Hengyi Petrochemical 2021 Annual Report
April 2022
Hengyi Petrochemical 2021 Annual Report
Chairman's Statement
In 2021, while China celebrated the 100th anniversary of the CPC and got the 14th Five-Year Plan off,
Hengyi Petrochemical made steady progress in the strategy of "refinery, polyester and polyamide
industries". However, we are still facing severe challenges in operation due to the Covid-19
resurgence and the complex and rapidly changing external environment. Only after polishing can a
piece of jade be finer. In this extraordinary year, we, all Hengyi staff, achieved a gratifying result
with joint efforts and full vigor.
Hitting a new high, we recorded both revenue and total assets exceeding RMB100 billion
In the year 2021, we continued to rise to various external challenges, with operating performance
reaching a new all-time high. The revenue was RMB128.98 billion, up 49.23% year on year; the total
assets amounted to RMB105.549 billion, up 13.88% year on year. With the revenue and total assets
both exceeding RMB100 billion, the Company has achieved its business objectives and development
goals, showing its strong growth momentum and vitality.
Releasing capacity, we unleash the growth potential
In the year 2021, our industrial chain planning which integrates upstream and downstream was
further refined. The Hengyi Brunei Phase I Project continuously operated at full capacity, and many
other projects were put into production, including the intelligent environmental and functional fiber
project of Haining New Materials, the new-type functional fiber project of Fujian Yijin and the
3-mtpa PTA project of Yisheng New Materials. With new capacity fully released, the Company's
capacity reached a new level. Accordingly, we have gained strong growth momentum and
consolidated our industry leader role.
With innovation, we empower our high-end intelligent developme nt
In the year 2021, following the transformation from "Made in China" to "Intelligent Manufacturing
in China", the Company further implemented the strategy of innovation-driven development. The
Company has made planning with foresight on long-term projects for high-end green products,
adding more to the highlights of high-quality development. The Company also has improved the
Hengyi Petrochemical 2021 Annual Report
integration of data and intelligence, building the first polyester factory with whole-process intelligent
storage and transportation system in China. Our AI full-detection prototype first applied in the
chemical fiber industry was selected as the Industrial Intelligent Pioneer Case at the Intelligent
Economy Summit 2021. By leveraging its supply chain, the Company has focused on building
"Hengyi Brain", an intelligent information platform, to empower the development of chemical fiber
industry and create more value.
Co-creating and sharing, we improve the talent incentive mechanism
In the year 2021, the Company continued to promote its employee stock ownership plan to benefit
those at grassroots level. We launched the special campaign of "ensuring frontline stable, solidifying
foundation" among all employees, which aimed to enable more Hengyi employees to better share our
development achievements. The establishment of the long-term development and sharing mechanism
has effectively enhanced the sense of belonging and cohesion of employees, increased our attraction
to high-level talents, and laid a solid foundation for our stable and sound long-term development.
Mountains do not reject fine dust, and rivers do not refuse to fill with water. It is the hard work of
every Hengyi employee and the support of leaders, investors and partners that make the Company
has the energy and courage to forge ahead. On behalf of the Company, I would like to express my
heartfelt thanks to you all!
With entering 2022, the ever-changing international community and the COVID-19 resurgence have
made the whole market under pressure. This era of challenges and opportunities also is a test for our
operation and management. As a multinational business, we will explore with a more global
perspective, give equal priority to exploring opportunities and preventing and controlling risks, and
plan ahead, keep innovating and make steady progress while seeking opportunities in changes.
Looking forward, as demanded by the high-quality development in the new era and the new pattern
of industrial development, we will continue to promote the construction of major strategic projects,
including the Brunei Phase II Project, the 1.2-mtpa Caprolactam-Polyamide Integration and
Supporting Project and Suqian Yida’s 1.1-mtpa New-type Differentiated Environmental Fiber Project,
and make further improvement in integrating the whole industry chain of "refinery, polyester and
polyamide industries". We will continue to consolidate the foundation of innovation and
development through high-intensity investment. With Hengyi Research Institute and platforms like
Hengyi Petrochemical 2021 Annual Report
joint laboratories co-built with top colleges and universities, we will continue to promote the
application and transformation of technological achievements, and improve the contribution of
scientific research and technological innovation to our main business to become a technology leader
in the whole industry.
We aim to build and operate a long-lasting company that ranks among the world’s top enterprises.
This is our mission and also original aspiration. With no fear for the long way ahead, we will work
hard and set off a new journey. We will stay true to our original value, make down-to-earth efforts,
and keep moving forward to embrace a bright future on our way to the high-quality development and
a century-old Hengyi.
Monday, April 25, 2022
Hengyi Petrochemical 2021 Annual Report
Section 1 Important Notes, Contents and Definitions
The Board of Directors (BOD), Board of Supervisors (BOS), directors,
supervisors and senior managers of the Company guarantee that the contents of
the 2021 Annual Report (hereinafter referred to as "the Report") are true,
accurate and complete, free of false records, misleading statements or major
omissions, and that they shall bear relevant individual and joint and several legal
liabilities.
The financial statements of the Report have been audited by Zhongxinghua
Certified Public Accountants LLP, and a standard unqualified audit report has
been issued.
Qiu Yibo, the head of the Company, Mao Ying, the person in charge of the
accounting work, and Yu Zhicheng, the head of the accounting body (accountant
in charge), declared that they would ensure the truthfulness, accuracy and
completeness of the financial statements in this Annual Report.
The Report has been deliberated and approved at the 17 th meeting of the 11 th
BOD of the Company. All directors have attended the Board meeting at which
this Report was considered.
The profit distribution plan approved by the BOD is as follows: a cash bonus of
RMB 2.00 (tax included) will be distributed to all shareholders for every 1 0
shares on the base of 3,666,280,014; no bonus shares will be distributed, and no
accumulation fund will be converted into share capital. If the Company’s total
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Hengyi Petrochemical 2021 Annual Report
share capital on the registration date of dividend-paying equity changes as a
result of additional issuance, share repurchase or conversion of convertible bonds
into additional capital stock prior to such date, the Company plans to maintain
the distribution ratio unchanged and adjust the total share capital. The 2021
Profit Distribution Plan shall also be submitted to the 2021 Annual General
Meeting of Shareholders of the Company 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
substantive commitment of the Company to investors, and investors are advised
to pay attention to investment risks. For possible risks in the operation and
development of the Company, please refer to 3.11.2 "Possible Risks and
Countermeasures in the Future" of 3.11 "Prospects for the Future Development
of the Company" of "Section 3 Management Discussion and Analysis".
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Hengyi Petrochemical 2021 Annual Report
Contents
Section 1 Important Notes, Contents and Definitions..................................................................... 5
Section 2 Company Profile and Main Financial Indicators .......................................................... 11
Section 3 Management Discussion and Analysis.......................................................................... 18
Section 4 Corporate Governance ................................................................................................ 127
Section 5 Environmental and Social Responsibility ................................................................... 172
Section 6 Important Matters........................................................................................................ 186
Section 7 Changes in Shares and Shareholders .......................................................................... 212
Section 8 Preference Shares ........................................................................................................ 224
Section 9 Bonds .......................................................................................................................... 225
Section 10 Financial Report .......................................................................................................... 231
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Hengyi Petrochemical 2021 Annual Report
List of Documents for Reference
1. Accounting statements signed and stamped by the legal representative, the financial principal
and the head of the accounting body;
2. The original audit report stamped by the accounting firm and signed and stamped by the certified
public accountant;
3. All original documents and original announcements of the Company publicly disclosed on the
website designated by CSRC during current period.
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Hengyi Petrochemical 2021 Annual Report
Definitions
Item Refers to Definition
Hengyi
Petrochemical/Company/the Refers to Hengyi Petrochemical Co., Ltd.
Company
SZSE/the Exchange Refers to Shenzhen Stock Exchange
Hengyi Group Refers to Zhejiang Hengyi Group Co., Ltd.
Hengyi Limited Refers to Zhejiang Hengyi Petrochemical Co., Ltd.
Hengyi Brunei Refers to Hengyi Industries Sdn. Bhd.
Zhejiang Yisheng Refers to Zhejiang Yisheng Petrochemical Co., Ltd.
Yisheng New Materials Refers to Zhejiang Yisheng New Materials Co., Ltd.
Yisheng Dahua Refers to Yisheng Dahua Petrochemical Co., Ltd.
Hainan Yisheng Refers to Hainan Yisheng Petrochemical Co., Ltd.
Hengyi Polymer Refers to Zhejiang Hengyi Polymer Co., Ltd.
Hengyi High-Tech Refers to Zhejiang Hengyi High-Tech Materials Co., Ltd.
Haining New Materials Refers to Haining Hengyi New Materials Co., Ltd.
Haining Thermal Power Refers to Haining Hengyi Thermal Power Co., Ltd.
Taicang Yifeng Refers to Taicang Yifeng Chemical 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 Materials Co., Ltd.
Ningbo Hengyi Trading Refers to Ningbo Hengyi Trading Co., Ltd.
Hong Kong Yisheng Refers to Hong Kong Yisheng Co., Ltd.
Hengyi Singapore Refers to Hengyi Industries International (Singapore) Co., Ltd.
Hangzhou Yijing Refers to Hangzhou Yijing Chemical Fiber Co., Ltd.
Hengyi Caprolactam Refers to Zhejiang Baling Hengyi Caprolactam Co., Ltd.
China Zheshang Bank Refers to China Zheshang Bank Co., Ltd.
Yisheng Investment Refers to Dalian Yisheng Investment Co., Ltd.
Hong Kong Tianyi Refers to Hong Kong Tianyi International Holding Co., Ltd.
Hengyi Investment Refers to Hangzhou Hengyi Investment Co., Ltd.
Hengyi Polyamide Refers to Zhejiang Hengyi Polyamide Co., Ltd.
Brunei Project, PMB The petrochemical project invested and constructed by
Refers to
Petrochemical Project the company in Brunei
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Hengyi Petrochemical 2021 Annual Report
Item Refers to Definition
Paraxylene, a colorless and transparent liquid. It is
PX Refers to
used to produce 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.
Isophthalic 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
MEG Refers to fiber, antifreeze, unsaturated polyester resin, lubricant,
plasticizers, nonionic surfactant and explosives, etc.
Polyethylene terephthalate. It is a fiber-forming
polymer made from PTA and MEG through direct
PET and polyester Refers to
esterification and continuous polycondensation
reaction.
POY Refers to Polyester pre-oriented yarn or partially oriented yarn
FDY Refers to Fully drawn yarn or polyester drawn yarn
Draw textured yarn, also known as polyester textured
DTY Refers to
yarn
Caprolactam, mainly used to produce polyamide fiber,
CPL Refers to engineering plastics, plastic film, etc. It is widely used
in industrial and civil fields.
A variety that is innovative in technology or
Differentiated yarn Refers to performance or has some characteristics different from
traditional yarns.
RMB and RMB 10,000 Refers to RMB and RMB 10,000
Reporting Period/during the
Reporting Period/this Refers to From January 1, 2021 to December 31, 2021
Reporting Period
End of Reporting Period/end
of the current Reporting Refers to As of December 31, 2021
Period
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Hengyi Petrochemical 2021 Annual Report
Section 2 Company Profile and Main Financial Indicators
2.1 Company profile
Stock abbreviation Hengyi Petrochemical Stock code 000703
Abbreviation of the changed
N/A
stock (if any)
Stock Exchange Shenzhen Stock Exchange
Chinese name 恒逸石化股份有限公司
Chinese abbreviation 恒逸石化
Name in foreign language (if any) HENGYI PETROCHEMICAL CO., LTD.
Abbreviation of name (if any) HYPC
Legal representative Qiu Yibo
No. G, 7/F, Haifu Building, No. 16 West Beihai Avenue, Beihai
Place of registration
City, Guangxi Zhuang Autonomous Region
Postal code of the registered
536000
address
Change history of the Company’s
No changes
registered address
Building 3, Hengyi Nan’an Mingzhu, No. 260 North Shixin
Office address
Road, Xiaoshan District, Hangzhou City, Zhejiang Province
Postal code of the office address 311215
Company website http://www.hengyishihua.com
E-mail hysh@hengyi.com
2.2 Contact person and contact information
Secretary of the Board Securities Representative
Name Zheng Xingang Chen Shasha
BOD Office, 16/F, Building 3, BOD Office, 16/F, Building 3, Nan’an
Contact address
Nan’an Mingzhu, No. 260 North Mingzhu, No. 260 North Shixin Road,
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Hengyi Petrochemical 2021 Annual Report
Shixin Road, Xiaoshan District, Xiaoshan District, Hangzhou City,
Hangzhou City, Zhejiang Province Zhejiang Province
Tel. (0571) 83871991 (0571)83871991
Fax. (0571) 83871992 (0571)83871992
E-mail hysh@hengyi.com hysh@hengyi.com
2.3 Information disclosure and place of preparation
The website of the Stock Exchange where the
Shenzhen Stock Exchange: http://www.szse.cn
Company discloses the Annual Report
China Securities Journal, Securities Times,
Name and website of the media through which
Shanghai Securities News and Securities Daily;
the Company discloses the Annual Report
CNINFO: http://www.cninfo.com.cn
Place where the Annual Report is prepared BOD Office of Hengyi Petrochemical Co., Ltd.
2.4 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
2.5 Other relevant information
Accounting firm engaged by the Company
Name of accounting firm Zhongxinghua Certified Public Accountants LLP
20/F, Tower B, Lize SOHO, No. 20 Lize Road, Fengtai
Office address of accounting firm
District, Beijing
Name of signing accountants Liu Hongyue, Wang Guohai
Sponsor institution engaged by the Company to perform continuous supervision duties during
Reporting Period
Name of sponsor Office address of sponsor Name of sponsor Continuous
institution institution representative supervision period
CITIC Securities Co., Ltd. No. 48 Liangmaqiao Road, Mao Zongxuan, January 2021 -
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Hengyi Petrochemical 2021 Annual Report
Chaoyang District, Beijing Xu Rui December 2021
Financial consultants engaged by the Company to perform continuous supervision duties
during Reporting Period
□ Applicable √ Not applicable
2.6 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
Changes in accounting policies
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Hengyi Petrochemical 2021 Annual Report
Increase/decrease of this year over the
2020 2019
2021 previous year
Before adjustment After adjustment After adjustment Before adjustment After adjustment
Operating income (RMB ) 128,979,539,693.27 86,429,630,191.87 86,429,630,191.87 49.23% 79,620,543,631.74 79,620,543,631.74
Net profit attributable to shareholders of
3,408,043,143.47 3,071,998,839.75 3,071,998,839.75 10.94% 3,201,348,425.33 3,190,185,517.79
listed companies (RMB)
Net profit after deducting non-recurring
gains and losses attributable to shareholders 2,758,543,282.50 2,479,101,027.63 2,479,101,027.63 11.27% 2,725,438,479.51 2,725,438,479.51
of listed companies (RMB )
Net cash flow from operating activities
7,754,871,519.56 5,013,772,777.95 5,013,772,777.95 54.67% -112,081,728.16 -91,125,777.91
(RMB )
Basic earnings per share (RMB /share) 0.94 0.83 0.83 13.25% 1.13 1.13
Diluted earnings per share (RMB /share) 0.91 0.83 0.83 9.64% 1.13 1.13
Weighted average ROE 13.56% 12.56% 12.56% 1.00% 14.73% 14.54%
Increase/decrease at the end of this
End of 2020 End of 2019
End of 2021 year over the end of the previous year
Before adjustment After adjustment After adjustment Before adjustment After adjustment
Total assets (RMB ) 105,548,909,472.93 92,260,268,155.54 92,685,505,184.24 13.88% 85,230,757,616.78 85,763,292,709.24
Net assets attributable to shareholders of
25,896,860,136.22 24,006,633,612.78 24,006,633,612.78 7.87% 23,253,008,414.00 23,741,845,506.46
listed companies (RMB )
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Hengyi Petrochemical 2021 Annual Report
Main reasons for changes in accounting policies
On December 7, 2018, the Ministry of Finance issued a Notice on the Accounting Standards for
Business Enterprises No. 21 - Leases (2018 Revision) (CK[2018] No. 35) (hereinafter referred to as
"New Lease Standards"). It stipulates that the new standards take effect from January 1, 2019 for
enterprises listed both at home and abroad, as well as enterprises listed overseas and prepare
financial statements according to IFRS or ASBE, and come into force from January 1, 2021 for other
enterprises abiding by ASBE.
The net profits before and after deducting non-recurring gains and losses (whichever is less) of
the Company in the previous three fiscal years is negative, and the audit report of the previous
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
2.7 Differences between accounting data under the domestic and foreign accounting standards
2.7.1 Differences in the net profit and net assets in the financial statements which are
presented concurrently in accordance with internationa l accounting standards and the
accounting standards of China
□ Applicable √ Not applicable
There are no differences in the net profit and net assets in the financial statements which are
presented concurrently in accordance with international accounting standards and the accounting
standards of China during the Reporting Period.
2.7.2 Differences in the net profit and net assets in the financial statements which are
presented concurrently in accordance with foreign accounting standards and the accounting
standards of China
□ Applicable √ Not applicable
There are no differences in the net profit and net assets in the financial statements which are
presented concurrently in accordance with foreign accounting standards and the accounting standards
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Hengyi Petrochemical 2021 Annual Report
of China during the Reporting Period.
2.8 Quarterly main financial indicators
Currency: RMB
First quarter Second quarter Third quarter Fourth quarter
Operating income 30,845,538,236.94 30,077,832,146.93 35,767,865,929.13 32,288,303,380.27
Net profit attributable to shareholders
1,212,734,962.38 1,021,756,838.87 848,284,552.74 325,266,789.48
of listed companies
Net profit after deducting
non-recurring gains and losses
1,228,382,021.90 816,937,257.00 813,551,002.26 -100,326,998.66
attributable to shareholders of listed
companies
Net cash flow from operating
-471,195,959.85 2,231,237,943.42 587,998,410.73 5,406,831,125.26
activities
Whether the aforesaid financial indicators or their sum are significantly different from the
financial indicators related to the quarterly and semi-annual reports disclosed by the Company
□ Yes √ No
2.9 Non-recurring gain and loss items and amounts
Currency: RMB
Amount in Amount in Amount in
Item Remarks
2021 2020 2019
Profit or loss from disposal of non-current assets
(including the write-off portion of asset impairment -12,534,455.04 -6,741,262.61 -1,811,565.51
provision)
Tax refund or exemption approved ultra vires or without
15,609,249.33 12,921,483.38 5,957,948.27
any formal approval
Government grants recorded into current profits and
losses (except for those that are closely related to the
normal business operation of the Company, in line with 277,839,245.44 318,607,292.74 420,716,519.76
national policies, and are continuously enjoyed on a
fixed quota or a quantitative basis)
Current net profit or loss from subsidiaries formed by
business merger under common control, from the 0.00 19,376,584.76 36,175,922.94
period-beginning to the merger date
Profit or loss from contingencies irrelevant to normal
0.00 0.00 -2,173,136.66
business operations of the Company
The gains or losses arising from the fair value changes of
480,727,659.11 487,752,983.95 301,297,013.33
held-for-trading financial assets and held-for-trading
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Hengyi Petrochemical 2021 Annual Report
financial liabilities, as well as investment gains received
from the disposal of held-for-trading financial assets,
held-for-trading financial liabilities and financial assets
available for sale, except for effective hedging
transactions that are related to the normal business
operations of the Company
Reversal of impairment provision for receivables that are
309,000.00 0.00 0.00
separately tested for impairment
Gains or losses from entrusted loans 49,567,383.65 41,586,615.56 29,136,336.48
Income from custodian fees obtained from entrusted
1,698,113.20 1,698,113.20 1,698,114.17
operation
Other non-operating income and expense in addition to
13,359,433.22 -6,299,334.89 -14,994,635.24
the above
Other profit or loss items that meet the definition of
0.00 2,595,730.83 -2,065,748.97
non-recurring profit and loss
Less: Influenced amount of income tax 38,805,031.16 215,685,156.22 139,947,035.37
Influenced amount of the minority shareholders’ equity
138,270,736.78 62,915,238.58 169,242,694.92
(after-tax)
Total 649,499,860.97 592,897,812.12 464,747,038.28 -
Details of other profit or loss ite ms that meet the definition of non-recurring profit and loss:
□ Applicable √ Not applicable
The Company does not have any other profit or loss items that meet the definition of non-recurring
profit and loss.
Cases of defining the non-recurring profit and loss items as recurring profit and loss items,
which are enume rated in the Explanatory Announce ment No. 1 on Information Disclosure of
Companies Offering Securities to the Public - Non-recurring Profits and Losses
□ Applicable √ Not applicable
There was no case of defining any non-recurring profit and loss items as recurring profit and loss
items, which are enumerated in the Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Securities to the Public - Non-recurring Profits and Losses.
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Hengyi Petrochemical 2021 Annual Report
Section 3 Management Discussion and Analysis
3.1 Main business of the Company and the industry in which the Company is engaged during
the Reporting Period
The Company shall comply with the disclosure require ments for petrochemical industry
specified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock
Exchange - Industry Information Disclosure
3.1.1 Overview
Committed to developing into a leading domestic and world-class
refining-petrochemical-chemical fiber industry group, Hengyi Petrochemical (stock code: 000703)
has made continuous efforts to enhance its comprehensive competitiveness through resource sharing
and industrial coordination. Under the guidance of the development strategy of "refinery, polyester
and polyamide industries", the Company, relying on the Brunei Project, has stepped up efforts in
internationalization, broke the "last kilometer" barrier of the whole industry chain from oil refining
to chemical fiber, and built an internally-highly-matched columnar-balanced integrated industry
chain in the upstream, midstream and downstream. By creating a unique "polyester + polyamide"
double-fiber driving mode among domestic counterparts, the Company has formed a "petrochemical
+" multi-level and three-dimensional industrial layout with petrochemical industry chain as the core
business, supply chain service business as the growth business, and differentiated fiber products and
application of industrial intelligent technology as the emerging business.
3.1.1.1 Overview of petrochemical che mical fiber business
3.1.1.1.1 One of the world’s leading groups in the integration of
“refining-petroche mical-che mical fiber” industry chain
During the Reporting Period, the Company's unique industrial layout of "refinery, polyester and
polyamide" continued to improve. While organizing the domestic and overseas staff to join hands in
scientific fight against the pandemic to avoid the Company's safe production and operation from
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Hengyi Petrochemical 2021 Annual Report
being significantly affected by the pandemic, the Company maintained stable operation throughout
the year and demonstrated strengths in expansion and quality improvement in polyester industry,
potential tapping and transformation in PTA industry, and full production in refining and
petrochemical industry. Besides, the Company uncovers the integrated, balanced and
internationalized operation mode of industry chain. Currently, the Company has developed into one
of the world's leading enterprises integrating the industry chains 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 the main business", the Company
has not only focused on the main business, but also continuously increased investment in
technological innovation and industrial intelligent tec hnologies, and enhanced the comprehensive
competitive edge, thereby ranking in the forefront of the industry for many years.
During the Reporting Period, the Company has continuously extended its petrochemical
industry chain, enriched product categories and further improved its product structure, which
effectively consolidated the core competitiveness of the main business, strengthened the profitability
of products and improved the ability to resist market risks. The Company's main products include:
gasoline, diesel, jet fuel and other product oil; light petrochemical oil, liquefied petroleum gas (LPG),
p-xylene (PX), benzene, purified terephthalic acid (PTA), caprolactam (CPL) and other
petrochemical products; polyester bottle flakes and other packaging products, as well as polyester
preoriented yarn (POY), polyester drawn yarn (FDY), polyester textured yarn (DTY), polyester
staple fiber, polyester (PET) flakes and other polyester products. The products are widely used for
meeting the rigid needs related to national economy and people's livelihood, and meeting people's
yearning for a better life.
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Hengyi Petrochemical 2021 Annual Report
Figure 1 The petroche mical and chemical fiber industry chain in which the Company is
engaged
Petroleum Refining-chemical integration
Oil refining Product Oil Olefins Aromatics
Paraxylene
Gasoline Diesel Jet Fuel Propylene Ethylene Benzene
(PX)
Petrochemical
Ethylene Glycol Purified terephthalic
Polypropylene Polyethylene Caprolactam (CPL)
(MEG) acid (PTA)
industry chain
industry chain
Polyamide
Polyamide
Polyethylene terephthalate (PET)
Polyester
(PA)
Bottle flake Polyamide
chip
Chemical fiber
Polyester fully Polyester partially Polyester staple
drawn yarn (FDY) oriented yarn (POY) fiber
Polyester drawn
textured yarn (DTY)
Weaving fields (such as textiles,
garments and home textiles)
Business in China
Business in Brunei
Business in future
Downstream products
Note: Polyamide flakes are products currently operated by Hengyi Group, the controlling shareholder.
As of the disclosure date of this report, the Company's designed crude oil production capacity
was 8mtpa; the PTA production capacity of holding and share holding companies was 19mtpa; the
PIA production capacity was 300,000 t/a; the polymer production capacity of holding and
shareholding companies was 10.465 million tons, among which the production capacity of polyester
fiber was 7.765mtpa, that of polyester bottle flakes (including RPET bottle flakes) was 2.7mtpa, and
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Hengyi Petrochemical 2021 Annual Report
that of caprolactam (CPL) was 400,000 t/a, ranking forefront in the industry.
Table 1 Production Capacity of Main Products of the Company (10,000 t/a)
Product Capacity
Petrochemical products 265
Product oil 565
PTA 1,900
PIA 30
Polyester fiber products 776.5
PET bottle flakes(including RPET) 270
Caprolactam 40
Note: 1) Polyester fiber products include POY, FDY, DTY, staple fiber and flake products
2) This table lists the actual production capacity of the Company during 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 “carbo n peaking and carbon
neutrality” strategy, and adhered to the guidance of "green manufacturing" and "circular economy".
In the polyester sector, the Company continued to carry out product development and achievement
transformation around the three major themes of environmental protection, function and bio-base.
Internally, the Company optimized the sales system, actively grasped market demand, and fully
tapped into and reasonably guided customer demands through the organic linkage of research and
development, production and sales. Externally, the Company, through cooperation with colleges and
universities, built an "industry-university-research" school-enterprise ecology and conducted
effective exploration in 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. The
antimony-free and environment-friendly "Eticont" series products were also recognized by more and
more customers, and the sales volume continued to rise. The flame retardant fibers continued to
maintain a strong market share among domestic flame retardant products. The market popularity of
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antibacterial and anti-virus products continued to rise, and antibacterial and anti-virus fibers will
become a new profit growth point for differentiated products.
3.1.1.1.2 Products meeting the rigid needs related to the national economy and people's
livelihood
The Company's terminal sales products mainly include product oil products such as gasoline,
diesel and jet fuel, as well as polyester products such as polyester bottle flakes, polyester filament
and polyester staple fiber, which are widely used to meet the rigid needs related to national economy
and people's livelihood. Among the products, product oil products such as gasoline, diesel and jet
fuel provide energy for automobiles, ships, and aircraft and other vehicles and corresponding
equipment. Polyester filament includes POY、FDY、DTY and other products, which are used in
production of garment, home textile and decorative fabrics and linings, 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 of medical suppli es; polyester staple
fiber can be widely used in spinning, non-woven and filling fields, among which non-woven fabrics
can be used in health areas such as disinfectant wipes; PET bottle flakes are widely used in food
packaging and medical materials production. The demand for bottle grade PET in beverage, dairy,
edible oil, condiments and other livelihood industries keeps growing steadily, and the share in
emerging application fields such as wine, daily chemicals, electronic products and medical products
is rising rapidly.
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Table 2 Main Product Features and Application Fields
Products Application fields
A type of hydrocarbon, colorless transparent liquid. It can be used in many
PX fields. It is the main raw material for the production of PTA and is also used
to make synthetic plastics, drugs, pesticides etc.
Mainly used as fuel of various fuel-fired power equipment and heating
Product supply. Used as fuel for automobiles, motorcycles, speedboats, helicopters,
Oil agricultural and forestry aircraft, motor vehicles with diesel engine (including
trains), vessels and diesel boilers.
Mainly used for producing polyester products, and is widely used for all
national economy aspects, such as clothing, decoration, electronics and
PTA construction. 75% of PTA is used for polyester fiber, 20% for bottle grade
polyester and 5% for film polyester (mainly for civil use in the downstream).
PIA is a white crystalline powder or acicular crystal used to produce alkyd
resins, unsaturated polyester resins and other high polymers and plasticizers.
PIA It is also used to make film finishers, coatings, polyester fiber dyeing
modifiers and medicines.
Used for DTY and fiber products with special styles
POY reprocessing production. It is widely used in clothing and
industrial fields.
Directly used for weaving and for production of garment
and decorative fabrics. It is widely used in clothing and
FDY industrial fields, and also used as isolation material for
protective suits and other protective products.
It is directly used for weaving and is widely used in
DTY clothing and industrial fields, garment fabrics and lining
materials.
It is mainly used to produce polyamide fibers, engineering
CPL plastics and plastic films; widely used in industrial and
civil fields.
Mainly used to produce yarns, nonwovens and filling
materials. The non-woven fabric can be used as a raw
PET staple material for the production of face masks and the
fiber downstream disinfectant wipes and disposable protective
products.
Widely used for indirect spinning. They can be used to
produce textile materials such as filaments and staple
PET chips fibers, and also for strip casting to produce plastics and
other products.
PET bottle Mainly used for food packaging (including coke bottle,
flakes beverage bottle, water bottle and oil bottle).
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3.1.1.2 Overview of “petrochemical +” business
3.1.1.2.1 Supply chain service business is conducive to improving product operation
capability and enhancing the supporting value-added services
With the continuous improvement of the integrated and balanced development of the
Company’s industry chains, the Company has strengthened the supply chain service management
capacity, and innovated and promoted intelligent management and operation modes. Relying on
refining and chemical fiber production base, the Company developed domestic and overseas regional
markets and optimized product layout; strengthened the construction of digital plants and actively
explored flexible and personalized customization of production through big data means; adopted a
variety of tools to improve product operation capability, explored the complementary advantages of
raw material procurement and product sales, and gave full play to the strengths of industry chain
integration to create product price differences.
The Company actively carried out comprehensive distribution services for raw materials and
products, with Hengyi Micro Mall and marketing supply chain system as the core online, and
logistics business as the support offline, to realize effective integration of online and offline services.
The Company continued to: optimize the functional applications (including price inquiry, quick order
placing, market information, intelligent logistics management platform (HTTMS), financial services
and other supporting services) of Hengyi Micro Mall; improve the efficiency of marketing
closed-loop system, which sees a sustained explosive growth in transaction volume at present;
innovatively build a unique omni-channel logistics control system and a tripartite logistics
transportation platform.
With the commissioning and operation of the Brunei Project, the Company has actively
conducted supporting shipping business, accelerated the implementation of integrated management
of supply chain services, formed a plant-product-warehouse-logistics-customer intelligent supply
chain closed-loop system, and led the upgrading of intelligent supply chain services in the industry.
3.1.1.2.2 China Zheshang Bank's equity investment provides a stable source of profits for
the Company
China Zheshang Bank BANK CO., LTD, established in 2004, is one of the 12 national
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joint-stock commercial banks approved by the China Banking and Insurance Regulatory
Commission. The Bank was listed on the Main Board of the Stock Exchange of Hong Kong on
March 30, 2016 and on Shanghai Stock Exchange on November 26, 2019, becoming an "A+H" listed
bank. At present, the Bank has developed into a high-quality commercial bank featuring solid
foundation, excellent benefits, rapid growth and well-established risk control. With the completion of
the "A+H" layout, China Zheshang Bank will accelerate its future growth. The Company will further
optimize the strategic layout and continuously create value for shareholders through the growth
premium of China Zheshang Bank. According to the 2021 Annual Report issued by China Zheshang
Bank, in 2021, the Bank achieved an operating income of RMB54.471 billion and net profit
attributable to shareholders of RMB12.648 billion. As of the end of December 2021, the total assets
of China Zheshang Bank were RMB2,290 billion, representing an increase of 11.64% over the e nd of
the previous year. Guided by the vision of "to be a first-class commercial bank", and focusing on the
“two most” general goal and the management principle of “scale up, adjust structure, control risks,
create benefits”, China Zheshang Bank has created a new situation of five business segments (i.e. big
retail, big company, big investment bank, big asset management and big cross-border business)
advancing together to serve the real economy to a new stage.
3.1.2 Industries involved
Hengyi Petrochemical is engaged in the petrochemical and chemical fiber industry. Its raw
materials come from petroleum or corresponding chemicals cracked by petroleum. The downstream
demand for terminal products are closely related to the basic necessities of ordinary people.
Important factors affecting the industry mainly include crude oil price fluctuation, downstream
demand, capacity supply and matching of upstream and downstream industry chains.
3.1.2.1 Refining and petrochemical business: Relying on the competitive advantage of
China-Brunei location, the Company explored the refining and petroche mical market potential
in Southeast Asia
3.1.2.1.1 The gap between global crude oil supply and demand was wide ned; crude oil
prices fluctuated to the upside
In 2021, global crude oil prices rose sharply. Oil demand was growing as the global economy
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recovered, helped by economic stimulus policies worldwide. "Delta" and "Omicron" mutation virus
once triggered market panic, and oil prices plunged in the short term, but overall crude oil prices still
maintained a rising trend. At the macro policy level, western countries represented by the United
States adopted quantitative easing policies, which, combined with the weak DOLLAR index, has
played a significant role in supporting the crude oil market. The temporary mismatch between supply
and demand caused by the pandemic and loose liquidity pushed up global commodity prices, in
particular, the sharp rise in energy prices such as coal and natural gas further stimulated the rise in
crude oil prices. Geopolitical risk has also roiled oil prices since 2022, with conflicts between Russia
and Ukraine, attacks on petroleum installations in Saudi Arabia and the Suez Canal blockade all
exacerbating volatility in the oil market.
In terms of supply, OPEC+ began to gradually release production capacity from May 2021 as
global demand for crude oil increased. In July, OPEC+ agreed to increase production by 400,000
barrels/day from August 2021 and by two million barrels/day by the end of the year, including
254,000 barrels/day per month from OPEC members. Despite the gradual increase in output by
major producers, the actual crude oil production was below the promised increase, while the rate of
production release lagged behind that of recovery in demand. According to the IEA, by the end of
2022, the gap between OPEC+ projected production and actual deliveries could reach one billion
barrels.
In terms of demand, according to the IEA, global oil demand rose by 5.4 million barrels/day in
2021. Meanwhile, the IEA forecasts that global oil demand will increase by 3.2 million barrels/day in
2022. The recovery of supply from some OPEC producers was not as good as expected, and global
energy demand was still strong, so the crude oil market remained in a volatile upward trend.
3.1.2.1.2 The product oil market in Southeast Asia ushered in a super cycle, with a broad
prospect for future growth
Since 2022, as Indonesia, Malaysia, Singapore and other Southeast Asian countries eased their
epidemic control measures and actively resumed work and production, market demand has been
growing rapidly. In addition, after the recovery of the supply chain in Southeast Asia, some overseas
orders returned, and under the influence of the resonance of internal and external demand, the
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demand for product oil products in Southeast Asia has recovered strongly.
According to Platts, in terms of gasoline products, Southeast Asia imported about 40.92 million
tons in 2021. The main importing countries included Indonesia, Malaysia, Singapore, the Philippines,
Myanmar and other places, while the main exporting countries were Singapore and Thailand. In
terms of diesel, 36.96 million tons were imported in 2021. The main importing countries were
Vietnam, Bangladesh, the Philippines, Sri Lanka, Myanmar, Indonesia and Malaysia. In terms of jet
fuel, countries were almost self-sufficient and trade circulation was the main flow. The major
importers in Southeast Asia were Malaysia and several other countries with smaller refineries, such
as the Philippines and Sri Lanka. About 3.57 million tons were imported in 2021. In addition, with
the implementation of the new IMO standard in 2020, the demand for low-sulfur fuel oil has risen.
Singapore is a major shipping base. As some marine diesel (MGO) has been required to replace
marine fuel oil, the demand for diesel in Southeast Asia is expected to continue to increase.
Compared with the surplus supply of domestic product oil products, Southeast Asia's product oil
market has a large gap. As the only product oil net import market in the world, it has a product oil
demand with great growth potential. Besides, Australia also needs to import product oil.
In terms of supply, due to the early construction of some refineries in Southeast Asia, their
outdated technology, poor management, heavy burden of government subsidies and other reasons,
more production capacity has been shut down in the previous three years in Asia. The planned new
capacity in Asia has been concentrated in China and India, while Southeast Asia only saw a small
increase in production in Brunei, Indonesia and Vietnam.
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Figure 2 Crack Spread of Product oil Products in Southeast Asia in Recent Years
January 2019 January 2020 January 2021 January 2022
Gasoline
January 2019 January 2020 January 2021 January 2022
Diesel
January 2019 January 2020 January 2021 January 2022
Jet Fuel
Data source: Platts (as of the disclosure date of the Report)
As the profit vane of refineries in Southeast Asia, from the perspective of the crack spread of
product oil products since 2019, the crack spread of product oil products was at the lowest level in
history during the pandemic in 2020. With the alleviation of the pandemic in Southeast Asia in 2021,
market demand gradually picked up, and the crack spread of product oil products continued to
recover. Since 2022, under the influence of multiple factors, such as soaring crude oil prices,
increased demand due to the mitigation of the pandemic in Southeast Asia and shrinking product oil
supply, the crack spread of product oil products in Singapore has been on the rise.
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The Asian Development Bank (ADB) has released its latest economic forecast for Southeast
Asia in 2022, predicting that the region's GDP will grow by 5.1%, and its economic recovery will
continue to gain momentum. It is expected that Southeast Asia will continue to import product oil
products every year in a market pattern where refinery supply capacity decreases rather than
increases. As the impact of the pandemic gradually diminishes, the demand for product oil products
in Southeast Asia is expected to be supported, and the import volume of product oil products will
continue to maintain the growth trend. At the same time, with the continued improvement of the
crack spread, the new, market-driven refineries will see a rebound in profitability, and the Hengyi
Petrochemical Brunei Refinery is expected to benefit from the continued widening of the spread of
product oil.
3.1.2.2 PTA business: Sufficient supply of raw materials and stable industrial order
In 2021, the rise of crude oil prices drove up the prices of PX and PTA. PX prices rallied off the
bottom throughout the year. In the second quarter, with the production of PTA plants by many
companies, PX prices maintained growth. According to CCF data, as of December 31, 2021, the
domestic existing PTA capacity base was adjusted to 65.63 million tons, up 13.88% year on year.
Under the influence of the policy of “controlling total energy consumption and intensity”, plant
maintenance and backward capacity close-down, the annual PTA output increased by 3.25 million
tons, with a year-on-year growth of 6.5%, lower than the growth rate of new capacity, but still a
record high. Due to many unexpected maintenance of PTA plants in the United States and South
Korea, the operating rate abroad was insufficient, and the domestic PTA export volume increased
greatly. CCF data shows that in 2021, the total import volume of PTA in mainland China was 76,500
tons, and the total export volume in mainland China was 2,575,100 tons, with a year-on-year growth
of 204.1% compared with the export volume in 2020, which was 846,700 tons. Due to the reduction
of South Korea's PTA exports, it is expected that the domestic PTA exports will continue to increase
in 2022.
3.1.2.3 Polyester business: The terminal de mand maintained healthy growth, and leading
enterprises will be nefit from reshaping of the pattern of che mical fiber industry chain
3.1.2.3.1 The consumer de mand of residents increased, and the downstream de mand for
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textile and clothing was strong
From the perspective of downstream demand, polyester fiber is mainly used in clothing, home
textile and emerging application fields, which is closely related to residents' consumption willingness.
In 2021, the situation of pandemic prevention and control in China became stable, residents'
disposable income increased, and the consumption level continued to rise. The strategy of expanding
domestic demand and various policies to promote consumption was effective, and consumer groups'
demands for textile and apparel and clothing quality, as well as their consumption capacity also
increased.
According to the National Bureau of Statistics, China's per capita disposable income has been
on the rise since 2013. In 2021, the national per capita disposable income amounted to RMB35,128,
up 9.1% year-on-year in nominal terms. Meanwhile, the per capita consumption expenditure of urban
residents amounted to RMB30,307, up 12.2%. The per capita consumption expenditure of rural
residents was RMB15,916, up 16.1%. The improvement of residents' consumption capacity has
promoted the increase of terminal consumption expenditure in textile clothing and apparel industry.
As the pandemic situation enters the stage of normal prevention and control, residents' consumption
habits and consumption patterns have changed to a certain extent, and online consumption has
entered residents' daily life. According to data from the Ministry of Commerce, in 2021, China's
online retail sales reached RMB13,100 billion, of which the online retail sales of physical
commodities amounted to RMB10,800 billion, up 12.0% year on year, accounting for 24.5% of the
total retail sales of consumer goods, and residents' consumption continued to shift to online
consumption. According to Euromonitor statistics, online sales of domestic shoes and clothing
industry accounted for 35.4%, still maintaining a continuous growth trend. In addition to traditional
e-commerce, e-commerce live-streaming platform has become an important way of clothing sales.
Online live-streaming consumption has emerged as a new force to provide strong support for
terminal consumption, driving the high growth of terminal demand for textile and apparel. Online
consumption has bucked the trend, effectively boosted consumption and unleashed market potential.
Meanwhile, it also means that China has entered an important stage in which the upgrading of
consumption structure has been accelerated, the iteration of consumption pattern has been sped up,
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and the role of consumption in driving the economy has become significantly stronger.
3.1.2.3.2 Overseas demand for textile and clothing was strong, and exports maintaine d high
growth
In 2021, developed countries led by the United States implemented relatively loose monetary
policies to stimulate economic recovery, improve clothing consumption willingness, and promote the
significant growth of clothing consumption demand in developed countries. Meanwhile, the spread
of the pandemic in Southeast Asia affected the production of local textile enterprises. Many factories
stopped production or reduced output, and some orders were transferred to China. According to the
statistics from China National Textile and Apparel Council, in 2021, supported by the growth of
overseas consumption demand, return of some orders and other factors, China's textile and apparel
export reached USD315.50 billion, up 8.4% year on year, and achieved more-than-expected growth
from a relatively high trade base in 2020. The main driving force came from the substantial increase
of exports of apparel, textile yarns and fabrics, among which apparel made a significant contribution.
In 2021, apparel exports totaled USD170.28 billion, up 24.0% year on year and 16.0% compared to
pre-pandemic levels, the best record since 2015. Increase of external demand for textile and apparel
also led to growth of upstream demand for polyester.
3.1.2.3.3 In the polyester industry, market concentration was improved and competition
order was further optimized.
In 2021, polyester production capacity and output in China both achieved steady growth.
According to CCF data, domestically, the polyester production capacity increased by 3.57 million
tons in 2021, with a capacity growth rate of 5.76%. As of December 31, 2021, the total polyester
production capacity was 65.56 million tons. From 2021 to the future, the new polyester capacity will
continue to be centered on capacity expansion of leading enterprises. The backward polyester
factories with outdated equipment lack the ability of technological innovation and will gradually
withdraw from the industry competition. The liquidation of backward production capacity will be
accelerated, the access threshold for the Company's industry chain will be further increased, the
market concentration in the polyester industry will be further optimized, the competition order in the
industry will continue to improve, and the development environment will become healt hier. As one
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of the leading enterprises, the Company has accelerated the expansion of downstream chemical fiber
business through a variety of ways, and will take the lead in enjoying the profit improvement brought
by the prosperity of the industry.
3.1.2.3.4 The upgrading of domestic products contributed to the improve ment of bottle
flake prosperity
According to CCF data, as of December 31, 2021, the global bottle-grade PET production
capacity was 32.27 million tons, among which, China's bottle-grade PET production capacity
accounted for 40% of the total global capacity, ranking first in the world.
In the context of product upgrading, the demand for polyester bottle flakes was increasing. At
the same time, driven by the demand for environmental protection, the reclaimed polyester bottle
flake market was also growing rapidly. In 2021, the global bottle-grade PET apparent consumption
was estimated at 32.08 million tons, with a year-on-year growth rate of more than 12%. The
domestic demand was growing rapidly. The annual apparent consumption of bottle-grade PET was
7.05 million tons, up about 24% year on year. On the downstream demand side, the traditional soft
drink market was doing well. The pandemic also promoted the rapid development of bottle flakes in
fresh e-commerce, household disinfection and other daily chemical fields, as well as new application
areas such as environmentally friendly flooring and optical thin film, thus increasing the demand for
bottle flakes.
3.1.3 Position of each business segment of the Company
The petrochemical and chemical fiber industry in which the Company is engaged 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 terminal
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 market share was further improved.
3.1.3.1 Refining and petrochemical business
According to Platts (Platts Energy Information Platform), as of December 31, 2021, the refining
and petrochemical production capacity in Southeast Asia was about 270 million tons. In the past
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three years, refinery capacity in Southeast Asia increased by 28.75 million tons; 15.5 million tons of
capacity were withdrawn; the capacity had a net increase of 13.25 million tons, among which the
capacity of the Hengyi Brunei Project Phase I accounted for 60.38% of the net increase. In order to
enhance international competitiveness, the first phase of the Hengyi Brunei Project introduced the
world's largest single series aromatics complex and the sixth flexicoking process unit in the world,
which have lower production cost per unit of product, are cleaner and more environmentally friendly,
and boast obvious late-mover advantages. After the second phase of the Hengyi Brunei Refining and
Petrochemical Project is put into operation, the production capacity will be further expanded and the
Company's share in refining and petrochemical market will be further enhanced.
3.1.3.2 PTA business
According to CCF data, as of December 31, 2021, the existing domestic PTA capacity base was
adjusted to 65.63 million tons. As one of the leading enterprises in PTA industry, the Company has
strategically arranged four PTA bases in Dalian of Liaoning Province, Ningbo of Zhejiang Province
and Yangpu of Hainan Province along the coastline from north to south. The total PTA production
capacity of holding and shareholding companies was about 19mtpa, ranking the first in the world. In
addition, according to CCF data, as of December 31, 2021, the national PIA production capacity was
about 550,000 tons, and the Company's PIA production capacity was 300,000 tons, accounting for
about 54.55% of the national total.
3.1.3.3 Polyester
According to CCF data, most of the polyester production capacity is concentrated in the
Asia-Pacific region, and China has been the world's largest textile producer and exporter. As of
December 31, 2021, China's total polymer production capacity reached 65.56 million tons, with a
year-on-year growth of 5.76%, of which the production capacity of polyester filament yarn was
37.17 million tons, that of polyester staple fiber was 8.55 million tons and that of polyester bottle
flakes was 11.11 million tons. The polymer production capacity of holding and shareholding
companies was 10.465 million tons, among which the production capacity of polyester bottle flakes
(including RPET) was 2.7 million tons, and that of polyester fiber consisted of 6.145 million tons of
filament yarn, 880,000 tons of staple fiber and 740,000 tons of polyester flakes, ranking first in the
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world. In 2021, the capacity concentration was further improved. The Company has continuously
increased the proportion of differentiated fiber varieties and sped up the development of customized
products to meet differentiated and personalized needs of the market, and its products have enjoyed a
good reputation in the market for a long time.
3.2 Main business model, process flow and performance drivers of the company during the
Reporting Period
The Company shall comply with the disclosure requirements for chemical industry specified in
Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock Exchange -
Industry Information Disclosure
3.2.1 Business model
3.2.1.1 Procure ment model
The Company mainly purchases raw materials through direct negotiation with manufacturers or
traders. It selects competitive suppliers to establish long-term and stable cooperative relations, on the
basis of which it decides the transaction price according to market conditions.
The raw materials required for production of the Company are mainly purchased from major
petrochemical products and crude oil suppliers at home and abroad. When selecting raw material
suppliers, the Company first considers the quality of their products and the stability of supply. While
ensuring the above, the Company will also give priority to suppliers with competitive prices to
reduce production costs. The Company will sign annual supply contracts with major suppliers,
regarding the supply in the relevant year of their products to the Company in accordance with
international or domestic market prices at the time of actual supply as per the quantity agreed in the
contracts.
The main procurement process for auxiliary materials is basically the same as that for raw
materials.
3.2.1.2 Production model
For polyester products, the Company arranges production mainly according to the production
plan formulated in advance. In specific implementation, the annual production plan will be
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subdivided into monthly production plan, and then the Production Department will make necessary
adjustments to the monthly production plan according to the market feedback and change
information provided by the Sales Department before finalizing the monthly production plan and
arranging production.
The Company's product oil and chemical products (PX, benzene, etc.) are mainly produced by
Hengyi Brunei. Usually, it will adjust the process and parameters to control the output of specific
products, such as product oil and chemical products, according to the market demand.
The Company's PTA products are mainly produced by Zhejiang Yisheng. Usually, it will adjust
the load level of production unit to control PTA output according to the market demand.
3.2.1.3 Sales model
The Company’s product oil products are mainly sold to Brunei, other Southeast Asian countries
and Australia. PTA and polyester products are mainly sold in the domestic market, covering more
than 20 provinces and regions in China. Most products are sold directly to customers through the
Company's Sales Department, and only a small number of products are sold through distributors.
3.2.1.3.1 Sales model of product oil and chemical products (PX, benzene, etc.)
The Company's product oil and chemical products are mainly produced by Hengyi Brunei.
Among them, the main customers of chemical products are PTA manufacturers downstream of the
Company's industry chain, and the settlement mode usually adopts wire transfer and letter of credit,
etc. Product oil is mainly sold to Brunei, other Southeast Asian countries and Australia. When selling
to local enterprises in Brunei, the Company usually signs sales contracts directly and the settlement
mode is letter of credit. The Company's sales to other Southeast Asian countries and Australi a are
mainly through Singapore Commodity Exchange. Sales contracts are directly entered into with
customers and the settlement mode is letter of credit.
3.2.1.3.2 Sales model of PTA products
The Company’s PTA products are generally sold by direct sales, that is, the Company will
directly sign purchase and sale contracts with downstream polyester manufacturers or large traders,
agreeing on the purchase quantity and price within a certain period. After receiving the payment for
goods from customers, the products are delivered directly from the Company's warehouse. The
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Hengyi Petrochemical 2021 Annual Report
settlement mode for sales of PTA products is “payment before delivery”, or “collect on delivery”,
usually by wire transfer, acceptance draft or letter of credit.
3.2.1.3.3 Sales model of polyester fiber products
The main customers of the Company's polyester fiber products are textile enterprises, including
elastomer enterprises, garment fabric manufacturers, bag fabric manufacturers, home decoration
fabric manufacturers, etc. These customers are mainly concentrated in the areas of Jiangsu and
Zhejiang as well as Shanghai. The Company generally adopts direct sales, and directly concludes
sales contracts with customers. The settlement mode is usually “payment before delivery”, or
“collect on delivery”.
3.2.1.4 Business model of supply chain service business
The Company's supply chain service business mainly includes trade business and supporting
logistics related services.
3.2.1.4.1 Trade business
Petrochemical industry is a cyclical industry. On the one hand, the supply side of raw materials
is susceptible to factors such as upstream suppliers' capacity, operation stability of the plant and
start-up time of the new plant. On the demand side, especially in the downstream polyester segment,
sales have typical seasonal characteristics. Meanwhile, chemical raw materials and finished products
are very dependent on the stability of port facilities and international logistics transportation. On the
other hand, the prices of products in the petrochemical industry chain are affected by the price of
terminal crude oil, showing wide fluctuations. Therefore, in order to ensure production and operation,
strengthen supply chain stability and reduce the risk of price fluctuation, petrochemical enterprises
need to smooth supply and demand and hedge risks through trade business in procurement and sales.
Under the impact of COVID-19, capacity release in the industry is uncertain. The quarantine and
lockdown measures in various regions have led to the instability of logistics supply. In addition, the
sharp shock of oil prices has increased the uncertainty of supply and demand in the industry, which
further drives the urgent need of enterprises to hedge supply risks through trade management. In
trade business, the Company always adheres to the principle of “serving the main business”. The
trading varieties focus on the primary business and core products, mainly PTA and MEG. Among
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Hengyi Petrochemical 2021 Annual Report
them, PTA belongs to the finished products of the Company’s PTA business segment, and PTA and
MEG are also important raw materials of polyester segment, which shows that the Company uses its
trade business to stabilize supply chain and hedge against price volatility.
3.2.1.4.2 Supporting logistics related services
The Company’s logistics sector provides transportation services of raw materials and products
for upstream and downstream industries of Hengyi Petrochemical. Its business covers three aspects
of raw materials transportation, product transportation and foreign trade transportation. It is deeply
rooted in China and gradually going abroad, and the business scope involves international shipping
and land transportation. The main business model is as follows:
（1）Transportation of raw materials mainly serves the production plants within the Company
system, through the land transport of self-own vehicles and third-party land transport, inland river
shipping, etc.
（2）Transportation of products mainly used for the Company to sell the Company's business
orders and organize the third-party logistics company to transport the products. The transportation
business settlement is carried out by Hengyi Logistics.
（3）Foreign trade transportation mainly through Hengyi Logistics, under collaboration with the
sales company of the Company and cooperation with third-party shipping companies or freight
forwarding companies, to carry out container transportation business by means of bidding.
Transportation modes include sea-rail combined transport, sea-river combined transport, direct
transport, etc.
（4）International transportation mainly serves Brunei PMB Petrochemical Project, most of
which are operated by Hengyi Logistics and its overseas subsidiaries. The imported crude oil and
coal, exported product oil and benzene and other products of the PMB Project are transported by spot
chartering with the fleet capacity of a third-party ship-owner in the market. For the transportation of
chemical PX, due to the relatively stable ports and batch volume o f upstream and downstream routes,
MR chemical fleet will be rented for transportation during the self-construction period. For some
LPG gas products, a mixture of the above two modes is adopted to achieve the goal of safe
transportation.
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Hengyi Petrochemical 2021 Annual Report
3.2.2 Process flow charts of main products
3.2.2.1 Production flow of product oil/che mical products
The production flow of the Company’s product oil/chemical products includes atmospheric
distillation, vacuum distillation, hydrocracking, flexicoking, catalytic cracking and alkylation, etc.
Vacuum Distillation
Atmospheric Distillation Unit Vacuum
Overhead gas
Unit
residue
Kerosene
Naphtha
Atmospheric 4th line Vacuum gas oil
Diesel
Flexicoking
Coker gasoline and diesel
Light ends recovery Kerosene Diesel
Hydrotreating Hydrot reat ing
Coker gas oil
Coker liquefied
Sulfur-bearing
Hydrogen
liquefied gas
Hydrocracking
Naphtha
gas
Gas from low
PSA
naphtha
naphtha
Heavy
Light
pressure separator
Sour water
Reforming
Sour gas
Hydrogen
Product Pre- Refined naphtha
purification hydrogenation Reforming
Reforming liquefied gas
Reformate
Cracking liquefied gas
Liquefied refinery gas
Sulfur Recovery
Light naphtha
Complex
Raffinate
Gas Light Naphtha oil Aromatics
fractionation Isomerization complex
LPG
Petroleum Gas
Liquefied
Aviation kerosene
Heavy aromatics
component C7+
Methylbenzene
isomerized oil
non-aromatic
Iso-butane
Propylene
component
component
isopentane
P
Gasoline
Gasoline
Gasoline
Sulfur (solid Flexible gas
Benzene
gasoline
Diesel
X & liquid) (fuel gas)
3.2.2.2 PTA preparation process
The specific PTA process flow can be divided into oxidation unit and refining unit:
3.2.2.2.1 Oxidation unit
The specific flow chart of oxidation unit is as follows:
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Hengyi Petrochemical 2021 Annual Report
Steam turbine Air compressor Expander
Steam
By-product
steam
PX
Oxidation Level-4 High pressure
Feed mixture
reactor condensation absorber
Co，Mn
Supplementing Post oxidation reactor Condenser Tail gas drying
acetic acid
Acetic acid
storage
PTA pressure
filter mother
liquor Solvent recovery
Primary crystallizer
and dehydration
Acetic acid
storage Residue
Second crystallizer Condenser Recovery and
evaporator hydrolysis of
Wastewater
treatment
methyl acetate
Mother Catalyst
Vacuum filter recovery
liquor
CTA dryer
TA bin
3.2.2.2.2 Refining unit
The flow chart of refining unit is as follows:
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Hengyi Petrochemical 2021 Annual Report
CTA bin PTA batch bin PTA bin
Desalted
water
Packaging
Slurry
PTA drying
preparation
Solvent
tank
Booster pump Vacuum filter
Recycling
solvent
Desalted
water
Sundyne pump Re-beating
Flash-off steam Pressure
Preheater
filtering
Hydrogenation Level-5 Mother liquor
reactor crystallization flashing
To mother-liquor
solid recovery
H2
Hydrogen
compression
3.2.2.3 Polyester esterification polycondensation process
In the process of polyester esterification, the raw material PTA, ethylene glycol and catalyst solution
are continuously sent into the slurry preparation tank according to the specified proportion. After
they enter the esterification reactor, the esterification rate can reach about 95%-96% by controlling
the reaction temperature at an appropriate level. By means of gear pump discharging and
pressurization, the polyester melt produced from esterified materials after prepolycondensation and
final polycondensation is filtered by melt filter, and is distributed through a specially designed melt
distribution system. Part of it is sent to the spinning device for melt direct spinning, and the other
part is sent to the flake production system for ribbon casting and pelletizing.
The specific flow chart of polyester esterification, polycondensation and other reactions is as
follows:
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Hengyi Petrochemical 2021 Annual Report
PTA store
Ethylene glycol
exhaust gas
Dust Feed EG tank
Ethylene glycol Ethylene glycol/
Catalyst Slurry allocation tank exhaust gas acetaldehyde exhaust gas Exhaust gas is burned in a
Condens thermal furnace
Stripping Sewage
er
tower treatment station
First esterification reactor Esterification
fractionating
Condensate
Process
column
collecting tank wastewater
Second esterification reactor
Heavy component
Prepolycondensation reactor Condenser
Ethylene glycol
liquid seal trough Oligomer residue
Residue Prepolymer filter EG EG jet pump Exhaust gas is incinerated in
a heat medium furnace
Liquid ring pump Recycle EG to slurry allocation tank
Final polycondensation reactor Condenser
Residue Melt filtering and conveying
Directly to spinning Ribbon Underwater
workshop casting Chip drying Packaging
pelletizing
PET caput-heels and waste chips
3.2.2.4 Production flow of POY/FDY
The production process of POY and that of FDY are basically the same. The polyester melt is
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Hengyi Petrochemical 2021 Annual Report
connected and transported to the device from the outlet of the melt distribution valve of the polyester
device, and then is divided into two systems through the melt three-way valve. On the way, it is
pressurized by the melt booster pump, and then sent to the melt distribution valve after cooling-down
by the melt cooler. The polyester melt from the melt distribution system enters the spinning chamber
insulated by steam phase heat medium at a certain temperature and is delivered to the spinning
assembly after metering by a metering pump. The melt pipe is equipped with a freezing valve to
ensure that the spinning position can be independently started and stopped. After the melt is filtered
and pressed by the filter layer again in the spinning assembly, it is ejected from the spinneret in a thin
stream and solidified into filaments under the condition of constant temperature and humidity. The
filament is oiled by the tanker, and then through the network nozzles, it is rolled into a filament tube
in the winding machine. POY and FDY products were prepared under high speed winding ranging
from 2,500m/min to 5,100m/min.
Booster Melt distribution Spinning
Melt cooler Static mixer Metering pump
Polyester melt pump valve assembly
Oil + water Blending Oil
Draw-off Packaging
POY winding Delivery
godet check
Cooling (ring
Oiling Spinning Network
blowing, side
device channel nozzle Heating
blowing) FDY winding Dyeing
roller
Oil dripping fluid
Oil exhaust gas Oil exhaust gas
3.2.2.5 Production flow of DTY
The POY filament on the filament tube rack is wound into a DTY filament tube and becomes a
finished product after it passes through yarn guide, feeding roller, texturing heater, cooling, drafting,
false twister, feeding roller in the middle, network, heater, delivery roller and oil roller.
POY Original Upper roller Upper heater Drafting and
(texturing heater)
Cooling Middle roller
filament filament rack feeding false twisting
Oil exhaust gas
Lower heater Winding and Grading and
Network Lower roller Oiling Delivery
(setting heater) forming packaging
DTY oil Waste yarn
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Hengyi Petrochemical 2021 Annual Report
3.2.2.6 Production flow of staple fiber
Polyester staple fiber is a kind of fiber that is transported to the spinning machine through melt, spun
into shape, cut into fibers of different lengths after drafting, crimping and heat setting, and then
packed into individual packages. The main process includes melt conveying, spinning, cooling,
winding, tube falling, bundling, drafting, tension heat setting, folding, crimping, cutting and
packaging.
Polyester melt Booster pump Melt cooler Static mixer
Metering pump
Spinning assembly Cutting off Packaging
Air cooling Drag tension machine Polyester staple fiber
Spinning oil Yarn guide
Spinning oil Dragger Feeding machine Relaxation heat setting
Reciprocating
Fiber-spreading machine
engine
Second drafter Draft bath First drafter Impregnating tank Yarn guide bundling Crimping machine
Folding
Steam heater Tension heat setting Spray oiling Third drafter Tension machine Steam preheater
machine
3.2.2.7 Production flow of bottle flakes
The production process of bottle flakes, i.e. bottle grade flakes, is composed of two parts: melt
polymerization + solid phase polymerization. The main process of melt polymerization consists of
pulping, esterification, polycondensation, and dicing, and is basically the same as that of fi ber
polymerization. The difference lies in that IPA, stabilizer and toner are added in the formula of bottle
flakes. The main process of solid phase polymerization is crystallization, preheating, reaction, and
cooling.
