 | ||||||
| Wu Zhong | Director, Vice President | Current | Male | 34 | September 14, 2021 | September 13, 2023 | 109,200 | 109,200 | ||||||
| Luo Dan | Director | Current | Female | 40 | December 22, 2022 | September 13, 2023 | 0 | 0 | ||||||
| Chen | Independent | Current | Male | 58 | August 25, 2017 | September 13, 2023 | 0 | 0 |
| Name | Title | Employment status | Gender | Age | Start date of term | End date of term | Number of shares held at the beginning of the period (shares) | Stock options | Number of restricted shares granted (shares) | Increase of shares in current period (shares) | Decrease of shares in current period (shares) | Other changes (shares) | Number of shares held at the end of the period (shares) | Reasons for increase or decrease of shares |
| Sanlian | Director | |||||||||||||
| Yang Bozhang | Independent Director | Current | Male | 66 | August 25, 2017 | September 13, 2023 | 0 | 0 | ||||||
| Yang Liuyong | Independent Director | Current | Male | 59 | August 25, 2017 | September 13, 2023 | 0 | 0 | ||||||
| Wang Songlin | Executive Vice President | Current | Male | 53 | May 16, 2011 | September 13, 2023 | 5,778,500 | 5,778,500 | ||||||
| Chen Liancai | Vice President | Current | Male | 56 | August 25, 2017 | September 13, 2023 | 3,640,000 | 3,640,000 | ||||||
| Zhao Donghua | Vice President | Current | Male | 38 | September 15, 2021 | September 13, 2023 | 327,600 | 327,600 | ||||||
| Zheng Xingang | Secretary of the BOD | Current | Male | 44 | August 28, 2017 | September 13, 2023 | 2,912,000 | 2,912,000 | ||||||
| Li Yugang | Chairman of the BOS | Current | Male | 46 | September 15, 2021 | September 13, 2023 | 218,400 | 218,400 | ||||||
| Jin Danwen | Supervisor | Current | Female | 37 | September 14, 2021 | September 13, 2023 | 109,200 | 109,200 | ||||||
| Ni Jinmei | Supervisor | Current | Female | 48 | August 28, 2021 | September 13, 2023 | 273,000 | 273,000 | ||||||
| Total | -- | -- | -- | -- | -- | -- | 25,561,900 | 25,561,900 | -- |
Where there is any dismissal of directors, supervisors or senior executives during thereporting periodDue to job adjustments, Ms. Mao Ying applied in writing to resign from her position as a director,vice president, and financial director of the Company on December 6, 2022. According to the relevantprovisions of the Company's Articles of Association, the written resignation application submitted byMs. Mao Ying took effect immediately.Changes in directors, supervisors and senior executives of the Company
| Name | Positions held | Date | Reason | |
| Mao Ying | Director, Vice President and Financial Director | Then | December 6, 2022 | Job changes |
| Fang Xianshui | Financial Director | Currently employed | December 6, 2022 | Currently employed |
| Luo Dan | Director | Currently employed | December 22, 2022 | Currently employed |
2. Employment status
Professional background, main work experience and main responsibilities of the currentdirectors, supervisors and senior executives of the Company
(1) Directors
Qiu Yibo, male, born in December 1987, Chinese nationality, with a bachelor degree and used towork as Manager of Investment Management Department of Sinopec Chemical Sales Co., Ltd. EastChina Branch and Hengyi Petrochemical Co., Ltd. He is currently President and CEO of HengyiPetrochemical Co., Ltd., and concurrently serves as Director of Zhejiang Hengyi Group Co., Ltd.,Executive Director of Suqian Yida New Materials Co., Ltd., Executive Director of Zhejiang YizhiInformation Technology Co., Ltd., President of Fujian Yijin Chemical Fiber Co., Ltd., Vice Presidentof Zhejiang Hengyi Polyamide Co., Ltd., Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd.,Director of Dongzhan Shipping Co., Ltd., Executive Director of Ningbo Jinhou Industrial InvestmentCo., Ltd., Director of Zhejiang Xianfeng Data Technology Co., Ltd., Executive Director of Zhejiang
Hengyi Hanlin Enterprise Management Co., Ltd., Executive Director of Hangzhou Yibo InvestmentManagement Co., Ltd., and Director of Zhejiang Hengyi Polymer Co., Ltd.Fang Xianshui, male, born in March 1964, Chinese nationality, senior economist with a bachelordegree and has more than 30 years of production management experience in chemical fiber industry.He used to work as General Manager of Hangzhou Hengyi Industrial Corporation, General Managerof Hangzhou Hengyi Chemical Fiber Co., Ltd., and General Manager of Zhejiang Hengyi Group Co.,Ltd. He is currently the Vice President of Hengyi Petrochemical Co., Ltd., and concurrently servesas the Director of Zhejiang Hengyi Group Co., Ltd., President and CEO of Hangzhou HengyiInvestment Co., Ltd., Executive Director and President of Zhejiang Hengyi Petrochemical Co., Ltd.,President of Zhejiang Hengyi Polymer Co., Ltd., President of Zhejiang Yisheng Petrochemical Co.,Ltd., President of Zhejiang Hengyi High-Tech Materials Co., Ltd., Director of Zhejiang BalingHengyi Caprolactam Co., Ltd., Director of Hong Kong Tianyi International Holding Co., Ltd.,Director of Good Park International Investment Co., Ltd., Director of Yisheng Dahua PetrochemicalCo., Ltd., Executive Director of Hainan Yisheng Trading Co., Ltd., Executive Director of ZhejiangYixin Chemical Fiber Co., Ltd., Executive Director and CEO of Ningbo Hengyi EngineeringManagement Co., Ltd., President of Hainan Yisheng Petrochemical Co., Ltd., Executive Director andPresident of Zhejiang Hengyi Petrochemical Sales Co., Ltd., President of Ningbo Hengyi TradingCo., Ltd., Director of Hong Kong Yisheng Co., Ltd., Executive Director of Shanghai HengyiPolyester Fiber Co., Ltd., President of Zhejiang Hengyi International Trading Co., Ltd., Director ofFujian Yijin Chemical Fiber Co., Ltd., Director of Zhejiang Yisheng New Materials Co., Ltd.,Director of Zhejiang Hengyi Polyamide Co., Ltd., Executive Director of Zhejiang Hengkai EnergyCo., Ltd., Executive Director of Zhejiang Shuangtu New Materials Co., Ltd., Executive Director ofZhejiang Hengyi Energy Co., Ltd., Executive Director of Zhejiang Xiaoyi Supply Chain ManagementCo., Ltd., Director of Dalian Yisheng Investment Co., Ltd., and Director of Haining Hengyi NewMaterials Co., Ltd.Ni Defeng, male, born in January 1978, Chinese nationality, a Senior Economist with a doctoraldegree and has nearly 20 years of work experience in finance and investment. He used to work asAuditor of Pan-China Certified Public Accountants, Manager of Finance Department, Manager of
Investment Development Department, and Assistant to CEO of Zhejiang Hengyi Group Co., Ltd.,and investment Director of Hengyi Petrochemical Co., Ltd. He is currently Director of HengyiPetrochemical Co., Ltd., and concurrently serves as Director and CEO of Zhejiang Hengyi Group Co.,Ltd., Director of Zhejiang Xianfeng Data Technology Co., Ltd., Director of Hangzhou HengyiInvestment Co., Ltd., Director of Zhejiang Hengyi Polyamide Co., Ltd., Director of Lanping CountyQingdian Bay Zinc Industry Co., Ltd., Director of Hainan Hengshengyuan International TourismDevelopment Co., Ltd., Executive Director and CEO of Hangzhou Jinglin Asset Management Co.,Ltd., Director of Dalian Yishengyuan Real Estate Co., Ltd., and President and CEO of HangzhouJinyi Industrial Co., Ltd.Lou Jianchang, male, born in November 1962, Chinese nationality, a professor-level senior engineerwith a master degree of engineering conferred by China University of Petroleum (Beijing) and anMBA degree conferred by University of Houston. He used to worked as Deputy Chief Dispatcher ofGeneral Dispatching Office, Deputy Plant Manager, and Plant Manager of Sinopec YanshanPetrochemical Company Refinery; Deputy General Manager of Sinopec Yanshan PetrochemicalCompany; Deputy Director of Sinopec Materials and Equipment Department and Deputy GeneralManager of Sinopec International Business Co., Ltd. He is currently Director and Vice President ofHengyi Petrochemical Co., Ltd., and concurrently serves as Director of Fujian Yijin Chemical FiberCo., Ltd., and Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd.Wu Zhong, male, born in July 1989, Chinese nationality, with a bachelor degree conferred byZhejiang Gongshang University. He used to worked as Deputy General Manager of Zhejiang HengyiPetrochemical Sales Co., Ltd. and General Manager of Ningbo Hengyi Industrial Co., Ltd. He iscurrently Director and Vice President of Hengyi Petrochemical Co., Ltd., and concurrently serves asDirector of Fujian Yijin Chemical Fiber Co., Ltd., Executive Director of Hainan Hengjing TradingCo., Ltd., and Executive Director of Zhejiang Hengyi International Trade Co., Ltd.Luo Dan, female, born in September 1983, Chinese nationality, with a bachelor's degree fromZhejiang Agricultural and Forestry University and a master's degree in MPA from Wuhan Universityof Technology. The former Manager of the Comprehensive Department of the ComprehensiveManagement Center of Hengyi Petrochemical Co., Ltd., and the current General Manager of the
Investment Management Department of Hengyi Petrochemical Co., Ltd.Chen Sanlian, male, Chinese nationality, born in November 1964, without overseas permanentresidency or party affiliation; holds a bachelor of law degree, an independent director qualificationcertificate and a lawyer qualification certificate. He successively served as Editorial Director andDeputy Editor of Lawyers and Legal System magazine, lawyer of High Mark Law Firm, and DeputySecretary-general and Secretary-general of the Lawyers Association of Zhejiang. He is currently full-time Vice President of the Lawyers Association of Zhejiang, Member of the Zhejiang ProvincialPolitical Consultative Conference, Vice President of the Association of Intellectuals of Zhejiang,Visiting Professor of the Law School of Zhejiang University of Technology, arbitrator of theShanghai International Economic and Trade Arbitration Commission, and arbitrator of the HangzhouArbitration Commission. He is an independent director of Hengyi Petrochemical Co., Ltd. andconcurrently serves as an independent director of Calxon Group Co., Ltd., Zheshang DevelopmentGroup Co., Ltd., and Viewshine Ltd.Yang Liuyong, male, born in March 1964, Chinese nationality, and a doctoral degree. He is currentlya professor of finance at Zhejiang University and Deputy Dean of Academy of Financial Research,Zhejiang University. He joined the Communist Party of China in 1984 and started working in 1987.He studied agricultural economics at Zhejiang University from 1980 to 1984 for a bachelor degreeand from 1984 to 1987 for a master degree. He has been a teacher in the Department of Finance ofZhejiang University since 1987 (including studying in the Department of Agricultural Economics andManagement of Zhejiang University from 1996 to 2001 [as a doctoral student]), and is also anindependent director of Hengyi Petrochemical Co., Ltd.Yang Bozhang, male, born in July 1957, Chinese nationality, a senior accountant with a junior collegedegree. He used to work as Vice President of Zhejiang Association of CFO, Director and VicePresident of Transfar Group Co., Ltd., General Manager of Zhejiang Transfar Jiangnan DadiDevelopment Co., Ltd., CEO of Hangzhou Transfar Science and Technology City Company,Secretary of the Party Committee of Transfar Logistics Group Co., Ltd., President of the BOS ofZhejiang Wynca Chemical Industrial Group Co., Ltd. (600596), and Director of Zhejin Trust Co.,Ltd. He is currently President of Transfar Group Finance Co., Ltd., President of Hangzhou Kezhu
Investment and Development Co., Ltd., and the President of Hangzhou Kerong Real Estate Co., Ltd.He is also an independent director of Hengyi Petrochemical Co., Ltd.
(2) Supervisors
Li Yugang, male, born in November 1977, Chinese nationality, economist, international registeredinternal auditor, and company lawyer; with a master degree and more than ten years of audit workexperience. He used to work as First Deputy Director of Audit Department of the BOD and DeputyDirector of Legal Department of Shagang Group, and is currently Audit and Legal Director of HengyiPetrochemical Co., Ltd.Jin Danwen, female, born in April 1986, Chinese nationality, with a master of accounting degreeconferred by Hangzhou Dianzi University. She holds qualifications of Chinese certified publicaccountant and intermediate accountant. She used to work as Director of Finance Department ofHengyi Industries Sdn. Bhd. She is currently General Manager of Fund Management Department ofHengyi Petrochemical Co., Ltd. and Director of Finance Department of Hengyi Industries Sdn. Bhd.She concurrently serves as Director of Hangzhou Jinyi Industrial Co., Ltd., and Director of ZhejiangHengyi High-Tech Materials Co., Ltd.Ni Jinmei, female, born on March 21, 1976; Chinese nationality, economist. She used to work asGeneral Manager of Zhejiang Hengyi Polymer Co., Ltd., and General Manager of ComprehensiveManagement Center of Zhejiang Hengyi Petrochemical Co., Ltd. Currently, she is Executive Directorand General Manager of Hangzhou Yijing Chemical Fiber Co., Ltd.
(3) Senior management
Wang Songlin, male, born in April 1970, Chinese nationality, master degree, has more than 20 yearsof experience in the petrochemical fiber industry. He used to be the deputy director of CTPIC, theoffice director of CNCFC, the general manager of China Chemical Fiber Economic InformationNetwork, and the general manager of Beijing Cotton Zhanwang Information Consulting Co., Ltd. Heis currently the executive vice president of Hengyi Petrochemical Co., Ltd., the director of ZhejiangBaling Hengyi Caprolactam Co., Ltd., the chairman of Haining Hengyi New Materials Co., Ltd., theexecutive director and president of Haining Hengyi Thermal Power Co., Ltd., and director of JiangsuNew Horizon Advanced Functional Fiber Innovation Center Co., Ltd.
Chen Liancai, male, born in June 1967, Chinese nationality, bachelor degree, senior engineer, withmore than 20 years of experience in the petrochemical industry. He used to be the deputy generalmanager of Sinopec Zhenhai Refining & Chemical Branch, the deputy general manager of GuodianSinopec Ningxia Energy Chemical Co., Ltd., and the general manager of Sinopec Great Wall EnergyChemical (Ningxia) Co., Ltd. He is currently the Chief Executive Officer (CEO) of Hengyi Bruneiand the Vice President of Hengyi Petrochemical Co., Ltd.Zhao Donghua, male, born in February 1985, Chinese nationality, Master of Law from ZhejiangUniversity, and EMBA from China Europe International Business School; intermediate economist.He used to serve as the representative of securities affairs, the deputy manager of the legal affairsdepartment, and the assistant general manager of the marketing center of Hengyi Petrochemical Co.,Ltd. He is currently the general manager of Zhejiang Hengyi Petrochemical Sales Co., Ltd. and thevice president of Hengyi Petrochemical Co., Ltd.Zheng Xingang, male, born in December 1979, Chinese nationality, bachelor degree from HuazhongUniversity of Science and Technology, master degree from Wuhan University, EMBA degree fromFudan University, senior economist. He has more than 10 years of investment and financing workexperience. He once served as deputy manager of the capital operation department, deputy managerof the investment development department, and director of the office of the BOD of HengyiPetrochemical Co., Ltd. He is currently the secretary of the BOD and assistant to the president ofHengyi Petrochemical Co., Ltd.Posts held in corporate shareholders
| Name of incumbent | Name of corporate shareholder | Post held | Start date of term | Whether to receive remuneration allowance in shareholder units |
| Qiu Yibo | Zhejiang Hengyi Group Co., Ltd. | Director | September 26, 2017 | No |
| Fang Xianshui | Zhejiang Hengyi Group Co., Ltd. | Director | October 18, 1994 | No |
| Fang Xianshui | Hangzhou Hengyi Investment Co., Ltd. | President & GM | October 8, 2022 | No |
| Ni Defeng | Zhejiang Hengyi Group Co., Ltd. | Director & President | September 26, 2017 | Yes |
| Ni Defeng | Hangzhou Hengyi Investment Co., Ltd. | Director | December 28, 2016 | No |
| Description of the position in the shareholder unit | None | |||
Posts held in other entities
| Name of incumbent | Name of other entities | Posts held in other entities | Start date of term | Is remuneration paid by other entities? |
| Qiu Yibo | Hangzhou Yibo Investment Management Co., Ltd. | Executive Director | March 17, 2016 | No |
| Qiu Yibo | Ningbo Jinhou Industry Investment Co., Ltd. | Manager & Executive Director | May 3, 2016 | No |
| Qiu Yibo | Zhejiang Yizhi Information Technology Co., Ltd. | Executive Director & GM | February 7, 2022 | No |
| Qiu Yibo | Zhejiang Hengyi Hanlin Enterprise Management Co., Ltd. | Executive Director & GM | August 20, 2021 | No |
| Qiu Yibo | Fujian Yijin Chemical Fiber Co., Ltd. | President | January 26, 2018 | No |
| Qiu Yibo | Zhejiang Hengyi Polyamide Co., Ltd. | Vice President | January 14, 2022 | No |
| Qiu Yibo | Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Director | June 9, 2022 | No |
| Qiu Yibo | Suqian Yida New Materials Co., Ltd. | Executive Director | January 19, 2018 | No |
| Qiu Yibo | Dongzhan Shipping Co., Ltd. | Director | November 30, 2017 | No |
| Qiu Yibo | Zhejiang Xianfeng Data Technology Co., Ltd. | Director | June 7, 2016 | No |
| Qiu Yibo | Zhejiang Hengyi Polymer Co., Ltd. | Director | November 29, 2022 | No |
| Name of incumbent | Name of other entities | Posts held in other entities | Start date of term | Is remuneration paid by other entities? |
| Fang Xianshui | Zhejiang Yixin Chemical Fiber Co., Ltd. | Executive Director | July 26, 2017 | No |
| Fang Xianshui | Hainan Yisheng Trading Co., Ltd. | Executive Director | August 14, 2014 | No |
| Fang Xianshui | Zhejiang Hengkai Energy Co., Ltd. | Executive Director | December 18, 2017 | No |
| Fang Xianshui | Ningbo Hengyi Trading Co., Ltd. | President | May 24, 2011 | No |
| Fang Xianshui | Ningbo Hengyi Engineering Management Co., Ltd. | GM & Executive Director | November 27, 2014 | No |
| Fang Xianshui | Zhejiang Hengyi Energy Co., Ltd. | Executive Director & GM | September 24, 2022 | No |
| Fang Xianshui | Zhejiang Xiaoyi Supply Chain Management Co., Ltd. (Zhejiang Xiaoyi Supply Chain Management Co., Ltd.) | Executive Director & GM | April 19, 2022 | No |
| Fang Xianshui | Zhejiang Hengyi Petrochemical Co., Ltd. | Executive Director & GM | July 26, 2004 | No |
| Fang Xianshui | Zhejiang Hengyi High-Tech Materials Co., Ltd. | President & manager | October 15, 2007 | No |
| Fang Xianshui | Zhejiang Hengyi Polymer Co., Ltd. | President | September 5, 2000 | No |
| Fang Xianshui | Zhejiang Yisheng Petrochemical Co., Ltd. | President | May 12, 2015 | No |
| Fang Xianshui | Zhejiang Hengyi Petrochemical Sales Co., Ltd. | Manager & Executive Director | July 24, 2017 | No |
| Fang Xianshui | Hainan Yisheng Petrochemical Co., Ltd. | President | June 23, 2014 | No |
| Fang Xianshui | Shanghai Hengyi Polyester Fiber Co., Ltd. | Executive Director | May 14, 2015 | No |
| Fang Xianshui | Fujian Yijin Chemical Fiber Co., Ltd. | Director | January 26, 2018 | No |
| Name of incumbent | Name of other entities | Posts held in other entities | Start date of term | Is remuneration paid by other entities? |
| Fang Xianshui | Yisheng Dahua Petrochemical Co., Ltd. | Director | April 29, 2006 | No |
| Fang Xianshui | Zhejiang Hengyi Polyamide Co., Ltd. | Director | August 12, 2013 | No |
| Fang Xianshui | Dalian Yisheng Investment Co., Ltd. | Director | September 29, 2007 | No |
| Fang Xianshui | Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Director | January 10, 2008 | No |
| Fang Xianshui | Zhejiang Yisheng New Materials Co., Ltd. | Director | November 27, 2017 | No |
| Fang Xianshui | Haining Hengyi New Materials Co., Ltd. | Director | October 5, 2019 | No |
| Fang Xianshui | Hong Kong Tianyi International Holding Co., Ltd. | Director | September 17, 2009 | No |
| Fang Xianshui | Good Park International Investment Co., Ltd. | Director | September 17, 2009 | No |
| Fang Xianshui | Hong Kong Yisheng Co., Ltd. | Director | June 27, 2014 | No |
| Ni Defeng | Hangzhou Jinyi Industrial Co., Ltd. | President & GM | September 30, 2019 | No |
| Ni Defeng | Hangzhou Jinglin Asset Management Co., Ltd. | Executive Director & GM | March 12, 2018 | No |
| Ni Defeng | Zhejiang Hengyi Polyamide Co., Ltd. | Director | January 27, 2015 | No |
| Ni Defeng | Lanping County Qingdian Bay Zinc Co., Ltd. | Director | January 16, 2006 | No |
| Ni Defeng | Hainan Hengshengyuan International Tourism Development Co., Ltd. | Director | February 26, 2018 | No |
| Ni Defeng | Dalian Yishengyuan Real Estate Co., Ltd. | Director | March 29, 2018 | No |
| Name of incumbent | Name of other entities | Posts held in other entities | Start date of term | Is remuneration paid by other entities? |
| Ni Defeng | Zhejiang Xianfeng Data Technology Co., Ltd. | Director | June 7, 2016 | No |
| Lou Jianchang | Fujian Yijin Chemical Fiber Co., Ltd. | Director | October 22, 2021 | No |
| Lou Jianchang | Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Director | June 9, 2022 | No |
| Wu Zhong | Hainan Hengjing Trading Co., Ltd. | Executive Director & manager | August 21, 2021 | No |
| Wu Zhong | Zhejiang Hengyi International Trade Co., Ltd. | Executive Director & GM | July 1, 2022 | No |
| Wu Zhong | Fujian Yijin Chemical Fiber Co., Ltd. | Director | October 22, 2021 | No |
| Jin Danwen | Hainan Hengjing Trading Co., Ltd. | Supervisor | August 21, 2021 | No |
| Jin Danwen | Hangzhou Jinyi Industrial Co., Ltd. | Director | February 28, 2021 | No |
| Jin Danwen | Zhejiang Hengyi High-Tech Materials Co., Ltd. | Director | February 28, 2021 | No |
| Jin Danwen | Zhejiang Hengyi Engineering Management Co., Ltd. | Supervisor | January 29, 2018 | No |
| Jin Danwen | Zhejiang Hengyi Hanlin Enterprise Management Co., Ltd. | Supervisor | August 20, 2021 | No |
| Jin Danwen | Haining Hengyi New Materials Co., Ltd. | Supervisor | October 27, 2021 | No |
| Wang Songlin | Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. | Executive Director & GM | August 4, 2021 | No |
| Wang Songlin | Jiangsu New Horizon Advanced Functional Fiber Innovation Center Co., Ltd. | Director | July 19, 2018 | No |
| Name of incumbent | Name of other entities | Posts held in other entities | Start date of term | Is remuneration paid by other entities? | |
| Wang Songlin | Haining Hengyi New Materials Co., Ltd. | President | June 29, 2018 | No | |
| Ni Jinmei | Hangzhou Yijing Chemical Fiber Co., Ltd. | Executive Director & GM | May 29, 2019 | No | |
| Posts held in other entities | None | ||||
Punishments of the Company’s current and outgoing directors, supervisors and seniormanagement by securities regulators during the reporting period in the previous three yearsOn September 9, 2022, the Company received the Administrative Supervision Measures DecisionLetter ([2022] No. 25) issued by the Guangxi Regulatory Bureau, i.e., Decision on Measures to IssueWarning Letter to Wuzhong. In accordance with Article 170 (2) of the Securities Law of the People'sRepublic of China, the Guangxi Regulatory Bureau decided to adopt the regulatory measures to issuea warning letter to Wuzhong. For details, please refer to the Announcement on the Receipt of WarningLetter from Guangxi Regulatory Bureau by Company Directors (Announcement No. 2022-097)disclosed on September 17, 2022 in the STCN, China Securities Journal, Shanghai Securities News,Securities Daily, and CNINFO (www.cninfo. com. cn).
3. Remuneration of directors, supervisors and senior managementDecision-making procedures, basis for determination, and actual payment of remuneration ofdirectors, supervisors, and senior managementThe Company passed the Salary and Performance Appraisal Management System for SeniorManagement Staff (reviewed and approved at the third meeting of the eighth session of the BOD) toconduct performance appraisal and pay remuneration to the Company's directors, supervisors andsenior management. The annual remuneration of directors, supervisors and senior managers whoreceive remuneration from the Company in 2022 (including total remuneration of basic salary,bonuses, allowances, subsidies, employee benefits and various insurance premiums, public reservefunds and other forms of pre-tax payment from the Company) is released in accordance with theCompany’s relevant regulations, and based on the Company’s operating conditions and the duties
and work performance evaluation of relevant personnel by BOD. During the reporting period, theremunerations of the Company's directors, supervisors and senior management have been paid on amonthly basis.Upon agreement reached at the first meeting of the eleventh BOD of the Company on September 15,2020 and the fifth extraordinary general meeting of shareholders of the Company on October 12,2020, the allowance standard of the independent director was adjusted to RMB 150,000 per personper year (including Tax), allowances are paid on an average monthly basis.Remuneration of directors, supervisors and senior management during the reporting period ofthe Company
Currency unit: RMB 10,000
| Name | Title | Gender | Age | Employment status | Total pre-tax remuneration received from the Company | Whether to get remuneration from related parties of the Company |
| Qiu Yibo | President and CEO | Male | 36 | Current | 142.13 | No |
| Fang Xianshui | Vice President and Financial Director | Male | 59 | Current | 142.13 | No |
| Ni Defeng | Director | Male | 45 | Current | -- | Yes |
| Lou Jianchang | Director, Vice President | Male | 61 | Current | 128.13 | No |
| Mao Ying | Director, Vice President and Financial Director | Female | 42 | Then | 101.60 | No |
| Wu Zhong | Director, Vice President | Male | 34 | Current | 106.13 | No |
| Luo Dan | Director | Female | 40 | Current | 2.43 | No |
| Chen Sanlian | Independent Director | Male | 59 | Current | 15.00 | No |
| Yang Bozhang | Independent | Male | 66 | Current | 15.00 | No |
| Name | Title | Gender | Age | Employment status | Total pre-tax remuneration received from the Company | Whether to get remuneration from related parties of the Company |
| Director | ||||||
| Yang Liuyong | Independent Director | Male | 59 | Current | 15.00 | No |
| Wang Songlin | Executive Vice President | Male | 53 | Current | 117.93 | No |
| Chen Liancai | Vice President | Male | 56 | Current | 118.08 | No |
| Zhao Donghua | Vice President | Male | 38 | Current | 106.13 | No |
| Zheng Xingang | Secretary of the BOD | Male | 44 | Current | 60.00 | No |
| Li Yugang | Chairman of the BOS | Male | 46 | Current | 53.13 | No |
| Jin Danwen | Supervisor | Female | 37 | Current | 47.53 | No |
| Ni Jinmei | Supervisor | Female | 47 | Current | 63.48 | No |
| Total | -- | -- | -- | -- | 1,233.83 | -- |
Note: On December 23, 2022, the Company issued the Announcement on the Resolution of the FifthExtraordinary General Meeting of Shareholders in 2022 (Announcement No.: 2022-140). Accordingto the announcement, Ms. Luo Dan was appointed as a director of the Company, and thus only thesalary for December was disclosed.
VI. Performance of Duties by the Directors during the reporting period
1. Performance of the BOD during the reporting period
| Session of meeting | Date of meeting | Disclosure date | Resolutions |
| The Sixteenth Meeting of the Eleventh Session of the BOD | January 20, 2022 | January 21, 2022 | 2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its Controlled Subsidiaries and Mutual Insurance Amount between Controlled Subsidiaries in 2022; 3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business in 2022; 4. Reviewed and approved the Proposal on Carrying out Commodity Hedging Business for the Year 2022; 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by the Controlling Shareholder and Related-party Transactions; 6. Reviewed and approved the Proposal on External Donation for Poverty Alleviation; 7. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's Directors, Supervisors and Senior Executives; 8. Reviewed and approved the Proposal on the Subsidiary’s Investment and Construction of the 1.2 mtpa Caprolactam-Polyamide Industry Integration and Supporting Project; 9. Reviewed and approved the Proposal on Guarantee Provision to Hainan Yisheng Petrochemical Co., Ltd. and related-party transactions; 10. Reviewed and approved the Proposal on Convening the Second Extraordinary General Meeting of Shareholders for 2022; |
| The Seventeenth Meeting of the Eleventh Session of | April 25, 2022 | April 26, 2022 | 1. Reviewed and approved the Proposal on the "Annual Report 2021" and Its Summary; 2. Reviewed and approved the First Quarterly Report 2022 (Full Text & Body); |
| Session of meeting | Date of meeting | Disclosure date | Resolutions |
| the BOD | 4. Reviewed and approved the Report on the Financial Accounts for the Year 2021; 5. Reviewed and approved the Proposal on Profit Distribution of the Company for the Year 2021; 6. Reviewed and approved the Report on Social Responsibilities 2021; 7. Reviewed and approved the Self-Evaluation of Internal Control for the Year 2021; 8. Reviewed and approved the Proposal on Deposit and Use of Raised Funds for the Year 2021; 9. Reviewed and approved the Proposal on Renewal of the Appointment of the Accounting Firm; 10. Reviewed and approved the Proposal on Closing Investment Projects with Raised Funds and Permanently Replenishing Working Capital with Surplus Raised Funds; 11. Reviewed and approved the Proposal on Addition of Daily Related-party Transactions for the Year 2022; 12. Reviewed and approved the Proposal on Capital Increase and related-party transactions of Hangzhou Jingxin Supply Chain Management Co., Ltd.; 13. Reviewed and approved the Proposal on Changes of Accounting Policies; 14. Reviewed and approved the Proposal on Retrospective Adjustment of Previous Financial Statements due to Changes in Accounting Policies; 15. Reviewed and approved the Proposal on Convening 2021 Annual General Meeting of Shareholders; | ||
| The Eighteenth Meeting of the Eleventh Session of the BOD | May 6, 2022 | May 7, 2022 | 1. Reviewed and approved the Proposal on Extending the Validity Period of the Resolution of the Shareholders' Meeting on the Public Issuance of Convertible Corporate Bonds; 2. Reviewed and approved the Proposal on Submission to the General Meeting of Shareholders to Extend the Validity Period of Authorizing the BOD to Handle Specific Matters Regarding the Company’s Public Offering of Convertible Corporate Bonds; 3. Reviewed and approved the Proposal on Adding Temporary Proposals and Supplementary Notices to the 2021 Annual General Meeting of Shareholders. |
| Session of meeting | Date of meeting | Disclosure date | Resolutions |
| The Nineteenth Meeting of the Eleventh Session of the BOD | July 18, 2022 | July 19, 2022 | 1. Reviewed and approved the Proposal on Further Clarifying the Specific Plan for the Public Issuance of Convertible Corporate Bonds by the Company; 2. Reviewed and approved the Proposal on the Public Issuance of Convertible Corporate Bonds by the Company for Listing; 3. Reviewed and approved the Proposal on Establishing a Special Account for Raising Funds through Public Issuance of Convertible Corporate Bonds and Signing a Supervision Agreement for Raising Funds by the Company. |
| The Twentieth Meeting of the Eleventh Session of the BOD | July 28, 2022 | July 29, 2022 | 1. Reviewed and approved the Proposal on Using Raised Funds to Replace Self-raised Funds and Paid Issuance Fees for Pre-invested Raised Investment Projects; 2. Reviewed and approved the Proposal on Proposal on Using Part of the Idle Raised Funds to Temporarily Supplement Working Capital; 3. Reviewed and approved the Proposal on Changing the Registered Address and Amending the Articles of Association of the Company; 4. Reviewed and approved the Proposal on Convening the Third EGM for FY2022. |
| The Twenty-first Meeting of the Eleventh Session of the BOD | August 21, 2022 | August 22, 2022 | 1. Reviewed and approved the Proposal on ‘Semi-annual Report 2022’ and the Summary; 2. Reviewed and approved the Proposal on Semi-annual Special Report on Deposit and Use of Raised Funds for FY2022. |
| The Twenty-second Meeting of the Eleventh Session of the BOD | August 24, 2022 | August 25, 2022 | 1. Reviewed and approved the Proposal on Not Revising the Conversion Price of "Hengyi Convertible Bonds" |
| The Twenty-third Meeting of the Eleventh Session of the BOD | October 14, 2022 | October 15, 2022 | 1. Reviewed and approved the Proposal on Not Revising the Conversion Price of "Hengyi Convertible Bond 2" |
| The Twenty-fourth Meeting of the Eleventh | October 27, 2022 | October 28, 2022 | 1. Reviewed and approved the Proposal on the Third Quarterly Report 2022; |
| Session of meeting | Date of meeting | Disclosure date | Resolutions |
| Session of the BOD | 2. Reviewed and approved the Proposal on Increase in Estimated Amount of Daily Related-party Transactions for the Year 2022; 3. Reviewed and approved the Proposal on Provision of Entrusted Loan to the Invested Company, Yisheng New Materials; 4. Reviewed and approved the Proposal on Share Repurchase by Way of Centralized Bidding (Phase III)”; 5. Reviewed and approved the Proposal on Convening the Fourth EGM for the Year 2022; | ||
| The Twenty-fifth Meeting of the Eleventh Session of the BOD | December 6, 2022 | December 7, 2022 | 1. Reviewed and approved the Proposal on the Estimated Amount of Daily Related-party Transactions for the Year 2023; 2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its Controlled Subsidiaries and Mutual Insurance Amount between Controlled Subsidiaries for the Year 2023; 3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business for the Year 2023; 4. Reviewed and approved the Proposal on Carrying out Commodity Hedging Business for the Year 2023; 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by the Controlling Shareholder and Related-party Transactions; 6. Reviewed and approved the Proposal on Guarantee Provision to Hainan Yisheng Petrochemical Co., Ltd. and related-party transactions; 7. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's Directors, Supervisors and Senior Executives; 8. Reviewed and approved the Proposal on Electing Company Directors; 9. Reviewed and approved the Proposal on Appointing the Vice President of the Company to concurrently serve as the Financial Director; 10. Reviewed and approved the Proposal on Adjusting the Members of the Audit Committee of the Eleventh Session of the BOD of the Company; |
| Session of meeting | Date of meeting | Disclosure date | Resolutions |
| 11. Reviewed and approved the Proposal on Increasing the Expected Amount of Daily Related-party Transactions for 2022 and Adjusting the Implementation Entities of related-party transactions; 12. Reviewed and approved the Proposal on Convening the Fifth EGM for the Year 2022; |
2. Attendance of Directors in the Board Meeting and the General Meeting of Shareholders
| Attendance of Directors in the Board Meeting and the General Meeting of Shareholders | |||||||
| Name of director | Number of board meetings to attend during the reporting period | Number of on-site attendance of board meetings | Number of attendance of board meetings by means of telecommunications | Number of attendance of board meetings by entrustees | Number of absence at board meetings | Whether absent from board meetings in person for two consecutive times | Number of attendance of General Shareholders Meetings |
| Qiu Yibo | 10 | 2 | 8 | 0 | 0 | No | 6 |
| Fang Xianshui | 10 | 2 | 8 | 0 | 0 | No | 6 |
| Ni Defeng | 10 | 2 | 8 | 0 | 0 | No | 6 |
| Lou Jianchang | 10 | 2 | 8 | 0 | 0 | No | 6 |
| Mao Ying | 9 | 2 | 7 | 0 | 0 | No | 5 |
| Wu Zhong | 10 | 2 | 8 | 0 | 0 | No | 6 |
| Chen Sanlian | 10 | 2 | 8 | 0 | 0 | No | 6 |
| Yang Bozhang | 10 | 2 | 8 | 0 | 0 | No | 6 |
| Yang Liuyong | 10 | 2 | 8 | 0 | 0 | No | 6 |
| Luo Dan | 0 | 0 | 0 | 0 | 0 | No | 1 |
Description of the failure to physically attend board meetings for two consecutive times
3. Objections of directors to related issues of the Company
Whether the directors raise objections to relevant matters of the CompanyDuring the reporting period, the directors did not raise objections to the Company’s related matters.
4. Other information on directors' performance of duties
Whether directors’ suggestions to the Company are accepted?Yes □ No
Description of the directors' recommendations that were adopted or refusedDuring the reporting period, all directors of the Company strictly followed the Company Law,Securities Law, Code of Corporate Governance for Listed Companies in China, Shenzhen StockExchange Self-Regulatory Guidelines for Listed Companies No. 1 - Standardized Operation of ListedCompanies on the Main Board and the Articles of Association and Rules of Procedure for the BODto diligently carry out their work and perform their duties. They took the initiative to pay attention tothe Company's operation and management information, financial position, important matters, etc.,put forward opinions on the Company’s important decisions regarding its governance and operation,deeply discussed the proposals submitted to the BOD for review, expressed their own views andreached unanimous options after full communication and discussion. They fully considered theinterests and demands of minority shareholders when making decisions, and resolutely supervisedand promoted the implementation of the resolutions adopted at the BOD in order to make thedecisions scientific, timely and efficient and protect the legitimate rights and interests of the Companyand all shareholders.
VII. Performance of duties by the specialized committees under the BOD during the reporting period
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| Strategy and Investment Decision-making Committee | Qiu Yibo, Fang Xianshui, Ni Defeng and Yang Liuyong | 2 | January 20, 2022 | 1. Reviewed the Proposal on Carrying out Foreign Exchange Hedging Business for the Year 2022; 2. Reviewed the Proposal on Carrying out Commodity Hedging Business for the Year 2022; | The Committee strictly followed the Company Law, the Regulatory Rules of the CSRC, the Articles of Association and the Rules of Procedure for the BOD to diligently perform its duties. It put forward opinions on and unanimously approved all proposals after full communication and discussion. | Not applicable | Not applicable |
| July 15, 2022 | 1. Reviewed the Proposal on Further Clarifying the Specific Plan for the Public Issuance of Convertible Corporate Bonds by the Company; 2. Reviewed the Proposal on the Public Issuance of Convertible Corporate Bonds by the Company for Listing | ||||||
| Audit Committee | Yang Bozhang, Chen Sanlian, Yang Liuyong, Lou Jianchang and Fang Xianshui | 3 | April 20, 2022 | 1. Reviewed the Annual Report on Implementation of Internal Audit 2021; 2. Reviewed the First Quarterly Report on Internal Audit 2022; 3. Reviewed the Annual Report on Financial Final Accounts for the Year 2021; 4. Reviewed the Annual Audit Report 2021; 5. Reviewed the Annual Report 2021 (The first draft); | The Committee strictly followed the Company Law, the Regulatory Rules of the CSRC, the Articles of Association, the Rules of Procedure for the BOD and other relevant laws and regulations to diligently perform its duties. It put forward opinions on and unanimously approved all proposals after full communication and discussion | Not applicable | Not applicable |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| 6. Reviewed the First Quarterly Report 2022 (The first draft); 7. Reviewed the Self-Evaluation of Internal Control for the Year 2021; 8. Reviewed the Proposal on Deposit and Use of Raised Funds for the Year 2021; 9. Reviewed the Proposal on Summary of Funds Appropriation and Other Related Fund Transactions for Non-operating Purpose for the Year 2021; 10. Reviewed the Proposal on Renewal of the Appointment of the Accounting Firm; | |||||||
| August 19, 2022 | 1. Reviewed the Semi-annual Report 2022 (The first draft); 2. Reviewed the Proposal on Semi-annual Special Report on Deposit and Use of Raised Funds for the Year 2022; 3. Reviewed the Semi-annual Report on Internal Audit 2022; | ||||||
| October 13, 2022 | 1. Reviewed the Third Quarterly Report 2022 (The first draft); 2. Reviewed the Third Quarterly Report on Internal Audit 2022; | ||||||
| Risk | Chen | January | 1. Reviewed the Proposal on Carrying out | The Committee strictly followed the Company | Not | Not |
| Committee | Members | Number of meetings held | Date of meeting | Contents | Important opinions and recommendations made | Other performance of duties | Details of objections (if any) |
| Control Committee | Sanlian, Yang Bozhang and Lou Jianchang | 2 | 20, 2022 | Foreign Exchange Hedging Business for the Year 2022; 2. Reviewed the Proposal on Carrying out Commodity Hedging Business for the Year 2022; | Law, the Regulatory Rules of the CSRC, the Articles of Association and the Rules of Procedure for the BOD to diligently perform its duties. It put forward opinions on and unanimously approved all proposals after full communication and discussion | applicable | applicable |
| April 20, 2022 | 1. Reviewed the Proposal on Renewal of the Appointment of the Accounting Firm; 2. Reviewed the Annual Report on Financial Final Accounts 2021; |
VIII. Performance of Duties by the BOSWhether there are any risks found by the BOS in its supervisory activities during thereporting periodThe BOS had no objections to the matters under supervision during the reporting periodIX. Employees of the Company
1. Number, composition and education level
| Number of employees in the parent company at the end of the reporting period (person) | 10 |
| Number of employees of service in major subsidiaries at the end of the reporting period (person) | 15,637 |
| Total number of employees in service at the end of the reporting period (person) | 15,637 |
| Total number of employees receiving salaries in current period (person) | 15,637 |
| Number of retired employees whose expense is borne by the parent company and major subsidiaries (person) | 235 |
| Composition | |
| Professional composition category | Number of professional composition (person) |
| Production personnel | 13,014 |
| Sales staff | 315 |
| Technical staff | 1,732 |
| Finance staff | 156 |
| Administrative staff | 420 |
| Total | 15,637 |
| Education level | |
| Education level category | Quantity (person) |
| Master degree or above | 221 |
| Bachelor degree | 1,826 |
| College degree or below | 13,590 |
| Total | 15,637 |
2. Compensation policies
The Company implements a labor contract system, sign labor contracts with every employee inaccordance with the Labor Law of the PRC, the Labor Contract Law of the PRC and relevant laborlaws and regulations. The Company strictly implements the national employment system, laborprotection system, and social security system, pays social insurance for employees in accordance withnational regulations, sets up corresponding safety protection measures, and creates a good and safeproduction environment for employees. Through innovative management mechanisms, the Companyguides the functional system to continuously improve quality and efficiency, and to create astreamlined and efficient functional team of headquarters. The Company develops an effective salaryincentive system for the Company's financial personnel, administrative personnel, technical personnel,production personnel and sales personnel, and gives corresponding performance rewards based onthe performance evaluation of the Company, department and individual.
3. Training plans
The Company established Hengyi Enterprise University according to the needs of production andoperation and talent training, aiming to build a competitive enterprise university and support Hengyi'sglobal development. It serves as the power center and load bearing platform for Hengyi'sorganizational development, talent training, technology accumulation, and corporate transformation.The "Blue" series of talent projects are implemented in Hengyi University, to establish talent echelonsat different levels; meanwhile, it attaches importance to continuous improvement, job skill assessment,and on-the-job education promotion to enhance professional skills and effectiveness. The Companydevelops training plans for different types of employees, organizes internal and outbound trainings
according to the plan, pays special attention to job skills training, and provides certification for specialpositions and hazardous chemical operators to ensure safe production and normal operation. TheCompany also trains technical and business backbones through targeted training to improve theirbusiness capabilities.
4. The situation of labor outsourcing
| Total number of working hours of labor outsourced (hours) | 10,946,124 |
| Total remuneration paid for labor outsourced (RMB) | 263,430,852 |
X. The Company’s common stock profit distribution and capitalization of capital reservesDuring the reporting period, the common stock profit distribution policy, especially theformulation, implementation or adjustment of the cash dividend policyAccording to the China Securities Regulatory Commission's Notice on Further Implementing IssuesRelated to Cash Dividends of Listed Companies (ZJF [2012] No. 37), Guangxi Securities RegulatoryBureau Notice on Strengthening the Awareness of Returning Shareholders and Improving DividendMechanism (GZJF [2012] 23) and Guidelines for the Supervision of Listed Companies No. 3 - CashDividends of Listed Companies Securities Regulatory Commission Announcement [2022] No. 3 andother documents, combined with the actual situation of the Company, specific provisions has beenmade for the profit distribution decision-making procedures and profit distribution policy in theArticles of Association. In addition, it has formulated the Shareholder Dividend Return Plan for theNext Three Years (2023-2025) to better guarantee the reasonable return of all shareholders, furtherrefine the provisions of the profit distribution policy in the Articles of Association, and increase thetransparency and operability in dividend distribution decision, establish a continuous, stable andscientific return plan and mechanism for investors to ensure the continuity and stability of the profitdistribution policy. During the reporting period, the Company shall strictly implement the aboveprofit distribution policy.According to the 2021 Profit Distribution Plan approved by the Company’s 2021 Annual GeneralMeeting of Shareholders held on May 17, 2022: Based on the total number of 3,666,280,554 shares
of the Company's existing share capital, after the deduction of 79,888,281 shares that have beenrepurchased in the Company's repurchase account, 3,586,392,273 shares will be distributed as a cashdividend of RMB 2 (including tax) for every 10 shares. No bonus shares will be given and no publicreserve funds will be converted into share capital. The Company published the Announcement ofDividend Distribution of Hengyi Petrochemical Co., Ltd. for the Year 2021, and completed thedistribution on July 7, 2022.
| Special description of cash dividend policy | |
| Whether it meets the requirements of the Company's Articles of Association or the resolutions of the General Meeting of Shareholders: | Yes |
| Whether the dividend standard and proportion are clear and definite: | Yes |
| Were the relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether independent directors have performed their due diligence and played their due role: | Yes |
| Whether small and medium shareholders have sufficient opportunities to express their opinions and demands, and whether their legitimate equities are fully protected: | Yes |
| If the cash dividend policy is adjusted or changed, whether the conditions and procedures are compliant and transparent: | Not applicable |
The Company was profitable during the reporting period and the parent company’s profitavailable for distribution to ordinary shareholders was positive, but no distribution plan forcash dividend for ordinary shares was proposed
□ Applicable ?Not applicable
Profit distribution and capitalization of capital reserve during the reporting periodAccording to the plan of the Company, no cash dividends or bonus shares will be distributed this year,and no public reserve funds will be converted into share capital.XI. Implementation of the Company's SIPs, ESOPs or other employee incentivesThere are no equity incentive plans, employee stock ownership plans, or other employee incentivemeasures and their implementation during the reporting period of the Company.
XII. Establishment and implementation of internal control system during the reporting period
1. Establishment and implementation
During the reporting period, the Company continuously updated and optimized its internal controlsystem in accordance with the Basic Standard for Enterprise Internal Control and other relevantregulations to adapt to the changing external environment and internal management requirements.The Company's internal control system is sound and reasonable and covers the main aspects of itsoperation and management. It works well and there is no significant omission.
(1) Internal environment. The Company has an organizational structure that is suitable for itsbusiness, which has a clear division of labor and sound and complete functional departments, and theCompany implements the principle of separation of incompatible duties to make these departmentsrestrain with each other.
(2) Risk assessment. The Company collects relevant information in a comprehensive and systematicmanner according to its strategic objectives, development thoughts and the industry characteristics toconduct risk assessment timely and weigh risks and benefits, then determines risk response strategiesto keep the risks under control.
(3) Control activities. The Company continuously sorts out and improves the system according tothe current state of its management and development needs, without comprising the legality, normality,feasibility and operability.
(4) Information and communication. The Company has established an information andcommunication system to define the procedures for the collection, processing and transmission ofinformation related to internal control, in order to build a smooth communication line and promoteeffective conduct of internal control.
(5) Supervision. The Company has established a corporate governance mechanism, so that theindependent directors and the BOS are able to independently perform their supervisory duties andindependently conduct evaluation and provide recommendations on the Company's management. Aspecial internal audit body is set up under the Audit Committee of the BOD to carry out internal auditwork independently according to law in order to realize the effective supervision of the managementand effective operation of the internal control system.
2. Details of significant internal control deficiency identified during the reporting period
□ Yes √ No
XIII. The Company’s management and control over subsidiaries during the reporting periodAs of the end of the reporting period, the Company has 48 subsidiaries. During the reporting period,in order to strengthen the management, regulate the internal operation and promote the healthydevelopment of subsidiaries, the Company developed and improved the Comprehensive ManagementSystem of Subsidiaries in accordance with the requirements for the standardized operation of listedcompanies, to provide for the establishment of a sound governance structure and its operation,operational business decision-making, financial management, information management, investmentdecision-making management, inspection and assessment, etc. Also, the Company requiressubsidiaries to implement the Internal Reporting System for Important Information, etc., whichclearly stipulates the procedures for reporting and reviewing important matters, to timely track thegovernance, financial position, production and operation, project construction, safety andenvironmental protection and other significant matters of the subsidiaries, in order to timely fulfillthe information disclosure obligations. To improve the standardized operation of its subsidiaries, theAudit Department and Legal Department of the Company provides guidance on, supervision andevaluation of the establishment and implementation of the internal control system of each subsidiary,and supervises the continuous improvement and effective operation of each internal control systemof the Company.XIV. Internal control self-evaluation report or internal control audit report
1. Internal control self-evaluation report
| Disclosure date of full text of Internal Control Evaluation Report | April 20, 2023 |
| Disclosure index of full text of Internal Control Evaluation Report | http://www.cninfo.com.cn |
| Proportion of total assets included in the evaluation scope to that of the Company’s consolidated | 100.00% |
| financial statements | ||
| Proportion of operating income included in the evaluation to that of the Company’s consolidated financial statements | 100.00% | |
| Defect Identification Standard | ||
| Category | Financial reports | Financial reports Non-financial reports |
| Qualitative criteria | ⑴Identification standard of major defects: ①lack of democratic decision-making process; ② huge errors caused by decision-making process; ③ violation of national laws and regulations and punishment;④ serious loss of middle or senior management members and senior technicians; ⑤ frequent negative news in the media, involving a wide range; ⑥ lack of system or system failures in major business;⑦ failure to rectify major or significant internal control defects. ⑵Identification standard of significant defects: ① Imperfect democratic decision-making procedures; ② decision-making procedures leading to general errors;③ violation of internal regulations of the Company, resulting in losses;④ outflow of many business personnel in key positions; ⑤ negative news appeared on the media, involving local region;⑥ defects in important business systems or systems; ⑦ failure to rectify material or general deficiencies in internal control. ⑶Identification standard of general defects: ①low efficiency of decision-making process; ② violation of internal rules and regulations without losses; ③ serious loss of business personnel in general positions; ④ negative news in the media, with little impact; ⑤ defects in general business systems; ⑥ failure to rectify general defects; ⑦ other defects. | ⑴Major defects: The negative news about the safety, eco-friendliness, social responsibility, practice ethics and operation of the enterprise has been spread all over the country, has been specially investigated by the government or regulatory agencies, and has caused continuous special reports by the public media. As a result, the enterprise has adverse events such as capital loan and recovery, suspension or revocation of administrative license, pledge of assets, and a large number of claims (occurrence of level-I mass disturbance). ⑵Significant defects: The negative news about the safety, eco-friendliness, social responsibility, practice ethics and operation of the enterprise has been reported by the public media for three times in a row, and has been concerned and investigated by the industry or regulatory agencies, and has caused adverse effects within the industry (occurrence of level-II mass disturbance). ⑶General defects: The negative news about the safety, eco-friendliness, social responsibility, practice ethics and operation of the enterprise has been reported by the public media for three times in a row, and has been concerned and investigated by the industry or regulatory agencies, and has caused adverse effects within the industry (occurrence of level-III or level-IV mass disturbance) |
| Quantitative standard | ⑴Major defects: The overall impact | ⑴Major defects: direct financial loss: |
| level is higher than the importance level (1% of the audited net assets of the previous year). ⑵Significant defects: 0.2% of the audited net assets of the previous year < overall importance level < 1% of the audited net assets of the previous year. ⑶General defects: The overall importance level is less than 0.2% of the audited net assets of the previous year. | RMB 50 million or above; personnel health and safety impact: death of more than 10 people, or serious injury of more than 50 people. ⑵Significant defects: direct financial loss: RMB 10 million (included) to RMB 50 million; personnel health and safety impact: death of more than 3 (included) but less than 10 people, or serious injury of more than 10 (included) but less than 50 people. ⑶General defects: direct financial loss: less than RMB 10 million; personnel health and safety impact: death of less than 3 people, or serious injury of less than 10 people. | |
| Number of major defects in financial report (piece) | 0 | |
| Number of major defects in non-financial report (piece) | 0 | |
| Number of significant defects in financial report (piece) | 0 | |
| Number of significant defects in non-financial report (piece) | 0 | |
2. Internal control audit report
| Reviewed parts in the internal control audit report | |
| In our opinion, Hengyi Petrochemical Co., Ltd. maintained effective internal control, in all material respects, in accordance with the Basic Norms for Enterprise Internal Control and relevant regulations at December 31, 2022. | |
| Disclosure of internal control audit report | Disclosure |
| Date of full-text disclosure for Internal Control Audit Report | April 20, 2023 |
| Full-text disclosure index for the Internal Control Audit Report | CNINFO (http://www.cninfo.com.cn) |
| Category of opinions | Opinion type in the Internal Control Audit Report |
| Whether there are major defects in | No |
the non-financial report
Whether the accounting firm has issued an internal control audit report with modified andqualified opinions
□Yes ?No
Whether the opinions in the internal control assurance report issued by the accounting firm areconsistent with those in the self-evaluation report issued by the BOD?Yes □ NoXV. Self-examination and rectifications through the special campaign on corporate governanceof listed companiesIn strict accordance with the Company Law, the Securities Law and other relevant laws andadministrative regulations, and the Articles of Association, Rules of Procedure for the BOD, Rules ofProcedure for the BOS and rules of procedure for special committees and other internal rules andregulations, the Company, adhering the principle of seeking truth from facts, conducted self-examination against the CSRC’s self-examination checklists for the special campaign on corporategovernance of listed companies, which covered a total of seven aspects, involving a total of 119questions and answers. The Company carefully sorted out and filled in the self-examination system,and completed self-examination on April 25, 2022.This self-examination revealed that the Company’s governance follows the Company Law, SecuritiesLaw, Guidelines for Standardized Operation, Guidelines for Articles of Association of ListedCompanies, and other laws and regulations. The Company is under relatively sound corporategovernance and standardized operation and there is no major mistake.
Section V Environmental and Social ResponsibilitiesI. Major environmental issuesWhether the listed company and its subsidiaries are the key pollutant discharge unitsannounced by the environmental protection departments??Yes □ NoEnvironmental protection related policies and industry standardsThe Company and its subsidiaries strictly abided by national and local environmental protection lawsand relevant rules and regulations, including Environmental Protection Law, Air Pollution Preventionand Control Law, Water Pollution Prevention and Control Law, Law of the PRC on the Preventionand Control of Environment Pollution Caused by Solid Wastes, Noise Pollution Prevention andControl Law, Environmental Protection Tax Law, Soil Pollution Prevention and Control Law,Regulations on the Administration of Construction Project Environmental Protection, and PollutantDischarge Permit Management Regulations. All pollutants are strictly discharged in accordance withrelevant standards, including: Emission Standards of Pollutants for Synthetic Resin Industry(GB31752-2015), Emission Standard of Air Pollutants for Boilers (GB13271-2014), EmissionStandards for Odor Pollutants (GB14554-93), Standard for Pollution Control on Hazardous WasteStorage (GB18597-2001), Emission Standard for Industrial Enterprises Noise at Boundary(GB12348-2008), and Standard for Pollution Control of General Industrial Solid Waste Storage andDisposal Sites (GB18599-2020).Environmental protection administrative permits
| SN | Holder | Certificate name | Certificate No. | Issuer | Validity period |
| 1 | Hengyi Limited | Emission Permit | 91330000765215943G001Y | Hangzhou Municipal Ecology and Environment Bureau | August 27, 2023 |
| 2 | Hengyi High-Tech | Emission Permit | 913301006680033406001Q | Hangzhou Municipal Ecology and Environment Bureau | November 25, 2026 |
| 3 | Hengyi Polymer | Emission Permit | 913301097245283880001P | Hangzhou Municipal Ecology and Environment Bureau | November 2, 2026 |
| 4 | Hengyi Polymer | Radiation Safety Permit | ZHFZ No. A2255 | Department of Ecology and Environment of Zhejiang Province | September 19, 2024 |
| 5 | Jiaxing Yipeng | Emission Permit | 91330411MA28BLMY30001V | Jiaxing Ecology and Environment Bureau | December 1, 2023 |
| 6 | Taicang Yifeng | Emission Permit | 91320585MA1P1GPBXM001V | Suzhou Municipal Ecology and Environment Bureau | December 30, 2027 |
| 7 | Shuangtu New Materials | Emission Permit | 91330100566050736P001Y | Hangzhou Municipal Ecology and Environment Bureau | November 26, 2026 |
| 8 | Shuangtu New Materials | Radiation Safety Permit | ZHFZ No. A3048 | Department of Ecology and Environment of Zhejiang Province | December 26, 2023 |
| 9 | Fujian Yijin | Emission Permit | 91350582MA31G07Q8C001V | Quanzhou Municipal Ecology and Environment Bureau | April 7, 2026 |
| 10 | Suqian Yida | Emission Permit | 91321311MA1UXUC8XJ001R | Suqian Municipal Ecology and Environment Bureau | July 18, 2026 |
| 11 | Suqian Yida | Radiation Safety Permit | SHFZ No. 0199 | Suqian Municipal Ecology and Environment Bureau | January 12, 2027 |
| 12 | Haining Thermal Power | Emission Permit | 91330481MA29HXML34001R | Jiaxing Ecology and Environment Bureau | July 22, 2025 |
| 13 | Haining New Materials | Emission Permit | 91330481MA29HRX724001V | Jiaxing Ecology and Environment Bureau | July 27, 2023 |
| 14 | Hangzhou Yijing | Emission Permit | 91330109MA28M4DD8Y001P | Hangzhou Municipal Ecology and Environment Bureau | November 4, 2026 |
| 15 | Hangzhou Yijing | Radiation Safety Permit | ZHFZ No. A2259 | Department of Ecology and Environment of Zhejiang Province | May 22, 2027 |
| 16 | Hengyi Caprolactam | Emission Permit | 913301006706049462 | Hangzhou Municipal Ecology and Environment Bureau | June 22, 2025 |
| 17 | Hengyi Caprolactam | Radiation Safety Permit | ZHFZ No. A3044 | Department of Ecology and Environment of Zhejiang Province | January 16, 2027 |
| 18 | Zhejiang Yisheng | Emission Permit | 91330200744973411W001W | Beilun Branch of Ningbo Municipal Ecology and Environment Bureau | December 15, 2026 |
| 19 | Zhejiang Yisheng | Radiation Safety Permit | ZHFZ No. B2005 | Department of Ecology and Environment of Zhejiang Province | November 17, 2024 |
| 20 | Yisheng Dahua | Emission Permit | 912102137873094570001R | Dalian Municipal Ecology and Environment Bureau | October 13, 2023 |
| 21 | Yisheng Dahua | Radiation Safety Permit | ZHFZ No. B0001 | Dalian Municipal Ecology and Environment Bureau | November 25, 2026 |
Industry emission standards and specific situations of pollutant emissions involved in production and business activities
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| Zhejiang Yisheng | Process wastewater | COD | Discharge after treatment | 1 | Sewage station | 50.38mg/L | GB31571-2015 | 477.9 t | 1039.84 t | Up to standard |
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage station | 0.21 mg/L | GB31571-2015 | 1.98 t | 17.35 t | Up to standard | ||
| Waste gas | SO2 | Discharge after treatment | 2 | Boiler Island | 4.82 mg/m? | DB33/2147-2018 | 24.27 t | 197.45 t | Up to standard | |
| NOX | Discharge after treatment | 2 | Boiler Island | 17.7 mg/m? | DB33/2147-2018 | 76.57 t | 859.17 t | Up to standard | ||
| Particulate matter | Discharge after treatment | 2 | Boiler Island | 1.8 mg/m? | DB33/2147-2018 | 9.19 t | 426.11 t | Up to standard | ||
| Hainan Yisheng | Waste gas | SO2 | Discharge after treatment | 2 | Boiler/thermal furnace | 53.83/98.31mg/m? | GB13223-2011、GB13271-2014 | 301.85 t | 679 t | Up to standard |
| NOx | Discharge after | 2 | Boiler/thermal furnace | 69.71/261.22mg/m? | GB13223-2011、 | 723.64 t | 989.9t | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| treatment | GB13271-2014 | |||||||||
| Smoke and ashes | Discharge after treatment | 2 | Boiler/thermal furnace | 9.34/6.51mg/m? | GB13223-2011、GB13271-2014 | 28.97 t | 232 t | Up to standard | ||
| Process wastewater | COD | Discharge after treatment | 1 | Sewage station | 30.68mg/L | GB31571-2015、GB31572-2015 | 126.83 t | 236.15 t | Up to standard | |
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage station | 0.19mg/L | GB31571-2015、GB31572-2015 | 0.74 t | 17.7 t | Up to standard | ||
| Hengyi Caprolactam | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 8.33 | GB31571-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment station | 136mg/L | GB31571-2015 | 95.17 t | 127.51 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment station | 0.3mg/L | GB31571-2015 | 4.76 t | 6.37t | Up to standard | ||
| Total phosphorus | Discharge after | 1 | Sewage treatment | 0.8mg/L | DB33-887-2013 | / | / | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| treatment | station | |||||||||
| Waste gas | Smoke and ashes | Discharge after treatment | 1 | Power station | 1.56 mg/m3 | DB33/2147-2018 | 9 t | 48.2 t | Up to standard | |
| SO2 | Discharge after treatment | 1 | Power station | 3.73mg/m3 | DB33/2147-2018 | 22.48 t | 368.87 t | Up to standard | ||
| NOx | Discharge after treatment | 1 | Power station | 41.6mg/m3 | DB33/2147-2018 | 290.48 t | 482.08 t | Up to standard | ||
| Mercury and its compounds | Discharge after treatment | 1 | Power station | 0.000023mg/m3 | DB33/2147-2018 | / | / | Up to standard | ||
| Ringerman blackness | Discharge after treatment | 1 | Power station | <Level 1 | DB33/2147-2018 | / | / | Up to standard | ||
| Hengyi High-Tech | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 7.25 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after | 1 | Sewage treatment | 12.54mg/L | GB31572-2015 | 0.90 t | 3.68 t | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| treatment | station | |||||||||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment station | 0.31mg/L | GB31572-2015 | 0.03 t | 0.15 t | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after treatment | 2 | Thermal coal station | 1.55/4.41mg/m3 | DB3301/T0250-2018 | 2.36 t | 18.55 t | Up to standard | |
| SO2 | Discharge after treatment | 2 | Heat media station | 12.47/12.74mg/m3 | DB3301/T0250-2018 | 11.04 t | 60.4 t | Up to standard | ||
| NOx | Discharge after treatment | 2 | Thermal coal station | 71.46/75.25mg/m3 | DB3301/T0250-2018 | 69.88 t | 181.21 t | Up to standard | ||
| Hengyi Polymer | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 8.12 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage station | 82.74mg/L | GB31572-2015 | 2.78 t | 34.5 t | Up to standard | ||
| Ammonia nitrogen | Discharge after | 1 | Sewage treatment | 6.52mg/L | GB31572-2015 | 0.22 t | 2.42 t | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| treatment | station | |||||||||
| Waste gas | Smoke and ashes | Discharge after treatment | 3 | Heat media station | 6.58/1.73/5.46mg/m3 | DB3301/T0250-2018 | 2.13 t | 14.02 t | Up to standard | |
| SO2 | Discharge after treatment | 3 | Heat media station | 20.87/8.5/27.64mg/m3 | DB3301/T0250-2018 | 8.28 t | 29.22 t | Up to standard | ||
| NOx | Discharge after treatment | 3 | Heat media station | 123.07/118.47/122.84mg/m3 | DB3301/T0250-2018 | 58.4 t | 87.67 t | Up to standard | ||
| Hangzhou Yijing | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 7.6 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment station | 36.21mg/L | GB31572-2015 | 0.65 t | 44 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment station | 2.32mg/L | GB31572-2015 | 0.02 t | 3.08 t | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after | 1 | Heat media station | 0.57mg/m3 | DB3301/T0250-2018 | 1.17 t | 7.5 t | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| treatment | ||||||||||
| SO2 | Discharge after treatment | 1 | Heat media station | 18.95mg/m3 | DB3301/T0250-2018 | 13.88 t | 33.75 t | Up to standard | ||
| NOx | Discharge after treatment | 1 | Heat media station | 91.25mg/m3 | DB3301/T0250-2018 | 43.33 t | 101.25 t | Up to standard | ||
| Shuangtu New Materials | Waste gas | Smoke and ashes | Discharge after treatment | 2 | Heat media station | 3.34/1.79mg/m3 | DB3301/T0250-2018 | 4.132 t | 28.32 t | Up to standard |
| SO2 | Discharge after treatment | 2 | Heat media station | 14.67/17.42mg/m3 | DB3301/T0250-2018 | 25.23 t | 75.92 t | Up to standard | ||
| NOx | Discharge after treatment | 2 | Heat media station | 125.61/116.19mg/m3 | DB3301/T0250-2018 | 160.91 t | 168 t | Up to standard | ||
| Haining Hengyi Thermal Power | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 8.03 | GB8978-1996 | / | / | Up to standard |
| COD | Discharge after | 1 | Sewage treatment | 35.1mg/L | GB8978-1996 | 13.56 t | 21.33 t | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| treatment | station | |||||||||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment station | 0.39mg/L | GB8978-1996 | 0.14 t | 2.13 t | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after treatment | 1 | Heat media station | 0.61mg/m3 | DB33/2147-2018 | 1.02 t | 8.83 t | Up to standard | |
| SO2 | Discharge after treatment | 1 | Heat media station | 16.31mg/m3 | DB33/2147-2018 | 27.53 t | 61.52 t | Up to standard | ||
| NOx | Discharge after treatment | 1 | Heat media station | 45.45mg/m3 | DB33/2147-2018 | 74.49 t | 88.33 t | Up to standard | ||
| Haining Hengyi New Materials | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 8.03 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment station | 35.1mg/L | GB31572-2015 | 0.06 t | 4.26 t | Up to standard | ||
| Ammonia nitrogen | Discharge after | 1 | Sewage treatment | 0.39mg/L | GB31572-2015 | 0.004 t | 0.42 t | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| treatment | station | |||||||||
| Jiaxing Yipeng | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 7.61 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment station | 11.12mg/L | GB31572-2015 | 0.29 t | 6.03 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment station | 0.51mg/L | GB31572-2015 | 0.01 t | 0.80 t | Up to standard | ||
| Taicang Yifeng | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 7.56 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment station | 64.25mg/L | GB31572-2015 | 1.9 | 13.27 | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment station | 1.85mg/L | GB31572-2015 | 0.02 | 0.46 | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after | 1 | Heat media station | 5.52mg/m3 | GB31572-2015 | 1.71 | 9.72 | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| treatment | ||||||||||
| SO2 | Discharge after treatment | 1 | Heat media station | 1.22mg/m3 | GB31572-2015 | 0.71 | 3.8 | Up to standard | ||
| NOx | Discharge after treatment | 1 | Heat media station | 67.83mg/m3 | GB31572-2015 | 25.37 | 26.6 | Up to standard | ||
| Suqian Yida | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 7.96 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after treatment | 1 | Sewage treatment station | 27.68mg/L | GB31572-2015 | 3.57 t | 6.09 t | Up to standard | ||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment station | 0.25mg/L | GB31572-2015 | 0.03 t | 0.06 t | Up to standard | ||
| Fujian Yijin | Process wastewater | PH | Discharge after treatment | 1 | Sewage treatment station | 7.4 | GB31572-2015 | / | / | Up to standard |
| COD | Discharge after | 1 | Sewage treatment | 25.02mg/L | GB31572-2015 | 1.21 t | 3.45 t | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| treatment | station | |||||||||
| Ammonia nitrogen | Discharge after treatment | 1 | Sewage treatment station | 0.23mg/L | GB31572-2015 | 0.011 t | 0.46 t | Up to standard | ||
| Waste gas | Smoke and ashes | Discharge after treatment | 1 | Heat media station | 1.19mg/m3 | GB13271-2014 | 0.73 t | 21.49 t | Up to standard | |
| SO2 | Discharge after treatment | 1 | Heat media station | 44.18mg/m3 | GB13271-2014 | 28.13 t | 114.64 t | Up to standard | ||
| NOx | Discharge after treatment | 1 | Heat media station | 140.46mg/m3 | GB13271-2014 | 90.66 t | 179.12 t | Up to standard | ||
| Yisheng Dahua | Process wastewater | COD | Continuous | 2 | Sewage station | 62.5mg/L | 300mg/L | 585.284 t | 1680 t | Up to standard |
| Ammonia nitrogen | Continuous | 2 | Sewage station | 0.86mg/L | 30mg/L | 8.02 t | 182 t | Up to standard | ||
| Waste gas | NOX | Continuous | 3 | Boiler Island | 14.29 mg/m3 | 50 mg/m3 | 24.99 t | 405 t | Up to standard |
| Name of Company or subsidiary | Main pollutants and characteristic pollutants | Name of main pollutants and characteristic pollutants | Way to discharge | Number of discharge ports | Distribution of discharge ports | Emission concentration | Pollutant discharge standards implemented | Total emissions | Total approved emissions | Excessive emissions |
| SO2 | Continuous | 3 | Boiler Island | 1.86 mg/m3 | 35 mg/m3 | 3.595 t | 251 t | Up to standard | ||
| Smoke and ashes | Continuous | 3 | Boiler Island | 1.48 mg/m3 | 5 mg/m3 | 2.271 t | 51 t | Up to standard |
Treatment of pollutants
(1) Sewage treatment
The principle of "separation of clean water and sewage, separation of rainwater and sewage, andseparation of sewage and sewage" has been implemented, a comprehensive wastewater collectionsystem in the factory has been established, and anti-corrosion, leak-proof, and anti-seepage measureshave been taken. The polyester production wastewater was pre-treated by a steam stripping deviceand enters the sewage treatment station for treatment along with the spinning workshop wastewaterand domestic sewage. The sewage treatment station adopted a “pre-treatment + anaerobic + aerobicsecondary biochemical" treatment process, and the treated parts were reused through the reclaimedwater reuse system. The remaining wastewater was treated to meet the relevant standards in theEmission Standards of Pollutants for Synthetic Resin Industry (GB31752-2015) and then included inthe sewage pipeline network.
