2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Hengyi Petrochemical
Annual Report 2020
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This document is a translated version of the Chinese version 2020 Annual Report (“2020 年年度报告全文”), and the published annual report in the
Chinese version shall prevail.
The complete published Chinese 2020 Annual Report may be obtained at http://www.cninfo.com.cn.
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Chairman's Statement
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Chairman's Statement
Looking back at 2020, it was an extremely extraordinary, unusual and difficult year for every country, region,
company and individual. Confronted with the sudden outbreak of the once-in-a-century coronavirus pandemic, all
Hengyi staff have made their concerted efforts and demonstrated their solidarity and resilience. They are not
afraid of difficulties and never shrink from challenges. They seize the day and live it to the full. They keep forging
ahead with entrepreneurial passion and strength, and achieve encouraging results in 2020.
Over the past year, we planned ahead and took all factors into consideration, we shouldered responsibility with
persistence and dedication, we protected life and guaranteed production, we took actions to save time and
maintain profitability. With all these efforts, we have enabled the Group to continue its rapid growth, and
completed all the targets in Hengyi’s strategy.
Over the past year, we made efforts in achieving further progress; we adhered to the overall strategy of engaging
in refinery, polyester and polyamide industries; we promoted the construction of Hengyi (Brunei) PMB
Petrochemical Project Phase II and major domestic projects; we put Haining Hengyi’s 1MMTA Differential
Environmental Protection Functional Fiber project into production, which further highlighted the advantage of
integrated operation of full industry chain.
Over the past year, we persevered with our goals regardless of adverse external factors; we enhanced the leading
role of digital intelligence; we increased investment in scientific research; we put new Hengyi Research and
Development Center formally into use; we achieved many major breakthroughs in scientific research relying on
the R&D platform developed by Hengyi together with Zhejiang University, Donghua University, Nanjing Tech
University, etc. Three manufacturing enterprises of Zhejiang Shuangtu New Materials, Hangzhou Yijing and
Jiaxing Yipeng have been certified as National High-tech Enterprises.
Look back at 2020, we should say our achievements did not come easily. None of these achievements would have
been possible without the hard work and contribution of all our staff, the tolerance and understanding of all their
family members, and the care and support of leaders at all levels and friends from all sectors. Here, I would like to
extend my sincere thanks and highest respect to all of you!
What's past is prologue. The new year brings new hope, and new journey experiences new dream. The year of
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2021 marks the 100th founding anniversary of Communist Party of China. We have set out the grand vision for
high-quality development in the next five years, and made “1-2-6” strategy implementation plan focused on the
construction of 1 platform, 2 centers, and 6 bases, and set the target of becoming a world-class petrochemical
group.
Even though tremendous success has been gained, we still have a long way to go since the worldwide pandemic
has not been quelled yet, the international situation is still complex and the market competition is becoming more
intense. Therefore, we shall remain resolve, assume responsibility, and forge ahead. Instead of aiming too high or
underestimating our own capabilities, we shall lay a solid foundation for Hengyi!
Chairman: Qiu Yibo
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Section I Important Notes, Contents and Interpretation
The board of directors, Supervisory Committee, Directors, Supervisors and
Senior Management of the Company guarantee that the contents of the 2020
Annual Report (hereinafter referred to as "the Report") are true, accurate and
complete, free from false records, misleading statements or major omissions, and
bear individual and joint legal liabilities.
The financial report of the Report has been audited by Zhongxinghua
Certified Public Accountants LLP and a standard unqualified audit report has
been issued.
Qiu Yibo, head of the Company, Mao Ying, person in charge of the
accounting work, and Wu Zhen, head of the accounting body (accountant in
charge), declared that they would ensure the truthfulness, accuracy and
completeness of the financial report in this Report.
This Report has been deliberated and approved at the 8th meeting of the
11th Board of Directors of the Company. All Directors have attended the Board
meeting at which this Report was deliberated.
The profit distribution plan approved by the Board of Directors is as
follows: Based on the base of 3,681,645,407, a cash dividend of RMB3 (including
tax) will be distributed to all shareholders for every 10 shares, no bonus shares
will be distributed, and no common reserve fund will be converted into share
capital. If the total share capital of dividend-paying date of record changes due
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
to additional issuance, repurchase of shares and conversion of convertible bonds
before the Company pays dividends to date of record, the Company plans to
maintain the distribution ratio unchanged and adjust the corresponding total
share capital. The profit distribution plan for 2020 shall be submitted to the
2020 General Meeting of Shareholders for deliberation and approval.
Forward-looking statements such as future plans, development strategies,
industry discussions and prospects involved in this Report do not constitute the
Company's substantive commitment to investors. Please pay attention to
investment risks. This Report describes in detail the main risks currently faced
by the Company and the countermeasures. Please refer to the relevant contents
in Section IV.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Table of Contents
Section I Important Notes, Contents and Interpretation ...................................................................... 5
Section II Company Profile and Main Financial Indicators .............................................................. 11
Section III Business Summary ........................................................................................................... 18
Section IV Discussion and Analysis of Business Situation ............................................................... 32
Section V Important Matters ............................................................................................................ 108
Section VI Changes in Shares and Shareholders ............................................................................. 152
Section VII Preference Shares Relevant Situation ........................................................................... 167
Section VIII Relevant Situation of Convertible Corporate Bonds ................................................... 168
Section IX Directors, Supervisors, Senior Management and Employees ........................................ 172
Section XIII Catalogue of Documents for Reference ...................................................................... 405
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Definitions
Item Refers to Definitions
Hengyi Petrochemical,
Refers to Hengyi Petrochemical Co., Ltd.
Company, the Company
Shenzhen Stock Exchange,
Refers to Shenzhen Stock Exchange
the exchange
Hengyi Group Refers to Zhejiang Hengyi Group Co., Ltd.
Hengyi Limited Refers to Zhejiang Hengyi Petrochemicals 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 Hi-tech Refers to Zhejiang Hengyi High-tech Materials Co., Ltd.
Haining New Materials Refers to Haining Hengyi New Materials Co., Ltd.
Haining Thermoelectric Refers to Haining Hengyi Thermoelectricity Co., Ltd.
Guangxi Hengyi New
Refers to Guangxi Hengyi New materials Co., Ltd
Materials
Taicang Yifeng Refers to Taicang Yifeng Chemical Fiber Co., Ltd.
Jiaxing Yipeng Refers to Jiaxing Yipeng Chemical Fiber Co., Ltd.
Shuangtu New Materials Refers to Zhejiang Shuangtu New Materials Co., Ltd.
Hangzhou Yichen Refers to Hangzhou Yichen Chemical Fiber Co., Ltd.
Shaoxing Hengming Refers to Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd.
Suqian Yida Refers to Suqian Yida New Material Co., Ltd.
Ningbo Hengyi Trade Refers to Ningbo Hengyi Trading Co., Ltd.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Refers to Definitions
Hangzhou Yijing Refers to Hangzhou Yijing Chemical Fiber Co., Ltd.
Hengyi Caprolactam Refers to Zhejiang Baling Hengyi Caprolactam Co., Ltd
China Zheshang Bank Refers to China Zheshang Bank Co., Ltd.
Yisheng Investment Refers to Dalian Yisheng Investment Co., Ltd.
Hong Kong Tianyi Refers to Hongkong Tianyi International Holding Co., Ltd.
Hengyi Investment Refers to Hangzhou Hengyi Investment Co., Ltd.
Hengyi Polyamide Refers to Zhejiang Hengyi Polyamide Co., Ltd.
Dongzhan Shipping Refers to Dongzhan Shipping Co., Ltd.
Fulida Group Refers to Fulida Group Holding Co., Ltd.
Xinghui Chemical Fiber Refers to Xinghui Chemical Fiber Group Co., Ltd.
Brunei Refining and
Petrochemical projects invested and built by the
Petrochemical Project, PMB Refers to
Company in Brunei
Petrochemical Project
P-xylene, colorless transparent liquid, used in the
PX Refers to
production of plastics, polyester fibers and films
Purified terephthalic acid, mainly used to produce
PET, can also be made into engineering polyester
PTA Refers to
plastics, and be used as the raw material of plasticizer
and dye intermediate.
Iso-phthalic acid, mainly used in the production of
alkyd resin, unsaturated polyester resin and other
PIA Refers to polymers and plasticizers, as well as in the
production of film finishers, coatings, polyester fiber
dyeing modifiers and medicines.
Ethylene glycol, mainly used to produce polyester
fiber, antifreeze, unsaturated polyester resin,
MEG Refers to
lubricant, plasticizer, nonionic surfactant and
explosives, etc.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Refers to Definitions
Polyethylene terephthalate, a fiber-forming polymer
prepared by direct esterification and continuous
PET, Polyester Refers to
polycondensation reaction of PTA and MEG as raw
materials
POY Refers to Pre-oriented yarn or partially oriented yarn
Fully drawn yarn, also known as polyester drawn
FDY Refers to
yarn
Draw textured yarn, also known as polyester textured
DTY Refers to
yarn
Caprolactam, mainly used to produce polyamide
CPL Refers to fiber, engineering plastics, plastic film, etc. It is
widely used in industrial and civil fields
Varieties that are innovative in technology or
Differential yarn Refers to performance or have certain characteristics and are
different from conventional yarns
Yuan, RMB10,000 Refers to RMB yuan and RMB 10,000
Reporting period/during
reporting period/this Refers to From January 1, 2020 to December 31, 2020
reporting period
End of reporting period/end
of the current reporting Refers to As of December 31, 2020
period
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Section II Company Profile and Main Financial Indicators
I. Company Profile
Stock abbreviation Hengyi Petrochemical Stock code 000703
Abbreviation of the changed stock (if any) N/A
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 HYPC
Legal Representative Qiu Yibo
No.G, 7/F, Haifu Building, No.16 West Beihai Avenue,
Place of registration
Beihai City, Guangxi Zhuang Autonomous Region
Postal code of the registered address 536000
Building 3, Hengyi Nan'an Mingzhu, 260 North Shixin
Office address Road, Xiaoshan District, Hangzhou City, Zhejiang
Province
Postal code of office address 311215
Company website http://www.hengyishihua.com
E-mail hysh@hengyi.com
II. Contact Person and Contact Information
Secretary of the board Securities representative
Name Zheng Xingang Chen Shasha
Board of Directors Office, 16/F, Building Board of Directors Office, 16/F, Building
Contact 3, Nan'an Mingzhu, No. 260 North Shixin 3, Nan'an Mingzhu, No. 260 North Shixin
address Road, Xiaoshan District, Hangzhou City, Road, Xiaoshan District, Hangzhou City,
Zhejiang Province Zhejiang Province
Tel (0571) 83871991 (0571) 83871991
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Fax: (0571) 83871992 (0571) 83871992
E-mail hysh@hengyi.com hysh@hengyi.com
III. Information Disclosure and Place of Preparation
Name of the information disclosure media China Securities Journal, Securities Times,
selected by the Company Shanghai Securities News and Securities Daily
The website address of the website designated
http://www.cninfo.com.cn/
by the CSRC for publishing the annual report
Place where the Company's annual report is Office of Board of Directors of Hengyi
prepared Petrochemical Co., Ltd.
IV. Registration Changes
Organization Code 9145050019822966X4
Changes in the Company's main business since listing (if any) No changes
Previous changes of controlling shareholders (if any) No changes
V. Other Relevant Information
The accounting firm engaged by the Company
Name of accounting firm Zhongxinghua Certified Public Accountants LLP
15/F, East Tower, No.1 Fuwai Street, Xicheng District,
Office address of accounting firm
Beijing
Signature name of accountants Liu Hongyue, Wang Guohai
Sponsor institutions engaged by the Company to perform continuous supervision duties
during the reporting period
Name of sponsor Office address of sponsor Name of sponsor Continuous
institution institution representative supervision period
CITIC Securities No.48 Liangmaqiao Road, Mao Zongxuan, Xu January 2021 -
CO., LTD Chaoyang District, Beijing Rui December 2021
Financial consultants engaged by the Company to perform continuous supervision duties
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
during the reporting period
□ Applicable √ Not applicable
VI. Main Accounting Data and Financial Indicators
Does the Company need to retroactively adjust or restate the accounting data of previous
years
√ Yes □ No
Reason for retrospective adjustment or restatement
Combination of businesses under common control
Increase/dec
rease of this
2019 year over 2018
2020 the previous
year
After
Before adjustment After adjustment Before adjustment After adjustment
adjustment
Operating income
86,429,630,191.87 79,620,543,631.74 79,620,543,631.74 8.55% 88,065,815,535.96 88,065,815,535.96
(Yuan)
Net profit
attributable to
shareholders of 3,071,998,839.75 3,201,348,425.33 3,190,185,517.79 -3.70% 1,872,494,729.34 1,872,494,729.34
the listed
company (Yuan)
Net profit after
deducting
non-recurring
gains and losses
2,479,101,027.63 2,725,438,479.51 2,725,438,479.51 -9.04% 1,536,880,249.17 1,536,880,249.17
attributable to
shareholders of
the listed
company (Yuan)
Net cash flow
from operating 5,013,772,777.95 -112,081,728.16 -91,125,777.91 5,602.04% 1,607,078,608.23 1,607,078,608.23
activities (Yuan)
Basic earnings
1.08 1.13 1.13 -4.42% 0.76 0.76
per share
Diluted earnings
1.07 1.13 1.13 -5.31% 0.76 0.76
per share
Weighted average
12.56% 14.73% 14.54% -1.98% 12.29% 12.29%
ROE
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Increase/dec
rease at the
end of this
End of 2019 year over End of 2018
End of 2020 the end of
the previous
year
After
Before adjustment After adjustment Before adjustment After adjustment
adjustment
Total assets
92,260,268,155.54 85,230,757,616.78 85,763,292,709.24 7.58% 61,834,734,496.64 61,834,734,496.64
(Yuan)
Net assets
attributable to
shareholders of 24,006,633,612.78 23,253,008,414.00 23,741,845,506.46 1.12% 18,363,073,231.64 18,363,073,231.64
the listed
company (Yuan)
Main reasons for the change:
Cash flow from operating activities increased significantly: During the reporting period, the
net cash flow from operating activities increased significantly after the Brunei project was put into
production in November 2019. The occupation of operating funds rose. When it was put into
production near the end of the year, the operating cash outflow was affected by settlement and the
corresponding operating cash inflow was not received, resulting in negative net operating cash flow
in 2019. During this reporting period, with the Brunei Project maintaining high load and stable
operation, the net operating cash flow of the Company substantially improved. For details, please
refer to "Section IV Discussion and Analysis of Operation".
The Company's net profit before and after deducting non-recurring gains and losses in the
last three fiscal years is negative, and the audit report of the last year shows that the
Company's going concern ability is uncertain.
□Yes √No
The lower of net profit before and after deducting non-recurring gains and losses is negative
□Yes √No
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
VII. Differences between accounting data under the domestic and foreign accounting
standards
1. Differences in the net profit and net assets in the financial statements which are presented
concurrently in accordance with the international accounting standard and the Chinese
accounting standard
No differences in the net profit and net assets in the financial statements which are presented
concurrently in accordance with the international accounting standard and the Chinese accounting
standard during the reporting period.
2. Differences in the net profit and net assets in the financial statements which are presented
concurrently in accordance with foreign accounting standard and the Chinese accounting
standard
No differences in the net profit and net assets in the financial statements which are presented
concurrently in accordance with foreign accounting standard and the Chinese accounting standard
during the reporting period.
VIII. Quarterly Main Financial Indicators
Currency Unit: RMB
First quarter Second quarter Third quarter Fourth quarter
Operating income 18,872,535,104.97 20,541,889,288.67 21,906,722,601.01 25,108,483,197.22
Net profit attributable to the
811,550,417.16 1,090,756,257.98 1,154,405,533.02 15,286,631.59
shareholders of the company
Net profit after deducting
non-recurring gains and losses
729,510,068.79 1,026,027,096.40 994,305,397.12 -270,741,534.68
attributable to shareholders of the
listed company
Net cash flow from operating
543,694,408.55 925,772,901.47 1,318,266,768.96 2,226,038,698.97
activities
Whether the aforesaid financial indicators or their sum are significantly different from the
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
financial indicators related to the quarterly and semi-annual reports disclosed by the
Company
□Yes √No
IX. Non-recurring Profit and Loss Items and Amounts
Currency Unit: RMB
Item Amount in 2020 Amount in 2019 Amount in 2018 Notes
Profit or loss from the disposal of non-current
assets (including the write-off of asset -6,741,262.61 -1,811,565.51 2,249,652.18
impairment provision)
Tax refund or exemption approved ultra vires or
12,921,483.38 5,957,948.27 7,979,386.68
without any formal approval
Government grants recorded into current profit
and loss (except for those are closely related to
Company business and are enjoyed in a fixed or 318,607,292.74 420,716,519.76 102,224,764.73
quatitative basis in accordance with unified
national policiesstandard)
Current net profit or loss from subsidiaries
formed by business combination under common
19,376,584.76 36,175,922.94 161,261,977.54
control, from period-beginning to acquisition
date
Profit or loss from contingencies irrelevant to
0.00 -2,173,136.66 -118,450.84
normal business operations of the Company
The gains or losses arising from the fair value
changes of held-for-trading financial assets,
derivative financial assets, held-for-trading
487,752,983.95 301,297,013.33 187,235,582.94
financial liabilities, and derivative financial
liabilities, as well as investment gain received
from the disposal of held-for-trading financial
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
assets, derivative financial assets,
held-for-trading financial liabilities, derivative
financial liabilities and other debt investments,
except for effective hedging transactions that are
related to the Company’s ordinary business
Profit or loss from entrusted loans 41,586,615.56 29,136,336.48 36,538,791.66
Income from entrusted operation 1,698,113.20 1,698,114.17 4,622,641.50
Other non-operating income and expense in
-6,299,334.89 -14,994,635.24 4,640,725.70
addition to the above
Other profit or loss that complies with the
2,595,730.83 -2,065,748.97 5,731,998.98
definition of non-recurring profit and loss
Less: effect of income tax 215,685,156.22 139,947,035.37 137,414,288.03
Influenced amount of the minority
62,915,238.58 169,242,694.92 39,338,302.87
shareholders' equity (after-tax)
Total 592,897,812.12 464,747,038.28 335,614,480.17 --
For the non-recurring gain or loss items determined by the Company in accordance with the
definition provided in the Explanatory Announcement No.1 on Information Disclosure for
Companies Offering Their Securities to the Public-Non-recurring Profits and Loss, and for
the Company’s classification, as recurring items, of the non-recurring gain or loss items
enumerated in the Explanatory Announcement No.1 on Information Disclosure for
Companies Offering Their Securities to the Public-Non-recurring Profits and Loss, the
relevant reasons should be explained.
During the reporting period, there was no case of defining the listed non-recurring profit and
loss items as recurring profit and loss items according to the definition of Explanatory
Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the
Public-Non-Recurring Profits and Loss.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Section III Business Summary
I. Main businesses of the Company during the reporting period
The Company shall comply with the disclosure requirements of Shenzhen Stock Exchange
Industry Information Disclosure Guidelines No.18-Listed Companies Engaged in Chemical
Industry Related Business.
i. Overview of the Company's main businesses during the reporting period
Hengyi Petrochemical (stock code: 000703) is committed to developing into one of the leading
petrochemical industry groups in China and the first-class in the world. Continue to enhance the
Company's comprehensive competitiveness through resource sharing and industrial coordination.
Under the guidance of the development strategy of "crude oil, polyester and polyamide", the
Company, relying on Brunei Refining and Petrochemical Project, has stepped up its efforts in
internationalization, lined up the "last kilometer" of the whole industrial chain from oil refining to
chemical fiber, realized a highly matched columnar balanced integrated industrial chain in the
upstream, midstream and downstream, and formed a unique "petrochemical +" multi-level
three-dimensional industrial layout with "polyester + polyamide" double-fiber driven petrochemical
industrial chain as the core business, supply chain service business as the growth business, and
differential fiber products and industrial intelligent technology application as the emerging business.
1. Petrochemical chemical fiber business
(1) One of the world's leading "refining & petrochemical-chemical fiber" industrial
chain integration leaders
During the reporting period, the Company's unique industrial layout of "crude oil, polyester
and polyamide" continued to improve. In the context of scientific pandemic prevention and smooth
production and operation, the Company maintains high-load and stable operation throughout the
year, and demonstrates its strengths in polyester industry expansion, quality improvement, PTA
industry potential tapping and transformation, and refining and chemical industry full production.
Besides, the Company uncovers its integrated, balanced and internationalized operation mode of
industrial chain. The Company has developed into one of the world's leading enterprises integrating
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
the industrial chain of "crude oil-PX-PTA-polyester" and "crude oil-benzene-CPL-polyamide".
Upholding the strategic development policy of "consolidating, highlighting and enhancing the
competitiveness of its main business", the Company focuses on its main business, continuously
increases investment in product research and development and industrial intelligent technology, and
enhances its comprehensive competitive advantage, thereby ranking in the forefront of the industry
for many years.
During the reporting period, the Company joined hands with strategic partners to realize
complementary advantages, continuously extend the petrochemical industry chain, enrich product
categories and further improve the product structure, effectively consolidate the core
competitiveness of the main business, strengthen the profitability of products and improve the
ability to resist market risks. The Company's main products include gasoline, diesel oil, kerosene
and other refined oil, liquefied petroleum gas (LPG), etc. Petrochemical products such as p-xylene
(PX), benzene, purified terephthalic acid (PTA) and caprolactam (CPL); polyester preoriented yarn
(POY), polyester draft yarn (FDY), polyester elastic yarn (DTY), polyester staple fiber, polyester
(PET) chips, polyester bottle chips and other chemical fiber products are widely used to meet the
rigid requirements of the national economy and people's livelihood.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Fig. 2 Company Layout of Petrochemical and Chemical Fiber Industry Chain
Petroleum Refining integration
Refined oil Olefin Arene
Oil refining
Gasoline Diesel oil Kerosene Propylene Ethylene P-xylene Benzene
Polypropylen Polythylene Ethylene glycol Pure terephthalic acid Caprolactam
Petrochemical
e
Polythylene terephthalate Polyamide
Polyamide
Poluamide
industry
industry chain
chain
Chemical fiber Bottle chip Polyamide chip
Polyester filament yarn Polyester filament yarn Polyamide short fiber
Draw texturing yarn
Indicate the domestic business
Weaving fields (such as textile, garment and home textiles)
Indicate the Brunei business
Indicate the future business
Indicate downstream use
Note: Polyamide chips are products operated by Hengyi Group, the controlling shareholder.
As of the disclosure date of this report, the Company's designed crude oil processing capacity
is 8 million tons/year, and it has been disclosed that the Company plans to add 14 million tons/year
of crude oil processing capacity; the PTA production capacity of participating holding companies is
13 million tons/year, and the new PTA production capacity under construction is planned to be 6
million tons/year; the capacity of PIA is 300,000 tons/year, and the capacity of CPL (caprolactam)
is 400,000 tons/year; the polyester fiber production capacity is 7.5 million tons/year, and the new
polyester fiber production capacity under construction is 750,000 tons/year; the production capacity
of polyester bottle chips is 2 million tons/year, ranking forefront in the industry.
Table 1 Production Capacity of Main Products of the Company (10,000 Tons/Year)
Products Capacity
Chemical products 265
Oil products 565
PTA 1,300
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
PIA 30
Polyester fiber products 750
Polyester bottle chip 200
Caprolactam 40
Note: 1) Polyester fiber products include POY, FDY, DTY, staple fiber and chip products.
2) This table is the actual production capacity table of the Company in the reporting period.
During the reporting period, the Company continued to attach importance to investment in
research and development of new products, actively responded to the carbon peak and carbon
neutrality strategy, and adhered to the guidance of "green manufacturing" and "circular economy".
In the polyester sector, it continued to carry out product development and achievement
transformation around the three major themes of green environmental protection, function and
bio-base. Internally, the Company optimizes the sales system, actively grasps the market demand,
and fully taps and reasonably guides customer demands through the organic linkage of research and
development, production and sales; externally, the Company, through cooperation with colleges and
universities, builds an "industry-university-research" school-enterprise ecology and effectively
explores basic materials research support and cutting-edge key technologies.
During the reporting period, the Company adopted a multi-path, multi-echelon and
multi-scenario research and development system. Through technical research, the Company quickly
opened up the regenerated fine denier fiber market and was well received by customers. Its
antimony-free and environment-friendly "Eticont" series products are also recognized by more and
more customers, and the sales volume continues to rise. The flame retardant fibers continue to
maintain a strong market share in domestic flame retardant products. The market popularity of
antibacterial and anti-virus products continues to rise, and antibacterial and anti-virus fibers will
become a crucial profit growth point for differentiated products.
(2) Products covering the rigid needs of the national economy and people's livelihood
The Company's terminal products mainly include refined oil products such as gasoline, diesel
oil and kerosene, as well as polyester products such as polyester filament, polyester staple fiber and
bottle chips, of which refined oil products such as gasoline, diesel oil and kerosene provide energy
supply for corresponding equipment; polyester filament includes POY, FDY, DTY and other
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
products, which are used in the production of fabrics and linings such as clothing, home textiles and
decorations, and can also be used for industrial purposes such as webbing, zippers, tents,
automobile interiors and ear threads of masks. Among them, FDY products of the Company can be
used as medical and other materials to meet the increasing demand of downstream customers for
raw materials for medical supplies; polyester staple fiber can be widely used in spinning,
non-spinning and filling fields; bottle chips are widely used in food packaging and medical
materials production, such as water bottles, oil bottles, carbonic acid, hot filling, fast-eating hot
carbonic acid, high B value water bottles, high viscosity oil bottles and low viscosity water bottles.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Table 2 Main Product Features and Application Fields
Products Application
One hydrocarbon, colorless clear liquid and extensive use, main raw material for
producing the purified terephthalic acid (PTA) and also used for synthetic plastics,
drug and pesticide.
Mainly used as fuel of various fuel oil power plants and supply of heat. Used as
Refined oil fuel of automobiles, motorcycles, speedboats, helicopters, agricultures and forestry
aircrafts, vehicles with diesel engines (including trains), vessels and diesel boilers.
Mainly used for producing polyester products, widely used for all the aspects of
national economies (such as clothing, decoration, electronics and architecture). 75%
used for polyester fiber, 20% used for bottle polyester and 5% used for film polyester
(mainly for civil use in the downstream).
PIA is a white crystalline powder or needle-like crystal used to produce alkyd resins,
unsaturated polyester resins and other high polymers and plasticizers. It is also used
to make film film color-forming electrodes, coatings, and dyeing polyester fibers
modifier and medicine.
Used for reprocessing and production of DTY and fiber
products with special styles and widely used for clothing
and industry.
Directly used for weaving as well as production of clothing
and upholstery fabric. Widely used for clothing and industry
and also used as isolation material (including protection
suit).
Directly used for weaving and widely used for clothing and
industry, garment materials and lining.
Mainly used to produce polyamide fabric, engineering
plastics and plastic film as well as widely used for industry
and civilian field.
Widely used for spinning, nonwoven and filling. The
Polyester
non-woven fabrics can be used as raw material of producing
staple fiber
the mask as well as also used for downstream disinfecting
wipes and disposable protective equipment.
Widely used for indirect spinning as well as producing
PET chip textile raw materials (such as filament yarn and short fiber)
and plastics.
Polyester Mainly used for food packaging (including coke bottle,
bottle chip beverage bottle, water bottle and oil bottle).
2. "Petrochemical +" business
(1) Supply chain service business is conducive to improving product operation capability
and enhancing value-added services
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
With the continuous improvement of the integrated and balanced development of the
Company's industrial chain, the Company has strengthened its supply chain service management
capacity and innovated and promoted intelligent management and operation modes. Relying on
refining and chemical fiber production base, the Company develops domestic and overseas regional
markets and optimizes product layout; strengthens the construction of digital plants and actively
explores flexible personalized customization of production through big data means; adopts a variety
of tools to improve product operation capability, explores the complementary advantages of raw
material procurement and product sales, and actively plays the strengths of industrial chain
integration to create product price differences.
The Company actively carries 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 to realize effective integration online and offline.
Continuously optimize the functional application of Hengyi Micro Mall, including price inquiry,
quick order placing, market information, intelligent logistics management platform (HTTMS),
financial services and other supporting services; improve the efficiency of the marketing
closed-loop system, which sees an exploding transaction volume at present; innovate the unique
omni-channel logistics control system and build a tripartite logistics transportation platform.
With the commissioning and operation of Brunei Refining and Petrochemical Project, the
Company has actively conducted supporting shipping business, accelerated the implementation of
integrated management of the supply chain services, formed an intelligent supply chain closed-loop
system of plant-product-warehouse-logistics-customer, and led the upgrading of intelligent supply
chain services in the industry.
(2) China Zheshang Bank's equity investment provides stable profits for the Company
Established in 2004, China Zheshang Bank is one of the 12 national joint-stock commercial
banks approved by the China Banking and Insurance Regulatory Commission. It was listed on the
Main Board of Hong Kong Stock Exchange on March 30, 2016 and Shanghai Stock Exchange on
November 26, 2019, becoming an "A+H" listed bank. At present, it has developed into a
high-quality commercial bank featuring solid foundation, excellent benefits, rapid growth and
perfect risk control. With the completion of the "A+H" layout, China Zheshang Bank will accelerate
its future growth. The Company will further optimize its strategic layout and continuously create
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
value for shareholders through the growth premium of China Zheshang Bank.
According to the 2020 annual report released by China Zheshang Bank, China Zheshang Bank
achieved an operating income of RMB47.703 billion in 2020 and net profit attributable to
shareholders of RMB12.309 billion. As of the end of December 2020, the total assets of China
Zheshang Bank were RMB2,048.225 billion, an increase of 13.74% over the end of the previous
year. The Bank is actively accelerating the transformation of digitalization, modernization and
professional innovation, taking financial technology as the engine, and continuously enhancing its
high-quality development and competitive strength.
(ii) Industry situation and company status
The petrochemical and chemical fiber industry in which the Company is located belongs to the
basic industry of the national economy and people's livelihood. The fluctuation of the industry is
mainly affected by factors such as upstream raw materials, product supply and downstream product
market. With the continuous advancement of refining and petrochemical projects, the
self-sufficiency rate of petrochemical products has gradually risen, and the global pricing power has
increased. During the reporting period, the industrial concentration was further improved.
1. Refining and petrochemical
According to Platts, by the end of 2020, the refining and petrochemical production capacity in
Southeast Asia is about 277 million tons/year. In terms of refinery capacity, the top five are
Singapore (69 million tons/year), Thailand (61 million tons/year), Indonesia (59 million tons/year),
Malaysia (48 million tons/year), Vietnam (17 million tons/year), and Brunei's refinery capacity
currently ranks sixth (8 million tons/year). Brunei's refining capacity will reach 22 million tons/year
after Phase II of Brunei's refining and petrochemical industry is put into operation, ranking fifth in
Southeast Asia's refining capacity.
2. PTA
According to CCF, by the end of 2020, the global PTA production capacity is mainly
concentrated in China, and the domestic production capacity is about 57.63 million tons. As one of
the leading enterprises in the PTA industry, the Company has strategically laid out three PTA bases
along the coastline from north to south, namely Dalian in Liaoning, Ningbo in Zhejiang and Yangpu
in Hainan, with a total PTA production capacity of about 13 million tons/year, ranking first in the
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
world.
2.1 PIA
According to CCF, by the end of 2020, the national PIA production capacity is about 450,000
tons/year, and the Company's production capacity is 300,000 tons/year, accounting for about 66% of
the national total.
3. Polyester
According to CCF, most of the production capacity of polyester is concentrated in the
Asia-Pacific region, and China is the world's largest textile producer and exporter. By the end of
2020, China's total production capacity has exceeded 62 million tons/year, of which 42.75 million
tons are polyester filament. In 2020, the concentration of production capacity has further increased,
with CR6 (the top six companies in the industry) accounting for 66%, polyester staple fiber
production capacity reaching 7.92 million tons, up 4.4% year on year, and polyester bottle chip
production capacity reaching 11.96 million tons/year. The Company has continuously increased the
proportion of differential fiber varieties and sped up the development of customized products to
meet differential and personalized needs of the market, and its products have enjoyed a good
reputation in the market for a long time. With a polyester production capacity of 7.5 million tons,
the Company ranks first nationwide in terms of polymerization capacity, including 6.62 million tons
of filament and 880,000 tons of staple fiber. The Company produces 2 million tons of bottle chips
per year, ranking forefront in the country.
II. Significant Changes in Major Assets
1. Significant changes in major assets
Major assets Description of significant changes
Mainly refer to the investment of newly-added equity-holding companies
Equity assets
and the investment gains and losses recognized under the Equity Method
Mainly refer to the consolidation of Yisheng PIA Project and Haining New
Fixed assets
Materials Project during the reporting period
Mainly due to the increase in intangible assets of newly established
Intangible assets
companies during the reporting period
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Mainly due to the increase in new materials projects in Haining during the
Construction in progress
reporting period
2. Main overseas assets
Proportion Whether
Specific of overseas there is
Operation Control measures to Income
contents of Reason Asset size Location assets to the significant
mode ensure asset safety status
assets Company's impairmen
net assets t risk
Strengthen the
Hong
Holding Overseas management control
5,606,296,10 Kong/Br
subsidiarie investmen Self-built of parent company Good 152.38% No
0 US dollars unei/Sin
s t over overseas
gapore
subsidiaries
Description of other
None
information
III. Analysis of Core Competitiveness
The Company is one of the leading enterprises in the petrochemical and chemical fiber
industries with leading comprehensive strength in China. Its core competitiveness is mainly
reflected in the following aspects:
1. The international industry strategy of "adhering to the real economy and highlighting
the main business" to facilitate high-quality development of the Company
Upholding the strategic policy of "consolidating, highlighting and optimizing the
competitiveness of main business", the Company has taken the lead in the fields of polyester melt
direct spinning, PTA, caprolactam, etc. through alliance with other giants, and has greatly improved
its technology and competitiveness in the above fields. The Company took the lead in arranging
Brunei Refining and Petrochemical Project, responded to the "Belt and Road Initiative" policy,
adapted to the requirements of high-quality development in the new era, seized the development
opportunities of Southeast Asian markets, realized the international layout and operation of the
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
industry, completed the integration of vertical industrial chains, solved the bottleneck of raw
materials, and complied with the trend of supply-side reform. In addition, the Company integrated
the petrochemical chemical fiber industry through mergers and acquisitions, realized the grafting of
advantages, expanded the terminal production capacity of the chemical fiber industry, and achieved
the high-quality development of chemical fiber.
2. The strengths of the whole industrial chain featuring balanced integration of upstream
and downstream strengthen profitability and anti-risk ability
The Company has developed into a leading enterprise in the integration of "PX-polyester" and
"benzene-polyamide" industrial chains in the world, and has built a "columnar" balanced integrated
industrial chain of "crude oil-aromatic hydrocarbon-PTA-polyester" and "crude
oil-benzene-CPL-polyamide" through overseas construction of upstream refineries, domestic
expansion of the middle and lower reaches, and implementation of differential development modes
such as mergers and acquisitions. The Company currently has a refining and petrochemical design
capacity of 8 million tons, PTA capacity of 13 million tons, polyester and caprolactam capacity of
7.5 million tons and 400,000 tons respectively. The upper, middle and lower reaches of the
Company are self-sufficient in raw materials, realizing the balanced and coordinated development
of the entire industrial chain from unique large refining and chemical to PX, PTA and polyester
(PET) capacity matching. The Company carries out operation at home and abroad to enhance its
ability to resist risks of operational fluctuations. Upon Phase II of the Brunei Refining and
Petrochemical Project is completed and put into operation, an "ethylene-propylene-polypropylene"
industrial chain will be added, which is conducive to improving the intensification, scale and
integration level of the Brunei Refining and Petrochemical Project; enhancing the integration,
globalization and balanced cooperative operation of the Company's industries, products and assets,
as well as its sustainable profitability and anti-risk ability.
3. Efficient operation and quality assurance further strengthen the scale advantage of
leading market share
The market share of PTA and polyester fiber products of the Company is at the forefront of the
industry. As of the latest statistics, the Company's participating PTA production capacity accounts
for 22.56% of the country's effective PTA production capacity, and its participating polyester
production capacity accounts for nearly 12.10% of the country's effective polyester production
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
capacity (data source: http://www.ccf.com). The industry concentration is relatively high and the
scale advantage is obvious. The Company continuously upgrades and optimizes its industrial model,
consolidates and expands the advantages of production capacity in all links, promotes the
quantitative change of its business scale and the qualitative change of its business structure, and
enhances the investment and application of large-scale equipment and energy-saving and
consumption-reducing technologies. Its scale advantage promotes the stability of production
equipment operation and product quality, and the improvement of production efficiency, and greatly
reduces unit investment cost and unit energy consumption. Also, the Company outperforms its peers
in terms of the unit manufacturing cost of products. Meanwhile, through large-scale procurement,
the Company possesses strong operation ability and obtains advantageous prices, thereby reducing
procurement costs and providing a strong guarantee for the profitability of the final products.
4. Focus on the technological advantages of high-end scientific research and innovation
and continue to explore new business growth points
The Company has long focused on the research and development and application of high-end
products in the field of polyester chemical fiber. Relying on the school-enterprise platform, the
Company has realized a "diverse, serialized, premium and unique" product structure. The Company
fully carries out research and development of new products and technologies regarding the entire
industrial chain, realizes full-process and flexible development of high-tech products (technologies)
and transformation of scientific and technological achievements, and occupies a leading position in
the domestic industry in terms of technical level.
Upholding the industrial structure of "crude oil, polyester and polyamide", the Company, in
terms of materials, focuses on the green manufacturing of polyester and the recycling of polyester,
breaks through the existing technology challenges, realizes quality recycling of polyester, and
prepares high-performance polyester materials with bio-based as raw materials. As for chemical
engineering, in order to expand the application range of PTA, the Company is currently developing
various diols of monomers needed for differential production of polyester. Also, to reduce the
production cost, the Company actively studies the development of three agents such as matting
agent, catalyst and additive in the existing process.
5. The industrial Internet advantages of digital intelligence promote the highly
coordinated operation of the whole industrial chain
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The Company established the information strategy of "petrochemical + industrial internet",
promoted the deep integration of new-generation information and communication technology and
petrochemical manufacturing industry, and strengthened the digital, networked and intelligent
development of the chemical fiber manufacturing industry. The Company, based on the basic policy
of innovation-driven, quality and efficiency improvement, and green development, makes good use
of the integration and application of information application, advanced manufacturing, automation
and enterprise management technologies, builds an intelligent informationization of the whole chain
integrating R&D and design, logistics procurement, production control, operation and management,
professional services and marketing, realizes product traceability and whole process management
and control, accelerates the digital transformation process through the integration of intelligent
production, networked collaboration, customized services and digital decision-making, and
promotes the transformation from "manufacturing" to "intelligent manufacturing" and from single
business management to highly coordinated operation of the industrial chain.
In the field of information infrastructure, the Company employs cloud computing,
virtualization, 5G, home base machines and other technologies to promote the construction of
industrial networking, service clusters, information security, etc. to provide technical support and
security for software applications.
In the field of manufacturing, the Company, relying on the information interconnection among
intelligent manufacturing devices such as automatic winding, automatic packaging, intelligent
external inspection, AGV trolley, robot and Automatic Storage and Retrieval System, adopts
network communication, Internet of Things, mobility, micro-service, real-time database and other
technologies to successfully develop a single ingot data flow system to realize efficient logistics
operation and automatic quality control of products in workshop warehouses, and achieve process
optimization, information sharing and efficiency improvement among production processes.
In terms of marketing services, the Company builds two software systems of micro mall and
marketing supply chain, and adopts Internet marketing and customer social experience management
to facilitate independent order placing, supply chain services, full process display of sales data, and
data services for multi-dimensional portraits; realizes data sharing of various business systems,
improves data interaction efficiency, eliminates information circulation barriers, and forms
closed-loop processes of supply chain business such as sales, collection, distribution, delivery,
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
vehicle dispatch, shipment, invoicing, etc.
6. Young, professional and international team management strengths at home and abroad
The Company emphasizes professional team management and introduces senior management
and technical personnel from home and abroad through various channels. While introducing
external talents, the Company focuses on the cultivation of internal talents, and offers opportunities
for young management talents, thereby providing a good career development channel for
employees.
The company has formed an international, specialized and professional management and
operation team, laying the foundation for the sustained and healthy development of the Company's
industry. With the continuous expansion of the Company's scale, the Company has drawn lessons
from advanced organizational management experience at home and abroad, established a perfect
internal system, continuously implemented organizational structure optimization, continuously
improved the efficiency of the Company's organizational management operation, and brought into
play the advantages of scale synergy.
To promote the long-term sustainable development of the Company's talent team and share the
Company's development achievements with employees, apart from providing employees with
competitive salary and incentive mechanisms, the Company has implemented two restricted stock
incentive plans and four employee stock ownership plans since 2015, fully mobilizing the
enthusiasm of employees and effectively attracting high-tech talents. Through the establishment of a
long-term development sharing mechanism, the Company effectively enhances the sense of
belonging and cohesion of employees, and provides a talent base for its long-term development.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Section IV Discussion and Analysis of Business Situation
I. Overview
i. Discussion and analysis of industry situation
Hengyi Petrochemical is engaged in the petrochemical and chemical fiber industry. Its raw
materials come from petroleum or corresponding chemicals cracked by petroleum. The demand for
final products is closely related to the food, clothing, housing and transportation of ordinary people.
Important factors affecting the industry include crude oil price fluctuation, downstream demand,
capacity supply and matching of upstream and downstream industrial chains.
1. Refining and chemical business: Rely on the competitive advantage of China-Brunei
location and conform to the recovery trend of global demands
(1) The recovery of the global economy and the crude oil prices are conducive to the
double growth of downstream demand and profits
Generally speaking, when the oil price rises steadily or moderately, it is beneficial to the
operation management and efficiency improvement of petrochemical enterprises. After the current
oil price plummets, the low oil price would be advantageous to petrochemical enterprises. For one
thing, the low oil price is conducive to expanding the price difference of downstream products, and
stimulating the growth of terminal demand, thus promoting the improvement of profits; for another,
low oil prices leave room for price rise. The rise in oil prices will bring about an increase in
inventory value in the industrial chain and the improvement in downstream production load, thus
stimulating demand growth.
The year 2020 saw great uncertainties in the global economy. Affected by the COVID-19
pandemic and OPEC's production reduction falling short of expectations, commodity prices have all
fallen to the bottom. In particular, the international oil price has plummeted to the low level in
recent years, and the panic decline of oil price has brought severe challenges to downstream
chemical fiber enterprises. Also affected by the pandemic, the terminal demand shrank sharply, and
at the same time, the cycle of expanding production capacity in the industry continued, resulting in
obvious changes in the market supply and demand pattern.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Since the beginning of this year, with the gradual weakening of the impact of the pandemic and
the recovery of crude oil demand brought about by global economic recovery, driven by the active
production reduction of OPEC and oil-producing countries and the passive production reduction of
non-OPEC oil-producing countries, there have been clear signs of improvement at both ends of
supply and demand in the oil market. In the long run, oil will return to the normal supply, and
international oil prices will continue to rise. At the macro policy level, countries ease monetary and
fiscal policies. In particular, the Federal Reserve implements various loose monetary policies to
stabilize the economy. Loose macro policies and the weakness of the US dollar index have played a
significant supporting role in the oil market. At present, Brent crude oil prices are gradually
returning to the normal range of USD50-70 per barrel. For the downstream, economic recovery is
expected to further stimulate demand growth due to the long-term rigidity of the Company's
products corresponding to downstream demand.
(2) Southeast Asia boasts a broad refining and chemical market prospect and Hengyi
Brunei seizes the first-mover advantage
Compared with the surplus supply of domestic refined oil products, Southeast Asia's refined oil
market has a large gap and broad prospects. According to Platts, from the supply level, Southeast
Asia has an existing production capacity of about 277 million tons/year, with Singapore, Thailand,
Indonesia and Malaysia at the forefront. Due to the 40-50 years of operation of some refinery plants,
outdated technology, poor management, heavy burden of government subsidies and other reasons,
the shut-down capacity in Asia is expected to reach 70.15 million tons in the past three years. Asia
plans to add new capacity in China and India, while Southeast Asia only saw a small increase in
production in Brunei, Indonesia and Malaysia. The demand for refined oil has great growth
potential.
Moreover, Southeast Asia is relatively close to Australia, and Australia needs to import refined
oil. According to the data of the Australian Renewable Energy Agency, the import volume of
gasoline, diesel and coal was about 8.4 million tons/year in 2019 and 6.9 million tons/year in 2020.
In addition, affected by the global pandemic, the overall demand is affected to some extent, but the
overall trend of imported refined oil products in Southeast Asia remains good. According to Platts,
in terms of gasoline products, Southeast Asia imported about 58.33 million tons/year in 2019 and
about 48.5 million tons/year in 2020. The main importing countries are Indonesia, Malaysia,
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Singapore, Philippines, Myanmar and other places, while the main exporting countries are
Singapore and Thailand. In terms of aviation kerosene, all countries are relatively self-sufficient in
the aviation industry and are dominated by trade circulation. Malaysia is the main importer in
Southeast Asia, and several other countries with smaller refineries, such as the Philippines and Sri
Lanka, imported about 4.7 million tons/year in 2019 and 4 million tons/year in 2020. In terms of
diesel oil, there is a big gap in Southeast Asia, with imports of about 42 million tons/year in 2019
and 38 million tons/year in 2020. The main importing countries are Vietnam, Bangladesh, the
Philippines, Sri Lanka, Myanmar, Indonesia and Malaysia. In addition, with the implementation of
the new IMO standard in 2020, the demand for low-sulfur fuel oil has risen. Singapore is a major
shipping base with an import volume of 5.5 million tons/year. Some marine diesel oil (MGO) needs
to replace marine fuel oil, and the import volume of diesel oil in Southeast Asia will increase.
Fig. 3 Price Difference of Refined Oil Cracking in Southeast Asia in Recent Seven Years
25.00
20.00
15.00
10.00
5.00
0.00
2014-6-30 2015-6-30 2016-6-30 2017-6-30 2018-6-30 2019-6-30 2020-6-30
-5.00
-10.00
Gasoline Diesel oil 航空煤油kerosene
Data source: Platts
As the profit vane of refineries in Southeast Asia, from the perspective of the price difference
of refined oil cracking in recent seven years, the price difference of refined oil cracking was at the
lowest level in history during the pandemic in 2020. Since 2021, with the recovery of the pandemic
and the recovery of downstream demands, the price difference of various refined oil products is in
the upward channel of recovery.
In 2021, entering the post-pandemic era, the supply capacity of the whole refinery in Southeast
Asia is declining instead of increasing. It is expected that the market will continue to maintain the
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
import trend of refined oil every year, and with the gradual recovery of the pandemic, the import
quantity of refined oil will continue to maintain the rebound trend. Meanwhile, with the gradual
repair of cracking spread, new market-oriented refineries may see a rebound in profitability.
The Brunei Refining and Petrochemical Project of the Company is located in the hinterland of
Southeast Asia's refined oil demand market, with obvious geographical advantages, as well as raw
material procurement advantages, refined oil sales advantages, production cost advantages and tax
advantages, and huge market space for product sales.
2. PTA business: The supply of raw materials is loose, and the industrial concentration
continues to increase
In the chemical fiber industry chain "naphtha-PX-PTA-POY/FDY/DTY", with the different
release of production capacity and the different concentration of the industry chain, it will show
different characteristics in different years. With the substantial increase of domestic PX production
capacity in the global share, the corresponding supply of new PX production capacity is loose. In
recent years, the import substitution of domestic PX has continued to accelerate, and the
dependence on domestic PX imports has dropped sharply in 2020. On this basis, ACP negotiations
all failed in 2020, which led to the obvious transfer of PX industry profits to the middle and lower
reaches in the pricing game between PX and PTA plants. In this process, the cost competitive
advantage brought by the scale advantage of domestic large-capacity PX will gradually squeeze the
small and medium-sized production capacity in China, Japan and South Korea, and the proportion
of PX production capacity will continue to increase.
The trend of PX production capacity has further affected the production capacity structure of
the PTA industry and promoted the concentration of the PTA industry to be further higher. As of
December 2020, the top five production capacity in the world accounted for 65.2%, and the
production capacity continued to concentrate on the leading enterprises. The leading enterprises
expanded at low cost and continued to give full play to their scale advantages. Leading enterprises
not only occupy an absolute advantage in production capacity, but also have obvious advantages in
production technology, industrial chain supporting and management level.
3. Chemical fiber business: The terminal demand keeps healthy growth, and leading
enterprises will benefit from reshaping the pattern of the chemical fiber industry chain
(1) Online sales continue to rise steadily, and the consumption structure is iteratively
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
upgraded
Judging from downstream demand, polyester fiber is mainly used in clothing, home textiles
and emerging industrial application fields, which are closely related to residents' consumption
wishes. With the stabilization of pandemic prevention and control in China, the increase of per
capita disposable income and the improvement of consumption level, the strategy of expanding
domestic demand and various policies to promote consumption have achieved remarkable efforts.
At present, with the application of online live broadcast and big data in the field of terminal
consumption, especially in third- and fourth-tier cities, counties and townships, the consumption
capacity has risen rapidly. Affected by the pandemic, offline contact consumption is hindered, and
online live broadcast consumption has sprung up everywhere, which strongly supports terminal
consumption and drives the high growth of terminal demand. Online consumption goes against the
trend, effectively promotes consumption replenishment, releases market potential, and creates new
ideas for economic recovery and development. According to the data of the National Bureau of
Statistics, the national online retail sales in 2020 was RMB11,760.1 billion, an increase of 10.9%
over the previous year. Among them, the online retail sales of physical goods reached RMB9,759
billion, an increase of 14.8%, accounting for 24.9% of the total retail sales of consumer goods, an
increase of 4.2 percentage points over the previous year. Online consumption achieved rapid growth.
Online consumption goes against the trend, which also means that China has entered an important
stage of accelerating the upgrading of consumption structure, accelerating the iteration of
consumption patterns, and obviously enhancing the role of consumption in stimulating the
economy.
(2) The export of foreign trade is growing against the trend, and the demand of the textile
and clothing industry is strong
In the context of COVID-19 in 2020, China's textile industry has steadily promoted the
resumption of work and production, benefiting from the recovery of orders at home and abroad, and
the production and supply capacity and the industrial chain operation have returned to normal. In
November 2020, the RCEP agreement was signed, which will significantly benefit the textile and
clothing industry and further accelerate the transfer of production capacity to Southeast Asia.
According to the statistics of the General Administration of Customs, P. R. China, in 2020, the
cumulative export of China's textile and garment boosted the overall export of national goods trade
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
by one percentage point, and the cumulative export of China's textile and garment was USD291.22
billion, an increase of 9.5% over the same period of 2019, which boosted the overall export of
national goods trade by one percentage point. Among them, textiles have risen for nine consecutive
months since April 2020, while clothing has reversed since August 2020 and increased for five
consecutive months.
(3) Residents' consumption has been transformed and upgraded, and the demand for
products in the polyester industry chain has remained rigid
In recent years, the income level and consumption expenditure of Chinese residents have
increased steadily. With the increase of income level, major consumer groups have higher
requirements for textile and clothing, clothing quality and consumption capacity. After the
upgrading of the demand system, the soaring consumption level has greatly increased the demand
for polyester differential products. According to the National Bureau of Statistics, the gross national
income in 2020 was RMB100,915.1 billion, an increase of 1.9% over the previous year. This would
promote the increase of terminal consumption expenditure such as the textile and clothing industry
and apparel industry. In addition, there is still a certain gap in per capita fiber sales between China
and developed countries, and there is still much room for the growth of chemical fiber or polyester.
According to the data of the 20th China Hangzhou Chemical Fiber Forum, in 2020, the per capita
fiber consumption in China was 16-17 kg, while that in the United States was 36-37 kg and that in
the European Union was 25 kg. Polyester is of a growth rate of 5-10%, which is expected to grow
for a long time in the future.
(4) The integrated layout of the chemical fiber industry chain is formed to enhance the
competitiveness of downstream chemical fibers
In recent years, private refineries, including the Company, have been put into operation one
after another. With the release of PX production capacity of private refining and chemical projects,
the industry in which the Company is located has changed from single product competition in the
past to a new competition pattern of industrial chain integration. Leading listed companies have
gradually expanded relying on the advantages of vertical integration and firmly grasped the new
share of future market demand.
During the same period, the growth rate of PTA and MEG production capacity continued to
accelerate, and PTA and MEG also entered a loose supply pattern. Since 2017, the growth rate of
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
polyester fiber production capacity has steadily declined (data source: CCF Annual Report). With
the gradual recovery of the global economy, the recovery of terminal demand and the loose supply
of the upstream raw material industry chain combined with the decline in the growth rate of
polyester production capacity will guide the profit of the industry chain to shift to chemical fiber.
(5) The market concentration of polyester industry increases, and the competition
pattern is more reasonable
After a decade of integration of polyester filament industry, from 2011 to the end of 2020, the
industry concentration CR6 share rose from 32% to about 66% (data source: CCF Annual Report).
According to the announced investment plan, the main new production capacity in the industry in
the future will come from CR6. Small and medium-sized polyester plants lack the ability of
technological innovation and will gradually withdraw from the competition in the industry. The
market concentration of the polyester industry will be further improved.
In the future, with the continuous improvement of leading enterprises' own competitiveness,
backward production capacity in the downward industry will be accelerated, the entry threshold for
the industrial chain in which the company is located will be further increased, the concentration of
industries in the upper, middle and lower reaches will continue to rise, the competition order in the
industry will continue to improve, and the development environment will become more benign. As
one of the leading enterprises, the Company has accelerated the expansion and income increase of
downstream chemical fiber business in various ways, taking the lead in enjoying the profit increase
brought about by the good prosperity of the industry. It is believed that with the smooth
commissioning of the Company's refining and petrochemical projects, the vertical integration layout
of the industrial chain has achieved initial results and the overall competitiveness will rise to a new
level.
(6) The Company will increase the input of informationization and automation, and
usher in a further improvement in quality and efficiency in the polyester industry
In recent years, leading companies in the industry have been deeply engaged in improving
equipment and technological processes and developing better production processes. Actively
respond to the call of the national green high-tech development, and promote innovative projects
with the overall efficiency of the industry through capital investment and talent investment, such as
the thorough replacement of wooden pallets by catalytic cycle pallets. At the same time, in recent
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
years, leading companies in the industry have carried out drastic reforms in digitalization,
accelerated the construction from intelligent manufacturing units and intelligent production lines to
intelligent workshops and intelligent plants, guided new formats such as personalized customization,
collaborative manufacturing and remote operation and maintenance, and promoted the digital
transformation of polyester industry.
(ii) The progress of the business plan disclosed in the previous period in the reporting period
In 2020, faced with the sudden global public health challenge of COVID-19, the economic risk
challenge at home and abroad, and the complex environment, the Company forged ahead with its
employees, facilitated the smooth operation of the Brunei Refining and Petrochemical Project, a key
project of "Belt and Road Initiative", continued to maintain high-load production, and improved its
competitive advantage. The leading competitive advantage of the PTA business sector has been
further improved, the potential has been continuously tapped and transformed, and the profitability
of products has maintained the leading level in the industry. The main business of chemical fiber
took high-quality development as the main line, continued to expand production and improve
quality, further improved the differential level of product, and greatly increased profitability
year-on-year; implemented lean production, upgraded quality and brand, and optimized
management innovation, with the management quality reaching a new level.
1. Maintain a good trend of sustained high growth and actively fulfill cash dividend
returns
During the reporting period, the Company realized an operating profit of RMB4.526 billion,
down about 5.19% from the same period of last year, and realized net profit attributable to its parent
company of RMB3.072 billion, down 3.7% from the same period of last year. At the end of the
reporting period, the total assets of the Company were RMB92.26 billion, an increase of 7.58%
over the beginning of the year; the owner's equity attributable to shareholders of listed companies
was RMB24.007 billion, an increase of 1.12% over the beginning of the year; net assets per share
attributable to shareholders of listed companies were RMB6.52; the asset-liability ratio was 67.17%,
which was at a reasonably low level compared with the same industry.
During the reporting period, the Company implemented the 2019 dividend payment plan, with
a total cash dividend of RMB1.137 billion, accounting for 35.51% of the Company's net profit
attributable to the parent company in 2019. Moreover, the board of directors of the Company
39
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
reviewed and approved the dividend plan for 2020, and distributed a cash dividend of RMB3.00
(including tax) for every 10 shares, with a total cash dividend of RMB1.104 billion, accounting for
35.95% of the net profit attributable to the parent company in 2020.
2. The coordination of production, supply and marketing has been enhanced, and
production and sales have increased steadily
During the reporting period, the production and sales of the Company's products were
booming and the production and sales volume increased steadily. Among them, the production and
sales volume of refined oil products (Hengyi Brunei, the controlling subsidiary) reached 5.9224
million tons and 5.8381 million tons respectively; the production and sales volume of chemical
products were 2,265,800 tons and 2,191,700 tons respectively; the production and sales volume of
PTA products (Zhejiang Yisheng, the controlling subsidiary) reached 4,850,200 tons and 4,843,200
tons respectively; the production and sales volume of polyester products of the controlling
subsidiary were 6.527 million tons and 6.056 million tons respectively.
Table 3 Output and Sales Volume of the Company's Main Products in 2020
Output
Sales Year-on-year
Major products (10,000 Sales in 2019
volume increase
tons)
Refining products 592.24 583.81 54.93 962.83%
Chemical products 226.58 219.17 12.88 1,601.63%
PTA 485.02 484.32 503.64 -3.84%
Polyester products 650.27 605.60 559.29 8.28%
3. The strategic layout of the international industry has achieved initial results, and the
Hengyi Brunei Refining and Petrochemical Project makes new performance contributions
During the reporting period, affected by the global spread of the COVID-19 pandemic, various
regions successively adopted strict closure and isolation measures. The demand for terminal
consumption continued to be sluggish, the global crude oil price plummeted, Crack Spreads of oil
products freely fell and the downstream petrochemical industry was under production, the inventory
was high, the price was upside down, and the global refineries as a whole fell into huge losses. The
world saw the continuous appreciation of RMB. Hengyi Brunei was facing an all-around "extreme
40
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
pressure test" in its first year of operation.
In this context, during the reporting period, the Company's Brunei Refining and Petrochemical
Project actively coordinated and organized various anti-pandemic work, maintaining high-load
stable operation and stable production management throughout the year.
(1) Give full play to the advantages of flexible management strategies and processes to cope
with oil price fluctuations
In light of the trend change of the difference between light and heavy oil prices, the Company
quickly adjusted its crude oil procurement strategy to overcome many difficulties such as long
international trade cycle, difficult price judgment, high uncertainty of resource guarantee, etc. The
plant quickly adjusted its production and processing mode, which greatly reduced the crude oil
procurement cost. Meanwhile, the changes in the raw oil market were continuously tracked, the
production blending formula was calculated and optimized through the whole process simulation,
and raw materials with high cost performance were purchased, so as to meet the production demand
and effectively reduce the purchase cost of raw materials.
Although the Crack Spreads of gasoline, aviation fuel and diesel oil reached the historical
freezing point in 2020, Brunei plant has produced a large number of marketable non-standard
products based on accurate market judgment, which can make positive contributions to performance
in the future.
(2) Take multiple measures to cope with the impact of the pandemic and ensure smooth and
optimized operation
During the pandemic, in order to solve the shortage of front-line employees, the Company
actively organized charter flights to promote the resumption of work and production. Besides, the
Company intensified its local recruitment, and engaged 675 local employees, achieving a
localization rate of 40% at the initial stage of Phase I operation. Apart from promoting the joint
training program with Chinese colleges and universities, the Company, together with local colleges
and universities, determined eight specialties for school running. At present, the project has been
fully started, which will lay a solid foundation for the stable supplement of local professionals.
During the reporting period, the Company actively promoted the linkage between production
and marketing, and always put the "target of reaching a “safe, stable and optimum operation at full
capacity for long on-stream running" in the first place. The monitoring model of equipment and
41
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
utilities system has been established, continuous technical research has been carried out, a large
number of technical transformation and measures projects have been implemented, and various
professional and technical management has been continuously consolidated to ensure the stable
operation of the whole plant under high load.
To sum up, Hengyi Brunei's refined oil, chemical products and other products have been sold
smoothly, and good results have been achieved in the international layout and operation of the
industry against the trend. During the reporting period, the Company produced a total of 8,188,200
tons of products, including 2,265,800 tons of chemical products and 5,922,400 tons of refined oil
products. The sales revenue of refined oil products and chemical products were RMB14.459 billion
and RMB4.286 billion respectively (the data are for external sales), which further promoted the
global popularity of "Hengyi" brand, and the integration of vertical industrial chain helped the
Company to continuously improve its competitive advantage.
With the full-scale resumption of work and production in China, the year 2021 will usher in the
all-around recovery in the post-pandemic era. The Company's Brunei Refining and Petrochemical
Project boasts great strengths in international operation:
(1) With the global recovery, oil prices continue to rebound rapidly, downstream demand
recovers, and economic benefits have been greatly improved. Meanwhile, the central banks of
major developed economies continue to loosen their currencies, maintaining zero or negative
interest rate policies, China's economy continues to recover, the RMB exchange rate tends to
stabilize, and the operating environment for the Brunei Refining and Petrochemical Project
improves significantly.
(2) China and Brunei are highly supportive of the project and the project enjoys long-term tax
incentives and other incentive policies
Brunei sees a stable political situation, and the project meets Brunei's 2035 Vision and
promotes the economic growth of the Belt and Road Initiative countries;
It is not restricted by trade barriers and belongs to the ASEAN Free Trade Area; the import
and export of products are duty-free;
The overall tax burden is obviously reduced. Brunei does not levy personal income tax,
business tax, payroll tax, production tax and export tax. The project has a local pioneer enterprise
certificate and an export enterprise certificate, and can enjoy a long-term enterprise income tax
relief;
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The project is in line with the "Belt and Road Initiative" strategy, and the syndicated loans
are of national strategic support.
(3) The plant is stable, operates at high load, and the industrial chain is integrated and stable.
The project is closer to the crude oil supply place and Singapore's crude oil trade market,
boasting convenient crude oil procurement and lower logistics cost;
The refined oil produced by the project is sold to Southeast Asia, which has strong demand;
Brunei Refining and Petrochemical Project has a short sales radius and low logistics cost;
All chemical products are digested downstream of the own industrial chain to realize the
integrated operation of the industrial chain.
(4) The cost advantage is significant, and the cost of energy transportation is reduced.
The project is fully equipped with coal-fired power generation and self-produced steam,
and the cost advantage of utilities is evident;
The main production plants, such as Hydrocracking, Reforming and PX units, adopt the
latest advanced technology, which has the technical characteristics of low operating cost, high
product conversion rate, etc., thus reducing the production cost of PX;
The low-temperature heat reuse technology is adopted, and the waste heat is used for
seawater desalination, which reduces the operation cost of seawater desalination and the
comprehensive energy consumption index of PX production;
Residual oil is treated with the latest flexi-coking process, which can be continuously
produced and reduce labor cost; by-product fuel gas reduces fuel cost; compared with the traditional
process, closed production of the plant is more environmentally friendly and harmless treatment of
residual oil is realized;
The liquid phase diesel hydrogenation technology can meet the new international diesel
standard in 2020, and at the same time reduce the unit investment and operation energy
consumption.
Brunei has a mild climate all year round and no natural disasters. As a rich oil-producing
country, Brunei has abundant oil and gas resources, which can provide some crude oil and reduce
the logistics cost of crude oil.
On the basis of the successful production of Brunei Phase I Project and adhering to the
strategic thinking of consolidating and enhancing the core competitiveness of its main business, the
43
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Company reviewed and approved the investment in the construction of Hengyi Brunei Refining &
Petrohemical Project Phase II in September 2020. The planning of Hengyi Brunei Refining and
Petrochemical Phase II Project mainly includes four parts: "Refining, Aromatics, Ethylene and
Polyester". The four related industrial chains will be highly integrated, including 14 million
tons/year refining, 2 million tons/year para-xylene, 2.5 million tons/year PTA downstream, 1
million tons/year PET, 1.65 million tons/year ethylene and downstream deep processing, as well as
supporting storage and transportation, utilities and corresponding auxiliary facilities.
In 2021, the Company will continue to focus on petrochemical industry and fully promote the
construction of Brunei Refining & Petrochemical Project Phase II. Brunei PMB Refining and
Petrochemical Project is a key link for the Company to realize the internationalization of upstream
industries. While facilitating the smooth operation of Phase I of the Project, the Company has
simultaneously promoted the planning and feasibility study report of Phase II of Brunei Refining
and Petrochemical Project, and finalized the main process framework and capacity composition of
Phase II of Brunei Refining and Petrochemical Project. The completion of Brunei Project Phase II
will help the Company further reduce the production cost of its products, ensure the stability of raw
material supply, strengthen the upstream production capacity base and development leading edge,
further enhance the business structure and integrated cooperative operation, optimize the product
structure, enhance the overall profitability, build the core circle of the Belt and Road Initiative
facing the development of ASEAN, and gradually building the Company into a petrochemical
enterprise with leading comprehensive strength in the world.
4. PTA has significantly improved quality and efficiency, maintaining the leading
profitability in the industry
As one of the leading enterprises in the PTA industry, during the reporting period, the
Company enhanced the production technology management of its PTA business and optimized its
operation capability. Zhejiang Yisheng, controlled by the Company, realized production and sales of
4.8502 million tons and 4.8432 million tons respectively. Zhejiang Yisheng (including Ningbo
Hengyi Trade) achieved a total net profit of RMB1.776 billion. The participating Dalian Yisheng
and Hainan Yisheng realized net profits of RMB1.092 billion and RMB983 million respectively.
Continue to maintain the leading level in the industry.
At present, the 6 million tons PTA project of Yisheng New Materials invested and constructed
44
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
by the Company in cooperation with Rongsheng Petrochemical is progressing as scheduled. The 3
million tons of Line 1# is planned to be completed and put into production in the second quarter of
2021, and Line 2# is expected to be completed and put into production by the end of 2021. At that
time, the Company's PTA production capacity will reach a higher level.
5. Continue to enrich high-end differential products, and continue to improve the
profitability of chemical fiber business
During the reporting period, the scale of the Company's chemical fiber business continued to
grow, the forward-looking technology research and development layout was smoothly industrialized,
and most of the newly increased productive capacity gave priority to advanced manufacturing
plants with high added value, high quality and differential production. Haining New Materials' 1
million tons of production capacity has been put into production in 2020 and the first quarter of
2021 consecutively. Jiaxing Yipeng Chemical Fiber Co., Ltd.'s "500,000 tons of differential
functional fiber upgrading and transformation project" will be completed and officially put into
production in June 2020. In 2020, the production and marketing of the Company's polyester
products (including filament, staple fiber, and chips) continued to maintain a booming trend,
achieving production and sales of 6.5027 and 6.0560 million tons, respectively, with a year-on-year
increase of 15.56% and 8.28%.
Despite the impact of the epidemic and the decline in the industry's prosperity, the Company's
strategy of balanced and integrated upstream and downstream development and high-end
differential products have demonstrated a good competitive advantage in responding to periodic
fluctuations of industry.
Table 4 As of the disclosure day of this report, the progress of the Company’s main projects
Capacity
Investment/acquisition
Product (Ten
No. Item amount Project Progress
type thousand
(RMB 10,000)
tons)
Haining New Material's annual
production of 1 million tons of POY, Put into
1 differential environmental 636,000 FDY, 100 production on
protection functional fiber chips February 18, 2021
construction project
2 Differential functional fiber 227,220 FDY 50 Put into
45
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
upgrading project of Jiaxing production on
Yipeng Chemical Fiber Co., June 04, 2020
Ltd.
New Type Functional Fiber Some devices
FDY,
Project with an Annual Output have been put into
3 335,000 staple 56.6
of 566,000 Tons of Fujian Yijin production on
fiber
Chemical Fiber Co., Ltd. April 9, 2021
Annual Production of 500,000
Put into
Tons of Multifunctional New
PET production in the
4 Materials Project of Hainan 83,600 50
flakes third quarter of
Yisheng Petrochemical Co.,
2020
Ltd.
Haining New Material's annual
production capacity of 500,000
Under
5 tons of new functional fiber 256,500 FDY 50
construction
technological transformation
project
6. New markets are opened up continuously through technological R&D and innovation,
supply chain capabilities are solidified through digital intelligence transformation,
organizational structure optimization continues to glow with new energy.
The Company devotes itself to improving the capability of independent innovation. The
proportion of high-end products is increased continuously by creating industry-leading technologies
and high-end products during reporting period; the development of customized products is
accelerated to meet the requirement of market differentiation and individualization, and the
products have earned good reputation in the market for a long time. The quality of the Company's
Eticont products has been further improved, which are widely used in infant clothing, facial masks
and other fields, and the added value of the products is much higher than that of conventional
products. The flame-retardant segmented products are also gradually enriched, and the final test of
regenerated flame-retardant polyester has been successfully completed, which has been accepted by
more and more customers. At the same time, the anti-bacterial and anti-viral fiber is also rapidly
industrialized, and its excellent anti-bacterial and anti-viral properties have been unanimously
recognized by customers.
During the reporting period, the Company fully implemented intelligent business management,
46
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
strengthened supply chain management, improved customer service capabilities, promoted
innovative operating models, strengthened personnel training, optimized organizational structure,
made the level of management and operating efficiency step into new phase. During the reporting
period, by the aid of big data, the Company promoted intelligent full-process management with
automation, digitization, and cloud computing as the core intelligent manufacturing; improved
supply chain integration projects, including the development of micro-mall, closed-loop marketing,
TMS and warehousing system upgrades, etc.; improved the level of functional application of
Hengyi Micro Mall, including price query, quick order placement, market information, intelligent
logistics management platform (HTTMS), financial services and other supporting services to
optimize the closed-loop marketing system, which effectively improves the operating efficiency of
Company, innovates a unique omni-channel logistics management and control system, and builds a
tripartite logistics transportation platform to provide enterprises with efficient, collaborative, and
real-time logistics transportation services.
During the reporting period, the Company focused on shaping a culture of co-creation, sharing
and win-win strivers, and vigorously promoted the reform of management institutions. Focusing on
the business objectives of the enterprise, the Company promoted the reform of the headquarters
functions, in a forward-looking manner by establishing a human resource management mechanism
that supports the culture of co-creation and sharing of a win-win strivers, and promoted the
establishment of a streamlined and efficient functional headquarters; focusing on promoting the
reform of the marketing system, further strengthened the operational capabilities of the marketing
system by reforming the production and sales coordination model, leading the industry to
continuously explore marketing models and marketing team management innovation; vigorously
promoted the integration and optimization of the engineering management system, and effectively
played the main role of the factory while exploring and improving the coordination functions of the
headquarters. At the same time, the Company exerted itself in introducing high-quality talents,
upgraded the organizational structure platform, innovated talent training models, promoted the
development and growth of key talents, and adhered to the three-dimensional and multi-source
incentive mechanism of "value co-creation and benefit sharing" to stimulate the vitality of the team.
The Company shall comply with the disclosure requirements of Shenzhen Stock Exchange
Industry Information Disclosure Guidelines No.18-Listed Companies Engaged in Chemical
47
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Industry Related Business.
Procurement mode of main raw materials
Currency Unit: RMB/ton
Proportion Whether the
Average Average
of purchase settlement
Main raw Procurement price in the price in the
amount in method has
materials model first half of second half
total changed
the year of the year
purchases significantly
Crude oil Purchasing inquiry 28.93% No 1,786.37 2,740.99
Naphtha Purchasing inquiry 2.13% No 3,166.20 3,088.44
Mixed xylene Purchasing inquiry 1.12% No 3,059.63 3,197.03
PX Purchasing inquiry 22.11% No 4,216.60 3,843.81
MEG Purchasing inquiry 12.88% No 3,418.31 3,250.89
Reasons for major changes in raw material prices from the previous reporting period
The purchase price of energy accounts for more than 30% of the total production cost
□ Applicable √ Not applicable
Production technology of main products
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
Introduction Advanced equipment technology, large production
Mass
Gasoline Multiplayer and capacity, low raw material and transportation costs,
production
innovation and high environmental protection level
Introduction Advanced equipment technology, large production
Mass
Diesel oil Multiplayer and capacity, low raw material and transportation costs,
production
innovation and high environmental protection level
Introduction Advanced equipment technology, large production
Mass
Kerosene Multiplayer and capacity, low raw material and transportation costs,
production
innovation and high environmental protection level
48
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
Advanced equipment technology, large production
Introduction
Mass capacity, low raw material and transportation costs,
Paraxylene Multiplayer and
production high product purity and long operation cycle of the
innovation
unit
Advanced equipment technology, large production
Introduction
Mass capacity, low raw material and transportation costs,
Benzene Multiplayer and
production high product purity and long operation cycle of the
innovation
unit
Introduction Large production capacity, low investment, low
Purified Mass
Multiplayer and energy consumption, convenient transportation, and
terephthalic acid production
innovation high level of environmental protection
Introduction
Mass Short process, large production capacity, low
Polyester Multiplayer and
production consumption of raw materials and utilities, etc.
innovation
The low-temperature easy-to-dye cationic polyester
is prepared by adding the third and fourth
monomers to the polymerization reaction system,
using a special equipment structure, through
esterification, pre-condensation, and final
Introduction
Mass polycondensation, which reduces the cost of
Polyester Multiplayer and
production downstream dyeing and reduces environmental
innovation
pollution. The melting point is increased using
accessory ingredient such as composite stabilizers,
to improve the thermal stability of the fused mass,
increase the whiteness, and improve the hue and
heat resistance
49
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
No matting agent is added during the
Introduction
Mass polymerization process to produce super bright
Polyester Multiplayer and
production polyester products to meet the needs of different
innovation
customers with low production costs
A full dull polyester product is produced by adding
Introduction a matting agent during the polymerization process,
Mass
Polyester Multiplayer and which solves the problem of reduced filter cycle
production
innovation caused by the increase of matting agent and reduces
energy consumption
The catalyst is uniformly dispersed in the material
by optimizing the design of the reactor structure,
Wide range Introduction adding a titanium-based catalyst to replace the
Polyester of Multiplayer and antimony catalysis, and produce an
applications innovation environmentally friendly antimony-free polyester
product with a high level of environmental
protection.
The preparation process of master batch was
improved, and the types and proportions of
Introduction Ag-carrying antibacterial agent, PBT powder
Mass
Polyester Multiplayer and mixing, and dispersant were studied, and the
production
innovation optimal ratio of the three was determined. The
antibacterial master batch was prepared by melt
blending and extrusion, with outstanding functions
Wide range Introduction
Maximum output, highest conversion rate and
Polyester of Multiplayer and
lowest energy consumption
applications innovation
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
Wide range Introduction By tapping the potential of equipment, the goal of
Polyester of Multiplayer and increasing production and efficiency is achieved
applications innovation without increasing investment
To increase Eenergy efficiency is increased, to
Wide range Introduction
continually introduce energy-saving technologies
Polyester of Multiplayer and
are introduced continually, and to reduce
applications innovation
production costs
The filter cycle is extended, and the waste of labor
Wide range Introduction
is reduced, and the packaging cost saved, which
Polyester of Multiplayer and
brings considerable economic benefits to the
applications innovation
Company
The fluidity of the polyester melt is improved
through the modification during the polymerization
reaction, for the effect of the polycondensation
reaction, the intrinsic viscosity of the product is
Wide range Introduction
higher than that of the conventional polyester under
Polyester of Multiplayer and
the condition of the original polymerization
applications innovation
residence time, and the melt processing
performance is improved. This technology has
obtained a utility model patent with patent number
of ZL 201120209233.4
The Spinning is characterized by short process, the
Introduction
Mass large production capacity, the high degree of
Spinning Multiplayer and
production differentiation, the stable product quality, and the
innovation
low consumption of utilities.
Spinning Mass Multiplayer Introduction The POY→DTY process route of melt direct
51
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
production and spinning is adopted, and the melt is sprayed from
innovation the self-designed "one"-shaped spinneret orifice,
and then cooled, oiled, and packaged into a flat
profiled POY yarn. POY is then made into flat
DTY polyester filament through a texturing
process. The polyester filament has a lower bulk
density, lighter weight, and a soft texture feeling.
Using the POY→DTY process route of melt direct
spinning, the melt is sprayed from the self-designed
"cross"-shaped spinneret orifice, then cooled, oiled,
Introduction
Mass and packaged into a cross-shaped POY yarn. POY
Spinning Multiplayer and
production is made into cross DTY polyester filament through
innovation
the texturing process. The polyester filament has a
low bulk density, light weight, good air
permeability, and a soft hand feeling.
Using the melt direct spinning PDY process route,
the melt is sprayed from the self-designed "feng" or
Introduction "mi"-shaped spinneret orifice, and then cooled,
Mass
Spinning Multiplayer and oiled, and packaged to be spun into a Feng-like or
production
innovation mi-like shaped FDY yarn. The polyester filament
has low bulk density, light weight, special luster
and soft hand feeling.
The functional hollow polyester fiber is produced
Introduction
Mass by adding functional self-heating masterbatch as
Spinning Multiplayer and
production the "core" part of the warm and comfortable
innovation
composite fiber, which has a dual-effect warmth
52
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
retention effect. This product has obtained an
invention patent, with patent number of
ZL201410481816. 0
Wide range Introduction Using advanced equipment and process technology,
Spinning of Multiplayer and short process, high degree of automation, low
applications innovation manufacturing cost
Wide range Introduction Through reasonable evaluation and extension of the
Spinning of Multiplayer and spinning blade cycle to improve product quality
applications innovation stability and reduce consumption and cost.
By installing on-line adding equipment, dynamic
and static mixing equipment, oil spray nozzles,
winding machines, etc. on the melt direct spinning
line, the existing equipment is upgraded and
transformed to produce the differential and
Wide range Introduction high-end products in the polyester melt direct
Spinning of Multiplayer and spinning line. The method solves the contradiction
applications innovation between the large-capacity polyester device and the
production of small batches of functionally
differential fibers with multiple varieties. The
Company mainly produces functional modified
fibers such as colored, flame retardant, antibacterial
and full dull.
By applying the Company's own technology to
Wide range Introduction
produce flame-retardant polyester, and usage of
Spinning of Multiplayer and
single-component spinning or composite spinning
applications innovation
technology, the single-component or
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
two-component sheath-core composite
flame-retardant and drip-resistant POY-DTY
polyester filaments can be produced.
The Company researches, develops, produces
Wide range Introduction
independently polyester polyamide, SPH, sea
Spinning of Multiplayer and
island, Melange and other composite yarns to meet
applications innovation
high-end market demand.
During the spinning production process, the
non-contact heating method is adopted to reduce
the friction and heating during the processing of the
thread, avoid the generation of broken filament.
The low temperature stretching deformation-high
Wide range Introduction temperature setting is used, coupled with
Spinning of Multiplayer and appropriate air interlacing jet, and reasonably
applications innovation controlling air interlacing pressure bundling
performance and other production processes,
producing ideal full-drawn FDY products similar to
flat-drawing machine products. This technology
has obtained an invention patent with patent
number of ZL200810059725.2
Through the use of programmable controller PLC,
the composite yarn is stretched in multiple stages,
Wide range Introduction
and the sequence of the stretch ratio of each
Spinning of Multiplayer and
segment can be changed at will within the range,
applications innovation
making the composite yarn have different structural
compactness, resulting in a difference in color
54
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
absorption and dyeing rate, and appearing a variety
of colors after dyeing. It has significant economic
and social benefits. This technology has obtained
an invention patent with patent number of
ZL200710070581.6
The graphene masterbatch and polyester chips are
blended for spinning, and a 4C-type aperture
spinneret is used to prepare hollow graphene
polyester fiber pre-oriented yarn, and the fluffy
Wide range Introduction crimp of the polyester fiber is further improved in
Spinning of Multiplayer and the subsequent texturing process. This enables
applications innovation polyester fiber to not only exert the functionality of
graphene, but also has the characteristics of warmth
and light weight, and expands the application
prospects of graphene in the field of empowered
textiles.
Through false-twist texturing temperature control,
Introduction
Mass the linen-like cloth style is achieved, so that it not
Texturing Multiplayer and
production only has the style of hemp natural fiber, but also
innovation
has the stiffness of linen-like fiber.
By intermittently closing the airflow through the air
interlacing jet a variety of polyester POY yarns of
Introduction
Mass different colors are compounded by false-twist
Texturing Multiplayer and
production texturing to obtain a polyester fancy composite
innovation
yarn alternating with fluffy non-net low-elasticity
section and an air interlacing mixed fiber section.