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Hengyi Petrochemical 2021 Annual Report
Nitrogen
Product Solid phase
packaging Chip cooling polycondensation reaction Preheating Crystallization
Auxiliary
Demineralized water Basic chip conveying
solution
PTA Slurry Esterification
preparation reaction Polycondensation reaction Cropping Drying
IPA
EG
distillation Vacuum system Water filtration
3.2.3 Main performance drivers
3.2.3.1 The Company adheres to scientific research and innovation to meet the high-end and
differentiated needs of the market
The Company has always been committed to improving the ability of independent innovation,
focusing on the R&D and application of high-end products and green products in the field of
polyester fiber. Relying on the university-enterprise platform, the Company has established a product
portfolio featuring "diversification, serialization, quality and uniqueness and plays a leading role in
China in terms of technology. The proportion of high-end products of the Company has continued to
increase. The Company's independently developed antimony-free green polyester product, Eticont, is
widely used in infant clothing, facial masks and other fields, and the added value is much higher than
that of conventional products. The diversity of flame retardant products is gradually increasing, and
the final test of recycled flame retardant polyester has successfully completed. These products have
been accepted by more and more customers. Meanwhile, the industrialization of antibacterial and
antiviral fibers has also been completed rapidly. As their excellent antibacterial and antiviral
properties have been unanimously recognized by customers, they will become a new profit growth
point among the differentiated products.
3.2.3.2 With unique advantage of integrated supply chain management, the Company can
independently control the product cost, which enhances the market competitivene ss of our
products
The Company keeps strengthening our supply chain management capability, and innovating and
promoting our intelligent management and operation models. The Company uses its own tankers for
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Hengyi Petrochemical 2021 Annual Report
transportation to ensure the supply of raw materials, improve transportation efficiency and reduce
logistics costs. The Company maintains a leading position in the industry in the proportion of
independent transportation. The supply chain business has effectively improved the Company's
sensitivity to product costs and selling prices, and enhanced our cost control ability and profitability.
With the commissioning and operation of the Brunei project, the Company has stepped in the
shipping sector to strengthen the integrated management of overseas supply chain service. The
Company has gradually built its own fleet to increase our shipping strength, effectively address the
inadequate shipping capacity and the increasing shipping costs, and ensure timely delivery of
shipments.
3.2.3.3 With major strategic projects being put into operation one after another, the Company
has improved the effect of economies of scale
In 2021, Yisheng New Materials’ 3-mtpa PTA Production Line 1, the plants of Haining Hengyi
New Materials Co., Ltd.'s "1-mtpa Differentiated Environmental Functional Fiber Project", and
Fujian Yijin Chemical Fiber Co., Ltd.'s "566,000 t/a new functional fiber project” were put into
operation in succession. In addition, Yisheng New Materials’ 3-mtpa PTA Production Line 2 was
officially put into operation in January 2022. The scale of the Company’s PTA and polyester fiber
business has continued to grow, and the Company’s production capacity risen to a new level,
consolidating our leading position in the industry. The release of new production capacity has
continued to provide incremental contributions to the Company and drive the Company's
performance growth.
3.2.3.4 The Company has adjusted the product structure to cater to market needs,
maintaining a sound gross margin
The Company's end products mainly include product oil, polyester bottle flakes and polyester
fibers, covering a wide range of varieties. In 2021, the domestic and international economies
recovered gradually, and consumer demand for textiles and clothing, home textiles, packaging, etc.
kept growing. Combined with the contraction of overseas supply chains, international orders returned
to China, and the downstream demand for the Company's products rebounded steadily. The
Company seized the growth opportunity of the strong market demand for bottle flakes to further
45
Hengyi Petrochemical 2021 Annual Report
expand the market share and maximize profits. As an industry leader, the Company has an annual
production capacity of 2.7 million tons of PET bottle flakes (including RPET).
The first phase of the Hengyi Brunei Project stands out with its low cost of new plants and
flexible adjustment of product mix. Due to the best performance of diesel in terms of Singapore
product oil crack spread, the Company continued to convert jet fuel into diesel in 2021, reduce the
output of jet fuel, and ensure full-load production, securing the optimal profitability of the project.
During the Reporting Period, with the continuous recovery of the crack spread of product oil in
Singapore, the gross margin of each product was maintained at a high level.
In addition, in order to improve profitability, the Company actively and flexibly converted some
PTA capacity to PIA capacity, which effectively improved the capacity utilization and added value of
products.
Procure ment mode of main raw materials
Currency: RMB
Proportion of Whether the Average
Average price
Main raw purchase settlement method price in the
Procurement model in the first half
materials amount in total has changed second half
of the year
Purchases significantly of the year
Crude oil Purchasing inquiry 24.05% No 3,294.04 3,932.96
PX Purchasing inquiry 13.65% No 5,184.90 5,898.87
MEG Purchasing inquiry 8.18% No 4,370.89 4,693.46
Reasons for major changes in raw material prices from the previous Reporting Period
During the Reporting Period, there were major changes in the Company's raw material prices
compared with the previous Reporting Period, the main reasons were that the global economy
gradually recovered against the backdrop of quantitative easing policy while the release of crude oil
production capacity lagged behind the rebound of demand and the recovery of crude oil supply was
less than expected. Therefore, prices of energy resources such as coal and natural gas have also risen
sharply, boosting the upward trend of crude oil price. Under the combined influence of various
factors, the crude oil price generally rose all the way in 2021. According to CCF data, in 2021, the
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Hengyi Petrochemical 2021 Annual Report
growth rate of the price of both WTI crude oil and Brent crude oil are 57.94% and 52.24%,
respectively. At the same time, the rise in crude oil price also lifted the prices of downstream
products in the industrial chain such as PX.
The purchase price of energy accounts for more than 30% of the total production cost
□ Applicable √ Not applicable
Reasons for significant changes in major energy types
□ Applicable √ Not applicable
Main production technologies
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
Introduction Advanced equipment and technology, high production
Mass Multiple
Gasoline and capacity, low costs of raw materials and transportation, and
production persons
innovation high level of eco-friendliness
Introduction Advanced equipment and technology, high production
Mass Multiple
Diesel and capacity, low costs of raw materials and transportation, and
production persons
innovation high level of eco-friendliness
Introduction Advanced equipment and technology, high production
Mass Multiple
Kerosene and capacity, low costs of raw materials and transportation, and
production persons
innovation high level of eco-friendliness
Introduction Advanced equipment and technology, high production
Mass Multiple
Paraxylene and capacity, low costs of raw materials and transportation, high
production persons
innovation product purity, and long operating cycle of the plant
Introduction Advanced equipment and technology, high production
Mass Multiple
Benzene and capacity, low costs of raw materials and transportation, high
production persons
innovation product purity, and long operating cycle of the plant
Purified Mass Multiple Introduction High production capacity, low investment, low energy
terephthalic production persons and consumption, convenient transportation and high level of
47
Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
acid innovation eco-friendliness
Introduction
Mass Multiple Short process, high production capacity, low consumption of
Polyester and
production persons raw materials and public works, etc.
innovation
The third and fourth monomers are added into the
polymerization reaction system, and a special equipment
structure is adopted. Through esterification,
pre-polycondensation, and final polycondensation,
Introduction
Mass Multiple low-temperature dyeable cationic polyester is prepared,
Polyester and
production persons lowering the cost of subsequent dyeing and reducing
innovation
environmental pollution. Additives such as compound
stabilizers are used to increase the melting point and improve
the heat resistance of melts, while increasing the whiteness and
improving the hue and heat resistance of the products.
Introduction No dulling agent is added in the polymerization process to
Mass Multiple
Polyester and produce super bright polyester products to meet the needs of
production persons
innovation different customers with low production costs.
By adding dulling agents in the polymerization process to
Introduction
Mass Multiple produce full dull polyester products, the problem of low filter
Polyester and
production persons life due to the increase of dulling agents is solved and energy
innovation
consumption is reduced.
By optimizing the design of the reactor structure and adding
Wide range Introduction
Multiple titanium-based catalysts instead of antimony-based catalysts,
Polyester of and
persons the catalyst is uniformly dispersed in the material, and an
applications innovation
environmentally friendly antimony-free polyester product is
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
produced, realizing a high level of eco-friendliness.
The master-batch preparation process has been improved, the
types and proportions of silver-based antibacterial agent, PBT
Introduction
Mass Multiple powder mixture and dispersant have been studied, and the
Polyester and
production persons optimal proportions of the three have been determined. The
innovation
antibacterial master-batch has been prepared by melt blending
and extrusion with outstanding features.
Wide range Introduction
Multiple Maximum output, highest conversion rate and lowest energy
Polyester of and
persons consumption are realized
applications innovation
Wide range Introduction By tapping the potential of equipment, the effect of increasing
Multiple
Polyester of and production and efficiency has been achieved without
persons
applications innovation increasing investment
Through recycling, energy waste is reduced and energy
Wide range Introduction
Multiple utilization rate is improved; by continuously introducing
Polyester of and
persons energy-saving technologies, production costs have been
applications innovation
reduced
Wide range Introduction It extends the filter service life, reduces labor waste, and saves
Multiple
Polyester of and packaging costs, bringing considerable economic benefits to
persons
applications innovation the Company
Through modification during the polymerization reaction, the
Wide range Introduction fluidity and ductility of the polyester melt are improved. With
Multiple
Polyester of and the same polymerization residence time, the intrinsic viscosity
persons
applications innovation of the product is higher than that of the conventional polyester,
and the processing performance of the melt is also improved. A
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
utility model patent has been granted for this technology. The
patent number is ZL 201120209233.4
Through independent R&D, the Company has successfully
Wide range Introduction
Multiple developed and produced titanium dioxide for nylon, and
Polymerization of and
persons completed independent production and supply of auxiliary
applications innovation
materials to replace imports.
Through independent R&D, the Company has successfully
Wide range Introduction
Multiple developed and produced titanium dioxide for nylon, and
Polymerization of and
persons completed independent production and supply of auxiliary
applications innovation
materials to replace imports.
Using advanced AI technology, the Company can
Wide range Introduction automatically monitor the spinning process, and detect and
Multiple
Spinning of and deal with abnormalities in a timely manner, thereby improving
persons
applications innovation the product quality and production efficiency and reducing the
cost
Using advanced AI technology, the Company can
Wide range Introduction
Multiple automatically inspect the appearance defects of filament rolls,
Spinning of and
persons thereby improving the production efficiency and reducing the
applications innovation
cost
Using advanced automation technology, the Company realizes
Wide range Introduction
Multiple the automation of the production process, greatly reducing
Spinning of and
persons manual operations, improving the production efficiency and
applications innovation
reducing the cost
Mass Multiple Introduction Using advanced technology, the Company shortens the process
Spinning
production persons and flow and increases the production capacity and degree of
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
innovation differentiation, maintaining stable product quality with low
utility costs
Using the melt direct spinning POY→DTY process route, the
melt is ejected from the independently designed
Introduction
Mass Multiple "straight-line"-shaped spinneret hole, and then cooled, oiled,
Spinning and
production persons rolled and spun into flat special-shaped POY yarns. POY yarns
innovation
are then textured into flat DTY polyester filaments, which
feature lower bulk density, lighter weight and softer fabric feel.
Using the melt direct spinning POY→DTY process route, the
melt is ejected from the independently designed
Introduction "cross"-shaped spinneret hole, and then cooled, oiled, rolled
Mass Multiple
Spinning and and spun into cross-shaped POY yarns. POY yarns are then
production persons
innovation textured into cross DTY polyester filaments, which feature
lower bulk density, lighter weight, better air permeability and
softer fabric feel.
Using the melt direct spinning PDY process route, the melt is
ejected from the independently designed "tree"- or
Introduction "star"-shaped and other special-shaped spinneret holes, and
Mass Multiple
Spinning and then cooled, oiled, rolled and spun into "tree"- or "star"-shaped
production persons
innovation and other special-shaped FDY yarns. This type of polyester
filament features lower bulk density, lighter weight, special
luster, and softer fabric feel.
Introduction The functional self-heating master-batch is added to produce
Mass Multiple
Spinning and the functional hollow polyester fiber. With double heat
production persons
innovation retaining effects, it can be used as the "core layer" of the heat
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
retaining and comfortable composite fiber. A utility model
patent has been granted for this technology. The patent number
is ZL201410481816.0
Wide range Introduction With the use of advanced equipment and process technology,
Multiple
Spinning of and short process, high degree of automation, and low
persons
applications innovation manufacturing cost are achieved.
Wide range Introduction Through technical improvement, the manual operation cycle is
Multiple
Spinning of and extended, the product quality stability is improved, and the
persons
applications innovation resource consumption and cost are reduced
By installing in-line addition equipment, dynamic and static
mixing equipment, oil nozzles, winders, etc. on the melt direct
spinning line, the existing equipment has been transformed and
Wide range Introduction upgraded, enabling the polyester melt direct spinning line to
Multiple
Spinning of and produce differentiated and high-end products. It solves the
persons
applications innovation challenge of using the large-capacity polyester plant to produce
functional differentiated fibers of multiple varieties in small
batches. Functional modified fibers are produced, including
colored, flame retardant, antibacterial and full dull fibers
The Company's own technology is applied to the production of
Wide range Introduction flame retardant polyester. Single-component spinning or
Multiple
Spinning of and composite spinning technology is used to produce
persons
applications innovation single-component or two-component sheath-core composite
flame-retardant and anti-dripping POY-DTY yarns
Wide range Multiple Introduction Through independent R&D, the Company produces polyester
Spinning
of persons and and polyamide, SPH, sea-island, cationic dyed polyester and
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
applications innovation other composite filaments to meet the high-end market demand
Through independent R&D, the Company produces
Wide range Introduction
Multiple differentiated and functional products such as HOY and
Spinning of and
persons medium-strength yarns for segment markets, meeting the needs
applications innovation
of specific users
In the spinning process, the non-contact heating method is
adopted to reduce the friction and heating of the filaments
during processing to avoid the production of broken filaments.
Low-temperature stretching deformation-high-temperature
Wide range Introduction
Multiple setting are adopted and appropriate tangle jets are used to
Spinning of and
persons reasonably control the tangle air pressure bundling
applications innovation
performance and other production processes to produce ideal
fully-drawn yarns (FDY) similar to the products of parallel
drafting machines. A utility model patent has been granted for
this technology. The patent number is ZL200810059725.2
Through independent R&D, the Company produces oils
Wide range
Multiple Independent suitable for the spinning process to improve the processing
Spinning of
persons R&D performance of the product, so that the weaving process can
applications
proceed smoothly and the product quality is excellent.
By using the programmable controller (PLC), the composite
yarn is stretched in multiple stages, and the order of the
Wide range Introduction
Multiple stretching ratio of each stage can be changed as needed within
Spinning of and
persons the range, so that the composite yarn has different structural
applications innovation
densities, resulting in the difference in color absorption and
dyeing rates, and realizing multiple colors after dyeing. It has
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
brought significant economic and social benefits. A utility
model patent has been granted for this technology. The patent
number is ZL200710070581.6
The graphene master-batch and polyester flakes are blended
and spun into yarns. A spinneret with a 4C aperture is used to
prepare hollow graphene polyester fiber POY, and the fluffy
Wide range Introduction
Multiple curl of the polyester fiber is further improved in the subsequent
Spinning of and
persons texturing process. This gives the polyester fiber the features of
applications innovation
heat retaining and light weight in addition to the functionality
of graphene, expanding its application prospect of graphene in
the field of textiles.
The antimony-free polyester melt is produced by adding a
Wide range Introduction titanium-based catalyst to polyester to instead of
Multiple
Spinning of and antimony-based catalysis, and then antimony-free staple fibers
persons
applications innovation and filaments are produced through a spinning process,
featuring high environment-friendliness.
By spinning and winding a bunch of POY and a bunch of FDY,
Wide range Introduction a new type of polyester/polyester composite yarn is made, and
Multiple
Spinning of and it can be used for weaving high-grade artificial silk clothing
persons
applications innovation fabrics and home textile fabrics, which has the advantages of
rich hand feel, anti-wrinkle property and good drapability.
Wide range Introduction
Multiple Through independent R&D, the spinning oil for FDY has been
Spinning of and
persons successfully prepared to replace imported oils.
applications innovation
Spinning Wide range Multiple Introduction The antimony-free polyester melt is produced by adding a
54
Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
of persons and titanium-based catalyst to polyester to instead of
applications innovation antimony-based catalysis, and then antimony-free staple fibers
and filaments are produced through a spinning process,
featuring high environment-friendliness.
By spinning and winding a bunch of POY and a bunch of FDY,
Wide range Introduction a new type of polyester/polyester composite yarn is made, and
Multiple
Spinning of and it can be used for weaving high-grade artificial silk clothing
persons
applications innovation fabrics and home textile fabrics, which has the advantages of
rich hand feel, anti-wrinkle property and good drapability.
Wide range Introduction
Multiple Through independent R&D, the spinning oil for FDY has been
Spinning of and
persons successfully prepared to replace imported oils.
applications innovation
Introduction By controlling the temperature of false twist deformation, the
Mass Multiple
Texturing and linen type is achieved, which not only has the style of natural
production persons
innovation linen fibers, but also has the stiffness of artificial linen fibers.
The airflow through the tangle jet is closed intermittently, and
a variety of polyester POY yarns of different colors are
composited through false twist deformation to produce a fancy
composite polyester yarn interleaved with fluffy
Introduction
Mass Multiple non-intermingled low-stretch fiber and intermingled blended
Texturing and
production persons fiber. Colored polyester POY is used to produce the colored
innovation
composite yarn directly by texturing, eliminating the
complicated downstream dyeing process, reducing the cost of
the product, simplifying the process and lessening the pollution
to the environment
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
A double-solenoid valve opening and closing logic design is
adopted. The two solenoid valves arranged in parallel or series
are designed with a reasonable opening and closing logic to
Introduction jointly control them to realize intermittent switching of the
Mass Multiple
Texturing and tangle jet airflow and the intelligent design of polyester fancy
production persons
innovation composite yarn tangling points. At the same time, it reduces
the frequency of use of a single solenoid valve to prevent
overheating damage to a single solenoid valve, effectively
improving the efficiency of texturing.
The Company has a more mature technology for producing
products with a monofilament fineness of 0.5-1.0dpf, which
provides technical support and experience accumulation for the
development of finer products. Through the supporting of pre-
Introduction
Mass Multiple and post-spinning equipment, the Company realizes
Texturing and
production persons independent R&D. At present, the Company's production
innovation
technology of ultra-fine fibers of less than 0.5dpf is mature, the
quality is stable, and relevant production conditions are
available. They are mainly used for producing high-grade
fabrics and decorative fabrics.
In pre-spinning, the third monomer is introduced into the
Introduction reaction system to prepare low-temperature dyeable cationic
Mass Multiple
Texturing and POY, which is matched with post-spinning and texturing to
production persons
innovation prepare DTY products, thereby reducing the cost of subsequent
dyeing and environmental pollution.
Texturing Mass Multiple Introduction The technology is independently researched and developed by
56
Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
production persons and the Company. Nubby products are produced under special
innovation process conditions such as stretching temperature and
stretching ratio. With the characteristics of cotton and linen
fabrics, they are widely used in summer cotton and linen
fabrics and popular in the market.
Composite yarns are made by processing two or more fibers.
The processed products have the characteristics of various
Introduction fibers, such as fabric cotton feel, softness and breathability, and
Mass Multiple
Texturing and different patterns of dyeing. Examples include FDY-DTY
production persons
innovation composite yarn, high- and low-viscosity composite yarn,
cationic dyed polyester compound, etc. This product is widely
used in high-end fabrics, and the market demand is great
The special-shaped section of the spinning spinneret produces
polyester fibers with different sections, which improves the
Introduction capillary effect of the fibers in the fabric, so that sweat can
Mass Multiple
Texturing and quickly migrate to the surface of the fabric and disperse due to
production persons
innovation the effects of wicking, diffusion and transmission, achieving
the purpose of moisture conductivity and fast drying, and
improving the moisture permeability of polyester fabrics
By producing the S+Z products on a twin-strand machine, the
torques of the two filaments cancel each other after stranding,
Introduction
Mass Multiple resulting in a torque-free product. This technology has the
Texturing and
production persons advantages of flat surface, easy weaving, rich hand feel, and
innovation
even dyeing. In particular, it shows good effect in oxford
fabric, so it is very suitable for high-end decorative fabrics
57
Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
Using the production technology of wool-like fibers, POY
yarns are drawn and false twisted on the DTY machine, and
then compounded with DTY of the PTT component. The PTT
Wide range Introduction fiber floats on the surface of the yarn and exerts its excellent
Multiple
Texturing of and wearing performance. The high-shrinkage modified PET fiber
persons
applications innovation is placed in the inner layer of the yarn to exert its rigid
supporting effect and bring out a stronger sense of uprightness.
A utility model patent has been granted for this technology.
The patent number is ZL201010174972.4
The false-twist texturing technology is used to produce
Wide range Introduction
Multiple polyester fiber filaments with good hollowness and clear
Texturing of and
persons profiled outline, and high requirements for conformal
applications innovation
properties such as profile degree and hollowness
The technology is independently developed by the Company
Wide range Introduction and is used to process DTY of various colors such as black,
Multiple
Texturing of and red, gray, and yellow. The color is uniform and not easy to fade
persons
applications innovation in daily use. No dyeing is required after weaving, and the yarn
is mostly used for making special-purpose fabrics.
The core technology of this product is the current international
Multifunctional Introduction advanced high-temperature crystallization and solid-phase
Leading in Multiple
polyester bottle and polycondensation process with short process and low energy
China persons
flakes innovation consumption. The comprehensive energy consumption per unit
of product has reached the leading level in China
Production capacity of main products
Please refer to 3.1 “Major businesses engaged in by the Company during the Reporting Period” of
58
Hengyi Petrochemical 2021 Annual Report
Section 3, “Business Summary of the Company”.
Product categories of major che mical parks
Major che mical parks Main product categories
PMB Industrial Park Gasoline, diesel, jet fuel, PX, benzene
Linjiang High-tech Industrial Park Flake, staple fiber, POY, FDY
Haining Economic Development Zone (Jianshan New
Flake, POY, FDY, DTY
District)
Suqian High-tech Industrial Development Zone Flakes, staple fiber
Jiaxing Xiuzhou High-tech Industrial Development Zone Flake, POY, FDY
Shaxi Town Industrial Park Flake, POY
Ningbo Petrochemical Economic and Technological
PTA
Development Zone
Dalian Economic and Technological Development Zone PTA, bottle flake
Yangpu Economic Development Zone PTA, bottle flake
EIA approvals being applied for or newly obtaine d during the Reporting Period
Approval Qualification/permit Validity
S/N Approval issuer
holder name period
Haining New
1 Emission Permit Jiaxing Ecology and Environment Bureau 07/27/2023
Materials
Haining New
2 Emission Permit Jiaxing Ecology and Environment Bureau 07/22/2025
Materials
3 Jiaxing Yipeng Emission Permit Jiaxing Ecology and Environment Bureau 12/01/2022
Port Operations Permit of Jiaxing Municipal Port and Shipping
4 Jiaxing Yipeng 03/11/2023
People's Republic of China Administration
Jiaxing Inland Port
Jiaxing Municipal Port and Shipping
5 Jiaxing Yipeng Shoreline Use Registration 03/11/2054
Administration
Certificate
59
Hengyi Petrochemical 2021 Annual Report
Suzhou Municipal Ecology and
6 Taicang Yifeng Emission Permit 12/30/2022
Environment Bureau
Quanzhou Municipal Ecology and
7 Fujian Yijin Emission Permit 04/07/2026
Environment Bureau
Hangzhou Municipal Ecology and
8 Hengyi Limited Emission Permit 08/27/2023
Environment Bureau
Hengyi Xiaoshan District Environmental Protection
9 Emission Permit 11/02/2026
Polymer Bureau
Hangzhou Xiaoshan District Environmental Protection
10 Emission Permit 11/04/2026
Yijing Bureau
Hengyi Dajiangdong Industrial Cluster Area
11 Emission Permit 11/25/2026
High-Tech Environmental Protection Bureau
Shuangtu New Dajiangdong Industrial Cluster Area
12 Emission Permit 11/26/2026
Materials Environmental Protection Bureau
Qiantang New District Branch of Hangzhou
Hengyi
13 Emission Permit Municipal Ecology and Environment 06/22/2025
Caprolactam
Bureau
Zhejiang Provincial Registration Center for
Hengyi Hazardous Chemical Hazardous Chemicals, Registration Center
14 12/19/2022
Caprolactam Registration Certificate for Chemicals of Ministry of Emergency
Management
Hengyi Department of Emergency Management of
15 Production Safety Permit 12/05/2022
Caprolactam Zhejiang Province
Unusual suspension of production of the listed company during the Reporting Period
□ Applicable √ Not applicable
Relevant approvals, permits, qualifications and validity periods
Including: production safety permit, emission permit, and cargo transportation permit; engaged in
60
Hengyi Petrochemical 2021 Annual Report
petroleum processing and petroleum trading.
Validity
S/N Holder Certificate name Certificate No. Issuer
period
Beilun Branch of
Zhejiang 91330200744973411W00 Ningbo Municipal
1 Emission Permit 12/15/2026
Yisheng 1W Bureau of Ecology and
Environment
Department of Ecology
Zhejiang Radiation Safety
2 ZHFZ No. B2005 and Environment of 11/17/2024
Yisheng Permit
Zhejiang Province
Department of
Zhejiang Production Safety (ZJ) WHAXZZ [2019]
3 Emergency Management 01/03/2025
Yisheng Permit No. B-1448
of Zhejiang Province
Hangzhou Municipal
Hengyi 91330000765215943G00
4 Emission Permit Ecology and 08/27/2023
Limited 1Y
Environment Bureau
Hangzhou Municipal
Hengyi 91330100668003340600
5 Emission Permit Ecology and 11/25/2026
High-Tech 1Q
Environment Bureau
Zhejiang Provincial
Hengyi Radiation Safety Department of
6 ZHFZ No. A2292 05/10/2022
High-Tech Permit Environmental
Protection
Hangzhou Municipal
Hengyi 91330109724528388000
7 Emission Permit Ecology and 11/02/2026
Polymer 1P
Environment Bureau
Department of Ecology
Hengyi Radiation Safety
8 ZHFZ No. A2255 and Environment of 09/19/2024
Polymer Permit
Zhejiang Province
Jiaxing 91330411MA28BLMY3 Jiaxing Ecology and
9 Emission Permit 12/01/2022
Yipeng 0001V Environment Bureau
Port Operations Jiaxing Municipal Port
Jiaxing
10 Permit of People's (ZJNH) GJZ No. 1265 and Shipping 03/11/2023
Yipeng
Republic of China Administration
Jiaxing Inland
Jiaxing Municipal Port
Jiaxing Port Shoreline
11 JNHAZ No. 1265 and Shipping 03/11/2054
Yipeng Use Registration
Administration
Certificate
Xiuzhou District
Jiaxing QS (JXNS) Z [2019] No.
12 Water Use Permit Agriculture, Rural 11/12/2023
Yipeng 007
Affairs and Water
61
Hengyi Petrochemical 2021 Annual Report
Validity
S/N Holder Certificate name Certificate No. Issuer
period
Resources Bureau of
Jiaxing City
Suzhou Municipal
Taicang 91320585MA1P1GPBX
13 Emission Permit Ecology and 12/30/2022
Yifeng M001V
Environment Bureau
Shuangtu Hangzhou Municipal
91330100566050736P00
14 New Emission Permit Ecology and 11/26/2026
1Y
Materials Environment Bureau
Shuangtu Department of Ecology
Radiation Safety
15 New ZHFZ No. A3048 and Environment of 12/26/2023
Permit
Materials Zhejiang Province
Quanzhou Municipal
Fujian 91350582MA31G07Q8C
16 Emission Permit Ecology and 04/07/2026
Yijin 001V
Environment Bureau
Suqian 91321311MA1UXUC8X Suqian Ecology and
17 Emission Permit 07/18/2026
Yida J001R Environment Bureau
Suqian Radiation Safety Suqian Environmental
18 SHFZ No. 0199 01/12/2027
Yida Permit Protection Bureau
Haining
91330481MA29HXML3 Jiaxing Ecology and
19 Thermal Emission Permit 07/22/2025
4001R Environment Bureau
Power
Zhejiang Special
Zhejiang Provincial
Hengyi Equipment
20 TS3833335-2024 Administration for 04/01/2024
Engineeri Production
Market Regulation
ng License
Zhejiang Construction
Hangzhou Urban and
Hengyi Enterprise
21 D333903322 Rural Construction 12/31/2022
Engineeri Qualification
Committee
ng Certificate
Road Transport
Zhejiang Hangzhou Municipal
Operations Permit ZJYGXKHZ No.
22 Hengyi Bureau of 08/31/2025
of People's 330109186475
Logistics Transportation
Republic of China
Ningbo Hazardous Beilun District Branch
23 Hengyi Chemicals YLAJ [2021] No. 0085 of Bureau of Emergency 11/25/2024
Trading Operations Permit Management of Ningbo
Hangzhou Municipal
Hangzhou 91330109MA28M4DD8
24 Emission Permit Ecology and 11/04/2026
Yijing Y001P
Environment Bureau
25 Hangzhou Radiation Safety ZHFZ No. A2259 Zhejiang Provincial 06/18/2022
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Hengyi Petrochemical 2021 Annual Report
Validity
S/N Holder Certificate name Certificate No. Issuer
period
Yijing Permit Department of
Environmental
Protection
Road Transport
Shaoxing Shaoxing Keqiao
Operations Permit ZJYGXKSZ No.
26 Hengyi District Bureau of 04/12/2031
of People's 330621104701
Logistics Transportation
Republic of China
Haining
91330481MA29HRX724 Jiaxing Ecology and
27 New Emission Permit 07/27/2023
001V Environment Bureau
Materials
Hengyi Department of
Production Safety (ZJ) WHAXZZ
28 Caprolacta Emergency Management 12/05/2022
Permit [2019]No. A-2191
m of Zhejiang Province
Work Safety
Hangzhou Municipal
Hengyi Standardization HZ AQBFZ III
29 Bureau of Emergency 2023.01
High-Tech Level-3 Enterprise 201900974
Management
(Textile)
Work Safety
Hangzhou Municipal
Hangzhou Standardization Zhejiang AQBFZ II
30 Bureau of Emergency 01/01/2023
Yijing Level-3 Enterprise 201900987
Management
(Textile)
Work Safety
Hengyi Standardization Department of
Zhejiang AQBWH II
31 Caprolacta Level-2 Enterprise Emergency Management 2023.06
202000002
m (Hazardous of Zhejiang Province
Chemicals)
Work Safety
Hangzhou Municipal
Hengyi Standardization Hangzhou AQBFZ III
32 Bureau of Emergency 2023.08
Limited Level-3 Enterprise 202000807
Management
(Textile)
Work Safety
Shuangtu Hangzhou Municipal
Standardization Hangzhou AQBFZ III
33 New Bureau of Emergency 2023.10
Level-3 Enterprise 202001128
Materials Management
(Textile)
Work Safety
Hangzhou Municipal
Hengyi Standardization Hangzhou AQBFZ III
34 Bureau of Emergency 04/01/2023
Polymer Level-3 Enterprise 202000038
Management
(Textile)
Hengyi Work Safety Ministry of Transport of
35 2018-01-101490 01/09/2024
Logistics Standardization the People's Republic of
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Hengyi Petrochemical 2021 Annual Report
Validity
S/N Holder Certificate name Certificate No. Issuer
period
Level-1 Enterprise China
(Road Transport)
Engaged in petroleum processing and petroleum trading
√ Yes □ No
Engaged in fertilizer industry
□ Yes √ No
Engaged in pesticide industry
□ Yes √ No
Engaged in chlor-alkali and soda ash industry
□ Yes √ No
Engaged in che mical fiber industry
√ Yes □ No
Engaged in plastic and rubber industry
□ Yes √ No
3.3 Analysis of core competitiveness
3.3.1 Leading international industrial strategy by adhering to industrial business and
highlighting main business
Focusing on the strategic policy of "consolidating, highlighting and optimizing the
competitiveness of main business", the Company takes the lead in applying polyester melt direct
spinning technology, large-scale PTA technology and high-end green caprolactam technology, and
optimizes and expands the terminal capacity of chemical fiber industry through mergers and
acquisitions to realize the grafting of its advantages in petrochemical and chemical fiber industry;
and substantially improves the technology level and competitiveness in the above-mentioned fields
of industry to boost the high-quality development of petrochemical and chemical fiber industry. In
addition, the Company also took the lead in deploying the Brunei Project overseas to respond to the
“Belt & Road” Initiative, adapt to the requirements of high-quality development in the new era, seize
the development opportunities in the Southeast Asian market, realize the international business
64
Hengyi Petrochemical 2021 Annual Report
deployment and operation, help the Company to complete vertical industry chain integration, solve
the bottleneck of raw materials and draw a blueprint of international industrial development.
3.3.2 Technological advantage by focusing on high-end scientific research and innovation
The Company has long been focusing on R&D and application of high-end technologies and
products in the field of petrochemical and chemical fibers. Relying on the university-enterprise
platform, the Company has established its leading position in technology and a product portfolio
featuring "diversification, serialization, quality, and uniqueness". Through comprehensive R&D of
new products and technologies related to the whole industry chain, the Company realizes full -process,
flexible development of high-tech products (technologies) and transformation of scientific and
technological achievements, and the technology level is industry-leading.
The Company closely focuses on the industrial structure of "refinery, polyester and polyamide".
In terms of materials, the Company focuses on the green manufacturing of polyester and the
recycling of polyester throughout its life cycle, breaking through existing technical difficulties,
achieving high quality recycling of polyester, and producing high performance polyester materials
from bio-based raw materials. In the chemical industry, to expand the application scope of PTA, the
Company is currently developing various types of diols required for the differential production of
polyester. Meanwhile, to reduce production costs, the Company actively researches and develops
three agents in the existing process, such as dulling agents, catalysts, and additives.
In terms of green development, the Company adheres to the concept of green and
environment-friendly development and the recycling of polyester throughout its life cycle, breaking
through existing technical difficulties and realizing high-quality recycling of polyester. Through
independent project establishment and R&D, the Company has produced safe, high-quality and
environment-friendly green polyester products, launched the self-developed antimony-free green
polyester product "Eticont", and prepared high-performance polyester from bio-based materials. By
promoting green manufacturing, the environmental pollution caused by production has been
effectively reduced, and the green loop of textile life cycle has been realized.
3.3.3 Large-scale whole industry chain with balanced and integrated upstream and
downstream enterprises
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Hengyi Petrochemical 2021 Annual Report
The Company has developed into a global leader in the integration of the "PX-Polyester" and
"Benzene-Polyamide" industry chains. Through the construction of upstream refineries overseas, the
expansion of midstream and downstream enterprises in China, the implementation of mergers and
acquisitions and restructuring and other differentiated development models, the Company has built a
balanced and integrated industry chain covering "crude oil - aromatics - PTA - polyester" and "crude
oil - benzene - CPL - polyamide". The Company's existing refining and chemical design capacity is 8
million tons, PTA capacity is 19 million tons (accounting for 28.95% of the national effective PTA
capacity), and polymerization and caprolactam capacities are 10.465 million tons and 400,000 tons
respectively. The polymerization capacity controlled and shared by the Company accounts for 15.96%
of the national effective polymerization capacity. In this highly concentrated industry, the Company
has an obviously advantage in scale. The Company is self-sufficient in upstream, mid-stream and
downstream raw materials, and has achieved balanced and coordinated development of the entire
industry chain from unique large-scale refining to supporting PX, PTA, and polyester (PET)
productions.
The Company continuously upgrades and optimizes the industrial model, consolidates and
expands the production capacity advantages of each link, advances the quantitative change of the
Company's operation scale and the qualitative change of the business structure, and promotes the
investment and application of large-scale equipment and energy-saving and consumption-reducing
technologies. The Company's advantage in scale promotes the stability of production plant operation,
improves product quality and production efficiency, and greatly reduces the unit investment cost and
unit energy consumption, giving the Company a significant advantage in unit manufacturing cost in
the industry. At the same time, the large-scale procurement enables the Company to form strong
operational capabilities and obtain advantageous prices, saving procurement costs and providing a
strong guarantee for the profitability of final products.
After the second phase of the Brunei Project is completed and put into operation, a new
"olefin-polyolefin" industry chain will be formed. It will improve the intensification, large-scale
operation and integration level of the Brunei Refining and Petrochemical Project. It is conducive to
the integrated, globalized and balanced synergistic operation of the Company's products, equipment
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Hengyi Petrochemical 2021 Annual Report
and utilities, and will help enhance the Company's sustainable profitability and anti-risk ability.
3.3.4 Industrial Internet enabling digital intelligent manufacturing and coordinated
operation of the whole industry chain
The Company has established the "Petrochemical + Industrial Internet" information strategy to
promote the deep integration of new-gen information and communication technologies and the
petrochemical manufacturing industry, diving the digitalization, networking and intelligent
development of the chemical fiber manufacturing industry. As one of the industry leaders, the
Company actively embraces the new era of Internet, big data and artificial intelligence, strengthens
the construction of digital infrastructure, and promotes information interconnection among intelligent
manufacturing facilities such as automatic winding, automatic packaging, intelligent external
inspection, AGVs, robots, and high-rise warehouses. The Company has built the first polyester plant
equipped with a full-process intelligent storage and transportation system in China, and creates the
first full-life product quality traceability system and smart sales supply chain system in the industry.
The first AI full-detection prototype applied in the chemical fiber industry by the Company was
selected as an Industrial Intelligent Pioneer Case at the Intelligent Economy Summit 2021. By using
network communication, Internet of Things, mobility, micro-services, real-time database and other
technologies, the Company has developed its own single-spindle data flow system and Yunbiao
finished product storage system to realize efficient logistics operation and automatic quality control
of products in the workshop warehouse, promote process optimization, information sharing and
efficiency improvement among production processes, and create digital workshops and smart
factories.
At the same time, keeping in mind the aim of being a leader in the Internet of chemical fiber
industry, the Company gives full play to its own supply chain supporting strength, actively builds an
industry ecosystem, and strives to create a "Hengyi Brain" that integrates and visualizes "online
trading + online finance + warehousing and logistics" to provide various digital solutions such as
digital management, intelligent manufacturing, online trading, logistics services, market analysis,
production, supply and marketing synergy, and supply chain finance and create more value that
empowers the development of global chemical fiber industry.
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Hengyi Petrochemical 2021 Annual Report
The Company has built an innovative customer service ecosystem and a chemical fiber supply
chain platform integrating micro-mall, supply chain finance, warehousing and logistics. Externally, it
combines Internet marketing and customer social experience management, providing various
services including independent order placement, supply chain support, data display through the
whole process of sales, and multi-dimensional portraits; internally, it realizes data sharing among
various business systems, improves the efficiency of data interaction, eliminates barriers to
information flow, and forms a closed-loop process for supply chain operations such as sales,
collection, scheduling, delivery, dispatching, shipment, and invoicing.
3.3.5 A young, professional and international manage ment team rooted in China with global
vision
The Company emphasizes management by professional team, and introduces senior executives
and technical talents at home and abroad through various channels. While introducing external
talents, the Company attaches great importance to the cultivation of internal talents, and actively
arranges young management talents cultivated internally to provide employees with good career
development channels.
At present, the Company has established an international, specialized and professional
management and operation team, laying a foundation for the sustainable and healthy development of
the Company. Meanwhile, with the continuous expansion of the Company's scale, by drawing on
advanced domestic and foreign organizational management experience, the Company has established
a sound internal system, to further optimize its organizational structure, continuously improve its
organizational management and operation efficiency, and bring into play the advantages of scale
synergy.
In order to promote the long-term sustainable development of the Company's talent team and
share the fruits of the Company's development with employees, on top of competitive remuneration
and incentive mechanisms in the industry, the Company has implemented two phases of restricted
stock incentive plans, four phases of employee stock ownership plans and two phases of share
repurchase plans to reserve for the subsequent employee stock ownership plans or stock incentive
plans since 2015, which has fully mobilized the enthusiasm of employees and effectively attracted
68
Hengyi Petrochemical 2021 Annual Report
more high-caliber talents. Through the establishment of the long-term development sharing
mechanism, the sense of belonging and cohesion of employees is effectively enhanced, which lays
the talent foundation for the Company's long-term development.
3.4 Analysis of main business
3.4.1 Overview
During the Reporting Period, the Company continued the improvement of the unique industrial
layout of "refinery, polyester and polyamide", and the integrated, balanced and internationalized
industrial chain business model became more prominent. All employees of the Company were united
to promote development and improve efficiency, and achieved safe and stable progress in production
and operation. At the end of the Reporting Period, the Company achieved an operating income of
RMB 128,979,539,700, up 49.23% year-on-year. The net profit attributable to shareholders of the
listed company was RMB 3,408,043,100, up 10.94% year-on-year; the Company's total assets valued
RMB 105.549 billion, up 13.88% compared with the beginning of the year; the owner's equity
attributable to shareholders of the listed company was RMB 25.897 billion, up 7.87% compared with
the beginning of the year; the net assets per share attributable to shareholders of the listed company
was RMB 7.06; the gearing ratio was 68.79%, which is at reasonably low compared with others in
the same industry.
During the Reporting Period, the Company implemented the dividend distribution plan for 2020,
distributing cash dividends totaling RMB 1.104 billion, which accounted for 35.95% of the
Company's net profit attributable to the parent company in 2020; in addition, the BOD of the
Company reviewed and approved the dividend plan for 2021, according to which RMB 2 (tax
included) will be distributed for every 10 shares and the total amount will be RMB 733 million,
accounting for 21.52% of the Company's net profits attributable to the parent Company in 2021.
3.4.1.1 The first phase of the Brunei Project was operating efficiently, with the operation level
continuously improving
During the Reporting Period, with the steady rebound of market demand in Southeast Asia, the
crack spread in the product oil market of the Hengyi Brunei Refining and Petrochemical Project
69
Hengyi Petrochemical 2021 Annual Report
continued to improve. The Company firmly grasped the market opportunities of the Hengyi Brunei
Refining and Petrochemical Project, leveraged the Company's advantages in scale production and
technology flexibility, actively optimized the product mix and continuously improved the
profitability of each unit of product. During the Reporting Period, the Hengyi Brunei Refining and
Petrochemical Project had been operating efficiently. It produces mainly product oil products such as
diesel, gasoline, chemical light oil, and liquefied gas, and chemicals such as PX and benzene. The
outputs of the two categories were 5,871,700 tons and 2,083,800 tons, the sales volumes were
5,897,800 tons and 2,113,700 tons, and the sales revenues (sales amounts) were RMB 24.082 billion
and RMB 4.553 billion respectively. The products further promoted the global popularity of the
"Hengyi" brand, and the improvement of vertical industrial chain integration enhanced the
Company's competitive advantage.
As of the disclosure date of this Report, the advantages of international operations of the Hengyi
Brunei Project are more prominent, including:
(1) active demand for product oil products in Southeast Asia. With the recovery of downstream
demand, the price spreads of the Company's related products continue to expand, and the business
environment in Brunei has significantly improved.
(2) powerful support of China and Brunei. The project enjoys long-term tax incentives and other
favorable policies.
Brunei has a stable political situation and the project meets Brunei's 2035 Vision and
promotes the economic growth of the Belt and Road Initiative countries;
The project is not restricted by trade barriers and belongs to the ASEAN Free Trade Area;
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;
The project is in line with the "Belt and Road Initiative" strategy, and the syndicated loans
are of national strategic support.
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Hengyi Petrochemical 2021 Annual Report
(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 product oil produced by the project is sold to Southeast Asia, which has strong demand;
Brunei Project has a short sales radius and low logistics cost;
All chemical products are digested downstream of the own industrial chain to realize 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 with waste heat 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 flexicoking 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 diesel liquid phase 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.
During the Reporting Period, the Brunei Project operated stably, and the benefits gradually
improved. The Hengyi PMB Petrochemical Project successively won the 2020-2021 National
71
Hengyi Petrochemical 2021 Annual Report
Prime-quality Project and the 2020-2021 China Construction Engineering Luban Prize (Overseas
Project). The Company's strength was widely recognized by all circles. While ensuring the stable
production and operation of the first phase of the project, based on the requirements of high-quality
development in the new era and the new pattern of industrial development, the Company fully
promoted the construction of the second phase of the Brunei Project, proposing a strategic
development plan that positions itself as an international first-class integrated
refining-chemical-chemical fiber service provider and systematically builds up
upstream-downstream synergy, domestic-overseas linkage, and comprehensive software-hardware
supporting competitiveness. After the Brunei Project is put into operation, the competitive advantage
of the Project will be greatly strengthened, the Company's industrial chain will be further expanded
and improved, and the international competitiveness will be significantly enhanced.
3.4.1.2 The leading position in PTA industry has been consolidated and the cost advantage
enhanced
During the Reporting Period, Yisheng New Materials’ 3-mtpa PTA Production Line 1 was put
into production, and the 3-mtpa PTA Production Line 2 was completed and put into production in
January 2022. The PTA production capacity of the Company reached a new level, and the leading
position of PTA was continuously consolidated.
As one of the leading enterprises in the PTA industry, the Company stre ngthened the production
technology management and optimized the operational capabilities of the PTA business during the
Reporting Period. Zhejiang Yisheng, a subsidiary held by the Company, achieved an output of
4,511,900 tons and a sales volume of 4,503,900 tons. In 2021, the consolidated gross margin of the
PTA business was 4.61%, remaining on a leading level in the industry. The Company fully leveraged
our leading position in the PTA industry and the advantages in industry chain integration to increase
the production capacity and output of PTA, achieving a steady increase in revenue.
3.4.1.3 By continuously enriching high-end differentiated products, the Company’s leadership
effect in polyester industry became increasingly prominent
During the Reporting Period, the plants of Haining Hengyi New Materials Co., Ltd.'s "1-mtpa
Differentiated Environmental Functional Fiber Project" and Fujian Yijin Chemical Fiber Co., Ltd.'s
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Hengyi Petrochemical 2021 Annual Report
"566,000 t/a new functional fiber project” were put into operation in succession. Both of them are the
Company's subsidiaries. The Company's polyester fiber business scale continued to grow, and most
of the new production capacity was contributed by advanced manufacturing plants with high added
value, high quality and differentiated production capability. As of the disclosure date of this Report,
the total polyester capacity controlled and shared by the Company reached 7.765 million tons.
In addition, with the improvement of downstream market demand and the steady upward
support of raw material prices, the Company's product prices have risen. Compared with the same
period of the previous year, the sales volume and prices of the Company's polyester products
(including filament yarns, staple fibers, and flakes) both increased, and the annual operating results
also rose significantly year-on-year. At the same time, the concentration of the polyester industry
increased, the competition pattern was optimized, and the quality of products was gradually
improved. During the Reporting Period, the production volume and sales volume of the Company's
chemical fiber products (including filaments, staple fibers, and flakes) maintained a growth trend,
achieving 7,233,800 and 7,406,900 tons respectively, up 11.24% and 22.31% year-on-year.
3.4.1.4 The Company continuously increased investment in R&D and adhered to
technological innovation to enhance the comprehensive competitiveness of products
During the Reporting Period, the Company's R&D investment was RMB 691,226,800,
representing a year-on-year increase of 92.22%. As of December 31, 2021, the Company has applied
for 586 patents, and obtained 233 validly granted patents and 108 validly granted invention patents.
During the Reporting Period, the Company attached great importance to the technological
innovation strategy and the transformation of achievements, and formulated and implemented a
technological innovation strategy in line with the current development trend based on our own
advantages. The Hengyi Research Institute, a subsidiary of the Company, is commi tted to the R&D
of green chemicals and advanced materials, actively enhances the Company’s ability to lead
innovation, and takes the initiative to assume the main responsibility for the transformation of
scientific and technological achievements, the launc h of new products on the market, and the
realization of economic benefits to accelerate the implementation of technological achievements.
During the Reporting Period, the Company continuously increased investment in R&D and
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Hengyi Petrochemical 2021 Annual Report
improved the construction of scientific and technological innovation platforms. Through
strengthening the construction of technological innovation capability, the Company established a
multi-level petrochemical technological innovation organization, strengthened the construction of
scientific research institutions that focus on the R&D of independent innovative technologies and
industry common key technologies directly facing the market, and built a high-level R&D team that
combines basic research and experimental development, industrial application research, common key
technology research in the industry, and differentiated fiber product development to actively explore
the development trend and industrialization process of related technologies in the fields of chemical,
polyester fiber, and textile, solve major scientific and technological problems including optimization
of special and key process technologies, quickly realize the transformation of scientific and
technological achievements and the improvement of new product industrialization capabilities, and
form independent intellectual property rights. At the same time, the Company has formed a complete
scientific and technological innovation mechanism combining "production, learning, research and
application" through cooperation with many well-known universities, research institutions, and
well-known enterprises at home and abroad, which can effectively share technological innovation
resources and complement each other. In addition, the Company's technological innovation strength,
scientific research level and market response capabilities have been rapidly improved.
During the Reporting Period, the Company's polyester segment focused on the deployment of
projects such as industrialization of polyester POY and FDY spinning oil, as well as the R&D of
cutting-edge processes and technologies in the fields of caprolactam and nylon, and the layout of
medium and long term projects such as biodegradable polyester, bio-based polyester and foamed
polyester. During the Reporting Period, the "Key Technology and Industrialization Project of
Antimony-free Environmentally-friendly Polyester Melt Direct Spinning" independently developed
and implemented by the Company won the first prize of Science and Technology Progress Award
granted by the China National Textile and Apparel Council in 2021. The promotion and application
polyester POY and FDY spinning oils independently researched and developed by the Company in
various production lines were intensified, and progress was made in the development of polye ster
foam special materials. Meanwhile, the Company established a scientific oil analysis method, and the
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Hengyi Petrochemical 2021 Annual Report
promotion and trial of the FDY oil developed by the Company were realized.
3.4.1.5 The employee stock ownership plan attracted outstanding talents and shaped a culture
of strivers to create and share achievements together
In order to improve the incentive and innovation mechanism, the Company launched the fourth
employee stock ownership plan to actively retain and attract outstanding talents, implement the
multi-dimensional and diversified incentive mechanism of "value creation and benefit sharing", and
stimulate the vitality of the team. The employee stock ownership plan was available to the directors,
supervisors, senior managers, and regular employees of the Company and the controlled subsidiaries
of the Company. The total number of employees covered did not exceed 4,011. As of September 28,
2021, purchase of shares under the fourth employee stock ownership plan was completed. A total of
113,754,600 shares were purchased, accounting for 3.10% of the Company's total share capital.
Meanwhile, by establishing and continuously improving the construction of management and
innovation systems such as R&D investment mechanism, talent incentive mechanism, restraint
mechanism and intellectual property management, the Company identified the production factors
such as labor, capital, technology, management, etc. According to their contribution, participation
and distribution, the value of knowledge and talents was fully reflected. To a large extent, it
mobilized and stimulated the initiative and enthusiasm of scientific and technological personnel for
technological innovation work, and effectively promoted the technological innovation capability of
the Company.
3.4.2 Income and cost
3.4.2.1 Composition of operating income
Currency: RMB
2021 2020
Year-on-year
Percentage in Percentage in
increase/decr
Amount operating Amount operating
ease
income income
Total operating income 128,979,539,693.27 100% 86,429,630,191.87 100% 49.23%
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Hengyi Petrochemical 2021 Annual Report
By industry
Petrochemical industry 36,094,837,257.96 27.98% 23,788,931,297.46 27.52% 51.73%
Chemical fiber industry 45,127,708,071.51 34.99% 24,934,786,768.51 28.85% 80.98%
Supply chain services 47,756,994,363.80 37.03% 37,705,912,125.90 43.63% 26.66%
By product
Refinery products 24,081,670,289.03 18.67% 14,458,642,505.91 16.73% 66.56%
Chemical products 4,553,199,820.35 3.53% 4,286,129,273.42 4.96% 6.23%
PTA 6,388,792,085.43 4.95% 4,759,627,567.43 5.51% 34.23%
PIA 1,071,175,063.15 0.83% 284,531,950.70 0.32% 276.47%
Polyester yarn 40,786,520,388.82 31.62% 21,978,130,175.76 25.43% 85.58%
Flake 4,341,187,682.69 3.37% 2,956,656,592.75 3.42% 46.83%
Supply chain services 47,756,994,363.80 37.03% 37,705,912,125.90 43.63% 26.66%
By region
Domestic 95,697,078,324.23 74.20% 63,753,435,093.36 73.76% 50.10%
Overseas 33,282,461,369.04 25.80% 22,676,195,098.51 26.24% 46.77%
By sales model
Direct sales 127,275,211,211.48 98.68% 85,385,894,135.62 98.79% 49.06%
Distribution 1,704,328,481.79 1.32% 1,043,736,056.25 1.21% 63.29%
3.4.2.2 Industries, products, regions, and sales models that account for more than 10% of the
Company's operating income or profit
The Company shall comply with the disclosure requirements for chemical industry specified in
Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 3 - Industry
Information Disclosure
Currency: RMB
Increase or Increase or Increase or
Gross
Operating income Operating cost decrease in decrease in decrease in
margin
operating operating cost gross margin
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Hengyi Petrochemical 2021 Annual Report
income compared compared
compared with with the same with the same
the same period period of the period of
of the previous previous year previous year
year
By industry
Petrochemical
36,094,837,257.96 33,635,007,453.04 6.81% 51.73% 54.93% -1.93%
industry
Chemical
45,127,708,071.51 40,968,485,460.65 9.22% 80.98% 87.70% -3.24%
fiber industry
Supply chain
47,756,994,363.80 47,004,538,385.40 1.58% 26.66% 27.34% -0.52%
services
By product
Refinery
24,081,670,289.03 23,211,693,487.84 3.61% 66.56% 67.08% -0.31%
products
Chemical
4,553,199,820.35 3,525,147,961.98 22.58% 6.23% 4.56% 1.24%
products
PTA 6,388,792,085.43 6,094,385,121.09 4.61% 34.23% 43.88% -6.39%
PIA 1,071,175,063.15 803,780,882.13 24.96% 276.47% 281.95% -1.08%
Polyester yarn 40,786,520,388.82 36,861,844,311.13 9.62% 85.58% 91.73% -2.90%
Flake 4,341,187,682.69 4,106,641,149.52 5.40% 46.83% 57.90% -6.64%
Supply chain
47,756,994,363.80 47,004,538,385.40 1.58% 26.66% 27.34% -0.52%
services
By region
Domestic 95,697,078,324.23 90,386,186,932.42 5.55% 50.10% 52.22% -1.31%
Overseas 33,282,461,369.04 31,221,844,366.67 6.19% 46.77% 48.18% -0.89%
Where the statistical scope of the Company's main business data was adjusted during the
Reporting Period, the Company's main business data according to the adjustment of the scope
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Hengyi Petrochemical 2021 Annual Report
at the end of the Reporting Period.
□ Applicable √Not applicable
Currency: RMB
Average Average
Production Sales Year-o
selling price selling price
Product volume volume Income n-year
in the first in the Reason for changes
name (10,000 (10,000 realized change
half of the second half
tons) tons) s
year of the year
Refinery 24,081,670, During the Reporting Period,
587.17 589.78 3,615.14 4,468.26 62.25%
products 289.03 the Company's raw material
prices rose, which drove the
prices of downstream
Polyester 40,786,520,
645.30 658.89 6,656.95 6,483.76 36.71% products in the downstream
yarn 388.82
industry chain to varying
extents.
Note: The products that account for more than 10% of the Company's operating income or net profit
are disclosed separately, including the output, sales volume and realized income of the products, the
average selling price of the products for each half-year and the year-on-year changes, with the
reasons for the changes analyzed.
Overseas business of which the operating income or net profit generated accounts for more
than 10% of the audited operating income or net profit of the Company in the previous fiscal
year
Name of overseas Operatio Impact of tax policies on overseas business during the
Company's response
business n status Reporting Period
Stable The overall tax burden during the Reporting Period was Both China and Brunei
operation low, because Brunei does not levy personal income tax, provided powerful
Brunei Project
under business tax, salary tax, production tax and export tax. A support. The project
high load local pioneer enterprise certificate and an export enterprise enjoyed long-term tax
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Hengyi Petrochemical 2021 Annual Report
certificate have been issued for the project, so it can enjoy a incentives and other
long-term corporate income tax exemptions favorable policies.
3.4.2.3 Whether the Company's income from product sales is greater than its income from
labor services
Year-on-year
Industry Item Unit 2021 2020
increase/decrease
Sales volume 10,000 tons 589.78 583.81 1.02%
Refinery
production volume 10,000 tons 587.17 592.24 -0.86%
products
Inventory 10,000 tons 11.60 14.21 -18.37%
Sales volume 10,000 tons 211.37 219.17 -3.56%
Chemical
production volume 10,000 tons 208.38 226.58 -8.03%
products
Inventory 10,000 tons 8.20 11.19 -26.72%
Sales volume 10,000 tons 450.39 484.32 -7.01%
PTA production volume 10,000 tons 451.19 485.02 -6.97%
Inventory 10,000 tons 3.11 2.31 34.20%
Sales volume 10,000 tons 15.67 5.51 184.39%
PIA production volume 10,000 tons 13.56 8.67 56.40%
Inventory 10,000 tons 1.05 3.16 -66.77%
Sales volume 10,000 tons 740.69 605.60 22.31%
Polyester
production volume 10,000 tons 723.38 650.27 11.24%
products
Inventory 10,000 tons 45.25 62.56 -27.67%
Explanation of the reasons for the year-on-year change of more than 30% in relevant data
During the Reporting Period, the Company's PIA production volume and sales volume increased
significantly compared with the same period of the previous year, mainly because the Company
began to produce PIA products in July of FY2020.
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Hengyi Petrochemical 2021 Annual Report
3.4.2.4 Performance of the major sales contracts and major purchase contracts entered into
by the Company as of the Reporting Date
□ Applicable √Not applicable
3.4.2.5 Composition of operating cost
By industry and product
By industry of Hengyi Brunei
Currency: RMB
2021 2020 Year-on-year
Industry Item Percentage in Percentage in increase/decr
Amount Amount
operating cost operating cost ease
Raw
22,068,840,115.45 95.08% 12,585,308,784.97 90.59% 75.35%
materials
Refinery Energy 435,640,277.36 1.88% 272,669,717.70 1.96% 59.77%
products Depreciation
707,213,095.03 3.04% 1,034,575,302.10 7.45% -31.64%
and others
Total 23,211,693,487.84 100.00% 13,892,553,804.77 100.00% 67.08%
Raw
3,229,472,939.74 91.61% 3,043,593,007.52 90.28% 6.11%
materials
Chemical Energy 162,281,960.64 4.60% 165,221,931.47 4.90% -1.78%
products Depreciation
133,393,061.60 3.79% 162,620,688.08 4.82% -17.97%
and others
Total 3,525,147,961.98 100.00% 3,371,435,627.07 100.00% 4.56%
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Hengyi Petrochemical 2021 Annual Report
By domestic industry and product
Currency: RMB
2021 2020 Year-on-year
Product Item Percentage in Percentage in increase/decrea
Amount Amount
operating cost operating cost se
Raw materials 589,219,138.02 73.31% 142,735,702.53 67.83% 312.80%
Energy 64,929,361.11 8.08% 27,026,909.89 12.84% 140.24%
PIA
Depreciation
products 149,632,383.00 18.61% 40,679,442.69 19.33% 267.83%
and others
Total 803,780,882.13 100.00% 210,442,055.12 100.00% 281.95%
Raw materials 5,337,995,524.43 87.59% 3,750,955,081.22 88.55% 42.31%
Energy 207,810,074.87 3.41% 138,178,717.94 3.26% 50.39%
PTA
Depreciation
products 548,579,521.79 9.00% 346,745,378.67 8.19% 58.21%
and others
Total 6,094,385,121.09 100.00% 4,235,879,177.83 100.00% 43.88%
Raw materials 33,303,019,280.35 81.29% 17,480,962,763.20 80.09% 90.51%
Energy 2,557,920,885.36 6.24% 1,410,863,173.13 6.46% 81.30%
Polyester
Depreciation
products 5,107,545,294.93 12.47% 2,935,144,069.73 13.45% 74.01%
and others
Total 40,968,485,460.65 100.00% 21,826,970,006.07 100.00% 87.70%
Note:
3.4.2.6 Whether there was any change in the scope of consolidation during the Reporting
Period
A total of 44 subsidiaries were included in the scope of consolidation in FY2021. For details, please
refer to Note 8 "Equities in Other Entities” in Section 10 "Financial Report". Compared with the
previous year, three subsidiaries were included in and three excluded from the Company's
consolidation scope in this fiscal year. For details, please refer to Note 7 "Changes in the Scope of
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Hengyi Petrochemical 2021 Annual Report
Consolidation” in Section 10 "Financial Report".
