2023 Annual Report of Hengyi Petrochemical Co., Ltd.
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Section I Important notes, Contents and Definitions
The Board of Directors, the Supervisory Committee and the Directors,
Supervisors and senior management of the Company warrant that the contents of
the annual report are true, accurate and complete, and that there are no false
records, misleading statements or material omissions, and that they shall bear
individual and joint legal liabilities.
Qiu Yibo, legal representative, Zheng Xingang, person in charge of accounting
activities, and Yu Zhicheng, the head of the accounting agency (account in charge),
declared that ensure the annual financial statement report is true, accurate and
complete.
The annual financial statement report has been audited by Zhongxinghua
Certified Public Accountants LLP, which has issued a standard unqualified audit
report.
The report has been considered and approved at the Eighth Meeting of the Twelfth
Session of the Board of Directors of the Company. All directors have attended the
Board meeting at which this report was considered.
This report involves future plans, development strategies, industry discussion and
outlook, etc. covered in this report do not constitute substantial commitments by
the company to investors, and investors are advised to pay attention the
investment risks. Investors are advised to refer to "XI: Prospects for the Future
Development of the Company IV: Risks and Countermeasures Faced by the
Company" under “Section III”: Management Discussion and Analysis" for the
risks that may exist in the operation and development of the Company.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
The Company is required to comply with the disclosure requirements in respect
of the chemical industry as set out in the "No. 3 Self-Regulatory Guidelines for
Listed Companies of the Shenzhen Stock Exchange - Disclosure of Industry
Information".
The Company's profit distribution plan reviewed and approved by the Board: on
the basis of the share capital entitled to profit distribution registered on the date
of registration of shareholdings for the implementation of the equity distribution,
a cash dividend of RMB 1.0 (tax included) per 10 shares will be distributed to all
shareholders. There will be no equity dividend (tax included) or conversion of
equity reserve into share capital of the Company.
This annual report is prepared in Chinese and English respectively. In case of any
discrepancy between the two versions, the Chinese version shall prevail.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Contents
Section I Important notes, Contents and Definitions ........................................... 4
Section II Company Profile and Key Financial Indicators ................................... 11
Section III Management Discussion and Analysis ................................................ 18
Section IV Corporate Governance ....................................................................... 129
Section V Environmental and Social Responsibilities ....................................... 191
Section VI Important Matters............................................................................... 212
Section VII Changes in Shares and Shareholders ................................................. 242
Section VIII Preferred Shares ................................................................................. 259
Section IX Bonds ................................................................................................. 260
Section X Financial Report ..................................................................................... 273
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
List of Documents for Reference
1. Accounting statements signed and stamped by the legal representative, person in
charge of accounting activities and the head of the accounting agency;
2. The original audit report stamped by the accounting firm and signed and stamped by
the certified public accountant;
3. All original documents and original announcements of the Company publicly
disclosed on the website designated by CSRC during the current period.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Definitions
Item Refers to Definition
Hengyi
Petrochemical/Company/the
Refers to Hengyi Petrochemical Co., Ltd.
Company
SZSE/the Exchange Refers to Shenzhen Stock Exchange
Hengyi Group Refers to Zhejiang Hengyi Group Co., Ltd.
Hengyi Limited Refers to Zhejiang Hengyi Petrochemical Co., Ltd.
Hengyi Brunei Refers to Hengyi Industries Sdn. Bhd.
Zhejiang Yisheng Refers to Zhejiang Yisheng Petrochemical Co., Ltd.
Yisheng New Materials Refers to Zhejiang Yisheng New Materials Co., Ltd.
Yisheng Dahua Refers to Yisheng Dahua Petrochemical Co., Ltd.
Hainan Yisheng Refers to Hainan Yisheng Petrochemical Co., Ltd.
Hengyi Polymer Refers to Zhejiang Hengyi Polymer Co., Ltd.
Hengyi High-Tech Refers to Zhejiang Hengyi High-Tech Materials Co., Ltd.
Haining New Materials Refers to Haining Hengyi New Materials Co., Ltd.
Haining Thermal Power Refers to Haining Hengyi Thermal Power Co., Ltd.
Taicang Yifeng Refers to Taicang Yifeng Chemical Fibre Co., Ltd.
Jiaxing Yipeng Refers to Jiaxing Yipeng Chemical Fibre Co., Ltd.
Shuangtu New Materials Refers to Zhejiang Shuangtu New Materials Co., Ltd.
Hangzhou Yichen Refers to Hangzhou Yichen Chemical Fibre Co., Ltd.
Suqian Yida Refers to Suqian Yida New Materials Co., Ltd.
Ningbo Hengyi Trading Refers to Ningbo Hengyi Trading Co., Ltd.
Hong Kong Yisheng Refers to Hong Kong Yisheng Co., Ltd.
Hengyi Singapore Refers to Hengyi Industries International (Singapore) Co., Ltd.
Hangzhou Yijing Refers to Hangzhou Yijing Chemical Fibre Co., Ltd.
Hengyi Caprolactam Refers to Zhejiang Baling Hengyi Caprolactam Co., Ltd.
Fujian Yijin Refers to Fujian Yi Jin Chemical Fibre Co., Ltd.
China Zheshang Bank Refers to China Zheshang Bank Co., Ltd.
Yisheng Investment Refers to Dalian Yisheng Investment Co., Ltd.
Hong Kong Tianyi Refers to Hong Kong Tianyi International Holding Co., Ltd.
Hengyi Investment Refers to Hangzhou Hengyi Investment Co., Ltd.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Refers to Definition
Hengqi Environmental Haining Hengqi Environmental Protection Technology
Protection Refers to Co., Ltd.
Hengyi Polyamide Refers to Zhejiang Hengyi Polyamide Co., Ltd.
Guangxi New Material Refers to Guangxi Hengyi New Material Co., Ltd.
Brunei Refinery
The petrochemical project invested and constructed by
Project,PMB Petrochemical Refers to
the Company in Brunei
Project
Paraxylene, a colorless and transparent liquid. It is used
PX Refers to
to produce plastics, polyester fibres and films.
Purified terephthalic acid, mainly used to produce PET,
can also be made into engineering polyester plastics,
PTA Refers to
and be used as the raw material of plasticizer and dye
intermediate.
Isophthalic acid, mainly used in the production of alkyd
resin, unsaturated polyester resin and other polymers
PIA Refers to and plasticizers, as well as in the production of film
finishers, coatings, polyester fibre dyeing modifiers and
medicines.
Ethylene glycol, mainly used to produce polyester fibre,
MEG Refers to antifreeze, unsaturated polyester resin, lubricant,
plasticizers, non-ionic surfactant and explosives, etc.
Polyethylene terephthalate. It is a fibre-forming
polymer made from PTA and MEG through direct
PET and polyester Refers to
esterification and continuous polycondensation
reaction.
POY Refers to Polyester pre-oriented yarn or partially oriented yarn
FDY Refers to Fully drawn yarn or polyester drawn yarn
Drawn textured yarn, also known as polyester textured
DTY Refers to
yarn
Caprolactam, mainly used to produce polyamide fibre,
CPL Refers to engineering plastics, plastic film, etc. It is widely used
in industrial and civil fields.
RPET Refers to Recycled plastic materials from PET
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Refers to Definition
A variety that is innovative in technology or
Differentiated yarn Refers to 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 Refers to
From January 1, 2023 to December 31, 2023
reporting period
End of reporting period/end
of the current reporting Refers to
As of December 31, 2023
period
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Section II Company Profile and Key Financial Indicators
I. Company profile
Stock abbreviation Hengyi Petrochemical Stock code 000703
Stock abbreviation before
None
the change (if any)
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
HYPC
any)
Legal representative Qiu Yibo
4/F, Building 2, International Science and Technology
Park, No. 5 Zhongma Avenue, China-Malaysia Qinzhou
Registered address
Industrial Park, Qinzhou Port Area, China (Guangxi) Pilot
Free Trade Zone
Post code of the registered
535000
address
The original registered address of the Company, No. G, F7,
Change history of the
Haifu Building, No. 16 West Beihai Avenue, Beihai City,
Company’s registered
Guangxi Zhuang Autonomous Region, was changed to
address
current registered address of the Company in August 2022.
Building 3, Hengyi Nan’an Mingzhu, 260 North Shixin
Office address Road, Xiaoshan District, Hangzhou City, Zhejiang
Province
Post code of the office
311215
address
Company website http://www.hengyishihua.com
E-mail address hysh@hengyi.com
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
II. Contact person and contact information
Secretary of BOD Securities Representative
Name Zheng Xingang Zhao Guanshuang
BOD Office, 16/F, Building 3, BOD Office, 16/F, Building 3,
Contact Nan’an Mingzhu, No. 260 North Nan’an Mingzhu, No. 260 North
address Shixin Road, Xiaoshan District, Shixin Road, Xiaoshan District,
Hangzhou City, Zhejiang Province Hangzhou City, Zhejiang Province
Telephone （0571）83871991 （0571）83871991
Fax （0571）83871992 （0571）83871992
E-mail address hysh@hengyi.com hysh@hengyi.com
III. Information disclosure and place of preparation
The website of the Stock
Exchange where the Company Shenzhen Stock Exchange：http://www.szse.cn
disclosure the Annual report
China Securities Journal, STCN, Shanghai Securities
Press name and website of
News and Securities Daily; CNINFO：
Annual reporting disclosure
http://www.cninfo.com.cn
Place where the Company’s
Office of the BOD of Hengyi Petrochemical Co., Ltd.
Annual Report is prepared
IV. Registration changes
Unified Social Credit Code 9145050019822966X4
Changes in the Company’s main business since listing (if
No changes
any)
Previous changes of controlling shareholders (if any) No changes
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
V. Other relevant information
Accounting firm engaged by the company
Name Zhongxinghua Certified Public Accountants LLP
20/F, Tower B, Lize SOHO, 20 Lize Road, Fengtai District,
Address
Bejing
Name of signing accountants Liu Yuehong, Wang Guohai
Sponsor engaged by the company to perform continuous supervisions duties during the
reporting period
□Applicable Not applicable
VI. Main accounting data and financial indicators
Whether the company is required to retrospectively adjust or restate prior years’
accounting data
□Applicable Not applicable
Increase/decrease
2023 2022 of this year over 2021
the previous year
Revenue (RMB) 136,148,114,082.34 152,050,274,944.64 -10.46% 129,666,931,795.26
Net profit attributable to
shareholders of listed 435,458,340.57 -1,079,547,699.72 140.34% 3,378,328,289.28
companies (RMB）
Net profit after deducting
non-recurring profits and
losses attributable to 53,685,831.74 -1,092,334,520.95 104.91% 2,728,828,428.31
shareholders of listed
companies（RMB）
Net cashflow from operation
4,531,834,805.15 2,705,533,483.36 67.50% 7,720,521,139.40
activities（RMB）
Primary earnings per
0.13 -0.30 143.33% 0.93
share（RMB/share）
Diluted earnings per share 0.13 -0.30 143.33% 0.90
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
（RMB/share）
Weighted average ROE 1.74% -4.31% 6.05% 13.45%
Increase/decrease
at the end of this
End of 2023 End of 2022 year over the end End of 2021
of the previous
year
Total assets（RMB） 108,052,106,925.94 111,964,797,711.33 -3.49% 105,514,058,363.19
Net assets attributable to
shareholders of listed 25,211,150,840.09 25,446,694,059.09 -0.93% 25,863,447,788.06
companies (RMB）
The lower of the net profit before and after deducting non-recurring gains and losses of
the company in the last three financial years is negative, and the audit report of the last
year shows that the company’s liability to continue as a going concern is uncertain.
□Yes No
The lower of the net profit before and after deducting non-recurring gains and losses is
negative.
□Yes No
VII. Difference in accounting data under domestic and foreign accounting
standards
(1) Difference in the net profit and net asset in the annual financial statement repor
which are presented concurrently in accordance with international accounting standards
and the accounting standards of China
There is no difference in the net profit and net asset in the annual financial statement
repor which are presented concurrently in accordance with international accounting
standards and the accounting standards of China.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(2) Difference in the net profit and net asset in the annual financial statement repor
which are presented concurrently in accordance with foreign accounting standards and
the accounting standards of China
There is no difference in the net profit and net asset in the annual financial statement
repor which are presented concurrently in accordance with international accounting
standards and the accounting standards of China.
VIII. Quarterly main financial indicators
Currency unit: RMB
First quarter Second quarter Third quarter Fourth quarter
Revenue 28,381,122,577.28 35,935,125,699.85 37,212,788,835.38 34,619,076,969.83
Net profit attributable to
shareholders of listed 34,846,332.38 41,236,053.83 130,208,150.81 229,167,803.55
company
Net Profit after deducting
non-recurring profits and
losses attributable to 7,863,150.21 65,147,441.32 118,617,778.05 -137,942,537.84
shareholders of listed
companies
Cash flow from operating
-1,607,351,938.39 2,411,545,164.17 -377,022,608.63 4,104,664,188.00
activities
Whether the above financial indicators or their sums are materially different from the
relevant financial indicators in the Company's disclosed quarterly reports and half-
yearly reports.
□Yes No
IX. Non-recurring profit and loss items and amount
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Currency: RMB
Note
Item 2023 2022 2021
s
Gains and losses on disposal of non-current
assets (including elimination of provision for 416,787,000.84 128,936,835.05 -12,534,455.04
impairment of assets)
Tax rebates, exemptions and reductions that
exceed the authority to approve or are not Inapplicable 24,841,218.44 15,609,249.33
accompanied by official approval documents
Government grants recognised in the current
period's profit or loss (except for government
grants that are closely related to the
Company's normal operating business, in line 114,355,884.18 179,870,984.15 277,839,245.44
with national policies and in accordance with
defined criteria, and that have a continuing
impact on the Company's profit or loss)
Gains and losses from changes in fair value of
financial assets and liabilities held by non-
financial corporations and gains and losses
from the disposal of financial assets and 491,763.52 -448,914,776.35 480,727,659.11
liabilities, except for effective hedging
operations related to the Company's normal
business operations
Gains and losses on external entrusted loans 38,393,856.92 48,520,852.95 49,567,383.65
Reversal of provision for impairment of
6,570.00 0.00 309,000.00
receivables individually tested for impairment
The cost of investments in subsidiaries,
associates and joint ventures acquired by an
enterprise is less than its share of the gain
16,534,148.40 0.00 0.00
arising from the fair value of the identifiable
net assets of the investee at the time the
investment is acquired
Custodian fee income earned on trusteeship 1,698,113.16 1,698,113.19 1,698,113.20
Non-operating income and expenses other
-24,115,026.00 612,146.73 13,359,433.22
than those listed above
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Other items of profit or loss that meet the
63,233,423.28 17,898,857.26 0.00
definition of non-recurring profit or loss
Less: income tax effect 156,969,934.37 91,691,403.61 38,805,031.16
Minority interest impact (after tax) 88,643,291.10 -151,013,993.42 138,270,736.78
Total 381,772,508.83 12,786,821.23 649,499,860.97 --
Details of other items of profit or loss that meet the definition of non-recurring
profit or loss:
Other profit and loss items that meet the definition of non-recurring profit and loss
mainly consist of non-recurring profit and loss attributable to investees from the
investment income of significant associates and joint ventures accounted for under the
equity method in the amount of RMB 64,952,698.90 through the recognition of non-
recurring profit and loss.
Definition of non-recurring profit and loss items listed in "Interpretative
Announcement for Information Disclosure of Companies Issuing Public Securities
No. 1 - Non-recurring Profit and Loss" as recurring profit and loss items
There are no instances where the Company defines items of non-recurring gains and
losses listed in "Interpretative Announcement No. 1 on Information Disclosure by
Companies Issuing Public Securities - Non-recurring Gains and Losses" as items of
recurring gains and losses.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Section III Management Discussion and Analysis
I． Industry in which the company operated during the reporting period
The Company shall comply with the disclosure requirements for petrochemical
industry specified in Guidelines No. 3 for Self-Regulation of Listed Companies of
Shenzhen Stock Exchange - Industry Information Disclosure
(I) Overview
Hengyi Petrochemical (Stock code: 000703.SZ) is a global leading enterprise in the
integration of the “refining-chemical engineering-chemical fibre” industry chain. Since
its establishment, the company has always focused on its core business, taking "one
drop of oil, two threads" as the core of its strategic policy. It has laid out the Brunei
refining project in a forward-looking manner, opening up the "last kilometer" of the
industrial chain from refining to chemical fibre. This has formed the unique "polyester
+ polyamide" dual "polyamide" drive mode in China. The company continues to give
full play to the comprehensive competitive advantages of "upstream and downstream
synergy, domestic and overseas linkage" and has constructed an integrated columnar
balanced industrial structure of upstream, midstream, and downstream industry chains.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
In order to deepen the core competitiveness of its main business, HengYi Petrochemical
has continued to push forward the strategic transformation from "Industry Hengyi" to
"Technology Hengyi" in recent years, and has built up a system of independent
intellectual property rights around the company's core business areas, steadily pushing
forward the technological research and development of high-value added products and
the innovative optimization of processes. We will steadily push forward the
technological research and development of high value-added products, as well as the
innovation and optimization of processes, in order to lay a solid foundation for the
company's sustainable development. Driven by digitalization and intelligent
construction, the company is marching towards the ambitious goal of becoming a
leading domestic and world-class private multinational industrial group of "refining,
chemical industry and chemical fibre".
(II) Industries in which the company’s three major business operate
In 2023, economics in the China achieved steady growth against the backdrop of a
faltering global economic recovery and intensifying international geopolitical conflicts.
According to the National Bureau of Statistic, China’s gross domestic growth (GDP)
grew by 5.2% year-on-year (y-o-y) in 2023, and total retail sales of consumer goods for
the year increased by 7.2% y-o-y. Focusing on the chemical industry, the boom in the
chemical industry was first depressed and then rose in the first three quarters of 2023,
before falling back to the median level for the year in the fourth quarter. As of 29
December 2023, China chemical product price index was 4,635, lower than the median
value of 4,696 and the average value of 4,657 in the past ten years, still at the low level
of the industry cycle.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
China chemcial product price index in 2023
5,200
5,000
4,800
4,600
4,400
4,200
4,000
Data sources: WIND
1. Refining and petrochemical industry
In 2023, under the geopolitics, the expectation of interest rate hike in the United States,
production cuts by major crude oil producers, banking crisis and other factors, the Brent
crude oil futures price is generally running in the range of 70-95 US dollars per barrel,
and the overall trend is wide oscillation.
Brent crude oil futures average daily price chart ($/bbl)
100
95
90
85
80
75
70
65
2023-01 2023-04 2023-07 2023-10 2024-01
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Data sources: CCF
(1) Southeast Asia refined oil market demand gap is large; supply tension situation
is difficult to improve in the short term
IEA reporting refers to Asia remains an important region dominating oil demand. From
the demand side, Southeast Asia has richer oil and gas resources, but due to the shortage
of infrastructure investment, instead of becoming the largest net import market of
refined oil in the world, besides, Australian also need import refined oil. In addition,
the implementation of the new IMO standard in 2020, a greater impact on the global
shipping industry, Singapore as a major shipping base, bunker fuel sulphur content of
shipping fuel is mandatory restrictions, some MGO (marine diesel) need to replace
marine fuel oil, stock replacement space release, Southeast Asia diesel demand is
expected to continue to increase.
According to the latest forecast released by the International Monetary Fund in January
2024, ASEAN's GDP growth rate in 2024 will remain high, of which Indonesia is
expected to grow at a rate of 5.0%, and the Philippines is expected to grow at a rate of
6.0%, which is still significantly higher than the global level, and the favourable trend
of the economic expectations may further drive the growth of demand for refined
chemical products.
From the supply side, compared with the surplus state of domestic refined oil supply,
the gap in the Southeast Asian refined oil market is larger, with an overall surplus of
supply over demand. According to Platts data, from 2020 to 2023, more than 30 million
tons of refining capacity in Southeast Asia and Australia will be withdrawn from the
market due to public health events and energy structure transformation. Some refineries
in Southeast Asia are still facing challenges such as early construction of equipment,
outdated technology, poor management, and heavy government subsidies burden.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Additionally, with the tightening of global environmental protection policies, refineries
are reluctant to expand production, and capital expenditure plans are becoming more
cautious. Refiners and chemical companies are also hesitant to increase production,
further limiting the future growth of refinery capacity. According to the IEA forecast,
the refining capacity in Southeast Asia is expected to remain unchanged until 2028.
(2) Refinery earnings expected to rise as refined oilcrack spreads remain high in
Singapore market
As a benchmark for refinery profitability in Southeast Asia, looking at the refinedoil
cracking spread in the Singapore market from 2022 to the present, in 2022, the refined
oil cracking spread fluctuated significantly due to multiple factors such as geopolitical
tensions, drastic fluctuations in crude oil prices, and weak downstream demand. In
2023, the reshaped global refined oil market supply and demand structure, influenced
by geopolitical factors, remained relatively stable, resulting in a reduced amplitude of
the refined oil cracking spread. There was a noticeable boost starting in the second
quarter. Since 2024, the refined oil cracking spread in Singapore has remained at high
levels, indicating the potential for sustained and robust improvement in refinery
profitability in Brunei.
Singapore market refined product crack spread ($/bbl）
80
70
60
50
40
30
20
10
0
-10
-20
汽油
Gasoline Diesel 航空煤油
Jet fuel
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Data sources: Platts platform
2. PTA industry
PTA is one of the important bulk organic raw materials, widely used in various aspects
of the national economy such as chemical fibers, light industry, electronics, and
construction. 95% of domestic PTA demand is used in the polyester industry. China
now dominates the worldwide PTA market since it is the largest producer and consumer
of PTA worldwide because to its ongoing improvement of PTA independent production
capacity.
The CCF statistics shows that in 2023 China's actual new PTA capacity expanded by
10 million tons, with a capacity growth rate that dropped from 18.5% in 2020 to 12.8%
in 2023. CCF anticipated that in 2024 China's PTA capacity commissioning would
continue to slow down and that the rate of capacity expansion would drop to 6%.
Furthermore, PTA exports are increasing consistently and China's market share in the
world PTA market has progressively grown. Chinese PTA capacity accounted for
almost 76% of Asian PTA output in 2023; the foreign PTA sector did not add any new
units. China's PTA capacity will continue to rise in the future years, accounting for the
percentage of Asia and the world. The demand for polyester goods is really high in
overseas markets such Bangladesh, Turkey, and other nations; China's PTA exports are
still rising.
3. Polyester industry
Polyester fibres are mainly used in clothing, home textiles and technical textiles, etc.
The development of the industry is closely related to the downstream demand of the
textile and chemical fibre industry.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(1) The downstream demand outlook has significantly improved, driving a steady
release of demand for polyester products.
The domestic economy steadily recovered in 2023, and the textile and apparel
industries' boom much improved, propelling polyester market production and sales and
exhibiting strong development against the backdrop of a slowing down of crude oil
price swings. According to the National Bureau of Statistics, China's retail sales of
consumer goods overall increased by 7.2% year over year in 2023, up 7.4 percentage
points from the prior year; retail sales of clothing, shoes, hats and textile goods in China
increased by 12.9% year over year, up 19.4 percentage points from the prior year.
Expanding, there was a clear marginal comeback trend in China's retail sales of textiles,
needles, headgear, clothes, and footwear in the second half of 2023. The demand is
continuing maintaining a better trend, demonstrating a strong momentum of recovery,
and the chain growth rate has been growing positively since August, particularly in
November when it reached a new record high of 24 percent. Exports in 2023 are little
less than in 2022 because of the sluggish recovery of the world economy, geopolitics,
supply chain adjustment, and other factors influencing the total export volume of
textiles and apparel. China's cumulative textile and apparel exports in 2023 were
US$293.64 billion, down 8.1 percent from the same time last year, but the total value
remains high and the export volume is still higher than in 2019. The development of
China's textile and garment industries still heavily depends on the international market.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Monthly data on retail sales of clothing, footwear, hats and textiles in
China (RMB billion)
1,800 24% 30%
1,600 15% 16%
20%
1,400
6%
1,200 2% 2% 10%
1,000 5% 0%
800
600 -10% -10%
400
-22% -20%
200
0 -30%
2023-03 2023-06 2023-09 2023-12
中国:零售额:服装鞋帽、针、纺织品类:当月值
China: Retail Sales: Clothing, Shoes, Hats, Textiles: Current Month Value 环比增速 growth rate
Month-on-month
Data sources: National Bureau of Statistics
Notes: In order to eliminate the impact of the irregularities brought about by the Spring
Festival holiday and to enhance the comparability of the data, the National Bureau of
Statistics does not carry out a separate survey of January statistics, and the January-
February data are surveyed and released together.
In the textile and apparel industry under the high degree of boom, polyester fibre
demand is expected to release, the production of high-load operation, production
growth rate hit a record high in the past thirteen years. According to CCF data, in 2023,
polyester fully drawn yarn demand growth is strong, and the demand growth rate is
much higher than the growth rate of production capacity, which is conducive to the
continuous optimization of the industry's competitive landscape. According to CCF
data, the apparent demand for polyester fully drawn yarn in 2023 was 36.68 million
tons, up 22.8% year-on-year, with the demand side of the boom significantly improved;
the net new capacity of 3.85 million tons during the year, the annual production capacity
reached 51.68 million tons, an increase of 8.0% year-on-year; the annual production
totalled 40.6 million tons, an increase of 22.7% year-on-year.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
China Polyester Filament Capacity, Production and Apparent
Demand 2019-2023 (10,000 tons)
6000 25%
5000 20%
15%
4000
10%
3000
5%
2000
0%
1000 -5%
0 -10%
2019 2020 2021 2022 2023
产能 产量 capacities 表观需求量
Apparent demand
Year-on-year capacity Year-on-year Year-on-year growth in
产能同比增速
growth 产量同比增速 rate
production growth 表观需求量同比增速
apparent demand
Data sources: CCF
(2) Strong demand in the overseas market, exports maintain high growth rate
In recent year, the polyester productions widely used in the apparel, industry and other
fields due to its excellent performance, favoured by international market, of which
filament, bottle chips and other products are in greater demand. China's polyester
industry has outstanding advantages in technological innovation, product quality and
cost control, etc., and is actively expanding overseas markets, continuously improving
brand awareness and market share, China's polyester product exports maintain a better
trend. According to CCF statistics, the total export volume of China's polyester industry
(including polyester fully drawn yarn, polyester staple fibre, polyester chips, polyester
bottle flakes and polyester film) in 2023 was 11.16 million tons, up 13.0% year-on-year,
with the growth rate maintaining a high level. Among them, the export volume of
polyester fully drawn yarn is 3.99 million tons, up 20.7% year-on-year; the export
volume of polyester staple fibre (including virgin and recycled polyester staple fibre)
is 1.205 million tons, up 21% year-on-year; the export volume of polyester chips is
855,000 tons, up 12.4% year-on-year; and the export volume of polyester bottle flakes
is about 4.55 million tons, up 5.6% year-on-year.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
China Polyester Exports 2019-2023 (10,000 tons)
1200 30%
25%
1000
20%
800 15%
10%
600
5%
400 0%
-5%
200
-10%
0 -15%
2019 2020 2021 2022 2023
Polyester exports -
聚酯出口量-左轴
left axis
同比增速-右轴
Year-on-year growth
rate - right axis
Data sources: CCF
(3) Outdated production capacity continues to be eliminated and the competitive
landscape is further optimized
While demand continues to pick up, industry concentration on the supply side is
expected to further increase, with the competitiveness of leading companies highlighted.
According to CCF statistics, in 2023, some factories or installations have been clearly
withdrawn, and the annual polyester fully drawn yarn production capacity withdrawal
totalled 1.01 million tons. The industry device old and backward, lack of technological
innovation ability of the plant, the future will gradually withdraw from the industry
competition, backward capacity clearance may speed up. In addition, along with the
dual-carbon policy and equipment supply requirements continue to improve, the
threshold of entry into the industry will be further increased, polyester industry market
concentration will continue to be optimised. At the same time, the company as an
industry leader, with obvious technological innovation and scale advantages, with
strong market competitiveness, operating efficiency is expected to improve.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(4) Upstream raw material supply tends to loosen; profit is expected to shift to the
downstream polyester side
Important raw materials for the polyester industry mainly include paraxylene (PX),
purified terephthalic acid (PTA) and ethylene glycol (MEG). For many years, China's
PX is highly dependent on imports, and its independent production capacity is limited,
while in recent years, along with the integrated construction of the domestic chemical
fibre industry chain and technological breakthroughs, the domestic PX production
capacity has been gradually enhanced, and according to CCF statistics, the domestic
PX production capacity in 2023 will be 43.67 million tons, a year-on-year increase of
21.4%. Accompanied by the continuous improvement of production capacity, the
domestic PX import dependence is reduced from 50% in 2019 to 21.3% in 2023.
China PX capacity 2019-2023 (10,000 tons)
5000 50%
4500 45%
4000 40%
3500 35%
3000 30%
2500 25%
2000 20%
1500 15%
1000 10%
500 5%
0 0%
2019 2020 2021 2022 2023
Year-on-year growth
产能-左轴-
Capacities 同比增速-右轴
rate - right axis
left axis
Data sources: CCF
According to CCF statistics, the global MEG new capacity in 2023 is 3.95 million tons,
of which 3.1 million tons of new domestic capacity, 850,000 tons of new foreign
production capacity, import dependence from the previous period of 35.5% to 30%, the
independent supply capacity to further enhance. From the price point of view, 2013 -
2023, MEG prices generally show a downward trend, the price in recent years is at a
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
low level, directly bringing the polyester industry cost end down. The continued
expansion of domestic PX, PTA and MEG production capacity is conducive to the
transfer of industry chain profits to the polyester industry.
Average daily domestic MEG spot price trend (RMB/ton)
8000
7000
6000
5000
4000
3000
2000
1000
0
2019-02 2020-02 2021-02 2022-02 2023-02 2024-02
Data sources: CCF
(5) Actively building a high-end, intelligent and green chemical fibre industry
During the "14th Five-Year Plan" period, China based on the new development stage,
the implementation of the new development concept, and the construction of a new
development pattern, which put forward higher requirements for the high-quality
development of the chemical fibre industry. In 2022, the Ministry of Industry and
Information Technology and the Development and Reform Commission of the two
ministries and commissions jointly issued the "Guiding Opinions on the High-quality
Development of the Chemical Fibre Industry", which put forward A series of high-
quality development goals to guide the chemical fibre industry to build a high-end,
intelligent, green and modern industrial system, and comprehensively build a strong
chemical fibre country. In the face of the new development situation, the chemical fibre
industry focuses on research and development of new technologies to promote the
development of the industry to high-end, intelligent and green. In terms of digital
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
transformation and upgrading, leading polyester enterprises have established a PTA-
polyester-spinning-trading polyester fibre whole industrial chain industrial internet
platform system, developed data-driven fibre high-efficiency production of the whole
process of intelligent management and control technology, and achieved large-scale,
flexible and green production, as well as high-value and efficient fine management.
(III) Industry position of the company’s three major businesses
1. Refining and petrochemical segment
As a unique overseas refinery operator among private large refineries, the company has
successfully built the largest single overseas project among private enterprises in terms
of investment. In the future, along with the completion and commissioning of the phase
II of the company's Brunei project, the company is expected to usher in new
development opportunities.
According to Platts data, as of 31 December 2023, Southeast Asia's refining capacity
will be approximately 271 million tons, in line with 2022. As the profitability of refined
products continues to trend better in 2023, there is no exit capacity, but it is still lower
than the 278 million tons in 2020, with the phase I of the Hengyi Brunei project
accounting for 3% of the total capacity.
Phase I of Hengyi's Brunei project introduced the world's largest single-series aromatics
plant and the world's sixth flexible coking process plant, which has a significant
latecomer's advantage in terms of lower unit production costs and cleaner and more
environmentally friendly products. After the completion of the second phase of the
Brunei project, the advantages of refining and chemical integration will be further
revealed under the trend of overall transformation and upgrading of the petrochemical
industry. In addition, due to the Southeast Asian countries in the future new refining
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
capacity is limited, and Southeast Asia itself there is a shortfall of refined oil, supply
and demand is expected to continue to be tight, Brunei refining project is expected to
benefit significantly.
2. PTA segment
According to CCF data, China’s PTA capacity is 80.615 million tons as at 31 December
2023. As a leading company in the PTA industry, the company has four major PTA
bases, with a total PTA capacity of about 21.5 million tons, strategically laid out along
the coastline from north to south in Dalian, Liaoning Province, Ningbo, Zhejiang
Province and Yangpu, Hainan Province. Moreover, according to CCF data, as of 31
December 2023, the national PIA capacity is 550,000 tons and the company's PIA
capacity is 300,000 tons.
3. Polyester segment
CCF data indicated that the majority of polyester productions capacity is focused in the
Asia-Pacific region, and China is the world’s leading textile exporter. As of 31
December 2023, the total national polyester production capacity was 79.84 million tons,
an increase of 13% year-on-year, of which 51.68 million tons were polyester fully
drawn yarn production capacity, 9.43 million tons were polyester staple fibre
production capacity, and 16.61 million tons were polyester bottle flakes production
capacity. The company participates in the holding of polymer production capacity of
11.115 million tons, including polyester bottle flakes (including RPET) capacity of 3.6
million tons; polyester fibre production capacity, including polyester filament 6.335
million tons, 1.18 million tons of staple fibre. In recent years, the company has been
increasing the proportion of differentiated fibre varieties, focusing on the promotion of
differentiated filament products, and accelerating the promotion of the new green and
environmentally friendly product "Yitaikang", which continues to lead the
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
technological progress of the chemical fibre industry.
II. Major businesses in which the Company was engaged during the reporting
period
The Company shall comply with the disclosure requirements for petrochemical
industry specified in Guidelines No. 3 for Self-Regulation of Listed Companies of
Shenzhen Stock Exchange -Industry Information Disclosure
(I) Overview of major operations
During the reporting period, the corporate continued to concentrate in the petrochemical
and chemical fibre industry chain, and continuously leverage "Petrochemical+"
segment, which includes supply chain services and long-term investments on equity, to
support our main business.
1. Petrochemical and chemical fibre business
The Company is deeply engaged in the petrochemical and chemical fibre industry, and
has developed into a leading private multinational enterprise integrating "refining-
chemical engineering-chemicalfibre" in China. During the reporting period, the
Company continued to extend and strengthen the chain, enrich the product range and
optimize the product structure, which effectively consolidated the core competitiveness
of the main industry, enhanced the profitability of the products and strengthened the
ability to withstand market risks.
During the reporting period, the main products of the company include refined oil such
as gasoline, diesel oil and aviation paraffin; petrochemical products such as chemical
light oil, liquefied petroleum gas (LPG), paraxylene (PX), benzene, purified
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
terephthalic acid (PTA) and caprolactam (CPL); polyester bottles and chips and other
packaging products, as well as polyester products such as polyester pre-oriented yarn
(POY), polyester drawn yarn (FDY), polyester textured yarn (DTY), polyester staple
fibre and polyester (PET). Polyester products such as PET chips are widely used to
satisfy the rigid needs of the country's economy and people's livelihood, and to meet
the people's aspirations for a better life.
As of the disclosure date of this report, the Company has a refining design capacity of
8 million tons, a PTA production capacity of 21.5 million tons, a polymerisation
production capacity of 11.12 million tons and a caprolactam production capacity of
400,000 tons.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
The production capacity of major products in the chemical and synthetic fibre
industry
Shareholding and controlling
Category Products
production capacity (10,000 tpa)
Refined oil Gasoline, diesel, jet fuel, etc. 565
Chemical products such as PX
265
and benzene
Chemical PTA 2,150
products
PIA 30
CPL 40
Polyester fibre 751.5
Polyester
products Polyester bottle flakes
360
(including RPET)
2. “Petrochemical +” business
In the face of the severe challenges of increasing uncertainty in the domestic and
international situation, the company firmly adheres to the core business of "one drop of
oil, two threads", and protects the company's steady development in all aspects by
constructing the "petrochemical +" business.
(1) Supply Chain Services to Enhance Product Operations
In order to reduce the negative impacts of global geopolitics, energy security and other
factors on the industrial chain and supply chain, the Company unswervingly pursues
and builds a supply chain system that is both resilient and stable, enhances the
independent control of the supply chain, promotes the healthy and stable development
of the industry, and ensures that the Company's strategy is steadily advanced. The
Company has continued to strengthen its supply chain co-operation and service
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
management capabilities, and has actively carried out comprehensive distribution
services for raw materials and products, with HengYi Micro Mall and marketing supply
chain system as the core online, and logistics business as the support offline, so as to
realize the effective integration of online and offline. Among them, the intelligent
logistics management platform (HTMS) is one of the functionalized applications of
HengYi Micro Mall, and the synergistic price enquiry, quick order, market information,
financial services and other ancillary services have contributed to the continuous
explosive growth of the system's trading volume. Meanwhile, the company has
pioneered the establishment of an omni-channel logistics control system and built a
three-party logistics and transport platform. In addition, the company strengthens the
construction of digital factory through the deep integration of digital intelligence
management, and actively explores the production of flexible personalized
customization through the means of big data to create a flexible, controllable and
efficient supply chain industry chain system.
With the sustained and stable operation of the first phase of the Brunei project, the
company is actively developing the supporting maritime business, accelerating the
implementation of integrated management of supply chain services, and forming an
intelligent supply chain closed-loop system of "factory-products-warehouse-logistics-
customers". The company will accelerate the implementation of integrated
management of supply chain services, forming an intelligent closed-loop supply chain
system of "factory-product-warehouse-logistics-customer", and leading the industry in
the upgrade of intelligent supply chain services.
(2) Long-term equity investment boots company’s profit
Zheshang Bank founded in 2004, which is one of the 12 national joint-stock commercial
banks approved by the China Banking Regulatory Commission, and was listed on the
Main Board of the Hong Kong Stock Exchange on 30 March 2016 and on the Shanghai
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Stock Exchange on 26 November 2019, becoming an "A+H" listed bank. ZCB has
developed into a high-quality commercial bank with solid foundation, excellent
efficiency, rapid growth and sound risk control. With the completion of the "A+H"
layout and the further optimization of its development strategy, Zheshang Bank is
poised to accelerate its development and continue to create value for its shareholders.
According to the 2023 annual report released by ZCB, ZCB achieved operating income
of RMB63.70 billion and net profit of RMB15.49 billion in 2023; as of the end of
December 2023, ZCB's total assets amounted to RMB3.14 trillion, representing an
increase of 19.91% compared with that at the end of the previous year. With the vision
of "a first-class commercial bank" as the overall leader, ZCB focuses on the 12-word
operation policy of "strengthening foundation, adjusting structure, controlling risks and
creating benefits", focuses on the four strategic priorities, carries out the operation
strategy of building up the ballast of weakly sensitive assets in the economic cycle, and
raises the flag of "Good Financial Services" to lead the financial development towards
goodness. The Company has achieved coordinated development in terms of scale,
efficiency and quality, and has continued to maintain a steady and positive trend in its
business development by promoting high-quality development through intelligent
management.
(II) Operation model
1. Procurement model
The Company mainly purchases raw materials through direct negotiation with
manufacturers or traders. It selects competitive suppliers to establish long-term and
stable cooperative relations, on the basis of which it decides the transaction price
according to market conditions. The Company adopts a centralized procurement
strategy, integrating resources from Brunei and domestic operating suppliers and
increasing resource sharing efforts, so as to enhance the Company's own bargaining
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
power.
The raw materials required for production of the Company are mainly purchased from
major petrochemical products and crude oil suppliers at home and abroad. When
selecting raw material suppliers, the Company first considers the quality of their
products and the stability of supply. While ensuring the above, the Company will also
give priority to suppliers with competitive prices to reduce production costs. The
Company will sign annual supply contracts with major suppliers, regarding the supply
in the relevant year of their products to the Company in accordance with international
or domestic 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 subdivided into monthly production plan, and then the
Production Department will make necessary adjustments to the monthly production
plan according to the market feedback and change information provided by the Sales
Department before finalizing the monthly production plan and arranging production.
The Company's refined oil and chemical products (PX, benzene, etc.) are mainly
produced by Hengyi Brunei. Usually, it will adjust the process and parameters to control
the output of specific products, such as refinedoil and chemical products, according to
the market demand.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
The Company's PTA products are mainly produced by Zhejiang Yisheng. Usually, it
will adjust the load level of production unit to control PTA output according to the
market demand.
3. Sales model
The Company’s refined 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 provinces and regions in China. Most products are sold directly
to customers through the Company's Sales Department, and only a small number of
products are sold through distributors.
(1) Sales model of refined oil and chemical products (PX, benzene, etc.)
The Company's refined oil and chemical products are mainly produced by Hengyi
Brunei. Among them, the main customers of chemical products are PTA manufacturers
downstream of the Company's industry chain, and the settlement mode usually adopts
wire transfer and letter of credit, etc. Refined oil is mainly sold to Brunei, other
Southeast Asian countries and Australia. When selling to local enterprises in Brunei,
the Company usually signs sales contracts directly and the settlement mode is letter of
credit. The Company's sales to other Southeast Asian countries and Australia are mainly
through Singapore Commodity Exchange. Sales contracts are directly entered into with
customers and the settlement mode is letter of credit.
(2) Sales model of PTA products
The Company’s PTA products are generally sold by direct sales, that is, the Company
will directly sign purchase and sale contracts with downstream polyester manufacturers
or large traders, agreeing on the purchase quantity and price within a certain period.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
After receiving the payment for goods from 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 by wire transfer,
acceptance draft or letter of credit.