55
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
Colored polyester POY is adopted to directly
texture and compound to prepare colored
composite yarns, eliminating the need for
complicated downstream dyeing processes,
reducing product costs, simplifying processes, and
reducing environmental pollution
Reasonable solenoid valve switching logic is
designed by adopting dual solenoid valve switching
logic design, through parallel or tandem type dual
solenoid valve. The two valves are used to jointly
Introduction control the intermittent switch realizing the air
Mass
Texturing Multiplayer and interlacing jet airflow, realizing the intelligent
production
innovation design of polyester fiber fancy complex yarn,
reducing the frequency of use of a single solenoid
valve, preventing the single solenoid valve from
overheating and damage, and effectively improving
the efficiency of texturing
The Company's technology for producing
monofilament with a fineness of 0.5-1.0dpf is
relatively mature, which provides technical support
Introduction and experience accumulation for the research and
Mass
Texturing Multiplayer and development of finer products. The Company's
production
innovation independent research and development is realized
by supporting the fore and post spinning. At
present, the Company has mature production
technology for super-fine products of less than
56
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
0.5dpf, with stable quality and production
conditions, which are mainly used for high-end
fabrics and decorative fabrics.
Fore spinning introduces the third monomer into
the reaction system to prepare low-temperature and
Introduction
Mass easy-to-dye cationic POY, supporting post-spinning
Texturing Multiplayer and
production and texturing to prepare DTY products, reducing
innovation
the cost of downstream dyeing and reducing
environmental pollution.
This technology is independently researched and
developed by the Company. It prepares bamboo
Introduction joint products through special process conditions
Mass
Texturing Multiplayer and such as stretching temperature and stretch ratio. It
production
innovation has the characteristics of ramie cotton fabric and is
widely used in summer ramie cotton fabric which is
needed widely in the market.
The composite yarn is made of two or more fibers.
The processed products have the characteristics of
a variety of fibers, such as cotton material hand
Introduction
Mass feeling, soft and airy, and different dyeing patterns,
Texturing Multiplayer and
production including FDY-DTY composite yarn, high and low
innovation
adhesive composite yarn, Melange and so on. This
product is widely used in the weaving of high-end
fabrics with the greater market demand.
Mass Introduction The special-shaped section of the spinning
Texturing Multiplayer
production and spinneret is used to produce polyester fibers of
57
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
innovation different cross-sections, which improves the
capillary effect of the fiber in the fabric, so that the
sweat is quickly migrated to the surface of the
fabric and diverges through the effects of wicking,
diffusion, and transmission, so as to achieve fast
moisture transfer and fast drying and improve the
moisture permeability of polyester fabric
The torque of the two wires after the merger
cancels each other, and a torque-free product is
produced by producing S+Z products on a
Introduction
Mass double-strand model. This technology has the
Texturing Multiplayer and
production advantages of flat surface, easy weaving, plentiful
innovation
hand feeling, uniform dyeing, etc., especially for
the Buzin cloth so it is very suitable for some
high-end decorative cloths.
Using the preparation technology of wool-like
fiber, the POY yarn is stretched and false twisted
on the DTY machine, and then compounded with
the DTY of the PTT component. The PTT fiber
Wide range Introduction
floats on the surface of the yarn and exerts its
Texturing of Multiplayer and
excellent wearability. The high-shrinkage modified
applications innovation
PET fiber is placed in the inner layer of the yarn to
exert its rigidity and bring a stronger sense of
straightness. This product has obtained an invention
patent with patent number of ZL201010174972. 4
Texturing Wide range Multiplayer Introduction False twist texturing technology is used to produce
58
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The stage of Situation of
Patented
Major products production core technical Product development advantage
technology
technology personnel
of and polyester fiber filaments that have good hollowness
applications innovation and clear profile with high requirements for shape
retention and hollowness.
This technology is independently researched and
developed by the Company. It is used to process
Wide range Introduction
DTY in black, red, gray, yellow and other colors.
Texturing of Multiplayer and
The color is uniform, no dyeing is required after
applications innovation
weaving, and is not easy to fade in daily use, which
is mostly used for weaving special-purpose fabrics.
The current international advanced
high-temperature crystallization and solid-phase
Multifunctional Introduction polycondensation process is adopted for the core
Domestic
polyester bottle Multiplayer and technology of this product with short process flow
advanced
flakes innovation and low energy consumption, and the
comprehensive energy consumption per unit
product has reached the domestic advanced level
Production capacity of main products
Please refer to one of the Company's business summary in Section III, the main business part
of the Company during the reporting period.
Product categories in major chemical parks
Major chemical parks Product Category
PMB Industrial Park Petrochemical Industry Chain Products
Linjiang High-tech Industrial Park Petrochemical Industry Chain Products
Haining Economic Development Zone (Jianshan New Petrochemical Industry Chain Products
District)
Suqian High-tech Industrial Development Zone Petrochemical Industry Chain Products
59
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Major chemical parks Product Category
Jiaxing Xiuzhou High-tech Industrial Development Zone Petrochemical Industry Chain Products
Shaxi Town Industrial Park Petrochemical Industry Chain Products
Ningbo Petrochemical Economic and Technological Petrochemical Industry Chain Products
Development Zone
Dalian Economic and Technological Development Zone Petrochemical Industry Chain Products
Yangpu Economic Development Zone Petrochemical Industry Chain Products
EIA approvals that are being applied for or newly obtained during the reporting period
Approved Approval Date of
No. Item Approving unit
unit number approval
Technology transformation project of Jiaxing Municipal
Haining JHHJ
Haining Hengyi New Material Co., Ltd. April 10, Ecology and
1 New (2020)
with annual production of 500,000 tons 2020 Environment
Materials No. 61
of new functional fiber Bureau
Technical transformation project of
Hangzhou
Hengyi traditional coal-based hydrogen HHQHPP
February Municipal Ecology
2 caprolacta preparation standard upgrading and [2021]
10, 2020 and Environment
m by-product synthetic ammonia combined No. 5
Bureau
plant
Qinzhou
The project of annual production of 1.2
Guangxi QGHGZ Municipal
million tons of caprolactam-polyamide December
3 New [2020] Ecological
industry integration and supporting 25, 2020
Materials No. 24 Environment
projects
Bureau
During the reporting period, abnormally shutdown occurred to listed companies.
□ Applicable √ Not applicable
Relevant approvals, permits, qualifications and validity period
Mainly include: Safe production license, pollutant discharging permit, cargo transportation
permit. Engaged in petroleum processing and petroleum trading industries.
60
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Approved Name of Issuing Valid
No. Approval department
unit qualification/license time period
Haining New Pollutant Jiaxing Municipal Ecology and July 28, July 27,
1
Materials discharging permit Environment Bureau 2020 2023
Haining
Pollutant Jiaxing Municipal Ecology and July 23, July 22,
2 Thermoelectri
discharging permit Environment Bureau 2020 2025
c
Jiaxing Pollutant Jiaxing Municipal Ecology and Decembe Decembe
3
Yipeng discharging permit Environment Bureau r 2, 2020 r 1, 2022
Port Business permit
Jiaxing Certification of the Jiaxing Ports and Shipping Administration March March
4
Yipeng People's Republic of Bureau of Zhejiang Province 13, 2020 11, 2023
China
Registration
Certificate for using
Jiaxing Jiaxing Ports and Shipping Administration August 8, March
5 harbor frontage of
Yipeng Bureau of Zhejiang Province 2017 11, 2054
inland port of
Jiaxing
Decembe Decembe
Taicang Pollutant Suzhou Municipal Ecological
6 r 31, r 30,
Yifeng discharging permit Environment Bureau
2019 2022
Pollutant Quanzhou Municipal Ecological April 8, April 7,
7 Fujian Yijin
discharging permit Environment Bureau 2021 2026
Hengyi Pollutant Hangzhou Municipal Ecology and August August
8
Limited discharging permit Environment Bureau 28, 2020 27, 2023
Hengyi Pollutant Environmental Protection Bureau of Novembe Novembe
9
polymer discharging permit Xiaoshan District r 6, 2018 r 5, 2021
Hangzhou Pollutant Environmental Protection Bureau of Novembe Novembe
10
Yixi discharging permit Xiaoshan District r 5, 2018 r 4, 2021
Hangzhou Pollutant Hangzhou Municipal Ecology and February February
11
Yixi discharging permit Environment Bureau 2, 2021 1, 2024
Novembe Novembe
Hengyi Pollutant Environmental Protection Bureau of
12 r 26, r 25,
Hi-tech discharging permit Dajiangdong Industrial Cluster Area
2018 2021
Shuangtu Novembe Novembe
Pollutant Environmental Protection Bureau of
13 New r 27, r 26,
discharging permit Dajiangdong Industrial Cluster Area
Materials 2018 2021
Qiantang New District Bureau of
Hengyi Pollutant May 9, June 22,
14 Hangzhou Municipal Ecology and
caprolactam discharging permit 2020 2025
Environment Bureau
Registration Zhejiang Provincial Hazardous Chemicals
Decembe Decembe
Hengyi certificate for Registration Center, Chemical
15 r 20, r 19,
caprolactam hazardous Registration Center of the Division of
2019 2022
Chemicals Emergency Management
61
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Approved Name of Issuing Valid
No. Approval department
unit qualification/license time period
Decembe
Hengyi Safety production Zhejiang Provincial Department of Decembe
16 r 16,
caprolactam license Emergency Management r 5, 2022
2020
Safety production Decembe
Hengyi Hangzhou Emergency Management January
17 standardization r 13,
Hi-tech Bureau 1, 2023
certificate 2019
Safety production Decembe
Hangzhou Hangzhou Emergency Management January
18 standardization r 13,
Yijing Bureau 1, 2023
certificate 2019
Safety production
Hengyi Zhejiang Provincial Department of June 1, June 1,
19 standardization
caprolactam Emergency Management 2020 2023
certificate
Safety production
Hengyi Hangzhou Emergency Management July 15, August
20 standardization
Limited Bureau 2020 1, 2023
certificate
Shuangtu Safety production Septemb
Hangzhou Emergency Management October
21 New standardization er 9,
Bureau 1, 2023
Materials certificate 2020
Safety production
Hengyi Hangzhou Emergency Management March April 1,
22 standardization
polymer Bureau 16, 2020 2023
certificate
Safety production Decembe
Taicang Administration of Work Safety Decembe
23 standardization r 28,
Yifeng Supervision of Taicang r 1, 2021
certificate 2018
Engaged in petroleum processing and petroleum trading industries
√ Yes □ No
Engaged in the fertilizer industry
□Yes √No
Engaged in the pesticide industry
□Yes √No
Engaged in chlor-alkali and soda ash industry
□Yes √No
Engaged in chemical fiber industry
√ Yes □ No
Engaged in plastics and rubber industry
□Yes √No
62
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
II. Main business analysis
1 Overview
Refer to "I. Overview" related content in "Discussion and Analysis of Business Conditions".
2. Income and cost
(1) Composition of operating income
Currency Unit: RMB
2020 2019 Year-on-ye
ar increase
Proportion of Proportion of
Amount Amount and
operating income operating income
decrease
Total operating
86,429,630,191.87 100% 79,620,543,631.74 100% 8.55%
income
Sector
Petrochemical
23,788,931,297.46 27.52% 14,023,110,039.95 17.62% 69.64%
industry
Chemical fiber
24,934,786,768.51 28.85% 37,440,083,098.09 47.02% -33.40%
industry
Supply Chain
37,705,912,125.90 43.63% 28,157,350,493.70 35.36% 33.91%
Service
Sub-product
Refining
14,458,642,505.91 16.73% 2,207,888,637.18 2.77% 554.86%
products
Chemical
4,286,129,273.42 4.96% 336,001,420.95 0.42% 1175.63%
products
PTA 4,759,627,567.43 5.51% 11,479,219,981.82 14.42% -58.54%
PIA 284,531,950.70 0.32% / / /
Polyester fiber 21,978,130,175.76 25.43% 32,689,228,369.81 41.06% -32.77%
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Wafering 2,956,656,592.75 3.42% 4,750,854,728.28 5.97% -37.77%
Supply Chain
37,705,912,125.90 43.63% 28,157,350,493.70 35.36% 33.91%
Service
Region
Domestic 63,753,435,093.36 73.76% 65,683,827,085.40 82.50% -2.94%
Overseas 22,676,195,098.51 26.24% 13,936,716,546.34 17.50% 62.71%
(2) The industry, product or region that accounts for more than 10% of the Company’s
operating income or operating profit
The Company shall comply with the disclosure requirements of Shenzhen Stock Exchange
Industry Information Disclosure Guidelines No.18-Listed Companies Engaged in Chemical
Industry Related Business.
Currency Unit: RMB
Gross
Operating
Operating costs margin
income
increased or increased or
increased or
Gross decreased decreased
Operating income Operating cost decreased
margin compared to the compared
compared with
same period with the
the same period
last year same period
last year
last year
Sector
Petrochemical
23,788,931,297.46 21,710,310,664.79 8.74% 69.64% 76.75% -3.67%
industry
Chemical
24,934,786,768.51 21,826,970,006.07 12.46% -33.40% -35.89% 3.40%
fiber industry
Supply Chain
37,705,912,125.90 36,912,550,026.08 2.10% 33.91% 33.42% 0.36%
Service
Sub-product
64
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Refining
14,458,642,505.91 13,892,553,804.77 3.92% 554.86% 806.84% -26.70%
products
Chemical
4,286,129,273.42 3,371,435,627.07 21.34% 1,175.63% 1,150.20% 1.60%
products
PTA 4,759,627,567.43 4,235,879,177.83 11.00% -58.54% -59.59% 2.31%
PIA 284,531,950.70 210,442,055.12 26.04% / / /
Polyester
21,978,130,175.76 19,226,194,309.13 12.52% -32.77% -35.21% 3.30%
fiber
Wafering 2,956,656,592.75 2,600,775,696.94 12.04% -37.77% -40.49% 4.03%
Supply Chain
37,705,912,125.90 36,912,550,026.08 2.10% 33.91% 33.42% 0.36%
Service
Region
Domestic 63,753,435,093.36 59,379,636,366.49 6.86% -2.94% -2.71% -0.22%
Overseas 22,676,195,098.51 21,070,194,330.45 7.08% 62.71% 62.56% 0.09%
When the statistical scope of the Company's main business data is adjusted during the
reporting period, the Company's main business data adjusted according to the scope at the
end of the reporting period in the recent year
□ Applicable √ Not applicable
Operating income or net profit generated by overseas business accounts for more than 10% of
the Company's audited operating income or net profit in the recent fiscal year
Name of The specific
The impact of taxation policies on overseas The Company's
overseas situation of the
business during the reporting period response
business development
The overall tax burden during the reporting The project is highly
Brunei Refining period was relatively small, and Brunei did support by China and
High load and
and not levy personal income tax, business tax, Brunei and enjoys
stable
Petrochemical payroll taxes, production tax and export long-term tax
operation
Project tax. The project has a local pioneer incentives and other
enterprise certificate and an export incentive policies
65
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
enterprise certificate, and can enjoy a
longer-term corporate income tax relief
(3) Whether the Company's physical sales income is greater than the labor income
Year-on-year increase
Category Item Unit 2020 2019
and decrease
Sales volume Ten thousand tons 583.81 54.93 962.83%
Refining
Production Ten thousand tons 592.24 60.71 875.52%
products
Inventory Ten thousand tons 14.21 5.78 145.85%
Sales volume Ten thousand tons 219.17 12.88 1,601.63%
Chemical
Production Ten thousand tons 226.58 16.66 1,260.02%
products
Inventory Ten thousand tons 11.19 3.78 195.77%
Sales volume Ten thousand tons 484.32 503.64 -3.84%
PTA Production Ten thousand tons 485.02 503.38 -3.65%
Inventory Ten thousand tons 2.31 1.61 43.48%
Sales volume Ten thousand tons 5.51 / /
PIA Production Ten thousand tons 8.67 / /
Inventory Ten thousand tons 3.16 / /
Sales volume Ten thousand tons 605.6 559.29 8.28%
Polyester
Production Ten thousand tons 650.27 562.71 15.56%
products
Inventory Ten thousand tons 62.56 17.89 249.64%
Explanation of the reason why relevant data has changed more than 30% year-on-year
1） During the reporting period, the Brunei Refining and Petrochemical project of the
Company operated stably under high load, so the production, sales and inventory of its refined oil
products and chemical products increased significantly compared with the same period last year.
2） During the reporting period, its main reason was that some of the new production capacity
of subsidiaries such as Haining New Materials and Jiaxing Yipeng were put into production, and the
impact caused by the stockpiling before the Spring Festival as a reasonable inventory change.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
(4) The implementation of major sales contracts signed by the Company as of the reporting
period
□ Applicable √ Not applicable
(5) Composition of operating costs
Industry and product classification
Industry Classification of Hengyi Brunei
Currency Unit: RMB
2020 2019 Year-on-year
Category Item Proportion of Proportion of increase and
Amount Amount
operating cost operating cost decrease
Raw materials 12,585,308,784.97 90.59% 1,267,816,583.44 82.76% 892.68%
Energy 272,669,717.70 1.96% 35,530,302.02 2.32% 667.43%
Refining
Depreciation
products 1,034,575,302.10 7.45% 228,628,253.65 14.92% 352.51%
and others
Total 13,892,553,804.77 100.00% 1,531,975,139.11 100.00% 806.84%
Raw materials 3,043,593,007.52 90.28% 240,231,973.62 89.08% 1,166.94%
Energy 165,221,931.47 4.90% 17,443,129.52 6.47% 847.20%
Chemical
Depreciation
products 162,620,688.08 4.82% 11,997,575.82 4.45% 1,255.45%
and others
Total 3,371,435,627.07 100.00% 269,672,678.96 100.00% 1,150.20%
Domestic Industrial Product Classification
Currency Unit: RMB
2020 2019 Year-on-year
Product
Item Proportion of Proportion of increase and
category Amount Amount
operating cost operating cost decrease
Raw materials 142,735,702.53 67.83% / / /
PIA
Energy 27,026,909.89 12.84% / / /
products
Depreciation 40,679,442.69 19.33% / / /
67
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
and others
Total 210,442,055.12 100.00% / / /
Raw materials 3,750,955,081.22 88.55% 9,654,704,824.15 92.11% -61.15%
Energy 138,178,717.94 3.26% 223,431,486.12 2.13% -38.16%
PTA
Depreciation
product 346,745,378.67 8.19% 603,035,291.29 5.75% -42.50%
and others
Total 4,235,879,177.83 100.00% 10,481,171,601.56 100.00% -59.59%
Raw materials 17,480,962,763.20 80.09% 29,308,065,693.20 86.09% -40.35%
Energy 1,410,863,173.13 6.46% 1,612,773,710.02 4.74% -12.52%
Polyester
Depreciation
products 2,935,144,069.73 13.45% 3,124,518,941.50 9.18% -6.06%
and others
Total 21,826,970,006.07 100.00% 34,045,358,344.72 100.00% -35.89%
Description
(6) Whether there was any change in the scope of consolidation during the reporting period
In 2020, there were 44 subsidiaries included in the company’s consolidation scope. For details,
please refer to Note VIII “Interests in Other Equities”. The Company's scope of consolidation this
year increased by 11 households and decreased by 1 household compared with the previous year.
Please refer to Note VII "Changes in Consolidated Scope" for details.
(7) Major changes or adjustments to the Company’s business, products or services during the
reporting period
□ Applicable √ Not applicable
(8) Circumstances of main sales customers and main suppliers
The Company's main sales customers
Total sales amount of the top five customers (yuan) 14,306,689,029.58
The total sales amount of the top five customers accounted for the proportion of
16.55%
the total annual sales
Percentage of sales from related parties in total annual sales among the top five 0.00%
68
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
customer sales
Profile of the Company's top 5 customers
No. Client name: Sales volume (yuan) Percentage in total annual sales
1 Customer 1 5,151,787,163.76 5.96%
2 Customer 2 3,170,783,127.55 3.67%
3 Customer 3 2,380,895,042.87 2.75%
4 Customer 4 1,869,697,397.32 2.16%
5 Customer 5 1,733,526,298.08 2.01%
Total -- 14,306,689,029.58 16.55%
Other information of major customers
□ Applicable √ Not applicable
Company's main suppliers
Total purchase amount of the top five suppliers (yuan) 25,011,317,723.26
Proportion of the total purchase amount of the top five suppliers to the total 31.09%
annual purchase
Proportion of the purchase amount of related parties in the purchase amount of 7.76%
the top five suppliers to the total annual purchase amount
Information of the Company's top 5 suppliers
No. Name of supplier Purchase amount (yuan) Percentage of total annual purchases
1 Supplier 1 9,936,751,965.54 12.35%
2 Supplier 2 4,230,613,310.70 5.26%
3 Supplier 3 4,021,190,684.43 5.00%
4 Supplier 4 3,800,132,841.33 4.72%
5 Supplier 5 3,022,628,921.27 3.76%
Total -- 25,011,317,723.26 31.09%
Other information of major suppliers
□ Applicable √ Not applicable
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
3. Expenses
Currency Unit: RMB
Year-on-year
2020 2019 increase and Description of major changes
decrease
The description is mainly on the adjustment of
Selling sales expenses related to the performance of the
218,109,801.14 455,835,985.78 -52.15%
expense contract to the presentation of operating costs
under the new revenue criteria
The description is mainly on the transportation
fees, lease fees and storage fees related to the
products under the new criteria in management
Administration expenses. In addition, after the Brunei Refining
970,153,607.89 583,493,439.21 66.27%
costs and Petrochemical project was put into
operation, the depreciation of fixed assets and
the salary of management personnel for related
management purposes increased significantly.
The description is mainly on that after the
Brunei project is put into production, the
interest expenditure that meets the capitalization
Financial 2,004,150,317. 1,011,335,714.9
98.17% has decreased; meanwhile, with the expansion
expenses 61 3
of the business scale, the corresponding
financing scale has expanded and the interest
expenditure has increased.
Research and
development 351,969,307.93 492,740,271.96 -28.57%
expenditure
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
4. R&D investment
During the reporting period, the Company actively explored new ideas for new materials, new
technology R&D and industrialization, and achieved certain results in new product R&D and
industrialization, R&D platform construction, talent team building, and external cooperation,
mainly focusing on Polyester and polyamide green production technology, chemical manufacturing
technology dedicated to industry chain, functional fiber materials, next-generation bio-based
polyester materials, etc. The current related research and development projects are progressing
smoothly. During the reporting period, the Company’s R&D base in Haining was officially put into
use. The new R&D base integrates small-scale and pilot-scale functions, becoming an important
hardware guarantee for the implementation of the Company’s R&D strategy. Meanwhile, the
Company is actively developing relation with excellent universities in the chemical and materials
fields and vigorously recruit talents in the industry.
A total of 164 patents were applied for in 2020, including 113 invention patents and 51 utility
models. A total of 28 authorized patents were obtained this year, including 8 invention patents and
20 utility models. More than 150 scientific and technological development projects will be
implemented in 2020 (including 2 national key research and development projects, 1 major
international cooperation project in Zhejiang Province, and 1 key high-tech product development
project in Zhejiang Province). The Company's antimony-free environmentally friendly polyester
"Eticont" project with independent intellectual property rights won the first prize of the 2020
Zhejiang Chemical Industry Science and Technology Progress Award.
The Company's R&D investment
2020 2019 Variable ratio
Number of R&D personnel (person) 597 445 34.16%
Proportion of number of R&D personnel 3.29% 2.69% 0.60%
R&D investment amount (yuan) 359,600,062.80 496,257,572.40 -27.54%
R&D investment proportion in operating income 0.42% 0.62% -0.20%
Capitalized amount of R&D investment (yuan) 7,630,754.87 3,517,300.44 116.95%
Proportion of capitalized R&D investment in R&D investment 2.12% 0.71% 1.41%
Reasons for the significant change in the proportion of total R&D investment in operating
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
income in the previous year
□ Applicable √ Not applicable
Reasons and explanation of its rationality for the substantial changes in the capitalization rate
of R&D investment
The description is mainly on the increase in R&D personnel and capitalizable R&D expenses
of the subsidiary Zhejiang Henglan Technology Co., Ltd. during the reporting period.
5. Cash flow
Currency Unit: RMB
Year-on-year increase
Item 2020 2019
and decrease
Sub-total of cash inflows from operating activities 97,642,317,743.64 87,825,272,597.30 11.18%
Sub-total of cash outflows from operating
92,628,544,965.69 87,916,398,375.21 5.36%
activities
Net cash flow from operating activities 5,013,772,777.95 -91,125,777.91 5,602.04%
Sub-total of cash inflows from investing activities 1,994,495,592.71 5,101,346,935.31 -60.90%
Sub-total of cash outflows from investing
9,946,968,313.72 18,111,448,942.04 -45.08%
activities
Net cash flow from investing activities -7,952,472,721.01 -13,010,102,006.73 38.87%
Sub-total of cash inflows from financing activities 40,896,350,951.42 41,026,194,049.12 -0.32%
Sub-total of cash outflows from financing
34,988,971,122.60 30,045,808,537.64 16.45%
activities
Net cash flow from financing activities 5,907,379,828.82 10,980,385,511.48 -46.20%
Net increase in cash and cash equivalents 2,713,245,267.65 -2,063,056,660.78 231.52%
Explanation of the main influencing factors of significant year-on-year changes in relevant
data
During the reporting period, the net cash flow from operating activities increased significantly,
mainly because the Brunei Refining and Petrochemical project was put into operation at the end of
2019, the operating funds used increased, and the operating cash outflow at the end of the period
72
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
did not match the corresponding operating cash inflow, resulting in that annual net operating cash
flow is negative in 2019. During the reporting period, as Brunei's refining and petrochemical project
maintained a high-load and stable operation, the Company's net operating cash flow increased
significantly.
The decrease in net cash flow from investment activities was mainly due to the relatively large
payment of investment funds for projects such as Brunei Refining and Petrochemical in the
previous year. The corresponding cash outflows of the projects during the reporting period
decreased.
The decrease in net cash flow from financing activities was mainly due to the decrease in the
Company's cash outflow from investment activities in 2020 compared to 2019, so the net cash
generated from financing activities during the same period decreased.
Explanation of the reason for the significant difference between the Company’s net cash flow
generated from operating activities during the reporting period and the current year’s net
profit
□ Applicable √ Not applicable
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
III. Analysis of non-main business
Currency Unit: RMB
Percentage of Whether it is
Amount Explanation of reasons
total profit sustainable
The description is mainly on the accrual of
the investment income of the main business
Investment income 1,691,621,709.35 37.43% joint stock company and the hedging Yes
investment income during the reporting
period
The description is mainly on the changes in
Profit or loss due to
the fair value of foreign exchange and
fair value change in 156,423,385.37 3.46% No
commodity hedging at the end of the
current period
reporting period
The description is mainly on the Company’s
Asset impairment -18,111,009.54 -0.40% No
provision for inventory depreciation
The description is mainly on the business
income that has nothing to do with daily
Non-operating income 14,227,568.48 0.31% No
business activities during the reporting
period
The description is mainly on that donation
Non-operating expenditures and other expenditures that
20,943,094.87 0.46% No
expense have nothing to do with daily business
activities during the reporting period
IV. Analysis of assets and liabilities
1. Major changes in asset composition
The Company implemented the new revenue criteria or the new lease criteria for the first
time since 2020 and adjust and implement the relevant items of the financial statement at the
beginning of the year
74
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
√ Applicable
Currency Unit: RMB
End of 2020 Beginning of 2020
Increase or
Percentage Percentage Description of
decrease in
Amount of total Amount of total major changes
proportion
assets assets
Monetary
10,078,983,803.86 10.92% 7,439,884,788.19 8.67% 2.25%
capital
Accounts
3,879,744,130.04 4.21% 5,890,241,538.78 6.87% -2.66%
receivable
Inventories 9,650,858,867.17 10.46% 9,153,238,548.05 10.67% -0.21%
Long-term
equity 10,062,484,360.52 10.91% 9,260,247,813.26 10.80% 0.11%
investments
Fixed assets 41,579,728,480.95 45.07% 38,775,633,926.67 45.21% -0.14%
Construction in
7,801,532,982.72 8.46% 3,690,131,551.30 4.30% 4.16%
progress
Short-term
26,482,672,125.98 28.70% 23,323,906,006.56 27.20% 1.50%
loans
Long-term
16,609,903,029.23 18.00% 12,733,302,561.13 14.85% 3.15%
loans
2. Assets and liabilities measured at fair value
Currency Unit: RMB
Item Beginning balance Ending balance
Financial assets
1. Transactional financial assets (excluding derivative financial assets) 149,692,516.20 251,904,308.53
2. Derivative financial assets 409,150,395.76 737,015,777.82
3. Other equity instruments investment 600,000.00 5,600,000.00
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Subtotal of financial assets 559,442,911.96 994,520,086.35
Financial liabilities 1,399,903.27 145,909,776.80
Other changes
During the reporting period, whether the Company’s main asset measurement attributes have
changed significantly
□Yes √No
3. Restricted asset rights as of the end of the reporting period
Item Book value at the end of the year Reason for restriction
Monetary capital 2,892,657,855.69 Security deposit
Notes receivable and
381,803,585.87 Acceptance bills pledged
receivables financing
Long-term equity investments 5,189,280,189.32 Mortgage loan
Sale and leaseback, financing
Fixed assets 21,933,701,563.05
leases, mortgage loans
Mortgage loans, financing
Intangible assets 638,649,800.63
lease guarantees
Mortgage loans, financing
Construction in progress 4,292,913,047.10
lease guarantees
Total 35,329,006,041.66 --
V. Investment status
1. General condition
Investment amount during the Investment in the same period last
Amount of variation
reporting period (yuan) year (yuan)
3,743,354,861.36 3,565,393,011.36 4.99%
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Major equity investments obtained during the reporting period
Currency Unit: RMB 10,000
Wheth
Estima Profit and er
Invest Shareh Capita Invest Progress as of Disclosu
Name of Main Amount ted loss of involv
ment olding l Partner ment Product type the balance re date Disclosure index (if any)
investee business Invested incom current ed in a
mode Ratio source period sheet date (if any)
e investment lawsui
t
Petroleum
products, http://www.cninfo.com.cn/new/dis
Capita Ningbo Petroleum
Yisheng chemical Self-o closure/detail?plate=szse&stockCo
l Zhongjin Expen products, July 17,
New products, 5,000 50% wned Completed / 2,576.89 No de=000703&announcementId=120
increas Petrochemical dable chemical 2019
Material production funds 6451916&announcementTime=20
e Co., Ltd. products
and sales, 19-07-17
etc.
Wanxiang
Group
http://www.cninfo.com.cn/new/dis
Company,
Self-o closure/detail?plate=szse&orgId=g
Dongzhan Water Acquis Zhejiang Expen Water January
13,246.19 30% wned Completed / 870.90 No ssz0000703&stockCode=000703&
Shipping transport ition Rongtong dable transport 17, 2020
funds announcementId=1207257962&an
Logistics Co.,
nouncementTime=2020-01-17
Ltd., Chen
Shenghong
Total -- -- 18,246.19 -- -- -- -- -- -- / 3,447.79 -- -- --
77
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
3. Significant non-equity investment in progress during the reporting period
Currency Unit: RMB
Whether
The industry
it is a Cumulative actual
Invest involved Amount invested
fixed investment amount Project Disclosure
Item ment with in this reporting Capital source Disclosure index (if any)
asset as of the end of the progress date (if any)
mode investment period
investme reporting period
project
nt
Chemical
Self-b
Brunei PX Project Promote Yes raw 1,945,445,827.09 1,945,445,827.09 Self-financing 100% / /
uilt
materials
http://www.cninfo.com.cn/new/disclosure/
Brunei Refining and Chemical
Self-b September detail?plate=szse&orgId=gssz0000703&st
Petrochemical Project Phase Yes raw 321,943,808.62 402,295,413.64 Self-financing 0.38%
uilt 16, 2020 ockCode=000703&announcementId=1208
II materials
444483&announcementTime=2020-09-16
New type functional fiber
http://www.cninfo.com.cn/new/disclosure/
project with an annual
Self-b Self-raised and August 29, detail?plate=szse&orgId=gssz0000703&st
output of 566,000 tons of Yes Polyester 863,277,779.84 924,046,018.56 91%
uilt borrowing 2020 ockCode=000703&announcementId=1208
Fujian Yijin Chemical Fiber
325104&announcementTime=2020-08-29
Co., Ltd.
Haining New Material's
annual production capacity http://www.cninfo.com.cn/new/disclosure/
of 500,000 tons of new Self-b Self-raised and August 29, detail?plate=szse&orgId=gssz0000703&st
Yes Polyester 4,844,273,114.87 6,612,617,682.85 72%
functional fiber uilt borrowing 2020 ockCode=000703&announcementId=1208
technological 325105&announcementTime=2020-08-29
transformation project
Differential functional fiber Self-b Yes Polyester 966,302,305.42 2,564,522,334.88 Self-raised and 100% / /
78
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether
The industry
it is a Cumulative actual
Invest involved Amount invested
fixed investment amount Project Disclosure
Item ment with in this reporting Capital source Disclosure index (if any)
asset as of the end of the progress date (if any)
mode investment period
investme reporting period
project
nt
upgrading project of Jiaxing uilt borrowing
Yipeng Chemical Fiber Co.,
Ltd.
Total -- -- -- 8,941,242,835.84 12,448,927,277.02 -- -- -- --
79
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
4. Financial asset investment
(1) Securities investment
There was no securities investment in the Company during the reporting period.
(2) Situation of hedging business
Currency Unit: RMB 10,000
The proportion
Actual
of the investment
Initial profit and
Investment amount at the
investment loss
Types of hedging Starting Expiration amount at end of the period
amount of amount
investments date date the end of to the Company’s
hedging during the
the period net assets at the
investment reporting
end of the
period
reporting period
Foreign exchange hedging 64,885 1/2/2020 4/23/2021 107,916 4.50% -213
Commodity hedging 58,161 1/2/2020 9/30/2021 90,491 3.77% 48,988
Total 123,047 -- -- 198,407 8.26% 48,775
Sources of funds for
Company's own funds
hedging investments
Litigation involved (if
None
applicable)
Disclosure date of the
board of directors’
announcement for January 17, 2020
approval of hedging
investment (if any)
Disclosure date of the
announcement of the
shareholders meeting for February 8, 2020
hedging investment
approval (if any)
Risk analysis and control 1. Market risk: When the market changes drastically, the Company may not be able
measures for hedging to fully lock the price of raw materials or products, causing losses. 2. Liquidity risk:
positions during the Operational command for Commodity hedging transactions is issued within the
reporting period (including authority specified in the Company's "Commodity Derivatives Transaction
but not limited to market Management System". If the market fluctuates too much, it may result in forced
risk, liquidity risk, credit liquidation due to insufficient time to replenish the margin. 3. Operational risk: Due
risk, operational risk, legal to the strong professionalism and complexity of futures and forward transactions,
80
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
risk, etc.) there may be accidental losses due to defects in the information system or internal
control. 4. Credit risk: When the price has a significant fluctuation that is
unfavorable to the counterparty, the counterparty may violate the relevant provisions
of the contract and cancel the contract, causing the Company to lose. 5. Legal risk:
Due to changes in the relevant legal system or the counterparty's violation of the
relevant legal system, the contract may not be executed normally, which cause the
loss to the Company. Risk control measures adopted by the Company: The
Company’s board of directors has reviewed and approved the "Foreign Exchange
Derivatives Transaction Management System" and "Commodity Derivatives
Transaction Management System", which stipulate that the Company engages in
hedging investment business, with the hedging as the main purpose and the
speculation and arbitrage trading is prohibited. The Company's business operation
principles, approval authority, internal review process, responsible department and
responsible person, information isolation measures, internal risk reporting system
and risk handling procedures, etc. are stated in the system, which meets the relevant
requirements of the regulatory authorities and meets the needs of actual operations.
The specified risk control measures are practical and effective.
For the changes in market
The market price or the fair value of the product changes during the reporting
prices or product fair
period. The analysis of the fair value of hedging should disclose the specific
values during the reporting
methods used and the setting of related assumptions and parameters. During the
period for invested
reporting period, the Company's hedging investment affected the current profit and
hedging, the analysis of
loss amount: RMB 487.75 million. The Company’s hedging investment is priced at
the fair value of hedging
fair value, and forward foreign exchange is basically determined at the price
should disclose the
provided or obtained by banks, Reuters systems and other pricing service agencies.
specific methods used and
The Company conducts fair value measurement and confirmation every month; the
related assumptions and
transaction price of futures is fair price.
parameter settings
An explanation of whether
No. According to relevant regulations and guidelines of the Ministry of Finance,
the Company’s hedging
"Accounting Standards for Business Enterprises No. 22-Recognition and
accounting policies and
Measurement of Financial Instruments", "Accounting Standards for Business
specific accounting
Enterprises No. 24-Hedging", "Accounting Standards for Business Enterprises No.
principles have changed
23-Transfer of Financial Assets", "Enterprise Accounting Standard No. 37-Financial
significantly during the
Instruments Presentation", the Company carries out corresponding accounting
reporting period compared
treatments for the hedging investment business carried out, and reflect the relevant
with the previous reporting
items of the balance sheet and the income statement.
period
The Company’s hedging investment business for the purpose of hedging is closely
Independent directors' related to the Company’s daily operating needs and complies with relevant laws and
special opinions on the regulations. The Company has established the "Foreign Exchange Derivatives
Company's hedging Transaction Management System" and "Commodity Derivatives Transaction
investment and risk control Management System" strengthens risk management and control, which is conducive
to improving the Company's ability to resist market risks, and there is no situation
81
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
that harms the interests of the Company and all shareholders.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
5. Use of raised funds
(1) Overall use of raised funds
Currency Unit: RMB 10,000
The total The total Proportion Amount
The
amount of amount of Cumulative of the total The total of funds
accumulativ
Year funds raised funds raised total amount amount of amount of raised
e total
of Recruitment Total funds has been for change of funds funds raised funds The purpose and destination of the raised after
amount of
Raisi method raised used during of purpose raised for for the raised has funds not yet used being idle
funds raised
ng the during change of cumulative not been for more
has been
reporting reporting purpose change of used than two
used
period period purpose years
Non-public
issuing of
2016 376,562.33 0 377,633.81 0 0 0.00% 0 / 0
shares in
2015
As of December 31, 2020, RMB
Issue shares
44,155,400 is temporarily stored in the
to purchase
Company's special account for raised
assets and
2019 291,091.12 4,849.09 288,705.07 156,300 156,300 53.69% 4,415.54 funds, the raised funds are ready to be 0
raise
used for intelligent upgrading and
matching
transformation and differential fiber
funds
energy-saving and consumption-reducing
83
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
upgrading projects.
Public
issuance of
As of December 31, 2020, the Company
convertible
2020 198,737.74 198,737.74 198,737.74 0 0 0.00% 239.77 has raised funds in the special account 0
corporate
balance of RMB 2,397,700.
bonds in
2020
Corporate
2020 99,550.00 99,550.00 99,550.00 0 0 0 0 / 0
bond
Total 965,941.19 303,136.83 964,626.62 156,300.00 156,300.00 16.18% 4,655.31 0
Description of the overall use of raised funds
Approved by the China Securities Regulatory Commission Securities Regulatory Commission [2016] No. 1320 document, and approved by the Shenzhen Stock
Exchange, the Company non-publicly issued 316,666,666 RMB ordinary shares (A shares) to eligible investors, approved by Ruihua Certified Public Accountants
(The special general partnership) verified that a total of RMB 3,799,999,992.00 was raised. After deducting the underwriting sponsorship fee and related issuance
expenses, the Company’s net fund raised this time was RMB 3,765,623,325.33. As of December 31, 2019, the Company has used the raised funds of RMB
3,776,338,100, of which: RMB 333,207,300 was used in 2016, RMB 3,208,492,800 was used in 2017, and 234,637,900 yuan was used in 2018. The funds raised in
this period are all used in the Brunei PMB petrochemical project.
Approved by the China National Securities Supervision and Management Committee [2018] No. 1937 document, and approved by the Shenzhen Stock Exchange,
the Company non-publicly issued 213,768,115 RMB ordinary shares (A shares) to eligible investors, approved by Ruihua public accounting firm (special general
partnership) that a total of RMB 2,949,999,987.00 was raised. After deducting brokerage underwriting expenses and related issuance expenses, the actual net
amount of raised funds was RMB 2,910,911,218.99. As of December 31, 2020, the Company has used the raised funds of RMB 2838.5598 million.
Approved by the China Securities Regulatory Commission Securities Regulatory Commission [2020] No. 522 and approved by the Shenzhen Stock Exchange, the
Company publicly issued 20 million convertible corporate bonds to eligible investors, each with a face value of 100 yuan and a total bonds issued is RMB 2 billion,
and the price of transferring share is 11.50 yuan per share, which will be listed on the Shenzhen Stock Exchange on November 16, 2020. The total amount of funds
raised from the public issuance of convertible corporate bonds reaches RMB 2 billion. After deducting the underwriting and sponsorship fees of RMB 11 million
84
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
that have been paid, the remaining amount of RMB 1,989 million will be used for the annual production of 1 million tons of intelligent environmental protection
functional fiber construction project" conducted by Haining Hengyi New Materials Co., Ltd.
Approved by Securities Regulatory License issued by China Securities Regulatory Commission [2018] No. 2141, and approved by the Shenzhen Stock Exchange,
the Company publicly issues corporate bonds of no more than RMB 3 billion to qualified investors. "20 Hengyi 01" was issued on March 11, 2020. After deducting
the underwriting fee, RMB 995.50 million was raised to repay the Company's interest-bearing debts and supplement liquidity.
85
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
(2) Projects committed to raising funds
Currency Unit: RMB 10,000
Whether Investme
Date Wheth
Committed the Total Cumulati nt Whether
when the Benefits er to
investment project committe Amount ve progress the project
Adjusted project realized achieve
projects and has been d invested investme as of the feasibility
total reaches during the
project changed investme in this nt amount end of has
investme its the expecte
targeted by (includi nt of reporting as of the the changed
nt (1) intended reportin d
over-raised ng some raised period end of the period significant
usable g period benefit
funds changes funds period (2) (3) = (2)/ ly
status s
) (1)
Committed investment projects
Brunei PMB
376,562. 376,562. 377,633.8 Novemb $6,919.
Petrochemic No 0 100.28% No No
33 33 1 er 2019 50
al Project
Upgrading
and
transformatio
n project of
No more
differential August 2,919.8
No than 93,500 0 93,647.49 100.16% No No
functional 2020 3
93,500
fiber with an
annual
output of
500,000 tons
Intelligent No more
upgrading No than 28,170 3,725.86 25,541.41 90.67% N/A N/A N/A No
project 28,170
Differential
fiber energy
saving and
consumption No more
May
reduction No than 8,500 0 8,399.34 98.82% N/A N/A No
2019
upgrading 8,500
and
transformatio
n project
Environment No more
al protection Yes than 416.05 0 416.05 100.00% N/A N/A N/A No
functional 141,500
86
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
fiber
upgrading
project with
an annual
output of
250,000 tons
Intelligent No more
upgrading Yes than 5,283.95 153.64 3,406.99 64.48% N/A N/A N/A No
project 20,500
Intelligent
environment
al protection Part of
functional the
No more
fiber 198,737. 198,737.7 planned 7,124.1
No than 200,000 99.37% N/A No
construction 74 4 availabili 9
200,000
project with ty in
an annual 2020
output of 1
million tons
Subtotal of No more
committed than 712,432. 202,617. 707,782.8
-- -- -- -- --
investment 868,732. 33 24 3
projects 33
Project
targeted by
0 0 0 0 /
over-raised
funds
No more
than 712,432. 202,617. 707,782.8
Total /
868,732. 33 24 3
33
Circumstanc
es and
reasons for
not reaching
the planned
None
schedule or
expected
benefits (by
specific
projects)
Description N/A
87
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
of major
changes in
the
feasibility of
the project
The amount,
purpose and
use progress
N/A
of
over-raised
funds
Changes in
the
implementati
on location
N/A
of
fund-raising
investment
projects
Adjustments
to the
implementati
on of N/A
fund-raising
investment
projects
Applicable
According to the Proposal on the Company’s Public Issuance of Convertible Corporate Bonds
approved by the Company’s 29th meeting of the 10th Board of Directors on April 25, 2019 and the
resolution of 2018 Annual General Meeting of Shareholders on May 9, 2019, it is agreed that before
Preliminary the funds raised from the issuance of convertible corporate bonds are fully funded, if the Company
investment has used self-raised funds to invest in the construction of the above-mentioned projects, it shall be
and replaced in accordance with the procedures prescribed by relevant laws and regulations after the
replacement funds raised are fully funded. As of October 23, 2020, the Company invested RMB
of raised 4,606,157,244.19 of self-raised funds in advance into the above-mentioned raised funds investment
funds project, deducting RMB 756,000,000.00 from the non-public issuance of RMB common stocks
investment raised by the Company to specific targets on January 30, 2019, as the supporting funds for the
projects construction of intelligent environmentally-friendly functional fibers with an annual output of 1
million tons, the remaining amount is RMB 3,850,157,244.19. The Company decided to replace the
self-raised funds of RMB 1,987,377,358.49 with the raised funds for the investment projects
invested in advance. As of December 31, 2020, the Company has replaced the self-raised funds of
RMB 1,987,377,358.49.
88
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Temporarily
supplement
liquidity with N/A
idle raised
funds
The amount
and reason of
the
fund-raising
balance in N/A
the
implementati
on of the
project
As of December 31, 2020, the raised funds of RMB 44,155,400 temporarily stored in the
Use and
Company's special fund-raising account are ready to be used for intelligent upgrading and
destination
transformation projects, differential fiber energy-saving and consumption-reducing upgrading and
of unused
transformation projects, and the temporary storage of RMB 2,397,700 is used for intelligent
raised funds
environmental protection functional fiber construction projects.
Problems or
other
circumstance
s in the use N/A
and
disclosure of
raised funds
(3) Changes in the projects with raised funds
The total Date Benef
Actual
amount when its Whet Whether the
invest Actual
of funds Investment the realiz her to feasibility
ment cumulative
to be progress project ed achie of the
amount investment
The project Corresponding invested as of the reaches durin ve the project after
during amount as
after change original commitment in the end of the its g the expec the change
the of the end of
project period intende report ted has changed
reporti the period
after the (3)=(2)/(1) d ing benef significantl
ng (2)
change usable perio its y
period
(1) status d
Intelligent upgrading and Part of
environmen transformation the 7,124
75,600 969.59 76,593.79 101.31% N/A No
tal projects with an planne .19
protection annual output of d
89
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
functional 250,000 tons of availab
fiber environmentally ility in
construction friendly functional 2020
project with fiber, intelligent
an annual upgrading and
output of 1 transformation
million tons projects (Taicang
Yifeng)
upgrading and
transformation
Acquired projects with an
100% annual output of
equity of 250,000 tons of
Hangzhou environmentally 7,023
80,700 0 80,700 100.00% N/A N/A No
Yijing friendly functional .19
Chemical fiber, intelligent
Fiber Co., upgrading and
Ltd. transformation
projects (Taicang
Yifeng)
14,14
Total -- 156,300 969.59 157,293.79 -- -- -- --
7.38
In order to improve the efficiency of the use of raised funds, the
Company held the 29th meeting of the tenth board of directors on
April 25, 2019. The "Proposal on Changing the Use of Part of the
Explanation of reasons for change, Raised Funds and Related Transactions" was reviewed and adopted,
decision-making procedures and and the use of raised funds for the environmentally friendly
information disclosure (by specific items) functional fiber upgrading project (Phase II) with annual production
of 250,000 tons and intelligent upgrading project (Taicang Yifeng)
was cancelled, the remaining funds raised from these two projects
will be invested in new projects.
The situation and reasons for not reaching
the planned progress or expected benefits N/A
(by specific projects)
Explanation of major changes in the
N/A
feasibility of the project after the change
VI. Major assets and equity sales
1. Sales of major assets
The Company did not sell any major assets during the reporting period.
90
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2. The sale of major equity
□ Applicable √ Not applicable
7. Analysis of major holding and shareholding companies
Major subsidiaries and shareholding companies that have an impact on the Company’s net profit by
more than 10%
Currency Unit: RMB 10,000
Type of
Company Main Registere Operating Operating
subsidiar Total assets Net assets Net profit
Name business d capital income profit
y
Refining and 1 billion
Hengyi Subsidiar
petrochemica US 3,635,668.24 734,242.95 2,321,258.54 47,853.39 47,747.33
Brunei y
l dollars
514,447,1
Zhejiang Subsidiar
PTA 00 US 1,565,487.2 871,522.55 2,352,467.7 152,596.71 109,630.01
Yisheng y
dollars
Ningbo
Subsidiar
Hengyi PTA 2,000 284,035.83 92,440.2 1,431,043.73 74,217.78 67,946.74
y
Trade
Yisheng Joint
Investmen stock PTA 201,800 1,682,012.42 771,515.6 2,536,416.86 122,694.19 109,206.53
t company
Joint
Hainan Yi
stock PTA 358,000 1,021,744.86 397,725.04 1,808,764.93 115,573.2 98,267.26
Sheng
company
Polyester
Hengyi Subsidiar
chips, POY, 28,074 252,542.03 104,801.11 349,464.95 11,797.92 10,768.95
Polymer y
etc.
Polyester
Hengyi Subsidiar
chips, POY, 275,725 1,117,219.86 495,420 988,395.09 33,737.05 32,287.47
Hi-tech y
etc.
Taicang Subsidiar
POY 77,100 229,654.21 109,060.52 245,351.87 14,353.29 10,920.28
Yifeng y
Shuangtu
Subsidiar POY, FDY,
New 60,000 423,595.34 201,498.38 599,804.4 30,056.05 29,155.51
y chips
Material
Hangzhou Subsidiar FDY, POY,
100,000 298,796.88 108,196.54 337,406.72 8,482.07 7,023.19
Yijing y DTY, chips
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Jiaxing Subsidiar
FDY 300,000 438,160.42 276,041.42 354,682.88 17,770.01 14,950.54
Yipeng y
Hengyi Subsidiar
DTY 300,000 3,523,380.86 775,873.77 3,719,091.6 101,169.04 101,404.67
Limited y
Hengyi
Subsidiar
caprolacta CPL 120,000 584,030.14 228,962.04 537,192.95 32,633.96 21,365.03
y
m
Hong 150,950
Subsidiar Investment
Kong US 3,658,052.13 1,226,682.38 2,473,752.13 16,607.18 16,074.76
y and trade
Tianyi dollars
China Joint
Zheshang stock Finance 2,126,870 204,822,500 13,254,300 4,770,300 1,447,100 1,255,900
Bank company
Acquisition and disposal of subsidiaries during the reporting period
Methods of acquiring and disposing of
Company Name
subsidiaries during the reporting period
Guangxi Hengyi New Material Co., Ltd. Acquisition
Guangxi Hengyi Shunqi Trading Co., Ltd. Establishment
Jiaxing Hengyu Trading Co., Ltd. Establishment
Hainan Hengjing Trading Co., Ltd. Establishment
Haining Lantai New Material Co., Ltd. Establishment
Hangzhou Yitong New Material Co., Ltd. Establishment
Haining Yixin Logistics Co., Ltd. Establishment
Hangzhou Jingxin Supply Chain Management Co., Ltd. Establishment
Guangxi Hengyi Environmental Technology Co., Ltd. Establishment
Zhejiang Hengyi Hanlin Real Estate Co., Ltd. Establishment
Ningbo Hengyi Logistics Co., Ltd. Disposal
Description of the main holding and shareholding companies
(1) Hengyi Limited
The Company directly holds 99.72% of the shares of Zhejiang Hengyi Petrochemical Co., Ltd.
(actually enjoys 100% equity), and Hengyi’s registered capital is RMB 3 billion. The Company’s
business scope is the production, processing and sales of chemical fibers, chemical raw materials
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(excluding dangerous goods); operating import and export business.
(2) Zhejiang Yisheng
The Company holds 70% of Zhejiang Yisheng Petrochemical Co., Ltd. shares through
Zhejiang Hengyi Petrochemical Co., Ltd. Zhejiang Yisheng has a registered capital of
US$514,447,100. The Company's business scope: Production of purified terephthalic acid (PTA)
and sales of self-produced products. The Company currently has three large-scale PTA production
lines with actual PTA production capacity of 5 million tons per year and PIA production capacity of
30 million tons.
(3) Ningbo Hengyi Trading
The Company holds a total of 70% of Ningbo Hengyi Trading Co., Ltd. shares through
Zhejiang Hengyi Petrochemical Co., Ltd.. Ningbo Hengyi Trading has a registered capital of RMB
20 million. The Company's business scope: Wholesale of hazardous chemicals (instruments trade)
(Please refer to YLAJ (2018) 0084 "Dangerous Chemicals Business Permit” for details of the
business scope) (within the validity period of the permit). Wholesale and retail of chemical raw
materials and products; self-operate and act as agent for the import and export business of various
goods and technologies (except for goods and technologies that are restricted by the state or
prohibited for import and export).
(4) Yisheng Investment
The Company holds a total of 30% of Dalian Yisheng Investment Co., Ltd. shares through
Zhejiang Hengyi Petrochemical Co., Ltd. Yisheng Investment has a registered capital of RMB 2.018
billion. The Company's business scope: Project investment, domestic general trade, import and
export of goods, import and export of technology, intermediary agency of trade.
(5) Hainan Yisheng
The Company holds 50% of Hainan Yisheng's shares through Zhejiang Hengyi Petrochemical
Co., Ltd. Hainan Yisheng has a registered capital of RMB 3.58 billion. The Company's business
scope covers the production, processing, wholesale and retail of purified terephthalic acid, polyester
chips, polyester bottle flakes, polyester staple fiber, POY yarn, FDY yarn, crude cobalt manganese
oxide, chemical fiber raw material; operation of p-xylene (PX), acetic acid, ethylene glycol;
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self-operate and act as agent for import and export of various commodities and technologies.
Terminal facility operations, loading and unloading general cargo services in the jetty area, jetty
tugboat operations, ship service business operations, providing ships with fresh water, ship
pollutants (oily sewage, residual oil, tank washing water, domestic sewage and garbage) reception
and containment Oil boom supply service.
(6) Hengyi Polymer
The Company holds 53.43% of the shares of Zhejiang Hengyi Polymer Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd. (actually holds 60% of the shares). The registered capital
of Hengyi Polymer reaches RMB 280.74 million. The Company's business scope covers the
production, processing and sales of polyester chips, POY yarn, chemical fiber raw materials, textile
fabrics, and clothing. Since May 2001, the Company took the lead in investing in
domestically-made melt direct spinning production lines in China.
(7) Hengyi High-tech
The Company holds 90.67% of the equity of Zhejiang Hengyi High-tech Materials Co., Ltd.
through Zhejiang Hengyi Petrochemical Co., Ltd. The business scope of Hengyi High-tech:
Production, processing and sales of polyester chips, POY yarn, FDY yarn, chemical fiber raw
materials; operating the export business of the Company’s self-produced products and technologies
and the import business of self-use products and technologies (the items prohibited or restricted by
national laws and regulations excluded); all other legal projects that do not need to be submitted for
approval.
(8) Hengyi Caprolactam
The Company holds 50% equity of Zhejiang Baling Hengyi Caprolactam Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd. Baling Hengyi caprolactam has a registered capital of
RMB 1.2 billion, and its business scope: Preparation for the production of caprolactam,
cyclohexane, cyclohexanone, cyclohexanol, ammonium sulfate, soda ash, sulfuric acid, hydrogen
peroxide solution and other downstream products produced by benzene hydrogenation, chemical
raw materials project.
(9) Hong Kong Tianyi
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The Company holds 100% equity of Hong Kong Tianyi International Holdings Co., Ltd.
through Zhejiang Hengyi Petrochemical Co., Ltd. Hong Kong Tianyi has a registered capital of
US$1, 509.5 million, and its business scope involves investment and trade.
(10) Hengyi Brunei
The Company holds 70% equity of Hengyi Industries Sdn Bhd. through Hong Kong Tianyi
International Holdings Co., Ltd. Hengyi Brunei has a registered capital of US$1 billion, and its
business scope: petroleum refining. After the Company is established, it will have a crude oil
processing design capacity of 8 million tons per year.
(11) Zheshang Bank
The Company, through its subsidiary Zhejiang Hengyi Petrochemical Co., Ltd. and its indirect
subsidiary Zhejiang Hengyi High-tech Material Co., Ltd., holds a total of 748,069,283 shares in
Zheshang Bank, accounting for 3.52% of the total share capital of Zheshang Bank. Business scope:
Operating financial business (see the approval of the China Banking and Insurance Regulatory
Commission for details). The Company was duly established in 2004 and is one of the 12 national
joint-stock commercial banks approved by the China Banking and Insurance Regulatory
Commission. Zheshang Bank was listed on the main board of the Hong Kong Stock Exchange on
March 30, 2016, stock symbol: 02016. HK; and it was listed on Shanghai Stock Exchange on
November 26, 2019, stock symbol: 601916.SH.
(12) Jiaxing Yipeng
The Company holds 100% equity of Jiaxing Yipeng Chemical Fiber Co., Ltd. Jiaxing Yipeng
has a registered capital of 3 billion yuan and is mainly engaged in the production and sales of civil
polyester filaments and fiber-grade polyester chips. Its products are mainly FDY and fiber-grade
polyester chips.
(13) Taicang Yifeng
The Company holds 100% equity of Taicang Yifeng Chemical Fiber Co., Ltd. With a
registered capital of RMB 771 million, Taicang Yifeng is mainly engaged in the production and
sales of civil polyester filaments and fiber-grade polyester chips. The products are mainly POY and
fiber-grade polyester chips.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
(14) Shuangtu New Material
The Company holds 100% equity of Zhejiang Shuangtu New Material Co., Ltd. With a
registered capital of 60 million yuan, Shuangtu New Material is mainly engaged in the production
and sales of civil polyester filaments and fiber-grade polyester chips. The products are mainly FDY,
POY and fiber-grade polyester chips.
(15) Hangzhou Yijing
The Company holds 100% equity of Hangzhou Yijing Chemical Fiber Co., Ltd. With a
registered capital of RMB 1 billion, Hangzhou Yitong is mainly engaged in the production,
processing and sales of polyester chips, polyester filaments, chemical fiber raw materials, etc. The
main products are FDY, POY and DTY.
VIII The situation of the structured entities controlled by the Company
□ Applicable √ Not applicable
IX. Prospects for the Company's future development
1) Development strategy of Company
The Company proactively adapts to economic changes, reshapes entrepreneurial passion, and
strictly observes the two bottom lines of legal compliance and safe production. Be firm in
development concept, adhere to the unchanged direction of industry strategy. The Company
continues to insist on consolidating, highlighting and optimizing the core competitiveness of the
main business, promote intelligent manufacturing, implement lean production, increase scientific
research and innovation, improve product quality, enhances operational efficiency, expand and
strengthen the petrochemical fiber industry chain, and improve the industrial chain driven by dual
wheels of "polyester + polyamide", deepens the multi-level and three-dimensional industrial layout
of "Petrochemical +". In 2021, the Company will rely on its strategic development plan to further
consolidate and enhance the main competitiveness of petrochemicals, realize resource sharing,
industrial coordination, and comprehensively enhance comprehensive competitiveness, and strive to
build the Company into one of the world's first-class petrochemical industry groups.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2) Industry Outlook
See section IV I. Overview (I) Discussion and analysis of business conditions
3) The Company's operational pattern outlook for 2021
1. Based on the Company's strategic development plan, steadily promote the construction
of Brunei Project Phase II
Based on the successful completion of the established goals and tasks of the Hengyi
Petrochemical Plan in 2020, the Company proposes to position itself as a world-class
petrochemical-chemical fiber integrated service provider based on the high-quality development
requirements of the new era and the new pattern of industrial development, and systematically
create the strategic development plan with upstream and downstream synergy, domestic and foreign
linkages and comprehensive competitiveness of matching software and hardware.
2. Create a digital benchmark for the polyester industry and realize the high-quality
development of the "polyester + polyamide" industry
The polyester industry is in a critical period of supply-side structural reform and
transformation and upgrading, and the profit of the industrial chain continues to restructure. With
the full commissioning of the Brunei Refining and Petrochemical project and the planning and
construction of the Project Phase II, the Company's unique "one drop of oil, two pieces of yarn"
industrial layout has been gradually improved, which has laid sound foundation for further
enriching the Company's product categories and improving its product structure to create
differential competitiveness. According to the Company’s strategic development plan, the Company
will focus on the construction of a "5+2+1" production base, continue to expand the scale of
upstream and downstream industries, and further highlight the industry positioning with
downstream polyester as the development core based on the integration of the industrial chain and
the drive of polyester and polyamide. With the further deepening of the combination of big data
applications and industrial production, the role of high-end technology in promoting the future
development of the industry has become more prominent. The Company will continue to uphold the
transformation concept of "manufacturing" to "intelligent manufacturing", always focus on
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
enhancing industrial competitiveness, resolutely implement strategic planning, and actively
implement the development and upgrading of the polyester industry.
3. Enhance industrial synergy and improve the integrated management of the supply
chain
In 2021, the Company will continue to adhere to the cost-quality leadership strategy,
strengthen management, and improve product quality through lean production. Clarify the market
positioning and product structure, plan the market promotion cycle and customer introduction and
expansion strategies, and increase the number of quality-oriented customers. Strengthen the linkage
between production and sales, improve product quality, and play a leading role in the market.
The Company will take the strengthening of the intelligent supply chain system as the starting
point, take customer demand as the starting point, and take customer satisfaction as the goal, build
an intelligent system from production line-product-warehouse-logistics-customer, and adopt system
judgment instead of human judgment for order processing, to optimally configure customer needs,
provide customers with the most suitable products and most desirable services, establish a customer
demand-oriented supply chain integration system, and finally achieve closed-loop management of
production, supply, marketing and logistics.
At the same time, the Company will continue to promote the synergy between the upper,
middle and lower reaches of the industrial chain, multiple manufacturing bases, production, sales
and research, and domestic and foreign platforms, so that the synergy is no longer limited to the
mining of economies of scale, and more attention is paid to integrating potential scope economic
benefits and developing better product mix, integrating R&D capabilities, optimizing the supply
chain, and exquisite management processes continue to explore synergies. The Company will
establish and improve the coordination mechanism and evaluation and incentive mechanism, and
make full use of new technologies and platform strategies to create "lean production" and realize
the Company's unified deployment and coordinated integration of the resources of its subsidiaries.
4. Focus on improving the intensity of scientific research and innovation and promote
breakthroughs in industrialization
In 2021, the Company will focus on the industrial layout, continue to increase investment in
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
product, technology and management innovation, fully support scientific and technological
innovation-driven development, strengthen R&D and innovation’s continuous contribution to the
Company’s production, operation, and development, and strive to make more achievements in key
technologies and equipment innovation and the research and development of high-value-added
differential products, to build a world-class research and development base for key common
technologies and high-end chemical products in the integration of refining and chemical industry.
To ensure the high-quality development of R&D and innovation work, the Company will
promote the construction of two major sub-platforms with supporting special mechanisms–
production, marketing and research integrated platform & school-enterprise cooperation platform.
The Company will give full play to the functional positioning and advantages of linkage with
universities and scientific research institutes, participate in basic research through various forms and
channels, carry out scientific and technological collaboration at the front end, promote application
implementation at the back end, and create a flexible mechanism with strong R&D motivation, high
conversion efficiency, smooth management and operation, continuously generates new results,
promotes the transformation of results, and actively acts on back-end innovation to build a
multi-agent collaborative innovation ecosystem of technological innovation, application
demonstration, talent training, model innovation and business integration.
5. Deepen the reform of the organizational system and shape a culture of co-creation and
sharing of strugglers
In 2021, the Company will continue to unswervingly promote organizational reforms, build
and improve continuously a young, professional, and international elite team, deepen continuously
sector management, and explore the establishment of a sectorized operation mechanism with
elasticity through a scientific division of labor system and performance management system, give
full play to the initiative of the operating entities. The Company will continue to deepen the reforms
of engineering management, scientific research framework, production sector and audit
management to build an innovative, active, collaborative and efficient operating system.
In order to improve the incentive and innovation mechanism, the Company’s fourth phase of
employee stock ownership plan was reviewed and approved by the Company’s board of directors on
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
April 1, 2021. The Company plans to implement a total employee stock ownership plan of no more
than RMB 1.4 billion. The employee stock ownership plan is orientated at company directors,
supervisors, senior managers, regular employees of the Company and its subsidiaries, etc. with the
total number of personnel of not exceeding 4,011.
4) Risks and countermeasures
1. Macroeconomic risks
The Company is engaged in the production and sales of petrochemical and polyester fiber
products. The petrochemical and polyester chemical fiber industry is closely related to the world
economy and domestic economic development. Its product prices and sales are affected by factors
such as macroeconomic fluctuations and changes in supply and demand. With the acceleration of
economic globalization and integration, national macro-control and cyclical fluctuations in the
world economy will have an impact on the development of the industry. If the global economic
growth slows down or a recession occurs, it will directly affect the Company’s business, operating
performance and financial status.
2. Safety and environmental protection production risks
With the increasing awareness of environmental protection and stricter environmental
protection requirements of the government, the Company strictly implements and carries out the
"Safety Production Law of the People's Republic of China", "Environmental Protection Law of the
People's Republic of China" and other related laws and regulations, has been committed to assume
safe and environmentally production and fulfill social responsibility. Since the operation of the main
production body, there has been no significant safety and environmental protection production
events. With the expansion of the Company's production scale and the extension of the industry
chain, how to prevent the occurrence of safety and environmental accidents is the focus of the
Company's management work.
In order to reduce the industry safety and environmental protection production risks, the
Company takes the strengthening of the organization and system construction as the starting point,
further implements the safety and environmental protection production responsibility system.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
According to the arrangements of national 1, 2, and 3 safety standardization, the Company actively
carries out safety standardization compliance acceptance, focusing on building a safety standard
management system. The Company shall implement the dual preventive work mechanism of
hierarchical management and control of safety risks and the detection and management of hidden
dangers, strengthen safety training, increase safety investment, implement the strategy of promoting
safety and security through science and technology, promptly remove hidden safety and
environmental hazards, and eliminate all possibilities of major accidents.
3. The risk of large fluctuations in crude oil prices
The Company is a leading refining and chemical fiber enterprise in China. The cost
composition of the industrial chain in which more than 80% is determined by upstream raw
materials, and the fluctuation of crude oil prices will affect the price fluctuations of various products
in the industrial chain, which intensifies the uncertainty of raw material costs and operating costs, as
well as the accompanying increase in sales risks and fluctuations in corporate benefits. In 2021, the
Company will continue to optimize its inventory strategy to reduce the adverse impact of product
price fluctuations in the industrial chain caused by crude oil price fluctuations on business
operations.
X. Reception of research, communication, interviews and other activities
1. Registration form for reception of research, communication, interviews and other activities
during the reporting period
Rece Rece Recept
Recept The main content of the
ption ption ion Reception Index of the basic
ion discussion and the information
locati meth object object situation of the survey
time provided
on od type
Staff of 50 On the premise of avoiding Please refer to the
Januar Field
Com Institut institutions selective disclosure, public Hengyi
y 6, resea
pany ion including information such as industry Petrochemical's
2020 rch
Everbright status, company business Investor Relations
101
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Securities development and future Activity Record Form
and development plans are on irm.cninfo.com.cn
Shenwan communicated and exchanged. on January 6, 2020
Hongyuan No paper materials are provided.
Group CO.,
LTD
On the premise of avoiding
Staff of 3 Please refer to the
selective disclosure, public
institutions Hengyi
information such as industry
Januar Field including Petrochemical's
Com Institut status, company business
y 13, resea HSBC Investor Relations
pany ion development and future
2020 rch Qianhai and Activity Record Form
development plans are
HSBC Asia on irm.cninfo.com.cn
communicated and exchanged.
Pacific on January 13, 2020
No paper materials are provided.
3W Fund On the premise of avoiding
Please refer to the
Telep Staff of 42 selective disclosure, public
Hengyi
hone institutions information such as industry
Februa Petrochemical's
Com com Institut including status, company business
ry 4, Investor Relations
pany muni ion Sinolink development and future
2020 Activity Record Form
catio Securities development plans are
on irm.cninfo.com.cn
n and 3W communicated and exchanged.
on February 04, 2020
Fund No paper materials are provided.
Telep Staff of 11 On the premise of avoiding Please refer to the
hone mecha institutions selective disclosure, public Hengyi
Februa
Com com nism including information such as industry Petrochemical's
ry 19,
pany muni Institut China status, company business Investor Relations
2020
catio ion Securities development and future Activity Record Form
n Cooperation development plans are on irm.cninfo.com.cn
102
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
and Zizhu communicated and exchanged. on February 19, 2020
Investment No paper materials are provided.
On the premise of avoiding
Staff of 8 Please refer to the
Telep selective disclosure, public
institutions Hengyi
hone information such as industry
Februa including Petrochemical's
Com com Institut status, company business
ry 19, Merchants Investor Relations
pany muni ion development and future
2020 Securities, Activity Record Form
catio development plans are
E Fund, on irm.cninfo.com.cn
n communicated and exchanged.
Yinhua etc. on February 19, 2020
No paper materials are provided.
Staff of 18
On the premise of avoiding
institutions Please refer to the
Telep selective disclosure, public
including Hengyi
hone information such as industry
April CITIC Petrochemical's
Com com Institut status, company business
28, Securities, Investor Relations
pany muni ion development and future
2020 CITIC Activity Record Form
catio development plans are
Capital and on irm.cninfo.com.cn
n communicated and exchanged.
Yingda on April 28, 2020
No paper materials are provided.
Insurance
Staff of 30
On the premise of avoiding
institutions Please refer to the
Telep selective disclosure, public
including Hengyi
hone information such as industry
April TF Petrochemical's
Com com Institut status, company business
28, Securities Investor Relations
pany muni ion development and future
2020 and Ping An Activity Record Form
catio development plans are
Asset on irm.cninfo.com.cn
n communicated and exchanged.
Managemen on April 28, 2020
No paper materials are provided.
t Co., Ltd.
103
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
20 On the premise of avoiding
Please refer to the
Telep institutions selective disclosure, public
Hengyi
hone including information such as industry
Petrochemical's
May 6, Com com Institut CICC, status, company business
Investor Relations
2020 pany muni ion CITIC development and future
Activity Record Form
catio Capital and development plans are
on irm.cninfo.com.cn
n Merchant communicated and exchanged.
on April 28, 2020
Fund No paper materials are provided.
29
On the premise of avoiding
institutions Please refer to the
Telep selective disclosure, public
including Hengyi
hone information such as industry
May Shenwan Petrochemical's
Com com Institut status, company business
13, Hongyuan, Investor Relations
pany muni ion development and future
2020 Wanjia Activity Record Form
catio development plans are
Fund, on irm.cninfo.com.cn
n communicated and exchanged.
Xingquan on May 13, 2020
No paper materials are provided.
Fund
16
On the premise of avoiding
institutions Please refer to the
Telep selective disclosure, public
including Hengyi
hone information such as industry
Wanjia Petrochemical's
July 9, Com com Institut status, company business
Fund, Investor Relations
2020 pany muni ion development and future
Huatai-pine Activity Record Form
catio development plans are
bridge on irm.cninfo.com.cn
n communicated and exchanged.
Fund, New on July 09, 2020
No paper materials are provided.
Hope
July Com Telep mecha 4 On the premise of avoiding Please refer to the
15, pany hone nism institutions selective disclosure, public Hengyi
104
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2020 com including information such as industry Petrochemical's
muni Founder status, company business Investor Relations
catio Securities development and future Activity Record Form
n and China development plans are on irm.cninfo.com.cn
Universal communicated and exchanged. on July 15, 2020
No paper materials are provided.
62
On the premise of avoiding Please refer to the
institutions
Telep selective disclosure, public Hengyi
including
hone information such as industry Petrochemical's
Septem CICC,
Com com Institut status, company business Investor Relations
ber 1, JPMorgan
pany muni ion development and future Activity Record Form
2020 Chase,
catio development plans are on irm.cninfo.com.cn
ICBC
n communicated and exchanged. on September 01,
Credit
No paper materials are provided. 2020
Suisse, etc.
31
institutions
including
On the premise of avoiding
East Please refer to the
selective disclosure, public
Securities Hengyi
information such as industry
Octobe Field Asset Petrochemical's
Com Institut status, company business
r 26, resea Managemen Investor Relations
pany ion development and future
2020 rch t, Gemboom Activity Record Form
development plans are
Investment on irm.cninfo.com.cn
communicated and exchanged.
Mgmt, Kuo on October 26, 2020
No paper materials are provided.
Hwa Life
Insurance,
etc.
105
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
14 On the premise of avoiding Please refer to the
institutions selective disclosure, public Hengyi
including information such as industry Petrochemical's
Novem Field
Com Institut Kaiyuan status, company business Investor Relations
ber 10, resea
pany ion Securities, development and future Activity Record Form
2020 rch
ABC-CA, development plans are on irm.cninfo.com.cn
and Kaifeng communicated and exchanged. on November 10,
Investment No paper materials are provided. 2020
9
institutions
On the premise of avoiding Please refer to the
including
selective disclosure, public Hengyi
Guangdong
information such as industry Petrochemical's
Novem Field Developme
Com Institut status, company business Investor Relations
ber 26, resea nt Fund, GF
pany ion development and future Activity Record Form
2020 rch Self-operate
development plans are on irm.cninfo.com.cn
d, Yangtze
communicated and exchanged. on November 26,
River Asset
No paper materials are provided. 2020
Managemen
t, etc.
On the premise of avoiding Please refer to the
selective disclosure, public Hengyi
1 institution information such as industry Petrochemical's
Decem Field
Com Institut including status, company business Investor Relations
ber 10, resea
pany ion Essence development and future Activity Record Form
2020 rch
Securities development plans are on irm.cninfo.com.cn
communicated and exchanged. on December 10,
No paper materials are provided. 2020
Decem Com Telep Institut 29 On the premise of avoiding Please refer to the
106
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
ber 23, pany hone ion institutions selective disclosure, public Hengyi
2020 com including information such as industry Petrochemical's
muni China Post status, company business Investor Relations
catio Fund, Bank development and future Activity Record Form
n of development plans are on irm.cninfo.com.cn
Communica communicated and exchanged. on December 23,
tions No paper materials are provided. 2020
Schroder,
Ivy League
Number of receptions 18
Number of reception institutions 377
Number of individuals received 0
Number of other objects received 0
Whether to divulge, disclose or reveal
No
undisclosed material information
107
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Section V Important Matters
I. The Company’s common stock profit distribution and capitalization of capital reserves
During the reporting period, the common stock profit distribution policy, especially the
formulation, implementation or adjustment of the cash dividend policy
According to the China Securities Regulatory Commission's "Notice on Further Implementing
Issues Related to Cash Dividends of Listed Companies" (ZJF [2012] No. 37), Guangxi Securities
Regulatory Bureau "Notice on Strengthening the Awareness of Returning Shareholders and
Improving Dividend Mechanism" (GZJF [2012] 23) and "Guidelines for the Supervision of Listed
Companies No. 3-Cash Dividends of Listed Companies" Securities Regulatory Commission
Announcement [201309] No. 43 and other documents, combined with the actual situation of the
Company, specific provisions has been made for the profit distribution decision-making procedures
and profit distribution policy in the "Articles of Association". In addition, it has formulated the
"Shareholder Dividend Return Plan for the Next Three Years (2019-2021)" to better guarantee the
reasonable return of all shareholders, further refine the provisions of the profit distribution policy in
"Articles of Association", and increase the transparency and operability in dividend distribution
decision, establish a continuous, stable and scientific return plan and mechanism for investors to
ensure the continuity and stability of the profit distribution policy. During the reporting period, the
Company shall strictly implement the above profit distribution policy.
According to the 2019 profit distribution plan approved by the Company’s 2019 shareholders
meeting held on May 19, 2020: Based on the Company’s existing total share capital of
2,841,725,474 shares, a cash dividend of RMB 4.00 (including tax) will be distributed to all
shareholders for every 10 shares. No bonus shares will be given, and 3 shares will be added for
every 10 shares. The Company published the "Announcement on the Implementation of Hengyi
Petrochemical Co., Ltd.'s Annual Equity Distribution in 2019", and the implementation was
completed on May 28, 2020.
Special description of cash dividend policy
Whether it meets the requirements of the Company's Articles of Association or the resolutions of the Yes
108
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
general meeting of shareholders :
Whether the dividend standard and proportion are clear and definite: Yes
Whether the relevant decision-making procedures and mechanisms are complete: Yes
Whether independent directors have performed their due diligence and played their due role: Yes
Whether small and medium shareholders have sufficient opportunities to express their opinions and
Yes
demands, and whether their legitimate rights and interests are fully protected:
If the cash dividend policy is adjusted or changed, whether the conditions and procedures are compliant
N/A
and transparent:
The Company’s common stock dividend distribution plan (preliminary programe) and the
capital reserve conversion plan (preliminary programe) for the past 3 years (including this
reporting period)
1. The Company's 2018 profit distribution plan: Based on the Company's total share capital of
2,841,725,474 shares as of April 17, 2019, a cash dividend of RMB 3 (tax included) for every 10
shares, no bonus shares, and no capital reserve is converted as share capital.
2. The Company's 2019 profit distribution plan: Based on the Company's total share capital of
2,841,725,474 shares as of December 31, 2019, a cash dividend of RMB 4 (tax included) for every
10 shares, no bonus shares, and capitalization of capital reserves is conducted. 3 shares are
transferred to all shareholders for every 10 shares.
3. The Company's 2020 profit distribution plan: Based on the Company's total share capital of
3,681,645,407 shares as of December 31, 2020, a cash dividend of RMB 3 (tax included) for every
10 shares, no bonus shares, and no capital reserve is converted as share capital.
The Company's cash dividends of common shares in the past three years (including this
reporting period)
Currency Unit: RMB
Net profit The ratio of the amount of Total cash The ratio of total cash
Cash dividend attributable to cash dividends to the net dividends dividends (including
Dividend
amount (tax common profit attributable to (including other methods) to the net
year
included) shareholders of common shareholders of other profit attributable to
listed companies in the listed company in the methods) common shareholders of
109
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
the annual consolidated statement listed companies in the
consolidated consolidated statement
statement of
dividends
2020 1,104,493,622.10 3,071,998,839.75 35.95% 0.00 0.00%
2019 1,136,690,189.60 3,190,185,517.79 35.63% 0.00 0.00%
2018 852,517,642.20 1,872,494,729.34 45.53% 0.00 0.00%
The Company was profitable during the reporting period and the parent company’s profit
available for distribution to ordinary shareholders was positive, but no distribution plan for
cash dividend for ordinary shares was proposed
□ Applicable √ Not applicable
II. Profit distribution and capitalization of capital reserve during the reporting period
Number of bonus shares for every 10 shares (shares) 0
Distributing dividends per 10 shares (yuan) (tax included) 3
The equity base of the distribution plan (shares) 3,681,645,407
Cash dividend amount (yuan) (tax included) 1,104,493,622.10
Cash dividend amount in other ways (such as share repurchase) (yuan) 0.00
Total cash dividends (including other methods) (yuan) 1,104,493,622.10
Distributable profit (yuan) 1,127,876,313.43
The ratio of total cash dividends (including other methods) to total profit
100%
distribution
This cash dividend situation
If the Company's development stage is in the growth period and has major capital expenditure
arrangements, when the profit distribution is carried out, the proportion of cash dividends in this
profit distribution should be at least 20%
Detailed explanation of the profit distribution or capital reserve transfer plan
Based on attaching importance to reasonable investment returns to investors and taking into
account the Company’s sustainable development principles, the Company intends to distribute 0
110
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
bonus shares (including tax) to all shareholders for every 10 shares on the basis of company’s
existing total share capital of 3,681,645,407 shares. The cash dividend of RMB 3.00 (tax included)
shall be distributed for every 10 shares, and the total distributed profit is RMB 1,104,493,622.10.
No bonus shares and no public reserve fund is converted as share capital. If the additional
issuance, repurchase, or conversion of convertible bonds into share capital occurs to the Company
before the dividend distribution equity registration date, resulting in a change in the total equity on
the dividend distribution equity registration date, the Company will adjust the corresponding total
equity. The remaining undistributed profits will be carried forward for distribution in subsequent
years (this plan still needs to be approved by the Company's 2020 annual shareholders meeting).
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
III. Fulfillment of commitments
1. Commitments that the Company’s actual controllers, shareholders, related parties, acquirers, and the Company and other relevant
parties have fulfilled during the reporting period and that have not been fulfilled as of the end of the reporting period
Comm
Promising Commitment Commitm Commitm
itment Commitment content Performance
party type ent time ent period
reason
Commitment It ensures the independence of Hengyi Group and its actual controller's
on independent affiliates and the Company in terms of personnel, assets, finance,
Qiu operation organization and business in the commitment.
Up to now,
Jianlin, Commitment
Hengyi Group
the actual on horizontal Promise not to compete with the Company in the same industry.
Comm and the actual
controller competition April 29, long term
itments controller Qiu
of Hengyi Commitment 2010 effective
made Jianlin have not
Group and on connected Commit to regulate related transactions with the Company.
in the violated this
the transaction
acquisi commitment.
Company Commitment
tion
on the use of Promise not to occupy company funds.
report
funds
or
It is promised that the equity adjustment of Zhejiang Yisheng and The undertaking
equity
Yisheng Investment will not increase the actual or potential tax burden remains valid and
change
Hengyi of Hengyi Petrochemical or related subsidiaries. On the premise of the is still in the
report
Group and Other completion of this major asset reorganization, if Hengyi Petrochemical April 29, long term process of
other commitments or its subsidiaries are required to pay taxes or be demanded by tax 2010 effective fulfillment. Up to
parties authorities for the above-mentioned equity adjustment due to the now, Hengyi
adjustment of national tax policy or other reasons, the reorganization Group has not
party promised to compensate the Company for any losses incurred by it violated this
112
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Comm
Promising Commitment Commitm Commitm
itment Commitment content Performance
party type ent time ent period
reason
in cash and full amount timely. undertaking.