3.4.2.7 Significant changes or adjustments in the Company's business, products or services
during the Reporting Period
□ Applicable √Not applicable
3.4.2.8 Major customers and suppliers
Major customers
Total sales amount of the top five customers (RMB ) 20,843,304,169.02
Percentage of the total sales amount of the top five customers in total annual
16.16%
sales amount
Percentage of sales amount of related parties among the top five customer in 0.00%
total annual sales amount
Top 5 customers
S/N Customer name Sales amount (RMB ) Percentage in total annual sales amount
1 Customer 1 8,753,951,423.37 6.79%
2 Customer 2 3,534,752,460.31 2.74%
3 Customer 3 3,383,786,669.98 2.62%
4 Customer 4 2,629,666,448.59 2.04%
5 Customer 5 2,541,147,166.77 1.97%
Total - 20,843,304,169.02 16.16%
Other information about major customers
□ Applicable √Not applicable
Major suppliers
Total purchase amount of top five suppliers (RMB ) 30,073,048,425.01
Percentage of the total purchase amount of the top five suppliers in the total 24.73%
annual purchase amount
Percentage of purchase amount of related parties among the top five suppliers 3.62%
in total annual sales amount
Top 5 suppliers
Percentage in total annual purchase
S/N Supplier name Purchase amount (RMB )
amount
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Hengyi Petrochemical 2021 Annual Report
1 Supplier 1 11,263,369,434.33 9.26%
2 Supplier 2 6,773,289,347.79 5.57%
3 Supplier 3 4,398,340,883.38 3.62%
4 Supplier 4 4,230,806,486.44 3.48%
5 Supplier 5 3,407,242,273.07 2.80%
Total - 30,073,048,425.01 24.73%
Other information about major suppliers
□ Applicable √ Not applicable
3.4.3 Expenses
Currency: RMB
Year-on-year
2021 2020 increase/decre Explanation of major changes
ase
Selling
228,081,384.04 218,109,801.14 4.57% /
expenses
Administrati
1,087,267,658.53 970,153,607.89 12.07% /
on expenses
Financial
2,133,576,548.94 2,004,150,317.61 6.46% /
expenses
Changes were generated mainly
R&D because the Company attached great
686,980,217.98 351,969,307.93 95.18%
expenses importance to product R&D and
increased investment in R&D
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Hengyi Petrochemical 2021 Annual Report
3.4.4 R&D investment
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
To improve and optimize the preparation
process of titanium-based polyester To meet the standards of
By further optimizing the catalyst
R&D of preparation catalyst to produce titanium-based high-quality polyester flakes and
preparation process and polymerization
technology of polyester polyester flakes with excellent Completed and fibers produced by large-scale
process to improve product quality, the
titanium-based performance and good hue, and then industrialized production lines with the polyester
project has high value of eco-friendliness
polycondensation catalyst conduct spinning and post-processing as flakes produced with the
and social significance.
needed to produce heavy metal-free titanium-based catalyst developed.
titanium-based polyester products.
To form a complete set of key
To break the monopoly of foreign
Research and application preparation technologies for the The project has high application value and
enterprises, reduce the raw material cost
development of bio-based Completed and development and production of prospects, and will greatly reduce
of downstream textile enterprises, and
PTT elastic shape industrialized PTT and composite filaments, and production costs and improve the
facilitate the promotion and application of
memory fiber series establish stable mass production of competitive advantage in the market.
bio-based PTT textile materials.
bio-based PTT flake series
The nano zinc-oxide antibacterial To study the effect of zinc oxide
R&D of zinc oxide polyester fiber features particle size and content on the The project will expand the market of
Completed and
antibacterial polyester environment-friendliness, safety and mechanical properties and functional fiber products and enhance the
industrialized
fiber health. With the change of people's antibacterial properties of fibers, competitiveness of the Company.
consumption concept and rise of health develop antibacterial
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
awareness, it will be favored by more master-batches or antibacterial
consumers in the fields of household polyester flakes to meet production
items, medical and health care, military needs, and melt-spin them into
clothing, etc., and the demand for antibacterial polyester fibers.
zinc-based antibacterial textiles will also
increase.
To solve the problems that the current
Low-melting-point
R&D of low-melting polyester produced has a low It will greatly improve the flame
polyester flakes have To form a mature technology for
low-melting-point melting point, resulting in no crystallinity retardancy of flakes, and is of great
been produced and producing and processing
polyester flake or low crystallinity of polymers, and it is significance to expansion of the market of
samples sent to low-melting-point polyester flakes
preparation process difficult to achieve industrialized mass the Company's differentiated products.
customers for trial
production.
To solve the problems of high price, Antistatic modified
To form a mature technology for The project will produce antistatic staple
R&D of key technology limited specification options, and great polyester staple fibers
producing and processing fibers, expand the market of the
of antistatic modified susceptibility to environmental humidity have been produced and
antistatic modified polyester staple Company's product, and enhance the
polyester staple fiber on the antistatic polyester products on the samples sent to
fibers Company's competitiveness
market. customers for trial
R&D of highly To complete the polymer modification by Related technologies To form a mature technology for The project will expand the market of the
hygroscopic and dyeable adding cellulose microcrystalline slurry in have been extended to producing and processing highly Company's products and is of great
microcrystalline cellulose situ, so that the modified polyester fiber mass production to hygroscopic and dyeable significance to the development of the
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
modified polyester fiber has moisture wicking and anti-static realize the microcrystalline cellulose chemical fiber industry.
effects. industrialization of modified polyester fibers.
products.
To produce a hydrophilic polyester fiber
Related technologies
through secondary esterification by
have been extended to To form a mature technology for The project will expand the market of the
endcapping sorbitol, followed by
R&D of hydrophilic and mass production to producing and processing Company's products and is of great
polycondensation and melt spinning,
dyeable polyester fiber realize the hydrophilic and dyeable polyester significance to the development of the
which can effectively improve the
industrialization of fibers. polyester industry.
hydrophilicity and flammability of the
products.
polyester fiber.
To develop the product by adding a new
composite flame retardant during the
The project will improve the hygroscopic
spinning process. Various properties of The project has passed To form a mature technology for
effect of fiber, improve the wearing
R&D of melt-spun flame the new composite flame retardant will the pilot test and is producing and processing flame
performance of polyester fiber, greatly
retardant polyester fiber bring many excellent properties to the transferred for retardant polyester fibers that can
improve the coloring performance, reduce
flame retardant polyester fiber compared industrialization test. be directly spun.
the dyeing temperature and save energy.
with conventional flame retardant
polyester fiber.
R&D of polyester To solve the problem that the heat Related technologies To explore and master the core The development of heat retaining and
elastomeric yarn retention and self-heating effects of fibers have been extended to technology for the preparation of self-heating fibers will enrich our range of
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
integrating heat retention on the current market cannot be mass production to heat retaining and self-heating differentiated fibers, enhance the
and self-heating effects integrated, and propose a process for realize the polyester elastomeric yarn through competitive advantage of our products,
producing heat retaining and self-heating industrialization of a series of R&D work, enable the improve our Company's reputation in the
fibers. products. relevant functional indicators of industry, and also help promote the
the prepared heat retaining and development of the entire sector of
self-heating fibers to meet the functional fiber.
testing standards, and realize the
transformation of the project
results.
To carry out systematic chemical The implementation of this project will
engineering basic research on three key realize the industrialization of bio-based
aspects of the industrial preparation furandicarboxylic acid monomer, provide
R&D and industrial
technology of high-purity FDCA: fructose To form a complete industrial necessary monomer raw materials for
demonstration of efficient
dehydration, HMF oxidation and FDCA The project has been preparation technology for producing high-performance bio-based
preparation technology of
refining; to screen efficient "catalytic + established and is under producing polymer-grade FDCA polyamide and polyester materials, help
polymer-grade
solvent" system for dehydration reaction implementation through the R&D and industrial promote the development of renewable
2,5-furandicarboxylic
to find the technical key to HMF implementation of this project. resources and technologies in China, and
acid
preparation with high selectivity; to provide an alternative technological route
optimize HMF oxidation process for China's "carbon peaking and carbon
conditions, hydrogenation catalyst carriers neutrality". It is of great significance for
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
and catalytically active components, and cultivating strategic emerging
break through the core technology of bio-industries and breaking the bottleneck
FDCA refining; to establish a constraints of resources and environment
mathematical model through in economic development.
determination of basic data, carry out
process simulation calculation, propose
process flow, and compile process
package and industrial design to obtain an
industrially implementable polymer-grade
FDCA preparation technology.
The project adopts fiber-forming polymer To complete all the development
grafting technology. By adding plan tasks under the project, and
aluminum-doped zinc oxide (AZO) form a mature technology for The development and enrichment of the
conductive powder and hydrophilic producing and processing Company's differentiated polyester fiber
R&D of key technology The project has been
molecular segments (PEE) to PET antistatic modified polyester staple product range will broaden the market of
of antistatic modified established and is under
polyester, more water in the environment fiber; to make full use of the the Company's products, and will be of
polyester staple fiber implementation
can be absorbed, causing a reduction in Company's existing equipment, great significance to the development of
electrostatic charge accumulation on the technologies and related the polyester fiber industry.
polymer surface, effectively achieving supporting conditions to
uniform dispersion and grafting of AZO successfully realize the
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
and hydrophilic PEE segments, and transformation of the project's
improving the antistatic properties of the achievements and industrial
co-polyester. production.
To complete all the planned tasks
under the project, and form a
mature technology for producing
This is to develop a two-color wool-like
The project has passed and processing cationic dyed
polyester fiber. After the fabric woven
the pilot test and is polyester two-color composite The development of the Company's
R&D of cationic dyed with the composite fiber is processed and
transferred for wool-like polyester fiber; to make differentiated polyester fiber product
polyester two-color dyed, it will not only have obvious
industrialization test. The full use of the Company's existing range will broaden the market and
composite wool-like contraction effect, but also show two
series of products of this equipment, technologies and improved the Company's economic
polyester fiber colors prominently. After the fabric is
project are promoted and related supporting conditions to benefits.
sanded, the fibers are not easy to fall, and
applied in the market. successfully realize the
feel thicker and plump like real wool.
transformation of the project's
achievements and industrial
production.
Independent R&D is carried out
To improve the beauty and comfort of Industrialization and The development of the Company's
R&D of in-line addition for this project. Dull black
clothing, further raise the grade of stable mass production master-batches are added to the differentiated polyester fiber product
full dull rabbit hair-like
polyester products, and enhance product are achieved. The Company's existing semi-dull range will broaden the market and
fiber polyester flakes for melt spinning.
competitiveness and the Company's products are promoted improved the Company's economic
The technical focus is on the
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
profitability; to reduce pollutant and applied in the design and manufacture of benefits.
special-shaped spinnerets, the
emissions in the downstream dyeing and market.
precise control of dull black
finishing process, improve the level of master-batch addition amount and
the development of spinning and
eco-friendliness, and achieve economic
drawing process for full dull rabbit
benefits for the Company and the society. hair-like black silk.
Highly oriented yarn (HOY) is also
known as fully oriented yarn. One-step
To complete all the planned tasks
high-speed spinning process is adopted.
under the project, and form a
Compared with FDY and DT
mature technology for producing
technologies, this technology eliminates
To develop a hollow curly wool-like fiber Industrialization and and processing HOY hollow curly
the need for drafting components or
based on HOY yarn, with comfortable stable mass production wool-like fiber. to make full use of
drafting equipment. After the polymer is
R&D of HOY hollow wool feel, warmth and breathability, to be are achieved. The the Company's existing equipment,
melt-sprayed, cooled and cured and oiled,
curly wool-like fiber used for making Altai, small teddy velvet, products are promoted technologies and related
it can be wound into polyester filament
big teddy velvet, wheat ear, granular and applied in the supporting conditions to
yarn directly used for weaving. Therefore,
cashmere, etc. market. successfully realize the
the total equipment cost is low. HOY
transformation of the project's
production features high efficiency,
achievements and industrial
simple process, low energy consumption
production.
and equipment investment. Meanwhile,
the product is dyeable, the fiber feels soft,
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
and the velvet made is desirable. It can be
used to make various high-grade clothing
fabrics and decorative fabrics, showing
good prospects for development in the
field of chemical fiber.
To determine a technical scheme
for producing flame retardant
In view of the future development
cationic polyester and flame
direction and market demand of flame
retardant high-shrinkage polyester,
retardant polyester fibers and based on the
The project has passed and prepare flame retardant
R&D and production of flame retardant
the pilot test and is cationic polyester flakes and flame
polyester fibers, this project is The project will enrich the Company's
transferred for retardant high-shrinkage polyester
R&D of flame retardant implemented to study the feasibility of differentiated product range, increase the
industrialization test to flakes; to research and confirm the
cationic polyester fiber producing flame retardant high-shrinkage market share, and achieve better
achieve stable mass spinning process and produce
fiber, flame retardant cationic dyeable economic benefits
production and flame retardant cationic polyester
fiber and other composite functional
promotion flakes and flame retardant
polyester fibers, and launch high-quality
high-shrinkage polyester flakes
functional composite flame retardant
that meet customer needs. The
polyester fibers
technology is owned by the
Company, and our Company's
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
existing equipment, technology
and related supporting conditions
are fully used. The Company has
completed the lab test and pilot
test and will provide technical
support for industrialization
To solve the various problems that occur To complete all the planned tasks
in the post-processing and finishing of
of the project, and form a
negative ion fiber, the ultra-dispersed
negative ion powder preparation process technology for producing hollow
The project has passed
is adopted, and special micro-modified self-heating & heat retaining
polyester raw materials and two modified the pilot test and is
polyester fiber to make full use of The project will enrich the Company's
R&D of hollow monomers of triciritol and isopentyl transferred for
glycol are used to prepare the product. It the Company's existing equipment, differentiated product range, increase the
self-heating & heat can improve the dyeing, hygroscopic and industrialization test to
technologies and related market share, and achieve better
retaining polyester fiber skin-friendly properties of negative ion achieve stable mass
polyester fibers. By adding tourmaline to production supporting conditions to economic benefits
and
polyester, polyester master-batch with successfully realize the
self-heating, far infrared and negative ion promotion
transformation of the project's
functions is prepared, and then hollow
self-heating & heat retaining polyester achievements and industrial
fiber can be produced. production.
The low-melting-point polyester
R&D of environmentally To study the flake crystallization ability, The project has passed To complete all the planned tasks
sheath-core composite fiber will partially
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
friendly antimony-free drying process, sheath-core composite the pilot test and is under the project, and form a melt and bond with other materials. It
features environment-friendliness, safety,
low-melting-point plate design, composite spinning process, transferred for mature technology for producing
and high bonding strength, and has broad
polyester sheath-core etc. by screening out antimony-free industrialization test to and processing antimony-free development prospects. The
implementation of this project and
composite fiber low-melting-point polyester flakes that achieve stable mass low-melting-point polyester
product promotion will further increase
meet the spinning requirements, form a production and sheath-core composite fiber; to the market share of differentiated
complete technology for producing promotion make full use of the Company's polyester fibers, thereby enhancing the
Company's economic benefits
antimony-free low-melting-point existing equipment, technologies
polyester sheath-core composite fiber, and and related supporting conditions
successfully realize the transformation to successfully realize the
and industrial production of the project transformation of the project's
achievements and industrial
production.
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Hengyi Petrochemical 2021 Annual Report
R&D personnel
2021 2020 Change ratio
Number of R&D staff (person) 643 597 7.71%
Percentage of R&D personnel 3.82% 3.29% 0.53%
Educational background of R&D personnel —— —— ——
PhD 33 23 43.48%
Master 52 35 48.57%
Bachelor 149 108 37.96%
Junior college degree 192 199 -3.52%
High school and below 217 232 -6.47%
Age of R&D personnel —— —— ——
Under 30 YO 241 225 7.11%
30~40 YO 247 216 14.35%
40~50 YO 117 114 2.63%
50~60 YO 36 41 -12.20%
60 YO or above 2 1 100.00%
R&D investment
2021 2020 Change ratio
R&D investment amount (RMB ) 691,226,781.85 359,600,062.80 92.22%
R&D investment as a percentage of operating income 0.54% 0.42% 0.12%
Capitalized R&D investment (RMB ) 4,246,563.87 7,630,754.87 -44.35%
Capitalized R&D investment as a percentage of R&D investment 0.61% 2.12% -1.51%
Reasons for and effects of significant changes in the composition of R&D personnel
□ Applicable √ Not applicable
Reasons for the significant changes in the percentage of total R&D investment in operating
income compared with the previous year
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
Reasons for the substantial changes in the capitalization rate of R&D investment and
explanation of their reasonableness
□ Applicable √ Not applicable
3.4.5 Cash flow
Currency: RMB
Year-on-year
Item 2021 2020
increase/decrease
Subtotal of cash inflows from operating activities 137,163,552,808.24 97,642,317,743.64 40.48%
Subtotal of cash outflows from operating activities 129,408,681,288.68 92,628,544,965.69 39.71%
Net cash flow from operating activities 7,754,871,519.56 5,013,772,777.95 54.67%
Subtotal of cash inflows from investing activities 2,597,646,523.70 1,994,495,592.71 30.24%
Subtotal of cash outflows from investing activities 10,149,350,833.73 9,946,968,313.72 2.03%
Net cash flows from investing activities -7,551,704,310.03 -7,952,472,721.01 5.04%
Subtotal of cash inflows from financing activities 47,569,372,668.77 40,896,350,951.42 16.32%
Subtotal of cash outflows from financing activities 44,628,796,599.91 34,988,971,122.60 27.55%
Net cash flows from financing activities 2,940,576,068.86 5,907,379,828.82 -50.22%
Net increase in cash and cash equivalents 3,058,411,003.67 2,713,245,267.65 12.72%
Explanation of the main factors influencing significant year-on-year changes in relevant data
(1) The increase in net cash flow from operating activities was mainly due to the Company's reserve
of working capital in advance in the fourth quarter in response to the increase in raw material prices
and the increase in inventory during the Spring Festival in the first quarter. We appli ed for
documentary bills to delay payment when the L/Cs used by the Brunei company to purchase and pay
to suppliers expired, and applied for negotiating discount for early collection of L/Cs received from
sales. At the same time, we also applied for discounted early collection of bank acceptance bills
received by domestic polyester companies from customers. The combined effect of these factors
achieved a significant year-on-year increase in cash inflow from operating activities.
(2) The decrease in net cash flow from financing activities was mainly due to the significant
95
Hengyi Petrochemical 2021 Annual Report
year-on-year increase in net cash inflows from operating activities during the Reporting Period. With
the amount of the Company’s external investment remaining stable, financing from conventional
financing channels was reduced, resulting in a significant year-on-year decrease in net cash flows
from financing activities.
Explanation of the reasons for the significant difference between the net cash flows generated
by the Company's operating activities and the net profit of the year during the Reporting
Period
For details, please refer to the supplementary information in the cash flow statement in the
Company's annual audit report.
3.5 Analysis of non-main business
Currency: RMB
Percentage of Sustainable
Amount Reasons
total profit or not
It was mainly attributable to the provision of
the investment income of subsidiaries from the
Investment income 1,069,400,148.61 24.85% Yes
main business, and the income from hedging
investment during the Reporting Period.
Gains and losses It was mainly attributable to changes in fair
from changes in fair 42,971,667.68 1.00% value of foreign exchange and commodity No
value hedging at the end of the Reporting Period
It was mainly attributable to the Company's
Asset impairment -146,977,289.85 -3.42% provision of inventory depreciation reserve and No
asset impairment reserve
It was mainly attributable to the income from
Non-operating
32,027,224.27 0.74% current accounts, indemnities and fines that do No
income
not need to be paid during the Reporting Period
Non-operating 19,712,097.61 0.46% It was mainly attributable to external donations No
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Hengyi Petrochemical 2021 Annual Report
Percentage of Sustainable
Amount Reasons
total profit or not
expenses during the Reporting Period, etc.
3.6 Analysis of assets and liabilities
3.6.1 Significant changes in asset composition
Currency: RMB
At the end of 2021 At the beginning of 2021
Percentage Explanation of
Percentage in Percentage in
Amount Amount change major changes
total assets total assets
Monetary funds 14,322,716,793.82 13.57% 10,078,983,803.86 10.87% 2.70%
Accounts
6,436,842,058.88 6.10% 3,879,744,130.04 4.19% 1.91%
receivable
Inventory 12,100,381,644.06 11.46% 9,650,858,867.17 10.41% 1.05%
Long-term
equity 12,085,626,559.38 11.45% 10,062,484,360.52 10.86% 0.59%
investments
Fixed assets 46,117,918,498.81 43.69% 41,579,728,480.95 44.86% -1.17%
Construction in
3,896,282,585.50 3.69% 7,801,532,982.72 8.42% -4.73%
progress
Right-of-use
411,032,649.33 0.39% 454,147,120.45 0.49% -0.10%
assets
Short-term loans 33,778,694,677.24 32.00% 26,482,672,125.98 28.57% 3.43%
Contract
1,723,901,780.92 1.63% 1,468,187,681.02 1.58% 0.05%
liabilities
Long-term loans 15,996,229,686.31 15.16% 16,609,903,029.23 17.92% -2.76%
Lease
380,145,523.29 0.36% 394,876,049.88 0.43% -0.07%
liabilities
97
Hengyi Petrochemical 2021 Annual Report
High proportion of overseas assets
Proportion Whether
Specific Controls to Inco of overseas there is
Operation
content of Reasons Asset size Location ensure asset me assets in the significant
mode
assets security status Company's risk of
net assets impairment
Strengthen the
parent
Subsidiaries
Hong Built by Company's
controlled Overseas USD6,54
Kong/Brunei/Si the management Good 161.23% No
by the investment 9,031,700
ngapore Company control over
Company
overseas
subsidiaries
Other information N/A
3.6.2 Assets and liabilities measured at fair value
Currency: RMB
Item Beginning balance Ending balance
Financial assets
1. Trading financial assets (excluding derivative financial assets) 251,904,308.53 388,958,054.67
2. Derivative financial assets 737,015,777.82 0.00
3. Investment in other equity instruments 5,600,000.00 5,600,000.00
Subtotal of financial assets 994,520,086.35 394,558,054.67
financial liabilities 145,909,776.80 25,375,802.83
Other changes
Whether the measurement attributes of the Company's main assets changed significantly
during the Reporting Period
□ Yes √ No
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Hengyi Petrochemical 2021 Annual Report
3.6.3 Restricted asset rights as of the end of the Reporting Period
Ending book value
Item Reason for restriction
of the year
Monetary funds 4,077,979,841.98 Margin
Notes receivable and receivables financing 341,723,232.79 Pledge to open acceptance bills
Long-term equity investments 5,649,517,951.90 Mortgage loan
Sale and leaseback financial leases and
Fixed assets 27,374,437,506.09
mortgage loan
Intangible assets 826,395,111.39 Mortgage loan and financial lease guarantee
Construction in progress 1,785,315,463.26 Mortgage loan and financial lease guarantee
Inventory 1,014,909,209.79 Mortgage loan
Total 41,070,278,317.20 -
3.7 Analysis of investment status
3.7.1 General situation
Investment amount during the Investment amount in the same period of
Range of change
Reporting Period (RMB ) the previous year (RMB )
5,315,505,561.36 3,743,354,861.36 42.00%
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Hengyi Petrochemical 2021 Annual Report
3.7.2 Significant equity investments acquired during the Reporting Period
Unit: RMB 10,000
Progress as
Name of Main Investment investment Shareholding Sources Investment Product of the Whether involved Disclosure
Partner Disclosure index (if any)
investee business method amount ratio of funds period type balance sheet in a lawsuit date (if any)
date
Production http://www.cninfo.com.cn/new/di
Ningbo
and sales of sclosure/detail?plate=szse&orgId
Zhongjin
Yisheng New petroleum Capital Self-owne =gssz0000703&stockCode=0007
49,000 49% Petroche 30 PTA Completed No 12/09/2021
Materials products and increase d capital 03&announcementId=121184880
mical Co.,
chemical 5&announcementTime=2021-12-
Ltd.
products 09
Production Dalian
PTA,
Hainan and sales of Self-owne Yisheng
Acquisition 37,350 50% 30 bottle Completed No / /
Yisheng PTA and d capital Investmen
flake
bottle flakes t Co., Ltd.
Hainan Production Capital 50,000 50% Self-owne Dalian 30 PTA, Completed No 12/09/2021 http://www.cninfo.com.cn/new/di
100
Hengyi Petrochemical 2021 Annual Report
Progress as
Name of Main Investment investment Shareholding Sources Investment Product of the Whether involved Disclosure
Partner Disclosure index (if any)
investee business method amount ratio of funds period type balance sheet in a lawsuit date (if any)
date
Yisheng and sales of increase d capital Yisheng bottle sclosure/detail?plate=szse&orgId
PTA and Investmen flake =gssz0000703&stockCode=0007
bottle flakes t Co., Ltd. 03&announcementId=121184879
8&announcementTime=2021-12-
09
Hangzhou Hangzhou
Jingxin Supply chain Qingyun Warehou RMB
Capital Self-owne
Supply Chain management 14,210 49% Holding 30 sing 128,650,700 No 04/26/2022 /
increase d capital
Management services Group services paid up
Co., Ltd. Co., Ltd.
Total - - 150,560 - - - - - - - - -
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Hengyi Petrochemical 2021 Annual Report
3.7.3 Significant non-equity investments in progress during the Reporting Period
Currency: RMB
Cumulative actual
Whether it is Industry Amount invested
Investme investment amount Sources of Project Disclosure date
Project name fixed asset involved in during the Reporting Disclosure index (if any)
nt method as of the end of the funds progress (if any)
investment the project Period
Reporting Period
Built by http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Brunei Project Petrochemical Self-financing
the Yes 1,169,371,270.11 1,571,666,683.75 1.69% 09/16/2020 zse&orgId=gssz0000703&stockCode=000703&announc
Phase II industry and loans
Company ementId=1208444483&announcementTime=2020-09-16
Fujian Yijin Built by http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Chemical fiber Self-financing
New Functional the Yes 457,738,280.80 1,381,784,299.36 103.00% 08/29/2020 zse&orgId=gssz0000703&stockCode=000703&announc
industry and loans
Fiber Project Company ementId=1208325104&announcementTime=2020-08-29
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Hengyi Petrochemical 2021 Annual Report
Cumulative actual
Whether it is Industry Amount invested
Investme investment amount Sources of Project Disclosure date
Project name fixed asset involved in during the Reporting Disclosure index (if any)
nt method as of the end of the funds progress (if any)
investment the project Period
Reporting Period
Haining New
Material New
Functional Built by http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Chemical fiber Self-financing
Fiber the Yes 1,459,814,800.73 8,072,432,483.58 91.00% 08/29/2020 zse&orgId=gssz0000703&stockCode=000703&announc
industry and loans
Technology Company ementId=1208325105&announcementTime=2020-08-29
Transformation
Project
Suqian Yida
New
Built by http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Environment-fr Chemical fiber Self-financing
the Yes 230,508,324.8 266,484,944.03 7.08% 06/01/2021 zse&orgId=gssz0000703&stockCode=000703&announc
iendly industry and loans
Company ementId=1210132115&announcementTime=2021-06-01
Differentiated
Fiber Project
Total - - - 3,317,432,676.44 11,292,368,410.72 - - - -
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Hengyi Petrochemical 2021 Annual Report
3.7.4 Investment in financial assets
3.7.4.1 Investment in securities
The Company's made no investment in securities in the Reporting Period.
3.7.4.2 Hedging business
Unit: RMB 10,000
Ending
investment
Beginning amount as a Actual gain
investment Ending percentage of or loss
Type of Hedging Start
amount of End date investment the Company's during the
Investment date
hedging amount net assets at Reporting
investment the end of the Period
Reporting
Period
Foreign exchange hedging 107,916 2021/1/2 2022/06/01 0 0.00% 5,728
Commodity hedging 90,491 2021/1/2 2021/12/31 38,729 1.50% 42,345
Total 198,407 - - 38,729 1.50% 48,073
Source of funds for
Self-owned funds
hedging investment
Involvement in lawsuits
N/A
(if applicable)
Date of disclosure of
announcement of the
BOD for approval of 01/23/2021
hedging investment (if
any)
Date of disclosure of
announcement of
shareholders meeting for 02/08/2021
approval of hedging
investment (if any)
Risk analysis and 1. Market risk: When the market changes drastically, the Company may not be able to
description of control fully lock in the price of raw materials or products, thereby resulting in losses. 2.
measures for hedging Liquidity risk: Commodity hedging transactions are ordered within the authority
positions during the specified in the Company's Management System for Commodity Derivatives
Reporting Period Transactions. If the market fluctuates drastically, losses may be caused by forced
(including but not limited liquidation of positions due to lack of time for margin replenishment. 3. Operational
to market risk, liquidity risk: As futures and forward transactions are highly specialized and complex,
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Hengyi Petrochemical 2021 Annual Report
risk, credit risk, unexpected losses may be caused due to defects in information systems or internal
operational risk, and legal controls. 4. Credit risk: When the price fluctuates greatly to the disadvantage of the
risk) counterparty, the counterparty may violate the relevant provisions of the contract and
cancel the contract, resulting in losses to the Company. 5. Legal risk: Due to changes
in relevant legal systems or violations of relevant legal systems by the counterparty,
the contract may not be executed normally, resulting in losses to the Company. Risk
control measures taken by the Company: The BOD of the Company has reviewed and
approved the Management System for Foreign Exchange Derivatives Transactions
and the Management System for Commodity Derivatives Transactions, which
stipulate that the Company engages in hedging investment business with the main
purpose of hedging, and speculation and arbitrage trading are prohibited. The systems
clearly stipulate the principles of the Company's business operations, approval
authority, internal audit process, responsible departments and responsible persons,
information isolation measures, internal risk reporting system and risk handling
procedures, which are in line with the relevant requirements of regulatory authorities
and meet the needs of actual operations. The specified risk control measures are
practical and effective.
Changes in market price
or air value of products Changes in market price or air value of products involved in hedging investment
involved in hedging during the Reporting Period; the analysis of the fair value of hedging should disclose
investment during the the specific methods used and the setting of relevant assumptions and parameters.
Reporting Period; the During the Reporting Period, the current gain and loss from the Company's hedging
analysis of the fair value investment was: RMB 480.73 million. The Company's hedging investment was priced
of hedging should disclose at fair value, and forward foreign exchange was basically determined according to the
the specific methods used price provided by or obtained from banks, the Reuters system and other pricing
and the setting of relevant service agencies. The Company conducted fair value measurement and confirmation
assumptions and every month; the transaction price of futures was the fair price.
parameters
Explanation on whether
No. The Company accounted for the hedging investment carried out in accordance
there is any significant
with the relevant provisions of the Ministry of Finance's Accounting Standards for
change in the accounting
Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments,
policy and specific
Accounting Standards for Business Enterprises No. 24 - Hedging, Accounting
principles of accounting
Standards for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting
for hedging of the
Standards for Business Enterprises No. 37 - Presentation of Financial Instruments and
Company in the Reporting
relevant guidelines to reflect the relevant items of the balance sheet and profit and loss
Period compared with the
statement.
previous Reporting Period
Special opinions of The hedging investment carried out by the Company for the purpose of hedging was
independent directors on closely related to the Company's daily business needs and complied with relevant
the Company's hedging laws and regulations. The Company formulated the Management System for Foreign
investment and risk Exchange Derivatives Transactions and the Management System for Commodity
control Derivatives Transactions, which have strengthened the Company’s risk management
105
Hengyi Petrochemical 2021 Annual Report
and control abilities and improved the Company's ability to withstand market risks,
causing no damage to the interests of the Company and all shareholders.
The Company shall comply with the disclosure requirements for chemical industry specified in
Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock Exchange -
Industry Information Disclosure
During the Reporting Period, the Company carried out hedging investment for the purpose of
reasonably avoiding the risk of price fluctuations of raw materials and finished products, reducing
the impact of price fluctuations of raw materials and finished products on the normal operation of the
Company, and ensuring the stable operation and sustainable profitability of the Company. The
commodities involved in the hedging transactions included raw materials and finished products
related to the Company's production and operation.
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Hengyi Petrochemical 2021 Annual Report
3.7.5 Raised funds
3.7.5.1 Use of raised funds
Unit: RMB 10,000
Proportion
Total
of
amount of
Total Cumulative cumulative Amount
raised funds Total
amount of Total amount total amount total amount of raised
Year of with amount of
Mode of Total funds raised of raised of raised of raised Usage and destination of raised funds not funds idle
fund changed raised
fund raising raised funds used funds used funds with funds with yet used for more
raising usage funds not
in this cumulatively changed changed than two
during the yet used
period usage usage in years
Reporting
total funds
Period
raised
As of December 31, 2021, RMB 43.484
Issue of
million was left in the Company's special
shares to
account for raised funds, and is intended
purchase
to be used for intelligent upgrading and
2019 assets and 291,091.12 80.29 288,785.36 0 156,300 53.69% 4,348.4 0
transformation project and differentiated
raise
fiber energy saving and consumption
supporting
reduction upgrading and transformation
funds
project.
Public
As of December 31, 2021, the balance of
issuance of
2020 198,737.74 0 198,737.74 0 0 0.00% 0.17 the Company's special account for raised 0
convertible
funds was RMB 1,700.
corporate
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Hengyi Petrochemical 2021 Annual Report
bonds in
2020
Total 489,828.86 80.29 487,523.1 0 156,300.00 31.91% 4,348.57 0
General description of the use of raised funds
1. As approved by CSRC Permit [2018] No. 1937 issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the
Company raised a total of RMB 2,949,999,987.00 through non-public issuance of 213,768,115 ordinary shares (A shares) to eligible investors, which was verified by
Ruihua Certified Public Accountants (Special General Partnership). After deducting the broker’s underwriting fees and related issuance expenses, the actual net
amount of funds raised was RMB 2,910,911,218.99. As of December 31, 2020, the Company has used RMB 2,838,559,800 from the funds.
2. As approved by CSRC Permit [2020] No. 522 issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the
Company publicly issued 20 million convertible corporate bonds to eligible investors, each with a face value of RMB 100. The total issuance amount was RMB 2
billion, the conversion price was RMB 11.50 per share, and the bonds were listed on the Shenzhen Stock Exchange on November 16, 2020. The total amount of funds
raised from the public issuance of convertible corporate bonds was RMB 2 billion. After deducting the paid underwriting and sponsorship fees of RMB 11 million, the
remaining RMB 1,989 million was used for the "1-mtpa Intelligent Differentiated Environmental Functional Fiber Project" implemented by Haining Hengyi New
Materials Co., Ltd.
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Hengyi Petrochemical 2021 Annual Report
3.7.5.2 Projects for committed investment with raised funds
Unit: RMB 10,000
Whet
Whet her
her Amo Benef there
Investme Whet
the unt its is a
nt her
Projects for proje invest Cumulative Date when realiz signifi
Total progress the
committed ct has Adjusted ed investment the project ed cant
committed as of the expec
investment and been total durin amount as reaches its durin chang
investment end of ted
investment chang investment g the of the end of scheduled g the e in
of raised the benef
direction of ed (or amount (1) Repo the period availabilit Repo the
funds period its are
over-raised funds partia rting (2) y date rting feasib
(3)=(2)/( achie
lly Perio Perio ility
1) ved
chang d d of the
ed) projec
t
Projects for committed investment
Brunei Refining
and November $19,3
No 376,562.33 376,562.33 0 377,633.81 100.28% No No
Petrochemical 2019 29.41
Project
500,000 t/a
differentiated
functional fiber No more August 8,865
No 93,500 0 93,647.49 100.16% No No
upgrading and than 93,500 2020 .92
transformation
project
Intelligent
Not Not
upgrading and No more November
No 28,170 80.29 25,621.7 90.95% appli appli No
transformation than 28,170 2020
cable cable
project
Differentiated
fiber energy
saving and
Not Not
consumption No more
No 8,500 0 8,399.34 98.82% May 2019 appli appli No
reduction than 8,500
cable cable
upgrading and
transformation
project
250,000 t/a Yes No more 416.05 0 416.05 100.00% Not Not Not No
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Hengyi Petrochemical 2021 Annual Report
environment-frien than applicable appli appli
dly functional 141,500 cable cable
fiber upgrading
and
transformation
project
Intelligent
Not Not
upgrading and No more Not
Yes 5,283.95 0 3,406.99 64.48% appli appli No
transformation than 20,500 applicable
cable cable
project
1-mtpa Intelligent
No more Partially Not
Environmental 13,68
No than 200,000 0 198,737.74 99.37% available appli No
Functional Fiber 3.88
200,000 in 2020 cable
Project
Subtotal of
No more
committed
- than 712,432.33 80.29 707,863.12 - - - -
investment for the
868,732.33
projects
Investment direction of over-raised funds
N/A
No more
Total - than 712,432.33 80.29 707,863.12 - - - -
868,732.33
Failure to meet
the planned
progress or
generate expected Due to the COVID-19 pandemic and the sharp fluctuations in oil prices, the revenue of some
revenue and projects did not meet expectations
reasons (to be
described by
project)
Description of
significant
Not applicable
changes in project
feasibility
Amount, purpose
and progress of
Not applicable
use of over-raised
funds
Change of
location for Not applicable
implementation
110
Hengyi Petrochemical 2021 Annual Report
of projects for
committed
investment
Adjustment of
implementation
mode of projects Not applicable
for committed
investment
Applicable
th
1. On February 1, 2019, the 24 meeting of the 10th session of the BOD of the Company
reviewed and approved the Proposal on Using Raised Funds to Replace Self-raised Funds and
Intermediary Fees and Related Taxes Pre-paid for Relevant Investment Projects, agreeing to
use RMB 1,147,288,319.73 from the raised funds to replace the self-raised funds and the
intermediary fees and related taxes that had been paid for relevant investment projects, of
which the self-raised funds that had been invested in the projects were RMB 1,141,188,319.73
and the intermediary fees and related taxes paid in advance by the Company with its own funds
were RMB 6,100,000.00. On June 18, 2019, the 30th meeting of the 10th session of the BOD of
the Company reviewed and approved the Proposal on Using Raised Funds to Replace
Self-raised Funds Pre-paid for Relevant Investment Projects, agreeing to use RMB
331,666,503.97 from the raised funds to replace the self-raised funds that had been paid for
Preliminary
relevant investment projects As of December 31, 2021, the Company has replaced the
investment and
self-raised funds invested in advance of RMB 1,473,806,091.82, and the remaining
replacement of
5,148,731.88 has not been replaced.
projects for
2. According to the Proposal on the Company's Public Issue of Convertible Corporate Bonds
committed
reviewed and approved at the 29th Meeting of the 10th Session of the BOD on April 25, 2019
investment
and the 2018 Annual General Meeting of Shareholders on May 9, 2019, it is agreed that if the
Company has invested its own funds in the construction of the above projects first before the
funds raised from the issuance of convertible corporate bonds are in place, the funds can be
replaced in accordance with the procedures prescribed by relevant laws and regulations after
the funds raised are available. As of October 23, 2020, the Company had invested RMB
4,606,157,244.19 in the above-mentioned project with its own funds. After deducting the
supporting fund of RMB 756,000,000.00 raised by the Company on January 30, 2019 through
the non-public issue of RMB ordinary shares to specific objects for the construction of the
1-mtpa Intelligent Environmental Functional Fiber Project, the remaining amount was RMB
3,850,157,244.19. The Company decided to replace its own funds, RMB 1,987,377,358.49,
invested in the project with the raised funds. As of December 31, 2021, the Company has
replaced the self-raised funds invested in advance of RMB 1,987,377,358.49.
Temporary
replenishment of
working capital Not applicable
with idle raised
funds
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Hengyi Petrochemical 2021 Annual Report
Amount and
reasons for the
balance of raised Not applicable
funds in project
implementation
As of December 31, 2021, RMB 43.484 million was left in the Company's special account for
Usage and
raised funds, and is intended to be used for intelligent upgrade and transformation projects,
destination of
differentiated fiber energy-saving and consumption-reducing upgrading and transformation
unused raised
projects, etc. The raised funds of RMB 1,700 temporarily deposited are intended to be used for
funds
the 1-mtpa Intelligent Environmental Functional Fiber Project.
Problems or other
situations in the
use and Not applicable
disclosure of
raised funds
3.7.5.3 Changes of projects for investment with raised funds
During the Reporting Period, there was no change of the projects for investment with raised
funds.
3.8 Sales of major assets and equity
3.8.1 Sales of major assets
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
3.8.2 Sales of major equity
Unit: RMB 10,000
Net profit
contributed Net profit Whether it is
by the equity contributed implemented
Whether
to the listed by the as planned; if
Impact of Pricing Whether it the equity
Transacti company equity sale Relationship not, explain
Counter Sold Date of the sale on principle is a involved Disclosure
on price from the to the listed with the reasons Disclosure index
party equity sale the of equity connected has been date
(10,000) beginning of company as counterparty and the
Company disposal transaction fully
current a percentage measures the
transferred
period to the of the total Company has
date of sale net profit taken
(10,000)
http://www.cninfo.co
m.cn/new/disclosure/
Hainan Ningbo detail?plate=szse&or
Net assets
Jiashui Hengyi gId=gssz0000703&st
06/30/20 as of Non-related 06/29/202
Trading Industry 21,000 -1,646.94 N/A 0.17% No Yes Yes ockCode=000703&a
21 March 31, party 1
Co., Co., nnouncementId=121
2021
Ltd. Ltd. 0354714&announce
mentTime=2021-06-
29
113
Hengyi Petrochemical 2021 Annual Report
3.9 Analysis of major subsidiaries and JV companies
Major subsidiaries and JV companies with an impact of 10% or more on the net profit of the
Company
Unit: RMB 10,000
Company Type of Registered Operating Operating
Main business Total assets Net assets Net profit
name company capital income profit
Hengyi Refining and USD
Subsidiary 4,053,480.61 849,364.93 3,594,810.02 124,973.37 124,738.48
Brunei petrochemical 1,014,000,000
Zhejiang USD
Subsidiary PTA 1,794,025.97 913,132.86 3,030,842.32 48,477.94 38,267.28
Yisheng 514,447,100
Hainan JV
PTA 458,000 1,145,411.50 481,736.89 1,680,459.55 36,883.35 34,217.72
Yisheng company
Hengyi
Subsidiary DTY 300,000 3,880,542.68 798,783.82 5,428,168.29 91,684.21 91,243.50
Limited
Polyester
Hengyi
Subsidiary flakes, POY, 28,074 293,347.67 95,752.99 381,008.64 11,678.14 10,951.88
Polymer
etc.
Polyester
Hengyi
Subsidiary flakes, POY, 275,725 1,258,795.53 497,835.78 1,320,748.04 33,690.46 34,065.72
High-Tech
etc.
Haining Polyester
New Subsidiary flakes, POY, 328500 961,794.77 335,315.04 792,425.38 33,304.95 24,555.17
Materials etc.
Taicang
Subsidiary POY 77,100 224,019.73 115,414.25 161,437.59 12,778.55 9,853.20
Yifeng
Shuangtu
POY, FDY,
New Subsidiary 60,000 521,900.57 222,568.39 677,866.54 28,618.14 26,316.87
flakes
Materials
Hangzhou FDY, POY,
Subsidiary 100,000 321,948.64 117,673.38 484,792.39 10,798.14 9,476.84
Yijing DTY, flakes
Jiaxing
Subsidiary FDY 300,000 479,621.74 286,260.19 530,117.94 13,446.86 11,718.77
Yipeng
Hong Kong Investment and
Subsidiary 150,950 1,368,852.84 1,042,624.04 788,476.89 80,106.07 80,106.07
Tianyi trade
China
JV
Zheshang Finance 2,126,870 228,672,300 16,688,300 5,447,100 1,493,200 1,291,600
company
Bank
Acquisition and disposal of subsidiaries during the Reporting Period
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Hengyi Petrochemical 2021 Annual Report
Methods of acquiring and
Company name disposing of subsidiaries during
the Reporting Period
Ningbo Shengmao Trading Co., Ltd. Establishment or investment
Haining Hengqi Environmental Protection Technology Co., Ltd. Establishment or investment
Zhejiang Xiaoyi Supply Chain Management Co., Ltd. (Zhejiang
Establishment or investment
Xiaoyi Supply Chain Management Co., Ltd.)
Ningbo Hengyi Industry Co., Ltd. Disposal
Hangzhou Jingxin Supply Chain Management Co., Ltd. Disposal
Haining Yixin Logistics Co., Ltd. Disposal
Description of major subsidiaries and JV companies
3.9.1 Hengyi Brunei
The Company holds 70% of the shares of Hengyi Industries Sdn. Bhd. through Hong Kong Tianyi
International Holding Co., Ltd. The registered capital of Hengyi Brunei is USD1.014 billion, and the
business scope involves petroleum refining and petrochemicals.
3.9.2 Zhejiang Yisheng
The Company holds 70% of the shares of Zhejiang Yisheng Petrochemical Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd.. Zhejiang Yisheng has a registered capital of
USD514,447,100, with business scope covering: production of chemical products (excluding
chemical products subject to license); manufacture of basic chemical raw materials (excluding
chemical products subject to license, such as hazardous chemicals); manufacture of synthetic fibers;
sales of chemical products (excluding chemical products subject to license); sales of synthetic
materials; sales of synthetic fibers; sales of new membrane materials; sales of petroleum products
(excluding hazardous chemicals); general cargo warehousing services (excluding hazardous
chemicals and other items subject to license and approval); technology services, technology
development, technology consulting, technology exchange, technology transfer, technology
promotion; technology import and export; goods import and export; import and export agency
(except for business subject to approval according to law, other business activities can be carried out
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Hengyi Petrochemical 2021 Annual Report
independently and legally with the business license). The Company currently has three large PTA
Production Lines, with a PTA production capacity of 5mtpa and a PIA production capacity of
300,000 tons.
3.9.3 Hainan Yisheng
The Company holds 50% of the shares of Hainan Yisheng Petrochemical Co., Ltd. through Zhejiang
Hengyi Petrochemical Co., Ltd. Hainan Yisheng has a registered capital of RMB 4.58 billion, with
business scope covering: production, processing, wholesale and retail of purified terephthalic acid,
polyester flakes, polyester bottle flakes, polyester staple fibers, POY yarns, FDY yarns, crude cobalt
oxide and manganese oxide, and chemical fiber raw materials; purchase and sales of paraxylene (PX),
acetic acid, and ethylene glycol; self-supporting and acting as an agent for the import and export of
various goods and technologies; terminal facilities operation, general cargo handling service in the
terminal area, terminal tugboat operation, ship service, fresh water supply for ships, collection of
ship pollutants (including oily sewage, residual oil, tank washing water, domestic sewage and
garbage), and supply of oil containment boom.
3.9.4 Hengyi Limited
The Company directly holds 99.72% of the shares (actually enjoys 100% of the rights) of Zhejiang
Hengyi Petrochemical Co., Ltd. Hengyi Limited has a registered capital of RMB 3 billion. The
business scope: production, processing and sales of chemical fibers and chemical raw materials
(excluding hazardous chemicals); import and export.
3.9.5 Hengyi Polymer
The Company holds 58.90504% of the shares (actually enjoys 60% of the rights) of Zhejiang Hengyi
Polymer Co., Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. Hengyi Polymer has a
registered capital of RMB 281 million. The business scope covers: production, processing and sales
of polyester flakes, POY yarns, chemical fiber raw materials, textile fabrics, and garments; export of
the company’s own products and technologies; import of raw and auxiliary materials, instruments
and meters, mechanical equipment, spare parts and technologies required for production of the
company (except for commodities and technologies that are restricted by the state and prohibited
from import and export by the state); warehouse management; processing with imported materials;
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Hengyi Petrochemical 2021 Annual Report
three-processing and one compensation business. In May2001, Hengyi Polymer took the lead in
investing in melt direct spinning production lines in China.
3.9.6 Hengyi High-tech
The Company holds 90.67% of the shares of Zhejiang Hengyi High-tech Materials Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd. The registered capital of Hengyi High-tech is RMB
2,757.25 million, and the business scope covers: production, processing and sales of polyester flakes,
POY yarns, FDY yarns, and chemical fiber raw materials; export of the company’s own products and
technologies and import of self-use products and technologies (except for items that are restricted by
the state and prohibited from import and export by the state); all other legal business not subject to
approval.
3.9.7 Haining New Materials
The Company holds 100% of the shares of Haining Hengyi New Materials Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd., and the registered capital of Haining New Materials is
RMB 3,285 million. Haining New Materials’ business scope is: manufacture, processing, and
wholesale of differentiated chemical fibers, polyester flakes, POY yarns, FDY yarns, and chemical
fiber raw materials; export of the company’s own products and technologies; import of raw and
auxiliary materials, mechanical equipment, and spare parts required for production of the company;
warehouse management.
3.9.8 Taicang Yifeng
The Company holds 100% of the shares of Taicang Yifeng Chemical Fiber Co., Ltd. The registered
capital of Taicang Yifeng is RMB 771 million. The business scope: production, processing and sales
of differentiated functional chemical fibers; distribution of textile raw materials and products,
chemical raw materials and products; self-supporting and acting as an agent for the import and
export of various goods and technologies (except for commodities and technologies that are
restricted by the state or prohibited from import and export).
3.9.9 Shuangtu New Materials
The Company holds 100% of the shares of Zhejiang Shuangtu New Materials Co., Ltd., and the
registered capital of Shuangtu New Materials is RMB 600 million. The business scope: general
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Hengyi Petrochemical 2021 Annual Report
business: production of chemical products (excluding chemical products subject to license); sales of
chemical products (excluding chemical products subject to license); sales of synthetic fibers;
synthetic fiber manufacturing; sales of synthetic materials; manufacture of synthetic materials
(excluding hazardous chemicals) (except for business subject to approval according to law, other
business activities can be carried out independently and legally with the business license). Licensed
business: import and export of goods; import and export of technologies (Business activities subject
to approval according to law can only be carried out after approved by relevant departments. Specific
business activities are subject to the approval results). The main products are FDY, POY and fiber
grade polyester flakes.
3.9.10 Hangzhou Yijing
The Company holds 100% of the shares of Hangzhou Yijing Chemical Fiber Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd., and Hangzhou Yijing has a registered capital of RMB one
billion. The business scope: general business: production of chemical products (excluding chemical
products subject to license); sales of chemical products (excluding chemical products subject to
license); sales of synthetic fibers; manufacture of synthetic fibers; sales of synthetic materials;
manufacture of synthetic materials (excluding hazardous chemicals); non-residential real estate
leasing (except for business subject to approval according to law, other business activities can be
carried out independently and legally with the business license). Licensed business: import and
export of technologies; import and export of goods. The main products include FDY, POY and DTY.
3.9.11 Jiaxing Yipe ng
The Company holds 100% of the shares of Jiaxing Yipeng Chemical Fiber Co., Ltd., which has a
registered capital of RMB 3 billion. The business scope: manufacture, processing and sales of
polyester flakes and FDY yarns; sales of chemical fiber raw materials; import and export of goods.
(hazardous chemicals excluded). The main products are FDY and fiber grade polyester flakes.
3.9.12 Hong Kong Tianyi
The Company holds 100% of the shares of Hong Kong Tianyi International Holding Co., Ltd.
through Zhejiang Hengyi Petrochemical Co., Ltd. The registered capital of Hong Kong Tianyi is
USD 1,509.5 million, and the business scope involves investment and trading.
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Hengyi Petrochemical 2021 Annual Report
3.9.13 China Zheshang Bank
The Company holds a total of 748,069,283 shares of China Zheshang Bank Co., Ltd. through its
subsidiary Zhejiang Hengyi Petrochemical Co., Ltd. and its indirect subsidiary Zhejiang Hengyi
High-tech Materials Co., Ltd., accounting for 3.52% of the total share capital of China Zheshang
Bank. The business cope: financial business (For details, please refer to the approval of the China
Banking and Insurance Regulatory Commission). Established in 2004, the company is one of the 12
national joint-stock commercial banks approved by the China Banking and Insurance Regulatory
Commission. China Zheshang Bank was listed on the main board of the Hong Kong Stock Exchange
on March 30, 2016 (stock code: 02016.HK) and on the Shanghai Stock E xchange on November 26,
2019 (stock code: 601916.SH).
3.10 Information on structured entities controlled by the Company
□ Applicable √ Not applicable
3.11 Prospects for the future developme nt of the Company
In 2022, the Company will continue to closely focus on the strategic development policy of
"consolidating, highlighting and enhancing the competitiveness of our main business", realize
resource sharing, systematically build upstream and downstream synergy, consolidate integration
advantages, enhance domestic and overseas linkage, improve the "polyester + polyamide"-driven
industry chain, deepen the "petrochemical +" multi-layered and multi-dimensional industrial layout,
enhance the overall competitiveness, and build the Company into one of the leading international
chemical groups.
3.11.1 Future business plan
The Company will strictly adhere to the two bottom lines of legal compliance and safe production to
maintain stable production and operation; intensify scientific research and innovation efforts, and
strengthen the continuous contribution of R&D innovation to the Company's production, operation
and development; promote intelligent manufacturing, continuously increase investment in industrial
intelligent technology, and implement lean production; improve marketing service capabilities to
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Hengyi Petrochemical 2021 Annual Report
deeply bind customers; take multiple initiatives to improve the talent training and incentive
mechanism.
3.11.1.1 Based on the Company's strategic development plan, we will steadily maintain
the existing production capacity and actively promote the construction of strategic projects
According to the requirements of high-quality development in the new era and the new pattern of
industrial development, the Company will always focus on enhancing our industrial competitiveness,
resolutely implement the strategic plan, push forward the construction and commissioning of new
projects in an orderly manner, and gradually improved the Company's unique industrial layout of
"refinery, polyester and polyamide". In 2022, under the influence of geopolitics, the export of
product oil products from Russia will be frustrated, and the European and American buyers will turn
to the Middle East and squeeze the product oil resources originally supplied to the Asia-Pacific
market. The significant decline in the export of product oil products from the Middle East to the
Asia-Pacific market will aggravate the tight supply in Southeast Asia, and the product oil market in
Southeast Asia will maintain the booming trend. The Company will seize the current window period
when the epidemic prevention and control is released in Southeast Asia and the domestic economy
continues to recover to maintain safe and steady production and operation of the first phase of the
Brunei Project and domestic polyester business. In addition, to further enrich product range and
optimize the product portfolio, the Company will continue to promote the construction of major
strategic projects such as Phase II of the Brunei Project, the 1.2-mtpa Caprolactam-Polyamide
Integration and Supporting Project, and the Suqian Yida’s 1.1-mtpa New-type Differentiated
Environmental Fiber Project.
Phase II of the Brunei Project has received a preliminary approval letter from the Brunei government.
According to the project planning, embankment reclamation and other works are being carried out in
an orderly manner. The project will help the Company further reduce the production costs, ensure the
stability of raw material supply, improve upstream supporting production capacity, strengthen the
Company's edge in coordinated operation of upstream and downstream industries, optimize the
Company's product portfolio, increase the added value of products, enhance the Company's overall
profitability, build a core circle along the Belt and Road for development in ASEAN countries, and
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Hengyi Petrochemical 2021 Annual Report
gradually become a leading petrochemical enterprise in the world in terms of comprehensive
strength.
The products of the "1.2-mtpa Caprolactam-Polyamide Integration and Supporting Project" involve
high-end nylon fibers, engineering plastics and films, covering a variety of application fields. The
most advanced gas-phase rearrangement technology developed independently by the Company is
adopted. With atomic economy reaching 100% and no by-product ammonium sulfate, it can be
considered a green, low-carbon, clean and efficient technology. The current advanced unit
technology in the industry is used to establish the whole preparation process of the project. All
production elements and energy sources are fully equipped for the whole process. The energy
consumption and material consumption of the products are greatly reduced, effectively lowering the
production costs of raw materials such as ammonia, liquid ammonia, hydrogen peroxide,
cyclohexanone. It can help the Company to achieve precise cost control, smooth out the price
fluctuations caused by the upstream raw material end, and further realize cost reduction and
efficiency increase. After the project is put into operation, it can effectively extend the downstream
industry chain of aromatic hydrocarbons, optimize the product portfolio, enhance the Company's
competitiveness, solidify the leading position in the industry, increase the overall profitability, and
further improve the Company's integrated strategic industrial layout.
3.11.1.2 We will increase investment in R&D and actively promote the transformation of
new technologies and new materials
The Company has always been committed to the R&D of green chemicals and advanced materials,
while attaching great importance to scientific research innovation and transformation of
achievements. In 2022, the Company will continue to increase investment in software and hardware
for technological innovation and the introduction and training of high-level talents, focus on the
R&D and application of high-end products in the field of "polyester + polyamide”, promote the
transformation of technological achievements, improve the contribution of scientific research to the
core competitiveness of the main business, strive to create more achievements in key technologies,
equipment innovation and R&D of high value-added differentiated products, accelerate the
transformation of scientific research results and the launch of new products, and build a world-class
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Hengyi Petrochemical 2021 Annual Report
R&D base for key common technologies and high-end chemical products for refining and chemical
integration to become a technology leader in the industry..
Meanwhile, as a leading enterprise in China's chemical fiber industry, the Company will actively
comply with the national requirements of "carbon peaking and carbon neutrality", integrate the
concept of green development into specific products, advance the development of new products such
as biodegradable polyester, bio-based polyester and foamed polyester in an orderly manner,
synchronize the optimization of industrialization projects and the R&D of pilot and key lab test
projects, and strengthen the R&D of new green products to play a good leading and demonstration
role for the healthy and sustainable development of chemical fiber industry.
3.11.1.3 We will strengthen the integration of data and intelligence, and continue to
improve the capacity of the integrated industrial digital platform
The Company will continue to uphold the concept of transformation from "manufacturing" to
"intelligent manufacturing", further implement the digital transformation strategy, enhance the
capacity of the integrated industrial digital platform, and deeply empower the production and sales
sides and other departments. We will improve intelligent production management and control
capabilities through the operation of digital factories, and make innovation in customer service
ecosystems through a chemical fiber supply chain platform that integrates micro-mall, supply chain
finance, and warehousing and logistics.
In 2022, the Company plans to promote the construction of the second phase of the "Hengyi Brain"
project to realize intelligent production control and deeply explore the value of operating da ta; push
forward the implementation of a number of high-quality software system projects and hardware
upgrades and iterations to ensure the stability of the operating system.
3.11.1.4 We will improve the talent system and provide a guarantee of talent supply for
the Company’s development
The Company will continue to deepen the organizational reform in order to build a young,
professional and international elite team. We will strengthen the construction of talent echelon,
establish leadership of middle and high-level managers, reserve, train and upgrade the middle-level
and grass-roots staff, promote stable front-line work on a regular basis, continuously increase
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Hengyi Petrochemical 2021 Annual Report
employees' sense of belonging by improving relevant systems, increasing policy transparency,
reforming compensation and benefits for front-line personnel, and enhancing the atmosphere at the
grassroots level, promote localization of talent training for the Brunei project, and extend talent
selection and training from basic to management talents.
3.11.2 Possible risks and countermeasures of the Company
3.11.2.1 Macroeconomic risks
The Company is engaged in the production and sales of petrochemical and polyester fi ber products.
The petrochemical and polyester fiber industry is closely related to the development of the world
economy and China's economy, and people's livelihood. The product prices and sales are affected by
macroeconomic fluctuations and changes in supply and demand. With the acceleration of economic
globalization and integration, national macro-control and cyclical fluctuations of the world economy
will have an impact on the development of the industry. If the global economic growth slows down
or declines, it will directly have a direct impact on the Company's business, operating results and
financial position end demand.
3.11.2.2 Safety and environment-friendly production risks
As the awareness of eco-friendliness increases and the government's environment-friendly
requirements become stricter, the Company strictly implements the Production Safety Law of the
People's Republic of China, Eco-friendliness Law of the People's Republic of China and other
relevant laws and regulations to ensure safe and environmentally friendly production, and earnestly
fulfills our social responsibility. Since the operation of the main production entity, no major safety
and eco-friendliness incidents have occurred. With the expansion of the Company's production scale
and the extension of the industry chain, preventing safety and eco-friendliness accidents has become
the focus of the Company's operation and management.
In order to reduce the safety and eco-friendliness production risks in the industry, the Company
strengthens the construction of the organizational structure and institutional system to further
implement the safety and eco-friendliness production responsibility system. According to the
arrangement of China’s 1, 2 and 3 levels of safety standardization, the Company actively carries out
the safety standardization acceptance work, and strives to build a safety standard management
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Hengyi Petrochemical 2021 Annual Report
system. The Company will implement the dual-prevention work mechanism combining safety risk
classification and control and hidden danger investigation and management, strengthen safety
training, increase safety investment, practice the strategy of promoting safety based on science and
technology, promptly remove safety and eco-friendliness hazards, and eliminate all possibilities of
major accidents.
3.11.2.3 Risk of significant fluctuations of crude oil price
The Company is a leader in the field of oil refining-chemical-chemical fiber in China. More than 80%
of the cost in the industry chain in which we operate is determined by upstream raw materials, and
the fluctuation of crude oil price will affect the prices of various products in the industry chain,
thereby exacerbating the uncertainty in raw material costs and operating costs, and resulting in the
accompanying increase in sales risk and fluctuations in the Company’s income. In 2022, the
Company will continue to optimize the inventory strategy to reduce the adverse impact of product
price fluctuations in the industry chain on the Company’s operations as a result of crude oil price
fluctuations.