(3) Sales model of polyester fibre products
The main customers of the Company's polyester fibre products are textile enterprises,
including elastomer enterprises, garment fabric manufacturers, bag fabric
manufacturers, home decoration fabric manufacturers, etc. These customers are mainly
concentrated in the areas of Jiangsu and Zhejiang as well as Shanghai. The Company
generally adopts direct sales, and directly concludes sales contracts with customers.
The settlement mode is usually “payment before delivery”, or “collect on delivery”.
4. Business model of supply chain service business
The company’s supply chain service business mainly includes trade business and
supporting logistics related services.
(1) Trading business
Petrochemical industry is a cyclical industry. On the one hand, the supply side of raw
materials is susceptible to factors such as upstream suppliers' production capacity,
operation stability of the plant and start-up time of the new plant. On the demand side,
especially in the downstream polyester business, sales have typical seasonal
characteristics. Meanwhile, chemical raw materials and finished products 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 price of terminal crude oil, showing wide fluctuations. Therefore, in order to
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
ensure production and operation, strengthen supply chain stability and reduce the risk
of price fluctuation, petrochemical enterprises need to smooth supply and demand and
hedge risks through trade business in procurement and sales.
The company has never carried out trade in products unrelated to its main business,
insisting on the principle of positioning trade business to serve the main business, and
trading varieties around the main business and core products. Among them, crude oil,
refined oil and other oil products are the main raw materials and products of Brunei
project of the company, PX is the raw material of the company's main product PTA,
PTA and MEG are the main raw materials of the company's polyester products. The
above trading business is conducive to the Company's access to spot market
information and revenue through trading, as well as the Company's need for inventory
management of raw materials and products, which can stabilize the supply chain and
hedge against the risk of price fluctuations.
(2) Logistics warehousing and other operations
The company's logistics segment provides raw material and product transport services
for the upstream and downstream industries of Hengyi Petrochemical. Its business
covers raw material transport, product transport, foreign trade transport and
international transport, etc. The company is deeply engaged in the domestic market and
is gradually moving towards the overseas market, and its business scope involves
international sea transport and land transport. Its main business model is raw material
transport, product transport, foreign trade transport and international transport and other
logistics services.
(III) Process flow charts of main products
1. Production flow of refined oil/chemical products
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
The production flow of the Company’s refined oil/chemical products include
atmospheric distillation, vacuum distillation, hydrocracking, flex coking, catalytic
cracking and alkylation, etc.
2. preparation process
PTA oxidation and refining unit
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
3. Polyester esterification polycondensation process
In the process of polyester esterification, the raw material PTA, ethylene glycol and
catalyst solution are continuously sent into the slurry preparation tank according to the
specified proportion. After they enter the esterification reactor, the esterification rate
can reach about 95%-96% by controlling the reaction temperature at an appropriate
level. By means of gear pump discharging and pressurization, the polyester melt
produced from esterified materials after Polycondensation and final polycondensation
is filtered by melt filter, and is distributed through a specially designed melt distribution
system. Part of it is sent to the spinning device for melt direct spinning, and the other
part is 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:
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
4. Production flow of POY/FDY
The production process of POY and that of FDY are basically the same. The polyester
melt is connected 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 is pressurized by the melt booster pump, and then sent
to the melt distribution valve after cooling-down by the melt cooler. The polyester melt
from the melt distribution system enters the spinning chamber insulated by steam phase
heat medium at a certain temperature and is delivered to the spinning assembly after
metering by a metering pump. The melt pipe is equipped with a freezing valve to ensure
that the spinning position can be independently started and stopped. After the melt is
filtered and pressed by the filter layer again in the spinning assembly, it is ejected from
the spinneret in a thin stream and solidified into yarns under the condition of constant
temperature and humidity. The yarn is oiled by the tanker, and then through the network
nozzles, it is rolled into a yarn tube in the winding machine. POY and FDY products
were prepared under highspeed winding ranging from 2,500m/min to 5,100m/min.
Blending
Oil + water Oil
Cooling
5. Production flow of DTY
The POY yarn on the yarn tube rack is wound into a DTY yarn tube and becomes a
finished product after it passes through yarn guide, feeding roller, texturing heater,
cooling, drafting, false twister, feeding roller in the middle, network, heater, delivery
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
roller and oil roller.
6. Production flow of staple fibre
Polyester staple fibre is a kind of fibre that is transported to the spinning machine
through melt, spun into shape, cut into fibres of different lengths after drafting,
crimping and heat setting, and then packed into individual packages. The main process
includes melt conveying, spinning, cooling, winding, tube falling, bundling, drafting,
tension heat setting, folding, crimping, cutting and packing.
7. Production flow of bottle flakes
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
The production process of bottle flakes, i.e. bottle grade flakes, is composed of two
parts: melt polymerization + solid phase polymerization. The main process of melt
polymerization consists of pulping, esterification, polycondensation, and dicing, and is
basically the same as that of fibre polymerization. The difference lies in that IPA,
stabilizer and toner are added in the formula of bottle flakes. The main process of solid
phase polymerization is crystallization, preheating, reaction, and cooling.
(IV) Highlights of company’s operations during the reporting period
In 2023, against the background of steady growth in the domestic economy and the
continued rebound in demand from the downstream textile and apparel industries where
the Company operates, the Board of Directors and the management of HYPC insisted
on innovation as the leader, technology as the foundation, and quality and efficiency
enhancement as the guidance, and relied on many years of experience in operation and
management of the chemical industry and its strategic advantages to keep close to
changes in end-use demand, flexibly adjust the market strategy, and steadily and
steadily enhance the operating efficiency of the main business. At the same time, the
Company made full use of its advantageous resources, continued to optimize its
industrial layout, ensured the smooth commissioning of its projects, pushed forward the
construction of major strategic projects, built up momentum and empowered itself for
high-quality development, and actively overcame the impact of unfavourable factors to
push forward the stable and positive operating results for the whole year.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
During the reporting period, the company implemented the third and fourth phases of
its share repurchase plan. The third phase of the share repurchase plan has been
completed, with a total repurchase of 150.8138 million shares, accounting for 4.11% of
the company's total share capital, with a transaction amount of RMB 1.112 billion. As
of March 31, 2024, the cumulative repurchase of shares under the fourth phase of the
share repurchase plan amounted to 64.5755 million shares, accounting for 1.76% of the
company's total share capital, with a transaction amount of RMB 430 million. The
company's cumulative repurchase amount of four-phase share repurchase plan reached
RMB 2.675 billion. Additionally, in 2023, the company implemented and completed
the fifth phase of its employee stock ownership plan, purchasing 87.1678 million shares
of company stock, accounting for 2.38% of the company's total share capital, with a
transaction amount of RMB 675 million. The cumulative amount of five-phase
employee stock ownership plan reached RMB 4.437 billion. The continued
implementation of share repurchase plans and employee stock ownership plans
demonstrate the company's strong confidence in its own value and future development.
The key operational priorities that drove the Company's performance during the
reporting period are set out below:
1. Tackling difficulties and promoting the upgrading and operation of key projects
(1) Successful completion of the phase I of the Brunei project's technical
renovation, with profitability gradually improving
In 2023, under the macro background of unstable global economic recovery momentum,
geopolitical risk exposure becoming bigger, downstream demand to be boosted,
Southeast Asia's economy showed strong resilience, economic development to maintain
a better trend, the demand for refined oil to obtain a strong support, and at the same
time by the backward production capacity to continue to exit, geopolitics and other
factors, the supply pattern of refined oil continues to be tight, in the context of demand
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
exceeds supply, the Under the background of supply exceeding demand, Southeast Asia
refined oil market maintains a booming pattern, driving Brunei Refining's profitability
to improve. Meanwhile, the first phase of Brunei project achieved safe and smooth
operation throughout the year. In addition, based on years of operating experience in
Southeast Asia, the Company continuously summed up and improved its production
and sales strategies, adhered to the market-oriented approach, followed the demand
trend, grasped the development opportunities, and made every effort to enhance the
operating efficiency of the refining and chemical segment.
During the reporting period, the Company successfully completed the "first technical
transformation" of Brunei Project Phase I, focusing on the working theme of "ensuring
safety, adjusting structure, stabilising operation and seeking development". Through
this scheduled turnover, the process and equipment indexes of Brunei Project Phase I
have been greatly improved, which further enhanced the competitive strength of Brunei
Project Phase I in the international market. We are fully prepared for market demand to
improve, and the marginal profit contribution is expected to continue to improve.
In the report period, the company ensured stable operation of Phase I of the Brunei
project. Measures were taken to actively respond to fluctuations in crude oil prices and
product price differentials. This involved procuring various types of crude oil materials
suitable for the company's processing, thereby reducing upstream costs. Simultaneously,
the product structure closely followed market changes. Rational adjustments were made
to the production volumes of chemical light oils, gasoline, diesel, aviation kerosene,
benzene, and PX. Clean oil products, benzene, PX, and diesel each accounted for
approximately one-third of the total production, aiming to maximize the operational
efficiency of Phase I of the Brunei project. During the reporting period, Phase I of the
Brunei project operated at high capacity, producing mainly refined oil products (diesel,
gasoline, chemical light oil, liquefied gas, etc.), as well as chemicals (PX, benzene, etc.).
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
The production volumes were 5.8024 million tons and 1.8184 million tons respectively,
while the sales volumes were 5.825 million tons and 1.8277 million tons respectively.
Sales revenue amounted to 31.841 billion yuan and 12.146 billion yuan (external sales
amount). This further enhanced the global recognition of the "Hengyi" brand and
contributed to the continuous improvement of the company's competitive advantage
through the vertical integration of the industrial chain.
In 2023, the performance of Brunei Phase I refining project was under pressure, mainly
due to (1) in the first half of 2023, the Brunei refinery implemented technical renovation
work, with higher expenditure on technical renovation costs, and at the same time, the
technical renovation period still needs to bear fixed costs such as manpower costs,
depreciation, and so on; and (2) the interest rate of overseas US dollar borrowings rose,
resulting in a significant increase in the company's financial expenses compared with
the same period of the previous year.
As of the disclosure date of this report, the Company's Brunei project's international
operation advantages have become more prominent, mainly including:
High level of support from both Chinese-speaking countries and long-term tax
incentives
Brunei is politically stable and the project is in line with Brunei's 2035 ambitions;
The project is in line with the national "Belt and Road" strategy, and the syndicated
loan has national strategic support;
The products are free of customs duty, personal income tax, business tax, salary
tax, production tax and export tax;
The project has been granted eleven-year tax exemption for pioneer enterprises and
preferential treatment for export enterprises, and can enjoy longer-term corporate
income tax exemption.
Brunei's significant geographical advantage, enabling strategic development of the
industry
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Brunei is closer to the crude oil supplying area and close to the Singapore crude
oil trading market, which is convenient for crude oil procurement and has lower
logistics cost;
Refined oil products produced by the project are sold to Southeast Asia and
Australia, with strong demand in Southeast Asia, Brunei project has a short sales
radius and low logistics cost;
Chemicals can be supplied to the downstream supporting digestion of its own
industrial chain, realizing integrated industrial chain operation.
Technological advantage of latecomer, unit cost continues to improve
The project is fully equipped with its own power plant, with obvious cost
advantages in public works;
The main production units, such as hydrocracking, reforming and PX unit, adopt
the latest advanced technology, which has the technical characteristics of low
running cost and high product conversion rate, and reduces the production cost of
PX;
Low-temperature heat reuse technology is adopted, and the waste heat is used for
seawater desalination, which reduces the seawater desalination operation cost and
the comprehensive energy consumption index of PX production;
Residual oil treatment adopts the latest flexible coking process, which can be
produced continuously, reducing labour costs, and the by-produced fuel gas
reduces fuel costs. Compared with the traditional process, the closed production of
the plant is more environmentally friendly, and the harmless treatment of residual
oil has been realized;
Liquid-phase diesel hydrotreating technology is adopted, which can meet the new
international diesel standard and at the same time reduce the investment and energy
consumption of the plant;
Brunei has a mild climate all year round and no natural disasters. As a rich oil
producing country, it has abundant oil and gas resources, which can provide part
of the crude oil and reduce the logistics cost of crude oil.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(2) Vigorous construction of key projects and solid advancement of industrial
layout
In 2023, driven by the high prosperity of the textile and apparel industry, the start rate
of the PTA industry basically remained at around 80%, and the growth rate of polyester
industry output hit a record high in the past thirteen years. Against this backdrop, the
company’s PTA and polyester segments maintained high annual average work rates,
higher than the industry average, to achieve efficient production of each project and
give full play to the economies of scale.
During the reporting period, the company's joint venture Hainan Yisheng annual output
of 2.5 million tons of purified terephthalic acid (PTA) project entered the trial
production stage; annual output of 1.8 million tons of functional materials project, the
first set of 600,000 tons of annual production capacity of the device has been trial
production, the two sets of 1.2 million tons of annual production capacity of the device
will be carried out in 2024 for the trial production, which will further enhance the
company's position in the industry. At the same time, the company vigorously promote
Qinzhou "annual output of 1.2 million tons of caprolactam - polyamide industry
integration and supporting projects", after the project is completed and put into
operation, the company's performance is expected to further thicken, increase the
company's market share in the field of bottle flakes, nylon and other areas, effectively
strengthen the downstream industrial chain, give full play to the company's "Polyester
+ polyamide" double "spandex" drive unique advantages, and further enhance the
upstream and downstream highly matched balanced integration of industry chain
advantages.
2. Technology leadership, accelerate the “industrial Hengyi” to “science and
technology Hengyi” innovation transformation
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
In 2023, the Company will focus on the core key technology of "one drop of oil, two
threads", strengthen the investment in R&D of scientific and technological innovation,
strongly promote the comprehensive innovation with science and technology as the
core, accelerate the transformation and application of relevant high-tech achievements,
and build up momentum and empower the Company's high-quality development.
During the reporting period, the Company actively introduced high-level R&D talents,
optimized the incentive mechanism and system for scientific research, and actively
created a corporate innovation culture of "creating and sharing"; at the same time, the
Company actively cooperated with Zhejiang University, Donghua University and other
famous universities in China to build the "Hengyi Scholars Laboratory", which is led
by famous professors in the industry. At the same time, the company actively cooperates
with Zhejiang University, Donghua University and other famous universities in China
to build the "Hengyi Scholars Laboratory" led by famous professors in the industry, and
establishes a joint research and development platform to break through the bottlenecks
of research and development, and to develop forward-looking innovative technologies.
In 2023, the company invested RMB 744 million in R&D, with a total of 1,027 R&D
personnel, accounting for 6.61% of the company's total headcount, of which the number
of R&D talents with doctoral degrees was 79. As of the end of the reporting period, the
company's innovation achievements continue to emerge, and Hengyi and its
subsidiaries have 422 validly authorized patents, of which 262 are valid invention
patents. The company's innovation development has achieved milestones, laying a solid
foundation for the next step of scientific and technological innovation development.
During the reporting period, Hengyi Petrochemical, relying on years of experience in
the petrochemical and chemical fibre industry, continued to play a leading role in the
industry, and the company has won major scientific and technological awards such as
the "First Prize of Scientific and Technological Progress of China Textile Association
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
in 2023", "Second Prize of Zhejiang Provincial Technical Invention Award", "Second
Prize of Technical Invention Award of China Chemical Industry Association in 2023",
etc. The company has taken part in the formulation and revision of a total of 40
standards, among which there are 10 national standards, 24 industry standards and 6
group standards.
During the reporting period, the company focused on strategic R&D directions,
breaking through key R&D projects such as "Research and Development Project of
Flame Retardant Cationic Polyester Fibre", which demonstrated its strong R&D
strength; and realizing the "Polyester Titanium Polycondensation Catalyst Preparation
Technology", The industrialization of projects such as "Polyester Titanium
Condensation Catalyst Preparation Technology", "Green Manufacturing of TiO2
Matting Agent for Nylon and Complete Set of Technology for Industrialization and
Application of Fully Matting Nylon" and "Research and Development of Zinc Oxide
Antibacterial Polyester Fibre" has enhanced the competitiveness of the differentiated
products and injected new impetus for the company's long-term and steady
development.
3. Keeping up with demand and strengthening production and marketing linkages
In 2023, to enhance the market sensitivity of various business departments and leverage
the guiding role of "Hengyi Brain" in scientific decision-making, the company
established the "Industry Chain Research Group" on the basis of the original "Market
Information Tracking Professional Team." This group deeply covers various segmented
markets upstream and downstream of the "Refining-Chemical-Fiber" industry chain. It
conducts in-depth analysis from the perspectives of market data, industry dynamics,
etc., and regularly produces professional research reports. These reports serve as the
basis for important decisions such as company production and sales coordination,
strategic planning, etc. The group has become an indispensable "nerve center" for the
company.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Relying on the digital visualization platform "Hengyi Brain" and its research team, the
Company gained insights into domestic and overseas market conditions, strengthened
market prediction, swiftly adjusted its business strategies, and optimized its product
and market structure to meet market demand and strengthen its competitive strength.
During the reporting period, the proportion of the Company's differentiated products
increased rapidly, and the added value of the products was significantly enhanced,
which provided the original impetus for the Company to consolidate its leading position
in the industry and seize the market share.
4. Improve quality and efficiency, fine management and stable operation
In 2023, while responding to the external market, the Company took "improving quality
and increasing efficiency" as the key to continuously improve internal operational
efficiency, fully implemented the production and operation tasks of each business line,
strictly controlled operational risks and ensured the stable operation of the business.
During the reporting period, the Company strengthened fine management, formulated
a detailed management system, continuously optimised workflow, deepened digital
operation empowerment, and continued to promote the management culture of striving
for excellence, constructing a closed loop of closely-connected and efficiently-
operating management processes, which significantly enhanced the timeliness,
accuracy and comprehensiveness of the Company's management, and promoted the
Company's per capita efficiency to continue to improve, meet the demand for refined
operation and assist the Company's high-quality development. The company's
management process is closed loop.
During the reporting period, the Company dug deep into the potential of process cost
reduction and efficiency enhancement, attached importance to the optimization and
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
innovation of process technology, and reduced production costs, improved production
efficiency and product quality through the introduction of advanced equipment and
improvement of process flow, thereby enhancing market competitiveness. At the same
time, the company strengthens cost control, comprehensively covering all aspects of
raw material procurement, manufacturing to sales and service, fine management and
reduce losses. In addition, the company actively explores ways to reduce costs and
increase efficiency, and continues to carry out the circular economy, implement green
production and improve resource utilization efficiency, laying a solid foundation for
steady development.
5. Green drive, practising sustainable development
In 2023, the company is committed to becoming an industry-leading chemical
innovation and technology enterprise, actively responding to the national carbon peak
and carbon neutral policy, adhering to the "green manufacturing" and "circular
economy" as the guidance, and continuing to practice and promote the green and low-
carbon transformation of the industrial chain, and actively exploring the innovation of
green polyester fibre products, of which the flame retardant fibre products are in the
leading position in the country, and the production and sales volume continue to
increase. We are actively exploring the innovation of green polyester fibre products, of
which the flame-retardant fibre products are in the leading position in the country, and
the output and sales volume continue to increase; the key technology of in-situ
polymerisation of anti-bacterial polyester has made a breakthrough, which has a broad
prospect.
Procurement pattern of major raw materials
Currency unit: RMB/Tons
Main raw Procurement Percentage Has the Average Average
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
materials model of total settlement price in the price in the
amount of method first half of second half
purchase changed the year of the year
significantly?
Purchasing
Crude oil 21.43% No 4,293.01 4,841.10
inquiry
Purchasing
PX 14.27% No 7,191.23 7,565.98
inquiry
Purchasing
MEG 6.52% No 3,598.00 3,523.51
inquiry
Reasons for the significant change in the prices of raw materials compared with
the previous period
During the reporting period, there were significant changes in the prices of the
Company's raw materials compared to the previous reporting period, mainly due to
higher interest rates as a result of the Federal Reserve's interest rate hike, as well as
slower growth in downstream demand and weaker upstream investment as a result of
geopolitical turmoil. Crude oil prices were constrained by macroeconomic pressures,
the risk of supply disruptions and expectations of falling demand, resulting in increased
price volatility throughout the year and overall lower prices compared to the same
period. According to CCF data, the average price of WTI crude oil fell 17.62 per cent
year-on-year in 2023 and the average price of Brent crude oil fell 16.82 per cent year-
on-year.
The purchase price of energy accounts for more than 30% of the total production
cost
□Applicable Not applicable
Reasons for significant changes in major energy types
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
□Applicable Not applicable
Main production technologies
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage of Core Patented
Main products production technical Advantage in product R&D
technology
technology personnel
Mass Multiple Introduction Advanced equipment and technology, high production
Gasoline
production persons and innovation capacity, low costs of raw materials and transportation, and
high level of eco-friendliness
Mass Multiple Introduction Advanced equipment and technology, high production
Diesel
production persons and innovation capacity, low costs of raw materials and transportation, and
high level of eco-friendliness
Mass Multiple Introduction Advanced equipment and technology, high production
Kerosene
production persons and innovation capacity, low costs of raw materials and transportation, and
high level of eco-friendliness
Introduction Advanced equipment and technology, high production
Paraxylene Mass Multiple
and capacity, low costs of raw materials and transportation, high
production persons
innovation product purity, and long operating cycle of the plant
Mass Multiple Introduction Advanced equipment and technology, high production
Benzene
production persons and innovation capacity, low costs of raw materials and transportation,
high product purity, and long operating cycle of the plant
Purified Mass Multiple Introduction High production capacity, low investment, low energy
terephthalic production persons and innovation consumption, convenient transportation and high level of
acid eco-friendliness
Polyester Mass Multiple Introduction Short process, high production capacity, low consumption
production persons and innovation of raw materials and public works, etc.
The third and fourth monomers are added into the
polymerization reaction system, and a special equipment
structure is adopted. Through esterification,
polycondensation and final polycondensation reaction,
Mass Multiple Introduction low-temperature dyeable cationic polyester is prepared,
Polyester
production persons and innovation 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.
Mass Multiple Introduction No dulling agent is added in the polymerization process to
Polyester
production persons and innovation produce super bright polyester products to meet the needs
of different customers with low production costs
By adding dulling agents in the polymerization process to
Mass Multiple Introduction produce full dull polyester products, the problem of low
Polyester
production persons and innovation filter life due to the increase of dulling agents is solved and
energy consumption is reduced.
By optimizing the design of the reactor structure and
Wide range adding titanium-based catalysts instead of antimony-based
Multiple Introduction catalysts, the catalyst is uniformly dispersed in the
Polyester of
persons and innovation material, and an environmentally-friendly antimony-free
applications
polyester product is produced, realizing a high level of eco-
friendliness.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
The masterbatch preparation process has been improved,
the types and proportions of silver-based antibacterial
Mass Multiple Introduction agent, PBT powder mixture and dispersant have been
Polyester
production persons and innovation 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.
Wide range
Multiple Introduction Maximum output, highest conversion rate and lowest
Polyester of
persons and innovation energy consumption are realized
applications
Wide range By tapping the potential of equipment, the effect of
of Multiple Introduction
Polyester increasing production and efficiency has been achieved
persons and innovation
applications without increasing investment
Wide range Through recycling, energy utilization rate is improved; by
of Multiple Introduction
Polyester continuously introducing energy-saving technologies,
applications persons and innovation production costs have been reduced.
Wide range It extends the filter service life, reduces labor waste, and
Polyester of Multiple Introduction saves packaging costs, bringing considerable economic
applications persons and innovation benefits to the Company
Through modification during the polymerization reaction,
the fluidity and ductility of the polyester melt are improved.
With the same polymerization residence time, the intrinsic
Wide range
Multiple Introduction viscosity of the product is higher than that of the
Polyester of
persons and innovation conventional polyester, and the processing performance of
applications
the melt is also improved. A utility model patent has been
granted for this technology. The patent number is
ZL201120219233.4.
Through independent R&D, the Company has successfully
Wide range
Multiple Introduction developed and produced titanium dioxide for polyamide,
Polymerization of
persons and innovation and completed independent production and supply of
applications
auxiliary materials to replace imports.
Using advanced AI technology, the Company can
Wide range automatically monitor the spinning process, and detect and
Spinning of Multiple Introduction deal with abnormalities in a timely manner, thereby
applications persons and innovation improving the product quality and production efficiency
and reducing the cost
Using advanced AI technology, the Company can
Wide range Multiple Introduction automatically inspect the appearance defects of fully drawn
Spinning of persons and innovation yarn rolls, thereby improving the production efficiency and
applications reducing the cost
Using advanced automation technology, the Company
Wide range
Spinning of Multiple Introduction realizes the automation of the production process, greatly
reducing manual operations, improving the production
application persons and innovation
efficiency and reducing the cost
Using advanced automation technology, the Company
Wide range
Spinning of Multiple Introduction realizes the automation of the production process, greatly
reducing manual operations, improving the production
application persons and innovation
efficiency and reducing the cost
Using advanced technology, the Company shortens the
Mass Multiple Introduction process flow and increases the production capacity and
Spinning
production persons and innovation degree of differentiation, maintaining stable product
quality with low utility costs
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Using the melt direct spinning POY→DTY process route,
the melt is ejected from the independently designed
Mass Multiple Introduction "straight-line"-shaped spinneret hole, and then cooled,
Spinning
production persons and innovation 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.
Using the melt direct spinning POY→DTY process route,
the melt is ejected from the independently designed
Mass Multiple Introduction "cross"-shaped spinneret hole, and then cooled, oiled,
Spinning
production persons and innovation 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.
Using the melt direct spinning PDY process route, the melt
is ejected from the independently designed "tree"- or
Mass Multiple Introduction "star"-shaped and other special-shaped spinneret holes,
Spinning
production persons and innovation 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.
The functional self-heating masterbatch is added to
produce the functional hollow polyester fibre. It can be
Mass Multiple Introduction used as the "core layer" of the heat retaining and
Spinning
production persons and innovation comfortable composite fibre, with double heat retaining
effects. A utility model patent has been granted for this
technology. The patent number is ZL201410481816.0.
Wide range Multiple Introduction With the use of advanced equipment and process
Spinning of persons and innovation technology, short process, high degree of automation, and
applications low manufacturing cost are achieved.
Wide range Multiple Introduction Through technical improvement, the manual operation
Spinning of persons and innovation cycle is extended, the product quality stability is improved,
applications and the resource consumption and cost are reduced
By installing in-line addition equipment, dynamic and
static mixing equipment, oiling nozzles, winders, etc. on
the melt direct spinning line, the existing equipment has
been transformed and upgraded, enabling the polyester
Wide range
melt direct spinning line to produce differentiated and
of Multiple Introduction high-end products. It solves the challenge of using the
Spinning
application persons and innovation
large-capacity polyester plant to produce functional
s
differentiated chemical fibres of multiple varieties in small
batches. Functional modified fibres are produced,
including colored, flame-retardant, antibacterial and full
dull fibres.
The self-owned technology of the Company is applied to
Wide range the production of flame-retardant polyester. Single-
Multiple Introduction component spinning or composite spinning technology is
Spinning of
persons and innovation used to produce single-component or two-component
applications
sheath-core composite flame-retardant and anti-dripping
POY-DTY polyester fully drawn yarn.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Wide range Through independent R&D, the Company produces
Multiple Introduction polyester and polyamide, SPH, sea-island, cationic dyed
Spinning of
persons and innovation polyester and other composite yarns to meet the high-end
applications
market demand
Wide range Through independent R&D, the Company produces
Multiple Introduction differentiated and functional products such as HOY and
Spinning of
persons and innovation medium-strength yarns for segment markets, meeting the
applications
needs of specific users
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-
Wide range temperature setting is adopted and appropriate tangle jets
Multiple Introduction
Spinning of
persons and innovation are used to reasonably control the tangle air pressure
applications 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.
Wide range Through independent R&D, the Company produces oils
Multiple Independent suitable for the spinning process to improve the processing
Spinning of
persons R&D performance of the product, so that the weaving process
applications
can proceed smoothly and the product quality is excellent.
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
Wide range
Multiple Introduction different structural densities, resulting in the difference in
Spinning of
persons and innovation color absorption and dyeing rates, and realizing multiple
applications
colors after dyeing. It has brought significant economic
and social benefits. A utility model patent has been granted
for this technology. The patent number is
ZL200710070581.6.
The graphene masterbatch and PET flakes are blended and
spun into yarns. A spinneret with a 4C aperture is used to
Wide range prepare hollow graphene polyester fibre POY, and the
Multiple Introduction fluffy curl of the polyester fibre is further improved in the
Spinning of
persons and innovation subsequent texturing process. This gives the polyester fibre
applications
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.
The antimony-free polyester melt is produced by adding a
Wide range
Multiple Introduction titanium-based catalyst to polyester to instead of antimony-
Spinning of
persons and innovation based catalysis, and then antimony-free staple fibres and
applications fully drawn yarns are produced through a spinning process,
featuring high environment-friendliness.
By spinning and winding a bunch of POY and a bunch of
Wide range FDY, a new type of polyester/polyester composite yarn is
Multiple Introduction made, and it can be used for weaving high-grade artificial
Spinning of
persons and innovation silk clothing fabrics and home textile fabrics, which has the
applications
advantages of rich hand feel, anti-wrinkle property and
good drapability.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Wide range Multiple Introduction Through independent R&D, the spinning oil for FDY has
Spinning of persons and innovation been successfully prepared to replace imported oils.
applications
By controlling the temperature of false twisting
Mass Multiple Introduction deformation, the linen type is achieved, which not only has
Texturing
production persons and innovation the style of natural linen fibres, but also has the stiffness of
artificial linen fibres.
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
Mass Multiple Introduction non-intermingled low-stretch fibre and intermingled
Texturing
production persons and innovation blended fibre. Colored polyester POY is used to produce
the colored composite yarn directly by texturing,
eliminating the complicated downstream dyeing process,
reducing the cost of the product, simplifying the process
and lessening the pollution to the environment
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
Mass Multiple Introduction switching of the tangle jet airflow and the intelligent design
Texturing
production persons and innovation 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.
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
Mass Multiple Introduction supporting of pre- and post-spinning equipment, the
Texturing
production persons and innovation Company realizes independent R&D. At present, the
Company's production technology of ultra-fine fibres of
less than 0.5dpf is mature, the quality is stable, and relevant
production conditions are available. They are mainly used
for producing high-grade fabrics and decorative fabrics.
Using the production technology of wool-like fibres, POY
yarns are drawn and falsely twisted on the DTY machine,
and then compounded with DTY of the PTT component.
Wide range The PTT fibre floats on the surface of the yarn and exerts
Multiple Introduction
Texturing of its excellent wearing performance. The high-shrinkage
persons and innovation
applications modified PET fibre is placed in the inner layer of the yarn
to exert its rigid supporting effect and bring out a stronger
sense of uprightness. A utility model patent has been
granted for this technology. The patent number is
ZL201010174972.4.
Wide range The false-twisting texturing technology is used to produce
Multiple Introduction
Texturing of polyester fully drawn yarn with good hollowness and clear
persons and innovation
applications profiled outline, and high requirements for conformal
properties such as profile degree and hollowness
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
The technology is independently developed by the
Wide range Company and is used to process DTY of various colors
Texturing of Multiple Introduction such as black, red, grey, and yellow. The color is uniform
applications persons and innovation 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.
The core technology of this product is the current
Multifunctional international advanced high-temperature crystallization
Leading in Multiple Introduction
polyester bottle and solid-phase polycondensation process with short
China persons and innovation
flakes process and low energy consumption. The comprehensive
energy consumption per unit of product has reached the
leading level in China
Production capacity of main products
Please refer to the section headed "II. MAJOR BUSINESSES OF THE COMPANY
DURING THE REPORTING PERIOD (I) Overview of major businesses.
Major chemical parks Main product categories
PMB Industrial Park Gasoline, diesel, jet fuel, PX, and benzene
Hangzhou Linjiang High-tech Industrial Park Flake, staple fibre, POY, FDY, CPL
Haining Economic Development Zone
Flake, POY, FDY, and DTY
(Jianshan New District)
Suqian High-tech Industrial Development
Flake and staple fibre
Zone
Jiaxing Xiuzhou High-tech Industrial
Flake, POY, and FDY
Development Zone
Shaxi Town Industrial Park Flake and POY
Ningbo Petrochemical Economic and
PTA
Technological Development Zone
Dalian Economic and Technological
PTA and bottle flake
Development Zone
Hainan Yangpu Economic Development Zone PTA and bottle flake
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Jingjiang Yinglin Town Industrial Park FDY, staple fibre, flake
EIA approvals being applied for or newly obtained during the reporting period
1. Zhejiang Hengyi High-tech Material Co., Ltd. submitted a new type of energy-saving
and environmentally friendly boiler renovation project for the record on 14th September,
2022, and obtained the approval of EIA on 13th April, 2023 (Hangzhou Huanyuanqian
evaluation approval [2023] No. 22);
2. Zhejiang Shuangtu New Materials Co., Ltd. submitted the thermal oil boiler
substitution project for filing on 14th September 2022, and obtained the EIA approval
on 13th April 2023 (Hangzhou Huanchengqian Assessment and Approval [2023] No.
23);
3. Zhejiang Hengyi Polymer Co., Ltd. submitted a new type of energy-saving and
environmentally-friendly boiler replacement and transformation project for filing on 31
July 2023, and obtained the EIA approval on 19 February 2024 (Xiaohuanjian [2024]
No. 23).
Unusual suspension of production of the listed company during the reporting
period
□Applicable Not applicable
Relevant approvals, permits, qualifications and validity periods
Validity
SN Holder Certificate name Certificate No. Issuer
period
Hengyi 9133000076521 Hangzhou August
1 Emission Permit
Limited 5943G001Y Municipal Ecology 27,2028
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
and Environment
Bureau
Hangzhou
Hengyi 9133010066800 Municipal Ecology November
2 Emission Permit
High- Tech 33406001Q and Environment 25, 2026
Bureau
Hangzhou
Hengyi 9133010972452 Municipal Ecology November
3 Emission Permit
Polymer 83880001P and Environment 02, 2026
Bureau
Department of
Hengyi Radiation Safety ZHFZ NO. Ecology and September
4
Polymer Permit A2255 Environment of 19, 2024
Zhejiang Province
Jiaxing Municipal
Jiaxing 91330411MA28 Ecological September
5 Emission Permit
Yipeng BLMY30001V Environment 21, 2026
Bureau
Suzhou Municipal
Taicang 91320585MA1P Ecological February
6 Emission Permit
Yifeng 1GPBXM001V Environment 29, 2028
Bureau
Hangzhou
Shuangtu
9133010056605 Municipal Ecology November
7 New Emission Permit
0736P001Y and Environment 26, 2026
Materials
Bureau
Hangzhou
Shuangtu
Radiation Safety ZHFZ NO. Municipal Ecology December
8 New
Permit A3048 and Environment 12, 2028
Materials
Bureau
Quanzhou
Municipal
Fujian 91350582MA31 April 07,
9 Emission Permit Ecological
Yijin G07Q8C001V 2026
Environment
Bureau
10 Suqian Emission Permit 91321311MA1 Suqian Municipal November
65
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Yida UXUC8XJ001R Ecological 05, 2028
Environment
Bureau
Suqian Municipal
Suqian Radiation Safety SHFZ No. Ecological January
11
Yida Permit N0199 Environment 12, 2027
Bureau
Suqian Suqian Municipal
Hengyuan 91321311MA25 Ecological December
12 Emission Permit
Thermal ADT26R001V Environment 27, 2028
Energy Bureau
Jiaxing Municipal
Haining
91330481MA29 Ecological July 22,
13 Thermal Emission Permit
HXML34001R Environment 2025
Power
Bureau
Jiaxing Municipal
Haining
91330481MA29 Ecological July27,
14 New Emission Permit
HRX724001V Environment 2025
Materials
Bureau
Hangzhou
Hengyi
9133010067060 Municipal Ecology August 20,
15 Caprolacta Emission Permit
49462 and Environment 2028
m
Bureau
Department of
Hengyi
Radiation Safety ZHFZ NO. Ecology and January
16 Caprolacta
Permit A3044 Environment of 16, 2027
m
Zhejiang Province
Beilun Branch of
Zhejiang 9133020074497 Ningbo Municipal 2028.Aug
17 Emission Permit
Yisheng 3411W001W Bureau of Ecology ust, 02
and Environment
Department of
Zhejiang Radiation Safety ZHFZ NO. Ecology and November
18
Yisheng Permit B2005 Environment of 17, 2024
Zhejiang Province
19 Hainan Emission Permit 9146030055279 Yangpu Economic May 14,
66
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Yisheng 89627001P Development Zone 2026
Ecological
Environment
Bureau
Department of
Hainan Radiation Safety QHFZ Ecology and December
20
Yisheng Permit No.00153 Environment of 26, 2026
Hainan Province
(Qiong) WH Hainan Provincial
Hainan Safety Production Security Department of March 29,
21
Yisheng Licence Licence No. Emergency 2027
(2024) 10 Management
Qiongpu Yangpu Economic
Dangerous and Development Zone
Hainan Hazardous Chemicals March 08,
22 Chemical Administrative
Yisheng Business Licence 2025
Economic Approval Service
[2022]0084 Bureau
Port Operation Yangpu Economic
2025.Sept
Hainan Licence of the (Qiongpu) Development Zone
23 ember 30,
Yisheng People's Republic of HKEX (0017) Transport and
2025
China Harbour Bureau
Production Safety
Standardisation Level QIONG Hainan Geological
Hainan 2024.July0
24 3 Enterprises AQB469034HG Testing and
Yisheng 6, 2024
(Hazardous M202100002 Research Centre
Chemicals)
Certificate of the Ministry of
Cross Harbour
Hainan People's Republic of Transport of the May 20,
25 Coast 2015 No.
Yisheng China for the Use of People's Republic 2065
50
Port Shoreline of China
Chemical
Registration
Certificate of
Hainan Centre of the February
26 Registration of 46902400021
Yisheng Ministry of 03, 2027
Dangerous Chemicals
Emergency
Management
67
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Reference
Hainan Provincial
Certificate of boiler
Hainan Pot 12 Joan Bureau of Quality
27 Registration of inspection
Yisheng A0007(13) and Technical
Special Equipment qualificati
Supervision
on period
HNSGHI ISPS-
Certificate of Hainan Provincial
Hainan 2021- August 09,
28 Conformity for Port Port and Maritime
Yisheng 004HNSGHI 2026
Facility Security Administration
ISPS-2021-007
460420140001/ Hainan Provincial
V00014604201 Department of
Hainan Radio Registration June 09,
29 40001/LM0001 Industry and
Yisheng Certificate 2031
Qiong ground Information
(2021)00022 Technology
Dalian Municipal
Yisheng 9121021378730 Ecology and October
30 Emission Permit
Dahua 94570001R Environment 13, 2028
Bureau
Dalian Municipal
Yisheng Radiation Safety LHFZ No. Ecology and November
31
Dahua Permit （B0001） Environment 25, 2026
Bureau
Engaged in petroleum processing and petroleum trading
Yes □ No
Engaged in fertilizer industry
□Yes No
Engaged in pesticide industry
□Yes No
Engaged in chlor-alkali and soda ash industry
□Yes No
68
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
III. Analysis of core competitiveness
1. Focus on the main business, strategic leadership
The company has been investing in the petrochemical and chemical fiber industries for
many years, accumulating significant expertise and resources. The company continues
to focus on the main business of "one drop of oil, two threads", and has formed a highly
integrated and deeply synergistic integrated industrial cluster, with three core
businesses of refining, PTA and polyester fibre, and is actively building a platform, two
centers and six bases in accordance with the trinity model of "headquarters + scientific
research + base", constructing "backed by the Yangtze River Delta, Pearl River Delta,
Bohai Bay and facing the South China Sea". In accordance with the "headquarters +
scientific research + base" trinity mode, the company is actively building a platform,
two centres and six bases, constructing a market pattern of "backing the Yangtze River
Delta, Pearl River Delta, Bohai Bay and facing the South China Sea", helping to cross
the cycle with sound operation and comprehensively enhancing the company's
development kinetic energy.
Strategic layout of the Southeast Asian market, accelerating the internationalization
process. The company took the lead in deploying the first phase of the Brunei project
overseas, actively responding to the “Belt and Road” initiative, seizing the development
opportunities in the Southeast Asian market, promoting the expansion of the industry
in the direction of internationalization, realizing the extension of the industrial chain
upwards, and assisting the integration of the strategic blueprint to move forward
steadily.
Hengyi (Brunei) PMB Petrochemical Project is the first large-scale overseas
petrochemical project that fully implements Chinese standards. It is the first private
refining and chemical project of the Company to realize the international layout of its
production capacity and to put into practice China's "One Belt, One Road" initiative,
and it has received unanimous and high level of support from the governments of the
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Chinese and English-speaking countries. At present, Brunei Project Phase II is carrying
out the work of dike blowing and filling construction, and all the work is progressing
in an orderly manner. The completion of Brunei Project Phase II will help the Company
to further reduce production costs, stabilize the supply of raw materials, optimize the
product structure and continue to enhance the overall profitability of the Company.
2. Enabling research and development, leading by science and technology
Deep research and development heritage, and continue to enhance the industry's leading
power. The company attaches great importance to technological research and
development innovation, and constantly explores cutting-edge technologies to lead
product and process innovation. Closely focusing on the strategic policy of
"consolidating, highlighting and optimising the competitiveness of the main business",
the company has taken the lead in applying polyester melt spinning technology, large-
scale PTA technology and caprolactam green high-end technology, highly leading the
development of the industry.
Focusing on high-end fields and accelerating the implementation of scientific research
results. The company has long been focusing on the R&D and application of high-end
technologies and products in the field of petrochemicals and chemical fibres. Relying
on the platform of schools and enterprises, the company realizes the leading technology
and "diversification, serialization, quality and uniqueness" of product structure, carries
out the R&D of new products and technologies related to the whole industrial chain,
and realizes the development of new and high-tech products and the transformation of
scientific and technological achievements with the full-process, flexible technology,
development and transformation of scientific and technological achievements, with
leading technology level in the industry.