Fulida
Group; The commitment
Xinghui Hengyi Group, Fulida Group, and Xinghui Chemical Fiber do not place remains valid and
Other December December
Chemical any form of encumbrances and rights on the new shares acquired by this is still in the
commitments 28, 2018 28, 2021
Fiber; reorganization that are still within the lock-up period. process of
Hengyi fulfillment.
Group
(1) All new shares will be locked up from the registration date of the
Comm newly added shares. After 12 months since the registration date of the
itment newly added shares and the number of shares to be compensated in the
made first year of the profit compensation period agreed in the "Profit Forecast
during Compensation Agreement" is determined (subject to the later date of
asset fulfillment), the remaining part of 33.33% of the new shares after
reorga Fulida deducting the number of shares to be compensated for fulfilling the The commitment
nizatio Group; Share profit compensation obligation according to the "Profit Forecast remains valid and
December December
n Xinghui restriction Compensation Agreement" can be lifted from the sales restriction;(2) is still in the
28, 2018 28, 2021
Chemical commitment After 24 months since the expiration of the new share registration date process of
Fiber and after the number of shares to be compensated in the second year of fulfillment.
the profit compensation period agreed under the "Profit Forecast
Compensation Agreement" is determined (subject to the later date of
satisfaction),the remaining part of the newly added share 33.33% after
deducting the number of shares to be compensated for fulfilling the
profit compensation obligation according to the "Profit Forecast
Compensation Agreement" can be lifted from the sales restriction;(3)
113
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Comm
Promising Commitment Commitm Commitm
itment Commitment content Performance
party type ent time ent period
reason
After 36 months since the expiration of the new share registration date
and the number of shares to be compensated in the third year of the
profit compensation period agreed under the "Profit Forecast
Compensation Agreement" (including the number of shares to be
compensated after the impairment test) is determined, the remaining part
of the new shares after deducting the number of shares that should be
compensated for the performance of the profit compensation obligation
(including the profit compensation obligation based on the impairment
test) according to the "Profit Forecast Compensation Agreement" can be
lifted from the sales restriction.
Within 36 months since the date of listing of the newly-added shares and
before the completion of the compensation obligations stipulated in the The commitment
Share "Profit Forecast Compensation Agreement" signed between the remains valid and
Hengyi December December
restriction Company and the listed company for the purchase of assets by the is still in the
Group 28, 2018 28, 2021
commitment issuance of shares (whichever evening shall prevail), no shares of the process of
listed company acquired through this asset purchase transaction can be fulfillment.
transferred.
Other Hainan It promises that it will not compete in the same industry with the Up to now,
commi Hengshen production and sales of polyester fiber products, which is one of the Hainan
tments gyuan main businesses of listed companies. Supplementary commitment: Hengshengyuan
Commitment
made Internatio Shanghai Hengyi Polyester Fiber Co., Ltd. will permanently shut down March 21, long term International
on horizontal
to the nal its existing production facilities, no longer participate in or add any areas 2016 effective Tourism
competition
Compa Tourism that may compete with the Company's industry in the same industry Development Co.,
ny's Developm since the 100% equity transfer transaction of Shanghai Hengyi Polyester Ltd. has not
small ent Co., Fiber Co., Ltd. is approved at the Company’s 2016 fourth extraordinary violated this
114
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Comm
Promising Commitment Commitm Commitm
itment Commitment content Performance
party type ent time ent period
reason
and Ltd. general meeting of shareholders, Meanwhile, Shanghai Hengyi Polyester commitment.
mediu Fiber Co., Ltd. split and disposes of its existing assets to completely
m solve this potential horizontal competition problem.
shareh
olders
Whether the promise is fulfilled on time Yes
If the commitment is not fulfilled within the time limit, the specific reasons for the unfulfilled commitment and the
N/A
next work plan shall be explained in detail
115
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2. There is a profit forecast for the Company’s assets or projects, and it is still in the profit
forecast period at the reporting period, the Company provides an explanation of the reason
for the assets or projects reaching the original profit forecast
Actual
Current
Name of asset Start Finish performance Reasons for not Original
forecast
or project time time for the meeting the forecast Original forecast
performance
whose profit is for for period forecast (if disclosure disclosure index
(RMB ten
forecast forecast forecast (RMB ten applicable) date
thousand)
thousand)
Product "Report on Issuing
demand has Shares to Purchase
Jiaxing Yipeng, fallen and November Assets and Raising
2018 2020 26,000 20,840.37
Taicang Yifeng spreads have 28, 2018 Supporting Funds and
narrowed due Related Party
to the epidemic Transactions"
"Report on Issuing
Shares to Purchase
Shuangtu New November Assets and Raising
2018 2020 24,000 26,595.66 N/A
Material 28, 2018 Supporting Funds and
Related Party
Transactions"
Commitments made by the Company’s shareholders and counterparties in the reporting
year’s operating performance
Zhejiang Hengyi Group Co., Ltd. promised that Jiaxing Yipeng Chemical Fiber Co., Ltd. and
Taicang Yifeng Chemical Fiber Co., Ltd. will realize a net profit of no less than RMB 260 million in
2020.
Fulida Group Holding Co., Ltd. and Xinghui Chemical Fiber Group Co., Ltd. promised that
Zhejiang Shuangtu New Material Co., Ltd. will realize a net profit of no less than RMB 240 million
116
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
in 2020.
The completion of performance commitments and its impact on the impairment test of
goodwill
Continental CPA (special general partnership) hired by the Company audited the 2020
financial statements of Jiaxing Yipeng and Taicang Yifeng, and issued a standard unqualified audit
report. After auditing, Jiaxing Yipeng and Taicang Yifeng realized net profit of RMB 208,403,700
attributable to owners of the parent company after deducting non-recurring gains and losses in 2020.
Compared with the counterparty’s performance commitment of RMB 260 million, the cumulative
completion rate was 80.16%. Jiaxing Yipeng and Taicang Yifeng have not fulfilled their
performance commitments for 2020.
Continental CPA (special general partnership) hired by the Company audited the 2020
financial statements of Shuangtu New Material and issued a standard unqualified audit report. After
auditing, Shuangtu New Material realized net profit of RMB 265,956,600 attributable to owners of
the parent company after deducting non-recurring gains and losses in 2020. Compared with the
counterparty’s performance commitment of 240 million yuan, the cumulative completion rate was
110.82%. Shuangtu New Material's 2020 performance commitment has been fulfilled. Shuangtu
New Material has completed its performance commitment and there is no risk of impairment of
goodwill.
IV. The non-operating capital occupation of the listed company by the controlling shareholder
and its related parties
During the reporting period of the Company, there was no non-operating capital occupation of
the listed company by the controlling shareholder and its related parties.
V. Explanations of the board of directors, the board of supervisors, and independent directors
(if any) on the “non-standard audit report” of the accounting firm during the reporting
period
□ Applicable √ Not applicable
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
VI. Compared with the financial report of the previous year, the explanation of the changes in
accounting policies, accounting estimates and accounting methods
(1) Changes in accounting policies
The Ministry of Finance issued the "Accounting Standards for Business Enterprises No.
14-Revenue (2017 Revision)" (CK [2017] No. 22) (hereinafter referred to as the "New Revenue
Criteria") on July 5, 2017. As approved by the 37th meeting of the tenth board of directors of the
Company on March 5, 2020, the Company will begin to implement the aforementioned new
revenue criteria on January 1, 2020.
The new revenue criteria establishes a new revenue recognition model for regulating revenue
generated from contracts with customers. In order to implement the new revenue criteria, the
Company reassessed the recognition and measurement, accounting and presentation of main
contract revenue.
After the implementation of the new revenue criteria, the Company will change the contractual
consideration received from customers in advance for the transfer of goods from the item of
“accounts received in advance” to the items of “contractual liabilities” and “other current liabilities”;
the Company will change the transportation cost incurred by the transfer of goods from the "sales
expense" item to the "operating cost" item.
Impact on the financial statements on January 1, 2020:
December 31, 2019 (before change) January 1, 2020 (after change)
Report item
Consolidated Statement The Company Consolidated Statement The Company
Deposit received 596,087,260.62
Contract liabilities 527,511,147.25
Other current liabilities 68,576,113.37
(2) Changes in accounting estimates
The Company has no changes in accounting estimates during the reporting period.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
VII. Explanation of the situation of retrospective restatement in the correction of major
accounting errors during the reporting period
During the reporting period, the Company had no major accounting error corrections requiring
retrospective restatement.
VIII. Compared with the financial report of the previous year, the explanation of the changes
in the scope of the consolidated statement
In 2020, there were 44 subsidiaries included in the company’s consolidation scope. For details,
please refer to Note VIII “Interests in Other Equities”. The scope of consolidation of the Company
this year increased by 11 households and decreased by one household compared with the previous
year. Please refer to Note VII "Changes in Consolidation Scope" for details.
IX. Appointment and dismissal of accounting firms
Currently employed accounting firm
Zhongxinghua Certified
Name of domestic accounting firm
Public Accountants LLP
Remuneration of domestic accounting firms (ten thousand yuan) 320
Consecutive years of audit services of domestic accounting firms 2
Liu Hongyue, Wang
Name of CPA in domestic accounting firms
Guohai
Consecutive years of CPA audit services of domestic accounting firms 2
Name of overseas accounting firms (if any) None
Remuneration of overseas accounting firms (RMB ten thousand) (if any) 0
Consecutive years of audit services of overseas accounting firms (if any) None
The name of the certified public accountant of the overseas accounting
None
firms (if any)
Consecutive years of CPA audit services of overseas accounting firms (if
None
any)
119
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether to reappoint an accounting firm in the current period
□Yes √No
Employment of internal control auditing accounting firms, financial consultants or sponsors
During the reporting period, the Company hired Continental CPA (special general partnership)
as the internal control audit agency, with an internal control audit fee of RMB 600,000, and RMB
550,000 was paid to them during the reporting period.
During the reporting period, due to the public issuance of convertible corporate bonds, the
Company hired CITIC Securities Co., Ltd. as the sponsor and lead underwriter, and paid RMB 11
million during the reporting period.
X. Delisting after the disclosure of the annual report
□ Applicable √ Not applicable
XI. Matters related to bankruptcy and reorganization
During the reporting period, the Company did not have any bankruptcy and reorganization
related matters.
XII. Major litigation and arbitration matters
The Company had no major litigation or arbitration matters during the reporting period.
XIII. Penalties and rectifications
There were no penalties and rectifications during the reporting period of the Company.
XIV. The integrity of the Company and its controlling shareholders and actual controllers
During the reporting period, the Company, its controlling shareholder, and actual controller did
not fail to implement the court’s effective judgments, and no large amounts of debts were not paid
when they were due.
120
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
XV. Implementation of the Company’s equity incentive plan, employee stock ownership plan
or other employee incentive measures
1. Progress of the Company's second phase of employee stock ownership plan
No. Date Title of Announcement Contents
"Announcement on the completion of the second http://www.cninfo.com.cn/new/disclosure/
phase of the Company's employee stock detail?plate=szse&orgId=gssz0000703&st
1 July 4, 2020 ownership plan and the completion of the stock ockCode=000703&announcementId=1208
sale and expiration" (Announcement No.: 001890&announcementTime=2020-07-04
2020-074)
2. Progress of the Company's second phase of restricted stock incentive plan
No. Date Title of Announcement Contents
"Announcement on the Achievements of http://www.cninfo.com.cn/new/disclosure/
Unlocking Conditions in the Third Unlocking detail?plate=szse&orgId=gssz0000703&st
1 June 13, 2020
Period of the Second Phase Restricted Stock ockCode=000703&announcementId=1207
Incentive Plan" (Announcement No.: 2020-070) 938780&announcementTime=2020-06-19
"Indicative Announcement on the Lifting of http://www.cninfo.com.cn/new/disclosure/
Restricted Stocks in the Third Unlocking Period detail?plate=szse&orgId=gssz0000703&st
2 June 13, 2020
of the Second Phase Restricted Stock Incentive ockCode=000703&announcementId=1207
Plan" (Announcement No.: 2020-068) 922974&announcementTime=2020-06-13
121
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
XVI. Major related transactions
1、 Related transactions related to daily operations
Pricing Amount of Whether Available
Contents Proportion Approved Settlement
principle related it market
of Related s in the trading method of
Type of connected for transaction exceeds prices for
Related party Related party relations connected transacti similar limit related
transaction related-par (ten the similar
transactio on price transactio (RMB transactio
ty thousand approve transaction
ns ns (%) 10,000) n
transaction yuan) d quota s
Market Market Market
Associated enterprises Goods procurement PTA 321,334.12 13.22 425,000 No Bills/cash
price price price
Yisheng Dahua
Market Market Market
Associated enterprises Selling goods PIA 2,339.91 8.62 1,700 Yes Bills/cash
price price price
Market Market Market
Associated enterprises Goods procurement PTA 36,453.03 1.50 60,000 No Bills/cash
price price price
Market Market Market
Associated enterprises Selling goods PX 163,511.48 80.22 290,000 No Bills/cash
Hainan Yi price price price
Sheng Market Market Market
Associated enterprises Selling goods PIA 5,430.91 20.00 5,000 Yes Bills/cash
price price price
Providing labor Cargo Market Market Market
Associated enterprises 1,542.06 4.05 6,600 No Bills/cash
services freight price price price
Market Market Market
Joint ventures Goods procurement Steam 8,870.08 100.00 9,000 No Bills/cash
price price price
Hengyi
Electric Market Market Market
caprolactam Joint ventures Goods procurement 31,157.77 100.00 35,000 No Bills/cash
power price price price
Energy Market Market Market
Joint ventures Selling goods 53,271.91 98.39 61,000 No Bills/cash
products price price price
122
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Market Market Market
Joint ventures Selling goods Benzene 16,314.66 81.66 13,000 Yes Bills/cash
price price price
Providing labor Cargo Market Market Market
Joint ventures 1,211.16 3.18 2,000 No Bills/cash
services freight price price price
Engineeri
Providing labor ng Market Market Market
Joint ventures 1,991.34 5.22 2,600 No Bills/cash
services managem price price price
ent
A holding subsidiary of
Market Market Market
the ultimate parent Selling goods PTA 129.53 0.01 300 No Bills/cash
price price price
company
A holding subsidiary of
Providing labor Cargo Market Market Market
Hengyi the ultimate parent 678.28 1.78 900 No Bills/cash
services freight price price price
Polyamide company
Engineeri
A holding subsidiary of
Providing labor ng Market Market Market
the ultimate parent 79.62 0.21 100 No Bills/cash
services managem price price price
company
ent
A holding subsidiary of
Polyester Market Market Market
the ultimate parent Goods procurement 298,676.25 99.73 480,000 No Bills/cash
products price price price
company
A holding subsidiary of
Shaoxing Packing Market Market Market
the ultimate parent Goods procurement 3,416.28 3.74 9,700 No Bills/cash
Hengming materials price price price
company
A holding subsidiary of
Polyester Market Market Market
the ultimate parent Selling goods 100.01 0.00 5,100 No Bills/cash
products price price price
company
A holding subsidiary of Selling goods Auxiliary Market Market 1,455.77 73.42 2,000 No Bills/cash Market
123
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
the ultimate parent materials price price price
company
A holding subsidiary of
Energy Market Market Market
the ultimate parent Selling goods 4,209.56 7.77 5,300 No Bills/cash
products price price price
company
A holding subsidiary of
Providing labor Cargo Market Market Market
the ultimate parent 2,440.24 6.40 6,000 No Bills/cash
services freight price price price
company
Engineeri
A holding subsidiary of
Providing labor ng Market Market Market
the ultimate parent 1,293.27 3.39 600 Yes Bills/cash
services managem price price price
company
ent
A holding subsidiary of
Polyamide Market Market Market
the ultimate parent Goods procurement 797.39 0.27 25,000 No Bills/cash
chips price price price
company
A holding subsidiary of
Market Market Market
the ultimate parent Selling goods PTA 257.26 0.01 350 No Bills/cash
price price price
Hangzhou company
Yichen A holding subsidiary of
Providing labor Cargo Market Market Market
the ultimate parent 2,357.93 6.19 3,500 No Bills/cash
services freight price price price
company
Engineeri
A holding subsidiary of
Providing labor ng Market Market Market
the ultimate parent 178.3 0.47 200 No Bills/cash
services managem price price price
company
ent
Total -- -- 959,498.12 -- 1,449,950 -- -- --
Disclosure date January 17, 2020
Disclosure Index www.cninfo.com.cn;：Announcement on the Estimated Amount of Daily Related Party Transactions in
124
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2020 (Announcement No.: 2020-005)
Details of returns of large sales None
The above-mentioned related transactions are conducive to utilization of the superior resources of the
The actual performance during the reporting period (if any) is estimated by Company and important related parties, ensuring the stable supply of important raw materials and the
category for the total amount of daily related transactions that will occur in the stable and continuous supply of electricity and other auxiliary materials, broadening the Company's
current period downstream product sales channels, and realizing the Company's attempts to operate upstream products. It
is conducive to consolidating and enhancing the advantages of industrial chain integration.
The related transactions between the Company and the above-mentioned related parties are closely related
to the Company’s daily operations. Related party transactions are based on market prices or prices
determined by regulatory authorities, and follow the principles of fairness, justice, and openness, and will
Reasons for the large difference between the transaction price and the market
not harm the interests of the Company and small and medium shareholders. The main business will not
reference price (if applicable)
form a significant dependence on related parties due to the above-mentioned related transactions, nor
affect the Company's independence, and will have a positive impact on the Company's current and future
financial status and operating results.
125
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Related party transactions arising from the acquisition or sale of assets or equity
During the reporting period, there were no related transactions involving the acquisition or sale
of assets or equity.
3. Related-party transactions for joint foreign investment
The
Registered Net assets of Net profit of
name Total assets of
capital of the the invested the invested
Co-in of the The main business the invested
Related party invested company company
vesto investe of the invested company (ten
relations company (ten (ten (ten
r d company thousand
thousand thousand thousand
compa yuan)
yuan) yuan) yuan)
ny
Production and
The vice chairman
sales of chemical
Yishe of the Company, Mr.
Hainan products such as
ng Fang Xianshui, also
Yi purified 358,000 1,021,744.86 397,725.04 98,267.26
Inves serves as the
Sheng terephthalic acid
tment chairman of Hainan
and polyester
Yisheng
bottle flakes
Ning
bo
The vice chairman
Zhon Chemical raw
of the Company, Mr. Yishen
gjin materials and
Fang Xianshui, also g New
Petro chemical products 200,000 622,519.61 185,267.46 5,153.77
serves as the director Materia
chem manufacturing
of Yisheng New l
ical industry
Material
Co.,
Ltd.
126
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The progress of major projects under construction of the invested
None
company (if any)
4. Related credit and debt transactions
During the reporting period, the Company did not have associated credit and debt transactions.
5. Other major related transactions
During the reporting period, the Company acquired 30% equity of Dongzhan Shipping Co.,
Ltd. held by the Company's controlling shareholder Hengyi Group in cash. The project has been
reviewed by the Company's board of directors, board of supervisors and shareholders meeting, and
the transaction has now been completed.
During the reporting period, the Company acquired 100% equity of Guangxi Hengyi New
Material held by the Company's controlling shareholder Hengyi Group in cash. The project has
been reviewed by the Company's board of directors, board of supervisors and shareholders meeting,
and the transaction has now been completed.
Related inquiries of major related party transaction interim report disclosure website
Temporary Name of Temporary
Name of temporary announcement announcement announcement disclosure
disclosure date website
"Announcement on the Company's Cash
Purchase of 30% Equity of Dongzhan January 17, 2020 Http://www.cninfo.com.cn/
Shipping Co., Ltd. and Related Transactions"
"Announcement on the Company's Cash
Purchase of 100% Equity of Guangxi Hengyi July 10, 2020 Http://www.cninfo.com.cn/
New Material and Related Transactions"
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
XVII. Major contracts and their performance
1. Custody, contracting and leasing matters
(1) Custody situation
There was no custody in the Company during the reporting period.
(2) Contracting situation
There was no contracting situation during the reporting period of the Company.
(3) Lease situation
During the reporting period, there was no leasing situation.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Major guarantee
(1) Guarantee
Currency Unit: RMB 10,000
The Company and its subsidiaries’ external guarantees (excluding guarantees to subsidiaries)
Whether Whether it
Name of Disclosure date of
Guarantee Actual guarantee Type of it has is a related
guaranteed guarantee quota related Actual date Guarantee period
limit amount guarantee been party
object announcement
fulfilled guarantee
Yisheng New General From 2020-4-14 to
April 28, 2020 30,000 April 28, 2020 30,000 No Yes
Material guarantee 2025-10-15
Total amount of external guarantee The total amount of external
approved during the reporting period 30,000 guarantees actually occurred 30,000
(A1) during the reporting period (A2)
The total amount of external Total balance of actual external
guarantees approved at the end of the 30,000 guarantees at the end of the 30,000
reporting period (A3) reporting period (A4)
The Company's guarantees for subsidiaries
Whether Whether it
Name of Disclosure date of
Guarantee Actual guarantee Type of it has is a related
guaranteed guarantee quota related Actual date Guarantee period
limit amount guarantee been party
object announcement
fulfilled guarantee
General From 2019-1-4 to
January 22, 2018 10,000 January 04, 2019 10,000 Yes Yes
guarantee 2020-1-3
Hengyi
General From 2019-3-11 to
Limited January 23, 2019 34,400 March 11, 2019 34,400 Yes Yes
guarantee 2020-7-24
January 16, 2020 9,228.14 May 27, 2020 9,228.14 General From 2020-5-27 to Yes Yes
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
guarantee 2020-12-21
General From 2020-1-8 to
January 23, 2019 5,000 January 08, 2020 5,000 No Yes
guarantee 2021-1-7
General From 2020-4-16 to
January 16, 2020 63,477.99 April 16, 2020 63,477.99 No Yes
guarantee 2021-12-4
General From 2020-02-26 to
January 16, 2020 133,325 February 26, 2020 133,325 No Yes
guarantee 2021-11-20
General From 2020-5-31 to
January 16, 2020 21,111.45 May 31, 2020 21,111.45 No Yes
guarantee 2023-5-31
General From 2020-7-24 to
January 16, 2020 13,830.84 July 24, 2020 13,830.84 No Yes
guarantee 2023-7-24
General From 2019-1-16 to
January 22, 2018 5,000 January 16, 2019 5,000 Yes Yes
guarantee 2020-1-14
General From 2019-3-11 to
January 23, 2019 70,626.76 March 11, 2019 70,626.76 Yes Yes
guarantee 2020-12-12
General From 2020-1-7 to
January 23, 2019 10,000.00 January 07, 2020 10,000.00 Yes Yes
guarantee 2021-1-6
Hengyi General From 2020-1-8 to
January 23, 2019 5,000 January 08, 2020 5,000 No Yes
Hi-tech guarantee 2021-1-7
General From 2020-4-9 to
January 16, 2020 52,957.38 April 09, 2020 52,957.38 No Yes
guarantee 2023-5-25
General From 2020-3-20 to
January 16, 2020 130,979.95 March 20, 2020 130,979.95 No Yes
guarantee 2021-12-2
General From 2019-12-6 to
January 23, 2019 8,616.67 December 06, 2019 8,616.67 No Yes
guarantee 2021-10-10
General From 2020-1-4 to
Hengyi January 23, 2019 6,400 January 14, 2020 3,840 No Yes
guarantee 2021-1-10
Polymer
January 16, 2020 31,900 June 24, 2020 19,140 General From 2020-6-24 to No Yes
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
guarantee 2021-12-4
General From 2020-6-12 to
January 16, 2020 51,548.5 June 12, 2020 30,929.1 No Yes
guarantee 2021-6-12
General From 2019-1-7 to
January 22, 2018 7,200 January 07, 2019 4,320 Yes Yes
guarantee 2020-1-9
General
January 23, 2019 21,700 August 23, 2019 13,020 2019-8-23 to 2020-12-6 Yes Yes
guarantee
General
January 23, 2019 5,000 January 08, 2020 3,000 2020-1-8 to 2021-1-7 Yes Yes
guarantee
General
January 23, 2019 29,000 March 01, 2019 20,300 2019-3-1 to 2020-7-5 Yes Yes
guarantee
Zhejiang General
January 16, 2020 29,325.37 February 03, 2020 20,527.76 2020-2-3 to 2021-4-9 Yes Yes
Yisheng guarantee
General
January 16, 2020 48,027.36 April 09, 2020 33,619.15 2020-4-9 to 2022-5-3 No Yes
guarantee
General
January 23, 2019 12,700 November 25, 2019 12,700 2019-11-25 to 2020-5-22 Yes Yes
guarantee
Ningbo
General
Hengyi January 16, 2020 12,700 May 26, 2020 12,700 2020-5-26 to 2020-11-20 Yes Yes
guarantee
Industry
General
January 16, 2020 12,500 November 24, 2020 12,500 2020-11-24 to 2021-5-21 No Yes
guarantee
General
January 23, 2019 2,000 July 24, 2019 2,000 2019-7-24 to 2020-1-10 Yes Yes
guarantee
General
Taicang Yifeng January 16, 2020 2,000 February 21, 2020 2,000 2020-2-21 to 2021-1-21 No Yes
guarantee
General
January 16, 2020 5,000 August 13, 2020 5,000 2020-8-13 to 2021-2-10 No Yes
guarantee
Suqian Yida January 16, 2020 12,000 June 17, 2020 12,000 General 2020-6-17 to 2021-9-2 No Yes
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
guarantee
General 2020-11-23 to
January 16, 2020 10,000.1 November 23, 2020 10,000.1 No Yes
guarantee 2021-11-19
General
January 23, 2019 18,900 April 16, 2019 18,900 2019-4-16 to 2024-4-10 Yes Yes
guarantee
General
January 16, 2020 5,000 January 17, 2020 5,000 2020-1-17 to 2020-9-3 Yes Yes
guarantee
General 2019-12-11 to
January 23, 2019 10,000 December 11, 2019 10,000 Yes Yes
guarantee 2020-10-18
General
Jiaxing Yipeng January 16, 2020 1,000 August 26, 2020 1,000 2020-8-26 to 2021-5-19 No Yes
guarantee
General
January 16, 2020 14,996 September 08, 2020 14,996 2020-9-8 to 2021-5-18 No Yes
guarantee
General
January 16, 2020 21,600 March 10, 2020 21,600 2020-3-10 to 2021-5-14 No Yes
guarantee
Shuangtu New General
January 16, 2020 49,740 January 20, 2020 49,740 2020-1-20 to 2021-12-29 No Yes
Material guarantee
General
January 23, 2019 13,320 May 10, 2019 13,320 2019/5/10 to 2022/8/10 No Yes
guarantee
General
January 16, 2020 20,000 March 20, 2020 20,000 2020-3-20 to 2021-3-20 No Yes
Hangzhou guarantee
Yijing General
January 16, 2020 30,000 July 22, 2020 30,000 2020-10-20 to 2021-3-4 No Yes
guarantee
General
January 16, 2020 16,274.15 October 09, 2020 16,274.15 2020-10-9 to 2021-3-31 No Yes
Hong Kong guarantee
Tianyi General
January 16, 2020 38,434.65 March 13, 2020 38,434.65 2020-3-13 to 2020-12-28 Yes Yes
guarantee
Haining January 16, 2020 50,000 April 24, 2020 50,000 General 2020-4-24 to 2029-12-10 No Yes
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Thermoelectri guarantee
c
General 2020-11-12 to
January 16, 2020 13,200 November 12, 2020 13,200 No Yes
Haining New guarantee 2021-11-12
Material General
January 16, 2020 6,800 November 12, 2020 6,800 2020-11-12 to 2021-5-12 No Yes
guarantee
General
January 16, 2020 48,117.14 May 26, 2020 31,276.14 2020-5-26 to 2028-5-21 No Yes
guarantee
General
Fujian Yijin January 16, 2020 2,999.5 June 29, 2020 1,949.68 2020-6-29 to 2021-6-24 No Yes
guarantee
General 2019-10-18 to
January 23, 2019 6,800 October 18, 2019 4,420 No Yes
guarantee 2022-12-20
The total amount of guarantees The total actual amount of
approved for subsidiaries during the 2,141,400 guarantees for subsidiaries during 910,437.47
reporting period (B1) the reporting period (B2)
The total amount of guarantees for The total balance of actual
subsidiaries approved at the end of the 2,141,400 guarantees for subsidiaries at the 837,903.59
reporting period (B3) end of the reporting period (B4)
Subsidiary guarantees for subsidiaries
Whether Whether it
Name of Disclosure date of
Guarantee Actual guarantee Type of it has is a related
guaranteed guarantee quota related Actual date Guarantee period
limit amount guarantee been party
object announcement
fulfilled guarantee
General 2019-11-20 to
January 23, 2019 12,539.4 December 17, 2019 8,777.58 Yes Yes
guarantee 2020-12-12
Hengyi
General
Hi-tech January 23, 2019 2,327.74 January 07, 2020 1,629.42 2020-1-7 to 2020-4-2 Yes Yes
guarantee
January 16, 2020 3,883.84 February 03, 2020 2,718.69 General 2020-2-3 to 2020-6-2 Yes Yes
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
guarantee
General
January 23, 2019 5,000 December 31, 2019 5,000 2019-12-31 to 2021-1-30 Yes Yes
guarantee
General
January 16, 2020 5,000 March 30, 2020 5,000 2020-3-30 to 2021-3-25 Yes Yes
guarantee
General 2020-11-19 to
January 16, 2020 9,000 November 19, 2020 6,300 No Yes
guarantee 2021-12-11
General
January 16, 2020 10,000 September 21, 2020 7,000 2020-9-21 to 2021-06-21 No Yes
guarantee
General
January 16, 2020 5,500 July 20, 2020 5,500 2020-7-20 to 2021-11-26 No Yes
guarantee
General
January 23, 2019 10,000 December 31, 2019 10,000 2019-12-31 to 2021-1-30 No Yes
guarantee
General 2020-07-17 to
January 16, 2020 27,300 July 17, 2020 27,300 No Yes
guarantee 2021-06-04
General 2019-10-31 to
January 23, 2019 7,354.1 October 31, 2019 5,147.87 Yes Yes
guarantee 2020-12-21
General
January 16, 2020 15,000 March 27, 2020 10,500 2020-3-27 to 2020-8-26 Yes Yes
guarantee
Hengyi General 2019-11-14 to
January 23, 2019 9,600 November 14, 2019 6,720 No Yes
Limited guarantee 2021-11-13
General
January 16, 2020 19,700.33 August 28, 2020 13,790.23 2020-8-28 to 2021-4-24 No Yes
guarantee
General
January 16, 2020 13,000.93 July 22, 2020 9,100.65 2020-7-22 to 2021-01-18 No Yes
guarantee
General
Zhejiang January 23, 2019 33,000 March 04, 2019 33,000 2019-3-4 to 2020-3-31 Yes Yes
guarantee
Yisheng
January 23, 2019 10,000 January 15, 2020 10,000 General 2020-1-15 to 2021-1-14 Yes Yes
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
guarantee
General
January 23, 2019 39,000 April 29, 2019 39,000 2019-4-29 to 2020-8-1 Yes Yes
guarantee
General
January 16, 2020 8,468.67 May 20, 2020 8,468.67 2020-5-20 to 2020-12-16 Yes Yes
guarantee
General
January 16, 2020 39,054.38 March 05, 2020 39,054.38 2020-3-5 to 2021-9-24 No Yes
guarantee
General
January 23, 2019 6,892.68 September 15, 2019 6,892.68 2019-9-15 to 2020-12-23 Yes Yes
guarantee
General
January 16, 2020 2,182.71 March 29, 2020 2,182.71 2020-3-29 to 2020-11-11 Yes Yes
Haining New guarantee
Material General
January 23, 2019 61,116.75 September 15, 2019 61,116.75 2019-9-15 to 2029-12-23 No Yes
guarantee
General
January 16, 2020 41,460.67 March 29, 2020 41,460.67 2020-3-29 to 2030-5-11 No Yes
guarantee
General
January 23, 2019 3,601.91 December 17, 2019 3,601.91 2019-12-17 to 2020-5-18 Yes Yes
guarantee
General
January 23, 2019 2,427.92 January 2, 2020 2,427.92 2020-1-2 to 2020-4-2 Yes Yes
Hong Kong guarantee
Tianyi General
January 16, 2020 27,788.06 March 17, 2020 27,788.06 2020-3-17 to 2020-8-18 Yes Yes
guarantee
General
January 16, 2020 16,959.51 September 11, 2020 16,959.51 2020-9-11 to 2021-6-28 No Yes
guarantee
General
January 16, 2020 80,778.72 November 06, 2020 80,778.72 2020-11-6 to 2021-3-26 No Yes
guarantee
Hengyi Brunei General
January 23, 2019 26,787.29 December 10, 2019 26,787.29 2019-12-10 to 2020-3-9 Yes Yes
guarantee
January 16, 2020 188,725.38 January 29, 2020 188,725.38 General 2020-1-29 to 2020-12-17 Yes Yes
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
guarantee
General
January 16, 2020 10,587.24 August 26, 2020 6,352.34 2020-8-26 to 2021-3-12 No Yes
guarantee
General 2020-12-22 to
January 16, 2020 800 December 22, 2020 480 No Yes
Hengyi guarantee 2021-06-22
polymer General
January 23, 2019 21,500 July 24, 2019 12,900 2019-7-24 to 2020-4-28 Yes Yes
guarantee
General
January 16, 2020 21,428.84 January 20, 2020 12,857.3 2020-1-20 to 2021-1-19 Yes Yes
guarantee
Shuangtu New General
January 16, 2020 7,980 July 21, 2020 7,980 2020-7-21 to 2021-1-21 No Yes
Material guarantee
The total amount of guarantees The total actual amount of
approved for subsidiaries during the 1,545,950 guarantees for subsidiaries during 534,354.66
reporting period (C1) the reporting period (C2)
The total amount of guarantees for The total balance of actual
subsidiaries approved at the end of the 1,545,950 guarantees for subsidiaries at the 339,893.26
reporting period (C3) end of the reporting period (C4)
The total amount of company guarantees (that is, the total of the first three items)
The total amount of approved The total amount of guarantees
guarantees during the reporting period 3,717,350 actually occurred during the 1,474,792.13
(A1+B1+C1) reporting period (A2+B2+C2)
The total amount of approved The total actual guarantee balance
guarantees at the end of the reporting 3,717,350 at the end of the reporting period 1,207,796.85
period (A3+B3+C3) (A4+B4+C4)
The percentage of total amount of actual guarantees in company's net assets
50.31%
(i.e. A4+B4+C4)
Of which:
The balance of guarantees provided for shareholders, actual controllers and 30,000
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
their related parties (D)
The balance of debt guarantee provided directly or indirectly for the guaranteed
0
object whose asset-liability ratio exceeds 70% (E)
The amount of the total guarantee exceeding 50% of the net assets (F) 0
The total amount of the above three guarantees (D+E+F) 30,000
For unexpired guarantees, the statement of the situation where guarantee
liability has occurred or may bear joint liability for repayment during the None
reporting period (if any)
Instructions for providing external guarantees in violation of prescribed
None
procedures (if any)
Description of the specific circumstances of the use of composite guarantees
Note: The Company and its subsidiaries provide the Company's holding subsidiary Hengyi Brunei with a guarantee line of US$1.75 billion
or equivalent overseas RMB for the syndicated loan. Please refer to the Company’s disclosure "Announcement on Providing Guarantees to
Holding Subsidiary Hengyi Industries Sdn Bhd" (Announcement No.: 2017-136) on the www.cninfo.com.cn on November 18, 2017 for details..
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
(2) Violation of external guarantees
During the reporting period, the Company had no violations of external guarantees.
3. Entrust others to manage cash assets
(1) Entrusted financing management
The Company did not have entrusted financing during the reporting period.
(2) Entrusted loans
Overview of entrusted loans during the reporting period
Currency Unit: RMB 10,000
Total amount of entrusted Sources of funds for Unexpired Amount not recovered
loans entrusted loans balance after the due date
160,000 Self-owned funds 100,000 0
138
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
The specific situation of a high-risk entrusted loans with a large single amount or low security, poor liquidity, and non-guaranteed
capital
Currency Unit: RMB 10,000
Actual Actual
The
profit and recovery of Whether it Whether
Capit amount of
Loan Loan Expected loss profits and goes there is any
Loan loan al Expiration provision Summary of matters and related query index
object interest Starting date benefit (if amount losses through entrusted
object amount sourc date for (if any)
type rate any) during the during the legal loan plan in
e impairmen
reporting reporting procedures the future
t (if any)
period period
Joint http://www.cninfo.com.cn/new/disclosure/de
Hainan Self-o
stock November December tail?plate=szse&orgId=gssz0000703&stock
Yishen 4.785% 52,000 wned 1,649.17 1,649.17 1,649.17 0 Yes Yes
compan 13, 2019 04, 2020 Code=000703&announcementId=12086085
g funds
y 29&announcementTime=2020-10-26
Yishen Joint http://www.cninfo.com.cn/new/disclosure/de
Self-o
g New venture December December tail?plate=szse&orgId=gssz0000703&stock
4.785% 8,000 wned 357.12 357.12 357.12 0 Yes Yes
Materi corporat 23, 2019 22, 2020 Code=000703&announcementId=12069335
funds
al ion 37&announcementTime=2019-09-19
Yishen Joint http://www.cninfo.com.cn/new/disclosure/de
Self-o
g New venture March 16, December tail?plate=szse&orgId=gssz0000703&stock
4.785% 100,000 wned 2,152.37 2,152.37 2,016.45 0 Yes Yes
Materi corporat 2020 22, 2021 Code=000703&announcementId=12086085
funds
al ion 28&announcementTime=2020-10-26
Total 160,000 -- -- -- 4,158.66 4,158.66 -- -- -- --
The principal of the entrusted loans is expected to be unable to be recovered or there are other situations that may cause impairment
□ Applicable √ Not applicable
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
4. Major contracts for daily operations
□ Applicable √ Not applicable
5. Other major contracts
There were no other major contracts during the reporting period.
XVIII. Social Responsibility
1. Fulfillment of social responsibilities
See the Social Responsibility Report for details.
The Company shall comply with the disclosure requirements of Shenzhen Stock Exchange
Industry Information Disclosure Guidelines No.18-Listed Companies Engaged in Chemical
Industry Related Business.
2. Fulfilling social responsibilities for targeted poverty alleviation
(1) Targeted poverty alleviation planning
Under the guidance of documents such as the "Notice of the State Council on Printing and
Distributing the Thirteenth Five-Year Plan for Poverty Alleviation" and the "Opinions of the China
Securities Regulatory Commission on Giving Full Play to the Capital Market to Serve the National
Poverty Alleviation Strategy", the Company actively responded to the relevant requirements for
poverty alleviation work called by the Zhejiang Provincial Party Committee and the Provincial
Government; implement coordinated arrangements and targeted poverty alleviation on poverty
alleviation cooperation carried out by Ningbo Municipal Party Committee and Municipal
Government between the east and the west, actively fulfilled the social responsibilities of listed
companies, and participated in the national targeted poverty alleviation work.
(2) Summary of annual targeted poverty alleviation
1) In 2020, according to the arrangement of the Ningbo Municipal Party Committee and
Municipal Government to carry out poverty alleviation cooperation between the east and the west,
the Company was determined to be the targeted poverty alleviation partner of Jilin Wangqing Beier
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Technology Co., Ltd. And signed the "Deep Processing Project of Yanbian Prefecture Agricultural
Specialty Products " with Wangqing County People's Government. The main task is to build a
constant temperature warehouse of 2,500 square meters, purchase refrigeration and product testing
equipment and other supporting facilities for packing 2,500 tons of edible fungi per year. The
construction period is from July 2019 to July 2020.
2) In order to implement the decision and deployment of the Party Central Committee and the
State Council on winning the fight against poverty, further give full play to the role of listed
companies in serving the country’s fight against poverty, and actively fulfill the social
responsibilities of listed companies, the Company donated RMB 3 million to Hongde Hope School
in Hongsipu District, Wuzhong City, Ningxia for education-related matters through Wuzhong City
Red Cross Society in response to the call of the party and the government.
(3) Effectiveness of targeted poverty alleviation
Index Measurement unit Quantity/Development
I Overall situation —— ——
Of which: 1. Funding RMB 10,000 800
II. Sub-item investment —— ——
8. Social poverty alleviation —— ——
Of which: 8.1 Amount invested in poverty
RMB 10,000 300
alleviation cooperation between the east and the west
8.2 Amount of investment in fixed-point
RMB 10,000 500
poverty alleviation work
(4) Follow-up targeted poverty alleviation plan
The Company will continue to participate in poverty alleviation activities, actively interact
with local governments for public welfare, give full play to the Company's important role as a local
enterprise, feedback the society in time, and build a harmonious development atmosphere.
On April 19, 2021, the Company held the fourth meeting of the eleventh board of directors for
deliberation and approval. It plans to continue to donate RMB 21 million to Hongde Hope School in
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Hongsipu District, Wuzhong City, Ningxia through the Wuzhong Red Cross for education related
matters. The specific donation arrangements are implemented in batches according to the progress
of the project.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
3.Situation related to environmental protection
Whether the listed company and its subsidiaries belong to the key pollutant discharge units announced by the environmental protection
department
During the reporting period, the Company strictly implements and carries out "Environmental Protection Law of the People's Republic of
China", "Air Pollution Prevention Law of the People's Republic of China", "Water Pollution Prevention Law of the People's Republic of China"
and "Environmental Prevention and Control Law of Solid Waste Pollution of the People's Republic of China" and other relevant laws and
regulations. The Company continues to attach great importance to environmental protection work, actively responds to the national "Three-Year
Action Plan for Winning the Blue Sky Defense War", and deepens continuously environmental management, controls the "three wastes”
according to high standards and strict requirements, and takes the path of sustainable development. In particular, the important subsidiaries of
key pollutant emission units announced by the environmental protection department continues to increase capital investment and actively carries
out environmental protection facilities renovation and upgrading to ensure that emissions meet the standards. The specific conditions are as
follows:
Name of Names of main Number
Distribution Total
Company pollutants and Discharge of Pollutant discharge Total Excessive
of discharge Emission concentration approved
or characteristic method discharge standards implemented emissions emissions
ports emissions
subsidiary pollutants ports
Discharge
Sewage 1,214.36 Reach the
COD after 1 44.85mg/L 100 mg/L 277.81 tons
station tons standard
Zhejiang treatment
Yisheng Discharge
Ammoniacal Sewage Reach the
after 1 0.51 mg/L 8 mg/L 2.65 tons 17.35 tons
nitrogen station standard
treatment
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Discharge
197.45 Reach the
SO2 after 2 Boiler island 7.99mg/m3 35 mg/m3 57.24 tons
tons standard
treatment
Discharge
859.17 Reach the
NOx after 2 Boiler island 18.46mg/m3 50 mg/m3 122.15 tons
tons standard
treatment
Discharge
426.11 Reach the
Smoke dust after 2 Boiler island 1.51mg/m3 5 mg/m3 10 tons
tons standard
treatment
Discharge Boiler/Heat
Reach the
SO2 after 2 Medium 69.18/74.02mg/m3 GB13223, GB13271 266.10 tons 600 tons
standard
treatment Furnace
Discharge Boiler/Heat
Reach the
NOx after 2 Medium 44.09/279.20mg/m3 GB13223, GB13271 509.50 tons 850 tons
standard
treatment Furnace
Discharge Boiler/Heat
Hainan Reach the
Smoke dust after 2 Medium 9.5/9.82mg/m3 GB13223, GB13271 35.40 tons 214.5 tons
Yisheng standard
treatment Furnace
Discharge
Sewage 224.59 Reach the
COD after 1 34.18mg/l GB31572 150.93 tons
station tons standard
treatment
Discharge
Ammoniacal Sewage Reach the
after 1 0.12mg/l GB31572 0.53 tons 17.35 tons
nitrogen station standard
treatment
Discharge
Reach the
Hengyi Smoke dust after 1 Power station 0.55mg/m3 DB3301/T0250-2018 4.37 tons 49.04 tons
standard
caprolactam treatment
SO2 Discharge 1 Power station 3.6mg/m3 DB3301/T0250-2018 29.25 tons 368.87 Reach the
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
after tons standard
treatment
Discharge
482.08 Reach the
NOx after 1 Power station 42.3mg/m3 DB3301/T0250-2018 340.6 tons
tons standard
treatment
Discharge
Mercury and its Reach the
after 1 Power station 0.000004mg/m3 DB3301/T0250-2018 / /
compounds standard
treatment
Discharge
Ringelmann Reach the
after 1 Power station <1 level DB3301/T0250-2018 / /
Blackness standard
treatment
Discharge Sewage
Reach the
PH after 1 treatment 7.93 GB31571-2015 / /
standard
treatment station
Discharge Sewage
127.51 Reach the
COD after 1 treatment 115.45mg/L GB31571-2015 104.89 tons
tons standard
treatment station
Discharge Sewage
Ammoniacal Reach the
after 1 treatment 0.42mg/L GB31571-2015 5.24 tons 6.376 tons
nitrogen standard
treatment station
Discharge Sewage
Reach the
Total phosphorus after 1 treatment 1.53mg/L DB33-887-2013 / /
standard
treatment station
Discharge
Thermal coal Reach the
Smoke dust after 3 3.76/2.38/1.04mg/m3 DB3301/T0250-2018 2.06 tons 18.55 tons
Hengyi station standard
treatment
Hi-tech
Discharge Heat medium Reach the
SO2 3 13.22/35.01/16.13mg/m3 DB3301/T0250-2018 18.5 tons 60.4 tons
after station standard
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
treatment
Discharge
Thermal coal 181.21 Reach the
NOx after 3 95.19/68.38/77.20mg/m3 DB3301/T0250-2018 91.92 tons
station tons standard
treatment
Discharge Sewage
Reach the
COD after 1 treatment 13.68mg/L GB31572-2015 0.699 tons 3.68 tons
standard
treatment station
Discharge Sewage
Ammoniacal Reach the
after 1 treatment 2.27mg/L GB31572-2015 0.11 tons 0.15 tons
nitrogen standard
treatment station
Discharge
Heat medium Reach the
Smoke dust after 3 8.67/1.44/9.25mg/m3 DB3301/T0250-2018 3.69 tons /
station standard
treatment
Discharge
Heat medium Reach the
SO2 after 3 16.40/22.64/9.72mg/m3 DB3301/T0250-2018 8.38 tons 29.22 tons
station standard
Hengyi treatment
polymer Discharge
Heat medium Reach the
NOx after 3 124.06/111.56/105.92mg/m3 DB3301/T0250-2018 56.24 tons 87.67 tons
station standard
treatment
Discharge
Sewage Reach the
COD after 1 28.63mg/L GB31572-2015 1.75 tons 34.5 tons
station standard
treatment
Discharge
Heat medium Reach the
Smoke dust after 1 1.16mg/m3 DB3301/T0250-2018 1.09 tons /
station standard
Hangzhou treatment
Yijing Discharge
Heat medium Reach the
SO2 after 1 13.75mg/m3 DB3301/T0250-2018 10.03 tons 33.8 tons
station standard
treatment
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Discharge
Heat medium Reach the
NOx after 1 68.81mg/m3 DB3301/T0250-2018 61.91 tons 101.3 tons
station standard
treatment
Discharge Sewage
Reach the
PH after 1 treatment 7.96 GB31572-2015 / /
standard
treatment station
Discharge Sewage
Reach the
COD after 1 treatment 40.83mg/L GB31572-2015 0.45 tons 44 tons
standard
treatment station
Discharge Sewage
Ammoniacal Reach the
after 1 treatment 8.28mg/L GB31572-2015 0.064 tons 3.08 tons
nitrogen standard
treatment station
Discharge
Heat medium Reach the
Smoke dust after 2 3.78/2.42mg/m3 DB3301/T0250-2018 5.528 tons 32.22 tons
station standard
treatment
Shuangtu Discharge
Heat medium Reach the
New SO2 after 2 9.99/17.2mg/m3 DB3301/T0250-2018 24.241 tons 111 tons
station standard
Material treatment
Discharge
Heat medium Reach the
NOx after 2 87.1/77.81mg/m3 DB3301/T0250-2018 147.023 tons 168 tons
station standard
treatment
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Construction and operation of pollution prevention facilities
The prevention and control measures for waste gas, waste water, solid waste and noise were
designed, constructed and put into use at the same time as the main equipment in strict accordance
with the requirements of environmental impact assessment, which are in good condition at present.
According to other rectification requirements put forward by the environmental protection
department, some new pollution prevention and control facilities have been added to further
improve the environmental protection and treatment level of the installation.
Environmental impact assessment of construction projects and other environmental
protection administrative permits
The Company's construction projects have successively passed environmental impact
assessments and other environmental protection administrative permits, or related work is in
progress.
Emergency plan for environmental emergencies
1. "Emergency Plan for Emergent Environmental Incidents of Zhejiang Baling Hengyi
Caprolactam Co., Ltd. " was filed by the local environmental protection department in July 2019.
2. The "Emergency Plan for Emergent Environmental Incidents of Zhejiang Hengyi High-tech
Material Co., Ltd. " was revised, reviewed and filed by the local environmental protection
department in March 2019.
3. The " Emergency Plan for Sudden Environmental Incidents of Zhejiang Hengyi Polymer
Co., Ltd." was revised, reviewed and filed by the local environmental protection department in
September 2018.
4. The "Emergency Plan for Sudden Environmental Incidents of Hangzhou Yijing Chemical
Fiber Co., Ltd." was revised, reviewed and filed by the local environmental protection department
in March 2019.
5. The " Emergency Plan for Emergent Environmental Incidents of Zhejiang Shuangtu New
Material Co., Ltd." was revised, reviewed and filed by the local environmental protection
department in October 2019.
6. "Emergency Plan for Emergent Environmental Incidents of Hainan Yisheng Petrochemical
148
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Co., Ltd. " was revised, reviewed and filed by the local environmental protection department in
December 2020.
7. The "Emergency Plan for Environmental Emergency of Zhejiang Yisheng Petrochemical
Co., Ltd." was revised, reviewed and filed by the local environmental protection department in
September 2020.
Environmental self-monitoring program
The Company and its subsidiaries strictly abide by national and local government
environmental protection laws, regulations and related regulations, and establish environmental
self-monitoring programs to ensure that all pollutants are discharged and reasonably disposed of in
strict accordance with the requirements of laws and regulations. The self-monitoring plan has been
disclosed in the pollution source monitoring data management system. The Company carries out
pollution source monitoring to ensure that all pollutants are discharged in strict accordance with the
requirements of laws and regulations. At the same time, it entrusts qualified third-party monitoring
units to carry out regular monitoring.
Other environmental information that should be disclosed
The environmental information that should be disclosed has been disclosed as required.
Other environmental protection related information
The Company and its subsidiaries attach great importance to environmental protection, and
make major decisions regarding the Company's environmental protection on a regular or irregular
basis. The Company has established a health, safety and environment (HSE) management
committee to implement comprehensive supervision and management of the Company's HSE work;
each subsidiary has a full-time environmental protection department responsible for daily
comprehensive management, supervision and inspection. The Company has established a strict
monitoring system and entrusted the environmental management and monitoring department to
monitor the water, gas, sound, and slag of the whole plant to grasp the pollution dynamics.
XIX. Explanation of other important matters
During the reporting period, the Company has disclosed the major issues on the
www.cninfo.com. in accordance with the "Securities Law" and the "Administrative Measures for
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Information Disclosure of Listed Companies", the details are as follows:
No. Announcement date Title of Announcement
Announcement on the plan to repurchase shares through centralized bidding
1 August 29, 2020
transactions (Announcement No.: 2020-090)
Announcement on the Appointment of Senior Management and Securities Affairs
2 September 16, 2020
Representatives of the Company (Announcement No.: 2020-098)
Announcement on the first repurchase of company shares (Announcement No.:
3 November 20, 2020
2020-134)
XX. Major matters of the Company's subsidiaries
No. Announce Title of Announcement Contents
ment date
Announcement on the production progress of the 1 http://www.cninfo.com.cn/new/disclosure/d
February million tons of differential environmentally friendly etail?plate=szse&orgId=gssz0000703&stoc
1
24, 2020 functional fiber project (Announcement No.: kCode=000703&announcementId=120731
2020-021) 8307&announcementTime=2020-02-24
Announcement on the commissioning of the http://www.cninfo.com.cn/new/disclosure/d
June 4, upgrade and transformation project of differential etail?plate=szse&orgId=gssz0000703&stoc
2
2020 functional fibers with an annual output of 500,000 kCode=000703&announcementId=120789
tons (Announcement No.: 2020-063) 4198&announcementTime=2020-06-04
Announcement on the subsidiary's investment in http://www.cninfo.com.cn/new/disclosure/d
August 29, the construction of a new functional fiber project etail?plate=szse&orgId=gssz0000703&stoc
3
2020 with an annual output of 566,000 tons kCode=000703&announcementId=120832
(Announcement No.: 2020-083) 5104&announcementTime=2020-08-29
Announcement on the subsidiary's investment in http://www.cninfo.com.cn/new/disclosure/d
August 29, the construction of a new functional fiber etail?plate=szse&orgId=gssz0000703&stoc
4
2020 technology transformation project with an annual kCode=000703&announcementId=120832
output of 500,000 tons (Announcement No.: 5105&announcementTime=2020-08-29
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2020-084)
Announcement on the subsidiary's investment in http://www.cninfo.com.cn/new/disclosure/d
September the construction of the Phase II of the Brunei etail?plate=szse&orgId=gssz0000703&stoc
5
16, 2020 Refining and Petrochemical Project kCode=000703&announcementId=120844
(Announcement No.: 2020-099) 4483&announcementTime=2020-09-16
Announcement on the production progress of the 1 http://www.cninfo.com.cn/new/disclosure/d
October million tons of differential environmentally friendly etail?plate=szse&orgId=gssz0000703&stoc
6
13, 2020 functional fiber project (Announcement No.: kCode=000703&announcementId=120853
2020-105) 8169&announcementTime=2020-10-13
Announcement on the production progress of the 1 http://www.cninfo.com.cn/new/disclosure/d
November million tons of differential environmentally friendly etail?plate=szse&orgId=gssz0000703&stoc
7
17, 2020 functional fiber project (Announcement No.: kCode=000703&announcementId=120875
2020-132) 0316&announcementTime=2020-11-17
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Section VI Changes in Shares and Shareholders
I. Share changes
1. Changes in shares
Unit: Share
Before this change Increase/decrease in current period (+, -) After this change
Sc
New
ri Conversion
Propor issue Propor
p of provident
Quantity tion of Others Subtotal Quantity tion
is fund to
(%) shar (%)
su shares
es
e
I. Shares with
restrictions on 560,933,868 19.74 0 0 89,151,447 -281,792,038 -192,640,591 368,293,277 10.00
sales
3. Other
domestic 560,933,868 19.74 0 0 89,151,447 -281,792,038 -192,640,591 368,293,277 10.00
capital shares
Including:
domestic
534,610,368 18.81 0 0 81,229,197 -276,444,088 -195,214,891 339,395,477 9.22
corporate
shares
Domestic
natural person 26,323,500 0.93 0 0 7,922,250 -5,347,950 2,574,300 28,897,800 0.78
shares
II. Shares
without
2,280,791,606 80.26 0 0 763,366,196 269,194,329 1,032,560,524 3,313,352,130 90.00
restrictions on
sales
1. RMB
ordinary 2,280,791,606 80.26 0 0 763,366,196 269,194,329 1,032,560,524 3,313,352,130 90.00
shares
III. The sum
2,841,725,474 100.00 0 0 852,517,643 -12,597,709 839,919,933 3,681,645,407 100.00
of shares
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Reasons for changes in shares
(1) In January 2020, the Company issued shares to purchase assets and raise matching funds
and related transactions to issue shares to purchase the new shares were released from the restricted
sale and listed for circulation. The number of new shares issued in this non-public offering is
50,078,264 shares.
(2) In February 2020, the Company issued shares to purchase assets and raise matching funds
and the non-public issuance of new shares in connected transactions was lifted from the restricted
sale. The number of new shares in the non-public issuance was 213,768,115 shares.
(3) In May 2020, the Company implemented the 2019 equity distribution business, and the
Company's total share capital increased from 2,841,725,474 shares to 3,694,243,116 shares.
(4) In June 2020, the Company implemented the repurchase and cancellation business due to
performance commitments to compensate shares, and the Company's total share capital was
changed from 3,694,243,116 shares to 3,681,645,407 shares.
(5) In June 2020, the restricted stocks in the third unlocking period of the Company's second
restricted stock incentive plan were lifted from the restricted stock market.
Approval of changes in shares
(1) The Company received the "Approval on Approving Hengyi Petrochemical Co., Ltd. to
issue shares to Zhejiang Hengyi Group Co., Ltd. to Purchase Assets and Raise Supporting Funds"
issued by China Securities Regulatory Commission on November 27, 2018(licensed by the China
Securities Regulatory Commission) [2018] No. 1937)
(2) The Company’s 2019 Board of Directors held on April 26, 2020 and the 2019 Annual
General Meeting of Shareholders held on May 19, 2020 reviewed and approved the “Proposal on
the Company’s 2019 Profit Distribution” and agreed that based on the Company’s total share capital
of 2,841,725,474 shares, a cash dividend of RMB 4.00 (including tax) will be distributed to all
shareholders for every 10 shares, and 0 bonus shares will be distributed for every 10 shares.
(3) The Company’s 2019 Board of Directors held on April 26, 2020 and the 2019 Annual
General Meeting of Shareholders held on May 19, 2020 reviewed and approved the “Proposal on
Issuance of Shares to Purchase Assets and Related-Party Transaction Projects for the
Implementation of 2019 Performance Commitments and Performance Compensation", the
Company's total share capital will be reduced by 12,597,709 shares to 3,681,645,407 shares after
153
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
the compensation shares are repurchased and cancelled.
(4) The 39th meeting of the tenth board of directors of the Company held on June 12, 2020
deliberated and approved the "Proposal on the Achievement of the Unlocking Conditions of the
Third Unlocking Period of the Second Restricted Stock Incentive Plan" and agreed to that
15,260,700 restricted stocks of the 49 incentive objects' in the third unlocking period of the second
restricted stock incentive plan were unlocked according to regulations.
Transfer of share changes
(1) On January 3, 2020, the Company issued shares to purchase assets and raised matching
funds and related transactions to issue shares to purchase assets and new shares of 50,078,264
shares were lifted from sales restrictions.
(2) On February 28, 2020, the Company issued shares to purchase assets and raised matching
funds and the non-public issuance of new shares of 213,768,115 in connected transactions was
lifted from the restriction on sales.
(3) On June 24, 2020, the 15,260,700 restricted shares of restricted stocks in the third
unlocking period of the Company's second restricted stock incentive plan were lifted from the
restriction on sales.
Implementation progress of share repurchase
As of December 31, 2020, the Company has repurchased 27,485,246 shares through a
centralized bidding transaction through a special securities repurchase account, accounting for 0.75%
of the Company’s total share capital. The highest transaction price for the purchase of shares is
RMB 13.97 per share, and the lowest transaction price is RMB 11.71 per share, and the total
amount paid is RMB 349,918,604.47 (excluding commissions, transfer fees and other transaction
costs).
Progress in the implementation of the centralized bidding method to reduce the shareholding
repurchase
□ Applicable √ Not applicable
The impact of share changes on financial indicators such as basic earnings per share and
diluted earnings per share, net assets per share attributable to the Company’s common
shareholders, etc. in the recent year and the recent period
The share capital at the beginning of the reporting period was 2,841,725,474.00 shares. According
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
to the "Accounting Standards for Business Enterprises-Earnings Per Share", the most recent share
capital was recalculated based on the adjusted number of shares. The basic earnings per share for
the period was 1.08, and the diluted earnings per share after the change was 1.07.
Other content that the Company deems necessary or required by the securities regulatory
agency to disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
Unit: Share
Number of
Number of Number of Number of
increased
restricted restricted restricted Release
restricted Reasons for
Name of shareholders shares at the shares lifted shares at the date of
shares in restricted sale
beginning of in this end of the restriction
the current
the period period period
period
Issuance of December
Zhejiang Hengyi Group Co., Ltd. 170,592,433 0 51,177,730 221,770,163
shares to 28, 2021
Fulida Group Holding Co., Ltd. 75,124,910 25,039,132 15,025,734 65,111,512 purchase
assets and
January 3,
Xinghui Chemical Fiber Group Co., new shares in
75,124,910 25,039,132 15,025,734 65,111,512 2020
Ltd. connected
transactions
Tianjin Xinxiang Enterprise
Management Partnership (Limited 21,739,130 21,739,130 0 0
Partnership)
Sino Safe Assets Issuing
Management-Industrial and shares to
Commercial Bank-Sino Safe Assets purchase
21,380,434 21,380,434 0 0
Management Stability Zengli No. 8 assets and
Collective Asset Management raising
Product supporting February
Beixin Ruifeng Fund-Hangzhou Triya funds and 28, 2020
Investment Management Partnership non-public
(Limited Partnership)-Beixin Ruifeng 3,623,188 3,623,188 0 0 offering of
Fund Shaoxia No. 2 Single Asset shares in
Management Plan connected
Sino Safe Assets transactions
Management-Industrial and
21,380,434 21,380,434 0 0
Commercial Bank-Sino Safe Assets
Management Stability Zengli No. 9
155
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Collective Asset Management
Product
Beixin Ruifeng Fund-Hangzhou
Qingyu Investment Management
Partnership (Limited
7,246,376 7,246,376 0 0
Partnership)-Beixin Ruifeng Fund
Bairui No. 78 Single Asset
Management Plan
Beixin Ruifeng Fund-Huaxin
Trust Zhixuan No. 51 Accumulative
Fund Trust Plan-Beixin Ruifeng Fund 21,739,130 21,739,130 0 0
Huaxin Zhixuan No. 51 Single Asset
Management Plan
Beixin Ruifeng Fund-Hangzhou
Shangju Investment Management
Partnership (Limited
9,275,362 9,275,362 0 0
Partnership)-Beixin Ruifeng Fund
Guangjie No. 1 Single Asset
Management Plan
Beixin Ruifeng Fund-CITIC Wealth
Management's Huiying Series Smart
Choice Tiantian Express Wealth
40,355,077 40,355,077 0 0
Management Product-Beixin Ruifeng
Fund CITIC No. 1 Single Asset
Management Plan
Beixin Ruifeng Fund-Hangzhou
Yuting Investment Management
Partnership (Limited
2,173,913 2,173,913 0 0
Partnership)-Beixin Ruifeng Fund
Shaoxia No. 3 Single Asset
Management Plan
Beixin Ruifeng Asset
Management-Bohai Bank 2018 Botai
No. 2 Open RMB Non-guaranteed
21,376,811 21,376,811 0 0
Floating Income Wealth Management
Product-Beixin Ruifeng Asset Bohai
No. 1 Single Asset Management Plan
Xinyuan Asset
Management-"Chuangying" Portfolio
Investment Wealth Management
43,478,260 43,478,260 0 0
Product 170720-Xinyuan Assets
Xinmeihua No. 358 Single Asset
Management Plan
Total 534,610,368 263,846,379 81,229,198 351,993,187 — —
156
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Continued
Number of Number of Number of
Number of
restricted increased restricted Reasons for
restricted Release date of
Name of shareholders shares at the restricted shares shares at the restricted
shares lifted restriction
beginning of in the current end of the sale
in this period
the period period period
Ni Defeng 1,176,000 1,528,800 352,800 0
The first grant date
Wu Zhong 42,000 54,600 12,600 0
Locked after is June 12, 2017,
Zheng Xingang 672,000 873,600 201,600 0
the grant of and the unlocking
Wang Songlin 1,113,000 1,446,900 333,900 0
restricted will be performed
Chen Liancai 840,000 1,092,000 252,000 0
stock equity in three phases at a
Zhao Donghua 126,000 163,800 37,800 0
incentive ratio of 40%, 30%,
Other 43 incentive
plan and 30% within 36
objects of restricted 7,770,000 10,101,000 2,331,000 0
months.
stock incentive plan
Total 11,739,000 15,260,700 3,521,700 0 — —
II. Securities issuance and listing
1. Securities issuance (excluding preferred shares) during the reporting period
Unit: Share, Yuan/sheet, Ten Thousands Sheet, 100 Million Yuan, Currency: RMB
The name of
Issue price Number of Transaction
the stock and Date of issue Disclosure
(or interest Listing date approved listing termination Disclosure Index
its derivative issue number date
rate) transactions date
securities
Convertible corporate bonds, separately traded convertible corporate bonds, corporate bonds
www.cninfo.com.cn:
Public Issuance of
Corporate Bonds to
March 11, March 23, March 13, Qualified Investors in March 13,
20 Hengyi 01 5.89% 10 10
2020 2020 2023 2020 (Phase 1) 2020
(Pandemic Prevention
and Control Bonds)
Announcement
Hengyi Issuance Juchao Information
October 16, November October 15, November
Convertible at par 2,000 2,000 Network: Listing
2020 16, 2020 2026 12, 2020
Bond value Announcement
Explanation of securities issuance (excluding preferred shares) during the reporting period
Corporate bonds:
(1) During the reporting period, the Company issued "20 Hengyi 01" corporate bonds, raising a
total of RMB 1 billion, and the value date is March 13, 2020. For details of the Company's bond
157
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
issuance, please refer to "Section X Corporate Bonds Related Information" of this report.
(2) During the reporting period, the Company issued "Hengyi Convertible Bonds" convertible
corporate bonds, raising a total of RMB 2 billion, and the value date is October 16, 2020. For
details about the Company's issuance of convertible corporate bonds, please refer to "Section VIII
Related Information about Convertible Corporate Bonds" of this report.
2. Description of changes in the total number of company shares and shareholder structure,
and changes in the Company's assets and liabilities structure
The Company implemented the repurchase and cancellation of 2019 profit distribution and
performance commitments during the reporting period. The total number of shares has changed
from 2,841,725,474 shares at the beginning of the period to 3,681,645,407 shares as of the
disclosure date of this report.
3. Existing internal employee shares
□ Applicable √ Not applicable
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
III. Shareholders and actual controllers
1. Number of shareholders and shareholding of the Company
Unit: Share
Total number of ordinary shareholders at the end of the Total number of shareholders as of March 31,
33,917 44,831
reporting period 2021
Shareholding of shareholders holding more than 5% or the top 10 shareholders
Changes of Pledge or freeze
Number of Number of
increase and Number of situation
Sharehol shares held at shares with
Nature of decrease in shares with
Name of shareholders ding the end of the restricted
shareholders the unrestricted
Ratio reporting sale Share
reporting sale conditions Quantity
period conditions status
period
Domestic
Pledg
Zhejiang Hengyi Group Co., Ltd. non-state legal 40.86% 1,504,313,458 337,458,714 209,172,454 1,295,141,004 1,129,851,061
ed
person
Domestic
Hangzhou Hengyi Investment Co.,
non-state legal 6.96% 256,338,027 59,154,929 0 256,338,027
Ltd.
person
Guangdong Fuye Shengde Asset
Management Co., Ltd.-Fuye Shengde
Others 4.30% 158,382,926 158,382,926 0 158,382,926
No. 1 Private Securities Investment
Fund
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Huaneng Guicheng Trust Co.,
Ltd.-Huaneng TrustJinyi Xincheng Others 3.61% 132,801,538 132,801,538 0 132,801,538
Accumulative Fund Trust
Domestic
Xinghui Chemical Fiber Group Co.,
non-state legal 2.65% 97,662,383 22,537,473 65,111,511 32,550,872
Ltd.
person
Hong Kong Securities Clearing Foreign legal
1.85% 68,121,317 68,121,317 0 68,121,317
Company Limited person
Chang’an International Trust Co.,
Ltd.-Chang’an Trust-Hengyi
Others 1.74% 64,236,044 -24,752,451 0 64,236,044
Petrochemical Phase III Employee
Stock Ownership Trust Plan
Domestic
Kingold Group Co., Ltd. non-state legal 1.52% 55,787,988 55,787,988 0 55,787,988
person
Domestic
Freez
Fulida Group Holding Co., Ltd. non-state legal 1.04% 38,421,512 -36,703,398 38,421,512 0 34,093,512
ed
person
Domestic natural
Wang Li 0.83% 30,395,693 30,395,693 0 30,395,693
person
Strategic investors or general legal persons become the top 10
None
shareholders due to the placement of new shares (if any) (see Note 3)
Among the top 10 shareholders, Hangzhou Hengyi Investment Co., Ltd. is a holding
Description of the above-mentioned shareholders' connected
subsidiary of Hengyi Group. As of the disclosure date of this report, the Company's
relationship or concerted action
controlling shareholder Hengyi Group and its concerted parties pledged 1,129,851,061
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
shares of the Company, accounting for 64.17% of its shares, of which 872,634,523 shares
(accounting for 49.56% of its shares) are the credit enhancement guarantee provided by
company's controlling shareholders for Hengyi Brunei for a project loan of US$1. 75
billion or equivalent overseas RMB, the above pledge does not involve the obligation of
stock covering position, and there is no liquidation risk.
Continued
Shareholdings of the top 10 shareholders with unrestricted sales conditions
Name of shareholders Number of unrestricted shares held at the end of the reporting period Types of shares
Zhejiang Hengyi Group Co., Ltd. 1,295,141,004 RMB ordinary shares
Hangzhou Hengyi Investment Co., Ltd. 256,338,027 RMB ordinary shares
Guangdong Fuye Shengde Asset Management Co., Ltd.-Fuye
158,382,926 RMB ordinary shares
Shengde No. 1 Private Securities Investment Fund
Huaneng Guicheng Trust Co., Ltd.-Huaneng TrustJinyi
132,801,538 RMB ordinary shares
Xincheng Accumulative Fund Trust
Hong Kong Securities Clearing Company Limited 68,121,317 RMB ordinary shares
Chang’an International Trust Co., Ltd.-Chang’an
Trust-Hengyi Petrochemical Phase III Employee Stock 64,236,044 RMB ordinary shares
Ownership Trust Plan
Kingold Group Co., Ltd. 55,787,988 RMB ordinary shares
Xinghui Chemical Fiber Group Co., Ltd. 32,550,872 RMB ordinary shares
Wang Li 30,395,693 RMB ordinary shares
China Life Asset Management-Bank of China-China Life
30,191,379 RMB ordinary shares
Assets-Phoenix Series Special Products (Phase 5)
161
2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Explanation of the related relationship or concerted action
among the top 10 shareholders of unlimited tradable shares, Among the top 10 shareholders, Hangzhou Hengyi Investment Co., Ltd. is a holding subsidiary of
and between the top 10 shareholders of unlimited tradable Hengyi Group.
shares and the top 10 shareholders
1. The Company's shareholder Zhejiang Hengyi Group Co., Ltd. holds 1,465,851,272 shares through
ordinary securities accounts, and also holds 38,462,186 shares through customer credit transaction
guarantee securities accounts of CITIC Securities Co., Ltd., a total of 1,504,313,458 shares.
2. The Company's shareholder Hangzhou Hengyi Investment Co., Ltd. holds 76,338,027 shares
through ordinary securities accounts, and also holds 180,000,000 shares through customer credit
transaction guarantee securities accounts of Soochow Securities Co., Ltd., a total of 256,338,027
shares.
Explanation on the participation of the top 10 ordinary 3. The Company’s shareholder Guangdong Fuye Shengde Asset Management Co., Ltd.-Fuye
shareholders in margin trading and securities lending Shengde Shengde No. 1 Private Securities Investment Fund holds 0 shares through an ordinary
business (if any) (see Note 4) securities account, and also holds 158,382,926 shares through a customer credit transaction guarantee
securities account of Huatai Securities, holding a total of 158,382,926 shares.
4. The Company's shareholder Kingold Group Co., Ltd. holds 0 shares through ordinary securities
accounts, and also holds 55,787,988 shares through customer credit transaction guarantee securities
accounts of China Merchants Securities Co., Ltd., holding a total of 55,787,988 shares.
5. The Company's shareholder Wang Li holds 0 shares through an ordinary securities account, and
also holds 30,395,693 shares through the customer credit transaction guarantee securities account of
Zheshang Securities Co., Ltd., holding a total of 30,395,693 shares.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether the Company’s top 10 common stock shareholders and top 10 common stock
shareholders with unrestricted sales conditions conducted agreed repurchase transactions
during the reporting period
The Company's top 10 common stock shareholders and the top 10 common stock shareholders
with unrestricted sales conditions did not engage in an agreed repurchase transaction during the
reporting period.
2. The Company’s controlling shareholder
Nature of controlling shareholder: Natural person holding
Type of controlling shareholder: Legal person
Legal
Date of
Name of controlling shareholder representative/p Organization Code Main business
establishment
erson in charge
Industrial
investment,
October 18,
Hengyi Group Qiu Jianlin 91330109143586141L production and sales
1994
of textile materials
and products, etc.
The controlling shareholder's
equity of other domestic and As of the disclosure date of this report, Hengyi Group currently holds
overseas listed companies that 494,655,630 shares of Zheshang Bank Co., Ltd. (stock code: 601916. SH,
hold or participate in shares during 02016.HK), Accounting for 2.33% of its total share capital
the reporting period
Change of controlling shareholder during the reporting period
The controlling shareholder of the Company remained unchanged during the reporting period.
3. The actual controller of the Company and those acting in concert
Nature of actual controller: domestic natural person
Type of actual controller: natural person
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Relationship with Whether to obtain the right of
Actual controller Nationality
actual controller abode in other countries or regions
Qiu Jianlin Personally China No
Since 1994, Mr. Qiu Jianlin has been the chairman of Zhejiang Hengyi
Main occupations and Group Co., Ltd. In addition, Qiu Jianlin also served as the vice
positions chairman of China Chemical Fiber Industry Association and other social
appointments.
As of the disclosure date of this report, Mr. Qiu Jianlin is the actual
Status of domestic and
controller of Hengyi Group. Hengyi Group directly holds 40.86% of the
overseas listed
Company’s shares, holds 6.96% of the Company’s shares through
companies that have held
Hengyi Investment, the holding subsidiary of Hengyi Group (Hengyi
holdings in the past 10
Group holds 60% of Hengyi Investment shares), therefore, Mr. Qiu
years
Jianlin is the actual controller of the Company
Change of actual controller during the reporting period
There was no change in the actual controller of the Company during the reporting period.
Block diagram of the property rights and control relationship between the Company and the
actual controller
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Sibling relationship
Nephew与邱利荣系
relationship 与邱祥娟系 Qiu
邱建林
Qiu Jianlin
between Qiu Jianlin
邱祥娟 朱军民
Zhu Junmin
叔侄关系
between Qiu Jianlin and姐弟关系 Xiangjuan
and Qiu Lirong
与邱杏娟系
Brother and sister 与邱奕博系
Set membership
relationship between Qiu between Qiu Jianlin
父子关系 95.00% 5.00%
兄妹关系 and Qiu Yibo
Jianlin and Qiu Xingjuan
Zhou Lingjuan, Xu
周玲娟、徐力方、方
Lifang, Fang Baigen, Yu Qiu 26.19% Fang 杭州万永实业
Hangzhou Wanyong
柏根、俞兆兴、潘伟 邱利荣
Qiu Lirong 邱杏娟 邱奕博
Qiu Yibo 方贤水 Industrial Investment
Zhaoxing, Pan Weimin
敏、项三龙
Xingjuan Xianshui 投资有限公司
Co., Ltd.
and Xiang Sanlong
7.40% 26.19% 7.83% 27.04%
3.94% 1.42%
Hangzhou Hengyi Investment Co.,
浙江恒逸集团有限公司
Zhejiang Hengyi Group Co., Ltd. 60.00% 杭州恒逸投资有限公司
Ltd.
40.86%
恒逸石化股份有限公司
Hengyi Petrochemical Co., Ltd. 6.94%
Note: As of the disclosure date of this report, Qiu Jianlin held 26.19% of the equity of Hengyi
Group and actually controlled 84.77% of the equity of Hengyi Group through concerted action
arrangements with family members (on February 8, 2018, Qiu Jianlin signed an Agreement for
Concerted Action with Hangzhou Wanyong Industrial Investment Co., Ltd., Qiu Xiangjuan, Qiu
Yibo, Qiu Lirong, and Qiu Xingjuan. The agreement continues to be effective. According to the
agreement, Wanyong Industrial controlled by Qiu Xiangjuan, Qiu Yibo, Qiu Lirong and Qiu
Xingjuan are the concerted actors of Qiu Jianlin, and the four shareholders hold 27.04%, 26.19%,
3.94% and 1.42% of the equity of Hengyi Group respectively). Hengyi Group directly holds 40.86%
of Hengyi Petrochemical and holds 6.96% of Hengyi Petrochemical through its subsidiary Hengyi
Investment, which controls 47.82% of Hengyi Petrochemical's shares. Qiu Jianlin is still the actual
controller of the listed company.
The actual controller controls the Company through trust or other asset management
methods
□ Applicable √ Not applicable
4. Other corporate shareholders holding more than 10% of the shares
□ Applicable √ Not applicable
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5. Controlling shareholders, actual controllers, restructuring parties and other commitment
subjects share restrictions on reductions
□ Applicable √ Not applicable
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Section VII Preference Shares Relevant Situation
During the reporting period, there were no preferred shares in the Company.
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Section VIII Relevant Situation of Convertible Corporate Bonds
I. Previous adjustments to the conversion price
On April 25, 2019, the Company held the 29th meeting of the tenth board of directors, at
which the "Proposal on the Company’s Public Issuance of Convertible Corporate Bonds" was
reviewed and approved. The validity period is 12 months from the date of approval by the
shareholders meeting. On May 9, 2019, the Company held the 2018 Annual General Meeting of
Shareholders, and the aforementioned resolution was passed by resolution. On April 26, 2020, the
Company convened the 38th meeting of the tenth board of directors. The "Proposal on Extending
the Validity Period of the Resolutions of the General Meeting of Shareholders of Public Offering of
Convertible Corporate Bonds" was considered and approved. The validity period of the resolutions
of the general meeting of shareholders shall be extended by 12 months from the date of expiry of
the previous validity period (i.e., May 8, 2021). On May 19, 2020, the Company held the 2019
Annual General Meeting of Shareholders, and the aforementioned resolution was passed by
resolution.
On March 31, 2020, the Company received the "Approval of the Public Issuance of
Convertible Corporate Bonds by Hengyi Petrochemical Co., Ltd." (ZJXK [2020] No. 522) issued by
the China Securities Regulatory Commission. As approved by the China Securities Regulatory
Commission, the issued convertible bonds are referred to as "Hengyi Convertible Bonds” for short
and the bond code is "127022". The Company publicly issued 20 million convertible corporate
bonds on October 22, 2020, each with a face value of RMB 100, a total issuance of RMB 2 billion,
and a conversion price of rmb 11.50 per share, and on November 16, 2020, listed on the Shenzhen
Stock Exchange.
As of the disclosure date of this report, the Company's convertible bond conversion price has
not yet been adjusted.
II. Cumulative share conversion
□ Applicable √ Not applicable
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III. The top ten holders of convertible bonds
Unit: Share
Number of Amount of Percentage of
Nature of convertible bonds convertible bonds convertible bonds
No. Name of convertible bond holders convertible held at the end of held at the end of the held at the end of
bond holders the reporting reporting period the reporting
period (sheets) (RMB) period
Industrial and Commercial Bank
of China Limited-China Universal
1 Others 609,478 60,947,800.00 3.05%
Convertible Bond Securities
Investment Fund
Ping An Selected Value-Added
No. 1 Hybrid Pension
2 Product-Industrial and Others 587,407 58,740,700.00 2.94%
Commercial Bank of China Co.,
Ltd.
Ping An Bank Co., Ltd.-Changxin
3 Convertible Bond Securities Others 465,161 46,516,100.00 2.33%
Investment Fund
Basic Pension Insurance Fund
4 Others 357,896 35,789,600.00 1.79%
307 Portfolio
China National Petroleum
Corporation Enterprise Annuity
5 Others 356,570 35,657,000.00 1.78%
Plan-Industrial and Commercial
Bank of China Co., Ltd.
Taikang Asset Credit Increasing
6 Fixed Income Pension Others 344,071 34,407,100.00 1.72%
Products-Bank of China Co., Ltd.