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Hengyi Petrochemical 2021 Annual Report
3.12 Reception of research, communication, interview and other activities during the Reporting Period
Main content of
Reception Visitor
Time Location Visitor communication and Index of basic facts of research
method type
information provided
171 institutions including Company operation and Record Form of Hengyi Petrochemical’s
The Company’s Telephone
02/24/2021 Institution CITIC Securities and industry development Investor Relation Activities on February 24, 2021
meeting room communication
Xitai Capital trend on SZSE: 1209300796.PDF (cninfo.com.cn)
Company operation and Record Form of Hengyi Petrochemical’s Investor
The Company’s 1 media, Financial
03/10/2021 Field research Institution industry development Relation Activities on March 10, 2021 on SZSE:
meeting room Associated Press
trend 1209377517.PDF (cninfo.com.cn)
93 institutions including Company operation and Record Form of Hengyi Petrochemical’s
The Company’s Telephone
04/20/2021 Institution Shenwan Hongyuan and industry development Investor Relation Activities on April 20, 2021 on
meeting room communication
Bosera Funds trend SZSE: 1209767286.PDF (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s
61 institutions including Company operation and
The Company’s Telephone Investor Relation Activities on August 25, 2021
08/25/2021 Institution Sealand Securities and industry development
meeting room communication on SZSE: 1210871293.PDF (cninfo.com.cn)
Hengqin Life trend
1210871294.PDF (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s
The Company’s Telephone 1 media, China Business
08/25/2021 Institution Company operation Investor Relation Activities on August 25, 2021
meeting room communication Journal
on SZSE: 1210871295.PDF (cninfo.com.cn)
p5w.net Investors who
"Investor Institution participated in the Company operation and Record Form of Hengyi Petrochemical’s
09/01/2021 Relations Other s and Company's 2021 industry development Investor Relation Activities on September 1, 2021
Interactive individuals semi-annual results trend on SZSE: 1210968327.PDF (cninfo.com.cn)
Platform" briefing
09/16/2021 The Company’s Telephone Institution Five institutions including Company operation and Record Form of Hengyi Petrochemical’s
125
Hengyi Petrochemical 2021 Annual Report
Main content of
Reception Visitor
Time Location Visitor communication and Index of basic facts of research
method type
information provided
meeting room communication Changjiang Securities and industry development Investor Relation Activities on September 16,
Ping An Asset trend 2021 on SZSE: 1211093496.PDF (cninfo.com.cn)
Management
71 institutions including Company operation and Record Form of Hengyi Petrochemical’s
The Company’s Telephone
10/28/2021 Institution CICC and Taiping industry development Investor Relation Activities on October 28, 2021
meeting room communication
Pension trend on SZSE: 1211431412.PDF (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s
The Company’s Telephone
11/22/2021 Institution 1 media, zghy.org.cn Company operation Investor Relation Activities on November 22,
meeting room communication
2021 on SZSE: 1211672291.PDF (cninfo.com.cn)
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Hengyi Petrochemical 2021 Annual Report
Section 4 Corporate Governance
4.1 Basic status of corporate governance
During the Reporting Period, the Company strictly complied with the Company Law, Securities Law,
the Code of Corporate Governance for Listed Companies in China, Rules Governing the Listing of
Shares on Shenzhen Stock Exchange, and Guidelines of the Shenzhen Stock Exchange for
Standardized Operation of Companies Listed on the Main Board and other relevant laws and
regulations. Based on the actual situation of the Company, we continuously improved and enhanced
the standardized operation of corporate governance, and established a sound internal management
and control system to regulate the operation of the Company. The Company's internal control system
has been increasingly improved, and the standardization level of governance has been continuously
increased.
4.1.1 Shareholders and shareholders' general meetings
During the Reporting Period, the Company strictly complied with laws and regulations, and
convened and held shareholders' general meetings in a standardized manner. The convening and
holding procedures of the shareholders' general meetings, the qualifications of the persons attending
the shareholders' general meetings, the voting procedures and voting results of the shareholders'
general meetings all complied with the Company Law, Rules for the Shareholders' Meetings of
Listed Companies and other laws and regulations and the Company's Rules of Procedure for the
General Meeting of Shareholders, which ensured that all shareholders, especially minority
shareholders, could fully exercise their rights. The Company's shareholders' general meetings during
the Reporting Period were convened by the BOD, and lawyers were engaged to witness the meetings
on site, ensuring the legality of the meeting convening, holding and voting procedures, and
safeguarding the legitimate equities of the Company and shareholders.
4.1.2 The Company and the controlling shareholder
The Company is completely independent from the controlling shareholder and its subsidiaries in
terms of business, personnel, assets, organization, and finance. The Company has independent and
complete business and the ability to operate independently. The Company's BOD, BOS and internal
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Hengyi Petrochemical 2021 Annual Report
organizations operate independently. The controlling shareholder of the Company can strictly
regulate its behavior. Major decisions of the Company were made by the shareholders’ general
meetings in accordance with the law. The controlling shareholder exercised its shareholder rights in
accordance with the law, and did not directly or indirectly interfere with the decision-making and
operating activities of the Company beyond the shareholders’ general meetings of the Company.
4.1.3 Directors and the BOD
The Company elected directors in strict accordance with the selection and appointment procedures
stipulated in the Company Law and the Articles of Association of the Company. The number and
composition of the BOD of the Company met the requirements of laws and regulations. All directors
of the Company could carry out their work in accordance with the Rules of Procedure of the BOD,
attend the board meetings and shareholders' general meetings on time with a conscientious and
responsible attitude, faithfully perform their duties in the interests of the Company and all
shareholders, actively participate in training on relevant knowledge, study relevant laws and
regulations, and promote the standardized operation and scientific decision-making of the BOD. The
independent directors of the Company could perform their duties independently in accordance with
the corresponding rules and regulations, without being influenced by the actual controller of the
Company or other units or persons that have an interest in the Company.
During the Reporting Period, the procedures of the meetings of the BOD of the Company were in
compliance with relevant regulations, the minutes of the meeting were complete and true, and the
disclosure of relevant information at the meetings was timely, accurate and adequate. The BOD of
the Company set up four special committees, namely the Remuneration Assessment and Nomination
Committee, the Risk Control Committee, the Audit Committee and the Strategy and Investment
Committee, which have played an important role in promoting the standardized operation and
healthy development of the Company.
4.1.4 Supervisors and the Board of Supervisors
The Board of Supervisors (BOS) of the Company consists of three supervisors, one of whom is an
employee representative. The number and personnel of the Company's BOS met the requirements of
relevant laws and regulations and the Company's Articles of Association. All the supervisors of the
Company could perform their duties conscientiously in accordance with the requirements of the
Company's Rules of Procedure of the BOS and other relevant regulations, attend the shareholders’
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Hengyi Petrochemical 2021 Annual Report
general meeting, attend the meetings of the BOD as nonvoting delegates, convene the meetings of
the BOS according to the prescribed procedures, diligently and conscientiously supervise the legality
and compliance of the Company's financial situation, directors and senior management, and
safeguard the legitimate equities of the Company and its shareholders.
4.1.5 Stakeholders
The Company fully respected and safeguarded the legitimate equities of relevant stakeholders to
achieve a win-win situation for customers, suppliers, employees, shareholders and other stake holders
and jointly promote the Company's sustainable and steady development.
4.1.6 Information disclosure and transparency
The Company strictly followed the requirements of relevant laws and regulations as well as the
Information Disclosure Management System and the Investor Relations Management System to
conscientiously fulfill our information disclosure obligations, disclose the Company's operation and
management and matters that have significant impact on the Company in a true, accurate, complete
and timely manner, coordinate the relationship between the Company and investors, receive
investors’ visits, and answer investors’ inquiries. The Company's designated newspapers and
websites such as STCN, cs.com.cn, Shanghai Securities News, Securities Daily and CNINFO
(http://www.cninfo.com.cn) for the Company's information disclosure.
4.1.7 Performance evaluation and incentive and restraint mechanisms
The Company is gradually improving and establishing fair and transparent performance evaluation
standards and incentive and restraint mechanisms for directors, supervisors and senior management.
The appointment of senior management of the Company was open and transparent, in line with laws
and regulations.
Whether there is any material difference between the actual situation of corporate governance
of the Company and the laws, administrative regulations and the rules on the governance of
listed companies issued by the China Securities Regulatory Commission
□ Applicable √ Not applicable
There is no material difference between the actual situation of corporate governance of the Company
and laws, administrative regulations and the rules on the governance of listed companies issued by
the China Securities Regulatory Commission.
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Hengyi Petrochemical 2021 Annual Report
4.2 Independence of the Company in guaranteeing the Company's assets, personnel, finance,
organization, and business relative to the controlling shareholder and actual controller
The Company carried out operations in strict accordance with the Company Law, Articles of
Association and other laws, regulations and rules, established a sound corporate governance structure
of the Company, and maintained independent from the controlling shareholder in terms of business,
personnel, assets, organization, and finance. The Company has an independent and complete
business system and the ability to operate independently.
4.2.1 Business: The Company has an independent and complete supply, R&D, production and
sales system, has the ability to operate independe ntly in the market, conduct business, accounting
and decision-making, assume responsibilities and risks independently, and does not rely on the
controlling shareholder or other any related parties.
4.2.2 Personnel: The Company has formed a complete system for labor, personnel and salary
management, and an independent human resources management department to manage labor,
personnel and salary independently of the controlling shareholder. The Company has an independent
workforce. The Company's directors, supervisors and senior management are legally elected in
accordance with the Company Law, Articles of Association and other relevant laws, regulations and
rules. The Company's senior executives all work in the Company and receive remuneration, and do
not hold any positions other than directors and supervisors in the controlling shareholder and its
subsidiaries.
4.2.3 Assets: The Company has a clear property relationship with the controlling shareholder, and
independently owns complete legal person assets, production and supporting facilities, land, plant,
machinery and equipment related to production and operation, as well as ownership and right to use
of trademarks, patents and non-patented technologies. The Company has full control over all assets,
and its assets and funds are not occupied by the controlling shareholder to the detriment of the
interests of the Company.
4.2.4 Organization: The Company established a sound organizational system to meets its own
production and operation needs. The functional departments operate independently and smoothly,
and there is no subordination relationship between the controlling shareholder and the functional
departments.
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4.2.5 Finance: The Company has an independent financial and accounting department equipped
with full-time financial personnel. The Company established an independent accounting system and
a standardized financial management system, and financial decisions were made independently. The
Company opened an independent bank account to independently make ta x declarations and perform
tax obligations in accordance with the law. There is no shared bank account or mixed tax payment
with the controlling shareholder.
4.3 Horizontal Competition
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
4.4 Information on the annual general meeting and extraordinary general meetings of shareholders held during the Reporting Period
4.4.1 The general meeting of shareholders held during the Reporting Period
Type of Percentage Date of Disclosure
Session of meeting Resolutions
meeting of investors meeting date
1. Reviewed and approved the Proposal on the Estimated Amount of Daily Connected
Transactions in 2021;
2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its
Controlled Subsidiaries and Mutual Insurance Amount between Controlled Subsidiaries in 2021";
3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business in
st Extraordinary
The 1 Extraordinary 2021;
general
General Meeting of 56.41% 02/08/2021 02/09/2021 4. Reviewed and approved the Proposal on Carrying out Commodity Hedging Business in 2021;
meeting of
Shareholders in 2021 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by
shareholders
the Controlling Shareholder and Connected Transactions;
6. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's
Directors, Supervisors and Senior Management;
7. Reviewed and approved the Proposal on Joint Investment and Establishment of a Company
with Related Parties and Related Party Transactions
1. Reviewed and approved the Proposal on “The Fourth Employee Stock Ownership Plan of
Hengyi Petrochemical Co., Ltd. (Draft)” and its Summary;
The 2nd Extraordinary
2. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to
Extraordinary general
1.89% 04/20/2021 04/21/2021 Authorize the BOD to Handle Matters Related to the Company's Fourth Employee Stock Ownership
General Meeting of meeting of
Plan;
Shareholders in 2021 shareholders
3. Reviewed and approved the Proposal on the “Management Measures for the Fourth Employee
Stock Ownership Plan of Hengyi Petrochemical Co., Ltd."
2020 Annual General Annual 51.09% 05/11/2021 05/12/2020 1. Reviewed and approved the Proposal on the "Annual Report 2020" and its Summary;
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Hengyi Petrochemical 2021 Annual Report
Type of Percentage Date of Disclosure
Session of meeting Resolutions
meeting of investors meeting date
Meeting of general 2. Reviewed and approved the Work Report of the BOD for FY 2020;
Shareholders meeting of 3. Reviewed and approved the Work Report of the BOS for FY 2020;
shareholders 4. Reviewed and approved the Report on the Financial Accounts for FY 2020;
5. Reviewed and approved the Proposal on Profit Distribution of the Company for FY 2020;
6. Reviewed and approved the Self-Evaluation of Internal Control for FY 2020;
7. Reviewed and approved the Proposal on the Annual Deposit and Use of Raised Funds in 2020;
8. Reviewed and approved the Proposal on the Appointment of Accounting Firm;
9. Reviewed and approved the Proposal on Achievement of Performance Commitment and
Performance Compensation Plan in 2020 Regarding the Issuance of Shares for Purchase of Assets
and Related Party Transactions;
10. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to
Authorize the Company's BOD to Fully Handle Matters Related to Share Repurchase and
Cancellation;
11. Reviewed and approved the Proposal on Addition of Daily Related Party Transactions for 2021;
12. Reviewed and approved the Proposal on Amending Part of the “Articles of Association of the
Company"
1. Reviewed and approved the Proposal on the Company's Compliance with the Conditions for
Public Issuance of Convertible Corporate Bonds;
2. Reviewed and approved the Proposal on the Company's Public Issue of Convertible Corporate
The 3rd Extraordinary
Bonds;
Extraordinary general
43.51% 06/16/2021 06/16/2021 3. Reviewed and approved the Proposal on the "Public Issuance of Convertible Corporate Bonds
General Meeting of meeting of
by Hengyi Petrochemical Co., Ltd.";
Shareholders in 2021 shareholders
4. Reviewed and approved the Proposal on Preparation of the Report on the Use of the Previous
Raised Funds by the Company;
5. Reviewed and approved the Proposal on the “Feasibility Analysis Report on the Use of Funds
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Hengyi Petrochemical 2021 Annual Report
Type of Percentage Date of Disclosure
Session of meeting Resolutions
meeting of investors meeting date
Raised From Public Issue of Convertible Corporate Bonds by Hengyi Petrochemical Co., Ltd.”;
6. Reviewed and approved the Proposal on the Dilution of Immediate Return From Public Issue of
Convertible Bonds, Measures to Filling and Commitment of Relevant Subjects;
7. Reviewed and approved the Proposal on the Company's Dividend Return Plan for Shareholders
for the Next Three Years (2021-2023)";
8. Reviewed and approved the Proposal on Formulating the “Rules for the Meeting of Convertible
Bondholders of Hengyi Petrochemical Co., Ltd.”;
9. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to
Authorize the BOD to Handle the Public Issue of Convertible Corporate Bonds
Extraordinary
The 4th Extraordinary
general 1. Reviewed and approved the Proposal on Providing Affiliated Entrusted Loans to a JV
General Meeting of 39.45% 11/12/2021 11/13/2021
meeting of Company-Yisheng New Materials"
Shareholders in 2021
shareholders
1. Reviewed and approved the Proposal on Related Party Transactions for the Capital Increase of
Extraordinary Zhejiang Yisheng New Materials Co., Ltd.;
The 5th Extraordinary
general 2. Reviewed and approved the Proposal on Related PartyTransactions for the Capital Increase of
General Meeting of 52.90% 12/24/2021 12/25/2021
meeting of Hainan Yisheng Petrochemical Co., Ltd.;
Shareholders in 2021
shareholders 3. Reviewed and approved the Proposal on Adding the Estimated Amount of Daily Connected
Transactions in 2021;
4.4.2 The preference shareholders whose voting rights have been restored request the convening of an extraordinary general meeting
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
4.5 Directors, supervisors and senior management
4.5.1 Basic information
Number of Number of Increase Decrease Number of
Reasons for
shares held at restricted of shares of shares Other shares held
Employm Start date of End date of Stock increase or
Name Title Gender Age the beginning shares in current in current changes at the end of
ent status term term options decrease of
of the period granted period period (shares) the period
shares
(shares) (shares) (shares) (shares) (shares)
President and
Qiu Yibo Current Male 35 05/15/2015 09/13/2023 1,365,000 1,365,000
CEO
Fang
Vice President Current Male 58 05/16/2011 09/13/2023 4,777,500 4,777,500
Xianshui
Ni Defeng Director Current Male 44 08/25/2017 09/13/2023 6,051,500 6,051,500
Lou Director, Vice
Current Male 60 09/14/2020 09/13/2023 0 0
Jianchang President
Director,
Mao Ying Chief Current Female 41 09/14/2020 09/13/2023 0 0
Financial
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Hengyi Petrochemical 2021 Annual Report
Number of Number of Increase Decrease Number of
Reasons for
shares held at restricted of shares of shares Other shares held
Employm Start date of End date of Stock increase or
Name Title Gender Age the beginning shares in current in current changes at the end of
ent status term term options decrease of
of the period granted period period (shares) the period
shares
(shares) (shares) (shares) (shares) (shares)
Officer, Vice
President
Director, Vice
Wu Zhong Current Male 33 09/14/2020 09/13/2023 109,200 109,200
President
Chen Independent
Current Male 57 08/25/2017 09/13/2023 0 0
Sanlian Director
Yang Independent
Current Male 65 08/25/2017 09/13/2023 0 0
Bozhang Director
Yang Independent
Current Male 58 08/25/2017 09/13/2023 0 0
Liuyong Director
Wang Executive
Current Male 52 05/16/2011 09/13/2023 5,778,500 5,778,500
Songlin Vice President
Chen Vice President Current Male 55 08/25/2017 09/13/2023 3,640,000 3,640,000
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Hengyi Petrochemical 2021 Annual Report
Number of Number of Increase Decrease Number of
Reasons for
shares held at restricted of shares of shares Other shares held
Employm Start date of End date of Stock increase or
Name Title Gender Age the beginning shares in current in current changes at the end of
ent status term term options decrease of
of the period granted period period (shares) the period
shares
(shares) (shares) (shares) (shares) (shares)
Liancai
Zhao
Vice President Current Male 37 09/15/2020 09/13/2023 327,600 327,600
Donghua
Zheng Secretary of
Current Male 43 08/28/2017 09/13/2023 2,912,000 2,912,000
Xingang the Board
Chairman of
Li Yugang Current Male 45 09/15/2020 09/13/2023 218,400 218,400
the BOS
Jin
Supervisor Current Female 36 09/14/2020 09/13/2023 109,200 109,200
Danwen
Ni Jinmei Supervisor Current Female 47 08/28/2020 09/13/2023 273,000 273,000
Total - - - - - - 25,561,900 25,561,900 -
Whether there is any loss of office of directors, supervisors or dismissal of the senior management during the Reporting Period
□ Yes √ No
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Hengyi Petrochemical 2021 Annual Report
Changes in directors, supervisors and senior management of the Company
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
4.5.2 Employment status
Professional background, main work experience and main responsibilities of the current
directors, supervisors and senior management of the Company
4.5.2.1 Directors
Qiu Yibo, male, born in December 1987, is a Chinese national with a bachelor degree and used to
work as Manager of Investment Management Department of Sinopec Chemical Sales Co., Ltd. East
China Branch and Hengyi Petrochemical Co., Ltd. He is currently President and CEO of Hengyi
Petrochemical Co., Ltd., and concurrently serves as Director of Zhejiang Hengyi Group Co., Ltd.,
Executive Director of Suqian Yida New Material Co., Ltd., Executive Director of Zhejiang Yizhi
Information Technology Co., Ltd., President of Fujian Yijin Chemical Fiber Co., Ltd., Vice President
of Zhejiang Hengyi Polyamide Co., Ltd., Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd.,
Director of Dongzhan Shipping Co., Ltd., Executive Director of Ningbo Jinhou Industrial Investment
Co., Ltd., Director of Zhejiang Xianfeng Data Technology Co., Ltd., Executive Director of Zhejiang
Hengyi Hanlin Enterprise Management Co., Ltd. and Executive Director of Hangzhou Yibo
Investment Management Co., Ltd.
Fang Xianshui, male, born in March 1964, is a Chinese senior economist with a bachelor degree and
has more than 30 years of production management experience in chemical fiber industry. He used to
work as General Manager of Hangzhou Hengyi Industrial Corporation, General Manager of
Hangzhou Hengyi Chemical Fiber Co., Ltd., and General Manager of Zhejiang Hengyi Group Co.,
Ltd. He is currently Vice President of Hengyi Petrochemical Co., Ltd., and concurrently serves as
Director of Zhejiang Hengyi Group Co., Ltd., Executive Director and CEO of Zhejiang Hengyi
Petrochemical Co., Ltd., President of Zhejiang Hengyi Polymer Co., Ltd., President of Zhejiang
Yisheng Petrochemical Co., Ltd., President of Zhejiang Hengyi High-tech Materials Co., Ltd.,
Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd., Director of Hong Kong Tianyi
International Holding Co., Ltd., Director of Good Park International Investment Co., Ltd., 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 CEO of
Ningbo Hengyi Engineering Management Co., Ltd., President of Hainan Yisheng Petrochemical Co.,
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Hengyi Petrochemical 2021 Annual Report
Ltd., Executive Director and President of Zhejiang Hengyi Petrochemical Sales Co., Ltd., President
of Ningbo Hengyi Trading Co., Ltd., Director of Hong Kong Yisheng Co., Ltd., Executive Director
of Shanghai Hengyi Polyester Fiber Co., Ltd., President of Zhejiang Hengyi International Trading
Co., Ltd., Director of Fujian Yijin Chemical Fiber Co., Ltd., Director of Zhejiang Yisheng New
Materials Co., Ltd., Director of Zhejiang Hengyi Polyamide Co., Ltd., Executive Director of
Zhejiang Hengkai Energy Co., Ltd., Executive Director of Zhejiang Shuangtu New Materials Co.,
Ltd., Executive Director of Zhejiang Hengyi Energy Co., Ltd., Executive Director of Zhejiang
Xiaoyi Supply Chain Management Co., Ltd., and Director of Dalian Yisheng Investment Co., Ltd.
Ni Defeng, male, born in January 1978, is a Chinese national with a doctoral degree and has nearly
20 years of work experience in finance and investment. He used to work as Auditor of Pan-China
Certified Public Accountants, Manager of Finance Department, Manager of Investment Development
Department, and Assistant to CEO of Zhejiang Hengyi Group Co., Ltd., and investment Director of
Hengyi Petrochemical Co., Ltd. He is currently Director of Hengyi Petrochemical Co., Ltd., and
concurrently serves as Director and CEO of Zhejiang Hengyi Group Co., Ltd., Director of Zhejiang
Xianfeng Data Technology Co., Ltd., Director of Hangzhou Hengyi Investment Co., Ltd., 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 CEO of Hangzhou Jinglin Asset Management Co., Ltd., Director of Dalian
Yishengyuan Real Estate Co., Ltd., and President of Hangzhou Jinyi Industrial Co., Ltd.
Lou Jianchang, male, born in November 1962, is a Chinese professor-level senior engineer with a
master degree of engineering conferred by China University of Petroleum (Beijing) and an MBA
degree conferred by University of Houston. He used to work as Deputy Chief Dispatcher of General
Dispatching Office, Deputy Plant Manager, and Plant Manager of Sinopec Yanshan Petrochemical
Company Refinery; Deputy General Manager of Sinopec Yanshan Petrochemical Company; Deputy
Director of Sinopec Material and Equipment Department and Deputy General Manager of Sinopec
International Business Co., Ltd. He is currently Director and Vice President of Hengyi Petrochemical
Co., Ltd., and concurrently serves as Director of Fujian Yijin Chemical Fiber Co., Ltd., and Director
of Zhejiang Baling Hengyi Caprolactam Co., Ltd.
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Hengyi Petrochemical 2021 Annual Report
Mao Ying, female, born in February 1981, is a Chinese senior economist with a bachelor degree. She
used to work as Assistant to CEO of Hengyi Petrochemical Co., Ltd. and Chief Financial Officer of
Hengyi Brunei. She is currently Vice President and Chief Financial Officer of Hengyi Petrochemical
Co., Ltd.
Wu Zhong, male, born in July 1989, is a Chinese national with a bachelor of law degree conferred by
Zhejiang Gongshang University. He used to work as Deputy General Manager of Zhejiang Hengyi
Petrochemical Sales Co., Ltd. and General Manager of Ningbo Hengyi Industry Co., Ltd. He is
currently Director and Vice President of Hengyi Petrochemical Co., Ltd., and concurrently serves as
Director of Fujian Yijin Chemical Fiber Co., Ltd., Executive Director of Hainan Hengjing Trading
Co., Ltd., and Executive Director of Zhejiang Hengyi International Trading Co., Ltd.
Chen Sanlian, male, Han nationality, born in November 1964, is a Chinese national without overseas
permanent residency or party affiliation. He holds a bachelor of law degree, an independent director
qualification certificate and a lawyer qualification certificate. He successively served as Editorial
Director and Deputy Editor of "Lawyers and Legal System" magazine, lawyer of High Mark Law
Firm, and Deputy Secretary-general and Secretary-general of the Lawyers Association of Zhejiang.
He is currently full-time Vice President of the Lawyers Association of Zhejiang, Member of the
Zhejiang Provincial Political Consultative Conference, and Vice President of the Association of
Intellectuals of Zhejiang, as well as Visiting Professor of the Law School of Zhejiang University of
Technology, arbitrator of the Shanghai International Economic and Trade Arbitration Commission,
and arbitrator of the Hangzhou Arbitration Commission. He is an independent director of Hengyi
Petrochemical Co., Ltd. and concurrently serves as an independent director of Calxon Group Co.,
Ltd., Zheshang Development Group Co., Ltd., and Viewshine Ltd.
Yang Liuyong, male, born in March 1964, is a Chinese national with a doctoral degree. He is
currently a professor of finance at Zhejiang University and Deputy Dean of Academy of Financial
Research, Zhejiang University. He joined the Communist Party of China in 1984 and started working
in 1987. He studied agricultural economics at Zhejiang University from 1980 to 1984 for a bachelor
degree and from 1984 to 1987 for a master degree. He has been a teacher in the Department of
Finance of Zhejiang University since 1987 (including studying in the Department of Agricultural
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Hengyi Petrochemical 2021 Annual Report
Economics and Management of Zhejiang University from 1996 to 2001 [as a doctoral student]), and
is also an independent director of Hengyi Petrochemical Co., Ltd.
Yang Bozhang, male, born in July 1957, is Chinese senior accountant with a junior college degree.
He used to work as Vice President of Zhejiang Association of CFO, Director and Vice President of
Transfar Group Co., Ltd., General Manager of Zhejiang Transfar Jiangnan Dadi Development Co.,
Ltd., CEO of Hangzhou Transfar Science and Technology City Company, Secretary of the Party
Committee of Transfar Logistics Group Co., Ltd., President of the BOS of Zhejiang Wynca Chemical
Industrial Group Co., Ltd. (600596), and Director of Zhejin Trust Co., Ltd. He is currently President
of Transfar Group Finance Co., Ltd., President of Hangzhou Kezhu Investment and Development
Co., Ltd., and the President of Hangzhou Kerong Real Estate Co., Ltd. He is also an independent
director of Hengyi Petrochemical Co., Ltd.
4.5.2.2 Supervisors
Li Yugang, male, born in November 1977, is Chinese economist and international registered internal
auditor with a master degree and more than ten years of audit work experience. He used to work as
Deputy Director of Audit Department of the BOD and First Deputy Director of Legal Department of
Shagang Group, and is currently Director of Audit and Legal Department of Hengyi Petrochemical
Co., Ltd.
Jin Danwen, female, born in April 1986, is Chinese national with a master of accounting degree
conferred by Hangzhou Dianzi University. She holds qualifications of Chinese certified public
accountant and intermediate accountant. She used to work as Director of Finance Department of
Hengyi Industries Sdn. Bhd. She is currently General Manager of Fund Management Department of
Hengyi Petrochemical Co., Ltd. and Director of Finance Department of Hengyi Industries Sdn. Bhd.
She concurrently serves as Director of Hangzhou Jinyi Industrial Co., Ltd., and Director of Zhejiang
Hengyi High-tech Materials Co., Ltd.,
Ni Jinmei, female, born on March 21, 1976, is a Chinese economist. She used to work as General
Manager of Zhejiang Hengyi Polymer Co., Ltd., and General Manager of Comprehensive
Management Center of Zhejiang Hengyi Petrochemical Co., Ltd. Currently, she is Executive Director
and General Manager of Hangzhou Yijing Chemical Fiber Co., Ltd.
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Hengyi Petrochemical 2021 Annual Report
4.5.2.3 Senior executives
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 dir ector
and president of Haining Hengyi Thermal Power Co., Ltd, and director of Jiangsu New Horizon
Advanced Functional Fiber Innovation Center Co., Ltd.
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 Law 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, senior economist. He has more than 10 years of investment and financing wor k
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 BOD of Hengyi
Petrochemical Co., Ltd. He is currently the secretary of the BOD and assistant to the president of
Hengyi Petrochemical Co., Ltd.
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Serving in shareholder units
Whether to receive
Name of Positions held in Start date of remuneration
Name of shareholder units
incumbent shareholder units term allowance in
shareholder units
Qiu Yibo Zhejiang Hengyi Group Co., Ltd. Director 09/26/2017 No
Fang Xianshui Zhejiang Hengyi Group Co., Ltd. Director 10/18/1994 No
Fang Xianshui Hangzhou Hengyi Investment Co., Ltd. President & GM 10/08/2021 No
Ni Defeng Zhejiang Hengyi Group Co., Ltd. Director & President 09/26/2017 Yes
Ni Defeng Hangzhou Hengyi Investment Co., Ltd. Director 12/28/2016 No
Description of the position in the shareholder unit N/A
Serving in other units
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Hangzhou Yibo Investment
Qiu Yibo Executive Director 03/17/2016 No
Management Co. Ltd.
Ningbo Jinhou Industry Manager &
Qiu Yibo 05/03/2016 No
Investment Co. Ltd. Executive Director
Zhejiang Yizhi Information Executive Director
Qiu Yibo 02/07/2021 No
Technology Co. Ltd. & GM
Zhejiang Hengyi Hanlin Executive Director
Qiu Yibo 08/20/2020 No
Real Estate Co. Ltd. & GM
Fujian Yijin Chemical Fiber
Qiu Yibo President 01/26/2018 No
Co. Ltd.
Zhejiang Hengyi Polyamide
Qiu Yibo Vice President 01/14/2021 No
Co., Ltd.
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Zhejiang Baling Hengyi
Qiu Yibo Director 06/09/2021 No
Caprolactam Co., Ltd.
Suqian Yida New Materials
Qiu Yibo Executive Director 01/19/2018 No
Co., Ltd.
Qiu Yibo Dongzhan Shipping Co. Ltd. Director 11/30/2017 No
Zhejiang Xianfeng Data
Qiu Yibo Director 06/07/2016 No
Technology Co. Ltd.
Zhejiang Yixin Chemical
Fang Xianshui Executive Director 07/26/2017 No
Fiber Co. Ltd.
Hainan Yisheng Trading Co.
Fang Xianshui Executive Director 08/14/2014 No
Ltd.
Zhejiang Hengkai Energy
Fang Xianshui Executive Director 12/18/2017 No
Co. Ltd.
Ningbo Hengyi Trading Co.,
Fang Xianshui President 05/24/2011 No
Ltd.
Ningbo Hengyi Engineering GM & Executive
Fang Xianshui 11/27/2014 No
Management Co. Ltd. Director
Zhejiang Hengyi Energy Co.
Executive Director
Fang Xianshui Ltd. (浙江恒逸能源有限公 09/24/2021 No
& GM
司)
Zhejiang Xiaoyi Supply
Chain Management Co., Ltd.
Executive Director
Fang Xianshui (Zhejiang Xiaoyi Supply 04/19/2021 No
& GM
Chain Management Co.,
Ltd.)
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Zhejiang Hengyi Executive Director
Fang Xianshui 07/26/2004 No
Petrochemical Co., Ltd. & GM
Zhejiang Hengyi High-Tech President &
Fang Xianshui 10/15/2007 No
Materials Co., Ltd. manager
Zhejiang Hengyi Polymer
Fang Xianshui President 09/05/2000 No
Co., Ltd.
Zhejiang Yisheng
Fang Xianshui President 05/12/2015 No
Petrochemical Co., Ltd.
Zhejiang Hengyi Manager &
Fang Xianshui 07/24/2017 No
Petrochemical Sales Co. Ltd. Executive Director
Hainan Yisheng
Fang Xianshui President 06/23/2014 No
Petrochemical Co., Ltd.
Shanghai Hengyi Polyester
Fang Xianshui Executive Director 05/14/2015 No
Fiber Co. Ltd.
Fujian Yijin Chemical Fiber
Fang Xianshui Director 01/26/2018 No
Co. Ltd.
Yisheng Dahua
Fang Xianshui Director 04/29/2006 No
Petrochemical Co., Ltd.
Zhejiang Hengyi Polyamide
Fang Xianshui Director 08/12/2013 No
Co., Ltd.
Dalian Yisheng Investment
Fang Xianshui Director 09/29/2007 No
Co., Ltd.
Zhejiang Baling Hengyi
Fang Xianshui Director 01/10/2008 No
Caprolactam Co., Ltd.
Fang Xianshui Zhejiang Yisheng New Director 11/27/2017 No
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Materials Co., Ltd.
Haining Hengyi New
Fang Xianshui Director 10/05/2019 No
Materials Co., Ltd.
Hong Kong Tianyi
Fang Xianshui International Holding Co., Director 09/17/2009 No
Ltd.
Good Park International
Fang Xianshui Director 09/17/2009 No
Investment Co. Ltd.
Hong Kong Yisheng Co.,
Fang Xianshui Director 06/27/2014 No
Ltd.
Hangzhou Jinyi Industrial
Ni Defeng President & GM 09/30/2019 No
Co. Ltd.
Hangzhou Jinglin Asset Executive Director
Ni Defeng 03/12/2018 No
Management Co. Ltd. & GM
Zhejiang Hengyi Polyamide
Ni Defeng Director 01/27/2015 No
Co., Ltd.
Lanping County Qingdian
Ni Defeng Director 01/16/2006 No
Bay Zinc Industry Co. Ltd.
Hainan Hengshengyuan
Ni Defeng International Tourism Director 02/26/2018 No
Development Co. Ltd.
Dalian Yishengyuan Real
Ni Defeng Director 03/29/2018 No
Estate Co. Ltd.
Zhejiang Xianfeng Data
Ni Defeng Director 06/07/2016 No
Technology Co. Ltd.
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Fujian Yijin Chemical Fiber
Lou Jianchang Director 10/22/2020 No
Co. Ltd.
Zhejiang Baling Hengyi
Lou Jianchang Director 06/09/2021 No
Caprolactam Co., Ltd.
Hainan Hengjing Trading Executive Director
Wu Zhong 08/21/2020 No
Co. Ltd. & manager
Zhejiang Hengyi Executive Director
Wu Zhong 07/01/2021 No
International Trade Co. Ltd. & GM
Fujian Yijin Chemical Fiber
Wu Zhong Director 10/22/2020 No
Co. Ltd.
Hainan Hengjing Trading
Jin Danwen Supervisor 08/21/2020 No
Co. Ltd.
Hangzhou Jinyi Industrial
Jin Danwen Director 02/28/2020 No
Co. Ltd.
Zhejiang Hengyi High-Tech
Jin Danwen Director 02/28/2020 No
Materials Co., Ltd.
Zhejiang Hengyi
Jin Danwen Engineering Management Supervisor 01/29/2018 No
Co. Ltd.
Zhejiang Hengyi Hanlin
Jin Danwen Supervisor 08/20/2020 No
Real Estate Co. Ltd.
Haining Hengyi New
Jin Danwen Supervisor 10/27/2020 No
Materials Co., Ltd.
Zhejiang Hengyi Executive Director
Wang Songlin 08/04/2020 No
Petrochemical Research & GM
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Institute Co. Ltd.
Haining Hengyi Thermal Manager &
Wang Songlin 09/13/2017 No
Power Co., Ltd. Executive Director
Jiangsu New Horizon
Wang Songlin Advanced Functional Fiber Director 07/19/2018 No
Innovation Center Co., Ltd.
Haining Hengyi New
Wang Songlin President 06/29/2018 No
Materials Co., Ltd.
Hangzhou Yijing Chemical Executive Director
Ni Jinmei 05/29/2019 No
Fiber Co., Ltd. & GM
Description of the position in the shareholder unit N/A
Punishme nts of the Company’s current and outgoing directors, supervisors and senior
management by securities regulators during the Reporting Period in the previous three years
□ Applicable √ Not applicable
4.5.3 Remuneration of directors, supervisors and senior manage ment
Decision-making procedures, basis for determination, and actual payme nt of remuneration of
directors, supervisors, and senior management
The Company passed the "Salary and Performance Appraisal Management System for Senior
Management Staff " (reviewed and approved at the third meeting of the 8 th BOD) 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 2021 (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
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Hengyi Petrochemical 2021 Annual Report
relevant regulations, and based on the Company’s operating conditions and the duties and work
performance evaluation of relevant personnel by BOD. During the Reporting Period, 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 BOD 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 RMB 150,000 per person per year
(including Tax), allowances are paid on an average monthly basis.
Remuneration of directors, supervisors and senior manage ment during the Reporting Period
of the Company
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Hengyi Petrochemical 2021 Annual Report
Unit: RMB 10,000
Whether to get
Total pre-tax
remuneration
Employment remuneration
Name Title Gender Age from related
status received from
parties of the
the Company
Company
President and
Qiu Yibo Male 35 Current 142.59 No
CEO
Fang Xianshui Vice President Male 58 Current 145.09 No
Ni Defeng Director Male 44 Current - Yes
Director, Vice
Lou Jianchang Male 60 Current 136.85 No
President
Directors, VP
Mao Ying Female 41 Current 101.60 No
and CFO
Director, Vice
Wu Zhong Male 33 Current 91.03 No
President
Independent
Chen Sanlian Male 57 Current 15.00 No
Director
Independent
Yang Bozhang Male 65 Current 15.00 No
Director
Independent
Yang Liuyong Male 58 Current 15.00 No
Director
Executive Vice
Wang Songlin Male 52 Current 131.68 No
President
Chen Liancai Vice President Male 55 Current 118.08 No
Zhao Donghua Vice President Male 37 Current 106.59 No
Secretary of
Zheng Xingang Male 43 Current 71.99 No
the Board
Chairman of
Li Yugang Male 45 Current 53.59 No
the BOS
Jin Danwen Supervisor Female 36 Current 41.99 No
Ni Jinmei Supervisor Female 47 Current 63.50 No
Total - - - - 1,249.58 -
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Hengyi Petrochemical 2021 Annual Report
4.6 Performance of Duties by the Directors during the Reporting Period
4.6.1 Performance of the BOD during the Reporting Period
Date of Disclos
Session of meeting meetin ure Resolutions
g date
1. Reviewed and approved the Proposal on the Estimated Amount of Daily Related Party Transactions in 2021;
2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its Controlled Subsidiaries and
Mutual Insurance Amount between Controlled Subsidiaries in 2021";
3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business in 2021;
4. The “Resolution on Carrying out Commodity Hedging Business for the Year 2021” was deliberated and adopted;
The Fifth Meeting of the
01/22/2 01/23/2 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by the Controlling
Eleventh Session of the
021 021 Shareholder and Related Party Transactions;
BOD
6. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's Directors, Supervisors and
Senior Management;
7. The “Resolution on Joint Investment in Establishment of a Company with Related Parties and Carrying out Related
Party Transactions” was deliberated and adopted;
8. The “Resolution on Convening the First EGM for the Year 2021” was deliberated and adopted;
The Sixth Meeting of
03/17/2 03/18/2 1. The “Resolution on Adjustment of the Program of Share Repurchase by Way of Centralized Bidding” was deliberated
the Eleventh Session of
021 021 and adopted;
the BOD
1. Reviewed and approved the Proposal on “The Fourth Employee Stock Ownership Plan of Hengyi Petrochemical Co.,
The Seventh Meeting of Ltd. (Draft)” and its Summary;
04/01/2 04/02/2
the Eleventh Session of 2. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to Authorize the BOD to
021 021
the BOD Handle Matters Related to the Company's Fourth Employee Stock Ownership Plan;
3. Reviewed and approved the Proposal on the “Management Measures for the Fourth Employee Stock Ownership Plan
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Hengyi Petrochemical 2021 Annual Report
Date of Disclos
Session of meeting meetin ure Resolutions
g date
of Hengyi Petrochemical Co., Ltd."
4. The “Resolution on Convening the Second EGM for the Year 2021” was deliberated and adopted;
1. The “Resolution on Annual Report 2020 and the Summary” was deliberated and adopted;
2. Reviewed and approved the Work Report of the BOD for FY 2020;
3. The “Report on Financial Final Accounts 2020” was deliberated and adopted;
4. The “Resolution on Distribution of the Company’s Profits for FY 2020” was deliberated and adopted;
5. The “Report on Social Responsibilities 2020” was deliberated and adopted;
6. Reviewed and approved the Self-Evaluation of Internal Control for FY 2020;
7. The “Resolution on Deposit and Use of Raised Funds for FY 2020” was deliberated and adopted;
8. The “Resolution on Renewal of the Appointment of the Accounting Firm” was deliberated and adopted;
9. Reviewed and approved the Proposal on Achievement of Performance Commitment and Performance Compensation
The Eighth Meeting of Plan in 2020 Regarding the Issue of Shares for Purchase of Assets and Related Party Transactions;
04/19/2 04/20/2
the Eleventh Session of 10. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to Authorize the
021 021
the BOD Company's BOD to Fully Handle Matters Related to Share Repurchase and Cancellation;
11. The “Resolution on Retrospective Adjustment of Previous Financial Statements due to Enterprise Merger Under
Common Control and Change in Accounting Policies” was deliberated and adopted;
12. The “Resolution on Increase in Daily Related Party Transactions for the Year 2021” was deliberated and adopted;
13. The “Resolution on Carrying out Bill Pool Business” was deliberated and adopted;
14. The “Resolution on External Donation for Poverty Alleviation” was deliberated and adopted;
15. The “Resolution on Amendment of Some Articles of the Articles of Association of the Company” was deliberated
and adopted;
16. The “Resolution on Convening 2020 Annual General Meeting of Shareholders” was deliberated and adopted;
The Ninth Meeting of 04/26/2 04/27/2 1. The “First Quarterly Report 2021 (Full Text & Body)” was deliberated and adopted;
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Hengyi Petrochemical 2021 Annual Report
Date of Disclos
Session of meeting meetin ure Resolutions
g date
the Eleventh Session of 021 021
the BOD
1. Reviewed and approved the Proposal on the Company's Compliance with the Conditions for Public Issue of
Convertible Corporate Bonds;
2. Reviewed and approved the Proposal on the Company's Public Issue of Convertible Corporate Bonds;
3. Reviewed and approved the Proposal on the Company's Public Issue of Convertible Corporate Bonds;
4. The “Resolution on Formulating ‘Convertible Bond Holders’ Meeting Rules’” was deliberated and adopted;
5. The “Resolution on the Feasibility Analysis Report of the Company’s Public Offering of Convertible Bonds for
Raising Funds” was deliberated and adopted;
The Tenth Meeting of 6. The “Resolution on the Company's Shareholder Return Plan for the Next Three Years (2021-2023)” was deliberated
05/31/2 06/01/2
the Eleventh Session of and adopted;
021 021
the BOD 7. The “Resolution on Public Offering of Convertible Bonds to Dilute the Spot Return, Filling Measures and
Commitments of Relevant Subjects” was deliberated and adopted;
8. The “Resolution on Report on Use of the Funds Raised in the Previous Time” was deliberated and adopted;
9. The “Resolution on Submission to the General Meeting of Shareholders to Authorize the BOD to Handle Specific
Matters Regarding the Company’s Public Offering of Convertible Bonds” was deliberated and adopted;
10. The “Resolution on the Subsidiary’s Investment and Construction of a 1.1-mtpa New-type Functional Fiber Project”
was deliberated and adopted;
11. The “Notice on the Third EGM for the Year 2021” was deliberated and adopted;
The Eleventh Meeting
06/28/2 06/29/2 1. The “Resolution on Transfer of 100% Equity in the Wholly-owned Subsidiary Ningbo Hengyi Industry Co. Ltd.” was
of the Eleventh Session
021 021 deliberated and adopted;
of the BOD
The Twelfth Meeting of 08/24/2 08/25/2 1. The “Resolution on ‘Semi-annual Report 2021’ and the Summary” was deliberated and adopted;
the Eleventh Session of 021 021 2. The “Resolution on Semi-annual Special Report on Deposit and Use of Raised Funds for the Year 2021” was
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Hengyi Petrochemical 2021 Annual Report
Date of Disclos
Session of meeting meetin ure Resolutions
g date
the BOD deliberated and adopted;
3. The “Resolution on Adjustment of the Fourth ESOP of the Company” was deliberated and adopted;
4. The “Resolution on Change of Accounting Policies” was deliberated and adopted;
1. The “Resolution on the Third Quarterly Report 2021” was deliberated and adopted;
2. The “Resolution on Increase in Estimated Amount of Daily Related Party Transactions for the Year 2021” was
The Thirteenth Meeting deliberated and adopted;
10/27/2 10/28/2
of the Eleventh Session 3. The “Resolution on Provision of Entrusted Loan to the Invested Company, Yisheng New Materials” was deliberated
021 021
of the BOD and adopted;
4. The “Resolution on Share Repurchase by Way of Centralized Bidding (Phase II)” was deliberated and adopted;
5. The “Resolution on Convening the Fourth EGM for the Year 2021” was deliberated and adopted;
1. The “Resolution on Capital Increase to Zhejiang Yisheng New Materials Co. Ltd. and Related Party Transactions”
was deliberated and adopted;
The Fourteenth Meeting 2. The “Resolution on Capital Increase to Hainan Yisheng Petrochemical Co., Ltd. and Related Party Transactions” was
12/08/2 12/09/2
of the Eleventh Session deliberated and adopted;
021 021
of the BOD 3. The “Resolution on Increase in Estimated Amount of Daily Related Party Transactions for the Year 2021” was
deliberated and adopted;
4. The “Resolution on Convening the Fifth EGM for the Year 2021” was deliberated and adopted;
1. The “Resolution on Changing the Scope of Business of the Company and Amendment of ‘the Articles of
The Fifteenth Meeting Association’” was deliberated and adopted;
12/30/2 12/31/2
of the Eleventh Session 2. The “Resolution on Increase in Estimated Amount of Daily Related Party Transactions for the Year 2021” was
021 021
of the BOD deliberated and adopted;
3. The “Resolution on Convening the First EGM for the Year 2022” was deliberated and adopted;
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Hengyi Petrochemical 2021 Annual Report
4.6.2 Attendance of Directors in the Board Meeting and the General Meeting of
Shareholders
Attendance of Directors in the Board Meeting and the General Meeting of Shareholders
Number of Number of
Number of Number of Whether absent Number of
board attendance of
on-site attendance of Number of from board attendance of
Name of meetings to board meetings
attendance of board absence at board meetings in person General
director attend during by means of
board meetings by meetings for two consecutive Shareholders
the Reporting telecommunicati
meetings entrustees times Meetings
Period ons
Qiu Yibo 11 2 9 0 0 No 6
Fang Xianshui 11 2 9 0 0 No 6
Ni Defeng 11 2 9 0 0 No 6
Lou Jianchang 11 2 9 0 0 No 6
Mao Ying 11 2 9 0 0 No 6
Wu Zhong 11 2 9 0 0 No 6
Chen Sanlian 11 2 9 0 0 No 6
Yang Bozhang 11 2 9 0 0 No 6
Yang Liuyong 11 2 9 0 0 No 6
Reasons for failure to attend the board meetings in person for two consecutive times:
4.6.3 Objections of directors to related issues of the Company
Whether the directors raise objections to relevant matters of the Company
During the Reporting Period, the directors did not raise objections to the Company’s related matters.
4.6.4 Other information on directors' performance of duties
Whether directors’ suggestions to the Company are accepted
√ Yes □ No
Statements of directors on the acceptance or rejection of proposals on company issues
During the Reporting Period, all directors of the Company strictly followed the Company Law,
Securities Law, Code of Corporate Governance for Listed Companies, Guidelines of Shenzhen Stock
Exchange for the Standardized Operation of Listed Companies and the Articles of Association and
Rules of Procedures for the BOD to diligently carry out their work and perform their duties. They
took the initiative to pay attention to the Company's operation and management information,
financial position, important matters, etc., put forward opinions on the Company’s important
156
Hengyi Petrochemical 2021 Annual Report
decisions regarding its governance and operation, deeply discussed the proposed resolutions
submitted to the BOD for deliberation, expressed their own views and reached unanimous options
after full communication and discussion. They fully considered the interests and demands of
minority shareholders when making decisions, and resolutely supervised and promoted the
implementation of the resolutions adopted at the BOD in order to make the decisions scientific,
timely and efficient and protect the legitimate equities of the Company and all shareholders.
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Hengyi Petrochemical 2021 Annual Report
4.7 Performance of duties by the special committees under the BOD during the Reporting Period
Numbe Other
Details of
r of Date of Important opinions and recommendations perform
Committee Members Contents objections
meetin meeting made ance of
(if any)
gs held duties
The “Resolution on Joint Investment in The Committee strictly followed the
01/08/20 Establishment of a Company with Related Parties Company Law, the Regulatory Rules of
Qiu Yibo,
Strategy and 21 and Carrying out Related Party Transactions” the CSRC, the Articles of Association and
Fang Not
Investment was deliberated; the Rules of Procedure for the BOD to Not
Xianshui, Ni 2 applica
Decision-making The “Resolution on the Subsidiary’s Investment diligently perform its duties. It put forward applicable
Defeng and ble
Committee 05/28/20 and Construction of 1.1-mtpa New-type opinions on and unanimously approved all
Yang Liuyong
21 Differentiated Environmental Fiber Project” was proposed resolutions after full
deliberated; communication and discussion.
1. The “Annual Report on Implementation of
Internal Audit 2020” was deliberated;
2. The “Annual Report on Financial Final The Committee strictly followed the
Yang Accounts 2020” was deliberated; Company Law, the Regulatory Rules of
Bozhang, 3. The “Annual Audit Report 2020” was the CSRC, the Articles of Association, the
Chen Sanlian, deliberated; Rules of Procedure for the BOD and other Not
04/17/20 st
Not
Audit Committee Yang 4 4. The “Annual Report 2020 (the 1 draft)” relevant laws and regulations to diligently applica
21 applicable
Liuyong, Lou was deliberated; perform its duties. It put forward opinions ble
Jianchang and 5. The “Annual Report on Internal Control on and unanimously approved all proposed
Mao Ying Self-Evaluation 2020” was deliberated; resolutions after full communication and
6. The “Resolution on Deposit and Use of discussion
Raised Funds for FY 2020” was deliberated;
7. The “Resolution on Summary of Funds
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Hengyi Petrochemical 2021 Annual Report
Numbe Other
Details of
r of Date of Important opinions and recommendations perform
Committee Members Contents objections
meetin meeting made ance of
(if any)
gs held duties
Appropriation and Other Related Fund
Transactions for Non-operating Purpose for FY
2020” was deliberated;
8. The “Resolution on Renewal of the
Appointment of the Accounting Firm” was
deliberated;
1. The “First Quarterly Report 2021 (draft)”
04/12/20 was deliberated;
21 2. The “First Quarterly Report on Internal
Audit 2021” was deliberated;
1. The “Semi-annual Report 2021 (the 1st
draft)” was deliberated;
2. The “Resolution on Semi-annual Special
08/16/20
Report on Deposit and Use of Raised Funds for
21
the Year 2021” was deliberated;
3. The “Semi-annual Report on Internal Audit
2021” was deliberated;
1. The “Third Quarterly Report 2021 (the 1st
10/13/20 draft)” was deliberated;
21 2. The “Third Quarterly Report on Internal
Audit 2021” was deliberated;
Risk Control Chen Sanlian, 01/08/20 1. The “Resolution on Carrying out Foreign The Committee strictly followed the Not Not
3
Committee Yang 21 Exchange Hedging Business for the Year 2021” Company Law, the Regulatory Rules of applica applicable
159
Hengyi Petrochemical 2021 Annual Report
Numbe Other
Details of
r of Date of Important opinions and recommendations perform
Committee Members Contents objections
meetin meeting made ance of
(if any)
gs held duties
Bozhang and was deliberated; the CSRC, the Articles of Association and ble
Lou 2. The “Resolution on Carrying out the Rules of Procedure for the BOD to
Jianchang Commodity Hedging Business for the Year 2021” diligently perform its duties. It put forward
was deliberated; opinions on and unanimously approved all
1. The “Resolution on Renewal of the proposed resolutions after full
Appointment of the Accounting Firm” was communication and discussion
04/01/20
deliberated;
21
2. The “Annual Report on Financial Final
Accounts 2020” was deliberated;
The “Resolution on the Subsidiary’s Investment
05/28/20 and Construction of 1.1-mtpa New-type
21 Differentiated Environmental Fiber Project” was
deliberated;
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Hengyi Petrochemical 2021 Annual Report
4.8 Performance of duties by the BOS
Were there any risks found by the BOS in its supervisory activities during the Reporting
Period?
The BOS had no objections to the matters under supervision during the Reporting Period
4.9 Employees of the Company
4.9.1 Number of employees, professional composition and education level
Number of employees in the parent company at the end of the
10
Reporting Period (person)
Number of employees of service in major subsidiaries at the end of
16,810
the Reporting Period (person)
Total number of employees in service at the end of the Reporting
16,820
Period (person)
Total number of employees receiving salaries in current period
16,820
(person)
Number of retired employees whose expense is born by the parent
261
company and major subsidiaries (person)
Professional Composition
Number of professional
Professional composition category
composition (person)
Production personnel 14,146
Sales staff 316
Technical staff 1,604
Financial staff 147
Administrative personnel 607
Total 16,820
Education level
Education level category Quantity (person)
Master degree or above 277
Bachelor degree 1,813
College degree or below 14,730
Total 16,820
4.9.2 Compensation policies
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.
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Hengyi Petrochemical 2021 Annual Report
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.
4.9.3 Training plans
The Company established Hengyi Enterprise University according to the needs of production and
operation and talent training, aiming to build a competitive enterprise university a nd 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.
4.9.4 The situation of labor outsourcing
Total number of working hours of labor outsourced (hours) 5,688,293
Total remuneration paid for labor outsourced (RMB ) 130,830,733
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4.10 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, imple mentation 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 i n
"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 2020 Profit Distribution Plan approved by the Company’s 2020 Annual General
Meeting of Shareholders held on May11, 2021: based on the Company’s total existing share capital
of 3,681,645,407 shares, a cash dividend of RMB 3.00 (including tax) will be distributed to all
shareholders for every 10 shares, No bonus shares will be given and no capital reserve will be
capitalized. The Company published the “Announcement on the Implementation Hengyi
Petrochemical Co., Ltd.’ Annual Dividend Distribution in 2020”, and the implementation was
completed on July 6, 2021.
Special description of cash dividend policy
Whether it meets the requirements of the Company's Articles of Association or the
Yes
resolutions of the general meeting of shareholders:
Whether the dividend standard and proportion are clear and definite: Yes
Were the relevant decision-making procedures and mechanisms complete? Yes
Whether independent directors have performed their due diligence and played their due Yes
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role:
Whether small and medium shareholders have sufficient opportunities to express their
Yes
opinions and demands, and whether their legitimate equities are fully protected:
If the cash dividend policy is adjusted or changed, whether the conditions and Not
procedures are compliant and transparent: applicable
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
Profit distribution and capitalization of capital reserve during the Reporting Period
Number of bonus shares per 10 shares (shares) 0
Distributing dividends per 10 shares (RMB ) (tax included) 2.00
Shares converted per 10 shares (shares) 0
The equity base of the distribution plan (shares) 3,666,280,014
Cash dividend amount (RMB) (tax included) 733,256,002.80
Cash dividend amount in other ways (such as share repurchase) (RMB) 0.00
Total cash dividends (including other methods) (RMB) 733,256,002.80
Distributable profit (RMB) 800,776,067.44
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
bonus shares (including tax) and cash dividend of RMB 2.00 (including tax) for every 10 shares to
all shareholders based on the total existing share capital of 3,666,280,014 shares. The total profit
distributed will be RMB 733,256,002.80, and No bonus shares and no public 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 2021
annual shareholders meeting).
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4.11 Imple mentation of the Company’s equity incentive plan, employee stock ownership
plan or other e mployee incentive measures
4.11.1 Equity incentive
Not applicable
4.11.2 Imple mentation of ESOPs
All valid ESOPs during the Reporting Period
Proportion to the Source of funds for the
Workf Total shares Chan
ESOP holder total share capital implementation of the
orce held (shares) ges
of the Company ESOPs
Directors, supervisors, senior Remuneration and fund
management, regular employees of the from self-raising and
4,011 113,754,600 / 3.10%
Company and its majority owned margin financing and
subsidiaries securities lending
Shareholdings of directors, supervisors, senior manage ment in the ESOPs during the
Reporting Period
Number of shares held Number of shares held at Proportion to the
Name Title at the beginning of the the end of the Reporting total share capital
Reporting Period Period (shares) of the Company
Ni Defeng Director 0 408,163 0.011%
Lou Jianchang Director, Vice President 0 408,163 0.011%
Mao Ying Director, Vice President 0 408,163 0.011%
Wu Zhong Director, Vice President 0 408,163 0.011%
Wang Songlin Vice President 0 408,163 0.011%
Chen Liancai Vice President 0 408,163 0.011%
Zhao Donghua Vice President 0 408,163 0.011%
Zheng Xingang Secretary of the Board 0 244,897 0.007%
Li Yugang Supervisor 0 244,897 0.007%
Ni Jinmei Supervisor 0 244,897 0.007%
Jin Danwen Supervisor 0 122,448 0.003%
Changes in asset management institutions during the Reporting Period
□ Applicable √ Not applicable
Changes in equity due to disposal of shares by holders, etc. during the Reporting Period
□ Applicable √ Not applicable
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Exercise of shareholders' rights during the Reporting Period
□ Applicable √Not applicable
Other relevant circumstances and explanations of the ESOPs during the Reporting Period
□ Applicable √ Not applicable
Changes in the me mbers of the ESOP Management Committee
□ Applicable √ Not applicable
Financial impact of the ESOPs on the Listed Company during the Reporting Period and
related accounting treatment
□ Applicable √ Not applicable
Termination of the ESOPs during the Reporting Period
On March 17, 2021, the Company disclosed that the Company’s 147,281,998 shares held under the
ESOP (Phase III) had been fully sold out and the assets obtained therefrom would be then liquidated
and distributed and the Third ESOP would be automatically terminated. For details, please refer to
“Announcement on the Expiry of the Company's Third ESOP and Co mpletion of the Sale of Shares”
on CNINFO (Announcement No. 2021-021).
Other explanations
N/A
4.11.3 Other employee incentives
□ Applicable √ Not applicable
4.12 Establishme nt and imple mentation of internal control system during the Reporting
Period
4.12.1 Establishme nt and imple mentation
During the Reporting Period, the Company continuously updated and optimized its internal control
system in accordance with the “Basic Standard for Enterprise Internal Control” and other relevant
regulations to adapt to the changing external environment and internal management requirements.
The Company's internal control system is sound and reasonable and covers the main aspects of its
operation and management. It works well and there is no significant omission.
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4.12.1.1 Internal environment. The Company has an organizational structure that is suitable for its
business, which has a clear division of labor and sound and complete functional departments, and the
Company implements the principle of separation of incompatible duties to make these departments
restrain with each other.
4.12.1.2 Risk assessment. The Company collects relevant information in a comprehensive and
systematic manner according to its strategic objectives, development thoughts and the industry
characteristics to conduct risk assessment timely and weigh risks and benefits, then determines risk
response strategies to keep the risks under control.
4.12.1.3 Control activities. The Company continuously sorts out and improves the system according
to the current state of its management and development needs, without comprising the legality,
normality, feasibility and operability.
4.12.1.4 Information and communication. The Company has established an information and
communication system to define the procedures for the collection, processing and transmission of
information related to internal control, in order to build a smooth communication line and promote
effective conduct of internal control.
4.12.1.5 Supervision. The Company has established a corporate governance mechanism, so that the
independent directors and the BOS are able to independently perform their supervisory duties and
independently conduct evaluation and provide recommendations on the Company's management. A
special internal audit body is set up under the Audit Committee of the BOD to carry out internal audit
work independently according to law in order to realize the effective supervision of the management
and effective operation of the internal control system.
4.12.2 Details of significant internal control deficiency identified during the Reporting Period
□ Yes √ No
4.13 The Company’s management and control over subsidiaries during the Reporting
Period
As of the end of the Reporting Period, the Company has 53 subsidiaries, including 44 majority
owned companies and 8 invested companies. During the Reporting Period, in order to strengthen the
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management, regulate the internal operation and promote the healthy development of subsidiaries,
the Company developed and improved the “Comprehensive Management System of Subsidiaries in
accordance with the requirements for the standardized operation of listed companies, to provide for
the establishment of a sound governance structure and its operation, operational business
decision-making, financial management, information management, investment decision-making
management, inspection and assessment, etc. Also, the Company requires subsidiaries to implement
the “Internal Reporting System for Important Information”, etc., which clearly stipulates the
procedures for reporting and deliberating important matters, to timely track the governance, financial
position, production and operation, project construction, safety and eco-friendliness and other
significant matters of the subsidiaries, in order to timely fulfill the information disclosure obligations.