Dedicated research organisation to achieve synergistic transformation of production,
learning, research and application. Hengyi Research Institute under the company is
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
committed to the research and development of advanced materials and green chemicals,
actively enhancing its innovation leading ability, taking the initiative to assume the
main responsibility for the transformation of scientific and technological achievements,
launching new products into the market and realising economic benefits, so as to
accelerate the landing of cutting-edge technological achievements. In addition, the
company has invested in the construction of the Hengyi Global Innovation Centre in
Hangzhou for research and development of future-oriented advanced technologies, and
has established joint research and development platforms with Zhejiang University and
Donghua University to promote synergistic innovation between schools and enterprises
and provide innovation power for the company's long-term development. At present,
the company has formed a complete combination of "production, learning, research and
use" of scientific and technological innovation mechanism, can effectively achieve the
sharing of technological innovation resources and complement each other, so as to
continuously improve the company's technological innovation ability, scientific
research level and market responsiveness.
Adhering to the concept of green environmental protection and sustainable
development. The company pays attention to the recycling of polyester throughout its
life cycle, breaks through the existing technical difficulties, and realises high-quality
recycling of polyester. At the same time, through independent projects and research and
development, the company has produced safe, high-quality, environmentally friendly
green polyester products, such as the company's innovative green polyester products
"Yitaikang", and high-performance polyester materials prepared from bio-based raw
materials. By promoting green manufacturing, the company is able to effectively reduce
pollutants in the production process of downstream enterprises and contribute to the
green cycle of the entire life cycle of textiles.
3. Integration and synergy, significant scale
It is a leading chemical and chemical fibre enterprise, continuously extending,
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
supplementing and strengthening the chain. The company has developed into a leading
enterprise in the integration of "PX-Polyester" and "Benzene-Nylon" industry chain,
and has continuously extended, supplemented and strengthened the chain through the
construction of upstream refineries overseas and the expansion of middle and
downstream in ChinaThe company has built a balanced and balanced integrated
industry chain of "crude oil-PX-PTA-polyester" and "crude oil-benzene-CPL-nylon"
by constructing upstream refineries overseas and expanding downstream at home. The
company's upstream, midstream and downstream raw materials are coordinated to
achieve the balanced and coordinated development of the whole industrial chain from
the unique large refining to the matching of PX, PTA and polyester (PET) production
capacity.
The company's production capacity is at the forefront of the industry, with obvious scale
advantages. The company has an existing refining design capacity of 8 million tons, a
holding capacity of 21.5 million tons of PTA, a holding capacity of 11.115 million tons
of polyester and a holding capacity of 400,000 tons of caprolactam. The company
continuously consolidates and expands the advantages of production capacity scale in
each segment, optimises and upgrades the industrial model, promotes the quantitative
change of the company's operation scale and the qualitative change of the business
structure, pushes forward the investment and application of large-scale devices and
energy-saving and consumption-reduction technologies, continues to guarantee the
operation of the production devices and the stability of the products' quality, and
continuously improves the production efficiency, which greatly reduces the investment
cost per unit and the energy consumption per unit and the unit cost of the products has
a significant advantage in the same industry. At the same time, large-scale procurement,
domestic and international project integration and centralised procurement enable the
company to have strong operational capability, obtain advantageous prices and save
procurement costs, which provides a strong guarantee for the profitability of the final
products.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
4. Excellent talents and advanced management
The management and operation team has outstanding professional ability and advanced
management experience. The Company has an international, professional and
vocational management and operation team with solid professional knowledge and rich
experience in the industry, which constantly injects vitality into the Company's high-
quality development. At the same time, the Company has established a perfect internal
system by drawing on the management experience of advanced organisations at home
and abroad, and continues to implement organisational structure optimisation to
continuously improve the efficiency of the Company's organisational management and
operation and give full play to the synergy advantage of scale.
Solidly promote the construction of industrial talent team, and strongly guarantee the
strategic transformation and upgrading of science and technology. The Company
attaches importance to talent introduction and talent cultivation, strengthens the
construction of management and technical talents, actively introduces domestic and
foreign senior management and technical talents through various channels, and
improves the internal talent cultivation mode combining "production, study, research
and application" to provide employees with good career development channels. The
company's Brunei project steadily improves the degree of staff localisation, and
strongly supports the growth of Brunei's local youth to achieve win-win talent
cooperation.
Improve the incentive mechanism, employees share the same creation. In terms of
employee incentives, in addition to providing employees with competitive benefits in
the industry, the Company has implemented two phases of Restricted Share Incentive
Plan and six phases of Employee Share Ownership Plan since 2015. As of the date of
disclosure of this report, the Company is continuing to promote the fourth phase of the
share repurchase plan to reserve for the subsequent implementation of the Employee
Share Ownership Plan or equity incentives, which has fully mobilised employees'
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
motivation and attracted high-calibre talents to join the Company. The establishment of
the long-term development and sharing mechanism has effectively enhanced the sense
of belonging and cohesion of employees and provided a talent base for the Company's
long-term development.
5. Digital Intelligence Integration, Efficient Operation
Closely integrated with information technology, the company has established a digital
intelligence system. The company has established the information strategy of
"Petrochemical + Industrial Internet", actively carried out industrial digital and
intelligent transformation, promoted the deep integration of new-generation
information technology and petrochemical manufacturing industry, and realised a high
degree of collaboration across the whole industry chain. As an industry leader, the
company actively builds digital workshops and intelligent factories, completing the first
full-process intelligent polyester factory and the first digital benchmark factory in
China; creatively proposes the single ingot data flow system to achieve the full life
cycle management of single ingot products; develops its own finished product
warehousing system to realize the efficient flow of products in the factory, optimize the
operation process and enhance the ability of resource integration; and opens up the data
barriers through intelligent manufacturing. The company is the first in the industry to
create a whole-life product quality traceability system and an intelligent sales supply
chain system, and has independently developed the visual "Hengyi Brain" to help the
company realise digital upgrading. The company's intelligent construction has won the
2nd China Benchmark Intelligent Factory, China Intelligent Manufacturing Best
Practice Award, the first batch of enterprise CDO pilot enterprises in Zhejiang Province,
China Textile Union Product Development Contribution Award, China Computer
Federation Outstanding Cases of Enterprise Digitalisation Development, and China
Industrial Internet Distinguished Application Award, among other awards.
Integrated supply chain platform, forming efficient closed-loop operation. The
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
company innovates the customer service ecosystem, builds the integrated platform of
chemical fibre supply chain with micro-mall, supply chain finance and warehousing
and logistics, externally combines the internet marketing and customer social
experience management, from the customer placing order independently to the
supporting supply chain service, from realizing the full process of sales data display to
providing the multi-dimensional portrait data service; internally realizes the data
sharing of each business system, improves the data interaction efficiency, and
eliminates the information circulation obstacles. It has also achieved data sharing
among business systems, improved data interaction efficiency, eliminated information
circulation barriers, and formed a closed-loop process of supply chain business, such
as sales, collection, scheduling, delivery, dispatching, loading, and invoicing.
At the same time, the company aims to become the leader of chemical fibre industrial
Internet, play its own supply chain supporting advantages, actively build the industry
ecosystem, and strive to build an integrated platform with the characteristics of the
chemical fibre industry, providing digital management, intelligent manufacturing,
online trading, logistics services, market analysis, production, supply and marketing
coordination, supply chain finance and other types of digital solutions for the chemical
fibre industry, to deeply empower the development of the chemical fibre industry, and
to do a good job as the industry digital leader. The industry digitalisation leader.
IV. Analysis of main business
1. Overview
In 2023, the Company achieved total operating revenue of RMB136.148 billion, net
profit attributable to shareholders of the listed company of RMB 435 million, and net
profit attributable to shareholders of the listed company of RMB 53.6858 million after
deducting non-recurring gains and losses, achieving a turnaround.
2. Revenue and costs
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(1) Composition of operating income
Currency unit: RMB
2023 2022 Year-on-
year
Percentage in
Percentage in
Amount Amount increase/d
operating income
operating income
e crease
Total operating
136,148,114,082.34 100% 152,050,274,944.64 100% -10.46%
income
By industry
Petrochemical
56,484,387,971.19 41.49% 59,269,682,296.57 38.98% -4.70%
industry
Chemical fibre
52,243,154,781.06 38.37% 46,316,793,158.99 30.46% 12.80%
industry
Supply chain
27,420,571,330.09 20.14% 46,463,799,489.08 30.56% -40.99%
services
By product
Refinery products 31,841,158,971.62 23.39% 41,531,346,473.30 27.31% -23.33%
Chemical
12,145,808,146.64 8.92% 8,599,075,610.04 5.66% 41.25%
products
PTA 11,572,721,877.37 8.50% 8,966,680,849.79 5.90% 29.06%
PIA 924,698,975.56 0.68% 172,579,363.44 0.11% 435.81%
Polyester yarn 46,359,718,319.18 34.05% 41,123,434,064.32 27.05% 12.73%
Flake 5,883,436,461.88 4.32% 5,193,359,094.67 3.42% 13.29%
Supply chain
27,420,571,330.09 20.14% 46,463,799,489.08 30.56% -40.99%
services
By region
Domestic 84,946,111,780.67 62.39% 98,119,165,712.07 64.53% -13.43%
Overseas 51,202,002,301.67 37.61% 53,931,109,232.57 35.47% -5.06%
By sales model
Direct sales 132,413,772,035.05 97.26% 150,056,276,149.80 98.69% -11.76%
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Distribution 3,734,342,047.29 2.74% 1,993,998,794.84 1.31% 87.28%
(2)Industries, products, regions, and sales models that account for more than 10%
of the Company's operating income or profit
The Company shall comply with the disclosure requirements for petrochemical
industry specified in Guidelines No. 3 for Self-Regulation of Listed Companies of
Shenzhen Stock Exchange - Industry Information Disclosure
Currency unit: RMB
Increase or
decrease in
Increase or Increase or
gross profit
decrease in decrease in
margin
Gross operating income operating cost
compared
Operating income Operating cost profit compared with compared with
with the
margin the same period the same period
same
of the previous of the previous
period of
year year
previous
year
By industry
Petrochemical
56,484,387,971.19 54,021,381,180.67 4.36% -4.70% -4.80% 0.10%
industry
Chemical fibre
52,243,154,781.06 50,038,957,948.78 4.22% 12.80% 9.66% 2.74%
industry
Supply chain
27,420,571,330.09 26,969,894,553.43 1.64% -40.99% -41.55% 0.95%
services
By product
Refinery
31,841,158,971.62 30,756,174,029.44 3.41% -23.33% -21.28% -2.51%
products
Chemical
12,145,808,146.64 10,728,464,028.04 11.67% 41.25% 28.08% 9.08%
products
PTA 11,572,721,877.37 11,671,156,811.34 -0.85% 29.06% 28.42% 0.51%
PIA 924,698,975.56 865,586,311.85 6.39% 435.81% 320.13% 25.77%
Polyester yarn 46,359,718,319.18 44,281,108,046.88 4.48% 12.73% 9.10% 3.17%
Flake 5,883,436,461.88 5,757,849,901.90 2.13% 13.29% 14.15% -0.74%
Supply chain
27,420,571,330.09 26,969,894,553.43 1.64% -40.99% -41.55% 0.95%
services
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
By region
Domestic 84,946,111,780.67 82,286,414,562.98 3.13% -13.43% -15.52% 2.40%
Overseas 51,202,002,301.67 48,743,819,119.90 4.80% -5.06% -4.63% -0.43%
By sales model
Direct sales 132,413,772,035.05 127,509,011,660.83 3.70% -11.76% -12.96% 1.33%
Distribution 3,734,342,047.29 3,521,222,022.05 5.71% 87.28% 74.30% 7.02%
The Company's main business data in the year adjusted according to the caliber
at the end of the reporting period as the statistical caliber of the Company's main
business data was adjusted during the reporting period
□Applicable Not applicable
Currency unit: RMB, 10,000 tons
Product name Capacity Sales volume Price trend during the Reason for
Income realized
reporting period change
Refinery First down, then up, Market
580.24 582.50 31,841,158,971.62
products overall, down reasons
First up and then Market
Polyester yarn 672.71 677.44 46,359,718,319.18
down; overall stable reasons
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 Operation Impact of tax policies on overseas business during the reporting
status period Company's response
business
Both China and
The overall tax burden during the reporting period was low, Brunei provided
because Brunei does not levy personal income tax, business tax, powerful support. The
Stable
salary tax, production tax and export tax. A local pioneer project enjoyed long-
operation
Brunei enterprise certificate and an export enterprise certificate have term tax incentives
under high
been issued for the project, so it can enjoy a long-term corporate and other favorable
Project load
income tax exemption. policies.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(3) Whether the Company's income from product sales is greater than its income
from labor services
Yes □No
Year-on-year
Industry Item Units 2023 2022 increase/decre
ase
Sales volume 10,000 tons 582.50 639.12 -8.86%
Refinery Production
10,000 tons 580.24 642.25 -9.66%
products volume
Inventory 10,000 tons 12.47 14.73 -15.34%
Sales volume 10,000 tons 182.77 201.79 -9.43%
Chemical Production
10,000 tons 181.84 202.39 -10.15%
products volume
Inventory 10,000 tons 7.87 8.80 -10.57%
Sales volume 10,000 tons 391.78 286.27 36.86%
Production
PTA 10,000 tons 392.25 285.13 37.57%
volume
Inventory 10,000 tons 2.44 1.97 23.86%
Sales volume 10,000 tons 11.93 2.11 465.40%
production
PIA 10,000 tons 14.25 1.07 1,231.78%
volume
Inventory 10,000 tons 2.33 0.01 23,200.00%
Sales volume 10,000 tons 772.03 684.97 12.71%
Polyester Production
10,000 tons 770.79 692.19 11.36%
Products volume
Inventory 10,000 tons 51.23 52.47 -2.36%
Note: The above PTA sales, production and inventory data only include the company's
holding subsidiary, Zhejiang Yisheng, and do not include other shareholding companies.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Description of the reasons for the year-on-year change of more than 30% in
relevant data
During the reporting period, the output and sales of PIA and PTA of the Company
increased by more than 30% as compared with the same period in 2022, which was
mainly due to the impact of the Company's shutdown and maintenance during the same
period in 2022, which resulted in a low start-up load, and a gradual increase in the start-
up load during the reporting period.
(4) Performance of the major sales contracts and major purchase contracts
entered into by the Company as of the Reporting Date
□Applicable Not applicable
(5) Composition of operating cost
By industry and product
Product Classification of Hengyi Brunei
Currency unit: RMB
2023 2022 Year-on-
year
Industry Item
Percentage in Percentage in increase/d
Amount Amount
operating cost operating cost
ecrease
Raw
29,630,498,059.96 96.34% 37,827,012,569.00 96.82% -21.67%
materials
Refinery Energy 246,049,392.24 0.80% 425,050,466.17 1.09% -42.11%
products Depreciation
879,626,577.24 2.86% 819,346,406.17 2.09% 7.36%
and others
Total 30,756,174,029.44 100.00% 39,071,409,441.34 100.00% -21.28%
Raw
9,681,365,938.90 90.24% 7,647,487,621.92 91.30% 26.60%
Chemical materials
products Energy 637,270,763.27 5.94% 500,515,083.07 5.98% 27.32%
Depreciation 409,827,325.87 3.82% 228,246,923.84 2.72% 79.55%
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
and others
Total 10,728,464,028.04 100.00% 8,376,249,628.83 100.00% 28.08%
By domestic industry and product
Currency unit: RMB
2023 2022 Year-on-
year
Industry Item
Percentage in Percentage in increase/d
Amount Amount
operating cost operating cost
ecrease
Raw
666,934,253.28 77.05% 144,253,439.63 70.02% 362.34%
materials
PIA Energy 89,588,183.28 10.35% 16,491,918.19 8.00% 443.22%
products Depreciation
109,063,875.29 12.60% 45,280,680.01 21.98% 140.86%
and others
Total 865,586,311.85 100.00% 206,026,037.83 100.00% 320.13%
Raw
10,689,612,523.50 91.59% 8,104,904,977.86 89.18% 31.89%
materials
PTA Energy 263,768,143.94 2.26% 263,544,052.57 2.90% 0.09%
products Depreciation
717,776,143.90 6.15% 720,052,888.16 7.92% -0.32%
and others
Total 11,671,156,811.34 100.00% 9,088,501,918.59 100.00% 28.42%
Raw
41,517,323,410.10 82.97% 37,624,877,259.76 82.46% 10.35%
materials
Polyester Energy 2,987,325,789.54 5.97% 3,093,599,154.96 6.78% -3.44%
products Depreciation
5,534,308,749.14 11.06% 4,911,638,564.92 10.76% 12.68%
and others
Total 50,038,957,948.78 100.00% 45,630,114,979.64 100.00% 9.66%
(6) Whether there was any change in the scope of consolidation during the
reporting period
The total number of subsidiaries included in the scope of consolidation in fiscal year
81
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
2023 was 52, an increase of 6 subsidiaries and a decrease of 2 subsidiaries compared
with the previous year. For details, please refer to "VII. Interests in Other Entities" in
"Section X. Financial Reporting".
(7) Significant changes or adjustments in the Company's business, products or
services during the reporting period
□Applicable Not applicable
(8) Major customers and suppliers Major customers
Total sales amount of the top five customers (RMB) 30,300,809,498.37
Percentage of the total sales amount of the top five customers in
22.26%
total annual sales amount
Percentage of sales amount of related parties among the top five
0.00%
customers in total annual sales amount
Top 5 customers
Percentage in total
SN Customer name Sales amount (RMB) annual sales
amount
1 Customer 1 8,474,515,955.22 6.22%
2 Customer 2 6,361,948,805.59 4.67%
3 Customer 3 6,033,936,095.69 4.43%
4 Customer 4 5,201,344,726.29 3.82%
5 Customer 5 4,229,063,915.58 3.11%
Total -- 30,300,809,498.37 22.26%
Other information about major customers
□ Applicable Not applicable
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Major suppliers
Total purchase amount of top five suppliers (RMB) 48,898,927,197.17
Percentage of the total purchase amount of the top five suppliers in the total
37.32%
annual purchase amount
Percentage of purchase amount of related parties among the top five suppliers
18.51%
in total annual sales amount
Top 5 suppliers
Percentage in total
SN Supplier name Purchase amount (RMB) annual purchase
amount
1 Supplier 1 24,077,350,046.95 18.38%
2 Supplier 2 8,882,321,610.32 6.78%
3 Supplier 3 6,114,575,959.58 4.67%
4 Supplier 4 5,650,282,142.12 4.31%
5 Supplier 5 4,174,397,438.20 3.19%
Total -- 48,898,927,197.17 37.32%
Other information about major suppliers
□Applicable Not applicable
3. Expense
Year-on- year
Description of major
2023 2022 increase/decreas
changes
e
Selling
229,284,289.09 247,443,749.81 -7.34% -
expenses
This was mainly due to
Administratio the implementation of
1,434,227,935.73 1,084,986,983.70 32.19%
n expenses technological
renovation and
83
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
upgrading work at the
Brunei Refinery, and
the cost of
technological
renovation was
included in
administrative
expenses, resulting in
an increase in
administrative expenses
year-on-year.
Mainly due to the
increase in interest
expense as a result of
Financial the year-on-year
3,243,902,745.47 2,787,697,495.20 16.36%
expenses increase in the USD
LIBOR rate, which led
to an increase in
interest expense -
Mainly due to the
R&D company's increased
716,319,527.66 668,706,028.57 7.12%
expenses investment in research
and development
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
4. R&D investment
Name of major
Project purpose Project progress Intended goal Name of major R&D projects
R&D projects
R&D of To improve and optimize the preparation process
The self-developed titanium
preparation of titanium-based polyester catalyst to produce By further optimizing the catalyst
catalysts are used in the production
technology of titanium-based PET flakes with excellent Completed preparation process and polymerization
of large lines, and the resulting
polyester performance and good hue, and then conduct and process to improve product quality, the
products meet the indicators of
titanium-based spinning and post-processing as needed to industrialized project has high eco-friendliness value
superior polyester chips and fibres
polycondensati produce heavy metal-free titanium- based and social significance.
for large line production.
on catalyst polyester products.
TiO2 matting agent is an important auxiliary for We have designed and built a Breaking the monopoly of foreign
Green
nylon production, used to improve the 10,000-ton green production technology, successfully solving the
manufacturing
performance of fibre, due to the technical demonstration plant for nylon "necklace" problem of matting agent in
of TiO2 matting
difficulty and European and American titanium dioxide matting agent paste, nylon industry, improving the
agent for nylon
technology blockade, the supply has long been Completed and combined with the relationship between supply and
and complete set
subject to European and American constraints, and characteristics of the matting agent demand, improving production
of technology
the domestic does not yet have a high-quality industrialized paste, we have carried out efficiency, reducing the production cost
for industrial
matting agent mature production technology. In engineering system modification to of domestic nylon manufacturers,
application of
recent years, China's nylon fibre into high- form a set of complete set of promoting the healthy and rapid
full matting
quality development stage, the demand for high- industrialised application technology development of nylon chemical fibre
nylon
quality matting agent is urgent, breakthrough for nylon titanium dioxide matting industry, and guaranteeing the security
85
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major
Project purpose Project progress Intended goal Name of major R&D projects
R&D projects
technology blockade, is of great significance. agent paste. of supply of important fibre materials.
Nano-zinc oxide antimicrobial polyester fibre
Study the effect of zinc oxide
has green, safe, healthy and other characteristics,
particle size and content on the
Research and with people's consumer attitudes and changes in
mechanical properties and Open up the market of functional fibre
development of the concept of health and the enhancement of the Completed
antimicrobial properties of fibres, products, increase market
zinc oxide concept of health, which will be favoured by and
develop antimicrobial masterbatch or competitiveness and enhance the added
antimicrobial more and more consumers in the field of home, industrialized
antimicrobial polyester chips to meet value of products.
polyester fibres medical and health care, military apparel, and so
the production needs, melt spinning
on, and zinc antimicrobial textiles will be more
into antimicrobial polyester fibres.
and more in demand.
Starting from the future development direction Determine the technical solutions of
of flame-retardant polyester fibre and market flame-retardant cation polyester and
Research and demand, based on the R&D and production of Pilot flame-retardant high shrinkage
Enrich the company's differentiated
Development flame-retardant polyester fibre, high shrinkage conversion to polyester, and prepare flame-
products, increase market
Project on fibre and cationic dyeable fibre, the feasibility of industrialisation retardant cation and flame-retardant
competitiveness, enhance the added
Flame Retardant preparing flame-retardant high shrinkage, flame- for stable mass high shrinkage polyester chips. The
value of products and achieve better
Cationic retardant cationic dyeable and other composite production and spinning process is also researched
economic benefits.
Polyester Fibre functional polyester fibre is investigated, aiming wider use and confirmed, and flame-retardant
at launching high-quality and functionalized cation and flame-retardant high
composite flame-retardant polyester fibre shrinkage fibres are prepared to meet
86
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major
Project purpose Project progress Intended goal Name of major R&D projects
R&D projects
products. customers' requirements. The
technology of this project is the
enterprise's own technology, and
makes full use of our existing
equipment, technology and relevant
supporting conditions.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
R&D personnel
2023 2022 Change ratio
Number of R&D staff
1,027 1,065 -3.57%
(person)
Percentage of R&D
6.61% 6.81% -0.20%
personnel
Educational background
—— ——
of R&D personnel
PhD 79 69 14.49%
Master 125 118 5.93%
Bachelor 375 335 11.94%
Junior college degree and
448 543 -17.50%
below
Age of R&D personnel —— ——
Under 30 414 457 -9.41%
30~40 401 373 7.51%
40~50 176 166 6.02%
50~60 34 64 -46.88%
60 and above 2 5 -60.00%
R&D investment
Change
2023 2022 ratio
R&D investment amount (RMB) 743,797,778.86 688,229,267.31 8.07%
R&D investment as a percentage of
0.55% 0.45% 0.10%
operating income
Capitalized R&D investment (RMB) 27,478,251.20 19,523,238.74 40.75%
Capitalized R&D investment as a
3.69% 2.84% 0.85%
percentage of R&D investment
Notes: R&D investment= R&D expenses + Capitalized R&D investment during the
period
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
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
operating income compared with the previous year
□Applicable Not applicable
Reasons for the substantial changes in the capitalization rate of R&D investment
and Description of their reasonableness
□Applicable Not applicable
5. Cash flow
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Year-on-year
Item 2023 2022
increase/decrease
Subtotal of cash inflows from
151,342,732,624.92 162,080,383,545.53 -6.62%
operating activities
Subtotal of cash outflows from
146,810,897,819.77 159,374,850,062.17 -7.88%
operating activities
Net cash flow from operating
4,531,834,805.15 2,705,533,483.36 67.50%
activities
Subtotal of cash inflows from
1,597,063,826.52 2,401,958,320.75 -33.51%
investing activities
Subtotal of cash outflows from
6,899,721,564.69 4,528,249,402.63 52.37%
investing activities
Net cash flows from investing
-5,302,657,738.17 -2,126,291,081.88 -149.39%
activities
Subtotal of cash inflows from
61,611,945,020.67 67,702,995,578.82 -9.00%
financing activities
Subtotal of cash outflows from
65,350,940,711.86 66,030,295,613.61 -1.03%
financing activities
Net cash flows from financing
-3,738,995,691.19 1,672,699,965.21 -323.53%
activities
Net increase in cash and cash
-4,415,951,490.91 2,689,332,661.19 -264.20%
equivalents
Description of the main factors influencing significant year-on-year changes in
relevant data
(1) Net cash flow from operating activities increased, mainly due to the polyester
segment downstream demand in the current period, price difference repair, improved
operating efficiency, compared with last year's sales volume rose, inventory realization
inflow increased in the current period, and inventory at the end of the reporting period
decreased year-on-year.
(2) Net cash flow from investing activities decreased, mainly due to the increase in cash
outflow from investing activities as a result of the payment of equipment for Guangxi
90
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
project and the purchase of equity shares of Zheshang Bank allotment.
(3) The decrease in net cash flows from financing activities was mainly due to the fact
that cash outflows for debt repayment exceeded cash inflows for new borrowings
during the period.
(4) The net decrease in cash and cash equivalents was mainly due to the combined effect
of changes in cash flows from operating activities, investing activities and financing
activities during the reporting period.
Description of the reasons for the significant difference between the net cash flows
generated by the Company's operating activities and the net profit of the year
during the reporting period
For details, please refer to the supplementary information in the cash flow statement in
the Company's annual audit report.
V. Analysis of non-main business
Currency unit: RMB
Percentage
Sustainable or
Amount of total Reasons
not
profit
Yes (of
Mainly attributable to the which
accrual of investment investment
Investment income on participating gains on
985,476,736.48 246.47%
income companies and investment disposal of
income on disposal of subsidiaries
subsidiaries are not
sustainable)
Profits and It was mainly attributable to
losses from -45,121,198.68 -11.28% changes in fair value of foreign No
changes in exchange and commodity
91
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
fair value derivatives during the reporting
period
It was mainly attributable
Assets
to the Company's provision
impairment -71,262,509.77 -17.82% No
of inventory depreciation
loss
reserves
Mainly represents non-
operating income
recognized under the
equity method by adjusting
Non-operating
35,920,509.46 8.98% the initial investment cost No
income
of long-term equity
investments, and income
from compensation and
penalties.
Mainly due to loss on fixed
Non-operating
65,971,503.46 16.50% assets, donations and fines No
expenses
during the reporting period.
VI. Analysis of assets and liabilities
1. Significant changes in asset composition
Currency unit: RMB
End of 2023 Early 2023
Proportion Description
Percenta Percenta
increase or of major
ge in ge in
Amount Amount decrease changes
total total
assets assets
Monetary funds 13,827,903,087.40 12.80% 17,358,475,538.50 15.50% -2.70%
Accounts
5,925,174,959.59 5.48% 6,857,913,648.22 6.13% -0.65%
receivable
Inventory 13,060,195,863.37 12.09% 14,083,484,571.18 12.58% -0.49%
Long-term
equity 13,669,254,123.61 12.65% 12,831,505,320.53 11.46% 1.19%
investments
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Fixed assets 45,430,020,661.94 42.04% 47,466,461,676.63 42.39% -0.35%
Construction in
4,610,305,760.02 4.27% 3,751,889,400.94 3.35% 0.92%
progress
Right-of-use
414,782,305.73 0.38% 430,002,663.24 0.38% 0.00%
assets
Short-term loans 41,122,258,268.86 38.06% 37,875,833,338.09 33.83% 4.23%
Contract
756,571,793.30 0.70% 989,622,772.97 0.88% -0.18%
liabilities
Long-term loans 14,739,441,863.92 13.64% 16,107,140,036.35 14.39% -0.75%
Lease liabilities 449,163,796.50 0.42% 431,285,378.29 0.39% 0.03%
High proportion of foreign assets
Specific Proportion of Whether there
Reason Asset size Location Operation Controls to ensure asset Income overseas assets in is significant
content of
mode security status the Company's net risk of
assets
assets impairment
Strengthen the
Subsidiaries USD Built by parent Company's
Overseas Hong Good No
controlled by 6209.6358 the management 174.45%
investment Kong/Brunei/Singapore control
the Company million Company
over overseas
subsidiaries
2. Assets and liabilities measured at fair value
Currency unit: RMB
Beginning
Item Ending balance
balance
1. Held-for-trading financial assets (excluding
251,021,508.33 366,311,518.38
derivative financial assets)
2. Derivative financial assets 1,872,460.80 0.00
3. Investment in other equity instruments 5,600,000.00 5,600,000.00
Subtotal of financial assets 258,493,969.13 371,911,518.38
Financial liabilities 62,965,410.64 108,194,619.69
Other changes
Not applicable
93
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether the measurement attributes of the Company's main assets changed
significantly during the reporting period
□Yes No
3. Restricted asset rights as of the end of the reporting period
Currency unit: RMB
Ending book value of the
Item Reason for restriction
year
Monetary funds 5,309,784,965.28 Margin
Notes and receivables Pledge to open acceptance
147,675,900.00
financing bills
Long-term equity
6,837,853,788.22 Mortgage, pledge loan
investments
Sale and leaseback finance
Fixed assets 20,145,141,526.55
leases, secured loans
Intangible assets 2,031,649,175.86 Mortgage loan
Total 34,472,105,355.91
VII. Analysis of investment status
1. General situation
Investment amount during the Investment amount in the same
Range of change
reporting period (RMB) period of previous year (RMB)
13,669,254,123.61 12,831,505,320.53 6.53%
94
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Significant equity investments acquired during the reporting period
Wheth
Inve er or
Percen Progress as
Name of stme not Date of
Main Investment tage of Source of Investmen at the
investee nt Co-operating party Product Type involv disclosure Disclosure index (if any)
business amount shareh funds t period balance
company Appr ed in (if any)
olding sheet date
oach litigati
on
Hong Kong Corporate and
Securities Clearing retail banking
http://www.cninfo.com.cn/new/dis
China Capi Company services,
closure/detail?plate=szse&orgId=g
Zheshang Financial tal Equity (Nominees) treasury and June 17, 202
453,329,985.70 3.54% Lump sum Completed No ssz0000703&stockCode=000703&
Bank industry incre fund Limited, Zhejiang other 3
announcementId=1217085275&an
Co.,Ltd. ase Provincial Financial commercial
nouncementTime=2023-06-17
Holdings Company banking
Limited, etc. operations
Total -- -- 453,329,985.70 -- -- -- -- -- -- -- -- --
3. Significant non-equity investments in progress during the reporting period
95
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Cumulative actual
Invest Industry
Whether it is Amount invested investment
ment involved Project Disclosure
Project name fixed asset during the amount as of the Sources of funds Disclosure index (if any)
metho in the progress date (if any)
investment reporting period end of the
d project
reporting period
http://www.cninfo.com.cn/new/dis
Built
Petrochem closure/detail?plate=szse&orgId=g
Brunei Phase II by the Self- raised funds September
Yes ical 455,933,849.94 2,535,847,842.18 2.86% ssz0000703&stockCode=000703&
Project Comp and loans 16, 2020
industry announcementId=1208444483&an
any
nouncementTime=2020-09-16
Suqian Yida
http://www.cninfo.com.cn/new/dis
New Built
Chemical Self-financing, closure/detail?plate=szse&orgId=g
Environment- by the June 1,
Yes fibre 451,809,220.82 973,324,107.87 borrowing and 30.00% ssz0000703&stockCode=000703&
friendly Comp 2021
industry fund-raising announcementId=1210132115&an
Differentiated any
nouncementTime=2021-06-01
Fibre Project
The 1.2 mtpa
Caprolactam- http://www.cninfo.com.cn/new/dis
Built Petroche
Polyamide mical closure/detail?plate=szse&orgId=g
by the Self-financing and January 22,
Industry Yes chemical 744,043,388.55 887,509,283.57 18.18% ssz0000703&stockCode=000703&
Comp fibre borrowing 2022
Integration and announcementId=1212243026&an
any industry
Supporting nouncementTime=2022-01-22
Project
Total -- -- -- 1,651,786,459.31 4,396,681,233.62 -- -- -- --
96
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
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
Ending
Profits and investment Profits and
losses from amount as a losses from
Beginning Accumulated fair Beginning
Type of Hedging changes in fair Ending percentage of the Type of Hedging changes in fair
investment value changes investment
Investment value in the amount Company's net Investment value in the
amount recognized in equity amount
reporting assets at the end reporting
period of the reporting period
period
Foreign exchange
-1,165 -1,165 -10,134 814 279,991 289,645 -10,819 -0.43%
hedging
97
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Commodity hedging 20,158 20,158 5,622 2,540 420,544 404,071 36,631 1.45%
Total 18,993 18,993 -4,512 3,354 700,535 693,716 25,812 1.02%
Explanation on whether
there is any significant
change in the
accounting policy and
No. The Company accounted for the hedging investment carried out in accordance with the relevant provisions of the Ministry of Finance's
specific principles of
Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Accounting Standards for
accounting for hedging
Business Enterprises No. 24 - Hedging, Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting
business of the
Standards for Business Enterprises No. 37 - Presentation of Financial Instruments and relevant guidelines to reflect the relevant items of the
Company in the
balance sheet and profit and loss statement.
reporting period
compared with that in
the previous reporting
period
Explanation on actual
During the reporting period, the actual gain or loss amounted to RMB 0.4918 million, of which the floating loss on positions was RMB 45.1212
profit or loss in the
million and the gain on closing positions was RMB 45.6130 million.
reporting period
Explanation on hedging The profits and losses generated from the Company's hedging tools can offset the value changes of the hedged items, and the hedging
effects business has a good hedging effect.
Source of funding for
investments in Self-owned funds
derivatives
98
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
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
Risk analysis and
liquidation of positions due to lack of time for margin replenishment. 3. Operational risks as futures and forward transactions are highly
description of control
specialized and complex, unexpected losses may be caused due to defects in information systems or internal controls. 4. Credit risks When
measures for
the price fluctuates greatly to the disadvantage of the counterparty, the counterparty may violate the relevant provisions of the contract and
derivatives positions
cancel the contract, resulting in losses to the Company. 5. Legal risks Due to changes in relevant legal systems or violations of relevant legal
during the reporting
systems by the counterparty, the contract may not be executed normally, resulting in losses to the Company. Risk control measures taken by
period (including but
the Company: The BOD of the Company has reviewed and approved the Management System for Foreign Exchange Derivatives
not limited to market
Transactions and the Management System for Commodity Derivatives Transactions, which stipulate that the Company engages in hedging
risk, liquidity risk,
investment business with the main purpose of hedging, and speculation and arbitrage transactions are prohibited. The systems clearly
credit risk, operational
stipulate the principles of the Company's business operations, approval authority, internal audit process, responsible departments and
risk, and legal risk)
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
Amount of current profit or loss affected by the Company's hedging investments during the reporting period: RMB 0.4918 million. The
period; the analysis of
Company's hedging investment was priced at fair value, and forward foreign exchange was basically determined according to the price
the fair value of
provided by or obtained from banks, the Reuters system and other pricing service agencies. The Company conducted fair value
derivatives shall
measurement and confirmation every month; the transaction price of futures was the fair price.
disclose the specific
methods used and the
setting of relevant
assumptions and
parameters
Involvement in lawsuits None
99
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(if applicable)
Date of disclosure of
announcement of the
BOD for approval of December 07, 2022
derivatives investment
(if any)
Date of disclosure of
announcement of
shareholders meeting
December 23, 2022
for approval of
derivatives investment
(if any)
The hedging investment carried out by the Company for the purpose of hedging was closely related to the Company's daily business needs
Special opinions of and complied with relevant laws and regulations. The Company formulated the Management System for Foreign Exchange Derivatives
independent directors Transactions and the Management System for Commodity Derivatives Transactions, which have strengthened the Company’s risk
on the Company's management and control abilities and improved the Company's ability to withstand market risks, causing no damage to the interests of the
derivatives investment Company and all shareholders.
and risk control
The Company shall comply with the disclosure requirements for petrochemical industry specified in Guidelines No. 3 for Self-Regulation
of Listed Companies of Shenzhen Stock Exchange - Industry Information Disclosure
During the reporting period, the Company carried out hedging investment for the purpose of reasonably avoiding the risk of price and exchange
rate fluctuations of raw materials and finished products, reducing the impact of price and exchange rate fluctuations of raw materials and finished
100
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
products on the normal operation of the Company, and ensuring the stable operation and sustainable profitability of the Company. The commodities
involved in the hedging transactions included raw materials, finished products, and foreign exchange related to the Company's production and
operation.
2) Investments in derivatives for speculative purposes during the reporting period
There were no investments in derivatives for speculative purposes during the reporting period.
5. overall of raised funds
(1) Overall use of raised funds
Currency unit: RMB 10,000
Total amount Proportion of Amount of
Cumulative cumulative raised
Total amount Total amount of of raised
Year of total amount Total amount
Mode of Total funds of raised funds raised funds Usage and destination of raised funds not yet funds idle
fund
fund raising raised used in this used funds with of raised funds total amount of raised funds used
raising with changed of raised funds not yet used for more
period cumulatively changed usage
usage during with changed than two
101
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
the reporting usage years
period
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
Issue of
shares to Capital with Surplus Raised Funds, agreeing to
purchase permanently supplement the working capital 0
2019 assets and 291,091.12 0 288,785.36 0 156,300 53.69% 0
raise with the balance of supporting funds from
supporting share issuance by the Company in 2019. As of
funds
December 31, 2023, the Company's remaining
sporadic idle proceeds have been permanently
transferred out to supplement liquidity and the
special account for proceeds has been
cancelled in full.
As of December 31, 2023, the unused raised
Public
2022 298,367.92 25,689.16 153,383.8 0 0 0.00% 144,984.13 funds amounted to RMB 1449.8413 million, of 0
issuance of
which RMB 1451.5893 million had not yet
convertible
been returned as temporary supplementary
corporate
working
102
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
capital due to the balance of the Company's
special account for fund-raising funds was RM
1.7856 million, and the sum of the amount of
temporary supplementary liquidity not yet due
for return and the balance of the special account
bonds in
for fund-raising funds exceeded the amount of
2022
fund-raising funds not yet used by RMB 3.5336
million, which represented the interest income
from the special account for fund-raising funds
less the net amount of the handling fee and the
issuance fee not yet paid.
Total -- 589,459.04 25,689.16 442,169.16 0 156,300 26.52% 144,984.13 -- 0
General description of the use of raised funds
1. As approved by the [2018] No. 1937 CSRC Permit issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company raised a total of RMB
2,949,999,987.00 through non-public issuance of 213,768,115 ordinary shares (A shares) to eligible investors, which was verified by Ruihua Certified Public Accountants (Special General
Partnership). After deducting the broker’s underwriting fees and related issuance expenses, the actual net amount of funds raised was RMB 2,910,911,218.99. As of December 31, 2023, the
Company has used RMB 2887.8536 million from the funds.
2. As approved by CSRC Permit [2022] No. 565 issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company publicly issued 30 million
convertible corporate bonds to eligible investors, each with a face value of RMB 100. The total issuance amount was RMB 3 billion, the conversion price was RMB 10.50 per share, and the
bonds were listed on the Shenzhen Stock Exchange on August 11, 2022. The total amount of funds raised from the public issuance of convertible corporate bonds was RMB 3 billion. After
deducting the underwriting and recommendation fees excluding taxes and related issuance fees, the actual net amount of funds raised was RMB 2983.6792 million. As of December 31, 2023,
the Company has used RMB 1553.8380 million from the funds.