Industrial and Commercial Bank
of China Co., Ltd.-E Fund
7 Others 322,955 32,295,500.00 1.61%
Security Return Bond Securities
Investment Fund
Shenwan Hongyuan Securities State-owned
8 317,679 31,767,900.00 1.59%
Co., Ltd. legal person
Taikang Asset Management Co.,
9 Ltd.-Kaitai-stable value-added Others 288,668 28,866,800.00 1.44%
investment products
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Taikang Asset
Management-China Construction
10 Bank-Taikang Asset Management Others 283,443 28,344,300.00 1.42%
Co., Ltd. enjoys the configuration
of asset management products
IV. Significant changes in the guarantor’s profitability, asset status, and credit status
□ Applicable √ Not applicable
V. At the end of the reporting period, the Company's liabilities, changes in credit standing,
and cash arrangements for debt repayment in future years
1. Relevant accounting data and financial indicators
Accumulated amount Rate of change over
Item Reporting period
in prior year the same period
Current ratio (%) 70.68 71.42 -0.74%
Debt-to-asset ratio (%) 67.17 65.54 1.63%
Quick ratio (%) 47.14 47.51 -0.37%
Time interest earned ratio(times) 3.11 3.75 -17.07%
Loan repayment rate (%) 100.00 100.00 0%
Interest repayment rate (%) 100.00 100.00 0%
2. Credit rating of convertible bonds
The convertible corporate bonds have been rated by Shanghai New Century Credit Rating
Investment Services Co., Ltd. and the "Credit Rating Report on Public Issuance of Convertible
Corporate Bonds by Hengyi Petrochemical Co., Ltd." was issued on September 4, 2020. According
to the rating report, the main credit rating of Hengyi Petrochemical is AA+, and the credit rating of
this convertible corporate bond is AA+. During the duration of this convertible bond, Shanghai New
Century Credit Rating Investment Service Co., Ltd. will conduct a regular follow-up rating once a
year.
3. Cash arrangements for debt repayment in future years
The Company’s operating conditions are stable, with abundant cash flow, steady growth in
asset scale and profitability, asset-liability ratio at a reasonable level, and credit status in good level.
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The Company will maintain stable and sufficient funds for future payment of convertible corporate
bond interest and bond repayment.
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Section IX Directors, Supervisors, Senior Management and Employees
I.Changes in the shareholding of directors, supervisors and senior executives
The number of
Number of shares Number of Number of shares
holding shares Other
Start date Expiry date held at the additional shares held at the end of
Name Job title Incumbency Gender Age reduced in the changes
of tenure of tenure beginning of the held in the current the period
current period (shares)
period (shares) period (shares) (shares)
(shares)
Chairman, May 15, September
Qiu Yibo Incumbent Male 34 1,050,000 0 0 315,000 1,365,000
President 2015 13, 2023
Fang May 16, September
Vice Chairman Incumbent Male 57 3,675,000 0 0 1,102,500 4,777,500
Xianshui 2011 13, 2023
Ni August 25, September
Director Incumbent Male 43 4,655,000 0 0 1,396,500 6,051,500
Defeng 2017 13, 2023
Wu September September
Director Incumbent Male 32 84,000 0 0 25,200 109,200
Zhong 14, 2020 13, 2023
Wang Executive Vice Incumbent Male 51 May 16, September 4,445,000 0 0 1,333,500 5,778,500
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Songlin President 2011 13, 2023
Chen August 25, September
Vice president Incumbent Male 54 2,800,000 0 0 840,000 3,640,000
Liancai 2017 13, 2023
Zhao September September
Vice president Incumbent Male 36 252,000 0 0 75,600 327,600
Donghua 15, 2020 13, 2023
Zheng Secretary of August 28, September
Incumbent Male 42 2,240,000 0 0 672,000 2,912,000
Xingang the board 2017 13, 2023
Chairman of
Li September September
the board of Incumbent Male 44 168,000 0 0 50,400 218,400
Yugang 15, 2020 13, 2023
supervisors
Jin September September
Supervisor Incumbent Female 35 84,000 0 0 25,200 109,200
Danwen 14, 2020 13, 2023
August 28, September
Ni Jinmei Supervisor Incumbent Female 45 210,000 0 0 63,000 273,000
2020 13, 2023
Lou Director, Leave August 25, September
Male 42 4,410,000 0 0 1,323,000 5,733,000
Xiang President office 2017 14, 2020
Total -- -- -- -- -- -- 24,073,000 0 0 7,221,900 31,294,900
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
II. Changes in the Company’s directors, supervisors and senior management
Position
Name Type Date Reason
held
Li Yugang Supervisor Engage September 14, 2020 Election at expiration of board of supervisors
Jin Danwen Supervisor Engage September 14, 2020 Election at expiration of board of supervisors
Ni Jinmei Supervisor Engage September 14, 2020 Election at expiration of board of supervisors
Mao Ying Director Engage September 14, 2020 General election of the board of directors
Wu Zhong Director Engage September 14, 2020 General election of the board of directors
Lou Xiang Director Leave the post at the end of the term September 14, 2020 General election of the board of directors
Leave the post of supervisor at the end of the
Wang Tieming Supervisor September 14, 2020 Election at expiration of board of supervisors
term
Gong Leave the post of supervisor at the end of the
Supervisor September 14, 2020 Election at expiration of board of supervisors
Yanhong term
Li Yue Supervisor Leave the post at the end of the term September 14, 2020 Election at expiration of board of supervisors
Lou Jianchang Director Engage September 14, 2020 General election of the board of directors
Leave the post of director at the end of the
Wang Songlin Director September 14, 2020 General election of the board of directors
term
Leave the post of director at the end of the
Chen Liancai Director September 14, 2020 General election of the board of directors
term
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
III. Incumbency situation
The professional background, main work experience and current main responsibilities in the
Company of the Company's current directors, supervisors, and senior management personnel
1. Director
Qiu Yibo, male, born in December 1987, Chinese nationality, bachelor degree, once worked as
the manager of the investment management department of Sinopec Chemical Sales Co., Ltd. East
China Branch and Hengyi Petrochemical Co., Ltd. He is currently the chairman of Hengyi
Petrochemical Co., Ltd., as well as executive director of Ningbo Jinhou Industrial Investment Co.,
Ltd., executive director of Hangzhou Yibo Investment Management Co., Ltd., director of Zhejiang
Xianfeng Data Technology Co., Ltd., and executive director of Suqian Yida New Material Co., Ltd.,
executive director of Zhejiang Yizhi Information Technology Co., Ltd., director of Fujian Yijin
Chemical Fiber Co., Ltd., director of Zhejiang Hengyi Group Co., Ltd., and director of Shanghai
Dongzhan Shipping Co., Ltd.
Fang Xianshui, male, born in March 1964, Chinese nationality, bachelor degree, senior
economist, with more than 30 years of production management experience in the chemical fiber
industry. He used to be the general manager of Hangzhou Hengyi Industrial Corporation, the
general manager of Hangzhou Hengyi Chemical Fiber Co., Ltd., and the general manager of
Zhejiang Hengyi Group Co., Ltd. He is currently the vice chairman of Hengyi Petrochemical Co.,
Ltd., the director of Zhejiang Hengyi Group Co., Ltd., the executive director and president of
Zhejiang Hengyi Petrochemical Co., Ltd., the chairman of Zhejiang Hengyi Polymer Co., Ltd., the
chairman of Zhejiang Yisheng Petrochemical Co., Ltd., executive Director of Zhejiang Hengyi
High-tech Material Co., Ltd., director of Zhejiang Baling Hengyi Caprolactam Co., Ltd., director of
Hong Kong Tianyi International Holdings Co., Ltd., director of Good Park International Holding
Limited., director of Yisheng Dahua Petrochemical Co., Ltd., executive director of Hainan Yisheng
Trading Co., Ltd., executive director of Zhejiang Yixin Chemical Fiber Co., Ltd., executive director
and president of Ningbo Hengyi Engineering Management Co., Ltd., chairman of Hainan Yisheng
Petrochemical Co., Ltd., executive director of Ningbo Hengyi Industrial Co., Ltd., executive
director and president of Zhejiang Hengyi Petrochemical Sales Co., Ltd. chairman of Ningbo
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Hengyi Trading Co., Ltd., director of Hong Kong Yisheng Co., Ltd., executive Director of Shanghai
Hengyi Polyester Fiber Co., Ltd., chairman of Zhejiang Hengyi International Trade Co., Ltd., and
director of Fujian Yijin Chemical Fiber Co., Ltd., director of Zhejiang Yisheng New Material Co.,
Ltd., director of Zhejiang Hengyi Polyamide Co., Ltd., executive director of Zhejiang Hengkai
Energy Co., Ltd., and executive director of Zhejiang Shuangtu New Material Co., Ltd.
Ni Defeng, male, born in January 1978, Chinese nationality, doctoral degree, has nearly 20
years of experience in finance and investment. He used to be the auditor of Zhejiang Tianjian
Certified Public Accountant, the manager of the financial department, the manager of the
investment development department, the assistant to the president of Zhejiang Hengyi Group Co.,
Ltd., and the investment director of Hengyi Petrochemical Co., Ltd. He is currently a director of
Hengyi Petrochemical Co., Ltd., a director of Zhejiang Xianfeng Data Technology Co., Ltd., a
director and president of Zhejiang Hengyi Group Co., Ltd., a director of Hangzhou Hengyi
Investment Co., Ltd., a director of Zhejiang Hengyi Polyamide Co., Ltd., director of Lanping
County Qingdian Bay Zinc Industry Co., Ltd., director of Hainan Hengshengyuan International
Tourism Development Co., Ltd., Executive Director and President of Hangzhou Jinglin Asset
Management Co., Ltd., and Director of Dalian Yishengyuan Real Estate Co., Ltd.
Lou Jianchang, male, born in November 1962, Chinese nationality, Master of Engineering,
China University of Petroleum (Beijing), MBA from the University of Houston, professor-level
senior engineer. He once served as Deputy Chief Dispatcher of the General Control Office of
Sinopec Beijing Yanshan Co., Deputy Plant Manager and Plant Manager of the Refinery Plant of
Sinopec Beijing Yanshan Co.; Deputy General Manager of Sinopec Beijing Yanshan Co.; Deputy
Director of Sinopec Material and Equipment Department and deputy general manager of Sinopec
International Business. He is currently a director and vice president of Hengyi Petrochemical Co.,
Ltd., and a director of Fujian Yijin Chemical Fiber Co., Ltd.
Mao Ying, female, born in February 1981, Chinese nationality, bachelor degree, senior
economist. She served as the assistant to the president of Hengyi Petrochemical Co., Ltd. and the
chief financial officer of Hengyi Brunei. She is currently the vice president and chief financial
officer of Hengyi Petrochemical Co., Ltd.
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Wu Zhong, male, born in July 1989, Chinese nationality, Zhejiang Gongshang University,
Bachelor of Laws. He once served as the deputy general manager of Zhejiang Hengyi
Petrochemical Sales Co., Ltd., and currently serves as the general manager of Ningbo Hengyi
Industrial Co., Ltd., currently serves as the director and vice president of Hengyi Petrochemical Co.,
Ltd., and also serves as the director of Fujian Yijin Chemical Fiber Co., Ltd. and executive director
and president of Hainan Hengjing Trading Co., Ltd.
Chen Sanlian, male, born in November 1964, Chinese nationality, bachelor in law, lawyer. He
once served as a cadre of the Lawyers Management Office of Department of Justice of Zhejiang
Province, deputy editor of "Lawyers and Legal System" magazine, lawyer of Zhejiang Lianhe Law
Firm, secretary of Zhejiang Lawyers Association, current full-time vice president of Zhejiang
Lawyers Association, Independent director of Hengyi Petrochemical Co., Ltd., he also serves as
independent director of Jiakaicheng Group Co., Ltd., Zhejiang Tony Electronics Co., Ltd., and
Zheshang Zhongtuo Co., Ltd. He is also a member of the Zhejiang Provincial Committee of the
Chinese People's Political Consultative Conference, a special inspector of the Zhejiang Provincial
Committee of Political and Legal Affairs, an expert member of the Zhejiang Provincial Judges and
Prosecutors Selection Committee, an arbitrator of the China International Economic and Trade
Arbitration Commission, and a visiting professor of Law School of Zhejiang University of
Technology.
Yang Liuyong, male, born in March 1964, Chinese nationality, doctoral degree, professor title,
is currently a professor of Finance at Zhejiang University and deputy dean of the Institute of
Finance at Zhejiang University. He joined the Communist Party of China in 1984 and entered the
employment in 1987. He studied in the major of agricultural economics at Zhejiang University from
1980 to 1984. He studied agricultural economics at Zhejiang University (master's degree) from
1984 to 1987, and he has been a teacher in the Department of Finance of Zhejiang University from
1987 to present (including: from 1996 to 2001 majoring in agricultural economics and management
of Zhejiang University [Ph.D. student]).
Yang Bozhang, male, born in July 1957, Chinese nationality, college degree, professor-level
senior accountant, and vice president of Zhejiang Provincial Association of Chief Accountants. He
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
used to be the manager of the financial department of Transfar Group Co., Ltd., and is currently an
independent director of Hengyi Petrochemical Co., Ltd., and also the director, chief accountant and
vice president of Transfar Group Co., Ltd.
2. Supervisors
Li Yugang, male, born in November 1977, Chinese nationality, master's degree, economist,
internationally registered internal auditor, with more than ten years of auditing experience, formerly
the deputy director of the audit department and the first deputy director of the Legal Department of
the board of directors of Shagang Group, currently serves as director of audit and legal affairs
department of Hengyi Petrochemical Co., Ltd.
Jin Danwen, female, born in April 1986, Chinese nationality, Master of Accounting from
Hanzhou Electronic Science and Technology University, China Certified Public Accountant,
Intermediate Accountant. She served as finance director of Hengyi Industries Sdn Bhd. She is
currently the general manager of the capital management department of Hengyi Petrochemical Co.,
Ltd. and the treasury secretary of Hengyi Industries Sdn Bhd.
Ni Jinmei, female, born on March 21, 1976, Chinese nationality, economist. She used to be the
general manager of the Comprehensive Department of Zhejiang Hengyi Polymer Co., Ltd., and the
general manager of the comprehensive management center of Zhejiang Hengyi Petrochemical Co.,
Ltd., and now she is the general manager of Hangzhou Yijing Chemical Fiber Co., Ltd.
3. Senior executive
Wang Songlin, male, born in April 1970, Chinese nationality, master degree, has more than 20
years of experience in the petrochemical fiber industry. He used to be the deputy director of CTPIC,
the office director of CNCFC, the general manager of China Chemical Fiber Economic Information
Network, and the general manager of Beijing Cotton Zhanwang Information Consulting Co., Ltd.
He is currently the executive vice president of Hengyi Petrochemical Co., Ltd., the director of
Zhejiang Baling Hengyi Caprolactam Co., Ltd., the chairman of Haining Hengyi New Material Co.,
Ltd., the executive director and president of Haining Hengyi Thermal Power Co., Ltd., the
executive director and president of Zhejiang Henglan Technology Co., Ltd, and director of Jiangsu
Xinshijie Advanced Functional Fiber Innovation Center Co., Ltd.
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Chen Liancai, male, born in June 1967, Chinese nationality, bachelor degree, senior engineer,
with more than 20 years of experience in the petrochemical industry. He used to be the deputy
general manager of Sinopec Zhenhai Refining & Chemical Branch, the deputy general manager of
Guodian Sinopec Ningxia Energy Chemical Co., Ltd., and the general manager of Sinopec Great
Wall Energy Chemical (Ningxia) Co., Ltd. He is currently the Chief Executive Officer (CEO) of
Hengyi Brunei and the Vice President of Hengyi Petrochemical Co., Ltd.
Zhao Donghua, male, born in February 1985, Chinese nationality, Master of Laws of Zhejiang
University, Intermediate Economist. He used to serve as the representative of securities affairs, the
deputy manager of the legal affairs department, and the assistant general manager of the marketing
center of Hengyi Petrochemical Co., Ltd. He is currently the general manager of Zhejiang Hengyi
Petrochemical Sales Co., Ltd. and the vice president of Hengyi Petrochemical Co., Ltd.
Zheng Xingang, male, born in December 1979, Chinese nationality, bachelor degree from
Huazhong University of Science and Technology, master degree from Wuhan University, EMBA
degree from Fudan University, master degree, senior economist. He has more than 10 years of
investment and financing work experience. He once served as deputy manager of the capital
operation department, deputy manager of the investment development department, and director of
the office of the board of directors of Hengyi Petrochemical Co., Ltd. He is currently the secretary
of the board of directors and assistant to the president of Hengyi Petrochemical Co., Ltd.
Serving in shareholder units
Name of Name of shareholder Positions held in Start date of Whether to receive remuneration
incumbent units shareholder units tenure allowance in shareholder units
Zhejiang Hengyi Group September 26,
Qiu Yibo Director No
Co., Ltd. 2017
Zhejiang Hengyi Group October 18,
Fang Xianshui Director No
Co., Ltd. 1994
Zhejiang Hengyi Group Director and September 26,
Ni Defeng Yes
Co., Ltd. President 2017
Hangzhou Hengyi December 28,
Ni Defeng Director No
Investment Co., Ltd. 2016
Description of the position in the shareholder unit None
Serving in other units
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance in
incumbent other units tenure
other units
Ningbo Jinhou Industry Investment May 03,
Qiu Yibo Executive director No
Co., Ltd. 2016
Hangzhou Yibo Investment March 17,
Qiu Yibo Executive director No
Management Co., Ltd. 2016
Zhejiang Xianfeng Data June 07,
Qiu Yibo Director No
Technology Co., Ltd. 2016
Fujian Yijin Chemical Fiber Co., Chairman of the January 26,
Qiu Yibo No
Ltd. board 2018
November
Qiu Yibo Dongzhan Shipping Co., Ltd. Director No
30, 2017
Zhejiang Hengyi Hanlin Real Estate Executive Director August 20,
Qiu Yibo No
Co., Ltd. and President 2020
January 14,
Qiu Yibo Zhejiang Hengyi Jinlun Co., Ltd. Vice chairman No
2021
January 19,
Qiu Yibo Suqian Yida New Material Co., Ltd. Executive director No
2018
Fang Zhejiang Yixin Chemical Fiber Co.,
Executive director July 26, 2017 No
Xianshui Ltd.
Fang August 14,
Hainan Yisheng Trading Co., Ltd. Executive director No
Xianshui 2014
Fang December
Zhejiang Hengkai Energy Co., Ltd. Executive director No
Xianshui 18, 2017
Fang June 07,
Ningbo Hengyi Industrial Co., Ltd. Executive director No
Xianshui 2011
Fang Chairman of the
Ningbo Hengyi Trading Co., Ltd. May 8, 2015 No
Xianshui board
Fang Ningbo Hengyi Engineering Executive director November
No
Xianshui Management Co., Ltd. and President 27, 2014
Fang Zhejiang Hengyi Petrochemicals Executive director
July 26, 2004 No
Xianshui Co., Ltd. and President
Fang Chairman of the May 18,
Zhejiang Hengyi Polymer Co., Ltd. No
Xianshui board 2015
Fang Zhejiang Hengyi High-tech Executive director October 15, No
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance in
incumbent other units tenure
other units
Xianshui Material Co., Ltd. and President 2007
Fang Zhejiang Yisheng Petrochemical Chairman of the
May 8, 2015 No
Xianshui Co., Ltd. board
Fang Zhejiang Hengyi Petrochemicals Executive director
July 24, 2017 No
Xianshui Sales Co., Ltd. and President
Fang Hainan Yi Sheng Petrochemical Chairman of the June 23,
No
Xianshui Co., Ltd. board 2014
Fang Shanghai Hengyi Polyester Fiber May 14,
Executive director No
Xianshui Co., Ltd. 2015
Fang Zhejiang Hengyi International Chairman of the December
No
Xianshui Trade Co., Ltd. board 06, 2017
Fang Fujian Yijin Chemical Fiber Co., January 26,
Director No
Xianshui Ltd. 2018
Fang Yisheng Dahua Petrochemical Co., April 29,
Director No
Xianshui Ltd. 2006
Fang August 12,
Zhejiang Hengyi Jinlun Co., Ltd. Director No
Xianshui 2013
Fang Dalian Yisheng Investment Co., December
Director No
Xianshui Ltd. 18, 2009
Fang Zhejiang Baling Hengyi December
Director No
Xianshui Caprolactam Co., Ltd. 25, 2014
Fang Zhejiang Yisheng New Material November
Director No
Xianshui Co., Ltd. 27, 2017
Fang Haining Hengyi New Material Co., November
Director No
Xianshui Ltd. 13, 2019
Fang Hongkong Tianyi International September
Director No
Xianshui Holding Company Limited 17, 2009
Fang Jiabai International Investment Co., September
Director No
Xianshui Ltd. 17, 2009
Fang June 27,
Hong Kong Yisheng Co., Ltd. Director No
Xianshui 2014
Chairman and February 28,
Ni Defeng Hangzhou Jinyi Industrial Co., Ltd. No
President 2020
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance in
incumbent other units tenure
other units
Hangzhou Jinglin Asset Executive director March 12,
Ni Defeng No
Management Co., Ltd. and President 2018
January 27,
Ni Defeng Zhejiang Hengyi Jinlun Co., Ltd. Director No
2015
Lanping County Qingdian Bay Zinc January 16,
Ni Defeng Director No
Industry Co., Ltd. 2006
Hainan Hengshengyuan
February 26,
Ni Defeng International Tourism Development Director No
2018
Co., Ltd.
Dalian Yishengyuan Real Estate March 29,
Ni Defeng Director No
Co., Ltd. 2018
Zhejiang Xianfeng Data June 07,
Ni Defeng Director No
Technology Co., Ltd. 2016
Chairman of the
November
Ni Defeng Dongzhan Shipping Co., Ltd. board of No
30, 2017
supervisors
Lou Fujian Yijin Chemical Fiber Co., October 22,
Director No
Jianchang Ltd. 2020
Executive director August 21,
Wu Zhong Hainan Hengjing Trading Co., Ltd. No
and President 2020
Fujian Yijin Chemical Fiber Co., October 22,
Wu Zhong Director No
Ltd. 2020
August 21,
Jin Danwen Hainan Hengjing Trading Co., Ltd. Supervisor No
2020
February 28,
Jin Danwen Hangzhou Jinyi Industrial Co., Ltd. Director No
2020
Zhejiang Hengyi High-tech February 28,
Jin Danwen Director No
Material Co., Ltd. 2020
Zhejiang Hengyi Engineering January 29,
Jin Danwen Supervisor No
Management Co., Ltd. 2018
Zhejiang Hengyi Hanlin Real Estate August 20,
Jin Danwen Supervisor No
Co., Ltd. 2020
Jin Danwen Haining Hengyi New Material Co., Supervisor October 27, No
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance in
incumbent other units tenure
other units
Ltd. 2020
Wang Zhejiang Henglan Technology Co., Executive director August 04,
No
Songlin Ltd. and President 2020
Wang Haining Hengyi Thermoelectricity Executive director October 09,
No
Songlin Co., Ltd. and President 2018
Wang Zhejiang Baling Hengyi June 04,
Director No
Songlin Caprolactam Co., Ltd. 2018
Jiangsu Xinshijie Advanced
Wang August 24,
Functional Fiber Innovation Center Director No
Songlin 2020
Co., Ltd.
Wang Haining Hengyi New Material Co., Chairman of the October 27,
No
Songlin Ltd. board 2020
Description of employment in other units None
The penalties of the current directors, supervisors and senior executives of the Company
during the reporting period by the securities’ regulatory institutions in the past three years
□ Applicable √ Not applicable
IV. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedures, basis for determination, and actual payment of remuneration of
directors, supervisors, and senior executives
The Company passed the "Salary and Performance Appraisal Management System for Senior
Management Staff " (reviewed and approved at the third meeting of the 8th Board of Directors) to
conduct performance appraisal and pay remuneration to the Company's directors, supervisors and
senior management. The annual remuneration of directors, supervisors and senior managers who
receive remuneration from the Company in 2020 (including total remuneration of basic salary,
bonuses, allowances, subsidies, employee benefits and various insurance premiums, public reserve
funds and other forms of pre-tax payment from the Company ) is released in accordance with the
Company’s relevant regulations, and based on the Company’s operating conditions and the duties
and work performance evaluation of relevant personnel by board of directors. During the reporting
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period, the remunerations of the Company's directors, supervisors and senior management have
been paid on a monthly basis.
Upon agreement reached at the first meeting of the Company’s eleventh board of directors on
September 15, 2020 and the Company’s fifth extraordinary general meeting of shareholders on
October 12, 2020, the allowance standard of the independent director was adjusted to 150,000 yuan
per person per year (including Tax), allowances are paid on an average monthly basis.
Remuneration of directors, supervisors and senior executives during the reporting period of
the Company
Currency Unit: RMB 10,000
Total pre-tax Whether to get
remuneration remuneration from
Name Job title Gender Age Incumbency
received from the related parties of
Company the Company
Qiu Yibo Chairman, President Male 34 Incumbent 143.1 No
Fang Xianshui Vice chairman Male 57 Incumbent 143.1 No
Ni Defeng Director Male 43 Incumbent 0 Yes
Lou Jianchang Director, Vice president Male 59 Incumbent 138.1 No
Director, Vice president,
Mao Ying Female 40 Incumbent 101.6 No
Chief financial officer
Wu Zhong Director, Vice president Male 32 Incumbent 58.92 No
Chen Sanlian Independent director Male 56 Incumbent 11.25 No
Yang Baizhang Independent director Male 64 Incumbent 11.25 No
Yang Liuyong Independent director Male 57 Incumbent 11.25 No
Wang Songlin Executive vice president Male 51 Incumbent 131.29 No
Chen Liancai Vice president Male 54 Incumbent 118.08 No
Zhao Donghua Vice president Male 36 Incumbent 99.1 No
Zheng Xingang Secretary of the board Male 42 Incumbent 71.99 No
Lou Xiang Director, President Male 42 Leave office 112.49 No
Li Yugang Supervisor Male 44 Incumbent 13.15 No
Jin Danwen Supervisor Female 35 Incumbent 10.61 No
Ni Jinmei Supervisor Female 46 Incumbent 16.36 No
Wang Tieming Supervisor Male 58 Leave office 56.51 No
Gong Yanhong Supervisor Female 51 Leave office 0 Yes
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Total pre-tax Whether to get
remuneration remuneration from
Name Job title Gender Age Incumbency
received from the related parties of
Company the Company
Li Yue Supervisor Female 37 Leave office 18.63 No
Total -- -- -- -- 1,266.78 --
Equity incentives granted of the directors and senior executives of the Company during the
reporting period
□ Applicable √ Not applicable
V. Employees of Company
1. Number of employees, professional composition and education level
Number of employees in the parent company (person) 10
Number of employees in service in major subsidiaries (person) 18,144
Total number of employees in service (person) 18,154
Total number of employees receiving salaries in the current period
18,130
(person)
Number of retired employees whose expense is born by the parent
128
company and major subsidiaries (person)
Professional composition
Number of professional
Professional composition category
composition (person)
Production staff 15,595
Sales people 271
Technical staff 1,558
Financial officer 126
Administrative personnel 604
Total 18,154
Degree of education
Education level category Quantity (person)
Master degree and above 274
Bachelor degree 1,729
College degree and below 16,151
Total 18,154
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Salary policy
The Company implements a labor contract system, sign labor contracts with every employee in
accordance with the "Labor Law", "Labor Contract Law" and relevant labor laws and regulations.
The Company strictly implements the national employment system, labor protection system, and
social security system, pays social insurance for employees in accordance with national regulations,
sets up corresponding safety protection measures, and creates a good and safe production
environment for employees. Through innovative management mechanisms, the Company guides the
functional system to continuously improve quality and efficiency, and to create a streamlined and
efficient functional team of headquarters. The Company develops an effective salary incentive
system for the Company's financial personnel, administrative personnel, technical personnel,
production personnel and sales personnel, and gives corresponding performance rewards based on
the performance evaluation of the Company, department and individual.
3. Training plan
The Company established Hengyi Enterprise University according to the needs of production
and operation and talent training, aiming to build a competitive enterprise university and support
Hengyi's global development. It serves as the power center and load bearing platform for Hengyi's
organizational development, talent training, technology accumulation, and corporate transformation.
The "Blue" series of talent projects are implemented in Hengyi University, to establish talent
echelons at different levels; meanwhile, it attaches importance to continuous improvement, job skill
assessment, and on-the-job education promotion to enhance professional skills and effectiveness.
The Company develops training plans for different types of employees, organizes internal and
outbound trainings according to the plan, pays special attention to job skills training, and provides
certification for special positions and hazardous chemical operators to ensure safe production and
normal operation. The Company also trains technical and business backbones through targeted
training to improve their business capabilities.
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4. The situation of labor outsourcing
Total number of working hours of labor outsourced (hours) 768,681
Total remuneration paid for labor outsourced (RMB) 16,401,431.00
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Section X Corporate Governance
I. Basic Situation on Corporate Governance
During the reporting period, in strict accordance with the requirements of the Company Law,
the Securities Law, the Code of Corporate Governance for Listed Companies, the Rules Governing
the Listing of Shares on Shenzhen Stock Exchange and other regulatory documents of China
Securities Regulatory Commission (CSRC), and in combination with its actual situation, the
Company continuously improved and enhanced the standard operation of corporate governance,
established and perfected a sound system of internal management and control, and regulated its
operation. The company’s internal control system is improving, and the standardization of
governance continues to enhance.
1. Shareholders and General Shareholders Meetings
During the reporting period, the Company held seven General Shareholders Meetings in total.
The convening, holding and voting procedures of the meetings strictly complied with the provisions
and requirements of the Rules for the General Shareholders Meetings of Listed Companies, its
articles of association and Rules of Procedure of General Shareholders Meetings. The company
treated all shareholders fairly, and provided network voting in accordance with relevant regulations,
which increased convenience for minority shareholders to participate in the General Shareholders
Meetings and ensured that minority shareholders could fully exercise their rights. All General
Shareholders Meetings of the Company during the reporting period were convened and held by the
Board of Directors, and witnessed by lawyers on the spot, so as to ensure the legitimacy of the
convening, holding and voting procedures, and protect the legitimate rights and interests of the
Company and its shareholders.
2. Controlling Shareholders and the Company
The company is completely independent from its controlling shareholders and their
subsidiaries in such aspects as business, personnel, assets, institution and financial affairs. The
company has independent and complete business and independent operation capacity. The Board of
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Directors, Supervisory Committee and other internal offices of the Company operate independently.
Its controlling shareholders can strictly regulate their behaviors, and have not directly or indirectly
interfered with the Company’s decision-making or business activities beyond the General
Shareholders Meetings.
3. Directors and the Board of Directors
The company elects its directors in strict accordance with the election procedures prescribed
by the Company Law and its articles of association, and the number and composition of its Board of
Directors is in compliance with laws and regulations. All directors of the Company can attend the
board meetings and the General Shareholders Meetings with chariness and responsibility, take
priority over the interests of the Company and all shareholders, faithfully perform their duties,
actively participate in relevant training and learn relevant laws and regulations, and promote the
standard operation and scientific decision-making of the Board of Directors. The independent
directors of the Company can carry out their duties independently in accordance with relevant rules
and regulations, and do not subject themselves to the influence of the Company’s actual controllers
or other entities or persons who are interested parties of the Company.
During the reporting period, the procedure of the board meetings of the Company complied
with relevant rules, the meeting minutes were complete and accurate, and the information disclosure
related to the meetings was timely, accurate and sufficient. The company’s Board of Directors
established four special committees, i.e., the remuneration, appraisal and nomination committee, the
risk control committee, the audit committee, and the strategy and investment committee, which
played an important role in promoting the standard operation and sound development of the
Company.
4. Supervisors and the Supervisory Committee
The board of supervisors of the Company consists of three supervisors, one of whom is the
employees’ representative. The number and personnel of the board of supervisors meet the
requirements of laws and regulations and the articles of association. All supervisors of the Company
can, in accordance with the Rules of Procedure of the Supervisory Committee and other relevant
regulations, earnestly perform their duties, attend the shareholders’ meetings, attend the on-site
board meetings as nonvoting delegates, convene supervisor meetings in accordance with the
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prescribed procedures, supervise with due diligence the Company’s finance and the legitimacy and
compliance of directors and senior executives’ performance of duties, and protect the legitimate
rights and interests of the Company and its shareholders.
5. Interested Parties
The company can fully respect and safeguard the legitimate rights and interests of relevant
interested parties, achieve a win-win result for customers, suppliers, employees, shareholders and
other interested parties, and jointly promote the sustainable and steady development of the
Company with the interested parties.
6. Information Disclosure and Transparency
In strict accordance with relevant laws and regulations as well as the requirements of the
Information Disclosure Administration System and the Investor Relations Administration System,
the Company earnestly performs its obligation of information disclosure by truthfully, accurately,
completely and timely disclosing the operation and management information of the Company and
matters that have significant impact on the Company, coordinates the relationship between the
Company and investors, receives investors and answers their inquiries. The company designates such
newspapers and websites as Securities Times, China Securities Journal, Shanghai Securities News, Securities
Daily and CINIFO (http://www.cninfo.com.cn), which are designated by CSRC as information media, for its
information disclosure.
Whether the actual status of corporate governance significantly deviates from the regulatory
documents issued by the China Securities Regulatory Commission regarding the governance of
listed companies.
There is no significant difference between the actual situation of corporate governance and the
regulatory documents on the governance of listed companies issued by China Securities Regulatory
Commission.
II. The company's independence from the controlling shareholders in business, personnel,
assets, organization, finance, etc.
The company operates in strict accordance with the Company Law and its articles of
association, keeps perfecting its sound corporate governance structure, and is completely separated
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
from its controlling shareholders in such aspects as business, personnel, assets, institution and
financial affairs, with independent and complete business and independent operation capacity.
III. Horizontal Competition
□ Applicable √ Not Applicable
IV. Relevant Situation of the Annual General Meeting of Shareholders and the Extraordinary
General Meeting of Shareholders Held within the Reporting Period
1. The shareholders' meetings for this reporting period
Percentage of
Conference Date of Date of
Conference Session Investors Disclosure index
Type meeting disclosure
Involved
Announcement on Resolution of the
First Interim Extraordinary First Extraordinary General Meeting
February 7, February 8,
Shareholders’Gene General 41.39% of 2020 (Announcement No.:
2020 2020
ral Meeting in 2020 Meeting 2020-020) on CNINF
(www.cninfo.com.cn)
Announcement on Resolution of the
Second Interim Extraordinary Second Extraordinary General
March 23, March 24,
Shareholders’Gene General 48.68% Meeting of 2020 (Announcement
2020 2020
ral Meeting in 2020 Meeting No.: 2020-033) on CNINF
(www.cninfo.com.cn)
Announcement on Resolution of the
Annual
2019 Annual May 19, May 20, 2019 Annual General Meeting
General 49.01%
General Meeting 2020 2020 (Announcement No.: 2020-059) on
Meeting
CNINF (www.cninfo.com.cn)
Announcement on Resolution of the
Third Interim Extraordinary Third Extraordinary General
June 29, June 30,
Shareholders’Gene General 42.53% Meeting of 2020 (Announcement
2020 2020
ral Meeting in 2020 Meeting No.: 2020-073) on CNINF
(www.cninfo.com.cn)
Announcement on Resolution of the
Fourth Interim Extraordinary Fourth Extraordinary General
September September
Shareholders’Gene General 51.80% Meeting of 2020 (Announcement
14, 2020 15, 2020
ral Meeting in 2020 Meeting No.: 2020-096) on CNINF
(www.cninfo.com.cn)
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Announcement on Resolution of the
Fifth Interim Extraordinary Fifth Extraordinary General
October 12, October 13,
Shareholders’Gene General 46.09% Meeting of 2020 (Announcement
2020 2020
ral Meeting in 2020 Meeting No.: 2020-106) on CNINF
(www.cninfo.com.cn)
Announcement on Resolution of the
Sixth Interim Extraordinary Sixth Extraordinary General
November November
Shareholders’Gene General 43.15% Meeting of 2020 (Announcement
10, 2020 11, 2020
ral Meeting in 2020 Meeting No.: 2020-130) on CNINF
(www.cninfo.com.cn)
2. Convening of the Extraordinary General Meetings upon request of the preferred
shareholders whose voting rights are restored
□ Applicable √ Not Applicable
V. The performance of the duties of independent directors during the reporting period
1. Attendance of independent directors in the boarding meetings and General Shareholders
Meetings
Attendance of independent directors at the Board Meetings and the General Shareholders Meetings
Number Whether
Number
of board Number of Number absent from Number of
Number of
meetings attendance of board of board attendance
Name of of on-site attendanc
to attend meetings by means absence meetings in of General
Independen attendanc e of board
during of at board person for Shareholde
t Director e of board meetings
the telecommunication meeting two rs
meetings by
reportin s s consecutive Meetings
entrustees
g period times
Chen
10 3 7 0 0 No 1
Sanlian
Yang
10 3 7 0 0 No 1
Baizhang
Yang
10 3 7 0 0 No 1
Liuyong
Notes on failure to attend the board meetings in person for two consecutive times
Not Applicable
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Objections of independent directors to related issues of the Company
Whether independent directors raise an objection to relevant matters of the Company
During the reporting period, independent directors did not raise objections to the Company’s
related matters.
3. Other information on independent directors' performance of duties
Whether independent directors’ suggestions to the Company are accepted
√ Yes □ No
Note on the acceptance or rejection of independent director's proposals on company issues
During the reporting period, in strict accordance with the relevant laws and regulations such as
the Guidelines of the Shenzhen Stock Exchange for the Standard Operation of Listed Companies on
the Main Board, the Rules Governing the Listing of Shares on Shenzhen Stock Exchange, and the
Guiding Opinions on Establishing the Independent Director System in Listed Companies, as well as
the Company’s articles of association, the independent directors of the Company attended the board
meetings and the General Shareholders Meetings, earnestly performed their duties, and put forward
constructive opinions or suggestions on the development policy of the Company. Based on various
specifications and requirements put forward by independent directors at the board meetings, the
Company summarized and sorted out meeting minutes, sent them irregularly to all directors,
supervisors, senior executives and persons in charge of relevant matters, and tracked the progress of
the matters in time, so as to effectively release, track and get feedback on the opinions of
independent directors. At the board meetings, the Company’s relevant persons in charge reported to
independent directors on the operation, financial conditions, etc. of the Company during the
corresponding period, and other members of the Board of Directors as well as management
members received the inquiries from independent directors. The independent directors offered
advice and suggestions on the improvement of the Company’s operation and management, and
reviewed and issued opinions of independent directors on such major issues as related party
transaction, stock ownership incentive, employee stock ownership plan, corporate bonds, and assets
purchase & fund raising by issuance of shares, which effectively ensured the fairness and
objectivity of the Board of Directors’ decisions and protected the overall interests of the Company
and the legitimate rights and interests of minority shareholders. The independent directors actively
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
participated in the Company’s management meetings, gave risk warning for problems in operation
and management of the Company in a timely manner, and provided professional training for senior
executives of the Company with their expertise, playing a positive role in the standard operation and
sound development of the Company.
VI. Performance of Duties of the Special Committees under the Board of Directors during the
Reporting Period
The Board of Directors of the Company established the strategy and investment committee, the
audit committee, the risk control committee, and the remuneration, appraisal and nomination
committee to expand its scope of operation.
1. Performance of duties of audit committee
During the reporting period, the audit committee of the Board of Directors actively performed
its duties, and held four meetings in total. In terms of internal audit, the audit committee looked into
the implementation of the audit work plan of the internal audit department and checked the audit
results; in terms of financial report, the audit committee actively communicated with the Company’s
accounting department and external auditing institutions, and inspected the Company’s financial
systems and specifications and the preparation process of financial report to ensure the accuracy and
integrity of the Company’s financial report; in terms of internal control, the audit committee
unanimously agreed that the Company had established a relatively adequate internal control
organization, and the internal control department of the Company, in strict accordance with relevant
internal control systems and specifications, fully carried out the internal control test process,
effectively prevented and controlled the Company’s internal control defects, and improved the
Company’s internal control level.
2. Performance of duties of remuneration, appraisal and nomination committee
During the reporting period, the remuneration, appraisal and nomination committee of the
Board of Directors of the Company conducted appraisal based on the main duties of the directors,
supervisors and senior executives of the Company and the completion of the key work.
3. Performance of duties of strategy and investment committee
The strategy and investment committee of the Board of Directors of the Company consists of
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
four directors, with Mr. Qiu Yibo, Chairman of the Company, acting as chairman. During the
reporting period, all members of the strategy and investment committee performed their duties with
due diligence, and completed their work.
During the reporting period, the strategy and investment committee discussed and analyzed the
Company’s major investments, and put forward opinions and suggestions, playing an important role
in enhancing the Company’s core competitiveness, strengthening scientific decision-making, and
improving the efficiency and quality of decision-making.
4. Performance of duties of risk control committee
The risk control committee of the Board of Directors of the Company consists of three
directors, with Mr. Chen Sanlian acting as chairman. During the reporting period, all members of
the risk control committee performed their duties with due diligence, and completed their work. The
risk control committee demonstrated and analyzed the possible risks in major investment projects
and operation and management of the Company, and put forward relevant suggestions, playing an
important role in the stable operation of the Company.
It effectively ensured the fairness and objectivity of the Board of Directors’ decisions and
protected the overall interests of the Company and the legitimate rights and interests of minority
shareholders. The independent directors actively participated in the Company’s management
meetings, gave risk warning for problems in operation and management of the Company in a timely
manner, and provided professional training for senior executives of the Company with their
expertise, playing a positive role in the standard operation and sound development of the Company.
VII. Work of the Supervisory Committee
Whether the Supervisory Committee found there was any risk in the Company during the
reporting period
The Supervisory Committee has no objection to the supervised matters during the reporting
period.
VIII. Evaluation and Incentive Mechanisms for Senior Management
In accordance with the System for Administration of Remuneration and Performance Appraisal
of Senior Executives and other relevant regulations, the comprehensive appraisal of senior
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
executives of the Company was conducted on the basis of the economic indicators and integrated
management of business operation, as well as the annual business plan and the duties and objectives
of senior executives, and the annual salary distribution of senior executives was determined
according to the appraisal results.
IX. Internal Control Assessment Report
1. Details of material weakness in internal control found during the reporting period
□ Yes √ No
2. Internal Control Self-evaluation Report
Disclosure date of full text of Internal
April 20, 2021
Control Evaluation Report
Disclosure index of full text of
http://www.cninfo.com.cn
Internal Control Evaluation Report
Proportion of total assets included in
the evaluation scope to that of the
100.00%
Company’s consolidated financial
statements
Proportion of operating revenue
included in the evaluation to that of
100.00%
the Company’s consolidated financial
statements
Defect Identification Standard
Category Financial Report Non-financial Report
(1) Identification standard of (1) Major defects: The negative news
major defects: ① lack of about the safety, environmental
democratic decision-making protection, social responsibility,
process; ② huge errors caused practice ethics and operation of the
by decision-making process; ③ enterprise has been spread all over the
violation of national laws and country, has been specially
Qualitative Standard
regulations and punishment; ④ investigated by the government or
serious loss of middle or senior regulatory agencies, and has caused
management members and senior continuous special reports by the
technicians; ⑤ frequent negative public media. As a result, the
news in the media, involving a enterprise has adverse events such as
wide range; ⑥ lack of system or capital loan and recovery, suspension
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
system failures in major business; or revocation of administrative
⑦ failure to rectify major or license, pledge of assets, and a large
significant internal control number of claims (occurrence of
defects. (2) Identification standard level-I mass disturbance). (2)
of significant defects: ① Significant defects: The negative news
democratic decision-making about the safety, environmental
process exists but is not adequate; protection, social responsibility,
② general errors caused by practice ethics and operation of the
decision-making process; ③ enterprise has been reported by the
violation of internal rules and public media for three times in a row,
regulations, resulting in losses; ④ and has been concerned and
serious loss of business personnel investigated by the industry or
in key positions; ⑤ negative regulatory agencies, and has caused
news in the media, involving local adverse effects within the industry
areas; ⑥ defects in important (occurrence of level-II mass
business systems; ⑦ failure to disturbance). (3) General defects: The
rectify significant or general negative news about the safety,
internal control defects. (3) environmental protection, social
Identification standard of general responsibility, practice ethics and
defects: ① low efficiency of operation of the enterprise has been
decision-making process; ② reported by the public media for three
violation of internal rules and times in a row, and has been
regulations without losses; ③ concerned and investigated by the
serious loss of business personnel industry or regulatory agencies, and
in general positions; ④ negative has caused adverse effects within the
news in the media, with little industry (occurrence of level-III or
impact; ⑤ defects in general level-IV mass disturbance)
business systems; ⑥ failure to
rectify general defects; ⑦ other
defects
(1) Major defects: The overall (1) Major defects: direct financial loss:
impact level is higher than the RMB 50 million or above; personnel
importance level (1% of the health and safety impact: death of
audited net assets of the previous more than 10 people, or serious injury
Quantitative Standard
year). of more than 50 people. (2) Significant
(2) Significant defects: 0.2% of defects: direct financial loss: RMB 10
the audited net assets of the million (including) to RMB 50
previous year < overall million; personnel health and safety
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2020 Annual Report of Hengyi Petrochemical Co., Ltd.
importance level < 1% of the impact: death of more than 3
audited net assets of the previous (including) but less than 10 people, or
year. serious injury of more than 10
(3) General defects: The overall (including) but less than 50 people. (3)
importance level is less than 0.2% General defects: direct financial loss:
of the audited net assets of the less than RMB 10 million; personnel
previous year. health and safety impact: death of less
than 3 people, or serious injury of less
than 10 people.
Number of major defects in financial
0
report (piece)
Number of major defects in
0
non-financial report (piece)
Number of significant defects in
0
financial report (piece)
Number of significant defects in
0
non-financial report (piece)
X. Internal Control Audit Report
Deliberations Paragraph in the Internal Control Audit Report
In our opinion, Hengyi Petrochemical Co., Ltd. maintained effective internal control, in all material
respects, in accordance with the Basic Norms for Enterprise Internal Control and relevant
regulations at December 31, 2021.
Disclosure of Internal Control Audit Report Disclosure
Date of full-text disclosure for Internal Control Audit Report April 20, 2021
Full-text disclosure index for the Internal Control Audit Report CNINFO (http://www.cninfo.com.cn)
Opinion type in the Internal Control Audit Report Standard unqualified opinion
Whether there are major defects in the non-financial report No
Whether the accounting firm has issued an internal control audit report with modified and
qualified opinions
□ Yes √ No
Whether the opinions in the internal control assurance report issued by the accounting firm
are consistent with those in the self-evaluation report issued by the Board of Directors
√ Yes □ No
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Full Text of 2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Section XI Corporate Bonds
Whether the Company has corporate bonds which have been publicly issued and listed on the
stock exchange and have not matured or are not fully redeemed at the approval date of
annual report
Yes
I. Basic Information about Corporate Bonds
Payment
Balance
Date of Maturity Intere method of
Name of bond Short name Code (RMB
issue date st rate principal and
10,000)
interest
“Belt and Road” corporate
bond publicly issued to
18 Hengyi March 2, March 5,
eligible investors by 112653.SZ 0 5.95%
R1 2018 2021
Hengyi Petrochemical Co.,
Ltd. in 2018
Corporate bond publicly
issued to eligible investors Simple
18 Hengyi March 19, March 22,
by Hengyi Petrochemical 112660.SZ 0 5.95% interest
01 2018 2021
Co., Ltd. in 2018 (1st calculated
series) per year,
Corporate bond publicly without
issued to eligible investors compound
18 Hengyi April 16, April 19,
by Hengyi Petrochemical 112681.SZ 0 5.00% interest.
02 2018 2021
Co., Ltd. in 2018 (2nd Simple
series) interest paid
Corporate bond publicly per year.
issued to eligible investors
19 Hengyi March 22, March 26,
by Hengyi Petrochemical 112883.SZ 0 6.38%
01 2019 2022
Co., Ltd. in 2019 (1st
series)
Corporate bond publicly 19 Hengyi May 31,
112910.SZ June 4, 2022 5 6.50%
issued to eligible investors 02 2019
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by Hengyi Petrochemical
Co., Ltd. in 2019 (2nd
series)
Corporate bond publicly
issued to eligible investors
by Hengyi Petrochemical
20 Hengyi March 11, March 13,
Co., Ltd. in 2020 (1st 149061.SZ 10 5.89%
01 2020 2023
series) (epidemic
prevention and control
bond)
Marketplace for listing and transfer of
Shenzhen Stock Exchange
corporate bond
The corporate bonds are publicly issued to eligible institution investors
that satisfy requirements of Administrative Measures for the Issuance
Eligibility arrangement of investors and Trading of Corporate Bonds and have opened an eligible A-share
securities account with China Securities Depository and Clearing Co.,
Ltd. Shenzhen Branch.
During the reporting period, the interest of “18 Hengyi R1”, “18
Hengyi 01”, “18 Hengyi 02”, “19 Hengyi 01”, “19 Hengyi 02” and “20
Interest payment and redemption of Hengyi 01” has been paid in full and on time. As of the date of
corporate bonds in the reporting period issuance of this report, the principal and interest of “18 Hengyi R1”,
“18 Hengyi 01”, “18 Hengyi 02” and “19 Hengyi 01” have been paid
in full and on time.
Each of “18 Hengyi R1”, “18 Hengyi 01”, and “18 Hengyi 02”
provides the Company with an option to adjust the nominal interest
rate, and the investor with a put option, effective at the end of the
second year. 1. On January 15, 2020, January 16, 2020 and January 17,
2020, respectively, the Company disclosed the first, the second and the
third suggestive announcements on the adjustment of the nominal
Implementation in the reporting period
interest and the exercise method of the investor’s put option on “18
of special clauses including the
Hengyi R1”. Within the period for application for exercising the put
issuer/investor’s option clauses and
option (from January 16, 2020 to January 20, 2020), an investor may
exchangeability clauses (if applicable).
sell part or all “18 Hengyi R1” bond it holds back to the Company at
the put price of RMB 100 per share. According to the data provided by
China Securities Depository and Clearing Co., Ltd. Shenzhen Branch,
3,464,950 bonds of “18 Hengyi R1” were repurchased at the total price
of RMB 368,913,226.50. After this repurchase, 1,535,050 bonds,
valuing RMB 153,505,000 (excluding interest), are not repurchased.
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The repurchase has ended. The principal of and interest on repurchased
“18 Hengyi R1” were fully paid to the account designated by China
Securities Depository and Clearing Co., Ltd. Shenzhen Branch and
were transferred to investors’ capital accounts on March 5, 2020, the
arrival date of the repurchase funds. 2. On February 7, 2020, February
10, 2020 and February 11, 2020, respectively, the Company disclosed
the first, the second and the third suggestive announcements on the
adjustment of the nominal interest and the exercise method of the
investor’s put option on “18 Hengyi 01”. Within the period for
application for exercising the put option (February 10, 2020 to
February 12, 2020), an investor may sell all or part of “18 Hengyi R1”
bond it holds back to the Company at the price of RMB 100 for each
bond. According to the data provided by China Securities Depository
and Clearing Co., Ltd. Shenzhen Branch, 3,596,820 bonds of “18
Hengyi 01” were repurchased at the total price of RMB
384,068,439.60. After this repurchase, 6,403,180 bonds, valuing RMB
640,318,000.00 (excluding interest), are not repurchased. The principal
of and interest on repurchased “18 Hengyi 01” were fully paid to the
account designated by China Securities Depository and Clearing Co.,
Ltd. Shenzhen Branch and were transferred to investors’ capital
accounts on March 23, 2020, the arrival date of the repurchase funds.
3. On March 5, 2020, March 6, 2020 and March 9, 2020, respectively,
the Company disclosed the first, the second and the third suggestive
announcements on the adjustment of the nominal interest and the
exercise method of the investor’s put option on “18 Hengyi 02”.
Within the period for application for exercising the put option (March
6, 2020 to March 10, 2020), an investor may sell all or part of “18
Hengyi 02” bond it holds back to the Company at the price of RMB
100 for each bond. According to the data provided by China Securities
Depository and Clearing Co., Ltd. Shenzhen Branch, 4,686,130 bonds
of “18 Hengyi 02” were repurchased at the total price of RMB
498,744,815.90. After this repurchase, 10,313,870 bonds, valuing
RMB 1,031,387,000 (excluding interest), are not repurchased. The
principal of and interest on repurchased “18 Hengyi 02” were fully
paid to the account designated by China Securities Depository and
Clearing Co., Ltd. Shenzhen Branch and were transferred to investors’
capital accounts on April 20, 2020, the arrival date of the repurchase
funds.
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The Company disclosed the Announcement of Hengyi
Petrochemical Co., Ltd. on Paying Interest and Delisting in 2021 for
Public Issuance of “the Belt and Road Initiative” Corporate Bonds to
Qualified Investors in 2018 on March 3, 2021, the Announcement of
Hengyi Petrochemical Co., Ltd. on Paying Interest and Delisting in
2021 for Public Issuance of Corporate Bonds to Qualified Investors in
2018 (Phase I) on March 19, 2021, and the Announcement of Hengyi
Petrochemical Co., Ltd. on Paying Interest and Delisting in 2021 for
Public Issuance of Corporate Bonds to Qualified Investors in 2018
(Phase II) on April 16, 2021. “18 Hengyi R1”, “18 Hengyi 01” and “18
Hengyi 02” have all been paid due, and the principal and interest have
been paid in full and on time.
“19 Hengyi 01” provides the Company with an option to adjust
the nominal interest rate, and the investor with a put option, effective
at the end of the second year. Of which:
On February 23, 2021, February 24, 2021 and February 25, 2021,
respectively, the Company disclosed the first, the second and the third
suggestive announcements on the adjustment of the nominal interest
and the exercise method of investor’s put option on “19 Hengyi 01”.
Within the period for application for exercising the put option
(February 26, 2021 to March 4, 2021), an investor may sell all or part
of “19 Hengyi 01” bond it holds back to the Company at the price of
RMB 100 for each bond. According to the data provided by China
Securities Depository and Clearing Co., Ltd. Shenzhen Branch,
5,000,000 bonds of “19 Hengyi 01” were repurchased at the total price
of RMB 500,000,000. This resale is a full resale, which has been
implemented at present. The principal and interest of some bonds
resold in full of “19 Hengyi 01” have been paid in full to the
designated account of Shenzhen Branch of China Securities
Depository and Clearing Co., Ltd., and transferred to the investor’s
fund account on March 26, 2021, and “19 Hengyi 01” was delisted
from Shenzhen Stock Exchange on March 26, 2021.
Each of “19 Hengyi 02”, and “20 Hengyi 01” provides the
Company with an option to adjust the nominal interest rate, and the
investor with a put option, effective at the end of the second year. The
issue date of this report comes earlier than the exercise date, and
therefore the said option clauses have not been executed.
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II. Information on Bond Trustee and Credit Rating Institution
18 Hengyi R1, 18 Hengyi 01, 18 Hengyi 02
Bond trustee:
Third Floor, Guosen Securities
Guosen
Office Tower, No.6 Xicheng Street, Pan Contact
Name Securities Contact 010-88005350
address: Financial Street, Xicheng Sijing No.
Co., Ltd.
District, Beijing
The credit rating institution that follows up and rates the corporate bonds in the reporting period:
K-22, Room 103, Building A, No.1555
Shanghai Brilliance Credit Rating & Investors Service Office
Name Kongjiang Road, Yangpu District,
Co., Ltd. address:
Shanghai
In case of any change during the reporting period of the bond trustee or
the credit rating institution hired by the Company, the causes, procedures Not Applicable
and impact on investors’ interests of such change (if applicable)
19 Hengyi 01, 19 Hengyi 02, 20 Hengyi 01
Bond trustee:
CITIC CITIC Securities Tower,
Office Xu Contact
Name Securities Co., No.48 Liangmaqiao Road, Contact 021-20262318
address: Lin No.
Ltd. Chaoyang District, Beijing
The credit rating institution that follows up and rates the corporate bonds in the reporting period:
K-22, Room 103, Building A,
Shanghai Brilliance Credit Rating & Investors Service Office
Name No.1555 Kongjiang Road, Yangpu
Co., Ltd. address:
District, Shanghai
In case of any change during the reporting period of the bond trustee or the
credit rating institution hired by the Company, the causes, procedures and Not Applicable
impact on investors’ interests of such change (if applicable)
III. Use of Funds Raised through Issuance of Corporate Bond
The company has been using the funds raised through issuance of
bonds in strict accordance with the prospectuses of “18 Hengyi
R1”, “18 Hengyi 01”, “18 Hengyi 02”, “19 Hengyi 01”, “19
Use of funds raised through
Hengyi 02” and “20 Hengyi 01”, and relevant regulations and
issuance of corporate bonds and
requirements of the Administrative Measures for the Issuance and
use procedures
Trading of Corporate Bonds, the Rules Governing the Listing of
Bonds on Shenzhen Stock Exchange, etc., and its disclosure of
relevant information has been timely, true, accurate, and complete.
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It has had no violation in the use and management of the said
funds.
Ending balance (RMB 10,000) 0
The company has deposited the funds raised in special accounts.
Operation of the special account The company has subjected the use of the funds raised to strict
for fund raising internal approval procedures, so as to ensure the use of funds as
ear-marked.
Whether the use of funds raised
was consistent with the purpose
The use of funds raised was consistent with the purpose agreed in
committed in the prospectuses,
the prospectuses.
the use plan and other
agreements
IV. Corporate Bond Rating
As of the issue date of this report, Shanghai Brilliance Credit Rating & Investors Service Co.,
Ltd. has conducted follow-up rating on existing “18 Hengyi R1”, “18 Hengyi 01”, “18 Hengyi 02”,
“19 Hengyi 01”, “19 Hengyi 02” and “20 Hengyi 01”, and new-issue rating on “20 Hengyi 01”.
Corresponding credit rating reports have been disclosed on Shenzhen Stock Exchange and CINIFO.
Here are the details:
Credit
rating of Rating Credit rating Latest date of Date of
Short name Credit rating notice
the outlook: of this bond: rating disclosure
issuer:
18 Hengyi R1 AA+ Stable AA+
18 Hengyi 01 AA+ Stable AA+
18 Hengyi 02 AA+ Stable AA+ [Brilliance Follow-up June 24, 2020
June 24, 2020
19 Hengyi 01 AA+ Stable AA+ Rating (2020) 100555] (follow-up rating)
19 Hengyi 02 AA+ Stable AA+
20 Hengyi 01 AA+ Stable AA+
[Brilliance Bond Rating February 26, 2020 March 9,
20 Hengyi 01 AA+ Stable AA+
(2020) 010220] (new-issue rating) 2020
No irregular follow-up rating was conducted in the reporting period, and there was no
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difference in rating.
V. Credit Enhancement Mechanism, Debt Service Plan and Other Debt Service Guarantee
Measures of the Company
(I) Change in credit enhancement mechanism, debt service plan and other debt service
guarantee measures of the Company
As of the issuance date of this report, “18 Hengyi R1”, “18 Hengyi 01”, “18 Hengyi 02”, “19
Hengyi 01”, “19 Hengyi 02” and “20 Hengyi 01” are consistent with the stipulations and relevant
commitments in the prospectus in terms of credit enhancement mechanism, debt repayment plan
and other debt repayment guarantee measures, which have not changed.
(II) Disclosure of implementation and change in credit enhancement mechanism, debt service
plan and other debt service guarantee measures
1. Credit enhancement mechanism
No security is established.
2. Debt service plan
Interest on “18 Hengyi R1”, “18 Hengyi 01”, “18 Hengyi 02”, “19 Hengyi 01”, “19 Hengyi 02”
and “20 Hengyi 01” shall be paid once per year in the duration, and the interest for the last year
shall be paid along with the redemption of the principal.
Payment of bond interest will be handled by the bond registration agency and related
institutions. The details shall be explained by the Company in interest payment announcements
published on CSRC-designated media, as is required by related national rules. According to China’s
tax laws and regulations, taxes payable on the investment in the bonds for this year shall be borne
by the investors.
Debt servicing costs will mainly rely on cash flow from daily operating activities of the
Company. In the reporting period, the Company’s financial structure remained robust, and the stable
cash inflow provided strong guarantee for the payment of the principal of and interest on the
corporate bonds. The debt service guarantee measures remained unchanged in the reporting period,
as committed in the prospectuses.
As of the issuance date of this report, the current interest of “18 Hengyi R1”, “18 Hengyi 01”,
“18 Hengyi 02”, “19 Hengyi 01”, “19 Hengyi 02” and “20 Hengyi 01” has been paid in full and on
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time.
3. Guarantee measures
For the purpose of effectively safeguarding rights and interests of bondholders, and ensuring
payment as agreed of the principals and interest for the current year, the Company has established a
series of working mechanisms, including opening special accounts for the funds raised and for debt
service, building a working group for debt service, setting up a long-term communication
mechanism between the Company and the bond trustee, improving the risk supervision and
pre-warning mechanism, and reinforcing information disclosure, thus constructing a complete
guarantee system to ensure the payment as agreed of the bond principals and interest for this year.
The guarantee measures remained unchanged in the reporting period, as committed in the
prospectuses.
4. Other credit enhancement measures
None.
5. Special accounts for debt service
The debt security was withdrawn without disturbance in the reporting period, as committed in
the prospectuses.
VI. Bondholder Meetings During the Reporting Period
As of the disclosure date of this report, no event has occurred to the corporate bonds issued by
the Company to entail holding of a bondholder meeting, and therefore no bondholder meeting has
been held.
VII. Duty Performance by Bond Trustee During the Reporting Period
Since the issuance of “18 Hengyi R1”, “18 Hengyi 01” and “18 Hengyi 02” and till the issue
date of this report, Guosen Securities Co., Ltd., the bond trustee, has, in strict accordance with
related laws and regulations and the Bond Trusteeship Agreement, been continuously following up
and supervising the Company’s credit, use of funds raised through issuance of corporate bonds,
implementation of debt service guarantee measures, etc., and urging the Company to perform its
obligations prescribed in the prospectuses. It has been actively performing its functions as the bond
trustee, protecting legitimate rights and interests of bondholders.
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On January 16, 2020, the Company disclosed the Temporary Report of Guosen Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the accumulated new loans of the Company as of
December 31, 2019 were disclosed.
On January 16, 2020, the Company disclosed the Temporary Report of Guosen Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the election of the Company’s Chairman and Vice
chairman was disclosed.
On March 9, 2020, the Company disclosed the Temporary Report of Guosen Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the Company’s replacement of the accounting firm
was disclosed.
On April 15, 2020, the Company disclosed the Temporary Report of Guosen Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the accumulated new loans of the Company as of
March 31, 2020 were disclosed.
On May 29, 2020, the Company disclosed the Temporary Report of Guosen Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the repurchase and cancellation of some shares of the
Company were disclosed.
Guosen Securities Co., Ltd. has announced the trusteeship events report of the previous year to
the public on the website of the Exchange before June 30 of each year in accordance with laws,
regulations and prospectus.
On June 29, 2020, the Company disclosed the Report on Regular Trusteeship of Corporate Bonds of Hengyi
Petrochemical Co., Ltd. in 2019 in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the Company’s corporate bonds in 2019 were
disclosed.
On September 15, 2020, the Company disclosed the Temporary Report of Guosen Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the changes of directors, supervisors and the
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president of the Company were disclosed.
From the issuance of “19 Hengyi 01”, “19 Hengyi 02” and “20 Hengyi 01” to the issuance date
of this report, CITIC Securities Co., Ltd., the trustee, has continuously tracked and supervised the
Company’s credit status, the use of funds raised by corporate bonds, and the implementation of debt
repayment guarantee measures in strict accordance with relevant laws and regulations and the
agreement in the Bond Trusteeship Agreement, urged the Company to fulfill the obligations agreed
in the prospectus, actively performed the duties of bond trustee and safeguarded the legitimate
rights and interests of bondholders.
On January 16, 2020, the Company disclosed the Temporary Report of CITIC Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the accumulated new loans of the Company as of
December 31, 2019 were disclosed.
On January 16, 2020, the Company disclosed the Temporary Report of CITIC Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the election of the Company’s Chairman and Vice
chairman was disclosed.
On March 9, 2020, the Company disclosed the Temporary Report of CITIC Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the Company’s replacement of the accounting firm
was disclosed.
On April 15, 2020, the Company disclosed the Temporary Report of CITIC Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the accumulated new loans of the Company as of
March 31, 2020 were disclosed.
On May 29, 2020, the Company disclosed the Temporary Report of CITIC Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the repurchase and cancellation of some shares of the
Company were disclosed.
CITIC Securities Co., Ltd. has announced the trusteeship events report of the previous year to
the public on the website of the Exchange before June 30 of each year in accordance with laws,
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regulations and prospectus. On June 29, 2020, the Company disclosed the Report on Regular Trusteeship of
Corporate Bonds of Hengyi Petrochemical Co., Ltd. in 2019 in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the Company’s corporate bonds in 2019 were
disclosed.
On September 15, 2020, the Company disclosed the Temporary Report of CITIC Securities Co., Ltd. on the
Trusteeship of Major Events of Corporate Bonds of Hengyi Petrochemical Co., Ltd. in Shenzhen Stock Exchange
(http://www.szse.cn/disclosure/bond/notice/index.html), and the changes of directors, supervisors and the
president of the Company were disclosed.
VIII. Key Accounting Data and Financial Indicators of the Past Two Years Ended the Report
Issue Date
Unit: RMB
Item 2020 2019 YOY change rate
EBITDA 9,080,600,284.77 7,283,089,459.39 24.68%
Current Ratio 70.68% 71.42% -0.74%
Debt Asset ratio 67.17% 65.54% 1.63%
Quick ratio 47.14% 47.51% -0.37%
EBITDA/total debt 15.51% 13.40% 2.11%
Times interest earned ratio 3.11 3.75 -17.07%
Times interest earned (cash basis) 2.78 1.33 109.02%
Times interest earned ratio (EBITDA
4.23 4.21 0.48%
basis)
Loan repayment rate 100.00% 100.00% 0.00%
Interest coverage 100.00% 100.00% 0.00%
Reasons why the above accounting data and financial indicators changed by more than 30%
In the above accounting data and financial indicators, the cash interest guarantee ratio changed
by 109.02%, mainly due to the increase of net operating cash flow after the Brunei Project was put
into operation, thus the cash interest guarantee ratio increased largely from 1.33 to 2.78.
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IX. Interest Payment and Redemption of Other Bonds and DFIs During the Reporting Period
During the reporting period, the Company’s other bonds and debt financing instruments mainly
include short-term financing bonds, medium-term notes, income vouchers and subordinated bonds.
For details, please refer to “23. Short-term financing payable and 34. Bonds payable in VII. Notes
to items of consolidated financial statements in Section XII. Financial Report” in this report. The
principal and interest of all financing have been paid on time.
X. Granting & Use of Bank Credit and Repayment of Bank Loans During the Reporting
Period
The credit status of the Company was good, without any bad loan record. The company had
established a stable long-term credit service relationship with major commercial banks, which
secured powerful indirect financing capacity. As of December 31, 2020, the Company and its
subsidiaries within the scope of consolidated statements had received credits from financial
institutions totaling RMB 70.688 billion, and unused credits amounted to RMB 23.378 billion.
XI. Implementation of Relevant Agreements or Commitments in the Prospectus of Corporate
Bonds During the Reporting Period
The Company strictly abides by the relevant agreements and commitments in the prospectus,
and there are no matters that have a significant impact on the interests of investors.
XII. Major Events Occurring During the Reporting Period
For details, please refer to “XIX. Explanation on other major matters” in “Section V Important
Matters” of this report.
XIII. Whether There Is a Guarantor for Corporate Bonds
□ Yes √ No
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Section XII Financial Report
I. Audit Report
Type of audit opinion Standard Unqualified Opinion
Signing Date of Audit Report April 19, 2021
Name of Audit Institution Zhongxinghua Certified Public Accountants LLP
Audit Report No. ZXHSZ [2021] No. 011967
Name of Chinese Certified Public Accountant Liu Hongyue, Wang Guohai
Audit Report
ZXHSZ [2021] No. 011967
All shareholders of Hengyi Petrochemical Co., Ltd.:
I. Audit Opinion
We have audited the accompanying financial statements of Hengyi Petrochemical Co., Ltd.
(hereinafter referred to as “the Company”), which comprise the consolidated and parent company’s
Balance Sheet as of December 31, 2020, and the consolidated and parent company’s Income
Statement, Cash Flow Statement, Statement of Changes in Owner's Equity for the year then ended,
and the Notes to Financial Statements.
In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2020, and the results of its operations and its cash
flows for the year then ended in accordance with Accounting Standards for Enterprises.
II. Basis for Audit Opinion
We conducted our audit in accordance with the Auditing Standards for the Chinese Certified
Public Accountants. “Responsibilities of Certified Public Accountants for the Audit of Financial
Statements” in the audit report has further explicated our responsibilities under these standards.
According to the code of professional ethics on Chinese Certified Public Accountants, we are
independent from your company and we implement other responsibilities on code of professional
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ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. We have
identified the following items as key audit matters that need to be dealt with in the audit report.
(I) Recognition of operating revenue
1. Description of Matters
For details of relevant information disclosure, please refer to Notes IV. 27. Revenue and Note
VI. 48. Operating Revenue and Operating Costs to the financial statements.
In 2020, Hengyi Petrochemical’s consolidated operating revenue was RMB 86,429,630,200,
representing a year-on-year increase of 8.55%. Taking into account the importance of revenue
recognition to the overall financial statements and the existence of the inherent risk of management
manipulating revenue recognition to achieve specific goals or expectations, we deem operating
revenue as a key audit matter.
2. Audit Response
The main audit procedures we have performed are as follows:
(1) Understanding, evaluating and testing the effectiveness of the Company’s internal control
design and operation related to revenue recycling;
(2) Selecting the sales contract signed by samples, identifying the individual performance
obligations, transfer of control and other terms in the contracts, and evaluating whether the timing
of revenue recognition has met the requirements of the Accounting Standards for Business
Enterprises;
(3) Performing analytical procedures on revenue and costs, analyzing the fluctuations in
revenue, cost and gross profit rate for each month in the current period, comparing and analyzing
the analysis procedures for revenue, cost, gross profit rate of main products in the current period
with those in the previous period, as well as product sales prices, raw material purchase prices and
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industry-related product prices, and evaluating the accuracy of revenue recognition;
(4) Selecting samples from the accounting records of sales revenue, checking sales-related
contracts, delivery notes, bills of lading, certificates of transfer of goods ownership, invoices and
other information, and evaluating the authenticity and completeness of revenue recognition;
(5) Selecting samples from customers in the reporting period, implementing procedures for
letter of confirmation of transaction, and evaluating the authenticity and accuracy of revenue;
(6) In respect of export sales, finding relevant information through the China Electronic Port
System, checking with the book sales records, export customs declarations, sales invoices and other
export information, and verifying the authenticity of export revenue;
(7) Implementing the cut-off testing procedures for revenue, selecting samples of revenue
recognition transactions before and after the balance sheet date, obtaining relevant materials, such
as contracts, invoices and delivery notes, etc., and evaluating whether the revenue has been
recognized in an appropriate period.
(II) Measurement of fixed assets and construction in progress
1. Description of Matters
For details of relevant information disclosure, please refer to Notes IV. 17. "Fixed Assets", 18.
"Construction in Progress", 34. (6) "Depreciation and Amortization" and Note VI. 15. Fixed Assets
and 16. Construction in Progress.
As at December 31, 2020, the book value of Hengyi Petrochemical’s fixed assets was RMB
41,579,728,500, which was mainly used for the production machinery and equipment as well as
correspondingly constructed plants of aromatic hydrocarbons, refined oil, polyester filaments,
purified terephthalic acid, etc.. These fixed assets were recorded in the book when they reached the
expected usable state and were depreciated according to the estimated service life by straight-line
method.
As at December 31, 2020, the book balance of Hengyi Petrochemical’s construction in
progress was RMB 7,801,533,000, which mainly consisted of Haining Intelligent Environmental
Protection Functional Fiber Construction Project and other projects. Hengyi Petrochemical’s
construction in progress is measured at actual costs, including construction costs, installation costs,
borrowing costs meeting capitalization conditions and other necessary expenditures required for the
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construction in progress to reach its intended use status, including engineering design, supervision,
cost consulting and other expenses. The management’s judgment on the following aspects will
affect the book value of fixed assets and construction in progress as well as the fixed asset
depreciation policies, including determining which expenditures meet the capitalization conditions,
determining the time point to transfer construction in progress to fixed assets and to start the accrual
of depreciation; and estimating the economic service life and residual value of corresponding fixed
asset.
The evaluation of book value of fixed assets and construction in progress involves significant
management judgments, and it accounts for a large portion in the consolidated financial statements,
so we have identified the measurement of fixed assets and construction in progress as a key audit
matter.
2. Audit Response
In respect of the measurement of fixed assets and construction in progress, the audit
procedures we have implemented mainly include:
(1) Understanding, evaluating and testing the effectiveness of design and operation of the
management’s key internal controls related to the recognition of fixed assets and construction in
progress;
(2) Conducting sampling inspections on the construction in progress investments newly added
in this year, determining whether the aforesaid investments have met the capitalization conditions,
such as the sampling inspections on the construction and installation costs at a significant amount
newly added in this year, checking the engineering contracts related thereto, and checking the actual
payment amounts with the amounts in invoices and payment vouchers;
(3) Obtaining borrowing contracts, checking the borrowing costs directly attributable to the
acquisition and construction of assets that meet the capitalization conditions based on the
investments in construction in progress, and evaluating the completeness and accuracy of timing
and amount of capitalization.
(4) Carrying out field investigation of the project construction sites, understanding and
evaluating the progress of projects, and checking with the amounts recorded in the book.
(5) Conducting spot check on the approval procedures for the transfer of new fixed assets in
the current period, and confirming the accuracy of transfer time based on the inventory taking on
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site;
(6) Evaluating the reasonableness of accounting estimates related to fixed assets, and
calculating reasonableness thereof on this basis.
(7) Checking presentation and disclosure of fixed assets and construction in progress in the
financial statements.
IV. Other Information
The management of the Company (hereinafter referred to as “the management”) is responsible
for other information. Other information includes information covered in the 2020 annual report,
but does not include financial statements and audit reports.
Our audit opinion on the financial statements does not cover other information, and we do not
publish any form of assurance conclusions on other information.
Our responsibility is to read other information based on the audits of financial statements, and
consider whether other information is materially inconsistent with the financial statements or what
we have learned during the audit or if there appears to be a material misstatement.
Based on the work we have performed, if we determine that there is a material misstatement of
other information, we should report that fact. In this regard, we have nothing to report.
V. Responsibilities of Management and Those Charged with Governance for the
Financial Statements
The management is responsible for preparing financial statements in accordance with
Accounting Standards for Business Enterprises, to realize fair presentation; designing,
implementing and maintaining appropriate internal control to further avoid material misstatements
arising from malpractice or error.
In preparing the financial statements, management is responsible for assessing the company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial
reporting process.
VI. Responsibilities of Certified Public Accountants for the Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
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whole are free from material misstatements, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with auditing standards will always detect a
material misstatement when it exists. Misstatements may be caused by frauds or errors, and if
reasonably predicted misstatements independently or jointly impact economic decisions in line with
financial statement made by financial statement users, thus, they would be deemed as material
misstatements.
As part of an audit in accordance with auditing standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
(4) Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, the future event or situation may cause your company fail
to continuously operate.
(5) Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
(6) Obtain sufficient and appropriate audit evidence regarding the financial information of the
entities or business activities within the company to express an opinion on the financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
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We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide a statement to the management on compliance with professional ethical
requirements related to independence, and communicate with the management on all relationships
and other matters that may be reasonably deemed to affect our independence, as well as relevant
precautions (if applicable).
From the matters that we have communicated with the management, we determine which items
are most important to the audit of the financial statements in this period, and thus constitute the key
audit items. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Zhongxinghua Certified Public Accountants Chinese CPA:
LLP
(Engagement Partner)
Beijing, China Chinese CPA:
April 19, 2021
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II. Financial statements
1. Consolidated Balance Sheet
Consolidated Balance Sheet
31-Dec-20
Prepared by: Hengyi Petrochemical Co., Ltd. Currency Unit: RMB
Item Ending balance Beginning balance Balance at the end of prior year
Current assets:
Monetary capital 10,078,983,803.86 7,439,884,788.19 7,439,884,788.19
Financial assets held for trading 251,904,308.53 149,692,516.20 149,692,516.20
Derivative financial assets 737,015,777.82 409,150,395.76 409,150,395.76
Notes receivable 214,684,966.98 728,006,603.36 728,006,603.36
Accounts receivable 3,879,744,130.04 5,890,241,538.78 5,890,241,538.78
Accounts receivable financing 537,214,790.48 442,981,896.97 442,981,896.97
Advance payments 883,379,980.28 639,205,988.61 639,205,988.61
Other receivables 444,853,725.83 891,840,089.91 891,840,089.91
Inventories 9,650,858,867.17 9,153,238,548.05 9,153,238,548.05
Contract assets N/A
Non-current assets due within one year 92,749,731.30 4,389,768.36 4,389,768.36
Other current assets 2,210,554,253.43 1,589,791,500.12 1,589,791,500.12
Total current assets 28,981,944,335.72 27,338,423,634.31 27,338,423,634.31
Non-current assets:
Debt investment
Other debt investment
Long-term accounts receivable 157,476,489.65 229,565,480.84 229,565,480.84
Long-term equity investments 10,062,484,360.52 9,260,247,813.26 9,260,247,813.26
Other equity instruments investment 5,600,000.00 600,000.00 600,000.00
Fixed assets 41,579,728,480.95 38,775,633,926.67 38,775,633,926.67
Construction in progress 7,801,532,982.72 3,690,131,551.30 3,690,131,551.30
Productive biological assets
Oil & gas assets
Intangible assets 1,780,817,303.08 1,600,920,513.80 1,600,920,513.80
Development expenditure 7,630,754.87 3,517,300.44 3,517,300.44
Goodwill 221,865,586.69 221,865,586.69 221,865,586.69
Long-term deferred expenses 558,914,884.31 672,941,486.88 672,941,486.88
Deferred income tax assets 135,860,344.06 155,720,874.87 155,720,874.87
Other non-current assets 966,412,632.97 3,813,724,540.18 3,813,724,540.18
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Total non-current assets 63,278,323,819.82 58,424,869,074.93 58,424,869,074.93
Total assets 92,260,268,155.54 85,763,292,709.24 85,763,292,709.24
Legal Representative: Chief Accountant: Head of Accounting Firm:
Consolidated Balance Sheet (Contd.)
31-Dec-20
Prepared by: Hengyi Petrochemical Co., Ltd. Currency Unit: RMB
Beginning Balance at the
Item Ending balance
balance end of prior year
Current liabilities:
Short-term loans 26,482,672,125.98 23,323,906,006.56 23,323,906,006.56
Financial liabilities held for trading 9,301,029.70 1,399,903.27 1,399,903.27
Derivative financial liabilities 136,608,747.10
Notes payable 1,187,267,473.78 2,250,294,707.08 2,250,294,707.08
Accounts payable 5,740,701,545.50 9,679,848,880.14 9,679,848,880.14
Accounts received in advance 596,087,260.62
Contract liabilities 1,468,187,681.02 527,511,147.25 N/A
Wages payable 293,025,783.34 344,069,770.27 344,069,770.27
Taxes and dues payable 640,490,564.22 316,917,106.52 316,917,106.52
Other payables 406,082,547.82 257,344,100.76 257,344,100.76
Liabilities available for sale
Non-current liabilities due within one year 4,487,453,396.24 1,506,007,634.42 1,506,007,634.42
Other current liabilities 151,856,844.93 68,576,113.37
Total current liabilities 41,003,647,739.63 38,275,875,369.64 38,275,875,369.64
Non-current liabilities:
Long-term loans 16,609,903,029.23 12,733,302,561.13 12,733,302,561.13
Bonds payable 3,521,330,557.49 3,989,762,031.71 3,989,762,031.71
Of which: preferred stock
Perpetual bond
Long-term accounts payable 520,596,948.45 883,441,367.14 883,441,367.14
Long-term wages payable
Estimated liabilities 3,555,907.35 2,645,266.16 2,645,266.16
Deferred income 197,513,098.48 198,911,445.22 198,911,445.22
Deferred income tax liabilities 111,572,094.08 127,067,875.20 127,067,875.20
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Other non-current liabilities
Total non-current liabilities 20,964,471,635.08 17,935,130,546.56 17,935,130,546.56
Total liabilities 61,968,119,374.71 56,211,005,916.20 56,211,005,916.20
Shareholders’ equity
Capital stock 3,681,645,407.00 2,841,725,474.00 2,841,725,474.00
Other equity instruments 478,546,158.81
Of which: preferred stock
Perpetual bond
Capital reserves 9,165,068,133.86 10,492,771,354.69 10,492,771,354.69
Less: treasury stock 349,918,604.53 55,450,720.00 55,450,720.00
Other comprehensive income -1,032,362,450.85 335,623,308.63 335,623,308.63
Special reserves
Surplus reserves 660,652,171.17 559,247,505.53 559,247,505.53
Undistributed profits 11,403,002,797.32 9,567,928,583.61 9,567,928,583.61
Total shareholders’ equity attributable to parent company 24,006,633,612.78 23,741,845,506.46 23,741,845,506.46
Minority equity 6,285,515,168.05 5,810,441,286.58 5,810,441,286.58
Total shareholders’ equity 30,292,148,780.83 29,552,286,793.04 29,552,286,793.04
Total liabilities and shareholder’s equity 92,260,268,155.54 85,763,292,709.24 85,763,292,709.24
Legal Representative: Chief Accountant: Head of Accounting Firm:
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2. Consolidated Income Statement
Consolidated Income Statement
2020
Currency Unit:
Prepared by: Hengyi Petrochemical Co., Ltd.