To improve the standardized operation of its subsidiaries, the Audit Department and Legal
Department of the Company provides guidance on, supervision and evaluation of the establishment
and implementation of the internal control system of each subsidiary, and supervises the continuous
improvement and effective operation of each internal control system of the Company.
4.14 Internal control self-evaluation report or internal control audit report
4.14.1 Internal control self-evaluation report
Disclosure date of full text of
04/26/2022
Internal 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
100.00%
the 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 reports Non-financial reports
(1) Identification standard of major (1) Major defects: The negative news
Qualitative standard defects: ① lack of democratic about the safety, eco-friendliness,
decision-making process; ② huge social responsibility, practice ethics
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errors caused by decision-making and operation of the enterprise has
process; ③ violation of national been spread all over the country, has
laws and regulations and punishment; been specially investigated by the
④ serious loss of middle or senior government or regulatory agencies,
management members and senior and has caused continuous special
technicians; ⑤ frequent negative reports by the public media. As a
news in the media, involving a wide result, the enterprise has adverse
range; ⑥ lack of system or system events such as capital loan and
failures in major business;⑦ failure recovery, suspension or revocation of
to rectify major or significant internal administrative license, pledge of
control defects. (2) Material assets, and a large number of claims
deficiencies: ① imperfect (occurrence of level-I mass
democratic decision-making disturbance). (2) Significant defects:
procedures; ② decision-making The negative news about the safety,
procedures leading to general errors; eco-friendliness, social
③ violation of internal regulations of responsibility, practice ethics and
the Company, resulting in losses;④ operation of the enterprise has been
outflow of many business personnel reported by the public media for
in key positions; ⑤ negative news three times in a row, and has been
appeared on the media, involving concerned and investigated by the
local region;⑥ defects in important industry or regulatory agencies, and
business systems or systems; ⑦ has caused adverse effects within the
failure to rectify material or general industry (occurrence of level-II mass
deficiencies in internal control. (3) disturbance). (3) General defects:
Identification standard of general The negative news about the safety,
defects: ① low efficiency of eco-friendliness, social
decision-making process; ② responsibility, practice ethics and
violation of internal rules and operation of the enterprise has been
regulations without losses; ③ reported by the public media for
serious loss of business personnel in three times in a row, and has been
general positions; ④ negative news concerned and investigated by the
in the media, with little impact; ⑤ industry or regulatory agencies, and
defects in general business systems; has caused adverse effects within the
⑥ failure to rectify general defects; industry (occurrence of level-III or
⑦ other defects. level-IV mass disturbance)
(1) Major defects: The overall impact (1) Major defects: direct financial
level is higher than the importance loss: RMB 50 million or above;
level (1% of the audited net assets of personnel health and safety impact:
Quantitative standard the previous year). (2) Significant death of more than 10 people, or
defects: 0.2% of the audited net assets serious injury of more than 50
of the previous year < overall people. (2) Significant defects: direct
importance level < 1% of the audited financial loss: RMB 10 million
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Hengyi Petrochemical 2021 Annual Report
net assets of the previous year. (3) (included) to RMB 50 million;
General defects: The overall personnel health and safety impact:
importance level is less than 0.2% of death of more than 3 (included) but
the audited net assets of the previous less than 10 people, or serious injury
year. of more than 10 (included) but less
than 50 people. (3) General defects:
direct financial loss: less than RMB
10 million; personnel health and
safety impact: death of less than 3
people, or serious injury of less than
10 people.
Number of major defects in
0
financial 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)
4.14.2 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 04/26/2022
CNINFO
Full-text disclosure index for the Internal Control Audit Report
(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 assura nce report issued by the accounting firm
are consistent with those in the self-evaluation report issued by the BOD
√ Yes □ No
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4.15 Self-examination and rectifications through the special campaign on corporate
governance of listed companies
In strict accordance with the Company Law, the Securities Law and other relevant laws and
administrative regulations, and the Articles of Association, Rules of Procedure for the BOD, Rules of
Procedure for the BOS and rules of procedure for special committees and other internal rules and
regulations, the Company, adhering the principle of seeking truth from facts, conducted
self-examination against the CSRC’s self-examination checklists for the special campaign on
corporate governance of listed companies, which covered a total of seven aspects, involving a total
of 119 questions and answers. The Company carefully sorted out and filled in the self-examination
system, and completed self-examination on April 25, 2021.
This self-examination revealed that the Company’s governance follows the Company Law, Securities
Law, Guidelines for Standardized Operation, Guidelines for Articles of Association of Listed
Companies, and other laws and regulations. The Company is under relatively sound corporate
governance and standardized operation and there is no major mistake.
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Section 5 Environmental and Social Responsibility
5.1 Major environme ntal issues
Whether the listed company and its subsidiaries belong to the key pollutant discharge units announced by the environme ntal protection
department
During the Reporting Period, the Company strictly follows and implements Environmental Protection Law of the People's Republic of China, Law of the
People's Republic of China on the Prevention and Control of Atmospheric Pollution, Law of the People's Republic of China on the Prevention and
Control of Water Pollution, Law of the People's Republic of China on Prevention and Control of Environmental Pollution by Solid Waste and other
relevant laws and regulations. The Company continues to attach great importance to environmental protection deepen environmental management and
dispose of "three wastes” (waste gas, waste water and waste residues) in strict accordance with high standards, to contribute to sustainable development.
In particular, the important subsidiaries of key pollutant discharge units announced by the environmental protection departme nt continues to actively
renovate and upgrade environmental protection facilities by increasing capital investment to ensure that emissions meet the standards. The specific
conditions are as follows:
Names of main
Name of Number of Total
pollutants and Discharge Distribution of Pollutant discharge Total Excessive
Company or discharge Emission concentration approved
characteristic method discharge ports standards implemented emissions emissions
subsidiary ports emissions
pollutants
Zhejiang Discharge Up to
COD 1 Sewage station 44.85mg/L 100mg/L 277.81 t 1,214.36 t
Yisheng after standard
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treatment
Discharge
Up to
Ammonia nitrogen after 1 Sewage station 0.51 mg/L 8mg/L 2.65 t 17.35 t
standard
treatment
Discharge
Up to
SO2 after 2 Boiler Island 7.99mg/m 35mg/m 57.24 t 197.45 t
standard
treatment
Discharge
Up to
NOX after 2 Boiler Island 18.46mg/m 50mg/m 122.15 t 859.17 t
standard
treatment
Discharge
Up to
Smoke and ashes after 2 Boiler Island 1.51mg/m 5mg/m 10 t 426.11 t
standard
treatment
Discharge Boiler/heat
GB13223-2011、 Up to
SO2 after 2 medium 41.6/33.6mg/m 174.37 t 679 t
GB13271-2014 standard
treatment furnace
Discharge Boiler/heat
GB13223-2011、 Up to
NOx after 2 medium 55.97/303.9mg/m 964.84 t 989.9t
GB13271-2014 standard
treatment furnace
Discharge Boiler/heat
Hainan Yisheng GB13223-2011、 Up to
Smoke and ashes after 2 medium 11.59/8.1mg/m 44.28 t 232 t
GB13271-2014 standard
treatment furnace
Discharge
GB31571-2015、 Up to
COD after 1 Sewage station 35.19mg/L 142.93 t 236.15 t
GB31572-2015 standard
treatment
Discharge GB31571-2015、 Up to
Ammonia nitrogen 1 Sewage station 0.15mg/L 0.62 t 17.7 t
after GB31572-2015 standard
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treatment
Discharge Sewage
Up to
PH after 1 treatment 8.33 GB31571-2015 / /
standard
treatment station
Discharge Sewage
Up to
COD after 1 treatment 102.7mg/L GB31571-2015 96.96 t 127.51 t
standard
treatment station
Discharge Sewage
Up to
Ammonia nitrogen after 1 treatment 0.43mg/L GB31571-2015 4.85 t 6.37t
standard
treatment station
Discharge Sewage
Up to
Total phosphorus after 1 treatment 1.55mg/L DB33-887-2013 / /
standard
treatment station
Hengyi Discharge
Up to
Caprolactam Smoke and ashes after 1 Power station 0.83mg/m3 DB33/2147-2018 6.36 t 49.04 t
standard
treatment
Discharge DB33/2147-2018
3
Up to
SO2 after 1 Power station 0.92mg/m 7.08 t 368.87 t
standard
treatment
Discharge DB33/2147-2018
3
Up to
NOx after 1 Power station 41.8mg/m 327.84 t 482.08 t
standard
treatment
Discharge DB33/2147-2018
Mercury and its 3 Up to
after 1 Power station 0.0000076mg/m / /
compounds standard
treatment
Discharge DB33/2147-2018 Up to
Ringerman blackness 1 Power station ＜1 级 / /
after standard
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Hengyi Petrochemical 2021 Annual Report
treatment
Discharge Sewage
Up to
PH after 1 treatment 7.58 GB31572-2015 / /
standard
treatment station
Discharge Sewage
Up to
COD after 1 treatment 18.45mg/L GB31572-2015 1.09 t 3.68 t
standard
treatment station
Discharge Sewage
Up to
Ammonia nitrogen after 1 treatment 0.92mg/L GB31572-2015 0.05 t 0.15 t
standard
Hengyi treatment station
High-Tech Discharge
Thermal coal Up to
Smoke and ashes after 3 1.16/2.97/2.02mg/m3 DB3301/T0250-2018 1.61 t 18.55 t
station standard
treatment
Discharge
Heat media Up to
SO2 after 3 15.75/8.64/14.69mg/m3 DB3301/T0250-2018 10.34 t 60.4 t
station standard
treatment
Discharge
Thermal coal Up to
NOx after 3 76.56/72.98/68.81mg/m3 DB3301/T0250-2018 61.81 t 181.21 t
station standard
treatment
Discharge Sewage
Up to
PH after 1 treatment 8.18 GB31572-2015 / /
standard
treatment station
Discharge
Hengyi Polymer Up to
COD after 1 Sewage station 93.7mg/L GB31572-2015 5.22 t 34.5 t
standard
treatment
Discharge Sewage Up to
Ammonia nitrogen 1 7.9mg/L GB31572-2015 1.36 t 2.42 t
after treatment standard
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Hengyi Petrochemical 2021 Annual Report
treatment station
Discharge
Heat media Up to
Smoke and ashes after 3 6.09/1.32/4.22mg/m3 DB3301/T0250-2018 3.29 t 14.02 t
station standard
treatment
Discharge
Heat media Up to
SO2 after 3 11.85/10.6/4.77mg/m3 DB3301/T0250-2018 7.36 t 29.22 t
station standard
treatment
Discharge
Heat media Up to
NOx after 3 76.3/72.9/73.9mg/m3 DB3301/T0250-2018 54.96 t 87.67 t
station standard
treatment
Discharge Sewage
Up to
PH after 1 treatment 8.01 GB31572-2015 / /
standard
treatment station
Discharge Sewage
Up to
COD after 1 treatment 43.12mg/L GB31572-2015 0.502 t 44 t
standard
treatment station
Discharge Sewage
Up to
Ammonia nitrogen after 1 treatment 2.62mg/L GB31572-2015 0.033 t 3.08 t
Hangzhou standard
treatment station
Yijing
Discharge
Heat media Up to
Smoke and ashes after 1 0.93mg/m3 DB3301/T0250-2018 0.934 t 7.5 t
station standard
treatment
Discharge
Heat media Up to
SO2 after 1 22.19mg/m3 DB3301/T0250-2018 17.41 t 33.8 t
station standard
treatment
Discharge Heat media Up to
NOx 1 83.49mg/m3 DB3301/T0250-2018 66.71 t 101.3 t
after station standard
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Hengyi Petrochemical 2021 Annual Report
treatment
Discharge
Heat media Up to
Smoke and ashes after 2 2.29/0.58mg/m3 DB3301/T0250-2018 2.26 t 22.42 t
station standard
treatment
Discharge
Shuangtu New Heat media Up to
SO2 after 2 6.68/19.76mg/m3 DB3301/T0250-2018 20.76 t 75.92 t
Materials station standard
treatment
Discharge
Heat media Up to
NOx after 2 87.62/105.49mg/m3 DB3301/T0250-2018 151.61 t 168 t
station standard
treatment
Discharge Sewage Up to
PH after 1 treatment 8.02 GB8978-1996 / / standard
treatment station
Discharge Sewage GB8978-1996 Up to
COD after 1 treatment 52.86mg/L 11.81 t 21.33 t standard
treatment station
Discharge Sewage GB8978-1996 Up to
Ammonia nitrogen after 1 treatment 0.49mg/L 1.09 t 2.13 t standard
Haining Hengyi
treatment station
Thermal Power
Discharge Up to
Heat media 3
Smoke and ashes after 2 1.69/0.32mg/m DB33/2147-2018 0.90 t 8.83 t standard
station
treatment
Discharge Up to
Heat media 3
SO2 after 2 10.9/14.36 mg/m DB33/2147-2018 29.30 t 61.52 t standard
station
treatment
Discharge Heat media Up to
NOx 2 34.95/38.02 mg/m3 DB33/2147-2018 79 t 88.33 t
after station standard
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Hengyi Petrochemical 2021 Annual Report
treatment
Discharge Sewage Up to
PH after 1 treatment 7.55 GB31572-2015 / / standard
treatment station
Discharge Sewage Up to
Haining Hengyi
COD after 1 treatment 18.2 mg/L GB31572-2015 0.10 t 4.26 t standard
New Materials
treatment station
Discharge Sewage Up to
Ammonia nitrogen after 1 treatment 0.27mg/L GB31572-2015 0.02 t 0.42 t standard
treatment station
Discharge Sewage Up to
PH after 1 treatment 7.76mg/L GB31572-2015 / / standard
treatment station
Discharge Sewage Up to
Jiaxing Yipeng COD after 1 treatment 12.47mg/L GB31572-2015 0.16 t 6.03 t standard
treatment station
Discharge Sewage Up to
Ammonia nitrogen after 1 treatment 0.57mg/L GB31572-2015 0.01 t 0.80 t standard
treatment station
Discharge Sewage Up to
PH after 1 treatment 8.03 GB31572-2015 / / standard
treatment station
Discharge Sewage Up to
Taicang Yifeng
COD after 1 treatment 67.06mg/L GB31572-2015 2.49 13.27 standard
treatment station
Discharge Sewage Up to
Ammonia nitrogen 1 2.68mg/L GB31572-2015 0.09 0.461
after treatment standard
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Hengyi Petrochemical 2021 Annual Report
treatment station
Discharge GB31572-2015 Up to
Heat media 3
Smoke and ashes after 1 6.97mg/m 3.38 9.724 standard
station
treatment
Discharge GB31572-2015 Up to
Heat media 3
SO2 after 1 4.9mg/m 2.34 3.8 standard
station
treatment
Discharge GB31572-2015 Up to
Heat media 3
NOx after 1 65.77mg/m 22.61 26.6 standard
station
treatment
Discharge Sewage GB31572-2015 Up to
PH after 1 treatment 8.18 / / standard
treatment station
Discharge Sewage GB31572-2015 Up to
Suqian Yida COD after 1 treatment 23.75mg/L 1.92 t 12.35 t standard
treatment station
Discharge Sewage GB31572-2015 Up to
Ammonia nitrogen after 1 treatment 0.44mg/L 0.03 t 0.14 t standard
treatment station
Discharge Sewage GB31572-2015 Up to
PH after 1 treatment 7.9 / / standard
treatment station
Discharge Sewage GB31572-2015 Up to
Fujian Yijin
COD after 1 treatment 23.98mg/L 0.35 t 3.45 t standard
treatment station
Discharge Sewage GB31572-2015 Up to
Ammonia nitrogen 1 0.55mg/L 0.01 t 0.46 t
after treatment standard
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Hengyi Petrochemical 2021 Annual Report
treatment station
Discharge GB13271-2014 Up to
Heat media 3
Smoke and ashes after 1 4.14mg/m 2.01 t 21.49 t standard
station
treatment
Discharge GB13271-2014 Up to
Heat media 3
SO2 after 1 71.56mg/m 37.91 t 114.64 t standard
station
treatment
Discharge GB13271-2014 Up to
Heat media 3
NOx after 1 132.82mg/m 67.75 t 179.12 t standard
station
treatment
Up to
COD Continuous 2 Sewage station 81mg/L 300mg/L 882.79 t 1680 t
standard
Up to
Ammonia nitrogen Continuous 2 Sewage station 1.37mg/L 30mg/L 14.86 182 t
standard
Up to
Yisheng Dahua NOX Continuous 3 Boiler Island 27.16 mg/m3 50mg/m 68.39 t 405 t
standard
Up to
SO2 Continuous 3 Boiler Island 2.97mg/m3 35mg/m 5.91 t 251 t
standard
Up to
Smoke and ashes Continuous 3 Boiler Island 1.6mg/m3 5mg/m 4.3 t 51 t
standard
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Hengyi Petrochemical 2021 Annual Report
Construction and operation of facilities for pollution prevention and control
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. Some new
pollution prevention and control facilities have been added according to other rectification
requirements put forward by the environmental protection department, to further improve the
environmental protection and treatment capacity of the installation.
Environmental impact assessment of projects and other environme ntal protection
administrative permits
Duringthe Reporting Period, Suqian Yida New Material Co., Ltd. submitted the EIA report of the
1.1-mtpa New-type Differentiated Environmental Fiber Project and obtained the approval from
Suqian Ecological Environment Bureau; Zhejiang Baling Hengyi Caprolactam Co., Ltd. submitted
the EIA report of the Project of Traditional CTG Upgrading and Technical Reform of By-product
Synthetic Ammonia Multiple Process Plant and obtained the approval from Hangzhou Municipal
Ecology and Environment Bureau.
Emergency plans for environme ntal e mergencies
1. The Emergency Plan for Emergent Environmental Incidents of Zhejiang Baling Hengyi
Caprolactam Co., Ltd. was filed by the local environmental protection department in July 2019, and
a new Emergency Plan for Emergent Environmental Incidents is being prepared.
2. The Emergency Plan for Emergent Environmental Incidents of Zhejiang Hengyi High-tech
Materials Co., Ltd. was filled by the local environmental protection department in March 2022.
3. The Emergency Plan for Emergent Environmental Incidents of Zhejiang Hengyi Polymer Co.,
Ltd. was filled by the local environmental protection department in August 2021.
4. The Emergency Plan for Emergent Environmental Incidents of Hangzhou Yijing Chemical Fiber
Co., Ltd. was filled by the local environmental protection department in March 2021.
5. The Emergency Plan for Emergent Environmental Incidents of Zhejiang Shuangtu New
Materials Co., Ltd. was filled by the local environmental protection department in October 2019, and
a new Emergency Plan for Emergent Environmental Incidents will be prepared recently.
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6. The Emergency Plan for Emergent Environmental Incidents of Haining Hengyi Thermal Power
Co., Ltd. was filled by the local environmental protection department in June 2021.
7. The Emergency Plan for Emergent Environmental Incidents of Haining Hengyi New Materials
Co., Ltd. was filled by the local environmental protection department in June 2021.
8. The Emergency Plan for Emergent Environmental Incidents of Jiaxing Yipeng Chemical Fiber
Co., Ltd. was filled by the local environmental protection department in November 2020.
9. The Emergency Plan for Emergent Environmental Incidents of Taicang Yifeng Chemical Fiber
Co., Ltd. was filled by the local environmental protection department in March 2022.
10. The Emergency Plan for Emergent Environmental Incidents of Suqian New Materials Co., Ltd.
was filled by the local environmental protection department in December2021.
11. The Emergency Plan for Emergent Environmental Incidents of Fujian Yijin Chemical Fiber Co.
Ltd. was filled by the local environmental protection department in January 2022.
12. The Emergency Plan for Emergent Environmental Incidents of Hainan Yisheng Petrochemical
Co., Ltd. was revised, reviewed and filled by the local environmental protection department in
December 2020.
13. The Emergency Plan for Emergent Environmental Incidents of Zhejiang Yisheng Petrochemical
Co. Ltd. was revised, reviewed and filled by the local environmental protection department in
September 2020.
14. The Emergency Plan for Emergent Environmental Incidents of Yisheng Dahua Petrochemical Co.
Ltd. was filled by the local environmental protection department in April 2020.
Environmental self-monitoring program
The Company and its subsidiaries strictly abide by national and local government environmental
protection laws, regulations and related rules, 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 program has been disclosed in the
pollution source monitoring data management system. The Company monitored pollution sources to
ensure that all pollutants are discharged in strict accordance with the requirements of laws and
regulations. At the same time, the Company entrusts qualified third-party monitoring units to carry
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Hengyi Petrochemical 2021 Annual Report
out regular monitoring.
Administrative punishment for environme ntal issues during the Reporting Period
N/A
Other environme ntal information that should be disclosed
Environmental information that should be disclosed had been disclosed as required.
Measures taken to reduce carbon emissions during the Reporting Period and their effects
The quality of coal was improved to make chemical raw materials lighter; a series of measures such
as renovation of energy-saving lamps, combined use of air compressors and renewal of equipment to
reduce the electricity consumption. Solar thermal power was used for power generation by
establishing a pilot base for solar thermal power generation and PV power generation on the roof of
the Company's factory. Employees were encouraged to use new energy vehicles and new energy
non-road mobile machinery and equipment were additionally arranged in the factory. Employees
were trained with knowledge of ecological civilization, to make them to practice the green
low-carbon concept in life and production, thematic publicity activities such as All Staff
Environment Day and Low Carbon Day were carried out to make employees know more about green
low-carbon.
Other environme ntal information
The Company and its subsidiaries attach great importance to eco-friendliness, 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.
5.2 Social responsibility
See the Social Responsibility Report for details.
The Company shall comply with the disclosure requirements for chemical industry specified in
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Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 3 - Industry
Information Disclosure
Establishme nt and operation of the internal control system related to safety management
during the Reporting Period
During the Reporting Period, the Company maintained work safety, with no major safety accidents
and no new cases of occupational diseases. The Company always put safety first, fully performed the
main responsibility of safety management, and paid close attention to the safety manage ment of each
link.
First, fulfill safety responsibilities: The Company respectively signed the Letter of Responsibility for
Work Safety and Environmental Protection Objectives and relevant departments at the beginning of
the year, to clarify the work safety responsibilities of each level.
Second, keep promoting the safety standardization: In the field of road transportation, the Company’s
safety standardization is maintained at Level A; in the field of hazardous chemicals, the safety
standardization is maintained at Level B; in the field of chemical fiber manufacturing, the safety
standardization of 80% enterprises is maintained at Level C and the other enterprises are gradually
construct and improve the safety standardization.
Third, strengthen the supervision of safety inspection to manage hidden dangers on a regular basis:
Safety inspection was carried out on a routine, regular and irregular basis and focused on seasonal
and pre-holiday safety inspection, special safety inspection and comprehensive safety inspection,
achieving 100% of completion rate of hidden dangers rectification in the whole year.
Fourth, increase investment in and consolidate the foundation of work safety: During the Reporting
Period, the Company invested a total of RMB 35,973,700 for safety.
Fifth, focus on safety education and training to improve the safety awareness of all staff: The
Company established a safety training system, which covers the principal, safe production
management personnel, special operation personnel and equipment operators, other employees as
well as contractors (subcontractors) and laborers. The attendants of training on work safety reached
25,900 person-times throughout the year, and the completion rate and pass rate reached 100%.
Sixth, build a double prevention mechanism and establish a solid defense line for work safety:
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Hengyi Petrochemical 2021 Annual Report
During the Reporting Period, the Company’s subsidiaries were subject to routine safety inspections
16 times of the competent departments, with no safety hazards found, no violation or penalty.
5.3 Achievements in poverty alleviation consolidation and expansion and rural revitalization
The Company actively responded to national policies, participated in targeted poverty alleviation
activities through various ways, and made contributions to the best of its ability in various aspects. In
order to promote east-west cooperation, effectively fulfill the corporate social responsibility, and
provide more support for education, the Company signed a donation agreement with the government
of Hongsibao District, Wuzhong City, Ningxia in August 2020, to support the construction of
Hongde Hope School in Hongsibao District, and has made the donation by installments according to
the construction progress. Up to now, the Company has donated a total amount of RMB 21 million.
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 local role as a local enterprise,
feedback the society in time, and build a harmonious development atmosphere.
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Section 6 Important Matters
6.1 Fulfillme nt of commitments
6.1.1 Commitme nts that the Company’s actual controllers, shareholders, related parties, acquirers, and the Company and other releva nt
parties have fulfilled during the Reporting Period and that have not been fulfilled as of the end of the Reporting Period
Commitment Commitment Commitment
Promising party Commitment content Commitment time Performance
item type period
Qiu Jianlin, the actual It ensures the independence of Hengyi Group and Up to now, Hengyi Group and
Commitment on
controller of Hengyi its actual controller's affiliates and the Company long term the actual controller Qiu Jianlin
independent 04/29/2010
Group and the in terms of personnel, assets, finance, effective have not violated this
operation
Company organization and business in the commitment. commitment.
Qiu Jianlin, the actual Up to now, Hengyi Group and
Commitment on
Commitments controller of Hengyi Promise not to compete with the Company in the long term the actual controller Qiu Jianlin
horizontal 04/29/2010
made in the Group and the same industry. effective have not violated this
competition
acquisition Company commitment.
report or Qiu Jianlin, the actual Up to now, Hengyi Group and
Commitment on
equity change controller of Hengyi Commit to regulate related transactions with the long term the actual controller Qiu Jianlin
connected 04/29/2010
report Group and the Company. effective have not violated this
transactions
Company commitment.
Qiu Jianlin, the actual Up to now, Hengyi Group and
controller of Hengyi Commitment on Commit to regulate related transactions with the long term the actual controller Qiu Jianlin
04/29/2010
Group and the the use of funds Company. effective have not violated this
Company commitment.
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Hengyi Petrochemical 2021 Annual Report
Commitment Commitment Commitment
Promising party Commitment content Commitment time Performance
item type period
It is promised that the equity adjustment of
Zhejiang Yisheng and Yisheng Investment will
not increase the actual or potential tax burden of
Hengyi Petrochemical or related subsidiaries. On
the premise of the completion of this major asset The undertaking remains valid
reorganization, if Hengyi Petrochemical or its and is still in the process of
Hengyi Group and Other long term
subsidiaries are required to pay taxes or be 04/29/2010 fulfillment. Up to now, Hengyi
other parties commitments effective
demanded by tax authorities for the Group has not violated this
above-mentioned equity adjustment due to the undertaking.
adjustment of national tax policy or other
reasons, the reorganization party promised to
compensate the Company for any losses incurred
by it in cash and full amount timely.
It promises that it will not compete in the same
industry with the production and sales of
polyester fiber products, which is one of the main
Other businesses of listed companies. Supplementary
Up to now, Hainan
commitments Hainan commitment: Shanghai Hengyi Polyester Fiber
Commitment on Hengshengyuan International
made to the Hengshengyuan Co., Ltd. will permanently shut down its existing long term
horizontal 03/21/2016 Tourism Development Co., Ltd.
Company's International Tourism production facilities, no longer participate in or effective
competition has not violated this
minority Development Co. Ltd. add any areas that may compete with the
commitment.
shareholders Company's industry in the same industry since
the 100% equity transfer transaction of Shanghai
Hengyi Polyester Fiber Co., Ltd. is approved at
the Company’s 2016 fourth extraordinary general
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Hengyi Petrochemical 2021 Annual Report
Commitment Commitment Commitment
Promising party Commitment content Commitment time Performance
item type period
meeting of shareholders, Meanwhile, Shanghai
Hengyi Polyester Fiber Co., Ltd. split and
disposes of its existing assets to completely solve
this potential horizontal competition problem.
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
Not applicable
and the next work plan shall be explained in detail
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Hengyi Petrochemical 2021 Annual Report
6.1.2 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
□ Applicable √ Not applicable
6.2 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.
6.3 External guarantees against the rules and regulations
There was no external guarantee provided by the Company which was against rules and regulations
during the Reporting Period.
6.4 Explanation of the BOD on the latest “non-standard audit report”
□ Applicable √ Not applicable
6.5 Explanations of the BOD, the BOS, and independent directors (if any) on the
“non-standard audit report” of the accounting firm during the Reporting Period
□ Applicable √ Not applicable
6.6 Compared with the financial report of the previous year, the explanation of the changes in
accounting policies, accounting estimates and accounting methods
There were no changes in accounting policies, accounting estimates or corrections of material
accounting errors during the Reporting Period.
6.7 Compared with the financial report of the previous year, the explanation of the changes in
the scope of the consolidated statements
A total of 44 subsidiaries were included in the scope of consolidation by the Company in FY2021.
For details, please refer to Note 8 "Equities in Other Entities” in Section 10 "Financial Report".
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Hengyi Petrochemical 2021 Annual Report
Compared with the previous year, three subsidiaries were included in and three excluded from the
Company's consolidation scope in this fiscal year. For details, please refer to Note 7 "Changes in the
Scope of Consolidation” in Section 10 "Financial Report".
6.8 Appointme nt and dismissal of the accounting firms
Currently employed accounting firm
Zhongxinghua Certified
Name of domestic accounting firm
Public Accountants LLP
Remuneration of domestic accounting firms (RMB 10,000) 325
Consecutive years of audit services of domestic accounting firms 3
Liu Hongyue, Wang
Name of CPA in domestic accounting firms
Guohai
Consecutive years of audit services provided by the domestic
3
accounting firm's CPAs
Name of overseas accounting firms (if any) N/A
Remuneration of overseas accounting firms (RMB 10,000) (if any) 0
Consecutive years of audit services of overseas accounting firms (if
N/A
any)
The name of the certified public accountant of the overseas
N/A
accounting firms (if any)
Consecutive years of CPA audit services of overseas accounting firms
N/A
(if any)
Whether to reappoint an accounting firm in current period
□ Yes √ No
Employment of internal control auditing accounting firms, financial consultants or sponsors
During the Reporting Period, the Company hired Zhongxinghua Certified Public Accountants LLP as
the internal control audit agency, with an internal control audit fee of RMB 550,000, 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 no service fees were paid
during the Reporting Period.
6.9 Delisting after the disclosure of annual report
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
6.10 Matters Related to bankruptcy and reorganization
During the Reporting Period, the Company did not have any bankruptc y and reorganization related
matters.
6.11 Major litigations and arbitrations
The Company had no major litigation or arbitration matters during the Reporting Period.
6.12 Penalties and rectifications
There were no penalties and rectifications during the Reporting Period of the Company.
6.13 Integrity of the Company and its controlling shareholders and the actual controller
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
6.14 Major connected transactions
6.14.1 Connected transactions related to daily operations
Amount Approved Available
Pricing Proportion s Whether it Settlement
Contents of Related of related trading market
Related Related party Type of connected principle for in the similar exceeds the method of
connected transaction transactio limit prices for
party relations transaction related-party transactions approved related
transactions price n (RMB (RMB similar
transaction (%) quota transaction
10,000) 10,000) transactions
Associated Procurement of Market
PTA Market price Market price 371,892 11.93% 520,000 No Bill/cash
Yisheng enterprises goods price
Dahua Associated Market
Sales of goods PIA Market price Market price 8,517 7.95% 14,000 No Bill/cash
enterprises price
Associated Procurement of Market
PTA Market price Market price 16,272 0.52% 200,000 No Bill/cash
enterprises goods price
Hainan Associated Market
Sales of goods PX Market price Market price 85,700 26.36% 250,000 No Bill/cash
Yisheng enterprises price
Associated Market
Sales of goods PIA Market price Market price 26,843 25.06% 30,000 No Bill/cash
enterprises price
Associated Procurement of Market
PTA Market price Market price 211,842 6.79% 230,000 No Bill/cash
Yisheng enterprises goods price
New Associated Market
Sales of goods PX Market price Market price 27,793 8.55% 45,000 No Bill/cash
Material enterprises price
s Associated Market
Sales of goods Acetic acid Market price Market price 43,842 96.99% 55,000 No Bill/cash
enterprises price
Hengyi Procurement of Market
JV Steam Market price Market price 11,115 100.00% 11,600 No Bill/cash
Caprola goods price
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Hengyi Petrochemical 2021 Annual Report
Amount Approved Available
Pricing Proportion s Whether it Settlement
Contents of Related of related trading market
Related Related party Type of connected principle for in the similar exceeds the method of
connected transaction transactio limit prices for
party relations transaction related-party transactions approved related
transactions price n (RMB (RMB similar
transaction (%) quota transaction
10,000) 10,000) transactions
ctam Procurement of Market
JV Electricity Market price Market price 27,878 100.00% 35,000 No Bill/cash
goods price
Energy-relate Market
JV Sales of goods Market price Market price 98,718 76.39% 101,400 No Bill/cash
d products price
Market
JV Sales of goods Benzene Market price Market price 34,784 49.18% 38,000 No Bill/cash
price
Provision of labor Transportation Market
JV Market price Market price 699 2.27% 2,000 No Bill/cash
services of goods price
Provision of labor Engineering Market
JV Market price Market price 3,482 47.96% 2,600 Yes Bill/cash
services management price
A holding
subsidiary of the Market
Sales of goods PTA Market price Market price 254 0.01% 300 No Bill/cash
ultimate parent price
company
A holding
Hengyi
subsidiary of the Provision of labor Transportation Market
Polyami Market price Market price 628 2.04% 900 No Bill/cash
ultimate parent services of goods price
de
company
A holding
subsidiary of the Provision of labor Engineering Market
Market price Market price 116 1.60% 700 No Bill/cash
ultimate parent services management price
company
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Hengyi Petrochemical 2021 Annual Report
Amount Approved Available
Pricing Proportion s Whether it Settlement
Contents of Related of related trading market
Related Related party Type of connected principle for in the similar exceeds the method of
connected transaction transactio limit prices for
party relations transaction related-party transactions approved related
transactions price n (RMB (RMB similar
transaction (%) quota transaction
10,000) 10,000) transactions
A holding
subsidiary of the Procurement of Polyester Market
Market price Market price 435,989 10.50% 500,000 No Bill/cash
ultimate parent goods products price
company
A holding
subsidiary of the Procurement of Packing Market
Market price Market price 3,422 49.03% 4,000 No Bill/cash
ultimate parent goods materials price
company
A holding
Shaoxin subsidiary of the Packing Market
Sales of goods Market price Market price 2,591 36.08% 2,800 No Bill/cash
g ultimate parent materials price
Hengmi company
ng A holding
subsidiary of the Auxiliary Market
Sales of goods Market price Market price 1,577 38.57% 2,000 No Bill/cash
ultimate parent materials price
company
A holding
subsidiary of the Energy-relate Market
Sales of goods Market price Market price 19,206 14.86% 19,850 No Bill/cash
ultimate parent d products price
company
A holding Provision of labor Transportation Market
Market price Market price 3,971 12.90% 6,000 No Bill/cash
subsidiary of the services of goods price
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Hengyi Petrochemical 2021 Annual Report
Amount Approved Available
Pricing Proportion s Whether it Settlement
Contents of Related of related trading market
Related Related party Type of connected principle for in the similar exceeds the method of
connected transaction transactio limit prices for
party relations transaction related-party transactions approved related
transactions price n (RMB (RMB similar
transaction (%) quota transaction
10,000) 10,000) transactions
ultimate parent
company
A holding
subsidiary of the Provision of labor Engineering Market
Market price Market price 579 7.98% 600 No Bill/cash
ultimate parent services management price
company
A holding
subsidiary of the Procurement of Polyamide Market
Market price Market price 1,616 0.37% 2,500 No Bill/cash
ultimate parent goods flake price
company
A holding
subsidiary of the Market
Sales of goods PTA Market price Market price 280 0.01% 500 No Bill/cash
ultimate parent price
Hangzh
company
ou
A holding
Yichen
subsidiary of the Provision of labor Transportation Market
Market price Market price 2,270 7.37% 4,000 No Bill/cash
ultimate parent services of goods price
company
A holding
subsidiary of the Provision of labor Engineering Market
Market price Market price 24 0.33% 100 No Bill/cash
ultimate parent services management price
company
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Hengyi Petrochemical 2021 Annual Report
Amount Approved Available
Pricing Proportion s Whether it Settlement
Contents of Related of related trading market
Related Related party Type of connected principle for in the similar exceeds the method of
connected transaction transactio limit prices for
party relations transaction related-party transactions approved related
transactions price n (RMB (RMB similar
transaction (%) quota transaction
10,000) 10,000) transactions
1,441,90
Total - - - 2,078,850 - - -
0
Disclosure date January 23, 2021, April 20, 2021, October 28, 2021, December 9, 2021, December 31, 2021
CNINFO: “Announcement on the Estimated Amount of Daily Connected Transactions for the Year 2021”
(Announcement No. 2021-005), “Announcement on Increase in Daily Connected Transactions for the Year 2021”
(Announcement No. 2021-044), “Announcement on Increase in Daily Connected Transactions for the Year 2021”
Disclosure index
(Announcement No. 2021-106), “Announcement on Increase in Daily Connected Transactions for the Year 2021”
(Announcement No. 2021-121), “Announcement on Increase in Daily Connected Transactions for the Year 2021”
(Announcement No. 2021-129)
Details of returns of large sales N/A
The above-mentioned related transactions are conducive to utilization of the superior resources of the Company and
Actual performance during the Reporting Period, if the total amount of important related parties, ensuring the stable supply of important raw materials and the stable and continuous supply of
the daily connected transactions that are expected to take place in electricity and other auxiliary materials, broadening the Company's downstream product sales channels, and realizing
current period is forecasted by category (if any) 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
Reasons for the large difference between the transaction price and the authorities, and follow the principles of fairness, justice, and openness, and will not harm the interests of the Company
market reference price (if applicable) and small and medium shareholders. The main business will not form a significant dependence on related parties due to
the above-mentioned related transactions, nor affect the Company's independence, and will have a positive impact on the
Company's current and future financial status and operating results.
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6.14.2 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.
6.14.3 Related-party transactions for joint overseas investment
Registered Net assets
Total assets of Net profit of
The name The main capital of the of the
the invested the invested
Related party of the business of the invested invested
Co-investor company company
relations invested invested company company
(RMB (RMB
company company (RMB (RMB
10,000) 10,000)
10,000) 10,000)
Mr. Fang
Xianshui, VP
Production and
of the
sales of PTA,
Yisheng Company, Hainan
Bottle PET and 458,000 1,145,411.5 481,736.89 34,217.72
Investment also serves as Yisheng
other chemical
President of
products
Hainan
Yisheng
Mr. Fang
Xianshui, VP
Production of
of the
Yisheng chemical raw
Ningbo Company,
New materials and 300,000 1,157,235.71 305,094.23 27.46
Zhongjin also serves as
Materials chemical
director of
products
Yisheng New
Materials
The progress of major projects under construction of the invested
N/A
company (if any)
6.14.4 Related credit and debt transactions
During the Reporting Period, the Company did not have associated credit and debt transactions.
6.14.5 Transactions with related finance companies
The Company had no transactions regarding deposits, loans, credits or other financial businesses
with the related finance companies and related parties.
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6.14.6 Transactions between finance companies controlled by the Company and related
parties
The finance companies controlled by the Company had no transactions regarding deposits, loans,
credits or other financial businesses with the related parties.
6.14.7 Other major connected transactions
The Company had no other major connected transactions during the Reporting Period.
6.15 Major Contracts and their Performance
6.15.1 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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6.15.2 Major guarantees
Unit: RMB 10,000
The Company and its subsidiaries’ external guarantees (excluding guarantees to subsidiaries)
Whethe
Whether it
Name of the Disclosure date of r it has
Guaranteed Actual guarantee is a related
guaranteed guarantee quota related Actual date Type of guarantee Guarantee period been
limit amount party
object announcement fulfille
guarantee
d
Yisheng New April 14, 2020 to February
04/28/2020 50,000 04/28/2020 44,150 General guaranty No Yes
Materials 15, 2026
Total amount of external guarantee The total amount of external guarantees
approved during the Reporting Period 0 actually occurred during the Reporting Period 20,000
(A1) (A2)
The total amount of external
Total balance of actual external guarantees at
guarantees approved at the end of the 50,000 44,150
the end of the Reporting Period (A4)
Reporting Period (A3)
The Company's guarantees for subsidiaries
Whethe
Whether it
Name of the Disclosure date of r it has
Guaranteed Actual guarantee is a related
guaranteed guarantee quota related Actual date Type of guarantee Guarantee period been
limit amount party
object announcement fulfille
guarantee
d
January 8, 2020 to January
Hengyi 01/23/2019 5,000 01/08/2020 5,000 General guaranty Yes Yes
7, 2021
Limited
01/16/2020 63,323.01 04/16/2020 63,323.01 General guaranty April 16, 2020 to Yes Yes
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Hengyi Petrochemical 2021 Annual Report
December 4, 2021
January 12, 2021 to April
01/16/2020 2,731.35 01/12/2021 2,731.35 General guaranty Yes Yes
11, 2021
January 22, 2021 to
01/22/2021 23,658.64 01/22/2021 23,658.64 General guaranty Yes Yes
October 26, 2021
April 21, 2021 to
01/22/2021 60,255 04/21/2021 60,255 General guaranty No Yes
November 29, 2022
March 22, 2021 to August
01/22/2021 153,022 03/22/2021 153,022 General guaranty No Yes
18, 2022
January 12, 2021 to
01/16/2020 29,095 01/12/2021 29,095 General guaranty No Yes
January 19, 2022
May 31, 2020 to May 31,
01/16/2020 13,000.3 05/31/2020 13,000.3 General guaranty No Yes
2023
July 24, 2020 to March 31,
01/16/2020 47,254.13 07/24/2020 47,254.13 General guaranty No Yes
2024
January 8, 2020 to January
01/23/2019 5,000 01/08/2020 5,000 General guaranty Yes Yes
7, 2021
April 9, 2020 to August 4,
01/16/2020 35,883.92 04/09/2020 35,883.92 General guaranty Yes Yes
2021
February 18, 2021 to July
01/22/2021 7,082.98 02/18/2021 7,082.98 General guaranty Yes Yes
Hengyi 1, 2022
High-Tech May 29, 2020 to May 25,
01/16/2020 17,000 05/29/2020 17,000 General guaranty No Yes
2023
January 12, 2021 to
01/16/2020 20,000 01/12/2021 20,000 General guaranty No Yes
January 14, 2022
April 1, 2021 to August 3,
01/22/2021 50,780 04/01/2021 50,780 General guaranty No Yes
2022
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Hengyi Petrochemical 2021 Annual Report
March 24, 2021 to
01/22/2021 157,739.45 03/24/2021 157,739.45 General guaranty No Yes
December 5, 2022
January 14, 2020 to
01/23/2019 6,400 01/14/2020 3,840 General guaranty Yes Yes
January 10, 2021
June 24, 2020 to December
01/16/2020 31,900 06/24/2020 19,140 General guaranty Yes Yes
4, 2021
Hengyi January 7, 2021 to January
01/16/2020 6,400 01/07/2021 3,840 General guaranty Yes Yes
Polymer 7, 2022
March 9, 2021 to
01/22/2021 35,300 03/09/2021 21,180 General guaranty No Yes
December 30, 2022
April 7, 2021 to May 25,
01/22/2021 32,545 04/07/2021 19,527 General guaranty No Yes
2022
April 9, 2020 to May 3,
01/16/2020 24,619.88 04/09/2020 17,233.92 General guaranty Yes Yes
2022
March 5, 2021 to
01/22/2021 34,106.75 03/05/2021 23,874.73 General guaranty Yes Yes
December 20, 2021
September 3, 2020 to May
01/16/2020 23,290 09/03/2020 16,303 General guaranty No Yes
Zhejiang 3, 2022
Yisheng January 1, 2021 to
01/16/2020 10,000 01/01/2021 7,000 General guaranty No Yes
September 1, 2022
March 12, 2021 to June 13,
01/22/2021 50,721.11 03/12/2021 35,504.78 General guaranty No Yes
2022
November 18, 2021 to
01/22/2021 13,760 11/18/2021 9,632 General guaranty No Yes
May 18, 2022
February 21, 2020 to
01/16/2020 2,000 02/21/2020 2,000 General guaranty Yes Yes
Taicang Yifeng January 21, 2021
01/16/2020 2,000 01/15/2021 2,000 General guaranty January 15, 2021 to July Yes Yes
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Hengyi Petrochemical 2021 Annual Report
14, 2021
July 22, 2021 to July 23,
01/22/2021 8,000 07/22/2021 8,000 General guaranty No Yes
2022
February 4, 2021 to
01/22/2021 5,000 02/04/2021 5,000 General guaranty No Yes
February 7, 2022
June 17, 2020 to
01/16/2020 12,000 06/17/2020 12,000 General guaranty Yes Yes
September 2, 2021
June 28, 2021 to June 26,
Suqian Yida 01/22/2021 2,000 06/28/2021 2,000 General guaranty No Yes
2022
November 24, 2021 to
01/22/2021 5,000 11/24/2021 5,000 General guaranty No Yes
November 24, 2022
August 26, 2020 to May
01/16/2020 1,000 08/26/2020 1,000 General guaranty Yes Yes
19, 2021
Jiaxing Yipeng
March 30, 2021 to May 19,
01/22/2021 51,996 03/30/2021 51,996 General guaranty No Yes
2022
March 10, 2020 to May 14,
01/16/2020 21,600 03/10/2020 21,600 General guaranty Yes Yes
2021
January 26, 2021 to July
01/22/2021 40,000 01/26/2021 40,000 General guaranty Yes Yes
Shuangtu New 26, 2021
Materials May 6, 2021 to July 26,
01/22/2021 40,400 05/06/2020 40,400 General guaranty No Yes
2022
April 29, 2021 to April 28,
01/22/2021 69,259.75 04/29/2021 69,259.75 General guaranty No Yes
2022
March 20, 2020 to March
01/16/2020 20,000 03/20/2020 20,000 General guaranty Yes Yes
Hangzhou 20, 2021
Yijing March 2, 2021 to
01/22/2021 20,000 03/02/2021 20,000 General guaranty Yes Yes
September 2, 2021
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Hengyi Petrochemical 2021 Annual Report
September 6, 2021 to
01/22/2021 15,000 09/06/2021 15,000 General guaranty No Yes
September 6, 2022
February 8, 2021 to March
01/22/2021 30,000 02/08/2021 30,000 General guaranty No Yes
4, 2022
October 9, 2020 to March
01/16/2020 15,902.02 10/09/2020 15,902.02 General guaranty Yes Yes
31, 2021
January 12, 2021 to April
01/16/2020 1,809.46 01/12/2021 1,809.46 General guaranty Yes Yes
Hong Kong 13, 2021
Tianyi February 1, 2021 to
01/22/2021 34,136.72 02/01/2021 34,136.72 General guaranty Yes Yes
December 21, 2021
October 12, 2021 to March
01/22/2021 13,724.29 10/12/2021 13,724.29 General guaranty No Yes
4, 2022
April 24, 2020 to
Haining 01/16/2020 6,000 04/24/2020 6,000 General guaranty Yes Yes
December 10, 2021
Thermal
April 24, 2020 to
Power 01/16/2020 44,000 04/24/2020 44,000 General guaranty No Yes
December 10, 2029
November 12, 2020 to
01/16/2020 13,200 11/12/2020 13,200 General guaranty Yes Yes
Haining New November 12, 2021
Materials November 15, 2021 to
01/22/2021 15,000 11/15/2021 15,000 General guaranty No Yes
November 14, 2022
March 22, 2021 to
01/22/2021 50 03/22/2021 32.50 General guaranty Yes Yes
September 20, 2021
March 22, 2021 to
01/22/2021 49,950 03/22/2021 32,467.50 General guaranty No Yes
Fujian Yijin September 20, 2022
May 26, 2020 to May 21,
01/16/2020 48,117.14 05/26/2020 31,276.14 General guaranty No Yes
2028
01/22/2021 3,000 06/24/2021 1,950 General guaranty June 24, 2021 to June 24, No Yes
203
Hengyi Petrochemical 2021 Annual Report
2022
October 18, 2019 to
01/23/2019 2,800 10/18/2019 1,820 General guaranty No Yes
December 20, 2022
May 20, 2021 to
01/22/2021 41,156.73 05/20/2021 41,156.73 General guaranty Yes Yes
Hengyi November 16, 2021
Singapore December 20, 2021 to June
01/22/2021 34,168.56 12/20/2021 23,917.99 General guaranty No Yes
17, 2022
The total amount of guarantees
The total actual amount of guarantees for
approved for subsidiaries during the 2,900,000 1,077,773.86
subsidiaries during the Reporting Period (B2)
Reporting Period (B1)
The total amount of guarantees for The total balance of actual guarantees for
subsidiaries approved at the end of the 2,900,000 subsidiaries at the end of the Reporting Period 1,048,104.33
Reporting Period (B3) (B4)
Subsidiary guarantees for subsidiaries
Whethe
Whether it
Name of the Disclosure date of r it has
Guaranteed Actual guarantee is a related
guaranteed guarantee quota related Actual date Type of guarantee Guarantee period been
limit amount party
object announcement fulfille
guarantee
d
February 10, 2021 to
01/22/2021 27,560.97 02/10/2021 19,292.68 General guaranty Yes Yes
December 14, 2021
November 19, 2020 to
01/16/2020 9,000 11/19/2020 6,300 General guaranty Yes Yes
Hengyi December 11, 2021
High-Tech December 31, 2019 to
01/23/2019 10,000 12/31/2019 10,000 General guaranty Yes Yes
January 30, 2021
July 20, 2020 to November
01/16/2020 5,500 07/20/2020 5,500 General guaranty Yes Yes
26, 2021
204
Hengyi Petrochemical 2021 Annual Report
January 4, 2021 to
01/16/2020 10,000 01/04/2021 10,000 General guaranty Yes Yes
December 27, 2021
September 18, 2021 to
01/22/2021 20 09/18/2021 20 General guaranty Yes Yes
December 27, 2021
August 12, 2021 to
01/22/2021 20,765.2 08/12/2021 14,535.64 General guaranty No Yes
February 22, 2022
September 22, 2021 to
01/22/2021 10,313.9 09/22/2021 7,219.73 General guaranty No Yes
June 23, 2022
February 4, 2021 to
01/22/2021 15,000 02/04/2021 15,000 General guaranty No Yes
December 2, 2022
July 27, 2021 to June 16,
01/22/2021 27,725 07/27/2021 27,725 General guaranty No Yes
2022
November 14, 2019 to
01/23/2019 9,600 11/14/2019 6,720 General guaranty Yes Yes
June 21, 2021
August 28, 2020 to April
01/16/2020 19,587.93 08/28/2020 13,711.55 General guaranty Yes Yes
24, 2021
January 15, 2021 to May
01/16/2020 3,935.59 01/15/2021 2,754.91 General guaranty Yes Yes
Hengyi 14, 2021
Limited March 1, 2021 to
01/22/2021 55,625.8 03/01/2021 38,938.06 General guaranty Yes Yes
December 15, 2021
August 25, 2021 to
01/22/2021 41,730.71 08/25/2021 29,211.5 General guaranty No Yes
November 13, 2023
July 23, 2021 to January
01/22/2021 13,380 01/16/2020 9,366 General guaranty No Yes
24, 2022
March 5, 2020 to
Zhejiang 01/16/2020 38,602.84 03/05/2020 38,602.84 General guaranty Yes Yes
September 24, 2021
Yisheng
01/22/2021 54,779.79 02/01/2021 54,779.79 General guaranty February 1, 2021 to Yes Yes
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Hengyi Petrochemical 2021 Annual Report
February 4, 2022
February 5, 2021 to August
01/22/2021 79,001.56 02/05/2021 79,001.56 General guaranty No Yes
6, 2022
July 19, 2021 to June 22,
01/22/2021 4,780 07/19/2021 4,780 General guaranty No Yes
2022
September 15, 2019 to
01/23/2019 6,193.71 09/15/2019 6,193.71 General guaranty Yes Yes
December 23, 2021
March 29, 2020 to
01/16/2020 3,926.33 03/29/2020 3,926.33 General guaranty Yes Yes
Haining New November 11, 2021
Materials September 15, 2019 to
01/23/2019 48,790.04 09/15/2019 48,790.04 General guaranty No Yes
December 23, 2029
March 29, 2020 to May 11,
01/16/2020 33,373.8 03/29/2020 33,373.8 General guaranty No Yes
2030
September 11, 2020 to
01/16/2020 16,571.71 09/11/2020 16,571.71 General guaranty Yes Yes
June 28, 2021
January 4, 2021 to May 4,
01/16/2020 1,597.09 01/04/2021 1,597.09 General guaranty Yes Yes
Hong Kong 2021
Tianyi September 21, 2021 to
01/22/2021 5,649.38 09/21/2021 5,649.38 General guaranty Yes Yes
January 25, 2022
September 20, 2021 to
01/22/2021 21,199.02 09/20/2021 21,199.02 General guaranty No Yes
April 27, 2022
June 29, 2021 to December
01/22/2021 49,466.95 06/29/2021 49,466.95 General guaranty Yes Yes
28, 2021
July 7, 2021 to November
Hengyi Brunei 01/22/2021 41,314.84 07/07/2021 41,314.84 General guaranty Yes Yes
30, 2021
October 20, 2021 to March
01/22/2021 170,365.32 10/20/2021 170,365.32 General guaranty No Yes
30, 2022
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Hengyi Petrochemical 2021 Annual Report
August 26, 2020 to March
01/16/2020 10,573.81 08/26/2020 6,344.29 General guaranty Yes Yes
12, 2021
Hengyi January 25, 2021 to
01/22/2021 51,231.74 01/25/2021 30,739.04 General guaranty Yes Yes
Polymer December 17, 2021
July 28, 2021 to February
01/22/2021 19,790 07/28/2021 11,874 General guaranty No Yes
18, 2022
Shuangtu New April 13, 2021 to
01/22/2021 8,000 04/13/2021 8,000 General guaranty Yes Yes
Materials September 1, 2021
Hong Kong August 24, 2021 to
01/22/2021 12,751.4 08/24/2021 12,751.4 General guaranty No Yes
Yisheng September 5, 2022
Ningbo
October 18, 2021 to April
Hengyi 01/22/2021 15,960 10/18/2021 15,960 General guaranty No Yes
18, 2022
Trading
The total amount of guarantees
The total actual amount of guarantees for
approved for subsidiaries during the 1,470,000 681,541.91
subsidiaries during the Reporting Period (C2)
Reporting Period (C1)
The total amount of guarantees for The total balance of actual guarantees for
subsidiaries approved at the end of the 1,470,000 subsidiaries at the end of the Reporting Period 501,153
Reporting Period (C3) (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 actually
guarantees during the Reporting Period 4,370,000 occurred during the Reporting Period 1,779,315.77
(A1+B1+C1) (A2+B2+C2)
The total amount of approved
The total actual guarantee balance at the end
guarantees at the end of the Reporting 4,420,000 1,593,407.33
of the Reporting Period (A4+B4+C4)
Period (A3+B3+C3)
The percentage of total amount of actual guarantees in company's 61.53%
207
Hengyi Petrochemical 2021 Annual Report
net assets (i.e. A4+B4+C4)
Wherein:
The balance of guarantees provided for shareholders, actual
44,150
controllers and their related parties (D)
The balance of debt guarantee provided directly or indirectly for the
0
guaranteed object whose asset-liability ratio exceeds 70% (E)
The amount of the total guarantee exceeding 50% of the net assets
0
(F)
The total amount of the above three guarantees (D+E+F) 44,150
For unexpired guarantees, the statement of the situation where
guarantee liability has occurred or may bear joint liability for N/A
repayment during the Reporting Period (if any)
Instructions for providing external guarantees in violation of
N/A
prescribed procedures (if any)
208
Hengyi Petrochemical 2021 Annual Report
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.
6.15.3 Entrust others to manage cash assets
6.15.3.1 Entrusted financing manage ment
Unit: RMB 10,000
Source of Outstanding Overdue Provision for impairment of
Type Amount
funds balance amount overdue wealth management
Bank Self-owned
6,000 0 0 0
WMPs capital
Total 6,000 0 0 0
6.15.3.2 Entrusted loans
Overview of entrusted loans during the Reporting Period
Unit: RMB 10,000
Total amount Sources of funds Outstanding balance Overdue amount
207,800 Self-owned capital 107,800 0
209
Hengyi Petrochemical 2021 Annual Report
High-risk entrusted loans with significant individual amounts or low security or low liquidity
Unit: RMB 10,000
Actual
Actual The
recovery of Whether it Whether
gain or amount of
Loan Loan Sourc Expected profits and goes there is any
Loan Loan loss provision Summary of matters and related query index
object interest es of Start date End date return (if losses through entrusted
object amount during the for (if any)
type rate funds any) during the legal loan plan in
Reporting impairmen
Reporting procedures the future
Period t (if any
Period
Yishen Self-o http://www.cninfo.com.cn/new/disclosure/de
g New wned tail?plate=szse&orgId=gssz0000703&stock
JV 4.785% 107,800 2021/1/5 2022/12/20 2,634.59 2,634.59 2,634.59 0 Yes Yes
Materi capita Code=000703&announcementId=12114036
als l 79&announcementTime=2021-10-28
Yishen Self-o http://www.cninfo.com.cn/new/disclosure/de
g New wned tail?plate=szse&orgId=gssz0000703&stock
JV 4.785% 100,000 2020/03/16 2021/12/22 2,322.15 2,322.15 2,322.15 0 Yes Yes
Materi capita Code=000703&announcementId=12086085
als l 28&announcementTime=2020-10-26
Total 207,800 - - - 4,956.74 4,956.74 - 0 - - -
The principal of the entrusted loans is expected to be unable to be recovered or there are other situations that may cause impairment
□ Applicable √Not applicable
6.15.4 Other major contracts
There were no other major contracts during the Reporting Period.
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Hengyi Petrochemical 2021 Annual Report
6.16 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 Information
Disclosure of Listed Companies", the details are as follows:
S/N Announcement date Title of Announcement
Announcement on Completion of Share Repurchase and Change of Shares
1 03/27/2021
(Announcement No.: 2021-026)
Announcement on Share Repurchase Program (Phase II) by way of Centralized
2 10/28/2021
Bidding (Announcement No.: 2021-108)
Announcement on the First Repurchase of the Company's Shares (Announcement
3 11/05/2021
No.: 2021-112)
6.17 Important matters of subsidiaries of the Company
S/N Announce Title of Announcement Index
ment date
Announcement on the Progress of the http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Commissioning of 1-mtpa New-type zse&orgId=gssz0000703&stockCode=000703&announc
02/19/202
1 Differentiated Environmental Fiber ementId=1209280236&announcementTime=2021-02-19
1
Project (Announcement No.:
2021-018)
Announcement on the Progress of the http://www.cninfo.com.cn/new/disclosure/detail?plate=s
04/09/202 Commissioning of 566,000 t/a New zse&orgId=gssz0000703&stockCode=000703&announc
2
1 Functional Fibers Project ementId=1209656578&announcementTime=2021-04-09
(Announcement No.: 2021-034)
Announcement on the Progress of the http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Commissioning of 1.1-mtpa New-type zse&orgId=gssz0000703&stockCode=000703&announc
06/01/202
3 Differentiated Environmental Fiber ementId=1210132115&announcementTime=2021-06-01
1
Project (Announcement No.:
2021-068)
211
Hengyi Petrochemical 2021 Annual Report
Section 7 Changes in Shares and Shareholders
7.1 Changes in shares
7.1.1 Changes in shares
Unit: share
Before the change Increase or decrease in current period (+, -) After the change
Proportion Issue of Bonus Capital reserve converted Proportion
Quantity Other Subtotal Quantity
(%) new shares shares into share capital (%)
I. Shares with Restrictions on Sales 368,293,277 10.00% -90,207,851 -90,207,851 278,085,426 7.58%
1. State shares
2. State-owned corporate shares
3. Other domestic shares 368,293,277 10.00% -90,207,851 -90,207,851 278,085,426 7.58%
Including: domestic corporate
339,395,477 9.22% -80,481,476 -80,481,476 258,914,001 7.06%
shares
Domestic natural person shares 28,897,800 0.78% -9,726,375 -9,726,375 19,171,425 0.52%
II. Shares without Restrictions on Sales 3,313,352,130 90.00% 74,842,458 74,842,458 3,388,194,588 92.42%
1. Ordinary shares in RMB 3,313,352,130 90.00% 74,842,458 74,842,458 3,388,194,588 92.42%
2. Domestically listed foreign
shares
3. Overseas listed foreign shares
4. Others
III. Total Number of Shares 3,681,645,407 100.00% -15,365,393 -15,365,393 3,666,280,014 100.00%
212
Hengyi Petrochemical 2021 Annual Report
Reasons for changes in shares
(1) In January 2021,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 65,101,746.
(2) In June 2021, the Company implemented repurchase and cancellation business as performance
compensation and therefore the total share capital decreased by 15,379,730.
(3) As at December 2021, the Company had 1,639 Hengyi Convertible Bonds which was converted
into 14,337 Hengyi Petrochemical shares.