(2) Projects for committed investment with raised funds
Currency unit: 10,000
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether
Date when Whether there is a
Projects for
the project the significant
committed Whether the Amount Cumulative Investment Benefits
project has been Adjusted invested investment progress as of realized
Total committed reaches its expected change in
investment and total
changed (or investment of raised during the amount as of the the end of the during the
investment scheduled benefits the
investment direction partially funds reporting end of the period period (3) = (2)/ reporting
amount (1)
changed) period (2) (1) availability period are feasibility
of over- raised funds
date achieved of the
project
Projects for committed investment
500,000 tpa
differentiated No No more than 93,500 0 93,647.49 100.16% 7,257.25 No No
functional fibre August 2020
93,500
upgrading and
transformation project
Intelligent upgrading
No No more than 28,170 0 25,621.7 90.95% Not Not No
and transformation August 2020
28,170 applicable applicable
project
Differentiated
chemical fibre energy
saving and
No 8,500 0 8,399.34 98.82% May 2019 Not Not No
consumption No more than 8,500
applicable applicable
reduction upgrading
and transformation
project
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
250,000 tpa
environmentally-
Yes No more than 416.05 0 416.05 100.00% Not Not Not Yes
friendly functional 141,500 applicable applicable applicable
fibre upgrading and
transformation project
Intelligent upgrading Yes No more than 5,283.95 0 3,406.99 64.48% Not Not Not Yes
and 20,500 applicable applicable applicable
transformation project
500,000 tpa New-
type Functional fibre No No more than 70,000 33,398.74 33,398.74 47.71% January and 6,105.52 No No
technological 70,000 August 2021
transformation
projects
Partially
1.1 mtpa New commissione
Environment- friendly No No more than 230,000 25,689.16 119,985.06 52.17% d in May and Not No
-3,415.06
Differentiated Fibre 230,000 December applicable
Project 2023
Subtotal of committed -- No more than 435,870.00 284,875.37 -- -- / -- --
investment for the 25,689.16
592,170
projects
Investment direction of over-raised funds
None
435,870.00 25,689.16 284,875.37 -- --
Total -- No more than 592,170 -- -- /
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Description of the
situation and reasons
why the planned
progress and expected
benefits have not been
achieved by projects
Due to significant fluctuations in raw material prices and the weak downstream demand, some project benefits did not meet expectations.
(including the reason
for selecting "not
applicable" for
"whether the expected
benefits have been
achieved")
Description of
significant changes in Not applicable
project feasibility
Amount, purpose and Not applicable
progress of use of
over-raised funds
Change of location for
implementation of Not applicable
projects for
committed investment
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Adjustment of
implementation mode Not applicable
of projects for
committed
investment
Applicable
1. On February 1, 2019, the twenty-fourth meeting of the tenth session of the BOD of the Company reviewed and approved the Proposal on Using Raised Funds to Replace
Self-raised Funds and Intermediary Fees and Related Taxes Pre-paid for Relevant Investment Projects, agreeing to use RMB 1,147,288,319.73 from the raised funds to
replace the self-raised funds and the intermediary fees and related taxes that had been paid for relevant investment projects, of which the self-raised funds that had been
invested in the projects were RMB 1,141,188,319.73 and the intermediary fees and related taxes paid in advance by the Company with its own funds were RMB 6,100,000.00.
On June 18, 2019, the thirtieth meeting of the tenth session of the BOD of the Company reviewed and approved the Proposal on Using Raised Funds to Replace Self-raised
Funds Pre-paid for Relevant Investment Projects, agreeing to use RMB 331,666,503.97 from the raised funds to replace the self-raised funds that had been paid for relevant
Preliminary
investment and investment projects
replacement of
projects for 2. According to the resolution of the tenth meeting of the eleventh session of the BOD on May 31, 2021, and the Proposal on the Company's Public Issuance of Convertible
committed investment Corporate Bonds reviewed and approved at the third Extraordinary General Meeting (EGM) of Shareholders 2021 on June 16, 2021, it is agreed that if the Company has
invested self-raised funds in the construction of the above projects first before the funds raised from the issuance of convertible corporate bonds are in place, the funds can be
replaced in accordance with the procedures prescribed by relevant laws and regulations after the funds raised are available. As of July 28, 2022, the Company has invested
RMB 1,042,688,264.58 in the above-mentioned raised funds investment project with self-raised funds in advance, and has made the advance payment of intermediary fees
and related taxes of RMB 1,550,000.00 with self-owned funds. After the review of the BOD of the Company, it was decided to replace the self-raised funds invested in the
raised funds investment project with the raised funds, with an amount of RMB 1,042,688,264.58, and to replace the self-raised funds with the raised funds for the paid issuance
fees, with an amount of RMB 1,462,264.15 (excluding tax). As of December 31, 2023, the Company has replaced the self-raised funds invested in advance of RMB
1,044,150,528.73.
Temporary
replenishment of Applicable
working capital with
idle raised funds
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
As of December 31, 2023, the Company has temporarily replenished its working capital with idle raised funds of RMB 1451.5893 billion, and there is no situation where
any fund has not been returned upon maturity.
Applicable
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 As of December 31, 2023, the unused proceeds amounted to RMB1,449,841,300, of which RMB1,451,589,300 had not yet been due for the return of temporary
destination of unused supplementary liquidity, and the balance of the Company's special account for proceeds was RMB1,785,600, and the sum of the a mount of temporary supplementary
liquidity that had not yet been due for the return of temporary supplementary liquidity and the balance of the special account for proceeds exceeded the amount of the
raised funds unused proceeds by RMB3,533,600, which was the amount of the special account for proceeds. Interest income net of h andling fees and outstanding issue fees.
Problems or other
situations in the use Not applicable
and disclosure of
raised funds
(3) Changes of projects for investment with raised funds
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
During the reporting period, there was no change of the projects for investment with raised funds.
VIII. Sales of major assets and equity
1. Sales of major assets
The company did not sell any significant assets during the reporting period.
2. Sales of major equity
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Net profit
contribute
s by the
Net profit
equity to Whether Whether it is
contributed Wheth
the listed the implemented
by the er it is
Ttransactio company Pricing equity as planned; if
Impact of the equity sale a
Counter Date of n price from the principle of Relationship with the involved not explain the Data of Disclosure index
Sold equity sale on the to the listed related
party sale (RM B beginning equity counter party has been reasons and disclosure (if any)
company company as -party
10,000) of current disposal fully the measures
a percentage transac
period to transferre the company
of the total tion
the date of d has taken
net profit
sale
(RMB10,0
00)
Hengyi Group is the
The disposal of Determined
controlling shareholder of http://www.cninf
100% equity equity interest with reference
the Company; Mr Qiu Yibo, o.com.cn/new/dis
interest in will not to the book
Chairman and President of closure/detail?pla
Hangzhou adversely affect value and
Zhejiang the Company, is a te=szse&orgId=g
Yijing Decemb the Company's appraised December
Hengyi shareholder and director of ssz0000703&stoc
Chemical er 19, 88,000 2,582.01 business 121.78% value of the Yes Yes Yes 08,
Group Hengyi Group; Mr Fang kCode=000703&
Fibre 2023 continuity, net assets of 2023
Co.,Ltd. Xianshui, Vice Chairman of announcementId
Co.,Ltd. management the subject
the Company, is also a =1218547547&a
stability and company as at
director of Hengyi Group; nnouncementTim
daily production 31 October
and Mr Ni Defeng, e=2023-12-08
and operation 2023
Director, is the President
110
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
and director of Hengyi
Group.
111
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
IX. Analysis of major subsidiaries and JV companies
Major subsidiaries and JV companies with an impact of 10% or more on the net
profit of the Company
Currency unit: RMB
Type of
Company
compan Main business Registered capital Total assets Net assets Operating income Operating profit Net profit
name
y
Hengyi
Subsidia Refining and USD 1.0548
Brunei 37,786,868,368.92 10,246,578,199.96 44,088,120,113.95 46,457,509.55 13,984,311.35
ry petrochemical billion
(Single unit)
Hainan JV PTA and bottle
compan 4,580,000,000.00 16,886,352,145.66 6,782,363,911.16 17,995,790,974.30 406,311,358.76 364,367,774.59
Yisheng flake
y
JV
Yisheng PTA and bottle
compan 2,018,000,000.00 16,216,384,823.21 7,700,142,596.37 30,081,391,445.25 3,961,933.76 57,567,769.18
Investment flake
y
JV
Yisheng New
compan PTA 3,000,000,000.00 11,939,894,488.83 2,291,993,920.94 34,389,876,066.56 -784,303,905.25 -567,448,779.11
Materials
y
Hengyi Subsidia
DTY 3,000,000,000.00 41,061,996,420.47 8,599,478,026.72 62,888,166,435.20 245,694,203.90 254,352,818.12
Limited ry
Hengyi High- Subsidia
Flakes, POY, etc. 2,757,250,000.00 11,607,580,622.29 4,898,283,462.40 10,358,224,455.18 441,336,470.83 432,448,585.91
Tech ry
Shuangtu
Subsidia POY, FDY, and
New 600,000,000.00 5,184,969,615.15 2,248,516,210.90 7,148,921,932.66 139,284,403.28 121,053,026.00
ry flakes
Materials
Subsidia
Jiaxing Yipeng FDY 3,000,000,000.00 5,334,717,810.95 2,746,345,202.72 4,605,245,658.41 64,957,382.37 65,077,779.99
ry
Hong Kong Subsidia Investment and USD
1.5095 14,995,526,709.40 11,292,819,604.28 1,019,114,286.03 -123,246,933.21 -123,246,933.21
Tianyi ry trade
billion
China JV
Zheshang compan Finance 27,464,635,963.00 3,143,879,000,000.00 189,577,000,000.00 63,704,000,000.00 17,523,000,000.00 15,493,000,000.00
Bank y
Acquisition and disposal of subsidiaries during the reporting period
Methods of acquiring and disposing of subsidiaries
Company name
during the reporting period
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Hangzhou Yijing Chemical Fibre Co.,Ltd. Disposal
Zhejiang Yi Zhi Information Technology Co. Cancellation
Hangzhou Lantong Technology Co. Establishment
Hangzhou Lanfang High-tech Material Co. Establishment
Hangzhou Lanshun Technology Co. Establishment
Hangzhou Lanbiao Testing Service Co. Establishment
Hangzhou Yigao Environmental Protection
Establishment
Technology Co.
Hangzhou Yixian Energy Technology Co. Establishment
Description of major subsidiaries and JV companies
(1) Hengyi Brunei
The Company holds 70% of the shares of Hengyi Industries Sdn. Bhd. through Hong
Kong Tianyi International Holding Co., Ltd. Hengyi Brunei has a registered capital of
USD 1.0548 billion, and the scope of business covers: Petroleum refining and
petrochemical.
(2) Hainan Yisheng
The Company holds 50% of the shares of Hainan Yisheng Petrochemical Co., Ltd.
through Ningbo Hengyi Commerce Co., Ltd. a subsidiary of Zhejiang Hengyi
Petrochemical Co., Ltd. Hainan Yisheng has a registered capital of RMB 4.58 billion.
The scope of business: production, processing, wholesale and retail of purified
terephthalic acid, PET flakes, polyester bottle flakes, polyester staple fibres, POY yarns,
FDY yarns, crude cobalt oxide and manganese oxide, and chemical fibre raw materials;
purchase and sales of paraxylene (PX), acetic acid, and ethylene glycol; self-supporting
and acting as an agent for the import and export of various goods and technologies;
terminal facilities operation, general cargo handling service in the terminal area,
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
terminal tugboat operation, ship service, fresh water supply for ships, collection of ship
pollutants (including oily sewage, residual oil, tank washing water, domestic sewage
and garbage), and supply of oil containment boom.
(3) Yisheng Investment
The Company holds 30% of the shares of Dalian Yisheng Investment Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd. Scope of Business: Project investment,
domestic general trade, import and export of goods, technology import and export, and
trade intermediary agency. (Except for business prohibited by laws and administrative
regulations, business restricted by laws and administrative regulations can be operated
only after obtaining corresponding permit). (Business activities 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) Yisheng New Materials
The Company holds 49% of the shares of Zhejiang Yisheng New Materials Co., Ltd.
through Zhejiang Hengyi Petrochemical Co., Ltd. The scope of business: import and
export of technologies; import and export of goods; import and export of agency
(Business activities subject to approval according to laws can be carried out only 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 to
license); sales of petroleum products (excluding hazardous chemicals); production of
chemical products (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 to approval according to laws,
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
business activities shall be carried out independently and legally with the business
license). The legal representative is Xu Baoyue, and the registered capital is RMB 3
billion.
(5) Hengyi Limited
The Company directly holds 100% of the shares (actually enjoys 100% of the rights)
of Zhejiang Hengyi Petrochemical Co., Ltd. Hengyi Limited has a registered capital of
RMB 3 billion. The scope of business: production, processing and sales of chemical
fibres and chemical raw materials (excluding hazardous chemicals); import and export.
(6) Hengyi High-Tech
The Company holds 100% of the shares of Zhejiang Hengyi High-Tech Materials Co.,
Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. Hengyi High-Tech has a
registered capital of RMB 2.75725 billion, and the scope of business covers: production,
processing and sales of PET flakes, POY yarns, FDY yarns, and chemical fibre raw
materials; export of the company’s own products and technologies and import of self-
use products and technologies (except for those that are prohibited or restricted
according to national laws and regulations); all other legal business not subject to
approval.
(7) Shuangtu New Materials
The Company holds 100% of the shares of Zhejiang Shuangtu New Materials Co., Ltd.,
and the registered capital of Shuangtu New Materials is RMB 600 million. Scope of
Business: General business: general business: production of chemical products
(excluding chemical products subject to license); sales of chemical products (excluding
chemical products subject to license); sales of synthetic fibres; synthetic fibre
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
manufacturing; sales of synthetic materials; manufacture of synthetic materials
(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 activities subject 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 and fibre grade PET
flakes.
(8) Jiaxing Yipeng
The Company holds 100% of the shares of Jiaxing Yipeng Chemical Fibre Co., Ltd.
Jiaxing Yipeng has a registered capital of RMB 3 billion, and the scope of business
covers: manufacture, processing and sales of PET flakes and FDY fully drawn yarns;
sales of chemical fibre raw materials; import and export of goods. (excluding hazardous
chemicals). The main products are FDY and fibre grade PET flakes.
(9) Hong Kong Tianyi
The Company holds 100% of the shares of Hong Kong Tianyi International Holding
Co., Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. The registered capital of
Hong Kong Tianyi is USD 1.5095 billion, and its business scope involves investment
and trading.
(10) China Zheshang Bank
The Company holds a total of 972,490,068 shares of China Zheshang Bank Co., Ltd.
through its subsidiary Zhejiang Hengyi Petrochemical Co., Ltd. and its indirect
subsidiary Zhejiang Hengyi High-Tech Materials Co., Ltd., accounting for 3.54% of
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
the total share capital of China Zheshang Bank. Scope of Business: financial business
(For details, please refer to the approval of the China Banking and Insurance Regulatory
Commission). Established in 2004, the company is one of the 12 national joint-stock
commercial banks approved by the China Banking and Insurance Regulatory
Commission. China Zheshang Bank was listed on the main board of the Hong Kong
Stock Exchange on 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 Company
(I) Strategic prospects for the development of the Company
In 2024, HengYi Petrochemical will continue to adhere to high-quality development,
taking technological innovation, product innovation and process innovation as the basis
for its strategic transformation from "Industrial HengYi" to "Technological HengYi".
At the same time, the company will continue to consolidate its integration advantages,
strengthen the linkage between domestic and overseas markets, further improve the
"polyester + polyamide" double "spandex" driven industrial chain, and deepen the
"petrochemical +" multi-level three-dimensional industrial layout to achieve resource
sharing, and to achieve the "petrochemical +" multi-level three-dimensional industrial
layout. We will continue to consolidate our integration advantages, strengthen the
linkage between home and abroad, further improve the "polyester+nylon" dual
"spandex"-driven industrial chain, deepen the "petrochemical+" multi-layered and
three-dimensional industrial layout, share resources, systematically build upstream and
downstream synergies, and comprehensively enhance our comprehensive
competitiveness, so as to develop into a leading domestic and first-class "refining-
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
chemicals-chemicals-chemical fibres" private multinational industrial group.
(II) Prospects for the industrial development of the Company
For details, please refer to the section headed (II) Industry in which the Company's three
major businesses operate" under the heading "I. Industry in which the Company
operated during the reporting period".
(III) Business strategy of the Company for 2024
Based on the requirements of high-quality development in the new era and the new
pattern of industrial development, the company will continue to promote the
transformation of "Industrial Hengyi" to "Science and Technology Hengyi", and take
"Green Manufacturing" and "Circular Economy" as the guide. With "Green
Manufacturing" and "Circular Economy" as the guiding principles, we will increase
investment in scientific and technological research and development to improve the
transformation efficiency of new materials and technologies; promote the planning and
construction of key strategic projects to enhance the company's sustained profitability
and risk-resistance; deepen the strategy of digital transformation, strengthen data-
driven, and empower the work of production, sales, operation, and management
decision-making at multiple levels; Optimise the grass-roots organisation model, build
up the talent team and introduce advanced management experience, so as to build up
momentum and energy for the company to achieve strategic transformation and long-
term high-quality development.
1. Promote the transformation from "Industrial Hengyi" to "Science and
Technology Hengyi", and create an innovation-driven science and technology
enterprise.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
In 2024, the company will continue to give full play to the functional positioning and
advantageous features of linkage with universities and research institutes, participate in
basic research through various forms and channels, carry out scientific and
technological collaboration in the front-end, and promote the application of landing in
the back-end to create a flexible mechanism with strong R&D momentum, high
transformation efficiency and smooth management and operation, to continuously give
rise to new results, promote the transformation of results, and to actively play a role in
the innovation of the back-end. We will build a multi-body synergistic innovation
ecology of technological innovation, application demonstration, talent training, model
innovation and business integration. The company will closely surround the industrial
layout, aim at the world's scientific and technological frontiers, gather global innovation
resources, cultivate high-end innovation achievements, build a world-class R&D base
for key common technologies of refining and chemical integration and high-end
chemical products, and will devote itself to the research and development of green
chemicals and advanced materials to become a technology leader in the whole industry.
The company has begun to enter the forefront of industry technology in some of its
advantageous areas, and will continue to give full play to the spirit of independent
innovation of the Enterprise Research Institute, continue to increase investment in
research and development, product development and transformation of results around
three major themes: environmental protection, functionality, and biobased categories.
We will continue to promote "Yitaikang" products and increase the promotion and
application of environmentally friendly polyester technology and product sales. We
have successfully completed the research on the "catalytic + solvent" system for the
efficient dehydration reaction for the preparation of bio-based polyester monomers, and
solved the key technical problems in the preparation of HMF with high selectivity; we
will accelerate the industrialisation of functional composite materials such as flame-
retardant and anti-static materials. At the same time, the company will focus on
promoting the research and development of gas-phase reformulation, ammonia,
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
hydrogen peroxide, chemical fibre oiling agent and other technologies, so as to promote
the high-quality development of the green petrochemical industry.
2. Stable operation of existing production capacity, and actively promote the
construction of major strategic projects
In 2024, the company will continue to deepen the integration of industrial chain and
strengthen the linkage between domestic and overseas advantages. On the domestic
front, the Company will safely and stably operate the two major segments of PTA and
polyester, strengthen the implementation and effect of the construction of the "1.2
million tons per annum caprolactam-polyamide industrial integration and ancillary
projects" in Qinzhou, and continue to build up the nylon industry.
Overseas, the Company will continue to do a good job in the production and operation
of Brunei Project Phase I, always put safety and environmental protection in the first
place in the operation of the refinery, insist on the operation of the plant to be
"affordable, stable, and long-cycle", and strive to maximise the operational efficiency
and profitability after the completion of the technological transformation in 2023, and
to maintain good performance in HSE. At the same time, the Company will continue to
adhere to the tenet of "market-oriented, benefit-oriented and production service", grasp
the whole process of control of raw materials entering the plant, product production,
blending and transferring, and sales, and further improve and optimise the processing
flow of the whole plant, so as to effectively ensure the safe production of the plant,
increase production capacity, optimise the process, and reduce costs and increase
efficiency. At the same time, the company will continue to steadily push forward the
construction of Brunei Project Phase II, the completion of Brunei Project Phase II will
further increase the company's overseas market share, thickening the company's profits,
injecting new blood for growth, and is conducive to strengthening the integration of the
industrial chain and the advantages of scale, reducing the cost of production, ensuring
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
the stability of the supply of raw materials, and enhancing the company's sustained
profitability and risk-resistant ability.
3. Deepen the integration of digital intelligence and strengthen data-driven
empowerment
Taking the digital intelligent factory as a blueprint, the company will accelerate the
construction of information operation standardisation system. In 2024, the company
will continue to consolidate and improve the service experience of HengYi Brain,
continue to upgrade the comprehensive application based on AI technology, and
provide the company's top management with a scientific decision-making system for
the integration of production and sales. At the same time, it will achieve online
management of information assets, operation knowledge base and system operation
configuration, online display and analysis of operation data, improve the information
infrastructure construction, promote the value mining of production and operation big
data, establish the construction of daily operation standardisation system, and realise
the development of digital transformation of traditional industries. In addition, with the
increasing demand for intelligent logistics technology in the petrochemical industry,
the Company will continue to focus on the construction of a highly efficient MES
system to achieve consistency and interconnection of data throughout the plant, and
continue to improve and upgrade the chemical fibre industrial internet platform with
the trinity of "online trading + online finance + warehousing and logistics", so as to
effectively reduce the cost of logistics of raw materials and products and realise the
development of digital transformation in the Company. This will effectively reduce the
logistics costs of raw materials and products, realise upstream and downstream synergy,
and provide powerful assistance for the development of the main industry, so as to
comprehensively enhance the comprehensive competitive strength.
4. Improve the company's management system, help the steady progress of
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
strategic objectives
In 2024, the Company will continue to build a management team that matches the
Company's strategy, stimulate the vitality of the organisation and mechanism, carry
forward the guiding spirit of hard work, and mobilise the enthusiasm and creativity of
employees to the greatest extent possible. The Company will continue to strengthen the
construction of the talent ladder, promote steady front-line work on a regular basis,
increase the sense of belonging of employees and stimulate the endogenous force of the
enterprise through continuous improvement of the system, enhancement of the
transparency of the policy, and enhancement of the grass-roots atmosphere.
At the same time, the company will continue to establish and improve the advanced
operation management system, continue to improve the efficiency of production
organisation and management performance, actively promote the construction of lean
production system, strengthen the awareness of cost reduction and efficiency from top
to bottom, deeply implement the whole process, all elements, all-directional cost
reduction and control, build a scientific and efficient management system, and further
refine the management of purchasing cost, production cost, operation cost, etc. to
effectively reduce the costs and expenses of the company, and achieve the goal of
reducing costs and expenses. Effectively reduce the company's costs and expenses,
achieve synergistic improvement of operational efficiency, and ensure the company's
sustainable, stable and healthy development.
(IV) Risks faced by the company and countermeasures
1. Macroeconomic risk
The company is engaged in the business of petrochemical and polyester fibre products
production and sales, petrochemical and polyester chemical fibre industry and the world
economy and China's economic development is closely related to the state of the
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
economy, but also an industry closely related to national economy and people's
livelihood, and the price and sales of its products are affected by macro-economic
fluctuations and changes in supply and demand and other factors. With the acceleration
of economic globalisation and integration, national macro-controls and cyclical
fluctuations in the world economy will have an impact on the development of the
industry, and if the global economic growth slows down or there is a recession, it will
have a direct impact on the Company's business, operating results and financial position
end demand.
2. Safety and environmental production risks
As the awareness of eco-friendliness increases and the government's environmentally-
friendly requirements become stricter, the Company strictly implements the Production
Safety Law of the People's Republic of China, Environmental Protection Law of the
People's Republic of China and other relevant laws and regulations to ensure safe and
environmentally-friendly production, and earnestly fulfils our social responsibility.
Since the operation of the main production entity, no major safety and eco-friendliness
incidents have occurred. With the expansion of the Company's production scale and the
extension of the industry chain, preventing safety and eco-friendliness accidents has
become 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 of equipment and facilities, the construction and implementation
of organizational systems, etc. The Company will actively carry out safety
standardization and acceptance work in accordance with the arrangements for the
construction of Class 1, 2, and 3 national safety standards, and focus on building a
safety standard management system. The Company will implement the dual-prevention
work mechanism combining safety risk classification and control and hidden danger
123
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
investigation and management, strengthen safety training, increase safety investment,
practice the strategy of promoting safety based on science and technology, promptly
remove safety and eco-friendliness hazards, and eliminate all possibilities of major
accidents.
3. Risk of significant fluctuations of raw materials price
More than 80% of the cost composition of the industry chain in which the Company
operates is determined by upstream raw materials, in particular, the price fluctuation of
crude oil has a greater impact on the Company's production and operation. 2024, the
price of crude oil is likely to fluctuate significantly in line with the international
situation, geopolitics, etc., which will in turn affect the price change of various products
in the industry chain, aggravate the uncertainty of raw material costs and operating
costs, and may bring about greater fluctuations in the Company's efficiency. The
Company will continue to optimise its inventory strategy to reduce the adverse impact
caused by price fluctuations of crude oil and other raw materials.
4. Environmental protection risks
The production and operation of the Company must comply with multiple
environmental protection laws and regulations related to air, water quality, waste
disposal, and public health and safety, obtain relevant environmental protection permits,
and accept inspections from relevant national environmental protection departments. In
recent years, the Company has invested a large amount of funds and technical strength
in the transformation of environmental protection equipment and production processes,
and has treated and discharged pollutants in accordance with national environmental
protection requirements. However, with the promotion of vertical integration of the
industrial chain of listed companies, the expansion of production scale, and the
possibility of stricter environmental protection standards and broader and stricter
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
pollution control measures being implemented in China or Brunei in the future, the
Company's environmental protection costs and management difficulties will also
increase.
5. Risk of exchange rate and interest rate fluctuations
The main operations of the Company's subsidiary, Hengyi Brunei, are located outside
of China, and its main business is settled in US dollars. The exchange rate and interest
rate between the settlement currency and RMB may fluctuate in line with changes in
the international political and economic environment, and is subject to a certain degree
of uncertainty. With the expansion of the Company's overseas business layout and the
increase in overseas sales revenue in the future, the Company's asset position and
operating results are exposed to risks arising from exchange rate fluctuations.
The Company's interest rate risk mainly comes from bank borrowings. The Company,
through establishing a good cooperative relationship with banks, has made reasonable
designs for credit limits, credit varieties and credit terms to ensure sufficient bank credit
limits to meet the Company's various long and short-term financing needs and to
reasonably reduce the risk of interest rate fluctuations.
XII. Reception of research, communication, interview and other activities during
the reporting period
Main content
of
communication Index of basic facts of
Time Location Reception method Visitor type Visitor
and research
information
provided
The Record Form of 2022 Hengyi
January Guosen Company
Company’s Field research Institution Petrochemicals’ Investor
10, 2023 Securities, operation
meeting room Relation Activities as of
125
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
China and industry January 11, 2023 on SZSE
Shipping development (cninfo.com.cn):
Fund and 2 trend 1215576894.PDF
other (cninfo.com.cn)
institutions
Record Form of 2022 Hengyi
Tianfeng
Company Petrochemicals’ Investor
Securities,
The operation Relation Activities as of
February Haitong February 15, 2023 on SZSE
Company’s Field research Institution and industry
14, 2023 Securities (cninfo.com.cn):
meeting room development
and other 12 1215871172.PDF
trend
institutions (cninfo.com.cn)
Record Form of 2022 Hengyi
CRE Company Petrochemicals’ Investor
The Securities, operation Relation Activities as of
February February 22, 2023 on SZSE
Company’s Field research Institution CICC and and industry
21, 2023
meeting room (cninfo.com.cn):
16 other development
institutions trend 1215939225.PDF
(cninfo.com.cn)
Changjiang Record Form of 2022 Hengyi
Securities, Company Petrochemicals’ Investor
The CITIC operation Relation Activities as of
February March 1, 2023 on SZSE
Company’s Field research Institution Capital and industry
28, 2023
meeting room (cninfo.com.cn):
Securities development
and other 10 trend 1216023145.PDF
institutions (cninfo.com.cn)
Shenwan
Hongyuan Record Form of 2022 Hengyi
Securities, Company Petrochemicals’ Investor
The Shenwan operation Relation Activities as of
March 09, March 10, 2023 on SZSE
Company’s Field research Institution Hongyuan and industry
2023
meeting room (cninfo.com.cn):
Capital development
1216091308.PDF
Management trend
and other 7 (cninfo.com.cn)
institutions
Teleconference Changjiang Company Record Form of 2022 Hengyi
April 20, and the Telephone Securities, operation Petrochemicals’ Investor
Institution
2023 Company’s communication Shenwan and industry Relation Activities as of April
meeting Hongyuan development 21, 2023 on SZSE
126
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
room Securities trend (cninfo.com.cn):
and other 1216516849.PDF
182 (cninfo.com.cn)
institutions
54
Record Form of 2022 Hengyi
institutions
Company Petrochemicals’ Investor
Teleconference such as CRE
operation Relation Activities as of April
April 26, and the Telephone Securities, 27, 2023 on SZSE
Institution and industry
2023 Company’s communication China (cninfo.com.cn):
meeting room
development
Pacific 1216656021.PDF
trend
Securities (cninfo.com.cn)
and others
Investors
Record Form of 2022 Hengyi
participating
p5w.net
Company Petrochemicals’ Investor
in the
"Investor Institutions operation Relation Activities as of May
May 08, Telephone Company's 09, 2023 on SZSE
Relations and and industry
2023 communication 2022 annual (cninfo.com.cn):
Interactive individuals development
Platform" online 1216782053.PDF
trend
earnings (cninfo.com.cn)
presentation
Shenwan
Hongyuan
Securities, Record Form of 2022 Hengyi
CITIC Company Petrochemicals’ Investor
Teleconference
Capital operation Relation Activities as of
August and the Telephone August 24, 2023 on SZSE
Institution Securities and industry
23, 2023 Company’s communication (cninfo.com.cn):
meeting room
and other development
124 trend 1217630484.PDF
institutions (cninfo.com.cn)
and
individuals
Record Form of 2022 Hengyi
Investors
p5w.net
Company Petrochemicals’ Investor
participating
"Investor Institutions operation Relation Activities as of
September in the September 12, 2023 on SZSE
Relations Others and and industry
11, 2023 Company's (cninfo.com.cn):
Interactive individuals development
Platform" 2023 Half- 1217835096.PDF
trend
Year Annual (cninfo.com.cn)
127
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Online
Earnings
Conference
CITIC
Capital Record Form of 2022 Hengyi
Securities, Company Petrochemicals’ Investor
Huachuang operation Relation Activities as of
October Telephone Institutions October 31, 2023 on SZSE
Teleconference Securities and industry
30, 2023 communication and
(cninfo.com.cn):
and 72 other development
institutions trend 1218216180.PDF
and (cninfo.com.cn)
individuals
XIII. Implementation and enforcement of the action programme "Quality
Returns and Double Improvement"
Whether the company has disclosed the "Quality Returns Double Improvement" action
programme.
□Yes No
128
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Section IV Corporate Governance
I. Basic status of corporate governance
During 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 Shares on Shenzhen Stock Exchange, Shenzhen Stock
Exchange Self-Regulatory Guidelines for Listed Companies No. 1 - Standardized
Operation of Listed Companies on the Main Board and other relevant laws and
regulations. Based on the actual situation of the Company, we continuously improved
and enhanced the standardized operation of corporate governance, and established a
sound internal management and control system to regulate the operation of the
Company. The Company's internal control system has been increasingly improved, and
the standardization level of governance has been continuously increased.
1. Shareholders and shareholders' general meetings
During the reporting period, the Company strictly complied with laws and regulations,
and convened and held shareholders' general meetings in a standardized manner. The
convening and holding procedures of the shareholders' general meetings, the
qualifications of the persons attending the shareholders' general meetings, the voting
procedures and voting results of the shareholders' general meetings all complied with
the Company Law, Rules for the Shareholders' Meetings of Listed Companies and other
laws and regulations and the Company's Rules of Procedure for the General Meeting
of Shareholders, which ensured that all shareholders, especially minority shareholders,
could fully exercise their rights. The Company's shareholders' general meetings during
the reporting period were convened by the BOD, and lawyers were engaged to witness
the meetings on site, ensuring the legality of the meeting convening, holding and voting
procedures, and safeguarding the legitimate rights and interests of the Company and
shareholders.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
2. The Company and the controlling shareholder
The Company is completely independent from the controlling shareholder and its
subsidiaries in terms of business, personnel, assets, organization, and finance. The
Company has independent and complete business and the ability to operate
independently. The Company's BOD, BOS and internal organizations operate
independently. The controlling shareholder of the Company can strictly regulate its
behavior. Major decisions of the Company were made by the shareholders’ general
meetings in accordance with the law. The controlling shareholder exercised its
shareholder rights in accordance with the law, and did not directly or indirectly interfere
with the decision-making and operating 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
procedures stipulated in the Company Law and the Articles of Association of the
Company. The number and composition of the BOD of the Company met the
requirements of laws and regulations. All directors of 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 and
responsible attitude, faithfully perform their duties in the interests of the Company and
all shareholders, actively participate in training on relevant knowledge, study relevant
laws and regulations, and promote the standardized operation and scientific decision-
making of the BOD. The independent directors of the Company could perform their
duties independently in accordance with the corresponding rules and regulations,
without being influenced by the actual controller of the Company 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 in compliance with relevant regulations, the minutes of the meeting were complete
and true, and the disclosure of relevant information at the meetings was timely, accurate
130
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
and adequate. The BOD of the Company set up four special committees, namely the
Remuneration Assessment and Nomination Committee, the Risk Control Committee,
the Audit Committee and the Strategy and Investment Committee, which have played
an important role in promoting the standardized operation and healthy development of
the Company.
4. Supervisors and the BOS
The Company's BOS consists of three supervisors, one of whom is an employee
representative. The number and personnel of the Company's BOS met the requirements
of relevant laws and regulations and the Company's Articles of Association. All the
supervisors of the Company could perform their duties conscientiously in accordance
with the requirements of the Company's Rules of Procedure of the 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
prescribed procedures, diligently and conscientiously supervise the legality and
compliance of the Company's financial situation, directors and senior executives, and
safeguard the legitimate rights and interests of the Company and its shareholders.
5. Stakeholders
The Company fully respected and safeguarded the legitimate rights and interests of
relevant stakeholders to achieve a win-win situation for customers, suppliers,
employees, shareholders and other 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 the Information Disclosure Management System and the Investor Relations
Management System to conscientiously fulfill our information disclosure obligations,
disclose the Company's operation and management and matters that have significant
131
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
impact on the Company in a true, accurate, complete and 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 as STCN,
China Securities Journal, Shanghai Securities News, Securities Daily and CNINFO
(http://www.cninfo.com.cn) for the Company's information disclosure.
7. Performance evaluation and incentive and restraint mechanisms
The Company is gradually improving and establishing fair and transparent performance
evaluation standards 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 laws and regulations.
Whether there is any material difference between the actual situation of corporate
governance of the Company and the laws, administrative regulations and the rules
on the governance of listed companies issued by the China Securities Regulatory
Commission
There is no material difference between the actual situation of corporate governance of
the Company and laws, administrative regulations and the rules on the governance of
listed companies issued by the China Securities Regulatory Commission.
II. Independence of the Company in guaranteeing the Company's assets,
personnel, finance, organization, and business relative to the controlling
shareholder and actual controller
The Company carried out operations in strict accordance with the Company Law,
Articles of Association and other laws, regulations and rules, established a sound
corporate governance structure of the Company, and maintained independent from the
controlling shareholder in terms of business, personnel, assets, organization, and
132
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
finance. The Company has an independent and complete business system and the ability
to operate independently.
1. Business: The Company has an independent and complete supply, R&D, production
and sales system, has the ability to operate independently in the market, conduct
business, accounting and decision-making, assume responsibilities and risks
independently, and does not rely on the controlling shareholder or other any related
parties.
2. Personnel: The Company has formed a complete system for labor, personnel and
salary management, and an independent human resources management department to
manage labor, personnel and salary independently of the controlling shareholder. The
Company has an independent workforce. The Company's directors, supervisors and
senior executives are legally elected in accordance with the Company Law, Articles of
Association and other relevant laws, regulations and rules. The Company's senior
executives all work in the Company and receive remuneration, and do not hold any
positions other than directors and supervisors in the controlling shareholder and its
subsidiaries.
3. Assets: The Company has a clear property relationship with the controlling
shareholder, and independently 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 use of 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 the interests of the
Company.
4. Organization: The Company established a sound organizational system to meets its
own production and operation needs. The functional departments operate independently
133
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
and smoothly, and there is no subordination relationship between the controlling
shareholder and the functional departments.
5. Finance: The Company has an independent financial and accounting department
equipped with full-time financial personnel. The Company established an independent
accounting system and a standardized financial management system, and financial
decisions were made independently. The Company opened an independent bank
account to independently make tax declarations and perform tax obligations in
accordance with the law. There is no shared bank account or mixed tax payment with
the controlling shareholder.
III. Competition in the same industry
□Applicable Not applicable
134
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
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 Type of Percentage of Date of
Session of meeting Disclosure date
meeting meeting investors meeting
1. Reviewed and approved the Proposal on the Company’s fulfilment of the conditions for the issuance of A shares
to specific targets；
2. Reviewed and approved the Proposal to amend the Company’s proposal for the issuance of A shares to specific
targets；
3. Reviewed and approved the Proposal on the Company’s and its Summary；
13. Reviewed and approved the Report on the work of the Board of Directors for the year 2022；
14. Reviewed and approved the Report on the work of the Supervisory Board for the year 2022；
15. Reviewed and approved the Report on the Financial Accounts for the year 2022；
16. Reviewed and approved the Motion on the Proposed Non-distribution of Profit for FY2022；
17. Reviewed and approved the Annual Internal Control Self-Evaluation Report 2022；
18. Reviewed and approved the Motion on the Deposit and Use of Proceeds in FY2022；
19. Reviewed and approved the Motion on the Report on the Use of Previously Raised Funds；
20. Reviewed and approved the Motion on the Renewal of Appointment of Accounting Firm
1. Reviewed and approved the Motion on < Hengyi Petrochemical Company Limited Fifth Employee Stock
Extraordinary Ownership Plan (Draft) > and Abstract；
First Extraordinary August 15, August 16,
general meeting 53.01% 2. Reviewed and approved the Motion on and its
Summary；
10、Reviewed and approved the Report on the work of the Board of Directors
for the year 2022；
11. Reviewed and approved the Report on the Financial Accounts for the year
2022；
12. Reviewed and approved the Motion on the Proposed Non-distribution of
Profit for FY2022；
13. Reviewed and approved the Annual Social Responsibility Report 2022；
14. Reviewed and approved the Annual Internal Control Self-Evaluation Report
2022；
15. Reviewed and approved the Motion on the Deposit and Use of Proceeds in
FY2022；
16. Reviewed and approved the Motion on the Report on the Use of Previously
Raised Funds；
17. Reviewed and approved the Motion on the Renewal of Appointment of
157
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Accounting Firm；
18. Reviewed and approved the Proposal to submit to the General Meeting of
Shareholders for approval of the exemption of subscribers from the issue of the
offer；
19. Reviewed and approved the Motion on Changes in Accounting Policies；
20. Reviewed and approved the Proposal to Convene the 2022 Annual General
Meeting of Shareholders
Twenty-ninth
meeting of the
April 25, 2023 - 1. Reviewed and approved the Full text of the
Eleventh Board
of Directors
Thirtieth
meeting of the 1. Reviewed and approved the Motion on Not Amending the Conversion Price
May 09, 2023 May 10, 2023
eleventh Board of “Heng Yi Conversion 2” Downwards
of Directors
Thirty-first
meeting of the 1. Reviewed and approved the Motion on the Proposed Participation in the
June 16, 2023 June 17, 2023
Eleventh Board Capital Increase by Share Allotment of Zheshang Bank Co.
of Directors
158
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
1. Reviewed and approved the Motion on < Hangyi Petrochemical Company
Limited Fifth Employee Stock Ownership Plan (Draft) > and Abstract；
2. Reviewed and approved the Motion on and Evaluation and
Yang July 28, Abstract； Nomination
Remu
Liuyong, 2023 2. Reviewed Motion on 1 year
At the end of the term, there is no important advance payment with aging >1 year in
the Company.
(3) Advance payment with top five ending balance collected by object of prepayment
The top five ending amounts (totals by prepayment objects) of the Company’s advance
payments amounted to RMB 981,272,442.02, accounting for 53.90% in the total
balance of prepayments at the year-end balance.