RMB
Amount incurred Amount incurred
Item
in current year in prior year
I. Gross revenue 86,429,630,191.87 79,620,543,631.74
Of which: operating income 86,429,630,191.87 79,620,543,631.74
II. Total operating cost 84,114,651,201.79 76,723,504,823.91
Of which: operating cost 80,449,830,696.94 73,994,833,712.93
Taxes and surcharges 120,437,470.28 185,265,699.10
Selling expenses 218,109,801.14 455,835,985.78
Administration costs 970,153,607.89 583,493,439.21
Research and development expenditure 351,969,307.93 492,740,271.96
Financial expenses 2,004,150,317.61 1,011,335,714.93
Of which: interest expenses 1,857,374,805.92 1,027,006,241.84
Interest income 185,855,314.84 149,956,766.49
Add: other income 371,817,061.73 475,316,277.37
Investment income (loss to be marked by “-”) 1,691,621,709.35 1,504,670,646.53
Of which: investment income from joint ventures and associates 1,326,696,982.37 1,086,988,500.99
Gains on the de-recognition of financial assets
measured at amortized cost
Exchange earnings (loss to be marked by “-”)
Gains on net exposure hedges (loss to be marked by “-”)
Gains from changes of fair value (loss to be marked by “-”) 156,423,385.37 -58,842,982.82
Loss on credit impairment (loss to be marked by “-”) 13,912,334.18 -25,187,182.20
Asset impairment loss (loss to be marked by “-”) -18,111,009.54 -20,345,690.78
Gains from the disposal of assets (loss to be marked by “-”) -4,357,509.27 1,543,684.20
III. Operating profits (loss to be marked by “-”) 4,526,284,961.90 4,774,193,560.13
Add: non-operating income 14,227,568.48 11,699,859.55
Less: non-operating expenses 20,943,094.87 29,743,281.16
IV. Total profit (loss to be marked by “-”) 4,519,569,435.51 4,756,150,138.52
Less: income tax expenses 704,967,451.61 746,630,993.51
V. Net profit (net loss to be marked by “-”) 3,814,601,983.90 4,009,519,145.01
(I) Classified by continuing operations:
1. Net profit of continuing operations (net loss to be marked by “-”) 3,814,601,983.90 4,009,519,145.01
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2. Net profit of discontinued operations (net loss to be marked by “-”)
(II) Classified by ownership attribution
1. Net profit attributable to the owners of parent company (net loss to be
3,071,998,839.75 3,190,185,517.79
marked by “-”)
2. Minority interest income (net loss to be marked by “-”) 742,603,144.15 819,333,627.22
VI. Net after-tax of other comprehensive income -1,477,073,355.49 330,650,510.31
(i) Net after-tax of other comprehensive income attributable to the
-1,367,985,759.48 239,474,532.17
owners of parent company
1. Other comprehensive income items which cannot be classified as
profit or loss in succeeding accounting period
(1) Changes due to remeasurement of the net liabilities or net assets
under the defined benefit plan
(2) Share in other comprehensive income that will not be reclassified into
profit and loss in investee under equity method
(3) Changes in the fair value of investment in other equity instruments
(4) Changes in fair value resulting from the credit risk of the Company
(5) Others
2. Other comprehensive income that will be reclassified into profit or
-1,367,985,759.48 239,474,532.17
loss in subsequent periods
(1) Other comprehensive income from convertible gains and losses under
-59,356,706.36 41,930,752.69
the equity method
(2) Changes in the fair value of other debt investments
(3) Amount of financial assets reclassified into other comprehensive
income
(4) Provision for credit impairment of other debt investments
(5) Cash Flow Hedge Reserve -431,713,895.59 108,757,841.33
(6) Converted difference in foreign currency financial statements -876,915,157.53 88,785,938.15
(7) Others
(ii) Net after-tax of other comprehensive income attributable to the
-109,087,596.01 91,175,978.14
minority shareholders
VII. Total comprehensive income 2,337,528,628.41 4,340,169,655.32
(i) Total comprehensive income attributable to the shareholders of
1,704,013,080.27 3,429,660,049.96
parent company
(ii)Total comprehensive income attributable to minority shareholders 633,515,548.14 910,509,605.36
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VIII. Earnings per share:
(i) Basic earnings per share 1.08 1.13
(ii) Diluted earnings per share 1.07 1.13
Legal Representative: Chief Accountant: Head of Accounting Firm:
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3. Consolidated Cash Flow Statement
Consolidated Cash Flow Statement
2020
Currency Unit:
Prepared by: Hengyi Petrochemical Co., Ltd.
RMB
Amount incurred Amount incurred
Item
in current year in prior year
I. Cash flow from operating activities:
Cash received from sales of goods or rendering labor services 94,164,418,130.34 85,608,267,111.66
Refunds of taxes received 1,606,851,370.63 662,041,823.18
Cash received from other related operating activities 1,871,048,242.67 1,554,963,662.46
Sub-total of cash inflows from operating activities 97,642,317,743.64 87,825,272,597.30
Cash paid for purchasing goods or receiving labor services 86,763,506,667.48 83,383,536,300.14
Cash paid to and for employees 2,063,286,244.53 1,498,511,091.64
Taxes and fees paid 1,103,552,261.90 1,749,852,708.90
Cash paid for other related operating activities 2,698,199,791.78 1,284,498,274.53
Sub-total of cash outflows from operating activities 92,628,544,965.69 87,916,398,375.21
Net cash flow from operating activities 5,013,772,777.95 -91,125,777.91
II. Cash flow from investing activities:
Cash received from the disposal of investments 881,887,917.02 4,644,938,837.78
Cash received from return on investments 504,230,715.53 342,853,197.41
Net cash received from the disposal of fixed assets, intangible
2,612,726.25 4,915,884.62
assets and other long-term assets
Net cash received from the disposal of subsidiaries and other
50,437,768.06
business entities
Cash received from other related investing activities 555,326,465.85 108,639,015.50
Sub-total of cash inflows from investing activities 1,994,495,592.71 5,101,346,935.31
Cash paid for acquisition or construction of fixed assets,
8,172,452,434.34 11,333,202,264.49
intangible assets and other long-term assets
Cash paid for investments 1,774,515,879.38 6,198,444,997.55
Net cash paid for acquisition of subsidiaries and other business
entities
Cash paid for other related investing activities 579,801,680.00
Sub-total of cash outflows from investing activities 9,946,968,313.72 18,111,448,942.04
Net cash flow from investing activities -7,952,472,721.01 -13,010,102,006.73
III. Cash flows from financing activities
Cash received from investors 3,035,100,000.00 4,927,624,987.11
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Of which: cash received from minority shareholders by
50,600,000.00 514,700,000.00
subsidiaries
Cash received from obtaining loans 35,951,594,602.98 30,279,457,278.04
Cash received from other related financing activities 1,909,656,348.44 5,819,111,783.97
Sub-total of cash inflows from financing activities 40,896,350,951.42 41,026,194,049.12
Cash paid for repayment of debts 29,558,054,825.43 19,879,080,400.10
Cash paid for dividends, profits distribution or interest repayment 3,146,712,192.03 2,503,033,651.79
Of which: dividends & profits paid to minority shareholders by
81,541,666.67
subsidiaries
Cash paid for other related financing activities 2,284,204,105.14 7,663,694,485.75
Sub-total of cash outflows from financing activities 34,988,971,122.60 30,045,808,537.64
Net cash flows from financing activities 5,907,379,828.82 10,980,385,511.48
IV. Effect of exchange rate changes on cash and cash equivalents -255,434,618.11 57,785,612.38
V. Net increase in cash and cash equivalents 2,713,245,267.65 -2,063,056,660.78
Add: balance of cash and cash equivalents at the beginning of
4,473,080,680.52 6,536,137,341.30
the period
VI. Balance of cash and cash equivalents at the end of the period 7,186,325,948.17 4,473,080,680.52
Legal Representative: Chief Accountant: Head of Accounting Firm:
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4. Consolidated Statement of Changes in Owner’s Equity
Consolidated Statement of Changes in Shareholder’s Equity
2020
Prepared by: Hengyi Petrochemical Co., Ltd. Currency Unit: RMB
Amount incurred in current year
Shareholder's equity attributable to parent company
Other equity instruments Other Total
Item Less: Minority
Capital Prefe Perpe Capital comprehe Special Surplus Undistrib sharehold
treasury Subtotal equity
stock rred tual Others reserves nsive reserves reserves uted ers’ equity
stock
stock bond income profits
I.
Balance at 2,841,725, 9,992,771, 55,450,7 335,623,3 559,247, 9,579,091, 23,253,008 5,810,441, 29,063,449
the end of 474.00 354.69 20.00 08.63 505.53 491.15 ,414.00 286.58 ,700.58
prior year
Add:
changes in
accounting
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policy
Correction
of prior
period
errors
Combinati
on of
500,000,00 -11,162,90 488,837,09 488,837,09
businesses
0.00 7.54 2.46 2.46
under
common
control
II.
Balance at
the 2,841,725, 10,492,771 55,450,7 335,623,3 559,247, 9,567,928, 23,741,845 5,810,441, 29,552,286
beginning 474.00 ,354.69 20.00 08.63 505.53 583.61 ,506.46 286.58 ,793.04
of current
year
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III.
Amount
of
increase/d
ecrease in
839,919,9 478,546, -1,327,703 294,467, -1,367,985 101,404, 1,835,074, 264,788,10 475,073,8 739,861,98
current
33.00 158.81 ,220.83 884.53 ,759.48 665.64 213.71 6.32 81.47 7.79
year
(decrease
to be
marked
by “-”)
(i) Total
comprehe -1,367,985 3,071,998, 1,704,013, 633,515,5 2,337,528,
nsive ,759.48 839.75 080.27 48.14 628.41
income
(ii)
Capital -12,597,7 478,546, 21,517,092 294,467, 192,997,65 58,600,00 251,597,65
invested 09.00 158.81 .34 884.53 7.62 0.00 7.62
by
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sharehold
ers and
capital
reduction
1.
Ordinary
shares
-12,597,7 478,546, 12,503,217 349,918, 128,533,06 58,600,00 187,133,06
invested
09.00 158.81 .34 604.53 2.62 0.00 2.62
by
shareholde
rs
2. Capital
invested
by holders
of other
equity
instrument
s
3. 9,013,875. -55,450, 64,464,595 64,464,595
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Amount 00 720.00 .00 .00
paid in
stock &
included in
shareholde
rs’ equity
4. Others
(iii)
Profit 101,404, -1,236,924 -1,135,519 -217,041, -1,352,561
distributio 665.64 ,626.04 ,960.40 666.67 ,627.07
n
1.
Appropriat
101,404, -101,404,6
ion to
665.64 65.64
surplus
reserves
2.
General
risk
230
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provisions
withheld
3.
Distributio
-1,135,519 -1,135,519 -217,041, -1,352,561
n to
,960.40 ,960.40 666.67 ,627.07
shareholde
rs
4. Others
(iv)
Internal
carry-for
852,517,6 -852,517,6
ward of
42.00 42.00
sharehold
ers’
equity
1. Capital
reserve 852,517,6 -852,517,6
transferred 42.00 42.00
to capital
231
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stock
2.
Surplus
reserve
transferred
to capital
stock
3,
Surplus
reserve for
making up
losses
4.
Carrying
over of
changes of
defined
benefit
plans into
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retained
earnings
5. Other
comprehen
sive
income
transferred
to retained
earnings
6. Others
(v)
Special
reserves
1.
Withdrawa 53,905,1 53,905,152 53,905,152
l in current 52.19 .19 .19
year
2. Use in 53,905,1 53,905,152 53,905,152
current 52.19 .19 .19
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year
(vi) -496,702,6 -496,702,6 -496,702,6
Others 71.17 71.17 71.17
IV.
Balance at
3,681,645, 478,546, 9,165,068, 349,918, -1,032,362 660,652, 11,403,002 24,006,633 6,285,515, 30,292,148
the end of
407.00 158.81 133.86 604.53 ,450.85 171.17 ,797.32 ,612.78 168.05 ,780.83
current
year
Legal Representative: Chief Accountant: Head of Accounting Firm:
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Consolidated Statement of Changes in Shareholder’s Equity (Contd.)
2020
Prepared by: Hengyi Petrochemical Co., Ltd. Currency Unit: RMB
Amount incurred in prior year
Shareholder's equity attributable to parent company
Other equity
Other Total
Item instruments Less: Undistrib Minority
Capital Capital compreh Special Surplus shareholde
Prefe Perpe treasury uted Subtotal equity
stock Oth reserves ensive reserves reserves rs’ equity
rred tual stock profits
ers income
stock bond
I.
Balance at 2,627,957, 7,919,543,0 125,771,7 100,082,6 483,115,7 7,358,146, 18,363,073, 4,464,847, 22,827,920,
the end of 359.00 59.77 20.00 37.81 39.87 155.19 231.64 704.45 936.09
prior year
Add:
changes in
accounting
235
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policy
Correction
of prior
period
errors
Others
II.
Balance at
the 2,627,957, 7,919,543,0 125,771,7 100,082,6 483,115,7 7,358,146, 18,363,073, 4,464,847, 22,827,920,
beginning 359.00 59.77 20.00 37.81 39.87 155.19 231.64 704.45 936.09
of current
year
III.
Amount of
213,768,1 2,573,228,2 -70,321,0 235,540,6 76,131,76 2,209,782, 5,378,772,2 1,345,593, 6,724,365,8
increase/d
15.00 94.92 00.00 70.82 5.66 428.42 74.82 582.13 56.95
ecrease in
current
236
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year
(decrease
to be
marked by
“-”)
(i) Total
comprehe 239,474,5 3,190,185, 3,429,660,0 910,509,6 4,340,169,6
nsive 32.17 517.79 49.96 05.36 55.32
income
(ii)
Capital
invested
by 213,768,1 3,453,782,3 -70,321,0 3,737,871,4 296,876,4 4,034,747,9
shareholde 15.00 64.53 00.00 79.53 24.04 03.57
rs and
capital
reduction
1. 213,768,1 3,422,196,4 3,635,964,5 296,876,4 3,932,841,0
Ordinary 15.00 68.70 83.70 24.04 07.74
237
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shares
invested by
shareholder
s
2. Capital
invested by
holders of
other
equity
instruments
3.
Amount
paid in
31,585,895. -70,321,0 101,906,89 101,906,89
stock &
83 00.00 5.83 5.83
included in
shareholder
s’ equity
4. Others
(iii) Profit 76,131,76 -928,141,5 -852,009,7 -38,250,00 -890,259,7
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distributio 5.66 06.06 40.40 0.00 40.40
n
1.
Appropriati
76,131,76 -76,131,76
on to
5.66 5.66
surplus
reserves
2. General
risk
provisions
withheld
3.
Distributio
-852,009,7 -852,009,7 -38,250,00 -890,259,7
n to
40.40 40.40 0.00 40.40
shareholder
s
4. Others
(iv)
Internal
239
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carry-forw
ard of
shareholde
rs’ equity
1. Capital
reserve
transferred
to capital
stock
2. Surplus
reserve
transferred
to capital
stock
3, Surplus
reserve for
making up
losses
4.
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Carrying
over of
changes of
defined
benefit
plans into
retained
earnings
5. Other
comprehen
sive
income
transferred
to retained
earnings
6. Others
(v)
Special
reserves
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1.
Withdrawal 56,346,5 56,346,557. 56,346,557.
in current 57.41 41 41
year
2. Use in
56,346,5 56,346,557. 56,346,557.
current
57.41 41 41
year
(vi) -880,554,0 -3,933,86 -52,261,58 -936,749,5 176,457,5 -760,291,9
Others 69.61 1.35 3.31 14.27 52.73 61.54
IV.
Balance at
2,841,725, 10,492,771, 55,450,72 335,623,3 559,247,5 9,567,928, 23,741,845, 5,810,441, 29,552,286,
the end of
474.00 354.69 0.00 08.63 05.53 583.61 506.46 286.58 793.04
current
year
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5. Parent Company’s Balance Sheet
Balance Sheet
31-Dec-20
Prepared by: Hengyi Petrochemical Co., Ltd. Currency Unit: RMB
Balance at the end of
Item Ending balance Beginning balance
prior year
Current assets:
Monetary capital 19,798,650.05 26,078,403.11 26,078,403.11
Financial assets held for trading
Derivative financial assets
Notes receivable
Accounts receivable
Accounts receivable financing
Advance payments
Other receivables 8,167,765,426.76 6,830,966,888.92 6,830,966,888.92
Inventories
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets 2,241,163.69 2,241,163.69
Total current assets 8,187,564,076.81 6,859,286,455.72 6,859,286,455.72
Non-current assets:
Debt investments
Financial assets available for sale
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Other debt investments
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investments 15,781,533,619.33 15,519,677,445.03 15,519,677,445.03
Other equity instruments investment
Other non-current financial assets
Investment real estates
Fixed assets 649.4 649.4 649.4
Construction in progress
Productive biological assets
Oil & gas assets
Intangible assets
Development expenditure
Goodwill
Long-term deferred expenses
Deferred income tax assets
Other non-current assets
Total non-current assets 15,781,534,268.73 15,519,678,094.43 15,519,678,094.43
Total assets 23,969,098,345.54 22,378,964,550.15 22,378,964,550.15
Legal Representative: Chief Accountant: Head of Accounting Firm:
Balance Sheet (Contd.)
31-Dec-20
Currency Unit:
Prepared by: Hengyi Petrochemical Co., Ltd.
RMB
Item Ending balance Beginning balance Balance at the end
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of prior year
Current liabilities:
Short-term loans
Financial liabilities held for trading
Derivative financial liabilities
Notes payable
Accounts payable
Accounts received in advance
Contract liabilities N/A
Wages payable 565,750.89 215,439.69 215,439.69
Taxes and dues payable 1,059,142.98 94,343.42 94,343.42
Other payables 3,683,674.52 58,206,847.35 58,206,847.35
Liabilities available for sale
Non-current liabilities due within one year 1,984,595,701.21 179,587,499.88 179,587,499.88
Other current liabilities
Total current liabilities 1,989,904,269.60 238,104,130.34 238,104,130.34
Non-current liabilities:
Long-term loans
Bonds payable 3,521,330,557.49 3,989,762,031.71 3,989,762,031.71
Of which: preferred stock
Perpetual bond
Long-term accounts payable
Long-term wages payable
Estimated liabilities
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Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 3,521,330,557.49 3,989,762,031.71 3,989,762,031.71
Total liabilities 5,511,234,827.09 4,227,866,162.05 4,227,866,162.05
Owner's equity:
Paid-in capital 3,681,645,407.00 2,841,725,474.00 2,841,725,474.00
Other equity instruments 478,546,158.81
Of which: preferred stock
Perpetual bond
Capital reserves 12,978,735,355.53 13,806,467,773.69 13,806,467,773.69
Less: treasury stock 349,918,604.53 55,450,720.00 55,450,720.00
Other comprehensive income
Special reserves
Surplus reserves 540,978,888.21 416,376,958.05 416,376,958.05
Undistributed profits 1,127,876,313.43 1,141,978,902.36 1,141,978,902.36
Total owner’s equity 18,457,863,518.45 18,151,098,388.10 18,151,098,388.10
Total liabilities and owner’s equity 23,969,098,345.54 22,378,964,550.15 22,378,964,550.15
Legal Representative: Chief Accountant: Head of Accounting Firm:
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6. Parent Company’s Income Statement
Income Statement
2020
Prepared by: Hengyi Petrochemical Co., Ltd. Currency Unit: RMB
Amount incurred Amount incurred
Item
in current year in prior year
I. Operating income 2,586,856,333.35 60,019,034.19
Less: operating costs 2,537,833,295.23 58,256,351.09
Taxes and surcharges 2,047,577.69 40,701.76
Selling expenses
Administration costs 11,662,067.37 27,585,827.42
Research and development expenditure
Financial expenses -5,006,422.90 -942,809.46
Of which: interest expenses 267,780,810.45 242,682,503.77
Interest income 273,374,198.05 243,646,931.09
Add: other income 1,241,974.76 1,004,798.52
Investment income (loss to be marked by “-”) 1,204,456,174.30 1,283,621,936.37
Of which: investment income from joint ventures and
-143,825.70 -308,063.63
associates
Gains on the de-recognition of financial assets measured
at amortized cost
Gains on net exposure hedges (loss to be marked by “-”)
Gains from the changes in fair value (loss to be marked by “-”)
Loss on credit impairment (loss to be marked by “-”) 1,500.00 863,818.05
Asset impairment loss (loss to be marked by “-”)
Gains from the disposal of assets (loss to be marked by “-”)
II. Operating profits (loss to be marked by “-”) 1,246,019,465.02 1,260,569,516.32
Add: non-operating income
Less: non-operating expenses 163.39 825.7
III. Total profit (loss to be marked by “-”) 1,246,019,301.63 1,260,568,690.62
Less: income tax expenses
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IV. Net profit (net loss to be marked by “-”) 1,246,019,301.63 1,260,568,690.62
(i) Net profit of continuing operations (net loss to be marked by “-”) 1,246,019,301.63 1,260,568,690.62
(ii) Net profit of discontinued operations (net loss to be marked by
“-”)
V. Net after-tax of other comprehensive income
(i) Other comprehensive income items which cannot be classified as
profit or loss in succeeding accounting period
1. Changes due to remeasurement of the net liabilities or net assets under
the defined benefit plan
2. Share in other comprehensive income that will not be reclassified into
profit and loss in investee under equity method
3. Changes in the fair value of investment in other equity instruments
4. Changes in fair value resulting from the credit risk of the Company
5. Others
(ii) Other comprehensive income items which will be classified as profit
or loss in succeeding accounting period
1. Other comprehensive income from convertible gains and losses under
the equity method
2. Changes in the fair value of other debt investments
3. Amount of financial assets reclassified into other comprehensive
income
4. Provision for credit impairment of other debt investments
5. Cash Flow Hedge Reserve
6. Converted difference in foreign currency financial statements
7. Others
VI. Total comprehensive income 1,246,019,301.63 1,260,568,690.62
Legal Representative: Chief Accountant: Head of Accounting Firm:
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7. Parent Company’s Cash Flow Statement
Cash Flow Statement
2020
Prepared by: Hengyi Petrochemical Co., Ltd. Currency Unit: RMB
Amount incurred Amount incurred
Item
in current year in prior year
I. Cash flow from operating activities:
Cash received from sales of goods or rendering labor services 2,741,399,334.51 68,845,000.00
Refunds of taxes received
Cash received from other related operating activities 569,171,451.77 551,845,344.88
Sub-total of cash inflows from operating activities 3,310,570,786.28 620,690,344.88
Cash paid for purchasing goods or receiving labor services 2,686,003,346.36 66,827,500.00
Cash paid to and for employees 1,735,359.81 2,319,935.16
Taxes and fees paid 4,624,508.88 804,744.33
Cash paid for other related operating activities 8,906,447.11 6,237,546.77
Sub-total of cash outflows from operating activities 2,701,269,662.16 76,189,726.26
Net cash flow from operating activities 609,301,124.12 544,500,618.62
II. Cash flow from investing activities:
Cash received from the disposal of investments 2,100,000,000.00
Cash received from return on investments 1,130,000,000.00 858,930,000.00
Net cash received from the disposal of fixed assets, intangible assets
and other long-term assets
Net cash received from the disposal of subsidiaries and other
business entities
Cash received from other related investing activities 3,256,632,750.20 241,906,384.73
Sub-total of cash inflows from investing activities 4,386,632,750.20 3,200,836,384.73
Cash paid for acquisition or construction of fixed assets, intangible
assets and other long-term assets
Cash paid for investments 262,000,000.00 3,880,000,000.00
Net cash paid for acquisition of subsidiaries and other business
entities
Cash paid for other related investing activities 4,807,330,000.00 2,699,640,014.17
Sub-total of cash outflows from investing activities 5,069,330,000.00 6,579,640,014.17
Net cash flow from investing activities -682,697,249.80 -3,378,803,629.44
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III. Cash flows from financing activities
Cash received from investors 2,984,500,000.00 3,912,924,987.11
Cash received from obtaining loans
Cash received from other related financing activities 6,783,381.50
Sub-total of cash inflows from financing activities 2,991,283,381.50 3,912,924,987.11
Cash paid for repayment of debts 1,174,790,000.00
Cash paid for dividends, profits distribution or interest repayment 1,396,519,960.40 1,054,519,622.12
Cash paid for other related financing activities 352,857,048.48 1,066,110.90
Sub-total of cash outflows from financing activities 2,924,167,008.88 1,055,585,733.02
Net cash flows from financing activities 67,116,372.62 2,857,339,254.09
IV. Effect of exchange rate changes on cash and cash equivalents
V. Net increase in cash and cash equivalents -6,279,753.06 23,036,243.27
Add: balance of cash and cash equivalents at the beginning of the
26,078,403.11 3,042,159.84
period
VI. Balance of cash and cash equivalents at the end of the period 19,798,650.05 26,078,403.11
Legal Representative: Chief Accountant: Head of Accounting Firm:
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8. Parent Company’s Statement of Changes in Owner’s Equity
Statement of Changes in Shareholder’s Equity
2020
Prepared by: Hengyi Petrochemical Co., Ltd. Currency Unit: RMB
Amount incurred in current year
Other equity instruments Speci
Less: Other Total
Item Capital Capital al Surplus Undistribute
Preferre Perpetu treasury comprehen shareholders’
stock Others reserves reserv reserves d profits
d stock al bond stock sive income equity
es
13,806,4
I. Balance at the 2,841,725, 55,450,720. 416,376,95 1,141,978,902 18,151,098,38
67,773.6
end of prior year 474.00 00 8.05 .36 8.10
9
Add: changes
in accounting policy
Correction of prior
period errors
Others
II. Balance at the 13,806,4
2,841,725, 55,450,720. 416,376,95 1,141,978,902 18,151,098,38
beginning of 67,773.6
474.00 00 8.05 .36 8.10
current year 9
III. Amount of
increase/decrease in 839,919,93 478,546, -827,732 294,467,88 124,601,93 -14,102,588.9 306,765,130.3
current year 3.00 158.81 ,418.16 4.53 0.16 3 5
(decrease to be
251
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marked by “-”)
(i) Total
1,246,019,301 1,246,019,301
comprehensive
.63 .63
income
(ii) Capital
invested by -12,597,70 478,546, 18,001,8 294,467,88 189,482,407.6
shareholders and 9.00 158.81 42.34 4.53 2
capital reduction
1. Ordinary shares
-12,597,70 478,546, 12,503,2 349,918,60 128,533,062.6
invested by
9.00 158.81 17.34 4.53 2
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount paid in
5,498,62 -55,450,720
stock & included in 60,949,345.00
5.00 .00
shareholders’ equity
4. Others
(iii) Profit 124,601,93 -1,260,121,89 -1,135,519,96
distribution 0.16 0.56 0.40
1. Appropriation to 124,601,93 -124,601,930.
surplus reserves 0.16 16
2. General risk
provisions withheld
3. Distribution to -1,135,519,96 -1,135,519,96
shareholders 0.40 0.40
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4. Others
(iv) Internal
carry-forward of 852,517,64 -852,517
shareholders’ 2.00 ,642.00
equity
1. Capital reserve
852,517,64 -852,517
transferred to capital
2.00 ,642.00
stock
2. Surplus reserve
transferred to capital
stock
3, Surplus reserve
for making up losses
4. Carrying over of
changes of defined
benefit plans into
retained earnings
5. Other
comprehensive
income transferred to
retained earnings
6. Others
(v) Special
reserves
1. Withdrawal in
current year
253
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2. Use in current
year
6,783,38
(vi) Others 6,783,381.50
1.50
12,978,7
IV. Balance at the 3,681,645, 478,546, 349,918,60 540,978,88 1,127,876,313 18,457,863,51
35,355.5
end of current year 407.00 158.81 4.53 8.21 .43 8.45
3
Legal Representative: Chief Accountant: Head of Accounting Firm:
254
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Statement of Changes in Shareholder’s Equity (Contd.)
2020
Prepared by: Hengyi Petrochemical Co., Ltd. Currency Unit: RMB
Amount incurred in prior year
Other equity instruments Specia
Less: Other Total
Item Preferr Capital l Surplus Undistribute
Capital stock Perpetu Othe treasury comprehens shareholders’
ed reserves reserv reserves d profits
al bond rs stock ive income equity
stock es
I. Balance at
2,627,957,359 11,082,812,36 125,771,720 290,320,088 859,476,821.2 14,734,794,90
the end of
.00 0.12 .00 .99 0 9.31
prior year
Add:
changes in
accounting
policy
Correction of
prior period
255
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errors
Others
II. Balance
at the 2,627,957,359 11,082,812,36 125,771,720 290,320,088 859,476,821.2 14,734,794,90
beginning of .00 0.12 .00 .99 0 9.31
current year
III. Amount
of
increase/decre
213,768,115.0 2,723,655,413. -70,321,000. 126,056,869 282,502,081.1 3,416,303,478.
ase in current
0 57 00 .06 6 79
year (decrease
to be marked
by “-”)
(i) Total
1,260,568,690 1,260,568,690.
comprehensiv
.62 62
e income
(ii) Capital 213,768,115.0 2,723,655,413. -70,321,000. 3,007,744,528.
invested by 0 57 00 57
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shareholders
and capital
reduction
1. Ordinary
shares invested 213,768,115.0 2,704,372,892. 2,918,141,007.
by 0 74 74
shareholders
2. Capital
invested by
holders of
other equity
instruments
3. Amount
paid in stock &
-70,321,000.
included in 19,282,520.83 89,603,520.83
00
shareholders’
equity
4. Others
(iii) Profit 126,056,869 -978,066,609. -852,009,740.4
257
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distribution .06 46 0
1.
Appropriation 126,056,869 -126,056,869.
to surplus .06 06
reserves
2. General
risk provisions
withheld
3.
-852,009,740. -852,009,740.4
Distribution to
40 0
shareholders
4. Others
(iv) Internal
carry-forwar
d of
shareholders’
equity
1. Capital
reserve
258
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transferred to
capital stock
2. Surplus
reserve
transferred to
capital stock
3, Surplus
reserve for
making up
losses
4. Carrying
over of
changes of
defined benefit
plans into
retained
earnings
5. Other
comprehensive
259
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income
transferred to
retained
earnings
6. Others
(v) Special
reserves
1.
Withdrawal in
current year
2. Use in
current year
(vi) Others
IV. Balance
2,841,725,474 13,806,467,77 55,450,720. 416,376,958 1,141,978,902 18,151,098,38
at the end of
.00 3.69 00 .05 .36 8.10
current year
Legal Representative: Chief Accountant: Head of Accounting Firm:
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Hengyi Petrochemical Co., Ltd.
Notes to 2020 Financial Statements
(Unless otherwise specified, amounts provided herein are all in RMB)
I. General Information
1. Historical development
Hengyi Petrochemical Co., Ltd. (referred to as "the Company" or "Company"), formerly
known as Centennial Brilliance Science and Technology Co., Ltd. (referred to as "Centennial
Brilliance"), which was changed into its current name on June 1, 2011 by change in the registration
with administration for industry and commerce. The Company was established with initiation by
shareholders on December 14, 1989 and upon approval by the Economic System Reform
Commission of Guangxi Zhuang Autonomous Region with the G. T. G. [1990] No. 3 Document
issued on February 10, 1990. The Company’s stocks were listed on Shenzhen Stock Exchange on
March 28, 1997 under the stock code of 000703 and the current stock abbreviation of "Hengyi
Petrochemical".
Upon approval by China Securities Regulatory Commission with the document Reply on
Approval of the Sales of Major Assets of Centennial Brilliance Science and Technology Co., Ltd.
and the Issuance of Its Shares to Zhejiang Hengyi Group Co., Ltd. for Purchase of Assets (Z. J. X.
K. [2011] No. 540) issued on April 15, 2011, the Company sold all its assets and liabilities to Henan
Huicheng Investment Co., Ltd. ("Henan Huicheng") with the employees transferred with assets.
Henan Huicheng paid the consideration in cash. The Company issued 432,883,813 shares to
purchase 100% equity in Zhejiang Hengyi Petrochemical Co., Ltd. (hereinafter referred to as
Hengyi Limited) held by Zhejiang Hengyi Group Co., Ltd., Tianjin Dinghui Stock Equity
Investment Yiqi Fund (Limited Partnership), Tianjin Dinghui Yuanbo Stock Equity Investment Fund
(Limited Partnership); at the same time, Henan Huicheng transferred its 12,237,050 shares in
Centennial Brilliance to Zhejiang Hengyi Group Co., Ltd. (hereinafter referred to as Hengyi Group)
in form of agreement, and Hengyi Group paid the consideration in cash.
On April 27, 2011, Ascenda conducted capital verification on the major asset reorganization
and issuance of shares to purchase assets, and issued T. J. Z. X. Y. (2011) Z. Z. No. 020057 Capital
Verification Report to verify the issued 432,883,813 shares.
According to the resolutions of the Company’s 2011 Annual General Meeting of Shareholders
and the revised articles of association, 3 bonus shares for every 10 shares were distributed to all
261
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shareholders on the basis of the Company’s original total share capital of RMB 576,793,813.00, and
the capital reserve was transferred to increase 7 shares for every 10 shares to all shareholders at the
same time. The Company increased its registered capital by RMB 576,793,813.00. The base date of
the increase by transfer was March 27, 2012, and the registered capital after the change was RMB
1,153,587,626.00.
According to the resolutions of the Company’s 2015 Annual General Meeting of Shareholders
and the Company’s revised articles of association, the Company implemented the first restricted
stock incentive plan in 2015. The incentive form adopted in this incentive plan was restricted stocks,
and 15 incentive objects were granted the restricted stocks in the first time. 11.7 million restricted
stocks with a par value of RMB 1 per share were granted to incentive objects by means of targeted
issuance. The Company increased its registered capital by RMB 11,700,000.00, and the registered
capital after the change was RMB 1,165,287,626.00.
According to the resolutions of the Company’s 2014 Annual General Meeting of Shareholders
and the revised articles of association, upon the approval granted by China Securities Regulatory
Commission with the Reply on Approval of Hengyi Petrochemical Co., Ltd.’s Non-public Issuance
of Stocks (Z. J. X. K. [2015] No. 2085), the Company privately issued 140,845,070 RMB ordinary
shares (A shares) with a par value of RMB 1 per share in 2015. The Company increased its
registered capital by RMB 140,845,070.00, and the registered capital after the change was RMB
1,306,132,696.00.
According to the resolutions of the 26th Meeting of the 9th Board of Directors of the Company
in 2016 and the revised articles of association, the Company’s repurchased and cancelled 25% of
the granted restricted stocks that were held by incentive objects and did not meet the unlocking
conditions for the first unlocking period, i.e. 2,925,000 restricted stocks. The Company reduced the
registered capital by RMB 2,925,000.00, and the registered capital after the change was RMB
1,303,207,696.00.
According to the resolutions of the Company’s 2015 Annual General Meeting of Shareholders
and the revised articles of association, upon the approval granted by China Securities Regulatory
Commission with the Reply on Approval of Hengyi Petrochemical Co., Ltd.’s Non-public Issuance
of Stocks (Z. J. X. K. [2016] No. 1320), the Company privately issued 316,666,666 RMB ordinary
shares (A shares) with a par value of RMB 1 per share in 2016. The Company increased its
registered capital by RMB 316,666,666.00, and the registered capital after the change was RMB
1,619,874,362.00.
According to the resolutions of the 2nd Extraordinary General Meeting of Shareholders of the
Company in 2017 and the Company’s revised articles of association, the Company implemented the
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second restricted stock incentive plan in 2017. The incentive form adopted in this incentive plan
was restricted stocks, and 50 incentive objects were granted the restricted stocks in this time. 28.55
million restricted stocks with a par value of RMB 1 per share were granted to incentive objects by
means of targeted issuance. The Company increased its registered capital by RMB 28,550,000.00,
and the registered capital after the change was RMB 1,648,424,362.00.
According to the resolutions of the Company’s 2017 Annual General Meeting of Shareholders
and the revised articles of association, the capital reserve was transferred to increase 4 shares for
every 10 shares to all shareholders based on the Company’s original total share capital of RMB
1,648,424,362. The Company completed the registration of bonus and transferred stocks on May 24,
2018. The Company increased its registered capital by RMB 659,369,744, and the registered capital
after the change was RMB 2,307,794,106.00.
In October 2018, due to the resignation of restricted stock incentive objects, the Company
repurchased and cancelled 679,000 restricted stocks. The Company reduced its registered capital
(share capital) by RMB 679,000.00. After the change, the registered capital was RMB
2,307,115,106.00, and the share capital was RMB 2,307,115,106.00.
In December 2018, the Company issued 170,592,433 shares to Zhejiang Hengyi Group Co.,
Ltd. (hereinafter referred to as "Hengyi Group"), 75,124,910 shares to Fulida Group Holding Co.,
Ltd. (hereinafter referred to as "Fulida Group"), and 75,124,910 shares to Xinghui Chemical Fiber
Group Co., Ltd. (hereinafter referred to as "Xinghui Chemical Fiber Group") to purchase related
assets. After the change, the registered capital was RMB 2,627,957,359.00, and the share capital
was RMB 2,627,957,359.00.
In January 2019, the Company privately issued 213,768,115 shares to 6 investors separately to
raise matching funds. After the change, the registered capital was RMB 2,841,725,474.00, and the
share capital was RMB 2,841,725,474.00.
According to the resolutions of the Company’s 2019 Annual General Meeting of Shareholders
and the revised articles of association, the capital reserve was transferred to increase 3 shares for
every 10 shares to all shareholders based on the Company’s original total share capital of RMB
2,841,725,474.00. The Company completed the registration of bonus and transferred stocks on May
28, 2020. The Company increased its registered capital by RMB 852,517,642, and the registered
capital after the change was RMB 3,694,243,116.00.
On June 9, 2020, in accordance with the Proposal on the Issuance of Shares to Purchase Assets
and the Realization of Performance Commitments for Related-party Transaction Projects in 2019
and Performance Compensation Plan, the cancellation of 12,597,709 shares was completed, and the
registered capital after the change was RMB 3,681,645,407.00.
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The Company’s unified credit code is 9145050019822966X4; its address is Beihai, Guangxi,
and it is now headquartered at No. 260 Shixinbei Road, Xiaoshan District, Hangzhou City, Zhejiang
Province; its legal representative is Qiu Yibo; as at December 31, 2020, its registered capital was
RMB 3,681,645,407.00 and share capital was RMB 3,681,645,407.00.
The parent company of the Company is Zhejiang Hengyi Group Co., Ltd.
2. Industry
The Company is mainly engaged in petrochemical and chemical fiber product manufacturing
industry.
3. Scope of business
The approved business scope covers: production, processing and sales of chemical fiber and
chemical raw materials (excluding dangerous goods); import and export business (except for items
prohibited and restricted by national laws and regulations).
4. Main products
The Company’s main products are purified terephthalic acid (PTA), polyester chips, polyester
bottle flakes, polyester pre-oriented yarn (POY), polyester fully drawn yarn (FDY), polyester drawn
textured yarn (DTY), polyester staple fiber, p-xylene (PX), gasoline, diesel, aviation kerosene, etc.
5. Relevant statement that during the reporting period, the Company changes its main
business, makes any major equity change, or undergoes any major merger, acquisition or
restructuring
For details, please refer to the Historical Evolution section.
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6. These financial statements are issued with approval from the Board of Directors by
means of a resolution on April 19, 2021.
7. In 2020, there were 44 subsidiaries included in the company’s consolidation scope. For
details, please refer to Note VIII “Interests in Other Equities”. The scope of consolidation of
the Company for this year included 11 new entities and excluded 1 entity when compared
with the previous year. For details, please refer to Note VII "Changes in Consolidation
Scope".
II. Basis for the preparation of financial statements
1. Basis for the preparation of financial statements
The Company's financial statements are prepared on the basis of the actual transactions and
affairs of the Company on the going-concern assumption in accordance with the Accounting
Standards for Enterprises - Basic Standard (promulgated with Decree 33 and revised with Decree 76
by the Ministry of Finance), the 42 Accounting Standards, guidelines for the application of and
explanations to Accounting Standards for Enterprises and other relevant provisions issued and
amended on and after February 15, 2006 (hereinafter collectively the “Accounting Standards for
Enterprises”), and provisions of CSRC on Preparation Rules for Information Disclosure by
Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports
(2014 Revision).
Following relevant provisions of the Accounting Standards for Enterprises, the Company
adopts the accrual basis for its accounting. Except for certain financial instruments, the financial
statements are measured on the historical cost basis. The held-for-sale non-current assets shall be
measured subject to the amount of fair value minus estimated cost or the original book value when
the assets meet the held-for-sale conditions, whichever is lower. Provision for impairment is
retained for assets following relevant provisions if any asset is impaired.
III. Statement of conformity
The financial statements of the Company have been formulated following the requirements of
the Accounting Standards for Enterprises and reflect the financial status as of December 31, 2020,
the business results and cash flows and other statuses of the Company in 2020 on a truthful and
complete basis. The Financial Statements are in conformity with requirements on disclosure of
information concerning financial statements and notes thereto contained in the Preparation Rules for
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Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions
on Financial Reports, as amended in 2014 by CSRC.
IV. Important Accounting Policies and Estimates
The Company and its subsidiaries have formulated a number of specific accounting policies
and accounting estimates in respect of transactions and matters, such as provision for bad debts of
receivables, depreciation of fixed assets, amortization of intangible assets, income recognition, etc.
according to the actual production and operation characteristics and in accordance with the
provisions of relevant corporate accounting standards. For details, please refer to the relevant
descriptions in Note IV in these Notes. For more information concerning major accounting
judgments and estimates, refer to Note IV-34 “Major Accounting Judgments and Estimates”.
1. Accounting period
The Company adopts an annual period and an interim accounting period. The latter refers to
one that is shorter than a complete accounting period. The Company adopts the calendar year as its
financial year, namely from January 1 to December 31 of each year.
2. Operating cycle
The normal operating cycle refers to the period in which the Company completes the steps
from the purchase of assets to be processed to the realization of cash or cash equivalent. The
Company adopts a 12-month period as its operating cycle and the criteria for determining the
liquidity of its assets and liabilities.
3. Recording currency
The Company uses RMB as the benchmark currency for its operations in the primary
economic environment, in which the Company and its domestic subsidiaries operate. Subsidiaries
outside China may decide US dollars as their recording currency pursuant to the prevailing
economic environment of their locations. In preparing these financial statements, the Company has
used RMB as recording currency.
4. Accounting treatment of business combination under common control and business
combination not under common control
Business combination refers to the process of combining two or more separate businesses into
one reporting entity. Both business combinations under common control and business combinations
not under common control are eligible for combination.
(1) Combination of businesses under common control
Business combination under common control refers to the combination of businesses that are
under the ultimate control of the same party or parties on a non-temporary basis before and after the
combination. In case of the combination of businesses under common control, the business that
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acquires the control of other businesses participating in the combination on the acquisition date is
the acquirer and the latter are the acquirees. Acquisition date refers to the date on which the acquirer
actually obtains control of the acquiree.
Assets and liabilities the acquirer acquires through the business combination are measured at
the book value of the acquiree on acquisition date. Capital reserve (stock premium) is adjusted
based on the difference between the net book value of assets acquired by the acquirer and the book
value of the consideration for the combination paid (or the total nominal value of issued shares),
and if the capital reserve (stock premium) is insufficient to offset such difference, the difference will
be offset against retained earnings.
Costs directly incurred by the acquirer in the course of the business combination are recorded
in current profit and loss.
(2) Combination of businesses not under common control
Business combination not under common control refers to the combination of businesses that
are not under the ultimate control of the same party or parties before and after the combination. In
case of the combination of businesses not under common control, the business that acquires the
control of other businesses participating in the combination on the combination date is the acquirer
and the latter are the acquirees. Acquisition Date refers to the date on which the acquirer actually
obtains control over the acquiree.
In case of combination of businesses not under common control, costs for the combination
include assets paid and liabilities incurred or assumed to acquire the control of the acquirees on the
Acquisition Date as well as the fair value of the equity securities. Intermediary costs incurred for
audit, legal and valuation services and other administrative services are recorded in current profit
and loss. Transaction costs incurred by the acquirer for equity securities or debt securities issued as
consideration for the combination are recorded as the initial recognition amounts for equity
securities or debt securities. Contingent considerations paid are recorded as cost for the combination
at the fair value on the Acquisition Date. If any new or further evidence is found as to the
circumstances within 12 months after the Acquisition Date and it is necessary to adjust the
contingent consideration, the goodwill for the combination is adjusted accordingly. Combination
costs incurred by the acquirer and identifiable net assets obtained from combinations shall be
measured at fair value on the date of acquisition. The balance of the combination cost less the fair
value of the net identifiable assets acquired is recognized as goodwill. If the merging cost is less
than the net fair value of the identifiable assets of the acquiree, the fair values of the identifiable
assets, liabilities and contingent liabilities as well as the merging cost are reviewed; if verified, the
difference is recognized in current profit and loss.
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In case of a deductible temporary difference arising in the acquisition that are not recognized
because it is unqualified as a deferred income tax asset, if new or further information is obtained
within 12 months of the acquisition evidencing that they are qualified to be recognized as deferred
income tax assets on the acquisition date, and if the benefits from deductible temporary differences
of the acquiree is expected to be realized on the acquisition date, such differences are recognized as
deferred income tax assets, with goodwill reduced accordingly. If the goodwill is not enough for the
reduction, the difference is recognized as gains or losses of the current period. Except for the
foregoing, all the deferred income tax assets related to the business combination are recognized in
current profit and loss.
Combination of businesses not under common control realized by steps is tested against
Circular of the Ministry of Finance for the Printing and Distribution of No. 5 Explanation to the
Accounting Standards for Enterprises (C.K. [2012] No. 19) and the criteria for the judgment of
package deals contained in Article 51 of the Accounting Standards for Enterprises No. 33 -
Consolidated Financial Statements (refer to Note IV-5(2)) to determine whether the related
transactions are qualified as a package deal. If qualified as a package deal, the transactions are
treated with reference to the foregoing paragraphs and Note IV-15 “Long-term Equity Investment”;
if they are not qualified, individual financial statements shall be separated from consolidated
financial statements for relevant accounting treatment:
In financial statements of individual companies, the aggregate of the book value of equity
investment held by the acquiree before the Acquisition Date and the increase in the investment cost
excessive of the book value on the Acquisition Date is taken as the initial investment cost; if the
equity held by the acquiree before the Acquisition Date involves other comprehensive income, the
relevant comprehensive income is treated in the same manner the acquiree disposes of relevant
assets or liabilities when disposing of the investment (i.e., the investment, except the portion in the
change resulted from the acquiree’s remeasurement of net liabilities or net asset accounted using the
equity method, is recorded in the income from investment of the current period).
In the Consolidated Financial Statements, the equity held by the acquiree before the
Acquisition Date is remeasured at the fair value on the Acquisition Date and the difference between
the fair value and the book value is recorded in the income from investments of the current period;
if the equity held by the acquiree before the Acquisition Date involves other comprehensive income,
the relevant comprehensive income is treated in the same manner the acquiree disposes of relevant
assets or liabilities (i.e., the income, except the portion in the change resulted from the acquiree's
remeasurement of the net liabilities or net assets of the defined benefit plan accounted using the
equity method, is recorded in the income from investment of the period to which the Acquisition
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Date belongs).
5. Preparation of Consolidated Financial Statements
(1) Principles for defining the scope of the Consolidated Financial Statements
The scope of the Consolidated Financial Statements is defined on the basis of control. Control
refers to the power the Company has over the entity in which it invests, to enjoy variable return
from the entity by participating in the business operations of the entity and to influence the amount
of the return through its ability of influencing the entity. The consolidation of financial statements
covers the Company and all subsidiaries. A subsidiary is an entity subject to the control of the
Company.
If any change in relevant circumstances arises and results in any change in the relevant
elements determining the control as related above, the Company will re-evaluate the same.
(2) Methods for preparing the Consolidated Financial Statements
The Company includes a subsidiary in the scope of the combination on the date the Company
acquires the actual control over the net assets and production operations of such subsidiary and
discontinues the combination on the date the Company loses the control. For a subsidiary disposed
of during the period, the business results and cash flow before the disposal are properly included in
the Consolidated Statement of Income and the Consolidated Statement of Cash Flow, while the year
beginning data contained in the Consolidated Balance Sheet are not adjusted. For a subsidiary
included in the period as a result of combination of businesses not under common control, the
business results and cash flow after the Acquisition Date have been properly included in the
Consolidated Statement of Income and the Consolidated Statement of Cash Flow, while the year
beginning data and the comparison data contained in the Consolidated Balance Sheet are not
adjusted. For a subsidiary under combination of businesses under common control and a acquiree
under consolidation by merger, the business results and cash flow during the period from the
beginning of the period to which the acquisition date belongs to the acquisition date have been
properly included in the Consolidated Statement of Income and the Consolidated Statement of Cash
Flow, while the comparison data contained in the Consolidated Balance Sheet are adjusted.
When preparing the Consolidated Financial Statements, if there is any inconsistency between
the accounting policies and accounting period of the subsidiary and those of the Company, the
financial statements of the subsidiary are adjusted accordingly where necessary. For a subsidiary
acquired through business combinations not under common control, its financial statements shall be
adjusted on the basis of the fair value of its identifiable net assets on the date of acquisition.
Balances of major transactions, transactions and unrealized profits within the scope of the
Company are offset when preparing the Consolidated Financial Statements.
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The shareholder equity and net gains or losses of the subsidiary not attributable to the
Company are separately presented in the categories of the shareholder equity and net profit as
minority shareholder's equity and net profit in the Consolidated Financial Statements. The portion
of net gains or losses of the subsidiary in the period that is taken as the minority shareholder's
equity is presented in the category of Minority Shareholder's Equity under the net profit in the
Consolidated Statement of Income. The balance of the loss of the subsidiary attributable to minority
shareholders less the shareholder equity of the subsidiary attributable to minority shareholders at the
year beginning is set off against the minority shareholder's equity.
If the control over a subsidiary is lost due to disposal of partial equity investment in the
subsidiary or any other reason, the remaining equity is remeasured at its fair value on the date the
control is lost. The aggregate of the consideration obtained by disposing of the equity and the fair
value of the remaining equity less the portion of the net assets of the subsidiary that has been
measured, as calculated at the original shareholding proportion, from the Acquisition Date is
recognized in the income from investments of the period, in which the control is lost. When the
control is lost, the comprehensive income related to the equity investment in the original subsidiary
is treated in the same manner the acquiree disposes of relevant assets or liabilities (i.e., the
comprehensive equity, except the portion in the change resulted from the remeasurement of the net
liabilities or net assets of the defined benefit plan, is recorded in the income from investment of the
period). This portion of the remaining equity is subsequently measured following the Accounting
Standards for Enterprises No. 2 - “Long-term Equity Investment” or the Accounting Standards for
Enterprises No. 22 - “Recognition and Measurement of Financial Instruments”, as noted in Note
IV-15 “Long-term Equity Investment” and Note IV-9 “Financial Instruments”.
If the control is lost through several transactions of disposing of equity investment in the
relevant subsidiary, the transactions are tested to determine whether they are qualified as a package
deal. A number of transactions of disposing of equity investments are usually accounted for as a
package deal if the conditions, terms and economic impacts of such transactions meet one or more
of the following conditions: 1) The transactions are done at the same time or in consideration of
mutual impacts on each other; 2) The transactions collectively achieve a complete business effect; 3)
The completion of one transaction depends on the completion of at least one of the other
transactions; 4) A transaction does not appear to be economic if considered alone but is economic if
considered in connection with other transactions. If the transactions are determined not to be a
package deal, each of them is accounted following the principles for “disposing of long-term equity
investments when the control is not lost (refer to Note IV-15(2)④) and “the control over a
subsidiary is lost due to disposal of partial equity investment in the subsidiary or any other reason”
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(for details, refer to the above paragraph). If the transactions of disposing of equity investment in a
subsidiary that lead to the loss of control are determined as a package deal, each of them is treated
as a transaction of disposing of equity investment in a subsidiary that lead to the loss of control;
however, the difference between the disposal price and the corresponding share of the net asset of
the subsidiary is recognized in the other comprehensive income in the Consolidated Financial
Statements and transferred to current profit and loss in which the control is lost.
6. Classification of joint arrangements and accounting of joint operations
A joint arrangement refers to an arrangement between two or more parties participating in
jointly control. The Company divides joint arrangements into joint operations and joint ventures on
the basis of the rights enjoyed and liabilities assumed in the joint arrangements. A joint operation
refers to a joint arrangement in which the Company enjoys rights and assumes liabilities. A joint
venture refers to a joint arrangement of which the Company enjoys only the rights to the net asset.
The Company's investment in joint ventures is accounted for using the equity method and
treated following the accounting policies described in Note IV-15(2) ② “Long-term Equity
Investments treated using the equity method.”
The Company, as a party to the joint operation, recognizes the assets and liabilities the
Company holds and assumes in the joint operation and the assets and liabilities it jointly holds with
other parties in proportion to the share the Company is entitled to in the joint operation; the
Company also recognizes the income from sales of share of the products of the joint operation in
proportion to the share in the joint operation the Company is entitled to; the Company recognizes
income the joint operation receives from sales of the products produced by the joint operation in
proportion to the share in the joint operation the Company is entitled to; the Company recognizes
the expenses the Company has incurred alone and the share of the expenses incurred by the joint
operation in proportion to the share the Company is entitled to.
When the Company makes investments in the joint operation or sells assets to the joint
operation to which the Company is a party (such assets do not constitute business of the joint
operation, as is also applicable below) or purchases assets from the joint operation, the Company
recognizes only the part of the gains or losses arising from such transactions attributable to other
parties to the joint operation. If impairment loss occurs to an asset defined in the Accounting
Standards for Enterprises No. 8 - Impairment of Assets and other regulatory documents, the
Company fully recognizes the loss occurs to such an asset as the Company has invested in or sold to
the joint operation, or only the loss occurs to such an asset as the Company has purchased from the
joint operation in proportion to the share in the joint operation the Company is entitled to.
7. Recognition criteria for cash and cash equivalents
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The cash and cash equivalents of the Company include cash at hand, deposit in bank that can
be readily used for payment and investments of short terms (generally mature within three months
from the date of purchase) and high liquidity that can be easily converted into known sums of cash
and are exposed to low risks in terms of change in value.
8. Foreign currency business and conversion of foreign currency statement
(1) Translation of transactions in foreign currencies
A transaction in a foreign currency of the Company, when initially recognized, is translated
into the benchmark currency at the spot exchange rate (the middle rate of the foreign exchange
quotation published by the People's Bank of China; the same below) on the transaction date,
provided that foreign currency translation transactions and transactions involving conversion of
foreign currencies are translated into the benchmark currency at the exchange rate actually adopted
for the transactions.
(2) Translation of monetary and non-monetary assets in foreign currencies
On the balance sheet date, monetary assets in foreign currencies are translated at the spot
exchange rate on the balance sheet date and the exchange difference arising therefrom is recognized
in current profit and loss except that ①the exchange difference arising from special loans in
foreign currencies used to purchase assets eligible for capitalization is treated following the
principle of capitalization of borrowing cost; ②the exchange difference arising from the hedging
instruments used for effective hedging of net investment in overseas operations is recognized in
other comprehensive income, and after the net investment is disposed, recognized in current profit
and loss; ③the exchange difference arising from changes in the book balance of monetary assets
available for sale, except the amortized cost, is recognized in other comprehensive income.
When preparing the Consolidated Financial Statements, if a monetary asset in foreign currency
constitutes a net investment in an overseas operation, the exchange difference arising due to a
change in the exchange rate is recognized in other comprehensive income and transferred to current
profit and loss upon the disposal of the overseas operation.
Non-monetary transactions in foreign currencies that are measured at the historical costs are
translated at the current exchange rate prevailing on the Transaction Date. A non-monetary asset in a
foreign currency measured at the fair value, is translated at the spot rate on the date on which the
fair value is determined and the difference between the amounts recorded in the benchmark
currency after the translation and that recorded in the original currency is treated as changes in the
fair value (including change in exchange rate) and recognized in current profit and loss or other
comprehensive income.
(3) Translation of accounting statements in foreign currencies
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When preparing the Consolidated Financial Statements, if a monetary asset in foreign currency
constitutes a net investment in an overseas operation, the exchange difference arising due to a
change in the exchange rate is recognized in other comprehensive income as a difference from
translation of accounting statements in foreign currencies and transferred to current profit and loss
upon the disposal of overseas operation.
Financial statements in foreign currencies of overseas operations are translated into RMB and
assets and liabilities in the balance sheet are translated at the current exchange rate on the Balance
Sheet Date; all transactions in Shareholders' Equity, except those in Undistributed Profit, are
translated at the current exchange rate on the Transaction Date. Income and expense in the balance
sheet are translated at the prevailing exchange rate on the Transaction Date. Undistributed profit at
the year beginning is the undistributed profit at the end of previous year; the undistributed profit at
the year end is measured and presented by the items of the translated profit distribution; the
difference between the translated assets/liabilities and the total shareholders' equity is recognized in
other comprehensive income as the difference of foreign currency translation. If an overseas
operation is disposed of and the control over it is lost, the difference of foreign currency translation
related to the overseas operation listed in Shareholders' Equity in the Balance Sheet is transferred to
current profit and loss in which the same is disposed of, wholly or in proportion to the share of the
overseas operation thus disposed of.
For cash flows in foreign currencies, the weighted-average exchange rate on the occurrence
day of cash flow shall apply. The difference of cash caused by change of exchange rate shall be
separately presented in Cash Flow Statement.
The year beginning amounts and the actual amounts of the previous year are presented as
translated from the financial statements of the previous year.
If all the shareholders’ equity in an overseas operation is disposed of or if the control over it is
lost as a result of disposal of part of the owners’ equity or for any other reason, the difference of
foreign currency translation related to the overseas operation that is attributable to shareholders of
the parent company, as listed in Owners’ Equity in the Balance Sheet is wholly transferred to
current profit and loss in which the same is disposed of.
If the share of the equity in an overseas operation held by the Company decreases as a result of
disposal of part of the equity investment or for any other reason but the decrease does not result in
the loss of control over the overseas operation, the difference of foreign currency translation related
to the part of the overseas operation is classified as minority shareholder's equity and is not
transferred to current profit and loss. If part of the equity in an overseas operation that is an
associate or a joint venture is disposed of, the difference of foreign currency translation related to
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the overseas operation is transferred to current profit and loss in which the same is disposed of,
wholly or in proportion to the share of the overseas operation thus disposed of.
9. Financial instruments
A financial instrument is recognized as an asset or liability when the Company becomes a
party thereto.
(1) Classification, recognition and measurement of financial assets
Based on the business model of managing financial assets and the characteristic of contractual
cash flow, the Company classifies financial assets into three categories, which are financial assets
measured at amortized cost, financial assets at fair value through other comprehensive income, and
financial assets at fair value through profit or loss.
Financial assets are measured at fair value for the purpose of initial recognition. For financial
assets measured at fair value through profit or loss, the transaction expenses are directly included in
current profit and loss; for financial assets in other categories, the transaction expenses are included
in the amount initially recognized. For accounts receivable or bills receivable arising from the sale
of goods or the rendering of services, which do not include or do not allow for a significant
financing component, the amount of consideration to which the Company is expected to be entitled
to, is treated as the amount of initial recognition.
①Financial assets measured at amortized cost
The objective of the business model within which financial assets measured at amortized cost
are managed is to collect contractual cash flow, and the contractual cash flow characteristic of such
financial assets is consistent with a basic lending arrangement, namely, the cash flow generated at a
specified date is solely payment of principal and the interest based on unpaid principal amount.
Such financial assets are subsequently measured at amortized cost using the effective interest rate
method, the gains or losses arising from the amortization or impairment of the assets are recorded in
current profit or loss.
② Financial assets measured at fair value and their changes are included in other
comprehensive income
Such financial assets are managed within a business model whose objectives are to collect
contractual cash flow and to sell the assets, and the contract cash flow characteristics of such assets
are consistent with a basic lending arrangement. Such financial assets are measured at fair value
through other comprehensive income, however, impairment losses or gains, exchange gains or
losses, as well as interest calculated according to the effective interest rate method are recorded in
current profit or loss.
Furthermore, the Company designates certain non-trading equity instruments as financial
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assets measured at fair value through other comprehensive income. The relevant dividend income
earned on such financial assets is recorded in current profit or loss, with changes in fair value
recorded in other comprehensive income. Upon de-recognition of financial assets, the cumulated
gains or losses which were previously recorded in other comprehensive income will be transferred
from other comprehensive income to retained earnings, and will not be recorded in current profit or
loss.
③Financial assets at fair value through profit or loss
The Company classifies financial assets other than those measured at amortized cost and those
measured at fair value through other comprehensive income, as financial assets at fair value through
profit or loss. Moreover, on initial recognition, in order to eliminate or significantly reduce
accounting mismatch, the Company designates certain financial assets as measured at fair value
through profit or loss. Such financial assets are subsequently measured at fair value, with changes in
fair value recorded in current profit or loss.
(2) Classification, recognition and measurement of financial liabilities
Financial liabilities are classified at the initial recognition as financial liabilities measured at
the fair value with the changes listed in current profit and loss and other financial liabilities. For
financial liabilities measured at fair value through profit or loss, the transaction expenses are
directly included in the current profit and loss; for financial liabilities in other categories, the
transaction expenses are included in the amount initially recognized.
①Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading (derivative instruments that belong to financial liabilities) and those designated financial
liabilities at fair value through profit or loss at the time of initial recognition.
Financial liabilities held-for-trading (including derivatives which fall within the category of
financial liabilities) are subsequently measured at fair value, with fair value changes recorded in
current profit or loss, except to the extent they are related to hedge accounting.
For financial liabilities designated as at fair value through profit or loss, fair value changes
arising from the change in the Company’s credit risk are recorded in other comprehensive income,
and upon de-recognition of such financial liabilities, the cumulative amount of changes in fair value
which arise from the change in credit risk and recorded in other comprehensive income are
transferred to retained earnings. Other changes in fair value are recorded in current profit or loss. If
accounting for the effects of change in the credit risk of the financial liabilities in the
abovementioned manner would result in or increase the accounting mismatch in profit and loss, the
Company will record all the gains or losses on the financial liabilities (including the amount of
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effects of the change in the Company’s credit risk) in current profit or loss.
②Other financial liabilities
Except for financial liabilities which arise due to that the transfer of financial asset does not
satisfy the criteria for de-recognition or due to the continuing involvement in the transferred asset,
and except for financial guarantee contract, all other financial liabilities are classified as measured
at amortized cost, which are subsequently measured at amortized cost with the gains or losses
arising from de-recognition or amortization recorded in current profit or loss.
(3) Basis for recognizing and methods for measuring the transfer of financial assets
A financial asset meeting one of the following conditions is derecognized: 1) The contractual
right to receive cash flows from the financial asset is terminated; 2) the financial asset has been
transferred and substantial risks related to and benefits from the ownership of the financial asset
have been transferred to the transferee; 3) the financial asset has been transferred and substantial
risks related to and benefits from the ownership of the financial asset has been waived instead of
being transferred or retained.
If risks related to and benefits from the ownership of the financial asset have not been
transferred nor retained, neither has the control over the financial asset been waived, then the
financial assets and related financial liabilities are recognized according to the extent to which the
financial asset has been transferred. The extent to which the financial asset has been transferred
refers to the level of risk the entity is exposed to due to the change in the value of the financial
asset.
If the transfer of the whole of a financial asset meets the conditions for derecognition, the
difference between the book value of the financial asset as well as the consideration received for the
transfer and the aggregate of changes in the fair value that has been recognized in other
comprehensive income is recognized in current profit and loss.
If the transfer of part of a financial asset meets the conditions for derecognition, the book value
of the financial asset is allocated to the part of the financial asset that has been derecognized and the
part that has not been derecognized; the aggregate of the consideration received for the transfer and
accumulated changes in the part of fair value that has been allocated to derecognized part and the
difference of the foregoing book value are recognized in current profit and loss.
In case of a financial asset sold with attached recourse or transferred with endorsement, the
Company determines whether substantial risks and benefits related to the ownership of the financial
asset have been transferred. If substantial risks and benefits related to the ownership of the financial
asset have been transferred to the transferee, the financial asset is derecognized; if the same is
retained, the financial asset is not derecognized; if the same is not transferred nor retained, the
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Company determines whether control over the financial asset is retained, and treated according to
the principles related in previous paragraphs.
(4) Derecognition of financial liabilities
Where the present obligation of a financial liability (or a portion thereof) has been discharged,
the Company de-recognizes the financial liability (or a portion thereof). Where the Company (as the
borrower) enters into an agreement with a lender whereby it assumes a new financial liability to
replace an existing one, and the new financial liability has substantially different contract terms than
those of the existing one, the existing financial liability is de-recognized, and a new financial
liability is recognized. Where the Company has made substantial changes to the contractual terms
of an existing financial liability (or a portion thereof), it de-recognizes the existing financial liability
and recognizes a new financial liability according to the changed terms.
Where a financial liability (or a portion thereof) is de-recognized, the difference between the
book value of that financial liability and the consideration paid (including the non-cash asset
transferred or liability assumed) is recognized in current profit or loss.
(5) Offsetting of financial assets and financial liabilities
If the Company has the legal right readily available to offset a recognized financial asset and a
financial liability and the Company plans a net settlement or realizes the financial asset and settles
the financial liability simultaneously, and the balance of the offsetting is presented in the Balance
Sheet. Other financial assets and liabilities are separately presented in the Balance Sheet without
offsetting one another.
(6) Methods for determining fair values of financial assets and liabilities
The fair value refers to the price is receivable from an asset sold or payable for a liability
transferred through a normal transaction on the measurement date. In case of a financial instrument
for which there is an active market, the fair value is determined by the price quoted on the active
market. The quotation on the active market refers to the price collected from stock exchanges,
brokers, associations of the industry, pricing institutions, etc., that represents the price at which a
transaction is actually an arm's length transaction. In case of a financial instrument for which there
is no active market, the fair value is determined using the valuation techniques. Valuation
techniques include the reference to the price at which market participants that are familiar with the
market and transact voluntarily have used recently, the reference to the fair value of other financial
instruments of similar properties, cash flow discount method and option valuation modes. At the
time of valuation, the Company uses valuation techniques that are applicable in the current
circumstances and that are sufficient to support the use of data and other information, selects input
values that are consistent with the characteristics of the asset or liability considered by the market
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participants in the transaction of the relevant asset or liability, and prioritizes the use of relevant
observable input values. Unobservable inputs are used if the relevant observable inputs are not
available or are not practicable.
(7) Equity instruments
An equity instrument refers to a contract evidencing the right to the remaining equity in an
asset after deducting all relevant liabilities. The issuance (including seasoned offering), repurchase,
sale or cancellation of equity instruments by the Company are treated as changes in equity, the
transaction costs related to equity transactions are deducted from the equity. The Company does not
recognize changes in the fair value of equity instruments.
Dividend distribution during the existence of an equity instrument (including “interest”
generated by an instrument that is classified as equity instrument) is treated as profit distribution.
10. Impairment of financial assets
Financial assets for which impairment loss is required to be recognized by the Company are
financial assets measured at amortized cost, investment in debt instruments measured at fair value
through other comprehensive income, these mainly include bills receivable, accounts receivable,
other receivables, debt investments, other debt investments and long-term receivables. Furthermore,
for certain financial guarantee contracts, impairment provision and credit impairment loss are
recognized according to the accounting policies mentioned in this section.
(1) Method for recognizing impairment provision
Based on expected credit loss, the Company recognizes impairment provision and credit
impairment loss in respect of the above-mentioned items according to the applicable method for
measuring excepted credit loss (the general approach or simplified approach).
Credit loss is the difference between all contractual cash flow receivable by the Company
under contracts which are discounted according to the original effective interest rate, and all the
cash flow expected to be received, namely the present value of all cash shortfall. Particularly,
financial assets acquired or derived to which credit impairment has occurred are discounted by the
Company according to the credit-adjusted effective interest rate.
The general approach for measuring expected credit loss means that, at each balance sheet date,
the Company assesses the financial assets to see if the credit risk has significantly increased after
initial recognition, if credit risk has significantly increased after initial recognition, the Company
calculates provision for loss according to the amount of expected credit loss over the life-time of the
assets; if credit risk has not significantly increased after initial recognition, the Company calculates
loss provision based on expected credit loss in the future twelve-month. When evaluating expected
credit loss, the Company considers all reasonable information that is supported by evidence,
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including forward-looking information.
For financial instruments that have relatively low credit risk at the balance sheet date, the about
assumes that the credit risk of such instruments has not significantly increased after initial
recognition, and chooses to calculate loss provision according to the twelve-month expected credit
loss.
(2) Criteria for determining whether credit risk has significantly increased since initial
recognition
If the probability of default of a certain financial asset within the expected lifetime of the asset,
as determined at the balance sheet date, is significantly higher than the probability of default within
the expected lifetime determined at the time of initial recognition, then it indicates that the credit
risk of such asset has significantly increased. Except for special circumstances, the Company
regards the change in default risk occurring in the future twelve-month period as the reasonable
estimate of the change in default risk occurring over the entire lifetime of an asset, thereby
determining whether the credit risk has increased significantly after initial recognition.
Usually in case of more than 30 days overdue, the Company deems that the credit risk of the
financial instrument has increased significantly, unless there is conclusive evidence showing that
the credit risk of the financial instrument has not increased significantly since its initial recognition.
The Company will take into account the following factors when assessing whether the credit
risk has increased significantly:
1） Whether the actual or expected operating results of the debtor have changed
significantly;
2） Whether the regulatory, economic or technological environment of the debtor has been
subject to significant adverse changes;
3） Whether the value of the collateral mortgaged for debt or the quality of guarantee
provided by a third party or credit enhancement has changed significantly with these changes
expected to reduce the debtor’s economic motivation to repay the debt within the term set out in the
contract or affect the probability of breach;
4） Whether the expected performance and repayment behaviors of the debtor have
changed significantly;
5） Whether the Company’s credit management methods for financial instruments have
changed, etc.
On the balance sheet date, if the Company determines that a financial instrument has only low
credit risk, the Company will assume that the credit risk of the financial instrument has not
increased significantly since its initial recognition. If the default risk of financial instruments is low,
the borrower has a strong capacity to fulfill its cash flow obligations under contract in the short term,
and the borrower’s performance of its cash obligations under contract may not necessarily be
reduced even if there are unfavorable changes in the economic situation and operating environment
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in a long period of time, then the financial instrument will be deemed to have low credit risk.
Criteria for determining financial assets that have been subject to credit impairment
When one or more events that adversely affects the expected future cash flow of a financial
asset has occurred, such financial asset is considered to be an asset which has suffered credit
impairment. Evidence of credit impairment of financial assets includes the following observable
information:
1） A serious financial difficulty occurs to the issuer or debtor;
2） The debtor breaches any of the contractual stipulations, for example, fails to pay or
delays the payment of interests or the principal, etc.;
3） Due to the economic or contractual considerations related to the debtor’s financial
difficulties, the creditor gives the debtor a compromise that the debtor would not make under any
other circumstances;
4） The debtor will probably become bankrupt or carry out other financial reorganizations;
5） The issuer or the debtor’s financial difficulties result in the disappearance of the active
market for the financial asset;
6） A financial asset is purchased or originated at a heavy discount, and this discount
reflects the fact that the credit loss has occurred.
The credit impairment of a financial asset may be caused by the combined effects of several
events, and may not necessarily be caused by a separately identifiable event.
(4) Method for evaluating the expected credit risk on a portfolio basis
For financial assets which have significantly different credit risk, the Company evaluates the
credit risk on an individual basis, for example, amounts due from related parties; receivables from a
debtor with which the Company has a dispute or which involve a lawsuit or arbitration; and
receivables for which there is a clear indication that the debtor thereof is very likely to be unable to
meet its payment obligation.
In addition to financial assets with credit risk assessed individually, the Company divides
financial assets into different groups based on common risk characteristics. The common credit risk
characteristics adopted by the Company include types of financial instruments, credit risk ratings,
aging combination, etc., and it assesses credit risk on the basis of combination.
(5) Accounting treatment for the impairment of financial assets
At the end of period, the Company calculates the expected credit loss of various financial
assets, if the expected credit loss is greater than the carrying amount of the current impairment
provision, the difference between the two amounts is recognized as an impairment loss; if the
expected credit loss is smaller than the carrying amount of impairment provision, then the
difference is recognized as an impairment gain.
(6) Method for determining the credit loss of financial assets
With regard to the notes receivable, accounts receivable and financing of accounts receivable
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arising from daily business activities such as selling goods, providing labor services, etc., the
Company measures the loss provision based on the expected credit loss for the entire duration,
regardless of whether there is a significant financing component.
①Notes receivable
Based on the credit risk characteristics, the notes receivable will be classified into different
combinations.
Method for measuring of expected credit
Item Basis for grouping
loss
The Company deems that this type of funds
Bank acceptance bills The acceptor is the bank with low
has a relatively low credit risk and does not
Domestic letter of credit credit risk.
recognize the expected credit loss.
This credit risk characteristic of this The expected credit rate is recognized with
Commercial acceptance
portfolio of receivables is defined by reference to the policy of accounts
bills
account receivable aging. receivable
②Accounts receivable and contract assets
Except for other receivables for which credit risk is assessed individually, assets are classified
into different portfolios based on credit risk characteristic:
Method for measuring of expected credit
Item Basis for grouping
loss
Amounts due from This portfolio represents receivables due The Company deems that this type of funds
related parties included from related parties with relatively low has a relatively low credit risk and does not
in the scope of risk which are included within the scope recognize the expected credit loss.
consolidation of consolidation.
With reference to historical credit loss
experience and based on the current
conditions and the forecasts of future
This credit risk characteristic of this
Receivables from third economic conditions, a comparison table
portfolio of receivables is defined by
parties between the aging of accounts receivable
account receivable aging.
and the expected credit loss rate for the
entire duration are prepared and the
expected credit losses are calculated.
Comparison table showing the account age of the portfolio of accounts receivable and other
receivables based on credit risk characteristic and the full lifetime expected credit loss:
Aging Expected credit loss rate (%)
Within 6 months (including 6 months) 0.00
7-12 months (inclusive) 5.00
1-2 years (inclusive) 30.00
2-3 years (inclusive) 50.00
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Aging Expected credit loss rate (%)
Over 3 years 100.00
③Other receivables
Based on the determination as to whether the credit risk of other receivables has increased
significantly since initial recognition, the Company calculates impairment loss according to the
twelve-month expected credit loss or life-time expected credit loss. Except for other receivables for
which credit risk is assessed individually, assets are classified into different portfolios based on
credit risk characteristic:
Basis for Method for measuring of expected
Item
grouping credit loss
Related party funds within the scope of consolidation
Receivables and payables such as advances from With reference to historical credit loss
entities beyond the scope of consolidation The nature of experience and based on the current
Combination of consumption taxes and export tax other conditions and the forecasts of future
rebates receivable receivables economic conditions, the expected
Combination of tax refunds receivable and other are used as credit loss is calculated based on the
government subsidies credit risk default risk exposure and the expected
Portfolio of deposits and security characteristics credit loss rate within the next 12
Employee loan and petty cash months or for the entire duration.
Other groups
④Other financial assets With regard to financial assets other than those under the aforesaid
measurement methods, the Company measures impairment at an amount equivalent to expected
credit losses within the next 12 months or for the entire duration based on whether its credit risk has
increased significantly since initial recognition loss.
11. Accounts receivable financing
For the notes and accounts receivable that are classified as measured at fair value with changes
included in other comprehensive income, the part thereof within one year (including one year) from
the date of acquisition is presented as receivable financing; if the period from the acquisition is
more than one year, it will be presented as other debt investment. For related accounting policies,
please refer to Note IV. 9 “Financial Instruments” and Note IV. 10 “Impairment of Financial
Assets”.
12. Inventories
(1) Classification of inventories
Inventories refer to finished goods or commodities for sale held in daily activities, unfinished
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goods in manufacturing process, and materials and supplies consumed in process of manufacturing
products or providing services, etc. Including large categories such as materials in transit, raw
materials, products in progress, commodities in stock, etc.
(2) Pricing method for acquisition and distribution of inventories
Inventories are measured at their actual cost, which includes the purchase cost, processing cost
and other costs. Inventories are measured at the weighted average method upon receiving and
sending. If the daily accounting of inventories is valued at planned cost, the cost difference of
materials shall be carried over at the end of the year and the planned cost shall be adjusted to the
actual cost.
(3) Methods for recognition of net realizable value of inventories and retaining the provision
for depreciation
The net realizable value of the inventory is determined at the estimated selling price less the
estimated cost and sales cost at the time it is distributed as well as related taxes and charges. The net
realizable value of the inventory is determined on the basis of conclusive evidence obtained while
considering the purpose of keeping the inventory and effect of events after the balance sheet date.
On the balance sheet date, the inventories are measured at the lower of cost and net realisable
value. If the net realizable value is lower than the cost, then the provision for price decline is
retained for the inventory. The provision for price decline of the inventory is retained by the
difference of the cost less its net realizable value.
If the factors leading to the write-down of the price of an inventory no longer exist and the net
realizable value is higher than the book value of the inventory after the provision is retained, the
difference is reversed from the provision and recognized in current profit and loss.
(4) Inventory system of inventory
The Company adopts the perpetual inventory system.
(5) Amortization of low-value consumables and packing materials
One-time amortization method will be used for low-value consumables and packing materials
13. Contract assets
The accounting policy for contract assets is applicable to 2020 and beyond:
The Company presents the right for which the customer has not paid the contract consideration,
but the Company has fulfilled its performance obligations in accordance with the contract and it
does not constitute the right to unconditionally collect payments from the customer (i.e. only
depending on the passage of time) as contract assets in the balance sheet. Contract assets and
contract liabilities under the same contract are presented at net amount, and contract assets and
contract liabilities under different contracts are not offset.
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For the determination method and accounting treatment method of expected credit losses of
contract assets, please refer to Note IV. 10. Financial Asset Impairment.
14. Assets available for sale and disposal group
Where the Company recovers the book value of one non-current asset or disposal group mainly
through sales (including the non-monetary asset exchange with commercial substance, similarly
hereinafter) rather than sustained use, upon satisfaction of following conditions, it is categorized to
the held-for-sale category. The specific standard is that the following conditions are met
simultaneously: some non-current assets or disposal group can be sold immediately under current
conditions according to the practices of selling similar asset or disposal group in similar transactions;
the Company has made a decision on the selling plan and obtained the positive purchase
commitment. It’s predicted that the selling will be completed within a year. Disposal group refers to
a group of assets disposed together through selling or other methods in a transaction as a whole and
liabilities directly related to these assets transferred in the transaction. If the goodwill from the
business merger is apportioned to the asset group or combination of asset groups that the disposal
group belongs to according to the Accounting Standard for Business Enterprises No. 8 Impairment
of Asset, the disposal group shall include the goodwill apportioned to the disposal group.
Upon initial measurement or re-measurement upon balance sheet date of held-for-sale
non-current asset or disposal group, where the book value is higher than the net amount that the fair
value minus the selling expense, the book value is written down the net amount after the fair value
minus selling expense, the write-down amount is determined as the asset impairment loss and
included into current profits and losses, and the provisioning of held-for-sale asset impairment is
made at the same time. For the disposal group, the recognized assets depreciation loss shall be used
to firstly offset against the book value of goodwill in the disposal group and then against the book
value of each non-current asset applicable to the measurement rules in the Accounting Standard for
Business Enterprises No. 42 Non-current Assets Held for Sale, Disposal Groups, and Discontinued
Operations (hereinafter referred to as “No. 42 Standard”). If the net amount of the fair value of the
disposal group held for sale on the subsequent balance sheet date less the selling fee is increased,
the previously written-down amount shall be recovered, and reversed in the amount of recognized
assets impairment loss of the non-current assets regulated by No. 42 Standard after being classified
as those held for sale. The reversed amount shall be included in the current profit and loss, and its
book value shall be increased proportionally according to the portion of the book value of each
non-current asset in the disposal group applicable to the measurement rules of No. 42 Standard,
except goodwill. The written-down book value of goodwill and the assets impairment loss
recognized before the non-current assets is classified into those held for sale applicable to the
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measurement rules of No. 42 Standard shall not be reversed.
No depreciation or amortization is provisioned for the non-current asset in the held-for-sale
non-current asset or disposal group, and the interest of liability in held-for-sale disposal group and
other expenses shall continue recognition.
When the non-current asset or disposal group no longer meets the classification condition of
held-for-sale category and no longer continues to classify the held-for-sale category, or the
non-current asset is removed from the held-for-sale disposal group, measurement is made at
whichever is lesser: (1) for the book value prior to classification into the held-for-sale category, the
amount after adjustment of depreciation, amortization or impairment to be recognized in case of
assuming no classification into the held-for-sale category; (2) Recoverable amount.