Approval of changes in shares
(1) On November 27, 2018, the Company received the Official Reply on Approving Hengyi
Petrochemical Co., Ltd. to Issue Shares to Zhejiang Hengyi Group Co., Ltd. etc. for Purchase of
Assets and Fundraising (ZJXK[2018] No. 1937) issued by China Securities Regulatory Commission
(CSRC).
(2) The Resolution on Achievement of Performance Commitments and Performance Compensation
Plan in 2020 through the Share Issuance for Asset Acquisition and Connected Transactions was
examined and adopted at the Company’s Board meeting 2020 held on April 19, 2021 and the2020
Annual General Meeting of Shareholders held on May 11, 2021, and after the repurchase and
cancellation of the compensation shares, the Company's total share capital will decrease by
15,379,730.
(3) Upon approval by Shenzhen Stock Exchange (approval document SZS\ [2020] No. 1027), the
Company’s convertible bonds amounting to RMB 2 billion were listed on Shenzhen Stock Exchange
on November 16, 2020. The bond named Hengyi Convertible Bonds and the bond code is 127022.
Transfer of changes in shares
(1) On January 18, 2021, the Company issued shares for the purpose of purchase of assets and fund
raising and involved in connected transactions to issue shares for purchase of assets and 65,101,746
shares were lifted from sales restrictions.
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
213
Hengyi Petrochemical 2021 Annual Report
shareholders, etc. in the recent one year and the Reporting Period
The Company’s share capital was 3,681,645,407 shares at the beginning of the Reporting Period and
was 3,666,280,014 shares as at the end of the Reporting Period. The change in shares resided in its
implementation of repurchase and cancellation of performance compensation shares and the
conversion of convertible bonds into shares. In accordance with Accounting Standards for Business
Enterprises-Earnings Per Share, the most recent share capital was recalculated on the basis of the
adjusted number of shares, and therefore the basic earnings per share over the past period was RMB
0.94/share and the diluted earnings per share after the change was RMB 0.91/share.
Other content that the Company deems necessary or required by the securities regulatory
agency to disclose
□ Applicable √ Not applicable
7.1.2 Changes in restricted shares
Unit: share
Number of
Number of Number of Number of
restricted
restricted restricted restricted Date of
shares Reasons for
Name of shareholders shares at the shares lifted shares at the restriction
increased in restrictions
beginning of in current end of the lifted
current
the period period period
period
Zhejiang Hengyi Group Shares added
209,172,454 0 0 193,792,724 01/12/2022
Co., Ltd. through the
Fulida Group Holdings issue of shares
65,111,512 32,550,873 0 32,560,639
Company for purchase of
assets and 01/18/2021
Xinghui Chemical Fiber
65,111,511 32,550,873 0 32,560,638 connected
Group Co., Ltd.
transactions
Total 339,395,477 65,101,746 0 258,914,001 - -
7.2 Securities issuance and listing
7.2.1 Securities issuance (excluding preference shares) during the Reporting Period
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
7.2.2 Statement of changes in the Company's total number of shares and shareholder
structure, and changes in the Company’s assets and liabilities structure
During the Reporting Period, the Company’s implementation of repurchase and cancellation of
performance compensation shares and the conversion of convertible bonds into shares resulted in
change in the total number of shares, which was 3,681,645,407 at the beginning of period and was
3,666,280,014 as at the disclosure date of the report.
7.2.3 Existing internal employee shares
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
7.3 Shareholders and actual controller
7.3.1 The numbe r of shareholders and shareholding of the Company
Unit: share
The total number of common shareholders at
66,205 The total number of shareholders as at March 31, 2022 69,915
the end of the Reporting Period
Holding of Shareholders owning over 5% of the Company’s shares or top 10 shareholders
Number of shares Holding of Holding of shares
Increase/decrease in Pledged or frozen
Nature of Shareholding held at the end of shares with without
Name of shareholders the Reporting
shareholders ratio the Reporting restrictions on restrictions on
Period Status of
Period sales sales Quantity
shares
Domestic
Zhejiang Hengyi Group
non-state-owned 40.61% 1,488,933,728 -15,379,730 193,792,724 1,295,141,004 Pledged 997,934,523
Co., Ltd.
legal person
Domestic
Hangzhou Hengyi
non-state-owned 6.99% 256,338,027 0 0 256,338,027
Investment Co., Ltd.
legal person
Huaneng Guicheng
Trust Co., Ltd. -
Huaneng Trust Jinyi Other 3.46% 126,857,927 -5,943,611 0 126,857,927
Xincheng Assembled
Fund Trust Program
Fortune Sender Assets
Management Other 2.77% 101,450,000 -56,932,926 0 101,450,000
(Guangdong) Co., Ltd. -
216
Hengyi Petrochemical 2021 Annual Report
Fortune Sender Shengde
No. 1 Private Securities
Investment Fund
Domestic
Xinghui Chemical Fiber
non-state-owned 2.66% 97,662,383 0 32,560,638 65,101,745
Group Co., Ltd.
legal person
Hong Kong Securities
Overseas legal
Clearing Company 1.77% 62,224,582 -5,896,735 0 62,224,582
person
Limited (HKSCC)
Huaneng Guicheng
Trust Co., Ltd. -
Huaneng Trust Jinxing Other 1.47% 53,834,649 53,834,649 0 53,834,649
Assembled Fund Trust
Program
Berseagold Asset
Management Co., Ltd. -
Berseagold Huixin No. Other 1.36% 49,936,900 49,936,900 0 49,936,900
8 Private Securities
Investment Fund
Tibetan Trust Co., Ltd. -
Tibetan Trust -
Hongjing No. 29 Other 1.30% 47,841,104 47,841,104 0 47,841,104
Assembled Fund Trust
Program
Ningbo Lanxi Domestic
Innovation Equity non-state-owned 1.17% 42,988,622 42,988,622 0 42,988,622
Investment Partnership legal person
217
Hengyi Petrochemical 2021 Annual Report
Firm (limited
partnership)
Strategic investors or general legal persons ranked the top 10
N/A
shareholders due to placing (if any) (Please refer to Note 3)
Among the top 10 shareholders, Hangzhou Hengyi Investment Co., Ltd. is a controlled subsidiary of Hengyi
Statement of the connected relation or parties acting in concert
Group. It is unknown whether connected relation exists among other shareholders and it is unknown whether
among the above shareholders
they are shareholders acting in concert either.
Statement of the above shareholders involvement in
N/A
entrustment /trustee voting and waiver of voting
Special statement of the existence of special account for Among the top 10 shareholders, Hengyi Petrochemical Co., Ltd. held 56,975,119 Company shares through
repurchase among top 10 shareholders (if any) (Please refer to its special account for securities repurchase, representing 1.55% of the Company's total share capital and it is
Note 10) not included in the list of top 10 shareholders.
Continued
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Hengyi Petrochemical 2021 Annual Report
Top 10 shareholders holding of shares without restrictions on sales
Holding of shares without restrictions on
Name of shareholders Stock class
sales at the end of the Reporting Period
Zhejiang Hengyi Group Co., Ltd. 1,295,141,004 Ordinary shares in RMB
Hangzhou Hengyi Investment Co., Ltd. 256,338,027 Ordinary shares in RMB
Huaneng Guicheng Trust Co., Ltd. -
Huaneng Trust Jinyi Xincheng 126,857,927 Ordinary shares in RMB
Assembled Fund Trust Program
Fortune Sender Assets Management
(Guangdong) Co., Ltd. - Fortune Sender
101,450,000 Ordinary shares in RMB
Shengde No. 1 Private Securities
Investment Fund
Xinghui Chemical Fiber Group Co., Ltd. 65,101,745 Ordinary shares in RMB
Hong Kong Securities Clearing
62,224,582 Ordinary shares in RMB
Company Limited (HKSCC)
Huaneng Guicheng Trust Co., Ltd. -
Huaneng Trust Jinxing Assembled Fund 53,834,649 Ordinary shares in RMB
Trust Program
Berseagold Asset Management Co., Ltd.
- Berseagold Huixin No. 8 Private 49,936,900 Ordinary shares in RMB
Securities Investment Fund
Tibetan Trust Co., Ltd. - Tibetan Trust -
Hongjing No. 29 Assembled Fund Trust 47,841,104 Ordinary shares in RMB
Program
Ningbo Lanxi Innovation Equity
Investment Partnership Firm (limited 42,988,622 Ordinary shares in RMB
partnership)
Statement of connected relation or
parties acting in connect among the top Among the top 10 shareholders, Hangzhou Hengyi Investment Co., Ltd.
10 shareholders of unrestricted tradable is a controlled subsidiary of Hengyi Group. It is unknown whether
shares and between the top 10 connected relation exists among other shareholders and it is unknown
shareholders of unrestricted tradable whether they are shareholders acting in concert either.
shares and top 10 shareholders
1. The shareholder Zhejiang Hengyi Group Co., Ltd. held
1,400,471,542 shares through ordinary securities account and held
88,462,186 shares through CITIC Securities customer credit collateral
Statement of the top 10 common
securities trading account, both of which sum up to 1,488,933,728
shareholders involvement in margin
shares.
trading and securities lending business
2. The shareholder Hangzhou Hengyi Investment Co., Ltd. held zero
(if any) (Please refer to Note 4)
shares through ordinary securities account and held 256,338,027 shares
through Soochow Securities Co., Ltd. customer credit collateral
securities trading account, both of which sum up to 256,338,027 shares.
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3. The shareholder Fortune Sender Assets Management (Guangdong)
Co., Ltd. - Fortune Sender Shengde No. 1 Private Securities Investment
Fund held zero shares through ordinary securities account and held
101,450,000 shares through Huatai Securities Co., Ltd. customer credit
collateral securities trading account, both of which sum up to
101,450,000 shares.
4. The shareholder Berseagold Asset Management Co., Ltd. -
Berseagold Hui Xin No. 8 Private Securities Investment Fund held zero
shares through ordinary securities account and held 49,936,900 shares
through Guosen Securities Co., Ltd. customer credit collateral securities
trading account, both of which sum up to 49,936,900 shares.
5. The shareholder Ningbo Lanxi Innovation Equity Investment
Partnership Firm (limited partnership) held zero shares through ordinary
securities account and held 42,988,622 shares through China Galaxy
Financial Holdings Company Limited customer credit collateral
securities trading account, both of which sum up to 42,988,622 shares.
Existence or nonexistence of agreed repurchase securities trading among the top 10 ordinary
shareholders and top 10 ordinary shareholders of shares without restrictions on sales
The top 10 ordinary shareholders and top 10 ordinary shareholders of shares without restrictions
on sales did not engage in agreed repurchase securities trading during the Reporting Period.
7.3.2 The controlling shareholder of the Company
Nature of controlling shareholder: natural person holding
Type of controlling shareholder: legal person
Legal
Name of controlling representative Date of
Organization code Primary business
shareholder /head of establishment
company
Industrial investment,
production and marketing
Hengyi Group Qiu Jianlin 10/18/1994 91330109143586141L
of textile materials and
products etc.
Controlling shareholder’s
equity controlling of and
As at the disclosure date hereof, Hengyi Group held 494,655,630 shares of China
equity participation in other
Zheshang Bank Co., Ltd. (Stock code 601916.SH, 02016.HK), representing
domestically and overseas
2.33% of its total share capital.
listed companies in the
Reporting Period
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Change to controlling shareholder in the Reporting Period
The controlling shareholder of the Company remained unchanged in the Reporting Period.
7.3.3 The Company's actual controller and persons acting in concert
Nature of actual controller: domestic natural person
Type of actual controller: natural person
Name of actual Relation with the actual Nationali Right of residence in other countries or regions
controller controller ty granted or not
Qiu Jianlin Himself China No
Primary Since 1994, Mr. Qiu Jianlin has been the president of Zhejiang Hengyi Group Co., Ltd. In
occupation and addition, he is the executive member of China National Textile and Apparel Council and the
title senior vice president of China Chemical Fibers Association.
Domestically and
overseas listed As at the disclosure date hereof, Mr. Qiu Jianlin is the actual controller of Hengyi Group that
companies in directly holds 40.61% of the Company shares and holds 6.99% of the Company shares
which he had a through Zhejiang Hengyi Investment Co., Ltd., a controlled subsidiary of Hengyi Group
controlling stake (Hengyi Group holds a 60% stake in Zhejiang Hengyi Investment Co., Ltd.). Therefore, Mr.
over the past 10 Qiu Jianlin is the actual controller of the Company.
years
Change to actual controller in the Reporting Period
The actual controller of the Company remained unchanged in the Reporting Period.
Block Diagram of Property Rights and Control Relationship Between the Company and the
Actual Controller
Qiu Elder Sister of Qiu Jianlin Qiu Zhu
Nephew of Qiu Jianlin
Jianlin Xiangjuan Junmin
Younger Sister of Qiu Jianlin 5.00%
Sonof Qiu Jianlin 95.00%
Zhou Lingjuan, Xu
Qiu Qiu Hangzhou Wanyong
Lifang, Fang Bogeng, Yu 26.19% Fang
Zhaoxing, Pan Weimin, Qiu Yibo Industrial Investment
Lirong Xingjuan Xianshui Co., Ltd.
Xiang Sanlong
7.40% 26.19% 7.83% 27.04%
3.94% 1.42%
Zhejiang Hengyi Group Co., Ltd. 60.00% Hangzhou Hengyi Investment Co., Ltd.
40.61%
Hengyi Petrochemical Co., Ltd. 6.99%
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Hengyi Petrochemical 2021 Annual Report
Note: As at the disclosure date hereof, Qiu Jianlin holds 26.19% of the equity of Hengyi Group and
actually controls 84.77% of the equity of Hengyi Group through acting in concert with his family
members (Qiu Jianlin signed the Acting-in-Concert Agreement with Hangzhou Wanyong Industrial
Investment Co., Ltd., Qiu Xiangjuan, Qiu Yibo, Qiu Lirong and Qiu Xingjuan on February 8, 2018.
The agreement has maintained effective and under the agreement, Wanyong Industrial Investment
Co., Ltd. controlled by Qiu Xiangjuan, Qiu Yibo, Qiu Lirong and Qiu Xingjuan are persons acting in
concert with Qiu Jianlin. The four shareholders hold 27.04%, 26.19%, 3.94% and 1.42% of Hengyi
Group equity respectively). Hengyi Group owns a direct 40.61% stake in Hengyi Petrochemical and
owns a 6.99% stake in Hengyi Petrochemical through its controlled subsidiary - Hengyi Investment
Co., Ltd., both of which sum up to a 47.60% stake in Hengyi Petrochemical. Therefore, Qiu Jianlin
remains the actual controller of the listed Company.
The actual controller controls the Company through trust or other means of asset
management.
□ Applicable √ Not applicable
7.3.4 The accumulative total numbe r of pledged shares owned by the controlling
shareholder of the Company or the largest shareholder and persons acting in concert with him
accounts for 80% of their holding.
□ Applicable √ Not applicable
7.3.5 Other corporate shareholders holding over 10%
□ Applicable √ Not applicable
7.3.6 Restricted reduction of holding of the controlling shareholder, actual controller,
restructuring party and other major parties to the commit ment
□ Applicable √ Not applicable
7.4 Imple mentation details of repurchase in the Reporting Period
Imple mentation progress of repurchase
Disclosure Proposed Proportion Proposed Proposed Purpose of Repurchased Proportion of
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date of the number of to total amount of period of repurchase shares repurchased
plan shares share repurchase repurchase shares to the
repurchased capital underlying
stocks relating to
share incentive
plan (if any)
Implement
Not less than
employee
RMB 500 August 28,
stock
million and 2020 to
08/29/2020 / / ownership 37,166,129 /
not more than August 28,
plan or share
RMB one 2021
incentive plan
billion
later
Implement
Not less than
employee
RMB 500 October 27,
stock
million and 2021 to
10/28/2021 / / ownership 23,839,372 /
not more than October 27,
plan or share
RMB one 2022
incentive plan
billion
later
Imple mentation progress of reducing the holding the repurchased shares through centralized
bidding
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
Section 8 Preference Shares
There were no preference shares of the Company in the Reporting Period.
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Hengyi Petrochemical 2021 Annual Report
Section 9 Bonds
9.1 Enterprise bonds
There were no corporate bonds of the Company in the Reporting Period.
9.2 Corporate bonds
9.2.1 Basic information about corporate bonds
Unit: RMB 10,000
Bond Place
Date of Bond
abbre Bond Value Maturit Intere Method for interest and of
Bond name issuanc balan
viatio code date y date st rate principal repayment tradin
e ce
n g
Yearly accrual of simple
interest is to be
calculated without
Hengyi Petrochemical Shenz
consideration of
Co., Ltd. issued corporate 20He hen
1490 03/11/2 03/13/2 03/13/2 compound interest.
bonds (tranche 1) publicly ngyi0 81.1 5.50% Stock
61.SZ 020 020 023 Interest will be paid per
to eligible investors in 1 Excha
annum and the last
2020 nge
installment of interest
will be paid together with
principal payment.
Corporate bonds are issued publicly to the eligible institutional
investors who are in compliance with the provisions of Measures for
Investor suitability arrangement (if Administration of Issuance and Trading of Corporate Bonds and have
any) opened an eligible securities account for A-share trading at China
Securities Depository and Clearing Corporation Limited (CSDC)
Shenzhen Branch.
During the Reporting Period, the interest of bond “20Hengyi01” was
paid in full amount and on time. As at the issue date of the report,
Applicable trading mechanism
RMB 999,189,000 of “20Hengyi01” has been put and RMB 811,000
hasn’t been put.
Risks of terminating the listing (if
N/A
any) and countermeasures
Overdue outstanding bonds
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
9.2.2 Activation and execution of issuer or investor option clauses, investor protection
clauses
“20Hengyi01” is under the option for issuer to change coupon rate: In accordance with the
Prospectus for Public Issue of Hengyi Petrochemical Co., Ltd. Corporate Bonds (Tranche 1) to
Eligible Investors in 2020, the issuer of the bonds has the right to decide whether to change the
coupon rate of current tranche at the end of the second year. The issuer will, on the 20 th trading day
prior to the interest payment date in the second interest bearing year of current tranche, disclose an
announcement on whether to change the coupon rate of current tranche and the detailed change. The
annual coupon rate of current tranche for the first two years of duration was 5.89%; the issuer opted
to reduce the coupon rate by 39bp at the end of the second year of duration and the coupon rate for
the third year of duration was 5.50%.
“20Hengyi01” is under investor put option: Upon the issuer making an announcement on whether
to change the coupon rate of current tranche, bondholders are entitled to an option for registration
within the accounted investor put registration period and put of current tranche at par, in whole or in
part, to the issuer. Finally, the declared number of effective put of current tranche within the put
registration period is 9,991,890 and the put amounts to RMB 999,189,000 (excluding interest). The
number of outstanding puttable bonds is 8,110.
9.2.3 Intermediary
Contact of
Intermediar Name of signing Telephone
Bond program name Office address intermedia
y name accountants number
ry
Hengyi Petrochemical Co., Ltd. 22/F Central Building, Liu Hongyue,
CITIC
issued corporate bonds (tranche No. 1568 Century Wang Zhiwei, 021-20262
Securities Xu Lin
1) publicly to eligible investors Avenue, Pudong New Jiang Bo, Li 318
Co., Ltd.
in 2020 Area, Shanghai Zhongshi
Whether there are changes to the said agency in the Reporting Period?
□ Yes √ No
9.2.4 Utilization of raised funds
Currency: RMB
Bond program name Total amount Amount used Amount Operation Correction Whether the
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Hengyi Petrochemical 2021 Annual Report
of funds unused of the of illegal fund use is
raised special use of compliant
account funds with the
for funds raised purpose, use
raised (if plan and
any) other
provisions
under the
prospectus?
Hengyi Petrochemical Co., Ltd. issued
corporate bonds (tranche 1) publicly to 1,000,000,000 1,000,000,000 0.00 N/A N/A Yes
eligible investors in 2020
Funds raised are used for construction projects.
□ Applicable √ Not applicable
The purpose of the said funds raised through bonds issuance was changed in the Reporting
Period.
□ Applicable √ Not applicable
9.2.5 Change in credit rating results in the Reporting Period
□ Applicable √ Not applicable
9.2.6 Guarantee, execution of and change in debt repayment plan and other debt repayment
safeguard measures in the Reporting Period and impacts on the equities of bond investors
“20Hengyi01” is under no guarantee. During the Reporting Period, the debt repayment plan and
other safeguard measures remained unchanged, having no impacts on the equities of bond investors.
9.3 Non-financial corporate debt financing instruments
There was no debt financing instruments of non-financial businesses in the Reporting Period.
9.4 Convertible corporate bonds
9.4.1 Previous adjustments to the conversion price
Since the Company implemented the equity distribution 2020 business, the convertible corporate
bonds issued by the Company (bond abbreviation: Hengyi Convertible Bonds, bond code: 127022)
were subject to change in the conversion price: original conversion price was RMB 11.50 per share
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Hengyi Petrochemical 2021 Annual Report
and the changed conversion price was RMB 11.20 per share, and the change took effect since July 6,
2021.
9.4.2 Cumulative conversion
Proportion Proporti
Cumul
Cumul of number on of
ative
ative of converted amount
number
Abbreviati amount bonds to Amount of of bonds
Beginning and Total Total amount of
on of the of total shares bonds not not
ending dates of number of of issuance bonds
convertibl conver in issue converted converte
conversion issues (RMB) convert
e bonds sion before the (RMB ) d to total
ed into
(RMB conversion amount
shares
) beginning of
(share)
date issuance
Hengyi
April 22, 2021 to 163,90
Convertibl 20,000,000 2,000,000,000 14,337 0.00039% 1,999,836,100 99.992%
October 15, 2026 0.00
e Bonds
9.4.3 Top 10 holders of convertible bonds
Unit: share
Proportion of
Number of Amount of
Nature of convertible
convertible bonds convertible bonds
S/ convertibl bonds held at
Name of convertible bonds holders held at the end of held at the end of
N e bonds the end of the
the Reporting the Reporting
holders Reporting
Period Period (RMB )
Period
ICBC Credit Suisse Hybrid Pension
1 Product - Industrial and Commercial Other 636,080 63,608,000 3.18%
Bank of China
ICBC - E Fund Management Anxin
2 Other 570,652 57,065,200 2.85%
Huibao Bond Securities Investment Fund
Shanghai Longlife Investment Co., Ltd. -
3 Longlife Xinrui Bond Gain No. 1 Private Other 482,520 48,252,000 2.41%
Securities Investment Fund
ICBC Credit Suisse Tianfeng Convertible
4 Bond Fixed Income Pension Product - Other 479,008 47,900,800 2.40%
ICBC
Overseas
5 UBS AG legal 449,977 44,997,700 2.25%
person
E Fund Management Yitian Hybrid
6 Other 447,925 44,792,500 2.24%
Pension Product - ICBC
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Hengyi Petrochemical 2021 Annual Report
Shanghai Pudong Development Bank Co.,
Ltd. (SPDB) - E Fund Management
7 Other 435,508 43,550,800 2.18%
Yufeng Huibao Bond Securities
Investment Fund
Enterprise Annuity Plan of Shenhua
8 Group Co., Ltd. - China Construction Other 431,666 43,166,600 2.16%
Bank Co., Ltd. (CCB)
State-own
9 Guoyuan Securities Co., Ltd. ed legal 397,550 39,755,000 1.99%
person
Agricultural Bank of China Co., Ltd.
10 (ABC) - Penghua Convertible Bond Other 359,255 35,925,500 1.80%
Securities Investment Fund
9.4.4 Significant changes in the guarantor’s profitability, condition of assets and credit
status
□ Applicable √ Not applicable
9.4.5 The Company’s liabilities, changes in credit standing at the end of the Reporting
Period and cash arrange ment for debt repayment in the coming years
9.4.5.1 Relevant accounting data and financial indicators
Current The same period
Year-on-year rate of
Item Reporting of the previous
change
Period year
Liquidity ratio 73.69% 70.63% 4.33%
Debt-to-asset ratio 68.79% 67.32% 1.47%
Acid-test ratio 50.59% 47.11% 7.39%
Times interest earned 2.84 3.11 -8.68%
Loan repayment ratio 100% 100% 0.00%
Interest repayment rate 100% 100% 0.00%
9.4.5. 2 Credit rating of convertible bonds
The convertible corporate bonds have been rated by Shanghai Brilliance Credit Rating & Investors
Service Co., Ltd. and the Credit Rating Report on Convertible Corporate Bonds Issued Publicly by
Hengyi Petrochemical Co., Ltd. was issued on September 4, 2020. According to the report, the main
credit rating of Hengyi Petrochemical is AA+ and the credit rating of the convertible corporate bonds
is AA+. In the duration of the convertible bonds, Shanghai Brilliance Credit Rating & Investors
Service Co., Ltd. will conduct a regularly annual rating.
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Hengyi Petrochemical 2021 Annual Report
9.4.5. 3 Cash arrangement for debt repayment in the coming years
The Company has maintained stable operation, sufficient cash flow, stable growth of asset size and
profitability. Its debt-to-asset ratio has been maintained at a reasonable level and credit standing has
been well maintained. The Company will maintain stable and sufficient cash to prepare for payment
of the interest of convertible corporation bonds and repayment of bonds in the future.
9.5 Losses within the consolidation scope in the Reporting Period more than 10% of the net
assets at the end of previous year
□ Applicable √ Not applicable
9.6 Overdue of interest-bearing debts except for bonds in the Reporting Period
□ Applicable √ Not applicable
9.7 Existence/non-existence of violation of rules and regulations in the Reporting Period
□ Yes √ No
9.8 Main accounting data and financial indicators for the past two years as at the end of the
Reporting Period
Unit: RMB 10,000
End of current Increase/decrease at the end of
End of
Item Reporting current Reporting Period over
previous year
Period the end of previous year
Liquidity ratio 73.69% 70.63% 4.33%
Debt-to-asset ratio 68.79% 67.32% 1.47%
Acid-test ratio 50.59% 47.11% 7.39%
Current The same Year-on-year increase/decrease
Reporting period of the
Period previous year
Net profit after deducting
275,854.33 247,910.10 11.27%
non-recurring profit and loss
Debts to EBITDA 13.69% 15.51% -1.82%
Times interest earned 2.84 3.11 -8.68%
Times cash interest earned 4.44 2.78 59.71%
Times interest earned – using 4.01 4.23 -5.20%
EBITDA
Loan repayment ratio 100.00% 100.00% 0.00%
Interest repayment rate 100.00% 100.00% 0.00%
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Hengyi Petrochemical 2021 Annual Report
Section 10 Financial Report
10.1 Audit report
Type of auditor's opinion Standard unqualified opinion
Signing date of the audit report 04/25/2022
Name of auditing agency Zhongxinghua Certified Public Accountants LLP
Reference number of the audit report ZXHSZ [2022] No. 012399
Name of certified public accountant Liu Hongyue, Wang Guohai
Audit Report
ZXHSZ [2022] No. 012399
To: all shareholders of Hengyi Petrochemical Co., Ltd.,
10.1.1 Auditor’s opinion
We have audited the financial statements of Hengyi Petrochemical Company Limited (hereinafter
referred to as "Hengyi Petrochemical"), which comprise the consolidated and parent company’
balance sheets as of December 31, 2021, the consolidated and parent co mpany’ income statements,
the consolidated and parent company’ cash flow statements, the consolidated and parent company’
statements of changes in shareholders' equity and notes to the financial statements for the year 2021.
In our opinion, the attached financial statements are prepared and present fairly, in all material
aspects, the consolidated and parent company’s financial position as of December 31, 2021, and the
results of their operations and cash flows for the year 2021 in accordance with Accounting Standards
for Business Enterprises.
10.1.2 Basis for auditor’s opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants
(CPAs) in China. Our responsibilities under these standards are further described in the section
"CPAs' Responsibilities for the Audit of the Financial Statements" of the audit report. According to
the China Code of Ethics for Certified Public Accountants, we are independent from Hengyi
Petrochemical and have fulfilled other ethical responsibilities as specified in the code. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
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Hengyi Petrochemical 2021 Annual Report
opinion.
10.1.3 Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements for 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.
10.1.3.1 Recognition of operating revenue
10.1.3.1.1 Description of matters
For details of relevant information disclosure, please refer to Note 4.27 “Revenue” and Note 6.49
“Operating Revenue and Operating Costs” to the Financial Statements.
In 2021, the consolidated operating revenue of Hengyi Petrochemical was RMB 128,979,539,700,
representing a year-on-year increase of 49.23%. Taking into account the importance of revenue
recognition to the overall financial statements, and the existence of the inherent risk that
management may manipulate revenue recognition to achieve specific goals or expectations, we deem
recognition of operating revenue as a key audit matter.
10.1.3.1.2 Audit response
The main audit procedures we performed are as follows:
(1) Understanding, evaluating and testing the effectiveness of the design and operation of the
Company's internal control related to the revenue recycling;
(2) Selecting the sales contracts 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 revenues and costs; analyzing fluctuations in revenue, cost,
gross profit rate for each month of current period; comparing and analyzing the analysis proce dures
for revenue, cost, gross profit rate of main products in current period with those in previous period,
and comparing and analyzing product sales prices and raw material purchase prices with those of
related products in the industry, and evaluating the accuracy of revenue recognition;
(4) Selecting samples from the accounting records of sales revenue, checking sales-related contracts,
delivery notes, bills of lading, certificates of transfer of goods property, invoices, etc., and evaluating
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Hengyi Petrochemical 2021 Annual Report
the authenticity and completeness of revenue recognition;
(5) Selecting samples from the customers involved in the Reporting Period, implementing
transaction confirmation procedure, and evaluating the authenticity and accuracy of the revenue;
(6) For export sales, checking the relevant information via China Export & Credit Insurance
Corporation and the People's Insurance Company of China APPs against the book sales records,
export declarations, sales invoices, etc. to verify the authenticity of the export income;
(7) Performing a cut-off test for revenue; selecting samples from revenue recognition transactions
before and after the balance sheet date, obtaining relevant documents such as contracts, invoices, and
delivery notes etc., and evaluating whether revenue has been recognized in an appropriate period.
10.1.3.2 Measure ment of fixed assets and construction in progress
10.1.3.2.1 Description of matters
For relevant information disclosure, please refer to Note 4.17 "Fixed Assets", 18 "Construction in
Progress", and 34 (6) "Depreciation and Amortization", and Note 6.15 “Fixed Assets”, and 16
“Construction in Progress” to the financial statements.
As of December 31, 2021, the book value of Hengyi Petrochemical's fixed assets was RMB
46,117,918,500. The assets mainly involved the machinery and equipment as well as corresponding
plants used for the production of aromatics, product oil products, polyester yarn, purified terephthalic
acid, etc. These fixed assets were recorded in the book when they reached their intended usable state
and were depreciated on a straight-line basis over their estimated useful lives.
As of December 31, 2021, the book balance of Hengyi Petrochemical's construction in progress was
RMB 3,896,282,600. The construction mainly involved the Haining Intelligent
Environment-Friendly Functional Fiber Construction Project, etc. The construction in progress of
Hengyi Petrochemical is measured at actual costs, including construction costs, installation costs,
and borrowing costs eligible for capitalization and other necessary expenditures to make the
construction in progress reach the intended usable state, including those expenses of engineering,
supervision and cost consulting. The management's judgments on the following aspects will affect
the book value of fixed assets and construction in progress as well as the depreciation policy for
fixed assets. The judgments include: determining which expenditures are eligible for capitalization,
determining the point at which the expenditures for construction in progress is rolled into fixed assets
and accrued depreciation begins; and estimating the economically useful lives and residual values of
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Hengyi Petrochemical 2021 Annual Report
the corresponding fixed assets.
We identified the measurement of fixed assets and construction in progress as a key audit matter
because evaluating the book value of fixed assets and construction in progress involves important
management judgments and they account for a large proportion of the consolidated financial
statements.
10.1.3.2.2 Audit response
The procedures we performed for the measurement of fixed assets and construction in progress
include:
(1) Understanding, evaluating and testing the effectiveness of the design and operation of
management's key internal control related to the recognition of fixed assets and construction in
progress;
(2) Conducting sampling inspection of new inputs into construction in progress this year and
checking whether the above inputs are eligible for capitalization, for example, random check of
significant construction and installation costs that are added during the year, examination of
corresponding construction contracts, and reconciliation of the amounts actually paid with the
invoices and payment vouchers.
(3) Obtaining borrowing contracts, checking the borrowing costs directly attributable to the
acquisition and construction of assets eligible for capitalization, and evaluating the completeness and
accuracy of the timing and amount of capitalization, based on the inputs of construction in progress;
(4) Visiting the construction site to understand and evaluate the progress of the project, and
reconciling it with the amount recorded in the book;
(5) Going through the approval procedures for the roll-in of new fixed assets to fixed assets in
current period, and confirming the accuracy of the roll-in time based on on-site inventory;
(6) Evaluating the rationality of accounting estimates related to fixed assets through calculation;
(7) Checking the presentation and disclosure of fixed assets and construction in progress in the
financial statements.
10.1.4 Other information
The management of Hengyi Petrochemical (hereinafter referred to as the “Management”) is
responsible for the “other information”. The “other information” comprises the information included
in Hengyi Petrochemical's 2021 Annual Report, but does not include the financial statements and our
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Hengyi Petrochemical 2021 Annual Report
audit report.
Our opinion on the financial statements does not cover the “other information” and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the “other
information” and, in doing so, consider whether the “other information” is materially inconsistent
with the financial statements or otherwise appears to be materially misstated to the best of our
knowledge in the course of our audit.
Based on the work we have performed, if we conclude that there is a material misstatement in the
“other information”, we are required to report that fact. We have nothing to report in this regard.
10.1.5 Responsibilities of manage ment 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 a bility
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.
10.1.6 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 hole
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 gua rantee
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 econo mic decisions in line with financial
statement made by financial statement users, thus, they would be deemed as material misstatements.
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Hengyi Petrochemical 2021 Annual Report
(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 co ncern 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 need 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.
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
236
Hengyi Petrochemical 2021 Annual Report
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 regul ation 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.
(As the signature and seal page of the Audit Report (ZXHSZ [2022] No. 012399, this page has no
text)
Zhongxinghua Certified Public Accountants LLP (Special General Partnership) Certified Public
Accountant of China:
(Project Partner)
Beijing, China Certified Public Accountant of China:
Monday, April 25, 2022
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Hengyi Petrochemical 2021 Annual Report
10.2 Financial Statements
Unit for the statements included in the notes: none.
10.2.1 Consolidated Balance Sheet
Consolidated Balance Sheet
12/31/2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Item Note Ending balance of Beginning balance Ending balance of
current period of current period previous period
Current assets:
Monetary capital VI. 1 14,322,716,793.82 10,078,983,803.86 10,078,983,803.86
Financial assets held for trading VI. 2 388,958,054.67 251,904,308.53 251,904,308.53
Derivative financial assets VI. 3 737,015,777.82 737,015,777.82
Notes receivable VI. 4 258,014,878.86 214,684,966.98 214,684,966.98
Accounts receivable VI. 5 6,436,842,058.88 3,879,744,130.04 3,879,744,130.04
Accounts receivable financing VI. 6 487,553,057.15 537,214,790.48 537,214,790.48
Advance payments VI. 7 2,361,528,254.53 883,379,980.28 883,379,980.28
Other receivables VI. 8 484,215,755.18 444,853,725.83 444,853,725.83
Inventory VI. 9 12,100,381,644.06 9,650,858,867.17 9,650,858,867.17
Contract assets
Held for sale assets
Non-current assets due within one year VI. 10 115,233,477.61 92,749,731.30 92,749,731.30
Other current assets VI. 11 1,640,351,289.45 2,210,554,253.43 2,210,554,253.43
Total current assets 38,595,795,264.21 28,981,944,335.72 28,981,944,335.72
Non-current assets:
Debt investment
Other debt investment
Long-term receivables VI. 12 3,307,639.58 157,476,489.65 157,476,489.65
Long-term equity investments VI. 13 12,085,626,559.38 10,062,484,360.52 10,062,484,360.52
Other equity instrument investment VI. 14 5,600,000.00 5,600,000.00 5,600,000.00
Other non-current financial assets
Investment property
Fixed assets VI. 15 46,117,918,498.81 41,579,728,480.95 41,579,728,480.95
Construction in progress VI. 16 3,896,282,585.50 7,801,532,982.72 7,801,532,982.72
Capitalized biological assets
Oil and gas assets
Right-of-use assets VI. 17 411,032,649.33 454,147,120.45
Intangible assets VI. 18 1,934,882,729.96 1,780,817,303.08 1,780,817,303.08
Development expenditure VI. 19 11,303,531.89 7,630,754.87 7,630,754.87
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Hengyi Petrochemical 2021 Annual Report
Item Note Ending balance of Beginning balance Ending balance of
current period of current period previous period
Goodwill VI. 20 221,865,586.69 221,865,586.69 221,865,586.69
Long-term deferred and prepaid expenses VI. 21 466,996,430.48 530,004,792.56 558,914,884.31
Deferred income tax assets VI. 22 123,507,368.56 135,860,344.06 135,860,344.06
Other non-current assets VI. 23 1,674,790,628.54 966,412,632.97 966,412,632.97
Total non-current assets 66,953,114,208.72 63,703,560,848.52 63,278,323,819.82
Total assets 105,548,909,472.93 92,685,505,184.24 92,260,268,155.54
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant: Head of Accounting Firm:
Continued from previous page
Consolidated Balance Sheet (Contd.)
12/31/2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Item Note Ending balance of Beginning balance Ending balance of
current period of current period previous period
Current liabilities:
Short-term loans VI. 24 33,778,694,677.24 26,482,672,125.98 26,482,672,125.98
Transactional financial liabilities VI. 25 1,670,361.85 9,301,029.70 9,301,029.70
Derivative financial liabilities VI. 26 23,705,440.98 136,608,747.10 136,608,747.10
Notes payable VI. 27 440,900,000.00 1,187,267,473.78 1,187,267,473.78
Accounts payable VI. 28 10,011,007,717.44 5,740,701,545.50 5,740,701,545.50
Advance receipts
Contract liabilities VI. 29 1,723,901,780.92 1,468,187,681.02 1,468,187,681.02
Wages payable VI. 30 311,462,869.52 293,025,783.34 293,025,783.34
Taxes and dues payable VI. 31 938,364,781.66 640,490,564.22 640,490,564.22
Other payables VI. 32 428,170,797.92 406,082,547.82 406,082,547.82
Held for sale liabilities
Non-current liabilities due within one VI. 33 4,534,519,325.21 4,517,814,375.06 4,487,453,396.24
year
Other current liabilities VI. 34 180,919,015.28 151,856,844.93 151,856,844.93
Total current liabilities 52,373,316,768.02 41,034,008,718.45 41,003,647,739.63
Non-current liabilities:
Long-term loans VI. 35 15,996,229,686.31 16,609,903,029.23 16,609,903,029.23
Bonds payable VI. 36 2,612,404,203.28 3,521,330,557.49 3,521,330,557.49
Including: preference shares
Perpetual bonds
Lease liabilities VI. 37 380,145,523.29 394,876,049.88
Long-term payables VI. 38 952,254,861.09 520,596,948.45 520,596,948.45
Long-term wages payable
Estimated liabilities VI. 39 213,630.54 3,555,907.35 3,555,907.35
Deferred income VI. 40 207,647,626.95 197,513,098.48 197,513,098.48
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Hengyi Petrochemical 2021 Annual Report
Deferred tax liabilities VI. 22 86,517,896.64 111,572,094.08 111,572,094.08
Other non-current liabilities
Total non-current liabilities 20,235,413,428.10 21,359,347,684.96 20,964,471,635.08
Total liabilities 72,608,730,196.12 62,393,356,403.41 61,968,119,374.71
Shareholders’ equity:
Share capital VI. 41 3,666,280,014.00 3,681,645,407.00 3,681,645,407.00
Other equity instruments VI. 42 478,506,692.86 478,546,158.81 478,546,158.81
Including: preference shares
Perpetual bonds
Capital reserve VI. 43 9,165,586,160.07 9,165,068,133.86 9,165,068,133.86
Less: treasury stock VI. 44 718,150,457.23 349,918,604.53 349,918,604.53
Other comprehensive income VI. 45 -1,070,859,214.62 -1,032,362,450.85 -1,032,362,450.85
Special reserve VI. 46
Surplus reserve VI. 47 751,895,667.87 660,652,171.17 660,652,171.17
Undistributed profit VI. 48 13,623,601,273.27 11,403,002,797.32 11,403,002,797.32
Total shareholders’ equity attributable 25,896,860,136.22 24,006,633,612.78 24,006,633,612.78
to parent company
Minority shareholders’ equity 7,043,319,140.59 6,285,515,168.05 6,285,515,168.05
Total shareholders’ equity 32,940,179,276.81 30,292,148,780.83 30,292,148,780.83
Total liabilities and shareholders’ 105,548,909,472.93 92,685,505,184.24 92,260,268,155.54
equity
(The attached notes to the statements are an integral part of the financi al statements)
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Hengyi Petrochemical 2021 Annual Report
10.2.2 Balance sheet of parent company
Balance Sheet
12/31/2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Ending balance of Beginning balance Ending balance of
Item Note
current period of current period previous period
Current assets:
Monetary funds 103,098,639.59 19,798,650.05 19,798,650.05
Financial assets held for trading
Derivative financial assets
Notes receivable
Accounts receivable
Accounts receivable financing
Advance payments 1,372,924.53
Other receivables XV. 1 4,741,406,347.78 8,167,765,426.76 8,167,765,426.76
Inventory
Contract assets
Held for sale assets
Non-current assets due within one year
Other current assets 2,526,591.06
Total current assets 4,848,404,502.96 8,187,564,076.81 8,187,564,076.81
Non-current assets:
Debt investment
Other debt investment
Long-term receivables
Long-term equity investments XV. 2 15,932,060,322.09 15,781,533,619.33 15,781,533,619.33
Other equity instrument investment
Other non-current financial assets
Investment property
Fixed assets 649.40 649.40 649.40
Construction in progress
Capitalized biological assets
Oil and gas assets
Right-of-use assets
Intangible assets
Development expenditure
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Hengyi Petrochemical 2021 Annual Report
Goodwill
Long-term deferred and prepaid expenses
Deferred income tax assets
Other non-current assets
Total non-current assets 15,932,060,971.49 15,781,534,268.73 15,781,534,268.73
Total assets 20,780,465,474.45 23,969,098,345.54 23,969,098,345.54
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant: Head of Accounting Firm:
Continued from previous page
Balance Sheet (Contd.)
As of December 31, 2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Item Note Ending balance of Beginning balance Ending balance of
current period of current period previous period
Current liabilities:
Short-term loans
Transactional financial liabilities
Derivative financial liabilities
Notes payable 235,000,000.00
Accounts payable 8,624.46
Advance receipts
Contract liabilities
Wages payable 787,610.58 565,750.89 565,750.89
Taxes and dues payable 473,166.43 1,059,142.98 1,059,142.98
Other payables 19,125,450.79 3,683,674.52 3,683,674.52
Held for sale liabilities
Non-current liabilities due within one year 51,033,160.10 1,984,595,701.21 1,984,595,701.21
Other current liabilities
Total current liabilities 306,428,012.36 1,989,904,269.60 1,989,904,269.60
Non-current liabilities:
Long-term loans
Bonds payable 2,612,404,203.28 3,521,330,557.49 3,521,330,557.49
Including: preference shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term wages payable
Estimated liabilities
Deferred income
Deferred tax liabilities
Other non-current liabilities
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Hengyi Petrochemical 2021 Annual Report
Total non-current liabilities 2,612,404,203.28 3,521,330,557.49 3,521,330,557.49
Total liabilities 2,918,832,215.64 5,511,234,827.09 5,511,234,827.09
Owner’s equity:
Paid-up capital 3,666,280,014.00 3,681,645,407.00 3,681,645,407.00
Other equity instruments 478,506,692.86 478,546,158.81 478,546,158.81
Including: preference shares
Perpetual bonds
Capital reserve 13,008,479,380.82 12,978,735,355.53 12,978,735,355.53
Less: treasury stock 718,150,457.23 349,918,604.53 349,918,604.53
Other comprehensive income
Special reserve
Surplus reserve 625,741,560.92 540,978,888.21 540,978,888.21
Undistributed profit 800,776,067.44 1,127,876,313.43 1,127,876,313.43
Total owner’s equity 17,861,633,258.81 18,457,863,518.45 18,457,863,518.45
Total liabilities and owner’s equity 20,780,465,474.45 23,969,098,345.54 23,969,098,345.54
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant: Head of Accounting Firm:
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Hengyi Petrochemical 2021 Annual Report
10.2.3 Consolidated income statement
Consolidated Income Statement
FY 2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Item Note Amount incurred in Amount incurred in
current year previous year
I. Gross revenue 128,979,539,693.27 86,429,630,191.87
Including: operation revenue VI. 49 128,979,539,693.27 86,429,630,191.87
II. Total operating cost 125,970,085,153.65 84,114,651,201.79
Including: operating cost VI. 49 121,608,03:1,299.09 80,449,830,696.94
Tax and associate charge VI. 50 226,148,045.07 120,437,470.28
Selling expenses VI. 51 228,081,384.04 218,109,801.14
Administration expenses VI. 52 1,087,267,658,53. 970,153,607.89
R&D expenses VI. 53 686,980,217:98 351,969,307.93
Financial expenses VI. 54 2,133,576,548.94 2,004,150,317.61
Including: interest expenses 2,098,777,291.01 1,857,374,805.92
Interest income 166,560, 838.30 185,855,314.84
Plus: other income VI. 55 332,264,253.83: .371,817,061.73
Income from investment (loss expressed with a minus VI. 56
1,069,400,148.61 1,691,621,709.35
sign)
Including: income from investment in associates and joint
625,843,764.66 1,326,696,982.37
ventures
Gains from derecognition of financial assets
measured at amortized cost
Exchange earnings (loss expressed with a minus sign “-”)
Net exposure hedging gains (loss expressed with a minus
sign “-”)
Income from changes in fair value (loss expressed with a VI. 57
42.,971,667.68 156,423,385.37
minus sign “-”)
Credit impairment loss (loss expressed with a minus sign VI. 58
82,758.06 13,912,334.18
“-”)
Asset impairment loss (loss expressed with a minus sign) VI.59 -146,977,289.85 -18,111,009.54
Asset disposal loss (loss expressed with a minus sign) VI.60 -16,621,636:32. -4,357,509.27:
III. Operating profit (loss expressed with a minus sign
4,290,574,441.63 4,526,284,961.90
“-”)
Plus: non-operating income VI. 61 32,027,224.27 14,227,568.48
Less: non-operating expenditure VI. 62 19,712,097.61 20,943,094.87
IV. Total profit (total loss expressed with a minus sign “-”) 4,302,889,568.29 4,519,569,435.51
Less: income tax expenses VI.63 344,590,446.03 704,967,451.61
V. Net profit (net loss expressed with a minus sign “-”) 3,958,299,122.26 3,814,601,983.90
(I) Classified by operation continuity:
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Hengyi Petrochemical 2021 Annual Report
1. Net profit from continuing operations (net loss expressed
3,958,299,122.26 3,814,601,983.90
with a minus sign)
2. Net profit from discontinued operation (net loss expressed
with a minus sign)
(II) Classified by attribution of the ownership
1. Net profit attributable to shareholders of parent company
3,408,043,143.47 3,071,998,839.75
(net loss expressed with a minus sign)
2. Minority interest income (net loss expressed with a minus
550,255,978.79 742,603,144.15
sign)
VI. Other comprehensive income, net of tax VI.64 3,515,560.65 -1,477,073,355.49
(I) Other comprehensive income, net of tax, attributable to
-38,496,763.77 -1,367,985,759.48
owners of the parent company
1. Other comprehensive income items which cannot be
classified as profit or loss in succeeding accounting period
(1) Remeasurement gains or losses of a defined benefit
plan
(2) Other comprehensive income cannot be recognized in
profit and loss under equity method
(3) Changes in fair value of other equity instrument
investments
(4) Changes in fair value of enterprise credit risks
(2) Others
2. Other comprehensive income to be reclassified into
-38,496,763.77 -1,367,985,759.48
profit and loss
(1) Other comprehensive income that can be recognized
9,011,096.96 -59,356,706.36
in profit and loss under equity method
(2) Changes in fair value of other debt investments
(3) Amount of financial assets reclassified into other
comprehensive income
(4) Provision for credit impairment of other debt
investments
(5) Cash flow hedge reserve 300,242,496.51 -431,713:895.59
(6) Converted difference in foreign currency statements -347,750,357.24 -876,915,137.53
(7) Others
(II) Other comprehensive income, net of tax, attributable
42,012,324.42: -109,087,596.01
to minority shareholders
VII. Total comprehensive income 3,961,814,682.91 2,337,528,628.41
(I) Total comprehensive income attributable to parent
3,369,546,379.70 1,704,013i080.27
company shareholders
(II) Other comprehensive income, net of tax, attributable
592,268,303.21 633,515,548.14
to minority shareholders
VIII. Earnings per Share (EPS):
(I) Basic earnings per share XVI. 2 0.94 0.83
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Hengyi Petrochemical 2021 Annual Report
(II) Diluted EPS XVI. 2 0.91 0.83
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant: Head of Accounting Firm:
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Hengyi Petrochemical 2021 Annual Report
10.2.4 Income Statement of Parent Company
Income Statement
FY 2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Item Note Amount incurred Amount incurred
in current year in previous year
I. Operation revenue XV. 3 3,707,429,681.57 2,586,856,333.35
Less: operating cost XV. 3 3,572,734,835.29 2,537,833,295.23
Tax and associate charge 5,754,198.90 2,047,577.69
Selling expenses
Administration expenses 9,310,644.14 11,662,067.37
R&D expenses
Financial expenses 18,986,910.99 -5,006,422.90
Including: interest expenses 215,840,087.70 267,780,810.45
Interest income 197,728,575.34 273,374,198.05
Plus: other income 2,193,970.06 1,241,974.76
Income from investment (loss expressed with a minus sign) XV. 4 744,799,664.76 1,204,456,174.30
Including: income from investment in associates and joint
26,702.76 -143,825.70
ventures
Gains from derecognition of financial assets measured at
amortized cost
Net exposure hedging gains (loss expressed with a minus sign
“-”)
Income from changes in fair value (loss expressed with a
minus sign “-”)
Credit impairment loss (loss expressed with a minus sign “-”) -10,000.00 1,500.00
Asset impairment loss (loss expressed with a minus sign)
Gains on asset disposal (loss expressed with a minus sign “-”)
II. Operating profit (loss expressed with a minus sign “-”) 847,626,727.07 1,246,019,465.02
Plus: non-operating income
Less: non-operating expenditure 163.39
III. Total profit (total loss expressed with a minus sign “-”) 847,626,727,07 1,246,019,301.63
Less: income tax expenses
IV. Net profit (net loss expressed with a minus sign “-”) 847,626,727.07 1,246,019,301.63
(I) Net profit from continuing operations (net loss expressed with a
847,626,727.07 1,246,019,301.63
minus sign)
(II) Net profit from discontinued operation (net loss expressed with
a minus sign)
V. Other comprehensive income, net of tax
I. Other comprehensive income that cannot be re-classified into
profit and loss
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Hengyi Petrochemical 2021 Annual Report
1. Remeasurement gains or losses of a defined benefit plan
2. Other comprehensive income cannot be recognized in profit and
loss under equity method
3. Changes in fair value of other equity instrument investments
4. Changes in fair value of enterprise credit risks
5. Others
II. Other comprehensive income to be re-classified into profit and
loss
1. Other comprehensive income can be recognized in profit and
loss under equity method
2. Changes in fair value of other debt investments
3. Amount of financial assets reclassified into other
comprehensive income
4. Provision for credit impairment of other debt investments
5. Cash flow hedge reserve
6. Converted difference in foreign currency statements
7. Others
VI. Total comprehensive income 847,626,727.07 1,246,019,301.63
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant: Head of Accounting Firm:
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Hengyi Petrochemical 2021 Annual Report
10.2.5 Consolidated Statement of Cash Flow
Consolidated Statement of Cash Flow
FY 2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Item Note Amount incurred in Amount incurred in
current year previous year
I. Cash flow from operating activities:
Cash received from the sales of goods and the rendering
1.35,429,689,619.36 94,164,418,130.34
of labor services
Tax refunds received 1,179,284,649.76 1,606,851,370.63
Other cash received relating to operating activities 554,578,539.12 1,871,043,242.67
Subtotal of cash inflows from operating activities VI.65 137,163,552,808.24 97,642,317,743.64
Cash payments for goods purchased and labor services
124,636,768,649.57 86,763,506,667.48
received
Cash payments to and on behalf of employees 2,196,370,278.69 2,063,286,244.53
Payments of all types of taxes 1,627,523,124.40 1,103,552,261.90
Other cash payments relating to operating activities VI.65 948,019,2.36.02 2,698,199,791.78
Subtotal of cash outflows from operating activities 129,408,681,288.68 92,628,544,965.69
Net cash flow from operating activities 7,754,871,519.56 5,013,772,777.95
II. Cash flow from investment activities:
Cash received from disposals and withdrawn on
1,297,909,623.83 881,887,917.02
investments
Cash received from return on investment 1,050,815,136.71 504,230,715.53
Net cash received from disposal of fixed assets, intangible
23,381,288.25 2,612,726.25
assets and other long-term assets
Net cash received from disposal of subsidiaries and other
173,134,35.7.42 50,437,768.06
business units
Other cash received relating to investment activities VI.65 52,406,117.49 555,326,465.85
Subtotal of cash inflows from investing activities 2,597,646,523.70 1,994,495,592.71
Cash payments to acquire and construct fixed assets,
6,007,146,711.00 8,172,452,434.34
intangible assets and other long-term assets
Cash payments to acquire investment 3,851,849,386.88 1,774,515,879.38
Net cash payments for acquisition of subsidiaries and
other business units
Other cash payments relating to investment activities VI.65 290,354,735.85
Subtotal of cash outflows from investing activities 10,149,350,833.73 9,946,968,313.72
Net cash flows from investing activities -7,551,704,310.03 -7,952,472,721.01
III. Cash flow from financing activities:
Cash received from investors in making investment in the
347,903,000.00 :S,Q35,100,000.00
enterprise
Including: cash received by subsidiaries from issuing 347,903,000.00 50,600,000.00
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Hengyi Petrochemical 2021 Annual Report
shares of minority shareholders
Cash received from borrowings 41,559,507,427.01 35,951,594,602.98
Other cash received relating to financing activities VI.65 5,661,962,241.76 1,909,656,348.44
Subtotal of cash inflows from financing activities 47,569,372,668.77 40,896,350,951.42
Cash repayments of amounts borrowed 35,587,266,783.39 29,553,054,825.43
Cash payments for distribution of dividends or profit or
3,075,829,806.46 3,146,712,192.03
for interest payment
Including: subsidiaries’ cash payments to minority
135,486,111.11 81,541,666.67
shareholders for distribution of dividends or profit
Other cash payments relating to financing activities VI.65 5,965,700,010.06 2,284,204,105.14
Subtotal of cash outflows from financing activities 44,628,796,599.91 34,988,971,122.60
Net cash flows from financing activities 2,940,576,068.86 5,907,379,828.82
IV. Effect of foreign exchange rate change on cash and
-85,332,274.72 -255,434,618.11
cash equivalents
V. Net increase in cash and cash equivalents VI.65 3,058,411,003.67 2,713,245,267.65
Plus: Beginning balance of cash and cash equivalents VI.65 7,186,325,948.17 4,473,080,680.52
VI. Ending balance of cash and cash equivalents VI.65 10,244,736,951.84 7,186,325,948.17
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant: Head of Accounting Firm:
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Hengyi Petrochemical 2021 Annual Report
10.2.6 Statement of Cash Flow of Parent Company
Statement of Cash Flow
FY 2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Amount incurred Amount incurred
Item Note in current year in previous year
I. Cash flow from operating activities:
Cash received from the sales of goods and the rendering of
labor services 4,189,382,332.64 2,741,399,334.51
Tax refunds received
Other cash received relating to operating activities 224,691,199.96 569,171,451.77
Subtotal of cash inflows from operating activities 4,414,073,532.60 3,310,570,786.28
Cash payments for goods purchased and labor services
received 3,802,342,240.19 2,686,003,346.36
Cash payments to and on behalf of employees 2,329,109.86 1,735,359.81
Payments of all types of taxes 25,517,443.07 4,624,508.88
Other cash payments relating to operating activities 70,349,804.23 8,906,447.11
Subtotal of cash outflows from operating activities 3,900,538,597.35 2,701,269,662.16
Net cash flow from operating activities 513,534,935.25 609,301,124.12
I. Cash flow from investment activities:
Cash received from disposals and withdrawn on investments
Cash received from return on investment 1,204,600,000.00 1,130,000,000.00
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets
Net cash received from disposal of subsidiaries and other
business units
Other cash received relating to investment activities 3,019,781,028.02 3,256,632,750.20
Subtotal of cash inflows from investing activities 4,224,381,028.02 4,386,632,750.20
Cash payments to acquire and construct fixed assets,
intangible assets and other long-term assets
Cash payments to acquire investment 150,500,000.00 262,000,000.00
Net cash payments for acquisition of subsidiaries and other
business units
Other cash payments relating to investment activities 4,807,330,000.00
Subtotal of cash outflows from investing activities 150,500,000.00 5,069,330,000.00
Net cash flows from investing activities 4,073,881,028.02 -682,697,249.80
III. Cash flow from financing activities:
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Cash received from investors in making investment in the
enterprise 2,984,500,000.00
Cash received from borrowings 250,000,000.00
Other cash received relating to financing activities 16,814,978.66 6,783,381.50
Subtotal of cash inflows from financing activities 266,814,978.66 2,991,283,381.50
Cash repayments of amounts borrowed 3,075,210,000.00 1,174,790,000.00
Cash payments for distribution of dividends or profit or for
interest payment 1,322,959,638.66 1,396,519,960.40
Other cash payments relating to financing activities 408,011,313.73 352,857,048.48
Subtotal of cash outflows from financing activities 4,806,180,952.39 2,924,167,008.88
Net cash flows from financing activities -4,539,365,973.73 67,116,372.62
IV. Effect of foreign exchange rate change on cash and cash
equivalents
V. Net increase in cash and cash equivalents 48,049,989.54 -6,279,753.06
Plus: Beginning balance of cash and cash equivalents 19,798,650.05 26,078,403.11
VI. Ending balance of cash and cash equivalents 67,848,639.59 19,798,650.05
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant: Head of Accounting Firm:
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10.2.7 Consolidated Statement of Changes in Owner’s Equity
Amount incurred in current year
Consolidated Statement of Changes in Shareholders’ Equity
FY 2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Amount incurred in current year
Shareholders’ equity attributable to parent company
Minority
Item Other equity instruments Other Total shareholders’
Less: treasury Undistributed shareholders’
Share capital Preference Perpetual Capital reserve comprehensive Special reserve Surplus reserve Subtotal equity
Other stock profit equity
shares bonds income
I. Ending balance of previous period 3,681,645,407.00 478,546,158.81 9,165,068,133.86 349,918,604.53 -1,032,362,450.85 660,652,171.17 11,403,002,797.32 24,006,633,612.78 6,285,515,168.05 30,292,148,780.83
Plus: changes in accounting policies
Correction of previous accounting
errors
Combination of enterprises under
the same control
II. Beginning balance of current year 3,681,645,407.00 478,546,158.81 9,165,068,133.86 349,918,604.53 -1,032,362,450.85 660,652,171.17 11,403,002,797.32 24,006,633,612.78 6,285,515,168.05 30,292,148,780.83
III. Amount increase or decrease in -15,365,393.00 -39,465.95 518,026.21 368,231,852.70 -38,496,763.77 91,243,496.70 2,220,598,475.95 1,890,226,523.44 757,803,972.54 2,648,030,495.98
current period (decrease expressed with
a minus sign “-”)
(I) Total comprehensive income -38,496,763.77 3,408,043,143.47 3,369,546,379.70 592,268,303.21 3,961,814,682.91
(II) Shareholders investment and -15,365,393.00 -39,465.95 29,744,025.29 368,231,852.70 -353,892,686.36 324,654,060.00 -29,238,626.36
capital reduction
1. Ordinary shares invested by -15,379 ,730.00 29,595,247.63 368,231 ,852.70 -354,016,335.07 324,654,060.00 -29,362,275.07
shareholders
2. Capital invested by other equity 14,337.00 -39,465.95 148,777.66 123,648.71 123,648.71
instrument holders
3. Amount of share-based payment that
recognized in shareholders’ equity
4. Others
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Hengyi Petrochemical 2021 Annual Report
(III) Profit distribution 91,243,496.70 -1,181,207,797.05 -1,089,964,300.35 -157,987,171.11 -1,247,951,471.46
1. Appropriation of earned surplus 91,243,496.70 -91,243,496.70
2. Appropriation of provision for normal
risks
3. Profit distributed to shareholders -1,089 ,964 ,300.35 -1,089,964,300.35 -157,987,171.11 -1,247,951,471.46
4. Others
(IV) Internal carry-over of
shareholder’s equity
1. Capital reserve carried over into share
capital
2. Earned surplus carried over into share
capital
3. Earned surplus carried over to cover
loss
4. Gains or losses of a defined benefit
plan carried over into retained earning
5. Other comprehensive income carried
over into retained earning
6. Others
(V) Appropriative reserve
1. Reserve withdrawn in current period 52,367,268.75 52,367,268.75 52 ,367,268.75
2. Reserve used in current period 52,367,268.75 52,367,268.75 52,367,268.75
(VI) Others -29,225,999.08 -6,236,870.47 -35,462,869.55 -1,131,219.56 -36,594,089.11
IV. Ending balance of current year 3,666,280,014.00 478,506,692.86 9,165,586,160.07 718,150,457.23 -1,070,859,214.62 751,895,667.87 13,623,601,273.27 25,896,860,136.22 7,043,319,140.59 32,940,179,276.81
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant Head of Accounting Firm
Amount incurred in previous year
Consolidated Statement of Changes in Shareholders’ Equity (Contd.)