(2) Waste gas treatment
The principle of classified waste gas treatment was adopted, and sources of waste gas were controlled.With various treatment measures proposed in the environmental impact assessment being taken, theamount of waste gas generated was reduced, and the emission of unorganized waste gas was strictlycontrolled and reduced. The PTA feeding dust was treated by a bag filter and discharged externally.The polyester waste gas was introduced into the thermal furnace for incineration and dischargedexternally. The spinning waste gas was treated by an oil fume purifier and discharged externally. Theflue gas from the coal water slurry boiler was treated by denitrification, dust removal, anddesulfurization and discharged through the chimney.The organized emissions of dust, non-methane total hydrocarbons, and acetaldehyde were incompliance with the relevant standards in the Emission Standards of Pollutants for Synthetic ResinIndustry (GB31752-2015), the flue gas emissions from coal water slurry boilers in Hangzhou werein compliance with the Hangzhou Emission Standard of Air Pollutants for Boilers, other regions werein compliance with the relevant standards in the Emission Standard of Air Pollutants for Boilers(GB13271-2014), and the emission of odor pollutants was in compliance with the relevant standardsin the Emission Standards for Odor Pollutants (GB14554-93).
(3) (General and dangerous) Solid waste treatment situation
According to the principles of "resource utilization, reduction, and harmless disposal", the Companyestablished a ledger system, set up temporary waste storage warehouses, classified, collected, stacked,and disposed of hazardous waste and general solid waste according to their quality, and achievedcomprehensive utilization of resources. Waste oils and other hazardous wastes were entrusted to
companies with corresponding hazardous waste treatment qualifications and processing capabilitiesfor disposal, hazardous waste transfer approval procedures were handled in accordance with relevantregulations, and the hazardous waste transfer receipt system was strictly implemented. The temporarystorage of hazardous waste was strictly in compliance with the relevant provisions of the Standardfor Pollution Control on Hazardous Waste Storage (GB18597-2001), and general solid waste were incompliance with the Standard for Pollution Control of General Industrial Solid Waste Storage andDisposal Sites (GB18599-2020).Environmental emergency response plan
1. Emergency Plan for Emergent Environmental Incidents of Zhejiang Baling Hengyi CaprolactamCo., Ltd. was filed by the local environmental protection department in April 2022, and a newEmergency Plan for Emergent Environmental Incidents is being prepared.
2. Emergency Plan for Emergent Environmental Incidents of Zhejiang Hengyi High-Tech MaterialsCo., Ltd. was filled by the local environmental protection department in March 2022.
3. Emergency Plan for Emergent Environmental Incidents of Zhejiang Hengyi Polymer Co., Ltd.was filled by the local environmental protection department in August 2021.
4. Emergency Plan for Emergent Environmental Incidents of Hangzhou Yijing Chemical Fiber Co.,Ltd. was filled by the local environmental protection department in March 2022.
5. Emergency Plan for Emergent Environmental Incidents of Zhejiang Shuangtu New MaterialsCo., Ltd. was filled by the local environmental protection department in October 2022.
6. Emergency Plan for Emergent Environmental Incidents of Haining Hengyi Thermal Power Co.,Ltd. was filled by the local environmental protection department authority in June 2021.
7. Emergency Plan for Emergent Environmental Incidents of Haining Hengyi New Materials Co.,Ltd. was filled by the local environmental protection department in June 2021.
8. Emergency Plan for Emergent Environmental Incidents of Jiaxing Yipeng Chemical Fiber Co.,Ltd. was filled by the local environmental protection department in November 2020.
9. Emergency Plan for Emergent Environmental Incidents of Taicang Yifeng Chemical Fiber Co.,Ltd. was filled by the local environmental protection department in March 2022.
10. Emergency Plan for Emergent Environmental Incidents of Suqian New Materials Co., Ltd. wasfilled by the local environmental protection department in December 2021.
11. Emergency Plan for Emergent Environmental Incidents of Fujian Yijin Chemical Fiber Co., Ltd.was filled by the local environmental protection department in January 2022.
12. Emergency Plan for Emergent Environmental Incidents of Hainan Yisheng Petrochemical Co.,Ltd. was revised, reviewed and filled by the local environmental protection department in December2021.
13. Emergency Plan for Emergent Environmental Incidents of Zhejiang Yisheng Petrochemical Co.,Ltd. was revised, reviewed and filled by the local environmental protection department in September2021.
14. Emergency Plan for Emergent Environmental Incidents of Yisheng Dahua Petrochemical Co.,Ltd. was filled by the local environmental protection department in April 2020.Environmental self-monitoring programThe Company and its subsidiaries strictly comply with national and local environmental protectionlaws, regulations and relevant provisions, and establish environmental self-monitoring programs toensure that all pollutants discharged are strictly up to the discharge standards set out in and reasonablydisposed according to relevant laws and regulations. The Company carries out pollution sourcemonitoring in strict accordance with the self-monitoring program, which is publicized in the pollutionsource monitoring data management system, to ensure that all pollutants discharged are strictly up tothe standards as specified by relevant laws and regulations, and also entrusts qualified third-partymonitoring entities to carry out regular monitoring.Investments in environmental governance and protection and payment of environmentalprotection taxesAs economic bodies, enterprises not only maximize profits, but also significantly promote theeconomic wealth accumulation, the social civilization progress, and the environmentally sustainabledevelopment. The Company conscientiously implements the ecological and environmentalrequirements of the national and local governments, and effectively implements the developmentconcept of "green water and green mountains are golden mountains and silver mountains". Withpollution prevention and control as the core work and standard emissions as the foundation work, theCompany actively responded to the "blue sky defense war", vigorously promoted clean
transformation, continued to carry out waste gas pollution control, achieving positive progress andresults and effectively improving the level of the ecological environment.In 2022, the Company's key pollutant discharge units invested a total of RMB 78.5532 million inenvironmental governance and protection, and paid RMB 26.7869 million in environmentalprotection tax. The joint venture subsidiary, Zhejiang Baling Hengyi Caprolactam Co., Ltd.,continued to invest about RMB 5.5 million to transform the collection of malodorous waste gas fromthe hydrogen peroxide sewage treatment station and VOC waste gas from the intermediate tank farm;Zhejiang Shuangtu New Materials Co., Ltd. invested approximately RMB 21 million to renovate theboiler flue gas denitrification and dust removal facilities, as well as the environmental waste gas ofthe Spinning Workshop B, reducing the emission of waste gas; Suqian Yida New Materials Co., Ltd.invested nearly RMB 5 million to renovate the staple fiber VOCs waste gas facilities, adopting VOCabsorption coupling and whitening integrated equipment to absorb VOC while reducing water vaporemissions; Zhejiang Hengyi Petrochemical Co., Ltd. invested approximately RMB 500,000 in therenovation of the oil fume purifier pipeline; Zhejiang Hengyi High-Tech Materials Co., Ltd. investedapproximately RMB 16 million to renovate the boiler flue gas denitrification and dust removalfacilities; Zhejiang Hengyi Polymer Co., Ltd. invested approximately RMB 200,000 to renovate thezero-direct discharge of sewage and polyester process waste gas, reducing the emissions of waste gasand VOCs.Measures taken to reduce carbon emissions during the reporting period and their effectsThe quality of coal was improved to make chemical raw materials lighter; a series of measures suchas renovation of energy-saving lamps, combined use of air compressors and renewal of equipment toreduce the electricity consumption. Solar thermal power was used for power generation byestablishing a pilot base for solar thermal power generation and PV power generation on the roof ofthe Company's factory. Employees were encouraged to use new energy vehicles and new energy non-road mobile machinery and equipment were additionally arranged in the factory. Employees weretrained with knowledge of ecological civilization, to make them to practice the green low-carbonconcept in life and production, thematic publicity activities such as All Staff Environment Day andLow Carbon Day were carried out to make employees know more about green low-carbon.
Administrative punishment for environmental issues during the reporting period
| Name of Company or subsidiary | Reasons for punishment | Violations | Penalty results | Impacts on the production and operation of listed companies | Rectification measures of the Company |
| Shuangtu New Materials | Spinning Workshop B was not sealed during production, and all 8 production lines in the winding process were equipped with suction ducts. The induced draft fan absorbed some of the process waste gas generated during production, and the waste gas was directly discharged into the external environment through the curved exhaust outlet on the roof without treatment. | Article 45 of the Air Pollution Prevention and Control Law was violated | Fine RMB 20,000 | No impacts on the production and operation of the Company | After receiving the notice of administrative penalty, the Company immediately arranged for the environmental protection company to carry out rectification, installing oil fume purifiers, treating the waste gas from the curved exhaust outlets on the roof, and strengthening the daily supervision to ensure the normal operation of the oil fume purifiers in environmental protection facilities. |
Other environmental information that shall be made publicEnvironmental information that shall be made public had been disclosed as required.Other environmental protection informationThe Company and its subsidiaries attach great importance to eco-friendliness, and make majordecisions regarding the Company's environmental protection on a regular or irregular basis. TheCompany has established a health, safety and environment (HSE) management committee toimplement comprehensive supervision and management of the Company's HSE work; eachsubsidiary has a full-time environmental protection department responsible for daily comprehensivemanagement, supervision and inspection. The Company has established a strict monitoring systemand entrusted the environmental management and monitoring department to monitor the water, gas,sound, and slag of the whole plant to grasp the pollution dynamics.The Company shall comply with the disclosure requirements for petrochemical industryspecified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen StockExchange - Industry Information DisclosureRelevant situations of environmental accidents in listed companies
□ Applicable ?Not applicable
II. Social responsibilityPlease see the Social Responsibility Report for details.The Company shall comply with the disclosure requirements for petrochemical industryspecified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen StockExchange - Industry Information DisclosureDuring the reporting period, the Company strictly implemented the management requirements of theProduction Safety Law, strengthened safety awareness, implemented safety responsibilities, strivingto achieve the goal of zero accidents in production safety throughout the year.First, the Company adhered to the work principle of "whoever is in charge shall be responsible", fullyimplemented the production safety responsibility system, signed the Safety and EnvironmentalProtection Production Objective Responsibility Letter, achieved clear division of labor, clear
responsibilities, responsibility to each person, and work in place, forming a good situation ofresponsibility at all levels and implementation at all levels.Second, the Company continued to promote the construction of safety standardization. The roadtransportation field of the Company maintained the first level of production safety standardization,the hazardous chemical production field maintained the second level of production safetystandardization, and 80% of enterprises in the chemical fiber manufacturing field achieved the thirdlevel of production safety standardization. Other non-compliant enterprises have been makingimprovement gradually.Third, the Company strengthened the supervision of safety inspection to carry out normalmanagement of hidden dangers: The Company vigorously implemented the troubleshooting andrectification of hidden dangers, strengthened on-site supervision of key engineering projects and keyhazard, resolutely put an end to all kinds of illegal operations, and focused on the safety inspection,special safety inspection and comprehensive safety inspection before seasonal and holiday days. Thecompletion rate of hidden dangers rectification throughout the year reached 100%.Fourth, the Company increased investment in and consolidate the foundation of safe production:
During the reporting period, the Company promoted the development of science and technology,actively adopted new technologies, processes, and equipment, continuously improved productionsafety conditions, and invested a total of RMB 72.7476 million in safety costs.Fifth, the Company focused on safety education and training to improve the safety awareness of allstaff: During the reporting period, the Company conducted multiple safety training and emergencydrills with different contents and themes, organized employees to conduct limited space emergencyrescue drills and fire drills, and improved their ability to handle accidents in an emergency manner.For the principal, safe production management personnel, special operations and equipment operators,and other employees as well as contractors (subcontractors) and laborers, education and trainingactivities on production safety were carried out for 47,725 person-times throughout the year, and thecompletion rate and pass rate reached 100%, covering all key points and all persons.During the reporting period, the Company maintained safe production, and there were no major firesor personal injuries throughout the year.
III. Achievements in poverty alleviation consolidation and expansion and rural revitalizationThe Company actively responded to national policies, participated in targeted poverty alleviationactivities through various ways, and made contributions to the best of its ability in various aspects. Inorder to promote east-west cooperation, effectively fulfill the corporate social responsibility, andprovide more support for education, the Company signed a donation agreement with HongsibaoDistrict, Wuzhong City, Ningxia in August 2020, to support the construction of Hongde Hope Schoolin Hongsibao District, and has made the donation by installments according to the constructionprogress. Up to now, the Company has donated a total amount of RMB 27 million.The Company will continue to participate in poverty alleviation activities, actively interact with localgovernments for public welfare, give full play to the Company's local role as a local enterprise,feedback the society in time, and build a harmonious development atmosphere.
Section VI Important Matters
I. Fulfillment of commitments
1. Commitments that the Company’s actual controllers, shareholders, related parties, acquirers, and the Company and other relevantparties have fulfilled during the reporting period and that have not been fulfilled as of the end of the reporting period
| Commitment item | Promising party | Commitment type | Commitment content | Commitment time | Commitment period | Performance |
| Commitments made in the acquisition report or equity change report | Qiu Jianlin, the actual controller of Hengyi Group and the Company | Commitment on independent operation | He ensures the independence of Hengyi Group and its actual controller's affiliates and the Company in terms of personnel, assets, finance, organization and business in the commitment. | April 29, 2010 | Long-term effective | Up to now, Hengyi Group and the actual controller Qiu Jianlin have not violated this commitment. |
| Qiu Jianlin, the actual controller of Hengyi Group and the Company | Commitment on horizontal competition | Promise not to compete with the Company in the same industry. | April 29, 2010 | Long-term effective | Up to now, Hengyi Group and the actual controller Qiu Jianlin have not violated this commitment. | |
| Qiu Jianlin, the actual controller of Hengyi Group and the Company | Commitment on related-party transactions | Commit to regulate related-party transactions with the Company. | April 29, 2010 | Long-term effective | Up to now, Hengyi Group and the actual controller Qiu Jianlin have not violated this commitment. |
| Commitment item | Promising party | Commitment type | Commitment content | Commitment time | Commitment period | Performance |
| Qiu Jianlin, the actual controller of Hengyi Group and the Company | Commitment on the use of funds | He commits not to take up the Company's funds. | April 29, 2010 | Long-term effective | Up to now, Hengyi Group and the actual controller Qiu Jianlin have not violated this commitment. | |
| Hengyi Group and other parties | Other commitments | It is promised that the equity adjustment of Zhejiang Yisheng and Yisheng Investment will not increase the actual or potential tax burden of Hengyi Petrochemical or related subsidiaries. On the premise of the completion of this major asset reorganization, if Hengyi Petrochemical or its subsidiaries are required to pay taxes or be demanded by tax authorities for the above-mentioned equity adjustment due to the adjustment of national tax policy or other reasons, the reorganization party promised to compensate the Company for any losses incurred by it in cash and full amount timely. | April 29, 2010 | Long-term effective | The commitment remains valid and is still in the process of fulfillment. Up to now, Hengyi Group did not go against this commitment. | |
| Other commitments made to the Company's minority shareholders | Hainan Hengshengyuan International Tourism Development Co., Ltd. | Commitment on horizontal competition | It promises that it will not compete in the same industry with the production and sales of polyester fiber products, which is one of the main businesses of listed companies. Supplementary commitment: Shanghai Hengyi Polyester Fiber Co., Ltd. will permanently shut down its existing production facilities, no longer participate in or add any areas that may compete with the Company's industry in the same industry since the 100% equity transfer transaction of Shanghai Hengyi Polyester Fiber Co., Ltd. is approved at the Company’s 2016 fourth extraordinary general meeting of shareholders; Besides, Shanghai Hengyi Polyester Fiber Co., Ltd. split and disposes of its existing assets to completely solve this potential horizontal competition problem. | March 21, 2016 | Long-term effective | Up to now, Hainan Hengshengyuan International Tourism Development Co., Ltd. has not violated this commitment. |
| Whether the promise is fulfilled on time | Yes | |||||
| Commitment item | Promising party | Commitment type | Commitment content | Commitment time | Commitment period | Performance |
| If the commitment is not fulfilled within the time limit, the specific reasons for the unfulfilled commitment and the next work plan shall be explained in detail | Not applicable | |||||
2. There is a profit forecast for the Company’s assets or projects, and it is still in the profitforecast period at the reporting period, the Company provides an explanation of the reason forthe assets or projects reaching the original profit forecast
□ Applicable ?Not applicable
II. The non-operating capital occupation of the listed company by the controlling shareholderand its related partiesDuring the reporting period of the Company, there was no non-operating capital occupation of thelisted company by the controlling shareholder and its related parties.III. External Guarantees Against the Rules and RegulationsThere was no external guarantee provided by the Company which was against rules and regulationsduring the reporting period.IV. Explanation of the BOD on the latest “Non-standard Audit Report ”
□ Applicable ?Not applicable
V. Description of the BOD, the BOS, and the independent directors (if any) on the “Non-standard Audit Report” for the current reporting period issued by the accounting firm
□ Applicable ?Not applicable
VI. Description of changes in accounting policies, accounting estimates or corrections ofmaterial accounting errors compared to the financial report of the previous yearOn December 30, 2021, the Ministry of Finance issued Interpretation No. 15 of the AccountingStandards for Business Enterprises, which stipulates the accounting treatment for the sale of productsor by-products produced by enterprises before the fixed assets reach the intended usable state orduring the R&D process, the presentation of centralized fund management, and the judgment on losscontracts. The Company held the seventeenth meeting of the eleventh session of the BOD and thetwelfth meeting of the eleventh of the BOS on April 25, 2022, and respectively reviewed andapproved the Proposal on Changes in Accounting Policies. From January 1, 2022, the aforementioned
interpretation was implemented and relevant accounting policies were changed accordingly.The impact of changes in accounting policies on the financial situation at the end of the previous year,as well as the operating results and cash flows of the previous period:
| Financial statements | Report item | Consolidated statements at the end of the previous year/before changes in previous period | Consolidated statements at the end of the previous year/after changes in previous period |
| Balance Sheet | Inventory | 12,100,381,644.06 | 12,145,955,534.77 |
| Balance sheet | Other current assets | 1,640,351,289.45 | 1,594,777,398.74 |
| Balance sheet | Fixed assets | 46,117,918,498.81 | 46,102,729,538.71 |
| Balance sheet | Construction in progress | 3,896,282,585.50 | 3,875,588,007.79 |
| Balance sheet | Deferred income tax assets | 123,507,368.56 | 124,539,796.63 |
| Balance sheet | Capital reserve | 9,165,586,160.07 | 9,161,888,666.10 |
| Balance sheet | Undistributed profit | 13,623,601,273.27 | 13,593,886,419.08 |
| Balance sheet | Minority stockholders’ equity | 7,043,319,140.59 | 7,041,880,379.01 |
| Income statement | Operating income | 128,979,539,693.27 | 129,666,931,795.26 |
| Income statement | Operating cost | 121,608,031,299.09 | 122,327,177,226.63 |
| Income statement | Assets impairment loss | -146,977,289.85 | -151,107,002.11 |
| Income statement | Income tax expenses | 344,590,446.03 | 343,558,017.96 |
| Statement of cash flow | Cash received from the sales of goods and the rendering of labor services | 135,429,689,619.36 | 136,206,442,694.61 |
| Statement of cash flow | Cash payments for goods purchased and labor services received | 124,636,768,649.57 | 125,447,872,104.98 |
| Statement of cash flow | Cash payments to acquire and construct fixed assets, intangible assets and other long-term assets | 6,007,146,711.00 | 5,972,796,330.84 |
VII. Description of changes in the scope of the consolidated financial statements comparedto the financial report of the previous yearA total of 48 subsidiaries were included in the scope of consolidation in FY2022. For details, pleaserefer to Note VIII "Equity in Other Entities” in "Section X, Financial Report". Compared with theprevious year, 5 subsidiaries were included in and 1 excluded from the Company's consolidationscope in this fiscal year. For details, please refer to Note VII "Changes in the Scope of Consolidation”in "Section X, Financial Report".VIII. Appointment and dismissal of the accounting firmsCurrently employed accounting firm
| Name of the domestic accounting firm | Zhongxinghua Certified Public Accountants LLP |
| Remuneration of domestic accounting firms (RMB 10,000) | 325 |
| Consecutive years of audit services of domestic accounting firms | 4 |
| Name of CPA in domestic accounting firms | Liu Hongyue, Wang Guohai |
| Consecutive years of audit services provided by the domestic accounting firm's CPAs | 4 |
| Name of overseas accounting firms (if any) | None |
| Remuneration of overseas accounting firms (RMB 10,000) (if any) | 0 |
| Consecutive years of audit services of overseas accounting firms (if any) | None |
| Name of the certified public accountant of the overseas accounting firms (if any) (if any) | None |
| Consecutive years of CPA audit services of overseas accounting firms (if any) | None |
Whether to reappoint an accounting firm in current period
□Yes ?No
Employment of internal control auditing accounting firms, financial consultants or sponsorsDuring the reporting period, the Company hired Zhongxinghua Certified Public Accountants LLP asthe internal control audit agency, with an internal control audit fee of RMB 550,000, and the fees paidduring the reporting period were RMB 3.8 million.During the reporting period, due to the public issuance of convertible corporate bonds, the Companyhired CITIC Securities Co., Ltd. as the sponsor and lead underwriter, and paid a service fee of RMB
14.6 million during the reporting period.
IX. Delisting after the disclosure of annual report
□ Applicable ?Not applicable
X. Matters Related to bankruptcy and reorganizationDuring the reporting period, the Company did not have any bankruptcy and reorganization relatedmatters.XI. Major litigations and arbitrationsThe Company had no major litigation or arbitration matters during the reporting period.XII. Penalties and rectificationsThere were no penalties and rectifications during the reporting period of the Company.XIII. Integrity of the Company and its controlling shareholders and the actual controller
□ Applicable ?Not applicable
XIV. Significant related-party transactions
1. Related-party transactions related to daily operations
| Related party | Related party relations | Type of related-party transactions | Contents of related-party transactions | Pricing principle for related-party transactions | Price of related-party transactions | Amount of related-party transactions (RMB 10,000) | Proportions in the amount of similar transactions (%) | Approved transaction limit (RMB 10,000) | Whether it exceeds the approved quota | Settlement method of related-party transactions | Available market prices for similar transactions |
| Yisheng Dahua | Associated enterprises | Procurement of goods | PTA | Market price | Market price | 269,090 | 8.01% | 311,000 | No | Bill/cash | Market price |
| Associated enterprises | Sales of goods | PIA | Market price | Market price | 3,910 | 22.65% | 16,000 | No | Bill/cash | Market price | |
| Associated enterprises | Procurement of goods | PET bottle flakes | Market price | Market price | 0 | 0.00% | 2,000 | No | Bill/cash | Market price | |
| Hainan Yisheng | Associated enterprises | Procurement of goods | PTA | Market price | Market price | 1,600 | 0.05% | 20,000 | No | Bill/cash | Market price |
| Associated enterprises | Sales of goods | PX | Market price | Market price | 226,499 | 50.37% | 250,000 | No | Bill/cash | Market price | |
| Associated enterprises | Sales of goods | PIA | Market price | Market price | 11,588 | 67.15% | 32,000 | No | Bill/cash | Market price | |
| Associated enterprises | Provision of labor services | Transportation of goods | Market price | Market price | 620 | 1.44% | 1,000 | No | Bill/cash | Market price | |
| Yisheng New Materials | Associated enterprises | Procurement of goods | PTA | Market price | Market price | 1,576,785 | 46.92% | 1,620,000 | No | Bill/cash | Market price |
| Associated enterprises | Sales of goods | Acetic acid | Market price | Market price | 49,124 | 100.00% | 55,670 | No | Bill/cash | Market price | |
| Associated enterprises | Sales of goods | PX | Market price | Market price | 226,424 | 50.36% | 437,000 | No | Bill/cash | Market price | |
| Associated enterprises | Provision of labor services | Transportation of goods | Market price | Market price | 6,239 | 14.48% | 9,500 | No | Bill/cash | Market price | |
| Hengyi Caprolactam | JV | Procurement of goods | Steam | Market price | Market price | 16,885 | 100.00% | 18,000 | No | Bill/cash | Market price |
| JV | Procurement of goods | Electricity | Market price | Market price | 32,543 | 100.00% | 33,800 | No | Bill/cash | Market price | |
| JV | Sales of goods | Power and energy-related products | Market price | Market price | 131,889 | 70.09% | 141,400 | No | Bill/cash | Market price | |
| JV | Sales of goods | Benzene | Market price | Market price | 51,925 | 27.73% | 102,000 | No | Bill/cash | Market price | |
| JV | Provision of labor services | Transportation of goods | Market price | Market price | 566 | 1.31% | 1,000 | No | Bill/cash | Market price | |
| JV | Provision of labor services | Engineering management | Market price | Market price | 2,429 | 42.46% | 4,600 | No | Bill/cash | Market price | |
| Hengyi Polyamide | A holding subsidiary of the ultimate parent company | Sales of goods | PTA | Market price | Market price | 259 | 0.01% | 520 | No | Bill/cash | Market price |
| A holding subsidiary of the ultimate parent company | Provision of labor services | Transportation of goods | Market price | Market price | 704 | 1.63% | 900 | No | Bill/cash | Market price |
| A holding subsidiary of the ultimate parent company | Sales of goods | Auxiliary materials | Market price | Market price | 1,032 | 15.33% | 5,000 | No | Bill/cash | Market price | |
| A holding subsidiary of the ultimate parent company | Procurement of goods | Polyamide flake | Market price | Market price | 2,457 | 0.46% | 2,520 | No | Bill/cash | Market price | |
| Shaoxing Hengming | A holding subsidiary of the ultimate parent company | Procurement of goods | Polyester products | Market price | Market price | 694,707 | 13.81% | 900,000 | No | Bill/cash | Market price |
| A holding subsidiary of the ultimate parent company | Procurement of goods | Packing materials | Market price | Market price | 3,141 | 40.16% | 4,000 | No | Bill/cash | Market price | |
| A holding subsidiary of the ultimate parent company | Sales of goods | Packing materials | Market price | Market price | 3,229 | 39.67% | 5,000 | No | Bill/cash | Market price | |
| A holding subsidiary of the ultimate parent company | Sales of goods | Auxiliary materials | Market price | Market price | 3,018 | 44.81% | 2,000 | Yes | Bill/cash | Market price | |
| A holding subsidiary of the ultimate parent company | Sales of goods | Energy-related products | Market price | Market price | 33,923 | 18.03% | 45,000 | No | Bill/cash | Market price | |
| A holding subsidiary of the ultimate parent company | Provision of labor services | Transportation of goods | Market price | Market price | 6,251 | 14.51% | 8,200 | No | Bill/cash | Market price | |
| A holding subsidiary of the ultimate parent company | Provision of labor services | Engineering management | Market price | Market price | 3,091 | 54.02% | 600 | Yes | Bill/cash | Market price | |
| Hangzhou Yichen | A holding subsidiary of the ultimate parent company | Procurement of goods | Polyamide flake | Market price | Market price | 992 | 0.18% | 2,000 | No | Bill/cash | Market price |
| A holding subsidiary of the ultimate parent company | Sales of goods | PTA | Market price | Market price | 371 | 0.01% | 520 | No | Bill/cash | Market price |
| A holding subsidiary of the ultimate parent company | Provision of labor services | Transportation of goods | Market price | Market price | 2,106 | 4.89% | 2,300 | No | Bill/cash | Market price | |
| Hengqi Environmental Protection | A holding subsidiary of the ultimate parent company | Sales of goods | Power and energy-related products | Market price | Market price | 111 | 0.06% | 1,300 | No | Bill/cash | Market price |
| Total | -- | -- | 3,363,508 | -- | 4,034,830 | -- | -- | -- | |||
| Disclosure date | January 22, 2022, April 26, 2022, October 28, 2022, and December 7 2022 | ||||||||||
| Disclosure index | CNINFO: Announcement on the Estimated Amount of Daily Related-party Transactions for the Year 2022 (Announcement No.: 2022-009), Announcement on Adding Daily Related-party Transactions for the Year 2022 (Announcement No.: 2022-037), Announcement on Adding Daily Related-party Transactions for the Year 2022 (Announcement No.: 2022-111), Announcement on Increasing the Expected Amount of Daily Related-party Transactions for the Year 2022 and Adjusting the Implementation Entities of related-party transactions (Announcement No.: 2022-133) | ||||||||||
| Details of returns of large sales | None | ||||||||||
| Actual performance during the reporting period, if the total amount of the daily related-party transactions that are expected to take place in current period is forecasted by category (if any) | The above-mentioned related-party transactions are conducive to utilization of the superior resources of the Company and important related parties, ensuring the stable supply of important raw materials and the stable and continuous supply of electricity and other auxiliary materials, broadening the Company's downstream product sales channels, and realizing the Company's attempts to operate upstream products. It is conducive to consolidating and enhancing the advantages of industrial chain integration. | ||||||||||
| Reasons for the large difference between the transaction price and the market reference price (if applicable) | The related-party transactions between the Company and the above-mentioned related parties are closely related to the Company’s daily operations. Related party transactions are based on market prices or prices determined by regulatory authorities, and follow the principles of fairness, justice, and openness, and will not harm the interests of the Company and small and medium shareholders. The main business will not form a significant dependence on related parties due to the above-mentioned related transactions, nor affect the Company's independence, and will have a positive impact on the Company's current and future financial status and operating results. | ||||||||||
2. Related-party transactions arising from the acquisition or sale of assets or equity
| Related Party | Related party relations | Type of related-party transactions | Contents of related-party transactions | Pricing principle for related-party transactions | Book value of transferred assets (RMB 10,000) | Assessed value of transferred assets (RMB 10,000) | Transfer price (RMB 10,000) | Settlement method of related-party transactions | Profit and loss of transactions (RMB 10,000) | Disclosure date | Disclosure index |
| Hengyi Group | The parent company of the Company | Transfer of assets | Sell 50% equity of Hengqi Environmental Protection | Market value | 298.67 | / | 300.00 | Cash | 1.33 | ||
| Reasons for significant differences between the transfer price and the book value or assessed value (if any) | Market value | ||||||||||
| Impacts on the operating results and financial conditions of the Company | Not applicable | ||||||||||
| Achievements of performance during the reporting period in case the relevant transaction involves performance agreements | Not applicable | ||||||||||
3. Related-party transactions for joint overseas investment
| Co-investor | Related party relations | The name of the invested company | The main business of the invested company | Registered capital of the invested company (RMB 10,000) | Total assets of the invested company (RMB 10,000) | Net assets of the invested company (RMB 10,000) | Net profit of the invested company (RMB 10,000) |
| Yisheng Investment | Mr. Fang Xianshui, VP of the Company, also serves as President of Hainan Yisheng | Hainan Yisheng | Production and sales of PTA, PET bottle flakes and other chemical products | 458,000 | 1,234,567.09 | 642,597.75 | 104,001.29 |
| Ningbo Zhongjin | Mr. Fang Xianshui, Vice President of the Company, also serves as director of Yisheng New Materials | Yisheng New Materials | Production of chemical raw materials and chemical products | 300,000 | 1,228,897.79 | 286,002.94 | -25,199.76 |
| Progress in major ongoing projects of the investee (if any) | None | ||||||
4. Related credit and debt transactions
During the reporting period, the Company did not have associated credit and debt transactions.
5. Transactions with related finance companies
The Company had no transactions regarding deposits, loans, credits or other financial businesses withthe related finance companies and related parties.
6. Transactions between finance companies controlled by the Company and related partiesThe finance companies controlled by the Company had no transactions regarding deposits, loans,credits or other financial businesses with the related parties.
7. Other major related-party transactions
The Company had no other major related-party transactions during the reporting period.XV. Major contracts and their performance
1. Custody, contracting and leasing matters
(1) Custody situation
There was no custody in the Company during the reporting period.
(2) Contracting situation
There was no contracting situation during the reporting period of the Company.
(3) Leasing situation
During the reporting period, there was no leasing situation.
2. Major guarantees
Currency unit: RMB 10,000
| The Company and its subsidiaries’ external guarantees (excluding guarantees to subsidiaries) | ||||||||
| Name of the guaranteed object | Date of disclosure of announcement on guaranteed quota | Guaranteed limit | Actual date | Actual guarantee amount | Type of guarantee | Guarantee period | Whether it has been fulfilled | Whether it is a related party guarantee |
| Hainan Yisheng | January 22, 2022 | 70,000 | February 23, 2022 | 35,114.17 | General guaranty | July 5, 2022 to April 24, 2023 | No | Yes |
| Total amount of external guarantees approved during the reporting period (A1) | 70,000 | Total amount of external guarantees actually incurred during the reporting period (A2) | 35,114.17 | |||||
| Total amount of external guarantees approved at the end of the reporting period (A3) | 70,000 | Total balance of actual external guarantees at the end of the reporting period (A4) | 35,114.17 | |||||
| The Company's guarantees for subsidiaries | ||||||||
| Name of the guaranteed object | Date of disclosure of announcement on guaranteed quota | Guaranteed limit | Actual date | Actual guarantee amount | Type of guarantee | Guarantee period | Whether it has been fulfilled | Whether it is a related party guarantee |
| Hengyi Limited | January 22, 2021 | 60,255 | April 21, 2021 | 60,255 | General guaranty | April 21, 2021 to November 29, 2022 | Yes | Yes |
| January 22, 2022 | 30,222.43 | January 27, 2022 | 30,222.43 | General | January 27, 2022 to | Yes | Yes | |
| guaranty | November 18, 2022 | |||||||
| January 22, 2022 | 71,700 | March 28, 2022 | 71,700 | General guaranty | March 28, 2022 to November 121, 2023 | No | Yes | |
| January 22, 2022 | 1,015.44 | November 25, 2022 | 1,015.44 | General guaranty | November 25, 2022 to February 23, 2023 | No | Yes | |
| January 22, 2022 | 25,119 | March 25, 2022 | 25,119 | General guaranty | March 25, 2022 to May 25, 2023 | No | Yes | |
| January 22, 2022 | 101,245 | February 14, 2022 | 101,245 | General guaranty | February 14, 2022 to September 7, 2023 | No | Yes | |
| January 22, 2021 | 20,000 | January 14, 2022 | 20,000 | General guaranty | January 14, 2022 to January 28, 2023 | No | Yes | |
| January 16, 2020 | 25,809.80 | July 24, 2020 | 25,809.80 | General guaranty | July 24, 2020 to March 31, 2024 | No | Yes | |
| January 16, 2020 | 4,444.86 | May 31, 2020 | 4,444.86 | General guaranty | May 31, 2020 to May 31, 2023 | No | Yes | |
| Hengyi High-Tech | January 16, 2020 | 3,000 | May 29, 2020 | 3,000 | General guaranty | May 29, 2020 to May 25, 2022 | Yes | Yes |
| January 16, 2020 | 20,000 | January 12, 2021 | 20,000 | General guaranty | January 12, 2021 to January 14, 2022 | Yes | Yes | |
| January 22, 2021 | 50,780 | April 1, 2021 | 50,780 | General guaranty | April 1, 2021 to August 3, 2022 | Yes | Yes | |
| January 22, 2022 | 4,500 | March 31, 2022 | 4,500 | General guaranty | March 31, 2022 to October 14, 2022 | Yes | Yes |
| January 16, 2020 | 14,000 | May 29, 2020 | 14,000 | General guaranty | May 29, 2020 to May 25, 2023 | No | Yes | |
| January 22, 2022 | 52,280 | March 21, 2022 | 52,280 | General guaranty | March 21, 2022 to August 5, 2023 | No | Yes | |
| January 22, 2022 | 41,869 | March 25, 2022 | 41,869 | General guaranty | March 25, 2022 to May 10, 2023 | No | Yes | |
| January 22, 2022 | 108,370.45 | June 28, 2022 | 108,370.45 | General guaranty | June 28, 2022 to December 6, 2023 | No | Yes | |
| Hengyi Polymer | January 22, 2021 | 35,300 | March 9, 2021 | 21,180 | General guaranty | March 9, 2021 to December 30, 2022 | Yes | Yes |
| January 22, 2022 | 3,000 | February 1, 2022 | 1,800 | General guaranty | February 1, 2022 to January 28, 2023 | Yes | Yes | |
| January 22, 2022 | 37,650 | March 10, 2022 | 22,590 | General guaranty | March 10, 2022 to December 16, 2023 | No | Yes | |
| January 22, 2022 | 12,595 | July 21, 2022 | 7,557 | General guaranty | July 21 2022 to April 28, 2023 | No | Yes | |
| January 22, 2022 | 30,600 | May 26, 2022 | 18,360 | General guaranty | May 26, 2022 to October 8, 2023 | No | Yes | |
| January 22, 2022 | 7,000 | July 22, 2022 | 4,200 | General guaranty | July 22, 2022 to July 22, 2023 | No | Yes | |
| Zhejiang Yisheng | January 16, 2020 | 23,290 | September 3, 2020 | 16,303 | General guaranty | September 3, 2020 to May 3, 2022 | Yes | Yes |
| January 16, 2020 | 10,000 | January 1, 2021 | 7,000 | General guaranty | January 1, 2021 to September 1, 2022 | Yes | Yes | |
| January 22, 2021 | 52,189.24 | March 12, 2021 | 36,532.47 | General guaranty | March 12, 2021 to June 13, 2022 | Yes | Yes | |
| January 22, 2022 | 193,779.73 | March 11, 2022 | 135,645.81 | General guaranty | March 11, 2022 to April 20, 2023 | Yes | Yes | |
| January 22, 2022 | 114,080 | March 22, 2022 | 79,856 | General guaranty | March 22, 2022 to March 20, 2024 | No | Yes | |
| January 22, 2021 | 20,000 | January 19, 2022 | 14,000 | General guaranty | January 19, 2022 to January 19, 2023 | No | Yes | |
| January 22, 2022 | 320 | July 6, 2022 | 224 | General guaranty | July 6, 2022 to January 6, 2023 | No | Yes | |
| January 22, 2022 | 39,897.49 | May 5, 2022 | 27,928.24 | General guaranty | May 5, 2022 to May 6, 2023 | No | Yes | |
| Taicang Yifeng | January 22, 2021 | 8,000 | July 22, 2021 | 8,000 | General guaranty | July 22, 2021 to July 23, 2022 | Yes | Yes |
| January 22, 2021 | 1,500 | January 17, 2022 | 1,500 | General guaranty | January 17, 2022 to January 16, 2023 | No | Yes | |
| January 22, 2022 | 18,000 | February 16, 2022 | 18,000 | General guaranty | February 16, 2022 to July 25, 2023 | No | Yes | |
| January 22, 2022 | 5,000 | February 9, 2022 | 5,000 | General guaranty | February 9, 2022 to February 9, 2023 | No | Yes |
| Suqian Yida | January 22, 2021 | 2,000 | June 28, 2021 | 2,000 | General guaranty | June 28, 2021 to June 26, 2022 | Yes | Yes |
| January 22, 2022 | 5,000 | June 24, 2022 | 5,000 | General guaranty | June 24, 2022 to July 27, 2023 | No | Yes | |
| January 22, 2022 | 5,000 | November 29, 2022 | 5,000 | General guaranty | November 29, 2022 to November 29, 2023 | No | Yes | |
| January 22, 2022 | 10,000 | January 26, 2022 | 10,000 | General guaranty | January 26, 2022 to July 24, 2023 | No | Yes | |
| Jiaxing Yipeng | January 22, 2022 | 10,000 | March 18, 2022 | 10,000 | General guaranty | March 18, 2022 to September 16, 2022 | Yes | Yes |
| January 22, 2022 | 5,000 | October 31, 2022 | 5,000 | General guaranty | October 31, 2022 to October 30, 2023 | No | Yes | |
| January 22, 2022 | 25,996 | July 25, 2022 | 25,996 | General guaranty | July 25, 2022 to April 25, 2023 | No | Yes | |
| January 22, 2022 | 60,000 | August 24, 2022 | 60,000 | General guaranty | August 24, 2022 to November 17, 2023 | No | Yes | |
| Shuangtu New Materials | January 22, 2021 | 40,400 | May 6, 2021 | 40,400 | General guaranty | May 6, 2021 to July 26, 2022 | Yes | Yes |
| January 22, 2021 | 1,000 | January 1, 2022 | 1,000 | General guaranty | January 1, 2022 to December 30, 2022 | Yes | Yes | |
| January 22, 2022 | 4,600 | May 10, 2022 | 4,600 | General guaranty | May 10, 2022 to May 9, 2023 | Yes | Yes |
| January 22, 2022 | 48,800 | May 6, 2022 | 48,800 | General guaranty | May 6, 2022 to July 25, 2023 | No | Yes | |
| January 22, 2022 | 69,999.75 | July 13, 2022 | 69,999.75 | General guaranty | July 13, 2022 to June 26, 2023 | No | Yes | |
| January 16, 2020 | 4,000 | September 30, 2020 | 4,000 | General guaranty | September 30, 2020 to September 20, 2023 | No | Yes | |
| Hangzhou Yijing | January 22, 2021 | 15,000 | September 6, 2021 | 15,000 | General guaranty | September 6, 2021 to September 6, 2022 | Yes | Yes |
| January 22, 2022 | 29,999.60 | August 24, 2022 | 29,999.60 | General guaranty | August 24, 2022 to December 5, 2023 | No | Yes | |
| January 22, 2022 | 15,000 | September 8, 2022 | 15,000 | General guaranty | September 8, 2022 to September 8, 2023 | No | Yes | |
| January 16, 2020 | 9,999 | September 30, 2020 | 9,999 | General guaranty | September 30, 2020 to September 20, 2025 | No | Yes | |
| Hong Kong Tianyi | January 22, 2021 | 14,991.95 | October 12, 2021 | 14,991.95 | General guaranty | October 12, 2021 to March 4, 2022 | Yes | Yes |
| January 22, 2022 | 43,397.81 | January 24, 2022 | 43,397.81 | General guaranty | January 24, 2022 to November 25, 2022 | Yes | Yes | |
| January 22, 2022 | 1,503.06 | November 2, 2022 | 1,503.06 | General guaranty | November 2, 2022 to February 7, 2023 | No | Yes | |
| Haining Thermal | January 16, 2020 | 6,250 | April 24, 2020 | 6,250 | General guaranty | April 24, 2020 to December 10, 2022 | Yes | Yes |
| Power | January 16, 2020 | 37,750 | April 24, 2020 | 37,750 | General guaranty | April 24, 2020 to December 10, 2029 | No | Yes |
| Haining New Materials | January 22, 2021 | 15,000 | November 15, 2021 | 15,000 | General guaranty | November 15, 2021 to November 14, 2022 | Yes | Yes |
| January 22, 2021 | 750 | January 4, 2022 | 750 | General guaranty | January 4, 2022 to July 4, 2022 | Yes | Yes | |
| January 22, 2021 | 14,250 | January 4, 2022 | 14,250 | General guaranty | January 4, 2022 to January 4, 2024 | No | Yes | |
| January 22, 2022 | 750 | October 21, 2022 | 750 | General guaranty | October 21, 2022 to October 21, 2024 | No | Yes | |
| January 22, 2022 | 24,000 | September 27, 2022 | 24,000 | General guaranty | September 27, 2022 to March 27, 2023 | No | Yes | |
| January 22, 2021 | 120,804 | April 20, 2021 | 120,804 | General guaranty | April 20, 2021 to April 26, 2029 | No | Yes | |
| Fujian Yijin | January 22, 2021 | 49,900 | March 22, 2021 | 44,910 | General guaranty | March 22, 2021 to March 20, 2023 | Yes | Yes |
| January 16, 2020 | 4,210.25 | May 26, 2020 | 3,789.23 | General guaranty | May 26, 2020 to November 21, 2022 | Yes | Yes | |
| January 16, 2020 | 43,906.89 | May 26, 2020 | 39,516.20 | General guaranty | May 26, 2020 to May 21, 2028 | No | Yes | |
| January 22, 2022 | 3,000 | July 15, 2022 | 2,700 | General guaranty | July 15, 2022 to July 14, 2023 | No | Yes |
| Hengyi Singapore | January 22, 2021 | 37,324.58 | December 20, 2021 | 37,324.58 | General guaranty | December 20, 2021 to June 17, 2022 | Yes | Yes |
| January 22, 2022 | 48,081.17 | April 1, 2022 | 48,081.17 | General guaranty | April 1, 2022 to December 23, 2022 | Yes | Yes | |
| January 22, 2022 | 184,145.55 | July 15, 2022 | 184,145.55 | General guaranty | July 15, 2022 to April 24, 2025 | No | Yes | |
| Total amount of guarantees to subsidiaries approved during the reporting period (B1) | 3,130,000 | Total amount of guarantees to subsidiaries actually incurred during the reporting period (B2) | 1,402,955.31 | |||||
| Total amount of guarantees to subsidiaries approved at the end of the reporting period (B3) | 3,130,000 | Total balance of guarantees to subsidiaries actually incurred at the end of the reporting period (B4) | 1,379,281.95 | |||||
| Subsidiary guarantees for subsidiaries | ||||||||
| Name of the guaranteed object | Date of disclosure of announcement on guaranteed quota | Guaranteed limit | Actual date | Actual guarantee amount | Type of guarantee | Guarantee period | Whether it has been fulfilled | Whether it is a related party guarantee |
| Hengyi High-Tech | January 22, 2021 | 20,928.25 | August 12, 2021 | 14,649.78 | General guaranty | August 12, 2021 to December 3, 2022 | Yes | Yes |
| January 22, 2022 | 22,192.22 | January 26, 2022 | 15,534.55 | General guaranty | January 26, 2022 to December 23, 2022 | Yes | Yes | |
| January 22, 2021 | 15,000 | February 4, 2021 | 15,000 | General guaranty | February 4, 2021 to December 2, 2022 | Yes | Yes | |
| January 22, 2021 | 10,000 | January 1, 2022 | 10,000 | General guaranty | January 1, 2022 to December 27, 2022 | Yes | Yes | |
| January 22, 2022 | 10,000 | March 14, 2022 | 10,000 | General guaranty | March 14, 2022 to April 14, 2023 | No | Yes | |
| January 22, 2022 | 5,500 | August 1, 2022 | 5,500 | General guaranty | August 1, 2022 to February 1, 2023 | No | Yes | |
| January 22, 2022 | 17,500 | March 7, 2022 | 17,500 | General guaranty | March 7, 2022 to May 18, 2023 | No | Yes | |
| January 22, 2022 | 36,615 | July 15, 2022 | 25,630.50 | General guaranty | July 15, 2022 to December 2, 2023 | No | Yes | |
| Hengyi Limited | January 22, 2021 | 33,319.80 | August 25, 2021 | 23,323.86 | General guaranty | August 25, 2021 to December 15, 2022 | Yes | Yes |
| January 22, 2022 | 26,260 | February 22, 2022 | 18,382 | General guaranty | February 22, 2022 to December 26, 2022 | Yes | Yes | |
| January 22, 2022 | 8,063.62 | February 7, 2022 | 5,644.53 | General guaranty | February 7, 2022 to June 2, 2022 | Yes | Yes | |
| January 22, 2021 | 9,600 | November 17, 2021 | 6,720 | General guaranty | November 17, 2021 to November 13, 2023 | No | Yes | |
| January 22, 2022 | 27,620 | July 20, 2022 | 19,334 | General guaranty | July 20, 2022 to February 17, 2023 | No | Yes | |
| January 22, 2022 | 3,539.83 | November 28, 2022 | 2,477.88 | General guaranty | November 28, 2022 to February 24, 2023 | No | Yes |
| Zhejiang Yisheng | January 22, 2021 | 80,578.40 | February 5, 2021 | 80,578.40 | General guaranty | February 5, 2021 to August 6, 2022 | Yes | Yes |
| January 22, 2022 | 117,813.93 | February 22, 2022 | 117,813.93 | General guaranty | February 22, 2022 to February 24, 2023 | Yes | Yes | |
| January 22, 2022 | 40,309.46 | June 27, 2022 | 40,309.46 | General guaranty | June 27, 2022 to September 27, 2023 | No | Yes | |
| January 22, 2022 | 83,531 | February 25, 2022 | 83,531 | General guaranty | February 25, 2022 to February 22, 2026 | No | Yes | |
| January 22, 2022 | 1,380 | August 5, 2022 | 1,380 | General guaranty | August 5, 2022 to February 5, 2023 | No | Yes | |
| January 22, 2022 | 37,000 | September 14, 2022 | 37,000 | General guaranty | September 14, 2022 to May 29, 2023 | No | Yes | |
| Haining New Materials | January 23, 2019 | 3,184.02 | September 15, 2019 | 3,184.02 | General guaranty | September 15, 2019 to June 23, 2022 | Yes | Yes |
| January 16, 2020 | 2,018.42 | March 29, 2020 | 2,018.42 | General guaranty | March 29, 2020 to May 11, 2022 | Yes | Yes | |
| January 23, 2019 | 43,795.21 | September 15, 2019 | 43,795.21 | General guaranty | September 15, 2019 to December 23, 2029 | No | Yes | |
| January 16, 2020 | 30,276.28 | March 29, 2020 | 30,276.28 | General guaranty | March 29, 2020 to May 11, 2030 | No | Yes | |
| Hong Kong Tianyi | January 22, 2021 | 32,768.24 | June 23, 2021 | 32,768.24 | General guaranty | June 23, 2021 to June 21, 2022 | Yes | Yes |
| January 22, 2022 | 9,502.85 | April 11, 2022 | 9,502.85 | General guaranty | April 11, 2022 to August 23, 2022 | Yes | Yes | |
| January 22, 2021 | 19,291.94 | January 21, 2022 | 19,291.94 | General guaranty | January 21, 2022 to January 19, 2023 | No | Yes | |
| January 22, 2022 | 55,605.65 | January 27, 2022 | 55,605.65 | General guaranty | January 27, 2022 to June 26, 2023 | No | Yes | |
| Hengyi Brunei | January 22, 2021 | 69,646 | January 5, 2022 | 69,646 | General guaranty | January 5, 2022 to July 5, 2022 | Yes | Yes |
| January 22, 2022 | 64,608.18 | July 7, 2022 | 64,608.18 | General guaranty | July 7, 2022 to January 3, 2023 | Yes | Yes | |
| January 22, 2021 | 186,101.34 | October 20, 2021 | 186,101.34 | General guaranty | October 20, 2021 to March 30, 2022 | Yes | Yes | |
| January 22, 2021 | 687.54 | January 11, 2022 | 687.54 | General guaranty | January 11, 2022 to April 11, 2022 | Yes | Yes | |
| January 22, 2022 | 356,130.73 | January 25, 2022 | 356,130.73 | General guaranty | January 25, 2022 to December 14, 2022 | Yes | Yes | |
| January 22, 2022 | 69,646 | December 12, 2022 | 69,646 | General guaranty | December 12, 2022 to June 12, 2023 | No | Yes | |
| January 22, 2022 | 341,201.20 | May 27, 2022 | 341,201.20 | General guaranty | May 27, 2022 to May 26, 2027 | No | Yes | |
| Hengyi Polymer | January 22, 2021 | 20,790 | July 28, 2021 | 12,474 | General guaranty | July 28, 2021 to September 2, 2022 | Yes | Yes |
| January 22, 2022 | 31,951.59 | January 25, 2022 | 19,170.95 | General guaranty | January 25, 2022 to August 17, 2022 | Yes | Yes | |
| January 22, 2022 | 33,370 | July 14, 2022 | 20,022 | General guaranty | July 14, 2022 to April 26, 2023 | No | Yes | |
| Hong Kong Yisheng | January 22, 2021 | 13,422.80 | August 24, 2021 | 13,422.80 | General guaranty | August 24, 2021 to September 5, 2022 | Yes | Yes |
| Total amount of guarantees to subsidiaries approved during the reporting period (C1) | 1,395,000 | Total amount of guarantees to subsidiaries actually incurred during the reporting period (C2) | 1,435,550.90 | |||||
| Total amount of guarantees to subsidiaries approved at the end of the reporting period (C3) | 1,395,000 | Total balance of guarantees to subsidiaries actually incurred at the end of the reporting period (C4) | 829,221.12 | |||||
| Total amount of company guarantees (i.e., the total of the first three items) | ||||||||
| Total amount of guarantees approved during the reporting period (A1+B1+C1) | 4,595,000 | Total amount of guarantees actually incurred during the reporting period (A2+B2+C2) | 2,873,620.39 | |||||
| Total amount of guarantees approved at the end of the reporting period (A3+B3+C3) | 4,595,000 | Total balance of guarantees actually incurred at the end of the reporting period (A4+B4+C4) | 2,243,617.24 | |||||
| Proportion of the actual total amount of guarantee (A4+B4+C4) to the Company's net assets | 88.17% | |||||||
| Wherein: | ||||||||
| Balance of guarantees provided for shareholders, actual controllers and their | 35,114.17 | |||||||
| related parties (D) | |
| Balance of debt guarantees provided directly or indirectly for the guaranteed object whose asset-liability ratio exceeds 70% (E) | 0 |
| Total amount of the total guarantee exceeding 50% of the net assets (F) | 0 |
| Total amount of the above three guarantees (D+E+F) | 35,114.17 |
| For unexpired guarantees, the statement of the situation where guarantee liability has occurred or may bear joint liability for repayment during the reporting period (if any) | None |
| Description of external guarantees against the rules and regulations (if any) | None |
Description of the specific circumstances of the use of composite guaranteesNote: The Company and its subsidiaries provide the Company's holding subsidiary Hengyi Bruneiwith a guarantee line of USD 1.75 billion or equivalent overseas RMB for the syndicated loan. Pleaserefer to the Company’s disclosure Announcement on Providing Guarantees to Holding SubsidiaryHengyi Industries Sdn. Bhd. on the website of CNINFO on November 18, 2017 for details(Announcement No.: 2017-136).
3. Entrust others to manage cash assets
(1) Entrusted financing management
Currency unit: RMB 10,000
| Type | Source of funds | Amount | Outstanding balance | Overdue amount | Provision for impairment of overdue wealth management |
| Bank WMPs | Self-owned capital | 19,023.76 | 0 | 0 | 0 |
| Total | 19,023.76 | 0 | 0 | 0 | |
High-risk entrusted wealth management with significant individual amounts or low security or lowliquidity
□ Applicable ?Not applicable
The principal of the entrusted wealth management is expected to be unable to be recovered or thereare other situations that may cause impairment
□ Applicable ?Not applicable
(2) Entrusted loans
Overview of entrusted loans during the reporting period
Currency unit: RMB 10,000
| Total amount | Sources of funds | Outstanding balance | Overdue amount |
| 206,600 | Self-owned capital | 98,800 | 0 |
High-risk entrusted loans with significant individual amounts or low security or low liquidity
Currency unit: RMB 10,000
| Loan object | Loan object type | Loan interest rate | Loan amount | Sources of funds | Start date | End date | Expected return (if any) | Actual profit and loss during the reporting period | Actual recovery of profits and losses during the reporting period | Amount of provision for impairment reserves (if any) | Whether it goes through legal procedures | Whether there is any entrusted loan plan in the future | Summary of matters and related query index (if any) |
| Yisheng New Materials | Associated company | 4.785% | 107,800 | Self-owned capital | January 5, 2021 | December 20, 2022 | 2,374.74 | 2,374.74 | 2,374.74 | 0 | Yes | Yes | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1211403679&announcementTime=2021-10-28 |
| Yisheng New Materials | Associated company | 4.785% | 98,800 | Self-owned capital | January 14, 2022 | December 21, 2023 | 2,490.76 | 2,490.76 | 2,490.76 | 0 | Yes | Yes | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1214941035&announcementTime=2022-10-28 |
| Total | 206,600 | -- | -- | -- | 4,865.50 | 4,865.50 | -- | 0 | -- | -- | -- | ||
The principal of the entrusted loans is expected to be unable to be recovered or there are other situations that may cause impairment
□ Applicable ?Not applicable
4. Other major contracts
There were no other major contracts during the reporting period.
XVI. Description of other important mattersDuring the reporting period, the Company has disclosed the major issues on the website of CNINFOin accordance with the Securities Law and the Administrative Measures for Information Disclosureof Listed Companies, the details are as follows:
| SN | Date of announcement | Title of announcement |
| 1 | March 8, 2022 | Announcement on the Approval of the Application for Public Issuance of Convertible Corporate Bonds by the Issuance and Examination Committee of the China Securities Regulatory Commission (Announcement No.: 2022-025) |
| 2 | March 26, 2022 | Announcement on the Approval of the Application for Public Issuance of Convertible Corporate Bonds by the Issuance and Examination Committee of the China Securities Regulatory Commission (Announcement No.: 2022-027) |
| 3 | July 19, 2022 | Announcement on the Public Issuance of Convertible Corporate Bonds by Hengyi Petrochemical Co., Ltd. (Announcement No.: 2022-064) |
| 4 | July 22, 2022 | Announcement on the Repurchase of Company Shares (Phase II) with a Ratio of 1% and the Progress of Repurchase (Announcement No.: 2022-072) |
| 5 | October 26, 2022 | Announcement on Completion of Share Repurchase and Change of Shares (Announcement No.: 2022-107) |
| 6 | October 28, 2022 | Announcement on Share Repurchase Program (Phase III) by way of Centralized Bidding (Announcement No.: 2022-113) |
| 7 | December 30, 2022 | Announcement on the Repurchase of Company Shares (Phase III) with a Ratio of 1% (Announcement No.: 2022-141) |
XVII. Important matters of subsidiaries of the company
| SN | Date of announcement | Title of announcement | Index |
| 1 | January 22, 2022 | Announcement on the Subsidiary’s Investment and Construction of 1.2 mtpa Caprolactam-Polyamide Industry Integration and Supporting Project (Announcement No.: 2022-016) | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1212243026&announcementTime=2022-01-22 |
| 2 | October 28, 2022 | Announcement on the Production of a 100,000 tpa New Green and Environmentally-friendly Polyester Renovation Project (Announcement No.: 2022-114) | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1214941032&announcementTime=2022-10-28 |
| 3 | December 7, 2022 | Announcement on the Production of CTG Upgrading and Technical Reform of By-product Synthetic Ammonia Joint Plant Technical Renovation Project (Announcement No.: 2022-137) | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000703&stockCode=000703&announcementId=1215290156&announcementTime=2022-12-07 |
Section VII Changes in Shares and Shareholders
I. Changes in shares
1. Changes in shares
Currency unit: Share
| Before the change | Increase or decrease in current period (+, -) | After the change | |||||||
| Quantity | Proportion (%) | Issue of new shares | Bonus shares | Capital reserve converted into share capital | Others | Subtotal | Quantity | Proportion (%) | |
| I. Shares with Restrictions on Sales | 278,085,426 | 7.58% | -258,914,001 | -258,914,001 | 19,171,425 | 0.52% | |||
| 1. State shares | |||||||||
| 2. State-owned legal person shares | |||||||||
| 3. Other domestic shares | 278,085,426 | 7.58% | -258,914,001 | -258,914,001 | 19,171,425 | 0.52% | |||
| Wherein: Domestic corporate shares | 258,914,001 | 7.06% | -258,914,001 | -258,914,001 | |||||
| Domestic natural person shares | 19,171,425 | 0.52% | 19,171,425 | 0.52% | |||||
| II. Shares without Restrictions on Sales | 3,388,194,588 | 92.42% | 258,914,793 | 258,914,793 | 3,647,109,381 | 99.48 | |||
| 1. Ordinary shares in RMB (A shares) | 3,388,194,588 | 92.42% | 258,914,793 | 258,914,793 | 3,647,109,381 | 99.48 | |||
| 2. Domestically listed foreign shares (B shares) | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total Number of Shares | 3,666,280,014 | 100.00% | 792 | 792 | 3,666,280,806 | 100.00% |
Reason for changes in shares
(1) In January 2022, the Company issued shares to purchase assets and raised supporting funds, aswell as related-party transactions. The issuance of shares to purchase assets and the addition of shareswere lifted from restrictions on sale and listed for circulation. The number of shares lifted fromrestrictions on sales this time is 258,914,001.
(2) As of December 2022, the Company had a total of 89 "Hengyi Convertible Bonds" which wasconverted into 792 shares of "Hengyi Petrochemical".Approval of changes in shares
(1) On November 27, 2018, the Company received the Official Reply on Approving HengyiPetrochemical Co., Ltd. to Issue Shares to Zhejiang Hengyi Group Co., Ltd. etc. for Purchase ofAssets and Fundraising (ZJXK[2018] No. 1937) issued by China Securities Regulatory Commission(CSRC).