15. Long-term equity investments
Long-term equity investments in this section refer to the long-term equity investments by the
Company in the investee with control, joint control or significant influence. Long-term equity
investments which do not enable the Company to exert control, common control or significant
influence over the investee entity are accounted for as financial assets at fair value through profit or
loss, in particular, if such long-term equity investments are not held for trading, they may be
designated by the Company on initial recognition as financial assets at fair value through other
comprehensive income, for the relevant accounting policy, refer to Note V(9) “Financial
Instruments”.
Joint control refers to the control the Company shares with other entities over a certain
arrangement following relevant agreement by which any activity under the arrangement may be
conducted only with unanimous agreement of all participants sharing the power of control.
Significant influence refers to the situation where the Company is entitled to participate in but is not
authorized to control the financial and/or business decisions, either alone or in joint efforts with
other participants.
(1) Determination of investment costs
For a long-term equity investment acquired through combination of businesses under common
control, the share of the shareholders' equity of the acquiree in the book value of the shareholders’
equity in the consolidated financial statements of the ultimate controlling party on acquisition date
shall be taken as the initial investment cost for the long-term equity investment. Capital reserve is
adjusted based on the difference between the initial cost for the long-term equity investment and the
book values of cash paid, non-cash asset transferred and debt assumed, and if the capital reserve is
insufficient to offset such difference, the difference will be offset against retained earnings. If the
consideration is paid in the form of equity securities, the share of the shareholders’ equity of the
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acquiree in the book value of the owners’ equity in the consolidated financial statements of the
ultimate controlling party on acquisition date is taken as the initial investment cost for the long-term
equity investment on the date of combination. The face value of the shares issued is taken as the
equity, and the capital reserve is adjusted by the difference between the initial investment cost for
the long-term equity investment and the total face value of the shares issued; and if the capital
reserve is insufficient to offset such difference, the difference will be offset against retained
earnings. If the combination of businesses under common control is realized through a series of
transactions in acquiring the equity of the acquiree, the transactions are determined whether to be a
package deal and treated in either of the following manners: If the whole series of transactions are
determined to constitute a package deal, then they are treated as one transaction realizing the
acquisition of the control. If not, the share of the shareholders’ equity of the acquiree in the book
value of the owners’ equity in the consolidated financial statements of the ultimate controlling party
on acquisition date is taken as the initial investment cost for the long-term equity investment on the
date of combination. Capital reserve is adjusted based on the difference between the initial
investment cost for the long-term equity investment and the book value of the long-term equity
investment before the combination plus the total book value of newly paid consideration for
acquiring shares on acquisition date; and if the capital reserve is insufficient to offset such
difference, the difference will be offset against retained earnings. The other comprehensive income
accounted for the adoption of equity method for the equity investment held or recognized for
financial assets available for sale before acquisition date is not accounted for upon the acquisition.
For a long-term equity investment acquired through combination of businesses not under
common control, the cost for the combination, which is fair value of the total of the assets paid,
liabilities incurred or assumed and the equity securities issued by the acquiring party, is taken as the
initial investment cost for the long-term equity investment on acquisition date. If the combination of
businesses not under common control is realized through a series of transactions in acquiring the
equity of the acquiree, the transactions are determined whether to be a package deal and treated in
either of the following manners: If the whole series of transactions are determined to constitute a
package deal, then they are treated as one transaction realizing the acquisition of the control. If not,
the aggregate of the book value of the equity investment in the acquiree held by the Company and
the increase in the investment cost is taken as the initial cost for the long-term equity investment
remeasured using the cost method. If the originally held equity is measured by the equity method,
the relevant other comprehensive income is not accounted. In case of an equity investment
originally held as a financial asset available-for-sale, the difference between its fair value and its
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book value as well as the cumulative change in the fair value originally recorded in other
comprehensive income is transferred to current profit and loss.
Intermediary costs incurred by the acquirer in the course of combination for audit, legal and
valuation services and other administrative services are recorded in current profit and loss.
Equity investments, except long-term equity investments derived from business combination,
are initially measured at the cost. The cost are determined, depending on the means of acquisition,
at the purchase price actually paid in cash, the fair value of the equity securities issued by the
Company, the value determined in the investment contract or agreement, the fair value of the
original book value of the asset traded off by means of exchange trade of non-monetary asset or the
fair value of long-term equity investment itself. Charges, taxes and other necessary expenses related
to the acquisition of long-term equity investments are recognized in Investment Costs. In case of a
long-term equity investment made in addition to other investment, if the investment results in the
Company's ability to exercise significant influence over the investee but does not constitute the
control over the same, the cost is the aggregate of the fair value of the equity investment originally
held, as determined following the Accounting Standards for Enterprises No. 22 - Recognition and
Measurement of Financial Instruments and the newly increased cost.
(2) Methods for subsequent measure and recognition of profit and loss
If the entity in which the Company invests exercises joint control (except those constitute a
joint operation) or significant influence over the long-term equity investments, equity method is
adopted for such long-term equity investments. Also, a long-term equity investment that grants
control over the investee is accounted for in the financial statements of the Company using the cost
method.
① Long-term equity investments accounted for using the cost method
Under the cost method, a long-term equity investment is measured at the initial investment cost,
which is adjusted by the increased or recovered investment. Except the price actually paid upon
acquisition of an investment or the cash dividend or profit that has been declared but not granted
and included in the consideration for the acquisition, cash dividend or profit in the investee
attributable to the Company shall be recognized as income from investments.
② Long-term equity investments accounted for using the equity method
If the long-term equity investment is accounted using the equity method and the initial cost for
the investment is greater than the share of the total fair value of the identifiable assets of the
investee, the initial cost for the investment is not adjusted; if the former is less than the latter, the
difference is recognized in current profit and loss and the cost for the long-term equity investment is
adjusted accordingly.
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When accounted for using the equity method, the share in the net gains or losses that have been
realized by the investee and which the Company is entitled to receive or obliged to assume and the
share in other comprehensive income are recognized in income from investments and other
comprehensive income, respectively, and the book value of the long-term equity investment is
adjusted accordingly; the book value of the long-term investment is adjusted according to the
portion of the profit or cash dividend declared and distributed by the investee; In case of any change
in the owners’ equity in the invested equity, except the net gains or losses, other comprehensive
income and profit distribution, the book value of the long-term equity investment is adjusted and the
balance is recognized in the capital surplus. The share in the net gains or losses of the investee is
recognized after adjustment is made on the basis of the fair values of all identifiable assets of the
investee upon the investment is realized. If the accounting policies and accounting periods adopted
by the investee are inconsistent with those adopted by the Company, the financial statements of the
investee are adjusted in accordance with the accounting policies and accounting period of the
Company and the investment income and other comprehensive income from the investee is
recognized according to the adjustment. In case of a transaction between the Company and its
associate or joint venture, where the investment or sale does not constitute a business transaction,
the unrealized gains or losses within the scope of the Company are calculated and offset according
to the share attributable to the Company, with the balance recognized as gains or losses from
investment, Provided that losses arising from unrealized transactions with the investee within the
Company, if being impairment loss of the asset to be transferred, may not be offset. In case of an
investment of an asset in a joint venture or an associated enterprise that constitutes a business
transaction and a long-term equity investment without realizing the control over the investee, the
fair value of the asset is taken to be the initial investment cost for the long-term equity investment
and the whole difference between the initial investment cost and the book value of the asset is
recognized in current profit and loss. In case of an investment of an asset sold to a joint venture or
an associated enterprise that constitutes a business transaction, the whole difference between the
consideration acquired and the book value of the asset is recognized in current profit and loss. An
asset acquired from a joint venture or an associate, if constitutes a business transaction, is treated
following Accounting Standards for Enterprises No. 20 - Business Combinations and wholly
recognized as gains or losses related to the transaction.
Net loss from an investment in an investee is written down against the total of the book value
of the long-term equity investment and the long-term equity from other actual net investment in the
investee, but only to that extent. In addition, if the Company assumes liability for any extra loss of
the investee, the obligation is recognized as an estimated liability in Losses from Investment of the
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period. If the investee realizes net profit subsequently, the share in the profit payable to the
Company is recognized as a share of income after the unrecognized loss arising from the
investment.
For the long-term equity investments to joint ventures and associates already held before the
first implementation of the new accounting standards, if there is the debit balance of equity
investments related to the investments, the amount amortized using the straight-line method over
the remaining period shall be included in the current profit and loss.
③. Acquisition of minority equity
When preparing the Consolidated Financial Statements, the difference between the newly
increased long-term equity investment due to the acquisition of minority equity and the share in the
net asset of the subsidiary attributable to the Company calculated at the newly increased
shareholding ratio on acquisition date or (the Consolidation Date) is recognized as an adjustment to
the capital surplus and, and if the capital reserve is insufficient to offset such difference, the
difference will be offset against retained earnings.
④ Disposal of long-term equity investments
If the Parent Company disposes of part of its long-term equity investment in a subsidiary
without losing the control over the latter, the difference between the price of the disposal and the
share in the net asset of the subsidiary corresponding to the long-term equity investment disposed of
is recognized in Shareholders' Equity in the Consolidated Financial Statements; if the Parent
Company disposes of part of its long-term equity investment in a subsidiary resulting in the loss of
control over the latter, the disposal price is treated following accounting policies described in Note
IV - 5(2) “Methods for Preparing Consolidated Financial Statements.”
In case of a long-term equity investment disposed of in other circumstances, the difference
between the book value and the price actually acquired is recognized in current profit and loss.
In case of a long-term equity investment accounted for using the equity method, if the
remaining equity after disposal continues to be accounted for using the equity method, the
corresponding share in the other comprehensive income originally recognized in Shareholders'
Equity is treated on the same basis on which the investee directly disposes of the relevant asset or
liability. All other shareholders' equity of the investee recognized because of changes in the
shareholders' equity, other than those in the net gains or losses, other comprehensive income and
profit distribution are carried over to current profit and loss in proportion.
Long-term equity investments accounted for using the cost method, if the remaining equity
after disposal continues to be accounted for using the cost method, the other comprehensive income
originally accounted for using the equity method or the standards for recognition and measurement
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of financial instruments before the acquisition of the control over the investee is treated on the same
basis on which the investee directly disposes of the relevant asset or liability and is carried forward
in proportion; all other shareholders’ equity in the net asset of the investee, as accounted for and
recognized using the equity method, except net gains or losses, other comprehensive income and
profit distributions, are carried forward in proportion.
If the Company loses the control over the investee due to disposal of part of its equity
investment but the remaining equity constitutes joint control or significant influence over the
investee, the remaining equity is re-accounted for using the equity method and adjustment is made,
as if the remaining equity were accounted for using the equity method since the acquisition; the
remaining equity, if it does not constitute joint control or significant influence over the investee, is
re-accounted for following the standards for recognition and measurement of financial instruments
and the difference between the fair value on the date the control is lost and the book value of the
equity is recognized in current profit and loss. When the control over the investee is lost, the other
comprehensive income accounted for using the equity method or following the standards for the
recognition and measurement of financial instruments before the acquisition of the control over the
investee is treated on the same basis on which the investee directly disposes of the relevant asset or
liability. All changes in other shareholders’ equity in the net asset of the investee, as accounted for
and recognized using the equity method, except net gains or losses, other comprehensive income
and profit distributions, are carried forward in proportion upon the loss of control. If the remaining
equity is accounted for using the equity method, the other comprehensive income and other
shareholders' equity are carried forward in proportion; if the remaining equity is accounted for
following the standards for recognition and measurement of the financial instruments, the other
comprehensive income and other shareholders' equity are fully carried forward.
If the Company loses the joint control or significant influence over the investee due to partial
disposal of equity investments, the remaining equity is re-accounted for following the standards for
recognition and measurement of financial instruments and the difference between the fair value on
the date the control or significant effect is lost and the book value of the remaining equity is
recognized in current profit and loss. When the control of the investee is terminated, the other
comprehensive income from the original equity investment, as accounted for the adoption of equity
method or following the standards for the recognition and measurement of financial instruments is
treated on the same basis on which the investee directly disposes of the relevant asset or liability; all
changes in other shareholders’ equity in the net asset of the investee, as accounted for and
recognized because of the adoption of the equity method, except net gains or losses, other
comprehensive income and profit distributions, are carried forward in proportion upon the loss of
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control.
If the Company disposes of equity investment in a subsidiary through a series of transactions
that lead to the loss of control and the transactions are determined to constitute a package deal, each
of them is treated as a transaction of disposing of equity investment in a subsidiary that leads to the
loss of control. However, the difference between the disposal price in each of the transactions and
the book value of the corresponding long-term equity investment in subsidiary is recognized in the
other comprehensive income in the Consolidated Financial Statements and transferred to current
profit and loss in which the control is lost.
16. Investment real estates
Investment real estate refers to real estate held for lease or capital increase or for both purposes.
including land use rights leased or held for sale after appreciation and leased buildings.
Investment properties are initially measured at cost. Subsequent expenditures relating to
investment properties, if the asset's economic benefits are likely to flow in and its cost can be
reliably measured, are recognized in cost for investment properties. Other subsequent expenditures
are recognized in current profit and loss.
The Company uses the cost method for subsequent measurement of investment properties and
calculates the depreciation or amortization using the same following policies in line with the
housing buildings and related land use rights.
Refer to Note IV - 22 “Impairment of Long-term Assets” for methods for depreciation test and
impairment provision retention for investment properties.
If owner-occupied properties or inventories are converted into investment properties or
investment properties converted into owner-occupied properties, the book value before the
conversion is taken as the entry value after the conversion.
When an investment real estate is changed for self-use, as from the date of such change, this
investment real estate shall be converted into fixed asset or intangible asset. When the use of
self-used real estate is changed to earn rent or capital appreciation, fixed assets or intangible assets
shall be converted into investment real estate from the date of change. In case of a conversion, if it
is converted into an investment real estate measured by cost model, the book value before the
conversion shall be the entry value after the conversion.
When an investment real estate is disposed of or withdraws permanently from use and no
economic benefit will be obtained from the disposal, the recognition of it as an investment real
estate shall be terminated. Income from disposal of an investment property by means of sale,
transfer, etc., less its book value and related taxes, is accounted for in current profit and loss.
17. Fixed assets
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(1) Conditions for recognition of fixed assets
The fixed assets of the Company refer to tangible assets held for production of goods,
provision of labor services, lease or business with a service life of over a fiscal year. A fixed asset is
recognized only when the related economic benefit is likely to flow in and the cost can be reliably
measured. A fixed asset is initially measured at cost and the estimated abandonment cost.
(2) Method for depreciating fixed assets
Provision for depreciation of a fixed asset is retained using the straight-line method from the
month after the fixed asset reaches the expected serviceable condition. Estimated service life,
estimated residual values and annual depreciation rates of different types of fixed assets are as
follows:
Annual depreciation
Category Depreciable life (year) Residual ratio (%)
rate (%)
5.00 4.75, 4.50
20 years, 30 years, 50
Houses & buildings 3.17, 3.00
years
10.00 1.90, 1.80
5.00 9.50, 4.75
Structures 10 and 20 years
10.00 9.00, 4.50
5.00
Machinery equipment 5-30 years 3.00-19.00
10.00
19.00,1 8.00
5 years, 6 years, 10 5.00
Transportation equipment 15.83, 15.00
years 10.00
9.50, 4.75
Office facilities & others 5 years 5.00, 10.00 19.00,18.00
Estimated net residual value refers to the value the Company is expected to acquire by
disposing of the fixed asset in its status upon the expiry of its using life.
(3) Method for impairment test of fixed assets and impairment provision retention
Refer to Note IV - 22 “Impairment of Long-term Assets” for methods for depreciation test and
impairment provision retention for fixed assets.
(4) The basis for recognizing and measuring fixed assets acquired under finance leases
Finance lease refers to the lease by which all risks and benefits from the control of an asset are
transferred while the ultimate ownership may or may not be transferred. Depreciation provision for
fixed assets leased by means of finance lease is retained following the same policy for the retention
of depreciation provision for own fixed assets. If it is reasonably expected that the Company will
acquire the title to the leased asset upon the expiry of the lease, the depreciation provision is
retained over the serviceable life of the leased asset; if it is not reasonably expected that the
Company will acquire the title to leased asset upon the expiry of the lease, the depreciation
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provision is retained over the shorter of the lease and serviceable life of the leased asset.
(5) Other Explanations
Subsequent expenditures relating to fixed assets, if the asset's economic benefits are likely to
flow in and its cost can be reliably measured, are recognized in cost for fixed assets and the book
value of the substituted part is derecognized. Other subsequent expenditures are recognized in
current profit and loss in which they are incurred.
Fixed assets are derecognized if they are disposed of or no economic gain can be realized
through use or disposal of the same. Income from disposal of fixed assets by means of sale, transfer,
etc., is accounted as current profit and loss less the book value and relevant taxes and charges.
The Company reviews the serviceable life, expected residual value and the method of
depreciation at the latest at the end of the accounting year. If any change is found in the original
estimates, adjustment is made to the relevant accounting estimate.
18. Construction in progress
The cost for construction-in-progress is recorded at the actual costs, including various
expenditures on the construction, the borrowing costs for the capitalization before the construction
reaches its serviceable status and other related expenses. A construction-in-progress is re-accounted
for as a fixed asset upon reaching its serviceable status.
Refer to Note IV - 22 “Impairment of Long-term Assets” for methods for depreciation test
and impairment provision retention for constructions-in-progress.
19. Borrowing costs
Borrowing costs of the Company include the interest accrued on loans, the amortization of
discount or premium and auxiliary expenses as well as the translation differences incurred by loans
in foreign currencies. Borrowing costs related to the purchase, construction or production of assets
that meet the conditions for capitalization are capitalized when the asset expenditure has been made,
the borrowing costs have been incurred and the purchase, construction or production activities
necessary to work the asset into its serviceable or marketable status have begun; the capitalization
ceases when the asset that meets the conditions for capitalization under construction or production
reaches its expected serviceable or marketable status. Other borrowing costs are recognized as
expenses in the period they are incurred.
The interest expenses incurred in the period for special loans less the interest income from the
loan fund deposited in a bank or income from temporary investments made out of the loans are
capitalized; general loans are capitalized on the basis of result of the accumulated capital
expenditures excessive of weighted average of the capital expenditures of the special loan
multiplied by the capitalization ratio of the general loans. The capitalization rate is determined on
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the basis of the weighted average interest rate of general borrowings.
During the capitalization, the difference arising from special loans in foreign currencies is fully
capitalized while that arising from general loans in foreign currencies is recognized in current profit
and loss.
Assets qualified for capitalization refer to fixed assets, investment real properties and
inventories that take a reasonable period of purchase, construction or production to be developed
into the ready-for-sale or ready-for-use status.
If the purchase, construction or production of the asset qualified for capitalization is suspended
for over 3 months, the capitalization of the borrowing cost is suspended until the resumption of
purchase, construction or production.
20. Intangible assets
(1) Intangible assets
Intangible asset refers to invisible recognizable non-currency assets owned or controlled by the
Company.
Intangible assets are initially measured at cost. Expenses related to intangible assets are
recognized in cost for intangible assets when related economic gains are likely to flow in and the
cost can be reliably measured. Other subsequent expenditures are recognized in current profit and
loss in which they are incurred.
Land use rights acquired are usually accounted for as intangible assets. Expenditures on the
land use right and the cost for the construction of self-developed plants and other buildings are
accounted for as intangible assets and fixed assets. In case of houses and buildings purchased, the
purchase price is allocated onto the land use right and the buildings and treated accordingly; if the
allocation cannot be done reasonably, the whole price is treated as fixed assets.
In case of an intangible asset of limited serviceable life, the original value, net of expected
residual value and the accumulated depreciation provision retained, is amortized over the expected
serviceable life using the straight-line method. Intangible assets with uncertain service life are not
amortized.
The service life and the amortization method adopted for intangible assets of a limited
serviceable life is reviewed at the year end, and if any change has occurred, adjustments are made
accordingly to the accounting estimates. The serviceable life of each intangible asset with uncertain
serviceable life is reviewed at the end of year. If there is evidence that the period in which the
intangible asset can bring in economic benefit can be predicted, the serviceable life is estimated and
the intangible asset is amortized following the policy for amortization of intangible assets with
limited serviceable life.
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(2) R&D expenses
Internal R&D expenses of the Company include expenses on the research stage and those on
the development stage.
Expenses incurred on the research stage are recognized in current profit and loss.
Expenses incurred on the development stage, if satisfying all of the following conditions, are
recognized as an intangible asset, otherwise, in current profit and loss.
① The expenses contribute to the completion of intangible asset so that it can be technically
usable or salable;
② Having the intention to complete the intangible asset and use or sell it;
③ The intangible asset is able to generate economic benefits, with evidence that there is a
market for the intangible asset or products produced using the intangible asset, or that the intangible
asset is useful if it is intended to be internally used;
④ Having sufficient technical, financial and other resources to support the development of the
intangible asset and having the ability to use or sell the intangible asset;
⑤The expenditure attributable to the development stage of the intangible asset can be reliably
measured.
Expenses on the research stage and the development stage, if not able to be distinguished, are
both recognized in current profit and loss.
(3) Impairment test of intangible assets and methods for withholding the impairment provision
Refer to Note IV - 22 “Impairment of Long-term Assets” for methods for depreciation test and
impairment provision retention for intangible assets.
21. Long-term deferred expenses
Long-term deferred expenses refer to expenses that have been incurred and should be
amortized over a period of longer than one year, including the current period and periods yet to
come. Long-term deferred expenses are recorded at actual expense and amortized using the
straight-line method over estimated period of benefit.
22. Impairment of long-term assets
The Company determines on the balance sheet date whether there are signs that impairment
has occurred to fixed assets, constructions-in-progress, intangible assets with limited serviceable
life, investment properties measured at cost and non-current non-financial assets including
long-term equity investments in its subsidiaries, joint ventures and associates. If there are signs of
impairments, the recoverable amount is estimated and an impairment test is done. Goodwill,
intangible assets with uncertain serviceable life and intangible assets that have not reached the
serviceable status are subject to impairment tests every year regardless of whether there are signs of
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impairments.
When impairment test indicates that the asset’s recoverable amount is below its book value,
impairment provision shall be made as per the difference and recorded into impairment loss. The
recoverable amount shall be the higher of the fair value minus disposal expenses and the present
value of expected future cash flows of the asset. The fair value of an asset is determined based on
contract price of fair trade; if there is no sales agreement but there is an active market, the bid price
the buyer offers for the asset is taken to be the fair value; if there is no sales agreement or active
market, the fair value of the asset is estimated on the basis of the best information available. Costs
of disposal include legal costs, taxes and fees related to the disposal of assets as well as the handling
fees and other expenses incurred in bringing the asset to the salable status. The present value of the
expected future cash flow from an asset is determined by discounting the expected future cash flow
from the asset while it is used on an on-going basis and the at the final disposal at a suitable
discount rate. Where there is any evidence indicating a possible impairment of assets, the enterprise
shall, on the basis of single item assets, estimate the recoverable amount. Where it is difficult to do
so, it shall determine the recoverable amount of the group assets on the basis of the asset group to
which the asset belongs. Asset group refers to a minimum combination of assets that can generate
cash inflows independently.
When conducting impairment loss of goodwill separately listed in the financial statements, the
book value of the goodwill is allocated to the asset group or combination of asset groups that
benefit from the synergies of the business combination. The corresponding impairment loss shall be
recognized when impairment test indicates that the recoverable amount of the asset group or
combination of asset groups to which goodwill is apportioned is lower than its book value. The
amount of the impairment loss shall first charge against the book value of goodwill apportioned to
the asset groups or combination of asset groups, then charge against the book value of other assets
in proportion to the weight of other assets in the asset groups or combination of asset groups with
goodwill excluded.
Once recognized, the aforesaid impairment loss subsequently shall not reverse the recovered
part.
23. Contract liabilities
The accounting policy for contract liabilities is applicable to 2020 and beyond:
Contract liabilities mean the obligation for which the Company shall transfer goods to
customers for the consideration received or receivable from customers. If the customer has already
paid the contract consideration or the Company has obtained the unconditional right to receive
payment before the Company transfers the goods to the customer, the Company shall present the
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received amounts or receivables as contract liabilities at the earlier of the time when the actual
payment is received by the Company from the customer and the due date of payment. Contract
assets and contract liabilities under the same contract are presented at net amount. If the net amount
is the debit balance, the contract asset and contract liability should be presented in the item of
"contract assets" or "other non-current assets" according to its liquidity; if the net amount is the
credit balance, the contract asset and contract liability should be presented in the item of “contract
liabilities” or “other non-current liabilities” according to n its liquidity. Contract assets and contract
liabilities under different contracts are not offset.
24. Staff remuneration
Employee benefits mainly include short-term employee remunerations, post-employment
benefits, termination benefits and other long-term employee benefits. Of which:
The short-term remunerations include salaries, bonuses, allowance and subsidies, welfare,
medical insurance premium, maternity insurance premium, industrial injury insurance premium,
housing fund contributions, labor union fund contribution, employee education fund contributions
and non-monetary benefits. The Company treats short-term employee remunerations actually
incurred during the accounting period in which employees provide services for the Company as
liabilities and recognizes the same in current profit and loss or relevant cost for assets of the period.
Non-monetary benefits are measured at fair value.
Post-employment benefits mainly include basic pension insurance, unemployment insurance
and annuities. Post-employment benefit plans include defined contribution plans. If a defined
contribution plan is in place, the corresponding amounts payable is included in relevant costs for
assets or current profit and loss in which they are incurred.
If the labor relationship with employees terminates before the employment contracts expire or
if the Company offers compensation with the view of encouraging employees to voluntarily accept
redundancy, payroll liabilities arising from the termination benefits are recognized in current profit
and loss on the earlier of the date on which it is determined that the Company may not withdraw the
termination benefits offered through labor relationship plans or redundancy proposals and the date
on which the Company recognizes the cost for the restructure involving the payment of termination
benefits. However, if the dismission welfare can not be completely paid within 12 months after the
termination of the annual report period, it shall be dealt with according to the remuneration of other
long-term employee.
Internal retirement plans are treated following the same principles related to the termination
benefits as described above. The Company recognizes in current profit and loss (termination
benefits) of the salaries, social insurance premiums, etc. that are to be paid between the date the
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employees stops to provide services for the Company and the date of normal retirement, if
satisfying the conditions for the recognition of estimated liabilities.
Other long-term employee benefits offered to employees, if eligible for the defined
contribution plan, are accounted for following such plan, or, if not eligible, following defined
benefit plan.
25. Estimated liabilities
A liability related to contingencies, if meeting the following conditions, is recognized as
estimated liabilities: (1) the liability is a current liability the Company assumes; (2) the performance
of the liability is likely to result in outflow of economic benefits; and (3) the amount of the liability
can be reliably measured.
On the balance sheet date, estimated liabilities are measured at the best estimate of the amount
to be expensed in performing related liabilities, while considering the risks, uncertainties and the
time value of money related to the contingencies.
If the expense for liquidating an estimated liability is wholly or partially compensated by a
third party, the compensation amount is recognized as a separate asset when it is basically certain to
be received, provided that the recognized compensation amount may not exceed the book value of
the estimated liability.
(1) Onerous contracts
Onerous contracts are contracts where the costs involved with fulfilling the terms and
conditions of the contract are inevitably higher than the amount of economic benefit received. If an
executory contract becomes an onerous contract and the liabilities thereunder satisfy the foregoing
conditions for the recognition of estimated liabilities, the expected loss from the performance of the
contract less the recognized impairment loss from the asset subject to the contract (if any) is
recognized as an estimated liability.
(2) Liabilities for restructure
In case of a detailed formal restructure plan that has been publicly announced, an estimated
liability based on the direct expense related to restructure is recognized if the same meet the
foregoing conditions for recognition of estimated liabilities.
26. Share-based payments
(1) Method for accounting for share-based payments
The share-based payment refers to the transaction by which the Company grants equity
instruments or assumes a liability based on equity instruments for the services an employee or
another party renders to the Company. Share-based payments include those settled in equity shares
or in cash.
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① Share-based payment settled in equity shares
Share-based payments designed to pay the employee equity shares in exchange for the services
he/she renders are measured at fair value of the equity instruments on the Grant Date. If the right to
the fair value are exercisable only if the employee completes the services in the specified waiting
period or attained the specified performance results, such rights are recognized in relevant cost or
expenses using the straight-line method during the waiting period; or if the right can be exercised
upon grant, such rights are recognized in relevant cost or expenses on the date of grant; in both
cases, the capital reserve is increased accordingly.
The Company makes its best estimates on the basis of the change in the number of employees
who have newly acquired the exercisable rights and other subsequent information and revise the
recorded the quantities of instruments expected to be exercisable. Those effects of the foregoing
estimates are recognized in impact of relevant costs or expenses of the period and the capital reserve
is adjusted accordingly.
A share-based payment settled with equity in exchange for another party's service, if the fair
value of the other party's service can be reliably measured, is measured at the fair value of such
service on the date such service is provided, or, if such fair value cannot be reliably measured but
the fair value of the equity instrument can be reliably measured, is measured at the fair value of the
equity instrument on the date such service is provided; the amount is recognized in relevant cost or
expenses and the shareholders' equity is increased accordingly.
② Share-based payment settled in cash
A share-based payment settled in cash is measured at the fair value of the liability assumed by
the Company, which is determined on the basis of shares and other equity instruments. If the rights
granted for such share-based payment settled in cash are immediately exercisable, the payment is
recognized in relevant costs and expenses and the liability is increased accordingly. If rights granted
to such share-based payment settled in cash are exercisable only if the employee completes the
services in the specified waiting period or attained the specified performance results, on each
balance sheet date during the waiting period, the liabilities of the Company are be increased at the
fair value of the liabilities to be assumed by the Company on the basis of the best estimate of the
quantities of exercisable equity instruments, with the services received in the current period
included in relevant costs or expenses.
The fair value of the liability is re-measured on each Balance Sheet Date and each settling date
prior to the settlement of the liability with the change included in current profit and loss.
(2) Accounting process in case of revision or termination of a share-based payment plan
If the modification of the share-based payment plan increases the fair value of the equity
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instruments granted, the increase in the services received shall be recognized according to the
increase in the fair value of the equity instruments. Increase in the fair value of an equity instrument
refers to the difference between the fair values of the equity instrument before and after the date of
revision. If the Company revises the terms and conditions by means of decreasing the total fair
value of the share-based payments or other means against the interest of employees, the Company
continues to account for the services received as if such modification had not been done, unless the
Company cancel all or part of the equity instruments granted.
If equity instruments granted are canceled during the vesting period, the exercise of the rights
granted on the equity instruments shall be accelerated and the amount to be recognized during the
remaining vesting period shall be forthwith included in current profit and loss and the Capital
Reserve shall be simultaneously recognized. If an employee or another party can choose to satisfy
non-exercise conditions but the vesting period has not yet expired, the circumstance may be
addressed as if the granted equity instruments were canceled.
(3) Accounting process for share-based payment transactions involving the Company or a
shareholder or the actual controller of the Company
In case of a share-based payment transaction involving the Company or a shareholder or the
actual controller of the Company, if one of the settling party and the serviced party is within the
scope of the Company and the other outside the scope, such payment is treated in accordance with
the following procedures:
① If the settling entity settles the payment with its own equity instruments, the share-based
payment transaction is treated as one settled in equity; in other cases, the share-based payment
transaction is treated as one settled in cash.
If the settling entity invests in the serviced entity, the share-based payment is treated as a
long-term equity investment at the fair value of the equity instrument or the liability to be assumed
on the grant date, and Capital Reserves (Other Capital Reserves) or liability is recognized
accordingly.
② If the serviced entity has no obligation to settle the payment or if it grants its own equity
instruments to its employees, the share-based payment transaction is treated as share-based payment
in equity; If the serviced entity has an obligation to settle the payment or if it grants equity
instruments of another entity to its employees, the share-based payment transaction is treated as
share-based payment in cash.
In case of a share-based payment transaction, if the settling entity and the serviced entity are
not the same entity, the transaction is recognized and measured following the foregoing principle in
individual financial statements of both entities.
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27. Revenue
(1) The following accounting policies for revenue are applicable to 2020 and beyond:
1) Principles of revenue recognition
On the commencement date of the contract, the Company evaluates the contract, identifies
each individual performance obligation contained in the contract, and determines whether each
individual performance obligation is performed within a certain period of time or at a certain time
point.
When one of the following conditions is met, it shall be the fulfillment of contract performance
obligation within a certain period of time, otherwise it shall be the fulfillment of contract
performance at a certain time point: ①The customer obtains and consumes the economic benefits
brought by the Company’s contract performance at the same time as the Company performs the
contract; ② The customer can control the goods or services under production during the
performance of the Company; ③The goods or services produced during the contract performance
of the Company have irreplaceable uses, and the Company has the right to collect payments for the
accumulative performance part that has been completed during the entire contract term.
For the contract performance obligations fulfilled within a certain period of time, the Company
recognizes revenue according to the performance progress during that period of time. When the
contract performance progress cannot be reasonably determined, if the cost incurred is expected to
be compensated, the revenue shall be recognized according to the amount of cost incurred until the
performance progress can be reasonably determined. For the contract performance obligations
fulfilled at a certain time point, revenue is recognized at the time point when the customer obtains
the control over the relevant goods or services. When determine whether the customer has obtained
the control of goods, the Company considers the following signs: ①The Company has the current
right to receive payment for the goods, i.e. the customer has the current obligation to pay for the
goods; ②The Company has transferred the legal ownership of the goods to the customer, i.e. the
customer has owned the legal ownership of the goods; ③The Company has transferred the goods
to the customer physically, i.e. the customer has physically taken possession of the goods; ④The
Company has transferred the main risks and rewards on the ownership of the goods to the customer,
i.e. the customer has obtained the main risks and rewards on the ownership of the goods; ⑤The
customer has accepted the goods; ⑥Other signs showing that the customer has obtained control
over the goods.
2) Principles of income measurement
① The Company measures revenue based on the transaction price allocated to each individual
performance obligation. The transaction price is the amount of consideration that the Company
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expects to have the right to receive due to the transfer of goods or services to the customer,
excluding the amounts collected on behalf of a third party and the amounts expected to be returned
to the customer.
② If there is variable consideration in the contract, the Company will determine the best
estimate of the variable consideration according to the expected value or the most likely amount,
but the transaction price including the variable consideration shall not exceed the amount of the
accumulated recognized income that is likely to have no major reversal when the relevant
uncertainty is eliminated.
③If there is a significant financing component in the contract, the Company will determine the
transaction price based on the amount payable that is assumed to be paid in cash when the customer
obtains the control over the goods or services. The difference between the transaction price and the
contract consideration is amortized by the effective interest method during the contract term. On the
commencement date of the contract, the Company expects that the interval between the customer’s
acquisition of control of the goods or services and the customer’s payment of price will not exceed
one year, regardless of the significant financing components in the contract.
④ If the contract contains two or more performance obligations, the Company will allocate
the transaction price to each individual performance obligation in accordance with the relative
proportion of the separate selling price of the goods promised under each individual performance
obligation on the contract commencement date.
3) Specific method of revenue recognition
The Company mainly sells refined oil products, chemical products, PTA, polyester chips,
polyester yarns, etc., and the sales shall be the fulfillment of contract performance obligation at a
certain time point. Based on the characteristics of actual production and operation, the following
conditions shall be met for the Company’s recognition of the income from domestic sales: the
Company has delivered the products to the purchaser in accordance with the contract provisions,
and the amount of product sales income has been determined, the payment has been recovered or
the receipt voucher has been obtained and the related economic benefits are likely to flow in, the
control of product has been transferred to the purchaser, and the costs of product can be reliably
measured. For exported goods, the income is recognized when the goods are declared for export.
For the sales of trade goods, the income is recognized when the Company has delivered the goods
property in goods to the purchaser in accordance with the contract provisions. For the goods in the
Company’s overseas subsidiary international trade business, the income is recognized according to
the time point for the transfer of goods risk as set out in the contract.
(2) The following accounting policies for income are applicable to 2019:
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1) Income from sales of goods
Income from sales of goods is recognized as realized when major risks related to and returns
from the title of the goods are transferred to the buyer, the Company no longer holds the actual
rights to manage and control over the same or exercise actual control of the same, the amount of
income can be reliably measured, the economic benefits from the transaction are likely to be
transferred to the Company and the income from and cost for the sales of the same can be reliably
measured. Based on the characteristics of actual production and operation, the Company recognizes
income from products sold domestically when the goods are delivered. or exported goods, the
income is recognized when the goods are declared for export. For the sales of trade goods, the
income is recognized when the Company has delivered the goods property in goods to the purchaser
in accordance with the contract provisions. For the goods in the Company’s overseas subsidiary
international trade business, the income is recognized according to the time point for the transfer of
goods risk as set out in the contract.
2) Income from labor provided
Income from labor services is recognized at the end of the balance sheet date by the percentage
of the service completed if the result of the labor service transaction can be reliably measured. The
percentage of the service completed is determined at the ratio of the labor costs that have been
incurred over the estimated total cost.
The statement that “the result of the labor service provided can be reliably estimated” means:
① the amount of the income can be reliably measured; ② relevant economic benefit is likely to
flow in; ③ the completion and progress of the construction can be reliably established and ④ the
costs that incurred or to be incurred can be reliably measured.
If the result of the labor transaction cannot be reliably estimated, then the income from the
labor service provided at the cost for labor services that have been incurred and can be compensated
for and the labor cost that has been incurred is recognized as expenses of the period. If the labor
cost that has been incurred is estimated as not being able to be compensated for, no income is
recognized.
If a contract or agreement contains provisions on sales of goods and provision of labor and the
two parts can be identified and separately measured, the two parts are treated separately; if the two
parts cannot be identified, or if they can be identified but cannot be separately measured, both parts
shall be treated as sales of goods.
3) Income from utilization fees
Income as utilization fees is recognized as income using the accrual basis following relevant
contracts or agreements.
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4) Interest income
Interest income is determined by the time span others use the monetary funds of the Company
and the effective interest rate.
28. Contract cost
The accounting policies for contract cost are applicable to 2020 and beyond:
If the incremental cost incurred by the Group for obtaining the contract is expected to be
recovered, it will be recognized as an asset as the cost of obtaining the contract.
If the cost incurred for the performance of contract does not fall within the scope of the
Accounting Standards for Business Enterprises No. 14-Revenue (Revision 2017) and the following
conditions are met at the same time, it shall be recognized as an asset as contract performance cost:
①The cost is directly related to a current or expected contract, including expenses of direct labor,
direct materials, manufacturing (or similar expenses), costs clearly borne by the customer, and other
costs incurred only due to the contract; ②The cost has increased the Group’s resources used for
fulfilling the contract performance obligation in the future; ③The cost is expected to be recovered.
Assets related to contract costs are amortized on the same basis as the recognition of income
from goods related to the asset and included in the current profit and loss.
29. Government grants
Government grant refers to monetary or non-monetary assets the Company receives from the
government for free, but excludes funds invested in the Company by the government, which enjoys
the owners’ equity in the same as a fund owner. Government grants are divided into asset-related
government grants and income-related government grants . The Company defines government grant
received and used for purchase or construction or formation of long-term assets as asset-related
government grant and other government grant is defined as income-related government grant. If the
target of a government grant is not specified in relevant government documents, the subsidy is
divided into income- and asset-related subsidy in the following manners: (1) if the project is defined
in relevant government document, the subsidy is divided in accordance with the relative proportions
of the expense allocated for asset and expenditure, provided that the division is reviewed against the
proportions on each balance sheet date and adjusted if necessary; (2) if only a general direction on
the use of the subsidy but no specific project is stated in relevant government documents, the
subsidy is recognized as income-related subsidy. If a government grant is a monetary asset, it shall
be measured in the light of the received or receivable amount. Government grants in the form of
non-monetary assets are measured at fair value or, if the fair value cannot be reliably obtained, at its
nominal amount. Government grants measured at nominal amounts shall be directly included into
current profit and loss.
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The Company usually recognizes and measures government grants at by the amount actually
received. However, the financial support funds that meet the relevant conditions stipulated by the
financial support policy with conclusive evidence at the end of the period shall be measured
according to the amount receivable. Government grant to be measured at the amount receivable
must meet all the following conditions: (1) The amount of the government grant receivable has been
confirmed by a formal document from competent government authority or can be reasonably
calculated following relevant regulations of formally issued financial fund management measures
and there is no significant uncertainty as to the amount to be received; (2) the government grant is
based on a financial support program and its financial fund management measures formally
implemented and disclosed following the Regulations on Open Government Information, and the
said measures are inclusive (open to all eligible entities) rather than specifically formulated for
certain entities; (3) a deadline for the disbursement has been announced in relevant documents and
guaranteed with financial budget so that the receipt of the amount is reasonably certain; (4) the
Company is expected to satisfy other conditions that may be required for such subsidy (if any).
Asset-related government grant is recognized as a deferred income, which is included into
current profit and loss in installments over the life of use of relevant assets in a reasonable and
systematic way. Income-related government grant, if used to cover relevant future expenses or
losses, is recognized as a deferred income and is included into current profit and loss in the period
when such expenses and losses are recognized, or, if used to cover related expenses and losses that
have been incurred, is directly included into current profit and loss.
If government grants include both asset-related and income-related grants, different accounting
methods may be applied for different parts of the grants; government grants that cannot be
differentiated are accounted for as income-related.
Government grants related to the daily operations of the Company are included in other
income or used to offset relevant costs and expenses and those irrelevant to the daily operations are
recorded as non-operating income.
When the recognized government subsidy needs to be returned, if there is a relevant deferred
income balance, the book balance of the relevant deferred income will be offset, and the excess will
be included in the current profit and loss; in other cases, it will be directly included in the current
profit and loss.
30. Deferred income tax assets and deferred income tax liabilities
(1) Income tax of the period
On the balance sheet date, the income tax liabilities (or assets) of the period that have
developed in the current and previous periods are measured at the amounts expected to be paid or
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recovered. The taxable income base for the calculation of the income tax of the current period shall
be determined on the basis of the accounting profit adjusted according to relevant provisions of the
Tax Law.
(2) Deferred income tax assets and liabilities
The difference between book values of certain assets or liabilities and their tax bases as well as
the temporary difference between the book values and the tax bases of items that are not recognized
as assets or liabilities but whose tax bases can be determined following relevant provisions of the
Tax Law are recognized as deferred tax assets or liabilities using the balance sheet liability method.
No deferred income tax liability is recognized for taxable temporary differences related to the
initial recognition of goodwill or the initial recognition of assets or liabilities arising from
transactions that have not occurred in a business combination process and which do not influence
the accounting profit and taxable income (or deductible losses). No deferred income tax liability is
recognized for taxable temporary differences related to investments in subsidiaries, joint ventures
and associates, if the Company can determine the time for the reversal of the temporary differences
and the taxable temporary differences are not likely to be reversed within a predictable future.
Except for the circumstances described above, the Company recognizes deferred income tax
liabilities for all other taxable temporary differences.
No deferred income tax asset is recognized for deductible temporary differences related to the
initial recognition of assets or liabilities arising from transactions that have not occurred in a
business combination process and which do not influence the accounting profit and taxable income
(or deductible losses). No deferred income tax asset is recognized for any deductible temporary
differences related to the investment of the subsidiaries, joint ventures and joint ventures of the
Company, if the temporary differences are not very likely to be reversed or the Company is not
likely to obtain and use taxable income to offset deductible temporary differences. Except for the
circumstances described above, the Company may recognize deferred income tax assets for all other
deductible temporary differences to the extent of the taxable income that can be obtained and used
to offset deductible temporary differences.
Deferred income tax assets are recognized for deductible loss and tax credits that can be
carried forward to future periods to the extent of the future taxable income that are likely to be
obtained and used to offset deductible loss and tax credits.
On the balance sheet date, deferred tax assets and liabilities are measured at the applicable tax
rate expected for the period, in which relevant assets are expected to be recovered or relevant
liabilities are expected to be settled following relevant provisions of the Tax Law.
The Company reviews book values of deferred tax assets on the balance sheet date. If it is
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determined that the Company is not likely to obtain adequate taxable income to offset benefits from
deferred tax assets, the book values of deferred tax assets are written down. The write-down is
reversed when it is determined that adequate taxable income can be obtained.
(3) Income tax expenses
Income tax expenses include current and deferred income taxes.
Except other comprehensive income or current and deferred income taxes related to
transactions that are related to classified in shareholders' equity are recognized in other
comprehensive income or shareholders' equity as well as book values of deferred income tax arising
from business combination that are adjusted to goodwill, all other current and deferred income
expenses are recognized as current profit and loss.
(4) Offset of income tax
If the Company has the legal right and plans to perform net settlement or plans to acquire
assets and settle liabilities, the current income tax assets and liabilities are listed at the net amount
after offset.
The deferred income taxes and liabilities are listed at the net value after offset if the Company
has the legal right to net its current income tax assets and liabilities, the deferred income taxes and
liabilities are related to the income taxes collected from the same tax subject by the tax authority or
related to different tax subjects, but the tax subject intends to net the current income taxes and
liability or acquires assets and settle liabilities simultaneously during the period when each
important deferred income tax or liability is reversed.
31. Leases
Finance lease refers to the lease by which all risks and benefits from the control of an asset are
transferred while the ultimate ownership may or may not be transferred. Leases other than finance
leases are operating leases.
(1) Operating lease transactions recorded by the Company as the lessee
Lease expenses for operating leases are recognized as costs for assets or current profit and loss
using the straight-line method in all periods within the leasehold. The initial direct expenses are
recognized in current profit and loss. Contingent rental is recognized in current profit and loss in
which it is actually incurred.
(2) Operating lease transactions accounted for by the Company as the lessor
Lease income from operating leases is recognized as current profit and loss during the
leasehold. Initial direct costs of large amounts are capitalized when incurred and listed in current
profit and loss following the same intervals by which the rental income is recognized during the
leasehold; other insignificant initial direct costs are included in current profit and loss when
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incurred. Contingent rental is recognized in current profit and loss in which it is actually incurred.
(3) Finance lease transactions recorded by the Company as the lessee
The Company records the lower of the fair value of the leased asset and the current value of
the minimum lease payment as the entry value for fixed assets leased on the date on which the lease
is commenced, and the minimum lease payment as the entry value for the long-term payables. The
difference between the two is recorded as unrecognized financing cost. Initial direct expenses
attributable to the leased asset incurred during the negotiation and execution of the lease contract
are also accounted for as the value of the leased asset. The minimum lease payment less
unrecognized financial expenses are accounted for as long-term liability and long-term liability
matured within 1 year.
Unrecognized financial expenses are recognized as current financial expenses in each of the
periods within the leasehold at the effective interest rate. Contingent rental is recognized in current
profit and loss in which it is actually incurred.
(4) Finance lease transactions recorded by the Company as the lessor
On the lease beginning date, the aggregate of the minimum lease payment on the lease
beginning date and the initial direct cost are taken for the entry value of the finance lease receivable,
and the unsecured balance is also recorded; the difference between the aggregate of the minimum
lease payment, the initial direct expenses and the unsecured balance and the total present value is
recognized as the unrealized financing income. The finance lease less unrealized financial income
are accounted for as long-term credit right and long-term credit right matured within 1 year.
Unrealized financial income is recognized as current financial income in each of the periods
within the leasehold at the effective interest rate. Contingent rental is recognized in current profit
and loss in which it is actually incurred.
32. Other important accounting policies and accounting estimates
(1) Discontinued operation
The discontinued operation refers to such component that meets any of the following
conditions, can be independently separated and has been disposed of or classified into the held for
sale by the Company: 1) the component represents an independent main business or an independent
main business area; 2) the component is a part of related plan that is to dispose of an independent
main business or an independent main business area; 3) The component is a subsidiary acquired
exclusively for reselling.
Method for accounting of discontinued operation is shown in Note IV-14 “Assets available for
sale and disposal group” herein.
(2) Hedge accounting
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In order to avoid certain risks, the Company hedges certain financial instruments as hedging
instruments. For a heading that satisfies specific conditions, the Company may treat it through
hedge accounting method. The company’s hedges include fair value hedges, cash flow hedges and
hedges of net investment in an overseas operation. With regards to hedge for foreign exchange risks
with firm commitment, the Company will treat it as cash flow hedge.
At the commencement of the hedging, the Company formally specifies the hedging instrument
and the hedged items, and prepares written documents in connection with the hedging relationship
and the risk management strategy and risk management objectives for the Company to conduct
hedging. In addition, the Company will continuously evaluate the effectiveness of hedging at the
commencement of hedging and thereafter.
(1) Fair value hedges
For the hedging instrument that is designated as a fair value hedge and meets the conditions,
the gains or losses from the tool will be included in the current profits and losses. If the hedging
instrument is to hedge non-trading equity instrument investment (or component parts thereof) that is
selected to be measured at fair value with changes included in other comprehensive income, then
the gains and losses arising from the hedging instrument will be included in other comprehensive
income. The profit or loss of the hedged items from the hedging risks shall also be included into the
current profit and loss, and at the same time the book value of the hedged item shall be adjusted. If
the hedged item is measured at fair value, the gain or loss of the hedged item arising from the
hedged risk does not need to be used to adjust the book value of the hedged item, and the relevant
gains and losses will be included in the current profit and loss or other comprehensive income.
When the Company withdraws the appointment of hedge relationship, the hedging instruments
have expired or been sold, the contract has been terminated or executed, or the conditions for
applying the hedge accounting are no more satisfied, the application of the hedge accounting will be
terminated.
(2) Cash flow hedges
For a hedging instrument that is designated to hedge cash flow and meets the conditions, the
part of the profit or loss arising therefrom that has effective hedging is included in other
comprehensive income as a cash flow hedging reserve, and the part that has ineffective hedging is
included in the current profit and loss.
If the expected transaction causes the Company to recognize a non-financial asset or
non-financial liability subsequently, or the expected transaction of a non-financial asset or
non-financial liability forms a definite commitment applicable to fair value hedge accounting, then
the Company will transfer out the cash flow hedge reserve amount originally recognized in
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comprehensive income and include the same in the initial recognized amount of the asset or liability.
For the cash flow hedging other than the above, the Company transfers out the cash flow hedging
reserve amount originally recognized in other comprehensive income during the same period when
the expected cash flow that is hedged affects the profit and loss, and includes the same in the
current profit and loss.
If it is expected that all or part of the net loss originally included in other comprehensive
income cannot be compensated in the future accounting period, the part that cannot be compensated
will be transferred out and included in the current profit and loss.
When the Company terminates the use of hedge accounting for cash flow hedging, the
accumulated cash flow hedging reserve that has been included in other comprehensive income will
be retained when future cash flow is expected to occur, or it will be transferred out from other
comprehensive income and included in the current profit and loss when future cash flow is not
expected to occur.
(3) Hedges of net investment in an overseas operation
The hedges of net investment in an overseas operation shall be accounted by using the similar
method to the cash flow hedges. Among the gains or losses of hedging instruments, the part that is
effective hedging is recognized as other comprehensive income, and the gains or losses of the
ineffective part of hedging are included in the current profits and losses.
The gains and losses that have been included in other comprehensive income are transferred
out of other comprehensive income and included in the current profit and loss upon disposal of
overseas operations.
(4) Repurchase shares
The consideration and transaction expenses paid during the share repurchase reduce the
shareholders’ equity, which can not be recognized as profit or loss upon the repurchase, transfer or
cancellation of the share.
As for the transfer of treasury stock, the difference between the received amount and the
carrying amount of the treasury stock shall be included in the capital reserve. If the capital reserve is
not enough for write-down, the surplus reserve and undistributed profit shall be written down. As
for the cancellation of treasury stock, the capital stock shall be reduced according to the par value of
stock and the quantity of canceled stocks; thee capital reserve shall be written down according to
the difference between the book balance and the par value of stocks. If the capital reserve is not
enough for write-down, the surplus reserve and undistributed profit shall be written down.
33. Changes in significant accounting policies and estimates
(1) Changes in Accounting Policies
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The Ministry of Finance issued the Accounting Standards for Business Enterprises No.
14-Revenue (Revision 2017) (C. K. [2017] No. 22) (hereinafter referred to as the "New Revenue
Standards") on July 5, 2017. Upon approval with the resolution of the 37th Meeting of the 10th
Board of Directors of the Company on March 5, 2020, the Company started to implement the
aforesaid new revenue standards from January 1, 2020.
The New Revenue Standards establish a new revenue recognition model for regulating revenue
from contracts with customers. In order to implement the New Revenue Standards, the Company
reassessed the recognition and measurement, accounting and presentation and other aspects of main
contract revenue.
After the implementation of the New Revenue Standards, the Company changes the
presentation of contractual consideration received from customers in advance due to the transfer of
goods from the item of “accounts received in advance” to the item of “contractual liabilities” and
“other current liabilities”; and the Company changes the presentation of the transportation costs
incurred from transfer of goods from the item of "sales expense" to the item of "operating cost".
Impact on the financial statements dated January 1, 2020:
December 31, 2019 (before change) January 1, 2020 (after change)
Statement items
Consolidated statements The Company Consolidated statements The Company
Accounts received in advance 596,087,260.62 0.00 0.00 0.00
Contract liabilities 0.00 0.00 527,511,147.25 0.00
Other current liabilities 0.00 0.00 68,576,113.37 0.00
(2) Changes in accounting estimates
The Company has no changes in accounting estimates during the reporting period.
34. Significant accounting judgments and estimates
Due to uncertainties in the business operations of the Company, the Company needs to make
judgments, estimates and assumptions as to items in the accounts that the Company is unable to
measure accurately in applying the accounting policies. Those judgments, estimates and
assumptions are based on the historical experience of the management of the Company and other
relevant elements. Those judgments, estimates and assumptions may influence the amounts of
income, expenses, assets and liabilities and the contingent liabilities disclosed on the balance sheet
date. However, those estimates, due to the uncertainties, may be significantly different from the
actual results of business operations of the Company and, thus, may necessitate significant
adjustments to the future book values of assets or liabilities subject to such estimates.
The Company periodically reviews the aforementioned judgments, estimates and assumptions
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on the basis of going concern. If a change to the accounting estimate concerns only the current
period, the change is recognized during the current period; and if a change concerns both the current
and future periods, such changes are recognized in both the current and relevant future periods.
On the balance sheet date, the Company needs to make judgments, estimates and assumptions
as to items in the financial statements in the following key areas:
(1) Classification of leases
The Company classifies leases into operating leases and finance leases following the
Accounting Standards for Enterprises No. 21 - Leases. When classifying leases, the Company
makes analysis and judgments as to whether the Company has transferred substantially all risks and
benefits related to the title to the assets leased out to the transferee or has assumed substantially all
risks and benefits related to the title to the assets leased in.
(2) Retention of bad debt provision
The Company accounts for the bad debt losses using the allowance method following
accounting policies concerning accounts receivable. The impairment of accounts receivable is
measured with reference to the assessment of the recoverability of accounts receivable. Determining
the impairment of accounts receivable requires the management to make judgments and estimates.
The differences between the actual outcomes and the estimates may influence the book value and
the retention and reversal of the bad debt provision for accounts receivable during the period when
the estimates are changed.
(3) Inventory impairment provision
The Company measures the cost and the realizable net value following the accounting policies
related to inventories and retains impairment provision for an inventory that is obsolete or moving
slowly or whose cost is higher than its realizable net value. Impairment of inventories is determined
on the basis of the assessment of the saleability and realizable net value of the inventories. The
inventory impairment is determined on the basis of conclusive evidence obtained while considering
the purpose of keeping the inventory and effect of events after the balance sheet date. The
differences between the actual outcomes and the estimates may influence the book value of the
inventories and the retention and reversal of the inventory impairment provision during the period
when the estimates are changed.
(4) Fair value of financial instruments
In case of a financial instrument for which there is no active market, the fair value is
determined using various valuation techniques, including the discounted cash flow model analysis,
among others. The Company is required to make estimates as to the future cash flow, credit risks,
market volatility and relevance and choose an appropriate discount rate. Such estimates feature
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uncertainty, and changes in such estimates may have Effect on the fair value of financial instrument.
(5) Provision for depreciation of long-term assets
On the Balance Sheet Date, the Company judges whether there are signs for possible
impairment of non-current assets except financial assets. Except for annual impairment tests, the
Company conducts impairment tests on intangible assets with uncertain serviceable life whenever
there are signs of impairment. Non-current assets, except financial assets, are tested when there are
signs that the book value is unable to be recovered.
Impairment is determined to have occurred when the book value of an asset or an asset group
is higher than its recoverable amount, which is the higher of the net balance of the fair value less the
disposal cost and the present value of the future cash flow.
The net balance of the fair value less the disposal cost is the price contained in sales agreement
for similar assets in fair trade or the market price observed less the incremental costs attributable to
the disposal of the asset.
Estimating the present value of the future cash flow requires significant judgments shall be
made as to the production, price, operating costs and the discount rate used to calculate the present
value of the asset (or asset group). The Company collects all information available, including all
estimates made on the basis of reasonable and supported assumptions as to the production, selling
price and operating costs, to estimate the recoverable amount.
The Company conducts impairment test on goodwill at least annually. This requires estimating
the future cash flow of an asset group or combination of asset groups, to which goodwill is allocated.
To estimate the present value of the future cash flow, the Company needs to estimate the cash flow
generated by a future asset group or combination of asset groups and choose an appropriate
discount rate.
(6) Depreciation and amortization
The Company depreciates and amortizes the investment properties, fixed assets and intangible
assets within its serviceable life using the straight-line method while giving due consideration to
their residual values. The Company reviews the serviceable life of its assets in order to determine
the cost for depreciation and amortization to be allocated to each reporting period. The Company
determines the serviceable life of its assets based on its historical experience and the expected
technological update. If a significant change occurs to an estimate previously made, the amount of
depreciation and amortization will be adjusted in future periods.
(7) Deferred income tax assets
The Company may recognize all unused tax loss as deferred income tax assets to the extent
there is likely to be adequate taxable profit to offset the loss. It requires the Management to make
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numerous judgments to estimate the time and amount of taxable profit with reference to the tax
payment scheduling strategy to determine the amount of the deferred income tax assets.
(8) Income tax
There are uncertainties as to the conclusive tax treatment and calculation of some transactions
in the normal business course of the Company. It requires approval from tax authorities as to
whether some items can be treated as pre-income-tax deduction items. The possible difference
between the conclusive determinations and the initial estimated amounts has effect over the current
and deferred income taxes in the period in which such items are conclusively determined.
(9) Estimated liabilities
The Company makes estimates on and retains provisions for product quality assurance,
expected contract losses, penalties on delayed delivery in accordance with the provisions of
contracts, its current knowledge and historical experience. When such a contingency results in a
current liability and the discharge of the same is likely to result in an outflow of the economic
benefits of the Company, the Company recognize the best-estimated expenses to discharge the same
as an estimated liability. The recognition and measurement of the estimated liability depends largely
on the judgment of the Management. To make the judgment, the Company needs to assess risks
related to and uncertainties of such contingencies as well as the time value of money.
The Company will recognize estimated liabilities for its guarantee on the sale, maintenance
and renovation for the sold products and quality assurance provided for customers. When
determining the estimated liabilities, the Company has considered the experience of maintenance,
which, nevertheless, may fail to fairly represent the future maintenance expenses. Any change in the
provision may influence the gains or losses of future periods.
(10) Fair value measurement
Certain assets and liabilities of the Company shall be measured at the fair value in the Balance
Sheet. When the fair value of certain assets or liabilities is estimated, the Company will adopt
available and observable market data. If the first-level input values are not available, the Company
will engage a qualified third-party appraiser to perform the valuation. Information related to the
valuation technique and input values used in the recognition of the fair value of various assets and
liabilities are disclosed in Note X.
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V. Taxes
1. Main Tax Categories and Tax Rates
Tax Categories Applicable tax rate
The output taxes of taxable income shall be calculated at a tax rate of
13%, 9% and 6%, and the VAT shall be calculated and paid based
VAT
on the difference after deducting the amount of input tax that can be
deducted for the current period;
Urban maintenance and
To be paid at 7%, 5% of the actually paid turnover tax.
construction tax:
Education surcharges: To be paid at 3% of the actually paid turnover tax.
Local education surcharge To be paid at 2% of the actually paid turnover tax.
Calculated and paid at 25%, 15%, 16.5%, 10% and 18.5% of taxable
Enterprise income tax
income.
The Company has different enterprise income tax rate taxpayers, and the specific conditions
are as follows:
Name of tax payer Income tax rate
Domestic subsidiary 25%, 15%
Hongkong Tianyi International Holding Company
16.5%
Limited
For offshore trade, the offshore profits tax exemption
Jiabai International Investment Co., Ltd.
can be applied for
Hong Kong Yisheng Petrochemical Investment Co., Ltd.
The Company is approved to join the Singapore
Global Trader Programme (GTP), so is entitled to the
Hengyi Industry International Co., Ltd.
preferential enterprise income tax rate and payment of
Hengyi Petrochemical International Co., Ltd.
enterprise income tax at a tax rate of 10% from 2019
to 2021.
Hengyi Industries Sdn Bhd 18.5%
2. Tax Incentives and Approvals
(1) According to the Announcement on Issuing the Measures for the Administration of
Preferential Value-Added Tax Policies for Promoting the Employment of Disabled Persons
(Announcement No. 33 [2016] of the State Administration of Taxation) released by the State
Administration of Taxation, Zhejiang Hengyi Polymer Co., Ltd. (Hereinafter “the Polymer
Company”), a holding subsidiary of the Company, enjoyed the preferential VAT policy of
immediate refund upon payment for the employment of disabled persons.
(2) Zhejiang Hengyi High-tech Materials Co., Ltd. (hereinafter referred to as "Hengyi
High-tech Materials"), the Company’s holding subsidiary, and Zhejiang Henglan Technology Co.,
Ltd. (hereinafter referred to as "Henglan"), the Company’s wholly-owned subsidiary, obtained the
High-tech Enterprise Certificates jointly issued by Zhejiang Provincial Department of Science and
Technology, Zhejiang Provincial Department of Finance and Zhejiang Provincial Taxation Bureau
of the State Administration of Taxation, and were recognized as high-tech enterprises with a validity
period of three years. According to the Enterprise Income Tax Law of the People’s Republic of
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China and the Implementation Regulations of the Enterprise Income Tax Law of the People’s
Republic of China, Hengyi High-tech Materials and Henglan are taxed at a reduced enterprise
income rate of 15% from January 1, 2019 to December 31, 2021. .
(3) Jiaxing Yipeng Chemical Fiber Co., Ltd. (hereinafter referred to as "Jiaxing Yipeng"),
Zhejiang Shuangtu New Materials Co., Ltd. (hereinafter referred to as "Shuangtu New Materials"),
Hangzhou Yijing Chemical Fiber Co., Ltd. (Hereinafter referred to as "Hangzhou
Yijing"),wholly-owned subsidiaries of the Company, obtained the High-tech Enterprise Certificate
jointly issued by Zhejiang Provincial Department of Science and Technology, Zhejiang Provincial
Department of Finance, and Zhejiang Provincial Taxation Bureau of the State Administration of
Taxation on December 1, 2020, and were recognized as high-tech enterprises with a validity period
of three years In accordance with the Enterprise Income Tax Law of the People’s Republic of China
and the Implementation Regulations of the Enterprise Income Tax Law of the People’s Republic of
China, Jiaxing Yipeng, Shuangtu New Materials and Hangzhou Yijing are taxed at a reduced
enterprise income rate of 15% from January 1, 2020 to December 31, 2023.
(4) Hengyi Industries Sdn Bhd, a holding subsidiary of the Company, can enjoy 11-year tax
exemption as PMB petrochemical project in Brunei meets the conditions of a “pioneer enterprise”,
which means the enterprise income tax is exempted and the imports of equipment and Imported raw
materials are exempt from tax.
(5) According to provisions of Article 100 of the Implementation Regulations of the Enterprise
Income Tax Law of the People’s Republic of China: the "tax credits" mentioned in Article 34 of the
Enterprise Income Tax Law means that, in case of the purchase and actual use of the environmental
protection, energy-saving and water-saving, safe production and other special equipment as
stipulated in the Catalogue of Enterprise Income Tax Benefits for Environmental Protection Special
Equipment, the Catalogue of Enterprise Income Tax Benefits for Energy-saving and Water-saving
Special Equipment and the Catalogue of Enterprise Income Tax Benefits for Safety Production
Special Equipment, 10% of the investment of the special equipment can be credited from the tax
payable of the enterprise in the current year; if the amount is insufficient for credit in the current
year, the credit can be carried forward in the next 5 tax years. Hengyi High-tech Materials enjoys
the enterprise income tax reduction amount equal to 10% of the purchase amount of the
environmental protection, energy saving, water saving, safety production and other special
equipment.
(6) According to the implementation opinions of the People’s Government Office of Xiaoshan
District, Hangzhou on deepening the reform of "giving priority to yield per acre" and promoting
high-quality development, “for giving full play to the role of taxation in regulating the economy,
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promoting the intensive and economical use of urban land, and implementing the urban land use tax
reduction and exemption policies by classifications and grading throughout the district, before
December 31, 2021, for those classified as Class A and Class B enterprises, the urban land use tax
will be reduced by 100% and 80% respectively. For those classified as Class C and D enterprises,
the urban land use tax will not be relieved". Hangzhou Yijing enjoys a preferential tax policy of 80%
reduced land use tax, and "Hengyi Limited enjoys a preferential tax policy of 100% reduced land
use tax.
(7) On March 15, 2019, the Company’s holding subsidiary Hengyi Industries International
Pte.Ltd. was approved to join the Singapore Global Trader Programme (GTP). According to the
approval document, Hengyi Industries International Pte. Ltd. enjoys the relevant preferential
enterprise income tax rate for three consecutive years (from 2019 to 2021) and pays enterprise
income tax at a tax rate of 10%.
(8) According to C. S. [2020] No. 31 Notice of the Ministry of Finance and the State
Administration of Taxation on the Preferential Enterprise Income Tax Policy of Hainan Free Trade
Port, Hainan Hengjing Trading Co., Ltd., a wholly-owned subsidiary of the Company, is taxed at a
reduced enterprise income rate of 15% from January 1, 2020.
VI. Notes to items of consolidated financial statements
Unless otherwise specified, for the following note items (including the main item notes to the
Company’s financial statements), the "beginning of the year" refers to January 1, 2020, the "end of
the period" refers to December 31, 2020, the "end of last year" refers to December 31, 2019, the
"current period" refers to 2020, and the "previous period" refers to 2019.
1. Monetary capital
Item Ending balance Balance at the end of prior year
Cash on hand 1,351,988.81 2,279,461.41
Bank deposit 6,364,528,999.42 3,820,783,848.39
Other monetary capital 3,713,102,815.63 3,616,821,478.39
Total 10,078,983,803.86 7,439,884,788.19
Of which: the total amount of funds deposited abroad 3,363,891,032.92 1,553,988,373.09
Note: As of December 31, 2020, the monetary capital that the Company’s right to use was
restricted was RMB 2,892,657,855.69, including RMB 1,203,876,128.81 of L/G guarantee deposit,
RMB 1,163,906,196.24 of acceptance bill marginal deposit, RMB 290,745,969.26 of L/G, RMB
63,977.05 of collection for bill pledge, RMB 8,127,489.32 of freezing of funds and RMB
225,938,095.01 of other margin.
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2. Financial assets held for trading
Balance at the end of
Item Ending balance
prior year
Financial assets at fair value through profit or loss 251,904,308.53 149,692,516.20
Of which: debt instruments 0.00 0.00
Equity instruments 0.00
Derivative financial assets 251,904,308.53 149,692,516.20
Others 0.00 0.00
Specified as financial assets at fair value through profit or loss 0.00 0.00
Total 251,904,308.53 149,692,516.20
Including: Portion reclassified to other non-current financial assets 0.00 0.00
3. Derivative financial assets
Item Ending balance Balance at the end of prior year
Foreign exchange derivatives 0.00 0.00
Commodity derivatives 737,015,777.82 409,150,395.76
Total: 737,015,777.82 409,150,395.76
Note: the derivative financial assets at the year end are the future exchange derivatives that are
designated and are effective hedging instruments.
(1) Cash flow hedges:
In order to avoid the risk of cash flow changes related to commodity prices in product sales
that are likely to occur in the future, the Company designates a series of commodity futures and
paper market contracts held by it as hedging instruments for expected commodity sales. Commodity
futures and paper market contracts designated as hedging instruments have an economic
relationship with the expected sales of commodities under the hedging. The hedge ratio of the
hedging relationship is the same as that set from the perspective of risk management, and the
hedging ratio of hedging relationship is reasonable.
In order to avoid the risk of cash flow changes related to foreign currency borrowings in the
future, the Company designates a series of foreign currency derivative contracts held by the
Company as hedging instruments for foreign currency borrowings. The underlying assets of foreign
currency derivatives designated as hedging instruments have an economic relationship with the
hedged foreign currency borrowings. The hedge ratio of the hedging relationship is the same as that
set from the perspective of risk management, and the hedging ratio of hedging relationship is
reasonable.
In the current year, the amount of cash flow hedging reserve included in shareholders’ equity is
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RMB -431,713,895.59, and the details are as follows:
Item Amount incurred in current year
Total fair value gains included into shareholders’ equity -386,595,860.29
Less: Deferred income tax from the gains of fair value -12,890,777.43
Less: Other comprehensive income is reclassified into current profit and loss 156,684,593.22
Less: Deferred income tax reclassified into current profit and loss -1,952,640.00
Less: Net after-tax income attributable to minority shareholders -100,628,420.49
Net gain of cash flow hedges -431,713,895.59
(2) Fair value hedges
At the end of 2020, the Company held a series of PTA futures contracts designated to
hedge the price risk of future PTA purchases, and the Company had firm commitments to these
purchases. The underlying assets of commodity futures designated as hedging instruments have an
economic relationship with the hedged expected sales commodity. The hedge ratio of the hedging
relationship is the same as that set from the perspective of risk management, and the hedging ratio
of hedging relationship is reasonable.
①Hedged items
Change of Fair value hedges
Type of risk Book value Items presented in balance sheet
Accumulative amount
Price risk 454,738,420.94 454,738,420.94 Other current assets
②Hedging instruments
Included in current Recognized ineffective part of
Balance Sheet profit and loss hedging
Type of risk Book value
Presented items Ineffective part of Items presented in income
hedging statement
Price risk -454,738,420.94 Derivative financial assets 0.00 Gains from changes of fair value
4. Notes receivable
(1) Notes receivable are listed by classification
Item Ending balance Balance at the end of prior year
Bank acceptance bills 214,684,966.98 728,006,603.36
Commercial acceptance bills 0.00 0.00
Domestic letter of credit 0.00 0.00
Subtotal 214,684,966.98 728,006,603.36
Less: bad debt provision 0.00 0.00
Total 214,684,966.98 728,006,603.36
(2) Pledged notes receivable at the end of the year
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Item Amounts pledged at the end of period
Bank acceptance bills 119,651,779.16
Commercial acceptance bills 0.00
Domestic letter of credit 0.00
Total 119,651,779.16
(3) The amount of endorsed or discounted notes receivable that become mature after the date
of balance sheet at the end of the year.
Ending balance of those not
Item Ending balance of those derecognized
derecognized
Bank acceptance bills 379,286,514.43 0.00
Commercial acceptance bills 0.00 0.00
Domestic letter of credit 0.00 0.00
Total 379,286,514.43 0.00
(4) Notes converted to accounts receivable at the year end due to the non-performance of the
drawer
Notes that are transferred to accounts receivable by the Company not due to the drawer’s
failure of performance at year end
5. Accounts receivable
(1) Disclosure based on aging analysis
Aging of accounts receivable Ending balance Balance at the end of prior year
Within 1 year 3,879,791,533.09 5,898,731,247.43
Including: within 6 months 3,668,167,642.10 5,897,452,251.37
7 - 12 months 211,623,890.99 1,278,996.06
1-2 years 9,090,985.04 120,647.36
2-3 years 16,931.85 0.00
Over 3 years 336,665.16 336,665.16
Subtotal 3,889,236,115.14 5,899,188,559.95
Less: bad debt provision 9,491,985.10 8,947,021.17
Total 3,879,744,130.04 5,890,241,538.78
(2) Presented based on bad debt reserve provision method
Ending balance
Book balance Provision for bad debts
Category
Proportio Allotment Book value
Amount Amount
n (%) rate, %
Accounts receivable with single
8,510,212.00 0.22 8,510,212.00 100.00 0.00
provision for bad debt
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Ending balance
Book balance Provision for bad debts
Category
Proportio Allotment Book value
Amount Amount
n (%) rate, %
Including: Hangzhou Hengchuang
8,510,212.00 0.22 8,510,212.00 100.00 0.00
Chemical Fiber Co., Ltd.
Receivables with bad debt
3,880,725,903.1 3,879,744,130.0
provision made as per different 99.78 981,773.10 0.03
4 4
groups
Including: those with aging of
3,880,725,903.1 3,879,744,130.0
accounts receivable used as credit 99.78 981,773.10 0.03
4 4
risk characteristics
3,889,236,115.1 3,879,744,130.0
Total 100.00 9,491,985.10 0.24
4 4
(Contd.)
Balance at the end of prior year
Book balance Provision for bad debts
Category
Proportion Allotment Book value
Amount Amount
(%) rate, %
Accounts receivable with single
8,510,212.00 0.14 8,510,212.00 100.00 0.00
provision for bad debt
Including: Hangzhou Hengchuang
8,510,212.00 0.14 8,510,212.00 100.00 0.00
Chemical Fiber Co., Ltd.
Receivables with bad debt
provision made as per different 5,890,678,347.95 99.86 436,809.17 0.01 5,890,241,538.78
groups
Including: those with aging of
accounts receivable used as credit 5,890,678,347.95 99.86 436,809.17 0.01 5,890,241,538.78
risk characteristics
Total 5,899,188,559.95 100.00 8,947,021.17 0.15 5,890,241,538.78
①Accounts receivable with single provision for bad debt
Ending balance
Accounts receivable (by unit) Provision for Allotment
Book balance Reason for provision
bad debts rate (%)
Hangzhou Hengchuang Chemical Expected to be less likely to be
8,510,212.00 8,510,212.00 100%
Fiber Co., Ltd. recovered
②Accounts receivable with provision for bad debts made based on aging combination in the
combination
Ending balance
Aging of accounts receivable
Accounts receivable Provision for bad debts Allotment rate, %
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Ending balance
Aging of accounts receivable
Accounts receivable Provision for bad debts Allotment rate, %
Within 6 months 3,870,543,331.22 0.00 0.00
7 12 months 9,248,201.87 462,410.10 5.00
1-2 years 580,773.04 174,231.91 30.00
2-3 years 16,931.85 8,465.93 50.00
Over 3 years 336,665.16 336,665.16 100.00
Total 3,880,725,903.14 981,773.10 0.03
(3) Bad debt preparation
Amount of changes in the current period
Beginning Amount Ending
Category Resell or
balance Provision recovered or balance
write off
written back
Accounts receivable with single
8,510,212.00 0.00 0.00 0.00 8,510,212.00
provision for bad debt
Amounts due from related
parties included in the scope of 0.00 0.00 0.00 0.00 0.00
consolidation
Receivables with bad debt
provision made as per different 436,809.17 583,434.81 38,470.88 0.00 981,773.10
groups
Total 8,947,021.17 583,434.81 38,470.88 0.00 9,491,985.10
(4) The top five ending amounts (totals by borrower) of accounts receivable
The top five ending amounts (totals by borrower) of accounts receivable amounted to
RMB 1,880,960,918.67 in total, accounting for 48.36% of the year-end balance of accounts
receivable, and the corresponding year-end balance of the provision for bad debts was RMB
0.00.
6. Accounts receivable financing
(1) Financing of receivables presented by category
Item Ending balance Beginning balance
Notes receivable 537,214,790.48 442,981,896.97
Accounts receivable 0.00 0.00
Total 537,214,790.48 442,981,896.97
(2) Changes of increase or decrease of financing of receivables in the current period and
changes in fair value thereof
Item Beginning balance Changes in the current period Ending balance
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Changes of Changes of Changes of
Costs Costs Costs
fair value fair value fair value
Notes
442,981,896.97 0.00 94,232,893.51 0.00 537,214,790.48 0.00
receivable
Accounts
0.00 0.00 0.00 0.00 0.00 0.00
receivable
Total 442,981,896.97 0.00 94,232,893.51 0.00 537,214,790.48 0.00
(3) Financing of pledged receivables at the end of the period
Item Amounts pledged at the end of period
Bank acceptance bills 262,151,806.71
Commercial acceptance bills 0.00
Domestic letter of credit 0.00
Total 262,151,806.71
(4) The amount of endorsed or discounted accounts receivable that become mature after the
date of balance sheet at the end of the year.
Ending balance of those
Item Ending balance of those not derecognized
derecognized
Bank acceptance bills 1,709,219,276.34 0.00
Commercial acceptance bills 0.00 0.00
Domestic letter of credit 0.00 0.00
Total 1,709,219,276.34 0.00
(5) Other Explanations
During the current period, the Company discounted bank acceptance bills of RMB
2,034,341,304.09 (previous year: RMB 4,574,723,760.80) under the financing of receivables to
banks. As the major risks such as interest rate risk related to the banker’ s acceptance and benefits
have been transferred to the bank, the Company ceased to recognize the banker’s acceptance that
has been cashed but not yet mature. 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, 2020, the cashed but not mature banker’s acceptance was RMB 822,644,628.06 in
total (December 31, 2019: RMB 1,864,896,260.32).
7. Advance payments
(1) Advance payments are listed by aging as follows
Aging of Ending balance Balance at the end of prior year
accounts
receivable Amount Proportion (%) Amount Proportion (%)
Within 1 year 870,010,754.43 98.49 634,753,441.64 99.31
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Aging of Ending balance Balance at the end of prior year
accounts
receivable Amount Proportion (%) Amount Proportion (%)
1-2 years 12,296,929.92 1.39 3,416,432.89 0.53
2-3 years 537,030.32 0.06 501,954.80 0.08
Over 3 years 535,265.61 0.06 534,159.28 0.08
Total 883,379,980.28 100.00 639,205,988.61 100.00
(2) Significant advance payments with aging exceeding 1 year
The Company has no significant advance payments with aging exceeding 1 year at the end of
the period.
(3) The top five ending amounts (totals by prepayment objects) of advance payments
The top five ending amounts (totals by prepayment objects) of advance payments
amounted to RMB 508,946,460.72, accounting for 57.61% in the total balance of prepayments
at the year-end balance.
8. Other receivables
Item Ending balance Balance at the end of prior year
Interests receivable 0.00 0.00
Dividend receivable 330,395,003.24 194,194,087.61
Other receivables 114,458,722.59 697,646,002.30
Total 444,853,725.83 891,840,089.91
(1) Dividends receivable
Investee Ending balance Balance at the end of prior year
Hainan Yi Sheng Petrochemical Co., Ltd. 212,500,000.00 127,500,000.00
Dalian Yisheng Investment Co., Ltd. 63,750,000.00 38,250,000.00
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 54,145,003.24 28,444,087.61
Subtotal 330,395,003.24 194,194,087.61
Less: bad debt provision 0.00 0.00
Total 330,395,003.24 194,194,087.61
(2) Other receivables
① Disclosure based on aging analysis
Aging of accounts receivable Ending balance Balance at the end of prior year
Within 1 year 66,799,712.81 676,000,505.62
1-2 years 13,196,734.21 61,298,689.59
2-3 years 59,795,633.48 4,638,827.45
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Aging of accounts receivable Ending balance Balance at the end of prior year
Over 3 years 5,347,080.87 1,022,337.27
Subtotal 145,139,161.37 742,960,359.93
Less: bad debt provision 30,680,438.78 45,314,357.63
Total 114,458,722.59 697,646,002.30
②Classification of accounts receivable by nature
Nature of account Ending balance Balance at the end of prior year
Receivables and payables such as advances from entities
31,101,998.16 518,394,221.11
beyond the scope of consolidation
Combination of tax refunds receivable and other government
23,000,185.76 144,919,980.00
subsidies
Portfolio of deposits and security 17,867,007.60 10,047,663.87
Employee loan and petty cash 4,825,111.28 5,107,590.62
Other groups 68,344,858.57 64,490,904.33
Subtotal 145,139,161.37 742,960,359.93
Less: bad debt provision 30,680,438.78 45,314,357.63
Total 114,458,722.59 697,646,002.30
③Bad debt provision
Stage 1 Stage 2 Stage 3
Provision for bad Expected credit Expected credit loss over Expected credit loss over Total
debts loss of the future the lifetime(no credit the lifetime(credit
twelve months impairment has occurred) impairment has occurred)
Beginning
18,130,372.54 628,940.00 26,555,045.09 45,314,357.63
balance
In this year, book
balance of other
receivables at the
beginning of the
year:
--Transferred to
-- -- -- --
the second stage
--Transferred to
-- -- -- --
the third stage
--Transferred
back to the -- -- -- --
second stage
--Transferred
back to the first -- 600,000.00 0.00 600,000.00
stage
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Stage 1 Stage 2 Stage 3
Provision for bad Expected credit Expected credit loss over Expected credit loss over Total
debts loss of the future the lifetime(no credit the lifetime(credit
twelve months impairment has occurred) impairment has occurred)
Withdrawal in
the current 1,434,544.65 15,000.00 0.00 1,449,544.65
period
Amount
written-back in
15,391,509.01 600,000.00 0.00 15,991,509.01
the current
period
Amount charged
off in the current 0.00 0.00 0.00 0.00
period
Amount
written-off in the 80,000.00 0.00 0.00 80,000.00
current period
Other changes 9,714.49 2,240.00 0.00 11,954.49
Ending balance 4,083,693.69 41,700.00 26,555,045.09 30,680,438.78
④Bad debt preparation
Amount of changes in the current period
Beginning Amount Resale or Ending
Category
balance Provision recovered or write-off and balance
written back others
Receivables and payables
such as advances from
15,561,166.85 437,272.75 15,036,034.51 7,614.49 954,790.60
entities beyond the scope
of consolidation
Combination of tax
0.00 0.00 0.00 0.00 0.00
refunds receivable
Portfolio of deposits and
1,156,900.08 703,851.46 850,682.70 82,240.00 927,828.84
security
Employee loan and petty
140,805.05 103,289.77 98,251.32 2,100.00 143,743.50
cash
Other groups 28,455,485.65 205,130.67 6,540.48 0.00 28,654,075.84
Total 45,314,357.63 1,449,544.65 15,991,509.01 91,954.49 30,680,438.78
⑤Other receivables actually written off in the current period
Item Amount written off
Other receivables actually written off 80,000.00
⑥ The top five ending amounts (totals by borrower) of other receivables:
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Proportions in
the total other Provision for
Nature of Ending accounts bad debts
Name of organization Aging
account balance receivable at Ending
the year ended balance
(%)
Fulida Group Holdings Co., Ltd.,
Within one
Xinghui Chemical Fiber Group Co., Compensations 38,309,664.44 26.40 1,915,483.22
year, 2-3 years
Ltd.