FY 2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Item Amount incurred in previous year
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Hengyi Petrochemical 2021 Annual Report
Shareholders’ equity attributable to parent company
Other equity instruments Other Minority Total shareholders’
Less: treasury Special
Share capital Preference Perpetual Capital reserve comprehensive Surplus reserve Undistributed profit Subtotal shareholders’ equity equity
Other stock reserve
shares bonds income
I. Ending balance of previous period 2,841,725,474.00 10,492,771,354.69 55,450,720.00 335,623,308.63 559,247,505.53 9,567,928,583.61 23,741,845,506.46 5,810,441,286.58 29,552,286,793.04
Plus: changes in accounting policies
Correction of previous
accounting errors
Other
II. Beginning balance of current 2,841,725,474.00 10,492,771,354.69 55,450,720.00 335,623,308.63 559,247,505.53 9,567,928,583.61 23,741,845,506.46 5,810,441,286.58 29,552,286,793.04
year
III. Amount increase or decrease in 839,919,933.00 478,546,158.81 -1,327,703,220.83 294,467,884.53 -1,367,985,759.48 101,404,665.64 1,835,074,213.71 264,788,106.32 475,073,881.47 739,861,987.79
current period (decrease expressed
with a minus sign “-”)
(I) Total comprehensive income -1,367,985,759.48 3,071,998,839.75 1,704,013,080.27 633,515,548.14 2,337,528,628.41
(II) Shareholders investment and -12,597,709.00 478,546,158.81 21,517,092.34 294,467,884.53 192,997,657.62 58,600,000.00 251,597,657.62
capital reduction
1. Ordinary shares invested by -12,597,709.00 478,546,158.81 12,503,217.34 349,918,604.53 128,533,062.62 58,600,000.00 187,133,062.62
shareholders
2. Capital invested by other equity
instrument holders
3. Amount of share-based payment that 9,013,875.00 -55,450,720.00 64,464,595.00 64,464,595.00
recognized in shareholders’ equity
4. Others
(III) Profit distribution 101,404,665.64 -1,236,924,626.04 -1,135,519,960.40 -217,041,666.67 -1,352,561,627.07
1. Appropriation of earned surplus 101,404,665.64 -101,404,665.64
2. Appropriation of provision for
normal risks
3. Profit distributed to shareholders -1,135,519,960.40 -1,135,519,960.40 -217,041,666.67 -1,352,561,627.07
4. Others
(IV) Internal carry-over of 852,517,642.00 -852,517,642.00
shareholder’s equity
1. Capital reserve carried over into 852,517,642.00 -852,517,642.00
share capital
2. Earned surplus carried over into
share capital
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Hengyi Petrochemical 2021 Annual Report
3. Earned surplus carried over to cover
loss
4. Gains or losses of a defined benefit
plan carried over into retained earning
5. Other comprehensive income
carried over into retained earning
6. Others
(V) Appropriative reserve
1. Reserve withdrawn in current period 53,905,152.19 53,905,152.19 53,905,152.19
2. Reserve used in current period 53,905,152.19 53,905,152.19 53,905,152.19
(VI) Others -496,702,671.17 -496,702,671.17 -496,702,671.17
IV. Ending balance of current year 3,681,645,407.00 478,546,158.81 9,165,068,133.86 349,918,604.53 -1,032,362,450.85 660,652,171.17 11,403,002,797.32 24,006,633,612.78 6,285,515,168.05 30,292,148,780.83
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant Head of Accounting Firm
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Hengyi Petrochemical 2021 Annual Report
10.2.8 Statement of Changes in Owner’s Equity of Parent Company
Amount incurred in current year
Statement of Changes in Shareholders’ Equity
FY 2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Amount incurred in current year
Other equity instruments Other
Item Less: treasury Special Total shareholders’
Share capital Preference Perpetual Capital reserve comprehensive Surplus reserve Undistributed profit
Other stock reserve equity
shares bonds income
I. Endi ng balance of previous 3,681,645,407.00 478,546,158.81 12,978,735,355.53 349,918,604.53 540,978,888.21 1,127,876,313.43 18,457,863,518.45
peri od
Plus: changes in accounting
policies
Correct ion of previous
accounting errors
Other
II. Beginning bal ance of current 3,681,645,407.00 478,546,158.81 12,978,735,355.53 349,918,604.53 540,978,888.21 1,127,876,313.43 18,457,863,518.45
year
III. Amount increase or -15,365,393.00 -39,465.95 29,744,025.29 368,231,852.70 84,762,672.71 -327,100,245.99 -596,230,259.64
decrease in current peri od
(decrease expressed wi th a
minus sign “-”)
(I) Total comprehensi ve income 847,626,727.07 847,626,727.07
(II) Sharehol ders investment -15,365,393.00 -39,465.95 29,744,025.29 368,231,852.70 -353,892,686.36
and capital reducti on
1. Ordinary shares invested by -15,379,730.00 29,595,247.63 368,231,852.70 -354,016,335.07
shareholders
2. Capital invested by other 14,337.00 -39,465.95 148,777.66 123,648.71
equity instrument holders
3. A mount of share-based
payment that recognized in
shareholders’ equity
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Hengyi Petrochemical 2021 Annual Report
4. Others
(III) Profit distri bution 84,762,672.71 -1,174,726,973.06 -1,089,964,300.35
1. Appropriation of earned 84,762,672.71 -84,762,672.71
surplus
2. Appropriation of provision for
normal risks
3. Profit distributed to -1,089,964,300.35 -1,089,964,300.35
shareholders
4. Others
(IV) Internal carry-over of
sharehol der’s equity
1. Capital reserve carried over
into share capital
2. Earned surplus carried over
into share capital
3. Earned surplus carried over to
cover loss
4. Gains or losses of a defined
benefit plan carried over into
retained earning
5. Other co mp rehensive income
carried over into retained earning
6. Others
(V) Appropri ati ve reserve
1. Reserve withdrawn in current
period
2. Reserve used in current period
(VI) Others
IV. Ending balance of current 3,666,280,014.00 478,506,692.86 13,008,479,380.82 718,150,457.23 625,741,560.92 800,776,067.44 17,861,633,258.81
year
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant Head of Accounting Firm
Amount incurred in previous year
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Hengyi Petrochemical 2021 Annual Report
Statement of Changes in Shareholders’ Equity (Contd.)
FY 2021
Prepared by: Hengyi Petrochemical Co., Ltd. Currency: RMB
Amount incurred in p revious year
Other equity instruments Other
Item Less: treasury Special Total shareholders’
Share capital Preference Perpetual Capital reserve comprehensive Surplus reserve Undistributed profit
Other stock reserve equity
shares bonds income
I. Endi ng balance of previous 2,841,725,474.00 13,806,467,773.69 55,450,720.00 416,376,958.05 1,141,978,902.36 18,151,098,388.10
peri od
Plus: changes in accounting
policies
Correct ion of p revious
accounting errors
Other
II. Beginning balance of 2,841,725,474.00 13,806,467,773.69 55,450,720.00 416,376,958.05 1,141,978,902.36 18,151,098,388.10
current year
III. Amount increase or 839,919,933.00 478,546,158.81 -827,732,418.16 294,467,884.53 124,601,930.16 -14,102,588.93 306,765,130.35
decrease i n current period
(decrease expressed with a
minus sign “-”)
(I) Total comprehensi ve 1,246,019,301.63 1,246,019,301.63
income
(II) Sharehol ders investment -12,597,709.00 478,546,158.81 18,001,842.34 294,467,884.53 189,482,407.62
and capital reducti on
1. Ord inary shares invested by -12,597,709.00 478,546,158.81 12,503,217.34 349,918,604.53 128,533,062.62
shareholders
2. Capital invested by other
equity instrument holders
3. A mount of share-based 5,498,625.00 -55,450,720.00 60,949,345.00
payment that recognized in
shareholders’ equity
4. Others
(III) Profit distri bution 124,601,930.16 -1,260,121,890.56 -1,135,519,960.40
1. Appropriation of earned 124,601,930.16 -124,601,930.16
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Hengyi Petrochemical 2021 Annual Report
surplus
2. Appropriation of p rovision
for normal risks
3. Profit distributed to -1,135,519,960.40 -1,135,519,960.40
shareholders
4. Others
(IV) Internal carry-over of 852,517,642.00 -852,517,642.00
sharehol der’s equity
1. Capital reserve carried over 852,517,642.00 -852,517,642.00
into share capital
2. Earned surplus carried over
into share capital
3. Earned surplus carried over to
cover loss
4. Gains or losses of a defined
benefit plan carried over into
retained earning
5. Other co mprehensive income
carried over into retained
earning
6. Others
(V) Appropri ati ve reserve
1. Reserve withdrawn in current
period
2. Reserve used in current
period
(VI) Others 6,783,381.50 6,783,381.50
IV. Ending balance of current 3,681,645,407.00 478,546,158.81 12,978,735,355.53 349,918,604.53 540,978,888.21 1,127,876,313.43 18,457,863,518.45
year
(The attached notes to the statements are an integral part of the financi al statements)
Legal representati ve: Chief Accountant Head of Accounting Firm
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Hengyi Petrochemical 2021 Annual Report
Hengyi Petrochemical Co., Ltd.
Notes to 2021 Financial Statements
(Unless otherwise specified, amounts provided herein are all in RMB)
Note 1 General information
Note 1.1 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 Ce ntennial 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, three bonus shares for every 10 shares were distributed to all
shareholders on the basis of the Company’s original total share capital of RMB 576,793,813.00, and
the capital reserve was transferred to increase 7 shares for every 10 shares to all shareholders at the
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Hengyi Petrochemical 2021 Annual Report
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 impleme nted 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 26 th Meeting of the 9th BOD 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 2 nd Extraordinary General Meeting of Shareholders of the
Company in 2017 and the Company’s revised articles of association, the Company implemented the
second restricted stock incentive plan in 2017. The incentive form adopted in this incentive plan was
restricted stocks, and 50 incentive objects were granted the 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
262
Hengyi Petrochemical 2021 Annual Report
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 three 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.
Upon approval by Shenzhen Stock Exchange (SZSE) (approval document SZS [2020] No. 1027), the
Company’s convertible bonds amounting to RMB 2 billion were listed on Shenzhen Stock Exchange
on November 16, 2020 with the bond name of Hengyi Convertible Bonds, the conversion period of
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Hengyi Petrochemical 2021 Annual Report
which was from April 22, 2021 to October 15, 2026. Through 2021, a total of 2,113 Hengyi
Convertible Bonds were converted into 14,337 Hengyi Petrochemical shares.
On July 28, 2021, in accordance with the “Resolution on Achievement of Performance Commitments
and Performance Compensation Plan in 2020 through the Share Issuance for Asset Acquisition and
Connected Transactions”, the Company canceled 15,379,730 shares.
After converting the said Hengyi Convertible Bonds into 14,337 Hengyi Petrochemical shares and
canceling 15,379,730 shares for fulfillment of performance commitments and compensation, the
registered capital of the Company changed into RMB 3,666,280,014.00.
The Company’s Unified Social Credit Identifier (USCI) is 9145050019822966X4; registered address
is in Beihai City, Guangxi Province, and the current headquarters is located on No. 260 North Shixin
Road, Xiaoshan District, Hangzhou City, Zhejiang Province; legal representative is Qiu Yibo; the
registered capital/share capital as at December 31, 2021 is RMB 3,666,280,014.00.
The parent company of the Company is Zhejiang Hengyi Group Co., Ltd.
Note 1.2 Industry
The Company is mainly engaged in petrochemical and chemical fiber product manufacturing
industry.
Note 1.3 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).
Note 1.4 Key products
The Company’s main products are purified terephthalic acid (PTA), polyester flakes, 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, jet fuel, etc.
Note 1.5 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 “Historical Development”.
Note 1.6 These financial statements are issued with approval from the BOD by means of a resolution
on April 25, 2022.
Note 1.7 In 2020, there were 44 subsidiaries included in the company’s consolidation scope. For
details, please refer to Note VIII “Equities in Other Entities”. The scope of consolidation of the
Company for this year included three new entities and excluded three entities when compared with
the previous year. For details, please refer to Note 7 "Changes in the Scope of Consolidation".
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Note 2 Basis for the preparation of financial statements
Note 2.1 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
Business 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 Business Enterprises and other relevant provisions issued
and amended on and after February 15, 2006 (hereinafter collectively the “Accounting Standards for
Business 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 Business 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.
Note 3 Statement of compliance with accounting standards for business enterprises
The Financial Statements prepared by the Company are in compliance with the requirements of
Accounting Standards for Business Enterprises, truly and completely reflecting the Company’s
financial conditions as at December 31, 2021 and the operating results and cash flows through 2021.
Furthermore, the Financial Statements have complied, in all material respects, with the disclosure
requirements for financial statements and notes thereto as specified in Rules No. 15 on Compiling
and Submitting Information Disclosed by Companies Offering Securities to the Public: General
Provisions on Financial Reports revised by CSRC in 2014.
Note 4 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 bad debt provision 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 4 herein.
For more information concerning significant accounting judgments and estimates, refer to Note 4.34
“Significant Accounting Judgments and Estimates”.
Note 4.1 Accounting period
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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
Note 4.2 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
Note 4.3 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
Note 4.4 Accounting treatment of business combination under common control and
business combination not under common control
Business combination refers to the transaction or matter where two or more than two individual
enterprises merge into one report subject. Business combination is divided into combination of
enterprises under the same control and combination of enterprises not under the same control.
Note 4.4.1 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
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.
Combination of enterprises under the same control means that enterprises involved in combination
are controlled finally by the same party or parties before combination and such control is not
temporary. Under a combination of enterprises under the same control, the party acquiring the
controlling interests in other enterprises involved in the combination at the combination date is the
acquirer and such other enterprises are the acquiree. The combination date refers to the day when the
acquirer substantially acquires the controlling interests 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
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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.
Note 4.4.2 Combination of enterprises not under the same control
Combination of enterprises not under the same control means that enterprises involved in
combination are not controlled finally by the same party or parties before combination. Under a
combination of enterprises not under the same control, the party acquiring the controlling interests in
other enterprises involved in the combination at the acquisition date is the acquirer and such other
enterprises are the acquiree. The acquisition date refers to the day when the acquirer substantially
acquires the controlling interests of 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 securiti es 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.
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
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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 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 Business Enterprises (C.K. [2012] No. 19) and the criteria for the judgment of package
deals contained in Article 51 of the Accounting Standards for Business Enterprises No. 33 -
Consolidated Financial Statements (refer to Note 4.5.2) 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 4.15 “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 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 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
Date belongs).
Note 4.5 Preparation of consolidated financial statements
Note 4.5.1 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
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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.
Note 4.5.2 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.
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
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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 4.15 “Long-term Equity Investment”
and Note 4.9 “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 4.15.2④) and "the control over a subsidiary is lost due to
disposal of partial equity investment in the subsidiary or any other reason" (refer to the above
paragraph for details). 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.
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Note 4.6 Classification of joint arrange ments 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 4.15.2② “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.
Note 4.7 Recognition criteria for cash and cash equivalents
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.
Note 4.8 Foreign currency business and conversion of foreign currency statement
Note 4.8.1 Translation of transactions in foreign currencies
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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.
Note 4.8.2 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; ② the 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.
Note 4.8.3 Translation of accounting statements in foreign currencies
When preparing the Consolidated Financial Statements, if a monetar y 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
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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
yearend 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 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.
Note 4.9 Financial instrume nts
A financial instrument is recognized as an asset or liability when the Company becomes a party
thereto.
Note 4.9.1 Classification, recognition and measurement of financial assets
Based on the business model of managing financial assets and the characteristic of contractual cash
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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.
① Financial assets measured at amortized cost
The objective of the business model within which financial assets measured at amortized cost are
managed is to collect contractual cash flow, and the contractual cash flow characteristic 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 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.
③ Financial assets at fair value through profit or loss
The Company classifies financial assets other tha n those measured at amortized cost and those
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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.
Note 4.9.2 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.
① Financial 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 effects of the change in the
Company’s credit risk) in current profit or loss.
② Other 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.
Note 4.9.3 Basis for recognizing and methods for measuring the transfer of financial assets
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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 transferre d
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 or
retained, neither or has the control over the financial asset been waived, then, the fi nancial 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 transfe r
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 Company
determines whether control over the financial asset is retained, and treated according to the principles
related in previous paragraphs.
Note 4.9.4 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
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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.
Note 4.9.5 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.
Note 4.9.6 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 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.
Note 4.9.7 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.
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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.
Note 4.10 Impairme nt 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.
Note 4.10.1 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 Compa ny 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, 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.
Note 4.10.2 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
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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 in a long
period of time, then the financial instrument will be deemed to have low credit risk.
Note 4.10.3 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 impai rment.
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
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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.
Note 4.10.4 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.
Note 4.10.5 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.
Note 4.10.6 Method for determining the credit loss of financial assets
With regard to the notes receivable, accounts receivable and financing of accounts receivable 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 dur ation, regardless of
whether there is a significant financing component.
① Notes receivable
Based on the credit risk characteristics, the notes receivable will be classified into different
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combinations.
Method for measuring of expected credit
Item Basis for grouping
loss
Bank acceptance bills The Company deems that this type of funds
The acceptor is the bank with
and domestic letter of has a relatively low credit risk and does not
low credit risk.
credit recognize the expected credit loss.
This credit risk characteristic of
The expected credit rate is recognized with
Commercial this portfolio of receivables is
reference to the policy of accounts
acceptance bills defined by account receivable
receivable
aging.
② Accounts 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:
Item Basis for grouping Method for measuring of expected credit loss
This portfolio represents The Company deems that this type of funds has a
Amounts due from
receivables due from related relatively low credit risk and does not recognize the
related parties included
parties with relatively low risk expected credit loss.
in the scope of
which are included within the
consolidation (note)
scope of consolidation.
With reference to historical credit loss experience and
based on the current conditions and the forecasts of
This credit risk characteristic of
future economic conditions, a comparison table
Receivables from third this portfolio of receivables is
between the aging of accounts receivable and the
parties defined by account receivable
expected credit loss rate for the entire duration are
aging.
prepared and the expected credit losses are
calculated.
Note: “Related parties included in the scope of consolidation” refer to Hengyi Petrochemical and
those companies recorded in the scope of its consolidated financial state ment (the same below).
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 six (6) months (included) 0.00
7-12 months (included) 5.00
1-2 years (included) 30.00
2-3 years (included) 50.00
Over three years 100.00
③ Other receivables
Based on the determination as to whether the credit risk of other receivables has 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
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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
④ For other 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.
Note 4.11 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 4.9 “Financial Instruments” and Note 4.10 “Impairment of Financial Assets”.
Note 4.12 Inventories
Note 4.12.1 Classification of inventories
Inventories refer to finished goods or commodities for sale held in daily activities, unfinished 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.
Note 4.12.2 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
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carried over at the end of the year and the planned cost shall be adjusted to the actual cost.
Note 4.12.3 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 realizable 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.
Note 4.12.4 Inventory system
The Company adopts the perpetual inventory system.
Note 4.12.5 Amortization of low-value consumables and packing materials
One-time amortization method will be used for low-value consumables and packing materials.
Note 4.13 Contract assets
The Company presents the right for which the customer has not paid the contract consideration, but
the Company has fulfilled its performance obligations in accordance with the contract 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 contr act liabilities under
the same contract are presented at net amount, and contract assets and contract liabilities under
different contracts are not offset.
For the determination method and accounting treatment method for expected credit losses of contract
assets, please refer to Note 4.10 “Impairment of Financial Assets”.
Note 4.14 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;
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the Company has made a decision on the selling plan and obtai ned 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”). 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 measureme nt 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
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.
Note 4.15 Long-term equity investments
Long-term equity investments in this part refer to the Company’s long-term equity investments
having control, joint control or significant influence on the invested unit. Long-term equity
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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 5.9 “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.
Note 4.15.1 Determination of investment cost
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
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.
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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 i n 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.
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 Business Enterprises No. 22 -
Recognition and Measurement of Financial Instruments and the newly increased cost.
Note 4.15.2 Methods for subsequent measure and recognition of profit and loss
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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.
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. However, the losses
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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 Business 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
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 investment
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
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the latter, the disposal price is treated following accounti ng policies described in Note 4.5.2
“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
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'
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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 i nstruments 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 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.
Note 4.16 Investment real estates
Investment real estate refers to real estate held for rental or capital increase or both purposes,
including land use rights leased, land held for sale after appreciation and leased buildings.
Investment real estates 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 houses,
buildings and related land use rights.
Refer to Note 4.22 “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
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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. Since the date of
changing its purpose into rental or capital gain, fixed assets or intangible assets shall be converted
into investment real estate. 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.
Note 4.17 Fixed assets
Note 4.17.1 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.
Note 4.17.2 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:
Yearly depreciation
Category Depreciable life (year) Residual ratio (%)
rate (%)
4.75，4.50
20 years, 30 years and 50 5.00
Houses & buildings 3.17, 3.00
years 10.00
1.90, 1.80
5.00 9.50, 4.75
Structures 10 years and 20 years
10.00 9.00, 4.50
5.00
Machinery equipment 5-30 years 3.00-19.00
10.00
19.00, 18.00
5.00
Transportation equipment 5 years, 6 years and 10 years 15.83, 15.00
10.00
9.50, 4.75
Office facilities and others 5 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
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the fixed asset in its status upon the expiry of its using life.
Note 4.17.3 Method for impairment test of fixed assets and impairment provision retention
Refer to Note 4.22 “Impairment of Long-term Assets” for methods for depreciation test and
impairment provision retention for fixed assets.
Note 4.17.4 The basis for recognizing and measuring fixed assets acquired under finance leases
(applicable in FY 2020, inapplicable as new leasing criteria are implemented in 2021)
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 provisi on 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 provision is r etained
over the shorter of the lease and serviceable life of the leased asset.
Note 4.17.5 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.
Note 4.18 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 4.22 “Impairment of Long-term Assets” for methods for depreciation test and
impairment provision retention for constructions-in-progress.
Note 4.19 Borrowing costs
Borrowing costs of the Company include the interest accrued on loans, the amortization of discount
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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 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 three months, the capitalization of the borrowing cost is suspended until the resumption of
purchase, construction or production.
Note 4.20 Intangible assets
Note 4.20.1 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
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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 yearend, 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.
Note 4.20.2 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;
⑤ The 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 4.22 “Impairment of Long-term Assets” for methods for depreciation test and
impairment provision retention for intangible assets.
Note 4.21 Long-term deferred expenses
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Long-term deferred expenses refer to expenses that have been incurred and should be amortized over
a period of longer than one year, including 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.
Note 4.22 Impairme nt 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 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
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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.
Note 4.23 Contract liabilities
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 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.
Note 4.24 Staff remuneration
Employee benefits mainly include short-term employee remunerations, post-employment benefits,
termination benefits and other long-term employee benefits. Of which: Wherein:
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
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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 cannot 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 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.
Note 4.25 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.
Note 4.25.1 Onerous contract
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 exec utive
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.
Note 4.25.2 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
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conditions for recognition of estimated liabilities.
Note 4.26 Share-based payme nts
Note 4.26.1 Method for accounting for share-based payments
Share-based payments refer 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.
① Share-based payments 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 payments settled in cash
Share-based payments settled in cash are 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 payments 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 payments 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
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exercisable equity instruments, with the services received in current period included in relevant costs
or expenses.
The fair value of the liability is re-measured on each Balance Sheet Date and each settling date prior
to the settlement of the liability with the change included in current profit and loss.
Note 4.26.2 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 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 t he
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.
Note 4.26.3 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 settled in equity; in other cases, the share-based payment transaction is 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
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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.
Note 4.27 Revenue
Note 4.27.1 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: ① The 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; ③ The 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; ④ The
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.
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Note 4.27.2 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
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.
③ If 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.
Note 4.27.3 Specific method of revenue recognition
The Company mainly sells product oil products, chemical products, PTA, polyester flakes, 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
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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.
Note 4.28 Contract cost
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.
Note 4.29 Governme nt 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 i n 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.
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
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financial support policy with conclusive evidence at the end of the period shall be mea sured
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 a uthority 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.
Note 4.30 Deferred income tax assets and deferred income tax liabilities
Note 4.30.1 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 recovered. The
taxable income base for the calculation of the income tax of current period shall be determined on
the basis of the accounting profit adjusted according to relevant provisions of the Tax Law.
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Note 4.30.2 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
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.
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Note 4.30.3 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.
Note 4.30.4 Offset of income tax
If the Company has the legal right and plans to perform net settlement or plans to acquire asse ts 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.
Note 4.31 Leases
Note 4.31.1 The following lease-related accounting policies are applicable to Year 2021 and
subsequent years:
Lease means that the Company has transferred or obtained the control right of using one or several
identified assets within a certain period for the purpose of getting in return or pay the contract price.
On the commencement date of a contract, the Company shall evaluate whether it is a lease contract
or whether lease is included in the contract.
Note 4.31.1.1 The Company as lessee
The assets leased by the Company are mainly houses & buildings, land use right and machinery
equipment.
① Initial measurement
On the commencement date of the lease term, the Company can confirm the right to use leased assets
within the lease term as right-of-use assets and the current value of unpaid rentals as lease liabilities,
excluding short-term lease and lease of low-value assets. While calculating the present value of lease
payment, the Company adopts the interest rate implicit in lease as discount rate. However, the
leasee’s incremental borrowing rate shall be taken as discount rate, when it is unable to determine the
interest rate implicit in lease.
② Follow-up measurement
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In the same month since the start of the lease term, the Company shall calculate depreciation of
right-of-use assets. When the obtainment of the ownership of leased assets can be rationally
determined at the expiry of the lease term, the Company shall calculate depreciation within the
residual service life of leased assets. If it is unable to determine the obtainment of the ownership of
leased assets at the expiry of the lease term, the Company shall calculate depreciation within the
lease term or within the residual service life of leased assets (whichever is shorter).
Interest expenses for lease liabilities in different periods within the lease term shall be calculated by
the Company in accordance with fixed periodic rate. Such expenses shall be recorded into current
profits and losses, or into related asset cost. Upon its occurrence, variable lease payment not
measured as lease liabilities shall be recorded into current profits and losses, or into related asset
cost.
In case of any change in the fixed amount of payment, in the amount payable estimated by the
guarantee balance, in the index or ratio used to determine the lease payment and in the assessment
results or actual right executing conditions of call option, renewal option or termination option after
the commencement date of the lease term, the Company shall re-measure lease liabilities in
accordance with the present value of changed lease payment, and make corresponding adjustment to
the book value of right-of-use assets. The Company shall record the residual amount into current
profits and losses, when the book value of right-of-use assets has already been decreased to zero, but
it is still necessary to cut down lease liabilities.
③ Short-term lease and lease of low-value assets
Simplified treatment method is adopted by the Company for short-term lease (the lease term since
the commencement date of lease is within twelve months) and lease of low -value assets.
Right-of-use assets and lease liabilities will not be confirmed. Instead, the lease payment shall be
recorded, in accordance with straight-line method or other systematic and reasonable methods, into
related asset cost or into current profits and losses in different periods within the lease term.
④ Lease change
When lease is changed and conforms to the following conditions at the same time, this lease change
shall be regarded by the Company as an individual lease for accounting treatment:
This lease change has expanded the scope of lease by increasing the use right of one or several
leased assets.
The increased price is equal to the amount of the expanded part after being adjusted in
accordance with the contract.
If lease change is not subject to accounting treatment as an individual lease (simplified method for
contract changes directly caused by COVID-19), on the effective date of such lease change, the
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Company shall re-amortize the changed contract price, determine a new lease term, and re-measure
lease liabilities in accordance with the present value calculated based on the changed lease payment
and the revised discount rate.
If the lease change narrows the scope of lease or shortens the lease term, the Company shall lower
the book value of right-of-use assets, and record gains from partially or completely terminated lease
into current profits and losses. The Company shall make corresponding adjustment to the book value
of right-of-use assets, when lease liabilities need to be re-measured due to other lease changes.
Note 4.31.1.2 The Company as leaser
On the commencement date of lease, based on the essence of transaction, lease is divided by the
Company into finance lease and operating lease. Finance lease refers to the lease that almost all risks
and remunerations related to the ownership of leased assets have already been transferred in essence.
Operating lease refers to other leases excluding finance lease.
① Operating lease
The straight-line method is adopted by the Company to confirm the lease receipts as rental income in
different periods within the lease term. Variable lease payment related to operating lease that is not
recorded into lease receipts shall be recorded into current profits and losses upon the occurrence.
② Finance lease
Since the commencement date of the lease term, the Company shall confirm the amount of finance
lease receivable, and derecognize finance lease assets. The amount of finance lease receivable shall
be initially measured by net lease investment (sum of present value of unguaranteed balance and
un-received lease receipts since the commencement date of the lease term after being discounted in
accordance with the interest rate implicit in lease). In addition, interest incomes within the lease term
shall be calculated and conformed in accordance with fixed periodic rate. Upon its occurrence, the
Company’s variable lease payment not measured into net lease investment shall be recorded into
current profits and losses.
③ Lease change
When operating lease is changed, the Company shall regard such c hange as a new lease for
accounting treatment since its effective date. Receivables in advance or lease receipts receivable
related to pre-change lease shall be deemed as receipts of new lease.
When finance lease is changed and conforms to the following conditions at the same time, this lease
change shall be regarded by the Company as an individual lease for accounting treatment:
This change has expanded the scope of lease by increasing the use right of one or several leased
assets.
The increased price is equal to the amount of the expanded part after being adjusted in
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accordance with the contract.
If the change in finance lease is not subject to accounting treatment as an individual lease, the
Company will treat the changed lease under the following circumstances:
In case that the change takes effect since the commencement date of lease and that such lease
will be classified into operating lease, the Company will, since the effective date of such lease
change, take it as a new lease for accounting treatment, and take net lease investment before the
effective date as the book value of leased assets.
In case that the change takes effect since the commencement date of lease and that such lease
will be classified into finance lease, the Company will perform accounting treatment in accordance
with relevant provisions for contract modification or negotiation in the ASBE No. 22 – Recognition
and Measurement of Financial Instruments.
Note 4.31.2 The following lease accounting policies are applicable to FY 2020:
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. Other leases beyond finance
lease shall be classified into operating lease.
Note 4.31.2.1 Recording of operating lease business by the Company as lessee
In different periods within the lease term, rental expenses for operating lease shall be recorded into
related asset cost or into current profits and losses in accordance with the straight-line method. Initial
direct expenses shall be recorded into current profits and losses. Upon its occurrence, contingent
rentals shall be recorded into current profits and losses.
Note 4.31.2.2 Recording of operating lease business by the Company as leaser
In different periods within the lease term, rental incomes from operating lease shall be confirmed as
current profit and loss in accordance with the straight-line method. Initial direct expenses with a
large amount shall be capitalized upon its occurrence. Within the entire lease term, such expenses
shall be recorded by stages into current profits and losses in accordance with the same basis used to
confirm rental income. However, other small initial direct expenses shall be recorded into current
profits and losses upon its occurrence. Upon its occurrence, contingent rentals shall be recorded into
current profits and losses.
Note 4.31.2.3 Recording of finance lease business by the Company as lessee
On the commencement date of the lease term, either the fair value of leased assets on the
commencement date of lease or the present value of the minimum lease payment (whichever is lower)
shall be taken as the entry value of leased assets, the minimum lease payment as the entry value of
long-term accounts payable, and the balance as unrecognized finance fees. In addition, initial direct
expenses incurred in the process of lease negotiation or contract signing that can be affiliated to
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leasing item shall also be recorded into rented asset value. The balance of the minimum lease
payment after the deduction of unrecognized finance fees shall be reported as long-term liabilities
and long-term liabilities mature within one year respectively.
Within the lease term, current financial charges for unrecognized finance fees shall be calculated and
confirmed with the effective interest method. Upon its occurrence, contingent rentals shall be
recorded into current profits and losses.
Note 4.31.2.4 Recording of finance lease business by the Company as leaser
On the commencement date of the lease term, the sum of minimum lease receipts and initial direct
expenses on the commencement date of lease shall be taken as the entry value of finance lease
receipts receivable. At the same time, unguaranteed balance shall be recorded. The difference
between the sum of minimum lease receipts, initial direct expenses and unguaranteed balance and the
sum of its present value shall be confirmed as unrealized financing income. The balance of finance
lease receipts receivable after the deduction of unrealized financing income shall be reported as
long-term debt and long-term debt mature within one year respectively.
For unrealized financing income, current financing income shall be calculated and confirmed with
the effective interest method within the lease term. Upon its occurrence, contingent rentals shall be
recorded into current profits and losses.
Note 4.32 Other important accounting policies and accounting estimates
Note 4.32.1 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 4.14 “Assets available for sale
and disposal group” herein.
Note 4.32.2 Hedge accounting
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
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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.
Note 4.32.2.1 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 any component part 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.
Note 4.32.2.2 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 comprehensive income and
include the same in the initial recognized amount of the asset or liability. For the cash flow hed ging
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 sa me 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.
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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.
Note 4.32.2.3 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 l osses 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.
Note 4.32.2.4 Repurchase shares
The consideration and transaction expenses paid during the share repurchase reduce the shareholders’
equity, which cannot be recognized as profit or loss upon the repurchase, trans fer 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.
Note 4.33 Changes in significant accounting policies and estimates
Note 4.33.1 Changes in accounting policies
Changes in accounting policies resulting from the implementation of new lease accounting
standards
The Ministry of Finance issued the notice on the Accounting Standards for Business Enterprises No.
21 – Leases (2018 Revision) (CK [2018] No. 35) (hereinafter referred to as “New Lease Standards”)
on December 7, 2018. Upon approval with the resolution of the 12 th Meeting of the 11th BOD of the
Company on August 24, 2021, the Company started to implement the aforesaid new lease standards
from January 1, 2021 and changed the relevant accounting policies in accordance with the provisions
of the new lease standards.
In accordance with the provisions of the new lease standards, the Company has elected not to
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reassess whether a contract existing prior to the date of initial implementation of the standards is a
lease contract or a contract containing lease.
The Company has elected to adjust the cumulative effect only for leases that were outstanding as of
January 1, 2021. The cumulative effect of initial implementation adjusts the amount of retained
earnings and other related items in the financial statements at the beginning of current period of
initial implementation (i.e., January 1, 2021) and does not adjust the information of comparable
periods.
As of the date of initial implementation of the new lease standards (i.e., January 1, 2021), the
Company's specific transition treatment and its effect are as follows.
A. The Company as lessee
For finance leases on the date of initial implementation, the Company, as the lessee, measures the
right-of-use assets and lease liabilities based on the original book value of finance lease assets and
finance lease payables, respectively; for operating leases on the date o f initial implementation, the
Company, as the lessee, measures the lease liabilities based on the present value of the remaining
lease payments discounted at the interest rate of incremental borrowings on the date of initial
implementation; the outstanding rentals payable accrued on an accrual basis under the previous lease
standards are included in the remaining lease payments.
For operating leases prior to the date of initial implementation, the Company measures the
right-of-use assets based on the assumption that the new lease standards are adopted from the
commencement date of the lease term and uses the interest rate of incremental borrowings on the
date of initial implementation as the discount rate. The Company conducts an impairment test on the
right-of-use assets on the date of initial application, and does not adjust the book value of the
right-of-use assets.
The Company does not recognize right-of-use assets and lease liabilities for operating leases where
the leased assets prior to the date of initial implementation are low-value assets. For operating leases
other than low-value leases on the date of initial implementation, the Company applies one or more
of the following simplified treatments for each of them:
● Leases that will be completed within twelve months after the date of initial implementation are
treated as short-term leases;
● When measuring lease liabilities, the same discount rate is used for leases with similar
characteristics;
● The measurement of right-of-use assets does not include initial direct costs;
● If there is an option to renew or terminate a lease, the Company determines the term of the lease
based on the actual exercise of the option prior to the date of initial implementation and other
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updates.
● As an alternative to the right-of-use asset impairment test, the Company assesses whether a
contract involving leases is an onerous contract prior to the date of initial implementation in
accordance with the Accounting Standards for Business Enterprises No. 13 - Contingencies, and
adjusts the right-of-use assets based on the amount of the provision for loss recorded in the balance
sheet prior to the date of initial implementation;
● If a lease change occurs prior to the date of initial implementation, the Company treats the lease
change according to the final arrangement of the lease change.
Effect of the change to accounting policies resulting from the implementation of the new lease
standards on the financial statements as of January 1, 2021:
Amount on December 31, Amount on January 1, 2021
2020 (before change) (after change)
Report item
Consolidated The Consolidated The
Statements Company Statements Company
Right-of-use assets 0.00 0.00 454,147,120.45 0.00
Long-term deferred and prepaid expenses 558,914,884.31 0.00 530,004,792.56 0.00
Non-current liabilities due within one year 4,487,453,396.24 0.00 4,517,814,375.06 0.00
Lease liabilities 0.00 0.00 394,876,049.88 0.00
Note 4.33.2 Accounting estimate change
In this Reporting Period, there is no accounting estimate change in the Company.
Note 4.34 Significant accounting judgme nts 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 on the
basis of going concern. If a change to the accounting estimate concerns only current period, the
change is recognized during 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
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items in the financial statements in the following key areas:
Note 4.34.1 Classification of leases
Note 4.34.1.1 The following lease-related significant accounting judgments and estimates are
applicable to Year 2021 and subsequent years:
① Identification of leases
When identifying whether it is a lease contract or whether lease is included in a contract, the
Company needs to evaluate whether an identified asset exists and that the client has controlled the
use right of such asset within a certain period. During such evaluation, it needs to consider the nature
of assets, substantial right of substitution, whether the client has the right to obtain almost all
economic interests generated by use of such assets in this period, and whether the client is able to
dominate the use of such assets.
② Classification of leases
As the leaser, the Company classified leases into operating lease and financing. 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.
③ Lease liabilities
As the lessee, the Company initially measures the lease liabilities in accordance with the present
value of unpaid lease payment on the commencement date of the lease term. While measuring the
present value of lease payment, the Company estimates the applied discount rate and the lease term
of contract containing renewal or termination option. While evaluating the lease term, the Company
comprehensively considers all facts and circumstances related to economic benefit from the
Company’s execution of its option, including expected changes in the facts and circumstances
between the commencement date of the lease term and the date of option execution. Different
judgments and estimates may influence the recognition of lease liabilities and right-of-use assets, and
thus influence gains and losses in subsequent periods.
Note 4.34.1.2 The following lease-related significant accounting judgment and estimates are
applicable to FY 2020:
In accordance with relevant provisions in the Accounting Standards for Business Enterprises No. 21 -
Leases, the Company classified leases into operating lease and finance lease. During classification,
the management needs to analyze and judge whether all risks and remunerations related to the
ownership of leased assets are transferred to the lessee substantially, or whether the Company has
already undertaken in essence all risks and remunerations related to such ownership.
Note 4.34.2 Retention of bad debt provision
The Company accounts for the bad debt losses using the allowance method following accounting
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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.
Note 4.34.3 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.
Note 4.34.4 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 uncertainty, and
changes in such estimates may have Effect on the fair value of financial instrument.
Note 4.34.5 Provision for impairment 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.
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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.
Note 4.34.6 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.
Note 4.34.7 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 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.
Note 4.34.8 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.
Note 4.34.9 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 econo mic benefits of the
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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.
Note 4.34.10Fair 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 10.
Note 5 Taxes
Note 5.1 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 on the
Value-added tax
difference after deducting the amount of input tax that can be deducted for
current period;
Urban maintenance and
To be paid at 7%, 5% of the actually paid turnover tax.
construction tax
Education surcharge To be paid at 3% of the actually paid turnover tax.
Local education surcharge To be paid at 2% of the actually paid turnover tax.
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%, 20% and 15%
Hong Kong Tianyi International Holding Co., Ltd. 16.5%
Good Park International Investment Co. Ltd. For offshore trade, the offshore profits tax
Hong Kong Yisheng Petrochemical Investment Co., Ltd. exemption can be applied for.
The Company is approved to join the
Hengyi Industry International Co., Ltd. Singapore Global Trader Programme (GTP),
Hengyi Petrochemical International Co., Ltd. so is entitled to the preferential enterprise
income tax rate and payment of enterprise
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Name of tax payer Income tax rate
income tax at a tax rate of 10% from 2019
to 2021.
Hengyi Industries Sdn. Bhd. 18.5%
Note 5.2 Tax incentives and approvals
Note 5.2.1 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.
Note 5.2.2 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 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.
Note 5.2.3 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, 2022.
Note 5.2.4 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
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reduced enterprise income rate of 15% from January 1, 2020.
Note 5.2.5 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. The Company and its
subsidiaries within the scope of consolidation enjoy 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 purchased and actually applied.
Note 5.2.6 In accordance with relevant provisions in the Notice of the Ministry of Finance and
SAT about Implementing Inclusive Tax Relief Policy for Small and Micro Businesses (CS [2019] No.
13) and the Notice of the Ministry of Finance and SAT about Implementing Favorable Income Tax
Policy for Small and Micro Businesses and Individual Businesses (Notice o f the Ministry of Finance
and SAT [2021] No. 12), for the part of annual incomes taxable exceeding RMB one million in
small-sized meager-profit enterprises, taxable income shall be paid by the rate of 12.5%, and
enterprise income tax paid by the rate of 20%. For the part of annual incomes taxable between RMB
one million and RMB three million, taxable income shall be paid by the rate of 25%, and enterprise
income tax paid by the rate of 20%. The 2.5% preferential enterprise income tax rate is applicable to
the Company’s wholly-owned subsidiaries – Zhejiang Yizhi Information Technology Co., Ltd. and
Shaoxing Hengyi Logistics Co., Ltd.
Note 5.2.7 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 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%.
Note 5.2.8 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 exe mpted and the imports of equipment and imported raw
materials are exempt from tax.
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Note 5.2.9 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, 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.
Note 5.2.10 In accordance with the Implementation Plan of Jiaxing City on Promoting Intensive and
Economical Land Use by The-same-level Adjustment to City and Town Land Use Tax Policy issued
by the Office of the People's Government of Jiaxing City, in order to deepen the reform of “giving
priority to yield per acre”, differential reduction policies are implemented for city and town land use
tax. Such tax is reduced based on the comprehensive assessment results of per acre benefit of
industrial enterprises published by EIU in that year. 100% and 80% city and town land use taxes
(payable in the whole year) are reduced for Category A and Category B enterprises, and no
incentives for Category C and Category D enterprises in the comprehensive assessment results.
Jiaxing Yipeng (a wholly-owned subsidiary of the Company) enjoys an incentive tax policy:
reduction of 80% land use taxes.
Note 5.2.11 In accordance with the Decision of the State Council about Modifying the ‘Interim
Regulations of the People's Republic of China on the Use Tax of Urban Land’ and Article 7 of
Decree No. 483 of the State Council: When it is necessary for reduction as it is really difficult for the
taxpayer to pay land use tax, the case shall be reported to SAT for approval after being reviewed by
provincial, autonomous and municipal tax authorities. From January 1 to December 31, 2021,
Haining Hengyi New Materials Co., Ltd. (a wholly-owned subsidiary of the Company) may enjoy an
incentive policy: reduce 50% land use taxes. From January 1 to December 31, 2021, Zhejiang
Shuangtu (a wholly-owned subsidiary of the Company) and Zhejiang Hengyi High-tech Materials (a
holding subsidiary of the Company) may enjoy an incentive policy: reduction of 100% land use
taxes.
Note 5.2.12 In accordance with Article 6 of the Interim Regulations of the People's Republic of
China on Property Tax (GF [1986] No. 90): when it is really difficult for the taxpayer to pay relevant
taxes, upon the decision made by provincial, autonomous and municipal people’s governments,
property tax may be reduced or exempted on a periodic basis. From January 1 to December 31, 2021,
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Zhejiang Shuangtu (a wholly-owned subsidiary of the Company) may enjoy an incentive policy:
reduction of 100% property taxes.
(13) In accordance with the Implementation Suggestions of Zhejiang Provincial Tax Service, State
Taxation Administration about Implementing the Decision of Provincial Party Committee for
Promoting Entrepreneurship-based Enrichment and Innovation-based Provincial Strength (ZDSF
[2008] No. 1), within one to three years since the date of establishment of new high-tech enterprises
and chain supermarkets, property tax, city and town land use tax and special funds for water
conservancy construction may be exempted upon the approval by local taxation bureau. Hangzhou
Yijing (a wholly-owned subsidiary of the Company) may be exempted from property tax in 2021.
Note 6 Notes to items of consolidated financial statements
Unless otherwise specified, for the following noted items (including the main item notes to the
Company’s financial statements), the "beginning of the year" refers to January 1, 2021, the "end of
the period" refers to December 31, 2021, the "end of last year" refers to December 31, 2020, the
"current period" refers to 2021, and the "previous period" refers to 2020.
Note 6.1Monetary capital
Ending balance of current Ending balance of
Item
period previous period
Cash on hand 1,296,711.32 1,351,988.81
Bank deposit 9,581,462,709.95 6,364,528,999.42
Other monetary capital 4,739,957,372.55 3,713,102,815.63
Total 14,322,716,793.82 10,078,983,803.86
Of which: the total amount of funds deposited abroad 2,841,363,553.38 3,363,891,032.92
Note: As of December 31, 2021, the monetary capital that the Company’s right to use was restricted
was RMB 4,077,979,841.98, including RMB 1,569,979,769.16 of L/C guarantee deposit, RMB
1,990,845,385.69 of acceptance bill deposit, RMB 378,388,760.33 of L/G deposit, RMB 64,198.97
of collection for bill pledge, RMB 113,858,073.65 of futures deposit, RMB 10,387,540.47 of
freezing of funds and RMB 14,456,113.71 of other margin.
Note 6.2Financial assets held for trading
Ending balance Ending balance of
Item
of current period previous period
Financial assets at fair value through profit or loss 388,958,054.67 251,904,308.53
Of which: debt instruments 0.00 0.00
Equity instruments 0.00 0.00
Derivative financial assets 388,958,054.67 251,904,308.53
Other 0.00 0.00
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Ending balance Ending balance of
Item
of current period previous period
Specified as financial assets at fair value and through current profit or loss 0.00 0.00
Total 388,958,054.67 251,904,308.53
Including: Portion re-classified to other non-current financial assets 0.00 0.00
Note 6.3Derivative financial assets
Item Ending balance of current period Ending balance of previous period
Foreign exchange derivatives 0.00 0.00
Commodity derivatives 0.00 737,015,777.82
Total: 0.00 737,015,777.82
Note: The derivative financial assets at the yearend are the future exchange derivatives that are
designated and are effective hedging instruments.
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 RMB
300,242,496.51, and the details are as follows:
Item Amount incurred in current year
Total fair value gains included into shareholders’ equity -23,268,217.35
Less: Deferred income tax from the gains of fair value -80,424.00
Less: Other comprehensive income is reclassified into current profit and loss -377,337,277.84
Less: Deferred income tax reclassified into current profit and loss -12,890,777.43
Less: Net after-tax income attributable to minority shareholders 41,016,210.55
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Item Amount incurred in current year
Net gain of cash flow hedges 300,242,496.51
Note 6.4Notes receivable
Note 6.4.1 Notes receivable are listed by classification
Item Ending balance of current period Ending balance of previous period
Bank acceptance bills 258,014,878.86 214,684,966.98
Commercial acceptance bills 0.00 0.00
Domestic letter of credit 0.00 0.00
Subtotal 258,014,878.86 214,684,966.98
Less: bad debt provision 0.00 0.00
Total 258,014,878.86 214,684,966.98
Note 6.4.2 Pledged notes receivable at the end of the year
Item Amounts pledged at the end of period
Bank acceptance bills 97,262,303.07
Commercial acceptance bills 0.00
Domestic letter of credit 0.00
Total 97,262,303.07
Note 6.4.3 The amount of endorsed or discounted notes receivable that become mature after the
date of balance sheet at the end of the year.
Item Ending balance of those derecognized Ending balance of those not derecognized
Bank acceptance bills 1,128,455,415.26 0.00
Commercial acceptance bills 0.00 0.00
Domestic letter of credit 0.00 0.00
Total 1,128,455,415.26 0.00
Note 6.4.4 Notes converted to accounts receivable at the yearend due to the non-performance of
the drawer
At the end of the year, there are not notes that are transferred to accounts receivable by the Company
due to the drawer’s failure of performance at yearend
Note 6.5Accounts receivable
Note 6.5.1 Disclosure based on aging analysis
Aging Ending balance of current period Ending balance of previous period
Within one year 6,436,739,812.92 3,879,791,533.09
Including: within 6 months 6,436,207,144.59 3,668,167,642.10
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Aging Ending balance of current period Ending balance of previous period
7-12 months 532,668.33 211,623,890.99
1-2 years 168,352.34 9,090,985.04
2-3 years 8,532,277.40 16,931.85
Over three years 336,665.16 336,665.16
Subtotal 6,445,777,107.82 3,889,236,115.14
Less: bad debt provision 8,935,048.94 9,491,985.10
Total 6,436,842,058.88 3,879,744,130.04
Note 6.5.2 Presented based on bad debt provision method
Ending balance
Book balance Bad debt provision
Category
Proportion Allotment Book value
Amount (%) Amount rate
(%) (%)
Accounts receivable with single
8,510,212.00 0.13 8,510,212.00 100.00 0.00
provision for bad debt
Including: Hangzhou Hengchuang
8,510,212.00 0.13 8,510,212.00 100.00 0.00
Chemical Fiber Co., Ltd.
Receivables with bad debt provision
6,437,266,895.82 99.87 424,836.94 0.01 6,436,842,058.88
made as per different groups
Including: those with aging of
accounts receivable used as credit risk 6,437,266,895.82 99.87 424,836.94 0.01 6,436,842,058.88
characteristics
Total 6,445,777,107.82 100.00 8,935,048.94 0.14 6,436,842,058.88
(Contd.)
Ending balance of previous period
Book balance Bad debt provision
Category
Allotment Book value
Proportion
Amount Amount rate
(%)
(%)
Accounts receivable with single
8,510,212.00 0.22 8,510,212.00 100.00 0.00
provision for bad debt
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 provision
3,880,725,903.14 99.78 981,773.10 0.03 3,879,744,130.04
made as per different groups
Including: those with aging of
accounts receivable used as credit 3,880,725,903.14 99.78 981,773.10 0.03 3,879,744,130.04
risk characteristics
Total 3,889,236,115.14 100.00 9,491,985.10 0.24 3,879,744,130.04
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① Accounts receivable with single provision for bad debt
Ending balance
Accounts receivable (by Unit)
Book balance Bad debt provision Allotment rate Reason for provision
Hangzhou Hengchuang Expected to be less
8,510,212.00 8,510,212.00 100%
Chemical Fiber Co., Ltd. likely to be recovered
② Accounts receivable with bad debt provision made based on aging combination in the
combination
Ending balance
Aging
Accounts receivable Bad debt provision Allotment rate (%)
Within 6 months 6,436,207,144.59 0.00 0.00
7-12 months 532,668.33 26,633.38 5.00
1-2 years 168,352.34 50,505.70 30.00
2-3 years 22,065.40 11,032.70 50.00
Over three years 336,665.16 336,665.16 100.00
Total 6,437,266,895.82 424,836.94 0.01
Note 6.5.3 Bad debt preparation
Amount of changes in current period
Beginning Ending
Category Amount recovered Resell or
balance Provision balance
or written back write off
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
This credit risk characteristic of this
portfolio of receivables is defined 981,773.10 61,175.82 618,111.98 0.00 424,836.94
by account receivable aging.
Total 9,491,985.10 61,175.82 618,111.98 0.00 8,935,048.94
Note 6.5.4 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
3,627,444,895.06 in total, accounting for 56.28% of the year-end balance of accounts receivable,
and the corresponding year-end balance of the bad debt provision was RMB 0.00.
Note 6.6Accounts receivable financing
Note 6.6.1 Financing of receivables presented by category
Item Ending balance Beginning balance
Notes receivable 487,553,057.15 537,214,790.48
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Item Ending balance Beginning balance
Accounts receivable 0.00 0.00
Total 487,553,057.15 537,214,790.48
Note 6.6.2 Changes of increase or decrease of financing of receivables in current period and
changes in fair value thereof
Beginning balance Changes in current period Ending balance
Item Changes Changes Changes
Cost of fair Cost of fair Cost of fair
value value value
Notes receivable 537,214,790.48 0.00 -49,661,733.33 0.00 487,553,057.15 0.00
Accounts receivable 0.00 0.00 0.00 0.00 0.00 0.00
Total 537,214,790.48 0.00 -49,661,733.33 0.00 487,553,057.15 0.00
Note 6.6.3 Financing of pledged receivables at the end of the period
Item Amounts pledged at the end of period
Bank acceptance bills 244,460,929.72
Commercial acceptance bills 0.00
Domestic letter of credit 0.00
Total 244,460,929.72
Note 6.6.4 The amount of endorsed or discounted accounts receivable that become mature after the
date of balance sheet at the end of the year.
Item Ending balance of those derecognized Ending balance of those not derecognized
Bank acceptance bills 4,214,860,790.67 0.00
Commercial acceptance bills 0.00 0.00
Domestic letter of credit 0.00 0.00
Total 4,214,860,790.67 0.00
Note 6.6.5 Other Explanations
During current period, the Company discounted bank acceptance bills of RMB 5,810,104,744.10
(RMB 2,034,341,304.09 in the previous year) 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,
2021, the cashed but not mature banker’s acceptance was RMB 3,032,977,371.34 in total (RMB
822,644,628.06 on December 31, 2020).
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Note 6.7Advance payments
Note 6.7.1 Advance payments are listed by aging as follows
Ending balance of current period Ending balance of previous period
Aging
Amount Proportion (%) Amount Proportion (%)
Within one year 2,325,038,241.09 98.46 870,010,754.43 98.49
1-2 years 30,708,837.83 1.30 12,296,929.92 1.39
2-3 years 5,275,977.46 0.22 537,030.32 0.06
Over three years 505,198.15 0.02 535,265.61 0.06
Total 2,361,528,254.53 100.00 883,379,980.28 100.00
Note 6.7.2 Significant advance payments with aging exceeding one year
The Company has no significant advance payments with aging exceeding one year at the end of the
period.
Note 6.7.3 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
1,218,751,692.54, accounting for 51.61% in the total balance of prepayments at the year-end balance.
Note 6.8Other Receivables
Item Ending balance of current period Ending balance of previous period
Interests receivable 0.00 0.00
Dividends receivable 344,500,000.00 330,395,003.24
Other receivables 139,715,755.18 114,458,722.59
Total 484,215,755.18 444,853,725.83
Note 6.8.1 Dividends receivable
Investee Ending balance of current period Ending balance of previous period
Hainan Yisheng Petrochemical Co., Ltd. 265,000,000.00 212,500,000.00
Dalian Yisheng Investment Co., Ltd. 79,500,000.00 63,750,000.00
Zhejiang Baling Hengyi Caprolactam Co.,
0.00 54,145,003.24
Ltd.
Subtotal 344,500,000.00 330,395,003.24
Less: bad debt provision 0.00 0.00
Total 344,500,000.00 330,395,003.24
Note 6.8.2 Other receivables
Note 6.8.2.1 Disclosure based on aging analysis
Aging Ending balance of current period Ending balance of previous period
Within one year 62,871,587.51 66,799,712.81
1-2 years 45,350,003.33 13,196,734.21
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Aging Ending balance of current period Ending balance of previous period
2-3 years 9,240,923.00 59,795,633.48
Over three years 53,364,478.08 5,347,080.87
Subtotal 170,826,991.92 145,139,161.37
Less: bad debt provision 31,111,236.74 30,680,438.78
Total 139,715,755.18 114,458,722.59
Note 6.8.2.2 Classification of accounts receivable by nature
Ending balance Ending balance of
Nature of account
of current period previous period
Receivables and payables such as advances from entities beyond the scope
35,211,893.21 31,101,998.16
of consolidation
Combination of tax refunds receivable and other government subsidies 37,132,620.00 23,000,185.76
Portfolio of deposits and security 39,807,477.55 17,867,007.60
Employee loan and petty cash 5,670,232.02 4,825,111.28
Other groups 53,004,769.14 68,344,858.57
Subtotal 170,826,991.92 145,139,161.37
Less: bad debt provision 31,111,236.74 30,680,438.78
Total 139,715,755.18 114,458,722.59
Note 6.8.2.3 Accrual of bad debt provisions
Stage 1 Stage 2 Stage 3
Expected credit
Expected credit loss loss over the
Bad debt provision Expected credit loss Total
over the lifetime (no lifetime (credit
of the future twelve
credit impairment impairment
months
has occurred) occurred has
occurred)
Beginning balance 4,083,693.69 41,700.00 26,555,045.09 30,680,438.78
In this year, book balance of
other receivables at the
beginning of the year:
- Transferred to Stage 2 0.00 - - 0.00
- Transferred to Stage 3 0.00 0.00 - 0.00
- Transferred back to Stage 2 - - 0.00 0.00
- Transferred back to Stage 1 - 0.00 0.00 0.00
Withdrawal in current period 1,620,650.54 300,000.00 0.00 1,920,650.54
Amount written-back in
1,180,852.58 0.00 309,000.00 1,489,852.58
current period
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Stage 1 Stage 2 Stage 3
Expected credit
Expected credit loss loss over the
Bad debt provision Expected credit loss Total
over the lifetime (no lifetime (credit
of the future twelve
credit impairment impairment
months
has occurred) occurred has
occurred)
Amount charged off in current
0.00 0.00 0.00 0.00
period
Amount written-off in current
0.00 0.00 0.00 0.00
period
Other changes 0.00 0.00 0.00 0.00
Ending balance 4,523,491.65 341,700.00 26,246,045.09 31,111,236.74
Note 6.8.2.4 Situation of bad debt provisions
Amount of changes in current period
Beginning Amount Resale or
Category Ending balance
balance Provision recovered or write-off and
written back others
Receivables and payables such
as advances from entities
954,790.60 208,279.92 106,713.74 0.00 1,056,356.78
beyond the scope of
consolidation
Combination of tax refunds
receivable and other 0.00 0.00 0.00 0.00 0.00
government subsidies
Portfolio of deposits and
927,738.84 1,643,462.59 249,952.50 0.00 2,321,248.93
security
Employee loan and petty cash 143,833.50 52,287.01 26,479.70 0.00 169,640.81
Other groups 28,654,075.84 16,621.02 1,106,706.64 0.00 27,563,990.22
Total 30,680,438.78 1,920,650.54 1,489,852.58 0.00 31,111,236.74
Note 6.8.2.5 Other receivables with top five ending balance collected by debtor
Proportions in
the total other Bad debt
Nature of
Name of organization Ending balance Aging accounts provision
account
receivable at the Ending balance
yearend (%)
Economic and Information
Government Within one year
Bureau of Xiaoshan District, 32,381,100.00 18.96 0.00
grants and 1-2 years
Hangzhou City
Baiduri Bank Berhad Margin 32,122,588.57 Within one year 18.80 963,677.66
Wang XX Claim 26,243,545.09 Over three years 15.36 26,243,545.09
Fulida Group Holdings Co., Compensations 23,640,786.12 1-2 years and >3 13.84 1,181,167.40
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Proportions in
the total other Bad debt
Nature of
Name of organization Ending balance Aging accounts provision
account
receivable at the Ending balance
yearend (%)
Ltd. and Xinghui Chemical years
Fiber Group Co., Ltd.
Receivables 2-3 years and >3
Sahid & CSEEC Sdn Bhd 6,132,848.16 3.59 306,642.41
and payables years
Total —— 120,520,867.94 - 70.55 28,695,032.56
Note 1: The relevant description on balance formation of the Company’s "other receivables - Wang"
and full bad debt provision at the end of 2021 can be found in Note 12.2.1.
Note 6.8.2.6 Accounts receivable involving government grants
Time, amount and
Name of government Aging at the end
Name of organization Ending balance basis of estimated
grants of the period
collection
Taxation Bureau, Xiaoshan
Refunds of taxes 4,751,520.00 Within one year May 2022
District, Hangzhou
Economic and Information
Within one year
Bureau of Xiaoshan District, Government grants 32,381,100.00 March 2022
and 1-2 years
Hangzhou City
Total —— 37,132,620.00 —— ——
Note 2: The balance of RMB 32,381,100.00 at the end of 2021 has totally refunded by Economy and
Information Bureau and Finance Bureau of Xiaoshan District, Hangzhou City” on March 28, 2022.