(2) Upon approval by Shenzhen Stock Exchange ("approval document" SZS [2020] No. 1027), theCompany’s convertible corporate bonds amounting to RMB 2 billion were listed on Shenzhen StockExchange on November 16, 2020. The bond named "Hengyi Convertible Bonds" and the bond codeis "127022".Transfer of changed shares
(1) On January 12, 2022, the Company issued shares for the purpose of purchase of assets and fundraising and involved in related-party transaction to issue shares for purchase of assets and258,914,001 shares were lifted from sales restrictions.The impact of share changes on financial indicators such as basic earnings per share and dilutedearnings per share, net assets per share attributable to the Company’s common shareholders,etc. in the recent one year and the reporting periodThe Company’s share capital was 3,666,280,014 shares at the beginning of the reporting period andwas 3,666,280,806 shares as at the end of the reporting period. The change in shares resided in theconversion of convertible corporate bonds into shares. In accordance with Accounting Standards forBusiness Enterprises - Earnings Per Share, the most recent share capital was recalculated on the basisof the adjusted number of shares, and therefore the basic earnings per share over the past period was
RMB -0.30/share and the diluted earnings per share after the change was RMB -0.30/share.Miscellaneous disclosures deemed necessary by the Company or required by regulatoryauthorities
□ Applicable √Not applicable
2. Changes in restricted shares
Currency unit: Share
| Name of shareholders | Number of restricted shares at the beginning of period | Number of restricted shares increased during the period | Number of restricted shares released in current period | Number of restricted shares at the end of period | Reason for restrictions | Date of restriction release |
| Zhejiang Hengyi Group Co., Ltd. | 193,792,724 | 0 | 193,792,724 | 0 | Shares added through the issue of shares for purchase of assets and related-party transactions | January 12, 2022 |
| Fulida Group Holdings Company | 32,560,639 | 0 | 32,560,639 | 0 | ||
| Xinghui Chemical Fiber Group Co., Ltd. | 32,560,638 | 0 | 32,560,638 | 0 | ||
| Total | 258,914,001 | 0 | 258,914,001 | 0 | -- | -- |
II. Securities issuance and listing
1. Securities issuance (excluding preference shares) in the reporting period
Currency unit: Share; RMB/piece; 10,000 pieces; RMB 100 million; currency: RMB
| Names of shares and their derivative securities | Date of issuance | Issuance price (or interest rate) | Number of issued shares | Listing date | Number of shares approved in listed transactions | Date of transaction termination | Disclosure index | Disclosure date |
| Convertible corporate bonds, detachable convertible corporate bonds, and corporate bonds | ||||||||
| Hengyi Convertible Bond 2 | July 21, 2022 | Issued at par with face value | 3,000 | August 18, 2022 | 3,000 | July 20, 2028 | CNINFO: Listing Announcement | August 16, 2022 |
Convertible corporate bonds:
(1) during the reporting period, the Company issued convertible corporate bonds "HengyiConvertible Bond 2", raising a total of RMB 3 billion, with a value date of July 20, 2022. For detailson the issuance of convertible corporate bonds by the Company, please refer to “Section VIIIConvertible Corporate Bonds” of this report.
2. Statement of changes in the Company's total number of shares and shareholder structure,changes in the Company’s assets and debtsDuring the reporting period, the Company’s conversion of convertible corporate bonds into sharesresulted in change in the total number of shares, which was 3,666,280,014 at the beginning of periodand was 3,666,280,806 as at the disclosure date of the report.
3. Existing employee stocks
□ Applicable ?Not applicable
III. Shareholders and actual controller
1. The number of shareholders and shareholding of the Company
Currency unit: Share
| The total number of common shareholders at the end of period | 59,442 | The total number of shareholders as at March 31, 2023 | 56,179 | |||||
| Shareholders holding over 5% of the Company’s shares or top 10 shareholders | ||||||||
| Name of shareholders | Nature of shareholders | Shareholding ratio | Number of shares held at the end of the reporting period | Increase/decrease in the reporting period | Number of shares with restrictions held | Number of shares without restrictions held | Pledged or frozen | |
| Status of shares | Quantity | |||||||
| Zhejiang Hengyi Group Co., Ltd. | Domestic non-state-owned legal person | 40.61% | 1,488,933,728 | 0 | 0 | 1,488,933,728 | Pledged | 967,234,523 |
| Hangzhou Hengyi Investment Co., Ltd. | Domestic non-state-owned legal person | 6.99% | 256,338,027 | 0 | 0 | 256,338,027 | ||
| Gongqingcheng Shengbang Investment Management Co., Ltd. - Gongqingcheng Shengbang Kaimi Investment Partnership (limited partnership) | Others | 2.68% | 98,111,801 | 98,111,801 | 0 | 98,111,801 | ||
| Xinghui Chemical Fiber Group Co., Ltd. | Domestic non-state-owned legal person | 2.66% | 97,662,383 | 0 | 0 | 97,662,383 | ||
| Hong Kong Securities Clearing Company Limited (HKSCC) | Overseas legal person | 2.18% | 79,793,773 | 17,569,191 | 0 | 79,793,773 | ||
| Huaneng Guicheng Trust Co., Ltd. - Huaneng Trust Jinyi Xincheng Assembled Funds Trust Program | Others | 1.96% | 72,030,334 | -54,827,593 | 0 | 72,030,334 | ||
| Huaneng Guicheng Trust Co., Ltd. - Huaneng Trust Jinxing Assembled Funds Trust Program | Others | 1.47% | 53,834,649 | 0 | 0 | 53,834,649 | ||
| Berseagold Asset Management Co., Ltd. - Berseagold Hui Xin No. 8 Private Securities Investment Fund | Others | 1.36% | 49,936,900 | 0 | 0 | 49,936,900 | ||
| Tibetan Trust Co., Ltd. - Tibetan Trust - Hong Jing No. 29 Assembled Funds Trust Program | Others | 1.30% | 47,841,104 | 0 | 0 | 47,841,104 | ||
| Fulida Group Holdings Company | Domestic non-state-owned legal person | 1.05% | 38,421,512 | 0 | 0 | 38,421,512 | Frozen | 38,421,512 |
| Strategic investors or general legal persons ranked the top 10 shareholders due to placing (if any) (Please refer to Note 3) | None | |||||||
| Statement of the connected relation or parties acting in concert among the above shareholders | Among the top 10 shareholders, Hangzhou Hengyi Investment Co., Ltd. is a controlled subsidiary of Hengyi Group. It is unknown whether connected relation exists among other shareholders and it is unknown whether they are shareholders acting in concert either. | |||||||
| Statement of the above shareholders involvement in entrustment /trustee voting and waiver of voting | None |
| Special statement of the existence of special account for repurchase among top 10 shareholders (if any) (Please refer to Note 10) | Among the top 10 shareholders, Hengyi Petrochemical Co., Ltd. held 152,305,981 Company shares through its special account for securities repurchase, representing 4.15% of the Company's total share capital and it is not included in the list of top 10 shareholders. |
Continued
| Top 10 shareholders holding of shares without restrictions | ||
| Name of shareholders | Number of shares without restrictions held at the end of the reporting period | Stock class |
| Zhejiang Hengyi Group Co., Ltd. | 1,488,933,728 | Ordinary shares in RMB |
| Hangzhou Hengyi Investment Co., Ltd. | 256,338,027 | Ordinary shares in RMB |
| Gongqingcheng Shengbang Investment Management Co., Ltd. - Gongqingcheng Shengbang Kaimi Investment Partnership (limited partnership) | 98,111,801 | Ordinary shares in RMB |
| Xinghui Chemical Fiber Group Co., Ltd. | 97,662,383 | Ordinary shares in RMB |
| Hong Kong Securities Clearing Company Limited (HKSCC) | 79,793,773 | Ordinary shares in RMB |
| Huaneng Guicheng Trust Co., Ltd. - Huaneng Trust Jinyi Xincheng Assembled Funds Trust Program | 72,030,334 | Ordinary shares in RMB |
| Huaneng Guicheng Trust Co., Ltd. - Huaneng Trust Jinxing Assembled Funds Trust Program | 53,834,649 | Ordinary shares in RMB |
| Berseagold Asset Management Co., Ltd. - Berseagold Hui Xin No. 8 Private Securities Investment Fund | 49,936,900 | Ordinary shares in RMB |
| Tibetan Trust Co., Ltd. - Tibetan Trust - Hong Jing No. 29 Assembled Funds Trust Program | 47,841,104 | Ordinary shares in RMB |
| Fulida Group Holdings Company | 38,421,512 | Ordinary shares in RMB |
| Statement of connected relation or parties acting in connect among the top 10 shareholders of unrestricted tradable shares and between the top 10 shareholders of unrestricted tradable shares and top 10 shareholders | Among the top 10 shareholders, Hangzhou Hengyi Investment Co., Ltd. is a controlled subsidiary of Hengyi Group. It is unknown whether connected relation exists among other shareholders and it is unknown whether they are shareholders acting in concert either. | |
| Statement of the top 10 common shareholders involvement in margin trading and securities lending business (if any) (Please refer to Note 4) | 1. The shareholder Zhejiang Hengyi Group Co., Ltd. held 1,400,471,542 shares through general securities account and held 88,462,186 shares through CITIC Securities customer credit collateral securities trading account, both of which sum up to 1,488,933,728 shares. | |
Whether there are agreed repurchase securities transactions among the top 10 ordinaryshareholders and top 10 ordinary shareholders of shares without restrictions?There are no agreed repurchase securities transactions among the top 10 ordinary shareholders andtop 10 ordinary shareholders of shares without restrictions.
2. The majority shareholder of the Company
Nature of controlling shareholder: natural person holdingType of controlling shareholder: legal person
| Name of majority shareholder | Legal representative/head of company | Date of establishment | Organization code | Primary business |
| Hengyi Group | Qiu Jianlin | October 18, 1994 | 91330109143586141L | Industrial investment, production and marketing of textile materials and products |
| Holding of and involvement in other domestically and overseas listed equity by majority shareholders in the reporting period | As at the disclosure date hereof, Hengyi Group held 494,655,630 shares of China Zheshang Bank Co., Ltd. (Security code: 601916.SH, 02016.HK), accounting for 2.33% of its total share capital. | |||
Change in majority shareholder in the reporting periodThere’s no change in majority shareholder of the Company in the reporting period.
3. The Company's actual controller and its persons acting in concertNature of actual controller: domestic natural personType of actual controller: natural person
| Name of actual controller | Relation with the actual controller | Nationality | Whether the right of residence in other countries or regions is acquired or not |
| Qiu Jianlin | Himself | China | No |
| Primary occupation and title | Since 1994, Mr. Qiu Jianlin has been serving as the President of Zhejiang Hengyi Group Co., Ltd. Currently, he holds social positions such as the Special Vice President of the China Textile Industry Federation and the Senior Vice President of the China Chemical Fibers Association. | ||
| Domestically and overseas listed companies controlled over the past 10 years | As at the disclosure date hereof, Mr. Qiu Jianlin is the actual controller of Hengyi Group that directly holds 40.61% of the Company shares and holds 6.99% of the Company shares through Zhejiang Hengyi Investment Co., Ltd., a controlled subsidiary of Hengyi Group (Hengyi Group holds 60% of the shares of Zhejiang Hengyi Investment Co., Ltd.). Therefore, Mr. Qiu Jianlin is the actual controller of the Company. | ||
Change in actual controller in the reporting periodThere’s no change in actual controller of the Company in the reporting period.Block diagram of equity and control relationship between the Company and the actualcontroller
Zhejiang Hengyi Group Co., Ltd.
Zhou Lingjuan, XuLifang, Fang Bogeng, YuZhaoxing, Pan Weimin,Xiang Sanlong
QiuLirong
QiuXingjuan
Qiu Yibo
FangXianshui
Hangzhou WanyongIndustrial InvestmentCo., Ltd.
QiuJianlin
ZhuJunmin
QiuXiangjuan
7.40%
7.83%
27.04%
5.00%
95.00%
26.19%
1.42%3.94%
Son of Qiu JianlinYounger sister of Qiu Jianlin
Nephew of Qiu Jianlin
26.19%
Hangzhou Hengyi Investment Co., Ltd.
Hengyi Petrochemical Co., Ltd.
40.61%
60.00%
6.99%
Elder sister of Qiu Jianlin
Note: As at the disclosure date hereof, Qiu Jianlin holds 26.19% of the equity of Hengyi Group andactually controls 84.77% of the equity of Hengyi Group through acting in concert with his familymembers (Qiu Jianlin signed the Acting-in-Concert Agreement with Hangzhou Wanyong IndustrialInvestment Co., Ltd., Qiu Xiangjuan, Qiu Yibo, Qiu Lirong and Qiu Xingjuan on February 8, 2018.The agreement has maintained effective and under the agreement, Wanyong Industrial InvestmentCo., Ltd. controlled by Qiu Xiangjuan, Qiu Yibo, Qiu Lirong and Qiu Xingjuan are persons acting in
concert with Qiu Jianlin. The four shareholders hold 27.04%, 26.19%, 3.94% and 1.42% of HengyiGroup equity respectively). Hengyi Group owns a direct 40.61% stake of Hengyi Petrochemical andowns a 6.99% stake of Hengyi Petrochemical through its controlled subsidiary - Hengyi InvestmentCo., Ltd., both of which sum up to a 47.60% stake of Hengyi Petrochemical. Therefore, Qiu Jianlinremains the actual controller of the listed Company.The actual controller controls the Company through trust or other means of assetmanagement.
□ Applicable ?Not applicable
4. The accumulative total number of pledged shares owned by the controlling shareholder ofthe Company or the largest shareholder and its persons acting in concert with him accounts for80% of their holding.
□ Applicable ?Not applicable
5. Other corporate shareholders with the holding over 10%
□ Applicable ?Not applicable
6. Restricted reduction of holding of the controlling shareholder, actual controller,restructuring party and other major parties to the commitment
□ Applicable ?Not applicable
IV. Implementation details of repurchase in the reporting periodImplementation progress of repurchase
| Disclosure date of the plan | Proposed number of shares repurchased | Proportion to total share capital | Proposed amount of repurchase | Proposed period of repurchase | Purpose of repurchase | Repurchased shares | Proportion of repurchased shares to the underlying stocks relating to share incentive plan (if any) |
| October 28, 2021 | / | / | Not less than RMB 500 million and not more than RMB 1 billion | October 27, 2021 to October 26, 2022 | Implement employee stock ownership plan or share incentive plan later | 63,703,752 | / |
| October 28, 2022 | / | / | Not less than RMB 1 billion and not more | October 27, 2022 to October 26, | Convert the Convertible corporate bonds | 122,499,800 | / |
| than RMB 2 billion | 2023 | issued by listed companies into shares |
Implementation progress of reducing the holding repurchased shares through centralizedbidding
□ Applicable ?Not applicable
Section VIII Preference Shares
There are no preference shares of the Company in the reporting period.
Section IX Bonds
I. Enterprise bondsThere are no corporate bonds of the Company in the reporting period.II. Corporate bonds
1. Basic information about corporate bonds
Currency unit: RMB 10,000
| Bond name | Bond abbreviation | Bond code | Date of issuance | Value date | Maturity date | Bond balance | Interest rate | Method for interest and principal repayment | Place of trading |
| Hengyi Petrochemical Co., Ltd. issued corporate bonds (Tranche 1) publicly to eligible investors in 2020 | 20Hengyi01 | 149061.SZ | March 11, 2020 | March 13, 2020 | March 13, 2023 | 81.10 | 5.50% | Yearly accrual of simple interest is to be calculated without consideration of compound interest. Interest will be paid per annum and the last installment of interest will be paid together with principal payment. | Shenzhen Stock Exchange |
| Investor suitability arrangement (if any) | Corporate bonds are issued publicly to the eligible institutional investors who are in compliance with the provisions of Measures for Administration of Issuance and Trading of Corporate Bonds and have opened an eligible securities account for A-share trading at China Securities Depository and Clearing Corporation Limited (CSDC) Shenzhen Branch. | ||||||||
| Applicable trading mechanism | As of the disclosure date of this report, the principal and interest of "20 Hengyi 01" have been paid in full and on time. | ||||||||
| Risks of terminating the listing (if any) and countermeasures | None | ||||||||
Overdue outstanding bonds
□ Applicable ?Not applicable
2. Activation and execution of issuer or investor option clauses, investor protection clauses"20 Hengyi 01" provides the coupon rate adjustment option for the issuer: In accordance withthe Prospectus for Public Issuance of Hengyi Petrochemical Co., Ltd. Corporate Bonds (Tranche 1)to Eligible Investors in 2020, the issuer of the bonds has the right to decide whether to change the
coupon rate of current tranche at the end of the second year. The issuer will, on the 20th trading dayprior to the interest payment date in the second interest bearing year of current tranche, disclose anannouncement on whether to change the coupon rate of current tranche and the detailed change. Theannual coupon rate of current tranche for the first two years of duration was 5.89%; the issuer optedto reduce the coupon rate by 39bp at the end of the second year of duration and the coupon rate forthe third year of duration was 5.50%."20 Hengyi 01" provides the put option for the investors:
As of the date of this report, "20 Hengyi 01" provides the coupon rate adjustment option for theCompany and the put option for the investors. The Company disclosed the first, second and thirdinformative announcements regarding the implementation of the measures for coupon rate adjustmentand investors’ put of "20 Hengyi 01" on February 9, 2022, February 10, 2022, and February 11, 2022respectively. Investors can choose to put all or part of their “20 Hengyi 01” to the Company duringthe put declaration period (from February 14, 2022 to February 18, 2022), with a put price of RMB100 per piece. According to the data provided by Shenzhen branch of China Securities Depositoryand Clearing Corporation Limited, the put number of “20 Hengyi 01” is 9991890 pieces, with anamount of RMB 999,189,000.00. The remaining quantity after this put is 8,110 pieces, with anamount of RMB 811000 (excluding interest). The put this time has been completed, and the principaland interest of the put "20 Hengyi 01"have been fully paid to the account designated by ShenzhenBranch of China Securities Depository and Clearing Corporation Limited, and the funds will betransferred to the investors' fund accounts on the receipt date of the put funds, March 14, 2022.On March 9, 2023, the Company released an announcement that "Hengyi Petrochemical Co., Ltd.publicly issued corporate bonds (Tranche 1) (epidemic prevention and control bonds) to qualifiedinvestors in 2020, and have cashed the principal and interest and delisted the bonds in 2023". “20Hengyi 01” has become due and been cashed, and the principal and interest have been paid in fulland on time.
3. Intermediary
| Bond program name | Intermediary name | Office address | Name of signing accountants | Contact of intermediary | Telephone number |
| Hengyi Petrochemical Co., Ltd. issued corporate bonds (Tranche 1) publicly to eligible investors in 2020 | CITIC Securities Co., Ltd. | 22F Central Building, No. 1568 Century Avenue, Pudong New Area, Shanghai | Liu Hongyue, Wang Zhiwei, Jiang Bo, Li Chongshi | Xu Lin | 021-20262318 |
Whether there are changes to the said agency in the reporting period?
□Yes ?No
4. Utilization of funds raised
Currency unit: RMB
| Bond program name | Total amount of funds raised | Amount used | Amount unused | Operation of the special account for funds raised (if any) | Correction of illegal use of funds raised | Whether the fund use is compliant with the purpose, use plan and other provisions under the prospectus |
| Hengyi Petrochemical Co., Ltd. issued corporate bonds (Tranche 1) publicly to eligible investors in 2020 | 1,000,000,000 | 1,000,000,000 | 0.00 | None | None | Yes |
Funds raised are used for construction projects.
□ Applicable ?Not applicable
The purpose of the said funds raised through bonds issuance was changed in the reportingperiod.
□ Applicable ?Not applicable
5. Change in credit rating results in the reporting period
□ Applicable ?Not applicable
6. Guarantee, execution of and change in debt repayment plan and other debt repaymentsafeguard measures in the reporting period and impacts on the rights and interests of bondinvestors“20Hengyi01” is under no guarantee. In the reporting period, the debt repayment plan and othersafeguard measures remained unchanged, having no impacts on the rights and interests of bond
investors.III. Non-financial corporate debt financing instrumentsThere were no debt-financing instruments of non-financial businesses in the reporting period.IV. Convertible corporate bonds(I) Hengyi convertible bonds (Bond code: 127022
1. Historic changes in conversion price
Since the Company implemented the equity distribution 2020 business, the convertible corporatebonds issued by the Company (bond abbreviation: Hengyi Convertible Bonds,; bond code: 127022)were subject to change in the conversion price: original conversion price was RMB 11.50 per shareand the changed conversion price was RMB 11.20 per share, and the change took effect since July 6,2021.Since the Company implemented the equity distribution 2021 business, the convertible corporatebonds issued by the Company (bond abbreviation: Hengyi Convertible Bonds; bond code: 127022)were subject to change in the conversion price The original conversion price of Hengyi ConvertibleBonds was RMB 11.20 per share and the changed conversion price of Hengyi Convertible Bonds wasRMB 11.00 per share, and the change took effect since July 7, 2022.
2. Cumulative conversion
| Abbreviation of the convertible bonds | Beginning and ending dates of conversion | Total number of issues | Total amount of issuance (RMB) | Accumulative amount of conversion (RMB) | Accumulative number of bonds converted into shares (share) | Proportion of converted quantity to total shares in issue before the conversion beginning date | Amount of bonds not converted (RMB) | Proportion of amount of bonds not converted to total amount of issuance |
| Hengyi Convertible Bonds | April 22, 2021 to October 15, 2026 | 20,000,000 | 2,000,000,000 | 172,800 | 15,129 | 0.0004% | 1,999,827,200 | 99.9914% |
3. Top 10 convertible bond holders
Currency unit: Share
4. Major changes in the profitability, condition of assets and credit status of guarantor
□ Applicable ?Not applicable
| SN | Name of convertible bonds holders | Nature of convertible bonds holders | Number of convertible bonds held at the end of the reporting period | Amount of convertible bonds held at the end of the reporting period (RMB ) | Proportion of convertible bonds held at the end of the reporting period |
| 1 | Industrial Bank Co., Ltd. - Tianhong Yongli Bond Securities Investment Fund | Others | 1,389,979 | 138,997,900 | 6.95% |
| 2 | Taikang Asset LOF Fixed Income Pension Products - Bank of China Limited | Others | 802,496 | 80,249,600 | 4.01% |
| 3 | Agricultural Bank of China Co., Ltd. (ABC) - Penghua Convertible Bond Securities Investment Fund | Others | 777,146 | 77,714,600 | 3.89% |
| 4 | ICBC Credit Suisse Tianli Convertible Bond Fixed Income Pension Product - Bank of China Limited | Others | 542,660 | 54,266,000 | 2.71% |
| 5 | China Construction Bank Corporation - China Merchants Anqing Bond Securities Investment Fund | Others | 510,198 | 51,019,800 | 2.55% |
| 6 | ICBC Credit Suisse hybrid pension product - Industrial and Commercial Bank of China | Others | 396,629 | 39,662,900 | 1.98% |
| 7 | UBS AG | Overseas legal person | 391,487 | 39,148,700 | 1.96% |
| 8 | Basic pension insurance fund 102 portfolio | Others | 377,050 | 37,705,000 | 1.89% |
| 9 | China Construction Bank Corporation - Guotai Shuangli Bond Securities Investment Fund | Others | 291,370 | 29,137,000 | 1.46% |
| 10 | Basic pension insurance fund 307 portfolio | Others | 284,910 | 28,491,000 | 1.42% |
5. Debt condition, credit standing and respectability changes of the Company at the end of thereporting period and cash arrangement for debt repayment in the coming years
1. Relevant accounting data and financial indicators
| Item | End of current reporting period | End of previous year | Add/deduct at the end of current reporting period over the end of previous year |
| Liquidity ratio | 0.75 | 0.74 | 1.35% |
| Debt-to-asset ratio | 70.83% | 68.81% | 2.02% |
| Acid-test ratio | 0.50 | 0.51 | -1.96% |
| Item | Current reporting period | The same period of previous year | Year-on-year add/deduct in the reporting period |
| Times interest earned | 0.58 | 2.83 | -79.51% |
| Loan repayment ratio (%) | 100.00% | 100.00% | 0.00% |
| Interest repayment rate (%) | 100.00% | 100.00% | 0.00% |
2. Credit rating of convertible bonds
The convertible corporate bonds have been rated by Shanghai Brilliance Credit Rating & InvestorsService Co., Ltd. and the Credit Rating Report on Convertible Corporate Bonds Issued Publicly byHengyi Petrochemical Co., Ltd. was issued on September 4, 2020. According to the report, the maincredit rating of Hengyi Petrochemical is AA+ and the credit rating of the convertible corporate bondsis AA+. In the duration of the convertible bonds, Shanghai Brilliance Credit Rating & InvestorsService Co., Ltd. will conduct a regularly annual rating.
3. Cash arrangement for debt repayment in the coming yearsThe Company has maintained stable operation, sufficient cash flow, stable growth of asset size andprofitability. Its asset-liability ratio has been maintained at a reasonable level and credit standing hasbeen well maintained. The Company will maintain stable and sufficient cash to prepare for paymentof the interest of convertible corporate bonds and repayment of bonds in the future.
(II) Hengyi Convertible Bonds 2 (Bond Code: 127067
1. Historic changes in conversion price
On March 31, 2021, the Company received the Approval for the Public Issuance of ConvertibleCorporate Bonds by Hengyi Petrochemical Co., Ltd. issued by China Securities RegulatoryCommission (CSRC Permit [2022] No. 565). This public issuance has been approved by the ChinaSecurities Regulatory Commission, and the convertible bonds issued are referred to as HengyiConvertible Bonds 2 and the bond code is 127067. On July 21, 2022, the Company publicly issued30 million pieces of convertible corporate bonds, each with a face value of RMB 100. The totalissuance amount was RMB 3 billion, the conversion price was RMB 10.50 per share, and the bondswere listed on Shenzhen Stock Exchange on August 18, 2022.As of the disclosure date of this report, the convertible bond to equity price of the Company has notbeen adjusted.
2. Cumulative conversion
□ Applicable ?Not applicable
3. Top 10 holders of convertible bonds
Currency unit: Share
| SN | Name of convertible bonds holders | Nature of convertible bonds holders | Number of convertible bonds held at the end of the reporting period | Amount of convertible bonds held at the end of the reporting period (RMB) | Proportion of convertible bonds held at the end of the reporting period |
| 1 | Zhejiang Hengyi Group Co., Ltd. | Domestic non-state-owned legal person | 12,453,441 | 1,245,344,100 | 41.51% |
| 2 | Hangzhou Hengyi Investment Co., Ltd. | Domestic non-state-owned legal person | 2,144,011 | 214,401,100 | 7.15% |
| 3 | Bank of China - E Fund Steady Income Bond Type Securities | Others | 785,912 | 78,591,200 | 2.62% |
4. Major changes in the profitability, condition of assets and credit status of guarantor
□ Applicable ?Not applicable
5. Debt condition, credit standing and respectability changes of the Company at the end of thereporting period and cash arrangement for debt repayment in the coming years
1. Relevant accounting data and financial indicators
Same as Hengyi Convertible Bonds (Bond Code: 127022
2. Credit rating of convertible bonds
The convertible corporate bonds have been rated by Shanghai Brilliance Credit Rating & InvestorsService Co., Ltd. and the Credit Rating Report on Convertible Corporate Bonds Issued Publicly byHengyi Petrochemical Co., Ltd. was issued on September 26, 2021. According to the report, the main
| Investment Fund | |||||
| 4 | Guosen Securities Co., Ltd. | Domestic state-owned legal person | 623,729 | 62,372,900 | 2.08% |
| 5 | Fuguo Fuyi Enterprising Fixed Income Pension Product - Industrial and Commercial Bank of China Limited | Others | 544,497 | 54,449,700 | 1.81% |
| 6 | Berseagold Asset Management Co., Ltd. - Berseagold Hui Xin No. 8 Private Securities Investment Fund | Others | 409,472 | 40,947,200 | 1.36% |
| 7 | Tibetan Trust Co., Ltd. - Tibetan Trust - Hong Jing No. 29 Assembled Funds Trust Program | Others | 400,000 | 40,000,000 | 1.33% |
| 8 | ICBC - Fuguo Tianli Growth Bond Investment Fund | Others | 371,612 | 37,161,200 | 1.24% |
| 9 | Agricultural Bank of China Co., Ltd. (ABC) - Penghua Convertible Bond Securities Investment Fund | Others | 352,010 | 35,201,000 | 1.17% |
| 10 | E Fund Steady Return Fixed Income Pension Product - Bank of Communications Co., Ltd. | Others | 349,990 | 34,999,000 | 1.17% |
credit rating of Hengyi Petrochemical is AA+ and the credit rating of the convertible corporate bondsis AA+. In the duration of the convertible bonds, Shanghai Brilliance Credit Rating & InvestorsService Co., Ltd. will conduct a regularly annual rating.
3. Cash arrangement for debt repayment in the coming yearsSame as Hengyi Convertible Bonds (Bond Code: 127022V. 10% more losses within the consolidation in the reporting period than the net assets at theend of previous year
□ Applicable ?Not applicable
VI. Overdue situation of interest-bearing debts except for bonds in the reporting period
□ Applicable ?Not applicable
VII. Existence/non-existence of violation of rules and regulations in the reporting period
□Yes ?No
VIII. Main accounting data and financial indicators for the past two years as at the end ofthe reporting period
Currency unit: RMB 10,000
| Item | End of current reporting period | End of previous year | Add/deduct at the end of current reporting period over the end of previous year |
| Liquidity ratio | 0.75 | 0.74 | 1.35% |
| Debt-to-asset ratio | 70.83% | 68.81% | 2.02% |
| Acid-test ratio | 0.50 | 0.51 | -1.96% |
| Current reporting period | The same period of previous year | Year-on-year add/deduct in the reporting period | |
| Net profit after deducting non-recurring profit and loss | -109,233.45 | 272,882.84 | -140.03% |
| Debts to EBITDA | 6.26% | 13.64% | -7.38% |
| Times interest earned ratio | 0.58 | 2.83 | -79.51% |
| Times cash interest earned ratio | 1.98 | 4.43 | -55.30% |
| EBITDA times interest earned ratio | 1.79 | 4.00 | -55.25% |
| Loan repayment ratio | 100.00% | 100.00% | 0.00% |
| Interest coverage | 100.00% | 100.00% | 0.00% |
Section X Financial Report
I. Audit Report
| Type of auditor's opinion | Standard unqualified opinion |
| date of signing the audit report | April 19, 2023 |
| Name of auditing agency | Zhongxinghua Certified Public Accountants LLP |
| Reference number of the audit report | ZXHSZ [2023] No. 012530 |
| Name of certified public accountant | Liu Hongyue, Wang Guohai |
Audit Report
ZXHSZ [2023] No. 012530
To:
All shareholders of Hengyi Petrochemical Co., Ltd.,
I. Auditor’s opinionsWe have audited the financial statements of Hengyi Petrochemical Co., Ltd. (hereinafter referred toas "Hengyi Petrochemical"), which comprise the parent company’ balance sheets as of December 31,2022 and the consolidated statement, the parent company’ income statements and the consolidatedstatement, the parent company’ cash flow statements and the consolidated statement, the parentcompany’ statements of changes in shareholders' equity and the consolidated statement, and notes tothe financial statements for the year 2022.In our opinion, the attached financial statements are prepared and present fairly, in all material aspects,the consolidated financial position of Hengyi Petrochemical and parent company’s financial positionas of December 31, 2022, and the results of their operations and cash flows for the year 2022 inaccordance with the Accounting Standards for Business Enterprises.
II. Basis for Auditor’s Opinions
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants(CPAs) in China. Our responsibilities under these standards are further described in the "CPAs'Responsibilities for the Audit of the Financial Statements" section of the audit report. According tothe China Code of Ethics for Certified Public Accountants, we are independent from HengyiPetrochemical and have fulfilled other ethical responsibilities as specified in the code. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.
III. Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance inour audit of the financial statements for current period. These matters were addressed in the contextof our audit of the financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters. We have identified the following items as key auditmatters that need to be dealt with in the Audit Report.(I) Recognition of operating income
1. Description of matters
For details of relevant information disclosure, please refer to Note IV. 27. “Revenue” and Note VI.
49. “Operating Income and Operating Costs” to the Financial Statements.In 2022, the consolidated operating income of Hengyi Petrochemical was RMB 152,050,274,900,representing a year-on-year increase of 17.26%. Taking into account the importance of revenuerecognition to the overall financial statements, and the existence of the inherent risk that managementmay manipulate revenue recognition to achieve specific goals or expectations, we deem recognitionof operating income as a key audit matter.
2. Audit response
The main audit procedures we performed are as follows:
(1) Understanding, evaluating and testing the effectiveness of the design and operation of theCompany's internal control related to the revenue recycling;
(2) Selecting the sales contracts signed by samples, identifying the individual performanceobligations, transfer of control and other terms in the contracts, and evaluating whether the timing ofrevenue recognition has met the requirements of the Accounting Standards for Business Enterprises;
(3) Performing analytical procedures on revenues and costs; analyzing fluctuations in revenue, cost,
gross profit rate for each month of current period; comparing and analyzing the analysis proceduresfor revenue, cost, gross profit rate of main products in current period with those in previous period,and comparing and analyzing product sales prices and raw material purchase prices with those ofrelated products in the industry, and evaluating the accuracy of revenue recognition;
(4) Selecting samples from the accounting records of sales revenue, checking sales-related contracts,delivery notes, bills of lading, certificates of transfer of goods property, invoices, etc., and evaluatingthe authenticity and completeness of revenue recognition;
(5) Selecting samples from the customers involved in the reporting period, implementing transactionconfirmation procedure, and evaluating the authenticity and accuracy of the revenue;
(6) For some major clients, implementing field-visit procedures to understand and evaluate thetransaction purpose and business background of relevant businesses;
(7) For export sales, checking the relevant information via China Export & Credit InsuranceCorporation and the People's Insurance Company of China APPs against the book sales records,export declarations, sales invoices, etc. to verify the authenticity of the export income;
(8) Performing a cut-off test for revenue; selecting samples from revenue recognition transactionsbefore and after the balance sheet date, obtaining relevant documents such as contracts, invoices, anddelivery notes etc., and evaluating whether revenue has been recognized in an appropriate period.(II) Inventory depreciation reserves
1. Description of matters
For details of relevant information disclosure, please refer to Note IV. 12. "Inventory", and Notes VI.
9. (2). "Inventory Depreciation Reserves" in the financial statements.
As stated in Note VI. 9 to the financial statements, inventory mainly includes product oil, chemicalproducts, polyester fibers, purified terephthalic acid, as well as related raw materials and semi-finished products for the production of these products. As of December 31, 2022, the book balanceof inventory was RMB 14,451,216,100, with a provision for depreciation of RMB 367,731,500 anda book value of RMB 14,083,484,600.On the balance sheet date, inventory is measured at the lower of cost and net realizable value, andinventory depreciation reserves are made based on the difference between the cost of a singleinventory item and the net realizable value. Where the management personnel of Hengyi
Petrochemical (hereinafter referred to as "the management") encounters damage to these inventories,product expiration, or objective reasons such as changes in market conditions that result in therealizable value being lower than the cost of the inventory, inventory depreciation reserves are madebased on the difference between the net realizable value and the cost. Due to the large amount ofinventory and the complexity of calculating inventory depreciation reserves, we have identifiedinventory depreciation reserves as a key audit matter.
2. Audit response
For inventory depreciation reserves, our audit procedure mainly includes:
(1) We understood, evaluated and tested the effectiveness of the design and operation related toinventory depreciation reserves by the management;
(2) We implemented inventory monitoring and checked the actual condition of the inventory;
(3) We obtained a calculation table for product depreciation reserves, conducted inventoryimpairment tests, checked whether relevant accounting policies were followed, checked the changesin inventory depreciation reserves made in previous years during the current period, and analyzedwhether the provision for inventory depreciation reserves was sufficient;
(4) For products that could obtain the domestic open market price, we retrieved the open marketprice information and compared them with the estimated price. For the inventory with provision fordepreciation reserves for sales after the balance sheet date, we evaluated the reasonableness of theassumptions and data used by management during the testing by comparing the actual and expectedselling prices of the products, and reviewed the accuracy of the inventory provision amount;
(5) By comparing the historical costs of similar raw materials and the costs that still need be incurreduntil the completion of the product, we evaluated the rationality of the management's estimate of thecosts that would be incurred until the completion;
(6) By comparing the sales expenses of similar products in history, we evaluated the rationality ofthe estimated sales expenses of the products estimated by the management;
(7) We checked the presentation and disclosure of inventory depreciation reserves in the financialstatements.
IV. Other informationThe management is responsible for the “other information”. The “other information” comprises the
information included in Hengyi Petrochemical's 2022 Annual Report, but does not include thefinancial statements and our audit report.Our opinion on the financial statements does not cover the “other information” and we do not expressany form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the “otherinformation” and, in doing so, consider whether the “other information” is materially inconsistentwith the financial statements or otherwise appears to be materially misstated to the best of ourknowledge in the course of our audit.If, based on the work we have performed, we conclude that there is a material misstatement in the“other information”, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the management and those charged with governance for the financialstatementsThe management is responsible for preparing financial statements that present fairly the financialposition of the Company in accordance with the provisions of the Accounting Standards for BusinessEnterprises, and designing, implementing and maintaining necessary internal controls relevant topreparing and presenting financial statements that are free from material misstatement due to fraudor error.In preparing the financial statements, management is responsible for assessing the ability to continueof Hengyi Petrochemical as a going concern, disclosing matters related to going concern (ifapplicable), and applying the going concern assumptions, unless management intends to liquidateHengyi Petrochemical, or Hengyi Petrochemical ceases operations or has no realistic alternative.Those charged with governance are responsible for overseeing the financial reporting process ofHengyi Petrochemical.
VI. Responsibilities of the CPAs for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an auditor's report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with Auditing Standards will always detect a material misstatementwhen it exists. Misstatements may arise from fraud or error and are generally considered material ifthey, individually or in aggregate, could reasonably be expected to influence the economic decisionsmade by users based on the financial statements.As part of an audit in accordance with Auditing Standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. At the same time, we also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion; The risk of not detectinga material misstatement resulting from fraud is higher than resulting from error, as fraud may involvecollusion, forgery, willful omission, misrepresentation or override of internal control;
(2) Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances;
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management;
(4) Conclude on the appropriateness of using the going concern assumption by the management; and,based on the audit evidence obtained, conclude whether a material uncertainty exists related to eventsor conditions that may cast significant doubt on the ability of Hengyi Petrochemical to continue as agoing concern. If we conclude that a material uncertainty exists, we are required by the AuditingStandards to draw attention in our report to the related disclosures in the financial statements; if suchdisclosures are inadequate, we shall express a modified opinion. Our conclusions are based oninformation available as of the date of our Audit Report. However, future events or conditions maycause Hengyi Petrochemical to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whetherthe financial statements fairly represent the relevant transactions and events.
(6) Obtain sufficient and appropriate audit evidence on the financial information of HengyiPetrochemical’s entities or business activities to express an audit opinion on the consolidated financialstatements. We are responsible for the direction, supervision and performance of the group audit andare solely responsible for our audit opinion.We communicated with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit matters, including any significant deficiencies ininternal control that we identified during our audit.We also provided a statement to those charged with governance that we had complied with ethicalrequirements related to independence and communicated with those charged with governance aboutall relationships and other matters that may reasonably be deemed to affect our independence, andrelated precautions, if applicable.From the matters communicated with those charged with governance, we determined which matterswere most significant to the audit of the financial statements for current period and thereforeconstituted key audit matters. We described these matters in our audit report except public disclosure
of such matters is prohibited by laws and regulations, or in rare cases where we determine that amatter shall not be communicated in an audit report if there is a reasonable expectation that thenegative consequences of communicating such matter in the audit report would outweigh the benefitsin the public interest.
(As the signature and seal page of the Audit Report (ZXHSZ [2023] No. 012530, this page has notext)
Zhongxinghua Certified Public Accountants LLP (Special General Partnership)Certified Public Accountant of China:
(Project Partner)Beijing, China Certified Public Accountant of China:
April 19, 2023
II. Financial statementsUnit for the statements included in the notes: RMB
1. Consolidated Balance Sheet
Currency unit: RMBConsolidated balance sheet
December 31, 2022Prepared by： Hengyi Petrochemical Co., Ltd. Currency unit: RMB
| Item | Note | Ending balance | Ending balance of previous year |
Current assets:
| Current assets: |
Monetary funds
| Monetary funds | VI. 1 | 17,358,475,538.50 | 14.322,716,793.82 |
Held-for-trading financial assets
| Held-for-trading financial assets | VI. 2 | 251,021,508.33 | 388,958,054.67 |
Derivative financial assets
| Derivative financial assets | VI. 3 | 1,872,460.80 |
Notes receivable
| Notes receivable | VI. 4 | 246,560,954.07 | 258,014,878.86 |
Accounts receivable
| Accounts receivable | VI. 5 | 6,857,913,648.22 | 6,436,842,058.88 |
Accounts receivable financing
| Accounts receivable financing | VI. 6 | 129,579,710.85 | 487,553,057.15 |
Advance payments
| Advance payments | VI. 7 | 1,792,696,846.85 | 2,361,528,254.53 |
Other receivables
| Other receivables | VI. 8 | 133,782,632.86 | 484,215,755.18 |
Inventory
| Inventory | VI. 9 | 14,083,484,571.18 | 12,145,955,534.77 |
Contract assets
| Contract assets |
Held for sale assets
| Held for sale assets |
Non-current assets due within one year
| Non-current assets due within one year | VI. 10 | 115,233,477.61 |
Other current assets
| Other current assets | VI. 11 | 1,711,232,831.86 | 1,594,777,398.74 |
Total current assets
| Total current assets | 42,566,620,703.52 | 38,595,795,264.21 |
Non-current assets:
| Non-current assets: |
Debt investment
| Debt investment |
Other debt investment
| Other debt investment |
Long-term receivables
| Long-term receivables | VI. 12 | 176,482,501.78 | 3,307,639.58 |
Long-term equity investments
| Long-term equity investments | VI. 13 | 12,831,505,320.53 | 12,085,626,559.38 |
Investments in other equity instruments
| Investments in other equity instruments | VI. 14 | 5,600,000.00 | 5,600,000.00 |
Other non-current financial assets
| Other non-current financial assets |
Investment property
| Investment property |
Fixed assets
| Fixed assets | VI. 15 | 47,466,461,676.63 | 46,102,729,538.71 |
Construction in progress
| Construction in progress | VI. 16 | 3,751,889,400.94 | 3,875,588,007.79 |
Capitalized biological assets
| Capitalized biological assets |
Oil and gas assets
| Oil and gas assets |
Right-of-use assets
| Right-of-use assets | VI. 17 | 430,002,663.24 | 411,032,649.33 |
Intangible assets
| Intangible assets | VI. 18 | 2,938,530,705.96 | 1,934,882,729.96 |
Development expenditure
| Development expenditure | VI. 19 | 21,381,548.20 | 11,303,53189 |
Goodwill
| Goodwill | VI. 20 | 221,865,586.69 | 221,865,586.69 |
Long-term deferred and prepaid expenses
| Long-term deferred and prepaid expenses | VI. 21 | 443,731,817.67 | 466,996,430.48 |
Deferred income tax assets
| Deferred income tax assets | VI. 22 | 351,648,873.24 | 124,539,796.63 |
Other non-current assets
| Other non-current assets | VI. 23 | 759,076,912.93 | 1,674,790,628.54 |
Total non-current assets
| Total non-current assets | 69,398,177,007.81 | 66,918,263,098.98 |
Total assets
| Total assets | 111,964,797,711.33 | 105,514,058,363.19 |
(The attached notes to the statements are an integral part of the financial statements)Legal representative: Chief accountant: Head of accounting agency:
Consolidated balance sheet (continued)
December 31, 2022Prepared by： Hengyi Petrochemical Co., Ltd. Currency unit: RMB
| Item | Note | Ending balance | Ending balance of previous year |
| Current liabilities: | |||
| Short-term loans | VI. 24 | 37,875,833,338.09 | 33,778,694,677.24 |
| Held-for-trading financial liabilities | VI. 25 | 21,353,552.33 | 1,670,361.85 |
| Derivative financial liabilities | VI. 26 | 41,611,858.31 | 23,705.440.98 |
| Notes payable | VI. 27 | 815,169,321.16 | 440,900,000.00 |
| Accounts payable | VI. 28 | 9,768,477,976.21 | 10,011,007,717.44 |
| Advance receipts | |||
| Contract liabilities | VI. 29 | 989,622,772.97 | 1,723,901,780.92 |
| Wages payable | VI. 30 | 191,287,035.07 | 311,462,869.52 |
| Taxes and dues payable | VI. 31 | 389,310,729.61 | 938,364,781.66 |
| Other payables | VI. 32 | 235,619,327.94 | 428,170,797.92 |
| Held for sale liabilities | |||
| Non-current liabilities due within one year | VI. 33 | 6,533,334,680.84 | 4,534,519,325.21 |
| Other current liabilities | VI. 34 | 90,760,675.06 | 180,919,015.28 |
| Total current liabilities | 56,952,381,267.59 | 52,373,316,768.02 | |
| Non-current liabilities: | |||
| Long-term loans | VI. 35 | 16,107,140,036.35 | 15,996,229,686.31 |
| Bonds payable | VI. 36 | 4,061,538,995.85 | 2,612,404,203.28 |
| Wherein: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | VI. 37 | 431,285,378.29 | 380,145,523.29 |
| Long-term payables | VI. 38 | 1,433,381,038.10 | 952,254,861.09 |
| Long-term wages payable | |||
| Estimated liabilities | VI. 39 | 360,508.08 | 213,630.54 |
| Deferred income | VI. 40 | 238,413,108.05 | 207,647,626.95 |
| Deferred income tax liabilities | VI. 22 | 82,151,983.86 | 86,517,896.64 |
| Other non-current liabilities | |||
| Total non-current liabilities | 22,354,271,048.58 | 20,235,413,428.10 | |
| Total liabilities | 79,306,652,316.17 | 72,608,730,196.12 | |
| Stockholders’ equity: | |||
| Share capital | VI. 41 | 3,666,280,806.00 | 3,666,280,014.00 |
| Other equity instruments | VI. 42 | 1,159,082,382.38 | 478,506,692.86 |
| Wherein: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | VI. 43 | 9,170,637,734.40 | 9,161,888,666.10 |
| Minus: Treasury Stock | VI. 44 | 1,483,566,737.98 | 718,150,457.23 |
| Other comprehensive income | VI. 45 | 380,920,744.19 | -1,070,859,214.62 |
| Special reserve | VI. 46 | ||
| Surplus reserve | VI. 47 | 781,701,619.18 | 751,895,667.87 |
| Undistributed profit | VI. 48 | 11,771,637,510.92 | 13,593,886,419.08 |
| Total stockholders’ equity attributable to parent company | 25,446,694,059.09 | 25,863,447,788.06 | |
| Minority stockholders’ equity | 7.211,451,336.07 | 7,041,880,379.01 | |
| Total stockholders’ equity | 32,658,145,395.16 | 32,905,328,167.07 | |
| Total liabilities and stockholders’ equity | 111,964,797,711.33 | 105,514,058,363.19 |
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
2. Balance Sheet of Parent Company
Currency unit: RMBBalance sheetDecember 31, 2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | |||
| Item | Note | Ending balance | Ending balance of previous year | |
| Current assets: | ||||
| Monetary funds | 384,399,115.21 | 103,098,639.59 | ||
| Held-for-trading financial assets | ||||
| Derivative financial assets | ||||
| Notes receivable | ||||
| Accounts receivable | ||||
| Accounts receivable financing | ||||
| Advance payments | 8,680,068.00 | 1,372,924.53 | ||
| Other receivables | XV. 1 | 6,026,278,001.08 | 4,741,406,347.78 | |
| Inventory | ||||
| Contract assets | ||||
| Held for sale assets | ||||
| Non-current assets due within one year | ||||
| Other current assets | 697,863.98 | 2,526,591.06 | ||
| Total current assets | 6,420,055,048.27 | 4,848,404,502.96 | ||
| Non-current Assets | ||||
| Debt investment | ||||
| Other debt investment | ||||
| Long-term receivables | ||||
| Long-term equity investments | XV. 2 | 15,946,023,143.22 | 15,932,060,322.09 | |
| Equity instruments | ||||
| Other non-current financial assets | ||||
| Investment property | ||||
| Fixed assets | 649.40 | 649.40 | ||
| Construction in progress | ||||
| Capitalized biological assets | ||||
| Oil and gas assets | ||||
| Right-of-use assets | ||||
| Intangible assets | ||||
| Development expenditure | ||||
| Goodwill | ||||
| Long-term deferred and prepaid expenses | ||||
| Deferred income tax assets | ||||
| Other non-current assets | ||||
| Total non-current assets | 15,946,023,792.62 | 15,932,060,971.49 | ||
| Total assets | 22,366,078,840.89 | 20,780,465,474.45 | ||
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
Balance sheet (continued)
December 31, 2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | |||
| Item | Note | Ending balance | Ending balance of previous year | |
| Current liabilities: | ||||
| Short-term loans | 500,545,833.33 | |||
| Held-for-trading financial liabilities | ||||
| Derivative financial liabilities | ||||
| Notes payable | 117,600,000.00 | 235,000,000.00 | ||
| Accounts payable | 708,624.46 | 8,624.46 | ||
| Advance receipts | ||||
| Contract liabilities | ||||
| Wages payable | 787,610.58 | |||
| Taxes and dues payable | 531,317.09 | 473,166.43 | ||
| Other payables | 576,035,092.59 | 19,125,450.79 | ||
| Held for sale liabilities | ||||
| Non-current liabilities due within one year | 6,828,015.61 | 51,033,160.10 | ||
| Other current liabilities | ||||
| Total current liabilities | 1,202,248,883.08 | 306,428,012.36 | ||
| Non-current Liabilities | ||||
| Long-term loans | ||||
| Bonds payable | 4,061,538,995.85 | 2,612,404,203.28 | ||
| Wherein: Preference shares | ||||
| Perpetual bonds | ||||
| Lease liabilities | ||||
| Long-term payables | ||||
| Long-term wages payable | ||||
| Estimated liabilities | ||||
| Deferred income | ||||
| Deferred income tax liabilities | ||||
| Other non-current liabilities | ||||
| Total non-current liabilities | 4,061,538,995.85 | 2,612,404,203.28 | ||
| Total liabilities | 5,263,787,878.93 | 2,918,832,215.64 | ||
| Owner’s equity | ||||
| Paid-up capital | 3,666,280,806.00 | 3,666,280,014.00 | ||
| Other equity instruments | 1,159,082,382.38 | 478,506,692.86 | ||
| Wherein: Preference shares | ||||
| Perpetual bonds | ||||
| Capital reserve | 13,008,339,529.73 | 13,008,479,380.82 | ||
| Minus: Treasury Stock | 1,483,566,737.98 | 718,150,457.23 | ||
| Other comprehensive income | ||||
| Special reserve | ||||
| Surplus reserve | 629,803,709.13 | 625,741,560.92 | ||
| Undistributed profit | 122,351,272.70 | 800,776,067.44 | ||
| Total owner’s equity | 17,102,290,961.96 | 17,861,633,258.81 | ||
| Total liabilities and owner’s equity | 22,366,078,840.89 | 20,780,465,474.45 | ||
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
3. Consolidated Income Statement
Currency unit: RMB
Consolidated income statement
FY2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | |||
| Item | Note | Current period amount | Last period amount | |
| I. Gross revenue | 152,050,274,944.64 | 129,666,931,795.26 | ||
| Wherein: Operating income | VI. 49 | 152,050,274,944.64 | 129,666,931,795.26 | |
| II. Total operating cost | 153,530,837,892.16 | 126,689,231,081.19 | ||
| Wherein: Operating cost | VI. 49 | 148,515,510,522.38 | 122,327,177,226.63 | |
Tax and associate charge
| Tax and associate charge | VI. 50 | 226,493,112.50 | 226,148,045.07 |
| Selling expenses | VI. 51 | 247,443,749.81 | 228,081,384.04 |
| Administration expenses | VI. 52 | 1,084,986,983.70 | 1,087,267,658.53 |
| R&D expenses | VI. 53 | 668,706,028.57 | 686,980,217.98 |
| Financial expenses | VI. 54 | 2,787,697,495.20 | 2,133,576,548.94 |
| Wherein: Interest expenses | 2,682,684,624.12 | 2,098777,291.01 | |
| Interest income | 193,688,404.54 | 166,560,838.30 | |
| Plus: Other incomes | VI. 55 | 236,242,477.21 | 332,264,253.83 |
| Income from investment (loss expressed with a minus sign “-”) | VI. 56 | 745,260,076.32 | 1,069,400,148.61 |
| Wherein: Income from investment in associates and joint ventures | 823,499,882.13 | 625,843,764.66 | |
| Gains from derecognition of financial assets measured at amortized cost | |||
| Net exposure hedging gains (loss expressed with a minus sign “-”) | |||
| Income from changes in fair value (loss expressed with a minus sign “-”) | VI. 57 | -211,436,484.36 | 42,971,667.68 |
| Credit impairment loss (loss expressed with a minus sign “-”) | VI. 58 | -1,101,785.57 | 82,758.06 |
| Asset impairment loss (loss expressed with a minus sign) | VI. 59 | -368,677,441.03 | -151,107,002.11 |
| Gains on asset disposal (loss expressed with a minus sign “-”) | VI. 60 | -23,661,125.27 | -16,621,636.32 |
III. Business profit (loss expressed with a minus sign “-”)
| III. Business profit (loss expressed with a minus sign “-”) | -1,103,937,230.22 | 4,254,690,903.82 | |
| Plus: Non-operating income | VI. 61 | 14,943,253.23 | 32,027,224.27 |
| Minus: Non-operating expenses | VI. 62 | 20,261,590.79 | 19,712,097.61 |
| IV. Total profit (total loss expressed with a minus sign “-”) | -1,109,255,567.78 | 4,267,006,030.48 | |
| Minus: Income Tax Expenses | VI. 63 | -184,856,758.54 | 343,558,017.96 |
| V. Net profit (net loss expressed with a minus sign “-”) | -924,398,809.24 | 3,923,448,012.52 | |
| (I) Classified by operation continuity: | |||
| 1. Net profit from continuing operations (net loss expressed with a minus sign) | -924,398,809.24 | 3,923,448,012.52 |
2. Net profit from discontinued operation (net loss expressed with a minus sign)
| 2. Net profit from discontinued operation (net loss expressed with a minus sign) | |||
| (II) Classification by attribution of the ownership: | |||
| 1. Net profit attributable to shareholders of parent company (net loss expressed with a minus sign) | -1,079,547,699.72 | 3,378,328,289.28 | |
| 2. Minority interest income (net loss expressed with a minus sign) | 155,148,890.48 | 545,119,723.24 | |
| VI. Other comprehensive income, net of tax | VI. 64 | 1,473,875,713.20 | 3,515,560.65 |
| (I) Other comprehensive income, net of tax, attributable to owners of the parent company | 1,451,779,958.81 | -38,496,763.77 | |
| 1. Other comprehensive income that cannot be re-classified into profit and loss | |||
| (1) Remeasurement gains or losses of a defined benefit plan | |||
| (2) Other comprehensive income cannot be recognized in profit and loss under equity method | |||
| (3) Changes in fair value of investments in other equity instruments | |||
| (4) Changes in fair value of enterprise credit risks | |||
| (5) Others | |||
| 2. Other comprehensive income to be reclassified into profit and loss | 1,451,779,958.81 | -38,496,763.77 | |
| (1) Other comprehensive income that can be recognized in profit and loss under equity method | 99,931,282.10 | 9,011,096.96 | |
| (2) Changes in fair value of other debt investments | |||
| (3) Amount of financial assets reclassified into other comprehensive income | |||
| (4) Provision for credit impairment of other debt investments | |||
| (5) Cash flow hedge reserve | -4,627,201.60 | 300,242,496.51 |
(6) Exchange differences from translation of financial statements
| (6) Exchange differences from translation of financial statements | 1,356,475,878.31 | -347,750,357.24 | |
| (7) Others | |||
| (II) Net amount after taxes of other comprehensive income attributable to minority shareholders | 22,095,754.39 | 42,012,324.42 | |
| VII. Total comprehensive income | 549,476,903.96 | 3,926,963,573.17 |
(I) Total comprehensive income attributable to parent company shareholders
| (I) Total comprehensive income attributable to parent company shareholders | 372,232,259.09 | 3,339,831,525.51 | |
| (II) Net amount after taxes of other comprehensive income attributable to minority shareholders | 177,244,644.87 | 587,132,047.66 | |
| VIII. Earnings per Share (EPS): | |||
| (I) Basic earnings per share | XVI. 2 | -0.30 | 0.93 |
| (II) Diluted earnings per share | XVI. 2 | -0.30 | 0.90 |
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
4. Income Statement of Parent Company
Currency unit: RMBIncome Statement
FY2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||
| Item | Note | Current period amount | Last period amount |
| I. Operating income | XV. 3 | 1,437,239,380.54 | 3,707,429,681.57 |
| Minus: Operating cost | XV. 3 | 1,413,310,442.21 | 3,572,734,835.29 |
| Tax and associate charge | 1,257,958.97 | 5,754,198.90 | |
| Selling expenses | |||
| Administration expenses | 5,131,757.12 | 9,310,644.14 | |
| R&D expenses | |||
| Financial expenses | -22,743,899.98 | 18,986,910.99 | |
| Wherein: Interest expenses | 177,581,595.81 | 215,840,087.70 | |
| Interest income | 203,043,659.19 | 197,728,575.34 | |
| Plus: Other incomes | 358,091.71 | 2,193,970.06 | |
| Income from investment (loss expressed with a minus sign “-”) | XV. 4 | -37,178.87 | 744,799,664.76 |
| Wherein: Income from investment in associates and joint ventures | -37,178.87 | 26,702.76 | |
| Gains from derecognition of financial assets measured at amortized cost | |||
| Net exposure hedging gains (loss expressed with a minus sign “-”) | |||
| Income from changes in fair value (loss expressed with a minus sign “-”) | |||
| Credit impairment loss (loss expressed with a minus sign “-”) | -10,000.00 | ||
| Asset impairment loss (loss expressed with a minus sign) | |||
| Gains on asset disposal (loss expressed with a minus sign “-”) | |||
| II. Business profit (loss expressed with a minus sign “-”) | 40,604,035.06 | 847,626,727.07 | |
| Plus: Non-operating income | 21,090.30 | ||
| Minus: Non-operating expenses | 3,643.29 | ||
| III. Total profit (total loss expressed with a minus sign “-”) | 40,621,482.07 | 847,626,727.07 | |
| Minus: Income Tax Expenses | |||
| IV. Net profit (net loss expressed with a minus sign “-”) | 40,621,482.07 | 847,626,727.07 | |
| (I) Net profit from continuing operations (net loss expressed with a minus sign) | 40,621,482.07 | 847,626,727.07 | |
| (II) Net profit from discontinued operation (net loss expressed with a minus sign) | |||
| V. Net amount after taxes of other comprehensive income | |||
| (I) Other comprehensive income cannot be reclassified into profit and loss | |||
| 1. Remeasurement gains or losses of a defined benefit plan | |||
| 2. Other comprehensive income cannot be recognized in profit and loss under equity method | |||
| 3. Changes in fair value of investments in other equity instruments | |||
| (4) Changes in fair value of enterprise credit risks | |||
| 5. Others | |||
| (II) Other comprehensive income to be reclassified into profit and loss | |||
| 1. Other comprehensive income can be recognized in profit and loss under equity method | |||
| 2. Changes in fair value of other debt investments | |||
3. Amount of financial assets reclassified into other comprehensive
income
| 3. Amount of financial assets reclassified into other comprehensive income | |||
| 4. Provision for credit impairment of other debt investments | |||
| 5. Cash flow hedge reserve | |||
| 6. Exchange differences from translation of financial statements | |||
| 7. Others | |||
| VI. Total comprehensive income | 40,621,482.07 | 847,626,727.07 |
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
5. Consolidated Statement of Cash Flow
Currency unit: RMB
Consolidated Statement of Cash Flow
FY2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | |||
| Item | Note | Current period amount | Last period amount | |
| I. Cash flow from operating activities: | ||||
| Cash received from the sales of goods and the rendering of labor services | 159,672,411,042.94 | 136,206,442,694.61 | ||
| Tax refunds received | 1,820,864,021.53 | 1,179,284,649.76 | ||
| Other cash received relating to operating activities | VI.65 | 587,108,481.06 | 554,578,539.12 | |
| Subtotal of cash inflows from operating activities | 162,080,383,545.53 | 137,940,305,883.49 | ||
| Cash payments for goods purchased and labor services received | 154,044,175,073.74 | 125,447,872,104.98 | ||
| Cash payments to and on behalf of employees | 2,515,740,844.55 | 2,196,370,278.69 | ||
| Payments of all types of taxes | 1,892,421,845.68 | 1,627,523,124.40 | ||
| Other cash payments relating to operating activities | VI.65 | 922,512,298.20 | 948,019,236.02 | |
| Subtotal of cash outflows from operating activities | 159,374,850,062.17 | 130,219,784,744.09 | ||
| Net cash flow from operating activities | 2,705,533,483.36 | 7,720,521,139.40 | ||
| II. Cash flow from investment activities: | ||||
| Cash received from disposals and withdrawn on investments | 1,375,000,000.00 | 1,297,909,623.83 | ||
| Cash received from return on investment | 637,798,059.48 | 1,050,815,136.71 | ||
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 14,502,494.60 | 23,381,288.25 | ||
| Net cash received from disposal of subsidiaries and other business units | 173,134,357.42 | |||
| Other cash received relating to investment activities | VI.65 | 374,657,766.67 | 52,406,117.49 | |
| Subtotal of cash inflows from investing activities | 2,401,958,320.75 | 2,597,646,523.70 | ||
| Cash payments to acquire and construct fixed assets, intangible assets and other long-term assets | 2,955,334,534.93 | 5,972,796,330.84 | ||
| Cash payments to acquire investment | 1,541,765,980.81 | 3,851,849,386.88 | ||
| Net cash payments for acquisition of subsidiaries and other business units | ||||
| Other cash payments relating to investment activities | VI.65 | 31,148,886.89 | 290,354,735.85 | |
| Subtotal of cash outflows from investing activities | 4,528,249,402.63 | 10,115,000,453.57 | ||
| Net cash flows from investing activities | -2,126,291,081.88 | -7,517,353,929.87 | ||
| III. Cash flow from financing activities: | ||||
| Cash received from investors in making investment in the enterprise | 3,029,697,000.00 | 347,903,000.00 | ||
| Wherein: Cash received by subsidiaries from issuing shares of minority shareholders | 44,297,000.00 | 347,903,000.00 | ||
| Cash received from borrowings | 57,429,242,118.33 | 41,559,507,427.01 | ||
| Other cash received relating to financing activities | VI.65 | 7,244,056,460.49 | 5,661,962,241.76 | |
| Subtotal of cash inflows from financing activities | 67,702,995,578.82 | 47,569,372,668.77 | ||
| Cash repayments of amounts borrowed | 55,105,512,814.65 | 35,587,266,783.39 | ||
| Cash payments for distribution of dividends or profit or for interest payment | 3,065,324,736.57 | 3,075,829,806.46 | ||
| Wherein: Subsidiaries’ cash payments to minority shareholders for distribution of dividends or profit | 235,986,111.11 | 135,486,111.11 | ||
| Other cash payments relating to financing activities | VI.65 | 7,859,458,062.39 | 5,965,700,010.06 | |
| Subtotal of cash outflows from financing activities | 66,030,295,613.61 | 44,628,796,599.91 | ||
| Net cash flows from financing activities | 1,672,699,965.21 | 2,940,576,068.86 | ||
| IV. Effect of foreign exchange rate change on cash and cash equivalents | 437,390,294.50 | -85,332,274.72 | ||
| V. Net increase in cash and cash equivalents | VI. 66 | 2,689,332,661.19 | 3,058,411,003.67 | |
| Plus: Beginning balance of cash and cash equivalents | VI. 66 | 10,244,736,951.84 | 7,186,325,948.17 | |
| VI. Ending balance of cash and cash equivalents | VI. 66 | 12,934,069,613.03 | 10,244,736,951.84 | |
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
6. Statement of Cash Flow of Parent Company
Currency unit: RMBStatement of Cash Flow
FY2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | |||
| Item | Note | Current period amount | Last period amount | |
| I. Cash flow from operating activities: | ||||
| Cash received from the sales of goods and the rendering of labor services | 1,624,080,500.11 | 4,189,382,332.64 | ||
| Tax refunds received | ||||
| Other cash received relating to operating activities | 636,125,692.27 | 224,691,199.96 | ||
| Subtotal of cash inflows from operating activities | 2,260,206,192.38 | 4,414,073,532.60 | ||
| Cash payments for goods purchased and labor services received | 1,723,040,799.70 | 3,802,342,240.19 | ||
| Cash payments to and on behalf of employees | 2,129,443.97 | 2,329,109.86 | ||
| Payments of all types of taxes | 1,369,758.25 | 25,517,443.07 | ||
| Other cash payments relating to operating activities | 99,176,944.28 | 70,349,804.23 | ||
| Subtotal of cash outflows from operating activities | 1,825,716,946.20 | 3,900,538,597.35 | ||
| Net cash flow from operating activities | 434,489,246.18 | 513,534,935.25 | ||
| II. Cash flow from investment activities: | ||||
| Cash received from disposals and withdrawn on investments | ||||
| Cash received from return on investment | 744,772,962.00 | 1,204,600,000.00 | ||
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | ||||
| Net cash received from disposal of subsidiaries and other business units | ||||
| Other cash received relating to investment activities | 1,091,801,527.22 | 3,019,781,028.02 | ||
| Subtotal of cash inflows from investing activities | 1,836,574,489.22 | 4,224,381,028.02 | ||
| Cash payments to acquire and construct fixed assets, intangible assets and other long-term assets | ||||
| Cash payments to acquire investment | 14,000,000.00 | 150,500,000.00 | ||
| Net cash payments for acquisition of subsidiaries and other business units | ||||
| Other cash payments relating to investment activities | 2,903,987,361.80 | |||
| Subtotal of cash outflows from investing activities | 2,917,987,361.80 | 150,500,000.00 | ||
| Net cash flows from investing activities | -1,081,412,872.58 | 4,073,881,028.02 | ||
| III. Cash flow from financing activities: | ||||
Cash received from investors in making investment in theenterprise
| Cash received from investors in making investment in the enterprise | 2,985,400,000.00 | ||
| Cash received from borrowings | 800,000,000.00 | 250,000,000.00 | |
| Other cash received relating to financing activities | 634,250,000.00 | 16,814,978.66 | |
| Subtotal of cash inflows from financing activities | 4,419,650,000.00 | 266,814,978.66 | |
| Cash repayments of amounts borrowed | 1,299,189,000.00 | 3,075,210,000.00 | |
| Cash payments for distribution of dividends or profit or for interest payment | 790,996,700.78 | 1,322,959,638.66 | |
| Other cash payments relating to financing activities | 1,383,685,128.45 | 408,011,313.73 | |
| Subtotal of cash outflows from financing activities | 3,473,870,829.23 | 4,806,180,952.39 | |
| Net cash flows from financing activities | 945,779,170.77 | -4,539,365,973.73 | |
| IV. Effect of foreign exchange rate change on cash and cash equivalents | |||
| V. Net increase in cash and cash equivalents | 298,855,544.37 | 48,049,989.54 | |
| Plus: Beginning balance of cash and cash equivalents | 67,848,639.59 | 19,798,650.05 | |
| VI. Ending balance of cash and cash equivalents | 366,704,183.96 | 67,848,639.59 |
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
7. Consolidated Statement of Owner’s Equity
Amount incurred in current period
Currency unit: RMBConsolidated Statement of Stockholders Equity
FY2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | |||||||||||||
| Item | Current period amount | |||||||||||||
| Stockholders’ equity attributable to parent company | Minority stockholders’ equity | Total stockholders’ equity | ||||||||||||
| Share capital | Other equity instruments | Capital reserve | Minus: Treasury Stock | Other comprehensive income | Appropriative reserve | Earned surplus | Undistributed profit | Subtotal | ||||||
| Preference shares | Perpetual bonds | Other | ||||||||||||
| I. Ending balance of previous year | 3,666,280,014.00 | 478,506,692.86 | 9,165,586,160.07 | 718,150,457.23 | -1,070,859,214.62 | 751,895,667.87 | 13,623,601,273.27 | 25,896,860,136.22 | 7,043,319,140.59 | 32,940,179,276.81 | ||||
| Plus: Changes in accounting policies | -3,697,493.97 | -29,714,854.19 | -33,412,348.16 | -1,438,761.58 | -34,851,109.74 | |||||||||
| Correction of previous accounting errors | ||||||||||||||
| Other | ||||||||||||||
| II. Beginning balance of current year | 3,666,280,014.00 | 478,506,692.86 | 9,161,888,666.10 | 718,150,457.23 | -1,070,859,214.62 | 751,895,667.87 | 13,593,886,419.08 | 25,863,447,788.06 | 7,041,880,379.01 | 32,905,328,167.07 | ||||
| III. Amount increase or decrease in current period (decrease expressed with a minus sign “-”) | 792.00 | 680,575,689.52 | 8,749,068.30 | 765,416,280.75 | 1,451,779,958.81 | 29,805,951.31 | -1,822,248,908.16 | -416,753,728.97 | 169,570,957.06 | -247,182,771.91 | ||||
| (I) Total comprehensive income | 1,451,779,958.81 | -1,079,547,699.72 | 372,232,259.09 | 177,244,644.87 | 549,476,903.96 | |||||||||
(II) Shareholders investment and capitalreduction
| (II) Shareholders investment and capital reduction | 792.00 | 680,575,689.52 | -139,851.09 | 765,416,280.75 | -84,979,650.32 | 96,408,075.00 | 11,428,424.68 | ||||||
| 1. Ordinary shares invested by shareholders | -147,916.45 | 765,416,280.75 | -765,564,197.20 | 96,408,075.00 | -669,156,122.20 | ||||||||
| 2. Capital invested by holders of other equity instruments | 792.00 | 680,575,689.52 | 8,065.36 | 680,584,546.88 | 680,584,546.88 | ||||||||
| 3. Amount of share-based payment that recognized in stockholders’ equity | |||||||||||||
| 4. Others | |||||||||||||
| (III) Profit distribution | 29,805,951.31 | -744,790,079.91 | -714,984,128.60 | -102,597,186.11 | -817,581,314.71 | ||||||||
| 1. Appropriation of earned surplus | 29,805,951.31 | -29,805,951.31 | |||||||||||
| 2. Profit distributed to shareholders | -714,984,128.60 | -714,984,128.60 | -102,597,186.11 | -817,581,314.71 | |||||||||
| 3. Others | |||||||||||||
| (IV) Internal carry-forward of stockholder’s equity | |||||||||||||
| 1. Capital reserve carried over into share capital |
2. Earned surplus carried over into share
capital
| 2. Earned surplus carried over into share capital | |||||||||||||
| 3. Earned surplus carried over to cover loss | |||||||||||||
| 4. Gains or losses of a defined benefit plan carried over into retained earning | |||||||||||||
| 5. Other comprehensive income carried over into retained earning | |||||||||||||
| 6. Others | |||||||||||||
| (V) Appropriative reserve | |||||||||||||
| 1. Reserve withdrawn in current period | 66,593,026.55 | 66,593,026.55 | 66,593,026.55 | ||||||||||
| 2. Reserve used in current period | 66,593,026.55 | 66,593,026.55 | 66,593,026.55 | ||||||||||
| (VI) Others | 8,888,919.39 | 2,088,871.47 | 10,977,790.86 | -1,484,576.70 | 9,493,214.16 | ||||||||
| IV. Ending balance of current year | 3,666,280,806.00 | 1,159,082,382.38 | 9,170,637,734.40 | 1,483,566,737.98 | 380,920,744.19 | 781,701,619.18 | 11,771,637,510.92 | 25,446,694,059.09 | 7,211,451,336.07 | 32,658,145,395.16 |
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
Amount incurred in previous period
Currency unit: RMBConsolidated Statement of Stockholders Equity(continued）
FY2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | |||||||||||||
| Item | Last period amount | |||||||||||||
| Stockholders’ equity attributable to parent company | Minority stockholders’ equity | Total stockholders’ equity | ||||||||||||
| Share capital | Other equity instruments | Capital reserve | Minus: Treasury Stock | Other comprehensive income | Appropriative reserve | Earned surplus | Undistributed profit | Subtotal | ||||||
| Preference shares | Perpetual bonds | Other | ||||||||||||
| I. Balance at the end of previous year | 3,681,645,407.00 | 478,546,158.81 | 9,165,068,133.86 | 349,918,604.53 | -1,032,362,450.85 | 660,652,171.17 | 11,403,002,797.32 | 24,006,633,612.78 | 6,285,515,168.05 | 30,292,148,780.83 | ||||
| Plus: Changes in accounting policies | ||||||||||||||
| Correction of previous accounting errors | ||||||||||||||
| Other | ||||||||||||||
| II. Beginning balance of current year | 3,681,645,407.00 | 478,546,158.81 | 9,165,068,133.86 | 349,918,604.53 | -1,032,362,450.85 | 660,652,171.17 | 11,403,002,797.32 | 24,006,633,612.78 | 6,285,515,168.05 | 30,292,148,780.83 | ||||
| III. Amount increase or decrease in current period (decrease expressed with a minus sign “-”) | -15,365,393.00 | -39,465.95 | -3,179,467.76 | 368,231,852.70 | -38,496,763.77 | 91,243,496.70 | 2,190,883,621.76 | 1,856,814,175.28 | 756,365,210.96 | 2,613,179,386.24 | ||||
| (I) Total comprehensive income | -38,496,763.77 | 3,378,328,289.28 | 3,339,831,525.51 | 587,132,047.66 | 3,926,963,573.17 | |||||||||
(II) Shareholders investment and capitalreduction
| (II) Shareholders investment and capital reduction | -15,365,393.00 | -39,465.95 | 29,744,025.29 | 368,231,852.70 | -353,892,686.36 | 324,654,060.00 | -29,238,626.36 | ||||||
| 1. Ordinary shares invested by shareholders | -15,379,730.00 | 29,595,247.63 | 368,231,852.70 | -354,016,335.07 | 324,654,060.00 | -29,362,275.07 | |||||||