Wang Claim 26,243,545.09 2-3 years 18.08 26,243,545.09
Economic and Information Bureau Government
18,715,600.00 Within 1 year 12.89 0.00
of Xiaoshan District Hangzhou grants
Special account for land bid margin
Security
of Zhejiang Jiangnan Elements 7,590,000.00 Within 1 year 5.23 379,500.00
deposit
Trading Center Co., Ltd.
1-2 years, 2-3
Sahid & CSEEC Sdn Bhd Deposit 6,224,322.39 4.29 311,216.12
years
Total —— 97,083,131.92 — 66.89 28,849,744.43
Note 1: The relevant description on balance formation of the Company’s "other receivables -
Wang" and full provision for bad debts at the end of 2020 can be found in Note XIII. 2.
⑦Accounts receivable involving government grants
Aging at Time, amount and
Project name of government Ending
Name of organization the end of basis of estimated
grants balance
the period collection
Economic and Information
2020 return subsidy fund from Within 1
Bureau of Xiaoshan District 18,715,600.00 End of May 2021
the headquarters year
Hangzhou
Taxation Bureau, Xiao Shan, Within 1
Refunds of VAT 4,284,585.76 End of May 2021
Hangzhou year
Total —— 23,000,185.76 —— ——
9. Inventories
(1) Classification of inventories
Ending balance
Item
Book balance Inventory falling price reserves Book value
In-transit materials 1,116,653,343.48 0.00 1,116,653,343.48
Raw materials 3,365,367,168.21 0.00 3,365,367,168.21
Goods in process 612,488,224.61 0.00 612,488,224.61
Commodity stocks 4,567,184,984.49 18,111,009.54 4,549,073,974.95
Project construction 7,276,155.92 0.00 7,276,155.92
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Ending balance
Item
Book balance Inventory falling price reserves Book value
Total 9,668,969,876.71 18,111,009.54 9,650,858,867.17
(Contd.)
Balance at the end of prior year
Item
Book balance Inventory falling price reserves Book value
In-transit materials 4,039,224,970.82 338,489.60 4,038,886,481.22
Raw materials 2,459,717,421.55 699,838.76 2,459,017,582.79
Goods in process 933,548,159.78 0.00 933,548,159.78
Commodity stocks 1,726,755,117.02 19,307,362.42 1,707,447,754.60
Project construction 14,338,569.66 0.00 14,338,569.66
Total 9,173,584,238.83 20,345,690.78 9,153,238,548.05
(2) Inventory price decline provision
Increase in the current
Decrease in the current period
period
Item Beginning balance Ending balance
Write-back or
Provision Others Others
write-off
In-transit materials 338,489.60 0.00 0.00 338,489.60 0.00 0.00
Raw materials 699,838.76 0.00 0.00 699,838.76 0.00 0.00
Goods in process 0.00 0.00 0.00 0.00 0.00 0.00
Commodity stocks 19,307,362.42 18,111,009.54 0.00 19,307,362.42 0.00 18,111,009.54
Total 20,345,690.78 18,111,009.54 0.00 20,345,690.78 0.00 18,111,009.54
Note: The reason for the Company’s re-sell inventory depreciation provision in the current
period is the external sales of the inventory for which the inventory depreciation provision has been
made.
10. Non-current assets due within one year
Item Ending balance Balance at the end of prior year Remarks
long-term accounts receivable due For details, please
92,749,731.30 4,389,768.36
within 1 year refer to Note VI. 12.
11. Other current assets
Item Ending balance Balance at the end of prior year
Deferred expenses 164,706,030.82 106,167,297.81
Input taxes retained for deduction purpose 553,743,560.98 850,870,478.90
Overpaid tax 30,789,142.69 31,897,740.08
Input taxes to be certified 3,105,506.54 0.00
Principal and interest of entrusted loan 1,001,440,816.65 600,855,983.33
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Item Ending balance Balance at the end of prior year
Hedged items 454,738,420.94 0.00
Estimated net realizable value of products in
2,030,774.81 0.00
trial production
Total 2,210,554,253.43 1,589,791,500.12
12. Long-term accounts receivable
Long-term accounts receivable
Ending balance Balance at the end of prior year
Impairme Impairme
Item
Book balance nt Book value Book balance nt Book value
Provision Provision
250,226,220. 250,226,220. 233,955,249. 233,955,249.
Finance leases 0.00 0.00
95 95 20 20
Of which: unrealized financing -24,800,126. -24,800,126. -43,765,551. -43,765,551.
0.00 0.00
income 32 32 02 02
Less: Portion due within one year 92,749,731.3 92,749,731.3
0.00 4,389,768.36 0.00 4,389,768.36
(Note VI. 10) 0 0
157,476,489. 157,476,489. 229,565,480. 229,565,480.
Total 0.00 0.00
65 65 84 84
13. Long-term equity investments
(1) Investments in joint ventures and associates
Changes of increase or decrease in the current period
Investment gains Other
Changes
Investee Beginning balance Additional Negative and losses comprehensive
in other
investment investment recognized under income
equity
the equity method adjustment
I. Associates
Zhejiang Baling Hengyi
1,139,905,940.15 0.00 0.00 99,150,058.48 0.00 0.00
Caprolactam Co., Ltd.
Zhejiang Yisheng New Material
850,568,431.26 50,000,000.00 0.00 25,768,873.47 0.00 0.00
Co., Ltd.
Subtotal 1,990,474,371.41 50,000,000.00 0.00 124,918,931.95 0.00 0.00
II. Joint ventures
Dalian Yisheng Investment Co.,
1,801,485,833.87 0.00 0.00 299,953,892.22 2,472,528.93 0.00
Ltd.
Hainan Yi Sheng Petrochemical
1,555,592,148.45 0.00 0.00 492,373,119.54 6,202,593.75 0.00
Co., Ltd.
China Zheshang Bank 3,892,730,356.96 0.00 0.00 401,922,655.50 -70,646,400.00 0.00
Ningbo Jinhou Industry
14,408,927.05 0.00 0.00 -143,825.70 0.00 0.00
Investment Co., Ltd.
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Changes of increase or decrease in the current period
Investment gains Other
Changes
Investee Beginning balance Additional Negative and losses comprehensive
in other
investment investment recognized under income
equity
the equity method adjustment
Hangzhou Huixin Zhishi
5,556,175.52 0.00 5,556,175.52 0.00 0.00 0.00
Technology Co., Ltd.
Dongzhan Shipping Co., Ltd. 0.00 132,461,850.00 0.00 8,709,007.75 0.00 0.00
Subtotal 7,269,773,441.85 132,461,850.00 5,556,175.52 1,202,814,849.31 -61,971,277.32 0.00
Total 9,260,247,813.26 182,461,850.00 5,556,175.52 1,327,733,781.26 -61,971,277.32 0.00
(Contd.)
Changes of increase or decrease in the current period
Impairment
Announcement of
provision
Investee release Ending balance
Impairment provision Others Ending
Cash dividend or
balance
profit
I. Associates
Zhejiang Baling Hengyi
74,145,003.24 0.00 0.00 1,164,910,995.39 0.00
Caprolactam Co., Ltd.
Zhejiang Yisheng New
0.00 0.00 0.00 926,337,304.73 0.00
Material Co., Ltd.
Subtotal 74,145,003.24 0.00 0.00 2,091,248,300.12 0.00
II. Joint ventures
Dalian Yisheng Investment
89,250,000.00 0.00 0.00 2,014,662,255.02 0.00
Co., Ltd.
Hainan Yi Sheng
297,500,000.00 0.00 0.00 1,756,667,861.74 0.00
Petrochemical Co., Ltd.
China Zheshang Bank 179,536,627.92 0.00 0.00 4,044,469,984.54 0.00
Ningbo Jinhou Industry
0.00 0.00 0.00 14,265,101.35 0.00
Investment Co., Ltd.
Hangzhou Huixin Zhishi
0.00 0.00 0.00 0.00 0.00
Technology Co., Ltd.
Dongzhan Shipping Co., Ltd. 0.00 0.00 0.00 141,170,857.75 0.00
Subtotal 566,286,627.92 0.00 0.00 7,971,236,060.40 0.00
Total 640,431,631.16 0.00 0.00 10,062,484,360.52 0.00
14. Other equity instruments investment
(1) Other equity instruments investment
Beginning
Item Ending balance
balance
Zhejiang Hengchuang Advanced Functional Fiber Innovation Center Co., Ltd. 600,000.00 600,000.00
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Beginning
Item Ending balance
balance
Jiangsu New Vision Advanced Functional Fiber Innovation Center Co., Ltd. 5,000,000.00 0.00
Total 5,600,000.00 600,000.00
15. Fixed assets
Item Ending balance Beginning balance
Fixed assets 41,521,433,906.78 38,775,633,926.67
Liquidation of fixed assets 58,294,574.17 0.00
Total 41,579,728,480.95 38,775,633,926.67
(1) Fixed assets
①Information on fixed assets
Houses & Machinery Transportation Office facilities
Item Structures Total
buildings equipment equipment & others
I. Original book value
1. Balance at the
beginning of current 10,266,177,506.41 1,148,321,883.71 37,060,711,323.00 194,201,545.23 164,739,722.32 48,834,151,980.67
year
2. Increase in current
326,410,473.41 1,367,338,006.21 4,122,790,793.75 125,049,469.69 67,966,935.45 6,009,555,678.51
year
(1) Acquisition 48,833,066.01 315,294.63 74,938,894.34 82,914,413.54 19,605,322.81 226,606,991.33
(2) Transfer from
734,640,862.20 1,278,414,740.57 4,286,876,174.66 1,313,442.38 10,117,291.95 6,311,362,511.76
construction in progress
(3) Changes in scope of
0.00 0.00 0.00 0.00 0.00 0.00
consolidation
(4) Reversal of rebuilt
0.00 88,615,649.00 985,332,746.02 0.00 0.00 1,073,948,395.02
fixed assets
(5) Reclassification of
0.00 0.00 0.00 45,478,017.34 42,101,831.44 87,579,848.78
fixed assets
(6) Others (conversion
of foreign currency -457,063,454.80 -7,677.99 -1,224,357,021.27 -4,656,403.57 -3,857,510.75 -1,689,942,068.38
statements)
3. Decrease in current
59,231,592.96 21,106,177.10 382,471,512.43 57,790,602.37 4,005,801.07 524,605,685.93
year
(1) Disposal or
6,033,786.14 0.00 165,360,220.38 25,839,438.34 1,981,233.85 199,214,678.71
retirement
(2) Changes in scope of
53,197,806.82 21,106,177.10 3,977,908.26 31,951,164.03 2,024,567.22 112,257,623.43
consolidation
(3) Transfer into
0.00 0.00 125,553,535.01 0.00 0.00 125,553,535.01
construction in progress
(4) Reclassification of
0.00 0.00 87,579,848.78 0.00 0.00 87,579,848.78
fixed assets
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Houses & Machinery Transportation Office facilities
Item Structures Total
buildings equipment equipment & others
4. Balance at the end of
10,533,356,386.86 2,494,553,712.82 40,801,030,604.32 261,460,412.55 228,700,856.70 54,319,101,973.25
current year
II. Accumulated
depreciation
1. Balance at the
beginning of current 694,101,771.93 457,378,903.46 8,708,067,381.58 105,278,599.14 93,691,397.89 10,058,518,054.00
year
2. Increase in current
240,098,383.98 108,639,361.91 2,524,435,786.38 24,288,465.47 20,106,720.01 2,917,568,717.75
year
(1) Provision 248,326,703.02 63,046,877.97 1,869,362,949.74 25,137,668.80 21,014,075.19 2,226,888,274.72
(2) Reversal of rebuilt
0.00 45,594,367.30 687,712,536.76 0.00 0.00 733,306,904.06
fixed assets
(3) Reclassification of
0.00 0.00 0.00 876,154.69 1,135,462.75 2,011,617.44
fixed assets
(4) Others (conversion
of foreign currency -8,228,319.04 -1,883.36 -32,639,700.12 -1,725,358.02 -2,042,817.93 -44,638,078.47
statements)
3. Decrease in current
7,936,518.27 9,623,916.28 117,545,774.92 40,659,986.47 2,652,509.34 178,418,705.28
year
(1) Disposal or
0.00 0.00 93,657,258.13 22,659,998.76 1,210,871.51 117,528,128.40
retirement
(2) Changes in scope of
7,936,518.27 9,623,916.28 1,913,139.25 17,999,987.71 1,441,637.83 38,915,199.34
consolidation
(3) Reclassification of
0.00 0.00 8,621,568.37 0.00 0.00 8,621,568.37
fixed assets
(4) Transfer into
0.00 0.00 13,353,809.17 0.00 0.00 13,353,809.17
construction in progress
4. Ending balance 926,263,637.64 556,394,349.09 11,114,957,393.04 88,907,078.14 111,145,608.56 12,797,668,066.47
III. Impairment
provision
1. Balance at the
beginning of current 0.00 0.00 0.00 0.00 0.00 0.00
year
2. Increase in current
0.00 0.00 0.00 0.00 0.00 0.00
year
(1) Provision 0.00 0.00 0.00 0.00 0.00 0.00
3. Decrease in current
0.00 0.00 0.00 0.00 0.00 0.00
year
(1) Disposal or
0.00 0.00 0.00 0.00 0.00 0.00
retirement
4. Ending balance 0.00 0.00 0.00 0.00 0.00 0.00
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Houses & Machinery Transportation Office facilities
Item Structures Total
buildings equipment equipment & others
IV. Book value
1. Book value at the
9,607,092,749.22 1,938,159,363.73 29,686,073,211.28 172,553,334.41 117,555,248.14 41,521,433,906.78
end of this year
2. Book value at the
9,572,075,734.48 690,942,980.25 28,352,643,941.42 88,922,946.09 71,048,324.43 38,775,633,926.67
beginning of this year
②Temporarily idle fixed assets
Accumulated Impairment
Item Original book value Book value
depreciation provision
Houses & buildings 0.00 0.00 0.00 0.00
Structures 278,529.56 112,456.32 0.00 166,073.24
Machinery equipment 14,080,545.76 4,273,816.60 0.00 9,806,729.16
Transportation vehicles 0.00 0.00 0.00 0.00
Office facilities & others 0.00 0.00 0.00 0.00
Total 14,359,075.32 4,386,272.92 0.00 9,972,802.40
③Explanation of fixed assets that did not have title certificates
Reasons for failure to complete relevant affairs
Item Book value
of property right certificate
Comprehensive water supply station
2,864,075.71 Property acquired by auction is being handled.
workshop
110KVA substation 2,173,449.63 Property acquired by auction is being handled.
Power station workshop 2,349,344.81 Property acquired by auction is being handled.
Fire water supply station 4,353,211.21 Supporting auxiliary facilities
110KV substation 3,521,294.92 Supporting auxiliary facilities
Dormitory Building 2# 15,796,465.38 Property acquired by auction is being handled.
Dormitory Building 4# 32,132,205.84 Property acquired by auction is being handled.
Dormitory Building 3# 33,891,288.36 Property acquired by auction is being handled.
Phase II polyester slurry preparation room 4,347,246.52 Property acquired by auction is being handled.
Phase II polyester building 12,732,519.76 Property acquired by auction is being handled.
Spinning CD workshop 135,282,913.69 Property acquired by auction is being handled.
New thermal coal station in Phase I 7,655,071.91 Property acquired by auction is being handled.
Smart stereoscopic storehouse 41,862,383.94 Property acquired by auction is being handled.
(2) Liquidation of fixed assets
Item Ending balance Balance at the end of prior year
Machinery equipment 58,294,574.17 0.00
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Item Ending balance Balance at the end of prior year
Total 58,294,574.17 0.00
16. Construction in progress
Item Ending balance Balance at the end of prior year
Construction in progress 7,605,609,683.33 3,437,747,296.61
Engineering materials 195,923,299.39 252,384,254.69
Total 7,801,532,982.72 3,690,131,551.30
(1) Construction in progress
①Description
Ending balance Balance at the end of prior year
Impairm Impair
Item ent ment
Book balance Book value Book balance Book value
provisio provisi
n on
Fujian Yijin Project Phase II 924,046,018.56 0.00 924,046,018.56 60,768,238.72 0.00 60,768,238.72
Haining Jianshan Industrial Park
645,712,875.42 0.00 645,712,875.42 419,125,628.96 0.00 419,125,628.96
Cogeneration Project
Haining New Material Construction 5,309,102,204.6
5,309,102,204.69 0.00 1,768,344,567.98 0.00 1,768,344,567.98
Project 9
Brunei Refining and Chemical
402,295,413.64 0.00 402,295,413.64 80,351,605.02 0.00 80,351,605.02
Project Phase II
Brunei PX Project Promote 0.00 0.00 0.00 0.00 0.00 0.00
Upgrading and Reforming Project
with an Annual Output of 500,000
0.00 0.00 0.00 414,122,083.64 0.00 414,122,083.64
tons of Differential Functional
Fibers
PIA Project 1,046,212.13 0.00 1,046,212.13 482,055,552.72 0.00 482,055,552.72
Other projects 323,406,958.89 0.00 323,406,958.89 212,979,619.57 0.00 212,979,619.57
7,605,609,683.3 3,437,747,296.6 3,437,747,296.6
Total 7,605,609,683.33 0.00 0.00
3 1 1
②Changes of major construction in progress projects
Budget Amount of Other
Increase in current
amount Beginning transferred into decrease in
Item year Ending balance
(RMB balance fixed assets in current
Amount
10,000) current year year
Fujian Yijin Project Phase II 134,100.00 60,768,238.72 863,277,779.84 0.00 0.00 924,046,018.56
Haining Jianshan Industrial
83,299.00 419,125,628.96 459,984,799.80 233,397,553.34 0.00 645,712,875.42
Park Cogeneration Project
334
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Budget Amount of Other
Increase in current
amount Beginning transferred into decrease in
Item year Ending balance
(RMB balance fixed assets in current
Amount
10,000) current year year
Haining New Material
892,500.00 1,768,344,567.98 4,844,273,114.87 1,303,515,478.16 0.00 5,309,102,204.69
Construction Project
Brunei Refining and Chemical
$1,365,389.00 80,351,605.02 321,943,808.62 0.00 0.00 402,295,413.64
Project Phase II
Brunei PX Project Promote $43,000.00 0.00 1,945,445,827.09 1,945,445,827.09 0.00 0.00
Upgrading and Reforming
Project with an Annual Output
227,220.00 414,122,083.64 966,302,305.42 1,380,424,389.06 0.00 0.00
of 500,000 tons of Differential
Functional Fibers
PIA Project 35,085.00 482,055,552.72 179,535,923.23 660,395,263.82 150,000.00 1,046,212.13
Other projects - 212,979,619.57 1,239,252,830.57 1,128,825,491.25 0.00 323,406,958.89
Total - 3,437,747,296.61 10,820,016,389.44 6,652,004,002.72 150,000.00 7,605,609,683.33
(Contd.)
Proportion of
Engineerin Interest Of which: amount Capitalization
project
g capitalization of interest rate of interest
Project name accumulated Capital source
Schedule Accumulative capitalization in in current year
investment in
(%) amount current year (%)
budget (%)
Fujian Yijin Project Phase Self-raising
86.00 91.00 22,091,717.22 22,091,717.22 4.79%
II and borrowing
Haining Jianshan Industrial Self-raising
83.00 95.00 45,601,673.82 35,436,763.98 5.07%
Park Cogeneration Project and borrowing
Haining New Material Self-raising
77.00 72.00 174,045,464.28 141,666,879.91 4.29%
Construction Project and borrowing
Brunei Refining and
0.38 0.38 0.00 0.00 - Self-financing
Chemical Project Phase II
Brunei PX Project Promote 55.47 100.00 0.00 0.00 - Self-financing
Upgrading and Reforming
Project with an Annual
Self-raising
Output of 500,000 tons of 92.00 100.00 27,954,550.75 2,958,895.36 4.35%
and borrowing
Differentiated Functional
Fibers
Self-raising
PIA Project 91.00 99.84 6,762,385.65 4,378,304.36 4.35%
and borrowing
Self-raising
Other projects - - 24,569,623.77 20,525,931.05 -
and borrowing
Total - - 301,025,415.49 227,058,491.88
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(2) Engineering materials
Ending balance Balance at the end of prior year
Item Impairmen Impairmen
Book balance Book value Book balance Book value
t provision t provision
Special
129,111,961.49 0.00 129,111,961.49 211,770,885.95 0.00 211,770,885.95
materials
Dedicated
66,811,337.90 0.00 66,811,337.90 40,613,368.74 0.00 40,613,368.74
equipment
Total 195,923,299.39 0.00 195,923,299.39 252,384,254.69 0.00 252,384,254.69
17. Intangible assets
(1) Information on intangible assets
Software and
Item Land use right Patent Trademark Total
others
I. Original book value
1. Balance at the
1,347,111,967.03 650,042,719.74 19,740.00 108,142,649.37 2,105,317,076.14
beginning of current year
2. Increase in current year 326,533,878.06 0.00 0.00 20,570,409.88 347,104,287.94
(1) Acquisition 326,533,878.06 0.00 0.00 20,570,409.88 347,104,287.94
(2) Internal R&D 0.00 0.00 0.00 0.00 0.00
(3) Business combination 0.00 0.00 0.00 0.00 0.00
(4) Capital invested by
0.00 0.00 0.00 0.00 0.00
investors
3. Decrease in current
63,933,808.57 22,355,802.30 0.00 3,128,820.51 89,418,431.38
year
(1) Disposal 0.00 0.00 0.00 0.00 0.00
(2) Changes in scope of
63,933,808.57 0.00 0.00 0.00 63,933,808.57
business consolidation
(3) Others 0.00 22,355,802.30 0.00 3,128,820.51 25,484,622.81
4. Ending balance 1,609,712,036.52 627,686,917.44 19,740.00 125,584,238.74 2,363,002,932.70
II. Accumulated
amortization
1. Balance at the
162,762,832.03 307,334,773.70 8,460.00 34,290,496.61 504,396,562.34
beginning of current year
2. Increase in current year 41,249,366.38 34,045,300.68 4,230.00 16,231,841.66 91,530,738.72
(1) Provision 41,249,366.38 34,045,300.68 4,230.00 16,231,841.66 91,530,738.72
(2) Changes in scope of
0.00 0.00 0.00 0.00 0.00
business consolidation
(2) Others 0.00 0.00 0.00 0.00 0.00
3. Decrease in current 11,294,973.25 2,038,200.31 0.00 408,497.88 13,741,671.44
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Software and
Item Land use right Patent Trademark Total
others
year
(1) Disposal 0.00 0.00 0.00 0.00 0.00
(2) Changes in scope of
11,294,973.25 0.00 0.00 0.00 11,294,973.25
business consolidation
(3) Others 0.00 2,038,200.31 0.00 408,497.88 2,446,698.19
4. Ending balance 192,717,225.16 339,341,874.07 12,690.00 50,113,840.39 582,185,629.62
III. Impairment provision 0.00 0.00 0.00 0.00 0.00
1. Balance at the
0.00 0.00 0.00 0.00 0.00
beginning of current year
2. Increase in current year 0.00 0.00 0.00 0.00 0.00
(1) Provision 0.00 0.00 0.00 0.00 0.00
3. Decrease in current
0.00 0.00 0.00 0.00 0.00
year
(1) Disposal 0.00 0.00 0.00 0.00 0.00
4. Ending balance 0.00 0.00 0.00 0.00 0.00
IV. Book value
1. Book value at the end
1,416,994,811.36 288,345,043.37 7,050.00 75,470,398.35 1,780,817,303.08
of this year
2. Book value at the
1,184,349,135.00 342,707,946.04 11,280.00 73,852,152.76 1,600,920,513.80
beginning of this year
(2) Important individual intangible assets
Book value at the Remaining amortization
Item
end of the period period (month)
Land use right of Zhejiang Hengyi High-tech Materials Co., Ltd. 48,370,084.42 449.00
Patent license of Hengyi Industries Sdn Bhd 170,500,771.12 107.00
Patent license of Hengyi Industries Sdn Bhd 107.00
66,724,973.16
Land use right of Haining Hengyi New Materials Co., Ltd. 66,320,302.68 566.00
Land use right of Taicang Yifeng Chemical Fiber Co., Ltd. 52,252,852.68 486.00
Land use right of Zhejiang Shuangtu New Materials Co., Ltd. 204,100,275.22 488.00
Land use right of Fujian Yijin Chemical Fiber Co., Ltd. 67,919,642.70 446.00
Land use right of Jiaxing Yipeng Chemical Fiber Co., Ltd. 148,794,310.01 398.00
(3) Intangible assets with restricted ownership or right to use
Book value at the end of the
Item Amortization amount in the current period Reason for restriction
period
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Book value at the end of the
Item Amortization amount in the current period Reason for restriction
period
Land use right 638,649,800.63 20,573,788.29 Mortgage loan
18. Development expenditure
Increase in current Decrease in the
year current period
Beginning Confirm Transfer to Ending
Item Internal
balance Oth ed as current balance
development
ers intangibl profit and
expenditure
e assets loss
Henglan Technology R&D PTT
3,517,300.44 3,502,034.92 0.00 0.00 0.00 7,019,335.36
Industrialization Project
Polyester POY and FDY Spinning Finish
0.00 6,388.67 0.00 0.00 0.00 6,388.67
Device Project
Development and Industrialization of
0.00 567,398.18 0.00 0.00 0.00 567,398.18
Branching PA6 Resin with High LDPE
Development of Differential New Flame
0.00 37,632.66 0.00 0.00 0.00 37,632.66
Retardant Products
Total 3,517,300.44 4,113,454.43 0.00 0.00 0.00 7,630,754.87
19. Goodwill
(1) Original book value
Increase in current Decrease in the
Name or formation of investee
Beginning balance year current period Ending balance
Goodwill matters
Business combinations Disposal
Zhejiang Shuangtu New
221,865,586.69 0.00 0.00 221,865,586.69
Materials Co., Ltd.
(2) Impairment test process of goodwill
In November 2018, the Company issued shares to purchase 100% equity in Zhejiang Shuangtu
New Materials Co., Ltd. (hereinafter referred to as Shuangtu) at a consideration of RMB 2.105
billion, and carried out the apportionment of the merger consideration in accordance with the
accounting standards. The fair value share of the identifiable net assets of the acquiree on the
merger date was RMB 1,883,134,400, which resulted in the goodwill of RMB 221,865,600 in the
consolidated accounting statements.
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
2,362,793,900 based on the consolidated financial statement as at December 31, 2020 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 as at
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December 31, 2020 was RMB 2,612,223,100, and no impairment occurred. Details are as follows:
Currency Unit: RMB
10,000
Item Book amount of consolidated statements
Fixed assets 192,886.31
Construction in progress 34.74
Intangible assets 21,080.86
Long-term deferred expenses 90.92
Goodwill recognized in consolidated statements 22,186.56
Subtotal of book value of asset groups containing goodwill 236,279.39
Value of goodwill not recognized as attributable to minority
0.00
shareholders' equity
Total adjusted book value of asset groups containing goodwill 236,279.39
Present value (recoverable amount) of the estimated future cash
261,222.31
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 Z. L. P. B. Z. [2021] No. 119 Asset Appraisal
Report issued by Zhejiang United Yaoxin Assets Appraisal Co., Ltd. on April 16, 2021 were used.
The recoverable amount of the asset groups above is determined according to the present value
of the expected future cash flow. The future cash flow is determined based on the profit forecast
from 2021 to 2025 as approved by the management. It is assumed that the future cash flow of the
asset groups will remain the same as that in 2025 and a discount rate of 13.29% will be used as
from 2026.
Important assumptions for goodwill impairment test:
①There are no major changes in the current macroeconomic, financial and industrial policies
of the state;
②There are no major changes in the Company’s social and economic environment and the
taxes, tax rates and other policies implemented by the Company in the future business period;
③The Company’s asset scale, composition, main business, product structure, revenue and cost
composition, sales strategy, cost control, etc. can be predicted and developed in accordance with the
Company’s plan in the future business period;
◇The contracts signed by the Company so far are valid and can be performed;
⑤For this impairment test, it is assumed that the equipment and related assets can be used
normally and reasonably, and the shutdown and maintenance caused by the improper use thereof are
not considered;
⑥For this estimate, it is assumed that the future price fluctuations of the main raw materials
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PTA and MEG are consistent with the product price fluctuations.
20. Long-term deferred expenses
Amortization
Beginning Increase in the Other decrease
Item amount in the Ending balance
balance current period in current year
current period
Renovation cost 2,973,993.44 527,015.22 1,540,626.43 75,134.81 1,885,247.42
Exterior wall coating
1,266,564.73 1,477,064.22 963,302.76 0.00 1,780,326.19
project
Workshop
1,009,819.80 0.00 367,207.17 0.00 642,612.63
reinforcement project
Rental fee 1,208,333.27 32,320,000.00 1,358,048.91 0.00 32,170,284.36
Transfer fee of storage
1,056,624.38 0.00 147,435.96 0.00 909,188.42
tank use right
Catalyst 659,497,018.52 0.00 106,984,706.24 36,841,970.52 515,670,341.76
Others 5,929,132.74 2,460,336.92 2,519,154.18 13,431.95 5,856,883.53
Total 672,941,486.88 36,784,416.36 113,880,481.65 36,930,537.28 558,914,884.31
21. Deferred income tax assets and deferred income tax liabilities
(1) Details about non-offset deferred income tax assets
Ending balance Balance at the end of prior year
Item Deductible temporaryDeferred income tax Deductible Deferred income
difference assets temporary difference tax assets
Impairment loss on credit
39,077,190.61 6,038,615.66 54,170,571.42 13,336,764.71
assets
Asset impairment provision 18,111,009.54 3,831,264.37 20,345,690.78 4,086,183.59
Changes of fair value of
financial assets held for 17,242,006.11 4,633,044.84 18,508,184.39 4,778,062.35
trading
Unrealized profit arising
105,803,721.83 26,450,930.46 108,481,550.28 27,120,387.57
from intra-group trading
Accrued expense 3,121,974.85 468,296.23 2,211,333.66 552,833.42
Deferred income 85,878,905.11 12,881,835.77 79,871,224.02 19,824,851.74
Deductible losses 266,851,757.20 66,712,939.30 336,276,605.91 84,069,151.49
Cash flow hedging 91,296,116.20 14,843,417.43 13,017,600.00 1,952,640.00
Total 627,382,681.45 135,860,344.06 632,882,760.46 155,720,874.87
(2) Details about non-offset deferred income tax liabilities
Ending balance Balance at the end of prior year
Taxable Taxable
Item Deferred income tax Deferred income tax
temporary temporary
liabilities liabilities
differences differences
Asset valuation appreciation of business 442,951,456.94 73,672,808.85 399,780,561.04 99,945,140.27
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Ending balance Balance at the end of prior year
Taxable Taxable
Item Deferred income tax Deferred income tax
temporary temporary
liabilities liabilities
differences differences
combinations not under common control
Changes of fair value of financial assets
139,028,274.42 33,975,572.86 0.00 0.00
held for trading
One-off deduction difference before
26,158,082.46 3,923,712.37 108,490,940.06 27,122,734.93
income tax on fixed assets
Total 608,137,813.82 111,572,094.08 508,271,501.10 127,067,875.20
(3) Details of unconfirmed deferred income tax assets
Item Ending balance Balance at the end of prior year
Deductible temporary differences 13,278,842.77 19,373,328.22
Deductible losses 787,814,103.31 522,947,999.94
Total 801,092,946.08 542,321,328.16
(4) Deductible losses of unconfirmed deferred income tax assets will expire the next year
Year Ending balance Balance at the end of prior year
2020 years -- 9,055,754.78
2021 26,715,814.79 50,772,045.66
2022 31,866,477.40 33,007,681.86
2023 229,079,938.78 251,186,681.12
2024 190,651,121.96 178,925,836.52
2025 309,500,750.38 --
Total 787,814,103.31 522,947,999.94
22. Other non-current assets
Item Ending balance Balance at the end of prior year
Prepaid project equipment payment 866,329,855.24 3,796,569,779.95
Advance payment for transfer of pollution discharge right 10,961,977.73 10,961,977.73
Advance payment for land 89,120,800.00 3,435,417.60
Others 0.00 2,757,364.90
Total 966,412,632.97 3,813,724,540.18
23. Short-term loans
(1) Classification of short-term loans
Item Ending balance Balance at the end of prior year
Pledge loan 10,134,292,276.14 8,623,348,275.08
Mortgage loan 1,096,431,610.43 2,919,310,000.00
Guaranteed loan 13,692,168,947.17 11,549,999,620.90
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Item Ending balance Balance at the end of prior year
Fiduciary loan 1,544,609,239.54 208,295,861.55
Loan interest 15,170,052.70 22,952,249.03
Total 26,482,672,125.98 23,323,906,006.56
Note: For asset classes and amounts of mortgaged loans, please refer to Note VI-66.
For the portage asset category and amount of pledge loan, please refer to Note VI-66.
24. Financial liabilities held for trading
Decrease in
Beginning Increase in Ending
Item the current
balance current year balance
period
Financial liabilities held for trading 1,399,903.27 9,301,029.70 1,399,903.27 9,301,029.70
Among which: issued bonds held for trading 0.00 0.00 0.00 0.00
Derivative financial liabilities 1,399,903.27 9,301,029.70 1,399,903.27 9,301,029.70
Others 0.00 0.00 0.00 0.00
Specified as financial liability at fair value
0.00 0.00 0.00 0.00
through profit or loss
Total 1,399,903.27 9,301,029.70 1,399,903.27 9,301,029.70
25. Derivative financial liabilities
Item Ending balance Balance at the end of prior year
Future exchange derivatives 11,490,000.00 0.00
Futures 125,118,747.10 0.00
Total 136,608,747.10 0.00
26. Notes payable
Category Ending balance Balance at the end of prior year
Commercial acceptance bills 0.00 0.00
Bank acceptance bills 1,107,267,473.78 1,278,572,207.08
Domestic letter of credit 80,000,000.00 971,722,500.00
Total 1,187,267,473.78 2,250,294,707.08
27. Accounts payable
(1) Accounts payable are listed as follows
Item Ending balance Balance at the end of prior year
Within 1 year 4,448,180,007.83 9,607,032,194.91
1-2 years 1,259,912,844.31 54,016,044.40
2-3 years 20,554,317.73 7,349,394.36
Over 3 years 12,054,375.63 11,451,246.47
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Item Ending balance Balance at the end of prior year
Total 5,740,701,545.50 9,679,848,880.14
(2) Significant accounts payable with aging exceeding 1 year
Reasons for outstanding or
Item Ending balance
carry over
China Chemical Engineering Second Construction Corporation
119,617,476.74 Warranty has not expired
Brunei Branch
China Chemical Engineering Third Construction Corporation
113,475,517.11 Warranty has not expired
Brunei Branch
Nanjing Chemical Construction Co., Ltd. Brunei Branch 120,214,551.35 Warranty has not expired
China Construction Installation Engineering (Brunei) Co., Ltd. 75,439,004.91 Warranty has not expired
CSCPE(B)SDN BHD 66,176,088.39 Warranty has not expired
Total 494,922,638.50 ——
28. Accounts received in advance
(1) Accounts received in advance are listed as follows
Item Ending balance Balance at the end of prior year
Within 1 year 0.00 561,874,711.40
1-2 years 0.00 31,467,549.24
2-3 years 0.00 2,594,233.19
Over 3 years 0.00 150,766.79
Total 0.00 596,087,260.62
29. Contract liabilities
(1) Contract liabilities
Item Ending balance
Advance receipt of payment for contracts unfulfilled 1,620,044,525.95
Less: Those included in other current liabilities (Note VI. 34) 151,856,844.93
Total 1,468,187,681.02
(2) There were no significant changes in the book value in the current period.
30. Wages payable
(1) Wages payable are listed as follows
Decrease in the
Item Beginning balance Increase in current year Ending balance
current period
I. Short-term remuneration 341,106,195.21 2,174,108,275.14 2,224,701,928.97 290,512,541.38
II. Post-employment benefit and
2,963,575.06 82,229,787.64 82,680,120.74 2,513,241.96
defined contribution plan
III. Termination benefits 0.00 2,853,563.78 2,853,563.78 0.00
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Decrease in the
Item Beginning balance Increase in current year Ending balance
current period
IV. Other benefits due within one
0.00 0.00 0.00 0.00
year
Total 344,069,770.27 2,259,191,626.56 2,310,235,613.49 293,025,783.34
(2) Short-term remuneration is listed as follows
Decrease in the
Item Beginning balance Increase in current year Ending balance
current period
1. Wages, bonuses, allowances &
328,452,040.04 1,968,939,703.71 2,015,662,285.13 281,729,458.62
subsidies
2. Employee welfare 0.00 76,471,291.53 75,723,515.98 747,775.55
3. Social insurance 1,646,843.42 65,467,092.19 66,068,498.89 1,045,436.72
Of which: medical insurance 1,417,772.33 62,530,914.71 62,945,192.99 1,003,494.05
Employment injury
37,005.54 1,804,930.94 1,815,871.87 26,064.61
insurance
Maternity insurance 192,065.55 1,131,246.54 1,307,434.03 15,878.06
4. Housing accumulation fund 891,971.35 36,084,600.06 35,907,255.54 1,069,315.87
5. Labor union & employee
10,115,340.40 27,145,587.65 31,340,373.43 5,920,554.62
education expense
6. Short-term paid absences 0.00 0.00 0.00 0.00
7. Short-term profit sharing plan 0.00 0.00 0.00 0.00
8. Others 0.00 0.00 0.00 0.00
Total 341,106,195.21 2,174,108,275.14 2,224,701,928.97 290,512,541.38
(3) Defined contribution plan is listed as follows
Decrease in the
Item Beginning balance Increase in current year Ending balance
current period
1. Basic pension insurance 2,886,265.39 79,288,130.43 79,712,393.85 2,462,001.97
2. Unemployment insurance 77,309.67 2,941,657.21 2,967,726.89 51,239.99
3. Enterprise annuity payment 0.00 0.00 0.00 0.00
Total 2,963,575.06 82,229,787.64 82,680,120.74 2,513,241.96
31. Taxes and dues payable
Item Ending balance Balance at the end of prior year
VAT 261,972,242.58 51,456,001.00
Corporate income tax: 328,881,257.17 214,774,318.58
Urban maintenance and construction tax 9,304,479.42 3,933,259.13
Education surcharges 4,089,343.55 1,716,934.27
Land use tax 11,014,092.06 12,232,209.40
Property tax 13,804,263.97 24,666,900.84
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Item Ending balance Balance at the end of prior year
Individual income tax 1,521,278.02 1,341,941.21
Stamp duty 6,777,481.05 3,619,939.70
Local education surcharges 2,726,229.02 1,143,445.11
Disabled employment security fund 58,226.03 219,444.49
Others 341,671.35 1,812,712.79
Total 640,490,564.22 316,917,106.52
32. Other payables
Item Ending balance Balance at the end of prior year
Interests payable 0.00 0.00
Dividends payable 173,750,759.38 38,250,759.38
Other payables 232,331,788.44 219,093,341.38
Total 406,082,547.82 257,344,100.76
(1) Dividends payable
Item Ending balance Balance at the end of prior year
Common stock dividends 759.38 759.38
Dividends payable by subsidiaries to minority shareholders 173,750,000.00 38,250,000.00
Total 173,750,759.38 38,250,759.38
(2) Other accounts payable
①Presented by nature of amount
Item Ending balance Balance at the end of prior year
Account current 21,116,555.50 30,923,407.60
Deposit & security 122,878,434.45 84,305,935.72
Nature of unsettled expenses 74,696,444.37 28,582,313.96
ESOP repurchase obligation 0.00 55,450,720.00
Receipts under custody 1,990,402.06 179,115.43
Others 11,649,952.06 19,651,848.67
Total 232,331,788.44 219,093,341.38
②Advance payments are listed by aging
Item Ending balance Balance at the end of prior year
Within 1 year 181,866,809.75 132,960,545.15
1-2 years 29,350,701.44 15,446,777.82
2-3 years 7,609,359.46 59,015,418.54
Over 3 years 13,504,917.79 11,670,599.87
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Item Ending balance Balance at the end of prior year
Total 232,331,788.44 219,093,341.38
③Significant accounts payable with aging exceeding 1 year
Item Ending balance Reasons for outstanding or carry over
Zhejiang Yaxia Decoration Group Co., Ltd. 5,195,500.00 Incomplete settlement
Zhejiang Weixin Trading Co., Ltd. 3,419,908.00 Pending litigation
Yousheng Village, Yaqian Town, Xiaoshan 2,136,825.00 Margin not due for payment
Zhejiang Dongxing Fire Engineering Co., Ltd. 1,250,000.00 Not due for repayment
Total 12,002,233.00 ---
33. Non-current liabilities due within one year
Balance at the
Item Ending balance
end of prior year
Long-term loans and interests due within 1 year (Note VI-35) 1,756,790,484.15 651,999,161.28
Bonds payable and interests due within 1 year (Note VI-36) 1,984,595,701.21 179,587,499.88
Long-term accounts payable and interests due within 1 year (Note VI-37) 746,067,210.88 674,420,973.26
Total 4,487,453,396.24 1,506,007,634.42
34. Other current liabilities
Item Ending balance Beginning balance
Output tax to be transferred 151,856,844.93 N/A
35. Long-term loans
Item Ending balance Balance at the end of prior year
Pledge loan 310,937,295.00 0.00
Mortgage loan 12,650,509,052.06 12,591,548,759.98
Guaranteed loan 5,375,637,314.17 773,564,066.31
Interests payable 29,609,852.15 20,188,896.12
Less: long-term loans due within 1 year (Note VI-33) 1,756,790,484.15 651,999,161.28
Total 16,609,903,029.23 12,733,302,561.13
Note: For asset classes and amounts of mortgaged loans, please refer to Note VI-66.
For the portage asset category and amount of pledge loan, please refer to Note VI-66.
36. Bonds payable
(1) Bonds payable
Item Ending balance Balance at the end of prior year
Corporate bond 3,521,330,557.49 3,989,762,031.71
(2) Changes in bond payables (excluding other financial instruments such as preferred shares
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and perpetual bonds classified as financial liabilities)
Name of bonds Face value Date of issue Bond maturity Issue amount Beginning balance
"Belt and Road" corporate bonds 500,000,000.00 2018-3-22 3 years 497,500,000.00 523,212,465.31
Corporate bonds (Tranche 1) 1,000,000,000.00 2018-3-22 3 years 995,000,000.00 1,048,728,784.49
Corporate Bond (Tranche 2) 1,500,000,000.00 2018-4-19 3 years 1,492,500,000.00 1,560,839,386.79
Corporate bonds (19 Hengyi 01) 500,000,000.00 2019-3-26 3 years 497,750,000.00 522,211,271.97
Corporate bonds (19 Hengyi 02) 500,000,000.00 2019-6-4 3 years 497,750,000.00 514,357,623.03
Corporate bonds (20 Hengyi 01) 1,000,000,000.00 2020-03-13 2 years 995,500,000.00 0.00
Hengyi Convertible Bonds 127022 2,000,000,000.00 2020-10-16 6 years 1,508,831,199.68 0.00
Subtotal 7,000,000,000.00 -- -- 6,484,831,199.68 4,169,349,531.59
Less: partial year-end balances
-- -- -- -- 179,587,499.88
due within one year (Note VI-33)
Total 7,000,000,000.00 -- -- 6,484,831,199.68 3,989,762,031.71
(Contd.)
Repayment in Interest paid
Issuance in the Accrued interest Discounted
Name of bonds the current in the current Ending balance
current period at face value amortization
period period
"Belt and Road" corporate bonds 0.00 14,937,660.60 1,006,255.21 346,495,000.00 32,350,000.00 160,311,381.12
Corporate bonds (Tranche 1) 0.00 45,524,190.76 1,921,441.23 359,682,000.00 67,800,000.00 668,692,416.48
1,065,206,211.
Corporate Bond (Tranche 2) 0.00 66,529,566.66 2,900,258.53 468,613,000.00 96,450,000.00
98
Corporate bonds (19 Hengyi
0.00 31,899,999.96 757,143.36 0.00 31,900,000.00 522,968,415.29
01)
Corporate bonds (19 Hengyi
0.00 32,499,999.94 751,942.29 0.00 32,500,000.00 515,109,565.26
02)
Corporate bonds (20 Hengyi 1,045,935,287.
995,500,000.00 49,083,333.30 1,351,954.47 0.00 0.00
01) 77
Hengyi Convertible Bonds 1,527,702,980.
1,508,831,199.68 1,127,358.48 17,744,422.64 0.00 0.00
127022 80
1,174,790,000. 261,000,000.0 5,505,926,258.
Subtotal 2,504,331,199.68 241,602,109.70 26,433,417.73
00 0 70
Less: partial year-end balances
1,984,595,701.
due within one year (Note -- -- -- -- --
21
VI-34)
1,174,790,000. 261,000,000.0 3,521,330,557.
Total 2,504,331,199.68 241,602,109.70 26,433,417.73
00 0 49
37. Long-term accounts payable
Item Ending balance Balance at the end of prior year
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Long-term accounts payable 520,596,948.45 883,441,367.14
Special accounts payable 0.00 0.00
Total 520,596,948.45 883,441,367.14
(1) Long-term accounts payable
Item Ending balance Balance at the end of prior year
Finance leases payable 1,266,664,159.33 1,557,862,340.40
Less: partial balances due within one year (Note VI-33) 746,067,210.88 674,420,973.26
Total 520,596,948.45 883,441,367.14
38. Estimated liabilities
Item Balance at the end of prior year Ending balance Reason
Pending litigations 2,645,266.16 3,555,907.35 Refer to Note XIII-2 for details.
39. Deferred income
Beginning Increase in Decrease in the
Item Ending balance Reason
balance current year current period
Government grants 198,911,445.22 12,689,800.00 14,088,146.74 197,513,098.48 Related to assets
Among them, projects involving government grants:
Recorded Amount
Newly
into accounted Othe Related
added
Beginning non-operat into other r Ending to
Grant items subsidies
balance ing income income in chan balance assets/in
in current
in current current ges come
year
year year
2,678,204. 2,901,38 Related
Refunds of fixed assets 5,579,592.61 0.00 0.00 0.00
45 8.16 to assets
Infrastructure fund within the central government
1,550,00 Related
budget for key industrial revitalization and technical 2,150,000.00 0.00 0.00 600,000.00 0.00
0.00 to assets
renovation
2013 industrial revitalization and technical renovation 1,587,500. 7,408,33 Related
8,995,833.25 0.00 0.00 0.00
projects 00 3.25 to assets
818,795. Related
20,000t/a functional fiber technical renovation project 969,957.50 0.00 0.00 151,162.21 0.00
29 to assets
1,717,30 Related
45,000 t/a functional fiber technical renovation project 2,015,962.87 0.00 0.00 298,661.17 0.00
1.70 to assets
Subsidy for automatic monitoring of source of 1,810,93 Related
2,016,792.63 0.00 0.00 205,860.76 0.00
pollution 1.87 to assets
2,013,757. 34,799,8 Related
Special award funds for major industrial projects 36,813,607.47 0.00 0.00 0.00
49 49.98 to assets
31,499.9 Related
Special subsidies for wastewater systems 34,999.97 0.00 0.00 3,500.00 0.00
7 to assets
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Recorded Amount
Newly
into accounted Othe Related
added
Beginning non-operat into other r Ending to
Grant items subsidies
balance ing income income in chan balance assets/in
in current
in current current ges come
year
year year
184,875. Related
Special subsidies for exhaust gas systems 206,625.00 0.00 0.00 21,750.00 0.00
00 to assets
2,00
96,500,0 Related
Land compensation funds of Haining New Material 98,500,000.00 0.00 0.00 0.00 0,00
00.00 to assets
0.00
The first batch of special funds for key technological
transformation in 2018 - Technological Transformation 2,066,982. 18,430,5 Related
20,497,572.40 0.00 0.00 0.00
Project with an Annual Output of 400,000 tons of 10 90.30 to assets
Differential Fibers
The second batch of subsidies for intelligent
manufacturing of the District in 2018 - Technology
Transformation Project with an Annual Output of 1,666,666. 18,055,5 Related
19,722,222.22 0.00 0.00 0.00
400,000 Tons of Differential Fibers + Intelligent 67 55.55 to assets
Manufacturing Workshop with an Annual Output of
67,000 Tons of DTY
The first batch of subsidies for industrial robot 782,281. Related
860,509.86 0.00 0.00 78,228.17 0.00
purchase in 2018 69 to assets
The second batch of subsidies for industrial robot 501,802. Related
547,769.44 0.00 0.00 45,966.67 0.00
purchase of the District in 2018 77 to assets
The second batch of subsidies for boiler cleaning 12,353,400 11,704,5 Related
0.00 0.00 648,882.05 0.00
transformation in 2020 .00 17.95 to assets
Subsidies of RMB 336,400 for Phase I Project of the 315,375. Related
0.00 336,400.00 0.00 21,025.00 0.00
Industrial Internet Digital Factory of the District 00 to assets
2,00
198,911,445.2 12,689,800 12,088,146 197,513, Related
Total 0.00 0,00
2 .00 .74 098.48 to assets
0.00
40. Capital stock
Changes of increase or decrease in the current period (+, -)
Conversion of
Item Beginning balance New issue Scrip Ending balance
provident fund to Others Subtotal
of shares issue
shares
The sum of shares 2,841,725,474.00 0.00 0.00 852,517,642.00 -12,597,709.00 839,919,933.00 3,681,645,407.00
Note: (1) According to the resolutions of the Company’s 2019 Annual General Meeting of
Shareholders and the revised articles of association, the capital reserve was transferred to increase 3
shares for every 10 shares to all shareholders based on the Company’s original total share capital of
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RMB 2,841,725,474.00. The Company completed the registration of bonus and transferred stocks
on May 28, 2020. The Company increased its registered capital by RMB 852,517,642.00, and the
registered capital after the change was RMB 3,694,243,116.00.
(2) On June 9, 2020, in accordance with the Proposal on the Issuance of Shares to Purchase
Assets and the Realization of Performance Commitments for Related-party Transaction Projects in
2019 and Performance Compensation Plan, the cancellation of 12,597,709 shares was completed.
41. Other equity instruments
Beginning Decrease in the Ending balance
Increase in current year
balance current period
Issued financial instruments
Book Book
Quantity Quantity Book value Quantity Quantity Book value
value value
Equity portion of convertible
0.00 0.00 20,000,000.00 478,546,158.81 0.00 0.00 20,000,000.00 478,546,158.81
corporate bonds
Total 0.00 0.00 20,000,000.00 478,546,158.81 0.00 0.00 20,000,000.00 478,546,158.81
42. Capital reserves
Increase in Decrease in the
Item Beginning balance Ending balance
current year current period
Premium on capital 12,022,558,116.44 28,394,965.50 852,612,133.66 11,198,340,948.28
Other capital reserves 799,514,342.86 4,513,947.33 508,000,000.00 296,028,290.19
Capital reserve generated by simulating
-2,329,301,104.61 0.00 0.00 -2,329,301,104.61
ownership structure and quantity
Total 10,492,771,354.69 32,908,912.83 1,360,612,133.66 9,165,068,133.86
Note 1: The reason for the decrease of the capital premium of RMB 852,517,642.00 this year is
shown in Note VI-40(1), and other decreases are due to the handling fee arising from share
repurchase.
Note 2: On June 30, 2020, the Company has made the best estimate of the number of feasible
equity instruments in Phase I and II restricted share incentive plans, revised the number of stock
options with expected feasible rights, and included the services obtained in the current period into the
relevant expenses and capital reserves according to the fair value of the restricted share authorization
date. It is estimated that the share payment cost from January to June 2020 is RMB9,013,875.00, and
the corresponding increase of “capital reserve-other capital reserves” is RMB9,013,875.00.
Note 3: On June 9, 2020, according to the Proposal on the Implementation of Performance
Commitment and Performance Compensation Scheme of Assets Purchase by Issuing Shares and
Related Party Transactions in 2019, 12,597,709 shares were cancelled, and the corresponding dividend
of RMB6,783,381.50was received, increasing the capital premium by RMB19,381,090.50.
Note 4: In 2020, the Company carried out combination under the same control, increasing other
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capital reserves by RMB500,000,000.00 at the beginning of the period, which was correspondingly
offset in the current period; in addition, the difference between the initial investment cost of the
long-term equity investment on the combination date and the share of the book net assets of the
acquiree was reduced by other capital reserves of RMB-213, 677.22, and the retained earnings realized
by the acquiree before the combination were reduced by other capital reserves of RMB8,213, 677.22.
43. Treasury stock
Beginning Increase in Decrease in the
Item Ending balance
balance current year current period
Inventory shares related to restricted share
55,450,720.00 0.00 55,450,720.00 0.00
obligation repurchase
Shares of the Company acquired due to
0.00 349,918,604.53 0.00 349,918,604.53
reduction of registered capital
Total 55,450,720.00 349,918,604.53 55,450,720.00 349,918,604.53
44. Other comprehensive income
Amount in the current period
Less: net
current profit
Net after-tax Net after-tax
At the beginning Current period and loss
Less: income income End of period
Item of the year Before-tax transferred
income tax attributable to attributable to Balance
Balance amount from previous
expense parent minority
incurred other
company shareholders
comprehensive
income
(i) Other
comprehensive
income items
which cannot
be classified as 0.00 0.00 0.00 0.00 0.00 0.00 0.00
profit or loss in
succeeding
accounting
period
Of which:
changes due to
remeasurement
of the net
0.00 0.00 0.00 0.00 0.00 0.00 0.00
liabilities or net
assets under the
defined benefit
plan
Share in other 0.00 0.00 0.00 0.00 0.00 0.00 0.00
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Amount in the current period
Less: net
current profit
Net after-tax Net after-tax
At the beginning Current period and loss
Less: income income End of period
Item of the year Before-tax transferred
income tax attributable to attributable to Balance
Balance amount from previous
expense parent minority
incurred other
company shareholders
comprehensive
income
comprehensive
income that
will not be
reclassified
into profit and
loss in investee
under equity
method
(ii) Other
comprehensive
income items
which will be
-12,890,777.4 -1,367,985,759.4
classified as 335,623,308.63 -1,331,326,899.70 158,637,233.22 -109,087,596.01 -1,032,362,450.85
3 8
profit or loss in
succeeding
accounting
period
Of which: other
comprehensive
income from
convertible
73,656,530.21 -61,971,277.32 0.00 0.00 -59,356,706.36 -2,614,570.96 14,299,823.85
gains and
losses under
the equity
method
Effective part
of cash flow -12,890,777.4
108,614,328.62 -386,595,860.29 158,637,233.22 -431,713,895.59 -100,628,420.49 -323,099,566.97
hedging profit 3
and loss
Converted
difference in
foreign 153,352,449.80 -882,759,762.09 0.00 0.00 -876,915,157.53 -5,844,604.56 -723,562,707.73
currency
statements
Total of other 335,623,308.63 -1,331,326,899.70 158,637,233.22 -12,890,777.4 -1,367,985,759.4 -109,087,596.01 -1,032,362,450.85
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Amount in the current period
Less: net
current profit
Net after-tax Net after-tax
At the beginning Current period and loss
Less: income income End of period
Item of the year Before-tax transferred
income tax attributable to attributable to Balance
Balance amount from previous
expense parent minority
incurred other
company shareholders
comprehensive
income
comprehe 3 8
nsive
income
45. Special reserves
Item Beginning balance Increase in current year Decrease in the current period Ending balance
Work safety funds 0.00 53,905,152.19 53,905,152.19 0.00
Note: The increase and decrease in special reserves during the reporting period are the work
safety funds withdrawn and used.
46. Surplus reserves
Increase in current Decrease in the
Item Beginning balance Ending balance
year current period
Statutory surplus reserves 559,247,505.53 101,404,665.64 0.00 660,652,171.17
Note: The Company shall withdraw 10% of net profit as the statutory surplus reserve
according to the provisions of Company Law and Articles of Association. The accumulative
statutory surplus reserve that reaches 50% or more of registered capital of the Company shall not be
withdrawn.
47. Undistributed profits
Item Current period Previous period
Undistributed profit before adjustment at the end of the previous year 9,567,928,583.61 7,358,146,155.19
Adjust the total undistributed profit at the beginning of the year (increase
0.00 0.00
to be marked by +, decrease to be marked by -)
Undistributed profits after adjustment at the beginning of the year 9,567,928,583.61 7,358,146,155.19
Add: net profit attributable to the owners of parent company in current
3,071,998,839.75 3,190,185,517.79
year
Less: withdrawal of statutory surplus reserves 101,404,665.64 76,131,765.66
Withdrawal for discretionary surplus reserves 0.00 0.00
General risk provisions withheld 0.00 0.00
Common stock dividends payable 1,135,519,960.40 852,009,740.40
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Item Current period Previous period
Common stock dividends transferred to capital stocks 0.00 0.00
Add: others 0.00 -52,261,583.31
Undistributed profits at the end of the year 11,403,002,797.32 9,567,928,583.61
48. Operating income and operating cost
Amount incurred in current year Amount incurred in prior year
Item
Revenue Costs Revenue Costs
Principal business 85,795,557,470.87 79,894,558,655.25 78,994,427,068.89 73,516,302,718.49
Other operations 634,072,721.00 555,272,041.69 626,116,562.85 478,530,994.44
Total 86,429,630,191.87 80,449,830,696.94 79,620,543,631.74 73,994,833,712.93
49. Taxes and surcharges
Item Amount incurred in current year Amount incurred in prior year
Consumption tax 5,458,218.81 739,383.34
Urban maintenance and construction tax 28,475,454.02 59,857,919.21
Education surcharges 12,515,877.22 25,854,989.49
Property tax 12,166,370.38 28,776,229.56
Land use tax 14,693,786.15 13,190,509.79
Vessel usage tax 82,324.22 85,915.97
Stamp duty 36,519,194.04 38,264,424.50
Local education surcharges 8,240,898.58 16,948,846.22
Others 2,285,346.86 1,547,481.02
Total 120,437,470.28 185,265,699.10
Note: please refer to Note V. Taxes for details of taxation and additional payment standards.
50. Selling expense
Item Amount incurred in current year Amount incurred in prior year
Transport expenses 3,856,318.79 287,238,464.56
Import and export expenses 87,223,211.47 14,112,141.18
Staff remuneration 97,461,347.91 106,116,142.88
Transport insurance expenses 851,252.32 4,167,047.84
Warehouse fee 2,143,725.80 11,265,981.52
Business entertainment 1,298,961.23 1,841,741.38
Travel expense 3,942,993.44 7,585,453.12
Vehicle cost 1,028,277.49 1,044,731.77
Rental fee 66,934.74 2,366,968.17
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Item Amount incurred in current year Amount incurred in prior year
Office expense 619,421.63 1,296,787.01
Handling cost 1,273,862.85 6,342,651.87
Others 18,343,493.47 12,457,874.48
Total 218,109,801.14 455,835,985.78
51. Administration costs
Item Amount incurred in current year Amount incurred in prior year
Staff remuneration 408,272,551.84 354,821,227.01
Amortization charge of intangible asset 32,383,255.26 30,419,072.08
Fixed asset depreciation expenses 196,684,292.39 54,679,441.36
Business entertainment 5,658,891.41 6,630,475.30
Vehicle cost 15,492,070.51 10,287,128.69
Environmental protection cost 11,850,664.75 12,280,420.34
Office expense 11,545,260.18 11,673,606.98
Intermediary agency expenses 20,806,234.27 13,395,457.02
Travel expense 6,803,278.43 8,291,975.41
Rental fee 71,152,170.94 18,154,915.16
Repair costs 68,902,650.22 3,300,255.83
Property insurance premium 21,782,408.76 1,297,772.32
Transportation and storage charges 45,540,587.48 9,421.56
Others 53,279,291.45 58,252,270.15
Total 970,153,607.89 583,493,439.21
52. Research and development expenditure
Item Amount incurred in current year Amount incurred in prior year
Direct input cost 219,624,282.26 283,464,492.03
Staff remuneration 85,841,604.65 77,361,355.81
Depreciation charge 12,299,524.80 16,220,031.68
Technical development service fee 11,734,405.96 37,236,839.44
Other expenses 22,469,490.26 78,457,553.00
Total 351,969,307.93 492,740,271.96
53. Financial expenses
Item Amount incurred in current year Amount incurred in prior year
Interest expense 1,857,374,805.92 1,027,006,241.84
Less: interest income 185,855,314.84 149,956,766.49
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Item Amount incurred in current year Amount incurred in prior year
Exchange loss/profit 206,643,585.24 31,115,541.83
Bank service charges 125,987,241.29 100,498,071.11
Others 0.00 2,672,626.64
Total 2,004,150,317.61 1,011,335,714.93
54. Other income
Amount
Amount incurred Amount of non-recurring gains
Item incurred in
in current year and losses of the current year
prior year
Government grants related to daily
369,221,330.90 475,243,984.43 316,639,730.90
activities of the Company
Return of charges for withholding and
2,595,730.83 72,292.94 2,595,730.83
remitting individual income tax for others
Total 371,817,061.73 475,316,277.37 319,235,461.73
Among them, the details of government grants related to the daily activities of the Company
are as follows:
Amount of non-recurring Related to
Amount incurred in Amount incurred
Item gains and losses of the assets/inco
current year in prior year
current year me
Government grants related to Related to
12,088,146.74 9,939,029.19 12,088,146.74
assets assets
Reward for issuing corporate Related to
1,000,000.00 1,000,000.00 1,000,000.00
bonds income
Ningbo Meishan financial support Related to
11,000,000.00 81,710,000.00 11,000,000.00
fund income
Related to
Financial grants for modern trade 0.00 1,274,900.00 0.00
income
Enterprise quality management Related to
2,302,200.00 24,712,000.00 2,302,200.00
subsidy income
Related to
Subsidy for permanent post 11,470,007.94 3,241,157.15 11,470,007.94
income
Special fund for science and Related to
101,523,400.00 1,200,000.00 101,523,400.00
technology development income
Headquarters financial support Related to
0.00 1,516,200.00 0.00
funds income
Related to
Investment grants 11,672,300.00 3,700,000.00 11,672,300.00
income
Environmental protection grant Related to
34,766.00 6,296,300.00 34,766.00
income income
Intelligent manufacturing support Related to
38,890,660.00 12,549,410.00 38,890,660.00
fund income
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Amount of non-recurring Related to
Amount incurred in Amount incurred
Item gains and losses of the assets/inco
current year in prior year
current year me
Refund of social insurance Related to
5,173,900.85 29,964,923.48 5,173,900.85
premiums income
Related to
Foreign trade support fund 9,810,177.00 15,206,430.93 9,810,177.00
income
Related to
Refunds of VAT 53,069,661.71 55,270,580.10 488,061.71
income
Special fund for promoting Related to
16,154,945.00 34,760,000.00 16,154,945.00
industrial restructuring income
Reward for a higher level of the
Related to
output value of industrial 0.00 1,500,000.00 0.00
income
enterprises
Recycling transformation grant Related to
0.00 147,300.00 0.00
funds income
Related to
Sales promotion subsidy 400,000.00 42,443,900.00 400,000.00
income
2019 return subsidy fund from the Related to
18,715,600.00 135,818,700.00 18,715,600.00
headquarters income
Property tax refunds for special Related to
0.00 1,756,184.67 0.00
enterprises income
Related to
Grants for cleaning transformation 12,220,200.00 0.00 12,220,200.00
income
Subsidies for resuming work and Related to
49,337,031.84 0.00 49,337,031.84
production income
Related to
Talent grants 2,359,636.62 0.00 2,359,636.62
income
Special fund for employment Related to
1,177,795.60 0.00 1,177,795.60
promotion income
Related to
Support fund 5,684,391.98 0.00 5,684,391.98
income
Related to
Others 5,136,509.62 11,236,968.91 5,136,509.62
income
Total 369,221,330.90 475,243,984.43 316,639,730.90 --
Note: Please refer to Notes VI-39 Deferred Revenue for details of government grants related to
assets.
55. Investment income
Amount incurred Amount incurred
Item
in current year in prior year
Long-term equity investment income accounted by the equity method 1,326,696,982.37 1,086,988,500.99
Investment income from disposal of long-term equity investment 33,595,128.40 0.00
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Amount incurred Amount incurred
Item
in current year in prior year
Investment income received from the disposal of transactional financial assets 331,329,598.58 408,510,501.70
Income from investment in finance products 0.00 9,171,643.84
Total 1,691,621,709.35 1,504,670,646.53
56. Gains from changes of fair value
Amount incurred Amount incurred
Source of gains from changes of fair value
in current year in prior year
Financial assets at fair value through profit or loss 155,023,482.10 -57,665,599.55
Of which: gains from changes of fair value derived from derivative
155,023,482.10 -57,612,799.55
financial instruments
Financial liabilities at fair value through profit or loss 1,399,903.27 -1,399,903.27
Hedging operations 0.00 222,520.00
Total 156,423,385.37 -58,842,982.82
57. Impairment loss on credit assets
Item Amount incurred in current year Amount incurred in prior year
Bad debt losses of receivables -579,235.36 -22,222,894.91
Bas debt loss from other receivables 14,491,569.54 -2,964,287.29
Total 13,912,334.18 -25,187,182.20
58. Impairment loss on assets
Item Amount incurred in current year Amount incurred in prior year
Loss due to decline in value -18,111,009.54 -20,345,690.78
Total -18,111,009.54 -20,345,690.78
59. Income from the disposal of assets
Amount incurred in Amount incurred in Amount of non-recurring gains
Item
current year prior year and losses of the current year
Gains or losses from disposal
-4,357,509.27 1,543,684.20 -4,357,509.27
of fixed assets
60. Non-operating income
Amount of
Amount Amount
non-recurring
Item incurred in incurred in
gains and losses of
current year prior year
the current year
Gains from scrapping of non-current assets 213,667.29 879,955.30 213,667.29
Where: fixed asset 213,667.29 879,955.30 213,667.29
Intangible assets 0.00 0.00 0.00
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Amount of
Amount Amount
non-recurring
Item incurred in incurred in
gains and losses of
current year prior year
the current year
Government grants unrelated to daily activities of the Company 1,967,561.84 2,479,600.00 1,967,561.84
Indemnity and fines income 7,266,071.78 2,624,761.68 7,266,071.78
Others 4,780,267.57 5,715,542.57 4,780,267.57
Total 14,227,568.48 11,699,859.55 14,227,568.48
Among them, the details of government grants are as follows:
Amount incurred in Amount incurred in
Grant items Related to assets/income
current year prior year
IRAS Jobs Support Scheme - COVID19 1,967,561.84 0.00 Related to income
Grants for attracting investment 0.00 2,323,600.00 Related to income
Others 0.00 156,000.00 Related to income
Total 1,967,561.84 2,479,600.00
61. Non-operating expense
Amount incurred Amount incurred in Amount of non-recurring gains
Item
in current year prior year and losses of the current year
Loss on disposal of non-current assets 2,597,420.63 4,235,205.01 2,597,420.63
Where: fixed asset 2,597,420.63 4,235,205.01 2,597,420.63
Intangible assets 0.00 0.00 0.00
Expenditure of liquidated damages 1,776,430.69 13,538,103.19 1,776,430.69
Donation expenditure 12,763,598.45 7,325,000.00 12,763,598.45
Overdue fine and penalty 422,111.29 426,868.22 422,111.29
Extraordinary loss 2,380,975.92 0.00 2,380,975.92
Others 1,002,557.89 4,218,104.74 1,002,557.89
Total 20,943,094.87 29,743,281.16 20,943,094.87
62. Income tax expenses
(1) Income tax expense table
Item Amount incurred in current year Amount incurred in prior year
Income tax expenses in current year 684,111,777.20 722,823,772.31
Deferred income tax expenses 20,855,674.41 23,807,221.20
Total 704,967,451.61 746,630,993.51
(2) Adjustment process of accounting profit and income tax expense
Item Amount incurred in the current period
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Item Amount incurred in the current period
Total profit 4,519,569,435.51
Income tax expense at legal/applicable tax rate 1,129,892,358.88
Impact of the different tax rate applicable to subsidiaries -84,792,642.63
Impact of income tax adjusted in previous period -5,383,242.84
Impact of non-taxable income -300,697,805.00
Impact of non-deductible cost, expense and loss 4,752,673.3
Impact of using deductible loss previously not recognized as deferred
-12,094,616.27
income tax assets
Impact of deductible temporary differences or deductible losses recognized
25,607,154.27
as deferred income tax assets at the end of the year
Tax rate adjustments lead to changes in balance of deferred income tax
13,898,682.78
assets/liabilities at the beginning the period
The impact of weighted deduction of costs, expenses and other deductions
-55,455,889.02
allowed by tax laws
Others -10,759,221.86
Income tax expenses 704,967,451.61
63. Other comprehensive income
For details, please refer to Note VI. 44.
64. Items of Cash Flow Statement
(1) Cash received from other related operating activities
Item Amount incurred in current year Amount incurred in prior year
Account current 1,072,000,000.00 708,507,405.30
Cash deposit 38,572,498.73 306,833,295.30
Government grants 438,096,929.36 396,808,447.53
Interest income 131,442,106.44 82,234,871.49
Indemnity and fines 7,266,071.78 40,678,600.84
Judicial freeze 4,279,494.72 12,063,260.00
Others 5,062,746.91 7,837,782.00
Hedging instrument margin 174,328,394.73 0.00
Total 1,871,048,242.67 1,554,963,662.46
(2) Cash paid for other related operating activities
Item Amount incurred in current year Amount incurred in prior year
Account current 1,097,488,830.85 643,217,361.34
Transport expenses 25,266,956.32 37,110,229.43
Import and export expenses 87,223,211.47 14,107,520.40
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Item Amount incurred in current year Amount incurred in prior year
Bank service charges 125,987,241.29 81,304,111.58
Business entertainment 6,957,852.64 9,383,926.14
Vehicle cost 16,520,348.00 15,950,925.53
Environmental protection cost 11,850,664.75 9,434,786.21
Security deposit 7,819,343.73 280,521,099.73
Transport insurance expenses 851,252.32 5,479,202.43
Warehouse fee 26,273,675.75 10,305,368.18
Intermediary agency expenses 20,806,234.27 17,736,843.14
Travel expense 10,746,271.87 16,384,985.57
Rental fee 71,219,105.68 36,436,179.51
Judicial frozen amount 1,881,515.45 4,362,940.59
Renovation cost 617,107.08 90,359.45
Hedging instrument margin 996,873,170.73 0.00
Repair costs 68,902,650.22 3,875,837.91
Property insurance premium 21,782,408.76 2,060,419.56
Others 99,131,950.60 96,736,177.83
Total 2,698,199,791.78 1,284,498,274.53
(3) Cash received from other related investing activities
Item Amount incurred in current year Amount incurred in prior year
Interest income from entrusted loans and
43,496,979.18 28,595,691.66
related party funds borrowing
PTA future guarantee recovered 0.00 79,801,680.00
Total principal and interest of the
511,829,486.67 0.00
borrowed funds of Hangzhou Wanyong
Others 0.00 241,643.84
Total 555,326,465.85 108,639,015.50
(4) Cash paid for other related investing activities
Item Amount incurred in current year Amount incurred in prior year
Future guarantee 0.00 79,801,680.00
Lending of the borrowed funds of Hangzhou
0.00 500,000,000.00
Wanyong
Total 0.00 579,801,680.00
(5) Cash received from other related financing activities
Item Amount incurred in current year Amount incurred in prior year
Recovering monetary capital of financial pledge 953,452,966.94 304,452,606.17
Collections of financing leaseback 396,000,000.00 1,196,520,000.00
361
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Item Amount incurred in current year Amount incurred in prior year
Funds borrowing and lending of Hengyi Group 553,420,000.00 4,318,029,097.80
Others 6,783,381.50 110,080.00
Total 1,909,656,348.44 5,819,111,783.97
(6) Cash paid for other related financing activities
Item Amount incurred in current year Amount incurred in prior year
Monetary capital of financial pledge 540,727,965.35 1,052,032,389.74
Repayment of the principal and interest of
574,520,000.00 5,038,148,374.77
Hengyi Group's borrowed funds
Share repurchase 350,013,157.87 0.00
Rent expenses paid for financing leaseback 782,309,036.86 1,282,555,605.37
Commission charges for financing leaseback 0.00 2,820,000.00
Financing after-sale leaseback margin 0.00 34,400,000.00
Loan handling fee 25,300,054.45 47,383,720.97
Incurrence of share-related expenses 0.00 1,066,110.90
Repayment of Hengming's borrowed funds 0.00 200,000,000.00
Others 11,333,890.61 5,288,284.00
Total 2,284,204,105.14 7,663,694,485.75
65. Supplementary information of Cash Flow Statement
(1) Supplementary information of Cash Flow Statement
Amount incurred in Amount incurred in
Supplementary information
current year prior year
1. Reconciliation of net profit to cash flow from
operating activities:
Net profit 3,814,601,983.90 4,009,519,145.01
Add: asset impairment provision 18,111,009.54 20,345,690.78
Impairment loss on credit assets -13,912,334.18 25,187,182.20
Depreciation of fixed assets, depletion of oil-and-gas
2,219,594,687.78 1,444,727,503.50
assets and depreciation of productive biological assets
Intangible asset amortization 82,927,125.36 38,526,350.10
Amortization of long-term deferred expenses 112,914,481.65 16,679,225.43
Loss from the disposal of fixed assets, intangible assets
4,357,509.27 -1,543,684.20
and other long-term assets (income to be marked by “-”)
Loss from fixed assets retirement (income to be marked
2,383,753.34 3,355,249.71
by “-”)
Loss from changes of fair value (income to be marked
-156,423,385.37 58,842,982.82
by “-”)
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Amount incurred in Amount incurred in
Supplementary information
current year prior year
Financial expenses (income to be marked by “-”) 2,199,804,202.55 987,299,417.78
Loss on investments ( income to be marked by “-”) -1,691,621,709.35 -1,504,670,646.53
Decrease in deferred income tax assets (increase to be
30,798,668.24 50,161,732.72
marked by “-”)
Increase in deferred income tax liabilities (decrease to
-11,892,474.98 -23,139,614.62
be marked by “-”)
Decrease in inventory (increase to be marked by “-”) -515,731,328.66 -6,082,546,523.71
Decrease in operating receivables (increase to be
1,025,906,081.61 -4,666,502,804.94
marked by “-”)
Increase in operating payables (decrease to be marked
-2,110,038,907.75 5,380,707,069.05
by “-”)
Others 1,993,415.00 151,925,946.99
Net cash flow from operating activities 5,013,772,777.95 -91,125,777.91
2. Significant investing and financing activities involving
no cash receipts and disbursements
Conversion of a debt into capital 0.00 0.00
Convertible corporate bond due within one year 0.00 0.00
Fixed assets acquired under finance leases 0.00 0.00
3. Net change of cash and cash equivalents
Balance of cash at the year ended 7,186,325,948.17 4,473,080,680.52
Less: balance of cash at the beginning of current year 4,473,080,680.52 6,536,137,341.30
Add: balance of cash equivalents at the year ended 0.00 0.00
Less: balance of cash equivalents at the beginning of current
0.00 0.00
year
Net increase in cash and cash equivalents 2,713,245,267.65 -2,063,056,660.78
(2) Composition of cash and cash equivalents
Amount incurred in Amount incurred
Item
current year in prior year
I. Cash 7,186,325,948.17 4,473,080,680.52
Of which: cash on hand 1,351,988.81 2,279,461.41
Bank deposits ready for payment 6,319,478,358.41 3,816,504,353.67
Other monetary capital ready for payment 865,495,600.95 654,296,865.44
Central bank deposits available for payment 0.00 0.00
Due from placements with banks and other financial institutions 0.00 0.00
Call loan to banks 0.00 0.00
II. Cash equivalents 0.00 0.00
Of which: bond investment due within 3 months 0.00 0.00
363
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Amount incurred in Amount incurred
Item
current year in prior year
III. Balance of cash and cash equivalents at the end of the period 7,186,325,948.17 4,473,080,680.52
Of which: cash & cash equivalents with restricted right to use for
0.00 0.00
parent company or subsidiaries under the Group
66. Assets with restricted ownership or right to use
Item Book value at the end of the period Reason for restriction
Monetary capital 2,884,530,366.37 Security deposit
Monetary capital 8,127,489.32 Judicial freeze
Notes receivable and receivables financing 381,803,585.87 Acceptance bills pledged
Long-term equity investments 5,189,280,189.32 Mortgage loan
Fixed assets 1,823,905,447.51 After-sale leaseback finance lease
Fixed assets 20,109,796,115.54 Mortgage loan
Intangible assets 638,628,140.25 Mortgage loan
Construction in progress 4,270,862,773.38 Mortgage loan
Intangible assets 21,660.38 Financial lease guarantee
Construction in progress 22,050,273.72 Financial lease guarantee
Total 35,329,006,041.66 --
67. Foreign currency monetary items
(1) Monetary items of foreign currency
Foreign currency balance at the Conversion Ending balance in
Item
end of the period exchange rate RMB
Monetary capital
Including: HKD 72,041.86 0.8416
60,633.28
USD 597,549,974.09 6.5249 3,898,953,825.93
EUR 30,138.37 8.0250 241,860.43
BND 30,852,704.59 4.9314 152,147,027.42
SGD 709,053.79 4.9314 3,496,627.97
Accounts receivable
Of which: USD 4.181,90,365.11 6.5249 2,728,650,313.3
BND 28,951,031.40 4.9314 142,772,573.60
Other receivables
USD 426,581.80 6.5249 2,783,403.61
BND 4,330,630.67 4.9314 21,356,072.09
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Foreign currency balance at the Conversion Ending balance in
Item
end of the period exchange rate RMB
Short-term loans
Of which: USD 822,806,683.23 6.5249 5,368,751,185.38
Accounts payable
Of which: USD 445,000,009.92 6.5249 2,903,580,602.42
EUR 2,545,606.01 8.0250 20,428,488.23
Yen 25,185,000.00 0.0632 1,592,598.66
BND 10,180,771.52 4.9314 50,205,456.67
Other payables
Of which: USD 266,250.00 6.5249 1,737,254.63
BND 2,951,839.39 4.9314 14,556,700.77
SGD 6.45 4.9314 31.81
Non-current liabilities due within one year
Of which: USD 1,952,936.28 6.5249 12,742,713.93
Long-term accounts payable
Of which: USD 6,077,830.61 6.5249 39,657,236.95
Long-term loans
Of which: USD 1,154,550,000.00 6.5249 7,533,323,295.00
EUR 25,389,731.18 8.0250 203,752,592.72
68. Hedge
Please refer to relevant contents of the item notes of Note VI. 3 “Derivative Financial Assets”.
69. Government grants
(1) Basic information on government grants
Amounts included
Category Amount Presentation items in current profit
and loss
Government grants related to income and 357,133,184.16 Other income 357,133,184.16
used to compensate the company for
1,967,561.84 Non-operating income 1,967,561.84
related costs or losses incurred.
Government grants related to income and
0.00 Deferred income 0.00
used to compensate related costs or losses
365
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Amounts included
Category Amount Presentation items in current profit
and loss
of the Company in future periods
Government grants related to assets 211,601,245.22 Deferred income 12,088,146.74
Total 570,701,991.22 318,607,292.74
VII. Change of the scope of consolidation
1. Combination of businesses under common control
(1) Combination of businesses under common control incurred in current year
Proportion of rights and Constitute the basis for
Basis for determining
Name of acquiree interests acquired in business combination under Merger date
the merger date
business combination (%) the common control
Guangxi Hengyi New Controlled by Hengyi
100.00 2020-7-15 Actual settlement date
material Co., Ltd Group
(Contd.)