401
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
8. Other receivables
Ending balance of previous
Item Ending balance
year
Interest receivable 0.00 0.00
Dividends receivable 0.00 0.00
Other receivables 187,541,184.46 133,782,632.86
Total 187,541,184.46 133,782,632.86
(1) Other receivables
① Disclosure by aging
Ending balance of previous
Aging Ending balance
year
Within 1 year 157,253,512.38 85,330,016.44
1-2 years 4,033,004.26 2,625,100.78
2-3 years 1,390,154.45 18,718,506.81
Over three years 61,190,426.54 59,126,527.96
Subtotal 223,867,097.63 165,800,151.99
Minus: Bad debt provision 36,325,913.17 32,017,519.13
Total 187,541,184.46 133,782,632.86
② Classification based on nature of fund
Ending balance of previous
Nature of account Ending balance
year
Receivables and payables such as advances from
27,184,746.69 27,054,550.51
entities beyond the scope of consolidation
Combination of tax refunds receivable and other
15,897,035.30 18,364,333.51
government subsidies
Portfolio of deposits and security 119,507,155.21 62,664,839.19
Employee loan and petty cash 6,383,068.94 6,311,098.39
Other groups 54,895,091.49 51,405,330.39
Subtotal 223,867,097.63 165,800,151.99
Minus: Bad debt provision 36,325,913.17 32,017,519.13
Total 187,541,184.46 133,782,632.86
402
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
③ Accrual of bad debt reserves
Stage 1 Stage 2 Stage 3
Expected credit loss
Expected credit loss
Expected credit loss over the lifetime
Bad debt provision over the lifetime (no Total
of the future twelve (credit impairment
credit impairment
months occurred has
has occurred)
occurred)
Balance at end of
5,350,148.44 421,325.60 26,246,045.09 32,017,519.13
previous 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
-- -- 0.00 0.00
Stage 2
- Transferred back to
-- 0.00 0.00 0.00
Stage 1
Provision in current
3,346,898.95 0.00 1,831,600.73 5,178,499.68
period
Roll-back in current
483,910.04 379,625.60 6,570.00 870,105.64
period
Write-off in current
0.00 0.00 0.00 0.00
period
Cancellation after
verification in current 0.00 0.00 0.00 0.00
period
Other changes 0.00 0.00 0.00 0.00
Ending balance 8,213,137.35 41,700.00 28,071,075.82 36,325,913.17
④ Situation of bad debt reserves
Amount of changes in current period
Write-off or
Ending
Amount Cancellation Ending
Category balance of
Provision recovered or after balance
previous year
written back Verification and
Others
403
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Receivables and payables such
as advances from entities
811,636.50 234,545.39 230,891.53 0.00 815,290.36
beyond the scope of
consolidation
Portfolio of deposits and
3,454,215.52 2,957,791.00 407,183.46 0.00 6,004,823.06
security
Employee loan and petty cash 189,328.29 79,399.85 77,236.12 0.00 191,492.02
Other groups 27,562,338.82 1,906,763.44 154,794.53 0.00 29,314,307.73
Total 32,017,519.13 5,178,499.68 870,105.64 0.00 36,325,913.17
⑤ Other receivables with top five ending balance collected by debtor
Proportions in
the total other Bad debt
Nature of
Name of organization Ending balance Aging accounts provision
account
receivable at the Ending balance
year ended (%)
Baiduri Bank Berhad Margin 60,183,999.39 Within 1 year 26.88 3,009,199.97
China (Guangxi) Pilot Free Margin Within 1 year
Trade Zone Qinzhou Port Area 40,000,000.00 17.87 2,000,000.00
Investment Service Centre
1,719,275.62 Within 1 year
Claim for
Wang XX Over three 12.49 27,956,250.71
indemnity 26,236,975.09
years
2,253,072.35 Within 1 year
Fulida Group and Xinghui
Compensation Over three 11.54 1,291,659.37
Chemical Fibre Group Co., Ltd. 23,580,115.13
years
Tax Bureau of Xiaoshan District Tax returns 15,897,035.30 Within 1 year 7.10 0.00
Total — 169,870,472.88 -- 75.88 34,257,110.05
Note: The relevant description on balance formation of the Company’s "other
receivables - Wang" and full provision for bad debts at the end of current period can be
found in Note XI. 1 (1).
⑥ Accounts receivable involving government grants
404
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Aging at the Time, amount and
Name of government
Name of organization Ending balance end of the basis of estimated
grants
period collection
Within 6 m
Tax Bureau of Xiaoshan District Value-added tax refund 15,897,035.30 Before May, 2024
onths
Note: As of the date of this financial report, RMB 11,428,235.30 has been recovered
from "VAT refunds".
9. Inventory
(1) Classification of inventory
Ending balance
Inventory depreciation
Item reserves/Impairment
Book balance Book value
reserves for contract
performance cost
Materials in transit 619,097,411.51 129,177.90 618,968,233.61
Raw materials 5,057,860,629.36 2,477,361.36 5,055,383,268.00
Goods in process 1,423,940,390.58 19,196,332.00 1,404,744,058.58
Commodity stocks 6,029,526,106.66 49,698,635.18 5,979,827,471.48
Contract performance cost 1,272,831.70 0.00 1,272,831.70
Total 13,131,697,369.81 71,501,506.44 13,060,195,863.37
(Continued)
Ending balance of previous year
Inventory depreciation
Item reserves/Impairment
Book balance Book value
reserves for contract
performance cost
Materials in transit 2,167,614,674.66 0.00 2,167,614,674.66
Raw materials 4,761,057,332.22 50,978,954.18 4,710,078,378.04
Goods in process 1,289,739,172.39 89,318,021.98 1,200,421,150.41
Commodity stocks 6,222,986,720.67 227,434,527.33 5,995,552,193.34
Contract performance cost 9,818,174.73 0.00 9,818,174.73
405
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous year
Inventory depreciation
Item reserves/Impairment
Book balance Book value
reserves for contract
performance cost
Total 14,451,216,074.67 367,731,503.49 14,083,484,571.18
(2) Inventory depreciation reserves
Increase in current period Decrease in current period
Ending balance
Item Write-back or Ending balance
of previous year Provision Others Others
write-off
Materials in transit 0.00 129,177.90 0.00 0.00 0.00 129,177.90
Raw materials 50,978,954.18 2,477,361.36 0.00 51,245,167.63 -266,213.45 2,477,361.36
Goods in process 89,318,021.98 19,105,849.83 0.00 90,358,235.15 -1,130,695.34 19,196,332.00
Commodity stocks 227,434,527.33 49,550,120.68 0.00 228,280,266.03 -994,253.20 49,698,635.18
Total 367,731,503.49 71,262,509.77 0.00 369,883,668.81 -2,391,161.99 71,501,506.44
Note: The reason for the Company’s re-sell inventory depreciation reserves in current
period is the external sales of the inventory for which the inventory depreciation
provision has been made.
10. Other current assets
Item Ending balance Ending balance of previous year
Unamortized expense 149,807,903.33 180,672,280.12
Input tax retained 246,014,337.84 217,586,355.91
Excess tax paid 26,449,284.90 9,688,362.57
Input tax to be certified 324,194,945.70 313,718,497.07
Principal and interest of entrusted
787,149,197.50 989,433,904.99
loan
Others 269,739.82 133,431.20
Total 1,533,885,409.09 1,711,232,831.86
11. Long-term receivable
Long-term accounts receivable
406
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Ending balance of previous year
Item Impairm Impair
Book balance ent Book value Book balance ment Book value
Reserve Reserve
Financing lease 137,312,857.42 0.00 137,312,857.42 172,869,347.67 0.00 172,869,347.67
Wherein: Unrealized financing
-50,417,221.27 0.00 -50,417,221.27 -66,418,901.96 0.00 -66,418,901.96
income
Long-term deposits 3,674,423.03 0.00 3,674,423.03 3,613,154.11 0.00 3,613,154.11
Minus: Portion due within one
year 0.00 0.00 0.00 0.00 0.00 0.00
Total 140,987,280.45 0.00 140,987,280.45 176,482,501.78 0.00 176,482,501.78
12. Long-term equity investments
Ending balance Ending balance of previous year
Item Impairme
Impai
Book balance rment Book value Book balance nt Book value
Reserve Reserve
Investments in joint
ventures 13,669,254,123.61 0.00 13,669,254,123.61 12,831,505,320.53 0.00 12,831,505,320.53
and associates
Investments in joint ventures and associates
Changes of increase or decrease in current period
Investment
profits and
losses Other
Ending balance of
Investee Additional Negative recognized comprehensive Changes in
previous year under the equity
investment investment method income other equity
Investment adjustment
profits and
losses
I. Joint ventures
Zhejiang Baling Hengyi
1,076,560,288.46 0.00 0.00 56,301,538.05 0.00 0.00
Caprolactam Co., Ltd.
Hainan Yisheng
3,304,105,270.86 0.00 0.00 175,495,660.54 -3,994,020.89 0.00
Petrochemical Co., Ltd.
Subtotal 4,380,665,559.32 0.00 0.00 231,797,198.59 -3,994,020.89 0.00
II. Associated companies
Dalian Yisheng
2,026,108,173.51 0.00 0.00 23,229,152.72 1,347,331.43 0.00
Investment Co., Ltd.
407
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Changes of increase or decrease in current period
Investment
profits and
losses Other
Ending balance of
Investee Additional Negative recognized comprehensive Changes in
previous year under the equity
investment investment method income other equity
Investment adjustment
profits and
losses
ChinaZheshang Bank Co.,
4,852,177,976.81 469,864,134.10 0.00 497,155,858.90 42,997,200.00 -108,658.67
Ltd.
Ningbo Jinhou
Industry Investment Co., 14,254,625.24 0.00 0.00 -98,622.42 0.00 0.00
Ltd.
Zhejiang Yisheng New
1,401,413,074.57 0.00 0.00 -278,049,901.76 -287,482.76 0.00
Materials Co., Ltd.
Dongzhan Shipping Co.,
156,885,911.08 0.00 0.00 10,165,363.70 825,799.57 0.00
Ltd.
Subtotal 8,450,839,761.21 469,864,134.10 0.00 252,401,851.14 44,882,848.24 -108,658.67
Total 12,831,505,320.53 469,864,134.10 0.00 484,199,049.73 40,888,827.35 -108,658.67
(Continued)
Investee Changes of increase or decrease in current period
Impairment
Announcement of Provisions for
Ending balance reserves
release impairment Others Ending balance
Cash dividend or
reserves
profit
I. Joint ventures
Zhejiang Baling Hengyi Caprolactam
0.00 0.00 0.00 1,132,861,826.51 0.00
Co., Ltd.
Hainan Yisheng Petrochemical Co.,
0.00 0.00 0.00 3,475,606,910.51 0.00
Ltd.
Subtotal 0.00 0.00 0.00 4,608,468,737.02 0.00
II. Associated companies
Dalian Yisheng Investment Co.,
0.00 0.00 0.00 2,050,684,657.66 0.00
Ltd.
ChinaZheshang Bank Co., Ltd. 157,094,549.43 0.00 0.00 5,704,991,961.71 0.00
Ningbo Jinhou Industry Investment
0.00 0.00 0.00 14,156,002.82 0.00
Co., Ltd.
Zhejiang Yisheng New Materials Co.,
0.00 0.00 0.00 1,123,075,690.05 0.00
Ltd.
Dongzhan Shipping Co., Ltd. 0.00 0.00 0.00 167,877,074.35 0.00
408
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Investee Changes of increase or decrease in current period
Impairment
Announcement of Provisions for
Ending balance reserves
release impairment Others Ending balance
Cash dividend or
reserves
profit
Subtotal 157,094,549.43 0.00 0.00 9,060,785,386.59 0.00
13,669,254,123.6
Total 157,094,549.43 0.00 0.00 0.00
1
13. Other equity instrument investments
(1) Investment in other equity instruments
Ending balance
Item Ending balance
of previous year
Zhejiang Hengchuang Advanced Functional Fibre Innovation Center Co., Ltd. 600,000.00 600,000.00
Jiangsu New Horizon Advanced Functional Fibre Innovation Center Co., Ltd. 5,000,000.00 5,000,000.00
Total 5,600,000.00 5,600,000.00
14. Fixed assets
Ending balance of previous
Item Ending balance
year
Fixed assets 45,430,020,661.94 47,462,032,827.08
Liquidation of fixed assets 0.00 4,428,849.55
Total 45,430,020,661.94 47,466,461,676.63
(1) Fixed assets
① Information of fixed assets
Houses and Machinery Transportation Office facilities
Item Structures Total
buildings equipment equipment and others
I. Original book value
1. Ending balance
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
(previous year)
2. Increase in
628,838,500.06 121,741,776.37 1,482,899,290.53 30,026,375.01 26,338,986.11 2,289,844,928.08
current period
(1) Acquisition 42,000,744.06 -9,289,997.33 22,835,176.49 7,412,796.46 7,968,173.39 70,926,893.07
（2）Transfer from construction in progress 466,137,930.91 110,645,472.22 1,129,603,596.51 20,980,339.70 17,270,956.02 1,744,638,295.36
409
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Houses and Machinery Transportation Office facilities
Item Structures Total
buildings equipment equipment and others
（3）Translation of foreign currency statements 120,699,825.09 2,009.24 330,418,039.65 1,633,238.85 1,099,856.70 453,852,969.53
（4）Others 0.00 20,384,292.24 42,477.88 0.00 0.00 20,426,770.12
3、Decrease in current
296,927,477.26 10,876,195.75 1,467,543,762.70 9,229,051.59 20,310,963.48 1,804,887,450.78
period
（1）Disposal or
5,818,853.36 583,799.01 124,612,947.41 4,899,755.36 861,769.06 136,777,124.20
retirement
（2）Transfer to construction in progress 0.00 0.00 882,985,801.72 0.00 0.00 882,985,801.72
(3) Conversion of foreign currency s a ements 0.00 0.00 0.00 0.00 5,168.98 5,168.98
（4）Change in scope of consolidation 259,087,577.64 10,292,396.74 458,956,369.11 4,329,296.23 19,434,623.76 752,100,263.48
（5）Others 32,021,046.26 0.00 988,644.46 0.00 9,401.68 33,019,092.40
4. Balance at the end
13,145,179,276.03 1,510,319,882.68 51,188,760,479.19 368,893,309.67 336,663,728.54 66,549,816,676.11
of current year
II. Accumulated
depreciation
1. Ending balance
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
(previous year)
2. Increase in
340,624,406.82 82,401,691.59 2,707,098,079.84 49,783,100.67 49,722,058.73 3,229,629,337.65
current period
(1) Provision 332,308,198.68 81,464,885.84 2,673,042,540.17 48,839,729.07 48,969,274.20 3,184,624,627.96
(2) (2) Conversion of foreign currency sta ements 8,316,208.14 961.46 34,040,318.43 943,371.60 752,784.53 44,053,644.16
（3）Others 0.00 935,844.29 15,221.24 0.00 0.00 951,065.53
3、Decrease in current
55,420,621.66 4,904,614.29 626,480,374.51 8,290,940.10 13,926,152.98 709,022,703.54
period
（1）Disposal or
3,229,713.76 435,273.57 73,287,657.09 4,829,450.86 740,604.36 82,522,699.64
retirement
（2）Transfer to construction in progress 0.00 0.00 350,182,352.56 0.00 0.00 350,182,352.56
(3) Conversion of foreign currency s a ements 0.00 0.00 0.00 0.00 0.00 0.00
（4）Change in scope of consolidation 51,255,063.61 4,469,340.72 203,010,364.86 3,461,489.24 13,185,548.62 275,381,807.05
（5）Others 935,844.29 0.00 0.00 0.00 0.00 935,844.29
4. Balance at the end
1,844,284,414.36 779,401,428.56 18,065,567,316.54 204,595,973.37 225,946,881.34 21,119,796,014.17
of current year
III. Impairment
reserves
1. Ending balance
0.00 0.00 3,636,991.67 0.00 0.00 3,636,991.67
(previous year)
2. Increase in
0.00 0.00 0.00 0.00 0.00 0.00
current period
(1) Provision 0.00 0.00 0.00 0.00 0.00 0.00
3. Decrease in
0.00 0.00 3,636,991.67 0.00 0.00 3,636,991.67
current period
410
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Houses and Machinery Transportation Office facilities
Item Structures Total
buildings equipment equipment and others
(1) Disposal or
0.00 0.00 3,636,991.67 0.00 0.00 3,636,991.67
retirement
4. Balance at the end
0.00 0.00 0.00 0.00 0.00 0.00
of current year
IV. Book value
1. Book value at the
11,300,894,861.67 730,918,454.12 33,123,193,162.65 164,297,336.30 110,716,847.20 45,430,020,661.94
end of this year
2. Book value at the end
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
of the previous year
Note: The original value of machinery and equipment of RMB882,985,801.72 and
accumulated depreciation of RMB350,182,352.56 were transferred to construction
materials in the statement of work-in-progress due to the adjustment of the planning of
the area in which Hangzhou Yi Maizi is located, and its related relocatable chemical
fibre production equipment was transferred to the Company's subsidiary, Hangzhou
Yitong New Materials Company Limited, which would be put into production on an
opportune basis.
② Temporarily idle fixed assets
Original Book Accumulated Impairment
Item Book value
Value depreciation reserves
Houses and buildings 8,710,289.69 947,846.90 0.00 7,762,442.79
Machinery equipment 14,580,738.09 3,970,255.89 0.00 10,610,482.20
Total 23,291,027.78 4,918,102.79 0.00 18,372,924.99
③ Situation of fixed assets with uncompleted certificate of title
Reasons for failure to complete
Item Book value relevant affairs of property right
certificate
Real estate of Fujian Yi Jin In process
124,783,293.52
Chemical Fibre Co., Ltd.
Real estate of Guangxi Hengyi In process
11,297,949.33
New Material Co., Ltd
Real estate of Haining Hengyi In process
140,296,429.23
Thermal Power Co., Ltd.
Real estate of Jiaxing Yipeng In process
417,698,198.53
Chemical Fibre Co., Ltd.
411
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Real estate of Suqian Hengyuan In process
167,660,813.21
Thermal Energy Co., Ltd.
Real estate of Suqian Yida New In process
311,886,879.10
Materials Co., Ltd.
Real estate of Taicang Yifeng Property obtained by auction,
12,797,028.70
Chemical Fibre Co., Ltd. under transaction
Real estate of Zhejiang Shuangtu
7,434,789.85 Makeshift house
New Materials Co., Ltd.
(2) Liquidation of fixed assets
Machinery equipment Ending balance Ending balance of previous year
Machinery equipment 0.00 4,428,849.55
15. Construction in progress
Item Ending balance Ending balance of previous year
Construction in progress 4,005,782,015.72 3,608,062,223.99
Engineering materials 604,523,744.30 143,827,176.95
Total 4,610,305,760.02 3,751,889,400.94
(1) In-process construction
① Situation of in-process construction
Ending balance Ending balance of previous year
Item Impairment
Book balance Impairment Book value Book balance Book value
Reserve reserves
Phase II of the refining-
petrochemical project in 2,713,040,992.62 0.00 2,713,040,992.62 2,217,273,317.70 0.00 2,217,273,317.70
Brunei
Haining New Materials
94,804.30 0.00 94,804.30 49,503,959.30 0.00 49,503,959.30
Construction Project
Suqian Yida Expansion
14,143,692.44 0.00 14,143,692.44 521,514,887.05 0.00 521,514,887.05
Project (Phase II)
The project of centralized
heating for Suqian Yida 232,083,426.90 0.00 232,083,426.90 365,207,528.09 0.00 365,207,528.09
Project
Guangxi Jijin Project
875,865,394.43 0.00 875,865,394.43 143,465,895.02 0.00 143,465,895.02
(Phase I)
The boiler project of Zhejiang 0.00 0.00 0.00 77,784,628.37 0.00 77,784,628.37
412
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Ending balance of previous year
Item Impairment
Book balance Impairment Book value Book balance Book value
Reserve reserves
Shuangtu New Materials Co.,
Ltd.
Heat transfer oil boiler
renovation project of Zhejiang
0.00 0.00 0.00 60,407,803.61 0.00 60,407,803.61
Hengyi High- Tech Materials
Co., Ltd.
Other projects 170,553,705.03 0.00 170,553,705.03 172,904,204.85 0.00 172,904,204.85
Total 4,005,782,015.72 0.00 4,005,782,015.72 3,608,062,223.99 0.00 3,608,062,223.99
② Changes of major construction projects in progress in current period
Amount of
Budget (RMB Ending balance of Increase in transferred into fixed Other decrease
Item Ending balance
10,000) previous year current period assets in current in current period
Amount
period
Phase II of the refining-
petrochemical project in $1,365,389.00 2,217,273,317.70 455,933,849.94 0.00 -39,833,824.98 2,713,040,992.62
Brunei
Haining New Materials
892,500.00 49,503,959.30 99,731,117.63 149,140,272.63 0.00 94,804.30
Construction Project
Suqian Yida Expansion
385,000.00 521,514,887.05 451,809,220.82 959,180,415.43 0.00 14,143,692.44
Project (Phase II)
The project of centralized
heating for Suqian Yida 65,000.00 365,207,528.09 111,958,777.79 245,082,878.98 0.00 232,083,426.90
Project
Guangxi Jijin Project
1,054,737.57 143,465,895.02 744,043,388.55 11,643,889.14 0.00 875,865,394.43
(Phase I)
The boiler project of Zhejiang
Shuangtu New Materials Co., 8,850.00 77,784,628.37 22,246,577.78 100,031,206.15 0.00 0.00
Ltd.
Heat transfer oil boiler
renovation project of
9,100.00 60,407,803.61 32,116,193.63 92,523,997.24 0.00 0.00
Zhejiang Hengyi High- Tech
Materials Co., Ltd.
Other projects -- 172,904,204.85 184,800,371.37 187,035,635.79 115,235.40 170,553,705.03
Total -- 3,608,062,223.99 2,102,639,497.51 1,744,638,295.36 -39,718,589.58 4,005,782,015.72
(Continued)
Proportion of
Interest Capitalization
project Progress of Wherein: Interest
Works (%) capitalization for the current rate of interest
Project name accumulated Project Sources of funds
accumulative period in current
investment in progress Capitalized amount
amount period (%)
budget (%)
Phase II of the refining- 2.86 2.86% 0.00 0.00 -- Self-raised funds
413
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Proportion of
Interest Capitalization
project Progress of Wherein: Interest
Works (%) capitalization for the current rate of interest
Project name accumulated Project Sources of funds
accumulative period in current
investment in progress Capitalized amount
amount period (%)
budget (%)
petrochemical project in
Brunei
Haining New Materials
Self-raised
Construction Project
103.88 99.50% 344,624,923.13 0.00 -- funds
and loans
Raised fund
Suqian Yida Expansion Self-raised funds
Project (Phase II) 25.61 30.00% 24,971,018.35 6,561,088.96 4.90 and loans
Raised fund
The project of centralized
heating for Suqian Yida 101.38 95.00% 0.00 0.00 -- Self-raised funds
Project
Guangxi Jijin Project Self-raised funds
(Phase I) 8.45 18.18% 58,549,344.58 58,549,344.58 4.06 and loans
Raised fund
The boiler project of
Zhejiang Shuangtu New 113.03 100.00% 0.00 0.00 -- Self-raised funds
Materials Co., Ltd.
Heat transfer oil boiler
renovation project of
101.67 100.00% 0.00 0.00 -- Self-raised funds
Zhejiang Hengyi High-
Tech Materials Co., Ltd.
Other projects -- -- 0.00 0.00 -- Self-raised funds
Total -- -- 428,145,286.06 65,110,433.54 -- --
(2) Engineering materials
Ending balance Ending balance of previous year
Item Impairment Impairment
Book balance Book value Book balance Book value
reserves reserves
Special
65,427,244.67 0.00 65,427,244.67 137,253,622.03 0.00 137,253,622.03
materials
Special
539,096,499.63 0.00 539,096,499.63 6,573,554.92 0.00 6,573,554.92
equipment
Total 604,523,744.30 0.00 604,523,744.30 143,827,176.95 0.00 143,827,176.95
414
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
16. Right-of-use assets
Houses and Machinery
Item Land use right Total
buildings equipment
I. Original book value
1. Ending balance
67,427,680.52 0.00 414,971,815.78 482,399,496.30
(previous year)
2. Increase in current period 18,178,771.20 0.00 7,036,753.21 25,215,524.41
(1) Increase in rental income 17,579,274.72 0.00 0.00 17,579,274.72
(2) Conversion of
foreign currency 599,496.48 0.00 7,036,753.21 7,636,249.69
statements
3. Decrease in current period 13,394,193.34 0.00 0.00 13,394,193.34
(1) Decrease due to
13,394,193.34 0.00 0.00 13,394,193.34
contract expiration
(2) Conversion of
foreign currency 0.00 0.00 0.00 0.00
statements
4. Balance at the end of
72,212,258.38 0.00 422,008,568.99 494,220,827.37
current year
II. Accumulated depreciation
1. Ending balance
21,921,141.95 0.00 30,475,691.11 52,396,833.06
(previous year)
2. Increase in current period 24,121,698.64 0.00 16,314,183.28 40,435,881.92
(1) Provision 23,803,098.53 0.00 15,721,790.14 39,524,888.67
(2) Conversion of
foreign currency 318,600.11 0.00 592,393.14 910,993.25
statements
3. Decrease in current period 13,394,193.34 0.00 0.00 13,394,193.34
(1) Decrease due to
13,394,193.34 0.00 0.00 13,394,193.34
contract expiration
(2) Conversion of
foreign currency 0.00 0.00 0.00 0.00
statements
4. Balance at the end of
32,648,647.25 0.00 46,789,874.39 79,438,521.64
current year
III. Impairment reserves
415
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Houses and Machinery
Item Land use right Total
buildings equipment
1. Ending balance
0.00 0.00 0.00 0.00
(previous year)
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
0.00 0.00 0.00 0.00
current year
IV. Book value
1. Book value at the end of
39,563,611.13 0.00 375,218,694.60 414,782,305.73
this year
2. Book value at the end of
45,506,538.57 0.00 384,496,124.67 430,002,663.24
the previous year
17. Intangible assets
(1) Situation of intangible assets
Patents and Software and
Item Land use right Mark Total
Licences others
I. Original book value
1. Ending balance
2,898,636,499.71 659,022,102.02 19,740.00 170,590,110.17 3,728,268,451.90
(previous year)
2. Increase in current
11,485,652.09 5,852,100.03 0.00 14,532,932.91 31,870,685.03
period
11,485,652.09 0.00 0.00 13,602,869.28 25,088,521.37
(1) Acquisition
(2) Internal R&D 0.00 0.00 0.00 0.00 0.00
(3) Conversion of foreign
0.00 5,852,100.03 0.00 930,063.63 6,782,163.66
currency statements
3、Decrease in current
145,773,556.73 0.00 0.00 2,454,859.33 148,228,416.06
period
（1）Disposal 0.00 0.00 0.00 0.00 0.00
（2）Changes in the scope of
145,773,556.73 0.00 0.00 2,412,381.45 148,185,938.18
business combinations
(3) Others 0.00 0.00 0.00 42,477.88 42,477.88
416
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Patents and Software and
Item Land use right Mark Total
Licences others
4. Balance at the end of
2,764,348,595.07 664,874,202.05 19,740.00 182,668,183.75 3,611,910,720.87
current year
II. Accumulated
amortization
1. Ending balance
293,979,925.46 410,545,149.16 19,740.00 85,192,931.32 789,737,745.94
(previous year)
2. Increase in current
69,203,639.03 37,980,284.24 0.00 16,541,903.97 123,725,827.24
period
（1）Provision 69,203,639.03 36,024,788.91 0.00 16,212,016.72 121,440,444.66
（2）Conversion of foreign
0.00 1,955,495.33 0.00 329,887.25 2,285,382.58
currency statements
3. Decrease in current
34,997,720.14 0.00 0.00 893,738.05 35,891,458.19
period
(1) Disposal 0.00 0.00 0.00 0.00 0.00
(2) Changes in the scope of
34,997,720.14 0.00 0.00 893,738.05 35,891,458.19
business combinations
4. Balance at the end of
328,185,844.35 448,525,433.40 19,740.00 100,841,097.24 877,572,114.99
current year
III. Impairment reserves
1. Ending balance
0.00 0.00 0.00 0.00 0.00
(previous year)
2. Increase in current
0.00 0.00 0.00 0.00 0.00
period
(1) Provision 0.00 0.00 0.00 0.00 0.00
3. Decrease in current
0.00 0.00 0.00 0.00 0.00
period
(1) Disposal 0.00 0.00 0.00 0.00 0.00
4. Balance at the end of
0.00 0.00 0.00 0.00 0.00
current year
IV. Book value
1. Book value at the end of this
2,436,162,750.72 216,348,768.65 0.00 81,827,086.51 2,734,338,605.88
year
2. Book value at the end of the
2,604,656,574.25 248,476,952.86 0.00 85,397,178.85 2,938,530,705.96
previous year
(2) Situation of intangible assets with limited ownership or use right
417
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amortization amount in Reason for
Item Book value at the end of the period
current period restriction
Land use right 2,031,649,175.86 54,247,115.09 Mortgage loan
18. Development expenditure
Increase in current period Decrease in current period
Ending balance Internal Recognized
Item Transferred to Ending balance
of previous year development Others as
Intangible current
expenditures profit and loss
assets
Research and application
development of bio-based PTT
3,002,503.92 434,913.72 0.00 0.00 0.00 3,437,417.64
elastic shape memory fibre
series
3,000t/a caprolactam
gas phase
18,340,465.12 27,043,337.48 0.00 0.00 0.00 45,383,802.60
rearrangement and
crystallization project
Development of
differentiated new flame- 38,579.16 0.00 0.00 0.00 38,579.16 0.00
retardant products
21,381,548.20 27,478,251.20 0.00 0.00 38,579.16 48,821,220.24
Total
19. Goodwill
(1) Original book value of goodwill
Increase in current Decrease in current
Name or formation of investee Ending balance of period period
Ending balance
goodwill matters previous year Business
Disposal
combination
Zhejiang Shuangtu New Material
221,865,586.69 0.00 0.00 221,865,586.69
Co., Ltd.
(2) Impairment test process of goodwill
In November 2018, with an amount of RMB 2,105 million, the Company purchased all
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
stocks of Zhejiang Shuangtu New Materials Co., Ltd., and amortized the merger prices
in accordance with relevant accounting standards. On the combination date, the fair
value is RMB 1,883,134,400 for the acquiree’s net identifiable assets. As a result, an
amount of RMB 221,865,600 goodwill is formed in the consolidated accounting
statement.
This year, the Company assessed the recoverable amount of goodwill and conducted
impairment tests on various asset groups related to goodwill. In the process of goodwill
impairment test, the Company determined the composition of the assets of the asset
groups related to the goodwill reflected in the Company’s consolidated financial
statements and their book value of RMB 1,750,023,000 based on the consolidated
financial statement as on December 31, 2023 and the assets and operating conditions
of the merged party Shuangtu. It is found after impairment test that the present value of
the expected future cash flow of this goodwill and related asset group on December 31,
2023 was RMB 1,856,000,000, and no impairment occurred. Details are as follows:
Currency unit: 10,000
Item Book number of consolidated statements
Fixed assets 132,855.52
Construction in progress 555.77
Intangible assets 19,357.76
Long-term unamortized expenses 46.69
Goodwill recognized in consolidated statements 22,186.56
Subtotal of book value of asset groups containing
175,002.30
goodwill
Vale of goodwill not recognized as attributable to minority
0.00
shareholders’ equity
Total adjusted book value of asset groups containing
175,002.30
goodwill
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Book number of consolidated statements
Present value (recoverable amount) of the estimated
185,600.00
future cash flow of the asset group
Note: For the present value (recoverable amount) of the expected future cash flow of
the asset groups above, the results of assessment set out in the HYZXPBZ [2024] No.
A01-0022 Asset Appraisal Report issued by Beijing Huaya Zhengxin Assets Appraisal
Co., Ltd. on April 12, 2024 was used.
The recoverable amount of the asset groups above is determined according to the
present value of the expected future cash flow. Based on its current operating conditions,
business characteristics and market supply & demand and upon an overall analysis and
consideration of various factors such as residual service life of main assets included in
the asset group, the acquirer is estimated to enter a stable period in 2028. Therefore, the
predictive period is determined from January 2024 to December 2028 (five years in
total), and the discount rate of 10.27% is adopted.
Important assumptions for goodwill impairment test:
① Assumption of orderly transaction: Orderly transaction refers to the transaction that
related assets or liabilities have usual marketing activities within a period of time prior
to the measurement date.
② Assumption of open market: It means that assets can be traded freely in the fully
competitive market, and that its price depends on independent buyer’s and seller’s value
judgment under certain market supply and demand conditions. It is an assumption about
the conditions of the target assets market and about the influence of assets under
relatively complete market conditions.
③ Going concern assumption: Assume no unforeseeable factor leading to a failure to
continue operations, when the entrusted asset group is continuously operated in
accordance with the current situation, purpose, usage mode and management level on
the base date;
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④ No significant change in the existing editions of applicable national laws &
regulations and macro-economic situation; No unforeseeable significant change in
external economic environment (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 the future, and predict the future cash flow of assets based on current asset conditions,
excluding the prediction of the future cash flow related to restructuring or modification
that will probably occur in the future and that has not been promised yet;
⑥ Assume that cash inflow and outflow of the asset group occur in the middle of the
year after the assessment base date.
⑦ Assume that the management of the acquired party after the assessment base date is
responsible, stable, and capable of assuming their positions.
20. Long-term deferred expenses
Ending balance Amortization
Increase in Other decreases in
Item of previous amount in Ending balance
current period amount
year current period
Renovation costs 1,300,456.92 8,661,752.88 1,726,403.06 -228.81 8,236,035.55
Storage tank use right
614,316.50 0.00 147,435.96 0.00 466,880.54
transfer fees
Catalyst 434,858,060.60 116,821,613.13 116,167,502.89 -7,377,113.76 442,889,284.60
Others 6,958,983.65 4,628,199.93 2,520,357.84 -4.35 9,066,830.09
Total 443,731,817.67 130,111,565.94 120,561,699.75 -7,377,346.92 460,659,030.78
21. Deferred income tax assets/ deferred income tax liabilities
(1) Details of deferred income tax assets
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Ending balance of previous year
Deductible
Item Deferred income tax Deductible Deferred income
temporary
assets temporary difference tax assets
difference
Impairment loss on credit
46,422,101.57 7,825,529.70 36,951,677.06 5,636,084.44
assets
Asset impairment reserves 13,950,243.69 3,487,560.92 73,251,230.47 15,843,906.01
Changes in fair value of
held-for-trading financial 16,480,122.16 4,120,030.54 28,824,109.33 7,206,027.34
assets
Accrued expenses 819,949.97 145,104.74 159,529.55 23,929.43
Deferred income 51,550,425.74 9,438,555.06 91,704,353.43 15,346,671.75
Deductible losses 1,394,478,280.40 313,916,414.42 1,467,199,781.25 306,067,338.31
Cash-flow hedging 0.00 0.00 6,047,943.46 1,511,985.87
Differences in right-of-
2,577,536.77 644,384.20 51,720.35 12,930.09
use assets
Total 1,526,278,660.30 339,577,579.58 1,704,190,344.90 351,648,873.24
(2) Details of deferred income tax liabilities
Ending balance Ending balance of previous year
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Appreciation of assets
appraisal for business
269,591,564.80 40,438,734.72 296,207,939.40 44,431,190.91
merger not under the same
control
Changes in fair value of
held-for-trading financial 24,503,635.04 4,663,526.26 25,596,501.91 4,572,763.08
assets
Deduction differences of
fixed assets before one- off 165,154,726.26 34,841,693.13 131,540,806.43 30,811,846.42
income tax
Differences in right-to-
3,127,960.70 781,990.18 0.00 0.00
use assets
Unrealized profits arising
12,545,133.80 3,136,283.45 9,344,733.79 2,336,183.45
from intra-group trading
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Ending balance of previous year
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Total 474,923,020.60 83,862,227.74 462,689,981.53 82,151,983.86
(3) Details of unconfirmed deferred income tax assets
Item Ending balance Ending balance of previous year
Deductible temporary
200,772,191.45 166,691,372.86
difference
Deductible losses 2,441,391,427.09 2,404,898,394.41
Total 2,642,163,618.54 2,571,589,767.27
(4) Deductible losses of unconfirmed deferred income tax assets will be mature in the
following years
Year Ending balance Ending balance of previous year
2023 -- 76,870,143.05
2024 112,798,534.47 145,795,018.28
2025 3,192,986.38 161,153,678.35
2026 466,167,211.51 506,572,258.86
2027 1,017,609,025.68 1,514,507,295.87
2028 and beyond 841,623,669.05 --
Total 2,441,391,427.09 2,404,898,394.41
22. Other non-current assets
Item Ending balance Ending balance of previous year
Payment for long-term
3,042,674,890.57 756,296,579.88
assets
Prepayment of dumping
2,134,899.05 2,268,330.25
right transfer fees
Taxes for right-of-use
4,801,825.00 512,002.80
assets
Others 3,049,611,614.62 759,076,912.93
23. Short- term borrowing
(1) Classification of short-term loans
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Ending balance Ending balance of previous year
Pledge loan 15,270,452,358.06 13,158,605,565.69
Mortgage loan 600,000,000.00 1,464,969,222.65
Guarantee loan 23,405,449,966.48 20,146,414,778.93
Fiduciary loan 1,745,634,031.66 3,018,789,487.46
Loan interest 100,721,912.66 87,054,283.36
Total 41,122,258,268.86 37,875,833,338.09
Note: For asset classes and amounts of mortgaged loans, please refer to Note V. 6. For
detail category and amount of assets pledged for loan, please refer to Notes V (66).
24. Held-for-trading financial liabilities
Ending balance Increase in Decrease in
Item Ending balance
of previous year current period current period
Trading financial liabilities 21,353,552.33 91,310,867.34 4,469,799.98 108,194,619.69
Wherein: Exchangeable bonds
0.00 0.00 0.00 0.00
issued
Derivative financial
21,353,552.33 91,310,867.34 4,469,799.98 108,194,619.69
liabilities
Others 0.00 0.00 0.00 0.00
Refers to financial liabilities
classified as at fair value through 0.00 0.00 0.00 0.00
profit or loss
Total 21,353,552.33 91,310,867.34 4,469,799.98 108,194,619.69
25. Derivative financial liabilities
Item Ending balance Ending balance of previous year
Foreign exchange derivatives 0.00 8,555,804.28
Commodity derivatives 0.00 33,056,054.03
Total 0.00 41,611,858.31
26. Notes payable
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Category Ending balance Ending balance of previous year
Commercial acceptance bills 0.00 0.00
Bank acceptance bills 740,998,553.81 117,879,321.16
Domestic letter of credit 0.00 697,290,000.00
Total 740,998,553.81 815,169,321.16
27. Accounts payable
(1) Presentation of accounts payable
Item Ending balance Ending balance of previous year
Within 1 year 5,541,601,283.94 8,480,378,889.22
1-2 years 225,665,423.99 651,432,866.93
2-3 years 416,065,535.80 142,063,217.20
Over three years 378,791,124.86 494,603,002.86
Total 6,562,123,368.59 9,768,477,976.21
(2) Important accounts payable with > 1year aging
Reasons for outstanding or carry
Item Ending balance
over
China Sinogy Electric Engineering Co., Ltd. 111,593,237.00 Warranty has not expired.
China Chemical Engineering Second Construction Warranty has not expired.
102,865,245.83
Corporation (Brunei Branch)
Nanjing Chemical Construction Co., Ltd. (Brunei Warranty has not expired.
93,402,273.86
Branch)
China National Chemical Engineering Third Warranty has not expired.
70,755,356.70
Construction Co., Ltd. (Brunei Branch)
CSCPE（B）SDN BHD 59,799,887.71 Warranty has not expired.
Total 438,416,001.10 --
28. Contract liabilities
(1) Situation of contract liabilities
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Ending balance Ending balance of previous year
Advance receipts for non-performance of contracts 833,244,701.76 1,080,383,448.03
Minus: Those included in other current liabilities
76,672,908.46 90,760,675.06
(Note V.33)
Total 756,571,793.30 989,622,772.97
(2) There were no significant changes in the book value in current period.
29. Payroll payable
(1) Presentation of payroll payable
Ending balance of Increase in current Decrease in
Item Ending balance
previous year period current period
I. Short-term remuneration 162,292,803.90 2,473,176,072.16 2,467,401,075.57 168,067,800.49
II. post-employment benefits -
28,994,231.17 120,244,892.33 139,887,725.74 9,351,397.76
defined contribution plans
III. Termination benefits 0.00 3,556,885.15 3,556,885.15 0.00
IV. Other benefits due within one year 0.00 0.00 0.00 0.00
Total 191,287,035.07 2,596,977,849.64 2,610,845,686.46 177,419,198.25
(2) Presentation of short-term salaries
Ending balance of Increase in current Decrease in
Item Ending balance
previous year period current period
1. Wage, bonus, allowances and
158,494,565.81 2,265,910,341.26 2,259,552,766.09 164,852,140.98
subsidies
2. Employee welfare expenses 119,631.64 82,082,911.11 82,100,626.23 101,916.52
3. Social insurance charges 2,114,081.70 70,198,208.46 71,187,818.82 1,124,471.34
Wherein: Medical insurance 791,173.83 63,219,728.67 63,242,234.68 768,667.82
Industrial injury
1,322,907.87 6,145,798.67 7,112,903.02 355,803.52
insurance premiums
Birth insurance premiums 0.00 832,681.12 832,681.12 0.00
4. Housing fund 30,036.14 38,253,330.96 38,217,541.00 65,826.10
5. Labor union dues and personnel
1,534,488.61 16,731,280.37 16,342,323.43 1,923,445.55
education fund
6. Short-term compensated
0.00 0.00 0.00 0.00
absences
7. Short-term profit-sharing plan 0.00 0.00 0.00 0.00
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of Increase in current Decrease in
Item Ending balance
previous year period current period
8. Others 0.00 0.00 0.00 0.00
Total 162,292,803.90 2,473,176,072.16 2,467,401,075.57 168,067,800.49
(3) Presentation of defined contribution plans
Ending balance of Increase in current Decrease in
Item Ending balance
previous year period current period
1. Basic endowment insurance 28,057,494.86 116,387,216.75 135,347,836.14 9,096,875.47
2. Unemployment insurance
936,736.31 3,857,675.58 4,539,889.60 254,522.29
expenses
3. Enterprise annuities 0.00 0.00 0.00 0.00
Total 28,994,231.17 120,244,892.33 139,887,725.74 9,351,397.76
30. Tax payable
Item Ending balance Ending balance of previous year
Value-added tax 170,678,334.27 254,514,471.42
Enterprise income tax 35,357,064.36 36,531,077.86
Urban maintenance and construction
1,362,481.67 7,138,301.48
tax
Education surcharge 690,626.52 3,098,068.34
Land use tax 23,073,288.28 12,211,062.04
Property tax 38,270,663.18 38,615,251.06
Individual income tax 1,734,026.33 1,559,102.94
Stamp tax 34,122,581.48 33,277,197.35
Local education surcharge 460,417.69 2,065,378.90
Disabled security fund 611,922.97 104,544.00
Others 359,963.56 196,274.22
Total 306,721,370.31 389,310,729.61
31. Other payables
Item Ending balance Ending balance of previous year
Interests payable 0.00 0.00
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Dividends payable 0.00 0.00
Other payables 188,374,004.43 235,619,327.94
Total 188,374,004.43 235,619,327.94
(1) Other payables
① Listed by nature of amount
Item Ending balance Ending balance of previous year
Receivables and payables 22,826,305.18 11,926,223.68
Deposit and security fund 115,320,416.26 169,136,880.99
Unliquidated expense funds 23,377,964.42 30,272,834.48
Agency fund 16,179,087.78 15,407,171.39
Others 10,670,230.79 8,876,217.40
Total 188,374,004.43 235,619,327.94
② Listed by aging
Ending balance of previous
Item Ending balance
year
Within 1 year 132,424,825.33 175,682,069.17
1-2 years 14,474,680.39 31,986,148.62
2-3 years 22,285,643.69 10,759,047.41
Over three years 19,188,855.02 17,192,062.74
Total 188,374,004.43 235,619,327.94
③ Significant accounts payable with aging exceeding 1 year
Reasons for outstanding or carry
Item Ending balance
over
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Hangzhou Huifeng Chemical Fibre
11,733,346.48 Deposit
Co., Ltd.