| 2. Capital invested by holders of other equity instruments | 14,337.00 | -39,465.95 | 148,777.66 | 123,648.71 | 123,648.71 | ||||||||
| 3. Amount of share-based payment that recognized in stockholders’ equity | |||||||||||||
| 4. Others |
(III) Profit distribution
| (III) Profit distribution | 91,243,496.70 | -1,181,207,797.05 | -1,089,964,300.35 | -157,987,171.11 | -1,247,951,471.46 | ||||||||
| 1. Appropriation of earned surplus | 91,243,496.70 | -91,243,496.70 | |||||||||||
| 2. Profit distributed to shareholders | -1,089,964,300.35 | -1,089,964.300.35 | -157,987,171.11 | -1,247,951,471.46 | |||||||||
| 3. Others | |||||||||||||
| (IV) Internal carry-forward of stockholder’s equity |
1. Capital reserve carried over into share
capital
| 1. Capital reserve carried over into share capital | |||||||||||||
| 2. Earned surplus carried over into share capital | |||||||||||||
| 3. Earned surplus carried over to cover loss | |||||||||||||
| 4. Gains or losses of a defined benefit plan carried over into retained earning | |||||||||||||
| 5. Other comprehensive income carried over into retained earning | |||||||||||||
| 6. Others |
(V) Appropriative reserve
| (V) Appropriative reserve | |||||||||||||
| 1. Reserve withdrawn in current period | 52,367,268.75 | 52,367,268.75 | 52,367,268.75 | ||||||||||
| 2. Reserve used in current period | 52,367,268.75 | 52,367,268.75 | 52,367,268.75 | ||||||||||
| (VI) Others | -32,923,493.05 | -6,236,870.47 | -39,160,363.52 | 2,566,274.41 | -36,594,089.11 | ||||||||
| IV. Ending balance of current year | 3,666,280,014.00 | 478,506,692.86 | 9,161,888,666.10 | 718,150,457.23 | -1,070,859,214.62 | 751,895,667.87 | 13,593,886,419.08 | 25,863,447,788.06 | 7,041,880,379.01 | 32,905,328,167.07 |
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
8. Statement of Owner’s Equity of Parent Company
Amount incurred in current period
Currency unit: RMB
Statement of Stockholders Equity
FY2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||||||||||
| Item | Current period amount | ||||||||||
| Share capital | Other equity instruments | Capital reserve | Minus: Treasury Stock | Other comprehensive income | Appropriative reserve | Earned surplus | Undistributed profit | Total stockholders’ equity | |||
| Preference shares | Perpetual bonds | Other | |||||||||
| I. Ending balance of previous year | 3,666,280,014.00 | 478,506,692.86 | 13,008,479,380.82 | 718,150,457.23 | 625,741,560.92 | 800,776,067.44 | 17,861,633,258.81 | ||||
Plus: Changes in accounting policies
| Plus: Changes in accounting policies | |||||||||||
| Correction of previous accounting errors |
Other
| Other | |||||||||||
| II. Beginning balance of current year | 3,666,280,014.00 | 478,506,692.86 | 13,008,479,380.82 | 718,150,457.23 | 625,741,560.92 | 800,776,067.44 | 17,861,633,258.81 | ||||
| III. Amount increase or decrease in current period (decrease expressed with a minus sign “-”) | 792.00 | 680,575,689.52 | -139,851.09 | 765,416,280.75 | 4,062,148.21 | -678,424,794.74 | -759,342,296.85 | ||||
| (I) Total comprehensive income | 40,621,482.07 | 40,621,482.07 | |||||||||
| (II) Shareholders investment and capital reduction | 792.00 | 680,575,689.52 | -139,851.09 | 765,416,280.75 | -84,979,650.32 | ||||||
| 1. Ordinary shares invested by shareholders | -147,916.45 | 765,416,280.75 | -765,564,197.20 | ||||||||
| 2. Capital invested by holders of other equity instruments | 792.00 | 680,575,689.52 | 8,065.36 | 680,584,546.88 | |||||||
| 3. Amount of share-based payment that recognized in stockholders’ equity | |||||||||||
| 4. Others |
(III) Profit distribution
| (III) Profit distribution | 4,062,148.21 | -719,046,276.81 | -714,984,128.60 | ||||||||
| 1. Appropriation of earned surplus | 4,062,148.21 | -4,062,148.21 | |||||||||
| 2. Profit distributed to shareholders | -714,984,128.60 | -714,984,128.60 | |||||||||
| 3. Others |
(IV) Internal carry-forward of stockholder’sequity
| (IV) Internal carry-forward of stockholder’s equity | |||||||||||
| 1. Capital reserve carried over into share capital | |||||||||||
| 2. Earned surplus carried over into share capital |
3. Earned surplus carried over to cover loss
| 3. Earned surplus carried over to cover loss | |||||||||||
| 4. Gains or losses of a defined benefit plan carried over into retained earning | |||||||||||
| 5. Other comprehensive income carried over into retained earning | |||||||||||
| 6. Others | |||||||||||
| (V) Appropriative reserve | |||||||||||
| 1. Reserve withdrawn in current period | |||||||||||
| 2. Reserve used in current period | |||||||||||
| (VI) Others | |||||||||||
| IV. Ending balance of current year | 3,666,280,806.00 | 1,159,082,382.38 | 13,008,339,529.73 | 1,483,566,737.98 | 629,803,709.13 | 122,351,272.70 | 17,102,290,961.96 |
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
Amount incurred in previous period
Currency unit: RMB
Statement of Stockholders Equity(continued）
FY2022
| Prepared by： Hengyi Petrochemical Co., Ltd. | Currency unit: RMB | ||||||||||
| Item | Last period amount | ||||||||||
| Share capital | Other equity instruments | Capital reserve | Minus: Treasury Stock | Other comprehensive income | Appropriative reserve | Earned surplus | Undistributed profit | Total stockholders’ equity | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| I. Ending balance of previous year | 3,681,645,407.00 | 478,546,158.81 | 12,978,735,355.53 | 349,918,604.53 | 540,978,888.21 | 1,127,876,313.43 | 18,457,863,518.45 | ||||
| Plus: Changes in accounting policies | |||||||||||
| Correction of previous accounting errors | |||||||||||
Others
| Others |
II. Beginning balance of current year
| II. Beginning balance of current year | 3,681,645,407.00 | 478,546,158.81 | 12,978,735,355.53 | 349,918,604.53 | 540,978,888.21 | 1,127,876,313.43 | 18,457,863,518.45 | ||||
| III. Amount increase or decrease in current period (decrease expressed with a minus sign “-”) | -15,365,393.00 | -39,465.95 | 29,744,025.29 | 368,231,852.70 | 84,762,672.71 | -327,100,245.99 | -596,230,259.64 | ||||
| (I) Total comprehensive income | 847,626,727.07 | 847,626,727.07 |
(II) Shareholders investment and capitalreduction
| (II) Shareholders investment and capital reduction | -15,365,393.00 | -39,465.95 | 29,744,025.29 | 368,231,852.70 | -353,892,686.36 | ||||||
| 1. Ordinary shares invested by shareholders | -15,379,730.00 | 29,595,247.63 | 368,231,852.70 | -354,016,335.07 | |||||||
| 2. Capital invested by holders of other equity instruments | 14,337.00 | -39,465.95 | 148,777.66 | 123,648.71 | |||||||
| 3. Amount of share-based payment that recognized in stockholders’ equity | |||||||||||
| 4. Others | |||||||||||
| (III) Profit distribution | 84,762,672.71 | -1,174,726,973.06 | -1,089,964,300.35 | ||||||||
| 1. Appropriation of earned surplus | 84,762,672.71 | -84,762,672.71 | |||||||||
| 2. Profit distributed to shareholders | -1,089,964,300.35 | -1,089,964,300.35 | |||||||||
| 3. Others |
(IV) Internal carry-forward of stockholder’sequity
| (IV) Internal carry-forward of stockholder’s equity | |||||||||||
| 1. Capital reserve carried over into share capital | |||||||||||
| 2. Earned surplus carried over into share capital |
3. Earned surplus carried over to cover loss
| 3. Earned surplus carried over to cover loss | |||||||||||
| 4. Gains or losses of a defined benefit plan carried over into retained earning | |||||||||||
| 5. Other comprehensive income carried over into retained earning | |||||||||||
| 6. Others | |||||||||||
| (V) Appropriative reserve | |||||||||||
| 1. Reserve withdrawn in current period | |||||||||||
| 2. Reserve used in current period | |||||||||||
| (VI) Others | |||||||||||
| IV. Ending balance of current year | 3,666,280,014.00 | 478,506,692.86 | 13,008,479,380.82 | 718,150,457.23 | 625,741,560.92 | 800,776,067.44 | 17,861,633,258.81 |
(The attached notes to the statements are an integral part of the financial statements)
| Legal representative: | Person in charge of accounting activities: | Head of accounting agency: |
Hengyi Petrochemical Co., Ltd.Notes to Financial Statements 2022(Unless otherwise specified, the currency unit is RMB)
I. Basic information about the Company
1. Historical development
Hengyi Petrochemical Co., Ltd. (referred to as "the Company" or "Company"), formerlyknown as Centennial Brilliance Science and Technology Co., Ltd. (referred to as "CentennialBrilliance"), which was changed into its current name on June 1, 2011 by change in theregistration with administration for industry and commerce. The Company was establishedwith initiation by shareholders on December 14, 1989 and upon approval by the EconomicSystem Reform Commission of Guangxi Zhuang Autonomous Region with the G. T. G. [1990]No. 3 Document issued on February 10, 1990. The Company’s stocks were listed on ShenzhenStock Exchange on March 28, 1997 under the stock code of 000703 and the current stockabbreviation of "Hengyi Petrochemical".Upon approval by China Securities Regulatory Commission with the document Reply onApproval of the Sales of Major Assets of Centennial Brilliance Science and Technology Co.,Ltd. and the Issuance of Its Shares to Zhejiang Hengyi Group Co., Ltd. for Purchase of Assets(ZJXK[2011] No. 540) issued on April 15, 2011, the Company sold all its assets and liabilitiesto Henan Huicheng Investment Co., Ltd. ("Henan Huicheng") with the employees transferredwith assets. Henan Huicheng paid the consideration in cash. The Company issued 432,883,813shares to purchase 100% equity in Zhejiang Hengyi Petrochemical Co., Ltd. (hereinafterreferred to as Hengyi Limited) held by Zhejiang Hengyi Group Co., Ltd., Tianjin DinghuiEquity Investment Phase I Fund (Limited Partnership), Tianjin Dinghui Yuanbo EquityInvestment Fund (Limited Partnership); at the same time, Henan Huicheng transferred its12,237,050 shares in Centennial Brilliance to Zhejiang Hengyi Group Co., Ltd. (hereinafterreferred to as Hengyi Group) in form of agreement, and Hengyi Group paid the considerationin cash.On April 27, 2011, Ascenda conducted capital verification on the major asset reorganizationand issuance of shares to purchase assets, and issued TJZXY(2011) Z. Z. No. 020057 CapitalVerification Report to verify the issued 432,883,813 shares.According to the resolutions of the Company’s 2011 Annual General Meeting of Shareholdersand the revised Articles of Association, three bonus shares for every 10 shares were distributedto all shareholders on the basis of the Company’s original total share capital of RMB
576,793,813.00, and the capital reserve was transferred to increase 7 shares for every 10 sharesto all shareholders at the same time. The Company increased its registered capital by RMB576,793,813.00. The base date of the increase by transfer was March 27, 2012, and theregistered capital after the change was RMB 1,153,587,626.00.According to the resolutions of the 2015 Annual General Meeting of Shareholders and therevised Articles of Association, the Company implemented the first restricted stock incentiveplan in 2015. The incentive form adopted in this incentive plan was restricted stocks, and 15incentive objects were granted the restricted stocks in the first time. 11.7 million restrictedstocks with a par value of RMB 1 per share were granted to incentive objects by means oftargeted issuance. The Company increased its registered capital by RMB 11,700,000.00, andthe registered capital after the change was RMB 1,165,287,626.00.According to the resolutions of the 2014 Annual General Meeting of Shareholders and therevised Articles of Association, upon the approval of China Securities Regulatory Commissionwith the Reply on Approval of Hengyi Petrochemical Co., Ltd.’s Non-public Issuance of Stocks(ZJXK [2015] No. 2085), the Company privately issued 140,845,070 RMB ordinary shares(A-shares) with a par value of RMB 1 per share in 2015. The Company increased its registeredcapital by RMB 140,845,070.00, and the registered capital after the change was RMB1,306,132,696.00.According to the resolutions of the twenty-sixth meeting of the ninth session of the BOD ofthe Company in 2016 and the revised Articles of Association, the Company’s repurchased andcancelled 25% of the granted restricted stocks that were held by incentive objects and did notmeet the unlocking conditions for the first unlocking period, i.e. 2,925,000 restricted stocks.The Company reduced the registered capital by RMB 2,925,000.00, and the registered capitalafter the change was RMB 1,303,207,696.00.According to the resolutions of the Company’s 2015 Annual General Meeting of Shareholdersand the revised Articles of Association, upon the approval granted by China SecuritiesRegulatory Commission with the Reply on Approval of Hengyi Petrochemical Co., Ltd.’s Non-public Issuance of Stocks (ZJXK [2016] No. 1320), the Company privately issued 316,666,666RMB ordinary shares (A shares) with a par value of RMB 1 per share in 2016. The Companyincreased its registered capital by RMB 316,666,666.00, and the registered capital after thechange was RMB 1,619,874,362.00.According to the resolutions of the Second Extraordinary General Meeting of Shareholders ofthe Company in 2017 and the Company’s revised Articles of Association, the Companyimplemented the second restricted stock incentive plan in 2017. The incentive form adopted in
this incentive plan was restricted stocks, and 50 incentive objects were granted the restrictedstocks in this time. 28.55 million restricted stocks with a par value of RMB 1 per share weregranted to incentive objects by means of targeted issuance. The Company increased itsregistered capital by RMB 28,550,000.00, and the registered capital after the change was RMB1,648,424,362.00.According to the resolutions of the Company’s 2017 Annual General Meeting of Shareholdersand the revised Articles of Association, the capital reserve was transferred to increase 4 sharesfor every 10 shares to all shareholders based on the Company’s original total share capital ofRMB 1,648,424,362. The Company completed the registration of bonus and transferred stockson May 24, 2018. The Company increased its registered capital by RMB 659,369,744, and theregistered capital after the change was RMB 2,307,794,106.00.In October 2018, due to the resignation of restricted stock incentive objects, the Companyrepurchased and cancelled 679,000 restricted stocks. The Company reduced its registeredcapital (share capital) by RMB 679,000. After the change, the registered capital was RMB2,307,115,106, and the share capital was RMB 2,307,115,106.In December 2018, the Company issued 170,592,433 shares to Zhejiang Hengyi Group Co.,Ltd. (hereinafter referred to as "Hengyi Group"), 75,124,910 shares to Fulida Group HoldingCo., Ltd. (hereinafter referred to as "Fulida Group"), and 75,124,910 shares to XinghuiChemical Fiber Group Co., Ltd. (hereinafter referred to as "Xinghui Chemical Fiber Group")to purchase related assets. After the change, the registered capital was RMB 2,627,957,359.00,and the share capital was RMB 2,627,957,359.00.In January 2019, the Company privately issued 213,768,115 shares to 6 investors separately toraise matching funds. After the change, the registered capital was RMB 2,841,725,474.00 andthe share capital was RMB 2,841,725,474.00.According to the resolutions of the Company’s 2019 Annual General Meeting of Shareholdersand the revised Articles of Association, the capital reserve was transferred to increase threeshares for every 10 shares to all shareholders based on the Company’s original total sharecapital of RMB 2,841,725,474.00. The Company completed the registration of bonus andtransferred stocks on May 28, 2020. The Company increased its registered capital by RMB852,517,642, and the registered capital after the change was RMB 3,694,243,116.00.On June 9, 2020, in accordance with the Proposal on the Issuance of Shares to Purchase Assetsand the Realization of Performance Commitments for Related-party Transaction Projects in2019 and Performance Compensation Plan, the cancellation of 12,597,709 shares wascompleted, and the registered capital after the change was RMB 3,681,645,407.00.
Upon approval by Shenzhen Stock Exchange (SZSE) (approval document SZS [2020] No.1027), the Company’s convertible corporate bonds amounting to RMB 2 billion were listed onShenzhen Stock Exchange on November 16, 2020 with the bond name of Hengyi ConvertibleBonds, the conversion period of which was from April 22, 2021 to October 15, 2026. Through2021, a total of 1,639 Hengyi Convertible Bonds were converted into 14,337 HengyiPetrochemical shares.On July 28, 2021, in accordance with the Proposal on Achievement of PerformanceCommitments and Performance Compensation Plan in 2020 through the Share Issuance forAsset Acquisition and related-party transactions, the Company canceled 15,379,730 shares.Through 2022, a total of 89 Hengyi Convertible Bonds were converted into 792 HengyiPetrochemical shares. This year, after completing the conversion of 792 shares through theaforementioned "Hengyi Convertible Bonds", the registered capital of the Company waschanged to RMB 3,666,280,806.00.The unified credit code of the Company is 9145050019822966X4; Domicile: Qinzhou,Guangxi; currently headquartered at: No. 260 North Shixin Road, Xiaoshan District, HangzhouCity, Zhejiang Province; legal representative: Qiu Yibo; as of December 31, 2022, theregistered capital was RMB 3,666,280,806.00 and the share capital was RMB3,666,280,806.00.The parent company of the Company is: Zhejiang Hengyi Group Co., Ltd.
2. Industry Involved
The Company involves petrochemical and chemical fiber products manufacturing.
3. Line of Business
The approved business scope of the Company: production, processing and sales of chemicalfibers, chemical raw materials (excluding hazardous chemicals); imports and exports (exceptthe items banned and restricted under national laws and regulations).
4. Key Products
The Company's main products include purified terephthalic acid (PTA), polyethyleneterephthalate (PET) flakes, PET bottle flakes, polyester pre-oriented yarn (POY), polyesterfully drawn yarn (FDY), polyester drawn textured yarn (DTY), polyester staple fiber,paraxylene (PX), gasoline, diesel and jet fuel etc.
5. Statement of Changes in Line of Business, Major Changes in Equity, Major Mergers andAcquisitions of the CompanyFor details, please refer to “Historical Development”.
6. The Financial Statements were approved for submission by the BOD of the Company on
April 19, 2023.
7. There are 48 subsidiaries included into the consolidated statements of the Company in2022. For details, please refer to Note VIII “Rights and Interests in Other Subjects”. Comparedwith previous year, three more subsidiaries are included in and some other three subsidiariesare removed from the consolidated statements for current year. For details, please refer to NoteVII “Changes in Scope of Consolidation”.
II. Basis for the preparation of the financial statements
1. Basis for the preparation
The Company's financial statements are prepared on the basis of the actual transactions andaffairs of the Company on the going concern assumption in accordance with the AccountingStandards for Business Enterprises - Basic Standard (promulgated with Decree 33 and revisedwith Decree 76 by the Ministry of Finance), the 42 Accounting Standards, guidelines for theapplication of and explanations to Accounting Standards for Business Enterprises and otherrelevant provisions issued and amended on and after February 15, 2006 (hereinaftercollectively the “Accounting Standards for Business Enterprises”), and provisions of CSRC onPreparation Rules for Information Disclosure by Companies Offering Securities to the PublicNo. 15 - General Provisions on Financial Reports (2014 Revision).Following relevant provisions of the Accounting Standards for Business Enterprises, theCompany adopts the accrual basis for its accounting. Except for certain financial instruments,the financial statements are measured on the historical cost basis. The held-for-sale non-currentassets shall be measured subject to the amount of fair value minus estimated cost or the originalbook value when the assets meet the held-for-sale conditions, whichever is lower. Impairmentreserves are retained for assets following relevant provisions if any asset is impaired.
2. Going concern
This financial statement is presented on a going concern basis, and the Company has going-concern ability for at least 12 months from the end of the reporting period.
III. Statement of compliance with the accounting standards for business enterprisesThe Financial Statements prepared by the Company are in compliance with the requirementsof the Accounting Standards for Business Enterprises, truly and completely reflecting theCompany’s financial conditions as at December 31, 2022 and the operating results and cashflows through 2022. Furthermore, the Financial Statements of the Company have been
complied, in all material respects, with the disclosure requirements for financial statementsand notes as specified in Rules No. 15 on Compiling and Submitting Information Disclosed byCompanies Offering Securities to the Public: General Provisions on Financial Reports revisedby CSRC in 2014.
IV. Important accounting policies and estimatesThe Company and its subsidiaries have formulated a number of specific accounting policiesand accounting estimates in respect of transactions and matters, such as bad debt provision ofreceivables, depreciation of fixed assets, amortization of intangible assets, income recognition,etc. according to the actual production and operation characteristics and in accordance with theprovisions of the Accounting Standards for Business Enterprises. For details, please refer tothe relevant descriptions in Note IV herein. For details, please refer to the relevant descriptionsin Note IV herein. For more information concerning significant accounting judgments andestimates, refer to Note IV, 34 “Significant Accounting Judgments and Estimates”.
1. Accounting period
The Company adopts an annual period and an interim accounting period. The latter refers toone that is shorter than a complete accounting period. The Company adopts the calendar yearas its financial year, namely from January 1 to December 31 of each year.
2. Operating cycle
The normal operating cycle refers to the period in which the Company completes the stepsfrom the purchase of assets to be processed to the realization of cash or cash equivalent. TheCompany adopts a 12-month period as its operating cycle and the criteria for determining theliquidity of its assets and liabilities.
3. Recording currency
The Company uses RMB as the benchmark currency for its operations in the primary economicenvironment, in which the Company and its domestic subsidiaries operate. The Company’ssubsidiaries outside China may decide US dollars as their recording currency pursuant to theprevailing economic environment of their locations. In preparing these financial statements,the Company has used RMB as recording currency.
4. Accounting treatment of business combination under common control and businesscombination not under common controlBusiness combination refers to the transaction or matter where two or more than two individualenterprises merge into one report subject. Business combination is divided into combinationof enterprises under the same control and combination of enterprises not under the same control.
(1) Combination of businesses under common control
Business combination under common control refers to the combination of businesses that areunder the ultimate control of the same party or parties on a non-temporary basis before andafter the combination. Under a combination of enterprises under the same control, the partyacquiring the controlling interests in other enterprises involved in the combination at thecombination date is the acquirer and such other enterprises are the acquiree. The combinationdate refers to the day when the acquirer substantially acquires the controlling interests of theacquiree.Assets and liabilities the acquirer acquires through the business combination are measured atthe book value of the acquiree on acquisition date. Capital reserve (stock premium) is adjustedbased on the difference between the net book value of assets acquired by the acquirer and thebook value of the consideration for the combination paid (or the total nominal value of issuedshares), and if the capital reserve (stock premium) is insufficient to offset such difference, thedifference will be offset against retained earnings.Costs directly incurred by the acquirer in the course of the business combination are recordedin current profit and loss.
(2) Combination of enterprises not under the same control
Combination of enterprises not under the same control means that enterprises involved incombination are not controlled finally by the same party or parties before combination. Undera combination of enterprises not under the same control, the party acquiring the controllinginterests in other enterprises involved in the combination at the acquisition date is the acquirerand such other enterprises are the acquiree. The acquisition date refers to the day when theacquirer substantially acquires the controlling interests of the acquiree.In case of combination of businesses not under common control, costs for the combinationinclude assets paid and liabilities incurred or assumed to acquire the control of the acquireeson the Acquisition Date as well as the fair value of the equity securities. Intermediary costsincurred for audit, legal and valuation services and other administrative services are recordedin current profit and loss. Transaction costs incurred by the acquirer for equity securities ordebt securities issued as consideration for the combination are recorded as the initialrecognition amounts for equity securities or debt securities. Contingent considerations paid arerecorded as cost for the combination at the fair value on the Acquisition Date. If any new orfurther evidence is found as to the circumstances within 12 months after the Acquisition Dateand it is necessary to adjust the contingent consideration, the goodwill for the combination isadjusted accordingly. Combination costs incurred by the acquirer and identifiable net assets
obtained from combinations shall be measured at fair value on the date of acquisition. Thebalance of the combination cost less the fair value of the net identifiable assets acquired isrecognized as goodwill. If the merging cost is less than the net fair value of the identifiableassets of the acquiree, the fair values of the identifiable assets, liabilities and contingentliabilities as well as the merging cost are reviewed; if verified, the difference is recognized incurrent profit and loss.Where an acquirer acquires the acquiree's deductible temporary difference which is notrecognized due to incompliance with the recognition condition for deferred income tax assetson the acquisition date, within the 12 months since acquisition date, if new or furtherinformation appears to demonstrate the existence of related situation on the acquisition date,and the economic benefits brought by the acquiree's deductible temporary difference on theacquisition date are expected to be realized, the relevant deferred tax assets are recognized andthe business reputation is written off; if the business reputation is not enough for write-off, thedifference is recognized as profit and loss for the period. Except for the above, the deferred taxassets as recognized relevant to the merger are included in profit and loss for the period.Combination of businesses not under common control realized by steps is tested againstCircular of the Ministry of Finance for the Printing and Distribution of No. 5 Explanation tothe Accounting Standards for Business Enterprises (C.K. [2012] No. 19) and the criteria forthe judgment of package deals contained in Article 51 of the Accounting Standards forBusiness Enterprises No. 33 - Consolidated Financial Statements [refer to Note IV, .5 (2)] todetermine whether the related transactions are qualified as a package deal. If qualified as apackage deal, the transactions are treated with reference to the foregoing paragraphs and NoteIV, 15 “Long-term Equity Investment”; if they are not qualified, individual financial statementsare separated from consolidated financial statements for relevant accounting treatment:
In the Consolidated Financial Statements, the equity held by the acquiree before theAcquisition Date is remeasured at the fair value on the Acquisition Date and the differencebetween the fair value and the book value is recorded in the income from investments of currentperiod; if the equity held by the acquiree before the Acquisition Date involves othercomprehensive income, the relevant comprehensive income is treated in the same manner theacquiree disposes of relevant assets or liabilities (i.e., the income, except the portion in thechange resulted from the acquiree's remeasurement of the net liabilities or net assets of thedefined benefit plan accounted using the equity method, is recorded in the income frominvestment of the period to which the Acquisition Date belongs).In consolidated financial statements, the acquiree's equity held before the acquisition date is
remeasured at the fair value of such equity on the acquisition date and the difference betweenthe fair value and the book value is included in current investment income; where the acquiree'sequity held before the acquisition date involves other comprehensive income, the accountingof other comprehensive income related to the investment is on the same basis as the accountingof the related assets or liabilities disposed directly by the acquiree (that is, other comprehensiveincome is transferred to the investment income for the period covering the acquisition date,except for the shares by equity method proportional to changes in the net defined benefitliability or asset caused by the acquiree's remeasurement).
5. Preparation of consolidated financial statements
(1) Principles for defining the scope of the Consolidated Financial StatementsThe scope of the Consolidated Financial Statements is defined on the basis of control. Controlrefers to the power the Company has over the entity in which it invests, to enjoy variable returnfrom the entity by participating in the business operations of the entity and to influence theamount of the return through its ability of influencing the entity. The scope of consolidationincludes the Company and all of its subsidiaries. A subsidiary is an entity subject to the controlof the Company.If any change in relevant circumstances arises and results in any change in the relevantelements determining the control as related above, the Company will re-evaluate the same.
(2) Methods for preparing the consolidated financial statements
The Company includes a subsidiary in the scope of the combination on the date the Companyacquires the actual control over the net assets and production operations of such subsidiary anddiscontinues the combination on the date the Company loses the control. For a subsidiarydisposed of during the period, the business results and cash flow before the disposal areproperly included in the Consolidated Statement of Income and the Consolidated Statement ofCash Flow, while the year beginning data contained in the Consolidated Balance Sheet are notadjusted. For a subsidiary included in the period as a result of combination of businesses notunder common control, the business results and cash flow after the Acquisition Date have beenproperly included in the Consolidated Statement of Income and the Consolidated Statement ofCash Flow, while the year beginning data and the comparison data contained in theConsolidated Balance Sheet are not adjusted. For a subsidiary under combination of businessesunder common control and a acquiree under consolidation by merger, the business results andcash flow during the period from the beginning of the period to which the acquisition datebelongs to the acquisition date have been properly included in the Consolidated Statement ofIncome and the Consolidated Statement of Cash Flow, while the comparison data contained in
the Consolidated Balance Sheet are adjusted.When preparing the Consolidated Financial Statements, if there is any inconsistency betweenthe accounting policies and accounting period of the subsidiary and those of the Company, thefinancial statements of the subsidiary are adjusted accordingly where necessary. For asubsidiary acquired through business combinations not under common control, its financialstatements shall be adjusted on the basis of the fair value of its identifiable net assets on thedate of acquisition.Balances of major transactions, transactions and unrealized profits within the scope of theCompany are offset when preparing the Consolidated Financial Statements.The shareholder equity and net profits or losses of the subsidiary not attributable to theCompany are separately presented in the categories of the shareholder equity and net profit asminority shareholder's equity and net profit in the Consolidated Financial Statements. Theportion of net profits or losses of the subsidiary in the period that is taken as the minorityshareholder's equity is presented in the category of Minority Shareholder's Equity under thenet profit in the Consolidated Statement of Income. The balance of the loss of the subsidiaryattributable to minority shareholders less the shareholder equity of the subsidiary attributableto minority shareholders at the year beginning is set off against the minority shareholder'sequity.If the control over a subsidiary is lost due to disposal of partial equity investment in thesubsidiary or any other reason, the remaining equity is remeasured at its fair value on the datethe control is lost. The aggregate of the consideration obtained by disposing of the equity andthe fair value of the remaining equity less the portion of the net assets of the subsidiary thathas been measured, as calculated at the original shareholding proportion, from the AcquisitionDate is recognized in the income from investments of the period, in which the control is lost.When the control is lost, the comprehensive income related to the equity investment in theoriginal subsidiary is treated in the same manner the acquiree disposes of relevant assets orliabilities (i.e., the comprehensive equity, except the portion in the change resulted from theremeasurement of the net liabilities or net assets of the defined benefit plan, is recorded in theincome from investment of the period). This portion of the remaining equity is subsequentlymeasured following the Accounting Standards for Business Enterprises No. 2 - Long-termEquity Investment or the Accounting Standards for Enterprises No. 22 - Recognition andMeasurement of Financial Instruments, as noted in Note IV, 15 “Long-term Equity Investment”and Note IV, 9 “Financial Instruments”.
If the control is lost through several transactions of disposing of equity investment in therelevant subsidiary, the transactions are tested to determine whether they are qualified as apackage deal. A number of transactions of disposing of equity investments are usuallyaccounted for as a package deal if the conditions, terms and economic impacts of suchtransactions meet one or more of the following conditions: ①The transactions are done at thesame time or in consideration of mutual impacts on each other; ②The transactions collectivelyachieve a complete business effect; ③The completion of one transaction depends on thecompletion of at least one of the other transactions; ④A transaction does not appear to beeconomic if considered alone but is economic if considered in connection with othertransactions. If the transactions are determined not to be a package deal, each of them isaccounted following the principles for “disposing of long-term equity investments when thecontrol is not lost” (refer to Note IV, 15.2④) and “the control over a subsidiary is lost due todisposal of partial equity investment in the subsidiary or any other reason” (refer to the aboveparagraph for details). If the transactions of disposing of equity investment in a subsidiary thatlead to the loss of control are determined as a package deal, each of them is treated as atransaction of disposing of equity investment in a subsidiary that lead to the loss of control;however, the difference between the disposal price and the corresponding share of the net assetof the subsidiary is recognized in the other comprehensive income in the ConsolidatedFinancial Statements and transferred to current profit and loss in which the control is lost.
6. Classification of joint arrangements and accounting of joint operationsA joint arrangement refers to an arrangement between two or more parties participating injointly control. The Company divides joint arrangements into joint operations and jointventures on the basis of the rights enjoyed and liabilities assumed in the joint arrangements. Ajoint operation refers to a joint arrangement in which the Company enjoys rights and assumesliabilities. A joint venture refers to a joint arrangement of which the Company enjoys only therights to the net asset.The Company adopts equity method for investment accounting of joint ventures, in accordancewith the accounting policies as specified in Note IV. 15. (2) ② “equity-accounted long-termequity investment”.The Company, as a party of joint operation, recognizes the assets and liabilities it is entitled toindividually and recognizes at its share the assets and liabilities to which the parties of jointoperation are entitled jointly; it recognizes the income from selling the share arising from jointoperation to which the Company is entitled and recognizes at its shares the income from jointoperation due to selling such share; it recognizes the expenses it incurs individually and
recognizes at its share the expenses arising from joint operation.When the Company makes investments in the joint operation or sells assets to the jointoperation to which the Company is a party (such assets do not constitute business of the jointoperation, as is also applicable below) or purchases assets from the joint operation, theCompany recognizes only the part of the profits or losses arising from such transactionsattributable to other parties to the joint operation. If impairment loss occurs to an asset definedin the Accounting Standards for Business Enterprises No. 8 - Impairment of Assets and otherregulatory documents, the Company fully recognizes the loss occurs to such an asset as theCompany has invested in or sold to the joint operation, or only the loss occurs to such an assetas the Company has purchased from the joint operation in proportion to the share in the jointoperation the Company is entitled to.
7. Recognition criteria for cash and cash equivalents
The cash and cash equivalents of the Company include cash at hand, deposit in bank that canbe readily used for payment and investments of short terms (generally mature within threemonths from the date of purchase) and high liquidity that can be easily converted into knownsums of cash and are exposed to low risks in terms of change in value.
8. Foreign currency business and conversion of foreign currency statement
(1) Translation of transactions in foreign currencies
A transaction in a foreign currency of the Company, when initially recognized, is translatedinto the benchmark currency at the spot rate (the middle rate of the foreign exchange quotationpublished by the People's Bank of China; the same below) on the transaction date, providedthat foreign currency translation transactions and transactions involving conversion of foreigncurrencies are translated into the benchmark currency at the exchange rate actually adopted forthe transactions.
(2) Translation of monetary and non-monetary assets in foreign currenciesOn the balance sheet date, monetary assets in foreign currencies are translated at the spot rateon the balance sheet date and the exchange difference arising therefrom is recognized in currentprofit and loss except that ①the exchange difference arising from special loans in foreigncurrencies used to purchase assets eligible for capitalization is treated following the principleof capitalization of borrowing cost; ②the exchange difference arising from the hedginginstruments used for effective hedging of net investment in overseas operations is recognizedin other comprehensive income, and after the net investment is disposed, recognized in currentprofit and loss; ③the exchange difference arising from changes in the book balance ofmonetary assets available for sale, except the amortized cost, is recognized in other
comprehensive income.When preparing the Consolidated Financial Statements, if a monetary asset in foreign currencyconstitutes a net investment in an overseas operation, the exchange difference arising due to achange in the exchange rate is recognized in other comprehensive income and transferred tocurrent profit and loss upon the disposal of the overseas operation.Non-monetary transactions in foreign currencies that are measured at the historical costs aretranslated at the spot rate prevailing on the Transaction Date. A non-monetary asset in a foreigncurrency measured at the fair value, is translated at the spot rate on the date on which the fairvalue is determined and the difference between the amounts recorded in the benchmarkcurrency after the translation and that recorded in the original currency is treated as changes inthe fair value (including change in exchange rate) and recognized in current profit and loss orother comprehensive income.
(3) Translation of accounting statements in foreign currencies
When preparing the Consolidated Financial Statements, if a monetary asset in foreign currencyconstitutes a net investment in an overseas operation, the exchange difference arising due to achange in the exchange rate is recognized in other comprehensive income as a difference fromtranslation of accounting statements in foreign currencies and transferred to current profit andloss upon the disposal of overseas operation.Financial statements in foreign currencies of overseas operations are translated into RMB andassets and liabilities in the balance sheet are translated at the spot rate on the Balance SheetDate; all transactions in Shareholders' Equity, except those in Undistributed Profit, aretranslated at the current exchange rate on the Transaction Date. Income and expense in thebalance sheet are translated at the prevailing exchange rate on the Transaction Date.Undistributed profit at the end of previous year is the undistributed profit at the end of previousyear; the undistributed profit at the yearend is measured and presented by the items of thetranslated profit distribution; the difference between the translated assets/liabilities and thetotal shareholders' equity is recognized in other comprehensive income as the difference offoreign currency translation. If an overseas operation is disposed of and the control over it islost, the difference of foreign currency translation related to the overseas operation listed inShareholders' Equity in the Balance Sheet is transferred to current profit and loss in which thesame is disposed of, wholly or in proportion to the share of the overseas operation thus disposedof.For cash flows in foreign currencies, the weighted-average exchange rate on the occurrenceday of cash flow shall apply. The difference of cash caused by change of exchange rate shall
be separately presented in Cash Flow Statement.The amounts at the end of the previous year and the actual amounts of the previous year arepresented as translated from the financial statements of the previous year.If all the shareholders’ equity in an overseas operation is disposed of or if the control over it islost as a result of disposal of part of the owner’s equity or for any other reason, the differenceof foreign currency translation related to the overseas operation that is attributable toshareholders of the parent company, as listed in Owners’ Equity in the Balance Sheet is whollytransferred to current profit and loss in which the same is disposed of.If the share of the equity in an overseas operation held by the Company decreases as a resultof disposal of part of the equity investment or for any other reason but the decrease does notresult in the loss of control over the overseas operation, the difference of foreign currencytranslation related to the part of the overseas operation is classified as minority shareholder'sequity and is not transferred to current profit and loss. If part of the equity in an overseasoperation that is an associate or a joint venture is disposed of, the difference of foreign currencytranslation related to the overseas operation is transferred to current profit and loss in whichthe same is disposed of, wholly or in proportion to the share of the overseas operation thusdisposed of.
9. Financial instruments
A financial instrument is recognized as an asset or liability when the Company becomes a partythereto.
(1) Classification, recognition and measurement of financial assetsBased on the business model of managing financial assets and the characteristic of contractualcash flow, the Company classifies financial assets into three categories, which are financialassets measured at amortized cost, financial assets at fair value through other comprehensiveincome, and financial assets at fair value through profit or loss.Financial assets are measured at fair value for the purpose of initial recognition. For financialassets measured at fair value through profit or loss, the transaction expenses are directlyincluded in current profit and loss; for financial assets in other categories, the transactionexpenses are included in the amount initially recognized. For accounts receivable or billsreceivable arising from the sale of goods or the rendering of services, which do not include ordo not allow for a significant financing component, the amount of consideration to which theCompany is expected to be entitled to, is treated as the amount of initial recognition.
① Financial assets measured at amortized cost
The objective of the business model within which financial assets measured at amortized cost
are managed is to collect contractual cash flow, and the contractual cash flow characteristic ofsuch financial assets is consistent with a basic lending arrangement, namely, the cash flowgenerated at a specified date is solely payment of principal and the interest based on unpaidprincipal amount. Such financial assets are subsequently measured at amortized cost using theeffective interest rate method, the profits or losses arising from the amortization or impairmentof the assets are recorded in current profit or loss.
② Financial assets measured at fair value and their changes are included in othercomprehensive incomeSuch financial assets are managed within a business model whose objectives are to collectcontractual cash flow and to sell the assets, and the contract cash flow characteristics of suchassets are consistent with a basic lending arrangement. Such financial assets are measured atfair value through other comprehensive income, however, impairment losses or gains,exchange profits or losses, as well as interest calculated according to the effective interest ratemethod are recorded in current profit or loss.Furthermore, the Company designates certain non-trading equity instruments as financialassets measured at fair value through other comprehensive income. The relevant dividendincome earned on such financial assets is recorded in current profit or loss, with changes infair value recorded in other comprehensive income. Upon de-recognition of financial assets,the cumulated profits or losses which were previously recorded in other comprehensive incomewill be transferred from other comprehensive income to retained earnings, and will not berecorded in current profit or loss.
③ Financial assets at fair value through profit or loss
The Company classifies financial assets other than those measured at amortized cost and thosemeasured at fair value through other comprehensive income, as financial assets at fair valuethrough profit or loss. Moreover, on initial recognition, in order to eliminate or significantlyreduce accounting mismatch, the Company designates certain financial assets as measured atfair value through profit or loss. Such financial assets are subsequently measured at fair value,with changes in fair value recorded in current profit or loss.
(2) Classification, recognition and measurement of financial liabilitiesFinancial liabilities are classified at the initial recognition as financial liabilities measured atthe fair value with the changes listed in current profit and loss and other financial liabilities.For financial liabilities measured at fair value through profit or loss, the transaction expensesare directly included in the current profit and loss; for financial liabilities in other categories,the transaction expenses are included in the amount initially recognized.
① Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financialliabilities (derivative instruments that belong to financial liabilities) and those designatedfinancial liabilities at fair value through profit or loss at the time of initial recognition.Held-for-trading financial liabilities (including derivatives which fall within the category offinancial liabilities) are subsequently measured at fair value, with fair value changes recordedin current profit or loss, except to the extent they are related to hedge accounting.For financial liabilities designated as at fair value through profit or loss, fair value changesarising from the change in the Company’s credit risk are recorded in other comprehensiveincome, and upon de-recognition of such financial liabilities, the cumulative amount ofchanges in fair value which arise from the change in credit risk and recorded in othercomprehensive income are transferred to retained earnings. Other changes in fair value arerecorded in current profit or loss. If accounting for the effects of change in the credit risk ofthe financial liabilities in the abovementioned manner would result in or increase theaccounting mismatch in profit and loss, the Company will record all the profits or losses onthe financial liabilities (including the amount of effects of the change in the Company’s creditrisk) in current profit or loss.
② Other financial liabilities
Except for financial liabilities which arise due to that the transfer of financial asset does notsatisfy the criteria for de-recognition or due to the continuing involvement in the transferredasset, and except for financial guarantee contract, all other financial liabilities are classified asmeasured at amortized cost, which are subsequently measured at amortized cost with theprofits or losses arising from de-recognition or amortization recorded in current profit or loss.
(3) Basis for recognizing and methods for measuring the transfer of financial assetsA financial asset meeting one of the following conditions is derecognized: ① The contractualright to receive cash flows from the financial asset is terminated; ② the financial asset hasbeen transferred and substantial risks related to and benefits from the ownership of the financialasset have been transferred to the transferee; ③the financial asset has been transferred andsubstantial risks related to and benefits from the ownership of the financial asset has beenwaived instead of being transferred or retained.If risks related to and benefits from the ownership of the financial asset have not beentransferred or retained, neither or has the control over the financial asset been waived, then,the financial assets and related financial liabilities are recognized according to the extent towhich the financial asset has been transferred. The extent to which the financial asset has been
transferred refers to the level of risk the entity is exposed to due to the change in the value ofthe financial asset.If the transfer of the whole of a financial asset meets the conditions for derecognition, thedifference between the book value of the financial asset as well as the consideration receivedfor the transfer and the aggregate of changes in the fair value that has been recognized in othercomprehensive income is recognized in current profit and loss.If the transfer of part of a financial asset meets the conditions for derecognition, the book valueof the financial asset is allocated to the part of the financial asset that has been derecognizedand the part that has not been derecognized; the aggregate of the consideration received for thetransfer and accumulated changes in the part of fair value that has been allocated toderecognized part and the difference of the foregoing book value are recognized in currentprofit and loss.In case of a financial asset sold with attached recourse or transferred with endorsement, theCompany determines whether substantial risks and benefits related to the ownership of thefinancial asset have been transferred. If substantial risks and benefits related to the ownershipof the financial asset have been transferred to the transferee, the financial asset is derecognized;if the same is retained, the financial asset is not derecognized; if the same is not transferred norretained, the Company determines whether control over the financial asset is retained, andtreated according to the principles related in previous paragraphs.
(4) Derecognition of financial liabilities
Where the present obligation of a financial liability (or a portion thereof) has been discharged,the Company de-recognizes the financial liability (or a portion thereof). Where the Company(as the borrower) enters into an agreement with a lender whereby it assumes a new financialliability to replace an existing one, and the new financial liability has substantially differentcontract terms than those of the existing one, the existing financial liability is de-recognized,and a new financial liability is recognized. Where the Company has made substantial changesto the contractual terms of an existing financial liability (or a portion thereof), it de-recognizesthe existing financial liability and recognizes a new financial liability according to the changedterms.Where a financial liability (or a portion thereof) is de-recognized, the difference between thebook value of that financial liability and the consideration paid (including the non-cash assettransferred or liability assumed) is recognized in current profit or loss.
(5) Offsetting of financial assets and financial liabilities
If the Company has the legal right readily available to offset a recognized financial asset and
a financial liability and the Company plans a net settlement or realizes the financial asset andsettles the financial liability simultaneously, and the balance of the offsetting is presented inthe Balance Sheet. Other financial assets and liabilities are separately presented in the BalanceSheet without offsetting one another. Other financial assets and liabilities are separatelypresented in the Balance Sheet without offsetting one another.
(6) Methods for determining fair values of financial assets and liabilitiesThe fair value refers to the price is receivable from an asset sold or payable for a liabilitytransferred through a normal transaction on the measurement date. In case of a financialinstrument for which there is an active market, the fair value is determined by the price quotedon the active market. The quotation on the active market refers to the price collected from stockexchanges, brokers, associations of the industry, pricing institutions, etc., that represents theprice at which a transaction is actually an arm's length transaction. In case of a financialinstrument for which there is no active market, the fair value is determined using the valuationtechniques. Valuation techniques include the reference to the price at which market participantsthat are familiar with the market and transact voluntarily have used recently, the reference tothe fair value of other financial instruments of similar properties, cash flow discount methodand option valuation modes. At the time of valuation, the Company uses valuation techniquesthat are applicable in the current circumstances and that are sufficient to support the use of dataand other information, selects input values that are consistent with the characteristics of theasset or liability considered by the market participants in the transaction of the relevant assetor liability, and prioritizes the use of relevant observable input values. Unobservable inputs areused if the relevant observable inputs are not available or are not practicable.
(7) Equity instruments
An equity instrument refers to a contract evidencing the right to the remaining equity in anasset after deducting all relevant liabilities. The issuance (including seasoned offering),repurchase, sale or cancellation of equity instruments by the Company are treated as changesin equity, the transaction costs related to equity transactions are deducted from the equity. TheCompany does not recognize changes in the fair value of equity instruments.Dividend distribution during the existence of an equity instrument (including “interest”generated by an instrument that is classified as equity instrument) is treated as profitdistribution.
10. Impairment of financial assets
Financial assets for which impairment loss is required to be recognized by the Company arefinancial assets measured at amortized cost, investment in debt instruments measured at fair
value through other comprehensive income, these mainly include bills receivable, accountsreceivable, other receivables, debt investments, other debt investments and long-termreceivables. Furthermore, for certain financial guarantee contracts, impairment reserves areprovided and credit impairment losses are recognized according to the accounting policiesmentioned in this section.
(1) Method for recognizing impairment reserves
Based on expected credit loss, the Company recognizes impairment reserves and creditimpairment loss in respect of the above-mentioned items according to the applicable methodfor measuring excepted credit loss (the general approach or simplified approach).Credit loss is the difference between all contractual cash flow receivable by the Company undercontracts which are discounted according to the original effective interest rate, and all the cashflow expected to be received, namely the present value of all cash shortfall. Particularly,financial assets acquired or derived to which credit impairment has occurred are discounted bythe Company according to the credit-adjusted effective interest rate.The general approach for measuring expected credit loss means that, at each balance sheet date,the Company assesses the financial assets to see if the credit risk has significantly increasedafter initial recognition, if credit risk has significantly increased after initial recognition, theCompany calculates provision for loss according to the amount of expected credit loss over thelife-time of the assets; if credit risk has not significantly increased after initial recognition, theCompany calculates loss provision based on expected credit loss in the future twelve-month.When evaluating expected credit loss, the Company considers all reasonable information thatis supported by evidence, including forward-looking information.For financial instruments that have relatively low credit risk at the balance sheet date, the aboutassumes that the credit risk of such instruments has not significantly increased after initialrecognition, and chooses to calculate loss provision according to the twelve-month expectedcredit loss.
(2) Criteria for determining whether credit risk has significantly increased since initialrecognitionIf the probability of default of a certain financial asset within the expected lifetime of the asset,as determined at the balance sheet date, is significantly higher than the probability of defaultwithin the expected lifetime determined at the time of initial recognition, then it indicates thatthe credit risk of such asset has significantly increased. Except for special circumstances, theCompany regards the change in default risk occurring in the future twelve-month period as thereasonable estimate of the change in default risk occurring over the entire lifetime of an asset,
thereby determining whether the credit risk has increased significantly after initial recognition.Usually in case of more than 30 days overdue, the Company deems that the credit risk of thefinancial instrument has increased significantly, unless there is conclusive evidence showingthat the credit risk of the financial instrument has not increased significantly since its initialrecognition.The Company will take into account the following factors when assessing whether the creditrisk has increased significantly:
1) Whether the actual or expected operating results of the debtor have changed significantly;
2) Whether the regulatory, economic or technological environment of the debtor has beensubject to significant adverse changes;
3) Whether the value of the collateral mortgaged for debt or the quality of guarantee providedby a third party or credit enhancement has changed significantly with these changes expectedto reduce the debtor’s economic motivation to repay the debt within the term set out in thecontract or affect the probability of breach;
4) Whether the expected performance and repayment behaviors of the debtor have changedsignificantly;
5) Whether the Company’s credit management methods for financial instruments havechanged, etc.On the balance sheet date, if the Company determines that a financial instrument has only lowcredit risk, the Company will assume that the credit risk of the financial instrument has notincreased significantly since its initial recognition. If the default risk of financial instrumentsis low, the borrower has a strong capacity to fulfill its cash flow obligations under contract inthe short term, and the borrower’s performance of its cash obligations under contract may notnecessarily be reduced even if there are unfavorable changes in the economic situation andoperating environment in a long period of time, then the financial instrument will be deemedto have low credit risk.
(3) Criteria for determining financial assets that have been subject to credit impairmentWhen one or more events that adversely affects the expected future cash flow of a financialasset has occurred, such financial asset is considered to be an asset which has suffered creditimpairment. Evidence of credit impairment of financial assets includes the followingobservable information:
A serious financial difficulty occurs to the issuer or debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays thepayment of interests or the principal, etc.;Due to the economic or contractual considerations related to the debtor’s financial difficulties,the creditor gives the debtor a compromise that the debtor would not make under any othercircumstances;The debtor will probably become bankrupt or carry out other financial reorganizations;The issuer or the debtor’s financial difficulties result in the disappearance of the active marketfor the financial asset;
1) A financial asset is purchased or originated at a heavy discount, and this discount reflectsthe fact that the credit loss has occurred.The credit impairment of a financial asset may be caused by the combined effects of severalevents, and may not necessarily be caused by a separately identifiable event.
(4) Method for evaluating the expected credit risk on a portfolio basisFor financial assets which have significantly different credit risk, the Company evaluates thecredit risk on an individual basis, for example, amounts due from related parties; receivablesfrom a debtor with which the Company has a dispute or which involve a lawsuit or arbitration;and receivables for which there is a clear indication that the debtor thereof is very likely to beunable to meet its payment obligation.In addition to financial assets with credit risk assessed individually, the Company dividesfinancial assets into different groups based on common risk characteristics. The common creditrisk characteristics adopted by the Company include types of financial instruments, credit riskratings, aging combination, etc., and it assesses credit risk on the basis of combination.
(5) Accounting treatment for the impairment of financial assets
At the end of period, the Company calculates the expected credit loss of various financial assets,if the expected credit loss is greater than the carrying amount of the current impairmentreserves, the difference between the two amounts is recognized as an impairment loss; if theexpected credit loss is smaller than the carrying amount of impairment reserves, then thedifference is recognized as an impairment gain.
(6) Method for determining the credit loss of financial assets
With regard to the notes receivable, accounts receivable and financing of accounts receivablearising from daily business activities such as selling goods, providing labor services, etc., theCompany measures the loss provision based on the expected credit loss for the entire duration,regardless of whether there is a significant financing component.? Notes receivableBased on the credit risk characteristics, the notes receivable will be classified into different
combinations.
| Item | Basis for grouping | Method for measuring of expected credit loss |
| and domestic letter of credit | Acceptor: banks at low credit risk | The Company deems that this type of funds has a relatively low credit risk and does not recognize the expected credit loss. |
| Commercial acceptance bills | This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | Confirm the expected credit rate with reference to corresponding policy of receivables |
? Accounts receivable and contract assetsExcept for other receivables for which credit risk is assessed individually, assets are classifiedinto different portfolios based on credit risk characteristic:
| Item | Basis for grouping | Method for measuring of expected credit loss |
| Related parties’ receivables within the scope of consolidation (note) |
This portfolio representsreceivables due from relatedparties with relatively low riskwhich are included within thescope of consolidation.
| The Company deems that this type of funds has a relatively low credit risk and does not recognize the expected credit loss. | ||
| Receivables from third parties | This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | With reference to historical credit loss experience and based on the current conditions and the forecasts of future economic conditions, a comparison table between the aging of accounts receivable and the expected credit loss rate for the entire duration are prepared and the expected credit losses are calculated. |
Note: “Related parties included in the scope of consolidation” refer to Hengyi Petrochemicaland those companies recorded in the scope of its consolidated financial statement (the samebelow).Comparison table showing the account age of the portfolio of accounts receivable and otherreceivables based on credit risk characteristic and the full lifetime expected credit loss:
| Aging | Expected credit loss rate (%) |
| Within six (6) months (included) | 0.00 |
| 7-12 months (included) | 5.00 |
| 1-2 years (included) | 30.00 |
| Aging | Expected credit loss rate (%) |
| Within six (6) months (included) | 0.00 |
| 2-3 years (included) | 50.00 |
| Over three years | 100.00 |
③ Other receivables
Based on the determination as to whether the credit risk of other receivables has increasedsignificantly since initial recognition, the Company calculates impairment loss according tothe twelve-month expected credit loss or life-time expected credit loss. Except for otherreceivables for which credit risk is assessed individually, assets are classified into differentportfolios based on credit risk characteristic:
| Item | Basis for grouping | Method for measuring of expected credit loss |
| Related party funds within the scope of consolidation | The nature of other receivables is used edit risk characteristics | With reference to historical credit loss experience and based on the current conditions and the forecasts of future economic conditions, the expected credit loss is calculated based on the default risk exposure and the expected credit loss rate within the next 12 months or for the entire duration. |
| Receivables and payables such as advances from entities beyond the scope of consolidation | ||
| Combination of consumption taxes and export tax rebates receivable | ||
| Combination of tax refunds receivable and other government subsidies | ||
| Portfolio of deposits and security | ||
| Employee loan and petty cash | ||
| Other groups |
④ For other financial assets, with regard to financial assets other than those under theaforesaid measurement methods, the Company measures impairment at an amount equivalentto expected credit losses within the next 12 months or for the entire duration based on whetherits credit risk has increased significantly since initial recognition loss.
11. Accounts receivable financing
For the notes and accounts receivable that are classified as measured at fair value with changesincluded in other comprehensive income, the part thereof within one year (including one year)from the date of acquisition is presented as receivable financing; if the period from the
acquisition is more than one year, it will be presented as other debt investment. For relatedaccounting policies, please refer to Note IV, 9 “Financial Instruments” and Note IV, 10“Impairment of Financial Assets”.
12. Inventory
(1) Classification of inventory
Inventories refer to finished goods or commodities for sale held in daily activities, unfinishedgoods in manufacturing process, and materials and supplies consumed in process ofmanufacturing products or providing services, etc. including large categories such as materialsin transit, raw materials, products in progress, commodities in stock, etc.
(2) Pricing method for acquisition and distribution of inventories
Inventories are measured at their actual cost, which includes the purchase cost, processing costand other costs. Inventories are measured at the weighted average method upon receiving andsending. If the daily accounting of inventories is valued at planned cost, the cost difference ofmaterials shall be carried over at the end of the year and the planned cost shall be adjusted tothe actual cost.
(3) Methods for recognition of net realizable value of inventories and retaining the provisionfor depreciationThe net realizable value of the inventory is determined at the estimated selling price less theestimated cost and sales cost at the time it is distributed as well as related taxes and charges.The net realizable value of the inventory is determined on the basis of conclusive evidenceobtained while considering the purpose of keeping the inventory and effect of events after thebalance sheet date.On the balance sheet date, the inventories are measured at the lower of cost and net realizablevalue. If the net realizable value is lower than the cost, then the inventory depreciation reservesis retained for the inventory. The inventory depreciation reserves are retained by the differenceof the cost less its net realizable value.If the factors leading to the write-down of the price of an inventory no longer exist and the netrealizable value is higher than the book value of the inventory after the inventory depreciationreserves are retained, the difference is reversed from the provision and recognized in currentprofit and loss.
(4) Inventory system
The Company adopts the perpetual inventory system.
(5) Amortization of low-value consumables and packing materialsOne-time amortization method will be used for low-value consumables and packing materials.
13. Contract assets
The Company presents the right for which the customer has not paid the contract consideration,but the Company has fulfilled its performance obligations in accordance with the contract andit does not constitute the right to unconditionally collect payments from the customer (i.e. onlydepending on the passage of time) as contract assets in the balance sheet. Contract assets andcontract liabilities under the same contract are presented at net amount, and contract assets andcontract liabilities under different contracts are not offset.For the determination method and accounting treatment method for expected credit losses ofcontract assets, please refer to Note IV, 10 “Impairment of Financial Assets”.
14. Assets available for sale and disposal group
Where the Company recovers the book value of one non-current asset or disposal group mainlythrough sales (including the non-monetary asset exchange with commercial substance,similarly hereinafter) rather than sustained use, upon satisfaction of following conditions, it iscategorized to the held-for-sale category. The specific standard is that the following conditionsare met simultaneously: some non-current assets or disposal group can be sold immediatelyunder current conditions according to the practices of selling similar asset or disposal group insimilar transactions; the Company has made a decision on the selling plan and obtained thepositive purchase commitment. It’s predicted that the selling will be completed within a year.Disposal group refers to a group of assets disposed together through selling or other methodsin a transaction as a whole and liabilities directly related to these assets transferred in thetransaction. If the goodwill from the business merger is apportioned to the asset group orcombination of asset groups that the disposal group belongs to according to the AccountingStandards for Business Enterprises No. 8 - Impairment of Asset, the disposal group shallinclude the goodwill apportioned to the disposal group.Upon initial measurement or re-measurement upon balance sheet date of held-for-sale non-current asset or disposal group, where the book value is higher than the net amount that the fairvalue minus the selling expense, the book value is written down the net amount after the fairvalue minus selling expense, the write-down amount is determined as the asset impairmentloss and included into current profits and losses, and the held-for-sale asset impairmentreserves are retained at the same time. For the disposal group, the recognized assetsdepreciation loss shall be used to firstly offset against the book value of goodwill in the disposalgroup and then against the book value of each non-current asset applicable to the measurementrules in the Accounting Standards for Business Enterprises No. 42 Non-current Assets Held forSale, Disposal Groups, and Discontinued Operations (hereinafter referred to as “No. 42
Standard”). The reversed amount shall be included in the current profit and loss, and its bookvalue shall be increased proportionally according to the portion of the book value of each non-current asset in the disposal group applicable to the measurement rules of No. 42 Standard,except goodwill. The written-down book value of goodwill and the assets impairment lossrecognized before the non-current assets is classified into those held for sale applicable to themeasurement rules of No. 42 Standard shall not be reversed.No depreciation or amortization is provisioned for the non-current asset in the held-for-salenon-current asset or disposal group, and the interest of liability in held-for-sale disposal groupand other expenses shall continue recognition.When the non-current asset or disposal group no longer meets the classification condition ofheld-for-sale category and no longer continues to classify the held-for-sale category, or thenon-current asset is removed from the held-for-sale disposal group, measurement is made atwhichever is lesser: (1) for the book value prior to classification into the held-for-sale category,the amount after adjustment of depreciation, amortization or impairment to be recognized incase of assuming no classification into the held-for-sale category; (2) Recoverable amount.