Income of the acquiree
Net profit of the acquiree
from the beginning of Income of the Net profit of the acquiree
from the beginning of the
Name of acquiree the current combination acquiree during the during the comparison
year of combination to the
period to the comparison period period
date of combination
combination date
Guangxi Hengyi New
0.00 19,376,584.76 0.00 -11,162,907.54
material Co., Ltd
(2) Combined cost
Combined cost
—Cash 508,000,000.00
(3) Book value of assets and liabilities of the acquiree on the combination date
Guangxi Hengyi New material Co., Ltd
Item
Merger date End of last year
Assets:
Monetary capital 510,806,748.63 55,950.25
Other receivables 0.00 485,351,625.00
Other current assets 2,155.29 11,089.72
Fixed assets 21,950.00 0.00
Construction in progress 433,637.09 72,272.85
Intangible assets 42,930,071.65 43,291,435.89
Deferred income tax assets 0.00 3,752,718.75
Total assets 554,194,562.66 532,535,092.46
366
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Guangxi Hengyi New material Co., Ltd
Item
Merger date End of last year
Assets:
Liabilities:
Accounts payable 619,300.74 21,219,000.00
Taxes and dues payable 2,841,585.00 1,379,000.00
Other payables 42,520,000.00 21,100,000.00
Total liabilities 45,980,885.44 43,698,000.00
Net assets 508,213,677.22 488,837,092.46
Less: minority interest 0.00 0.00
Net assets obtained 508,213,677.22 488,837,092.46
2. Disposal of subsidiaries
(1) A single disposal of investment in a subsidiary company when the control right is lost
The difference
between the disposal
price and the share of
Basis for
Equity Equity Equity Time point the net assets of the
Name of determining the
disposal disposal disposal of loss of subsidiary at the
subsidiary time point of losing
price ratio (%) method control consolidated
control right
statement level
corresponding to the
disposal investment
Ningbo Hengyi
Logistics Co., 92,080,000.00 100.00 Transfer 2020-5-15 Equity delivery 34,651,303.92
Ltd.
(Contd.)
Amount of other
comprehensive
Book value Determination
Proportion of income related to
of Fair value of Gains or losses method and main
remaining the equity
remaining remaining arising from assumptions of
Name of equity on the investment of the
equity at equity at the remeasuring fair value of
subsidiary date of loss original
the date of date of loss remaining equity residual equity on
of control subsidiary
loss of of control at fair value the date of loss of
(%) transferred to the
control control right
investment profit
and loss
Ningbo Hengyi
Logistics Co., 0.00 0.00 0.00 0.00 0.00 0.00
Ltd.
367
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3. Change of consolidation scope caused by other reasons
This year, the Company invested in the establishment of the following 10 subsidiaries,
including Hangzhou Yitong New Materials Co., Ltd., Hangzhou Jingxin Supply Chain Management
Co., Ltd., Haining Yixin Logistics Co., Ltd., Shaoxing Hengyi Logistics Co., Ltd., Guangxi Hengyi
Environmental Technology Co., Ltd., Zhejiang Hengyi Hanlin Real Estate Co., Ltd., Hainan
Hengjing Trading Co., Ltd., Guangxi Hengyi Shunqi Trading Co., Ltd., Haining Lantai New
Materials Co., Ltd., Jiaxing Hengyu Trading Co., Ltd.
4. Original subsidiaries that are no longer included in the current period
Shareholding ratio of Proportion of voting Reasons for no
Name of Place of Nature of
the parent company rights of the parent longer becoming a
subsidiary registration business
(%) company (%) subsidiary
Ningbo Hengyi
Logistics
Logistics Co., Ningbo City 100.00 100.00 Transfer of equity
transportation
Ltd.
Continued
Total Owner's Total assets at Total Owner's
Total assets
liabilities on equity on the the end of last liabilities at equity at the
Name of subsidiary on the date of
the date of date of year the end of last end of last
disposal
disposal disposal year year
Ningbo Hengyi Logistics
186,304,297.31 128,875,601.23 57,428,696.08 182,253,815.21 107,594,983.19 74,658,832.02
Co., Ltd.
Continued
Income from the beginning Net profit from the beginning
Total cost from the beginning of
Name of subsidiary of the year to the date of of the year to the date of
the year to the date of disposal
disposal disposal
Ningbo Hengyi
76,625,865.58 70,701,367.76 4,539,864.06
Logistics Co., Ltd.
VIII. Interests in other equities
1. Interests in subsidiaries
(1) Composition of enterprise group
Shareholding ratio
Main place of Place of
Name of subsidiary Nature of business (%) Method of acquisition
business registration
Direct Indirect
Manufacturing of
Zhejiang Hengyi Petrochemicals Hangzhou Establishment or
Hangzhou City chemical fiber 100.00 0.00
Co., Ltd. City investment
products
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Shareholding ratio
Main place of Place of
Name of subsidiary Nature of business (%) Method of acquisition
business registration
Direct Indirect
Manufacturing of Combination of
Zhejiang Hengyi Polymer Co., Hangzhou
Hangzhou City chemical fiber 0.00 60.00 businesses under
Ltd. City
products common control
Manufacturing of Combination of
Zhejiang Yisheng Petrochemical
Ningbo City Ningbo City petrochemical 0.00 70.00 businesses under
Co., Ltd.
products common control
Zhejiang Yixin Chemical Fiber Hangzhou Commercial and Establishment or
Hangzhou City 0.00 70.00
Co., Ltd. City trade industry investment
Hong Kong Yisheng
Trade and Establishment or
Petrochemical Investment Co., Hong Kong Hong Kong 0.00 70.00
consulting investment
Ltd.
Manufacturing of
Zhejiang Hengyi High-tech Hangzhou Establishment or
Hangzhou City chemical fiber 0.00 90.67
Materials Co., Ltd. City investment
products
Commercial and Establishment or
Ningbo Hengyi Trading Co., Ltd. Ningbo City Ningbo City 0.00 70.00
trade industry investment
Hongkong Tianyi International Trade and Establishment or
Hong Kong Hong Kong 0.00 100.00
Holding Company Limited investment investment
Jiabai International Investment Trade and Establishment or
Hong Kong Hong Kong 0.00 100.00
Co., Ltd. investment investment
Manufacturing of Combination of
Hengyi Industries Sdn Bhd Brunei Brunei petrochemical 0.00 70.00 businesses under
products common control
Combination of
Ningbo Hengyi Engineering Engineering
Ningbo City Ningbo City 0.00 70.00 businesses under
Management Co., Ltd. management
common control
Hengyi Industry International Pte. Commercial and Establishment or
Singapore Singapore 0.00 70.00
Ltd. trade industry investment
Hengyi Petrochemical Commercial and Establishment or
Singapore Singapore 0.00 100.00
International Pte. Ltd. (Singapore) trade industry investment
Zhejiang Hengyi Petrochemicals Hangzhou Establishment or
Hangzhou City Trade 0.00 100.00
Sales Co., Ltd. City investment
Manufacturing of
Haining Hengyi New Materials Establishment or
Haining City Haining City chemical fiber 0.00 100.00
Co., Ltd. investment
products
Electricity, thermal
Haining Hengyi Thermoelectricity Establishment or
Haining City Haining City production and 0.00 90.00
Co., Ltd. investment
supply industry
Suqian Yida New Material Co., Manufacturing of Establishment or
Suqian City Suqian City 0.00 100.00
Ltd. chemical fiber investment
369
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Shareholding ratio
Main place of Place of
Name of subsidiary Nature of business (%) Method of acquisition
business registration
Direct Indirect
products
Manufacturing of
Fujian Yijin Chemical Fiber Co., Quanzhou, Quanzhou, Establishment or
chemical fiber 0.00 65.00
Ltd. Fujian Fujian investment
products
Production and
Shaoxing Shengong Packaging Shaoxing Establishment or
Shaoxing City processing of 0.00 51.00
Co., Ltd. City investment
packaging materials
Combination of
Zhejiang Hengyi Logistics Co., Hangzhou Logistics
Hangzhou City 0.00 100.00 businesses under
Ltd. City transportation
common control
Zhejiang Hengyi International Hangzhou Commercial and Establishment or
Hangzhou City 100.00 0.00
Trading Co., Ltd. City trade industry investment
Commercial and Establishment or
Ningbo Hengyi Industrial Co., Ltd. Ningbo City Ningbo City 0.00 100.00
trade industry investment
Hangzhou Commercial and Establishment or
Zhejiang Hengkai Energy Co., Ltd. Hangzhou City 0.00 60.00
City trade industry investment
Zhejiang Hengyi Engineering Hangzhou Engineering Establishment or
Hangzhou City 100.00 0.00
Management Co., Ltd. City management investment
Manufacturing of
Zhejiang Henglan Technology Co., Hangzhou Establishment or
Hangzhou City chemical fiber 100.00 0.00
Ltd. City investment
products
Manufacturing of Combination of
Jiaxing Yipeng Chemical Fiber
Jiaxing City Jiaxing City chemical fiber 100.00 0.00 businesses under
Co., Ltd.
products common control
Manufacturing of Combination of
Taicang Yifeng Chemical Fiber
Taicang City Taicang City chemical fiber 100.00 0.00 businesses under
Co., Ltd.
products common control
Manufacturing of Business combinations
Zhejiang Shuangtu New Materials Hangzhou
Hangzhou City chemical fiber 100.00 0.00 not under common
Co., Ltd. City
products control
Manufacturing of Combination of
Hangzhou Yijing Chemical Fiber Hangzhou
Hangzhou City chemical fiber 0.00 100.00 businesses under
Co., Ltd. City
products common control
Hong Kong Hengyi Logistics Co., Logistics Establishment or
Hong Kong Hong Kong 0.00 100.00
Ltd. transportation investment
Hengyi International Logistics Logistics Establishment or
Singapore Singapore 0.00 100.00
Co., Ltd. transportation investment
Software and
Zhejiang Yizhi Information Hangzhou Establishment or
Hangzhou City information 0.00 100.00
Technology Co., Ltd. City investment
technology service
370
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Shareholding ratio
Main place of Place of
Name of subsidiary Nature of business (%) Method of acquisition
business registration
Direct Indirect
industry
Haining Junbo Shengming Trading Commercial and Establishment or
Haining City Haining City 0.00 100.00
Co., Ltd. trade industry investment
Manufacturing of
Hangzhou Yitong New Material Hangzhou Establishment or
Hangzhou City chemical fiber 0.00 60.00
Co., Ltd. City investment
products
Supply chain
Hangzhou Jingxin Supply Chain Hangzhou Establishment or
Hangzhou City management 0.00 100.00
Management Co., Ltd. City investment
services
Logistics Establishment or
Haining Yixin Logistics Co., Ltd. Haining City Haining City 0.00 100.00
transportation investment
Shaoxing Hengyi Logistics Co., Shaoxing Logistics Establishment or
Shaoxing City 0.00 100.00
Ltd. City transportation investment
Qinzhou
Guangxi Hengyi Environmental Qinzhou City, Science and Establishment or
City, 0.00 100.00
Science and Technology Co., Ltd. Guangxi technology service investment
Guangxi
Real estate
Zhejiang Hengyi Hanlin Real Hangzhou Establishment or
Hangzhou City development and 0.00 75.00
Estate Co., Ltd. City investment
management
Hainan Hainan Establishment or
Hainan Hengjing Trading Co., Ltd. Trade 0.00 100.00
Province Province investment
Qinzhou
Guangxi Hengyi Shunqi Trading Qinzhou City, Establishment or
City, Trade 0.00 100.00
Co., Ltd. Guangxi investment
Guangxi
Manufacturing of
Haining Lantai New Material Co., Establishment or
Haining City Haining City chemical fiber 0.00 100.00
Ltd. investment
products
Establishment or
Jiaxing Hengyu Trading Co., Ltd. Jiaxing City Jiaxing City Trade 0.00 100.00
investment
Qinzhou Manufacturing of Combination of
Guangxi Hengyi New material Qinzhou City,
City, chemical fiber 0.00 100.00 businesses under
Co., Ltd Guangxi
Guangxi products common control
(2) Important non-wholly owned subsidiaries
Gains and losses Dividends
Balance of
Shareholding attributable to declared to
minority interest at
Name of subsidiary ratio of minority minority minority
the end of the
shareholders (%) shareholders in shareholders in
period
current year current period
Ningbo Hengyi Trading Co., Ltd. 30.00 203,840,218.81 179,250,000.00 237,647,696.78
Zhejiang Hengyi Polymer Co., Ltd. 40.00 43,075,805.64 20,000,000.00 395,204,435.11
371
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Gains and losses Dividends
Balance of
Shareholding attributable to declared to
minority interest at
Name of subsidiary ratio of minority minority minority
the end of the
shareholders (%) shareholders in shareholders in
period
current year current period
Zhejiang Yisheng Petrochemical Co., Ltd. 30.00 328,890,016.52 30,000,000.00 2,679,865,926.49
Hengyi Industries Sdn Bhd 30.00 125,974,280.45 0.00 2,308,834,043.73
Zhejiang Hengyi High-tech Materials Co.,
9.33 30,124,205.73 17,791,666.67 462,226,864.25
Ltd.
(3) Major financial information of important non-wholly owned subsidiaries Currency Unit: RMB 10,000
Ending balance
Name of subsidiary Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liabilities
Ningbo Hengyi Trading Co., Ltd. 93,556.05 190,479.78 284,035.83 191,595.63 0.00 191,595.63
Zhejiang Hengyi Polymer Co., Ltd. 202,630.90 49,911.13 252,542.03 147,413.47 327.45 147,740.92
Zhejiang Yisheng Petrochemical Co.,
1,115,094.69 450,392.51 1,565,487.20 619,229.88 74,734.77 693,964.65
Ltd.
Hengyi Industries Sdn Bhd 1,062,634.75 2,573,033.49 3,635,668.24 1,888,536.30 1,012,888.99 2,901,425.29
Zhejiang Hengyi High-tech
589,997.70 527,222.16 1,117,219.86 603,657.91 18,141.95 621,799.86
Materials Co., Ltd.
(Contd.)
Balance at the end of prior year
Name of subsidiary Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liabilities
Ningbo Hengyi Trading Co., Ltd. 118,220.32 170,475.89 288,696.21 205,073.01 0.00 205,073.01
Zhejiang Hengyi Polymer Co., Ltd. 281,712.36 39,851.26 321,563.61 222,149.98 381.48 222,531.46
Zhejiang Yisheng Petrochemical Co.,
1,068,370.20 470,424.71 1,538,794.91 773,480.19 557.96 774,038.15
Ltd.
Hengyi Industries Sdn Bhd 1,241,036.43 2,608,342.18 3,849,378.61 1,919,063.01 1,162,011.83 3,081,074.84
Zhejiang Hengyi High-tech
577,835.80 540,293.09 1,118,128.89 609,665.28 16,894.51 626,559.78
Materials Co., Ltd.
(Contd.)
Amount incurred in current year Balance at the end of prior year
Cash Cash
Total inflows Total inflows
Name of subsidiary Operating Operating
Net profit comprehensive from Net profit comprehensive from
income income
income operating income operating
activities activities
Ningbo Hengyi Trading
1,431,043.73 67,946.74 68,567.00 71.32 1,739,584.17 44,838.32 45,950.19 -6,869.55
Co., Ltd.
Zhejiang Hengyi 349,464.95 10,768.95 10,768.95 49,137.40 474,801.52 13,139.93 13,139.93 65,058.81
372
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Name of subsidiary Amount incurred in current year Balance at the end of prior year
Polymer Co., Ltd.
Zhejiang Yisheng
2,352,467.70 109,630.01 106,765.78 222,553.67 3,261,678.77 141,436.90 141,737.42 37,449.76
Petrochemical Co., Ltd.
Hengyi Industries Sdn
2,321,258.54 47,747.33 -34,060.82 168,216.90 1,016,837.15 77,056.52 105,143.62 -239,080.35
Bhd
Zhejiang Hengyi
High-tech Materials 988,395.09 32,287.47 22,920.21 -186,077.82 1,182,134.72 38,487.03 39,480.41 72,660.61
Co., Ltd.
2. Trade that still controls the subsidiary after its owner's equity share changes
None.
3. Rights and interests in joint ventures and associated enterprises
(1) Important joint ventures or associates
Shareholding ratio Accounting treatment
Name of joint venture and Main place of Place of
Nature of business (%) methods of joint venture
associated enterprise business registration
Direct Indirect or associated enterprise
Zhejiang Baling Hengyi Manufacturing of
Xiao Shan Xiao Shan 0.00 50.00 Equity method
Caprolactam Co., Ltd chemical fiber products
Dalian Yisheng Investment
Dalian Dalian Trade and investment 0.00 30.00 Equity method
Co., Ltd.
Hainan Yisheng Petrochemical Production, sales,
Hainan Hainan 0.00 50.00 Equity method
Co., Ltd. import and export
China Zheshang Bank Hangzhou Hangzhou Banking business 0.00 3.52 Equity method
Note 1: The Company holds 3.52% of shares of China Zheshang Bank Co., Ltd., and has
assigned representatives to its Board of Directors, with substantial power of participating in
decision-making. Therefore, the Company can participate in preparing financial and operating
policies of Zheshang Bank Co., Ltd. through such representative, for imposing significant impact on
the Bank.
Note 2: According to the resolution of the shareholders' meeting of Hainan Yisheng
Petrochemical Co., Ltd., the minority shareholders gave up the rights and interests arising from the
operation from January 1, 2020, and Ningbo Hengyi Trading Co., Ltd. and Dalian Yisheng
Investment Co., Ltd. each enjoyed 50%.
(2) Major financial information of important associated enterprises
Balance at the end of the period/amount Beginning balance/Amount
incurred in the current period incurred in prior year
Item
Zhejiang Baling Hengyi Caprolactam Zhejiang Baling Hengyi
Co., Ltd. Caprolactam Co., Ltd.
Current assets 1,288,155,439.19 1,310,639,379.21
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Balance at the end of the period/amount Beginning balance/Amount
incurred in the current period incurred in prior year
Item
Zhejiang Baling Hengyi Caprolactam Zhejiang Baling Hengyi
Co., Ltd. Caprolactam Co., Ltd.
Of which: cash & cash equivalents 184,103,365.57 89,504,828.65
Non-current assets 4,552,145,931.54 4,783,456,861.87
Total assets 5,840,301,370.73 6,094,096,241.08
Current liabilities 3,122,327,679.98 3,355,528,855.04
Non-current liabilities 428,353,281.19 498,957,087.01
Total liabilities 3,550,680,961.17 3,854,485,942.05
Minority equity 0.00 0.00
Shareholder's equity attributable to parent
2,289,620,409.56 2,239,610,299.03
company
Net asset share calculated based on
1,144,810,204.78 1,119,805,149.52
shareholding ratio
Events adjusted 0.00 0.00
- Goodwill 0.00 0.00
- Unrealized profit arising from intra-group
0.00 0.00
trading
-Others 20,100,790.61 20,100,790.61
Book value of equity investment in joint
1,164,910,995.39 1,139,905,940.15
ventures
Fair value of equity investment in joint
0.00 0.00
ventures with public quotation
Operating income 5,371,929,504.09 5,047,750,726.47
Financial expenses: 117,037,894.48 87,671,729.17
Income tax expenses 66,296,918.59 75,477,468.63
Net profit 213,650,290.24 239,789,757.30
Net profit of discontinued operations 0.00 0.00
Other comprehensive income 0.00 0.00
Total comprehensive income 213,650,290.24 239,789,757.30
Dividends received from joint ventures
74,145,003.24 75,000,000.00
during the year
(3) Major financial information of important associated enterprises
Currency Unit: RMB 10,000
Balance at the end of the period/amount incurred in Beginning balance/Amount incurred in prior
the current period year
Item
Yisheng Hainan Yi China Zheshang Yisheng Hainan Yi China Zheshang
Investment Sheng Bank Investment Sheng Bank
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Balance at the end of the period/amount incurred in Beginning balance/Amount incurred in prior
the current period year
Item
Yisheng Hainan Yi China Zheshang Yisheng Hainan Yi China Zheshang
Investment Sheng Bank Investment Sheng Bank
Current assets 792,315.14 472,043.34 197,614,400.00 726,570.27 458,958.73 --
Non-current assets 889,697.28 549,701.51 7,208,100.00 912,324.81 595,160.71 --
Total assets 1,682,012.42 1,021,744.86 204,822,500.00 1,638,895.09 1,054,119.44 180,078,586.70
Current liabilities 866,438.91 552,299.55 166,036,500.00 936,694.90 636,727.61 --
Non-current liabilities 44,057.90 71,720.27 25,531,700.00 11,002.42 49,174.57 --
Total liabilities 910,496.82 624,019.82 191,568,200.00 947,697.32 685,902.18 167,275,819.80
Minority equity 118,276.34 0.00 203,100.00 109,017.31 0.00 178,125.80
Shareholder's equity
attributable to parent 653,239.26 397,725.04 13,051,200.00 582,180.46 368,217.26 12,624,641.10
company
Net asset share calculated
195,971.78 176,496.23 459,402.24 174,654.14 156,492.33 444,387.37
based on shareholding ratio
Events adjusted 0.00 0.00 0.00 0.00 0.00 0.00
—Goodwill 0.00 0.00 0.00 0.00 0.00 0.00
- Unrealized profit arising
0.00 -829.44 0.00 0.00 -933.12 0.00
from intra-group trading
-Others 5,494.45 0.00 -54,954.97 5,494.45 0.00 -55,114.33
Book value of equity
201,466.23 175,666.79 404,447.00 180,148.58 155,559.21 389,273.04
investment in associates
Fair value of equity
investment in associates with 0.00 0.00 8,677,628.38 0.00 0.00 10,166,437.17
public quotation
Operating income 2,536,416.86 1,808,764.93 4,770,300.00 3,901,448.91 1,976,267.35 4,636,390.90
Net profit 109,206.53 98,267.26 1,255,900.00 116,523.88 55,963.72 1,314,298.30
Net profit of discontinued
0.00 0.00 0.00 0.00 0.00 0.00
operations
Other comprehensive income 861.31 1,240.52 -200,700.00 1,066.54 2,616.15 87,861.20
Total comprehensive income 110,067.84 99,507.78 1,055,200.00 117,590.42 58,579.87 1,402,159.50
Dividends received from 8,925.00 29,750.00 17,953.66 0.00 0.00 0.00
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Balance at the end of the period/amount incurred in Beginning balance/Amount incurred in prior
the current period year
Item
Yisheng Hainan Yi China Zheshang Yisheng Hainan Yi China Zheshang
Investment Sheng Bank Investment Sheng Bank
associated enterprises in
current year
(4) Summary financial information of unimportant joint ventures associated enterprises
Currency Unit: RMB 10,000
Balance at the end of the period/amount Beginning balance/Amount
Item
incurred in the current period incurred in prior year
Joint ventures:
Total book value of investments 92,633.73 85,056.84
The total of the following items calculated
based on shareholding ratio
- Net profit 2,576.89 52.45
- Other comprehensive income 0.00 0.00
- Total comprehensive income 2,576.89 52.45
Associated enterprises:
Total book value of investments 15,543.60 1,996.51
The total of the following items calculated
based on shareholding ratio
- Net profit 856.52 -167.29
- Other comprehensive income 0.00 0.00
- Total comprehensive income 856.52 -167.29
(5) Excess deficit of joint venture or associated enterprise
As of December 31, 2020, the Company has no excess deficit of joint venture or associated
enterprise.
(6) Unconfirmed commitment related to the investment of joint venture
As of December 31, 2020, the Company has no unconfirmed commitment related to the
investment of joint venture.
(7) Contingent liabilities related to the investment of joint venture or associated enterprise
As of December 31, 2020, the Company has no contingent liabilities related to the investment
of joint venture or associated enterprise.
4. Equity of structured entity not incorporated into the consolidated financial statement
The Company does not have any equity of structured entity not incorporated into the
consolidated financial statement.
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IX. Risks associated with financial instruments
The Company's major financial instruments include monetary funds, financial assets measured
at fair value with changes included in profit or loss, borrowings, accounts receivable, accounts
payable, etc. For details of various financial instruments, please refer to the relevant items in Note
VI. Risks relating to these financial instruments, together with risk management policies taken by
the Company to lower these risks, are as follows. The company management manages and monitors
the risk exposure in order to ensure the above risks to be controlled within the limited range.
The Company takes the sensitivity analysis techniques to analyze the reasonable risk variables
and probable changes towards current profits and losses or shareholders' equity. Since any risk
variables rarely change in isolation, and the correlation between the variables has a significant
effect on the final impact of the change in a risk variable, therefore, the following content is under
the assumption that the change of each variable was conducted under the independent condition.
(I) Risk management objectives and policies
The purpose of risk management is to maintain a proper balance between risks and benefits,
minimize the risks’ negative impact on the operating results of the Company and maximize the
benefits to shareholders and other equity investors. Based on such an objective, the basic policy for
risk management is to determine and analyze various risks to be faced with, establish proper risk
tolerances and carry out risk management, oversee various risks in a timely and reliable manner and
keep relevant risks within the defined range.
1. Market Risk
(1) Foreign Exchange Risk
Foreign exchange risk refers to the risk of causing a loss due to exchange rate movement. The
Company's exposure to foreign exchange risk is mainly related to the USD and the BND. Except for
several subsidiaries of the Company that purchase and sell in USD, other major business activities
of the Company are settled in RMB. On December 31, 2020, the balances of assets and liabilities
are almost in RMB except for the below balances of US dollars and BND. The foreign exchange
risk from assets and liability of foreign currency balance may have an effect on the business
performance of the Company.
Ending balance Beginning balance
Item
USD BND USD BND
Cash & Cash Equivalents 597,549,974.09 30,852,704.59 272,473,370.08 2,168,288.48
Accounts receivable 418,190,365.11 28,951,031.41 751,315,469.46 1,195,207.71
Other receivables 426,581.80 4,330,630.67 60,608,150.13 3,872,007.78
Accounts payable 445,000,009.92 10,180,771.52 613,534,713.95 2,751,356.79
Other payables 266,250.00 2,951,839.39 781,115,996.18 1,210,564.77
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Ending balance Beginning balance
Item
USD BND USD BND
Short-term loans 822,806,683.23 0.00 1,229,209,378.59 0.00
Non-current liabilities due within one
1,952,936.28 0.00 0.00 0.00
year
Long-term loans 1,154,550,000.00 0.00 1,657,512,508.24 0.00
Long-term accounts payable 6,077,830.61 0.00 0.00 0.00
The Company pays close attention to the impact of exchange rate changes on the Company's
foreign exchange risk, and stipulates that the Company will not conduct any foreign exchange
derivatives trading for speculative purposes. All foreign exchange derivatives trading is based on
normal production and operation, and relies on specific business operations for the purpose of
avoiding and preventing exchange rate or interest rate risk.
Foreign exchange risk sensitivity analysis:
The Company's exposure to foreign exchange risk is mainly related to changes in the exchange
rate of USD and Euro against RMB. The following table shows the sensitivity analysis under the
assumption regarding the Company's relevant foreign currency and RMB exchange rate changes of
1%. During the sensitivity analysis conducted by management, the movement of 1% is considered
to reflect the possible range of exchange rate changes. Based on the above assumptions, if other
variables remain the same, the pre-tax impacts of possible reasonable interest rate changes on the
profits and losses of the current period and the shareholders' equities are as follows:
Pre-tax impact on current profit & loss
Item Exchange rate movement and shareholders' equity
Current period Previous period
USD-monetary assets 66,303,875.42 71,421,557.02
USD monetary liabilities 1% appreciation against RMB -158,597,723.93 -244,184,900.98
Net influence -92,293,848.50 -172,763,343.96
USD-monetary assets -66,303,875.42 -71,421,557.02
USD monetary liabilities 1% depreciation against RMB 158,597,723.93 244,184,900.98
Net influence 92,293,848.50 172,763,343.96
Currency monetary assets 3,162,722.16 374,357.74
Currency monetary liabilities 1% appreciation against RMB -647,621.57 -204,985.86
Net influence 2,515,100.58 169,371.88
Currency monetary assets -3,162,722.16 -374,357.74
Currency monetary liabilities 1% depreciation against RMB 647,621.57 204,985.86
Net influence -2,515,100.58 -169,371.88
(2) Interest rate risk--risk for cash flow changes
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The risk of changes in fair value of financial instruments caused by changes in interest rates of
the Company mainly comes from the fact that the interest rate of the financial market is in a
downward trend, the Company's fixed-rate borrowings will not enjoy the cost savings brought by
interest-rate cuts. Conversely, when the financial market interest rate is in an upward trend, the
Company's borrowing with floating interest rate will cause the cost increase due to the rate hike. As
the short-term and medium-term loans of the Company's interest-bearing debt each account for
about half of the Company's interest-bearing debt, and short-term loans bear interest at fixed interest
rates and medium-term and long-term debts bear interest at floating interest rates, the Company's
management believed that under the current trend of interest rate changes in macro financial
markets, the Company's interest rate risk-fair value change risk was not significant. The Company
currently has no interest rate hedging policy.
Interest rate risk sensitivity analysis:
The interest rate risk sensitivity analysis is based on the assumption that market interest rate
changes affect interest income or expenses of financial instruments with variable rate. For
short-term loans, such sensitivity analysis is based on the fact that borrowing that will continue to
revolve in the whole fiscal year. Additionally, when the management conducted such a sensitivity
analysis, the increase and decrease of 50 basis points was considered to reasonably reflect the
possible range of interest rate changes. Based on above assumptions, when other variables remain
the same, if interest rate increases/decreases by 50 basis points, the pre-tax impacts of possible
reasonable interest rate changes on current profits and losses and shareholders' equities are as
follows:
Profit increase Profit decrease
Item Interest rate movement in the current in the current
period period
Short-term borrowings and
Upward trend of interest rates, with an
medium-and long-term debts bearing 150,260,187.30 —
increase of 50 basis points
interest at fixed interest rates
Short-term borrowings and
Downward trend of interest rates, with a
medium-and long-term debts bearing — 150,260,187.30
decrease of 50 basis points
interest at fixed interest rates
Medium and long-term debt bearing Upward trend of interest rates, with an
— 79,255,491.22
interest at the floating interest rate increase of 50 basis points
Medium and long-term debt bearing Downward trend of interest rates, with a
79,255,491.22 —
interest at the floating interest rate decrease of 50 basis points
(3) Other price risks
The investment classified as the trading financial assets held by the Company shall be
measured according to the fair value on the balance sheet date. Therefore, the Company is exposed
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to the risk of price changes of relevant assets. The Company has internally established an
investment management department, with designated members closely monitoring the price
changes of investment products. Given the necessity of investing in futures and characteristics of
leverage risk, the Board of Directors of the Company authorized the Chairman to form a company
futures leading team, further authorized the team to lead the Company's futures business,
formulated working ideas of futures business, and clearly established futures trading team in
company investment management department for organizing and implementing the trade execution
as decided by foresaid futures leading team, futures settlement team in company financial
management department for the fund management, accounting processing, transaction confirmation
and settlement management of the Company's futures business, and futures supervision team in
company audit department for the risk management & control of futures trading and regular review
of trading behavior. Further, to strengthen the Company's internal control over futures business,
effectively prevent and resolve various risks that may exist in the trade execution and
implementation, the Company has formulated the Futures Business Management System, which
requires staff participating in the futures business to strictly follow relevant regulations and
procedures for operation. The Company's staff involved in futures business has undergone special
training and fully understands the characteristics and risks of the futures variety business involved.
Therefore, the directors of the Company believe that price risks faced by the Company have been
alleviated.
2. Credit risk
Credit risk refers to risk that one party of financial instruments does not perform obligations so
that the other party encounters financial loss. The Company's credit risks mainly arise from bank
deposits and accounts receivable. The Company has taken the following measures to control the
above related risks.
To reduce credit risk, the Company set up a team for credit line determination, credit approval,
and payment-to-delivery policy for unapproved customers. In addition, the Company will review
collection situation of every account receivable on every balance sheet date to guarantee to
withdraw enough bad debt provision for funds that cannot be collected. Therefore, the management
of the Company thinks credit risk undertaken by the Company has been reduced significantly.
The Company’s working capital is deposited in banks with high credit ratings, so the credit
risk of working capital is low.
3. Liquidity risk
In managing the liquidity risk, the Company, to meet its managing demand, should keep and
supervise enough cash and cash equivalent which approved by the management. Meanwhile, it
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should decrease the influence of the fluctuation of cash flow. The Company management monitors
the using of bank loans and guarantees to abide by the loan agreement.
The Company sets the bank loans as the main fund source. On December 31, 2020, the bank
credit line of the Company was RMB 23.378 billion (December 31, 2019: RMB 24.503 billion).
According to the deadline of undiscounted remaining contract obligations, financial assets and
financial liabilities held by the Company are analyzed as follows:
Item Within 6 months 7-12 months 1-3 years Over 3 years
Non-derivative financial
assets and liabilities:
Notes receivable 128,306,084.37 86,378,882.61 0.00 0.00
Short-term loans 19,403,889,638.52 7,078,782,487.46 0.00 0.00
Notes payable 1,187,267,473.78 0.00 0.00 0.00
Long-term loans due within 1
594,968,849.55 1,161,821,634.60 0.00 0.00
year
Long-term loans 0.00 0.00 4,395,716,680.86 12,214,186,348.37
Accounts receivable financing 277,820,103.37 259,394,687.11 0.00 0.00
Derivative financial assets
and liabilities:
Forward exchange contract 4,648,638.91 0.00 0.00 0.00
Futures contract 759,555,645.85 80,274,127.29 -1,468,102.50 0.00
Note: The maturity time of other undiscounted financial assets and financial liabilities held by
the Company is included in corresponding items in Note VI of financial statements.
(II) Financial assets transfer
1. Financial assets transferred but not confirmed wholly
Financial assets transferred but not confirmed wholly of this year that the Company need not
disclose
2. Transferred financial assets that have been derecognized wholly but the transferor still
continues to involve in
In 2020, the Company cashed the banker's acceptance of RMB 2,262,383,251.48, (RMB
4,574,723,760.80 for last year) in total to the bank. As the major risks such as interest rate risk
related to the banker’ s acceptance and benefits have been transferred to the bank, the Company
ceased to recognize the banker’s acceptance that has been cashed but not yet mature. 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, 2020, the cashed but not mature
banker’s acceptance was RMB 924,028,209.32 in total (December 31, 2019: RMB
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1,864,896,260.32).
X. Disclosure of fair value
1. Year-end fair values of assets and liabilities measured at fair value
Fair value at the end of the period
Fair value Fair value Fair value
Item
measurement at measurement measurement Total
Level 1 at Level 2 at Level 3
1. Continuous fair value
measurement
(i) Financial assets held for
251,904,308.53 0.00 0.00 251,904,308.53
trading
1. Financial assets at fair value
251,904,308.53 0.00 0.00 251,904,308.53
through profit or loss
(1) Investment in debt instruments 0.00 0.00 0.00 0.00
(2) Investment in equity
0.00 0.00 0.00 0.00
instruments
(3) Derivative financial assets 251,904,308.53 0.00 0.00 251,904,308.53
2. Specified as financial assets at
0.00 0.00 0.00 0.00
fair value through profit or loss
(1) Investment in debt instruments 0.00 0.00 0.00 0.00
(2) Investment in equity
0.00 0.00 0.00 0.00
instruments
(ii) Derivative financial assets 737,015,777.82 0.00 0.00 737,015,777.82
(iii) Financial liabilities held for
9,301,029.70 0.00 0.00 9,301,029.70
trading
Among which: issued bonds held
0.00 0.00 0.00 0.00
for trading
Derivative financial liabilities 9,301,029.70 0.00 0.00 9,301,029.70
Others 0.00 0.00 0.00 0.00
(iv) Derivative financial
136,608,747.10 0.00 0.00 136,608,747.10
liabilities
2. Basis of determining the market price of continuous and non-continuous level-1 fair
value measurement project
Items for which the continuous measurement is made at the level-based fair value for the first
time mainly include derivative financial instruments and an active market exists. The unadjusted
offer for the same assets or liabilities at the active market can be obtained.
XI. Related parties and connected transactions
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1. Introduction about parent company of the Company
Parent company’s
Place of Parent company’s
Nature of Registered proportion of voting
Name of parent company registrati shareholding ratio in the
business capital rights in the Company
on Company (%)
(%)
Zhejiang Hengyi Group Hangzho Investment and RMB51.8
40.86 47.82
Co., Ltd. u trade million
Note: the ultimate controller of the Company is Qiu Jianlin
2. Introduction about subsidiaries of the Company
Please refer to Note VIII, 1: Interests in Subsidiaries.
3. Introduction to joint ventures and associated enterprises
Place Shareholding
Name of joint Main
of ratio (%) Accounting treatment
venture and place of
regis Nature of business methods of joint venture or
associated busines Indire
tratio Direct associated enterprise
enterprise s ct
n
Ningbo Jinhou
Industry Hangzh Ning Investment and
25.00 0.00 Equity method
Investment Co., ou bo consulting
Ltd.
Chemical raw
materials and
Zhejiang Yisheng
Ning chemical
New Material Co., Ningbo 0.00 50.00 Equity method
bo products
Ltd.
manufacturing
industry
Dongzhan Zhoush Zhou Water transport
0.00 30.00 Equity method
Shipping Co., Ltd. an shan industry
As for important joint ventures or associated enterprise of the Company, please see Note VII. 3:
Equity in Joint Ventures or Associated Enterprise.
4. Other related parties
Name of other related parties Relationship between other related parties and the Company
Corporate shareholders which hold more than 5% of the
Hangzhou Hengyi Investment Co., Ltd. Company's shares, and
The wholly-owned subsidiaries of the parent company
Zhejiang Hengyi Polyamide Co., Ltd. A holding subsidiary of the ultimate parent company
HENGYI JAPAN Co., Ltd. A holding subsidiary of the ultimate parent company
Hangzhou Yichen Chemical Fiber Co.,
A holding subsidiary of the ultimate parent company
Ltd.
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Shaoxing Keqiao Hengming Chemical
A joint venture of the ultimate parent company
Fiber Co., Ltd.
Zhejiang Rongtong Chemical Fiber New
A holding subsidiary of the joint venture
Material Co., Ltd.
Yisheng Dahua Petrochemical Co., Ltd. A holding subsidiary of the joint venture
Hong Kong Yisheng Dahua Co., Ltd. A holding subsidiary of the joint venture
Hong Kong Yisheng Co., Ltd. A wholly-owned subsidiary of a joint venture
Hangzhou Wanyong Industrial
Related natural person serves as the senior executive.
Investment Co., Ltd.
Ningbo Qingshi Chemical Wharf Co.,
Related natural person serves as the senior executive.
Ltd.
Hangzhou Yibo Investment Management
A company controlled by related natural persons
Co., Ltd.
Zhejiang Hengyi Real Estate
Related natural person serves as the senior executive.
Development Co., Ltd.
5. Related-party transactions
(1) Connected transactions for purchase and sale of goods, provision and acceptance of
services
① Purchasing goods or receiving labor services
Contents of
Related parties connected Current period Previous period
transactions
Goods
Hainan Yi Sheng Petrochemical Co., Ltd. 364,528,944.69 707,144,849.70
procurement
Receiving labor
Hainan Yi Sheng Petrochemical Co., Ltd. 270,152.21 0.00
services
Goods
Yisheng Dahua Petrochemical Co., Ltd. 3,217,687,757.97 3,742,056,138.64
procurement
Receiving labor
Yisheng Dahua Petrochemical Co., Ltd. 0.00 463,250.00
services
Goods
Zhejiang Baling Hengyi Caprolactam Co., Ltd 403,774,807.18 394,461,794.88
procurement
Goods
Zhejiang Hengyi Jinlun Co., Ltd. 110,164.61 21,653.99
procurement
Receiving labor
Ningbo Qingshi Chemical Wharf Co., Ltd. 59,917,129.31 62,873,091.10
services
Goods
Hangzhou Yichen Chemical Fiber Co., Ltd. 8,920,172.05 1,169,225.66
procurement
Acceptance of
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 0.00 3,980,917.42
services
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. Goods 3,022,628,921.27 1,261,644,792.24
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Contents of
Related parties connected Current period Previous period
transactions
procurement
② Sales of goods and rendering labor services
Contents of
Related parties connected Current period Previous period
transactions
Zhejiang Baling Hengyi Caprolactam Co., Ltd Selling goods 670,705,898.26 486,960,795.87
Provision of
Zhejiang Baling Hengyi Caprolactam Co., Ltd 32,214,927.63 31,319,840.06
services
Hainan Yi Sheng Petrochemical Co., Ltd. Selling goods 1,691,872,715.08 167,237,590.77
Provision of
Hainan Yi Sheng Petrochemical Co., Ltd. 15,521,892.37 58,272,787.10
services
Zhejiang Hengyi Polyamide Co., Ltd. Selling goods 1,295,293.80 2,658,544.26
Provision of
Zhejiang Hengyi Polyamide Co., Ltd. 7,579,045.74 8,853,956.48
services
Hangzhou Hengyi Investment Co., Ltd. Selling goods 0.00 11,686,888.04
Provision of
Yisheng Dahua Petrochemical Co., Ltd. 202,233.49 20,537.74
services
Yisheng Dahua Petrochemical Co., Ltd. Selling goods 28,277,321.68 17,681,415.93
Provision of
Hangzhou Yichen Chemical Fiber Co., Ltd. 25,362,366.14 13,041,287.52
services
Hangzhou Yichen Chemical Fiber Co., Ltd. Selling goods 2,577,034.44 3,068,169.24
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. Selling goods 62,637,805.44 95,173,107.23
Provision of
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 37,335,011.58 38,513,321.22
services
Trademark
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. licensing 5,565,160.26 4,837,273.39
expenses
(2) Information about related trusteeship management/entrusted management
The Company as the trustee
Custody
Entrustm
fee
Entrusted assets ent
Name of entrusting party Name of trustee confirme
Type Starting
d in this
date
period
Shaoxing Keqiao Hengming Chemical Zhejiang Hengyi Petrochemicals Operation 2018-7-2 1,698,113
Fiber Co., Ltd. Co., Ltd. trusteeship 5 .20
Note: Zhejiang Hengyi Petrochemical Co., Ltd., a subsidiary of the Company, was entrusted to
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provide management consulting services for the production and operation activities of Shaoxing
Keqiao Hengming Chemical Fiber Co., Ltd. and did not bear any operational risks of the entrusting
party. The termination date of the entrustment is the date when the entrusting party is acquired by
the Company or non-related parties of the Company.
(3) Introduction about associated lease
①The Company as a lessor
Rental income Rental income
Type of leasing
Name of lessee recognized in current recognized in prior
assets
period period
Hangzhou Yibo Investment Management Co., Ltd. House property 0.00 209,090.91
②The Company as a lessee
Type of leasing Rental recognized in Rental recognized in
Name of lessor
assets current period prior period
Zhejiang Baling Hengyi Caprolactam Co., Ltd House property 0.00 258,095.24
Zhejiang Hengyi Real Estate Development Co., Ltd. House property 0.00 1,333,333.34
(4) Guarantee of related parties
①The company as a guarantor
As of December 31, 2020, the Company has no related-party guarantee as a guarantor.
②The Company as the secured party
Whether
Does the
the
Amount (RMB Company
Guarantor Guarantee Debit date Repayment date guarantee
10,000) provide
has been
collateral
fulfilled
Zhejiang Southeast Space
Frame Group Company Zhejiang Hengyi
5,000.00 2020-03-24 2021-03-03 No No
Limited and Zhejiang Petrochemicals Co., Ltd.
Hengyi Group Co., Ltd.
Zhejiang Southeast Space
Frame Group Company Zhejiang Hengyi
14,992.50 2020-10-16 2021-05-18 No No
Limited and Zhejiang Petrochemicals Co., Ltd.
Hengyi Group Co., Ltd.
Xinghui Chemical Fiber Zhejiang Hengyi Polymer Co.,
13,200.00 2020-04-01 2021-07-24 No No
Group Co., Ltd. Ltd.
Xinghui Chemical Fiber Zhejiang Hengyi
28,000.00 2020-07-29 2021-07-20 No No
Group Co., Ltd. Petrochemicals Co., Ltd.
Zhejiang Hengyi Real
Zhejiang Hengyi Polymer Co.,
Estate Development Co., 7,200.00 2020-01-21 2021-01-20 Yes No
Ltd.
Ltd., Zhejiang Hengyi Real
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Whether
Does the
the
Amount (RMB Company
Guarantor Guarantee Debit date Repayment date guarantee
10,000) provide
has been
collateral
fulfilled
Estate Development Co.,
Ltd., Xinghui Chemical
Fiber Group Co., Ltd.
Zhejiang Hengyi Group Haining Hengyi New
367,785.01 2020-01-14 2024-12-30 Yes No
Co., Ltd. Materials Co., Ltd.
Zhejiang Hengyi Group Jiaxing Yipeng Chemical Fiber
15,000.00 2020-02-28 2021-07-01 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Ningbo Hengyi Trading Co.,
49,984.00 2020-12-01 2021-06-01 No No
Co., Ltd. Ltd.
Zhejiang Hengyi Group Taicang Yifeng Chemical
14,950.00 2020-08-25 2021-09-10 No No
Co., Ltd. Fiber Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi High-tech
$15,000.00 2020-02-21 2021-02-20 No No
Co., Ltd. Materials Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi High-tech
54,000.00 2020-01-13 2021-03-19 No No
Co., Ltd. Materials Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi High-tech
20,000.00 2020-03-11 2021-03-11 No No
Co., Ltd. Materials Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi Polymer Co.,
6,000.00 2016-03-14 2023-3-13 Yes No
Co., Ltd. Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi
2,000.00 2015-12-30 2023-12-29 Yes No
Co., Ltd. Petrochemicals Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi
15,000.00 2020-05-12 2021-05-12 No No
Co., Ltd. Petrochemicals Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi
115,999.64 2020-02-21 2021-09-03 No No
Co., Ltd. Petrochemicals Co., Ltd.
Zhejiang Hengyi Group Zhejiang Shuangtu New
6,991.89 2020-08-13 2021-03-10 No No
Co., Ltd. Materials Co., Ltd.
Zhejiang Hengyi Group Zhejiang Shuangtu New
10,000.00 No No
Co., Ltd. Materials Co., Ltd. 2020-03-06 2021-12-04
Zhejiang Hengyi Group Zhejiang Yisheng
206,000.00 2020-01-09 2021-11-23 No No
Co., Ltd. Petrochemical Co., Ltd.
Zhejiang Hengyi Group Zhejiang Yisheng
$11,439.17 2020-02-18 2022-02-18 No No
Co., Ltd. Petrochemical Co., Ltd.
Zhejiang Hengyi Group Hengyi Industries International
$3,605.54 2020-12-29 2021-01-27 No No
Co., Ltd. Pte Ltd (Singapore)
Zhejiang Hengyi Group Hongkong Tianyi International
$1,802.00 No No
Co., Ltd. Holding Company Limited 2020-08-17 2022-06-02
Zhejiang Hengyi Group
32,500.00 No No
Co., Ltd. Hengyi Industries Sdn Bhd 2020-09-09 2022-03-04
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Whether
Does the
the
Amount (RMB Company
Guarantor Guarantee Debit date Repayment date guarantee
10,000) provide
has been
collateral
fulfilled
Zhejiang Hengyi Group
$9,336.58 No No
Co., Ltd. Hengyi Industries Sdn Bhd 2020-10-05 2021-01-10
Zhejiang Hengyi Group
$10,000.00 No No
Co., Ltd. Hengyi Industries Sdn Bhd 2020-12-18 2022-03-04
Zhejiang Hengyi Group
$8,000 No No
Co., Ltd. Hengyi Industries Sdn Bhd 2020-03-02 2021-03-01
Zhejiang Hengyi Group Taicang Yifeng Chemical
23,500.00 2020-06-19 2021-12-24 No No
Co., Ltd. Fiber Co., Ltd.
Zhejiang Hengyi Group Hangzhou Yijing Chemical
25,000.00 No No
Co., Ltd. Fiber Co., Ltd. 2020-07-22 2021-09-04
Zhejiang Hengyi Group Zhejiang Shuangtu New
4,800.00 2019-05-08 2022-05-09 Yes No
Co., Ltd. Materials Co., Ltd.
Zhejiang Hengyi Group Suqian Yida New Material
5,926.67 2019-11-26 2022-11-20 Yes No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group
Hengyi Industries Sdn Bhd $700.00 2019-06-25 2024-09-25 Yes No
Co., Ltd.
Zhejiang Hengyi Group Hangzhou Yijing Chemical
20,440.00 2019-12-09 2022-12-10 Yes No
Co., Ltd. Fiber Co., Ltd.
Zhejiang Hengyi Group
Hengyi Industries Sdn Bhd 410,000.00 2018-08-23 2030-08-22 Yes No
Co., Ltd., Qiu Jianlin
Zhejiang Hengyi Group
Hengyi Industries Sdn Bhd $107,000 2018-08-23 2030-08-22 Yes No
Co., Ltd., Qiu Jianlin
Zhejiang Hengyi Group
Co., Ltd. and Shaoxing Shaoxing Shengong Packaging
1,379.46 2020-01-21 2023-12-31 Yes No
Shengong Machinery Co., Ltd.
Manufacturing Co., Ltd.
As of December 31, 2020, the Company has no related-party guarantee as a guarantor.
(5) Funds borrowed from related party
Inter-bank
Starting Expiring
Related parties Borrowing Description
date date
and Lending
Lending:
Hainan Yi Sheng Petrochemical 520,000,000.0 2019-11- 2020-12- Entrusted loan, with a loan interest rate of
Co., Ltd. 0 13 4 4.785%
Zhejiang Yisheng New Material 2019-12- 2020-12- Entrusted loan, with a loan interest rate of
80,000,000.00
Co., Ltd. 23 22 4.785%
Zhejiang Yisheng New Material 1,000,000,000 2020-3-1 2021-12- Entrusted loan, with a loan interest rate of
Co., Ltd. .00 6 22 4.785%
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(6) Related-party Assets Transfer and Debt Restructuring
Contents of connected Current Previous
Related parties
transactions period period
Shaoxing Keqiao Hengming Chemical Fiber Co.,
Transferred assets 0.00 130,119.82
Ltd.
Shaoxing Keqiao Hengming Chemical Fiber Co.,
Asset alienation 0.00 298,964.16
Ltd.
Zhejiang Yisheng New Material Co., Ltd. Asset alienation 32,943.58 0.00
Hangzhou Huixin Zhishi Technology Co., Ltd. Transferred assets 675,006.60 0.00
Zhejiang Hengyi Group Co., Ltd. Transferred assets 100,000.00 0.00
Zhejiang Hengyi Group Co., Ltd. Asset alienation 1,000,000.00 0.00
(7) Remuneration of key management personnel
Item Current period Previous period
Remuneration of key management personnel RMB 12,667,800 RMB 12,974,400
(8) Other related-party transactions
During the year, the Company conducted paper transactions with Hong Kong Yisheng Co., Ltd.
and Hong Kong Yisheng Dahua Co., Ltd. respectively, with a total revenue of USD5,739,102.00
and USD706,944.00 respectively.
As of December 31, 2020, the deposit balance of the Company and its subsidiaries in the
related party China Zheshang Bank Co., Ltd. was RMB61.6471 million; at the end of the period, the
amount of discounted bank acceptance bills that have not yet expired was RMB735.8737 million.
6. Accounts receivable from and payable to affiliated parties
(1) Receivable items
Ending balance Balance at the end of prior year
Provisio
Item Provision for
Book balance n for bad Book balance
bad debts
debts
Accounts receivable:
Hong Kong Yisheng Co., Ltd. 35,140,697.19 0.00 7,106,850.27 0.00
Hainan Yi Sheng Petrochemical Co., Ltd. 553,876,023.16 0.00 1,154,281.98 0.00
Hong Kong Yisheng Dahua Co., Ltd. 0.00 0.00 10,709,108.81 0.00
Zhejiang Baling Hengyi Caprolactam Co., Ltd 214,624.00 0.00 0.00 0.00
Shaoxing Keqiao Hengming Chemical Fiber Co.,
229,073.95 0.00 0.00 0.00
Ltd.
Total 589,460,418.30 0.00 18,970,241.06 0.00
Advance payments:
Zhejiang Baling Hengyi Caprolactam Co., Ltd 5,083.43 0.00 0.00 0.00
Zhejiang Rongtong Chemical Fiber New Material
0.00 0.00 943,940.00 0.00
Co., Ltd.
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Ending balance Balance at the end of prior year
Provisio
Item Provision for
Book balance n for bad Book balance
bad debts
debts
Total 5,083.43 0.00 943,940.00 0.00
Other receivables:
Hangzhou Yichen Chemical Fiber Co., Ltd. 2,400.00 0.00 0.00 0.00
Zhejiang Hengyi Group Co., Ltd. 1,000,000.00 0.00 0.00 0.00
Hangzhou Wanyong Industrial Investment Co., Ltd. 0.00 0.00 500,362,500.00 15,010,875.00
Total 1,002,400.00 0.00 500,362,500.00 15,010,875.00
Dividend receivable:
Zhejiang Baling Hengyi Caprolactam Co., Ltd 54,145,003.24 0.00 28,444,087.61 0.00
Dalian Yisheng Investment Co., Ltd. 63,750,000.00 0.00 38,250,000.00 0.00
Hainan Yi Sheng Petrochemical Co., Ltd. 212,500,000.00 0.00 127,500,000.00 0.00
Total 330,395,003.24 0.00 194,194,087.61 0.00
(2) Payable items
Item Ending balance Balance at the end of prior year
Accounts payable:
Zhejiang Baling Hengyi Caprolactam Co., Ltd 7,833,213.52 331,922.92
Hangzhou Yichen Chemical Fiber Co., Ltd. 7,871,460.86 1,213,470.00
Zhejiang Hengyi Polyamide Co., Ltd. 0.00 10,344.08
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 48,740,055.61 19,523,227.72
Hangzhou Huixin Zhishi Technology Co., Ltd. 0.00 5,625,073.25
Ningbo Qingshi Chemical Wharf Co., Ltd. 0.00 10,920,679.93
Total 64,444,729.99 37,624,717.90
Accounts received in advance:
Zhejiang Baling Hengyi Caprolactam Co., Ltd 0.00 1,801,612.46
Zhejiang Hengyi Polyamide Co., Ltd. 0.00 147,360.00
Total 0.00 1,948,972.46
Contractual liabilities:
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 9,944,293.55 0.00
Hong Kong Yisheng Petrochemical Investment Co., Ltd. 35,131,486.70 0.00
Zhejiang Hengyi Group Co., Ltd. 0.00 0.00
Zhejiang Hengyi Jinlun Co., Ltd. 198,244.97 0.00
Total 45,274,025.23 0.00
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Item Ending balance Balance at the end of prior year
Other payables:
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 0.00 3,145,068.00
Zhejiang Hengyi Group Co., Ltd. 100,000.00 21,100,000.00
Total 100,000.00 24,245,068.00
XII. Share-based Payment
1. General situation of share-based payment in Phase I
Item Related contents
Total amount of various equity instruments granted by the Company in the
0.00
current period
Total amount of various equity instruments exercised by the Company in the
0.00
current period
Total amount of various equity instruments invalidated in the current period 0.00
The range of the exercise price of the stock options issued by the Company at
——
the end of the year and the remaining term of the contract
The scope of the exercise price of other equity instruments of the Company at
——
the end of the year and the remaining term of the Contract
The Company implemented the Phase I Restricted Share Incentive Plan (hereinafter referred to
as “the Plan” or “the Incentive Plan”) in 2015. Taking August 25, 2015 as the grant date, the
Company granted 11.7 million restricted shares with a par value of RMB1 per share and a grant
price of RMB5.35 per share to 15 incentive targets through targeted issuance.
The validity period of this Plan is 5 years from the date of grant of restricted shares. The
restricted shares granted by this Incentive Plan shall be locked in within 12 months from the date of
grant. The unlocking arrangements for granting restricted shares are shown in the table:
Proportion of the number of
Unlock schedule Unlock time unlocked stocks to the number of
restricted shares
From the first trading day after the expiration of 12
First unlocking months from the first grant date to the last trading day 25%
within 24 months from the first grant date
From the first trading day after the expiration of 24
Second unlocking months from the first grant date to the last trading day 25%
within 36 months from the first grant date
End on the last trading day within 36 months from the
Third unlocking date of the first grant; end on the last trading day 25%
within 48 months from the date of the first grant
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From the first trading day after the expiration of 48
Fourth unlocking months from the first grant date to the last trading day 25%
within 60 months from the first grant date
This incentive plan is an equity tool with performance evaluation conditions. As the Company
failed to meet the requirement that “the net profit attributable to shareholders of the listed company
during the lock-in period and the net profit attributable to shareholders of the listed company after
deducting non-recurring gains and losses shall not be lower than the average level of the last three
fiscal years before the grant date and shall not be negative” in 2015, and the unlocking conditions of
the Company's stocks in the first unlocking period were not met, the relevant stocks involved
cannot be unlocked within the first unlocking time or deferred to the next year. In 2016, the
Company repurchased and cancelled 25% of the restricted shares granted to incentive targets that
did not meet the unlocking conditions for the first unlocking period, i.e. 2,925,000 restricted shares.
On August 28, 2017, the first meeting of the 10th Board of Directors of the Company
deliberated and passed the Proposal on the Achievement of Unlocking Conditions in the Second
Unlocking Period of the Phase I Restricted Share Incentive Plan, agreeing that 2,925,000 restricted
shares of the 15 incentive targets of the Company in the second unlocking period of the Phase I
Restricted Share Incentive Plan shall be unlocked according to regulations.
On August 27, 2018, the 17th meeting of the 10th Board of Directors deliberated and passed
the Proposal on the Achievement of Unlocking Conditions in the Third Unlocking Period of the
Phase I Restricted Share Incentive Plan, agreeing that 4,095,000 restricted shares (after excluding
rights) of 15 incentive targets of the Company in the third unlocking period of the Phase I
Restricted Share Incentive Plan should be unlocked according to regulations.
On August 29, 2019, the 33rd Meeting of the 10th Board of Directors deliberated and passed
the Proposal on the Achievement of Unlocking Conditions in the Fourth Unlocking Period of the
Phase I Restricted Share Incentive Plan, agreeing that 3,920,000 restricted shares (after excluding
rights) of 14 incentive targets of the Company in the fourth unlocking period of the Phase I
Restricted Share Incentive Plan should be unlocked according to regulations.
2. General situation of share-based payment in Phase II
Item Related contents
Total amount of various equity instruments granted by the Company in the
0.00
current period
Total amount of various equity instruments exercised by the Company in the
15,260,700.00
current period
Total amount of various equity instruments invalidated in the current period 0.00
The range of the exercise price of the stock options issued by the Company at
——
the end of the year and the remaining term of the contract
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Item Related contents
The scope of the exercise price of other equity instruments of the Company at
——
the end of the year and the remaining term of the Contract
The Company implemented the Phase II Restricted Share Incentive Plan (hereinafter referred
to as the “Phase II Incentive Plan”) in 2017. Taking June 12, 2017 as the grant date, the Company
granted 28.55 million restricted shares, each with a par value of RMB1, and the grant price of
restricted shares was RMB6.60 per share to 50 incentive targets through targeted issuance.
The validity period of the Phase II Incentive Plan is 3 years from the date of grant of restricted
shares. The restricted shares granted by this Incentive Plan shall be locked in within 12 months
from the date of grant. The unlocking arrangements for granting restricted shares are shown in the
table:
Proportion of the
number of unlocked
Unlock schedule Unlock time
stocks to the number of
restricted shares
From the first trading day after the expiration of 12 months from
First unlocking the first grant date to the last trading day within 24 months from 40%
the first grant date
From the first trading day after the expiration of 24 months from
Second
the first grant date to the last trading day within 36 months from 30%
unlocking
the first grant date
From the first trading day after the expiration of 36 months from
Third unlocking the first grant date to the last trading day within 48 months from 30%
the first grant date
On June 12, 2018, the 16th Meeting of the 10th Board of Directors deliberated and passed the
Proposal on the Achievement of Unlocking Conditions in the First Unlocking Period of Phase II
Restricted Share Incentive Plan, agreeing that 15,988,000 shares (after excluding rights) of 50
incentive targets of the Company in the first unlocking period of Phase II Restricted Share Incentive
Plan should be unlocked according to regulations.
On June 18, 2019, the 30th Meeting of the 10th Board of Directors deliberated and passed the
Proposal on the Achievement of Unlocking Conditions in the Second Unlocking Period of Phase II
Restricted Share Incentive Plan, agreeing that 11,739,000 shares (after excluding rights) of 49
incentive targets of the Company in the second unlocking period of Phase II Restricted Share
Incentive Plan should be unlocked according to regulations.
On June 12, 2020, the 39th Meeting of the 10th Board of Directors deliberated and passed the
Proposal on the Achievement of Unlocking Conditions in the Third Unlocking Period of Phase II
Restricted Share Incentive Plan, agreeing that 15,260,700 restricted shares (after excluding rights)
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of 49 incentive targets of the Company in the third unlocking period of Phase II Restricted Share
Incentive Plan should be unlocked according to regulations.
3. Share-based payment settled in equity shares
Item Related contents
The fair value of the Company's restricted shares in
Phase II was determined directly based on the market
price of the shares with unlimited selling conditions on
the grant date minus the grant price, regardless of
Method for determining fair value of equity factors such as option value and liquidity discount, i.e.
instruments on grant date the fair value of restricted shares = the closing price of
the shares on the grant date-the grant price; the total
cost to be recognized for the restricted shares granted
this time = the fair value of each restricted share * the
number of restricted shares.
Basis for determining the amount of equity
According to the best estimate of the Company's
instruments in respect of which an option is
management
exercisable
Reasons for the significant difference between the
——
current period’s estimate and prior-period estimate
Cumulative amount of equity-settled share
187,774,833.33
payments included in the capital reserve
Total amount of confirmed fees paid by
9,013,875.00
equity-settled shares in the current period
XIII. Commitments and Contingencies
1. Commitments
(1) On January 27, 2014, the Company's controlling subsidiary, Hengyi Industries Sdn Bhd
(hereinafter referred to as “Brunei Industries”) and the Brunei Economic Development Board
signed the Land Lease Agreement, to clarify the rental rate, payment methods, and other specific
items. The main contents are as follows:
①Location of leased land
Pulau Muara Besar, Brunei Darussalam.
②Area leased: 260 hectares.
③Term of lease: 30 years, and additional 30 years extended upon expiration.
④Land rent determination method:
Considering that the PMB petrochemical project land requires filling and proposal, the Brunei
government gives the project an initial rent-free concession.
Land rent is subject to local rent level; and considering other contributions of the PMB
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petrochemical project to local areas, certain concessions will be granted.
Given the currency inflation and rising household consumption price, the Brunei Economic
Development Board will raise rental rate once every five years, with each increase not exceeding
10%.
⑤Land rent payment method
The rent shall be paid to the Brunei Economic Development Board on the first working day of
the first month of each quarter upon expiration of rent-free period.
⑥Prerequisite conditions
Before the formal implementation of the Land Lease Agreement, prerequisite conditions shall
be met: The Brunei Economic Development Board has obtained the ownership certificate of leased
land that meets project requirements, the Implementation Agreement signed between both parties
has entered into force, and its conditions have been met.
2. Contingencies
(1) Contingent liabilities formed by arbitration of pending litigation and their financial impact
Criminal case and related civil litigation case of Wang of Shuangtu Company
Since October 21, 2018, Shuangtu Company has received notices from more than ten
customers, including Haiyan Yixiao Knitting New Materials Co., Ltd. After paying for the goods,
the customers have not received the goods from Shuangtu Company and cannot contact Wang, a
business employee of Shuangtu Company. Haiyan Yixiao Knitting New Materials Co., Ltd., Tonglu
Yueheng Knitting Garment Co., Ltd., and Yiwu Zijing Garment Co., Ltd. filed a lawsuit with the
court on the grounds that Shuangtu Company did not complete the delivery after receiving the
payment.
Upon inspection by Shuangtu Company, the Company has received the payment from the
above customers and completed activities such as delivery and issuance of sales invoices according
to the sales order. Customers who did not receive the goods were handled by Wang, a salesperson of
Shuangtu Company. After losing contact with Wang, Shuangtu Company reported the case to the
Criminal Investigation Brigade of Dajiangdong Industrial Agglomeration Branch of Hangzhou
Public Security Bureau on November 1, 2018. On April 13, 2019, Shuangtu Company received a
notice from the public security organ that Wang had been arrested. As of the reporting date of this
financial report, the public security organ is still investigating the criminal case.
Three civil cases related to Wang's criminal case and the contract dispute case with Haiyan
Yixiao Knitting New Materials Co., Ltd. have been heard on December 3, 2018, and the court has
not yet issued a judgment. The contract dispute case with Tonglu Yueheng Knitting Garment Co.,
Ltd. has been withdrawn because it involved Wang's criminal case, and how to solve it will be
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decided after the criminal case is handled. In the case of the contract dispute with Yiwu Zijing
Garment Co., Ltd., Shuangtu Company has submitted a reply and evidential materials to the court,
and the court temporarily postponed the hearing. In the case of the contract dispute of Haiyan
Yixiao Knitting New Materials Co., Ltd., the court frozen the bank deposit of RMB300,000 of
Shuangtu Company.
In 2018, Shuangtu Company offset the income by RMB26,201,814.47 according to the
information such as the quantity of goods not yet received in customer correspondence notice, and
included the corresponding cost of goods by RMB24,105,503.18 in “Other Receivables-Wang” and
fully accrued bad debt losses. At the same time, according to the time and amount of customer
payment, the estimated liabilities of RMB433,932.50 were accrued according to the bank loan
interest rate for the same period.
On May 17, 2019, Wang was arrested according to law. On January 22, 2020, Hangzhou
Xiaoshan District People's Procuratorate filed a public prosecution with Hangzhou Xiaoshan
District People's Court for the crime of duty encroachment and contract fraud, which was accepted.
Due to the pandemic and other reasons, the court trial has not yet started. According to the amount
of duty-related crimes found in the indictment of Hangzhou Xiaoshan District People's
Procuratorate, Shuangtu Company offset its income by RMB2,414,257.32 included the
corresponding cost of goods by RMB2,138,041.91 into “Other Receivables-Wang” and fully
confirmed the estimated loss. At the same time, according to the time and amount of customer
payment, the estimated liabilities of RMB1,573,136.66 were accrued according to the bank loan
interest rate for the same period.
According to the Agreement on Issuing Shares to Purchase Assets and subsequent related
agreements signed by the Company, Fulida Group Holding Co., Ltd. and Xinghui Chemical Fiber
Group Co., Ltd., the former shareholders of Shuangtu Company, Fulida Group Holding Co., Ltd.
and Xinghui Chemical Fiber Group Co., Ltd. promised and agreed to assume joint and several
liabilities to Shuangtu Company and the Company for all losses suffered by Shuangtu Company due
to the dispute case that occurred before December 7, 2018 (inclusive). Therefore, the above matters
would not have a significant impact on Shuangtu Company and the Company.
On July 20, 2020, the Xiaoshan District People's Court of Hangzhou issued a criminal
judgment and ruled that: (1) The defendant Wang committed the crime of duty encroachment and
was sentenced to 13 years in prison; Wang was convicted of contract fraud and sentenced to 11
years and 6 months in prison and fined RMB150,000; Wan was sentenced to 18 years in prison and
fined RMB150,000. (2) The defendant Wang was ordered to compensate the relevant victim units
and their economic losses.
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After Wang's criminal case was judged, cases identified as duty encroachment were judged or tried.
On September 2, 2020, Hangzhou Intermediate People's Court of Zhejiang Province made a
first-instance judgment: Terminate the contract signed between the Company and Tonglu Yueheng
Knitting Clothing Co., Ltd., return the latter's payment of RMB407,160.00 (including tax), pay
capital interest of RMB31,938.08, property preservation fee of RMB25,610, and bear the
acceptance fee of the second-instance case of RMB7,422. On March 17, 2021, Hangzhou
Intermediate People's Court held a hearing on the dispute over the sales contract between Yiwu
Zijing Clothing Co., Ltd. and the Company. The plaintiff filed a lawsuit requesting the court to
dissolve the sales contract relationship between the plaintiff and the defendant, and demanded that
the defendant immediately return the defendant's payment and interest loss. As of the date of this
report, the court has not made a judgment.
XIV. Events after the Balance Sheet Date
1. Profit distribution
On April 19, 2021, at the eighth meeting of the 11th Board of Directors of the Company, the
Proposal on Profit Distribution in 2020 was deliberated and passed. The Company planned to
distribute cash dividends of RMB 3 (including tax) for every 10 shares based on the total share
capital of 3,681,645,407.00 shares. The proposal would be submitted to the Company for
deliberation through 2020 general meeting of shareholders.
2. As of the reporting date of the financial statement, except the disclosed above, there are
no other post balance sheet date items needing to be disclosed this year.
XV. Other important matters
1. Correction of prior period errors
The Company has no prior-period error correction items that should be disclosed in 2020.
2. Segment information
The Company has neither branch management, nor has branch reporting.
3. Other important matters
The Company has no other major matters that are necessary to be disclosed during the
reporting period.
XVI. Notes to main items of financial statements
1. Other accounts receivable
Item Ending balance Balance at the end of prior year
397
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Item Ending balance Balance at the end of prior year
Interests receivable 0.00 0.00
Dividend receivable 1,629,600,000.00 1,555,000,000.00
Other receivables 6,538,165,426.76 5,275,966,888.92
Total 8,167,765,426.76 6,830,966,888.92
(1) Dividends receivable
Item or name of investee Ending balance Balance at the end of prior year
Zhejiang Hengyi
1,209,400,000.00 1,055,000,000.00
Petrochemicals Co., Ltd.
Zhejiang International Business
0.00 100,000,000.00
Group Co., Ltd
Jiaxing Yipeng Chemical Fiber
150,000,000.00 200,000,000.00
Co., Ltd.
Taicang Yifeng Chemical Fiber
70,200,000.00 0.00
Co., Ltd.
Zhejiang Shuangtu New
200,000,000.00 200,000,000.00
Materials Co., Ltd.
Subtotal 1,629,600,000.00 1,555,000,000.00
Less: bad debt provision 0.00 0.00
Total 1,629,600,000.00 1,555,000,000.00
Important dividend receivable which is outstanding for longer than one year
Whether
impairment
has occurred
Ending
Item or name of investee Aging Reason for no recovery and the basis
balance
for
determining
impairment
The Company has no demand for external
Zhejiang Hengyi 425,000,000.0 1-2 dividend distribution, and the daily
No
Petrochemicals Co., Ltd. 0 years working capital demand is also small, so
the dividend has not been recovered yet.
(2) Other receivables
①Disclosure based on aging analysis
Aging of accounts receivable Ending balance Balance at the end of prior year
Within 1 year 1,262,247,037.84 5,275,968,388.92
1-2 years 5,275,918,388.92 0.00
2-3 years 0.00 0.00
398
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Aging of accounts receivable Ending balance Balance at the end of prior year
Over 3 years 2,500.00 2,500.00
Subtotal 6,538,167,926.76 5,275,970,888.92
Less: bad debt provision 2,500.00 4,000.00
Total 6,538,165,426.76 5,275,966,888.92
②Classification of accounts receivable by nature
Nature of account Ending balance Balance at the end of prior year
Related party funds within the scope of consolidation 6,538,165,426.76 5,275,918,388.92
Receivables and payables such as advances from entities
0.00 0.00
beyond the scope of consolidation
Combination of consumption taxes and export tax rebates
0.00 0.00
receivable
Combination of tax refunds receivable 0.00 0.00
Portfolio of deposits and security 2,500.00 2,500.00
Employee loan and petty cash 0.00 50,000.00
Other groups 0.00 0.00
Subtotal 6,538,167,926.76 5,275,970,888.92
Less: bad debt provision 2,500.00 4,000.00
Total 6,538,165,426.76 5,275,966,888.92
③Bad debt provision
Stage 1 Stage 2 Stage 3
Expected credit loss
Provision for bad debts Expected credit Expected credit loss over Total
over the lifetime(no
loss of the future the lifetime(credit
credit impairment has
twelve months impairment has occurred)
occurred)
Balance as of January 1,
1,500.00 0.00 2,500.00 4,000.00
2020
On January 1, 2020, the
book balance of other
receivables was in this
year:
--Transferred to the
0.00 -- -- 0.00
second stage
--Transferred to the third
0.00 0.00 -- 0.00
stage
--Transferred back to the
-- -- 0.00 0.00
second stage
--Transferred back to the -- 0.00 0.00 0.00
399
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Stage 1 Stage 2 Stage 3
Expected credit loss
Provision for bad debts Expected credit Expected credit loss over Total
over the lifetime(no
loss of the future the lifetime(credit
credit impairment has
twelve months impairment has occurred)
occurred)
first stage
Withdrawal in the current
0.00 0.00 0.00 0.00
period
Recovered or reversed in
1,500.00 0.00 0.00 1,500.00
the current period
Written-off or canceled in
0.00 0.00 0.00 0.00
the current period
Other changes 0.00 0.00 0.00 0.00
Balance as of December
0.00 0.00 2,500.00 2,500.00
31, 2020
④Bad debt preparation
Amount of changes in the current period
Beginning Amount Ending
Category Resell or
balance Provision recovered or balance
write off
written back
Related party funds within the scope of
0.00 0.00 0.00 0.00 0.00
consolidation
Receivables and payables such as
advances from entities beyond the 0.00 0.00 0.00 0.00 0.00
scope of consolidation
Combination of consumption taxes and
0.00 0.00 0.00 0.00 0.00
export tax rebates receivable
Combination of tax refunds receivable 0.00 0.00 0.00 0.00 0.00
Portfolio of deposits and security 2,500.00 0.00 0.00 0.00 2,500.00
Employee loan and petty cash 1,500.00 0.00 1,500.00 0.00 0.00
Other combination 0.00 0.00 0.00 0.00 0.00
Total 4,000.00 0.00 1,500.00 0.00 2,500.00
⑤The top five ending amounts (totals by borrower) of other receivables:
Proportions in the total Provision
other accounts receivable for bad
Name of organization Nature of account Ending balance Aging at the year ended (%) debts
Ending
balance
Zhejiang Hengyi Receivables and Within one
6,290,185,123.00 96.21 0.00
Petrochemicals Co., payables with year, 1-2
400
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Proportions in the total Provision
other accounts receivable for bad
Name of organization Nature of account Ending balance Aging at the year ended (%) debts
Ending
balance
Ltd. related parties years
Jiaxing Yipeng Receivables and
Chemical Fiber Co., payables with 101,700,000.00 1-2 years 1.56 0.00
Ltd. related parties
Receivables and
Suqian Yida New Within 1
payables with 101,505,222.21 1.55 0.00
Material Co., Ltd. year
related parties
Taicang Yifeng Receivables and
Within 1
Chemical Fiber Co., payables with 39,440,014.17 0.60 0.00
year
Ltd. related parties
Zhejiang Shuangtu Receivables and
Within 1
New Materials Co., payables with 5,335,067.00 0.08 0.00
year
Ltd. related parties
Total —— 6,538,165,426.38 —— 100.00 0.00
2. Long-term equity investments
(1) Classification of long-term equity investments
Ending balance Balance at the end of prior year
Impairm
Item ent Impairment
Book balance Book value Book balance Book value
provisio provision
n
15,767,268,51 15,767,268,51 15,505,268,51 15,505,268,51
Investments in subsidiaries - 0.00
7.98 7.98 7.98 7.98
Investments in joint ventures and
14,265,101.35 - 14,265,101.35 14,408,927.05 0.00 14,408,927.05
associates
15,781,533,61 15,781,533,61 15,519,677,44 15,519,677,44
Total - 0.00
9.33 9.33 5.03 5.03
(2) Investments in subsidiaries
Decrease Current
Impairment
Increase in in the balance of
Investee Beginning balance Ending balance provision in
current year current impairment
current year
period provision
Zhejiang Hengyi
9,372,870,750.00 0.00 0.00 9,372,870,750.00 0.00 0.00
Petrochemicals Co., Ltd.
Zhejiang Hengyi International
300,000,000.00 0.00 0.00 300,000,000.00 0.00 0.00
Trading Co., Ltd.
Zhejiang Hengyi Engineering 105,000,000.00 62,000,000.00 0.00 167,000,000.00 0.00 0.00
401
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Decrease Current
Impairment
Increase in in the balance of
Investee Beginning balance Ending balance provision in
current year current impairment
current year
period provision
Management Co., Ltd.
Zhejiang Henglan Technology
38,500,000.00 0.00 0.00 38,500,000.00 0.00 0.00
Co., Ltd.
Jiaxing Yipeng Chemical Fiber
2,686,198,482.98 200,000,000.00 0.00 2,886,198,482.98 0.00 0.00
Co., Ltd.
Taicang Yifeng Chemical Fiber
897,699,306.80 0.00 0.00 897,699,306.80 0.00 0.00
Co., Ltd.
Zhejiang Shuangtu New
2,104,999,978.20 0.00 0.00 2,104,999,978.20 0.00 0.00
Materials Co., Ltd.
Total 15,505,268,517.98 262,000,000.00 0.00- 15,767,268,517.98 0.00 0.00
(3) Investments in joint ventures and associates
Changes of increase or decrease in the current period
Addition Negati
Beginning Investment gains and Other
Investee al ve Changes in
balance losses recognized under comprehensive
investme invest other equity
the equity method income adjustment
nt ment
Associated enterprises
Ningbo Jinhou Industry
14,408,927.05 0.00 0.00 -143,825.70 0.00 0.00
Investment Co., Ltd.
(Contd.)
Changes of increase or decrease in the
Ending
current period
Ending balance of
Investee Declaring distribution
Impairment balance impairment
of cash dividends or Others
provision provision
profits
Associated enterprises
Ningbo Jinhou Industry Investment Co., Ltd. 0.00 0.00 0.00 14,265,101.35 0.00
3. Operating income and operating cost
Amount incurred in current year Amount incurred in prior year
Item
Revenue Costs Revenue Costs
Principal business 2,586,856,333.35 2,537,833,295.23 60,019,034.19 58,256,351.09
Other operations 0.00 0.00 0.00 0.00
Total 2,586,856,333.35 2,537,833,295.23 60,019,034.19 58,256,351.09
4. Investment income
Amount incurred in Amount incurred in
Item
current year prior year
402
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Amount incurred in Amount incurred in
Item
current year prior year
Long-term equity investment income accounted by the cost method 1,204,600,000.00 1,275,000,000.00
Long-term equity investment income accounted by the equity method -143,825.70 -308,063.63
Income from investment in finance products 0.00
8,930,000.00
Total 1,204,456,174.30 1,283,621,936.37
XVII. Supplementary Information
1. Statement of Non-Recurring Profit and Loss in current year
Item Amount
Gains and losses from the disposal of non-current assets -6,741,262.61
Tax refund, reduction or exemption approved ultra vires or without any formal approval or
12,921,483.38
granted incidentally
Government grants recorded into current profit and loss but closely related to normal business
operations of the Company, except for those that are continuously make available at specified 318,607,292.74
portion or amount in accordance with national policies
Current net profit or loss from subsidiaries formed by business combination under common
19,376,584.76
control, from period-beginning to acquisition date
Profit or loss from contingencies irrelevant to normal business operations of the Company 0.00
The gains or losses arising from the fair value changes of held-for-trading financial assets,
derivative financial assets, held-for-trading financial liabilities, and derivative financial
liabilities, as well as investment gain received from the disposal of held-for-trading financial
487,752,983.95
assets, derivative financial assets, held-for-trading financial liabilities, derivative financial
liabilities and other debt investments, except for effective hedging transactions that are related
to the Company’s ordinary business
Profit or loss from entrusted loans 41,586,615.56
Income from entrusted operation 1,698,113.20
Other non-operating income and expense in addition to the above -6,299,334.89
Other profit or loss that complies with the definition of non-recurring profit and loss 2,595,730.83
Subtotal 871,498,206.92
Effect of income tax 215,685,156.22
Influenced amount of the minority shareholders' equity (after-tax) 62,915,238.58
Total 592,897,812.12
Note: “+” in non-recurring profit and loss items means “profit and income”, while “-” means loss or
expenditure.
The Company confirms the non-recurring profit and loss items according to relevant
regulations of Explanatory Announcement on Information Disclosures of Companies Issuing
403
Full Text of 2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Securities No. 1 -- Non-Recurring Profits and Losses (ZJHGG [2008] No. 43).
2. ROE and EPS
Earnings per share
Weighted average net Basic Diluted
Profit in report period
asset Rate of return (%) earnings per earnings per
share share
Net profit attributable to holders of ordinary shares of the
12.56 1.08 1.07
Company
Net profit attributable to holders of ordinary shares of the
10.39 0.87 0.86
Company, after deducting non-recurring profit or loss
404
Full Text of 2020 Annual Report of Hengyi Petrochemical Co., Ltd.
Section XIII Catalogue of Documents for Reference
I. Accounting statements containing the signatures and seals of the legal representative, the person
in charge of finance and the person in charge of accounting institutions.
II. The original audit report containing the seal of the accounting firm and the signature and seal of
the certified public accountant.
III. The originals of all Company documents and announcements publicly disclosed on the website
designated by the CSRC during the reporting period.
Hengyi Petrochemical Co., Ltd.
Chairman: Qiu Yibo
April 19, 2021
405