Employee stock ownership 3,097,780.33 Incomplete settlement
Yousheng Village, Yaqian Town, Incomplete settlement
2,136,825.00
Xiaoshan City
Shandong Antai Construction Co. 1,601,960.00 Margin
Zhejiang Hengyang Logistics Co. 1,000,000.00 Margin
Total 19,569,911.81 ---
32. Non-current liabilities due within one year
Ending balance of previous
Item Ending balance
year
Long-term loans and interests mature within one 4,916,491,740.40 5,278,621,966.80
year (Notes V. 34)
Bonds payable and interests mature within one
10,092,304.09 6,828,015.61
year (Notes V. 35)
Lease liabilities mature within one year (Notes V.
11,080,739.86 12,747,561.17
36)
Long-term payables and interests mature within
872,044,031.44 1,235,137,137.26
one year (Notes V5. 37)
Total 5,809,708,815.79 6,533,334,680.84
33. Other current liabilities
Item Ending balance Ending balance of previous year
Taxes of items for write-off 76,672,908.46 90,760,675.06
34. Long-term borrowings
Ending balance of previous
Item Ending balance
year
Pledge loan 116,793,723.00 128,357,577.99
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Mortgage loan 10,974,343,200.55 12,774,621,309.20
Guarantee loan 8,496,751,227.48 8,343,813,035.68
Fiduciary loan 0.00 75,000,000.00
Interests payable 68,045,453.29 63,970,080.28
Minus: Long-term loans and interests due within
one year 4,916,491,740.40 5,278,621,966.80
(Notes V, 32)
Total 14,739,441,863.92 16,107,140,036.35
For asset classes and amounts of mortgaged loans, please refer to Note V. 66.
For detail category and amount of assets pledged for loan, please refer to Notes V (66).
35. Bonds payable
(1) Bonds payable
Ending balance of previous
Item Ending balance
year
Corporate bonds 4,278,805,701.33 4,061,538,995.85
(2) Increase/decrease in bonds payable (excluding other financial instruments divided
into financial liabilities, such as preferred stock and perpetual bond)
Bond name Nominal Value Date of issue Bond Issue Amount Ending balance of
Deadline previous year
Corporate bonds (20Hengyi01) 1,000,000,000.00 2020-03-13 3 years 995,500,000.00 848,170.74
Hengyi Convertible Bond 127022 2,000,000,000.00 2020-10-16 6 years 1,508,831,199.68 1,705,891,393.84
Hengyi Convertible Bond 127067 3,000,000,000.00 2022-07-21 6 years 2,303,101,412.70 2,361,627,446.88
Subtotal 6,000,000,000.00 -- -- 4,807,432,612.38 4,068,367,011.46
Bond name Nominal Value Date of issue Bond Issue Amount Ending balance of
Deadline previous year
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Minus: Partial year-end balance due -- -- -- -- 6,828,015.61
within one year (Note V. 32)
Total 6,000,000,000.00 -- -- 4,807,432,612.38 4,061,538,995.85
(Continued)
Repayment or
Bond name Issuance in current Accrued interest Discounted Interest paid in Ending balance
stock conversion
period at face value amortization current period
in current period
Corporate bonds 0.00 7,434.26 0.00 811,000.00 44,605.00 0.00
(20Hengyi01)
Hengyi Convertible Bond 0.00 14,903,446.07 -87,872,188.76 12,000.00 11,998,909.20 1,796,656,119.47
127022
Hengyi Convertible Bond 0.00 7,207,515.15 -129,618,116.72 211,600.00 5,999,592.80 2,492,241,885.95
127067
Subtotal 0.00 22,118,395.48 - 1,034,600.00 18,043,107.00 4,288,898,005.42
217,490,305.48
Minus: Partial year-end -- -- -- -- -- 10,092,304.09
balance due within one year
(Note V. 32)
Total 0.00 22,118,395.48 1,034,600.00 18,043,107.00 4,278,805,701.33
-217,490,305.48
36. Lease liabilities
Increase in current period
Item Ending balance Decrease in Ending balance
of previous year current period
New Lease Interest for Others
the current
period
Land use right 426,757,376.88 0.00 0.00 89,396.16 -18,293,380.23 445,140,153.27
Buildings 17,275,562.58 17,753,344.90 -94,455.23 7,401,295.30 27,231,364.46 15,104,383.09
Minus: Lease liabilities due
within one year (Note V. 12,747,561.17 -- -- -- -- 11,080,739.86
32.)
Total 431,285,378.29 17,753,344.90 -94,455.23 7,490,691.46 8,937,984.23 449,163,796.50
37. Long-term payables
Item Ending balance Ending balance of previous
year
Long-term payables 464,759,585.87 1,433,381,038.10
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Special payables 0.00 0.00
Total 464,759,585.87 1,433,381,038.10
(1) Long-term payables
Item Ending balance Ending balance of
previous year
Financing lease payable 1,336,803,617.31 2,668,518,175.36
Minus: Partial balance due within one year (Note V. 32) 872,044,031.44 1,235,137,137.26
Total 464,759,585.87 1,433,381,038.10
38. Estimated liabilities
Item Ending balance of previous Ending balance Reason
year
Pending action 360,508.08 819,949.97 See Notes XI, 1 for
detail.
39. Deferred income
Ending
Increase in Decrease in
Item balance of Ending balance Reason
current period current period
previous year
Government grants 231,197,027.42 57,184,900.00 71,658,000.79 216,723,926.63 Assets-related
Government grants 7,216,080.63 2,064,926.00 2,282,704.88 6,998,301.75 Income-related
Total 238,413,108.05 59,249,826.00 73,940,705.67 223,722,228.38
Items involving governmental subsidies:
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount
included in Amount
Number of new
Ending balance non- included in ssets- related/
Subsidized Items subsidies for the Other changes Ending balance
of previous year operating other income in Income- related
current period
income in current period
current period
Development, modification
and corresponding 7,216,080.63 2,064,926.00 0.00 2,282,704.88 0.00 6,998,301.75
industrialization projects
Special rewards for
36,786,793.07 500,000.00 0.00 2,140,348.68 0.00 35,146,444.39 Income- related
significant industry projects
Subsidies for boiler cleaner
8,583,313.17 0.00 0.00 1,560,602.39 0.00 7,022,710.78 Assets- related
transformation
Subsidies for automation
4,843,879.45 0.00 0.00 565,749.07 0.00 4,278,130.38 Assets- related
projects
Functional fibre
technological transformation 40,238,631.91 39,235,200.00 0.00 23,745,697.35 6,933,666.18 48,794,468.38 Assets- related
projects
Technological transformation
projects in manufacturing 40,931,703.78 12,548,100.00 0.00 29,888,745.99 2,182,621.07 21,408,436.72
enterprises
Special equipment subsidies 5,645,161.29 4,701,600.00 0.00 1,113,650.28 0.00 9,233,111.01 Assets- related
Industrial robot projects 1,035,694.78 0.00 0.00 672,673.80 363,020.98 0.00 Assets- related
Internet digital factory
259,308.34 0.00 0.00 167,198.98 92,109.36 0.00
projects
Land compensation 92,500,000.00 0.00 0.00 2,000,000.00 0.00 90,500,000.00 Assets- related
Others 372,541.63 200,000.00 0.00 105,250.00 126,666.66 340,624.97 Assets- related
Total 238,413,108.05 59,249,826.00 0.00 64,242,621.42 9,698,084.25 223,722,228.38 Assets- related
40. Share capital
Increase/decrease in current period (+, -)
Item Ending balance of Ending balance
previous year Issue of new Bonus Capital reserve Others Subtotal
shares shares converted into
share capital
Sum of
shares 3,666,280,806.00 0.00 0.00 0.00 21,219.00 21,219.00 3,666,302,025.00
Note: The conversion period of "Heng Yi Convertible Bonds" (bond code: 127022) is
from 22 April 2021 to 15 October 2026, and the conversion period of "Heng Yi
Convertible 2" (bond code: 127067) is from 30 January 2023 to 20 July 2028. In
FY2023, a total of 120 "Heng Yi Convertible Bonds" will be converted into a total of
433
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
1,084 shares of "Heng Yi Petrochemical Company"; and the total number of 2,116
"Heng Yi Conversion 2" shares was converted into 20,135 "Heng Yi Petrochemical"
shares. The Company's share capital was increased by RMB 21,219.00, and the "capital
surplus - capital premium" was increased by RMB 192,596.12 at the same time.
41. Other equity instruments
Increase in current
Decrease in current Ending balance
Outstanding Ending balance of previous year period period
Qu
Financial
Instruments Quantity Book value anti Book value Book Quantity Book value
Quantity
ty value
Equity part of
49,998,272 1,159,082,382.38 0.00 0.00 2,236 50,612.09 49,996,036 1,159,031,770.29
convertible
corporate bonds
Note: For the equity part of convertible corporate bonds decreased in current period,
please refer to Note V. 40.
42. Capital surplus
Item Ending balance of Increase in current Decrease in Ending balance
previous year period current period
Capital premiums 11,351,506,628.30 192,596.12 86,407.31 11,351,612,817.11
Other capital reserves 148,432,210.71 1,909,527.00 87,424,269.34 62,917,468.37
Capital reserves generated by
simulation of shareholding structure -2,329,301,104.61 0.00 0.00 -2,329,301,104.61
and quantity
Total 9,170,637,734.40 2,102,123.12 87,510,676.65 9,085,229,180.87
Note 1: An amount of RMB192,596.12 is increased for capital reserves - capital
premiums. Please refer to Note V. 40 for details.
Note 2: In current period, capital reserves - capital premiums are decreased by an
amount of RMB 86,407.31, due to the reduction in commission charges resulted from
stock repurchase.
434
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Note 3: The increase of RMB1,909,527.00 in capital surplus-other during the period
was due to the addition of new customers involved in lawsuits between Shuangtu New
Material and the customers before it was acquired by the Company, which increased
the loss of Shuangtu New Material and was recognised in the consolidated statement of
income as capital surplus.
Note 4: Capital surplus-other decreased by RMB 87,424,269.34 during the period.
Among them, the Company decreased by RMB 108,658.67 due to the share placement
of an associate, Zheshang Bank Co., Ltd., which was accounted for under the equity
method, and reduced capital surplus by RMB 87,315,610.67 in the consolidated
statement of accounts due to the purchase of equity interests in subsidiaries owned by
minority shareholders of the subsidiaries.
43. Treasury stock
Item Ending balance of Increase in current Decrease in Ending balance
previous year period current period
Stock repurchases via centralized bidding 1,483,566,737.98 885,375,228.94 0.00 2,368,941,966.92
Note: In this reporting period, the Company has increased an amount of RMB
885,375,228.94 treasury stock by means of centralized bidding.
44. Other comprehensive income
Amount incurred in current period
Minus:
Recorded into
At end of Amount other
the Assigned to
incurred before comprehensive Minus: Assigned to
Item previous minority Ending Balance
year income tax for income in the Income tax Parent Company
shareholders
Balance the current earlier stage expenses after tax
after tax
period and rolled into
current profits
and losses
I. 0.00 790,515.39 0.00 0.00 790,515.39 0.00 790,515.39
O
ther
435
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current period
Minus:
Recorded into
At end of Amount other
the Assigned to
incurred before comprehensive Minus: Assigned to
Item previous minority Ending Balance
year income tax for income in the Income tax Parent Company
shareholders
Balance the current earlier stage expenses after tax
after tax
period and rolled into
current profits
and losses
comprehensive
income
that cannot be
re- classified
into profit and
loss
Wherein:
Re-
measurement
0.00 0.00 0.00 0.00 0.00 0.00 0.00
profits or losses
of a defined
benefit plan
Other
comprehensive
income cannot
be recognized 0.00 790,515.39 0.00 0.00 790,515.39 0.00 790,515.39
in profit
and loss by
equity law
II. Other
comprehensive
income to be re-
380,920,744.19 268,844,549.37 -32,027,065.93 0.00 299,021,100.60 1,850,514.70 679,941,844.79
classified
into profit and
loss
Wherein: Other
comprehensive
income can be
recognized in 123,242,202.91 40,098,311.96 0.00 0.00 41,753,641.58 -1,655,329.62 164,995,844.49
profit and loss
under equity
method
436
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current period
Minus:
Recorded into
At end of Amount other
the Assigned to
incurred before comprehensive Minus: Assigned to
Item previous minority Ending Balance
year income tax for income in the Income tax Parent Company
shareholders
Balance the current earlier stage expenses after tax
after tax
period and rolled into
current profits
and losses
Effective
part of cash-
flow hedge -22,418,946.16 0.00 -32,027,065.93 0.00 22,418,946.16 9,608,119.77 0.00
profits and
losses
Exchan
ge
differen
ces
from 280,097,487.44 228,746,237.41 0.00 0.00 234,848,512.86 -6,102,275.45 514,946,000.30
translation
of financial
statements
Total (other
comprehensive 380,920,744.19 269,635,064.76 -32,027,065.93 0.00 299,811,615.99 1,850,514.70 680,732,360.18
income)
45. Appropriative reserve
Ending balance of Increase in current Decrease in current
Item Ending balance
previous year period period
Production safety expenses 0.00 56,840,830.32 56,840,830.32 0.00
Note: Both increase and decrease in special reserves in this reporting period are
calculated and utilized production safety expenses.
46. Earned surplus
Ending balance of Increase in current Decrease in current
Item Ending balance
previous year period period
Legal surplus 781,701,619.18 25,435,281.81 0.00 807,136,900.99
437
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
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 be withdrawn any more, when its accumulated amount reaches over
50% of the Company’s registered capital.
47. Undistributed profit
Item Current Period Prior Period
Undistributed profits at the end of previous year before
11,771,637,510.92 13,623,601,273.27
adjustment
Total amount of undistributed profits at the end of the
0.00 -29,714,854.19
previous year after adjustment (+/-)
Undistributed profits at the end of the previous year 11,771,637,510.92 13,593,886,419.08
after adjustment
Plus: Net profits assigned to the parent company’s
435,458,340.57 -1,079,547,699.72
shareholders in current period
Minus: Legal surplus withdrawal 25,435,281.81 29,805,951.31
Withdrawal of any legal surplus 0.00 0.00
Withdrawal of common risk reserves 0.00 0.00
Common stock dividends payable 0.00 714,984,128.60
Dividends transferred to capital 0.00 0.00
Plus: Others 0.00 2,088,871.47
Undistributed profits at the end of the period 12,181,660,569.68 11,771,637,510.92
48. Operating income and operating cost
Amount incurred in current period Amount incurred in previous period
Item
Revenue Cost Revenue Cost
438
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Main business 134,516,059,362.49 129,629,554,889.25 151,033,877,489.07 147,658,124,585.52
Other businesses 1,632,054,719.85 1,400,678,793.63 1,016,397,455.57 857,385,936.86
131,030,233,682.8 152,050,274,944.6
Total 136,148,114,082.34 148,515,510,522.38
8 4
49. Tax and associate charge
Item Amount incurred in current Amount incurred in previous
period period
Consumption tax 3,035,691.33 2,281,758.47
Urban maintenance and construction tax 22,513,751.09 34,209,769.24
Education surcharge 10,382,113.28 14,778,808.23
Property tax 45,739,257.62 45,934,982.23
Land use tax 30,084,436.29 20,656,922.96
Vehicle and vessel use tax 115,925.99 132,337.88
Stamp tax 129,021,455.41 96,476,768.46
Local education surcharge 6,921,408.85 9,852,512.83
Water conservancy construction funds 0.00 107,209.29
Others 1,727,250.02 2,062,042.91
Total 249,541,289.88 226,493,112.50
Note: For detail payment standard for various taxes and surcharges, please refer to Note
IV. “Taxes”.
50. Selling expenses
Item Amount incurred in current period Amount incurred in previous period
Import & export charges 78,314,347.37 80,703,510.03
Staff Salaries 98,266,014.49 105,863,328.67
Insurance 14,105,980.26 18,242,399.53
439
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Amount incurred in current period Amount incurred in previous period
Storage charges 6,848,857.07 6,890,273.57
Business entertainment 1,796,525.52 1,386,492.92
Travel expenses 4,985,577.18 3,588,383.56
Vehicle expenses 1,510,011.64 1,704,177.86
Rental expenses 2,800.00 1,024,141.89
Office expenses 1,262,715.92 1,098,049.00
Handling charges 5,786,721.28 3,629,779.27
Agency fees 5,249,744.25 1,073,079.70
Others 11,154,994.11 22,240,133.81
Total 229,284,289.09 247,443,749.81
51. Administration expenses
Item Amount incurred in current period Amount incurred in previous period
Staff Salaries 403,725,775.77 380,611,106.77
Intangible assets
45,052,660.96 44,717,399.78
amortization cost
Fixed assets depreciation
265,706,471.75 264,912,054.87
expenses
Business entertainment 8,422,226.85 7,534,601.57
Vehicle expenses 13,767,451.92 14,199,552.08
Environmental expenditure 13,995,242.27 14,099,876.20
Office expenses 10,691,860.18 12,719,117.63
Agency fees 22,896,767.26 23,525,506.07
Travel expenses 30,398,870.01 9,618,696.43
Rental expenses 13,972,415.31 31,059,048.43
Repair charges 416,808,822.16 104,455,800.29
Premiums for property
28,510,503.37 30,266,565.27
insurance
Transportation and storage
59,767,369.80 64,342,751.65
fees
Operating licence fee 11,908,662.76 10,376,076.19
Others 88,602,835.36 72,548,830.47
440
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Amount incurred in current period Amount incurred in previous period
Total 1,434,227,935.73 1,084,986,983.70
52. R&D expenses
Item Amount incurred in current period Amount incurred in previous period
Direct investment cost 411,739,313.04 422,987,682.39
Staff Salaries 148,843,373.25 138,713,533.15
Depreciation expenses 64,325,403.87 45,568,357.41
Technical development cost 17,636,809.83 20,972,568.77
Other expenses 73,774,627.67 40,463,886.85
Total 716,319,527.66 668,706,028.57
53. Financial expenses
Item Amount incurred in current period Amount incurred in previous period
Interest expense 3,306,322,914.56 2,682,684,624.12
Minus: Interest income 217,648,751.41 193,688,404.54
Profit or loss on exchange -140,346,056.78 -66,292,681.05
Bank charges 295,574,639.10 364,993,956.67
Total 3,243,902,745.47 2,787,697,495.20
54. Other incomes
Amount included in
Amount incurred non-recurring
Amount incurred in
Item in previous profits and losses
current period for the current
period period
Governmental subsidies related to daily
336,311,581.30 234,911,502.58 113,982,377.05
enterprise acti
441
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Return of withhold individual income tax
649,467.48 1,330,974.63 0.00
commission charges
Total 336,961,048.78 236,242,477.21 113,982,377.05
Governmental subsidies related to daily enterprise activities are described in detail as
follows:
Amount included
Amount Amount in non-recurring
Assets-related/
Item incurred in incurred in profits and losses
Income-related
current period previous period for the current
period
Assets-related subsidies 61,959,916.54 17,382,373.75 42,444,758.19 Income-related
Income-related deferred income 2,282,704.88 1,982,904.60 2,282,704.88 Income-related
“Head Goose” policy support Income-related
0.00 7,657,500.00 0.00
rewards
Rewards for high-tech enterprise 530,000.00 300,000.00 530,000.00 Income-related
Environmental protection Income-related
613,680.00 121,900.00 613,680.00
subsidies
Subsidies for scientific and Income-related
6,499,432.04 66,800,000.00 6,499,432.04
technological innovation
Incentives for export operations 10,539,924.52 11,386,675.00 0.00 Income-related
Tax refund 59,934,431.35 58,170,985.10 3,779,601.35 Income-related
Employment-related subsidies 5,599,282.77 14,697,824.54 5,599,282.77 Income-related
Policy support funds 36,468,100.00 -7,673,592.73 36,468,100.00 Income-related
Intelligent manufacturing funds 61,100.00 1,100,000.00 61,100.00 Income-related
Special funds for promotion of Income-related
0.00 34,050,000.00 0.00
industrial structure adjustment
Rewards for manufacturing Income-related
14,713,800.00 1,470,000.00 14,713,800.00
enterprises
Working capital subsidy 0.00 15,575,600.00 0.00 Income-related
Investment promotion 0.00 1,500,000.00 0.00 Income-related
Advanced manufacturing input Income-related
136,119,291.38 0.00 0.00
VAT credits and deductions
Others 989,917.82 10,389,332.32 989,917.82 Income-related
Total 336,311,581.30 234,911,502.58 113,982,377.05 --
Note: For government subsidies related to assets and deferred income related to income,
442
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
please refer to Note V. 39. Deferred Income for details.
55. Investment income
Amount incurred in Amount incurred in
Item
current period previous period
Income from long-term equity investment checked with equity
490,890,359.42 823,499,882.13
method
Investment income generated by disposal of long-term equity
448,973,414.86 159,238,486.18
investment
Investment income generated by disposal of held-for-trading 45,612,962.20 -237,478,291.99
financial assets
Total 985,476,736.48 745,260,076.32
56. Income from fair value changes
Amount incurred in Amount incurred in
Source of income from fair value changes
current period previous period
Financial assets measured at fair value through profit and loss 35,044,790.52 -165,711,256.97
Wherein: Income from fair value change generated by
35,044,790.52 -165,711,256.97
derivative financial instruments
Financial liabilities measured by fair value and whose changes
-82,757,620.02 -41,547,937.87
included in current profits and losses
Hedging business 2,591,630.82 -4,177,289.52
Total -45,121,198.68 -211,436,484.36
57. Credit impairment losses
Amount incurred in Amount incurred in
Item
current period previous period
Bad debt loss on receivables -7,103,558.34 -454,388.44
443
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Bad debt loss on other receivables -4,323,174.58 -647,397.13
Total -11,426,732.92 -1,101,785.57
58. Assets impairment loss
Item Amount incurred in Amount incurred in
current period previous period
Loss on inventory depreciation -71,262,509.77 -361,681,414.01
Loss on impairment of fixed assets 0.00 -6,996,027.02
Total -71,262,509.77 -368,677,441.03
59. Income from assets disposal
Amount included in
Amount incurred in Amount incurred in non-recurring profits
Item
current period previous period and losses for the
current period
Profits or losses from disposal of -9,399,633.84 -23,661,125.27 -9,399,633.84
fixed assets
Gains or losses from disposal of
56,843.35 0.00 56,843.35
intangible assets
Total -9,342,790.49 -23,661,125.27 -9,342,790.49
60. Non-operating income
Amount included in non-
Amount incurred in Amount incurred in recurring profits and
Item
current period previous period losses for the current
period
Gains from damage and scrapping of
524,905.44 0.00 524,905.44
non-current assets
Wherein: Fixed assets 524,905.44 0.00 524,905.44
444
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount included in non-
Amount incurred in Amount incurred in recurring profits and
Item
current period previous period losses for the current
period
Governmental subsidies irrelevant to
373,507.13 710,041.57 373,507.13
daily enterprise activities
Income from indemnities and fines 12,920,943.66 6,654,298.45 12,920,943.66
Non-payable current accounts 202,885.35 1,331,685.07 202,885.35
The cost of acquisition of an
investment in an associate is less
than the gain arising from the fair
16,534,148.40 0.00 16,534,148.40
value of the identifiable net assets
of the investee at the time the
investment is acquired
Others 5,364,119.48 6,247,228.14 5,364,119.48
Total 35,920,509.46 14,943,253.23 35,920,509.46
Governmental subsidies are described in detail as follows:
Assets-related
Subsidized Items Amount incurred in Amount incurred in
current period previous period /Income-related
IRAS Jobs Support Scheme 159,652.92 601,143.99
Income-related
Others 213,854.21 108,897.58 Income-related
Total 373,507.13 710,041.57 --
61. Non-operating expenses
Amount included in non-
Amount incurred in Amount incurred in recurring profits and
Item
current period previous period losses for the current
period
Loss on damage and scrapping of non-
23,368,528.97 6,640,525.86 23,368,528.97
current assets
445
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount included in non-
Amount incurred in Amount incurred in recurring profits and
Item
current period previous period losses for the current
period
Wherein: Fixed assets 23,368,528.97 6,640,525.86 23,368,528.97
Expenditure of donation 6,858,000.00 6,922,110.90 6,858,000.00
Late fees, penalties and
23,519,641.48 4,909,233.94 23,519,641.48
liquidated damages
Others 12,225,333.01 1,789,720.09 12,225,333.01
Total 65,971,503.46 20,261,590.79 65,971,503.46
62. Income tax expenses
(1) Table of income tax expenses
Amount incurred in previous
Item Amount incurred in current period
period
Income tax expenses in current period 46,126,222.53 45,178,553.83
Deferred income tax expenses -14,966,761.28 -230,035,312.37
Total 31,159,461.25 -184,856,758.54
(2) Accounting profit and income tax expense adjustment process
Amount incurred in current
Item
period
Total profits 399,838,171.03
Income tax expenses calculated by legal/applicable tax rate 99,959,542.76
Influence of subsidiary applicable to different tax rates -11,340,252.06
Influence of adjustment to income tax in previous periods 5,137,381.07
Influence of nontaxable income -137,939,906.39
Influence of non-deductible cost, expense and loss 45,809,652.14
Influence of deductible loss on the use of previously unconfirmed deferred
-75,737,303.76
income tax assets
Influence of deductible temporary difference or deductible loss on 164,580,656.38
446
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current
Item
period
unconfirmed deferred income tax assets in current period
Influence of weighted deduction cost, expense and other items allowed to deduct
-53,165,286.40
by tax law
Others -6,145,022.49
Income tax expenses 31,159,461.25
63. Other comprehensive income
See Notes V. 44 for detail.
64. Items in cash flow statement
(1) Reception of other cash related to business activities
Item Amount incurred in Amount incurred in
current period previous period
Receivables and payables 25,922,960.56 1,739,551.19
Margin and deposit 115,436,902.90 144,266,262.60
Government grants 141,665,269.80 249,608,718.75
Interest income 167,866,162.76 130,714,288.20
Indemnities and fines 10,812,516.37 6,333,085.21
Judicial freezing 0.00 10,503,440.47
Bank bill margin 6,230.51 5,572,609.84
L/G deposit 0.00 32,068,223.09
Others 5,041,293.05 6,302,301.71
Total 466,751,335.95 587,108,481.06
(2) Payment of other cash related to business activities
447
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current Amount incurred in previous
Item
period period
Vehicle expenses 2,492,921.07 24,310,168.76
Environmental expenditure 11,516,869.98 11,770,134.03
Margin and deposit 66,156,351.22 97,966,065.18
Operating license fee 252,738,019.47 265,497,302.14
Agency fee 10,480,905.30 6,936,808.59
Travel expenses 15,134,956.54 18,316,260.47
Rental expenses 13,991,862.40 11,778,965.14
Frozen fund 187,229,453.52 86,429,498.96
Repair charges 11,912,838.75 10,376,076.19
Insurance 40,363,230.33 29,280,458.44
Transportation, storage and handling charges 36,465,208.62 13,168,292.46
Expenditure of donation 14,598,058.03 26,120,029.25
Others 0.00 25,169,796.00
Total 403,455,069.89 105,146,816.30
Operating license fee 47,423,146.87 43,564,927.95
Agency fee 56,845,928.25 54,051,957.63
Travel expenses 6,853,000.00 6,813,000.00
Rental expenses 112,334,370.43 85,815,740.71
Frozen fund 1,289,992,190.67 922,512,298.20
(3) Reception of other cash related to investment activities
Amount incurred in Amount incurred in
Item
current period previous period
Income from consigned loan and interest on capital
40,982,195.82 51,574,324.99
lending by related parties
Futures margin recovery 105,530,878.67 47,083,441.68
L/G margin recovery 0.00 276,000,000.00
Total 146,513,074.49 374,657,766.67
448
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(4) Payment of other cash related to investment activities
Amount incurred in current Amount incurred in previous
Item
period period
Net cash received by disposal of subsidiary
0.00 100,000.00
(negative)
Futures margin recovery 144,345,965.50 31,048,462.70
Others 0.00 424.19
Total 144,345,965.50 31,148,886.89
(5) Reception of other cash related to financing activities
Item Amount incurred in Amount incurred in
current period previous period
Withdrawal of monetary funds pledged for financing 1,556,261,828.88 1,019,866,989.49
Collection of financing leaseback 100,000,000.00 2,075,000,000.00
Interbank borrowing from Hengyi Group 5,588,422,499.99 4,133,189,471.00
Others 0.00 16,000,000.00
Total 7,244,684,328.87 7,244,056,460.49
(6) Payment of other cash related to financing activities
Amount incurred Amount incurred
Item
in current period in previous period
Monetary funds pledged for financing 2,696,022,987.63 1,593,104,467.79
Repayment of loan principal and interest of Hengyi Group 5,578,409,681.37 4,126,142,959.89
Stock repurchases 885,461,636.25 765,564,197.20
Rental expenses and commission charges paid for financing leaseback 1,368,484,777.98 1,126,017,003.66
Lease margin for financing leaseback 5,000,000.00 116,500,000.00
Loan commission 102,882,954.07 101,642,305.39
Rental expenses paid for lease liabilities 32,340,033.50 29,061,128.46
Others 950,000.00 1,426,000.00
449
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Total 10,669,552,070.80 7,859,458,062.39
65. Further information about cash flow statements
(1) Further information about cash flow statement
Amount incurred in current Amount incurred in previous
Further Information
period period
1. Adjust net profit to operating cash flow:
Net profit 368,678,709.78 -924,398,809.24
Plus: Asset impairment reserves 71,262,509.77 368,677,441.03
Impairment loss on credit assets 11,426,732.92 1,101,785.57
Depreciation of fixed assets 3,171,949,886.05 3,057,365,476.37
Depreciation of right-of-use assets 38,811,361.86 37,746,948.82
Amortization of intangible assets 84,384,861.47 80,585,704.09
Amortization of long-term deferred expenses 118,793,677.98 109,624,239.00
Loss on disposal of fixed assets, intangible
assets and other long-term assets (income listed with 9,342,790.49 23,661,125.27
“-”)
Loss on scrapping of fixed assets (income listed
22,843,623.53 6,640,525.86
with “-”)
Loss on fair value change (income listed with
45,121,198.68 211,436,484.36
“-”)
Financial cost (income listed with “-”) 3,062,809,389.14 2,623,127,122.84
Investment losses (income listed with “-”) -985,476,736.48 -745,260,076.32
Decrease in deferred income tax assets
-16,340,029.81 -225,671,514.74
(increase listed with “+”)
Increase in deferred income tax liabilities
1,373,268.53 -4,365,912.78
(decrease listed with “-”)
Decrease in inventory (increase listed with “-”) 969,448,083.78 -1,704,647,587.22
Decrease in operating receivables (increase
1,327,681,725.88 993,927,177.80
listed with “-”)
Increase in operating payables (decrease listed
-3,731,423,035.99 -1,263,321,017.94
with “-”)
Others -38,853,212.43 59,304,370.59
450
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current Amount incurred in previous
Further Information
period period
Net cash flow from operating activities 4,531,834,805.15 2,705,533,483.36
2. Significant investment and financing
activities involving no cash receipt and payment:
Conversion of debt into capital 0.00 0.00
Convertible corporate bonds mature within one year 0.00 0.00
Fixed assets under financing lease 0.00 0.00
3. Net changes in cash and cash equivalents:
Ending balance of cash 8,518,118,122.12 12,934,069,613.03
Minus: Cash balance at the end of previous year 12,934,069,613.03 10,244,736,951.84
Plus: Ending balance of cash equivalents 0.00 0.00
Minus: Cash equivalent balance at the end of
0.00 0.00
previous year
Net increase in cash and cash equivalents -4,415,951,490.91 2,689,332,661.19
(2) Net cash on subsidiary disposal received in current period
Item Amount
Cash or cash equivalents on subsidiary disposal received in current period 880,000,000.00
Wherein: Hangzhou Yijing Chemical Fibre Co., Ltd 880,000,000.00
Minus: Cash and cash equivalents held by subsidiary on the date of losing control
917,530,587.60
right
Wherein: Hangzhou Yijing Chemical Fibre Co., Ltd 917,530,587.60
Less: Unpaid amounts due at the date of loss of control paid in the
669,675,230.43
current period after the date of loss of control
Wherein: Hangzhou Yijing Chemical Fibre Co., Ltd 669,675,230.43
Add: Cash received during the period for commercial paper issued by
disposed subsidiaries discounted prior to the date of loss of control and 845,700,000.00
not yet due at the date of loss of control
Wherein: Hangzhou Yijing Chemical Fibre Co., Ltd 845,700,000.00
Net cash received by subsidiary disposal 138,494,181.97
(3) Composition of cash and cash equivalents
451
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Ending balance Ending balance of previous year
I. Cash 8,518,118,122.12 12,934,069,613.03
Wherein: Cash on hand 1,065,013.70 1,118,679.20
Bank deposit payable at any time 7,887,839,429.74 11,714,153,408.04
Other monetary fund payable at any time 629,213,678.68 1,218,797,525.79
Payable due from Central Bank 0.00 0.00
Deposits in other banks 0.00 0.00
Due from banks 0.00 0.00
II. Cash Equivalents 0.00 0.00
Wherein: Bond investments mature within
0.00 0.00
three months
III. Ending balance of cash and cash equivalents 8,518,118,122.12 12,934,069,613.03
Wherein: Cash and cash equivalents used by
the parent company or group subsidiaries under 0.00 0.00
certain limitation
(4) Classification of changes in liabilities arising from financing activities from opening
to closing balances
Increase during the period Decrease during the period
Item Beginning balance Ending balance
Changes in cash Non-cash changes Changes in cash Non-cash changes
Bank
59,261,595,341.24 54,367,260,691.80 24,671,437,509.23 52,008,787,096.99 25,513,314,572.10 60,778,191,873.18
Borrowings
Other
payables -
0.00 0.00 0.00 0.00 0.00 0.00
Dividends
payable
Bonds
payable
(including 4,068,367,011.46 0.00 0.00 811,000.00 -221,341,993.96 4,288,898,005.42
within one
year)
Lease
liabilities
(including 444,032,939.46 0.00 25,149,581.13 32,340,033.50 -23,402,049.27 460,244,536.36
within one
year)
452
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Increase during the period Decrease during the period
Item Beginning balance Ending balance
Changes in cash Non-cash changes Changes in cash Non-cash changes
Long-term
accounts
payable
2,668,518,175.36 100,000,000.00 -963,452.85 1,368,484,777.98 62,266,327.22 1,336,803,617.31
(including
within one
year)
Total 66,442,513,467.52 54,467,260,691.80 24,695,623,637.51 53,410,422,908.47 25,330,836,856.09 66,864,138,032.27
66. Assets with limited ownership or use right
Book value at the end of the
Item Reason for restriction
period
Monetary funds 5,284,615,169.28 Margin
Monetary funds 25,169,796.00 Judicial freezing
Notes receivable 147,675,900.00 Pledge to open acceptance bills
Long-term equity investments 6,837,853,788.22 Mortgage, pledge borrowing
Fixed assets 2,672,083,843.53 Leaseback financing
lease
Fixed assets 17,473,057,683.02 Mortgage loan
Intangible assets 2,031,649,175.86 Mortgage loan
Total 34,472,105,355.91 --
67. Monetary items in foreign currency
(1) Monetary items in foreign currency
Ending balance in foreign Exchange rate for Ending balance (converted into
Item
currency conversion RMB)
Monetary funds
Wherein: HKD 454,907.43 0.9062 412,237.11
USD 490,067,263.72 7.0827 3,470,999,408.51
EUR 864,384.42 7.8592 6,793,370.03
BND 11,371,328.85 5.3772 61,145,909.49
453
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance in foreign Exchange rate for Ending balance (converted into
Item
currency conversion RMB)
SGD 1,058,287.46 5.3772 5,690,623.33
Accounts receivable
Wherein: USD 608,193,939.66 7.0827 4,307,655,216.43
BND 53,547,754.04 5.3772 287,936,983.02
Other receivables
Wherein: HKD 1,779,600.00 0.9062 1,612,673.52
USD 8,924,007.85 7.0827 63,206,070.40
BND 5,274,274.23 5.3772 28,360,827.39
SGD 262,311.75 5.3772 1,410,502.74
Long-term receivables
Wherein: USD 518,788.46 7.0827 3,674,423.03
Short-term loans
Wherein: USD 1,286,616,775.17 7.0827 9,112,720,633.51
Accounts payable
Wherein: HKD 193,000.00 0.9062 174,896.60
USD 567,677,254.66 7.0827 4,020,687,691.58
EUR 6,073,482.56 7.8592 47,732,714.14
BND 3,191,737.90 5.3772 17,162,613.04
Other payables
Wherein：USD 3,140,568.35 7.0827 22,243,703.45
BND 3,848,062.37 5.3772 20,691,800.98
Non-current liabilities
due within one year
454
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance in foreign Exchange rate for Ending balance (converted into
Item
currency conversion RMB)
Wherein：USD 188,339,242.85 7.0827 1,333,950,355.33
EUR 14,017,262.00 7.8592 110,164,465.51
BND 1,385,745.68 5.3772 7,451,431.67
SGD 448,510.12 5.3772 2,411,728.62
Lease liabilities
Wherein: BND 83,328,762.28 5.3772 448,066,067.92
Long-term loans
Wherein: USD 950,220,000.00 7.0827 6,730,123,194.00
EUR 71,753,283.00 7.8592 563,923,401.75
68. Hedging
Please refer to Notes VI (3. Notes to derivative financial assets).
69. Government grants
(1) Basic information about governmental subsidies
Amount recorded into
Category Amount Reported Item
current profits and
losses
272,068,959.88 Other incomes 272,068,959.88
Income-related subsidies used to
compensate for related costs or losses
incurred 373,507.13 Non-operating 373,507.13
income
Income-related subsidies used to
9,281,006.63 Deferred 2,282,704.88
compensate for related costs or losses in
income
subsequent periods
Assets-related subsidies 288,381,927.42 Deferred 61,959,916.54
income
Total 570,105,401.06 336,685,088.43
455
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
70. Leases
(1) The Company as Lessee
① Refer to Notes V, 16 and 36 of this Note for right-of-use assets and lease liabilities.
② Charged to current year's profit or loss
Charged to profit or loss for the year
Item
Presentation of items Amount
Interest on lease liabilities Financial expense 27,300,291.48
Administrative expenses,
Short-term lease costs (simplified
selling expenses, 14,326,787.75
treatment applied)
Operating costs, etc.
Lease costs for low-value assets
Administrative expense 157,726.68
(simplified treatment applied)
Sale and leaseback transactions Financial expense 108,303,027.47
③ Cash flow outflows related to leases
Item Category of cash flow Amount for the year
Cash payments for principal and Cash outflows from
32,340,033.50
interest on lease liabilities financing activities
Payments made on short-term leases
Cash outflows from
and low-value assets 15,035,391.83
operating activities
(simplified treatment applies)
Total -- 47,375,425.33
④ Other information
A. At the end of the reporting period, the Company's right-of-use assets mainly
consisted of buildings and structures and land use rights, of which land use rights
included:
a. 260 hectares of land use rights for production area: the leased land is located in Pulau
Grande Mora, Brunei Darussalam, with a lease period of 30 years (from 26 March 2017
to 27 March 2047), with the possibility of applying for a renewal of the lease for a
456
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
period of 30 years prior to expiry.
b. 69.7978 hectares of Western Irrigation, Wharf and other land use rights: the leasehold
land is situated in Pulau Grande Mora, Brunei Darussalam for a term of 27 years (from
1 November 2019 to 27 March 2047) with the possibility of applying for a renewal of
the lease for a period of 30 years prior to expiry.
B. Sale and leaseback transactions
Some subsidiaries of the Company entered into leasing agreements with financial
leasing companies to carry out financial leasing business by way of sale and leaseback
of their own specialised production equipment as leased goods. The Company has been
using the above assets since the beginning and has agreed to a forward retention in the
said contract, indicating that the financial leasing company did not obtain control of the
relevant goods at the point of sale, and therefore the transfer of assets in the transaction
is not a sale.
Effect of sale and leaseback transactions on current cash flows:
Item Category of cash flow Amount for the year
Cash inflow from financing
Finance leaseback receipts 100,000,000.00
activities
Lease payments made on finance sale Cash outflow from
1,368,484,777.98
and leasebacks financing activities
Financial sale and leaseback lease Cash outflow from
30,000,000.00
deposits financing activities
(2) The Company as Lessor
① Charged to profit or loss for the year
457
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Charged to profit or loss for the year
Item
Presentation of items Amount
Lease income Other operating income 4,696,494.24
Total -- 4,696,494.24
②Major operating lease assets
Item Carrying value at end of period
Houses and buildings 34,239,526.01
Site Not applicable (Note)
Note: Haining Hengyi New Material Co., Ltd, a subsidiary of the Company, leased part
of its factory to the outside world and charged the lessee for the use of the site as agreed
in the lease agreement.