15. Long-term equity investments
Long-term equity investments in this part refer to the Company’s long-term equity investmentshaving control, joint control or significant influence on the invested unit. Long-term equityinvestments in this section refer to the long-term equity investments by the Company in theinvestee with control, joint control or significant influence. Long-term equity investmentswhich do not enable the Company to exert control, common control or significant influenceover the investee entity are accounted for as financial assets at fair value through profit or loss,in particular, if such long-term equity investments are not held for trading, they may bedesignated by the Company on initial recognition as financial assets at fair value through othercomprehensive income, for the relevant accounting policy, refer to Note IV, 9 “FinancialInstruments”.Joint control refers to the control the Company shares with other entities over a certainarrangement following relevant agreement by which any activity under the arrangement maybe conducted only with unanimous agreement of all participants sharing the power of control.Significant influence refers to the situation where the Company is entitled to participate in butis not authorized to control the financial and/or business decisions, either alone or in jointefforts with other participants.
(1) Determination of investment cost
For a long-term equity investment acquired through combination of businesses under commoncontrol, the share of the shareholders' equity of the acquiree in the book value of theshareholders’ equity in the consolidated financial statements of the ultimate controlling partyon acquisition date shall be taken as the initial investment cost for the long-term equityinvestment. Capital reserve is adjusted based on the difference between the initial cost for thelong-term equity investment and the book values of cash paid, non-cash asset transferred anddebt assumed, and if the capital reserve is insufficient to offset such difference, the differencewill be offset against retained earnings. If the consideration is paid in the form of equitysecurities, the share of the shareholders’ equity of the acquiree in the book value of the owners’equity in the consolidated financial statements of the ultimate controlling party on acquisitiondate is taken as the initial investment cost for the long-term equity investment on the date ofcombination. The face value of the shares issued is taken as the equity, and the capital reserveis adjusted by the difference between the initial investment cost for the long-term equityinvestment and the total face value of the shares issued; and if the capital reserve is insufficientto offset such difference, the difference will be offset against retained earnings. If thecombination of businesses under common control is realized through a series of transactionsin acquiring the equity of the acquiree, the transactions are determined whether to be a packagedeal and treated in either of the following manners: If the whole series of transactions aredetermined to constitute a package deal, then they are treated as one transaction realizing theacquisition of the control. If not, the share of the shareholders’ equity of the acquiree in thebook value of the owners’ equity in the consolidated financial statements of the ultimatecontrolling party on acquisition date is taken as the initial investment cost for the long-termequity investment on the date of combination. Capital reserve is adjusted based on thedifference between the initial investment cost for the long-term equity investment and the bookvalue of the long-term equity investment before the combination plus the total book value ofnewly paid consideration for acquiring shares on acquisition date; and if the capital reserve isinsufficient to offset such difference, the difference will be offset against retained earnings.The other comprehensive income accounted for the adoption of equity method for the equityinvestment held or recognized for financial assets available for sale before acquisition date isnot accounted for upon the acquisition.For a long-term equity investment acquired through combination of businesses not undercommon control, the cost for the combination, which is fair value of the total of the assets paid,liabilities incurred or assumed and the equity securities issued by the acquiring party, is takenas the initial investment cost for the long-term equity investment on acquisition date. If the
combination of businesses not under common control is realized through a series oftransactions in acquiring the equity of the acquiree, the transactions are determined whether tobe a package deal and treated in either of the following manners: If the whole series oftransactions are determined to constitute a package deal, then they are treated as one transactionrealizing the acquisition of the control. If not, the aggregate of the book value of the equityinvestment in the acquiree held by the Company and the increase in the investment cost istaken as the initial cost for the long-term equity investment remeasured using the cost method.If the originally held equity is measured by the equity method, the relevant othercomprehensive income is not accounted.Intermediary costs incurred by the acquirer in the course of combination for audit, legal andvaluation services and other administrative services are recorded in current profit and loss.Equity investments, except long-term equity investments derived from business combination,are initially measured at the cost. The cost is determined, depending on the means ofacquisition, at the purchase price actually paid in cash, the fair value of the equity securitiesissued by the Company, the value determined in the investment contract or agreement, the fairvalue of the original book value of the asset traded off by means of exchange trade of non-monetary asset or the fair value of long-term equity investment itself. Charges, taxes and othernecessary expenses related to the acquisition of long-term equity investments are recognizedin Investment Costs. In case of a long-term equity investment made in addition to otherinvestment, if the investment results in the Company's ability to exercise significant influenceover the investee but does not constitute the control over the same, the cost is the aggregate ofthe fair value of the equity investment originally held, as determined following the AccountingStandards for Business Enterprises No. 22 - Recognition and Measurement of FinancialInstruments and the newly increased cost.
(2) Methods for subsequent measurement and recognition of profit and lossIf the entity in which the Company invests exercises joint control (except those constitute ajoint operation) or significant influence over the long-term equity investments, equity methodis adopted for such long-term equity investments. Also, a long-term equity investment thatgrants control over the investee is accounted for in the financial statements of the Companyusing the cost method.
① Long-term equity investments accounted for using the cost methodUnder the cost method, a long-term equity investment is measured at the initial investmentcost, which is adjusted by the increased or recovered investment. Except the price actually paidupon acquisition of an investment or the cash dividend or profit that has been declared but not
granted and included in the consideration for the acquisition, cash dividend or profit in theinvestee attributable to the Company shall be recognized as income from investments.
② Long-term equity investments accounted for using the equity methodIf the long-term equity investment is accounted using the equity method and the initial cost forthe investment is greater than the share of the total fair value of the identifiable assets of theinvestee, the initial cost for the investment is not adjusted; if the former is less than the latter,the difference is recognized in current profit and loss and the cost for the long-term equityinvestment is adjusted accordingly.When accounted for using the equity method, the share in the net profits or losses that havebeen realized by the investee and which the Company is entitled to receive or obliged to assumeand the share in other comprehensive income are recognized in income from investments andother comprehensive income, respectively, and the book value of the long-term equityinvestment is adjusted accordingly; the book value of the long-term investment is adjustedaccording to the portion of the profit or cash dividend declared and distributed by the investee;In case of any change in the owners’ equity in the invested equity, except the net profits orlosses, other comprehensive income and profit distribution, the book value of the long-termequity investment is adjusted and the balance is recognized in the capital surplus. The share inthe net profits or losses of the investee is recognized after adjustment is made on the basis ofthe fair values of all identifiable assets of the investee upon the investment is realized. I If theaccounting policies and accounting periods adopted by the investee are inconsistent with thoseadopted by the Company, the financial statements of the investee are adjusted in accordancewith the accounting policies and accounting period of the Company and the investment incomeand other comprehensive income from the investee is recognized according to the adjustment.In case of a transaction between the Company and its associate or joint venture, where theinvestment or sale does not constitute a business transaction, the unrealized profits or losseswithin the scope of the Company are calculated and offset according to the share attributableto the Company, with the balance recognized as profits or losses from investment. However,the losses arising from unrealized transactions with the investee within the Company, if beingimpairment loss of the asset to be transferred, may not be offset. In case of an investment ofan asset in a joint venture or an associated enterprise that constitutes a business transaction anda long-term equity investment without realizing the control over the investee, the fair value ofthe asset is taken to be the initial investment cost for the long-term equity investment and thewhole difference between the initial investment cost and the book value of the asset isrecognized in current profit and loss. In case of an investment of an asset sold to a joint venture
or an associated enterprise that constitutes a business transaction, the whole difference betweenthe consideration acquired and the book value of the asset is recognized in current profit andloss. An asset acquired from a joint venture or an associate, if constitutes a business transaction,is treated following Accounting Standards for Business Enterprises No. 20 - BusinessCombinations and wholly recognized as profits or losses related to the transaction.Net loss from an investment in an investee is written down against the total of the book valueof the long-term equity investment and the long-term equity from other actual net investmentin the investee, but only to that extent. In addition, if the Company assumes liability for anyextra loss of the investee, the obligation is recognized as an estimated liability in Losses fromInvestment of the period. If the investee realizes net profit subsequently, the share in the profitpayable to the Company is recognized as a share of income after the unrecognized loss arisingfrom the investment.For the long-term equity investments to joint ventures and associates already held before thefirst implementation of the new accounting standards, if there is the debit balance of equityinvestments related to the investments, the amount amortized using the straight-line methodover the remaining period shall be included in the current profit and loss.? Acquisition of minority equityWhen preparing the Consolidated Financial Statements, the difference between the newlyincreased long-term equity investment due to the acquisition of minority equity and the sharein the net asset of the subsidiary attributable to the Company calculated at the newly increasedshareholding ratio on acquisition date or (the Consolidation Date) is recognized as anadjustment to the capital surplus and, and if the capital reserve is insufficient to offset suchdifference, the difference will be offset against retained earnings.? Disposal of long-term equity investmentIf the Parent Company disposes of part of its long-term equity investment in a subsidiarywithout losing the control over the latter, the difference between the price of the disposal andthe share in the net asset of the subsidiary corresponding to the long-term equity investmentdisposed of is recognized in Shareholders' Equity in the Consolidated Financial Statements; ifthe Parent Company disposes of part of its long-term equity investment in a subsidiaryresulting in the loss of control over the latter, the disposal price is treated following accountingpolicies described in Note IV, 5 (2) “Methods for Preparing Consolidated FinancialStatements.”In case of a long-term equity investment disposed of in other circumstances, the differencebetween the book value and the price actually acquired is recognized in current profit and loss.
In case of a long-term equity investment accounted for using the equity method, if theremaining equity after disposal continues to be accounted for using the equity method, thecorresponding share in the other comprehensive income originally recognized in Shareholders'Equity is treated on the same basis on which the investee directly disposes of the relevant assetor liability. All other shareholders' equity of the investee recognized because of changes in theshareholders' equity, other than those in the net profits or losses, other comprehensive incomeand profit distribution are carried over to current profit and loss in proportion.Long-term equity investments accounted for using the cost method, if the remaining equityafter disposal continues to be accounted for using the cost method, the other comprehensiveincome originally accounted for using the equity method or the standards for recognition andmeasurement of financial instruments before the acquisition of the control over the investee istreated on the same basis on which the investee directly disposes of the relevant asset orliability and is carried forward in proportion; all other shareholders’ equity in the net asset ofthe investee, as accounted for and recognized using the equity method, except net profits orlosses, other comprehensive income and profit distributions, are carried forward in proportion.If the Company loses the control over the investee due to disposal of part of its equityinvestment but the remaining equity constitutes joint control or significant influence over theinvestee, the remaining equity is re-accounted for using the equity method and adjustment ismade, as if the remaining equity were accounted for using the equity method since theacquisition; the remaining equity, if it does not constitute joint control or significant influenceover the investee, is re-accounted for following the standards for recognition and measurementof financial instruments and the difference between the fair value on the date the control is lostand the book value of the equity is recognized in current profit and loss. When the control overthe investee is lost, the other comprehensive income accounted for using the equity method orfollowing the standards for the recognition and measurement of financial instruments beforethe acquisition of the control over the investee is treated on the same basis on which theinvestee directly disposes of the relevant asset or liability. All changes in other shareholders’equity in the net asset of the investee, as accounted for and recognized using the equity method,except net profits or losses, other comprehensive income and profit distributions, are carriedforward in proportion upon the loss of control. If the remaining equity is accounted for usingthe equity method, the other comprehensive income and other shareholders' equity are carriedforward in proportion; if the remaining equity is accounted for following the standards forrecognition and measurement of the financial instruments, the other comprehensive incomeand other shareholders' equity are fully carried forward.
If the Company loses the joint control or significant influence over the investee due to partialdisposal of equity investments, the remaining equity is re-accounted for following thestandards for recognition and measurement of financial instruments and the difference betweenthe fair value on the date the control or significant effect is lost and the book value of theremaining equity is recognized in current profit and loss. When the control of the investee isterminated, the other comprehensive income from the original equity investment, as accountedfor the adoption of equity method or following the standards for the recognition andmeasurement of financial instruments is treated on the same basis on which the investeedirectly disposes of the relevant asset or liability; all changes in other shareholders’ equity inthe net asset of the investee, as accounted for and recognized because of the adoption of theequity method, except net profits or losses, other comprehensive income and profitdistributions, are carried forward in proportion upon the loss of control.If several transactions through which the Company disposes its subsidiary’s equity investmenttill losing the right of control belong to “package deal”, such transactions shall be subject toaccounting treatment as one transaction for treatment of the subsidiary’s equity investment andfor losing the right of control. Prior to losing the right of control, the balance between everydisposal price and the book value of long-term equity investment corresponding to the disposedequities shall be confirmed as other comprehensive income. On the point of losing such right,it shall be jointly shifted into current profits and losses of losing the right of control.
16. Investment real estates
Investment real estate refers to real estate held for rental or capital increase or both purposes,including land use rights leased, land held for sale after appreciation and leased buildings,including leased land use rights, land use rights held and prepared for transfer after appreciationand leased buildings.Investment real estates are initially measured at cost. Subsequent expenditures relating toinvestment properties, if the asset's economic benefits are likely to flow in and its cost can bereliably measured, are recognized in cost for investment properties. Other subsequentexpenditures are recognized in current profit and loss.The Company uses the cost method for subsequent measurement of investment properties andcalculates the depreciation or amortization using the same following policies in line with thehouses, buildings and related land use rights.Refer to Note IV， 22 “Impairment of Long-term Assets” for methods for depreciation testand impairment reserves retention for investment properties.If owner-occupied properties or inventories are converted into investment properties or
investment properties converted into owner-occupied properties, the book value before theconversion is taken as the entry value after the conversion.When an investment real estate is changed for self-use, as from the date of such change, thisinvestment real estate shall be converted into fixed asset or intangible asset. When the use ofself-used real estate is changed to earn rent or capital appreciation, fixed assets or intangibleassets shall be converted into investment real estate from the date of change. In case of aconversion, if it is converted into an investment real estate measured by cost model, the bookvalue before the conversion shall be the entry value after the conversion.When an investment real estate is disposed of or withdraws permanently from use and noeconomic benefit will be obtained from the disposal, the recognition of it as an investment realestate shall be terminated. Income from disposal of an investment property by means of sale,transfer, etc., less its book value and related taxes, is accounted for in current profit and loss.
17. Fixed assets
(1) Conditions for recognition of fixed assets
The fixed assets of the Company refer to tangible assets held for production of goods, provisionof labor services, lease or business with a service life of over a fiscal year. A fixed asset isrecognized only when the related economic benefit is likely to flow in and the cost can bereliably measured. A fixed asset is initially measured at cost and the estimated abandonmentcost.
(2) Method for depreciating fixed assets
Provision for depreciation of a fixed asset is retained using the straight-line method from themonth after the fixed asset reaches the expected serviceable condition. Estimated service life,estimated residual values and annual depreciation rates of different types of fixed assets are asfollows:
| Category | Depreciable life (year) | Residual ratio (%) | Yearly depreciation rate (%) |
| Houses & buildings | 20 years, 30 years and 50 years | 5.00 10.00 | 4.75，4.50 3.17，3.00 1.90，1.80 |
| Structures | 10 years and 20 years | 5.00 10.00 | 9.50，4.75 9.00，4.50 |
| Machinery equipment | 5-30 years | 5.00 10.00 | 3.00-19.00 |
| Category | Depreciable life (year) | Residual ratio (%) | Yearly depreciation rate (%) |
| Transportation equipment | 5 years, 6 years and 10 years | 5.00 10.00 | 19.00，18.00 15.83，15.00 9.50，4.75 |
| Office facilities and others | 3 years and 5 years | 5.00 10.00 | 31.67，30.00 19.00，18.00 |
Estimated net residual value refers to the value the Company is expected to acquire bydisposing of the fixed asset in its status upon the expiry of its using life.
(3) Method for impairment test of fixed assets and impairment reserves retentionRefer to Note IV, 22 “Impairment of Long-term Assets” for methods for depreciation test andimpairment reserves retention for fixed assets.
(4) Other description
Subsequent expenditures relating to fixed assets, if the asset's economic benefits are likely toflow in and its cost can be reliably measured, are recognized in cost for fixed assets and thebook value of the substituted part is derecognized. Other subsequent expenditures arerecognized in current profit and loss in which they are incurred.Fixed assets are derecognized if they are disposed of or no economic benefit can be realizedthrough use or disposal of the same. Income from disposal of fixed assets by means of sale,transfer, etc., is accounted as current profit and loss less the book value and relevant taxes andcharges.The Company reviews the serviceable life, expected residual value and the method ofdepreciation at the latest at the end of the accounting year. If any change is found in the originalestimates, adjustment is made to the relevant accounting estimate.
18. Construction in progress
The cost for construction in progress is recorded at the actual costs, including variousexpenditures on the construction, the borrowing costs for the capitalization before theconstruction reaches its serviceable status and other related expenses. A construction-in-progress is re-accounted for as a fixed asset upon reaching its serviceable status.Refer to Note IV, 22. “Impairment of Long-term Assets” for methods for depreciation testand impairment reserves retention for constructions-in-progress.
19. Borrowing costs
Borrowing costs of the Company include the interest accrued on loans, the amortization of
discount or premium and auxiliary expenses as well as the translation differences incurred byloans in foreign currencies. Borrowing costs related to the purchase, construction or productionof assets that meet the conditions for capitalization are capitalized when the asset expenditurehas been made, the borrowing costs have been incurred and the purchase, construction orproduction activities necessary to work the asset into its serviceable or marketable status havebegun; the capitalization ceases when the asset that meets the conditions for capitalizationunder construction or production reaches its expected serviceable or marketable status. Otherborrowing costs are recognized as expenses in the period they are incurred.The interest expenses incurred in the period for special loans less the interest income from theloan fund deposited in a bank or income from temporary investments made out of the loans arecapitalized; general loans are capitalized on the basis of result of the accumulated capitalexpenditures excessive of weighted average of the capital expenditures of the special loanmultiplied by the capitalization ratio of the general loans. The capitalization rate is determinedon the basis of the weighted average interest rate of general borrowings.During the capitalization, the difference arising from special loans in foreign currencies is fullycapitalized while that arising from general loans in foreign currencies is recognized in currentprofit and loss.Assets qualified for capitalization refer to fixed assets, investment real properties andinventories that take a reasonable period of purchase, construction or production to bedeveloped into the ready-for-sale or ready-for-use status.If the purchase, construction or production of the asset qualified for capitalization is suspendedfor over 3 months, the capitalization of the borrowing cost is suspended until the resumptionof purchase, construction or production.
20. Intangible assets
(1) Intangible assets
Intangible asset refers to invisible recognizable non-currency assets owned or controlled bythe Company.Intangible assets are initially measured at cost. Expenses related to intangible assets arerecognized in cost for intangible assets when related economic gains are likely to flow in andthe cost can be reliably measured. Other subsequent expenditures are recognized in currentprofit and loss in which they are incurred.Land use rights acquired are usually accounted for as intangible assets. Expenditures on theland use right and the cost for the construction of self-developed plants and other buildings areaccounted for as intangible assets and fixed assets. In case of houses and buildings purchased,
the purchase price is allocated onto the land use right and the buildings and treated accordingly;if the allocation cannot be done reasonably, the whole price is treated as fixed assets.In case of an intangible asset of limited serviceable life, the original value, net of expectedresidual value and the accumulated impairment reserves retained, is amortized over theexpected serviceable life using the straight-line method. Intangible assets with uncertainservice life are not amortized.The service life and the amortization method adopted for intangible assets of a limitedserviceable life is reviewed at the year end, and if any change has occurred, adjustments aremade accordingly to the accounting estimates. The serviceable life of each intangible assetwith uncertain serviceable life is reviewed at the end of year. If there is evidence that the periodin which the intangible asset can bring in economic benefit can be predicted, the serviceablelife is estimated and the intangible asset is amortized following the policy for amortization ofintangible assets with limited serviceable life.
(2) R&D expenses
Internal R&D expenses of the Company include expenses on the research stage and those onthe development stage.Expenses incurred on the research stage are recognized in current profit and loss.Expenses incurred on the development stage, if satisfying all of the following conditions, arerecognized as an intangible asset, otherwise, in current profit and loss.? The expenses contribute to the completion of intangible asset so that it can be technicallyusable or salable;? Having the intention to complete the intangible asset and use or sell it;? The intangible asset is able to generate economic benefits, with evidence that there is amarket for the intangible asset or products produced using the intangible asset, or that theintangible asset is useful if it is intended to be internally used;? With enough supports from technical/financial and other resources to finish thedevelopment of such intangible assets, and be capable of using or selling such intangible assets;? The expenditure attributable to the development stage of the intangible asset can bereliably measured.Expenses on the research stage and the development stage, if not able to be distinguished, areboth recognized in current profit and loss.
(3) Impairment test of intangible assets and methods for withholding the impairment reservesFor detail test method and calculation method of provisions for impairment reserves ofintangible assets, please refer to Note IV (22. “Impairment of Long-term Assets”).
21. Long-term deferred expenses
Long-term deferred expenses refer to expenses that have been incurred and shall be amortizedover a period of longer than one year, including the current period and periods yet to come.Long-term deferred expenses are recorded at actual expense and amortized using the straight-line method over estimated period of benefit.
22. Impairment of long-term assets
The Company determines on the balance sheet date whether there are signs that impairmenthas occurred to fixed assets, constructions-in-progress, intangible assets with limitedserviceable life, right-of-use assets, investment properties measured at cost and non-currentnon-financial assets including long-term equity investments in its subsidiaries, joint venturesand associates. If there are signs of impairments, the recoverable amount is estimated and animpairment test is done. Goodwill, intangible assets with uncertain serviceable life andintangible assets that have not reached the serviceable status are subject to impairment testsevery year regardless of whether there are signs of impairments.If the impairment test results indicate that the recoverable amount of assets is lower than itsbook value, provisions for impairment reserves shall be calculated in accordance with itsbalance, and then recorded into impairment loss. The recoverable amount shall be the higherof the fair value minus disposal expenses and the present value of expected future cash flowsof the asset. The fair value of an asset is determined based on contract price of fair trade; ifthere is no sales agreement but there is an active market, the bid price the buyer offers for theasset is taken to be the fair value; if there is no sales agreement or active market, the fair valueof the asset is estimated on the basis of the best information available. Disposal expensesinclude legal fees related to assets disposal, related taxes, carriage expenses and direct expensesfor making the assets reach the marketable condition. The present value of the expected futurecash flow from an asset is determined by discounting the expected future cash flow from theasset while it is used on an on-going basis and the at the final disposal at a suitable discountrate. Asset impairment reserves shall be calculated and confirmed on the basis of single assets.The recoverable amount of this asset group shall be determined with such assets’ group, if it isdifficult to estimate the recoverable amount of single assets. Asset group is the minimum assetportfolio capable of generating cash inflow independently.When conducting impairment loss of goodwill separately listed in the financial statements, thebook value of the goodwill is allocated to the asset group or combination of asset groups thatbenefit from the synergies of the business combination. The corresponding impairment lossshall be recognized when impairment test indicates that the recoverable amount of the asset
group or combination of asset groups to which goodwill is apportioned is lower than its bookvalue. Firstly, the amount of impairment losses shall be amortized to the book value of goodwillof this asset group or asset portfolio. Secondly, the book value of other assets shall be amortizedin proportion based on the book value of other assets (excluding goodwill) in the asset groupor asset portfolio.Once impairment losses on above assets are confirmed, the part with recovered value cannotbe rolled back in subsequent periods.
23. Contract liabilities
Contract liabilities mean the obligation for which the Company shall transfer goods tocustomers for the consideration received or receivable from customers. If the customer hasalready paid the contract consideration or the Company has obtained the unconditional right toreceive payment before the Company transfers the goods to the customer, the Company shallpresent the received amounts or receivables as contract liabilities at the earlier of the time whenthe actual payment is received by the Company from the customer and the due date of payment.Contract assets and contract liabilities under the same contract are presented at net amount. Ifthe net amount is the debit balance, the contract asset and contract liability shall be presentedin the item of "contract assets" or "other non-current assets" according to its liquidity; if thenet amount is the credit balance, the contract asset and contract liability shall be presented inthe item of “contract liabilities” or “other non-current liabilities” according to n its liquidity.Contract assets and contract liabilities under different contracts are not offset.
24. Staff remuneration
Employee benefits mainly include short-term employee remunerations, post-employmentbenefits, termination benefits and other long-term employee benefits. Wherein:
The short-term remunerations include salaries, bonuses, allowance and subsidies, welfare,medical insurance premium, maternity insurance premium, industrial injury insurancepremium, housing fund contributions, labor union fund contribution, employee education fundcontributions and non-monetary benefits. The Company treats short-term employeeremunerations actually incurred during the accounting period in which employees provideservices for the Company as liabilities and recognizes the same in current profit and loss orrelevant cost for assets of the period. Non-monetary benefits are measured at fair value.Post-employment benefits mainly include basic pension insurance, unemployment insuranceand annuities. Post-employment benefit plans include defined contribution plans. If a definedcontribution plan is in place, the corresponding amounts payable is included in relevant costsfor assets or current profit and loss in which they are incurred.
If the labor relationship with employees terminates before the employment contracts expire orif the Company offers compensation with the view of encouraging employees to voluntarilyaccept redundancy, payroll liabilities arising from the termination benefits are recognized incurrent profit and loss on the earlier of the date on which it is determined that the Companymay not withdraw the termination benefits offered through labor relationship plans orredundancy proposals and the date on which the Company recognizes the cost for therestructure involving the payment of termination benefits. However, if the demission welfarecannot be completely paid within 12 months after the termination of the annual report period,it shall be dealt with according to the remuneration of other long-term employee.Internal retirement plans are treated following the same principles related to the terminationbenefits as described above. The Company recognizes in current profit and loss (terminationbenefits) of the salaries, social insurance premiums, etc. that are to be paid between the datethe employees stops to provide services for the Company and the date of normal retirement, ifsatisfying the conditions for the recognition of estimated liabilities.Other long-term employee benefits provided by the Company to its staff that conform to thedefined contribution plans shall be subject to accounting treatment in accordance with thedefined contribution plans. Others shall be shall be subject to accounting treatment inaccordance with the defined benefit plans.
25. Estimated liabilities
Contingency-related obligation conforming to the following conditions at the same time shallbe confirmed as accrued liabilities: (1) Such obligation is a current obligation undertaken bythe Company; (2) Performance of this obligation will probably lead to economic interestoutflow; (3) The amount of this obligation can be measured reliably.On the balance sheet date, estimated liabilities are measured at the best estimate of the amountto be expensed in performing related liabilities, while considering the risks, uncertainties andthe time value of money related to the contingencies.If the expense for liquidating an estimated liability is wholly or partially compensated by athird party, the compensation amount is recognized as a separate asset when it is basicallycertain to be received, provided that the recognized compensation amount may not exceed thebook value of the estimated liability.
(1) Onerous contract
Onerous contracts are contracts where the costs involved with fulfilling the terms andconditions of the contract are inevitably higher than the amount of economic benefit received.If an executive contract becomes an onerous contract and the liabilities thereunder satisfy the
foregoing conditions for the recognition of estimated liabilities, the expected loss from theperformance of the contract less the recognized impairment loss from the asset subject to thecontract (if any) is recognized as an estimated liability.
(2) Liabilities for restructure
In case of a detailed formal restructure plan that has been publicly announced, an estimatedliability based on the direct expense related to restructure is recognized if the same meet theforegoing conditions for recognition of estimated liabilities.
26. Share-based payments
(1) Method for accounting for share-based payments
The share-based payment refers to the transaction by which the Company grants equityinstruments or assumes a liability based on equity instruments for the services an employee oranother party renders to the Company. Share-based payments include those settled in equityshares or in cash.? Share-based payments settled in equity sharesShare-based payments designed to pay the employee equity shares in exchange for the serviceshe/she renders are measured at fair value of the equity instruments on the Grant Date. If theright to the fair value are exercisable only if the employee completes the services in thespecified waiting period or attained the specified performance results, such rights arerecognized in relevant cost or expenses using the straight-line method during the waiting period;or if the right can be exercised upon grant, such rights are recognized in relevant cost orexpenses on the date of grant; in both cases, the capital reserve is increased accordingly.The Company makes its best estimates on the basis of the change in the number of employeeswho have newly acquired the exercisable rights and other subsequent information and revisethe recorded the quantities of instruments expected to be exercisable. Those effects of theforegoing estimates are recognized in impact of relevant costs or expenses of the period andthe capital reserve is adjusted accordingly.A share-based payment settled with equity in exchange for another party's service, if the fairvalue of the other party's service can be reliably measured, is measured at the fair value of suchservice on the date such service is provided, or, if such fair value cannot be reliably measuredbut the fair value of the equity instrument can be reliably measured, is measured at the fairvalue of the equity instrument on the date such service is provided; the amount is recognizedin relevant cost or expenses and the shareholders' equity is increased accordingly.? Share-based payments settled in cashA share-based payment settled in cash is measured at the fair value of the liability assumed by
the Company, which is determined on the basis of shares and other equity instruments. If therights granted for such share-based payment settled in cash are immediately exercisable, thepayment is recognized in relevant costs and expenses and the liability is increased accordingly.If rights granted to such share-based payment settled in cash are exercisable only if theemployee completes the services in the specified waiting period or attained the specifiedperformance results, on each balance sheet date during the waiting period, the liabilities of theCompany are be increased at the fair value of the liabilities to be assumed by the Company onthe basis of the best estimate of the quantities of exercisable equity instruments, with theservices received in current period included in relevant costs or expenses.The fair value of the liability is re-measured on each Balance Sheet Date and each settling dateprior to the settlement of the liability with the change included in current profit and loss.
(2) Accounting process in case of revision or termination of a share-based payment planIf the modification of the share-based payment plan increases the fair value of the equityinstruments granted, the increase in the services received shall be recognized according to theincrease in the fair value of the equity instruments. Increase in the fair value of an equityinstrument refers to the difference between the fair values of the equity instrument before andafter the date of revision. If the Company revises the terms and conditions by means ofdecreasing the total fair value of the share-based payments or other means against the interestof employees, the Company continues to account for the services received as if suchmodification had not been done, unless the Company cancel all or part of the equity instrumentsgranted.If equity instruments granted are canceled during the vesting period, the exercise of the rightsgranted on the equity instruments shall be accelerated and the amount to be recognized duringthe remaining vesting period shall be forthwith included in current profit and loss and theCapital Reserve shall be simultaneously recognized. If an employee or another party canchoose to satisfy non-exercise conditions but the vesting period has not yet expired, thecircumstance may be addressed as if the granted equity instruments were canceled.
(3) Accounting process for share-based payment transactions involving the Company or ashareholder or the actual controller of the CompanyIn case of a share-based payment transaction involving the Company or a shareholder or theactual controller of the Company, if one of the settling party and the serviced party is withinthe scope of the Company and the other outside the scope, such payment is treated inaccordance with the following procedures:
? If the settling entity settles the payment with its own equity instruments, the share-basedpayment transaction is settled in equity; in other cases, the share-based payment transaction issettled in cash.If the settling entity invests in the serviced entity, the share-based payment is treated as a long-term equity investment at the fair value of the equity instrument or the liability to be assumedon the grant date, and Capital Reserves (Other Capital Reserves) or liability is recognizedaccordingly.? If the serviced entity has no obligation to settle the payment or if it grants its own equityinstruments to its employees, the share-based payment transaction is treated as share-basedpayment in equity; If the serviced entity has an obligation to settle the payment or if it grantsequity instruments of another entity to its employees, the share-based payment transaction istreated as share-based payment in cash.In case of a share-based payment transaction, if the settling entity and the serviced entity arenot the same entity, the transaction is recognized and measured following the foregoingprinciple in individual financial statements of both entities.
27. Revenue
1) Principles of revenue recognition
On the commencement date of the contract, the Company evaluates the contract, identifieseach individual performance obligation contained in the contract, and determines whether eachindividual performance obligation is performed within a certain period of time or at a certaintime point.It belongs to performance within a period when satisfying any one of the following conditions.Otherwise, it belongs to performance at a time point. ? The client obtains and consumescorresponding economic benefits while the Company performs its obligations; ? The client isable to control in-process commodities or services in the process of performance by theCompany; ③ Commodities or services in the process of performance by the Company haveirreplaceable usage, and the Company has, within the entire contract period, the right to collectmoney for the part performed so far.For the contract performance obligations fulfilled within a certain period of time, the Companyrecognizes revenue according to the performance progress during that period of time. Whenthe contract performance progress cannot be reasonably determined, if the cost incurred isexpected to be compensated, the revenue shall be recognized according to the amount of costincurred until the performance progress can be reasonably determined. For the contractperformance obligations fulfilled at a certain time point, revenue is recognized at the time point
when the customer obtains the control over the relevant goods or services. The Company shalltake the following signs into consideration while judging whether the client has obtained thecontrol right of commodity or not: ① The Company has the right of current collection oversuch commodity. In other words, the client is obligated to pay for this commodity currently;
②The Company has already transferred legal ownership of this commodity to the client. Inother words, the client has legal ownership of this commodity; ③ The Company has alreadytransferred this commodity to the client. In other words, the client has already occupied thiscommodity in real material; ④ The Company has already transferred to the client main risksand remunerations related to the ownership of this commodity. In other words, the client hasalready obtained main risks and remunerations related to the ownership of this commodity; ⑤The client has already accepted this commodity; ⑥ Other signs indicating that the client hasalready obtained the control right of this commodity
2) Principles of revenue measurement
? The Company measures revenue based on the transaction price allocated to each individualperformance obligation. The transaction price is the amount of consideration that the Companyexpects to have the right to receive due to the transfer of goods or services to the customer,excluding the amounts collected on behalf of a third party and the amounts expected to bereturned to the customer.
② If there is variable consideration in the contract, the Company will determine the bestestimate of the variable consideration according to the expected value or the most likelyamount, but the transaction price including the variable consideration shall not exceed theamount of the accumulated recognized income that is likely to have no major reversal whenthe relevant uncertainty is eliminated.? If there is a significant financing component in the contract, the Company will determinethe transaction price based on the amount payable that is assumed to be paid in cash when thecustomer obtains the control over the goods or services. The difference between the transactionprice and the contract consideration is amortized by the effective interest method during thecontract term. On the commencement date of the contract, the Company expects that theinterval between the customer’s acquisition of control of the goods or services and thecustomer’s payment of price will not exceed one year, regardless of the significant financingcomponents in the contract.? If the contract contains two or more performance obligations, the Company will allocatethe transaction price to each individual performance obligation in accordance with the relativeproportion of the separate selling price of the goods promised under each individual
performance obligation on the contract commencement date.
3) Specific method of revenue recognition
The Company mainly sells refined oil products, chemical products, PTA, PET flakes, polyesteryarns, etc., and the sales shall be the fulfillment of contract performance obligation at a certaintime point. In combination with the Company’s actual production and management features,its internal product sales revenues shall be confirmed in accordance with the followingconditions: The Company has already delivered corresponding products to the client inaccordance with the contract agreement; the amount of product sales revenues has beendetermined already; the Company has already taken back relevant loans or obtained the receiptvoucher, and relevant economic interests are likely to flow in; the product control right hasalready been transferred to the acquirer; product-related costs can be measured reliably. Forexported goods, the income is recognized when the goods are declared for export. For the salesof trade goods, the income is recognized when the Company has delivered the goods propertyin goods to the purchaser in accordance with the contract provisions. For the goods in theCompany’s overseas subsidiary international trade business, the income is recognizedaccording to the time point for the transfer of goods risk as set out in the contract.
28. Contract cost
If the incremental cost incurred by the Company for winning the contract is expected to berecovered, it will be recognized as an asset as the cost of obtaining the contract.Cost incurred by performance of the contract that doesn’t belong to the scope of otheraccounting standards (the Accounting Standards for Business Enterprises No. 14 – Income(Revision in 2017)) and satisfy the following conditions at the same time shall be confirmedas an asset in a form of contract performance cost: ? This cost is in direct correlation with acurrent or an expected contract, including direct manpower and direct material andmanufacturing expenses (or similar expenses). Specify the client’s cost and other costs incurreddue to this contract; ? This cost increases the Company’s resources used for futureperformance; ? This cost can be taken back as estimated.Assets related to contract costs are amortized on the same basis as the recognition of incomefrom goods related to the asset and included in the current profit and loss.
29. Government grants
Government grant refers to monetary or non-monetary assets the Company receives from thegovernment for free, but excludes funds invested in the Company by the government, whichenjoys the owners’ equity in the same as a fund owner. Government grants are divided intoasset-related government grants and income-related government grants. Governmental
subsidies obtained by the Company to structure or form long-term assets in other ways shallbe defined as assets-related subsidies, and other governmental subsidies as income-relatedsubsidies. If the target of a government grant is not specified in relevant government documents,the grant is divided into income- and asset-related subsidy in the following manners: (1) if theproject is defined in relevant government document, the subsidy is divided in accordance withthe relative proportions of the expense allocated for asset and expenditure, provided that thedivision is reviewed against the proportions on each balance sheet date and adjusted ifnecessary; (2) if only a general direction on the use of the subsidy but no specific project isstated in relevant government documents, the subsidy is recognized as income-related subsidy.If a government grant is a monetary asset, it shall be measured in the light of the received orreceivable amount. Government grants in the form of non-monetary assets are measured at fairvalue or, if the fair value cannot be reliably obtained, at its nominal amount. Government grantsmeasured at nominal amounts shall be directly included into current profit and loss.The Company usually recognizes and measures government grants at by the amount actuallyreceived. However, the financial support funds that meet the relevant conditions stipulated bythe financial support policy with conclusive evidence at the end of the period shall be measuredaccording to the amount receivable. Government grant to be measured at the amount receivablemust meet all the following conditions: (1) The amount of the government grant receivable hasbeen confirmed by a formal document from competent government authority or can bereasonably calculated following relevant regulations of formally issued financial fundmanagement measures and there is no significant uncertainty as to the amount to be received;
(2) the government grant is based on a financial support program and its financial fundmanagement measures formally implemented and disclosed following the Regulations onOpen Government Information, and the said measures are inclusive (open to all eligible entities)rather than specifically formulated for certain entities; (3) a deadline for the disbursement hasbeen announced in relevant documents and guaranteed with financial budget so that the receiptof the amount is reasonably certain; (4) the Company is expected to satisfy other conditionsthat may be required for such subsidy (if any).Asset-related government grant is recognized as a deferred income, which is included intocurrent profit and loss in installments over the life of use of relevant assets in a reasonable andsystematic way. Income-related government grant, if used to cover relevant future expenses orlosses, is recognized as a deferred income and is included into current profit and loss in theperiod when such expenses and losses are recognized, or, if used to cover related expenses andlosses that have been incurred, is directly included into current profit and loss.
If government grants include both asset-related and income-related grants, different accountingmethods may be applied for different parts of the grants; government grants that cannot bedifferentiated are accounted for as income-related.Government grants related to the daily operations of the Company are included in other incomeor used to offset relevant costs and expenses and those irrelevant to the daily operations arerecorded as non-operating income.When the recognized government subsidy needs to be returned, if there is a relevant deferredincome balance, the book balance of the relevant deferred income will be offset, and the excesswill be included in the current profit and loss; in other cases, it will be directly included in thecurrent profit and loss.
30. Deferred income tax assets/deferred income tax liabilities
(1) Income tax of the period
On the balance sheet date, the income tax liabilities (or assets) of the period that havedeveloped in the current and previous periods are measured at the amounts expected to be paidor recovered. Taxable income used as the basis for calculating current income tax expenses iscalculated after corresponding adjustment to pre-tax accounting profits in this year inaccordance with relevant tax law provisions.
(2) Deferred income tax assets and liabilities
The difference between book values of certain assets or liabilities and their tax bases as wellas the temporary difference between the book values and the tax bases of items that are notrecognized as assets or liabilities but whose tax bases can be determined following relevantprovisions of the Tax Law are recognized as deferred income tax assets or liabilities using thebalance sheet liability method.No deferred income tax liability is recognized for taxable temporary differences related to theinitial recognition of goodwill or the initial recognition of assets or liabilities arising fromtransactions that have not occurred in a business combination process and which do notinfluence the accounting profit and taxable income (or deductible losses). No deferred incometax liability is recognized for taxable temporary differences related to investments insubsidiaries, joint ventures and associates, if the Company can determine the time for thereversal of the temporary differences and the taxable temporary differences are not likely to bereversed within a predictable future. Except for the circumstances described above, theCompany recognizes deferred income tax liabilities for all other taxable temporary differences.No deferred income tax asset is recognized for deductible temporary differences related to theinitial recognition of assets or liabilities arising from transactions that have not occurred in a
business combination process and which do not influence the accounting profit and taxableincome (or deductible losses). No deferred income tax asset is recognized for any deductibletemporary differences related to the investment of the subsidiaries, joint ventures and jointventures of the Company, if the temporary differences are not very likely to be reversed or theCompany is not likely to obtain and use taxable income to offset deductible temporarydifferences. Except for the circumstances described above, the Company may recognizedeferred income tax assets for all other deductible temporary differences to the extent of thetaxable income that can be obtained and used to offset deductible temporary differences.Deferred income tax assets are recognized for deductible loss and tax credits that can be carriedforward to future periods to the extent of the future taxable income that are likely to be obtainedand used to offset deductible loss and tax credits.On the balance sheet date, deferred income tax assets and liabilities are measured at theapplicable tax rate expected for the period, in which relevant assets are expected to berecovered or relevant liabilities are expected to be settled following relevant provisions of theTax Law.The Company reviews book values of deferred income tax assets on the balance sheet date. Ifit is determined that the Company is not likely to obtain adequate taxable income to offsetbenefits from deferred tax assets, the book values of deferred tax assets are written down. Thewrite-down is reversed when it is determined that adequate taxable income can be obtained.
(3) Income tax expenses
Income tax expenses include current income taxes and deferred income taxes.Except other comprehensive income or current and deferred income taxes related totransactions that are related to classified in shareholders' equity are recognized in othercomprehensive income or shareholders' equity as well as book values of deferred income taxarising from business combination that are adjusted to goodwill, all other current and deferredincome expenses are recognized as current profit and loss.
(4) Offset of income tax
If the Company has the legal right and plans to perform net settlement or plans to acquire assetsand settle liabilities, the current income tax assets and liabilities are listed at the net amountafter offset.The deferred income taxes and liabilities are listed at the net value after offset if the Companyhas the legal right to net its current income tax assets and liabilities, the deferred income taxesand liabilities are related to the income taxes collected from the same tax subject by the taxauthority or related to different tax subjects, but the tax subject intends to net the current income
taxes and liability or acquires assets and settle liabilities simultaneously during the period wheneach important deferred income tax or liability is reversed.
31. Leases
Lease means that the Company has transferred or obtained the control right of using one orseveral identified assets within a certain period for the purpose of getting in return or pay thecontract price. On the commencement date of a contract, the Company shall evaluate whetherit is a lease contract or whether lease is included in the contract.
(1) The Company as lessee
The assets leased by the Company are mainly houses & buildings, land use right and machineryequipment.? Initial measurementOn the commencement date of the lease term, the Company can confirm the right to use leasedassets within the lease term as right-of-use assets and the current value of unpaid rentals aslease liabilities, excluding short-term lease and lease of low-value assets. While calculating thepresent value of lease payment, the Company adopts the interest rate implicit in lease asdiscount rate. However, the leasee’s incremental borrowing rate shall be taken as discount rate,when it is unable to determine the interest rate implicit in lease.? Follow-up measurementIn the same month since the start of the lease term, the Company shall calculate depreciationof right-of-use assets. When the obtainment of the ownership of leased assets can be rationallydetermined at the expiry of the lease term, the Company shall calculate depreciation within theresidual service life of leased assets. If it is unable to determine the obtainment of theownership of leased assets at the expiry of the lease term, the Company shall calculatedepreciation within the lease term or within the residual service life of leased assets (whicheveris shorter).Interest expenses for lease liabilities in different periods within the lease term shall becalculated by the Company in accordance with fixed periodic rate. Such expenses shall berecorded into current profits and losses, or into related asset cost. Upon its occurrence, variablelease payment not measured as lease liabilities shall be recorded into current profits and losses,or into related asset cost.In case of any change in the fixed amount of payment, in the amount payable estimated by theguarantee balance, in the index or ratio used to determine the lease payment and in theassessment results or actual right executing conditions of call option, renewal option ortermination option after the commencement date of the lease term, the Company shall re-
measure lease liabilities in accordance with the present value of changed lease payment, andmake corresponding adjustment to the book value of right-of-use assets. The Company shallrecord the residual amount into current profits and losses, when the book value of right-of-useassets has already been decreased to zero, but it is still necessary to cut down lease liabilities.
③ Short-term lease and lease of low-value assets
Simplified treatment method is adopted by the Company for short-term lease (the lease termsince the commencement date of lease is within twelve months) and lease of low-value assets.Right-of-use assets and lease liabilities will not be confirmed. Instead, the lease payment shallbe recorded, in accordance with straight-line method or other systematic and reasonablemethods, into related asset cost or into current profits and losses in different periods within thelease term.? Lease changeWhen lease is changed and conforms to the following conditions at the same time, this leasechange shall be regarded by the Company as an individual lease for accounting treatment:
? This lease change has expanded the scope of lease by increasing the use right of one orseveral leased assets.? The increased price is equal to the amount of the enlarged part after being adjusted inaccordance with the contract.If lease change is not subject to accounting treatment as an individual lease (simplified methodfor contract changes directly caused by COVID-19), on the effective date of such lease change,the Company shall re-amortize the changed contract price, determine a new lease term, and re-measure lease liabilities in accordance with the present value calculated based on the changedlease payment and the revised discount rate.If the lease change narrows the scope of lease or shortens the lease term, the Company shalllower the book value of right-of-use assets, and record gains from partially or completelyterminated lease into current profits and losses. The Company shall make correspondingadjustment to the book value of right-of-use assets, when lease liabilities need to be re-measured due to other lease changes.
(2) The Company as leaser
On the commencement date of lease, based on the essence of transaction, lease is divided bythe Company into finance lease and operating lease. Finance lease refers to the lease that almostall risks and remunerations related to the ownership of leased assets have already beentransferred in essence. Operating lease refers to other leases excluding finance lease.
① Operating lease
The straight-line method is adopted by the Company to confirm the lease receipts as rentalincome in different periods within the lease term. Variable lease payment related to operatinglease that is not recorded into lease receipts shall be recorded into current profits and lossesupon the occurrence.
② Finance lease
Since the commencement date of the lease term, the Company shall confirm the amount offinance lease receivable, and derecognize finance lease assets. The amount of finance leasereceivable shall be initially measured by net lease investment (sum of present value ofunguaranteed balance and un-received lease receipts since the commencement date of the leaseterm after being discounted in accordance with the interest rate implicit in lease). In addition,interest incomes within the lease term shall be calculated and conformed in accordance withfixed periodic rate. Upon its occurrence, variable lease payment not measured as leaseliabilities shall be recorded into current profits and losses, or into related asset cost.
③ Lease change
When operating lease is changed, the Company shall regard such change as a new lease foraccounting treatment since its effective date. Receivables in advance or lease receiptsreceivable related to pre-change lease shall be deemed as receipts of new lease.When finance lease is changed and conforms to the following conditions at the same time, thislease change shall be regarded by the Company as an individual lease for accounting treatment:
? This change has expanded the scope of lease by increasing the use right of one or severalleased assets.? The increased price is equal to the amount of the enlarged part after being adjusted inaccordance with the contract.If the change in finance lease is not subject to accounting treatment as an individual lease, theCompany will treat the changed lease under the following circumstances:
? In case that the change takes effect since the commencement date of lease and that such leasewill be classified into operating lease, the Company will, since the effective date of such leasechange, take it as a new lease for accounting treatment, and take net lease investment beforethe effective date as the book value of leased assets.? In case that the change takes effect since the commencement date of lease and that such leasewill be classified into finance lease, the Company will perform accounting treatment inaccordance with relevant provisions for contract modification or negotiation in the AccountingStandards for Business Enterprises No. 22 – Recognition and Measurement of FinancialInstruments.
32. Other important accounting policies and accounting estimates
(1) Discontinued operation
Discontinuing operation refers to the constituent part that satisfies one of the followingconditions, that can be distinguished separately and that is disposed by the Company or dividedinto the held-for-sale group: ① This part represents an independent main business or anindividual main business region; ② This part is part of a proposal used to deal with anindependent main business or an individual main business region; ③ This part is a subsidiaryobtained for exclusive reselling.Method for accounting of discontinued operation is shown in Note IV. 14. “Assets availablefor sale and disposal group” herein.
(2) Hedge accounting
In order to avoid certain risks, the Company hedges certain financial instruments as hedginginstruments. For a heading that satisfies specific conditions, the Company may treat it throughhedge accounting method. The company’s hedges include fair value hedges, cash flow hedgesand hedges of net investment in an overseas operation. With regards to hedge for foreignexchange risks with firm commitment, the Company will treat it as cash flow hedge.At the commencement of the hedging, the Company formally specifies the hedging instrumentand the hedged items, and prepares written documents in connection with the hedgingrelationship and the risk management strategy and risk management objectives for theCompany to conduct hedging. In addition, the Company will continuously evaluate theeffectiveness of hedging at the commencement of hedging and thereafter.
① Fair value hedges
For the hedging instrument that is designated as a fair value hedge and meets the conditions,the profits or losses from the tool will be included in the current profits and losses. If thearbitrage tool is used to hedge nonmarketable equity instrument investment (or its constituentpart) measured by fair value and whose changes included in other comprehensive income, bothprofits and losses from the arbitrage tool shall be recorded into other comprehensive income.The profit or loss of the hedged items from the hedging risks shall also be included into thecurrent profit and loss, and at the same time the book value of the hedged item shall be adjusted.If the hedged item is measured at fair value, the profit or loss of the hedged item arising fromthe hedged risk does not need to be used to adjust the book value of the hedged item, and therelevant profits and losses will be included in the current profit and loss or other comprehensiveincome.When the Company withdraws the appointment of hedge relationship, the hedging instruments
have expired or been sold, the contract has been terminated or executed, or the conditions forapplying the hedge accounting are no more satisfied, the application of the hedge accountingwill be terminated.
② Cash-flow hedges
For a hedging instrument that is designated to hedge cash flow and meets the conditions, thepart of the profit or loss arising therefrom that has effective hedging is included in othercomprehensive income as a cash flow hedging reserve, and the part that has ineffective hedgingis included in the current profit and loss.If the expected transaction causes the Company to recognize a non-financial asset or non-financial liability subsequently, or the expected transaction of a non-financial asset or non-financial liability forms a definite commitment applicable to fair value hedge accounting, thenthe Company will transfer out the cash flow hedge reserve amount originally recognized incomprehensive income and include the same in the initial recognized amount of the asset orliability. For the cash flow hedging other than the above, the Company transfers out the cashflow hedging reserve amount originally recognized in other comprehensive income during thesame period when the expected cash flow that is hedged affects the profit and loss, and includesthe same in the current profit and loss.If it is expected that all or part of the net loss originally included in other comprehensiveincome cannot be compensated in the future accounting period, the part that cannot becompensated will be transferred out and included in the current profit and loss.When the Company terminates the use of hedge accounting for cash flow hedging, theaccumulated cash flow hedging reserve that has been included in other comprehensive incomewill be retained when future cash flow is expected to occur, or it will be transferred out fromother comprehensive income and included in the current profit and loss when future cash flowis not expected to occur.
③ Hedges of net investment in an overseas operation
The hedges of net investment in an overseas operation shall be accounted by using the similarmethod to the cash flow hedges. Among the profits or losses of hedging instruments, the partthat is effective hedging is recognized as other comprehensive income, and the profits or lossesof the ineffective part of hedging are included in the current profits and losses.The profits and losses that have been included in other comprehensive income are transferredout of other comprehensive income and included in the current profit and loss upon disposalof overseas operations.
(3) Repurchase shares
The consideration and transaction expenses paid during the share repurchase reduce theshareholders’ equity, which cannot be recognized as profit or loss upon the repurchase, transferor cancellation of the share.As for the transfer of treasury stock, the difference between the received amount and thecarrying amount of the treasury stock shall be included in the capital reserve. If the capitalreserve is not enough for write-down, the surplus reserve and undistributed profit shall bewritten down. As for the cancellation of treasury stock, the share capital shall be reducedaccording to the par value of stock and the quantity of canceled stocks; the capital reserve shallbe written down according to the difference between the book balance and the par value ofstocks. If the capital reserve is not enough for write-down, the surplus reserve and undistributedprofit shall be written down.
33. Changes in significant accounting policies and estimates
(1) Changes in accounting policies
① In December 2021, the Ministry of Finance issued Interpretation No. 15 of the AccountingStandards for Business Enterprises (CK [2021] No.35) (hereinafter referred to as“Interpretation No. 15”), which stipulates the accounting treatment for the sale of products orby-products produced by enterprises before the fixed assets reach the intended usable state orduring the R&D process, the presentation of centralized fund management, and the judgmenton loss contracts. The Company held the seventeenth meeting of the eleventh session of theBOD and the twelfth meeting of the eleventh of the BOS on April 25, 2022, and respectivelyreviewed and approved the Proposal on Changes in Accounting Policies.From January 1, 2022, the Company has been implementing the contents in “the accountingtreatment for the sale of products or by-products produced by enterprises before the fixed assetsreach the intended usable state or during the R&D process” and “the judgment on losscontracts”. The content of “report on centralized fund management" will be implemented sincethe date of publication.A. Accounting treatment for trial salesInterpretation No. 15 clarified the accounting treatment and presentation for external sales ofproducts or by-products produced by enterprises before the fixed assets reach the intendedusable state or during the R&D process, and it stipulates that the net amount of trial salesrevenue after offsetting related costs shall not be offset against fixed asset costs or R&Dexpenses. This regulation came into effect from January 1, 2022. For trial sales that occurredbetween the beginning of the earliest period presented in the financial statements and January1, 2022, retrospective adjustments were made to the comparative financial statements.
The impact of changes in the accounting policy on the Company's consolidated financialstatements is listed as follows:
| Report item | December 31, 2021/FY2021 | ||
| Before the retroactive adjustment | Retroactively adjusted amount | After the retroactive adjustment | |
| Inventory | 12,100,381,644.06 | 45,573,890.71 | 12,145,955,534.77 |
| Other current assets | 1,640,351,289.45 | -45,573,890.71 | 1,594,777,398.74 |
| Fixed assets | 46,117,918,498.81 | -15,188,960.10 | 46,102,729,538.71 |
| Construction in progress | 3,896,282,585.50 | -20,694,577.71 | 3,875,588,007.79 |
| Deferred income tax assets | 123,507,368.56 | 1,032,428.07 | 124,539,796.63 |
| Capital reserve | 9,165,586,160.07 | -3,697,493.97 | 9,161,888,666.10 |
| Undistributed profit | 13,623,601,273.27 | -29,714,854.19 | 13,593,886,419.08 |
| Minority stockholders’ equity | 7,043,319,140.59 | -1,438,761.58 | 7,041,880,379.01 |
| Operating income | 128,979,539,693.27 | 687,392,101.99 | 129,666,931,795.26 |
| Operating cost | 121,608,031,299.09 | 719,145,927.54 | 122,327,177,226.63 |
| Assets impairment loss | -146,977,289.85 | -4,129,712.26 | -151,107,002.11 |
| Income tax expenses | 344,590,446.03 | -1,032,428.07 | 343,558,017.96 |
| Cash received from the sales of goods and the rendering of labor services | 135,429,689,619.36 | 776,753,075.25 | 136,206,442,694.61 |
| Cash payments for goods purchased and labor services received | 124,636,768,649.57 | 811,103,455.41 | 125,447,872,104.98 |
| Cash payments to acquire and construct fixed assets, intangible assets and other long-term assets | 6,007,146,711.00 | -34,350,380.16 | 5,972,796,330.84 |
Changes in the accounting policy have no impacts on the financial statements of the parentcompany.B. Judgment on loss contractsInterpretation No. 15 clarifies that the "cost for performing the contract" considered by
enterprises when determining whether the contract constitutes a loss contract shall include boththe incremental cost for performing the contract and the allocation amount of other costsdirectly related to the performance of the contract. This regulation came into effect fromJanuary 1, 2022, and was implemented for contracts that had not fulfilled all obligations byJanuary 1, 2022. According to the accumulative impacts, retroactive adjustments were madeto the retained earnings and other related financial statement items at the beginning of the yearof the implementation date, without adjustments to the comparative financial statement datafor the previous period.The implementation of this regulation has no impacts on the Company's financial statements.
② In November 2022, the Ministry of Finance issued Interpretation No. 16 of the AccountingStandards for Business Enterprises (CK [2022] No. 31, hereinafter referred to as"Interpretation No. 16"), which stipulated the accounting treatment for the deferred income taxthat is related to assets and liabilities generated from individual transactions and are notapplicable to initial recognition exemption, the accounting treatment for the income tax impactof the dividend related to financial instruments classified as equity instruments by issuers, andthe accounting treatment of enterprises modifying cash-settled share-based payments to equity-settled share-based payments.A. Accounting treatment for the deferred income tax that is related to assets and liabilitiesgenerated from individual transactions and is not applicable to initial recognition exemptionInterpretation No. 16 stipulates that for individual transactions generated from non-businesscombinations, and those that do not affect accounting profits or taxable income (or deductiblelosses) and those of which the initial recognition of assets and liabilities leads to individualtransactions that generate equal taxable temporary differences and deductible temporarydifferences (including leasing transactions where the lessee initially recognizes the leaseliabilities on the lease term start date and includes it in the right-of-use assets, as well astransactions where the expected liability is recognized and included in the relevant asset costdue to the abandonment obligation of fixed assets), the provisions of Article 11 (2) and Article13 of the Accounting Standards for Business Enterprises No. 18 - Income Tax regardingexemption from initial recognition of deferred income tax liabilities and deferred income taxassets are not applicable. For the taxable temporary differences and deductible temporarydifferences arising from the initial recognition of assets and liabilities in the transaction, theenterprise shall recognize the corresponding deferred income tax liabilities and deferredincome tax assets at the time of the transaction in accordance with relevant provisions such asthe Accounting Standards for Business Enterprises No. 18 - Income Tax.
This regulation came into effect on January 1, 2023, allowing enterprises to implement it inadvance from the year of publication. For individual transactions that apply this interpretationbetween the beginning of the earliest period presented in the financial statements in which thisinterpretation is first implemented and the date of implementation of this interpretation,enterprises shall make adjustments in accordance with the provisions of this interpretation. Forthe lease liabilities and right-of-use assets recognized as a result of individual transactions towhich this interpretation applies at the beginning of the financial statement presentation for thefirst time, as well as the estimated liabilities and corresponding assets related to the disposalobligation recognized, which generate taxable temporary differences and deductible temporarydifferences, the enterprise shall comply with the provisions of this interpretation and theAccounting Standards for Business Enterprises No. 18- Income Tax, adjust the cumulativeimpact amount to present the initial retained earnings and other related financial statementitems for the earliest period presented in the financial statements. The Company started theimplementation of this accounting policy from January 1, 2022.The implementation of this regulation by the Company in 2022 has no impacts on theCompany's financial statements.B. Accounting treatment for the income tax impact of the dividend related to financialinstruments classified as equity instruments by issuersInterpretation No. 16 stipulates that for financial instruments classified as equity instrumentsby the issuer in accordance with the Accounting Standards for Business Enterprises No. 37-Presentation of Financial Instruments and other regulations (such as perpetual bonds classifiedas equity instruments), if the relevant dividend expenses are deducted before the enterprise'sincome tax in accordance with relevant tax policies, the enterprise shall recognize the incometax impact related to the dividends when recognizing the payable dividends. The income taximpact of the dividend is usually more directly related to past transactions or events thatgenerate distributable profits. Enterprises shall include the income tax impact of the dividendin current period's profit or loss or owner's equity (including other comprehensive incomeitems) in a manner consistent with the accounting treatment used in past transactions or eventsthat generate distributable profits. For transactions or events where the distributed profits comefrom previous profits and losses, the income tax impact of the dividend shall be included inthe current profits and losses; for transactions or events where the distributed profits come frompreviously recognized owners' equity, the income tax impact of the dividend shall be includedin the owner's equity item.This regulation came into effect from the date of promulgation. For the relevant dividends
payable occur between January 1, 2022 and the implementation date, adjustments were madein accordance with this regulation; for those occurring before January 1, 2022 and the relevantfinancial instruments had not been derecognized as at January 1, 2022, retrospectiveadjustments were made.The implementation of this regulation has no impacts on the Company's financial statements.C. Accounting treatment of enterprises modifying cash-settled share-based payments toequity-settled share-based paymentsInterpretation No. 16 stipulates that if an enterprise modifies the terms and conditions of acash-settled share-based payment agreement to become an equity-settled share-based payment,on the date of modification, the enterprise shall measure the equity-settled share-basedpayment at fair value on the date of granting the equity instruments, record the acquiredservices in the capital reserve, and derecognize the recognized liabilities of the cash-settledshare-based payment on the date of modification, with the difference between the two includedin the current profit and loss.This regulation shall come into effect from the date of promulgation. For the above-mentionedtransactions newly added to this interpretation from January 1, 2022 to the date ofimplementation of this interpretation, enterprises shall make adjustments in accordance withthe provisions of this interpretation. For the transactions mentioned in this interpretation thatoccurred before January 1, 2022 and were not processed in accordance with the aboveregulations, the enterprise shall make adjustments to the retained earnings and other relatedfinancial statement items according to the accumulative impact as at January 1, 2022, withoutadjustments to the information of comparable periods.The implementation of this regulation has no impacts on the Company's financial statements.
(2) Accounting estimate change
In this reporting period, there is no accounting estimate change in the Company.
34. Significant accounting judgments and estimates
Due to uncertainties in the business operations of the Company, the Company needs to makejudgments, estimates and assumptions of the book value as to items in the accounts that theCompany is unable to measure accurately in applying the accounting policies. Thosejudgments, estimates and assumptions are based on the historical experience of themanagement of the Company and other relevant elements. Those judgments, estimates andassumptions may influence the amounts of income, expenses, assets and liabilities and thecontingent liabilities disclosed on the balance sheet date. However, those estimates, due to theuncertainties, may be significantly different from the actual results of business operations of
the Company and, thus, may necessitate significant adjustments to the future book values ofassets or liabilities subject to such estimates.The Company periodically reviews the aforementioned judgments, estimates and assumptionson the basis of going concern. If a change to the accounting estimate concerns only the currentperiod, the change is recognized during the current period; and if a change concerns both thecurrent and future periods, such changes are recognized in both the current and relevant futureperiods.On the balance sheet date, the Company needs to make judgments, estimates and assumptionsas to items in the financial statements in the following key areas:
(1) Classification of leases
① Identification of leases
When identifying whether it is a lease contract or whether lease is included in a contract, theCompany needs to evaluate whether an identified asset exists and that the client has controlledthe use right of such asset within a certain period. During such evaluation, it needs to considerthe nature of assets, substantial right of substitution, whether the client has the right to obtainalmost all economic interests generated by use of such assets in this period, and whether theclient is able to dominate the use of such assets.
② Classification of leases
As the leaser, the Company classified leases into operating lease and financing. Whenclassifying leases, the Company makes analysis and judgments as to whether the Company hastransferred substantially all risks and benefits related to the title to the assets leased out to thetransferee.
③ Lease liabilities
As the lessee, the Company initially measures the lease liabilities in accordance with thepresent value of unpaid lease payment on the commencement date of the lease term. Whilemeasuring the present value of lease payment, the Company estimates the applied discount rateand the lease term of contract containing renewal or termination option. While evaluating thelease term, the Company comprehensively considers all facts and circumstances related toeconomic benefit from the Company’s execution of its option, including expected changes inthe facts and circumstances between the commencement date of the lease term and the date ofoption execution. Different judgments and estimates may influence the recognition of leaseliabilities and right-of-use assets, and thus influence profits and losses in subsequent periods.
(2) Retention of bad debt provision
The Company accounts for the bad debt losses using the allowance method following
accounting policies concerning accounts receivable. The impairment of accounts receivable ismeasured with reference to the assessment of the recoverability of accounts receivable.Determining the impairment of accounts receivable requires the management to makejudgments and estimates. The differences between the actual outcomes and the estimates mayinfluence the book value and the retention and reversal of the bad debt provision for accountsreceivable during the period when the estimates are changed.
(3) Inventory depreciation reserves
The Company measures the cost and the net realizable value following the accounting policiesrelated to inventories and retains inventory depreciation reserves that is obsolete or movingslowly or whose cost is higher than its realizable net value. Inventory impairment is determinedon the basis of the assessment of the saleability and net realizable value of the inventories. Theinventory impairment is determined on the basis of conclusive evidence obtained whileconsidering the purpose of keeping the inventory and effect of events after the balance sheetdate. The differences between the actual outcomes and the estimates may influence the bookvalue of the inventories and the retention and reversal of the inventory depreciation reservesduring the period when the estimates are changed.
(4) Fair value of financial instruments
In case of a financial instrument for which there is no active market, the fair value is determinedusing various valuation techniques, including the discounted cash flow model analysis, amongothers. The Company is required to make estimates as to the future cash flow, credit risks,market volatility and relevance and choose an appropriate discount rate. Such estimates featureuncertainty, and changes in such estimates may have Effect on the fair value of financialinstrument.
(5) Impairment reserves for long-term assets
On the Balance Sheet Date, the Company judges whether there are signs for possibleimpairment of non-current assets except financial assets. Except for annual impairment tests,the Company conducts impairment tests on intangible assets with uncertain serviceable lifewhenever there are signs of impairment. Non-current assets, except financial assets, are testedwhen there are signs that the book value is unable to be recovered.Impairment is determined to have occurred when the book value of an asset or an asset groupis higher than its recoverable amount, which is the higher of the net balance of the fair valueless the disposal cost and the present value of the future cash flow.The net balance of the fair value less the disposal cost is the price contained in sales agreementfor similar assets in fair trade or the market price observed less the incremental costs
attributable to the disposal of the asset.Estimating the present value of the future cash flow requires significant judgments shall bemade as to the production, price, operating costs and the discount rate used to calculate thepresent value of the asset (or asset group). The Company collects all information available,including all estimates made on the basis of reasonable and supported assumptions as to theproduction, selling price and operating costs, to estimate the recoverable amount.The Company conducts impairment test on goodwill at least annually. This requires estimatingthe future cash flow of an asset group or combination of asset groups, to which goodwill isallocated. To estimate the present value of the future cash flow, the Company needs to estimatethe cash flow generated by a future asset group or combination of asset groups and choose anappropriate discount rate.
(6) Depreciation and amortization
The Company depreciates and amortizes the investment properties, fixed assets, right-of-useassets and intangible assets within its serviceable life using the straight-line method whilegiving due consideration to their residual values. The Company reviews the serviceable life ofits assets in order to determine the cost for depreciation and amortization to be allocated toeach reporting period. The Company determines the serviceable life of its assets based on itshistorical experience and the expected technological update. If a significant change occurs toan estimate previously made, the amount of depreciation and amortization will be adjusted infuture periods.
(7) Deferred income tax assets
The Company may recognize all unused tax loss as deferred income tax assets to the extentthere is likely to be adequate taxable profit to offset the loss. It requires the Management tomake numerous judgments to estimate the time and amount of taxable profit with reference tothe tax payment scheduling strategy to determine the amount of the deferred income tax assets.
(8) Income tax
There are uncertainties as to the conclusive tax treatment and calculation of some transactionsin the normal business course of the Company. It requires approval from tax authorities as towhether some items can be treated as pre-income-tax deduction items. The possible differencebetween the conclusive determinations and the initial estimated amounts has effect over thecurrent and deferred income taxes in the period in which such items are conclusivelydetermined.
(9) Estimated liabilities
The Company makes estimates on and retains provisions for product quality assurance,
expected contract losses, penalties on delayed delivery in accordance with the provisions ofcontracts, its current knowledge and historical experience. When such a contingency results ina current liability and the discharge of the same is likely to result in an outflow of the economicbenefits of the Company, the Company recognize the best-estimated expenses to discharge thesame as an estimated liability. The recognition and measurement of the estimated liabilitydepends largely on the judgment of the Management. To make the judgment, the Companyneeds to assess risks related to and uncertainties of such contingencies as well as the time valueof money.The Company will recognize estimated liabilities for its guarantee on the sale, maintenanceand renovation for the sold products and quality assurance provided for customers. Whendetermining the estimated liabilities, the Company has considered the experience ofmaintenance, which, nevertheless, may fail to fairly represent the future maintenance expenses.Any change in the provision may influence the profits or losses of future periods.
(10) Fair value measurement
Certain assets and liabilities of the Company shall be measured at the fair value in the BalanceSheet. When the fair value of certain assets or liabilities is estimated, the Company will adoptavailable and observable market data. If the first-level input values are not available, theCompany will engage a qualified third-party appraiser to perform the valuation. Informationrelated to the valuation technique and input values used in the recognition of the fair value ofvarious assets and liabilities are disclosed in Note X.
V. Taxes
1. Main tax categories and tax rates
| Tax Category | Specific Tax Rate |
| Value-added tax | The output taxes of taxable income shall be calculated at a tax rate of 13%, 9% and 6%, and the VAT shall be calculated and paid based on the difference after deducting the amount of input tax that can be deducted for the current period. |
| Urban maintenance and construction tax | To be paid at 7%, 5% of the actually paid turnover tax. Education surcharge |
| Education surcharge | To be paid at 3% of the actually paid turnover tax. |
| Local education surcharge | To be paid at 2% of the actually paid turnover tax. |
| Enterprise income tax | Calculated and paid at 25%, 18.5%, 17%, 16.5%, 15%, 5% and 2.5% of taxable income. |
The Company has different enterprise income tax rate taxpayers, and the specific conditionsare as follows:
| Name of tax payer | Income tax rate |
| Domestic subsidiary | 25%, 20% and 15% |
| Hong Kong Tianyi International Holding Co., Ltd. Good Park International Investment Co., Ltd. Hong Kong Yisheng Petrochemical Investment Co., Ltd. | 16.5% For offshore trade, the offshore profits tax exemption can be applied for. |
| Hengyi Industry International Co., Ltd. | The Company is approved to join the Singapore Global Trader Programme (GTP), so is entitled to the preferential enterprise income tax rate and payment of enterprise income tax at a tax rate of 5% from 2022 to 2026. |
| Hengyi Industries Sdn. Bhd. | 18.5% |
| Hengyi International Logistics Co., Ltd. Hengyi Petrochemical International Co., Ltd. | 17% |
2. Tax incentives and approvals
(1) According to the Announcement on Issuing the Measures for the Administration ofPreferential Value-Added Tax Policies for Promoting the Employment of Disabled Persons(Announcement No. 33 [2016] of the State Administration of Taxation) released by the StateAdministration of Taxation, Zhejiang Hengyi Polymer Co., Ltd. (Hereinafter “the PolymerCompany”), a holding subsidiary of the Company, enjoyed the preferential VAT policy ofimmediate refund upon payment for the employment of disabled persons.
(2) Zhejiang Hengyi High-Tech Materials Co., Ltd. (hereinafter referred to as "Hengyi High-Tech Materials"), the Company’s holding subsidiary, and Zhejiang Hengyi PetrochemicalResearch Institute Co., Ltd. (hereinafter referred to as the "Institute"), the Company’s wholly-owned subsidiary, obtained the High-tech Enterprise Certificates jointly issued by ZhejiangProvincial Department of Science and Technology, Zhejiang Provincial Department of Financeand Zhejiang Provincial Taxation Bureau of the State Administration of Taxation on December24, 2022, and were recognized as high-tech enterprises with a validity period of three years.According to the Enterprise Income Tax Law of the People’s Republic of China and theImplementation Regulations of the Enterprise Income Tax Law of the People’s Republic of
China, Hengyi High-Tech Materials and the Institute are taxed at a reduced enterprise incomerate of 15% from January 1, 2022 to December 31, 2024.
(3) On December 1, 2020, the Company’s wholly-owned subsidiaries - Jiaxing YipengChemical Fiber Co., Ltd. (hereinafter referred to as “Jiaxing Yipeng”), Zhejiang Shuangtu NewMaterials Co., Ltd. (hereinafter referred to as “Zhejiang Shuangtu”) and Hangzhou YijingChemical Fiber Co., Ltd. (hereinafter referred to as “Hangzhou Yijing”), obtained the High-tech Enterprise Certificate jointly issued by Science Technology Department of ZhejiangProvince, Zhejiang Provincial Department of Finance and Zhejiang Provincial Tax Service,State Taxation Administration, and were therefore confirmed as high-tech enterprise with theperiod of validity as three (3) years. In accordance with the Enterprise Income Tax Law of thePeople’s Republic of China and the Implementation Regulations of the Enterprise Income TaxLaw of the People’s Republic of China, Jiaxing Yipeng, Shuangtu New Materials andHangzhou Yijing are taxed at a reduced enterprise income rate of 15% from January 1, 2020to December 31, 2022.
(4) According to C S [2020] No. 31 Notice of the Ministry of Finance and the StateAdministration of Taxation on the Preferential Enterprise Income Tax Policy of Hainan FreeTrade Port, Hainan Hengjing Trading Co., Ltd., a wholly-owned subsidiary of the Company,is taxed at a reduced enterprise income rate of 15% from January 1, 2020.
(5) In accordance with relevant provisions in the Notice of the Ministry of Finance and SATabout Implementing Inclusive Tax Relief Policy for Small and Micro Businesses (CS No. 13[2019]) and the Notice of the Ministry of Finance and SAT about Implementing FavorableIncome Tax Policy for Small and Micro Businesses and Individual Businesses (Notice of theMinistry of Finance and SAT No. 12 [2021]), for the part of annual incomes taxable exceedingRMB 1 million in small-sized meager-profit enterprises, taxable income shall be paid by therate of 12.5%, and enterprise income tax paid by the rate of 20%. For the part of annual incomestaxable between RMB 1 million and RMB 3 million, taxable income shall be paid by the rateof 25%, and enterprise income tax paid by the rate of 20%. The 2.5% preferential enterpriseincome tax rate is applicable to the Company’s wholly-owned subsidiaries – Zhejiang YizhiInformation Technology Co., Ltd. in current year.
(6) On March 15, 2019, the Company’s holding subsidiary Hengyi Industries InternationalPte. Ltd. was approved to join the Singapore Global Trader Programme (GTP). According tothe approval document on December 31, 2021, Hengyi Industries International Pte. Ltd. wasendowed with Approved Global Trading Company Status and it will enjoy the applicablepreferential enterprise income tax rate of 5% from 2022 to 2026.
(7) The standard corporate income tax rate in Singapore is 17%, but the first 10,000 Singaporedollars of taxable income can enjoy 75% tax relief, and the taxable income of 10,001~190,000Singapore dollars can enjoy 50% tax relief. The wholly-owned subsidiaries of the Company,Hengyi International Logistics Co., Ltd. and Hengyi Petrochemical International Co., Ltd.,enjoy this preference.
(8) As Brunei PMB Petrochemical Project meets corresponding conditions for “PioneerEnterprise”, Hengyi Industries Sdn. Bhd. (a holding subsidiary of the Company) may enjoytax preference for 11 years: exemption of corporate income tax and imported apparatus &imported raw material tax.
(9) According to the implementation opinions of the People’s Government Office of XiaoshanDistrict, Hangzhou on deepening the reform of "giving priority to yield per acre" andpromoting high-quality development, “for giving full play to the role of taxation in regulatingthe economy, promoting the intensive and economical use of urban land, and implementing theurban land use tax reduction and exemption policies by classifications and grading throughoutthe district, before December 31, 2021, for those classified as Class A and Class B enterprises,the urban land use tax will be reduced by 100% and 80% respectively. Hengyi Limited enjoysa preferential policy of 100% reduction in land use tax and 30% reduction in property tax, andHangzhou Yijing enjoys a preferential policy of 100% reduction in land use tax.
(10) In accordance with the Decision of the State Council about Modifying the ‘InterimRegulations of the People's Republic of China on the Use Tax of Urban Land’ and Article 7 ofDecree of the State Council No. 483: When it is necessary for reduction as it is really difficultfor the taxpayer to pay land use tax, the case shall be reported to SAT for approval after beingreviewed by provincial, autonomous and municipal tax authorities. From January 1 toDecember 31, 2022, Haining Hengyi New Materials Co., Ltd. (a wholly-owned subsidiary ofthe Company) may enjoy a preferential policy of 50% reduction in land use tax for difficulties.From January 1 to December 31, 2022, Jiaxing Yipeng (a wholly-owned subsidiary of theCompany) and Shaoxing Shengong Packaging Co., Ltd. (a holding subsidiary of the Company)may enjoy a preferential policy of 80% reduction in land use tax for difficulties. From January1 to December 31, 2022, Zhejiang Shuangtu (a wholly-owned subsidiary of the Company) andZhejiang Hengyi High-Tech Materials (a holding subsidiary of the Company) may enjoy apreferential policy of 100% reduction in land use tax for difficulties.
(11) In accordance with Article 6 of the Interim Regulations of the People's Republic of Chinaon Property Tax (GF No. 90 [1986]): when it is really difficult for the taxpayer to pay relevanttaxes, upon the decision made by provincial, autonomous and municipal people’s governments,
property tax may be reduced or exempted on a periodic basis. From January 1 to December 31,2022, Zhejiang Shuangtu (a wholly-owned subsidiary of the Company) may enjoy apreferential policy: reduce 100% property taxes.
(12) In accordance with the Implementation Suggestions of Zhejiang Provincial Tax Service,State Taxation Administration about Implementing the Decision of Provincial Party Committeefor Promoting Entrepreneurship-based Enrichment and Innovation-based Provincial Strength(ZDSF No. 1 [2008]), within one to three years since the date of establishment of new high-tech enterprises and chain supermarkets, property tax, city and town land use tax and specialfunds for water conservancy construction may be exempted upon the approval by local taxationbureau. Hangzhou Yijing (a wholly-owned subsidiary of the Company) may be exempted fromproperty tax in 2022.
(13) In Notice of the Finance Department of Guangxi Zhuang Autonomous Region onClarifying the Preferential Policies for Local Water Conservancy Construction Funds (GCG[2022] No.1) issued by the Finance Department of Guangxi Zhuang Autonomous Region,Article 2 stipulates: From January 1, 2022 to December 31, 2022, enterprises registered inChina (Guangxi) Pilot Free Trade Zone (including Nanning, Qinzhou Port, and Chongzuo area)and engaged in legitimate operations are exempt from local water conservancy constructionfunds. The Company and its wholly-owned subsidiary Guangxi Hengyi Shunqi Trading Co.,Ltd. enjoy this preferential policy.
(14) According to Notice of Ministry of Finance, State Taxation Administration, and theMinistry of Veteran Affairs on Further Supporting Entrepreneurship and Employment of Self-employed Retired Soldiers Through Preferential Tax Policy (ZS [2019] No. 21), the PolymerCompany, Hengyi High-Tech Materials and Zhejiang Shuangtu may have value-added tax,urban maintenance and construction tax, education surcharges, local education surcharges andenterprise income tax deducted sequentially based on the actual number of retired soldiers anda quota of RMB 9,000 per person per year within three years from the month of signing thelabor contract and paying social insurance premiums provided that they recruit self-employedretired soldiers, and sign labor contracts with them for a period longer than one year and paysocial insurance premiums for them in accordance with the law.
VI. Notes to items of consolidated financial statementsUnless otherwise specified, for the following note items (including the main item notes to theCompany’s financial statements), the "end of the period" refers to December 31, 2022, the "endof previous year" refers to December 31, 2021, the "current period" refers to 2022, and the
"previous period" refers to 2021.
1. Monetary funds
| Item | Ending balance | Ending balance of previous year |
| Cash on hand | 1,118,679.20 | 1,296,711.32 |
| Bank deposit | 11,793,245,385.08 | 9,581,462,709.95 |
| Other monetary funds | 5,564,111,474.22 | 4,739,957,372.55 |
| Total | 17,358,475,538.50 | 14,322,716,793.82 |
| Wherein: The total amount of funds deposited abroad | 4,521,667,307.86 | 2,841,363,553.38 |
Note: As of December 31, 2022, the monetary capital that the Company’s right to use wasrestricted was RMB 4,424,405,925.47, including RMB 2,466,706,685.89 of L/C guaranteedeposit, RMB 1,757,049,826.23 of acceptance bill deposit, RMB 50,018,853.56 of L/G deposit,RMB 58,189.75 of collection for bill pledge, RMB 25,169,796.00 of judicially frozen fund,RMB 115,396,976.82 of futures deposit, and RMB 10,005,597.22 of other restricted funds.
2. Held-for-trading financial assets
| Item | Ending balance | Ending balance of previous year |
| Financial assets measured at fair value through profit and loss | 251,021,508.33 | 388,958,054.67 |
| Wherein: Debt instrument investment | 0.00 | 0.00 |
| Equity instrument investment | 0.00 | 0.00 |
| Derivative financial assets | 251,021,508.33 | 388,958,054.67 |
| Others | 0.00 | 0.00 |
| Specified as financial assets measured by fair value and whose changes included in current profits and losses | 0.00 | 0.00 |
| Total | 251,021,508.33 | 388,958,054.67 |
| Wherein: Portion reclassified to other non-current financial assets | 0.00 | 0.00 |
3. Derivative financial assets
| Item | Ending balance | Ending balance of previous year |
| Foreign exchange derivatives | 0.00 | 0.00 |
| Commodity derivatives | 1,872,460.80 | 0.00 |
| Total: | 1,872,460.80 | 0.00 |
Note: The derivative financial assets at the yearend are the future exchange derivatives that aredesignated and are effective hedging instruments.Cash-flow hedge:
In order to avoid the risk of cash flow changes related to commodity prices in product salesthat are likely to occur in the future, the Company designates a series of commodity futuresand paper market contracts held by it as hedging instruments for expected commodity sales.Commodity futures and paper market contracts designated as hedging instruments have aneconomic relationship with the expected sales of commodities under the hedging. The hedgeratio is reasonable, if the hedge ratio of hedging relationship is the same as the hedge ratio setfrom the perspective of risk management.In order to avoid the risk of cash flow changes related to foreign currency borrowings in thefuture, the Company designates a series of foreign currency derivative contracts held by theCompany as hedging instruments for foreign currency borrowings. The underlying assets offoreign currency derivatives designated as hedging instruments have an economic relationshipwith the hedged foreign currency borrowings. The hedge ratio is reasonable, if the hedge ratioof hedging relationship is the same as the hedge ratio set from the perspective of riskmanagement.In this year, an amount of RMB -4,627,201.60 was recorded into stockholders' equity as cash-flow hedge reserves in the Company. Details are described as follows:
| Item | Current-period Quantity |
| Total gains of fair value recorded into stockholders' equity | -32,287,505.91 |
| Minus: Deferred income tax from the gains of fair value | -1,511,985.87 |
| Minus: Other comprehensive income is reclassified into current profit and loss | -24,245,656.05 |
| Minus: Deferred income tax reclassified into current profit and loss | -80,424.00 |
| Minus: Assigned to Minority Shareholders after Tax | -1,983,086.39 |
| Net profits from cash-flow hedge | -4,627,201.60 |
4. Notes receivable
(1) Classified presentation of notes receivable
| Item | Ending balance | Ending balance of previous year |
| Bank acceptance bills | 246,560,954.07 | 258,014,878.86 |
| Commercial acceptance bills | 0.00 | 0.00 |
| Domestic letter of credit | 0.00 | 0.00 |
| Subtotal | 246,560,954.07 | 258,014,878.86 |
| Minus: Provision for bad debts | 0.00 | 0.00 |
| Total | 246,560,954.07 | 258,014,878.86 |
(2) Pledged notes receivable at the end of the year
| Item | Amounts pledged at the end of period |
| Bank acceptance bills | 53,822,104.39 |
(3) The amount of endorsed or discounted notes receivable that become mature after thedate of balance sheet at the end of the year.
| Item | Ending balance of those derecognized | Ending balance of those not derecognized |
| Bank acceptance bills | 753,032,485.93 | 0.00 |
(4) Notes converted to accounts receivable at the yearend due to the non-performance of thedrawerThere are not notes converted to accounts receivable at the yearend due to the non-performanceof the drawer.
5. Accounts receivable
(1) Disclosure by aging
| Aging | Ending balance | Ending balance of previous year |
| Within 1 year | 6,857,378,133.02 | 6,436,739,812.92 |
| Wherein: Within 6 months | 6,853,588,160.54 | 6,436,207,144.59 |
| 7-12 months | 3,789,972.48 | 532,668.33 |
| Aging | Ending balance | Ending balance of previous year |
| 1-2 years | 918,708.38 | 168,352.34 |
| 2-3 years | 163,835.86 | 8,532,277.40 |
| Over three years | 8,510,212.00 | 336,665.16 |
| Subtotal | 6,866,970,889.26 | 6,445,777,107.82 |
| Minus: Provision for bad debts | 9,057,241.04 | 8,935,048.94 |
| Total | 6,857,913,648.22 | 6,436,842,058.88 |
(2) Presented based on bad debt reserve provision method
| Category | Ending balance | ||||
| Book Balance | Provision for bad debts | Book Value | |||
| Amount | Proportion (%) | Amount | Allotment rate (%) | ||
| Accounts receivable with single provision for bad debt | 8,510,212.00 | 0.12 | 8,510,212.00 | 100.00 | 0.00 |
| Wherein: Hangzhou Hengchuang Chemical Fiber Co., Ltd. | 8,510,212.00 | 0.12 | 8,510,212.00 | 100.00 | 0.00 |
| Receivables with bad debt provision made as per different groups | 6,858,460,677.26 | 99.88 | 547,029.04 | 0.01 | 6,857,913,648.22 |
| Wherein: This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | 6,858,460,677.26 | 99.88 | 547,029.04 | 0.01 | 6,857,913,648.22 |
| Total | 6,866,970,889.26 | 100.00 | 9,057,241.04 | 0.13 | 6,857,913,648.22 |
(Continued)
| Category | Ending balance of previous year | ||||
| Book Balance | Provision for bad debts | Book Value | |||
| Amount | Proportion (%) | Amount | Allotment rate (%) | ||
| Accounts receivable with single provision for bad debt | 8,510,212.00 | 0.13 | 8,510,212.00 | 100.00 | 0.00 |
| Wherein: Hangzhou Hengchuang Chemical Fiber Co., Ltd. | 8,510,212.00 | 0.13 | 8,510,212.00 | 100.00 | 0.00 |
| Receivables with bad debt provision made as per different groups | 6,437,266,895.82 | 99.87 | 424,836.94 | 0.01 | 6,436,842,058.88 |
| Wherein: This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | 6,437,266,895.82 | 99.87 | 424,836.94 | 0.01 | 6,436,842,058.88 |
| Total | 6,445,777,107.82 | 100.00 | 8,935,048.94 | 0.14 | 6,436,842,058.88 |
① Accounts receivable with single provision for bad debt
| Accounts Receivable (by Unit) | Ending balance | |||
| Book balance | Bad debt provision | Allotment rate | Reason for provision | |
| Hangzhou Hengchuang Chemical Fiber Co., Ltd. | 8,510,212.00 | 8,510,212.00 | 100% | Expected to be less likely to be recovered |
② Accounts receivable with bad debt provision made based on aging combination in the
combination
| Aging | Ending balance | ||
| Accounts receivable | Bad debt provision | Allotment rate (%) | |
| Within 6 months | 6,853,588,160.54 | 0.00 | 0.00 |
| 7-12 months | 3,789,972.48 | 189,498.62 | 5.00 |
| 1-2 years | 918,708.38 | 275,612.50 | 30.00 |
| 2-3 years | 163,835.86 | 81,917.92 | 50.00 |
| Over three years | 0.00 | 0.00 | 0.00 |
| Aging | Ending balance | ||
| Accounts receivable | Bad debt provision | Allotment rate (%) | |
| Total | 6,858,460,677.26 | 547,029.04 | — |
(3) Bad debt preparation
| Category | Ending balance of previous year | Amount of changes in current period | Ending balance | ||
| Provision | Amount recovered or written back | Resell or write off | |||
| Accounts receivable with single provision for bad debt | 8,510,212.00 | 0.00 | 0.00 | 0.00 | 8,510,212.00 |
| Amounts due from related parties included in the scope of consolidation | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| This credit risk characteristic of this portfolio of receivables is defined by account receivable aging. | 424,836.94 | 470,701.26 | 11,844.00 | 336,665.16 | 547,029.04 |
| Total | 8,935,048.94 | 470,701.26 | 11,844.00 | 336,665.16 | 9,057,241.04 |
(4) The top five ending amounts (totals by borrower) of accounts receivableThe top five ending amounts (totals by borrower) of the Company’s accounts receivableamounted to RMB 3,556,408,361.50 in total, accounting for 51.79% of the year-endbalance of accounts receivable, and the corresponding year-end balance of the provisionfor bad debts was RMB 0.00.
6. Accounts receivable financing
(1) Classified presentation of receivables financing
| Item | Ending balance | Ending balance of previous year |
| Notes receivable | 129,579,710.85 | 487,553,057.15 |
| Accounts receivable | 0.00 | 0.00 |
| Total | 129,579,710.85 | 487,553,057.15 |
(2) Changes of increase or decrease of financing of receivables in current period and changesin fair value thereof
| Item | Ending balance of previous year | Changes in current period | Ending balance |
| Cost | Changes of fair value | Cost | Changes of fair value | Cost | Changes of fair value | |
| Notes receivable | 487,553,057.15 | 0.00 | -357,973,346.30 | 0.00 | 129,579,710.85 | 0.00 |
| Accounts receivable | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 487,553,057.15 | 0.00 | -357,973,346.30 | 0.00 | 129,579,710.85 | 0.00 |
(3) The amount of endorsed or discounted accounts receivable that become mature after thedate of balance sheet at the end of the year.
| Item | Ending balance of those derecognized | Ending balance of those not derecognized |
| Bank acceptance bills | 2,716,097,809.54 | 0.00 |
(4) Other description
During the current period, the Company discounted bank acceptance bills of RMB3,927,622,490.56 (RMB 5,810,104,744.10 in the previous year) under the financing ofreceivables to banks. Main risks (e.g. interest rate risk) and remunerations related to these bankacceptance bills have been transferred to the bank. Therefore, the Company shall derecognizediscounted immature bank acceptance bills. According to the cashing agreement, if thebanker’s acceptance failed to be cashed upon maturity, the bank has the right to ask theCompany to pay off the unsettled balance. Therefore, the Company continued to involve incashing the banker’s acceptance. On December 31, 2022, the cashed but not mature banker’sacceptance was RMB 2,163,654,777.55 in total (RMB 3,032,977,371.34 on December 31,2021).
7. Advance payment
(1) Presentation of advance payment based on aging
| Aging | Ending balance | Ending balance of previous year | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 1,750,732,277.13 | 97.65 | 2,325,038,241.09 | 98.46 |
| 1-2 years | 23,433,483.12 | 1.31 | 30,708,837.83 | 1.30 |
| 2-3 years | 12,874,502.42 | 0.72 | 5,275,977.46 | 0.22 |
| Over three years | 5,656,584.18 | 0.32 | 505,198.15 | 0.02 |
| Aging | Ending balance | Ending balance of previous year | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Total | 1,792,696,846.85 | 100.00 | 2,361,528,254.53 | 100.00 |
(2) Important advance payment with aging >1 year
At the end of the term, there is no important advance payment with aging >1 year in theCompany.
(3) Advance payment with top five ending balance collected by object of prepaymentThe top five ending amounts (totals by prepayment objects) of the Company’s advancepayments amounted to RMB 943,319,263.86, accounting for 52.62% in the total balance ofprepayments at the year-end balance.
8. Other receivables
| Item | Ending balance | Ending balance of previous year |
| Interests receivable | 0.00 | 0.00 |
| Dividends receivable | 0.00 | 344,500,000.00 |
| Other receivables | 133,782,632.86 | 139,715,755.18 |
| Total | 133,782,632.86 | 484,215,755.18 |
(1) Dividends receivable
| Investee | Ending balance | Ending balance of previous year |
| Hainan Yisheng Petrochemical Co., Ltd. | 0.00 | 265,000,000.00 |
| Dalian Yisheng Investment Co., Ltd. | 0.00 | 79,500,000.00 |
| Subtotal | 0.00 | 344,500,000.00 |
| Minus: Bad debt provision | 0.00 | 0.00 |
| Total | 0.00 | 344,500,000.00 |
(2) Other receivables
① Disclosure by aging
| Aging | Ending balance | Ending balance of previous year |
| Within 1 year | 85,330,016.44 | 62,871,587.51 |
| 1-2 years | 2,625,100.78 | 45,350,003.33 |
| 2-3 years | 18,718,506.81 | 9,240,923.00 |
| Over three years | 59,126,527.96 | 53,364,478.08 |
| Subtotal | 165,800,151.99 | 170,826,991.92 |
| Minus: Bad debt provision | 32,017,519.13 | 31,111,236.74 |
| Total | 133,782,632.86 | 139,715,755.18 |
② Classification based on nature of fund
| Nature of account | Ending balance | Ending balance of previous year |
| Receivables and payables such as advances from entities beyond the scope of consolidation | 27,054,550.51 | 35,211,893.21 |
| Combination of tax refunds receivable and other government subsidies | 18,364,333.51 | 37,132,620.00 |
| Portfolio of deposits and security | 62,664,839.19 | 39,807,477.55 |
| Employee loan and petty cash | 6,311,098.39 | 5,670,232.02 |
| Other groups | 51,405,330.39 | 53,004,769.14 |
| Subtotal | 165,800,151.99 | 170,826,991.92 |
| Minus: Bad debt provision | 32,017,519.13 | 31,111,236.74 |
| Total | 133,782,632.86 | 139,715,755.18 |
③ Accrual of bad debt reserves
| Bad debt provision | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss of the future twelve months | Expected credit loss over the lifetime (no credit impairment has occurred) | Expected credit loss over the lifetime (credit impairment occurred has occurred) | ||
| Ending balance of previous | 4,523,491.65 | 341,700.00 | 26,246,045.09 | 31,111,236.74 |
| Bad debt provision | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss of the future twelve months | Expected credit loss over the lifetime (no credit impairment has occurred) | Expected credit loss over the lifetime (credit impairment occurred has occurred) | ||
| year | ||||
| Book balance of other receivables at the end of the previous year: | ||||
| - Transferred to Stage 2 | 0.00 | -- | -- | 0.00 |
| - Transferred to Stage 3 | 0.00 | 0.00 | -- | 0.00 |
| - Transferred back to Stage 2 | -- | -- | 0.00 | 0.00 |
| - Transferred back to Stage 1 | -- | 0.00 | 0.00 | 0.00 |
| Provision in current period | 1,490,069.79 | 79,625.60 | 0.00 | 1,569,695.39 |
| Roll-back in current period | 663,413.00 | 0.00 | 0.00 | 663,413.00 |
| Write-off in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Cancellation after verification in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Other changes | 0.00 | 0.00 | 0.00 | 0.00 |
| Ending balance | 5,350,148.44 | 421,325.60 | 26,246,045.09 | 32,017,519.13 |
④ Situation of bad debt reserves
| Category | Ending balance of previous year | Amount of changes in current period | Ending balance | ||
| Provision | Amount recovered or written back | Write-off or Cancellation after Verification and Others | |||
| Receivables and payables such as advances from entities beyond the scope of consolidation | 1,056,356.78 | 21,720.49 | 266,440.77 | 0.00 | 811,636.50 |
| Portfolio of deposits and security | 2,321,248.93 | 1,429,728.50 | 296,761.91 | 0.00 | 3,454,215.52 |
| Employee loan and petty cash | 169,640.81 | 86,272.40 | 66,584.92 | 0.00 | 189,328.29 |
| Other groups | 27,563,990.22 | 31,974.00 | 33,625.40 | 0.00 | 27,562,338.82 |
| Total | 31,111,236.74 | 1,569,695.39 | 663,413.00 | 0.00 | 32,017,519.13 |
⑤ Other receivables with top five ending balance collected by debtor
| Name of organization | Nature of account | Ending balance | Aging | Proportions in the total other accounts receivable at the year ended (%) | Bad debt provision Ending balance | |
| Baiduri Bank Berhad | Margin | 54,567,641.00 | Within 1 year | 32.91 | 2,728,382.05 | |
| Wang XX | Claim for indemnity | 26,243,545.09 | Over three years | 15.83 | 26,243,545.09 | |
| Fulida Group and Xinghui Chemical Fiber Group Co., Ltd. | Compensation | 23,586,685.13 | Over three years | 14.23 | 1,179,334.26 | |
| Tax Bureau of Xiaoshan District | Tax returns | 15,405,733.51 | Within 1 year | 9.29 | 0.00 | |
| Sinotrans (B) Sdn. Bhd. | Receivables and payables | 4,331,307.12 | ≤2 years Over three years | 2.61 | 129,939.21 | |
| Total | — | 124,134,911.85 | — | 74.87 | 30,281,200.61 | |
Note: The relevant description on balance formation of the Company’s "other receivables -Wang" and full provision for bad debts at the end of current period can be found in Note XII.1 (1).
⑥ Accounts receivable involving government grants
| Name of organization | Name of government grants | Ending balance | Aging at the end of the period | Time, amount and basis of estimated collection |
| Tax Bureau of Xiaoshan District | Value-added tax refund | 15,405,733.51 | Within 1 year | February 15, 2023 |
| Xiaoshan District Bureau of Economic and Information | Headquarters regress | 2,958,600.00 | Within 1 | May 1, 2023 |
| Name of organization | Name of government grants | Ending balance | Aging at the end of the period | Time, amount and basis of estimated collection |
| Tax Bureau of Xiaoshan District | Value-added tax refund | 15,405,733.51 | Within 1 year | February 15, 2023 |
Technology
| Technology | subsidies | year | ||
| Total | — | 18,364,333.51 | — | — |
Note: “The balance RMB 15,405,733.51 of value-added tax refund was totally received beforeFebruary 15, 2023.
9. Inventory
(1) Classification of inventory
| Item | Ending balance | ||
| Book balance | Inventory depreciation reserves/Impairment reserves for contract performance cost | Book value | |
| Materials in transit | 2,167,614,674.66 | 0.00 | 2,167,614,674.66 |
| Raw materials | 4,761,057,332.22 | 50,978,954.18 | 4,710,078,378.04 |
| Goods in process | 1,289,739,172.39 | 89,318,021.98 | 1,200,421,150.41 |
| Commodity stocks | 6,222,986,720.67 | 227,434,527.33 | 5,995,552,193.34 |
| Project construction | 9,818,174.73 | 0.00 | 9,818,174.73 |
| Total | 14,451,216,074.67 | 367,731,503.49 | 14,083,484,571.18 |
(Continued)
| Item | Ending balance of previous year | ||
| Book balance | Inventory depreciation reserves/Impairment reserves for contract performance cost | Book value | |
| Materials in transit | 1,731,750,808.56 | 4,065,527.08 | 1,727,685,281.48 |
| Raw materials | 4,375,371,606.99 | 11,834,022.08 | 4,363,537,584.91 |
| Goods in process | 1,117,706,067.47 | 5,826,212.07 | 1,111,879,855.40 |
| Item | Ending balance of previous year | ||
| Book balance | Inventory depreciation reserves/Impairment reserves for contract performance cost | Book value | |
| Commodity stocks | 5,057,408,304.21 | 116,161,441.71 | 4,941,246,862.50 |
| Project construction | 1,605,950.48 | 0.00 | 1,605,950.48 |
| Total | 12,283,842,737.71 | 137,887,202.94 | 12,145,955,534.77 |
(2) Inventory depreciation reserves
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | ||
| Provision | Others | Write-back or write-off | Others | |||
| Materials in transit | 4,065,527.08 | 0.00 | 0.00 | 4,065,527.08 | 0.00 | 0.00 |
| Raw materials | 11,834,022.08 | 50,230,584.53 | 748,369.65 | 11,834,022.08 | 0.00 | 50,978,954.18 |
| Goods in process | 5,826,212.07 | 86,393,812.27 | 3,228,894.26 | 6,130,896.62 | 0.00 | 89,318,021.98 |
| Commodity stocks | 116,161,441.71 | 225,057,017.21 | 2,558,122.39 | 116,342,053.98 | 0.00 | 227,434,527.33 |
| Total | 137,887,202.94 | 361,681,414.01 | 6,535,386.30 | 138,372,499.76 | 0.00 | 367,731,503.49 |
Note: The reason for the Company’s re-sell inventory depreciation reserves in current periodis the external sales of the inventory for which the inventory depreciation provision has beenmade.
10. Non-current assets due within one year
| Item | Ending balance | Ending balance of previous year | Remarks |
| Long-term receivables mature within one year | 0.00 | 115,233,477.61 | Please refer to Note VI. 12. for details. |
11. Other current assets
| Item | Ending balance | Ending balance of previous year |
| Unamortized expense | 180,672,280.12 | 170,334,722.91 |
| Input tax retained | 217,586,355.91 | 293,635,460.12 |
| Excess tax paid | 9,688,362.57 | 50,171,578.66 |
| Item | Ending balance | Ending balance of previous year |
| Input tax to be certified | 313,718,497.07 | 859,364.43 |
| Principal and interest of entrusted loan | 989,433,904.99 | 1,079,576,125.83 |
| Others | 133,431.20 | 200,146.79 |
| Total | 1,711,232,831.86 | 1,594,777,398.74 |
12. Long-term receivables
Long-term accounts receivable
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment Reserve | Book value | Book balance | Impairment Reserve | Book value | |
| Financing lease | 172,869,347.67 | 0.00 | 172,869,347.67 | 115,233,477.61 | 0.00 | 115,233,477.61 |
| Wherein: Unrealized financing income | -66,418,901.96 | 0.00 | -66,418,901.96 | -52,145,883.55 | 0.00 | -52,145,883.55 |
| Long-term deposits | 3,613,154.11 | 0.00 | 3,613,154.11 | 3,307,639.58 | 0.00 | 3,307,639.58 |
| Minus: Portion due within one year (Notes VI. 10) | 0.00 | 0.00 | 0.00 | 115,233,477.61 | 0.00 | 115,233,477.61 |
| Total | 176,482,501.78 | 0.00 | 176,482,501.78 | 3,307,639.58 | 0.00 | 3,307,639.58 |
13. Long-term equity investments
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment Reserve | Book value | Book balance | Impairment Reserve | Book value | |
| Investments in joint ventures and associates | 12,831,505,320.53 | 0.00 | 12,831,505,320.53 | 12,085,626,559.38 | 0.00 | 12,085,626,559.38 |
Investments in joint ventures and associates
| Investee | Ending balance of previous year | Changes of increase or decrease in current period | ||||
| Additional investment | Negative investment | Investment profits and losses recognized under the equity method Investment profits and losses | Other comprehensive income adjustment | Changes in other equity | ||
| I. Joint ventures | ||||||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 1,319,719,520.62 | 0.00 | 0.00 | -175,859,390.73 | 0.00 | 0.00 |
| Hainan Yisheng Petrochemical Co., Ltd. | 2,748,764,205.65 | 0.00 | 0.00 | 521,043,246.22 | 34,297,818.99 | 0.00 |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | 0.00 | 3,000,000.00 | 2,986,703.89 | -13,296.11 | 0.00 | 0.00 |
| Subtotal | 4,068,483,726.27 | 3,000,000.00 | 2,986,703.89 | 345,170,559.38 | 34,297,818.99 | 0.00 |
| II. Associated companies | ||||||
| Dalian Yisheng Investment Co., Ltd. | 1,876,736,059.44 | 0.00 | 0.00 | 127,094,005.96 | 22,278,108.11 | 0.00 |
| Hangzhou Jingxin Supply Chain Management Co., Ltd. | 134,119,750.25 | 0.00 | 134,774,809.93 | 655,059.68 | 0.00 | 0.00 |
| China Zheshang Bank Co., Ltd. | 4,349,899,221.89 | 0.00 | 0.00 | 435,222,754.92 | 57,516,800.00 | 9,539,200.00 |
| Ningbo Jinhou Industry Investment Co., Ltd. | 14,291,804.11 | 0.00 | 0.00 | -37,178.87 | 0.00 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | 1,494,961,748.42 | 0.00 | 0.00 | -93,353,326.07 | -195,347.78 | 0.00 |
| Dongzhan Shipping Co., Ltd. | 147,134,249.00 | 0.00 | 0.00 | 9,784,806.02 | -33,143.94 | 0.00 |
| Subtotal | 8,017,142,833.11 | 0.00 | 134,774,809.93 | 479,366,121.64 | 79,566,416.39 | 9,539,200.00 |
| Total | 12,085,626,559.38 | 3,000,000.00 | 137,761,513.82 | 824,536,681.02 | 113,864,235.38 | 9,539,200.00 |
(Continued)
| Investee | Changes of increase or decrease in current period | Ending balance | Impairment reserves Ending balance | ||
| Announcement of release Cash dividend or profit | Provisions for impairment reserves | Others | |||
| I. Joint ventures | |||||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 67,299,841.43 | 0.00 | 0.00 | 1,076,560,288.46 | 0.00 |
| Hainan Yisheng Petrochemical Co., Ltd. | 0.00 | 0.00 | 0.00 | 3,304,105,270.86 | 0.00 |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Subtotal | 67,299,841.43 | 0.00 | 0.00 | 4,380,665,559.32 | 0.00 |
| II. Associated companies | |||||
| Dalian Yisheng Investment Co., Ltd. | 0.00 | 0.00 | 0.00 | 2,026,108,173.51 | 0.00 |
| Hangzhou Jingxin Supply Chain Management Co., Ltd. | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| China Zheshang Bank Co., Ltd. | 0.00 | 0.00 | 0.00 | 4,852,177,976.81 | 0.00 |
| Ningbo Jinhou Industry Investment Co., Ltd. | 0.00 | 0.00 | 0.00 | 14,254,625.24 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | 0.00 | 0.00 | 0.00 | 1,401,413,074.57 | 0.00 |
| Dongzhan Shipping Co., Ltd. | 0.00 | 0.00 | 0.00 | 156,885,911.08 | 0.00 |
| Subtotal | 0.00 | 0.00 | 0.00 | 8,450,839,761.21 | 0.00 |
| Total | 67,299,841.43 | 0.00 | 0.00 | 12,831,505,320.53 | 0.00 |
14. Other equity instrument investments
(1) Investment in other equity instruments
| Item | Ending balance | Ending balance of previous year |
| Zhejiang Hengchuang Advanced Functional Fiber Innovation Center Co., Ltd. | 600,000.00 | 600,000.00 |
| Jiangsu New Horizon Advanced Functional Fiber Innovation Center Co., Ltd. | 5,000,000.00 | 5,000,000.00 |
| Item | Ending balance | Ending balance of previous year |
| Total | 5,600,000.00 | 5,600,000.00 |
15. Fixed assets
| Item | Ending balance | Ending balance of previous year |
| Fixed assets | 47,462,032,827.08 | 46,072,017,947.83 |
| Liquidation of fixed assets | 4,428,849.55 | 30,711,590.88 |
| Total | 47,466,461,676.63 | 46,102,729,538.71 |
(1) Fixed assets
① Information of fixed assets
| Item | Houses and buildings | Structures | Machinery equipment | Transportation equipment | Office facilities and others | Total |
| I. Original book value | ||||||
| 1. Ending balance (previous year) | 11,746,241,517.22 | 1,359,891,066.38 | 47,818,422,523.06 | 310,074,288.75 | 253,589,965.55 | 61,488,219,360.96 |
| 2. Increase in current period | 1,076,085,965.72 | 39,841,765.24 | 3,437,845,726.37 | 46,437,940.33 | 77,410,161.34 | 4,677,621,559.00 |
| (1) Acquisition | 55,933,568.79 | 149,372.99 | 46,200,482.05 | 36,699,481.70 | 16,999,710.54 | 155,982,616.07 |
| (2) In-progress construction roll-in | 422,110,451.27 | 39,682,373.26 | 1,744,974,410.40 | 2,071,615.56 | 54,766,359.89 | 2,263,605,210.38 |
| (3) Conversion of foreign currency statements | 598,041,945.66 | 10,018.99 | 1,646,670,833.92 | 7,666,843.07 | 5,644,090.91 | 2,258,033,732.55 |
| (4) Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decrease in current period | 9,059,229.71 | 278,529.56 | 82,863,298.07 | 8,416,242.83 | 364,420.98 | 100,981,721.15 |
| (1) Disposal or retirement | 9,059,229.71 | 278,529.56 | 48,871,515.80 | 8,416,242.83 | 173,151.02 | 66,798,668.92 |
| (2) Roll into in-progress construction | 0.00 | 0.00 | 26,333,459.58 | 0.00 | 0.00 | 26,333,459.58 |
| (3) Conversion of foreign currency statements | 0.00 | 0.00 | 0.00 | 0.00 | 191,269.96 | 191,269.96 |
| (4) Others | 0.00 | 0.00 | 7,658,322.69 | 0.00 | 0.00 | 7,658,322.69 |
| Item | Houses and buildings | Structures | Machinery equipment | Transportation equipment | Office facilities and others | Total |
| 4. Balance at the end of current year | 12,813,268,253.23 | 1,399,454,302.06 | 51,173,404,951.36 | 348,095,986.25 | 330,635,705.91 | 66,064,859,198.81 |
| II. Accumulated depreciation | ||||||
| 1. Ending balance (previous year) | 1,203,549,293.66 | 624,378,786.50 | 13,328,518,331.87 | 114,398,422.73 | 145,356,578.37 | 15,416,201,413.13 |
| 2. Increase in current period | 358,670,877.52 | 77,638,021.06 | 2,687,673,630.57 | 55,556,071.82 | 45,071,923.23 | 3,224,610,524.20 |
| (1) Provision | 328,584,300.19 | 77,634,069.23 | 2,563,190,312.47 | 52,188,749.75 | 42,054,676.41 | 3,063,652,108.05 |
| (2) Conversion of foreign currency statements | 30,086,577.33 | 3,951.83 | 124,483,318.10 | 3,367,322.07 | 3,017,246.82 | 160,958,416.15 |
| (3) Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decrease in current period | 3,139,541.98 | 112,456.30 | 31,242,351.23 | 6,850,681.75 | 277,526.01 | 41,622,557.27 |
| (1) Disposal or retirement | 3,139,541.98 | 112,456.30 | 24,130,445.80 | 6,850,681.75 | 122,618.53 | 34,355,744.36 |
| (2) Roll into in-progress construction | 0.00 | 0.00 | 6,105,399.91 | 0.00 | 0.00 | 6,105,399.91 |
| (3) Conversion of foreign currency statements | 0.00 | 0.00 | 0.00 | 0.00 | 154,907.48 | 154,907.48 |
| (4) Others | 0.00 | 0.00 | 1,006,505.52 | 0.00 | 0.00 | 1,006,505.52 |
| 4. Balance at the end of current year | 1,559,080,629.20 | 701,904,351.26 | 15,984,949,611.21 | 163,103,812.80 | 190,150,975.59 | 18,599,189,380.06 |
| III. Impairment reserves | ||||||
| 1. Ending balance (previous year) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Increase in current period | 0.00 | 0.00 | 3,636,991.67 | 0.00 | 0.00 | 3,636,991.67 |
| (1) Provision | 0.00 | 0.00 | 3,636,991.67 | 0.00 | 0.00 | 3,636,991.67 |
| 3. Decrease in current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal or retirement | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 0.00 | 0.00 | 3,636,991.67 | 0.00 | 0.00 | 3,636,991.67 |
| Item | Houses and buildings | Structures | Machinery equipment | Transportation equipment | Office facilities and others | Total |
| IV. Book value | ||||||
| 1. Book value at the end of this year | 11,254,187,624.03 | 697,549,950.80 | 35,184,818,348.48 | 184,992,173.45 | 140,484,730.32 | 47,462,032,827.08 |
| 2. Book value at the end of the previous year | 10,542,692,223.56 | 735,512,279.88 | 34,489,904,191.19 | 195,675,866.02 | 108,233,387.18 | 46,072,017,947.83 |
② Temporarily idle fixed assets
| Item | Original Book Value | Accumulated depreciation | Impairment reserves | Book value |
| Houses and buildings | 8,670,425.29 | 503,644.34 | 0.00 | 8,166,780.95 |
| Structures | 0.00 | 0.00 | 0.00 | 0.00 |
| Machinery equipment | 45,143,510.44 | 24,062,433.73 | 3,636,991.67 | 17,444,085.04 |
| Transportation facilities | 0.00 | 0.00 | 0.00 | 0.00 |
| Office facilities and others | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 53,813,935.73 | 24,566,078.07 | 3,636,991.67 | 25,610,865.99 |
③ Situation of fixed assets with uncompleted certificate of title
| Item | Book value | Reasons for failure to complete relevant affairs of property right certificate |
| Real estate of Haining Hengyi New Materials Co., Ltd. | 1,459,490,961.20 | In process |
| Real estate of Fujian Yijin Chemical Fiber Co., Ltd. | 187,642,422.69 | In process |
| Real estate of Haining Hengyi Thermal Power Co., Ltd. | 183,606,691.10 | In process |
| Real estate of Jiaxing Yipeng Chemical Fiber Co., Ltd. | 436,497,520.35 | In process |
| Real estate of Taicang Yifeng Chemical Fiber Co., Ltd. | 16,208,937.48 | Property obtained by auction, under transaction |
| Real estate of Zhejiang Shuangtu New Materials Co., Ltd. | 7,794,158.73 | Makeshift house |
| Real estate of Suqian Yida New Materials Co., Ltd. | 2,112,597.89 | In process |
(2) Liquidation of fixed assets
| Item | Ending balance | Ending balance of previous year |
| Machinery equipment | 4,428,849.55 | 30,711,590.88 |
16. Construction in progress
| Item | Ending balance | Ending balance of previous year |
| Construction in progress | 3,608,062,223.99 | 3,769,242,612.01 |
| Engineering materials | 143,827,176.95 | 106,345,395.78 |
| Total | 3,751,889,400.94 | 3,875,588,007.79 |
(1) In-process construction
① Situation of in-process construction
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment Reserve | Book value | Book balance | Impairment reserves | Book value | |
| Phase II of the refining-petrochemical project in Brunei | 2,217,273,317.70 | 0.00 | 2,217,273,317.70 | 1,548,872,381.35 | 0.00 | 1,548,872,381.35 |
| Haining New Materials Construction Project | 49,503,959.30 | 0.00 | 49,503,959.30 | 1,755,641,933.05 | 0.00 | 1,755,641,933.05 |
| Suqian Yida Expansion Project (Phase II) | 521,514,887.05 | 0.00 | 521,514,887.05 | 129,640,869.78 | 0.00 | 129,640,869.78 |
| The project of centralized heating for Suqian Yida Project | 365,207,528.09 | 0.00 | 365,207,528.09 | 135,725,175.25 | 0.00 | 135,725,175.25 |
| Guangxi Jijin Project (Phase I) | 143,465,895.02 | 0.00 | 143,465,895.02 | 21,345,635.27 | 0.00 | 21,345,635.27 |
| The boiler project of Zhejiang Shuangtu New Materials Co., Ltd. | 77,784,628.37 | 0.00 | 77,784,628.37 | 0.00 | 0.00 | 0.00 |
| Heat transfer oil boiler renovation project of Zhejiang Hengyi High-Tech Materials Co., Ltd. | 60,407,803.61 | 0.00 | 60,407,803.61 | 453,921.84 | 0.00 | 453,921.84 |
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment Reserve | Book value | Book balance | Impairment reserves | Book value | |
| 3,000tpa caprolactam gas phase rearrangement and crystallization pilot-scale project | 0.00 | 0.00 | 0.00 | 31,419,297.29 | 0.00 | 31,419,297.29 |
| Other projects | 172,904,204.85 | 0.00 | 172,904,204.85 | 146,143,398.18 | 0.00 | 146,143,398.18 |
| Total | 3,608,062,223.99 | 0.00 | 3,608,062,223.99 | 3,769,242,612.01 | 0.00 | 3,769,242,612.01 |
② Changes of major construction projects in progress in current period
| Project name | Budget (RMB 10,000) | Ending balance of previous year | Increase in current period Amount | Amount of transferred into fixed assets in current period | Other decrease in current period | Ending balance |
| Phase II of the refining-petrochemical project in Brunei | $1,365,389.00 | 1,548,872,381.35 | 508,247,308.49 | 0.00 | -160,153,627.86 | 2,217,273,317.70 |
| Haining New Materials Construction Project | 892,500.00 | 1,755,641,933.05 | 138,530,140.90 | 1,844,668,114.65 | 0.00 | 49,503,959.30 |
| Suqian Yida Expansion Project (Phase II) | 385,000.00 | 129,640,869.78 | 391,874,017.27 | 0.00 | 0.00 | 521,514,887.05 |
| The project of centralized heating for Suqian Yida Project | 65,000.00 | 135,725,175.25 | 411,300,565.70 | 181,818,212.86 | 0.00 | 365,207,528.09 |
| Guangxi Jijin Project (Phase I) | 1,054,737.57 | 21,345,635.27 | 122,120,259.75 | 0.00 | 0.00 | 143,465,895.02 |
| The boiler project of Zhejiang Shuangtu New Materials Co., Ltd. | 8,850.00 | 0.00 | 77,784,628.37 | 0.00 | 0.00 | 77,784,628.37 |
| Heat transfer oil boiler renovation project of Zhejiang Hengyi High-Tech Materials Co., Ltd. | 7,100.00 | 453,921.84 | 59,953,881.77 | 0.00 | 0.00 | 60,407,803.61 |
| 3,000tpa caprolactam gas phase rearrangement and crystallization pilot-scale project | 4,100.00 | 31,419,297.29 | 9,432,550.06 | 40,851,847.35 | 0.00 | 0.00 |
| Other projects | -- | 146,143,398.18 | 222,882,559.27 | 196,267,035.52 | -145,282.92 | 172,904,204.85 |
| Total | -- | 3,769,242,612.01 | 1,942,125,911.58 | 2,263,605,210.38 | -160,298,910.78 | 3,608,062,223.99 |
(Continued)
| Project name | Proportion of project accumulated investment in budget (%) | Progress of Works (%) Project progress | Interest capitalization accumulative amount | Wherein: Interest for the current period Capitalized amount | Capitalization rate of interest in current period (%) | Sources of funds |
| Phase II of the refining-petrochemical project in Brunei | 2.35 | 2.35% | 0.00 | 0.00 | -- | Self-raised funds |
| Haining New Materials Construction Project | 102.76 | 99.42% | 344,624,923.13 | 355,674.61 | 5.33 | Self-raised funds and loans Raised fund |
| Suqian Yida Expansion Project (Phase II) | 13.71 | 30.00% | 18,409,929.39 | 10,814,601.58 | 4.90 | Self-raised funds and loans Raised fund |
| The project of centralized heating for Suqian Yida Project | 84.16 | 95.00% | 0.00 | 0.00 | -- | Self-raised funds |
| Guangxi Jijin Project (Phase I) | 1.36 | 1.36% | 0.00 | 0.00 | -- | Self-raised funds |
| The boiler project of Zhejiang Shuangtu New Materials Co., Ltd. | 87.89 | 90.00% | 0.00 | 0.00 | -- | Self-raised funds |
| Heat transfer oil boiler renovation project of Zhejiang Hengyi High-Tech Materials Co., Ltd. | 83.80 | 85.00% | 0.00 | 0.00 | -- | Self-raised funds |
| 3,000tpa caprolactam gas phase rearrangement and crystallization pilot-scale project | 99.64 | 100.00% | 0.00 | 0.00 | -- | Self-raised funds |
| Other projects | -- | -- | 0.00 | 0.00 | -- | Self-raised funds |
| Total | -- | -- | 363,034,852.52 | 11,170,276.19 | -- | -- |
(2) Engineering materials
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment reserves | Book value | Book balance | Impairment reserves | Book value | |
| Special materials | 137,253,622.03 | 0.00 | 137,253,622.03 | 99,653,889.72 | 0.00 | 99,653,889.72 |
| Special equipment | 6,573,554.92 | 0.00 | 6,573,554.92 | 6,691,506.06 | 0.00 | 6,691,506.06 |
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Impairment reserves | Book value | Book balance | Impairment reserves | Book value | |
| Total | 143,827,176.95 | 0.00 | 143,827,176.95 | 106,345,395.78 | 0.00 | 106,345,395.78 |
17. Right-of-use assets
| Item | Houses and buildings | Machinery equipment | Land use right | Total |
| I. Original book value | ||||
| 1. Ending balance (previous year) | 66,732,473.78 | 0.00 | 379,883,382.51 | 446,615,856.29 |
| 2. Increase in current period | 25,060,750.66 | 0.00 | 35,088,433.27 | 60,149,183.93 |
| (1) Increase in rental income | 21,948,079.26 | 0.00 | 0.00 | 21,948,079.26 |
| (2) Conversion of foreign currency statements | 3,112,671.40 | 0.00 | 35,088,433.27 | 38,201,104.67 |
| 3. Decrease in current period | 24,365,543.92 | 0.00 | 0.00 | 24,365,543.92 |
| (1) Decrease due to contract expiration | 24,365,543.92 | 0.00 | 0.00 | 24,365,543.92 |
| (2) Conversion of foreign currency statements | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 67,427,680.52 | 0.00 | 414,971,815.78 | 482,399,496.30 |
| II. Accumulated depreciation | ||||
| 1. Ending balance (previous year) | 21,624,466.03 | 0.00 | 13,958,740.93 | 35,583,206.96 |
| 2. Increase in current period | 24,662,219.84 | 0.00 | 16,516,950.18 | 41,179,170.02 |
| (1) Provision | 23,036,845.03 | 0.00 | 14,710,103.79 | 37,746,948.82 |
| (2) Conversion of foreign currency statements | 1,625,374.81 | 0.00 | 1,806,846.39 | 3,432,221.20 |
| 3. Decrease in current period | 24,365,543.92 | 0.00 | 0.00 | 24,365,543.92 |
| (1) Decrease due to contract expiration | 24,365,543.92 | 0.00 | 0.00 | 24,365,543.92 |
| Item | Houses and buildings | Machinery equipment | Land use right | Total |
| (2) Conversion of foreign currency statements | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 21,921,141.95 | 0.00 | 30,475,691.11 | 52,396,833.06 |
| III. Impairment reserves | ||||
| 1. Ending balance (previous year) | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Increase in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Provision | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decrease in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 0.00 | 0.00 | 0.00 | 0.00 |
| IV. Book value | ||||
| 1. Book value at the end of this year | 45,506,538.57 | 0.00 | 384,496,124.67 | 430,002,663.24 |
| 2. Book value at the end of the previous year | 45,108,007.75 | 0.00 | 365,924,641.58 | 411,032,649.33 |
18. Intangible assets
(1) Situation of intangible assets
| Item | Land use right | Patent | Trademark | Software and others | Total |
| I. Original book value | |||||
| 1. Ending balance (previous year) | 1,838,686,027.98 | 617,565,886.45 | 19,740.00 | 144,887,818.28 | 2,601,159,472.71 |
| 2. Increase in current period | 1,059,925,171.73 | 41,456,215.57 | 0.00 | 25,702,291.89 | 1,127,083,679.19 |
| (1) Acquisition | 1,059,925,171.73 | 2,986,096.00 | 0.00 | 21,280,812.05 | 1,084,192,079.78 |
| (2) Internal R&D | 0.00 | 9,445,222.43 | 0.00 | 0.00 | 9,445,222.43 |
| Item | Land use right | Patent | Trademark | Software and others | Total |
| (3) Conversion of foreign currency statements | 0.00 | 29,024,897.14 | 0.00 | 4,421,479.84 | 33,446,376.98 |
| 3. Decrease in current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (2) Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 2,898,611,199.71 | 659,022,102.02 | 19,740.00 | 170,590,110.17 | 3,728,243,151.90 |
| II. Accumulated amortization | |||||
| 1. Ending balance (previous year) | 226,718,599.05 | 370,133,209.21 | 16,920.00 | 69,408,014.49 | 666,276,742.75 |
| 2. Increase in current period | 67,236,026.41 | 41,249,595.19 | 2,820.00 | 15,784,916.83 | 124,273,358.43 |
| (1) Provision | 67,236,026.41 | 34,040,970.67 | 2,820.00 | 14,548,912.21 | 115,828,729.29 |
| (2) Others | 0.00 | 7,208,624.52 | 0.00 | 1,236,004.62 | 8,444,629.14 |
| 3. Decrease in current period | 0.00 | 837,655.24 | 0.00 | 0.00 | 837,655.24 |
| (1) Disposal | 0.00 | 837,655.24 | 0.00 | 0.00 | 837,655.24 |
| (2) Conversion of foreign currency statements | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 293,954,625.46 | 410,545,149.16 | 19,740.00 | 85,192,931.32 | 789,712,445.94 |
| III. Impairment reserves | |||||
| 1. Ending balance (previous year) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Increase in current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Provision | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Item | Land use right | Patent | Trademark | Software and others | Total |
| 3. Decrease in current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance at the end of current year | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| IV. Book value | |||||
| 1. Book value at the end of this year | 2,604,656,574.25 | 248,476,952.86 | 0.00 | 85,397,178.85 | 2,938,530,705.96 |
| 2. Book value at the end of the previous year | 1,611,967,428.93 | 247,432,677.24 | 2,820.00 | 75,479,803.79 | 1,934,882,729.96 |
(2) Situation of important individual intangible assets
| Item | Book value at the end of the period | Remaining amortization period |
| Land use right of Zhejiang Hengyi Hanlin Enterprise Management Co., Ltd. | 1,035,570,510.84 | 469.00 |
| Land use right of Zhejiang Shuangtu New Materials Co., Ltd. | 181,956,040.34 | 464.00 |
| Land use right of Guangxi Hengyi New Materials Co., Ltd. | 160,143,196.34 | 572.00 |
| Land use right of Guangxi Hengyi New Materials Co., Ltd. | 39,823,814.10 | 575.00 |
| Land use right of Jiaxing Yipeng Chemical Fiber Co., Ltd. | 139,821,788.81 | 374.00 |
| Land use right of Hangzhou Yitong New Materials Co., Ltd. | 137,802,754.65 | 583.00 |
| Land use right of Hangzhou Yitong New Materials Co., Ltd. | 128,937,700.33 | 571.00 |
| Land use right of Haining Hengyi New Materials Co., Ltd. | 76,389,934.50 | 586.00 |
| Land use right of Haining Hengyi New Materials Co., Ltd. | 63,508,134.36 | 542.00 |
| Land use right of Haining Hengyi New Materials Co., Ltd. | 21,475,500.00 | 556.00 |
| Land use right of Fujian Yijin Chemical Fiber Co., Ltd. | 64,297,261.76 | 422.00 |
| Patent license of Hengyi Industries Bdn. | 144,224,536.99 | 83.00 |
| Patent license of Hengyi Industries Bdn. | 54,077,554.15 | 83.00 |
(3) Situation of intangible assets with limited ownership or use right
| Item | Book value at the end of the period | Amortization amount in current period | Reason for restriction |
| Land use right | 781,320,192.43 | 10,789,190.44 | Mortgage loan |
| Software | 15,360.38 | 3,169.81 | Finance lease guarantees |
| Total | 781,335,552.81 | 10,792,360.25 | -- |
19. Development expenditure
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | ||
| Internal development expenditures | Others | Recognized as Intangible assets | Transferred to current profit and loss | |||
| Henglan Technology’s PTT Industrialization Research & Development Project | 9,445,222.43 | 0.00 | 0.00 | 9,445,222.43 | 0.00 | 0.00 |
| Research and application development of bio-based PTT elastic shape memory fiber series | 1,819,730.30 | 1,182,773.62 | 0.00 | 0.00 | 0.00 | 3,002,503.92 |
| 3,000t/a caprolactam gas phase rearrangement and crystallization project | 0.00 | 18,340,465.12 | 0.00 | 0.00 | 0.00 | 18,340,465.12 |
| Development of differentiated new flame-retardant products | 38,579.16 | 0.00 | 0.00 | 0.00 | 0.00 | 38,579.16 |
| Total | 11,303,531.89 | 19,523,238.74 | 0.00 | 9,445,222.43 | 0.00 | 21,381,548.20 |
20. Business reputation
(1) Original book value of goodwill
| Name or formation of investee | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| goodwill matters | Business combination | Disposal | ||
| Zhejiang Shuangtu New Materials Co., Ltd. | 221,865,586.69 | 0.00 | 0.00 | 221,865,586.69 |
(2) Impairment test process of goodwill
In November 2018, with an amount of RMB 2,105 million, the Company purchased all stocksof Zhejiang Shuangtu New Materials Co., Ltd., and amortized the merger prices in accordancewith relevant accounting standards. On the combination date, the fair value is RMB1,883,134,400 for the acquiree’s net identifiable assets. As a result, an amount of RMB221,865,600 goodwill is formed in the consolidated accounting statement.This year, the Company assessed the recoverable amount of goodwill and conductedimpairment tests on various asset groups related to goodwill. In the process of goodwillimpairment test, the Company determined the composition of the assets of the asset groupsrelated to the goodwill reflected in the Company’s consolidated financial statements and theirbook value of RMB 1,956,231,800 based on the consolidated financial statement as onDecember 31, 2022 and the assets and operating conditions of the merged party Shuangtu. Itis found after impairment test that the present value of the expected future cash flow of thisgoodwill and related asset group on December 31, 2021 was RMB 2,031,000,000, and noimpairment occurred. Details are as follows:
Currency unit: RMB 10,000
| Item | Book amount of consolidated statements |
| Fixed assets | 145,671.91 |
| Construction in progress | 7,805.38 |
| Intangible assets | 19,897.90 |
| Long-term unamortized expenses | 61.43 |
| Goodwill recognized in consolidated statements | 22,186.56 |
| Subtotal of book value of asset groups containing goodwill | 195,623.18 |
| Vale of goodwill not recognized as attributable to minority shareholders’ equity | 0.00 |
| Total adjusted book value of asset groups containing goodwill | 195,623.18 |
| Item | Book amount of consolidated statements |
| Present value (recoverable amount) of the estimated future cash flow of the asset group | 203,100.00 |
Note: For the present value (recoverable amount) of the expected future cash flow of the assetgroups above, the results of assessment set out in the HYZXPBZ [2023] No. A01-0016 AssetAppraisal Report issued by Beijing Huaya Zhengxin Assets Appraisal Co., Ltd. on April 12,2023 was used.The recoverable amount of the asset groups above is determined according to the present valueof the expected future cash flow. Based on its current operating conditions, businesscharacteristics and market supply & demand and upon an overall analysis and consideration ofvarious factors such as residual service life of main assets included in the asset group, theacquirer is estimated to enter a stable period in 2027. Therefore, the predictive period isdetermined from January 2023 to December 2027 (five years in total), and the discount rate of
11.29% is adopted.
Important assumptions for goodwill impairment test:
① Assumption of orderly transaction: Orderly transaction refers to the transaction that relatedassets or liabilities have usual marketing activities within a period of time prior to themeasurement date.
② Assumption of open market: It means that assets can be traded freely in the fullycompetitive market, and that its price depends on independent buyer’s and seller’s valuejudgment under certain market supply and demand conditions. It is an assumption about theconditions of the target assets market and about the influence of assets under relativelycomplete market conditions.
③ Going concern assumption: Assume no unforeseeable factor leading to a failure to continueoperations, when the entrusted asset group is continuously operated in accordance with thecurrent situation, purpose, usage mode and management level on the base date;
④ No significant change in the existing editions of applicable national laws & regulations andmacro-economic situation; No unforeseeable significant change in external economicenvironment (e.g. interest rate, exchange rate, tax base & rate and policy collection expenses);
⑤ Assume that the Company’s current business model can be continuously maintained in thefuture, and predict the future cash flow of assets based on current asset conditions, excludingthe prediction of the future cash flow related to restructuring or modification that will probablyoccur in the future and that has not been promised yet;
⑥ Assume that cash inflow and outflow of the asset group occur in the middle of the year
after the assessment base date.