VI. R&D expenditure
1. R&D expenditure incurred during the period
Amount for the current
Item Prior period amount
period
Expensed R&D expenditure 716,319,527.66 668,706,028.57
Capitalised R&D expenditure 27,478,251.20 19,523,238.74
Total 743,797,778.86 688,229,267.31
(1) Expensed R&D expenditure
Amount for the current
Item Prior period amount
period
Direct input costs 411,739,313.04 422,987,682.39
Salary of employees 148,843,373.25 138,713,533.15
Depreciation 64,325,403.87 45,568,357.41
Technology development costs 17,636,809.83 20,972,568.77
Other expense 73,774,627.67 40,463,886.85
Total 716,319,527.66 668,706,028.57
458
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(2) Capitalised R&D expenditure
Item Amount for the current period Prior period amount
Receiving material 439,813.51 2,787,238.10
Salary of employees 6,692,526.70 4,971,705.71
Depreciation 12,216,189.17 5,406,582.52
Fuel cost 4,136,610.81 2,828,841.11
Others 3,993,111.01 3,528,871.30
Total 27,478,251.20 19,523,238.74
2. Status of capitalised development projects
Decrease in
Item Beginning balance Increase in current period current Closing balance
period
Research and
application
development of
bio-based PTT 3,002,503.92 434,913.72 0.00 3,437,417.64
elastic memory
fibre series
products
3000t/a
Caprolactam Gas
Phase Reworking
18,340,465.12 27,043,337.48 0.00 45,383,802.60
and
Crystallisation
Project
Flame retardant
differentiated
38,579.16 0.00 38,579.16 0.00
new product
development
Total 21,381,548.20 27,478,251.20 38,579.16 48,821,220.24
Flame retardant differentiated new product development project transferred to current
459
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
expense in the period.
(1) Status of significant capitalised development projects
Point of
Estimated Projected manner of commence
Item R&D progress completio generation of ment of Specific basis
n time economic benefits capitalisatio
n
Research and Based on the previous
PTT slice spinning test has been
Formation of spinning research and
application completed, the indicators are
process technology to development of PTT
development of basically in line with
be applied in the slices has been stable
expectations; PTT and ECDP June 30,
bio-based PTT workshop for the July, 2021 production, the
composite spinning test has 2024
production of PTT development of PTT
elastic memory been completed, the composite
filaments and slices process spinning
fibre series spinning process needs to be
elasticated filaments samples in good
further improved.
products condition
Formation of
technical process
3000t/a The pilot plant was
Technology development of the packages and core
Caprolactam Gas completed and started
project process package has patented
December up in the first half of
Phase Reworking been completed, and the process technologies, July, 2022
31, 2024 2022, and the plant is in
is currently being optimised to licensing for external
and Crystallisation stable operating
reduce material consumption. use, and collection of
Project condition
licence fees and
technical service fees
(2) Changes in the provision for impairment of development expenditures and
impairment testing
As at 31 December 2023, the Company's development expenditure was not impaired.
VII. Interests in other entities
1. Composition of enterprise group
460
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Shareholding ratio
Main Place of
Name of subsidiary Domicile Nature of business (%) Gaining method
Business
Direct Indirect
Manufacturing of
Hangzhou Hangzhou
Zhengjiang Hengyi Petrochemical chemical fibre 100.00 0.00 Establishment or
City City
products
Manufacturing of
Hangzhou Hangzhou Business merger under
Zhengjiang Hengyi Polymer Co., chemical fibre 0.00 60.00
City City the same control
products
Manufacturing of
Business merger under
Zhengjiang Yisheng Petrochemical Ningbo City Ningbo City petrochemicalp 0.00 70.00
the same control
roducts
Hangzhou Hangzhou
Zhengjiang Yixin Chemical Fibre Commerce and trade 0.00 70.00 Establishment or
City City
Hong Kong Yisheng Petrochemical
Hong Kong Hong Kong Trade and consulting 0.00 70.00 Establishment or
Investment Co., Ltd.
Zhejiang Hengyi High-Tech Hangzhou Hangzhou Manufacturing of
0.00 100.00 Establishment or
Materials Co., Ltd. City City chemical fibre
products
Ningbo Hengyi Trading Co., Ltd. Ningbo City Ningbo City Commerce and trade 0.00 70.00 Establishment or
Hong Kong Tianyi International
Hong Kong Hong Kong Trade and investment 0.00 100.00 Establishment or
Holding Co., Ltd.
Good Park International
Hong Kong Hong Kong Trade and investment 0.00 100.00 Establishment or
Investment Co., Ltd.
Manufacturing of
Business merger under
Hengyi Industries Sdn. Bhd. Brunei Brunei petrochemical 0.00 70.00
the same control
products
Ningbo Hengyi Engineering Engineering Business merger under
Ningbo City Ningbo City 0.00 70.00
Management Co., Ltd. management the same control
Hengyi Industry International Co.,
Singapore Singapore Commerce andtrade 0.00 70.00 Establishment or
Ltd.
Hengyi Petrochemical International
Singapore Singapore Commerce and trade 0.00 100.00 Establishment or
Co., Ltd.(Singapore)
Zhejiang Hengyi Petrochemical Hangzhou Hangzhou
Commerce and trade 0.00 100.00 Establishment or
Sales Co., Ltd. City City
Manufacturing of
Haining Hengyi New Materials
Haining City Haining City chemical fibre 0.00 100.00 Establishment or
Co., Ltd.
products
Haining Hengyi Thermal Power Electricity & heat
Haining City Haining City production and 0.00 90.00 Establishment or
Co., Ltd.
supply
Suqian Yida New Materials Co.,
Suqian City Suqian City Manufacturing of 0.00 91.00 Establishment or
Ltd. chemical fibre
461
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Shareholding ratio
Main Place of
Name of subsidiary Domicile Nature of business (%) Gaining method
Business
Direct Indirect
products
Quanzhou Quanzhou Manufacturing of
Fujian Yijin Chemical Fibre Co.,
City, Fujian City, Fujian chemical fibre 0.00 90.00 Establishment or
Ltd.
Province Province products
Shaoxing Shengong Packaging Shaoxing Wrap page production
Shaoxing City 0.00 51.00 Establishment or
Co., Ltd. City and processing
Zhejiang Hengyi Logistics Co., Business merger under
Hangzhou Hangzhou Logistics transportation 0.00 100.00
Ltd. City City the same control
Zhejiang Hengyi International Hangzhou Hangzhou Commerce and 100.00 0.00 Establishment or
Trade Co., Ltd. City City trade
Zhejiang Hengkai Energy Co.,
Hangzhou Hangzhou Commerce and 0.00 60.00 Establishment or
Ltd. City City trade
Zhejiang Hengyi Engineering Hangzhou Hangzhou Engineering
100.00 0.00 Establishment or
Management Co., Ltd. City City management
Zhejiang Hengyi Petrochemical Hangzhou Hangzhou Manufacturing of
chemical fibre 100.00 0.00 Establishment or
Research Institute Co., Ltd. City City
products
Jiaxing Yipeng Chemical Fibre Manufacturing of Business merger under
Jiaxing City Jiaxing City chemical fibre 100.00 0.00
Co., Ltd. the same control
products
Taicang Yifeng Chemical Fibre Manufacturing of Business merger under
Taicang City Taicang City chemical fibre 100.00 0.00
Co., Ltd. the same control
products
Zhejiang Shuangtu New Materials Hangzhou Hangzhou Manufacturing of Business merger not
100.00 0.00
Co., Ltd. City City chemical fibre under the same control
products
Hong Kong Hengyi Logistics Co.,
Hong Kong Hong Kong Logistics transportation 0.00 100.00 Establishment or
Ltd.
Hengyi International
Singapore Singapore Logistics transportation 0.00 100.00 Establishment or
Logistics Co., Ltd.
Haining Junbo Shengming Trading
Haining City Haining City Commerce and 0.00 100.00 Establishment or
Co., Ltd. trade
Hangzhou Yitong New Materials Hangzhou Hangzhou Manufacturing of
0.00 100.00 Establishment or
Co., Ltd. City City chemical fibre
products
Shaoxing Hengyi Logistics Co., Shaoxing Shaoxing Logistics transportation 0.00 100.00 Establishment or
Ltd. City City
Guangxi Hengyi Environmental Qinzhou Qinzhou Science and
0.00 100.00 Establishment or
Technology Co., Ltd. City, Guangxi City, Guangxi technology service
462
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Shareholding ratio
Main Place of
Name of subsidiary Domicile Nature of business (%) Gaining method
Business
Direct Indirect
Commercial service
Zhejiang Hengyi Hanlin Enterprise Management Co., L td . Hangzhou Hangzhou 0.00 75.00 Establishment or
City City industry
Hainan Hainan Commerce and
Hainan Hengjing Trading Co., Ltd. 0.00 100.00 Establishment or
Province Province trade
Guangxi Hengyi Shunqi Trading Commerce and
Qinzhou Qinzhou 0.00 100.00 Establishment or
Co., Ltd. City, Guangxi City, Guangxi trade
Manufacturing of
Haining Lantai New Materials Co., chemical fibre 0.00 74.00 Establishment or
Haining City Haining City products
Ltd.
Commerce and
0.00 100.00 Establishment or
Jiaxing Hengyu Trading Co., Ltd. Jiaxing City Jiaxing City trade
Manufacturing of Business merger under
Guangxi Hengyi New Materials Qinzhou Qinzhou
chemical fibre 0.00 100.00
City, Guangxi City, Guangxi the same control
Co., Ltd. products
Zhejiang Xiaoyi Supply Chain
Management Co., Ltd. (Zhejiang Hangzhou Hangzhou Commercial service
0.00 100.00 Establishment or
Xiaoyi Supply Chain Management City City industry
Co., Ltd.)
Ningbo Shengmao Trading Co.,
Ningbo City Ningbo City Commerce and 0.00 70.00 Establishment or
Ltd. trade
Suqian Hengyuan Thermal Energy Electricity & heat
Suqian City Suqian City production and 0.00 100.00 Establishment or
Co., Ltd.
supply
Water
Suqian Huida Port Co., Ltd. Suqian City Suqian City transportation 0.00 100.00 Establishment or
industry
Guangxi Free Trade Zone Yihai Qinzhou Qinzhou Water
transportation 0.00 66.00 Establishment or
Port Co., Ltd. City City
industry
Hangzhou Lanxing Chemical Hangzhou Hangzhou
Wholesale business 0.00 80.00 Establishment or
Fibre Oiling Agent Co., Ltd. City City
Lianyungang Junbo
Lianyungang Lianyungan Road
transportation 0.00 100.00 Establishment or
Shengda Logistics Co., Ltd. City g City
industry
Hangzhou Yigao Environmental Professional and
Hangzhou Hangzhou 0.00 100.00 Establishment or
Protection Technology Co., Ltd. technical services
Manufacture of
Hangzhou Lantong Technology
City City chemical materials 0.00 80.00 Establishment or
Co., Ltd.
and products
463
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Shareholding ratio
Main Place of
Name of subsidiary Domicile Nature of business (%) Gaining method
Business
Direct Indirect
Manufacture of
Hangzhou Lanfang High-tech
Hangzhou Hangzhou chemical materials 0.00 75.00 Establishment or
Material Co., Ltd.
and products
Hangzhou Lanshun Technology Chemical fibre
City City 0.00 70.00 Establishment or
Co., Ltd. manufacturing
Hangzhou Lanbiao Testing Service Professional and
Hangzhou Hangzhou 0.00 70.00 Establishment or
Co., Ltd. technical services
Energy storage
Hangzhou Yixian Energy
City City technical services, 100.00 0.00 Establishment or
Technology Co., Ltd.
etc.
2. Combination of enterprises not under the same control
In current period, there is no combination of enterprises not under the same control in
the Company.
3. Business merger under the same control
In current period, there is no business merger under the same control in the Company.
4. Disposal of Subsidiary
(1) Control right lost by single disposal of subsidiary investment
Balance between disposal
Equity Basis for price and the subsidiary’s net
Equity Equity Control right
disposal determination of asset shares at the level of
disposal price disposal losing time-
Name of subsidiary proportion control right consolidated statements
(RMB) mode point
(%) losing time-point corresponding to disposal
investment
Completion of
Hangzhou Yijing Chemical 880,000,000.0 December 19,
100.00 Transfer shareholding 448,973,414.86
Fibre Co.,Ltd. 0 2023
rights transfer
(Continued)
464
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Determination
Proportion Gains or Amount of other
Book value of Fair value of method and main
of residual Losses on comprehensive income
residual residual assumption of fair
equities on Remeasureme (related to original subsidiary
equities on the equities on the value of residual
Name of subsidiary the control nt of Residual equity investment) shifted
control right control right equities on the
right losing Equities by into investment profits and
losing date losing date control right
date (%) Fair Value losses
losing date
Hangzhou Yijing
0.00 -- -- -- -- 0.00
Chemical Fibre Co., Ltd.
5. Consolidation Scope Change due to Other Reasons
During the year, the Company invested in and established the following six subsidiaries,
details of which are as follows:
The Company invested in and established Hangzhou Yixian Energy Technology Co.,
Ltd. with a 100% shareholding.
Zhejiang Hengyi Petrochemical Company Limited, a subsidiary of the Company,
invested in and established Hangzhou Yigao Environmental Protection Technology
Company Limited, with a 100% shareholding.
Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. a subsidiary of the
Company, invested in and established Hangzhou Lantong Technology Co., Ltd, with a
80% shareholding.
Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. a subsidiary of the
Company, invested in and established Hangzhou Lanfang High-tech Material Co., Ltd,
with a 75% shareholding.
Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. a subsidiary of the
Company, invested in and established Hangzhou Lanfang Hangzhou Lanshun
Technology Co., Ltd, with a 70% shareholding.
465
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Zhejiang Hengyi Petrochemical Research Institute Co., Ltd. a subsidiary of the
Company, invested in and established Hangzhou Hangzhou Lanbiao Testing Service
Co., Ltd, with a 70% shareholding.
Therefore, the number of the Company's subsidiaries included in the scope of
consolidation for the current reporting period increased by 6 as mentioned above.
In addition, the cancellation of the Company's subsidiary Zhejiang Yi Zhi Information
Technology Co., Ltd. was completed during the year, thus the number of the Company's
subsidiaries included in the scope of consolidation for the year was reduced by the
aforesaid one.
6. Transactions in which the share of ownership interest in subsidiary changes and
the subsidiary is still controlled
(1) Explanation of changes in the share of ownership interest in subsidiaries
① On 30 December 2022, Heng Yi Limited, a subsidiary of the Company, entered into
an equity transfer agreement with BOC Financial Assets Investment Company Limited
("BOC Assets"), pursuant to which BOC Assets transferred its 9.33% equity interest in
Heng Yi High-Tech Materials, a subsidiary of the Company, to Heng Yi Limited at a
transfer price of RMB 50,000,000. On 31 January 2023, Heng Yi Limited paid the
entire amount of the equity transfer. Upon completion of the equity transfer, the
Company held 100% equity interest in Heng Yi High-Tech Materials.
② In August 2023, Heng Yi Limited, a subsidiary of the Company, and Polymer
Company, a subsidiary of the Company, entered into an agreement whereby Polymer
Company transferred 100% of its equity interest in Hangzhou Yitong New Material
Company Limited (hereinafter referred to as "Yitong") to Heng Yi Limited at a price of
466
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
RMB 534,774,373.33. In August 2023, Heng Yi Limited paid the full amount of the
equity transfer. Upon completion of the equity transfer, the Company held 100% equity
interest in Yat Tung.
(2) Effect of the transaction on minority interests and equity attributable to
owners of the parent company
Item Hengyi High-Tech Materials
Purchase cost consideration 500,000,000.00
-Cash 500,000,000.00
Total purchase cost consideration 500,000,000.00
Less: Share of net assets of subsidiaries in proportion to equity
412,684,389.33
acquired
Balance 87,315,610.67
Wherein: Adjustments to capital surplus 87,315,610.67
Adjustments to surplus reserves 0.00
Adjustments to unallocated profits 0.00
Amounts affecting minority interests -412,684,389.36
7. Interests held by minority shareholders in subsidiaries
(1) Important non-wholly owned subsidiaries
Minority Dividends distributed
Profits and losses assigned to Balance of minority
shareholders’ to minority
Name of subsidiary minority shareholder in current shareholders’ equities at the
shareholding ratio shareholder in current
period end of current period
(%) period
Ningbo Hengyi Trading Co.,
30.00 -62,971,541.07 0.00 126,651,920.04
Ltd.
Zhejiang Hengyi Polymer
40.00 6,913,809.56 0.00 366,199,183.96
Co., Ltd.
Zhejiang Yisheng
30.00 8,343,778.94 0.00 2,758,981,276.81
Petrochemical Co., Ltd.
Hengyi Industries Sdn. Bhd. 30.00 -25,861,396.76 50,981,568.00 2,976,819,525.24
Fujian Yi Jin Chemical Fibre
10.00 -1,005,023.33 0.00 7,295,072.79
Co., Ltd.
Suqian Yida New Material 9.00 2,404,523.74 0.00 189,334,048.48
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Minority Dividends distributed
Profits and losses assigned to Balance of minority
shareholders’ to minority
Name of subsidiary minority shareholder in current shareholders’ equities at the
shareholding ratio shareholder in current
period end of current period
(%) period
Co., Ltd.
(2) Main financial information about Important Non-wholly Owned Subsidiaries
Unit: RMB 10,000
Ending balance
Name of subsidiary Current Assets Non-current Current liabilities Non-current Total liabilities
assets Total assets liabilities
Ningbo Hengyi Trading Co.,
66,293.06 362,835.45 429,128.52 373,686.90 0.00 373,686.90
Ltd.
Zhejiang Hengyi Polymer
279,560.79 29,636.31 309,197.10 196,740.75 20,906.56 217,647.31
Co., Ltd.
Zhejiang Yisheng
1,649,863.75 313,769.13 1,963,632.89 922,048.55 143,690.00 1,065,738.56
Petrochemical Co., Ltd.
Hengyi Industries Sdn. Bhd. 1,447,702.72 2,815,925.17 4,263,627.88 2,403,551.51 850,331.94 3,253,883.45
Fujian Yi Jin Chemical Fibre
56,226.55 164,503.15 220,729.70 140,018.74 23,170.89 163,189.63
Co., Ltd.
Suqian Yida New Material
95,436.61 218,556.01 313,992.63 104,722.03 923.31 105,645.34
Co., Ltd.
(Continued)
Ending balance of previous year
Name of subsidiary Current Assets Non-current Current liabilities Non-current Total liabilities
assets Total assets liabilities
Ningbo Hengyi Trading Co.,
28,711.46 345,016.16 373,727.61 296,896.09 0.00 296,896.09
Ltd.
Zhejiang Hengyi Polymer
225,211.27 71,718.48 296,929.74 206,821.00 287.40 207,108.40
Co., Ltd.
Zhejiang Yisheng
1,517,642.10 359,313.47 1,876,955.57 910,110.02 73,350.86 983,460.88
Petrochemical Co., Ltd.
Hengyi Industries Sdn. Bhd. 1,868,714.56 2,807,143.74 4,675,858.29 2,536,416.94 1,138,641.20 3,675,058.14
Fujian Yi Jin Chemical Fibre
32,319.73 177,905.71 210,225.44 116,269.85 35,410.49 151,680.34
Co., Ltd.
Suqian Yida New Material
90,103.86 198,243.78 288,347.64 95,083.66 564.52 95,648.17
Co., Ltd.
(Continued)
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current period Balance of previous period
Total Total
Name of subsidiary Operating Operating Operating Operating
Net profit comprehensi Net profit comprehensiv
income cash flow income cash flow
ve income e income
Ningbo Hengyi Trading Co., Ltd. 1,799,643.68 -20,990.51 -21,389.92 3,030.31 1,148,454.08 9,271.50 12,701.28 30,454.43
Zhejiang Hengyi Polymer Co.,
349,128.66 1,728.45 1,728.45 -60,001.73 380,707.73 -3,431.65 -3,431.65 -28,627.14
Ltd.
Zhejiang Yisheng Petrochemical
2,259,138.29 2,781.26 4,399.63 -128,706.13 2,138,615.21 -17,193.75 -19,638.17 -106,204.81
Co., Ltd.
Hengyi Industries Sdn. Bhd. 4,468,000.63 -7,538.29 8,944.28 147,955.36 5,631,775.07 65,336.76 139,648.15 323,556.31
Fujian Yi Jin Chemical Fibre
337,451.11 -1,005.02 -1,005.02 14,293.55 349,489.45 -11,805.93 -11,805.93 86,191.01
Co., Ltd.
Suqian Yida New Material Co.,
364,246.51 2,671.69 2,671.69 19,535.20 181,493.80 -396.93 -396.93 -10,691.58
Ltd.
8. Equities in cooperative enterprise or associated enterprise
(1) Significant joint ventures or associates
Shareholding ratio (%) Accountant
arrangement method for
Name of cooperative enterprise or Main place of
Domicile Nature of business investment in
associated enterprise business Direct Indirect
cooperative enterprise
or associated enterprise
Chemical raw
Zhejiang Baling Hengyi Caprolactam materials and
Hangzhou Hangzhou chemical products 0.00 50.00 Equity method
Co., Ltd.
manufacturing
industry
Trade and
Dalian Yisheng Investment Co., Ltd. Dalian Dalian 0.00 30.00 Equity method
investment
Chemical raw
materials and
Hainan Yisheng Petrochemical Co., Ltd. Hainan Hainan chemical products 0.00 50.00 Equity method
manufacturing
industry
China Zheshang Bank Co., Ltd. Hangzhou Hangzhou Finance 0.00 3.54 Equity method
Chemical raw
Zhejiang Yisheng New Materials Co., materials and
Ningbo Ningbo chemical products 0.00 49.00 Equity method
Ltd.
manufacturing
industry
Note: The Company holds 3.54% stocks of China Zheshang Bank Co., Ltd., and sent a
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
representative to CZB’s BOD. The Company enjoys substantial right of participation
in decision making. The Company may exert significant impact on CZB by such
representative’s participating into CZB’s financial and business policy formulation.
(2) Main financial information about important cooperative enterprises
Currency Unit: 10,000
Ending balance/ amount in current Balance at end of the previous year/
Item period amount in previous period
Caprolactam Hainan Yisheng Caprolactam Hainan Yisheng
Current assets 150,136.38 616,295.60 173,189.83 515,284.65
Wherein: Cash and cash
13,037.12 97,422.24 14,264.69 101,655.70
equivalents
Non-current assets 548,138.82 1,072,339.62 600,320.82 719,282.44
Total assets 698,275.20 1,688,635.21 773,510.65 1,234,567.09
Current liabilities 414,346.75 577,746.58 475,101.61 416,670.21
Non-current liabilities 61,227.74 432,652.24 86,968.64 175,299.13
Total liabilities 475,574.50 1,010,398.82 562,070.25 591,969.34
Minority stockholders’ equity 148.50 0.00 148.50 0.00
Stockholders’ equity attributable to
222,552.21 678,236.39 211,291.90 642,597.75
parent company
Net assets calculated by
111,276.10 339,118.20 105,645.95 321,298.87
shareholding ratio
Adjusting events
- Goodwill 0.00 0.00 0.00 0.00
- Unrealized profit of internal
0.00 -1,291.21 0.00 -622.08
transaction
- Others 2,010.08 9,733.71 2,010.08 9,733.73
Carrying value of equity
113,286.18 347,560.69 107,656.03 330,410.53
investments in joint ventures
Fair value of cooperative
enterprise equity investment with -- -- -- --
public offer
Operating income 746,659.86 1,799,579.10 753,035.72 2,271,698.29
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance/ amount in current Balance at end of the previous year/
Item period amount in previous period
Caprolactam Hainan Yisheng Caprolactam Hainan Yisheng
Financial expenses 11,628.06 12,423.80 10,420.14 9,078.70
Income tax expenses 3,673.62 5,020.46 -13,253.96 18,135.43
Net profit 11,273.81 36,436.78 -35,158.38 104,001.29
Net profits of discontinuing
0.00 0.00 0.00 0.00
operation
Other comprehensive income 0.00 -798.75 0.00 6,859.56
Total comprehensive income 11,273.81 35,638.03 -35,158.38 110,860.85
Dividends from cooperative
0.00 0.00 6,729.98 0.00
enterprise received this year
(3) Main financial information about important associated enterprises
Currency Unit: 10,000
Balance at end of the previous year/ amount in
Ending balance/ amount in current period
previous period
Item
Yisheng Yisheng New China Zheshang Yisheng Yisheng New China Zheshang
Investment Materials Bank Investment Materials Bank
Current assets 604,338.28 309,241.66 -- 786,301.63 317,543.60 --
Non-current assets 1,017,300.20 884,747.79 -- 967,092.10 911,354.19 --
1,621,638.48 1,193,989.45 314,387,900.00 1,753,393.73 1,228,897.79 262,193,000.00
Total assets
Current liabilities 750,987.62 697,732.79 -- 902,013.51 782,318.59 --
Non-current liabilities 100,636.60 267,057.26 -- 87,726.34 160,576.27 --
851,624.22 964,790.06 295,430,200.00 989,739.85 942,894.85 245,600,000.00
Total liabilities
Minority stockholders’ equity 104,767.53 0.00 333,200.00 106,599.31 0.00 299,700.00
Stockholders’ equity attributable to
665,246.73 229,199.39 18,624,500.00 657,054.57 286,002.94 16,293,300.00
parent company
Net assets calculated by shareholding
199,574.02 112,307.70 659,307.30 197,116.37 140,141.44 573,524.16
ratio
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Balance at end of the previous year/ amount in
Ending balance/ amount in current period
previous period
Item
Yisheng Yisheng New China Zheshang Yisheng Yisheng New China Zheshang
Investment Materials Bank Investment Materials Bank
Adjusting events
- Goodwill 0.00 0.00 0.00 0.00 0.00 0.00
- Unrealized profit of internal
0.00 0.00 0.00 0.00 0.00 0.00
transaction
- Others 5,494.45 -0.13 -88,807.83 5,494.45 -0.13 -88,306.09
Book value of equity investment in
205,068.47 112,307.57 570,499.20 202,610.82 140,141.31 485,217.80
associated enterprise
Fair value of associated enterprise
-- -- 245,067.50 -- -- 219,932.37
equity investment with public offer
Operating income 3,008,139.14 3,438,987.61 6,370,400.00 2,974,782.89 3,370,855.32 6,108,500.00
5,756.78 -56,744.88 1,549,300.00 40,524.44 -25,199.76 1,398,900.00
Net profit
Net profits of discontinuing
0.00 0.00 0.00 0.00 0.00 0.00
operation
Other comprehensive income 603.60 -58.67 121,800.00 8,153.65 -39.87 163,400.00
Total comprehensive income 6,360.38 -56,803.55 1,671,100.00 48,678.09 -25,239.62 1,562,300.00
Dividends from associated enterprise
0.00 0.00 15,709.45 0.00 0.00 0.00
received this year
(4) Summary of financial information about unimportant associated enterprises
Currency unit: RMB 10,000
Ending balance/ amount in Balance at end of the previous
Item
current period year/ amount in previous period
Associated enterprise:
Total book value of investment 18,203.31 17,114.05
Total (calculated by shareholding ratio)
- Net profit 1,006.67 974.76
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
- Other comprehensive income 82.58 -3.31
- Total comprehensive income 1,089.25 971.45
(5) Excess losses in cooperative enterprise or associated enterprise
By the end of December 31, 2023, no excess loss takes place in the Company’s
cooperative enterprises and associated enterprises.
(6) Unconfirmed commitment related to cooperative enterprise investment
By the end of December 31, 2022, there is no unconfirmed commitment related to
cooperative enterprise investment in the Company.
(7) Contingent liabilities related to cooperative enterprise or associated enterprise
investment by the end of December 31, 2022, there is no contingent liability
related to cooperative enterprise or associated enterprise investment in the
Company.
9. Equities in structural subjects excluded in the scope of consolidated financial
statement
In the Company, there is no equity in structural subject excluded in the scope of
consolidated financial statement.
VIII. Risks related to financial instruments
The Company’s main financial instruments include monetary capital, financial
assets measured by fair value and whose changes included in current profits and
losses, loan, accounts receivable and accounts payable. For detail description of
different financial instruments, please refer to related items in Note V. Risks
related to these financial instruments and corresponding risk management policies
taken by the Company to mitigate such risks are described in detail as follows.
The Company’s management shall manage and monitor these risk exposures, so
as to control above risks within a limited scope.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Sensitivity analysis techniques are used by the Company to analyze probable
influence of rational and probable changes in risk variables on current profit and
loss or stockholders' equity. Risk variables seldom change separately. Correlation
between different variables will have great effect on the final influence amount of
a risk variable. Therefore, the following contents are stated upon the assumption
that change of every variable takes place independently.
(I) Risk management objective and policy
The Company’s risk management objective is to appropriately balance risk and
income, minimize adverse impact of risk on the Company’s business performance,
and maximize benefits 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 different risks, set up an appropriate risk tolerance
baseline for risk management, supervise various risks in time and reliably, and
control all risks within a limited scope.
1. Market risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss generated by fluctuations in
exchange rate. The Company’s foreign exchange risk is mainly correlated with
USD and BND. Except the Company’s several subsidiaries that purchase and sell
in USD, other main business activities of the Company shall be settled in RMB.
On December 31, 2022, most assets and liabilities of the Company are of RMB
balance (excluding the following assets or liabilities in USD and BND). Foreign
exchange risk generated by assets and liabilities in such foreign currency may
influence the Company’s business performance.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Balance at the end of previous
Item year
USD BND USD BND
Cash and cash equivalents 490,067,263.72 11,371,328.85 581,686,909.13 8,184,622.74
Accounts receivable 608,193,939.66 53,547,754.04 817,630,221.72 54,599,853.33
Other receivables 8,924,007.85 5,274,274.23 8,028,333.81 3,631,010.18
Long-term receivables 518,788.46 0.00 518,788.46 0.00
Short-term loans 1,286,616,775.17 0.00 1,493,172,376.69 177,944,666.40
Accounts payable 567,677,254.66 3,191,737.90 1,116,259,414.13 4,823,807.10
Other payables 3,140,568.35 3,848,062.37 4,323,553.62 1,935,823.58
Non-current liabilities due 188,339,242.85 1,385,745.68 251,125,031.52 1,334,939.91
within one year
Long-term loans 950,220,000.00 0.00 1,326,310,000.00 0.00
Long-term payables 0.00 0.00 1,897,602.19 0.00
Lease liabilities 0.00 83,328,762.28 0.00 81,899,040.00
The Company pays close attention to the influence of exchange rate fluctuations
on its foreign exchange risk. In accordance with relevant provisions, the Company
shall not be engaged in any transaction of foreign exchange derivatives for the
purpose of speculation. Based on normal production and management, all foreign
exchange derivatives transactions shall depend on 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 rate between USD & BND and RMB. The following table shows
sensitivity analysis upon the assumption of 1% exchange rate change between
foreign currency and RMB related to the Company. In the process of sensitivity
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
analysis made by the management, 1% increase or decrease is deemed as rational
reflection of probable exchange rate change scope. On the basis of above
assumption, under the circumstance that other variables are maintained unchanged,
the influence of probable rational changes in exchange rate on current profit &
loss and stockholders' equity (before tax) is shown as follows:
Influence on Current Profit & Loss and
Item Fluctuation in Stockholders' Equity (Before Tax)
Exchange Rate
Current Period Previous Period
Monetary assets (USD) 78,455,351.19 98,052,113.77
Appreciation of RMB
Monetary liabilities (USD) -212,197,255.78 -292,031,805.33
by 1%
Net influence -133,741,904.59 -193,979,691.55
Monetary assets (USD) -78,455,351.19 -98,052,113.77
Depreciation of RMB
Monetary liabilities (USD) 212,197,255.78 292,031,805.33
by 1%
Net influence 133,741,904.59 193,979,691.55
Monetary assets (BND) 3,774,437.20 3,442,381.07
Appreciation of RMB
Monetary liabilities (BND) -4,933,812.66 -13,887,508.83
by 1%
Net influence -1,159,375.46 -10,445,127.77
Monetary assets (BND) -3,774,437.20 -3,442,381.07
Depreciation of RMB
Monetary liabilities (BND) 4,933,812.66 13,887,508.83
by 1%
Net influence 1,159,375.46 10,445,127.77
(2) Interest rate risk – cash-flow change risk
The Company’s risk at fair value change of financial instruments caused by
interest rate change mainly comes from: When the financial market interest rate is
at a downward trend, the Company cannot enjoy cost saving for fixed-rate loans
that are brought by interest-rate reduction. On the contrary, cost will be increased
for its loans at floating interest rates due to rate hiking when the financial market
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
interest rate is at an upward trend. The Company’s short- term loans and mid-and-
long-term loans account for approximately 50% of its liabilities with interest
respectively. Moreover, interest is at a fixed rate for most short-term loans, and
floating interest 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 the current tendency of interest rate change in macroscopic
financial market. At present, there is no interest rate hedging policy in the
Company.
Interest rate risk sensitivity analysis:
Interest rate risk sensitivity shall be analysed upon the following assumption:
influence of market interest rate changes on interest income or expense of financial
instruments at variable interest rates. For short-term loans, sensitivity analysis
shall be based on continuously circulating borrowing of such loan in an integral
accounting year. During sensitivity analysis by the management, increase/
decrease in 50 base points will be deemed as reasonable reflection on the feasible
range of interest rate change. On the basis of above assumption, under the
circumstance that other variables are maintained unchanged and that the interest
rate is increased/decreased by 50 base points, probably rational interest rate
changes may have the following influence on current profit & loss and
stockholders' equity (before tax):
Profit increase in Profit decrease in
Item Interest rate change
current period current period
Short-term loans and mid-and-
long-term liabilities at fixed Increase in every 50 base points at an
interest rate
227,932,255.55 --
upward trend of interest rate
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Short-term loans and mid-and-
Decrease in every 50 base points at a
long-term liabilities at fixed -- 227,932,255.55
downward trend of interest rate
interest rate
Mid-and-long-term liabilities at Increase in every 50 base points at an
-- 102,274,200.18
floating interest rates upward trend of interest rate
Mid-and-long-term liabilities at Decrease in every 50 base points at a
102,274,200.18 --
floating interest rates downward trend of interest rate
(3) Other price risks
The Company’s investments classified into held-for-trading financial assets shall
be measured by fair value on the balance sheet. Therefore, the Company
undertakes the risk of related assets price variation The Company has established
an investment management department, in which members are assigned to closely
monitor the price variation of investment products. In consideration of the
necessity of futures investment and relevant features of leverage risk, the
Company’s BOD authorized the president to set up a futures leading group, and
authorized this group to take charge of the Company’s futures. In addition, the
Company also formulated the train of thought of futures, specified to establish a
futures trading group in the Investment Management Department (responsible for
organization and implementation of transaction in accordance with decisions made
by the futures trading group), specified to establish a futures settlement group in
the Financial Management Department (responsible for such works as funds
management, accounting treatment, transaction confirmation and settlement
management), and specified to establish a futures supervision group in the
Auditing Department (responsible for futures trading risk management & control
and periodic review for transaction behaviors). In order to strengthen its internal
control over futures and to effectively prevent and relieve probable risks in the
transaction process, the Company also formulated the Futures Business
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Management System, requiring all futures business participants to operate in strict
accordance with related provisions and processes. All personnel participating into
futures business in the Company have received special training, and have an
adequate understanding of corresponding features and risks of futures involved.
According to the 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
financial instruments fails to perform its obligations. The Company’s credit risk
mainly comes from bank deposit and receivables. In order to control above risk,
the Company took the following measures.
In order to lower its credit risk, the Company established a group for determination
of credit limit and for credit approval. The policy of payment before delivery is
adopted for unapproved clients. In addition, the Company shall also review on
every balance sheet date recovery of every single receivable, making sure to
withdraw adequate bad debt reserves for unrecyclable funds. According to the
Company’s management, therefore, its credit risk has been reduced substantially.
The Company’s working capital is saved in the bank at high credit rating.
Therefore, its working capital is at relatively low credit risk.
3. Liquidity risks
According to the Company’s management, adequate cash and cash equivalents
shall be prepared 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 use of bank loans and make sure to abide by the
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
loan agreement.
The Company takes bank loan as the main source of funding. On December 31,
2023, the Company’s available credit line is RMB 42.348 billion (RMB 32.156
billion on December 31, 2022).
Based on maturity of undiscounted residual contract obligations, the Company’s
financial assets and financial liabilities are analyzed as follows:
Item Within 6 months 7-12 months 1-3 Years Over three years
Non-derivative financial
assets and liabilities:
Notes receivable 167,871,662.32 0.00 0.00 0.00
Short-term loans 32,365,768,268.86 8,756,490,000.00 0.00 0.00
Notes payable 740,998,553.81 0.00 0.00 0.00
Long-term loans mature within
2,330,380,457.38 2,586,111,283.02 0.00 0.00
one year
Long-term loans 0.00 0.00 6,959,828,587.95 7,779,613,275.97
Accounts receivable
36,904,996.06 0.00 0.00 0.00
financing
Derivative financial assets
and liabilities:
Forward foreign exchange
-108,194,619.69 0.00 0.00 0.00
contract
Futures contract 366,311,518.38 0.00 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 V to the financial statement
for details.
(II) Transfer of financial assets
1. Financial assets transferred but not derecognized integrally
This year, it is unnecessary for the Company to disclose financial assets transferred
but no derecognized integrally.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Transferred financial assets derecognized integrally already but still
involving the assignor
In current period, the Company accumulatively discounted an amount of RMB
3,126,325,566.01 bank acceptance bills (RMB 4,632,637,495.03 in 2022. Main risks
(e.g. interest rate risk) and remunerations related to these bank acceptance bills have
been transferred to the bank. Thus, the Company shall derecognize discounted
immature bank acceptance bills. According to the cashing agreement, if the banker’s
acceptance failed to be cashed upon maturity, the bank has the right to ask the Company
to pay off the unsettled balance. Therefore, the Company continued to involve in
cashing the banker’s acceptance. On December 31, 2023, the cashed but not mature
banker’s acceptance was RMB1,313,709,044.00 in total (RMB 2,384,694,492.22 on
December 31, 2022).
IX. Disclosure of fair value
1. Ending fair value of assets and liabilities measured at fair value
Ending Fair Value
The second- tier
Item The first-tier fair The third-tier fair
fair value Total
value measurement value measurement
measurement
I. Continuous fair value measurement
(I) Held-for-trading financial assets 366,311,518.3
0.00 0.00 366,311,518.38
8
1. Financial assets measured by fair
366,311,518.3
value and whose changes included in current 0.00 0.00 366,311,518.38
8
profits and losses
(1) Debt instrument investment 0.00 0.00 0.00 0.00
(2) Equity instrument investment 0.00 0.00 0.00 0.00
(3) Derivative financial assets 366,311,518.3
0.00 0.00 366,311,518.38
8
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending Fair Value
The second- tier
Item The first-tier fair The third-tier fair
fair value Total
value measurement value measurement
measurement
2. Specified as financial assets measured
by fair value and whose changes included in 0.00 0.00 0.00 0.00
current profits and losses
(1) Debt instrument investment 0.00 0.00 0.00 0.00
(2) Equity instrument investment 0.00 0.00 0.00 0.00
(II) Derivative financial assets 0.00 0.00 0.00 0.00
(III) Held-for-trading financial liabilities 108,194,619.6
0.00 0.00 108,194,619.69
9
Wherein: Issued bonds held for trading 0.00 0.00 0.00 0.00
Derivative financial liabilities 108,194,619.6
0.00 0.00 108,194,619.69
9
Others 0.00 0.00 0.00 0.00
(IV) Derivative financial liabilities 0.00 0.00 0.00 0.00
2. Determination basis for market price of continuous and non-continuous first-
tier fair value measurement items
The Company’s continuous first-tier fair value measurement items mainly include its
derivative financial instruments with an active market that can obtain unadjusted offer
of the same assets or liabilities in the active market.
XI. Related parties and related-party transaction
1. Information about the Company’s parent company
Shareholding Percentage of
ratio of the the parent
Nature of Registered parent company's
Name of parent company Domicile
business capital company in voting rights in
the Company the Company
(%) (%)
482
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
RMB 51.8
Zhejiang Hengyi Group Co., Hangzhou Investment and 40.61 47.60
Ltd. trade million
Note: The Company’s ultimate controller is Qiu Jianlin.
2. Information about the Company’s subsidiaries
For detail information, please refer to Notes VII (1. Equities in Subsidiary).
3. Information about the Company’s cooperative and associated enterprises
Shareholding Accountant
ratio (%) Arrangement
Method for
Name of cooperative Main Investment in
Nature of
enterprise or associated place of Domicile Cooperative
business
enterprise business Direct Indirect Enterprise or
Associated
Enterprise
Ningbo Jinhou
Industry Investment Co., Hangzhou Ningbo Investment 25.00 0.00 Equity method
and consulting
Ltd.
Water
Dongzhan Shipping
Zhoushan Zhoushan transportation 0.00 30.00 Equity method
Co., Ltd.
industry
For important cooperative and associated enterprises of the Company, please refer to
Notes VII (8. Equities in Cooperative or Associated Enterprise).