⑦ Assume that the management of the acquired party after the assessment base date isresponsible, stable, and capable of assuming their positions.
21. Long-term deferred expenses
| Item | Ending balance of previous year | Increase in current period | Amortization amount in current period | Other decreases in amount | Ending balance |
| Renovation costs | 768,433.23 | 980,000.00 | 466,164.72 | -18,188.41 | 1,300,456.92 |
| Exterior wall coating | 817,023.44 | 0.00 | 817,023.44 | 0.00 | 0.00 |
| Workshop reinforcement | 275,405.41 | 0.00 | 275,405.41 | 0.00 | 0.00 |
| Storage tank use right transfer fees | 761,752.46 | 0.00 | 147,435.96 | 0.00 | 614,316.50 |
| Catalyst | 445,620,377.38 | 57,188,192.15 | 105,970,589.71 | -38,020,080.78 | 434,858,060.60 |
| Others | 18,753,438.56 | 5,343,775.02 | 16,396,005.07 | 742,224.86 | 6,958,983.65 |
| Total | 466,996,430.48 | 63,511,967.17 | 124,072,624.31 | -37,296,044.33 | 443,731,817.67 |
22. Deferred income tax assets/deferred income tax liabilities
(1) Details of deferred income tax assets
| Item | Ending balance | Ending balance of previous year | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Impairment loss on credit assets | 36,951,677.06 | 5,636,084.44 | 37,453,702.79 | 5,761,347.25 |
| Asset impairment reserves | 73,251,230.47 | 15,843,906.01 | 141,881,525.64 | 29,940,480.75 |
| Changes in fair value of held-for-trading financial assets | 28,824,109.33 | 7,206,027.34 | 2,752,654.17 | 688,163.54 |
| Unrealized profits arising from intra-group trading | 0.00 | 0.00 | 29,235,837.12 | 7,308,959.28 |
| Item | Ending balance | Ending balance of previous year | ||
| Deferred income tax assets | Deferred income tax assets | |||
| Accrued expenses | 159,529.55 | 23,929.43 | 213,630.54 | 32,044.58 |
| Deferred income | 91,704,353.43 | 15,346,671.75 | 102,310,974.76 | 16,486,593.90 |
| Deductible losses | 1,467,199,781.25 | 306,067,338.31 | 256,991,133.33 | 64,247,783.33 |
| Cash-flow hedging | 6,047,943.46 | 1,511,985.87 | 297,696.00 | 74,424.00 |
| Differences in right-of-use assets | 51,720.35 | 12,930.09 | 0.00 | 0.00 |
| Total | 1,704,190,344.90 | 351,648,873.24 | 571,137,154.35 | 124,539,796.63 |
(2) Details of deferred income tax liabilities
| Item | Ending balance | Ending balance of previous year | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Appreciation of assets appraisal for business merger not under the same control | 296,207,939.40 | 44,431,190.91 | 326,354,000.73 | 48,953,100.11 |
| Changes in fair value of held-for-trading financial assets | 25,596,501.91 | 4,572,763.08 | 12,825,770.08 | 3,206,442.52 |
| Deduction differences of fixed assets before one-off income tax | 131,540,806.43 | 30,811,846.42 | 146,811,742.93 | 34,358,354.01 |
| Unrealized profits arising from intra-group trading | 9,344,733.79 | 2,336,183.45 | 0.00 | 0.00 |
| Total | 462,689,981.53 | 82,151,983.86 | 485,991,513.74 | 86,517,896.64 |
(3) Details of unconfirmed deferred income tax assets
| Item | Ending balance | Ending balance of previous year |
| Deductible temporary difference | 166,691,372.86 | 15,553,769.45 |
| Item | Ending balance | Ending balance of previous year |
| Deductible losses | 2,404,898,394.41 | 1,015,129,215.36 |
| Total | 2,571,589,767.27 | 1,030,682,984.81 |
(4) Deductible losses of unconfirmed deferred income tax assets will be mature in thefollowing years:
| Year | Ending balance | Ending balance of previous year |
| 2022 | -- | 9,878,721.42 |
| 2023 | 76,870,143.05 | 127,251,885.07 |
| 2024 | 145,795,018.28 | 162,170,932.41 |
| 2025 | 161,153,678.35 | 194,792,129.27 |
| 2026 | 506,572,258.86 | 521,035,547.19 |
| 2027 | 1,514,507,295.87 | -- |
| Total | 2,404,898,394.41 | 1,015,129,215.36 |
23. Other non-current assets
| Item | Ending balance | Ending balance of previous year |
| Payment for long-term assets | 756,296,579.88 | 1,669,998,308.04 |
| Prepayment of dumping right transfer fees | 0.00 | 2,152,324.64 |
| Taxes for right-of-use assets | 2,268,330.25 | 2,335,045.86 |
| Others | 512,002.80 | 304,950.00 |
| Total | 759,076,912.93 | 1,674,790,628.54 |
24. Short-term borrowings
(1) Classification of short-term loans
| Item | Ending balance | Ending balance of previous year |
| Pledge loan | 13,158,605,565.69 | 13,328,541,060.00 |
| Mortgage loan | 1,464,969,222.65 | 2,355,437,939.49 |
| Item | Ending balance | Ending balance of previous year |
| Guarantee loan | 20,146,414,778.93 | 16,660,351,966.72 |
| Fiduciary loan | 3,018,789,487.46 | 1,383,344,685.85 |
| Loan interest | 87,054,283.36 | 51,019,025.18 |
| Total | 37,875,833,338.09 | 33,778,694,677.24 |
Note: For asset classes and amounts of mortgaged loans, please refer to Note VI. 67.For detail category and amount of assets pledged for loan, please refer to Notes VI (67).
25. Held-for-trading financial liabilities
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Held-for-trading financial liabilities | 1,670,361.85 | 41,547,937.87 | 21,864,747.39 | 21,353,552.33 |
| Wherein: Issued bonds held for trading | 0.00 | 0.00 | 0.00 | 0.00 |
| Derivative financial liabilities | 1,670,361.85 | 41,547,937.87 | 21,864,747.39 | 21,353,552.33 |
| Others | 0.00 | 0.00 | 0.00 | 0.00 |
| Specified as financial liabilities measured by fair value and whose changes included in current profits and losses | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 1,670,361.85 | 41,547,937.87 | 21,864,747.39 | 21,353,552.33 |
26. Derivative financial liabilities
| Item | Ending balance | Ending balance of previous year |
| Foreign exchange derivatives | 8,555,804.28 | 297,696.00 |
| Commodity derivatives | 33,056,054.03 | 23,407,744.98 |
| Total | 41,611,858.31 | 23,705,440.98 |
27. Notes payable
| Category | Ending balance | Ending balance of previous year |
| Commercial acceptance bills | 0.00 | 0.00 |
| Bank acceptance bills | 117,879,321.16 | 440,900,000.00 |
| Category | Ending balance | Ending balance of previous year |
| Domestic letter of credit | 697,290,000.00 | 0.00 |
| Total | 815,169,321.16 | 440,900,000.00 |
28. Accounts payable
(1) Presentation of accounts payable
| Item | Ending balance | Ending balance of previous year |
| Within 1 year | 8,480,378,889.22 | 8,777,122,209.14 |
| 1-2 years | 651,432,866.93 | 360,995,063.03 |
| 2-3 years | 142,063,217.20 | 853,087,925.13 |
| Over three years | 494,603,002.86 | 19,802,520.14 |
| Total | 9,768,477,976.21 | 10,011,007,717.44 |
(2) Important accounts payable with >1 year aging
| Item | Ending balance | Reasons for outstanding or carry over |
| China Sinogy Electric Engineering Co., Ltd. | 162,533,025.24 | Warranty has not expired. |
| China Chemical Engineering Second Construction Corporation (Brunei Branch) | 106,481,911.32 | Warranty has not expired. |
| CSCPE(B）SDN BHD | 58,805,206.60 | Warranty has not expired. |
| China National Chemical Engineering Third Construction Co., Ltd. (Brunei Branch) | 92,247,237.94 | Warranty has not expired. |
| Nanjing Chemical Construction Co., Ltd. (Brunei Branch) | 91,198,059.19 | Warranty has not expired. |
| Total | 511,265,440.29 | — |
29. Contract liabilities
(1) Situation of contract liabilities
| Item | Ending balance | Ending balance of previous year |
| Precollection of unperformed contract price | 1,080,383,448.03 | 1,904,820,796.20 |
| Item | Ending balance | Ending balance of previous year |
| Minus: Those included in other current liabilities (Note VI. 34.) | 90,760,675.06 | 180,919,015.28 |
| Total | 989,622,772.97 | 1,723,901,780.92 |
(2) There were no significant changes in the book value in current period.
30. Payroll payable
(1) Presentation of payroll payable
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| I. Short-term remuneration | 308,151,517.88 | 2,518,901,848.57 | 2,664,760,562.55 | 162,292,803.90 |
| II. Post-employment benefits - defined contribution plans | 3,311,351.64 | 126,966,443.32 | 101,283,563.79 | 28,994,231.17 |
| III. Termination benefits | 0.00 | 608,792.75 | 608,792.75 | 0.00 |
| IV. Other benefits due within one year | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 311,462,869.52 | 2,646,477,084.64 | 2,766,652,919.09 | 191,287,035.07 |
(2) Presentation of short-term salaries
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | |
| 1. Wage, bonus, allowances and subsidies | 298,619,004.75 | 2,297,281,609.50 | 2,437,406,048.44 | 158,494,565.81 | |
| 2. Employee welfare expenses | 1,558,783.82 | 88,575,689.42 | 90,014,841.60 | 119,631.64 | |
| 3. Social insurance charges | 1,292,603.87 | 78,211,633.97 | 77,390,156.14 | 2,114,081.70 | |
| Wherein: Medical insurance | 1,262,032.56 | 73,216,895.84 | 73,687,754.57 | 791,173.83 | |
| Industrial injury insurance premiums | 30,571.31 | 4,311,100.68 | 3,018,764.12 | 1,322,907.87 | |
| Birth insurance premiums | 0.00 | 683,637.45 | 683,637.45 | 0.00 | |
| 4. Housing fund | 283,376.68 | 40,563,223.68 | 40,816,564.22 | 30,036.14 | |
| 5. Labor union dues and personnel education fund | 6,397,748.76 | 14,269,692.00 | 19,132,952.15 | 1,534,488.61 | |
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| 6. Short-term compensated absences | 0.00 | 0.00 | 0.00 | 0.00 |
| 7. Short-term profit sharing plan | 0.00 | 0.00 | 0.00 | 0.00 |
| 8. Others | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 308,151,517.88 | 2,518,901,848.57 | 2,664,760,562.55 | 162,292,803.90 |
(3) Presentation of defined contribution plans
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| 1. Basic endowment insurance | 3,236,899.23 | 122,999,549.36 | 98,178,953.73 | 28,057,494.86 |
| 2. Unemployment insurance expenses | 74,452.41 | 3,966,893.96 | 3,104,610.06 | 936,736.31 |
| 3. Enterprise annuities | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 3,311,351.64 | 126,966,443.32 | 101,283,563.79 | 28,994,231.17 |
31. Tax payable
| Item | Ending balance | Ending balance of previous year |
| Value-added tax | 254,514,471.42 | 705,004,834.17 |
| Enterprise income tax | 36,531,077.86 | 108,956,677.95 |
| Urban maintenance and construction tax | 7,138,301.48 | 43,186,920.36 |
| Education surcharge | 3,098,068.34 | 18,535,812.25 |
| Land use tax | 12,211,062.04 | 10,069,167.57 |
| Property tax | 38,615,251.06 | 30,075,843.64 |
| Special funds for water conservancy construction | 0.00 | 402,705.79 |
| Individual income tax | 1,559,102.94 | 1,775,884.69 |
| Stamp tax | 33,277,197.35 | 6,938,813.73 |
| Item | Ending balance | Ending balance of previous year |
| Local education surcharge | 2,065,378.90 | 12,356,058.55 |
| Disabled security fund | 104,544.00 | 53,136.00 |
| Others | 196,274.22 | 1,008,926.96 |
| Total | 389,310,729.61 | 938,364,781.66 |
32. Other payables
| Item | Ending balance | Ending balance of previous year |
| Interests payable | 0.00 | 0.00 |
| Dividends payable | 0.00 | 169,500,759.38 |
| Other payables | 235,619,327.94 | 258,670,038.54 |
| Total | 235,619,327.94 | 428,170,797.92 |
(1) Dividends payable
| Item | Ending balance | Ending balance of previous year |
| Common stock dividends | 0.00 | 759.38 |
| Dividends paid by subsidiary to minority shareholders | 0.00 | 169,500,000.00 |
| Total | 0.00 | 169,500,759.38 |
(2) Other payables
① Listed by nature of amount
| Item | Ending balance | Ending balance of previous year |
| Receivables and payables | 11,926,223.68 | 7,096,248.66 |
| Deposit and security fund | 169,136,880.99 | 138,103,829.71 |
| Unliquidated expense funds | 30,272,834.48 | 91,205,577.81 |
| Agency fund | 15,407,171.39 | 20,451,297.80 |
| Others | 8,876,217.40 | 1,813,084.56 |
| Total | 235,619,327.94 | 258,670,038.54 |
② Listed by aging
| Item | Ending balance | Ending balance of previous year |
| Within 1 year | 175,682,069.17 | 210,669,131.56 |
| 1-2 years | 31,986,148.62 | 27,219,847.22 |
| 2-3 years | 10,759,047.41 | 9,183,180.26 |
| Over three years | 17,192,062.74 | 11,597,879.50 |
| Total | 235,619,327.94 | 258,670,038.54 |
③ Significant accounts payable with aging exceeding 1year
| Item | Ending balance | Reasons for outstanding or carry over |
| Hangzhou Huifeng Chemical Fiber Co., Ltd. | 11,468,665.84 | Margin |
| Employee stock ownership | 2,792,780.33 | Incomplete settlement |
| Yousheng Village, Yaqian Town, Xiaoshan City | 2,136,825.00 | Incomplete settlement |
| Zhejiang Dongxing Fire Engineering Co., Ltd. | 1,400,000.00 | Incomplete settlement |
| Total | 17,798,271.17 | --- |
33. Non-current liabilities due within one year
| Item | Ending balance | Ending balance of previous year |
| Long-term loans and interests mature within one year (Notes VI. 35) | 5,278,621,966.80 | 3,818,951,287.70 |
| Bonds payable and interests mature within one year (Notes VI. 36) | 6,828,015.61 | 51,033,160.10 |
| Lease liabilities mature within one year (Notes VI. 37) | 12,747,561.17 | 10,209,931.72 |
| Long-term payables and interests mature within one year (Notes VI. 38) | 1,235,137,137.26 | 654,324,945.69 |
| Total | 6,533,334,680.84 | 4,534,519,325.21 |
34. Other current liabilities
| Item | Ending balance | Ending balance of previous year |
| Taxes of items for write-off | 90,760,675.06 | 180,919,015.28 |
35. Long-term borrowings
| Item | Ending balance | Ending balance of previous year |
| Pledge loan | 128,357,577.99 | 83,489,791.50 |
| Mortgage loan | 12,774,621,309.20 | 12,275,719,140.06 |
| Guarantee loan | 8,343,813,035.68 | 7,426,177,456.63 |
| Fiduciary loan | 75,000,000.00 | 0.00 |
| Interests payable | 63,970,080.28 | 29,794,585.82 |
| Minus: Long-term loans and interests due within one year (Notes VI, 33) | 5,278,621,966.80 | 3,818,951,287.70 |
| Total | 16,107,140,036.35 | 15,996,229,686.31 |
Note: For asset classes and amounts of mortgaged loans, please refer to Note VI. 67.For detail category and amount of assets pledged for loan, please refer to Notes VI (67).
36. Bonds payable
(1) Bonds payable
| Item | Ending balance | Ending balance of previous year |
| Corporate bonds | 4,061,538,995.85 | 2,612,404,203.28 |
(2) Increase/decrease in bonds payable (excluding other financial instruments divided intofinancial liabilities, such as preferred stock and perpetual bond)
| Bond name | Nominal Value | Date of issue | Bond Deadline | Issue Amount | Ending balance of previous year |
| Corporate bonds (20Hengyi01) | 1,000,000,000.00 | 2020-03-13 | 3年 | 995,500,000.00 | 1,047,489,284.54 |
| Hengyi Convertible Bond 127022 | 2,000,000,000.00 | 2020-10-16 | 6年 | 1,508,831,199.68 | 1,615,948,078.84 |
| Hengyi Convertible Bond 127067 | 3,000,000,000.00 | 2022-07-21 | 6年 | 2,303,101,412.70 | 0.00 |
| Subtotal | 6,000,000,000.00 | -- | -- | 4,807,432,612.38 | 2,663,437,363.38 |
| Bond name | Nominal Value | Date of issue | Bond Deadline | Issue Amount | Ending balance of previous year |
| Minus: Partial year-end balance due within one year (Note VI. 33) | -- | -- | -- | -- | 51,033,160.10 |
| Total | 6,000,000,000.00 | -- | -- | 4,807,432,612.38 | 2,612,404,203.28 |
(Continued)
| Bond name | Issuance in current period | Accrued interest at face value | Discounted amortization | Repayment or stock conversion in current period | Interest paid in current period | Ending balance |
| Corporate bonds (20Hengyi01) | 0.00 | 9,853,837.48 | -1,594,048.72 | 999,189,000.00 | 58,900,000.00 | 848,170.74 |
| Hengyi Convertible Bond 127022 | 0.00 | 9,029,330.83 | -88,920,607.02 | 7,310.05 | 7,999,312.80 | 1,705,891,393.84 |
| Hengyi Convertible Bond 127067 | 2,303,101,412.70 | 3,000,000.00 | -55,526,034.18 | 0.00 | 0.00 | 2,361,627,446.88 |
| Subtotal | 2,303,101,412.70 | 21,883,168.31 | -146,040,689.92 | 999,196,310.05 | 66,899,312.80 | 4,068,367,011.46 |
| Minus: Partial year-end balance due within one year (Note VI. 33) | -- | -- | -- | -- | -- | 6,828,015.61 |
| Total | 2,303,101,412.70 | 21,883,168.31 | -146,040,689.92 | 999,196,310.05 | 66,899,312.80 | 4,061,538,995.85 |
37. Lease liabilities
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | ||
| New Lease | Interest for the current period | Others | ||||
| Land use right | 362,979,372.62 | 9,163,663.00 | 0.00 | 47,229,045.37 | -7,385,295.89 | 426,757,376.88 |
| Buildings | 27,376,082.39 | 12,784,416.33 | 107,673.47 | -10,886,564.28 | 12,106,045.33 | 17,275,562.58 |
| Minus: Lease liabilities due within one year (Note VI. 33.) | 10,209,931.72 | -- | -- | -- | -- | 12,747,561.17 |
| Total | 380,145,523.29 | 21,948,079.33 | 107,673.47 | 36,342,481.09 | 4,720,749.44 | 431,285,378.29 |
38. Long-term payables
| Item | Ending balance | Ending balance of previous year |
| Long-term payables | 1,433,381,038.10 | 952,254,861.09 |
| Special payables | 0.00 | 0.00 |
| Total | 1,433,381,038.10 | 952,254,861.09 |
(1) Long-term payables
| Item | Ending balance | Ending balance of previous year |
| Financing lease payable | 2,668,518,175.36 | 1,606,579,806.78 |
| Minus: Partial balance due within one year (Note VI. 33.) | 1,235,137,137.26 | 654,324,945.69 |
| Total | 1,433,381,038.10 | 952,254,861.09 |
39. Estimated liabilities
| Item | Ending balance of previous year | Ending balance | Reason |
| Pending action | 213,630.54 | 360,508.08 | See Notes XII, 1 for detail. |
40. Deferred income
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | Reason |
| Government grants | 203,804,991.72 | 44,774,409.45 | 17,382,373.75 | 231,197,027.42 | Assets-related |
| Government grants | 3,842,635.23 | 5,356,350.00 | 1,982,904.60 | 7,216,080.63 | Income-related |
| Total | 207,647,626.95 | 50,130,759.45 | 19,365,278.35 | 238,413,108.05 |
Items involving governmental subsidies:
| Subsidized Items | Ending balance of previous year | Amount of new subsidies for the current period | Amount included in non-operating income in current period | Amount included in other income in current period | Other changes | Ending balance | Assets-related/ Income-related |
| Development, modification and corresponding industrialization projects | 3,842,635.23 | 5,356,350.00 | 0.00 | 1,982,904.60 | 0.00 | 7,216,080.63 | Income-related |
| Special rewards for significant industry projects | 32,786,092.49 | 6,130,500.00 | 0.00 | 2,129,799.42 | 0.00 | 36,786,793.07 | Assets-related |
| Subsidies for boiler cleaner transformation | 10,143,915.56 | 0.00 | 0.00 | 1,560,602.39 | 0.00 | 8,583,313.17 | Assets-related |
| Subsidies for automation projects | 3,895,375.77 | 1,658,600.00 | 0.00 | 710,096.32 | 0.00 | 4,843,879.45 | Assets-related |
| Functional fiber technological transformation projects | 34,838,770.82 | 10,000,000.00 | 0.00 | 4,600,138.91 | 0.00 | 40,238,631.91 | Assets-related |
| Fixed assets refund | 223,183.70 | 0.00 | 0.00 | 223,183.70 | 0.00 | 0.00 | Assets-related |
| Technological transformation projects in manufacturing enterprises | 19,456,716.58 | 26,771,976.12 | 0.00 | 5,296,988.92 | 0.00 | 40,931,703.78 | Assets-related |
| Special equipment subsidies | 6,322,580.65 | 0.00 | 0.00 | 677,419.36 | 0.00 | 5,645,161.29 | Assets-related |
| Industrial robot projects | 1,159,889.50 | 0.00 | 0.00 | 124,194.72 | 0.00 | 1,035,694.78 | Assets-related |
| Internet digital factory projects | 287,341.68 | 0.00 | 0.00 | 28,033.34 | 0.00 | 259,308.34 | Assets-related |
| Land compensation | 94,500,000.00 | 0.00 | 0.00 | 2,000,000.00 | 0.00 | 92,500,000.00 | Assets-related |
| Others | 191,124.97 | 213,333.33 | 0.00 | 31,916.67 | 0.00 | 372,541.63 | Assets-related |
| Total | 207,647,626.95 | 50,130,759.45 | 0.00 | 19,365,278.35 | 0.00 | 238,413,108.05 | -- |
41. Share capital
| Item | Ending balance of previous year | Increase/decrease in current period (+, -) | Ending balance | ||||
| Issue of new shares | Bonus shares | Capital reserve converted into share capital | Others | Subtotal | |||
| Sum of shares | 3,666,280,014.00 | 0.00 | 0.00 | 0.00 | 792.00 | 792.00 | 3,666,280,806.00 |
Note: The share conversion period of “Hengyi Convertible Bonds” (bond code: 127022) isfrom April 22, 2021 to October 15, 2026. In 2022, totally 89 “Hengyi Convertible Bonds” weretransferred, converted into 792 shares of “Hengyi Petrochemical”. An amount of RMB 792.00share capital is increased in the Company. At the same time, an amount of RMB 8,065.36capital reserve – capital premium is increased.
42. Other equity instruments
| Outstanding Financial Instruments | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | ||||
| Quantity | Book value | Quantity | Book value | Quantity | Book value | Quantity | Book value | |
| Equity part of convertible corporate bonds | 19,998,361 | 478,506,692.86 | 30,000,000 | 680,577,832.58 | 89 | 2,143.06 | 49,998,272 | 1,159,082,382.38 |
Note: For the equity part of convertible corporate bonds decreased in current period, pleaserefer to Note VI. 41.
43. Capital reserve
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Capital premiums | 11,351,646,479.39 | 8,065.36 | 147,916.45 | 11,351,506,628.30 |
| Other capital reserves | 139,543,291.32 | 8,934,905.23 | 45,985.84 | 148,432,210.71 |
| Capital reserves generated by simulation of shareholding structure and quantity | -2,329,301,104.61 | 0.00 | 0.00 | -2,329,301,104.61 |
| Total | 9,161,888,666.10 | 8,942,970.59 | 193,902.29 | 9,170,637,734.40 |
Note 1: An amount of RMB 8,065.36 is increased for capital reserves - capital premiums.Please refer to Note VI. 41 for details.Note 2: In current period, capital reserves - capital premiums are decreased by an amount ofRMB 147,916.45, due to the reduction in commission charges resulted from stock repurchase.
Note 3: In current period, capital reserve - others are increased by RMB 8,934,905.23, due tothe increase in other capital reserves of the associated enterprise China Zheshang Bank Co.,Ltd. The capital reserves of the Company are increased by RMB8,934,905.23 according to theequity method.Note 4: In current period, capital reserves - others are decreased by an amount of RMB45,985.84, due to the compromise between Zhejiang Shuangtu and the litigation-related clientbefore being purchased by the Company. The compromise reduced the losses of ShuangtuCompany, and such losses shall be confirmed as capital reserve in the consolidated statement.
44. Treasury stock
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Stock repurchase via centralized bidding | 718,150,457.23 | 765,416,280.75 | 0.00 | 1,483,566,737.98 |
Note: In this reporting period, the Company has increased an amount of RMB 765,416,280.75treasury stock by means of centralized bidding.
45. Other comprehensive income
| Item | At end of the previous year Balance | Amount incurred in current period | Ending Balance | ||||
| Amount incurred before income tax for the current period | Minus: Recorded into other comprehensive income in the earlier stage and rolled into current profits and losses | Minus: Income tax expenses | Assigned to Parent Company after tax | Assigned to minority shareholders after tax | |||
| I. Other comprehensive income that cannot be re-classified into profit and loss | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Wherein: Re-measurement profits or losses of a defined benefit plan | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other comprehensive income cannot be recognized in profit and loss by equity law | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Item | At end of the previous year Balance | Amount incurred in current period | Ending Balance | ||||
| Amount incurred before income tax for the current period | Minus: Recorded into other comprehensive income in the earlier stage and rolled into current profits and losses | Minus: Income tax expenses | Assigned to Parent Company after tax | Assigned to minority shareholders after tax | |||
| II. Other comprehensive income to be re-classified into profit and loss | -1,070,859,214.62 | 1,448,198,495.28 | -24,165,232.05 | -1,511,985.87 | 1,451,779,958.81 | 22,095,754.39 | 380,920,744.19 |
| Wherein: Other comprehensive income can be recognized in profit and loss under equity method | 23,310,920.81 | 113,864,235.38 | 0.00 | 0.00 | 99,931,282.10 | 13,932,953.28 | 123,242,202.91 |
| Effective part of cash-flow hedge profits and losses | -16,915,662.44 | -32,287,505.91 | -24,165,232.05 | -1,511,985.87 | -4,627,201.60 | -1,983,086.39 | -21,542,864.04 |
| Exchange differences from translation of financial statements | -1,077,254,472.99 | 1,366,621,765.81 | 0.00 | 0.00 | 1,356,475,878.31 | 10,145,887.50 | 279,221,405.32 |
| Total (other comprehensive income) | -1,070,859,214.62 | 1,448,198,495.28 | -24,165,232.05 | -1,511,985.87 | 1,451,779,958.81 | 22,095,754.39 | 380,920,744.19 |
46. Appropriative reserve
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Production safety expenses | 0.00 | 66,593,026.55 | 66,593,026.55 | 0.00 |
Note: Both increase and decrease in special reserves in this reporting period are calculated andutilized production safety expenses.
47. Earned surplus
| Item | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance |
| Legal surplus | 751,895,667.87 | 29,805,951.31 | 0.00 | 781,701,619.18 |
Note: In accordance with the Company Law and the Articles of Association of the Company,the Company shall withdraw legal surplus by 10% of its net profits. Legal surplus will not bewithdrawn any more, when its accumulated amount reaches over 50% of the Company’sregistered capital.
48. Undistributed profit
| Item | Current Period | Prior Period |
| Undistributed profits at the end of previous year before adjustment | 13,623,601,273.27 | 11,403,002,797.32 |
| Total amount of undistributed profits at the end of the previous year after adjustment (+/-) | -29,714,854.19 | 0.00 |
| Undistributed profits at the end of the previous year after adjustment | 13,593,886,419.08 | 11,403,002,797.32 |
| Plus: Net profits assigned to the parent company’s shareholders in current period | -1,079,547,699.72 | 3,378,328,289.28 |
| Minus: Legal surplus withdrawal | 29,805,951.31 | 91,243,496.70 |
| Withdrawal of any legal surplus | 0.00 | 0.00 |
| Withdrawal of common risk reserves | 0.00 | 0.00 |
| Common stock dividends payable | 714,984,128.60 | 1,089,964,300.35 |
| Dividends transferred to capital | 0.00 | 0.00 |
| Plus: Others | 2,088,871.47 | -6,236,870.47 |
| Undistributed profits at the end of the period | 11,771,637,510.92 | 13,593,886,419.08 |
49. Operating income and operating cost
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 151,033,877,489.07 | 147,658,124,585.52 | 128,869,822,896.67 | 121,736,466,612.66 |
| Other businesses | 1,016,397,455.57 | 857,385,936.86 | 797,108,898.59 | 590,710,613.97 |
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Total | 152,050,274,944.64 | 148,515,510,522.38 | 129,666,931,795.26 | 122,327,177,226.63 |
50. Tax and associate charge
| Item | Amount incurred in current period | Amount incurred in previous period |
| Consumption tax | 2,281,758.47 | 2,787,152.86 |
| Urban maintenance and construction tax | 34,209,769.24 | 65,590,454.61 |
| Education surcharge | 14,778,808.23 | 28,203,251.69 |
| Property tax | 45,934,982.23 | 31,798,198.04 |
| Land use tax | 20,656,922.96 | 14,992,349.39 |
| Vehicle and vessel use tax | 132,337.88 | 94,474.69 |
| Stamp tax | 96,476,768.46 | 57,703,181.07 |
| Local education surcharge | 9,852,512.83 | 18,900,490.23 |
| Water conservancy construction funds | 107,209.29 | 3,473,198.38 |
| Others | 2,062,042.91 | 2,605,294.11 |
| Total | 226,493,112.50 | 226,148,045.07 |
Note: For detail payment standard for various taxes and surcharges, please refer to Note V.“Taxes”.
51. Selling expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Import & export charges | 80,703,510.03 | 77,772,150.15 |
| Staff Salaries | 105,863,328.67 | 102,828,797.93 |
| Insurance | 18,242,399.53 | 1,099,472.73 |
| Storage charges | 6,890,273.57 | 17,059,401.49 |
| Business entertainment | 1,386,492.92 | 1,619,634.71 |
| Item | Amount incurred in current period | Amount incurred in previous period |
| Travel expenses | 3,588,383.56 | 3,350,338.43 |
| Vehicle expenses | 1,704,177.86 | 1,559,735.76 |
| Rental expenses | 1,024,141.89 | 800.00 |
| Office expenses | 1,098,049.00 | 1,096,892.62 |
| Handling charges | 3,629,779.27 | 3,338,845.67 |
| Agency fees | 1,073,079.70 | 2,113,272.34 |
| Others | 22,240,133.81 | 16,242,042.21 |
| Total | 247,443,749.81 | 228,081,384.04 |
52. Administration expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Staff Salaries | 380,611,106.77 | 383,637,195.81 |
| Intangible assets amortization cost | 44,717,399.78 | 42,033,555.98 |
| Fixed assets depreciation expenses | 264,912,054.87 | 233,237,775.08 |
| Business entertainment | 7,534,601.57 | 8,440,639.17 |
| Vehicle expenses | 14,199,552.08 | 13,840,430.78 |
| Environmental expenditure | 14,099,876.20 | 14,482,753.74 |
| Office expenses | 12,719,117.63 | 12,242,075.43 |
| Agency fees | 23,525,506.07 | 26,294,122.66 |
| Travel expenses | 9,618,696.43 | 12,128,511.44 |
| Rental expenses | 31,059,048.43 | 66,463,358.90 |
| Repair charges | 104,455,800.29 | 117,276,476.32 |
| Premiums for property insurance | 30,266,565.27 | 31,318,221.28 |
| Transportation and storage fees | 64,342,751.65 | 50,588,101.98 |
| Others | 82,924,906.66 | 75,284,439.96 |
| Item | Amount incurred in current period | Amount incurred in previous period |
| Total | 1,084,986,983.70 | 1,087,267,658.53 |
53. R&D expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Direct investment cost | 422,987,682.39 | 533,064,525.62 |
| Staff Salaries | 138,713,533.15 | 88,592,180.79 |
| Depreciation expenses | 45,568,357.41 | 22,475,912.22 |
| Technical development cost | 20,972,568.77 | 6,552,285.65 |
| Other expenses | 40,463,886.85 | 36,295,313.70 |
| Total | 668,706,028.57 | 686,980,217.98 |
54. Financial expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Interest expense | 2,682,684,624.12 | 2,098,777,291.01 |
| Minus: Interest income | 193,688,404.54 | 166,560,838.30 |
| Profit or loss on exchange | -66,292,681.05 | -26,965,852.84 |
| Bank charges | 364,993,956.67 | 228,325,949.07 |
| Total | 2,787,697,495.20 | 2,133,576,548.94 |
55. Other incomes
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Governmental subsidies related to daily enterprise activities | 234,911,502.58 | 330,605,860.76 | 179,160,942.58 |
| Return of withhold individual income tax commission charges | 1,330,974.63 | 1,658,393.07 | 0.00 |
| Total | 236,242,477.21 | 332,264,253.83 | 179,160,942.58 |
Governmental subsidies related to daily enterprise activities are described in detail as follows:
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period | Assets-related/ Income-related |
| Assets-related subsidies | 17,382,373.75 | 15,136,473.43 | 17,382,373.75 | Assets-related |
| Income-related deferred income | 1,982,904.60 | 35,564.77 | 1,982,904.60 | Income-related |
| “Head Goose” policy support rewards | 7,657,500.00 | 40,558,800.00 | 7,657,500.00 | Income-related |
| Rewards for high-tech enterprise | 300,000.00 | 630,000.00 | 300,000.00 | Income-related |
| Environmental protection subsidies | 121,900.00 | 17,771,700.00 | 121,900.00 | Income-related |
| Rewards for infrastructure | 181,422.20 | 18,053,400.00 | 181,422.20 | Income-related |
| Subsidies for merger and reorganization of enterprises | 0.00 | 5,000,000.00 | 0.00 | Income-related |
| Subsidies for scientific and technological innovation | 66,800,000.00 | 93,325,163.22 | 66,800,000.00 | Income-related |
| Rewards for trade companies | 11,386,675.00 | 18,527,895.20 | 11,386,675.00 | Income-related |
| Subsidies for high-quality enterprise management | 0.00 | 900,000.00 | 0.00 | Income-related |
| Rewards for issuance of enterprise bonds | 0.00 | 2,000,000.00 | 0.00 | Income-related |
| Tax refund | 58,170,985.10 | 53,583,569.78 | 2,420,425.10 | Income-related |
| Employment-related subsidies | 14,697,824.54 | 5,775,947.22 | 14,697,824.54 | Income-related |
| Policy support funds | -7,673,592.73 | 38,965,364.85 | -7,673,592.73 | Income-related |
| Intelligent manufacturing funds | 1,100,000.00 | 90,000.00 | 1,100,000.00 | Income-related |
| Headquarters regress subsidies | 2,958,600.00 | 13,665,500.00 | 2,958,600.00 | Income-related |
| Special funds for promotion of industrial structure adjustment | 34,050,000.00 | 0.00 | 34,050,000.00 | Income-related |
| Rewards for manufacturing enterprises | 1,470,000.00 | 0.00 | 1,470,000.00 | Income-related |
| Working capital subsidy | 15,575,600.00 | 0.00 | 15,575,600.00 | Income-related |
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period | Assets-related/ Income-related |
| Investment promotion | 1,500,000.00 | 0.00 | 1,500,000.00 | Income-related |
| Others | 7,249,310.12 | 6,586,482.29 | 7,249,310.12 | Income-related |
| Total | 234,911,502.58 | 330,605,860.76 | 179,160,942.58 | -- |
Note: For government subsidies related to assets and deferred income related to income, pleaserefer to Note VI. 40. Deferred Income for details.
56. Investment income
| Item | Amount incurred in current period | Amount incurred in previous period |
| Income from long-term equity investment checked with equity method | 823,499,882.13 | 625,843,764.66 |
| Investment income generated by disposal of long-term equity investment | 159,238,486.18 | 5,800,392.52 |
| Investment income generated by disposal of held-for-trading financial assets | -237,478,291.99 | 437,755,991.43 |
| Total | 745,260,076.32 | 1,069,400,148.61 |
57. Income from fair value changes
| Source of income from fair value changes | Amount incurred in current period | Amount incurred in previous period |
| Financial assets measured at fair value through profit and loss | -165,711,256.97 | 45,191,254.26 |
| Wherein: Income from fair value change generated by derivative financial instruments | -165,711,256.97 | 45,191,254.26 |
| Financial liabilities measured by fair value and whose changes included in current profits and losses | -41,547,937.87 | -1,039,942.85 |
| Hedging business | -4,177,289.52 | -1,179,643.73 |
| Total | -211,436,484.36 | 42,971,667.68 |
58. Credit impairment losses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Bad debt loss on receivables | -454,388.44 | 553,207.17 |
| Bad debt loss on other receivables | -647,397.13 | -470,449.11 |
| Total | -1,101,785.57 | 82,758.06 |
59. Assets impairment loss
| Item | Amount incurred in current period | Amount incurred in previous period |
| Loss on inventory depreciation | -361,681,414.01 | -137,994,128.08 |
| Loss on impairment of fixed assets | -6,996,027.02 | -13,112,874.03 |
| Total | -368,677,441.03 | -151,107,002.11 |
60. Income from assets disposal
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Profits or losses from disposal of fixed assets | -23,661,125.27 | -16,639,589.77 | -23,661,125.27 |
| Gains or losses from disposal of intangible assets | 0.00 | 17,953.45 | 0.00 |
| Total | -23,661,125.27 | -16,621,636.32 | -23,661,125.27 |
61. Non-operating income
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Gains from damage and scrapping of non-current assets | 0.00 | 6,027.52 | 0.00 |
| Wherein: Fixed assets | 0.00 | 6,027.52 | 0.00 |
| Intangible assets | 0.00 | 0.00 | 0.00 |
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Governmental subsidies irrelevant to daily enterprise activities | 710,041.57 | 668,904.68 | 710,041.57 |
| Income from indemnities and fines | 6,654,298.45 | 8,419,939.76 | 6,654,298.45 |
| Non-payable current accounts | 1,331,685.07 | 18,342,279.33 | 1,331,685.07 |
| Others | 6,247,228.14 | 4,590,072.98 | 6,247,228.14 |
| Total | 14,943,253.23 | 32,027,224.27 | 14,943,253.23 |
Governmental subsidies are described in detail as follows:
| Subsidized Items | Amount incurred in current period | Amount incurred in previous period | Assets-related /Income-related |
| IRAS Jobs Support Scheme - COVID19 | 601,143.99 | 568,096.34 | Income-related |
| Others | 108,897.58 | 100,808.34 | Income-related |
| Total | 710,041.57 | 668,904.68 | -- |
62. Non-operating expenses
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Loss on damage and scrapping of non-current assets | 6,640,525.86 | 1,719,238.76 | 6,640,525.86 |
| Wherein: Fixed assets | 6,640,525.86 | 1,719,238.76 | 6,640,525.86 |
| Intangible assets | 0.00 | 0.00 | 0.00 |
| Expenditure of donation | 6,922,110.90 | 16,325,574.78 | 6,922,110.90 |
| Overdue fine and fine | 3,654,114.74 | 911,181.49 | 3,654,114.74 |
| Abnormal loss | 0.00 | 244,316.31 | 0.00 |
| Item | Amount incurred in current period | Amount incurred in previous period | Amount included in non-recurring profits and losses for the current period |
| Others | 3,044,839.29 | 511,786.27 | 3,044,839.29 |
| Total | 20,261,590.79 | 19,712,097.61 | 20,261,590.79 |
63. Income tax expenses
(1) Table of income tax expenses
| Item | Amount incurred in current period | Amount incurred in previous period |
| Income tax expenses in current period | 45,178,553.83 | 367,901,689.65 |
| Deferred income tax expenses | -230,035,312.37 | -24,343,671.69 |
| Total | -184,856,758.54 | 343,558,017.96 |
(2) Accounting profit and income tax expense adjustment process
| Item | Amount incurred in current period |
| Total profits | -1,109,255,567.78 |
| Income tax expenses calculated by legal/applicable tax rate | -277,313,891.95 |
| Influence of subsidiary applicable to different tax rates | -96,762,965.05 |
| Influence of adjustment to income tax in previous periods | -7,627,257.76 |
| Influence of nontaxable income | -104,052,702.36 |
| Influence of non-deductible cost, expense and loss | -6,415,962.35 |
| Influence of deductible loss on the use of previously unconfirmed deferred income tax assets | -26,137,235.23 |
| Influence of deductible temporary difference or deductible loss on unconfirmed deferred income tax assets in current period | 374,785,149.58 |
| Change in the balance of deferred income tax assets/ liabilities due to tax rate adjustment | 0.00 |
| Influence of weighted deduction cost, expense and other items allowed to deduct by tax law | -49,898,280.36 |
| Item | Amount incurred in current period |
| Others | 8,566,386.94 |
| Income tax expenses | -184,856,758.54 |
64. Other comprehensive income
See Notes VI. 45 for detail.
65. Items in cash flow statement
(1) Reception of other cash related to business activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Receivables and payables | 1,739,551.19 | 32,860,194.35 |
| Margin and deposit | 144,266,262.60 | 15,225,395.26 |
| Government grants | 249,608,718.75 | 328,935,252.74 |
| Interest income | 130,714,288.20 | 150,359,760.74 |
| Indemnities and fines | 6,333,085.21 | 8,419,939.76 |
| Judicial freezing | 10,503,440.47 | 7,336,220.00 |
| Bank bill margin | 5,572,609.84 | 0.00 |
| L/G deposit | 32,068,223.09 | 0.00 |
| Others | 6,302,301.71 | 11,441,776.27 |
| Total | 587,108,481.06 | 554,578,539.12 |
(2) Payment of other cash related to business activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Receivables and payables | 24,310,168.76 | 50,990,396.24 |
| Office expenses | 11,770,134.03 | 13,338,968.05 |
| Import & export charges | 97,966,065.18 | 77,410,944.06 |
| Bank charges | 265,497,302.14 | 224,690,871.29 |
| Business entertainment | 6,936,808.59 | 10,060,273.88 |
| Item | Amount incurred in current period | Amount incurred in previous period | |
| Vehicle expenses | 18,316,260.47 | 15,400,166.54 | |
| Environmental expenditure | 11,778,965.14 | 14,482,753.74 | |
| Margin and deposit | 86,429,498.96 | 95,747,559.13 | |
| Operating license fee | 10,376,076.19 | 11,025,525.45 | |
| Agency fee | 29,280,458.44 | 24,425,724.39 | |
| Travel expenses | 13,168,292.46 | 15,478,849.87 | |
| Rental expenses | 26,120,029.25 | 66,464,158.90 | |
| Frozen fund | 25,169,796.00 | 9,596,271.15 | |
| Repair charges | 105,146,816.30 | 117,276,476.32 | |
| Insurance | 43,564,927.95 | 31,318,221.28 | |
| Transportation, storage and handling charges | 54,051,957.63 | 72,085,821.87 | |
| Expenditure of donation | 6,813,000.00 | 16,325,574.78 | |
| Others | 85,815,740.71 | 81,900,679.08 | |
| Total | 922,512,298.20 | 948,019,236.02 | |
(3) Reception of other cash related to investment activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Income from consigned loan and interest on capital lending by related parties | 51,574,324.99 | 52,406,117.49 |
| Futures margin recovery | 47,083,441.68 | 0.00 |
| L/G margin recovery | 276,000,000.00 | 0.00 |
| Total | 374,657,766.67 | 52,406,117.49 |
(4) Payment of other cash related to investment activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| L/G deposit | 0.00 | 276,000,000.00 |
| Item | Amount incurred in current period | Amount incurred in previous period |
| Net cash received by disposal of subsidiary (negative) | 100,000.00 | 14,354,735.85 |
| Futures margin recovery | 31,048,462.70 | 0.00 |
| Others | 424.19 | 0.00 |
| Total | 31,148,886.89 | 290,354,735.85 |
(5) Reception of other cash related to financing activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Withdrawal of monetary funds pledged for financing | 1,019,866,989.49 | 977,985,563.01 |
| Collection of financing leaseback | 2,075,000,000.00 | 1,300,000,000.00 |
| Interbank borrowing from Hengyi Group | 4,133,189,471.00 | 3,369,661,700.09 |
| Others | 16,000,000.00 | 14,314,978.66 |
| Total | 7,244,056,460.49 | 5,661,962,241.76 |
(6) Payment of other cash related to financing activities
| Item | Amount incurred in current period | Amount incurred in previous period |
| Monetary funds pledged for financing | 1,593,104,467.79 | 1,322,103,655.96 |
| Repayment of loan principal and interest of Hengyi Group | 4,126,142,959.89 | 3,369,661,700.09 |
| Stock repurchase | 765,564,197.20 | 368,331,313.73 |
| Rental expenses and commission charges paid for financing leaseback | 1,126,017,003.66 | 854,479,952.84 |
| Lease margin for financing leaseback | 116,500,000.00 | 3,347,897.56 |
| Loan commission | 101,642,305.39 | 10,290,077.78 |
| Rental expenses paid for lease liabilities | 29,061,128.46 | 35,555,412.10 |
| Others | 1,426,000.00 | 1,930,000.00 |
| Total | 7,859,458,062.39 | 5,965,700,010.06 |
66. Further information about cash flow statements
(1) Further information about cash flow statement
| Further Information | Amount incurred in current period | Amount incurred in previous period |
| 1. Adjust net profit to operating cash flow: | ||
| Net profit | -924,398,809.24 | 3,923,448,012.52 |
| Plus: Asset impairment reserves | 368,677,441.03 | 151,107,002.11 |
| Impairment loss on credit assets | 1,101,785.57 | -82,758.06 |
| Depreciation of fixed assets | 3,057,365,476.37 | 2,751,016,476.25 |
| Depreciation of right-of-use assets | 37,746,948.82 | 35,985,260.79 |
| Amortization of intangible assets | 80,585,704.09 | 75,354,585.36 |
| Amortization of long-term deferred expenses | 109,624,239.00 | 91,023,892.22 |
| Loss on disposal of fixed assets, intangible assets and other long-term assets (income listed with “-”) | 23,661,125.27 | 16,621,636.32 |
| Loss on scrapping of fixed assets (income listed with “-”) | 6,640,525.86 | 1,713,211.24 |
| Loss on fair value change (income listed with “-”) | 211,436,484.36 | -42,971,667.68 |
| Financial cost (income listed with “-”) | 2,623,127,122.84 | 1,688,684,989.15 |
| Investment losses (income listed with “-”) | -745,260,076.32 | -1,069,400,148.61 |
| Decrease in deferred income tax assets (increase listed with “+”) | -225,671,514.74 | -1,489,805.99 |
| Increase in deferred income tax liabilities (decrease listed with “-”) | -4,365,912.78 | -22,853,865.70 |
| Decrease in inventory (increase listed with “-”) | -1,704,647,587.22 | -2,563,833,223.07 |
| Decrease in operating receivables (increase listed with “-”) | 993,927,177.80 | -3,700,168,580.54 |
| Increase in operating payables (decrease listed with “-”) | -1,263,321,017.94 | 6,392,922,234.48 |
| Others | 59,304,370.59 | -6,556,111.39 |
| Net cash flow from operating activities | 2,705,533,483.36 | 7,720,521,139.40 |
| 2. Significant investment and financing activities involving no cash receipt and payment: | ||
| Conversion of debt into capital | 0.00 | 0.00 |
| Further Information | Amount incurred in current period | Amount incurred in previous period |
| Convertible corporate bonds mature within one year | 0.00 | 0.00 |
| Fixed assets under financing lease | 0.00 | 0.00 |
| 3. Net changes in cash and cash equivalents: | ||
| Ending balance of cash | 12,934,069,613.03 | 10,244,736,951.84 |
| Minus: Cash balance at the end of previous year | 10,244,736,951.84 | 7,186,325,948.17 |
| Plus: Ending balance of cash equivalents | 0.00 | 0.00 |
| Minus: Cash equivalent balance at the end of previous year | 0.00 | 0.00 |
| Net increase in cash and cash equivalents | 2,689,332,661.19 | 3,058,411,003.67 |
(2) Net cash on subsidiary disposal received in current period
| Item | Amount |
| Cash or cash equivalents on subsidiary disposal received in current period | 0.00 |
| Wherein: Haining Hengqi Environmental Protection Technology Co., Ltd. | 0.00 |
| Minus: Cash and cash equivalents held by subsidiary on the date of losing control right | 100,000.00 |
| Wherein: Haining Hengqi Environmental Protection Technology Co., Ltd. | 100,000.00 |
| Net cash received by subsidiary disposal | -100,000.00 |
Note: The above amount has been reclassified as “other cash payments relating to investmentactivities”.
(3) Composition of cash and cash equivalents
| Item | Ending balance | Ending balance of previous year |
| I. Cash | 12,934,069,613.03 | 10,244,736,951.84 |
| Wherein: Cash on hand | 1,118,679.20 | 1,296,711.32 |
| Bank deposit payable at any time | 11,714,153,408.04 | 9,525,027,347.46 |
| Other monetary fund payable at any time | 1,218,797,525.79 | 718,412,893.06 |
| Item | Ending balance | Ending balance of previous year |
| Payable due from Central Bank | 0.00 | 0.00 |
| Deposits in other banks | 0.00 | 0.00 |
| Due from banks | 0.00 | 0.00 |
| II. Cash Equivalents | 0.00 | 0.00 |
| Wherein: Bond investments mature within three months | 0.00 | 0.00 |
| III. Ending balance of cash and cash equivalents | 12,934,069,613.03 | 10,244,736,951.84 |
| Wherein: Cash and cash equivalents used by the parent company or group subsidiaries under certain limitation | 0.00 | 0.00 |
67. Assets with limited ownership or use right
| Item | Book value at the end of the period | Reason for restriction |
| Monetary funds | 4,399,233,129.47 | Margin |
| Monetary funds | 25,172,796.00 | Judicial freezing |
| Notes receivable | 53,822,104.39 | Pledge to open acceptance bills |
| Long-term equity investments | 5,928,738,265.27 | Mortgage loan |
| Fixed assets | 3,804,170,108.15 | Leaseback financing lease |
| Fixed assets | 18,130,631,539.37 | Mortgage loan |
| Intangible assets | 781,320,192.43 | Mortgage loan |
| Intangible assets | 15,360.38 | Finance lease guarantees |
| Inventory | 2,550,641,487.83 | Mortgage loan |
| Total | 35,673,744,983.29 | -- |
68. Monetary items in foreign currency
(1) Monetary items in foreign currency
| Item | Ending balance in foreign currency | Exchange rate for conversion | Ending balance (converted into RMB) |
| Monetary funds | |||
| Wherein: HKD | 71,184.17 | 0.8933 | 63,588.75 |
| USD | 581,686,909.13 | 6.9646 | 4,051,216,647.33 |
| EUR | 14,106.93 | 7.4229 | 104,714.33 |
| BND | 8,184,622.74 | 5.1831 | 42,421,718.12 |
| SGD | 1,079,043.74 | 5.1831 | 5,592,791.61 |
| Accounts receivable | |||
| Wherein: USD | 817,630,221.72 | 6.9646 | 5,694,467,455.57 |
| BND | 54,599,853.33 | 5.1831 | 282,996,499.79 |
| Other receivables | |||
| Wherein: USD | 8,028,333.81 | 6.9646 | 55,914,133.65 |
| BND | 3,631,010.18 | 5.1831 | 18,819,888.86 |
| SGD | 262,311.75 | 5.1831 | 1,359,588.03 |
| Long-term receivables | |||
| Wherein: USD | 518,788.46 | 6.9646 | 3,613,154.11 |
| Short-term loans | |||
| Wherein: USD | 1,493,172,376.69 | 6.9646 | 10,399,348,334.67 |
| BND | 177,944,666.40 | 5.1831 | 922,305,000.42 |
| Accounts payable |
| Item | Ending balance in foreign currency | Exchange rate for conversion | Ending balance (converted into RMB) |
| Wherein: USD | 1,116,259,414.13 | 6.9646 | 7,774,300,315.96 |
| EUR | 4,269,988.96 | 7.4229 | 31,695,701.04 |
| BND | 4,823,807.10 | 5.1831 | 25,002,274.58 |
| Other payables | |||
| Wherein: USD | 4,323,553.62 | 6.9646 | 30,111,821.54 |
| BND | 1,935,823.58 | 5.1831 | 10,033,567.20 |
| Non-current liabilities due within one year | |||
| Wherein: USD | 251,125,031.52 | 6.9646 | 1,748,985,394.53 |
| EUR | 14,017,262.00 | 7.4229 | 104,048,734.10 |
| BND | 1,334,939.91 | 5.1831 | 6,919,127.05 |
| SGD | 932,206.71 | 5.1831 | 4,831,720.60 |
| Lease liabilities | |||
| Wherein: BND | 81,899,040.00 | 5.1831 | 424,490,914.22 |
| SGD | 473,138.35 | 5.1831 | 2,452,323.38 |
| Long-term payables | |||
| Wherein: USD | 1,897,602.19 | 6.9646 | 13,216,040.21 |
| Long-term loans | |||
| Wherein: USD | 1,326,310,000.00 | 6.9646 | 9,237,218,626.00 |
| Item | Ending balance in foreign currency | Exchange rate for conversion | Ending balance (converted into RMB) |
| EUR | 85,770,545.00 | 7.4229 | 636,666,178.48 |
69. Hedging
Please refer to Notes VI (3. Notes to derivative financial assets).
70. Government grants
(1) Basic information about governmental subsidies
| Category | Amount | Reported Item | Amount recorded into current profits and losses |
| Income-related subsidies used to compensate for related costs or losses incurred | 215,546,224.23 | Other incomes | 215,546,224.23 |
| 710,041.57 | Non-operating income | 710,041.57 | |
| Income-related subsidies used to compensate for related costs or losses in subsequent periods | 9,198,985.23 | Deferred income | 1,982,904.60 |
| Assets-related subsidies | 248,579,401.17 | Deferred income | 17,382,373.75 |
| Total | 474,034,652.20 | 235,621,544.15 |
(2) Return of government subsidies
| Category | Amount | Reported Item |
| Financial support by Meishan Bonded Port Area to Ningbo Hengyi Trading | 10,210,000.00 | Refund calculated according to the paid value-added tax and income tax in 2021 |
VII. Consolidation scope changes
1. Business merger under the same control
In current period, there is no business merger under the same control in the Company.
2. Combination of enterprises not under the same control
In current period, there is no combination of enterprises not under the same control in theCompany.
3. Disposal of Subsidiary
(1) Control right lost by single disposal of subsidiary investment
| Name of subsidiary | Equity disposal price | Equity disposal proportion (%) | Equity disposal mode | Control right losing time-point | Basis for determination of control right losing time-point | Balance between disposal price and the subsidiary’s net asset shares at the level of consolidated statements corresponding to disposal investment |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | 0.00 | 50.00 | Transfer | May 5, 2022 | Completion of shareholding rights transfer | 0.00 |
(Continued)
| Name of subsidiary | Proportion of residual equities on the control right losing date (%) | Book value of residual equities on the control right losing date | Fair value of residual equities on the control right losing date | Gains or Losses on Remeasurement of Residual Equities by Fair Value | Determination method and main assumption of fair value of residual equities on the control right losing date | Amount of other comprehensive income (related to original subsidiary equity investment) shifted into investment profits and losses |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | 50.00 | 0.00 | 0.00 | 0.00 | Trading price agreed | 0.00 |
4. Consolidation Scope Change due to Other Reasons
The Company has invested three (5) subsidiaries this year as follows:
Guangxi Hengyi New Materials Co., Ltd., a subsidiary of the Company, invested andestablished Guangxi Free Trade Zone Yihai Port Co., Ltd., holding 66% of the shares.Zhejiang Hengyi Petrochemical Research Institute Co., Ltd., a subsidiary of the Company,invested and established Hangzhou Lanxing Chemical Fiber Oil Co., Ltd., holding 80% of theshares.Zhejiang Hengyi Logistics Co., Ltd., a subsidiary of the Company, invested and establishedLianyungang Junbo Shengda Logistics Co., Ltd., holding 100% of the shares.Suqian Yida New Materials Co., Ltd., a subsidiary of the Company, invested and establishedSuqian Hengyuan Thermal Energy Co., Ltd., holding 100% of the shares.Suqian Yida New Materials Co., Ltd., a subsidiary of the Company, invested and establishedSuqian Huida Port Co., Ltd., holding 100% of the shares.In this reporting period, therefore, above three holding subsidiaries recorded into the scope ofconsolidation are increased in the Company.
5. Information about original subsidiaries no longer consolidated in current period
| Former name of subsidiary | Domicile | Nature of business | Shareholding ratio of parent company (%) | Proportion of parent company’s voting rights (%) | Reason for derecognition of subsidiary |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Haining City | Wastewater recovery and treatment | 100.00 | 100.00 | Losing control right |
Continued
| Former name of subsidiary | Total assets on the disposal date | Total liabilities on the disposal date | Owner’s equity on the disposal date | Total Assets at the end of the previous year | Total Liabilities at the end of the previous year | Owner’s equity at the end of the previous year |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | 100,000.00 | 100,000.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Continued
| Former name of subsidiary | Income from the end of the previous year to the disposal date | Total cost from the end of the previous year to the disposal date | Net profit from the end of the previous year to the disposal date |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | 0.00 | 0.00 | 0.00 |
VIII. Equities in other subjects
1. Equities in subsidiaries
(1) Composition of enterprise group
| Name of subsidiary | Main Place of Business | Domicile | Nature of business | Shareholding ratio (%) | Gaining method | |
| Direct | Indirect | |||||
| Zhejiang Hengyi Petrochemical Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fiber products | 100.00 | 0.00 | Establishment or investment |
| Zhejiang Hengyi Polymer Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fiber products | 0.00 | 60.00 | Business merger under the same control |
| Zhejiang Yisheng Petrochemical Co., Ltd. | Ningbo City | Ningbo City | Manufacturing of petrochemical products | 0.00 | 70.00 | Business merger under the same control |
| Zhejiang Yixin Chemical Fiber Co., Ltd. | Hangzhou City | Hangzhou City | Commerce and trade | 0.00 | 70.00 | Establishment or investment |
| Name of subsidiary | Main Place of Business | Domicile | Nature of business | Shareholding ratio (%) | Gaining method | |
| Direct | Indirect | |||||
| Hong Kong Yisheng Petrochemical Investment Co., Ltd. | Hong Kong | Hong Kong | Trade and consulting | 0.00 | 70.00 | Establishment or investment |
| Zhejiang Hengyi High-Tech Materials Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fiber products | 0.00 | 90.67 | Establishment or investment |
| Ningbo Hengyi Trading Co., Ltd. | Ningbo City | Ningbo City | Commerce and trade | 0.00 | 70.00 | Establishment or investment |
| Hong Kong Tianyi International Holding Co., Ltd. | Hong Kong | Hong Kong | Trade and investment | 0.00 | 100.00 | Establishment or investment |
| Good Park International Investment Co., Ltd. | Hong Kong | Hong Kong | Trade and investment | 0.00 | 100.00 | Establishment or investment |
| Hengyi Industries Sdn. Bhd. | Brunei | Brunei | Manufacturing of petrochemical products | 0.00 | 70.00 | Business merger under the same control |
| Ningbo Hengyi Engineering Management Co., Ltd. | Ningbo City | Ningbo City | Engineering management | 0.00 | 70.00 | Business merger under the same control |
| Hengyi Industry International Co., Ltd. | Singapore | Singapore | Commerce and trade | 0.00 | 70.00 | Establishment or investment |
| (Singapore) | Singapore | Singapore | Commerce and trade | 0.00 | 100.00 | Establishment or investment |
| Zhejiang Hengyi Petrochemical Sales Co., Ltd. | Hangzhou City | Hangzhou City | Commerce and trade | 0.00 | 100.00 | Establishment or investment |
| Haining Hengyi New Materials Co., Ltd. | Haining City | Haining City | Manufacturing of chemical fiber products | 0.00 | 100.00 | Establishment or investment |
| Haining Hengyi Thermal Power Co., Ltd. | Haining City | Haining City | Electricity & heat production and supply | 0.00 | 90.00 | Establishment or investment |
| Suqian Yida New Materials Co., Ltd. | Suqian City | Suqian City | Manufacturing of chemical fiber products | 0.00 | 91.00 | Establishment or investment |
| Fujian Yijin Chemical Fiber Co., Ltd. | Quanzhou City, Fujian Province | Quanzhou City, Fujian Province | Manufacturing of chemical fiber products | 0.00 | 90.00 | Establishment or investment |
| Shaoxing Shengong Packaging Co., Ltd. | Shaoxing City | Shaoxing City | Wrappage production and | 0.00 | 51.00 | Establishment or investment |
| Name of subsidiary | Main Place of Business | Domicile | Nature of business | Shareholding ratio (%) | Gaining method | |
| Direct | Indirect | |||||
| processing | ||||||
| Zhejiang Hengyi Logistics Co., Ltd. | Hangzhou City | Hangzhou City | Logistics transportation | 0.00 | 100.00 | Business merger under the same control |
| Zhejiang Hengyi International Trade Co., Ltd. | Hangzhou City | Hangzhou City | Commerce and trade | 100.00 | 0.00 | Establishment or investment |
| Zhejiang Hengkai Energy Co., Ltd. | Hangzhou City | Hangzhou City | Commerce and trade | 0.00 | 60.00 | Establishment or investment |
| Zhejiang Hengyi Engineering Management Co., Ltd. | Hangzhou City | Hangzhou City | Engineering management | 100.00 | 0.00 | Establishment or investment |
| Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fiber products | 100.00 | 0.00 | Establishment or investment |
| Jiaxing Yipeng Chemical Fiber Co., Ltd. | Jiaxing City | Jiaxing City | Manufacturing of chemical fiber products | 100.00 | 0.00 | Business merger under the same control |
| Taicang Yifeng Chemical Fiber Co., Ltd. | Taicang City | Taicang City | Manufacturing of chemical fiber products | 100.00 | 0.00 | Business merger under the same control |
| Zhejiang Shuangtu New Materials Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fiber products | 100.00 | 0.00 | Business merger not under the same control |
| Hangzhou Yijing Chemical Fiber Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fiber products | 0.00 | 100.00 | Business merger under the same control |
| Hong Kong Hengyi Logistics Co., Ltd. | Hong Kong | Hong Kong | Logistics transportation | 0.00 | 100.00 | Establishment or investment |
| Hengyi International Logistics Co., Ltd. | Singapore | Singapore | Logistics transportation | 0.00 | 100.00 | Establishment or investment |
| Zhejiang Yizhi Information Technology Co., Ltd. | Hangzhou City | Hangzhou City | Software and IT service industry | 0.00 | 100.00 | Establishment or investment |
| Haining Junbo Shengming Trading Co., Ltd. | Haining City | Haining City | Commerce and trade | 0.00 | 100.00 | Establishment or investment |
| Hangzhou Yitong New Materials Co., Ltd. | Hangzhou City | Hangzhou City | Manufacturing of chemical fiber products | 0.00 | 60.00 | Establishment or investment |
| Shaoxing Hengyi Logistics Co., Ltd. | Shaoxing City | Shaoxing City | Logistics transportation | 0.00 | 100.00 | Establishment or investment |
| Name of subsidiary | Main Place of Business | Domicile | Nature of business | Shareholding ratio (%) | Gaining method | |
| Direct | Indirect | |||||
| Guangxi Hengyi Environmental Technology Co., Ltd. | Qinzhou City, Guangxi | Qinzhou City, Guangxi | Science and technology service | 0.00 | 100.00 | Establishment or investment |
| Zhejiang Hengyi Hanlin Enterprise Management Co., Ltd. | Hangzhou City | Hangzhou City | Commercial service industry | 0.00 | 75.00 | Establishment or investment |
| Hainan Hengjing Trading Co., Ltd. | Hainan Province | Hainan Province | Commerce and trade | 0.00 | 100.00 | Establishment or investment |
| Guangxi Hengyi Shunqi Trading Co., Ltd. | Qinzhou City, Guangxi | Qinzhou City, Guangxi | Commerce and trade | 0.00 | 100.00 | Establishment or investment |
| Haining Lantai New Materials Co., Ltd. | Haining City | Haining City | Manufacturing of chemical fiber products | 0.00 | 74.00 | Establishment or investment |
| Jiaxing Hengyu Trading Co., Ltd. | Jiaxing City | Jiaxing City | Commerce and trade | 0.00 | 100.00 | Establishment or investment |
| Guangxi Hengyi New Materials Co., Ltd. | Qinzhou City, Guangxi | Qinzhou City, Guangxi | Manufacturing of chemical fiber products | 0.00 | 100.00 | Merger of enterprises under the same control |
| Zhejiang Xiaoyi Supply Chain Management Co., Ltd. (Zhejiang Xiaoyi Supply Chain Management Co., Ltd.) | Hangzhou City | Hangzhou City | Commercial service industry | 0.00 | 100.00 | Establishment or investment |
| Ningbo Shengmao Trading Co., Ltd. | Ningbo City | Ningbo City | Commerce and trade | 0.00 | 70.00 | Establishment or investment |
| Suqian Hengyuan Thermal Energy Co., Ltd. | Suqian City | Suqian City | Electricity & heat production and supply | 0.00 | 100.00 | Establishment or investment |
| Suqian Huida Port Co., Ltd. | Suqian City | Suqian City | Water transportation industry | 0.00 | 100.00 | Establishment or investment |
| Guangxi Free Trade Zone Yihai Port Co., Ltd. | Qinzhou City | Qinzhou City | Water transportation industry | 0.00 | 66.00 | Establishment or investment |
| Hangzhou Lanxing Chemical Fiber Oiling Agent Co., Ltd. | Hangzhou City | Hangzhou City | Wholesale business | 0.00 | 80.00 | Establishment or investment |
| Lianyungang Junbo Shengda Logistics Co., Ltd. | Lianyungang City | Lianyungang City | Road transportation industry | 0.00 | 100.00 | Establishment or investment |
(2) Important non-wholly owned subsidiaries
| Name of subsidiary | Minority shareholders’ shareholding ratio (%) | Profits and losses assigned to minority shareholder in current period | Dividends distributed to minority shareholder in current period | Balance of minority shareholders’ equities at the end of current period |
| Ningbo Hengyi Trading Co., Ltd. | 30.00 | 27,814,486.29 | 0.00 | 190,821,667.38 |
| Zhejiang Hengyi Polymer Co., Ltd. | 40.00 | -13,726,592.77 | 10,000,000.00 | 359,285,374.40 |
| Zhejiang Yisheng Petrochemical Co., Ltd. | 30.00 | -51,581,261.64 | 0.00 | 2,745,782,373.09 |
| Hengyi Industries Sdn. Bhd. | 30.00 | 199,857,756.26 | 35,361,222.00 | 3,004,030,202.46 |
| Zhejiang Hengyi High-Tech Materials Co., Ltd. | 9.33 | 1,662,426.37 | 56,486,111.11 | 413,945,232.64 |
(3) Main Financial Information about Important Non-wholly Owned SubsidiariesUnit: RMB 10,000
| Name of subsidiary | Ending balance | |||||
| Current Assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Ningbo Hengyi Trading Co., Ltd. | 28,711.46 | 345,016.16 | 373,727.61 | 296,896.09 | 0.00 | 296,896.09 |
| Zhejiang Hengyi Polymer Co., Ltd. | 225,211.27 | 71,718.48 | 296,929.74 | 206,821.00 | 287.40 | 207,108.40 |
| Zhejiang Yisheng Petrochemical Co., Ltd. | 1,517,642.10 | 359,313.47 | 1,876,955.57 | 910,110.02 | 73,350.86 | 983,460.88 |
| Hengyi Industries Sdn. Bhd. | 1,868,714.56 | 2,807,143.74 | 4,675,858.29 | 2,536,416.94 | 1,138,641.20 | 3,675,058.14 |
| Zhejiang Hengyi High-Tech Materials Co., Ltd. | 536,774.05 | 535,109.86 | 1,071,883.91 | 569,560.33 | 58,652.38 | 628,212.70 |
(Continued)
| Name of subsidiary | Ending balance of previous year | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Ningbo Hengyi Trading Co., Ltd. | 55,810.48 | 289,585.73 | 345,396.21 | 281,265.96 | 0.00 | 281,265.96 |
| Zhejiang Hengyi Polymer Co., Ltd. | 221,425.25 | 71,922.42 | 293,347.67 | 197,246.45 | 348.23 | 197,594.68 |
| Zhejiang Yisheng Petrochemical Co., Ltd. | 1,392,502.93 | 401,523.04 | 1,794,025.97 | 790,186.03 | 90,707.08 | 880,893.11 |
| Name of subsidiary | Ending balance of previous year | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Hengyi Industries Sdn. Bhd. | 1,449,167.73 | 2,604,312.88 | 4,053,480.61 | 2,272,381.31 | 931,734.37 | 3,204,115.68 |
| Zhejiang Hengyi High-Tech Materials Co., Ltd. | 740,333.77 | 518,504.88 | 1,258,838.65 | 682,879.60 | 78,080.15 | 760,959.75 |
(Continued)
| Name of subsidiary | Amount incurred in current period | Balance of previous period | ||||||
| Operating income | Net profit | Total comprehensive income | Operating cash flow | Operating income | Net profit | Total comprehensive income | Operating cash flow | |
| Ningbo Hengyi Trading Co., Ltd. | 1,148,454.08 | 9,271.50 | 12,701.28 | 30,454.43 | 1,332,702.94 | -22,957.05 | -23,059.95 | 87,274.06 |
| Zhejiang Hengyi Polymer Co., Ltd. | 380,707.73 | -3,431.65 | -3,431.65 | -28,627.14 | 381,008.64 | 10,951.88 | 10,951.88 | 81,745.69 |
| Zhejiang Yisheng Petrochemical Co., Ltd. | 2,138,615.21 | -17,193.75 | -19,638.17 | -106,204.81 | 3,030,842.32 | 38,267.28 | 41,610.31 | 29,567.27 |
| Hengyi Industries Sdn. Bhd. | 5,631,775.07 | 65,336.76 | 139,648.15 | 323,556.31 | 3,594,810.02 | 124,738.48 | 115,121.98 | 337,126.12 |
| Zhejiang Hengyi High-Tech Materials Co., Ltd. | 977,880.38 | 1,781.81 | 5,687.07 | 75,702.98 | 1,325,913.87 | 34,108.85 | 40,493.31 | 138,091.97 |
2. Transactions that still control subsidiaries despite of change in the shares of owner'sequity in the subsidiaryIn 2022, Hengyi Limited, a subsidiary of the Company, contributed a total of RMB 1.07 billionto its subsidiary Suqian Yida New Materials Co., Ltd. (hereinafter referred to as "Suqian Yida").Suqian Industrial Development Fund (limited partnership), another shareholder of Suqian Yida,did not increase the capital in equal proportion. After the capital increase, the paid-in capitalof Suqian Yida was up to RMB 1.85 billion, and the proportion of equity held by HengyiLimited in Suqian Yida increased from 88.42% to 91%.
3. Equities in cooperative enterprise or associated enterprise
(1) Important cooperative enterprises or associated enterprises
| Name of cooperative enterprise or associated enterprise | Main place of business | Domicile | Nature of business | Shareholding ratio (%) | Accountant arrangement method for investment in cooperative enterprise or associated enterprise | |
| Direct | Indirect | |||||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Xiaoshan | Xiaoshan | Chemical raw materials and chemical products manufacturing industry | 0.00 | 50.00 | Equity method |
| Dalian Yisheng Investment Co., Ltd. | Dalian | Dalian | Trade and investment | 0.00 | 30.00 | Equity method |
| Hainan Yisheng Petrochemical Co., Ltd. | Hainan | Hainan | chemical products manufacturing industry | 0.00 | 50.00 | Equity method |
| China Zheshang Bank Co., Ltd. | Hangzhou | Hangzhou | Finance | 0.00 | 3.52 | Equity method |
| Zhejiang Yisheng New Materials Co., Ltd. | Ningbo | Ningbo | Chemical raw materials and chemical products manufacturing industry | 0.00 | 49.00 | Equity method |
Note: The Company holds 3.52% stocks of China Zheshang Bank Co., Ltd., and sent arepresentative to CZB’s BOD. The Company enjoys substantial right of participation indecision making. The Company may exert significant impact on CZB by such representative’sparticipating into CZB’s financial and business policy formulation.
(2) Main financial information about important cooperative enterprises
Currency unit: RMB 10,000
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period | ||
| Caprolactam | Hainan Yisheng | Caprolactam | Hainan Yisheng | |
| Current assets | 173,189.83 | 515,284.65 | 180,585.16 | 569,269.63 |
| Wherein: Cash and cash equivalents | 14,264.69 | 101,655.70 | 16,799.78 | 83,224.96 |
| Non-current assets | 600,320.82 | 719,282.44 | 520,779.04 | 576,141.87 |
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period | ||
| Caprolactam | Hainan Yisheng | Caprolactam | Hainan Yisheng | |
| Total assets | 773,510.65 | 1,234,567.09 | 701,364.20 | 1,145,411.50 |
| Current liabilities | 475,101.61 | 416,670.21 | 381,545.90 | 580,110.26 |
| Non-current liabilities | 86,968.64 | 175,299.13 | 58,417.43 | 83,564.34 |
| Total liabilities | 562,070.25 | 591,969.34 | 439,963.33 | 663,674.60 |
| Minority stockholders’ equity | 148.50 | 0.00 | 0.00 | 0.00 |
| Stockholders’ equity attributable to parent company | 211,291.90 | 642,597.75 | 261,400.87 | 481,736.89 |
| Net assets calculated by shareholding ratio | 105,645.95 | 321,298.87 | 130,700.43 | 265,868.45 |
| Adjusting events | 0.00 | 0.00 | 0.00 | 0.00 |
| - Goodwill | 0.00 | 0.00 | 0.00 | 0.00 |
| - Unrealized profit of internal transaction | 0.00 | -622.08 | 0.00 | -725.76 |
| - Others | 2,010.08 | 9,733.73 | 2,010.08 | 9,733.73 |
| Book value of equity investment in cooperative enterprise | 107,656.03 | 330,410.53 | 132,710.51 | 274,876.42 |
| Fair value of cooperative enterprise equity investment with public offer | -- | -- | -- | -- |
| Operating income | 753,035.72 | 2,271,698.29 | 788,167.12 | 1,680,459.55 |
| Financial expenses | 10,420.14 | 9,078.70 | 11,763.95 | 18,707.82 |
| Income tax expenses | -13,253.96 | 18,135.43 | 10,721.31 | 3,215.56 |
| Net profit | -35,158.38 | 104,001.29 | 32,438.83 | 34,217.72 |
| Net profits of discontinuing operation | 0.00 | 0.00 | 0.00 | 0.00 |
| Other comprehensive income | 0.00 | 6,859.56 | 0.00 | -205.86 |
| Total comprehensive income | -35,158.38 | 110,860.85 | 32,438.83 | 34,011.86 |
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period | ||
| Caprolactam | Hainan Yisheng | Caprolactam | Hainan Yisheng | |
| Dividends from cooperative enterprise received this year | 6,729.98 | 0.00 | 5,414.50 | 5,250.00 |
(3) Main financial information about important associated enterprises
Currency unit: RMB 10,000
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period | ||||
| Yisheng Investment | Yisheng New Materials | China Zheshang Bank | Yisheng Investment | Yisheng New Materials | China Zheshang Bank | |
| Current assets | 786,301.63 | 317,543.60 | - | 771,555.31 | 270,105.44 | - |
| Non-current assets | 967,092.10 | 911,354.19 | - | 890,924.47 | 887,130.26 | - |
| Total assets | 1,753,393.73 | 1,228,897.79 | 262,193,000.00 | 1,662,479.78 | 1,157,235.71 | 228,672,300.00 |
| Current liabilities | 902,013.51 | 782,318.59 | - | 838,736.64 | 546,549.00 | - |
| Non-current liabilities | 87,726.34 | 160,576.27 | - | 108,767.35 | 305,592.48 | - |
| Total liabilities | 989,739.85 | 942,894.85 | 245,600,000.00 | 947,503.99 | 852,141.47 | 211,984,000.00 |
| Minority stockholders’ equity | 106,599.31 | 0.00 | 299,700.00 | 107,711.92 | 0.00 | 271,400.00 |
| Stockholders’ equity attributable to parent company | 657,054.57 | 286,002.94 | 16,293,300.00 | 607,263.87 | 305,094.23 | 16,416,900.00 |
| Net assets calculated by shareholding ratio | 197,116.37 | 140,141.44 | 573,524.16 | 182,179.16 | 149,496.17 | 577,874.88 |
| Adjusting events | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| - Goodwill | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| - Unrealized profit of internal transaction | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| - Others | 5,494.45 | -0.13 | -88,306.09 | 5,494.45 | 0.00 | -142,884.69 |
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period | ||||
| Yisheng Investment | Yisheng New Materials | China Zheshang Bank | Yisheng Investment | Yisheng New Materials | China Zheshang Bank | |
| Book value of equity investment in associated enterprise | 202,610.82 | 140,141.31 | 485,217.80 | 187,673.61 | 149,496.17 | 434,989.92 |
| Fair value of associated enterprise equity investment with public offer | -- | -- | 219,932.37 | -- | -- | 261,824.25 |
| Operating income | 2,974,782.89 | 3,370,855.32 | 6,108,500.00 | 2,940,215.69 | 748,476.21 | 5,447,100.00 |
| Net profit | 40,524.44 | -25,199.76 | 1,398,900.00 | -51,297.63 | 27.46 | 1,291,600.00 |
| Net profits of discontinuing operation | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other comprehensive income | 8,153.65 | -39.87 | 163,400.00 | 7.82 | - | 29,600.00 |
| Total comprehensive income | 48,678.09 | -25,239.62 | 1,562,300.00 | -51,289.81 | 27.46 | 1,321,200.00 |
| Dividends from associated enterprise received this year | 0.00 | 0.00 | 0.00 | 1,575.00 | 0.00 | 12,043.92 |
(4) Summary of financial information about unimportant associated enterprises
Currency unit: RMB 10,000
| Item | Ending balance/ amount in current period | Balance at end of the previous year/ amount in previous period |
| Associated enterprise: | ||
| Total book value of investment | 17,114.05 | 29,554.58 |
| Total (calculated by shareholding ratio) | ||
| - Net profit | 974.76 | 729.12 |
| - Other comprehensive income | -3.31 | 0.00 |
| - Total comprehensive income | 971.45 | 729.12 |
(5) Excess losses in cooperative enterprise or associated enterpriseBy the end of December 31, 2022, no excess loss takes place in the Company’s cooperativeenterprises and associated enterprises.
(6) Unconfirmed commitment related to cooperative enterprise investmentBy the end of December 31, 2022, there is no unconfirmed commitment related to cooperativeenterprise investment in the Company.
(7) Contingent liabilities related to cooperative enterprise or associated enterprise investmentBy the end of December 31, 2022, there is no contingent liability related to cooperativeenterprise or associated enterprise investment in the Company.
4. Equities in structural subjects excluded in the scope of consolidated financialstatementIn the Company, there is no equity in structural subject excluded in the scope of consolidatedfinancial statement.
IX. Risks related to financial instrumentsThe Company’s main financial instruments include monetary capital, financial assets measuredby fair value and whose changes included in current profits and losses, loan, accountsreceivable and accounts payable. For detail description of different financial instruments,please refer to related items in Note VI. Risks related to these financial instruments andcorresponding risk management policies taken by the Company to mitigate such risks aredescribed in detail as follows. The Company’s management shall manage and monitor theserisk exposures, so as to control above risks within a limited scope.Sensitivity analysis techniques are used by the Company to analyze probable influence ofrational and probable changes in risk variables on current profit and loss or stockholders' equity.Risk variables seldom change separately. Correlation between different variables will havegreat effect on the final influence amount of a risk variable. Therefore, the following contentsare stated upon the assumption that change of every variable takes place independently.(I) Risk management objective and policyThe Company’s risk management objective is to appropriately balance risk and income,minimize adverse impact of risk on the Company’s business performance, and maximizebenefits of its stockholders and other equity investors. Based on this risk management objective,the Company’s basic strategy for the risk management is to determine and analyze differentrisks, set up an appropriate risk tolerance baseline for risk management, supervise various risksin time and reliably, and control all risks within a limited scope.
1. risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss generated by fluctuations in exchange rate. TheCompany’s foreign exchange risk is mainly correlated with USD and BND. Except theCompany’s several subsidiaries that purchase and sell in USD, other main business activitiesof the Company shall be settled in RMB. On December 31, 2022, most assets and liabilities ofthe Company are of RMB balance (excluding the following assets or liabilities in USD andBND). Foreign exchange risk generated by assets and liabilities in such foreign currency mayinfluence the Company’s business performance.
| Item | Ending balance | Balance at the end of previous year | ||
| USD | BND | USD | BND | |
| Cash and cash equivalents | 581,686,909.13 | 8,184,622.74 | 547,247,784.70 | 27,826,214.79 |
| Accounts receivable | 817,630,221.72 | 54,599,853.33 | 840,996,762.49 | 22,453,475.80 |
| Other receivables | 8,028,333.81 | 3,631,010.18 | 6,236,866.48 | 4,584,383.96 |
| Long-term receivables | 518,788.46 | 0.00 | 518,788.46 | 0.00 |
| Short-term loans | 1,493,172,376.69 | 177,944,666.40 | 1,227,099,050.80 | 51,695,100.00 |
| Accounts payable | 1,116,259,414.13 | 4,823,807.10 | 1,154,481,981.82 | 10,642,043.33 |
| Other payables | 4,323,553.62 | 1,935,823.58 | 201,240.96 | 593,591.35 |
| Non-current liabilities due within one year | 251,125,031.52 | 1,334,939.91 | 119,955,234.38 | 1,212,324.09 |
| Long-term loans | 1,326,310,000.00 | 0.00 | 943,120,000.00 | 0.00 |
| Long-term payables | 1,897,602.19 | 0.00 | 4,086,552.93 | 0.00 |
| Lease liabilities | 0.00 | 81,899,040.00 | 0.00 | 80,360,757.05 |
The Company pays close attention to the influence of exchange rate fluctuations on its foreignexchange risk. In accordance with relevant provisions, the Company shall not be engaged inany transaction of foreign exchange derivatives for the purpose of speculation. Based onnormal production and management, all foreign exchange derivatives transactions shall dependon specific business, so as to avoid and prevent corresponding exchange rate or interest rate
risks.Foreign exchange risk sensitivity analysis:
The Company’s foreign exchange risk is mainly correlated with changes in the exchange ratebetween USD & BND and RMB. The following table shows sensitivity analysis upon theassumption of 1% exchange rate change between foreign currency and RMB related to theCompany. In the process of sensitivity analysis made by the management, 1% increase ordecrease is deemed as rational reflection of probable exchange rate change scope. On the basisof above assumption, under the circumstance that other variables are maintained unchanged,the influence of probable rational changes in exchange rate on current profit & loss andstockholders' equity (before tax) is shown as follows:
| Item | Fluctuation in Exchange Rate | Influence on Current Profit & Loss and Stockholders' Equity (Before Tax) | |
| Current Period | Previous Period | ||
| Monetary assets (USD) | Appreciation of RMB by 1% | 98,052,113.77 | 88,941,027.89 |
| Monetary liabilities (USD) | -292,031,805.33 | -219,894,326.49 | |
| Net influence | -193,979,691.55 | -130,953,298.60 | |
| Monetary assets (USD) | Depreciation of RMB by 1% | -98,052,113.77 | -88,941,027.89 |
| Monetary liabilities (USD) | 292,031,805.33 | 219,894,326.49 | |
| Net influence | 193,979,691.55 | 130,953,298.60 | |
| Monetary assets (BND) | Appreciation of RMB by 1% | 3,442,381.07 | 2,588,432.17 |
| Monetary liabilities (BND) | -13,887,508.83 | -6,817,545.53 | |
| Net influence | -10,445,127.77 | -4,229,113.35 | |
| Monetary assets (BND) | Depreciation of RMB by 1% | -3,442,381.07 | -2,588,432.17 |
| Monetary liabilities (BND) | 13,887,508.83 | 6,817,545.53 | |
| Net influence | 10,445,127.77 | 4,229,113.35 | |
(2) Interest rate risk – cash-flow change risk
The Company’s risk at fair value change of financial instruments caused by interest rate changemainly comes from: When the financial market interest rate is at a downward trend, theCompany cannot enjoy cost saving for fixed-rate loans that are brought by interest-ratereduction. On the contrary, cost will be increased for its loans at floating interest rates due to
rate hiking when the financial market interest rate is at an upward trend. The Company’s short-term loans and mid-and-long-term loans account for approximately 50% of its liabilities withinterest respectively. Moreover, interest is at a fixed rate for most short-term loans, and floatinginterest rates for mid-and-long-term loans. According to the Company’s management,therefore, the Company’s interest rate risk – fair value change risk is insignificant under thecurrent tendency of interest rate change in macroscopic financial market. At present, there isno interest rate hedging policy in the Company.Interest rate risk sensitivity analysis:
Interest rate risk sensitivity shall be analyzed upon the following assumption: influence ofmarket interest rate changes on interest income or expense of financial instruments at variableinterest rates. For short-term loans, sensitivity analysis shall be based on continuouslycirculating borrowing of such loan in an integral accounting year. During sensitivity analysisby the management, increase/ decrease in 50 base points will be deemed as reasonablereflection on the feasible range of interest rate change. On the basis of above assumption, underthe circumstance that other variables are maintained unchanged and that the interest rate isincreased/decreased by 50 base points, probably rational interest rate changes may have thefollowing influence on current profit & loss and stockholders' equity (before tax):
| Item | Interest rate change | Profit increase in current period | Profit decrease in current period |
| Short-term loans and mid-and-long-term liabilities at fixed interest rate | Increase in every 50 base points at an upward trend of interest rate | 206,308,392.66 | — |
| Short-term loans and mid-and-long-term liabilities at fixed interest rate | Decrease in every 50 base points at a downward trend of interest rate | — | 206,308,392.66 |
| Mid-and-long-term liabilities at floating interest rates | Increase in every 50 base points at an upward trend of interest rate | — | 102,767,945.78 |
| Mid-and-long-term liabilities at floating interest rates | Decrease in every 50 base points at a downward trend of interest rate | 102,767,945.78 | — |
(3) Other price risks
The Company’s investments classified into held-for-trading financial assets shall be measuredby fair value on the balance sheet. Therefore, the Company undertakes the risk of related assetsprice variation The Company has established an investment management department, in which
members are assigned to closely monitor the price variation of investment products. Inconsideration of the necessity of futures investment and relevant features of leverage risk, theCompany’s BOD authorized the president to set up a futures leading group, and authorized thisgroup to take charge of the Company’s futures. In addition, the Company also formulated thetrain of thought of futures, specified to establish a futures trading group in the InvestmentManagement Department (responsible for organization and implementation of transaction inaccordance with decisions made by the futures trading group), specified to establish a futuressettlement group in the Financial Management Department (responsible for such works asfunds management, accounting treatment, transaction confirmation and settlementmanagement), and specified to establish a futures supervision group in the AuditingDepartment (responsible for futures trading risk management & control and periodic reviewfor transaction behaviors). In order to strengthen its internal control over futures and toeffectively prevent and relieve probable risks in the transaction process, the Company alsoformulated the Futures Business Management System, requiring all futures businessparticipants to operate in strict accordance with related provisions and processes. All personnelparticipating into futures business in the Company have received special training, and have anadequate understanding of corresponding features and risks of futures involved. According tothe Company’s directors, therefore, its price risk has been mitigated already.
2. Credit risks
Credit risk refers to the risk of financial loss on the other party as one party of financialinstruments fails to perform its obligations. The Company’s credit risk mainly comes frombank deposit and receivables. In order to control above risk, the Company took the followingmeasures.In order to lower its credit risk, the Company established a group for determination of creditlimit and for credit approval. The policy of payment before delivery is adopted for unapprovedclients. In addition, the Company shall also review on every balance sheet date recovery ofevery single receivable, making sure to withdraw adequate bad debt reserves for unrecyclablefunds. According to the Company’s management, therefore, its credit risk has been reducedsubstantially.The Company’s working capital is saved in the bank at high credit rating. Therefore, itsworking capital is at relatively low credit risk.
3. Liquidity risks
According to the Company’s management, adequate cash and cash equivalents shall beprepared to monitor liquidity risk, so as to meet the Company’s operation needs and to lower
the influence from cash flow fluctuations. The Company’s management shall monitor the useof bank loans and make sure to abide by the loan agreement.The Company takes bank loan as the main source of funding. On December 31, 2022, theCompany’s available credit line is RMB 32.156 billion (RMB 26.901 billion on December 31,2021).Based on maturity of undiscounted residual contract obligations, the Company’s financialassets and financial liabilities are analyzed as follows:
| Item | Within 6 months | 7-12 months | 1-3 Years | Over three years |
| Non-derivative financial assets and liabilities: | ||||
| Notes receivable | 242,510,954.07 | 4,050,000.00 | 0.00 | 0.00 |
| Short-term loans | 27,161,545,541.06 | 10,714,287,797.03 | 0.00 | 0.00 |
| Notes payable | 458,995,000.00 | 356,174,321.16 | 0.00 | 0.00 |
| Long-term loans mature within one year | 2,626,499,359.55 | 2,652,122,607.25 | 0.00 | 0.00 |
| Long-term loans | 0.00 | 0.00 | 8,315,260,128.94 | 7,791,879,907.41 |
| Accounts receivable financing | 114,419,710.85 | 15,160,000.00 | 0.00 | 0.00 |
| Derivative financial assets and liabilities: | ||||
| Forward foreign exchange contract | 6,943,975.24 | -2,419,304.03 | 0.00 | 0.00 |
| Futures contract | 183,625,602.03 | 1,778,285.25 | 0.00 | 0.00 |
Note: For the maturity of the Company’s other undiscounted financial assets and liabilities,please refer to corresponding items in Note VI to the financial statement for details.(II) Transfer of financial assets
1. Financial assets transferred but not derecognized integrallyThis year, it is unnecessary for the Company to disclose financial assets transferred but noderecognized integrally.
2. Transferred financial assets derecognized integrally already but still involving theassignorIn current period, the Company accumulatively discounted an amount of RMB
4,632,637,495.03 bank acceptance bills (RMB 6,435,173,167.33 in 2021. Main risks (e.g.interest rate risk) and remunerations related to these bank acceptance bills have beentransferred to the bank. Therefore, the Company shall derecognize discounted immature bankacceptance bills. According to the cashing agreement, if the banker’s acceptance failed to becashed upon maturity, the bank has the right to ask the Company to pay off the unsettledbalance. Therefore, the Company continued to involve in cashing the banker’s acceptance. OnDecember 31, 2022, the cashed but not mature banker’s acceptance was RMB2,384,694,492.22 in total (RMB 3,504,143,937.29 on December 31, 2021).
X. Disclosure of fair value
1. Ending fair value of assets and liabilities measured at fair value
| Item | Ending Fair Value | |||
| The first-tier fair value measurement | The second-tier fair value measurement | The third-tier fair value measurement | Total | |
| I. Continuous fair value measurement | ||||
| (I) Held-for-trading financial assets | 251,021,508.33 | 0.00 | 0.00 | 251,021,508.33 |
| 1. Financial assets measured by fair value and whose changes included in current profits and losses | 251,021,508.33 | 0.00 | 0.00 | 251,021,508.33 |
| (1) Debt instrument investment | 0.00 | 0.00 | 0.00 | 0.00 |
| (2) Equity instrument investment | 0.00 | 0.00 | 0.00 | 0.00 |
| (3) Derivative financial assets | 251,021,508.33 | 0.00 | 0.00 | 251,021,508.33 |
| 2. Specified as financial assets measured by fair value and whose changes included in current profits and losses | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Debt instrument investment | 0.00 | 0.00 | 0.00 | 0.00 |
| (2) Equity instrument investment | 0.00 | 0.00 | 0.00 | 0.00 |
| (II) Derivative financial assets | 1,872,460.80 | 0.00 | 0.00 | 1,872,460.80 |
| (III) Held-for-trading financial liabilities | 21,353,552.33 | 0.00 | 0.00 | 21,353,552.33 |
| Wherein: Issued bonds held for trading | 0.00 | 0.00 | 0.00 | 0.00 |
| Item | Ending Fair Value | |||
| The first-tier fair value measurement | The second-tier fair value measurement | The third-tier fair value measurement | Total | |
| Derivative financial liabilities | 21,353,552.33 | 0.00 | 0.00 | 21,353,552.33 |
| Others | 0.00 | 0.00 | 0.00 | 0.00 |
| (IV) Derivative financial liabilities | 41,611,858.31 | 0.00 | 0.00 | 41,611,858.31 |
2. Determination basis for market price of continuous and non-continuous first-tier fairvalue measurement itemsThe Company’s continuous first-tier fair value measurement items mainly include itsderivative financial instruments with an active market that can obtain unadjusted offer of thesame assets or liabilities in the active market.
XI. Related parties and related-party transaction
1. Information about the Company’s parent company
| Name of parent company | Domicile | Nature of business | Registered capital | Shareholding ratio of the parent company in the Company (%) | Percentage of the parent company's voting rights in the Company (%) |
| Zhejiang Hengyi Group Co., Ltd. | Hangzhou | Investment and trade | RMB 51.8 million | 40.61 | 47.60 |
Note: The Company’s ultimate controller is Qiu Jianlin.
2. Information about the Company’s subsidiaries
For detail information, please refer to Notes VIII (1. Equities in Subsidiary).
3. Information about the Company’s cooperative and associated enterprises
| Name of cooperative enterprise or associated enterprise | Main place of business | Domicile | Nature of business | Shareholding ratio (%) | Accountant Arrangement Method for Investment in Cooperative Enterprise or Associated Enterprise | |
| Direct | Indirect | |||||
| Ningbo Jinhou Industry Investment Co., Ltd. | Hangzhou | Ningbo | Investment and consulting | 25.00 | 0.00 | Equity method |
| Dongzhan Shipping Co., Ltd. | Zhoushan | Zhoushan | Water transportation industry | 0.00 | 30.00 | Equity method |
For important cooperative and associated enterprises of the Company, please refer to NotesVIII (3. Equities in Cooperative or Associated Enterprise).
4. Information about other related parties
| Name of Other Related Party | Relationship between Other Related Parties and the Company |
| Zhejiang Hengyi Polyamide Co., Ltd. | A holding subsidiary of the ultimate parent company |
| Hangzhou Yichen Chemical Fiber Co., Ltd. | A holding subsidiary of the ultimate parent company |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | Associated company of ultimate parent company |
| Haining Yixin Logistics Co., Ltd. | Wholly-owned subsidiary of the associated enterprise |
| Zhejiang Rongtong Chemical Fiber New Materials Co., Ltd. | Holding subsidiary of the associated enterprise |
| Yisheng Dahua Petrochemical Co., Ltd. | Holding subsidiary of the associated enterprise |
| Hong Kong Yisheng Dahua Co., Ltd. | Holding subsidiary of the associated enterprise |
| Hong Kong Yisheng Co., Ltd. | Wholly-owned subsidiary of the joint venture |
| Zhejiang Rongyi Trading Co., Ltd. | Wholly-owned subsidiary of the associated enterprise |
| Hangzhou Bayi Energy Co., Ltd. | Holding subsidiary of the joint venture |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Joint venture of ultimate parent company |
| Zhejiang Hengyi Energy Co., Ltd. | A holding subsidiary of the ultimate parent company |
| Xin Heng Rong (HK) Limited | Wholly-owned subsidiary of the joint venture |
5. Information about related-party transaction
(1) Related-party transaction of commodity purchase & sale and labor provision & reception
① Information about commodity purchase / labor reception
| Related party | Contents of related-party transactions | Amount incurred in current period | Amount incurred in previous period |
| Hainan Yisheng Petrochemical Co., Ltd. | Procurement of goods | 16,318,689.67 | 162,724,539.89 |
| Yisheng Dahua Petrochemical Co., Ltd. | Procurement of goods | 2,690,904,003.22 | 3,736,570,569.02 |
| Yisheng Dahua Petrochemical Co., Ltd. | Labor reception | 504.72 | 0.00 |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Procurement of goods | 329,558,085.16 | 395,843,216.27 |
| Zhejiang Hengyi Polyamide Co., Ltd. | Procurement of goods | 24,605,115.88 | 0.00 |
| Hangzhou Yichen Chemical Fiber Co., Ltd. | Procurement of goods | 10,048,586.90 | 16,168,663.69 |
| Zhejiang Yisheng New Materials Co., Ltd. | Procurement of goods | 15,096,435,470.51 | 2,118,416,389.92 |
| Haining Yixin Logistics Co., Ltd. | Labor reception | 0.00 | 8,924,840.50 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | Procurement of goods | 6,987,350,219.75 | 4,398,340,883.38 |
| Zhejiang Rongyi Trading Co., Ltd. | Procurement of goods | 671,415,929.18 | 0.00 |
| Hangzhou Bayi Energy Co., Ltd. | Procurement of goods | 169,237,789.57 | 0.00 |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Procurement of goods | 95,751.42 | 0.00 |
② Information about commodity sale/ labor provision
| Related party | Contents of related-party transactions | Amount incurred in current period | Amount incurred in previous period |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Sales of goods | 950,423,022.45 | 1,335,024,533.02 |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Labor provision | 29,951,315.01 | 41,807,660.81 |
| Hainan Yisheng Petrochemical Co., Ltd. | Sales of goods | 2,380,871,191.28 | 1,125,429,557.32 |
| Related party | Contents of related-party transactions | Amount incurred in current period | Amount incurred in previous period |
| Hainan Yisheng Petrochemical Co., Ltd. | Labor provision | 6,389,568.19 | 55,779.82 |
| Zhejiang Hengyi Polyamide Co., Ltd. | Sales of goods | 13,117,614.46 | 4,266,819.10 |
| Zhejiang Hengyi Polyamide Co., Ltd. | Labor provision | 7,565,474.40 | 7,442,086.17 |
| Yisheng Dahua Petrochemical Co., Ltd. | Labor provision | 488,210.40 | 21,702.83 |
| Yisheng Dahua Petrochemical Co., Ltd. | Sales of goods | 71,433,479.86 | 85,171,783.96 |
| Hangzhou Yichen Chemical Fiber Co., Ltd. | Labor provision | 21,485,237.51 | 22,936,669.38 |
| Hangzhou Yichen Chemical Fiber Co., Ltd. | Sales of goods | 4,807,243.81 | 3,011,757.35 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | Sales of goods | 403,795,638.58 | 242,895,119.50 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | Labor provision | 93,638,375.93 | 45,497,278.60 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | Trademark use license fee | 8,905,990.74 | 5,728,849.96 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | Patent royalty | 747,910.00 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | Sales of goods | 2,755,482,514.25 | 716,350,522.64 |
| Zhejiang Yisheng New Materials Co., Ltd. | Labor provision | 62,385,809.22 | 10,810,130.56 |
| Zhejiang Rongtong Chemical Fiber New Materials Co., Ltd. | Sales of goods | -212,389.39 | 0.00 |
| Hangzhou Bayi Energy Co., Ltd. | Sales of goods | 897,671,146.13 | 0.00 |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Sales of goods | 3,339,460.36 | 0.00 |
(2) Information about related trusteeship management/ mandatory managementThe Company as trustee
| Name of the Client | Name of the Trustee | Type of Entrusted Assets | Starting Date of Entrustment | Custody fee recognized in current period |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | Zhejiang Hengyi Petrochemical Co., Ltd. | Entrustment of operation | July 25, 2018 | 1,698,113.19 |
Note: Zhejiang Hengyi Petrochemical Co., Ltd. (a subsidiary of the Company) is entrusted toprovide management advisory services to the production and operating activities of ShaoxingKeqiao Hengming Chemical Fiber Co., Ltd. However, the former will not undertake anybusiness risk of the client. The termination date of entrust is the date of completion when theclient is purchased by the Company or the Company’s non-related parties.
(3) Information about related-party lease
① The Company as leasee
| Name of lessor | Category of leased assets | Rental expenses recognized in current period | Rental expenses confirmed in the previous year |
| Hangzhou Yichen Chemical Fiber Co., Ltd. | Warehouse | 661,447.12 | 196,243.04 |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Property | 0.00 | 69,314.29 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | Property | 12,495.41 | 0.00 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. (Note) | Property | 1,280,000.00 | 0.00 |
Note: On January 1, 2021, the Company signed a house-leasing contract with Shaoxing KeqiaoHengming Chemical Fiber Co., Ltd., with the lease term from January 1, 2021 to December31, 2023 and annual rentals of RMB 1.28 million.
② The Company as the leaser
| Name of the lessee | Category of leased assets | Rental expenses recognized in current period | Rental expenses confirmed in the previous year |
| Haining Hengqi Environmental Protection Technology Co., Ltd. | Premises | 596,003.52 | 0.00 |
| Name of the lessee | Category of leased assets | Rental expenses recognized in current period | Rental expenses confirmed in the previous year |
| Zhejiang Hengyi Polyamide Co., Ltd. | Property | 4,000.00 | 0.00 |
| Hainan Yisheng Petrochemical Co., Ltd. | Property | 1,419,145.21 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | Property | 1,015,495.53 | 0.00 |
(4) Information about related-party guarantee
① The Company as guarantor
| Warrantee | Amount guaranteed (RMB 10,000) | Starting date of guarantee | Maturity date of guarantee | Guarantee finished or not |
| Hainan Yisheng Petrochemical Co., Ltd. | 35,114.17 | July 5, 2022 | April 24, 2023 | No |
② The Company as the warrantee
| Guarantor | Warrantee | Amount (RMB 10,000) | Borrowing date | Repayment date | Mortgage provided by the Company or not | Guarantee finished or not |
| Zhejiang Hengyi Group Co., Ltd. | Haining Hengyi New Materials Co., Ltd. | 90,000.00 | 2022-5-13 | 2023-12-20 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hangzhou Yijing Chemical Fiber Co., Ltd. | 8,800.00 | 2022-7-1 | 2023-6-30 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hangzhou Yijing Chemical Fiber Co., Ltd. | 46,000.00 | 2022-6-29 | 2023-9-6 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Petrochemical Co., Ltd. | 50,000.00 | 2022-4-22 | 2023-12-15 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Petrochemical Co., Ltd. | 9,996.00 | 2022-12-15 | 2023-6-15 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Industries Sdn. Bhd. | 105,000.00 | 2022-3-18 | 2023-7-15 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Industries Sdn. Bhd. | $30,683.37 | 2022-8-17 | 2023-6-7 | No | No |
| Zhejiang Hengyi Group Co., Ltd. and Qiu Jianlin | Hengyi Industries Sdn. Bhd. | 334,560.00 | 2018-8-23 | 2030-8-22 | No | No |
| Zhejiang Hengyi Group Co., Ltd. and Qiu Jianlin | Hengyi Industries Sdn. Bhd. | $87,312.00 | 2018-8-23 | 2030-8-22 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Industry International Co., Ltd. | $9,031.20 | 2022-9-26 | 2023-5-8 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Jiaxing Yipeng Chemical Fiber Co., Ltd. | 30,000.00 | 2022-8-26 | 2023-9-2 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Ningbo Hengyi Trading Co., Ltd. | 41,985.00 | 2022-9-2 | 2023-11-30 | No | No |
| Guarantor | Warrantee | Amount (RMB 10,000) | Borrowing date | Repayment date | Mortgage provided by the Company or not | Guarantee finished or not |
| Zhejiang Hengyi Group Co., Ltd. | Suqian Yida New Materials Co., Ltd. | 5,000.00 | 2022-3-10 | 2023-3-6 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Taicang Yifeng Chemical Fiber Co., Ltd. | 48,810.00 | 2022-7-18 | 2023-12-7 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Taicang Yifeng Chemical Fiber Co., Ltd. | 10,000.00 | 2022-9-14 | 2023-9-26 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Hong Kong Tianyi International Holding Co., Ltd. | $1,843.00 | 2022-6-28 | 2024-6-27 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi High-Tech Materials Co., Ltd. | 66,908.00 | 2021-11-11 | 2024-11-10 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi High-Tech Materials Co., Ltd. | 10,000.00 | 2022-11-18 | 2023-11-15 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi Polymer Co., Ltd. | 10,000.00 | 2022-8-24 | 2023-8-24 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi Petrochemical Co., Ltd. | 40,000.00 | 2022-6-8 | 2023-7-26 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi Petrochemical Co., Ltd. | 1,000.00 | 2015-12-30 | 2023-12-29 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi Petrochemical Co., Ltd. | 130,200.00 | 2022-8-22 | 2023-10-8 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Shuangtu New Materials Co., Ltd. | 10,000.00 | 2022-2-11 | 2023-11-18 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Shuangtu New Materials Co., Ltd. | 16,975.00 | 2022-9-6 | 2023-9-6 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Yisheng Petrochemical Co., Ltd. | 347,750.00 | 2021-2-24 | 2025-11-9 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Yisheng Petrochemical Co., Ltd. | 12,579.00 | 2022-9-27 | 2023-6-12 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Yisheng Petrochemical Co., Ltd. | $9,809.01 | 2022-3-31 | 2023-4-27 | No | No |
| Zhejiang Hengyi Group Co., Ltd. | Haining Hengyi New Materials Co., Ltd. | 190,284.69 | 2020-1-14 | 2024-12-30 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. | Hangzhou Yijing Chemical Fiber Co., Ltd. | 24,050.00 | 2022-4-29 | 2025-8-10 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. | Hengyi Industries Sdn. Bhd. | $400.00 | 2019-6-25 | 2024-9-25 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. | Jiaxing Yipeng Chemical Fiber Co., Ltd. | 88,433.33 | 2022-4-15 | 2026-11-11 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Hengyi High-Tech Materials Co., Ltd. | 67,225.45 | 2021-3-8 | 2025-2-22 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. | Zhejiang Shuangtu New Materials Co., Ltd. | 35,200.00 | 2022-1-28 | 2025-2-20 | Yes | No |
| Guarantor | Warrantee | Amount (RMB 10,000) | Borrowing date | Repayment date | Mortgage provided by the Company or not | Guarantee finished or not |
| Zhejiang Hengyi Group Co., Ltd. and Shaoxing Shengong Machinery Manufacturing Co., Ltd. | Shaoxing Shengong Packaging Co., Ltd. | 5,800.00 | 2022-11-9 | 2023-12-7 | Yes | No |
| Zhejiang Hengyi Group Co., Ltd. and Zhejiang Southeast Space Frame Group Co., Ltd. | Zhejiang Hengyi Petrochemical Co., Ltd. | 5,000.00 | 2022-8-23 | 2023-8-23 | No | No |
| Zhejiang Hengyi Group Co., Ltd. and Zhejiang Southeast Space Frame Group Co., Ltd. | Zhejiang Hengyi Petrochemical Co., Ltd. | 14,992.50 | 2022-11-15 | 2023-5-25 | No | No |
(5) Related-party lending
| Related party | Lending amount | Start date | Maturity date | Notes |
| Borrowing: | ||||
| Zhejiang Hengyi Group Co., Ltd. | 4,133,189,471.00 | -- | -- | Among temporary working capital supplemented by Hengyi Group to the Company, remaining RMB 7,355,322.62 has not been returned. |
| Lending: | ||||
| Zhejiang Yisheng New Materials Co., Ltd. | 1,078,000,000.00 | 2021/1/5 | 2022/12/20 | Entrusted loan, lending rate: 4.785% |
| Zhejiang Yisheng New Materials Co., Ltd. | 988,000,000.00 | 2022/1/27 | 2023/12/30 | Entrusted loan, lending rate: 4.785% |
(6) Information about related-party assets transfer and debt restructuring
| Related party | Contents of related-party transactions | Amount incurred in current period | Amount incurred in previous period |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | Transferred assets | 0.00 | 25,530.26 |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | Transferred assets | 0.00 | 187,609.38 |
| Zhejiang Hengyi Energy Co., Ltd. | Asset transfer | 3,000,000.00 | 0.00 |
(7) Remunerations for key management personnel
| Item | Amount incurred in current period | Amount incurred in previous period |
| Remunerations for key management personnel | RMB 12.4958 million | RMB 12.4958 million |
(8) Other related-party transactions
Through paper transaction with Hong Kong Yisheng Co., Ltd. and Hong Kong Yisheng DahuaCo., Ltd., the Company realized total losses of USD 9,302,200.00 and USD 9,302,200.00 incurrent period.Through paper transaction with Xin Heng Rong (HK) Limited, the Company realized the totalincome of USD 16,438,510.00in current period.By the end of December 31, 2022, the Company’s and its subsidiaries’ balance of deposits isRMB 3,679,800 in its related party, namely China Zheshang Bank Co., Ltd. The amount ofcommercial draft discounted but immature at the end of the term is RMB 51 million.
6. Related parties’ receivables and payables
(1) Receivables
| Project name | Ending balance | Ending balance of previous year | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | |
| Notes receivable: | ||||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 527,200.00 | 0.00 | 2,713,741.00 | 0.00 |
| Total | 527,200.00 | 0.00 | 2,713,741.00 | 0.00 |
| Accounts receivable: | ||||
| Hainan Yisheng Petrochemical Co., Ltd. | 140,711,918.33 | 0.00 | 226,858,886.34 | 0.00 |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 49,142.00 | 0.00 | 6,917,468.74 | 0.00 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | 0.00 | 0.00 | 12,828,512.13 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | 1,106,890.13 | 0.00 | 8,759,499.90 | 0.00 |
| Total | 141,867,950.46 | 0.00 | 255,364,367.11 | 0.00 |
| Advance payment: | ||||
| Project name | Ending balance | Ending balance of previous year | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | |
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 5,525.28 | 0.00 | 10,064.34 | 0.00 |
| Zhejiang Rongtong Chemical Fiber New Materials Co., Ltd. | 0.00 | 0.00 | 15,306,150.00 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | 0.00 | 0.00 | 141,341,842.00 | 0.00 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | 0.00 | 0.00 | 821.27 | 0.00 |
| Total | 5,525.28 | 0.00 | 156,658,877.61 | 0.00 |
| Dividends receivable: | ||||
| Dalian Yisheng Investment Co., Ltd. | 0.00 | 0.00 | 79,500,000.00 | 0.00 |
| Hainan Yisheng Petrochemical Co., Ltd. | 0.00 | 0.00 | 265,000,000.00 | 0.00 |
| Total | 0.00 | 0.00 | 344,500,000.00 | 0.00 |
| Other current assets: | ||||
| Zhejiang Yisheng New Materials Co., Ltd. | 989,433,904.99 | 0.00 | 1,079,576,125.83 | 0.00 |
| Total | 989,433,904.99 | 0.00 | 1,079,576,125.83 | 0.00 |
(2) Payables
| Project name | Ending balance | Ending balance of previous year |
| Accounts payable: | ||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 9,887,234.54 | 32,465,816.85 |
| Hangzhou Yichen Chemical Fiber Co., Ltd. | 0.00 | 569,077.20 |
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | 3,705,778.85 | 32,629,365.25 |
| Project name | Ending balance | Ending balance of previous year |
| Hong Kong Yisheng Dahua Co., Ltd. | 0.00 | 28,498,358.89 |
| Hong Kong Yisheng Co., Ltd. | 0.00 | 28,498,358.89 |
| Zhejiang Yisheng New Materials Co., Ltd. | 6,305,312.50 | 0.00 |
| Hangzhou Bayi Energy Co., Ltd. | 1,065,580.38 | 0.00 |
| Total | 20,963,906.27 | 122,660,977.08 |
| Contractual liabilities and other current liabilities: | ||
| Zhejiang Baling Hengyi Caprolactam Co., Ltd. | 0.00 | 64,356,669.84 |
| Hangzhou Bayi Energy Co., Ltd. | 493,849.41 | 0.00 |
| Zhejiang Yisheng New Materials Co., Ltd. | 52,067,253.14 | 14,170,289.00 |
| Total | 52,561,102.55 | 78,526,958.84 |
| Other payables: | ||
| Zhejiang Hengyi Group Co., Ltd. | 7,355,322.62 | 0.00 |
| Total | 7,355,322.62 | 0.00 |
| Non-current liabilities mature within one year: | ||
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | 1,119,181.06 | 1,174,311.93 |
| Total | 1,119,181.06 | 1,174,311.93 |
| Lease liabilities: | ||
| Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. | 0.00 | 1,011,507.59 |
| Total | 0.00 | 1,011,507.59 |
XII. Commitments and Contingencies
1. Contingencies
(1) Contingent liabilities formed by pending action arbitration and its financial influence
① Criminal case of Wang XX and related civil action cases in Zhejiang ShuangtuSince October 21, 2018, Zhejiang Shuangtu has received the notice from more than ten clients(including Haiyan Yixiao Knitting New Materials Co., Ltd.). After the payment, the clientsnever received goods delivered by Zhejiang Shuangtu, and could not get contact with WangXX. For the reason of the failure of Zhejiang Shuangtu to deliver after their payment, HaiyanYixiao Knitting New Materials Co., Ltd., Tonglu Yueheng Knitting Clothing Co., Ltd. andYiwu Zijing Clothing Co., Ltd. submitted a case to the court.According to its self-inspection, Zhejiang Shuangtu has already received the payment of aboveclients for goods, and finished related activities (including delivery and issuance of salesinvoice) as per the sales order. All clients failing to receive the goods were handled by WangXX, a salesman in Zhejiang Shuangtu. Then, the clients could not get contact with Wang XX.On November 11, 2018, Zhejiang Shuangtu reported the case to the criminal investigationbrigade subordinate to Dajiangdong Industry Cluster District Suboffice of Hangzhou PublicSecurity Bureau. The case has been accepted already. On April 13, 2019, Zhejiang Shuangtureceived a notice from the public security organ: Wang XX was arrested.Both the three civil cases related to Wang XX and the contract dispute case with Haiyan YixiaoKnitting New Materials Co., Ltd. were opened to a court session on December 3, 2018. Thecourt has not made a judgment yet. As Wang XX’s criminal case is involved, Tonglu YuehengKnitting Clothing Co., Ltd. positively withdrew the contract dispute case, and would decidehow to solve after the criminal case was handled. For the contract dispute case with YiwuZijing Clothing Co., Ltd., Zhejiang Shuangtu has submitted corresponding answer brief andevidence materials to the court. The court will open a court session later. For the contractdispute case with, Haiyan Yixiao Knitting New Materials Co., Ltd., the court froze RMB300,000 deposits of Zhejiang Shuangtu.In 2018, based on the information in the client’s letter of notice (including quantity of goodsnot received), Zhejiang Shuangtu deducted an amount of RMB 26,201,814.47 from itsrevenues, recorded corresponding freight cost (i.e. RMB 24,105,503.18) into “otherreceivables – Wang XX”, and withdrew bad debt losses in full amount. Based on the receivingtime and amount, Zhejiang Shuangtu also withdrew an amount of RMB 433,932.50 accruedliabilities by bank lending rates in corresponding period.On May 17, 2019, Wang XX was arrested by law. On January 22, 2020, the People'sProcuratorate of Hangzhou Xiaoshan District initiated a public prosecution to the People's
Court of Hangzhou Xiaoshan District on the charge of post occupation and contract swindling.The case was accepted. Due to epidemic and other reasons, the court has not determined thedate yet. According to the amount involving duty-related crime as found in the indictment bythe People's Procuratorate of Hangzhou Xiaoshan District, Zhejiang Shuangtu deducted anamount of RMB 2,414,257.32 from its revenues, and recorded corresponding freight cost (i.e.RMB 2,138,041.91) into “other receivables – Wang XX”, and confirmed anticipated losses infull amount. Based on the receiving time and amount, Zhejiang Shuangtu also withdrew anamount of RMB 1,573,136.66 accrued liabilities by bank lending rates in corresponding period.According to the Agreement on Stock Issuance for Assets Purchase and subsequent agreementssigned by and between the Company and the former shareholders of Zhejiang Shuangtu(namely Fulida Group and Xinghui Chemical Fiber Group Co., Ltd.), Fulida Group andXinghui Chemical Fiber Group Co., Ltd. promise and agree to assume joint and severalliabilities to the Company and Zhejiang Shuangtu with respect to all losses on ZhejiangShuangtu and the Company caused by the disputed case prior to December 7, 2018 (included).Therefore, above event will have no significant influence on the Company and ZhejiangShuangtu.On July 20, 2020, the People’s Court of Hangzhou Xiaoshan District issued a paper of sentenceto judge: (1) The Defendant Wang XX is sentenced to jail for 13 years for duty encroachmentand for eleven (11) years and six (6) months for contract swindling, and also fined for RMB150,000. Upon a combined punishment, Wang XX is sentenced to 18-year imprisonment, andfined RMB 150,000. (2) The Defendant Wang XX is ordered to return and compensate foreconomic losses to related units and the victim.After the criminal case of Wang XX was judged, the cases deemed as duty encroachment ofrelated victims were also heard, judged and/or compromised. By the end of the issue date ofthis report, 11 out of 13 victims from duty encroachment affirmed by the court have beenjudged, compromised and settled. A total amount of RMB 936,800 is involved in other twounsettled cases.For the reason of compromise with some victims in 2021 and 2022, the actual repayment ofZhejiang Shuangtu is smaller than the amount of money involved in the case as affirmed bythe court. Based on the actual expenditures to the settled case, the Company has reduced RMB8,555,800 and RMB 54,100 compensation receivable to the two former shareholders ofZhejiang Shuangtu, namely Fulida Group and Xinghui Chemical Fiber Group Co., Ltd.respectively.
② Arbitration Case for EPC Contract Dispute with COOEC International Co., Limited
Hengyi Industries Sdn. Bhd. (hereinafter referred to as Hengyi Brunei or Respondent), asubsidiary of the Company, has received China International Economic and Trade ArbitrationCommission's Notice on Defense of EPC Contract Dispute Case No. P20220470. COOECInternational Co., Limited (hereinafter referred to as CNOOC International or Applicant) hassubmitted an arbitration application to China International Economic and Trade ArbitrationCommission for disputes arising from the settlement of Hengyi (Brunei) PMB PetrochemicalProject Single Point Mooring and Submarine Pipeline EPC signed with Hengyi Brunei. Themain arbitration requests of CNOOC International Company involved the total amount ofRMB 116,758,196.47 from twelve claims, including payment or refund of project progresspayment, quality assurance deposit, costs incurred due to contract changes, as well as the lossesand corresponding interest and other expenses caused by the respondent during theconstruction. The Company categorized and summarized the above arbitration requests andprovided defense opinions. In addition, the Company proposes arbitration counterclaims, suchas bearing corresponding compensation for delayed construction period losses due to theserious delay in the manufacturing, delivery and installation progress of key equipment byCNOOC, resulting in the completion of the project far behind the original contract date. Thecase was heard at Zhejiang Branch of China International Economic and Trade ArbitrationCommission on July 18, 2022 and March 23, 2023, respectively. As of the disclosure date ofthis report, the arbitration case has not yet been adjudicated.
③Dispute over the sales contract with Hainan Guomao Industrial Co., Ltd.On December 28, 2022, Zhejiang Hengyi Petrochemical Sales Co., Ltd. (hereinafter referredto as Hengyi Sales or Defendant), a subsidiary of the Company, received the subpoena of No.(2022) Zhejiang 0109 MC 19111 from the People’s Court of Hangzhou Xiaoshan District:
Hainan Guomao Industrial Co., Ltd. (hereinafter referred to as Hainan Guomao or plaintiff)has filed a lawsuit to terminate five contracts with Hengyi Sales, requiring Hengyi Sales toreturn the payment of RMB 29,468,547.72 paid by Hainan Guomao, pay the interest calculatedfrom the plaintiff's payment date to the actual performance date based on the above amountaccording to three times of the market interest rate for one-year loans publicized by NationalInterbank Funding Center during the same period and bear the litigation costs of the case. InFebruary 2023, Zhejiang Yilanwen Technology Co., Ltd. was added as the third party to thecase. On March 27, 2023, the People’s Court of Hangzhou Xiaoshan District tried the case. Asof the disclosure date of this report, the case is still in the trial stage.
(2) By the end of December 31, 2022, the Company’s debt guarantee is shown as follows:
Currency unit: RMB 10,000
| Guarantor | Warrantee | Guaranty Style | Amount Guaranteed | Maturity date of guarantee |
| Hengyi Petrochemical Co., Ltd. | Hainan Yisheng Petrochemical Co., Ltd. | Credit guarantee | 35,114.17 | 2023-4-24 |
XIII. Events after the balance sheet dateBy the end of the issue date of this financial report, the Company has no events after the balancesheet date to be disclosed this year.
XIV. Other important events
1. Correction to prior period errors
There were no prior period error corrections that need to be disclosed by the Company duringthis year.
2. Segment information
Segmental management is not implemented in the Company. Therefore, there is no reportingsegment.
3. Other important events
There were no other important events that need to be disclosed by the Company during thisyear.
XV. Notes to main items in the company’s financial statements
1. Other receivables
| Item | Ending balance | Ending balance of previous year |
| Interests receivable | 0.00 | 0.00 |
| Dividends receivable | 425,000,000.00 | 1,169,772,962.00 |
| Other receivables | 5,601,278,001.08 | 3,571,633,385.78 |
| Total | 6,026,278,001.08 | 4,741,406,347.78 |
(1) Dividends receivable
| Project (or Invested Unit) | Ending balance | Ending balance of previous year |
| Zhejiang Hengyi Petrochemical Co., Ltd. | 425,000,000.00 | 1,079,772,962.00 |
| Project (or Invested Unit) | Ending balance | Ending balance of previous year |
| Jiaxing Yipeng Chemical Fiber Co., Ltd. | 0.00 | 15,000,000.00 |
| Taicang Yifeng Chemical Fiber Co., Ltd. | 0.00 | 35,000,000.00 |
| Zhejiang Shuangtu New Materials Co., Ltd. | 0.00 | 40,000,000.00 |
| Subtotal | 425,000,000.00 | 1,169,772,962.00 |
| Minus: Bad debt provision | 0.00 | 0.00 |
| Total | 425,000,000.00 | 1,169,772,962.00 |
(2) Other receivables
① Disclosure by aging
| Aging | Ending balance | Ending balance of previous year |
| Within 1 year | 2,093,805,561.80 | 19,585,865.33 |
| 1-2 years | 200,000.00 | 1,260,741,815.63 |
| 2-3 years | 1,255,406,748.63 | 2,291,315,704.82 |
| Over three years | 2,251,878,190.65 | 2,500.00 |
| Subtotal | 5,601,290,501.08 | 3,571,645,885.78 |
| Minus: Bad debt provision | 12,500.00 | 12,500.00 |
| Total | 5,601,278,001.08 | 3,571,633,385.78 |
② Classification based on nature of fund
| Nature of account | Ending balance | Ending balance of previous year |
| Related party funds within the scope of consolidation | 5,601,088,001.08 | 3,571,443,385.78 |
| Portfolio of deposits and security | 202,500.00 | 202,500.00 |
| Subtotal | 5,601,290,501.08 | 3,571,645,885.78 |
| Minus: Bad debt provision | 12,500.00 | 12,500.00 |
| Total | 5,601,278,001.08 | 3,571,633,385.78 |
③ Accrual of bad debt reserves
| Bad debt provision | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss of the future twelve months | Expected credit loss over the lifetime (no credit impairment has occurred) | Expected credit loss over the lifetime (credit impairment occurred has occurred) | ||
| Ending balance of previous year | 10,000.00 | 0.00 | 2,500.00 | 12,500.00 |
| Book balance of other receivables at the end of the previous year: | ||||
| - Transferred to Stage 2 | 0.00 | -- | -- | 0.00 |
| - Transferred to Stage 3 | 0.00 | 0.00 | -- | 0.00 |
| - Transferred back to Stage 2 | -- | -- | 0.00 | 0.00 |
| - Transferred back to Stage 1 | -- | 0.00 | 0.00 | 0.00 |
| Provision in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Withdrawal or Roll-back in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Write-off or cancellation after verification in current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Other changes | 0.00 | 0.00 | 0.00 | 0.00 |
| Ending balance | 10,000.00 | 0.00 | 2,500.00 | 12,500.00 |
④ Situation of bad debt reserves
| Category | Ending balance of previous year | Amount of changes in current period | Ending balance | ||
| Provision | Amount recovered or written back | Resell or write off | |||
| Related party funds within the scope of consolidation | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Receivables and payables such as advances from entities beyond the scope of consolidation | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Combination of tax refunds receivable and other government subsidies | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Portfolio of deposits and security | 12,500.00 | 0.00 | 0.00 | 0.00 | 12,500.00 |
| Employee loan and petty cash | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other groups | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 12,500.00 | 0.00 | 0.00 | 0.00 | 12,500.00 |
⑤ Other receivables with top five ending balance collected by debtor
| Name of organization | Nature of account | Ending balance | Aging | Proportions in the total other accounts receivable at the year ended (%) | Bad debt provision Ending balance |
| Zhejiang Hengyi Petrochemical Co., Ltd. | Related receivables and payables | 5,398,210,001.08 | Within 1 year 2-3 years Over three years | 96.37 | 0.00 |
| Jiaxing Yipeng Chemical Fiber Co., Ltd. | Related receivables and payables | 101,700,000.00 | Over three years | 1.82 | 0.00 |
| Suqian Yida New Materials Co., Ltd. | Related receivables and payables | 101,178,000.00 | Within 1 year 2-3 years | 1.81 | 0.00 |
| Name of organization | Nature of account | Ending balance | Aging | Proportions in the total other accounts receivable at the year ended (%) | Bad debt provision Ending balance |
| Total | -- | 5,601,088,001.08 | -- | 100.00 | 0.00 |
2. Long-term equity investment
(1) Classification of long-term equity investment
| Item | Ending balance | Ending balance of previous year | ||||
| Book balance | Reserve | Book value | Book balance | Reserve | Book value | |
| Investment in subsidiaries | 15,931,768,517.98 | 0.00 | 15,931,768,517.98 | 15,917,768,517.98 | 0.00 | 15,917,768,517.98 |
| Investments in joint ventures and associates | 14,254,625.24 | 0.00 | 14,254,625.24 | 14,291,804.11 | 0.00 | 14,291,804.11 |
| Total | 15,946,023,143.22 | 0.00 | 15,946,023,143.22 | 15,932,060,322.09 | 0.00 | 15,932,060,322.09 |
(2) Investment in subsidiaries
| Investee | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | Provision for impairment reserves in current period | Ending Balance of impairment reserves |
| Zhejiang Hengyi Petrochemical Co., Ltd. | 9,372,870,750.00 | 10,000,000.00 | 0.00 | 9,382,870,750.00 | 0.00 | 0.00 |
| Zhejiang Hengyi International Trade Co., Ltd. | 300,000,000.00 | 0.00 | 0.00 | 300,000,000.00 | 0.00 | 0.00 |
| Zhejiang Hengyi Engineering Management Co., Ltd. | 196,000,000.00 | 4,000,000.00 | 0.00 | 200,000,000.00 | 0.00 | 0.00 |
| Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. | 160,000,000.00 | 0.00 | 0.00 | 160,000,000.00 | 0.00 | 0.00 |
| Zhejiang Shuangtu New Materials Co., Ltd. | 2,104,999,978.20 | 0.00 | 0.00 | 2,104,999,978.20 | 0.00 | 0.00 |
| Jiaxing Yipeng Chemical Fiber Co., Ltd. | 2,886,198,482.98 | 0.00 | 0.00 | 2,886,198,482.98 | 0.00 | 0.00 |
| Investee | Ending balance of previous year | Increase in current period | Decrease in current period | Ending balance | Provision for impairment reserves in current period | Ending Balance of impairment reserves |
| Taicang Yifeng Chemical Fiber Co., Ltd. | 897,699,306.80 | 0.00 | 0.00 | 897,699,306.80 | 0.00 | 0.00 |
| Total | 15,917,768,517.98 | 14,000,000.00 | 0.00 | 15,931,768,517.98 | 0.00 | 0.00 |
(3) Investment in associated and cooperative enterprises
| Investee | Ending balance of previous year | Changes of increase or decrease in current period | ||||
| Additional investment | Negative investment | Profits and losses on investments confirmed by equity method | Other comprehensive income adjustment | Other Equity Changes | ||
| Associated enterprises | ||||||
| Ningbo Jinhou Industry Investment Co., Ltd. | 14,291,804.11 | 0.00 | 0.00 | -37,178.87 | 0.00 | 0.00 |
(Continued)
| Investee | Changes of increase or decrease in current period | Ending balance | Ending balance of impairment reserves | ||
| Cash dividends or profits declared to distribute | Provisions for impairment reserves | Others | |||
| Associated enterprises | |||||
| Ningbo Jinhou Industry Investment Co., Ltd. | 0.00 | 0.00 | 0.00 | 14,254,625.24 | 0.00 |
3. Operating income and operating cost
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 1,437,239,380.54 | 1,413,310,442.21 | 3,707,241,002.32 | 3,572,734,835.29 |
| Other businesses | 0.00 | 0.00 | 188,679.25 | 0.00 |
| Total | 1,437,239,380.54 | 1,413,310,442.21 | 3,707,429,681.57 | 3,572,734,835.29 |
4. Investment income
| Item | Amount incurred in current period | Amount incurred in previous period |
| Income from long-term equity investment checked with cost method | 0.00 | 744,772,962.00 |
| Income from long-term equity investment checked with equity method | -37,178.87 | 26,702.76 |
| Total | -37,178.87 | 744,799,664.76 |
XVI. Further information
1. List of non-recurring profits and losses in this year
| Item | Amount |
| Profits and losses from disposal of non-current assets | 128,936,835.05 |
| Tax returns and reduction upon unauthorized approval, or without official document of approval or accidental | 24,841,218.44 |
| Governmental subsidies recorded into current profits and losses, but closely related to the Company’s normal business, in compliance with relevant national policy provisions, excluding governmental subsidies continuously enjoyed in certain standard quota or in fixed quantify | 179,870,984.15 |
| Subsidiaries’ net current profits and losses (from the end of year to the combination date) generated by business merger under the same control | 0.00 |
| Profit or loss from contingencies irrelevant to normal business operations of the Company | 0.00 |
| Except effective hedging business related to the Company’s normal business, changes in fair value recognized in profit or loss due to held-for-trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities as well as investment income obtained by disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities and other equity investments. | -448,914,776.35 |
| Roll-back of impairment reserves of accounts receivable subject to separate impairment testing | 0.00 |
| Profits or losses from entrusted loans | 48,520,852.95 |
| Income from custodian fees obtained from entrusted operation | 1,698,113.19 |
| Other non-operating income and expense in addition to the above | 612,146.73 |
| Other profit or loss items that meet the definition of non-recurring profit and loss | 17,898,857.26 |
| Item | Amount |
| Subtotal | -46,535,768.58 |
| Income tax influence amount | 91,691,403.61 |
| Influenced amount of the minority shareholders’ equity (after-tax) | -151,013,993.42 |
| Total | 12,786,821.23 |
Note: “+” in the column of non-recurring profit and loss stands for earnings or income, and "-" for loss orexpenditure.Non-recurring profits and losses shall be confirmed by the Company in accordance withrelevant provisions in the Explanatory Announcement No.1 on Information Disclosure forCompanies That Offer Securities to the Public – Non-recurring Profits and Losses (ZJKGGNo. 43 [2008]).
2. Return on equity and earnings per share
| Profits in reporting period | Weighted average return on net assets (%) Rate of return (%) | Earnings per Share | |
| Basic earnings per share | Diluted EPS | ||
| Net profits assigned to the Company’s common shareholders | -4.31 | -0.30 | -0.30 |
| Net profits assigned to common shareholders after deduction of non-recurring profits and losses | -4.36 | -0.30 | -0.30 |
Note: Due to the anti-dilution caused by the convertible corporate bonds in this period, thediluted earnings per share are determined based on the basic earnings per share.
Hengyi Petrochemical Co., Ltd.
President: Qiu YiboApril 20, 2023