4. Information about other related parties
Name of Other Related Party Relationship between Other Related Parties and the Company
Zhejiang Hengyi Polyamide Co., Ltd. A holding subsidiary of the ultimate parent company
Hangzhou Yichen Chemical Fibre Co., Ltd. A holding subsidiary of the ultimate parent company
Hangzhou Yiqing Chemical Fibre Co., Ltd. A holding subsidiary of the ultimate parent company
483
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of Other Related Party Relationship between Other Related Parties and the Company
Zhejiang Hengyi Energy Co., Ltd. A holding subsidiary of the ultimate parent company
Hong Kong Yitian Company Limited A holding subsidiary of the ultimate parent company
Shaoxing Keqiao Hengming Chemical Fibre
Associated company of ultimate parent company
Co., Ltd.
Zhejiang Rongtong Chemical Fibre New
Holding subsidiary of the associated enterprise
Material Co., Ltd.
Yisheng Dahua Petrochemical Co., Ltd. Holding subsidiary of the associated enterprise
Zhejiang Rongyi Trading Co., Ltd. Wholly-owned subsidiary of the associated enterprise
Hangzhou Bayi Energy Co., Ltd. Holding subsidiary of the joint venture
Haining Hengqi Environmental Protection
Joint venture of ultimate parent company
Technology Co., Ltd.
Ningbo Qingzhi Chemical Terminal Co., Ltd.
Connected natural persons as directors
(Note)
Note: Mr Wu Zhong, a director of the Company, has been a director of Ningbo Qingchi
Chemical Terminal Company Limited ("Qingchi Terminal") since September 2023, and
Qingchi Terminal has been added as a related party of the Company.
5. Information about related-party transaction
(1) Related-party transaction of commodity purchase & sale and labor provision &
reception
① Information about commodity purchase / labor reception
Contents of related-party Amount incurred in Amount incurred in
Related party
transactions current period previous period
Hainan Yisheng Petrochemical Co., Ltd. Procurement of goods 20,005,238.94 16,318,689.67
Yisheng Dahua Petrochemical Co., Ltd. Procurement of goods 0.00 2,690,904,003.22
Yisheng Dahua Petrochemical Co., Ltd. Labor reception 0.00 504.72
Zhejiang Baling Hengyi Caprolactam Co.,
Procurement of goods 311,180,720.25 329,558,085.16
Ltd.
Zhejiang Baling Hengyi Caprolactam Co.,
Labor reception 2,945,499.49 0.00
Ltd.
Zhejiang Hengyi Polyamide CO., Ltd. Procurement of goods 3,457,927.39 24,605,115.88
Hangzhou Yichen Chemical Fibre Co.,
Procurement of goods 115,012,477.80 10,048,586.90
Ltd.
484
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Contents of related-party Amount incurred in Amount incurred in
Related party
transactions current period previous period
Zhejiang Yisheng New Material Co., Ltd. Procurement of goods 15,213,825,593.72 15,096,435,470.51
Shaoxing Keqiao Hengming Chemical
Procurement of goods 8,881,144,362.80 6,987,350,219.75
Fibre Co., Ltd.
Zhejiang Rongyi Trading Co., Ltd. Procurement of goods 0.00 671,415,929.18
Hangzhou Bayi Energy Co., Ltd. Procurement of goods 147,355,009.33 169,237,789.57
Haining Hengqi Environmental Protection
Procurement of goods 1,886,335.85 95,751.42
Technology Co., Ltd.
Hangzhou Yijing Chemical Fibre Co., Ltd. Procurement of goods 2,986,764.93 0.00
Hangzhou Yijing Chemical Fibre Co., Ltd. Labor reception 2,020,554.09 0.00
Ningbo Qingchi Chemical Terminal
Labor reception 13,521,634.13 0.00
Co.,Ltd
Hong Kong Yitian Company Limited Procurement of goods 1,525,810,777.02 0.00
Zhejiang Rongtong Chemical Fibre New
Procurement of goods 154,592,511.47 0.00
Material Co., Ltd.
② Information about commodity sale/ labor provision
Contents of related-party Amount incurred in Amount incurred in
Related party
transactions current period previous period
Zhejiang Baling Hengyi Caprolactam
Sales of goods 1,008,802,975.63 950,423,022.45
Co., Ltd.
Zhejiang Baling Hengyi Caprolactam
Provision of services 37,439,423.67 29,951,315.01
Co., Ltd.
Hainan Yisheng Petrochemical Co., Ltd. Sales of goods 1,253,839,220.98 2,380,871,191.28
Hainan Yisheng Petrochemical Co., Ltd. Provision of services 1,796,386.36 6,389,568.19
Zhejiang Hengyi Polyamide CO, Ltd. Sales of goods 26,966,224.78 13,117,614.46
Zhejiang Hengyi Polyamide CO., Ltd. Provision of services 14,398,564.97 7,565,474.40
Yisheng Dahua Petrochemical Co., Ltd. Provision of services 3,119.27 488,210.40
Yisheng Dahua Petrochemical Co., Ltd. Sales of goods 102,296,411.49 71,433,479.86
Hangzhou Yichen Chemical Fibre Co.,
Provision of services 30,478,797.91 21,485,237.51
Ltd.
Hangzhou Yichen Chemical Fibre Co.,
Sales of goods 23,289,840.16 4,807,243.81
Ltd.
Shaoxing Keqiao Hengming Chemical
Sales of goods 385,958,886.01 403,795,638.58
Fibre Co., Ltd.
485
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Contents of related-party Amount incurred in Amount incurred in
Related party
transactions current period previous period
Shaoxing Keqiao Hengming Chemical
Provision of services 128,033,960.04 93,638,375.93
Fibre Co., Ltd.
Shaoxing Keqiao Hengming Chemical
Trademark use license fee 11,784,356.33 8,905,990.74
Fibre Co., Ltd.
Shaoxing Keqiao Hengming Chemical
Patent royalty 0.00 747,910.00
Fibre Co., Ltd.
Zhejiang Yisheng New Materials Co.,
Sales of goods 0.00 2,755,482,514.25
Ltd.
Zhejiang Yisheng New Materials Co.,
Labor provision 71,010,316.16 62,385,809.22
Ltd.
Zhejiang Rongtong Chemical Fibre New
Sales of goods 0.00 -212,389.39
Materials Co., Ltd.
Hangzhou Bayi Energy Co., Ltd. Sales of goods 734,737,484.94 897,671,146.13
Haining Hengqi Environmental
Sales of goods 20,617,481.18 3,339,460.36
Protection Technology Co., Ltd.
Hangzhou Yijing Chemical Fibre
Labor provision 648,331.19 --
Co., Ltd.
Ningbo Qingzhi Chemical
Sales of goods 2,996,198.66 --
Terminal Co., Ltd.
(2) Information about related trusteeship management/ mandatory management
The Company as trustee
Custody
Starting fee
Type of Date of recogniz
Name of the Client Name of the Trustee
Entrusted Assets Entrustm ed in
ent current
period
July 25, 1,698,11
Shaoxing Keqiao Hengming Zhejiang Hengyi Entrustment of
Chemical Fibre Co., Ltd. Petrochemical Co., Ltd. operation 2018 3.19
Note: Zhejiang Hengyi Petrochemical Co., Ltd. (a subsidiary of the Company) is
entrusted to provide management advisory services to the production and operating
486
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
activities of Shaoxing Keqiao Hengming Chemical Fibre Co., Ltd. However, the former
will not undertake any business risk of the client. The termination date of entrust is the
date of completion when the client is purchased by the Company or the Company’s
non-related parties.
(3) Information about related-party lease
① The Company as lessee
Rental expenses Rental expenses
Name of lessor Category of leased assets recognized in current confirmed in the
period previous year
Hangzhou Yijing Chemical Fibre
Warehouse 994,555.81 661,447.12
Co., Ltd.
Hangzhou Yijing Chemical Fibre Property
1,445,624.69 --
Co., Ltd.
Shaoxing Keqiao Hengming Chemical Property
2,935.78 12,495.41
Fibre Co., Ltd.
Shaoxing Keqiao Hengming Chemical Property
1,280,000.00 1,280,000.00
Fibre Co., Ltd. (Note)
Note: On January 1, 2021, the Company signed a house-leasing contract with Shaoxing
Keqiao Hengming Chemical Fibre Co., Ltd., with the lease term from January 1, 2021
to December 31, 2023 and annual rentals of RMB 1.28 million.
② The Company as the leaser
Rental expenses Rental expenses
Name of the lessee Category of leased assets recognized in current confirmed in the
period previous year
Haining Hengqi Environmental
Premises 910,741.10 596,003.52
Protection Technology Co., Ltd.
Zhejiang Hengyi Polyamide Co., Ltd. Property 0.00 4,000.00
Hainan Yisheng Petrochemical Co., Ltd. Property 1,346,678.51 1,419,145.21
Zhejiang Yisheng New Materials Co., Property
365,845.33 1,015,495.53
Ltd.
487
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(4) Information about related-party guarantee
① The Company as guarantor
Amount guaranteed (RMB Starting date Maturity date of Guarantee finished
Warrantee
10,000) of guarantee guarantee or not
Hainan Yisheng May 22, December 24,
53,662.78 No
Petrochemical Co., Ltd. 2023 2024
② The Company as the warrantee
Mortgage
Guarantee
Amount (RMB Borrowing Repayment provided by
Guarantor Warrantee finished or
10,000) date date the Company
not
or not
Zhejiang Hengyi Group Co., Ltd. and
Hengyi Industries Sdn. Bhd. $76,612.00 2018-8-23 2030-8-22 Yes No
Qiu Jianlin
Zhejiang Hengyi Group Co., Ltd. and
Hengyi Industries Sdn. Bhd. 293,560.00 2018-8-23 2030-8-22 Yes No
Qiu Jianlin
Zhejiang Hengyi Group Co., Ltd. and Zhejiang Hengyi High-Tech Materials
25,000.00 2023-7-5 2024-6-20 No No
Qiu Jianlin Co., Ltd.
Zhejiang Hengyi Group Co., Ltd. and Zhejiang Hengyi Petrochemicals
11,000.00 2023-7-5 2024-6-20 No No
Qiu Jianlin Co.,Ltd.
Zhejiang Hengyi Group Co.,
Hengyi Industries Sdn. Bhd. $200.00 2019-6-25 2024-9-25 Yes No
Ltd.
Zhejiang Hengyi Group Co., Jiaxing Yipeng Chemical Fibre Co.,
66,460.69 2022-4-15 2027-1-13 Yes No
Ltd. Ltd.
Zhejiang Hengyi Group Co., Zhejiang Hengyi High-Tech Materials
30,088.84 2021-3-8 2025-2-22 Yes No
Ltd. Co., Ltd.
Zhejiang Hengyi Group Co., Zhejiang Shuangtu New Materials
16,200.00 2022-1-28 2025-2-20 Yes No
Ltd. Co., Ltd.
Zhejiang Hengyi Group Co., Haining Hengyi New Materials Co.,
70,000.00 2023-8-29 2024-12-19 No No
Ltd. Ltd.
Zhejiang Hengyi Group Co., Haining Hengyi New Materials Co.,
10,000.00 2023-5-15 2024-5-15 No No
Ltd. Ltd.
Zhejiang Hengyi Group Co.,
Heng Yi Petrochemical Co. 40,792.00 2023-7-25 2024-11-15 No No
Ltd.
Zhejiang Hengyi Group Co.,
Hengyi Industries Sdn. Bhd. $18,560.04 2023-10-11 2024-4-11 No No
Ltd.
Zhejiang Hengyi Group Co.,
Hengyi Industries Sdn. Bhd. 170,000.00 2023-1-19 2024-6-14 No No
Ltd.
Zhejiang Hengyi Group Co., Hengyi Industry International Co.,
$11,481.44 2023-7-14 2024-4-15 No No
Ltd. Ltd.
Zhejiang Hengyi Group Co., Jiaxing Yipeng Chemical Fibre Co.,
20,000.00 2023-8-24 2024-8-28 No No
Ltd. Ltd.
488
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Mortgage
Guarantee
Amount (RMB Borrowing Repayment provided by
Guarantor Warrantee finished or
10,000) date date the Company
not
or not
Zhejiang Hengyi Group Co., Jiaxing Yipeng Chemical Fibre Co.,
10,000.00 2023-9-4 2024-9-4 No No
Ltd. Ltd.
Zhejiang Hengyi Group Co., Nongbo Hengyi Trading Co.,
42,000.00 2023-9-12 2024-6-11 No No
Ltd. Ltd
Zhejiang Hengyi Group Co.,
Suqian Yida New Materials Co., Ltd. 14,500.00 2023-6-26 2024-12-25 No No
Ltd.
Zhejiang Hengyi Group Co., Taicang Yifeng Chemical Fibre Co.,
55,410.00 2023-8-8 2024-12-6 No No
Ltd. Ltd.
Zhejiang Hengyi Group Co., Hong Kong Tianyi International
$1,649.00 2022-6-28 2024-6-27 No No
Ltd. Holding Co., Ltd.
Zhejiang Hengyi Group Co., Zhejiang Hengyi High-tech
75,816.00 2021-11-11 2024-11-10 No No
Ltd. Material Co., Ltd
Zhejiang Hengyi Group Co., Zhejiang Hengyi Polymers
10,000.00 2023-8-24 2024-8-15 No No
Ltd. Co., Ltd.
Zhejiang Hengyi Group Co., Zhejiang Hengyi
40,000.00 2023-8-9 2024-12-3 No No
Ltd. Petrochemicals Co.,Ltd.
Zhejiang Hengyi Group Co., Zhejiang Hengyi
85,500.00 2023-7-27 2024-7-26 No No
Ltd. Petrochemicals Co.,Ltd.
Zhejiang Hengyi Group Co., Zhejiang Shuangtu New Materials
33,000.00 2023-2-10 2024-11-14 No No
Ltd. Co., Ltd.
Zhejiang Hengyi Group Co., Zhejiang Shuangtu New Materials
6,975.00 2023-10-10 2024-4-24 No No
Ltd. Co., Ltd.
Zhejiang Hengyi Group Co., Zhejiang Yisheng
373,300.00 2021-2-24 2026-4-18 No No
Ltd. Petrochemical Co., Ltd.
Zhejiang Hengyi Group Co., Zhejiang Yisheng
148,172.24 2023-7-13 2024-6-12 No No
Ltd. Petrochemical Co., Ltd.
Zhejiang Hengyi Group Co., Haining Hengyi New Materials Co.,
77,482.54 2020-1-14 2024-12-30 Yes No
Ltd. Ltd.
Zhejiang Hengyi Group Co.,
Zhejiang Hengyi
Ltd. and Zhejiang Southeast Space 5,000.00 2023-8-23 2024-8-23 No No
Petrochemicals Co.,Ltd.
Frame Group Co., Ltd.
Zhejiang Hengyi Group Co.,
Zhejiang Hengyi
Ltd. and Zhejiang Southeast Space 15,000.00 2023-11-27 2024-6-3 No No
Petrochemicals Co.,Ltd.
Frame Group Co., Ltd.
(5) Related-party lending
Maturity
Related party Lending amount Start date Notes
date
Borrowing:
489
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Maturity
Related party Lending amount Start date Notes
date
Temporary working capital replenished by
Zhejiang Hengyi Group Co.,
5,588,422,499.99 -- -- Heng Yi Group to the Company, which has
Ltd.
been returned in full
Lending:
Zhejiang Yisheng New Entrusted loan, lending rate: 4.785%
988,000,000.00 2022-1-14 2023-12-21
Materials Co., Ltd.
Zhejiang Yisheng New Entrusted loan, lending rate: 4.785%
786,000,000.00 2023-1-9 2024-12-20
Materials Co., Ltd.
(6) Information about related-party assets transfer and debt restructuring
Contents of related- Amount incurred in Amount incurred
Related party
party transactions current period in previous period
Zhejiang Hengyi Energy Co., Ltd. Asset transfer 0.00 3,000,000.00
Zhejiang Hengyi Group Co., Ltd. Asset transfer 880,000,000.00 0.00
(7) Remunerations for key management personnel
Amount incurred in current Amount incurred in previous
Item
period period
Remunerations for key management
RMB 8.0573 million RMB 12.3383 million
personnel
(8) Other related-party transactions
By the end of December 31, 2023, the Company’s and its subsidiaries’ balance of
deposits is RMB 170.1697 million in its related party, namely China Zheshang Bank
Co., Ltd. The amount of commercial draft discounted but immature at the end of the
term is RMB 0,00.
6. Related parties’ receivables and payables
(1) Receivables
490
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Ending balance of previous year
Project name Bad debt Bad debt
Book balance Book balance
provision provision
Notes receivable:
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 966,628.00 0.00 527,200.00 0.00
Accounts receivable:
Hainan Yisheng Petrochemical Co., Ltd. 213,112,065.66 0.00 140,711,918.33 0.00
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 400,689.72 0.00 49,142.00 0.00
Zhejiang Yisheng New Materials Co., Ltd. 398,771.41 0.00 1,106,890.13 0.00
Hangzhou Yijing Chemical Fibre Co., Ltd. 3,877,449.15 0.00 -- --
Ningbo Qingzhi Chemical Terminal Co., Ltd. 280,105.95 0.00 -- --
Advance payment:
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 9,978.79 0.00 5,525.28 0.00
Other current assets:
Zhejiang Yisheng New Materials Co., Ltd. 787,149,197.50 0.00 989,433,904.99 0.00
(2) Payables
Project name Ending balance Ending balance of previous year
Notes payables:
Zhejiang Yisheng New Materials Co., Ltd. 281,000,000.00 0.00
Accounts payable:
Zhejiang Baling Hengyi Caprolactam Co.,Ltd 2,716,705.08 9,887,234.54
Hangzhou Yichen Chemical Fibre Co.,
2,346.68 0.00
Ltd.
Shaoxing Keqiao Hengming Chemical Fibre
848,660.98 3,705,778.85
Co., Ltd.
Zhejiang Hengyi Polyamide Co., Ltd 1,487.41 0.00
Zhejiang Yisheng New Materials Co., Ltd. 0.00 6,305,312.50
Hangzhou Bayi Energy Co., Ltd. 2,201,434.04 1,065,580.38
Hangzhou Yijing Chemical Fibre Co.,
391,541.53 --
Ltd.
Hong Kong Yitian Company Limited 48,652,663.66 0.00
491
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Project name Ending balance Ending balance of previous year
Contractual liabilities and other current
liabilities:
Hangzhou Bayi Energy Co., Ltd. 0.00 493,849.41
Zhejiang Yisheng New Materials Co., Ltd. 0.00 52,067,253.14
Other payables:
Zhejiang Hengyi Group Co., Ltd. 0.00 7,355,322.62
Non-current liabilities mature within one year:
Shaoxing Keqiao Hengming Chemical Fibre
0.00 1,119,181.06
Co., Ltd.
XI. Commitments and Contingencies
1. Contingent liabilities arising from pending litigation and arbitration and their
financial impact
① Criminal case of Wang XX and related civil action cases in Zhejiang Shuangtu
Since 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 clients never received goods delivered by Zhejiang Shuangtu, and could not get
contact with Wang
XX. For the reason of the failure of Zhejiang Shuangtu to deliver after their payment,
Haiyan Yixiao Knitting New Materials Co., Ltd., Tonglu Yueheng Knitting Clothing
Co., Ltd. and Yiwu Zijing Clothing Co., Ltd. submitted a case to the court.
According to its self-inspection, Zhejiang Shuangtu has already received the payment
of above clients for goods, and finished related activities (including delivery and
issuance of sales invoice) as per the sales order. All clients failing to receive the goods
were handled by Wang XX, 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 investigation brigade subordinate to Dajiangdong Industry
Cluster District Suboffice of Hangzhou Public Security Bureau. The case has been
accepted already. On April 13, 2019, Zhejiang Shuangtu received a notice from the
492
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
public security organ: Wang XX was arrested.
Both the three civil cases related to Wang XX and the contract dispute case with Haiyan
Yixiao Knitting New Materials Co., Ltd. were opened to a court session on December
3, 2018. The court has not made a judgment yet. As Wang XX’s criminal case is
involved, Tonglu Yueheng Knitting Clothing Co., Ltd. positively withdrew the contract
dispute case, and would decide how to solve after the criminal case was handled. For
the contract dispute case with Yiwu Zijing Clothing Co., Ltd., Zhejiang Shuangtu has
submitted corresponding answer brief and evidence materials to the court. The court
will open a court session later. For the contract dispute case with, Haiyan Yixiao
Knitting New Materials Co., Ltd., the court froze RMB 300,000 deposits of Zhejiang
Shuangtu.
In 2018, based on the information in the client’s letter of notice (including quantity of
goods not received), Zhejiang Shuangtu deducted an amount of RMB 26,201,814.47
from its revenues, recorded corresponding freight cost (i.e. RMB 24,105,503.18) into
“other receivables – Wang XX”, and withdrew bad debt losses in full amount. Based
on the receiving time and amount, Zhejiang Shuangtu also withdrew an amount of RMB
433,932.50 accrued liabilities by bank lending rates in corresponding period.
On May 17, 2019, Wang XX was arrested by law. On January 22, 2020, the People's
Procuratorate 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 the date yet. According to the amount involving duty-related crime
as found in the indictment by the People's Procuratorate of Hangzhou Xiaoshan District,
Zhejiang Shuangtu deducted an amount of RMB 2,414,257.32 from its revenues, and
recorded corresponding freight cost (i.e. RMB 2,138,041.91) into “other receivables –
493
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Wang XX”, and confirmed anticipated losses in full amount.
Based on the receiving time and amount, Zhejiang Shuangtu also withdrew an amount
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
agreements signed by and between the Company and the former shareholders of
Zhejiang Shuangtu (namely Fulida Group and Xinghui Chemical Fibre Group Co.,
Ltd.), Fulida Group and Xinghui Chemical Fibre Group Co., Ltd. promise and agree to
assume joint and several liabilities to the Company and Zhejiang Shuangtu with respect
to all losses on Zhejiang Shuangtu 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 Zhejiang Shuangtu.
On July 20, 2020, the People’s Court of Hangzhou Xiaoshan District issued a paper of
sentence to judge: (1) The Defendant Wang XX is sentenced to jail for 13 years for duty
encroachment and for eleven (11) years and six (6) months for contract swindling, and
also fined for RMB 150,000. Upon a combined punishment, Wang XX is sentenced to
18-year imprisonment, and fined RMB 150,000. (2) The Defendant Wang XX is
ordered to return and compensate for economic losses to related units and the victim.
After the criminal case of Wang XX was judged, the cases deemed as duty
encroachment of related victims were also heard, judged and/or compromised. By the
end of the issue date of this report, 11 out of 13 victims from duty encroachment
affirmed by the court have been judged, compromised and settled. A total amount of
RMB 936,800 is involved in other two unsettled cases.
On 3 April 2023, Hangzhou Qiantang District People's Procuratorate filed an
indictment with Hangzhou Qiantang District People's Court charging defendant Wang
494
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
XX with committing the crime of occupational encroachment: from August to October
2018, defendant Wang XX took advantage of the convenience of his position, and
encroached on Shuangtu Company's property by taking partial shipments and other
means after presenting the goods on behalf of the company's customers, such as
Zhejiang Huagang Clothing Accessories Company Limited and other 3 units. The total
amount involved was RMB 2,100,307.86.
On 30 June 2023, Hangzhou Qiantang District People's Court issued a criminal
judgement, sentencing Wang to four years' fixed-term imprisonment for the crime of
occupying positions and imposing a fine of RMB 50,000; together with the sentence of
eighteen years' fixed-term imprisonment for the previous crime and a fine of RMB
150,000, it decided to carry out the fixed-term imprisonment of eighteen years and nine
months and impose a fine of RMB 200,000; and ordered Defendant Wang Yishi to pay
compensation for economic losses of the aggrieved unit, Zhejiang Shuangtu New
Material Ltd. for economic losses of RMB 2,100,307.86.
In 2023, Double Rabbit Company offset its income by RMB 1,813,774.41, recorded
the corresponding cost of goods of RMB 1,719,275.62 as "other receivables - Mr.
Wang," and fully recognized the estimated loss; at the same time, it accrued estimated
liabilities based on the timing and amount of customer payments received, using the
same period bank loan interest rate and interbank lending rate.
On October 13, 2023, the company received RMB 6,570 from the Hangzhou Qiantang
District People's Court transferred on behalf of the defendant Mr. Wang.
Due to settlements with some of the victims, the actual refund of payments to the
victims by Double Rabbit Company was less than the amount determined by the court
for the case. Therefore, the company reduced the amount of receivable compensation
495
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
from the original shareholders of Double Rabbit Company, Fulida Group Holding Co.,
Ltd., and Xinghui Chemical Fibre Group Co., Ltd., based on the actual expenditures of
settled cases, reducing the amounts for the years 2021 and 2022 by RMB 8.5558 million
yuan and RMB 54,100 respectively. In 2023, due to the newly confirmed embezzlement
offense committed by Mr. Wang resulting in losses to Double Rabbit Company and the
parent company, the receivable compensation from the original shareholders of Double
Rabbit Company, Fulida Group Holding Co., Ltd., and Xinghui Chemical Fibre Group
Co., Ltd. increased by RMB 2,246,502.35 (excluding RMB 6,570 for court-executed
funds for the year).
As of December 31, 2023, the company recognized "other receivables - Mr. Wang" at
27,956,250.71 yuan, fully recognizing credit impairment losses; at the same time, it
recognized receivable compensation from the original shareholders of Double Rabbit
Company, Fulida Group Holding Co., Ltd., and Xinghui Chemical Fibre Group Co.,
Ltd., at RBM 25,833,187.48.
② Arbitration Case for EPC Contract Dispute with COOEC International Co., Ltd.
Hengyi Industries Sdn. Bhd. (hereinafter referred to as Hengyi Brunei or Respondent),
a subsidiary of the Company, has received China International Economic and Trade
Arbitration Commission's Notice on Defense of EPC Contract Dispute Case No.
P20220470. COOEC International Co., Limited (hereinafter referred to as CNOOC
International or Applicant) has submitted an arbitration application to China
International Economic and Trade Arbitration Commission for disputes arising from
the settlement of Hengyi (Brunei) PMB Petrochemical Project Single Point Mooring
and Submarine Pipeline EPC signed with Hengyi Brunei. The main arbitration requests
of CNOOC International Company involved the total amount of RMB 116,758,196.47
from twelve claims, including payment or refund of project progress payment, quality
assurance deposit, costs incurred due to contract changes, as well as the losses and
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
corresponding interest and other expenses caused by the respondent during the
construction. The Company categorized and summarized the above arbitration requests
and provided defense opinions. In addition, the Company proposes arbitration
counterclaims, such as bearing corresponding compensation for delayed construction
period losses due to the serious delay in the manufacturing, delivery and installation
progress of key equipment by CNOOC, resulting in the completion of the project far
behind the original contract date. The case was heard at Zhejiang Branch of China
International Economic and Trade Arbitration Commission on July 18, 2022 and March
23, 2023, respectively. As of the disclosure date of this 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
referred to 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 to return the payment of RMB 29,468,547.72 paid by
Hainan Guomao, pay the interest calculated from the plaintiff's payment date to the
actual performance date based on the above amount according to three times of the
market interest rate for one-year loans publicized by National Interbank Funding Center
during the same period and bear the litigation costs of the case. In February 2023,
Zhejiang Yilanwen Technology Co., Ltd. was added as the third party to the case. On
March 27, 2023, the People’s Court of Hangzhou Xiaoshan District tried the case. As
of the disclosure date of this report, the case is still in the trial stage.
On August 31, 2023, the People's Court of Xiaoshan District, Hangzhou City, issued
the following civil judgment (hereinafter referred to as the "first-instance judgment"):
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
the termination of the unfulfilled contract between Hengyi Sales Company and Hainan
Guomao, with Hengyi Sales Company required to refund the unpaid goods amount of
RMB 756,107.16 to Hainan Guomao within ten days of the judgment coming into
effect, and to pay interest on the funds occupied from March 27, 2023, to the actual
performance date calculated at the one-year loan market quotation rate published by the
National Interbank Funding Center during the same period.
Hainan Guomao appealed against the first-instance judgment to the Hangzhou
Intermediate People's Court in September 2023, requesting the termination of the five
contracts involved, the refund of the paid goods amount of RMB 29,468,547.72, and
the payment of triple interest calculated based on the above amount from the date of
payment by the appellant to the actual performance date at three times the one-year loan
market rate published by the National Interbank Funding Center during the same period,
with all first and second-instance litigation costs to be borne by the defendant. In
December 2023, Hengyi Sales Company submitted a second-instance defense pleading
to the Hangzhou Intermediate People's Court requesting the dismissal of Hainan
Guomao's appeal. The second-instance trial for the aforementioned case took place on
December 27, 2023, and on February 21, 2024, the Zhejiang Provincial Higher People's
Court issued a civil judgment "rejecting the appeal and upholding the original
judgment," which served as the final judgment.
(2) By the end of December 31, 2022, the Company’s debt guarantee is shown as
follows:
Currency unit: RMB 10,000
Guaranty Amount Maturity date
Guarantor Warrantee
Style Guaranteed of guarantee
Hengyi Petrochemical Co., Hainan Yisheng Petrochemical Credit 2024-12-
53,662.78
Ltd. Co., Ltd. guarantee 24
498
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
XII. Events after the balance sheet date
1. Distribution of profits
On April 19, 2024, during the eighth session of the twelfth Board of Directors meeting,
the company approved the "Proposal on the Distribution of Profits for the Year 2023."
The company intends to distribute cash dividends of RMB 1.00 (tax included) per 10
shares to all shareholders entitled to dividends, using the total share capital recorded on
the registration date determined in the announcement of the equity distribution as the
base, deducting the shares held by the company's repurchase special securities account.
There will be no bonus shares issued, and no increase in share capital through capital
reserve conversion. This proposal is subject to approval at the annual general meeting
of shareholders for the year 2023.
2. As at the date of this financial report, apart from the above matters, there were
no other matters required to be disclosed after the balance sheet date during the
current year
XIII. Other important events
1. Correction to prior period errors
There were no prior period error corrections that need to be disclosed by the Company
during this year.
2. Segment information
Segmental management is not implemented in the Company. Therefore, there is no
reporting segment.
3. Other important events
There were no other important events that need to be disclosed by the Company during
this year.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
XIV. Notes to main items in the company’s financial statements
1. Other receivables
Ending balance of previous
Item Ending balance
year
Interests receivable 0.00 0.00
Dividends receivable 765,000,000.00 425,000,000.00
Other receivables 5,147,890,574.22 5,601,278,001.08
Total 5,912,890,574.22 6,026,278,001.08
(1) Dividends receivable
Ending balance of previous
Project (or Invested Unit) Ending balance
year
Zhejiang Hengyi Petrochemical Co., Ltd. 425,000,000.00 425,000,000.00
Taicang Yifeng Chemical Fibre Co., Ltd. 230,000,000.00 0.00
Zhejiang Hengyi International Trading Co.,
110,000,000.00 0.00
Ltd.
Subtotal 765,000,000.00 425,000,000.00
Minus: Bad debt provision 0.00 0.00
Total 765,000,000.00 425,000,000.00
(2) Other receivables
① Disclosure by aging
Aging Ending balance Ending balance of
previous year
Within 1 year 5,147,710,574.22 2,093,805,561.80
1-2 years 0.00 200,000.00
2-3 years 200,000.00 1,255,406,748.63
Over three years 2,500.00 2,251,878,190.65
Subtotal 5,147,913,074.22 5,601,290,501.08
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Minus: Bad debt provision 22,500.00 12,500.00
Total 5,147,890,574.22 5,601,278,001.08
② Classification based on nature of fund
Nature of account Ending balance Ending balance of previous
year
Related party funds within the scope of
5,147,510,574.22 5,601,088,001.08
consolidation
Portfolio of deposits and security 402,500.00 202,500.00
Subtotal 5,147,913,074.22 5,601,290,501.08
Minus: Bad debt provision 22,500.00 12,500.00
Total 5,147,890,574.22 5,601,278,001.08
③ Accrual of bad debt reserves
Stage 1 Stage 2 Stage 3
Bad debt provision Expected credit Expected credit loss Expected credit loss Total
over the lifetime over the lifetime
loss of the future (credit impairment
(no credit
twelve months impairment has occurred has
occurred) occurred)
Ending balance of previous
10,000.00 0.00 2,500.00 12,500.00
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
-- -- 0.00 0.00
2
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
- Transferred back to Stage
-- 0.00 0.00 0.00
1
Provision in current period 10,000.00 0.00 0.00 10,000.00
Withdrawal or Roll-back in
0.00 0.00 0.00 0.00
current period
Write-off or cancellation
after verification in current 0.00 0.00 0.00 0.00
period
Other changes 0.00 0.00 0.00 0.00
Ending balance 20,000.00 0.00 2,500.00 22,500.00
④ Situation of bad debt reserves
Amount of changes in current period
Ending
Ending
Category balance of Amount
Provision balance
previous year recovered or Resell or write off
written back
Related party funds within
0.00 0.00 0.00 0.00 0.00
the scope of consolidation
Receivables and payables
such as advance from 0.00 0.00 0.00 0.00 0.00
entities beyond the scope
of consolidation
Combination of tax
refunds receivable and
0.00 0.00 0.00 0.00 0.00
other government
subsidies
Portfolio of deposits and
12,500.00 0.00 0.00 0.00 12,500.00
security
Employee loan and petty 0.00 0.00 0.00 0.00 0.00
cash
Other groups 0.00 0.00 0.00 0.00 0.00
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Total 12,500.00 0.00 0.00 0.00 12,500.00
⑤ Other receivables with top five ending balance collected by debtor
Proportions in
the total other
Nature of accounts Bad debt
Name of organization Ending balance Aging provision
account receivable at
Ending balance
the year
ended (%)
Related
Zhejiang Hengyi Within 1
receivables 5,147,510,574.22 99.99 0.00
Petrochemical Co., Ltd. year
and payables
Convertible
bonds
China Securities Depository
converted
& Clearing Corporation 400,000.00 Within 1 0.01 20,000.00
to pay zero year, 2-3
Shenzhen Branch
share
capital
More than 3
Beihai Haifu Building Deposit 2,500.00 0.00 2,500.00
years
Total -- 5,147,913,074.22 -- 100.00 22,500.00
2. Long-term equity investment
(1) Classification of long-term equity investment
Ending balance Ending balance of previous year
Item Impairm Impair
Book balance ent Book value Book balance ment Book value
Reserve Reserv
e
Investment in 15,941,768,517.98 0.00 15,941,768,517.98 15,931,768,517.98 0.00 15,931,768,517.98
subsidiaries
Investments in joint
ventures and 14,156,002.82 0.00 14,254,625.24 0.00 14,254,625.24
associates 14,156,002.82
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Total 15,955,924,520.80 0.00 15,955,924,520.80 15,946,023,143.22 0.00 15,946,023,143.22
(2) Investment in subsidiaries
Provision
for Ending
Investee Ending balance of Increase in Decrease in Ending balance impairment Balance of
previous year current period current period reserves in
current impairment
period reserves
Zhejiang Hengyi Petrochemical Co., Ltd.
9,382,870,750.00 10,000,000.00 0.00 9,392,870,750.00 0.00 0.00
Zhejiang Hengyi International Trade Co., Ltd.
300,000,000.00 0.00 0.00 300,000,000.00 0.00 0.00
Zhejiang Hengyi Engineering Management Co.,
200,000,000.00 0.00 0.00 200,000,000.00 0.00 0.00
Ltd.
Zhejiang Hengyi Petrochemical Research
Institute Co., Ltd. 160,000,000.00 0.00 0.00 160,000,000.00 0.00 0.00
Zhejiang Shuangtu New Materials Co., Ltd.
2,104,999,978.20 0.00 0.00 2,104,999,978.20 0.00 0.00
Jiaxing Yipeng Chemical Fibre Co., Ltd.
2,886,198,482.98 0.00 0.00 2,886,198,482.98 0.00 0.00
Taicang Yifeng Chemical Fibre Co., Ltd.
897,699,306.80 0.00 0.00 0.00 0.00
897,699,306.80
15,931,768,517.98 10,000,000.00 0.00 15,941,768,517.98 0.00 0.00
Total
(3) Investment in associated and cooperative enterprises
Changes of increase or decrease in current period
Investee Ending balance of
previous year Profits and losses on Other
Additional Negative investments comprehensive Other Equity
investment investment confirmed by equity income Changes
method adjustment
Associated enterprises
Ningbo Jinhou Industry
14,254,625.24 0.00 0.00 -98,622.42 0.00 0.00
Investment Co., Ltd.
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
(Continued)
Changes of increase or decrease in current period
Ending balance of
Investee Ending balance impairment
Cash dividends or Provisions for Others reserves
profits declared to impairment
distribute reserves
Associated enterprises
Ningbo Jinhou Industry 0.00 0.00 0.00 14,156,002.82 0.00
Investment Co., Ltd.
3. Operating income and operating cost
Amount incurred in current period Amount incurred in previous period
Item
Revenue Cost Revenue Cost
Main business 0.00 0.00 1,437,239,380.54 1,413,310,442.21
Other businesses 0.00 0.00 0.00 0.00
Total 0.00 0.00 1,437,239,380.54 1,413,310,442.21
4. Investment income
Item Amount incurred in current Amount incurred in previous
period period
Income from long-term equity investment
340,000,000.00 0.00
checked with cost method
Income from long-term equity investment
-98,622.42 -37,178.87
checked with equity method
Total 339,901,377.58 -37,178.87
XV. Further information
1. List of non-recurring profits and losses in this year
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2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Amount
1. Gains and losses on disposal of non-current assets, including
416,787,000.84
elimination of provision for impairment of assets
2. Government grants recognised in profit or loss for the current
period, except for those government grants that are closely
related to the Company's normal business operations, in line 114,355,884.18
with national policies and in accordance with defined criteria,
and that have a sustained impact on the Company's profit or loss
3. Gains and losses arising from changes in the fair value of
financial assets and liabilities held by non-financial corporations
and gains and losses arising from the disposal of financial assets 491,763.52
and liabilities, except for effective hedging operations related to
the Company's normal business operations
4. Occupancy fees charged to non-financial corporations included in
0.00
profit or loss for the period
5. Gains or losses on the investment or management of assets entrusted to
0.00
others;
6. Gains and losses on external entrusted loans 38,393,856.92
7. Losses of assets due to force majeure factors, such as natural disasters; 0.00
8. Reversal of provision for impairment of receivables individually tested for
6,570.00
impairment;
9. The cost of investments in subsidiaries, associates and joint ventures
acquired by an enterprise is less than its share of the gain arising from the fair
16,534,148.40
value of the identifiable net assets of the investee at the time the investment
is acquired
10. Net profit or loss for the period from the beginning of the period to the
date of consolidation of subsidiaries resulting from business combinations 0.00
under the same control;
11. Gains and losses on exchange of non-monetary assets; 0.00
12. Debt restructuring gains and losses; 0.00
13. One-off costs incurred by an enterprise because the relevant business
0.00
activity is no longer sustainable, such as expenses for relocating employees;
14. One-time effect on profit or loss for the period due to adjustments in tax,
0.00
accounting and other laws and regulations;
15. One-time recognition of share-based payment fees due to cancellation and 0.00
506
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Amount
modification of equity incentive plans;
16. For cash-settled share-based payments, gains and losses arising from
changes in the fair value of employee compensation payable after the feasible 0.00
date;
17. Gains and losses arising from changes in the fair value of investment
0.00
properties that are subsequently measured using the fair value model;
18. Gains arising from transactions where the transaction price is
0.00
significantly unfair;
19. Gains and losses arising from contingencies that are not related to the
0.00
Company's normal business operations;
20. Custodial fee income earned on trusteeship; 1,698,113.16
21. Non-operating income and expenses other than those listed above. -24,115,026.00
22. Other items of profit or loss that meet the definition of non-recurring
63,233,423.28
profit or loss (Note)
Total non-recurring gains and losses before income tax 627,385,734.30
Less: Amount of income tax effect 156,969,934.37
Total non-recurring gains and losses, net of income tax 470,415,799.93
Effect of minority interests in profit or loss (loss expressed as "-
88,643,291.10
")
Amount of net profit attributable to owners of the parent
381,772,508.83
company from non-recurring gains and losses
Note: Other income and expenses items that meet the definition of non-recurring gains
and losses mainly include non-recurring gains and losses attributable to the investee
units in significant jointly controlled entities and associates accounted for using the
equity method, with an amount of RMB 64,952,698.90.
The recognition of non-recurring gains and losses by the Company is implemented in
accordance with the provisions of the "Interpretation Announcement No. 1 on Non-
recurring Gains and Losses in the Information Disclosure of Companies Issuing
Publicly Traded Securities" (Revised in 2023) (CSRC Announcement [2023] No. 65).
(2) The Company has been implementing the "Interpretation Announcement No. 1 on
507
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Non-recurring Gains and Losses in the Information Disclosure of Companies Issuing
Publicly Traded Securities (Revised in 2023)" since December 22, 2023, and
recalculating the non-recurring gains and losses for the comparable accounting period
of the year 2022. The affected amount of non-recurring gains and losses is as follows:
Item Amount
Net non-recurring gains and losses attributable to owners of the
12,786,821.23
parent company for the year 2022
Net non-recurring gains and losses attributable to owners of the
parent company calculated in accordance with "Interpretative
Announcement for Information Disclosure by Public Securities 32,716,781.06
Issuers No. 1 - Non-recurring Gains and Losses (Revised in
2023)" for the year 2022
Amount of impact 19,929,959.83
2. Return on equity and earnings per share
Weighted average Earnings per Share
Profits in reporting period return on net assets
(%) Basic earnings Diluted EPS
per share
Net profits assigned to the Company’s common
1.74 0.13 0.13
shareholders
Net profits assigned to common shareholders after 0.21 0.02 0.02
deduction of non-recurring profits and losses
508
2023 Annual Report of Hengyi Petrochemical Co., Ltd.
Hengyi Petrochemical Co., Ltd.
President: Qiu Yibo
April 19, 2024
509