Note 6.9Inventories
Note 6.9.1 Classification of inventories
Ending balance
Item Provisions for inventory price
Book balance decline/Provisions for impairment of contract Book value
performance cost
Materials in transit 1,731,750,808.56 4,065,527.08 1,727,685,281.48
Raw materials 4,375,371,606.99 11,834,022.08 4,363,537,584.91
Goods in process 1,117,706,067.47 5,826,212.07 1,111,879,855.40
Commodity stocks 5,007,704,701.24 112,031,729.45 4,895,672,971.79
Project construction 1,605,950.48 0.00 1,605,950.48
Contract performance cost 0.00 0.00 0.00
Total 12,234,139,134.74 133,757,490.68 12,100,381,644.06
(Contd.)
Item Ending balance of previous period
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Provisions for inventory price decline/Provisions
Book balance Book value
for impairment of contract performance cost
Materials in transit 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
Contract performance cost 0.00 0.00 0.00
Total 9,668,969,876.71 18,111,009.54 9,650,858,867.17
Note 6.9.2 Provisions for inventory price decline
Increase in current period Decrease in current period
Item Beginning balance Ending balance
Provision Other Write-back or write-off Other
Materials in transit 0.00 4,065,527.08 0.00 0.00 0.00 4,065,527.08
Raw materials 0.00 11,834,022.08 0.00 0.00 0.00 11,834,022.08
Goods in process 0.00 5,826,212.07 0.00 0.00 0.00 5,826,212.07
Commodity stocks 18,111,009.54 112,031,729.45 0.00 18,111,009.54 0.00 112,031,729.45
Total 18,111,009.54 133,757,490.68 0.00 18,111,009.54 0.00 133,757,490.68
Note: The reason for the Company’s re-sell inventory depreciation provision in current period is the
external sales of the inventory for which the inventory depreciation provision has been made.
Note 6.10 Non-current assets due within one year
Ending balance of current Ending balance of
Item Remarks
period previous period
Long-term accounts receivable due Please refer to Note
115,233,477.61 92,749,731.30
within one year 6.12 for details.
Note 6.11 Other current assets
Item Ending balance of current period Ending balance of previous period
Deferred expense 170,334,722.91 164,706,030.82
Input tax retained for deduction
293,635,460.12 553,743,560.98
purpose
Overlaid tax 50,171,578.66 30,789,142.69
Input tax to be certified 859,364.43 3,105,506.54
Principal and interest of entrusted
1,079,576,125.83 1,001,440,816.65
loan
Hedged items 0.00 454,738,420.94
Estimated net realizable value of
45,774,037.50 2,030,774.81
products in trial production
Total 1,640,351,289.45 2,210,554,253.43
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Note 6.12 Long-term accounts receivable
Long-term accounts receivable
Ending balance of current period Ending balance of previous period
Impair
Item Impairmen ment
Book balance Book value Book balance Book value
t provision provisio
n
Finance leases 115,233,477.61 0.00 115,233,477.61 250,226,220.95 0.00 250,226,220.95
Of which: Unrealized
-52,145,883.55 0.00 -52,145,883.55 -24,800,126.32 0.00 -24,800,126.32
financing income
Long-term deposits 3,307,639.58 0.00 3,307,639.58 0.00 0.00 0.00
Less: Portion due within
115,233,477.61 0.00 115,233,477.61 92,749,731.30 0.00 92,749,731.30
one year
Total 3,307,639.58 0.00 3,307,639.58 157,476,489.65 0.00 157,476,489.65
Note 6.13 Long-term equity investments
Ending balance of current period Ending balance of previous period
Impair Impair
Item ment ment
Book balance Book value Book balance Book value
provisi provisi
on on
Investments in joint
ventures 12,085,626,559.38 0.00 12,085,626,559.38 10,062,484,360.52 0.00 10,062,484,360.52
and associates
Total 12,085,626,559.38 0.00 12,085,626,559.38 10,062,484,360.52 0.00 10,062,484,360.52
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Hengyi Petrochemical 2021 Annual Report
Investments in joint ventures and associates
Changes of increase or decrease in current period
Investment gains Other
Investee Beginning balance Additional and losses comprehensive Changes in
Negative investment
investment recognized under income other equity
the equity method adjustment
I. Associates
Zhejiang Baling
Hengyi
1,164,910,995.39 0.00 0.00 154,808,525.23 0.00 0.00
Caprolactam Co.,
Ltd.
Zhejiang Yisheng
New Materials 926,337,304.73 100,000,000.00 1,026,337,304.73 0.00 0.00 0.00
Co., Ltd. (Note 2)
Hainan Yisheng
Petrochemical Co., 0.00 2,630,167,861.74 0.00 172,125,391.59 -1,029,047.68 0.00
Ltd. (Note 1)
Subtotal 2,091,248,300.12 2,730,167,861.74 1,026,337,304.73 326,933,916.82 -1,029,047.68 0.00
II. Joint ventures
Dalian Yisheng
Investment Co., 2,014,662,255.02 0.00 0.00 -122,148,467.44 -27,728.14 0.00
Ltd.
Hangzhou Jingxin
Supply Chain
0.00 132,818,623.62 0.00 1,301,126.63 0.00 0.00
Management Co.,
Ltd.
Hainan Yisheng
Petrochemical Co., 1,756,667,861.74 0.00 1,756,667,861.74 0.00 0.00 0.00
Ltd.
China Zheshang
4,044,469,984.54 0.00 0.00 415,449,191.91 10,419,200.00 0.00
Bank Co., Ltd.
Ningbo Jinhou
Industry
14,265,101.35 0.00 0.00 26,702.76 0.00 0.00
Investment Co.
Ltd.
Zhejiang Yisheng
New Materials 0.00 1,495,607,046.79 0.00 -645,298.37 0.00 0.00
Co., Ltd.
Dongzhan
141,170,857.75 0.00 0.00 5,963,391.25 0.00 0.00
Shipping Co., Ltd.
Subtotal 7,971,236,060.40 1,628,425,670.41 1,756,667,861.74 299,946,646.74 10,391,471.86 0.00
Total 10,062,484,360.52 4,358,593,532.15 2,783,005,166.47 626,880,563.56 9,362,424.18 0.00
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Hengyi Petrochemical 2021 Annual Report
(Contd.)
Changes of increase or decrease in current period Impairment
Announcement of provision
Investee Impairment Ending balance
release of cash Other Ending
provision
dividend or profit balance
I. Associates
Zhejiang Baling Hengyi Caprolactam
0.00 0.00 0.00 1,319,719,520.62 0.00
Co., Ltd.
Zhejiang Yisheng New Materials Co.,
0.00 0.00 0.00 0.00 0.00
Ltd.
Hainan Yisheng Petrochemical Co.,
52,500,000.00 0.00 0.00 2,748,764,205.65 0.00
Ltd.
Subtotal 52,500,000.00 0.00 0.00 4,068,483,726.27 0.00
II. Joint ventures
Dalian Yisheng Investment Co., Ltd. 15,750,000.00 0.00 0.00 1,876,736,059.44 0.00
Hangzhou Jingxin Supply Chain
0.00 0.00 0.00 134,119,750.25 0.00
Management Co., Ltd.
Hainan Yisheng Petrochemical Co.,
0.00 0.00 0.00 0.00 0.00
Ltd.
China Zheshang Bank Co., Ltd. 120,439,154.56 0.00 0.00 4,349,899,221.89 0.00
Ningbo Jinhou Industry Investment
0.00 0.00 0.00 14,291,804.11 0.00
Co. Ltd.
Zhejiang Yisheng New Materials Co.,
0.00 0.00 0.00 1,494,961,748.42 0.00
Ltd.
Dongzhan Shipping Co., Ltd. 0.00 0.00 0.00 147,134,249.00 0.00
Subtotal 136,189,154.56 0.00 0.00 8,017,142,833.11 0.00
Total 188,689,154.56 0.00 0.00 12,085,626,559.38 0.00
Notes:
1. In 2021, the Company and Dalian Yisheng Investment Co., Ltd. purchased 7.5% stocks of
Hainan Yisheng Petrochemical Co., Ltd. respectively. After the completion of shareholding rights
transfer, the Company and Dalian Yisheng Investment Co., Ltd. hold 50% stocks of Hainan Yisheng
Petrochemical Co., Ltd. respectively. So far, Hainan Yisheng Petrochemical Co., Ltd. has become a
cooperative enterprise of the Company.
2. In July 2021, the Company transferred its 1% stocks of Zhejiang Yisheng New Materials Co.,
Ltd. to Ningbo Zhongjin Petrochemical Co., Ltd. After the completion of shareholding rights transfer,
the Company’s shareholding ratio over Zhejiang Yisheng New Materials Co., Ltd. has been
decreased to 49%. So far, Zhejiang Yisheng New Materials Co., Ltd. has become an associated
enterprise of the Company.
Note 6.14 Other equity instrume nts investment
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Hengyi Petrochemical 2021 Annual Report
Other equity instruments investment
Ending balance of Ending balance of
Item
current period previous period
Zhejiang Hengchuang Advanced Functional Fiber Innovation Center Co., Ltd. 600,000.00 600,000.00
Jiangsu New Horizon Advanced Functional Fiber Innovation Center Co., Ltd. 5,000,000.00 5,000,000.00
Total 5,600,000.00 5,600,000.00
Note 6.15 Fixed assets
Item Ending balance Beginning balance
Fixed assets 46,087,206,907.93 41,521,433,906.78
Liquidation of fixed assets 30,711,590.88 58,294,574.17
Total 46,117,918,498.81 41,579,728,480.95
Note 6.15.1 Fixed assets
Note 6.15.1.1 Information of fixed assets
Houses and Machinery Transportation Office facilities
Item Structures Total
buildings equipment equipment and others
I. Original book
value
1. Beginning
10,533,356,386.86 1,229,107,363.08 42,071,674,049.09 261,460,412.55 223,503,761.67 54,319,101,973.25
balance
2. Increase in
1,668,997,074.71 130,794,441.65 6,306,831,533.50 59,359,532.84 32,410,364.30 8,198,392,947.00
current year
(1) Acquisition 33,382,517.28 3,144,877.73 296,438,587.00 59,359,532.84 30,845,424.20 423,170,939.05
(2) Transfer from
construction in 1,635,614,557.43 127,649,563.92 6,010,392,946.50 0.00 1,564,940.10 7,775,222,007.95
progress
(3) Changes in
scope of 0.00 0.00 0.00 0.00 0.00 0.00
consolidation
(4) Reversal of
0.00 0.00 0.00 0.00 0.00 0.00
rebuilt fixed assets
(5) Re-classification
0.00 0.00 0.00 0.00 0.00 0.00
of fixed assets
(6) Others
(conversion of
0.00 0.00 0.00 0.00 0.00 0.00
foreign currency
statements)
3. Decrease in
456,111,944.35 10,738.35 546,427,257.08 10,745,656.64 2,324,160.42 1,015,619,756.84
current year
(1) Disposal or
0.00 8,200.00 131,310,069.19 8,915,844.13 548,322.02 140,782,435.34
retirement
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Hengyi Petrochemical 2021 Annual Report
Houses and Machinery Transportation Office facilities
Item Structures Total
buildings equipment equipment and others
(2) Changes in
scope of 305,779,354.16 0.00 0.00 0.00 395,109.40 306,174,463.56
consolidation
(3) Transfer into
construction in 0.00 0.00 0.00 0.00 0.00 0.00
progress
(4) Others
(conversion of
150,332,590.19 2,538.35 415,117,187.89 1,829,812.51 1,380,729.00 568,662,857.94
foreign currency
statements)
4. Ending balance 11,746,241,517.22 1,359,891,066.38 47,832,078,325.51 310,074,288.75 253,589,965.55 61,501,875,163.41
II. Accumulated
depreciation
1. Beginning
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
balance
2. Increase in
285,349,381.12 67,985,745.32 2,330,168,090.41 33,742,175.51 34,779,589.66 2,752,024,982.02
current year
(1) Provision 285,349,381.12 67,985,745.32 2,330,168,090.41 33,484,686.00 34,245,261.24 2,751,233,164.09
(2) Others
(conversion of
0.00 0.00 0.00 257,489.51 534,328.42 791,817.93
foreign currency
statements)
(3) Re-classification
0.00 0.00 0.00 0.00 0.00 0.00
of fixed assets
3. Decrease in
8,063,725.10 1,307.91 118,140,309.23 8,250,830.92 568,619.85 135,024,793.01
current year
(1) Disposal or
0.00 519.33 96,114,429.10 8,250,830.92 328,572.97 104,694,352.32
retirement
(2) Changes in
scope of 3,227,670.96 0.00 0.00 0.00 240,046.88 3,467,717.84
consolidation
(3) Re-classification
72,355.97 0.00 0.00 0.00 0.00 72,355.97
of fixed assets
(4) Others
(conversion of
4,763,698.17 788.58 22,025,880.13 0.00 0.00 26,790,366.88
foreign currency
statements)
4. Ending balance 1,203,549,293.66 624,378,786.50 13,326,985,174.22 114,398,422.73 145,356,578.37 15,414,668,255.48
III. Impairment
provision
1. Beginning
0.00 0.00 0.00 0.00 0.00 0.00
balance
2. Increase in
0.00 0.00 0.00 0.00 0.00 0.00
current year
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Houses and Machinery Transportation Office facilities
Item Structures Total
buildings equipment equipment and others
(1) Provision 0.00 0.00 0.00 0.00 0.00 0.00
3. Decrease in
0.00 0.00 0.00 0.00 0.00 0.00
current 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
IV. Book value
1. Ending book
10,542,692,223.56 735,512,279.88 34,505,093,151.29 195,675,866.02 108,233,387.18 46,087,206,907.93
value
2. Beginning book
9,607,092,749.22 672,713,013.99 30,956,716,656.05 172,553,334.41 112,358,153.11 41,521,433,906.78
value
Note 6.15.1.2 Temporarily idle fixed assets
Accumulated Impairment
Item Original book value Book value
depreciation provision
Houses and buildings 8,561,594.67 223,746.88 0.00 8,337,847.79
Structures 278,529.56 138,916.63 0.00 139,612.93
Machinery equipment 14,080,545.76 5,886,345.69 0.00 8,194,200.07
Transportation vehicles 0.00 0.00 0.00 0.00
Office facilities and others 0.00 0.00 0.00 0.00
Total 22,920,669.99 6,249,009.20 0.00 16,671,660.79
③ Explanation of fixed assets that did not have title certificates
Reasons for failure to complete relevant affairs
Item Book value
of property right certificate
Real estate of Haining Hengyi Thermal Power
186,183,859.78 In process
Co., Ltd.
Real estate of Haining Hengyi New Materials
1,250,116,886.91 In process
Co., Ltd.
Real estate of Jiaxing Yipeng Chemical Fiber
444,708,600.76 In process
Co., Ltd.
Real estate of Taicang Yifeng Chemical Fiber
22,618,002.14 Property acquired by auction is being handled.
Co., Ltd.
Real estate of Zhejiang Shuangtu New Materials
10,497,053.17 Property acquired by auction is being handled.
Co., Ltd.
Note 6.15.2 Liquidation of fixed assets
Item Ending balance of current period Ending balance of previous period
Machinery equipment 30,711,590.88 58,294,574.17
Total 30,711,590.88 58,294,574.17
Note 6.16 Construction in progress
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Hengyi Petrochemical 2021 Annual Report
Item Ending balance of current period Ending balance of previous period
Construction in progress 3,789,937,189.72 7,605,609,683.33
Engineering materials 106,345,395.78 195,923,299.39
Total 3,896,282,585.50 7,801,532,982.72
Note 6.16.1 Construction in progress
Note 6.16.1.1 Description
Ending balance of current period Ending balance of previous period
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
924,046,018. 924,046,018.
Fujian Yijin Project (Phase II) 0.00 0.00 0.00 0.00
56 56
Haining Jianshan Industrial Park CHP 645,712,875. 645,712,875.
0.00 0.00 0.00 0.00
Project 42 42
Haining New Materials Construction 1,776,336,51 1,776,336,51 5,309,102,20 5,309,102,20
0.00 0.00
Project 0.76 0.76 4.69 4.69
265,366,045. 265,366,045. 35,976,619.2 35,976,619.2
Suqian Yida Project (Phase II) 0.00 0.00
03 03 3 3
Yipeng Flake Removal Expansion 83,071,911.5 83,071,911.5
0.00 0.00 0.00 0.00
Project (Phase I) 8 8
Brunei Refining and Chemical Project 1,548,872,38 1,548,872,38 402,295,413. 402,295,413.
0.00 0.00
Phase II 1.35 1.35 64 64
21,345,635.2 21,345,635.2
Guangxi Jijin Project (Phase I) 0.00 4,206,792.60 0.00 4,206,792.60
7 7
178,016,617. 178,016,617. 201,197,847. 201,197,847.
Other projects 0.00 0.00
31 31 61 61
3,789,937,18 3,789,937,18 7,605,609,68 7,605,609,68
Total 0.00 0.00
9.72 9.72 3.33 3.33
Note 6.16.1.2 Changes of important construction projects in progress
Amount of
Budget (RMB Increase in Other
Beginning transferred into
Project name 10,000) current year decrease in Ending balance
balance fixed assets in
Amount current year
current year
Fujian Yijin Project (Phase
134,100.00 924,046,018.56 457,738,280.80 1,381,784,299.36 0.00 0.00
II)
Haining Jianshan Industrial
113,076.00 645,712,875.42 66,392,140.48 712,105,015.90 0.00 0.00
Park CHP Project
Haining New Materials
892,500.00 5,309,102,204.69 1,459,814,800.73 4,992,580,494.66 0.00 1,776,336,510.76
Construction Project
Suqian Yida Expansion
385,000.00 35,976,619.23 230,508,324.80 1,118,899.00 0.00 265,366,045.03
Project (Phase II)
Yipeng Flake Removal
10,000.00 83,071,911.58 25,658,748.60 108,730,660.18 0.00 0.00
Expansion Project (Phase I)
Brunei Refining and $1,365,389.00 402,295,413.64 1,169,371,270.11 0.00 22,794,302.40 1,548,872,381.35
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Hengyi Petrochemical 2021 Annual Report
Amount of
Budget (RMB Increase in Other
Beginning transferred into
Project name 10,000) current year decrease in Ending balance
balance fixed assets in
Amount current year
current year
Chemical Project Phase II
Guangxi Jijin Project
1,054,737.57 4,206,792.60 17,138,842.67 0.00 0.00 21,345,635.27
(Phase I)
Other projects - 201,197,847.61 555,938,382.19 578,902,638.85 216,973.64 178,016,617.31
Total - 7,605,609,683.33 3,982,560,790.38 7,775,222,007.95 23,011,276.04 3,789,937,189.72
(Contd.)
Proportion of Of which: amount Capitalization
Engineering Interest
project of interest rate of
schedule capitalization
Project Name accumulated capitalization in interest in Sources of funds
(%) Accumulative
investment in current year current year
amount
budget (%) (%)
Fujian Yijin Project (Phase Self-financing
103.13 100.00 61,328,260.95 39,236,543.73 5.69
II) and loans
Haining Jianshan Industrial Self-financing
84.34 100.00 63,091,059.72 17,489,385.90 4.77
Park CHP Project and loans
Haining New Materials Self-financing
91.00 80.00 344,269,248.52 170,223,784.24 4.73
Construction Project and loans
Suqian Yida Expansion Self-financing
7.08 7.08 7,595,327.81 6,807,629.41 4.90
Project (Phase II) and loans
Flake removal expansion
109.00 100.00 0.00 0.00 0.00 Self-funded
project (Phase I)
Brunei Refining and
1.69 1.69 0.00 0.00 0.00 Self-funded
Chemical Project Phase II
Guangxi Jijin Project
0.20 0.20 0.00 0.00 0.00 Self-funded
(Phase I)
Self-financing
Other projects - - 5,026,731.06 0.00 0.00
and loans
Total - - 481,310,628.06 233,757,343.28 - -
Note 6.16.2 Engineering materials
Ending balance of current period Ending balance of previous period
Item
Book balance Impairment provision Book value Book balance Impairment provision Book value
Special materials 99,653,889.72 0.00 99,653,889.72 129,111,961.49 0.00 129,111,961.49
Dedicated equipment 6,691,506.06 0.00 6,691,506.06 66,811,337.90 0.00 66,811,337.90
Total 106,345,395.78 0.00 106,345,395.78 195,923,299.39 0.00 195,923,299.39
Note 6.17 Right-of-use assets
Houses and Machinery
Item Land use right Total
buildings equipment
I. Original book value
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Hengyi Petrochemical 2021 Annual Report
Houses and Machinery
Item Land use right Total
buildings equipment
1. Beginning balance 64,426,583.36 0.00 389,720,537.09 454,147,120.45
2. Increase in current year 3,202,382.10 0.00 0.00 3,202,382.10
(1) Acquisition 3,202,382.10 0.00 0.00 3,202,382.10
(2) Others (conversion of foreign
0.00 0.00 0.00 0.00
currency statements)
3. Decrease in current year 896,491.68 0.00 9,837,154.58 10,733,646.26
(1) Disposal 0.00 0.00 0.00 0.00
(2) Others (conversion of foreign
896,491.68 0.00 9,837,154.58 10,733,646.26
currency statements)
4. Ending balance 66,732,473.78 0.00 379,883,382.51 446,615,856.29
II. Accumulated depreciation
1. Beginning balance 0.00 0.00 0.00 0.00
2. Increase in current year 21,856,625.05 0.00 14,128,635.74 35,985,260.79
(1) Provision 21,856,625.05 0.00 14,128,635.74 35,985,260.79
(2) Others (conversion of foreign
0.00 0.00 0.00 0.00
currency statements)
3. Decrease in current year 232,159.02 0.00 169,894.81 402,053.83
(1) Disposal 0.00 0.00 0.00 0.00
(2) Others (conversion of foreign
232,159.02 0.00 169,894.81 402,053.83
currency statements)
4. Ending balance 21,624,466.03 0.00 13,958,740.93 35,583,206.96
III. Impairment provision 0.00 0.00 0.00 0.00
1. Beginning balance 0.00 0.00 0.00 0.00
2. Increase in current year 0.00 0.00 0.00 0.00
(1) Provision 0.00 0.00 0.00 0.00
3. Decrease in current year 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00
4. Ending balance 0.00 0.00 0.00 0.00
IV. Book value 0.00 0.00 0.00 0.00
1. Ending book value 45,108,007.75 0.00 365,924,641.58 411,032,649.33
2. Beginning book value 64,426,583.36 0.00 389,720,537.09 454,147,120.45
Note 6.18 Intangible assets
Note 6.18.1 Information about intangible assets
Software and
Item Land use right Patent Trademark Total
others
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Hengyi Petrochemical 2021 Annual Report
Software and
Item Land use right Patent Trademark Total
others
I. Original book value
1. Beginning balance 1,603,399,636.52 627,686,917.44 19,740.00 131,896,638.74 2,363,002,932.70
2. Increase in current year 315,651,691.46 567,398.18 0.00 13,683,821.66 329,902,911.30
(1) Acquisition 315,651,691.46 0.00 0.00 13,683,821.66 329,335,513.12
(2) Internal R&D 0.00 567,398.18 0.00 0.00 567,398.18
(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 year 80,365,300.00 10,121,030.99 0.00 1,260,040.30 91,746,371.29
(1) Disposal 25,300.00 2,763,421.61 0.00 170,211.20 2,958,932.81
(2) Changes in scope of
80,340,000.00 0.00 0.00 0.00 80,340,000.00
business consolidation
(2) Others 0.00 7,357,609.38 0.00 1,089,829.10 8,447,438.48
4. Ending balance 1,838,686,027.98 618,133,284.63 19,740.00 144,320,420.10 2,601,159,472.71
II. Accumulated
amortization
1. Beginning balance 186,404,825.16 339,341,874.07 12,690.00 56,426,240.39 582,185,629.62
2. Increase in current year 40,646,444.70 32,011,104.80 4,230.00 13,200,549.40 85,862,328.90
(1) Provision 40,646,444.70 32,011,104.80 4,230.00 13,200,549.40 85,862,328.90
(2) Others 0.00 0.00 0.00 0.00 0.00
3. Decrease in current year 332,670.81 1,181,943.11 0.00 256,601.85 1,771,215.77
(1) Disposal 0.00 0.00 0.00 41,134.36 41,134.36
(2) Changes in scope of
332,670.81 0.00 0.00 0.00 332,670.81
business consolidation
(3) Others (conversion of
0.00 1,181,943.11 0.00 215,467.49 1,397,410.60
foreign currency statements)
4. Ending balance 226,718,599.05 370,171,035.76 16,920.00 69,370,187.94 666,276,742.75
III. Impairment provision
1. Beginning balance 0.00 0.00 0.00 0.00 0.00
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 year 0.00 0.00 0.00 0.00 0.00
(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 0.00 0.00 0.00 0.00 0.00
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Software and
Item Land use right Patent Trademark Total
others
1. Ending book value 1,611,967,428.93 247,962,248.87 2,820.00 74,950,232.16 1,934,882,729.96
2. Beginning book value 1,416,994,811.36 288,345,043.37 7,050.00 75,470,398.35 1,780,817,303.08
(2) Important individual intangible assets
Ending book value Remaining amortization
Item
of current period period (month)
Land use right of Zhejiang Shuangtu New Materials Co., Ltd. 186,661,799.98 476
Land use right of Jiaxing Yipeng Chemical Fiber Co., Ltd. 144,308,049.40 386
Land use right of Hangzhou Yitong New Materials Co., Ltd. 140,639,174.99 595
Land use right of Hangzhou Yitong New Materials Co., Ltd. 131,647,424.33 583
Land use right of Haining Hengyi New Materials Co., Ltd. 70,389,533.50 598
Land use right of Fujian Yijin Chemical Fiber Co., Ltd. 66,108,452.23 434
Land use right of Haining Hengyi New Materials Co., Ltd. 64,914,218.55 554
Land use right of Taicang Yifeng Chemical Fiber Co., Ltd. 50,958,942.00 474
Land use right of Zhejiang Hengyi High-tech Materials Co., Ltd. 47,077,342.74 437
Patent license of Hengyi Industry (Brunei) Co., Ltd. 56,341,003.87 95
Patent license of Hengyi Industry (Brunei) Co., Ltd. 147,917,714.83 95
(3) Intangible assets with restricted ownership or right to use
Ending book value of current
Item Amortization amount in current period Reason for restriction
period
Land use right 729,140,492.16 22,722,445.48 Mortgage guarantee
Software 18,490.57 3,169.81 Finance lease guarantees
Total 729,158,982.73 22,725,615.29
Note 6.19 Development expenditure
Increase in current year Decrease in current year
Beginning Internal Recognized as Transferred to Ending balance
Item
balance development Other Intangible current
expenditures assets profit and loss
Henglan Technology R&D PTT
7,019,335.36 2,425,887.07 0.00 0.00 0.00 9,445,222.43
Industrialization Project
Development and Industrialization of
567,398.18 0.00 0.00 567,398.18 0.00 0.00
Branching PA6 Resin with High LDPE
Research and application development
of bio-based PTT elastic shape memory 0.00 1,819,730.30 0.00 0.00 0.00 1,819,730.30
fiber series
Other projects 44,021.33 946.50 0.00 0.00 6,388.67 38,579.16
Total 7,630,754.87 4,246,563.87 0.00 567,398.18 6,388.67 11,303,531.89
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Note 6.20 Goodwill
Note 6.20.1 Original book value
Name or formation of Increase in current year Decrease in current year
Beginning
investee Ending balance
balance Business combination Disposal
goodwill matters
Zhejiang Shuangtu New
221,865,586.69 0.00 0.00 221,865,586.69
Materials Co., Ltd.
Note 6.20.2 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 goodw ill 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
2,119,781,100.00 based on the consolidated financial statement as on December 31, 2021 and the
assets and operating conditions of the merged party Shuangtu. It is found after impairment test that
the present value of the expected future cash flow of this goodwill and related asset group on
December 31, 2021 was RMB 2,197,000,000.00, and no impairment occurred. Details are as follows:
Unit: RMB 10,000
Book amount of
Item
consolidated statements
Fixed assets 169,147.44
Construction in progress 115.04
Intangible assets 20,452.89
Long-term deferred and prepaid expenses 76.18
Goodwill recognized in consolidated statements 22,186.56
Subtotal of book value of asset groups containing goodwill 211,978.11
Vale of goodwill not recognized as attributable to minority shareholders’ equity 0.00
Total adjusted book value of asset groups containing goodwill 211,978.11
Present value (recoverable amount) of the estimated future cash flow of the asset
group 219,700.00
Note: For the present value (recoverable amount) of the expected future cash flow of the asset groups
above, the results of assessment set out in the HYZXPBZ [2022] No. A01-0015 Asset Appraisal
Report issued by Beijing Huaya Zhengxin Assets Appraisal Co., Ltd. on April 18, 2022 was used.
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Hengyi Petrochemical 2021 Annual Report
The recoverable amount of the asset groups above is determined according to the present value of the
expected future cash flow. Based on its current operating conditions, business characteristics and
market supply & demand and upon an overall analysis and consideration of various factors such as
residual service life of main assets included in the asset group, the acquirer is estimated to enter a
stable period in 2026. Therefore, the predictive period is determined from January 2022 to December
2026 (five years in total), and the discount rate of 13.13% is adopted.
Important assumptions for goodwill impairment test:
① Assumption of orderly transaction: Orderly transaction refers to the transaction that related assets
or liabilities have usual marketing activities within a period of time prior to the measurement date.
② Assumption of open market: It means that assets can be traded freely in the fully competitive
market, and that its price depends on independent buyer’s and seller’s value judgment under certain
market supply and demand conditions. It is an assumption about the conditions of the target assets
market and about the influence of assets under relatively complete market conditions.
③ Assumption of continuing operations: Assume no unforeseeable factor leading to a failure to
continue operations, when the entrusted asset group is continuously operated in accordance with the
current situation, purpose, usage mode and management level on the base date;
④ No significant change in the existing editions of applicable national laws & regulations and
macro-economic situation; no unforeseeable significant change in external economic environment
(e.g. interest rate, exchange rate, tax base & rate and policy collection expenses);
⑤ Assume that the Company’s current business model can be continuously maintained in the future,
and predict the future cash flow of assets based on current asset conditions, excluding the prediction
of the future cash flow related to restructuring or modification that will probably occur in the future
and that has not been promised yet;
⑥ Assume that cash inflow and outflow of the asset group occur in the middle of the year after the
assessment base date
Note 6.21 Long-term deferred expenses
Amortization
Beginning Increase in Other decreases
Item amount in current Ending balance
balance current period in amount
period
Decoration cost 1,885,247.42 0.00 1,113,696.08 3,118.11 768,433.23
Exterior wall coating 1,780,326.19 0.00 963,302.75 0.00 817,023.44
Workshop
642,612.63 0.00 367,207.22 0.00 275,405.41
reinforcement
Transfer fees for
909,188.42 0.00 147,435.96 0.00 761,752.46
storage tank use right
Catalyst 515,670,341.76 28,516,955.56 87,484,549.36 11,082,370.58 445,620,377.38
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Amortization
Beginning Increase in Other decreases
Item amount in current Ending balance
balance current period in amount
period
Other 9,117,076.14 15,325,542.17 3,141,294.70 2,547,885.05 18,753,438.56
Total 530,004,792.56 43,842,497.73 93,217,486.07 13,633,373.74 466,996,430.48
Note 6.22 Deferred income tax assets and deferred income tax liabilities
Note 6.22.1 Details of deferred income tax assets
Ending balance of current period Ending balance of previous period
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Impairment loss on credit
37,453,702.79 5,761,347.25 39,077,190.61 6,038,615.66
assets
Asset impairment provision 137,751,813.38 28,908,052.68 18,111,009.54 3,831,264.37
Changes in fair value of
financial assets held for 2,752,654.17 688,163.54 17,242,006.11 4,633,044.84
trading
Unrealized profits arising
29,235,837.12 7,308,959.28 105,803,721.83 26,450,930.46
from intra-group trading
Accrued expenses 213,630.54 32,044.58 3,121,974.85 468,296.23
Deferred income 102,310,974.76 16,486,593.90 85,878,905.11 12,881,835.77
Deductible losses 256,991,133.33 64,247,783.33 266,851,757.20 66,712,939.30
Cash flow hedging 297,696.00 74,424.00 91,296,116.20 14,843,417.43
Total 567,007,442.09 123,507,368.56 627,382,681.45 135,860,344.06
Note 6.22.2 Details of deferred income tax liabilities
Ending balance of current period Ending balance of previous period
Item Taxable temporary Deferred tax Taxable temporary
Deferred tax liabilities
differences liabilities differences
Asset valuation
appreciation of business
326,354,000.73 48,953,100.11 370,650,553.73 55,597,583.06
combinations not under
common control
Changes in fair value of
financial assets held for 12,825,770.08 3,206,442.52 139,028,274.42 33,975,572.86
trading
One-off deduction
difference before income 146,811,742.93 34,358,354.01 98,458,985.67 21,998,938.16
tax on fixed assets
Total 485,991,513.74 86,517,896.64 608,137,813.82 111,572,094.08
Note 6.22.3 Details of unconfirmed deferred income tax assets
Ending balance of current
Item Ending balance of previous period
period
Deductible temporary difference 15,553,769.45 13,278,842.77
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Hengyi Petrochemical 2021 Annual Report
Ending balance of current
Item Ending balance of previous period
period
Deductible losses 1,015,129,215.36 787,814,103.31
Total 1,030,682,984.81 801,092,946.08
Note 6.22.4 Deductible losses of unconfirmed deferred income tax assets will expire the next year:
Year Ending balance of current period Ending balance of previous period
2021 - 26,715,814.79
2022 9,878,721.42 31,866,477.40
2023 127,251,885.07 229,079,938.78
2024 162,170,932.41 190,651,121.96
2025 194,792,129.27 309,500,750.38
2026 521,035,547.19 -
Total 1,015,129,215.36 787,814,103.31
Note 6.23 Other non-current assets
Item Ending balance of current period Ending balance of previous period
Payment for long-term assets 1,669,998,308.04 955,145,705.24
Advance payment for transfer of pollution
2,152,324.64 10,961,977.73
discharge right
Taxes for right-of-use assets 2,335,045.86 0.00
Other 304,950.00 304,950.00
Total 1,674,790,628.54 966,412,632.97
Note 6.24 Short-term loans
Classification of short-term loans
Item Ending balance of current period Ending balance of previous period
Pledge loan 13,328,541,060.00 10,134,292,276.14
Mortgage loan 2,355,437,939.49 1,096,431,610.43
Guarantee loan 16,660,351,966.72 13,692,168,947.17
Fiduciary loan 1,383,344,685.85 1,544,609,239.54
Loan interest 51,019,025.18 15,170,052.70
Total 33,778,694,677.24 26,482,672,125.98
Note: For asset classes and amounts of mortgaged loans, please refer to Note 6.67.
For the portage asset category and amount of pledge loan, please refer to Note 6.67.
Note 6.25 Financial liabilities held for trading
Beginning Increase in Decrease in Ending
Item
balance current year current year balance
Transactional financial liabilities 9,301,029.70 1,670,361.85 9,301,029.70 1,670,361.85
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Hengyi Petrochemical 2021 Annual Report
Beginning Increase in Decrease in Ending
Item
balance current year current year balance
Among which: issued bonds held for trading 0.00 0.00 0.00 0.00
Derivative financial liabilities 9,301,029.70 1,670,361.85 9,301,029.70 1,670,361.85
Other 0.00 0.00 0.00 0.00
Specified as financial liability at fair value through
0.00 0.00 0.00 0.00
profit or loss
Total 9,301,029.70 1,670,361.85 9,301,029.70 1,670,361.85
Note 6.26 Derivative financial liabilities
Item Ending balance of current period Ending balance of previous period
Foreign exchange derivatives 297,696.00 11,490,000.00
Commodity derivatives 23,407,744.98 125,118,747.10
Total 23,705,440.98 136,608,747.10
Note 6.27 Notes payable
Category Ending balance of current period Ending balance of previous period
Commercial acceptance bills 0.00 0.00
Bank acceptance bills 440,900,000.00 1,107,267,473.78
Domestic letter of credit 0.00 80,000,000.00
Total 440,900,000.00 1,187,267,473.78
Note 6.28 Accounts payable
Note 6.28.1 Accounts payable are listed as follows
Item Ending balance of current period Ending balance of previous period
Within one year 8,777,122,209.14 4,448,180,007.83
1-2 years 360,995,063.03 1,259,912,844.31
2-3 years 853,087,925.13 20,554,317.73
Over three years 19,802,520.14 12,054,375.63
Total 10,011,007,717.44 5,740,701,545.50
Note 6.28.2 Significant accounts payable with aging exceeding one year
Reasons for outstanding
Item Ending balance
or carry over
Nanjing Chemical Construction Co., Ltd. (Brunei Branch) 122,082,966.43 Warranty has not expired.
China National Chemical Engineering Third Construction Co., Ltd.
113,897,134.17 Warranty has not expired.
(Brunei Branch)
China Chemical Engineering Second Construction Corporation (Brunei
127,926,911.75 Warranty has not expired.
Branch)
China Construction Industrial & Energy Engineering (Brunei) Co., Ltd. 51,680,789.56 Warranty has not expired.
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Hengyi Petrochemical 2021 Annual Report
PAHAYTC & BENTENG J.V. SDN BHD 38,309,747.46 Warranty has not expired.
Total 453,897,549.37 ——
Note 6.29 Contract liabilities
Note 6.29.1 Contract liabilities
Ending balance of
Item Ending balance of current period
previous period
Advance receipt of payment for contracts unfulfilled 1,904,820,796.20 1,620,044,525.95
Less: Those included in other current liabilities (Note 6.34) 180,919,015.28 151,856,844.93
Total 1,723,901,780.92 1,468,187,681.02
Note 6.29.2 There were no significant changes in the book value in current period.
Note 6.30 Payroll payable
Note 6.30.1 Wages payable are listed as follows
Decrease in
Item Beginning balance Increase in current year Ending balance
current year
I. Short-term remuneration 290,512,541.38 2,551,991,363.81 2,534,352,387.31 308,151,517.88
II. Post-employment Benefits -
Defined Contribution Plan
2,513,241.96 125,091,260.44 124,293,150.76 3,311,351.64
Post-employment benefit and
defined contribution plan
III. Termination benefits 0.00 1,051,857.80 1,051,857.80 0.00
IV. Other benefits due within one
0.00 0.00 0.00 0.00
year
Total 293,025,783.34 2,678,134,482.05 2,659,697,395.87 311,462,869.52
Note 6.30.2 Short-term remuneration is listed as follows
Decrease in
Item Beginning balance Increase in current year Ending balance
current year
1. Wages, bonuses, allowances &
281,729,458.62 2,335,916,764.06 2,319,027,217.93 298,619,004.75
subsidies
2. Employee welfare 747,775.55 77,428,186.37 76,617,178.10 1,558,783.82
3. Social insurance 1,045,436.72 74,634,806.78 74,387,639.63 1,292,603.87
Of which: medical insurance 1,003,494.05 70,712,916.88 70,454,378.37 1,262,032.56
Employment injury
26,064.61 3,318,683.04 3,314,176.34 30,571.31
insurance
Maternity insurance 15,878.06 603,206.86 619,084.92 0.00
4. Housing accumulation fund 1,069,315.87 34,910,813.46 35,696,752.65 283,376.68
5. Labor union and employee
5,920,554.62 29,100,793.14 28,623,599.00 6,397,748.76
education expense
6. Short-term paid absences 0.00 0.00 0.00 0.00
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Hengyi Petrochemical 2021 Annual Report
Decrease in
Item Beginning balance Increase in current year Ending balance
current year
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 290,512,541.38 2,551,991,363.81 2,534,352,387.31 308,151,517.88
Note 6.30.3 Defined contribution plan is listed as follows
Decrease in
Item Beginning balance Increase in current year Ending balance
current year
1. Basic pension insurance 2,462,001.97 120,320,622.37 119,545,725.11 3,236,899.23
2. Unemployment insurance 51,239.99 4,770,638.07 4,747,425.65 74,452.41
3. Enterprise annuity 0.00 0.00 0.00 0.00
Total 2,513,241.96 125,091,260.44 124,293,150.76 3,311,351.64
Note 6.31 Taxes and dues payable
Ending balance of current Ending balance of previous
Item
period period
Value-added tax 705,004,834.17 261,972,242.58
Enterprise income tax 108,956,677.95 328,881,257.17
Urban maintenance and construction tax 43,186,920.36 9,304,479.42
Education surcharge 18,535,812.25 4,089,343.55
Land use tax 10,069,167.57 11,014,092.06
Property tax 30,075,843.64 13,804,263.97
Special funds for water conservancy construction 402,705.79 0.00
Individual income tax 1,775,884.69 1,521,278.02
Stamp tax 6,938,813.73 6,777,481.05
Local education surcharge 12,356,058.55 2,726,229.02
Disabled security fund 53,136.00 58,226.03
Other 1,008,926.96 341,671.35
Total 938,364,781.66 640,490,564.22
Note 6.32 Other payables
Item Ending balance of current period Ending balance of previous period
Interests payable 0.00 0.00
Dividends payable 169,500,759.38 173,750,759.38
Other payables 258,670,038.54 232,331,788.44
Total 428,170,797.92 406,082,547.82
Note 6.32.1 Dividends payable
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Hengyi Petrochemical 2021 Annual Report
Item Ending balance of current period Ending balance of previous period
Common stock dividends 759.38 759.38
Dividends payable by subsidiaries
169,500,000.00 173,750,000.00
to minority shareholders
Total 169,500,759.38 173,750,759.38
Note 6.32.2 Other payables
Note 6.32.2.1 Presented by nature of amount
Item Ending balance of current period Ending balance of previous period
Receivables and payables 7,096,248.66 21,116,555.50
Deposit and security 138,103,829.71 122,878,434.45
Nature of unsettled expense 91,205,577.81 74,696,444.37
Receipts under custody 20,451,297.80 1,990,402.06
Other 1,813,084.56 11,649,952.06
Total 258,670,038.54 232,331,788.44
Note 6.32.2.2 Listed by aging
Item Ending balance of current period Ending balance of previous period
Within one year 210,669,131.56 181,866,809.75
1-2 years 27,219,847.22 29,350,701.44
2-3 years 9,183,180.26 7,609,359.46
Over three years 11,597,879.50 13,504,917.79
Total 258,670,038.54 232,331,788.44
Note 6.32.2.3 Significant accounts payable with aging exceeding one year
Ending Reasons for outstanding
Item
balance or carry over
Henan Huicheng Investment Co., Ltd. 2,569,363.91 Incomplete settlement
Hangzhou Hongju Construction Co., Ltd. 1,860,500.00 Incomplete settlement
Jiangsu Ruicheng Construction Engineering Co., Ltd. 1,675,420.00 Incomplete settlement
Canteen settlement – Lin Haijiang 1,014,928.33 Incomplete settlement
Zhejiang Kexin United Project Management Consultancy Co., Ltd. 1,000,000.00 Incomplete settlement
Total 8,120,212.24 -
Note 6.33 Non-current liabilities due within one year
Ending balance of Ending balance of
Item
current period previous period
Long-term loans and interests due within one year (Note 6.35) 3,818,951,287.70 1,756,790,484.15
Bonds payable and interests due within one year (Note 6.36) 51,033,160.10 1,984,595,701.21
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Hengyi Petrochemical 2021 Annual Report
Lease liabilities due within one year (Note 6.37) 10,209,931.72 30,360,978.82
Long-term payables and interests due within one year (Note 6.38) 654,324,945.69 746,067,210.88
Total 4,534,519,325.21 4,517,814,375.06
Note 6.34 Other current liabilities
Item Ending balance of current period Ending balance of previous period
Output tax to be transferred 180,919,015.28 151,856,844.93
Note 6.35 Long-term loans
Ending balance of current Ending balance of
Item
period previous period
Pledge loan 83,489,791.50 310,937,295.00
Mortgage loan 12,275,719,140.06 12,650,509,052.06
Guarantee loan 7,426,177,456.63 5,375,637,314.17
Interests payable 29,794,585.82 29,609,852.15
Less: Long-term loans and interests due within one year 3,818,951,287.70 1,756,790,484.15
Total 15,996,229,686.31 16,609,903,029.23
Note: For asset classes and amounts of mortgaged loans, please refer to Note 6.67).
For the portage asset category and amount of pledge loan, please refer to Note 6.67.
Note 6.36 Bonds payable
Note 6.36.1 Bonds payable
Item Ending balance of current period Ending balance of previous period
Corporate bonds 2,612,404,203.28 3,521,330,557.49
Note 6.36.2 Changes in bond payables (excluding other financial instruments such as preferred
shares and perpetual bonds classified as financial liabilities)
Bond Beginning
Bond name Face value Date of issue Issue amount
maturity balance
“Belt and Road” corporate bonds 500,000,000.00 2018-03-22 3 497,500,000.00 160,311,381.12
Corporate bonds (Tranche 1) 1,000,000,000.00 2018-03-22 3 995,000,000.00 668,692,416.48
Corporate bonds (Tranche 2) 1,500,000,000.00 2018-04-19 3 1,492,500,000.00 1,065,206,211.98
Corporate bonds (19Hengyi01) 500,000,000.00 2019-03-26 3 497,750,000.00 522,968,415.29
Corporate bonds (19Hengyi02) 500,000,000.00 2019-06-04 3 497,750,000.00 515,109,565.26
Corporate bonds (20Hengyi01) 1,000,000,000.00 2020-03-13 2 995,500,000.00 1,045,935,287.77
Hengyi Convertible Bond 127022 2,000,000,000.00 2020-10-16 6 1,508,831,199.68 1,527,702,980.80
Subtotal 7,000,000,000.00 - - 6,484,831,199.68 5,505,926,258.70
Less: partial year-end balance due
- - - - 1,984,595,701.21
within one year (Note 6.33)
Total 7,000,000,000.00 - - 6,484,831,199.68 3,521,330,557.49
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Hengyi Petrochemical 2021 Annual Report
(Contd.)
Accrued Interest paid in
Issuance in Discounted Repayment in
Bond name interest at face current period Ending balance
current period amortization current period
value
“Belt and Road” corporate
0.00 2,283,386.88 43,779.50 153,505,000.00 9,133,547.50 0.00
bonds
Corporate bonds (Tranche 1) 0.00 9,524,730.24 199,774.28 640,318,000.00 38,098,921.00 0.00
Corporate bonds (Tranche 2) 0.00 17,189,783.33 560,354.69 1,031,387,000.00 51,569,350.00 0.00
Corporate bonds
0.00 7,975,000.00 956,584.71 500,000,000.00 31,900,000.00 0.00
(19Hengyi01)
Corporate bonds
0.00 16,250,000.00 1,140,434.74 500,000,000.00 32,500,000.00 0.00
(19Hengyi02)
Corporate bonds
0.00 58,899,999.96 1,553,996.81 0.00 58,900,000.00 1,047,489,284.54
(20Hengyi01)
Hengyi Convertible Bond
0.00 4,822,152.56 87,586,529.68 163,900.00 3,999,684.20 1,615,948,078.84
127022
Subtotal 0.00 116,945,052.97 92,041,454.41 2,825,373,900.00 226,101,502.70 2,663,437,363.38
Less: partial year-end
balance due within one year 0.00 0.00 0.00 0.00 0.00 51,033,160.10
(Note 6.33)
Total 0.00 116,945,052.97 92,041,454.41 2,825,373,900.00 226,101,502.70 2,612,404,203.28
Note 6.37 Lease liabilities
Increase in current year
Interest for Decrease in
Item Beginning balance Ending balance
New lease current Other current year
period
Land use right 397,165,688.84 0.00 0.00 0.00 34,186,316.22 362,979,372.62
Buildings 28,071,339.86 2,185,819.52 0.00 0.00 2,881,076.99 27,376,082.39
Less: Lease liabilities due within
30,360,978.82 1,174,311.93 0.00 0.00 21,325,359.03 10,209,931.72
one year (Note 6.33)
Total 394,876,049.88 1,011,507.59 0.00 0.00 15,742,034.18 380,145,523.29
Note 6.38 Long-term accounts payables
Long-term accounts payable
Ending balance of previous
Item Ending balance of current period
period
Long-term payables 952,254,861.09 520,596,948.45
Special accounts payable 0.00 0.00
Total 952,254,861.09 520,596,948.45
Finance leases payable 1,606,579,806.78 1,266,664,159.33
Less: partial balance due within one year
654,324,945.69 746,067,210.88
(Note 6.33)
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Hengyi Petrochemical 2021 Annual Report
Total 952,254,861.09 520,596,948.45
Note 6.39 Estimated liabilities
Item Ending balance of previous period Ending balance of current period Reasons
Please refer to Note
Pending litigations 3,555,907.35 213,630.54
12.2 for details.
Note 6.40 Deferred income
Beginning Increase in Decrease in
Item Ending balance Reasons
balance current year current year
Government grants 197,513,098.48 23,261,700.00 16,969,806.76 203,804,991.72 Related to assets
Government grants 0.00 3,878,200.00 35,564.77 3,842,635.23 Related to income
Total 197,513,098.48 27,139,900.00 17,005,371.53 207,647,626.95
Items involving government subsidies:
Amount
Amount
included in Related to
Amount of new included in
Beginning non-operati assets/
Subsidized Items subsidies for other income Other changes Ending balance
balance ng income Related to
current period in current
in current income
period
period
Development,
modification and Related to
0.00 3,878,200.00 0.00 35,564.77 0.00 3,842,635.23
corresponding income
industrialization projects
Special award funds for Related to
34,799,849.98 0.00 0.00 2,013,757.49 0.00 32,786,092.49
major industrial projects assets
Subsidies for boiler Related to
11,704,517.95 0.00 0.00 1,560,602.39 0.00 10,143,915.56
cleaning transformation assets
Subsidies for automation Related to
1,810,931.87 2,382,100.00 0.00 297,656.10 0.00 3,895,375.77
projects assets
Functional fiber
Related to
technological 39,022,242.84 0.00 0.00 4,183,472.02 0.00 34,838,770.82
assets
transformation projects
Tax refund for fixed Related to
2,901,388.16 0.00 0.00 2,678,204.46 0.00 223,183.70
assets assets
Technological
Related to
transformation projects in 8,958,333.25 13,879,600.00 0.00 3,381,216.67 0.00 19,456,716.58
assets
manufacturing enterprises
Special equipment Related to
0.00 7,000,000.00 0.00 677,419.35 0.00 6,322,580.65
subsidies assets
Related to
Industrial robot projects 1,284,084.46 0.00 0.00 124,194.96 0.00 1,159,889.50
assets
Internet digital factory Related to
315,375.00 0.00 0.00 28,033.32 0.00 287,341.68
projects assets
Land compensation 96,500,000.00 0.00 0.00 166,666.67 1,833,333.33 94,500,000.00 Related to
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Hengyi Petrochemical 2021 Annual Report
Amount
Amount
included in Related to
Amount of new included in
Beginning non-operati assets/
Subsidized Items subsidies for other income Other changes Ending balance
balance ng income Related to
current period in current
in current income
period
period
assets
Related to
Other 216,374.97 0.00 0.00 25,250.00 0.00 191,124.97
assets
Total 197,513,098.48 27,139,900.00 0.00 15,172,038.20 1,833,333.33 207,647,626.95 -
Note 6.41 Capital stock
Changes of increase or decrease in current period (+, -)
Item Beginning balance Capital reserve Ending balance
Issue of
Bonus shares converted into Other Subtotal
new shares
share capital
Sum of shares 3,681,645,407.00 0.00 0.00 0.00 -15,365,393.00 -15,365,393.00 3,666,280,014.00
Note:
(1) The share conversion period of “Hengyi Convertible Bond” (bond code: 127022) is from April
22, 2021 to October 15, 2026. In 2021, totally 2,113 “Hengyi Convertible Bonds” were converted
into 14,337 shares of “Hengyi Petrochemical”. An amount of RMB 14,337.00 capital stock is
increased in the Company. At the same time, an amount of RMB 148,777.66 capital reserve – capital
premium is increased.
(2) In accordance with the Resolution on Achievement of Performance Commitment and
Performance Compensation Plan in 2020 Regarding the Issue of Shares for Purchase of Assets and
Connected Transactions, the Company has cancelled 15,379,730 shares, and decreased RMB
15,379,730.00 capital stock on July 28, 2021. At the same time, the Company has received an
amount of RMB 14,314,978.66 as cash dividends returned by Hengyi Group (subject of performance
commitment). Therefore, an amount of RMB 29,694,708.66 is increased as capital reserves - capital
premiums.
Note 6.42 Other equity instrume nts
Increase in current Decrease in
Beginning balance Ending balance
year current year
Issued financial instruments
Quantit Quantit Book
Quantity Book value Book value Quantity Book value
y y value
Equity portion of convertible corporate 20,000,00 478,546,158. 39,465.9 19,997,88 478,506,692.
0 0.00 2,113
bonds 0 81 5 7 86
20,000,00 478,546,158. 39,465.9 19,997,88 478,506,692.
Total 0 0.00 2,113
0 81 5 7 86
Note: For the equity part of convertible corporate bonds decreased in current period, please refer to
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Hengyi Petrochemical 2021 Annual Report
Note 6.41.
Note 6.43 Capital reserves
Increase in Decrease in
Item Beginning balance Ending balance
current year current year
Premium on capital 11,338,659,906.61 29,843,486.32 16,856,913.54 11,351,646,479.39
Other capital reserves 155,709,331.86 0.00 12,468,546.57 143,240,785.29
Capital reserve generated by simulating
-2,329,301,104.61 0.00 0.00 -2,329,301,104.61
ownership structure and quantity
Total 9,165,068,133.86 29,843,486.32 29,325,460.11 9,165,586,160.07
Note:
1. The amount of capital reserve minus capital premium increases by RMB 29,843,486.32. Please
refer to Note 6.41 for details.
2. The amount of capital reserve minus capital premium decreases by RMB 16,856,913.54,
including the decrease by RMB 16,757,452.51 due to purchase of minority shareholders’ equities and
their capital increase in subsidiaries, and the decrease by RMB 99,461.03 due to commission charges
resulted from stock repurchase.
3. The amount of capital reserve minus others decreased by RMB 12,468,546.57. Losses of
Zhejiang Shuangtu have decreased due to a compromise between Zhejiang Shuangtu and the
litigation-related client before being purchased by the Company. Such loss was recognized as capital
reserve in the consolidated statement.
Note 6.44 Treasury stock
Item Beginning balance Increase in current year Decrease in current year Ending balance
Stock repurchased via
349,918,604.53 368,231,852.70 0.00 718,150,457.23
centralized bidding
Total 349,918,604.53 368,231,852.70 0.00 718,150,457.23
Note: In current period, the Company has increased the treasury stock by RMB 368,231,852.70 via
centralized bidding.
Note 6.45 Other comprehensive income
Amount in current period
Less: net
current profit Net after-tax Net after-tax
Before-tax
Beginning and loss Less: income income
Item amount incurred Ending balance
balance transferred from income tax attributable to attributable to
in current
previous other expenses parent minority
period
comprehensive company shareholders
income
I. Other
0.00 0.00 0.00 0.00 0.00 0.00 0.00
comprehensive
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Hengyi Petrochemical 2021 Annual Report
Amount in current period
Less: net
current profit Net after-tax Net after-tax
Before-tax
Beginning and loss Less: income income
Item amount incurred Ending balance
balance transferred from income tax attributable to attributable to
in current
previous other expenses parent minority
period
comprehensive company shareholders
income
income items which
cannot be classified
as profit or loss in
succeeding
accounting period
Of which: changes
due to
remeasurement of
0.00 0.00 0.00 0.00 0.00 0.00 0.00
the net liabilities or
net assets under the
defined benefit plan
Share in other
comprehensive
income that will not
be reclassified into 0.00 0.00 0.00 0.00 0.00 0.00 0.00
profit and loss in
investee under
equity method
II. Other
comprehensive
income items which
will be classified as -1,032,362,450.85 -361,011,363.76 -364,446,500.41 -80,424.00 -38,496,763.77 42,012,324.42 -1,070,859,214.62
profit or loss in
succeeding
accounting period
Of which: other
comprehensive
income fro m
14,299,823.85 9,362,424.18 0.00 0.00 9,011,096.96 351,327.22 23,310,920.81
convertible gains
and losses under the
equity method
Effective part of
cash flow hedging -323,099,566.97 -23,268,217.35 -364,446,500.41 -80,424.00 300,242,496.51 41,016,210.55 -22,857,070.46
profit and loss
Converted
difference in
-723,562,707.73 -347,105,570.59 0.00 0.00 -347,750,357.24 644,786.65 -1,071,313,064.97
foreign currency
statements
Total of other-1,032,362,450.85 -361,011,363.76 -364,446,500.41 -80,424.00 -38,496,763.77 42,012,324.42 -1,070,859,214.62
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Hengyi Petrochemical 2021 Annual Report
Amount in current period
Less: net
current profit Net after-tax Net after-tax
Before-tax
Beginning and loss Less: income income
Item amount incurred Ending balance
balance transferred from income tax attributable to attributable to
in current
previous other expenses parent minority
period
comprehensive company shareholders
income
comprehensive
income
Note 6.46 Special reserve
Item Beginning balance Increase in current year Decrease in current year Ending balance
Work safety funds 0.00 52,367,268.75 52,367,268.75 0.00
Note: The increase and decrease in special reserves during the Reporting Period are the work safety
funds withdrawn and used.
Note 6.47 Surplus reserves
Item Beginning balance Increase in current year Decrease in current year Ending balance
Statutory surplus reserves 660,652,171.17 91,243,496.70 0.00 751,895,667.87
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.
Note 6.48 Undistributed profits
Item Current period Previous period
Undistributed profit before adjustment at the end of the previous year 11,403,002,797.32 9,567,928,583.61
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 profit after adjustment at the beginning of the year 11,403,002,797.32 9,567,928,583.61
Add: net profit attributable to the owners of parent company in current year 3,408,043,143.47 3,071,998,839.75
Less: withdrawal of statutory surplus reserves 91,243,496.70 101,404,665.64
Withdrawal for discretionary surplus reserves 0.00 0.00
General risk provisions withheld 0.00 0.00
Common stock dividends payable 1,089,964,300.35 1,135,519,960.40
Common stock dividends transferred to capital stocks 0.00 0.00
Add: Others -6,236,870.47 0.00
Undistributed profits at the end of the year 13,623,601,273.27 11,403,002,797.32
Note 6.49 Operating revenue and operating cost
Item Amount incurred in current year Amount incurred in previous year
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Hengyi Petrochemical 2021 Annual Report
Revenue Cost Revenue Cost
Main business 128,182,319,388.88 121,017,587,183.75 85,795,557,470.87 79,894,558,655.25
Other operations 797,220,304.39 590,444,115.34 634,072,721.00 555,272,041.69
Total 128,979,539,693.27 121,608,031,299.09 86,429,630,191.87 80,449,830,696.94
Note 6.50 Taxes and surcharges
Item Amount incurred in current year Amount incurred in previous year
Consumption tax 2,787,152.86 5,458,218.81
Urban maintenance and construction tax 65,590,454.61 28,475,454.02
Education surcharge 28,203,251.69 12,515,877.22
Property tax 31,798,198.04 12,166,370.38
Land use tax 14,992,349.39 14,693,786.15
Vehicle and vessel usage tax 94,474.69 82,324.22
Stamp tax 57,703,181.07 36,519,194.04
Local education surcharge 18,900,490.23 8,240,898.58
Water conservancy construction funds 3,473,198.38 0.00
Other 2,605,294.11 2,285,346.86
Total 226,148,045.07 120,437,470.28
Note: please refer to Note 5 “Taxes” for details of taxation and additional payment standards.
Note 6.51 Sales expense
Item Amount incurred in current year Amount incurred in previous year
Transportation expenses 361,206.09 3,856,318.79
Import and export expenses 77,410,944.06 87,223,211.47
Staff remuneration 102,828,797.93 97,461,347.91
Transport insurance expenses 1,099,472.73 851,252.32
Warehouse fee 17,059,401.49 2,143,725.80
Business entertainment 1,619,634.71 1,298,961.23
Travel expenses 3,350,338.43 3,942,993.44
Vehicle cost 1,559,735.76 1,028,277.49
Rental fee 800.00 66,934.74
Office expenses 1,096,892.62 619,421.63
Handling cost 3,338,845.67 1,273,862.85
Agency fees 2,113,272.34 0.00
Other 16,242,042.21 18,343,493.47
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Hengyi Petrochemical 2021 Annual Report
Item Amount incurred in current year Amount incurred in previous year
Total 228,081,384.04 218,109,801.14
Note 6.52 Administration cost
Item Amount incurred in current year Amount incurred in previous year
Staff remuneration 383,637,195.81 408,272,551.84
Amortization charge of intangible asset 42,033,555.98 32,383,255.26
Fixed assets depreciation expenses 233,237,775.08 196,684,292.39
Business entertainment 8,440,639.17 5,658,891.41
Vehicle cost 13,840,430.78 15,492,070.51
Environmental protection cost 14,482,753.74 11,850,664.75
Office expenses 12,242,075.43 11,545,260.18
Agency fees 26,294,122.66 20,806,234.27
Travel expenses 12,128,511.44 6,803,278.43
Rental fee 66,463,358.90 71,152,170.94
Repair costs 117,276,476.32 68,902,650.22
Property insurance premium 31,318,221.28 21,782,408.76
Transportation and storage charges 50,588,101.98 45,540,587.48
Other 75,284,439.96 53,279,291.45
Total 1,087,267,658.53 970,153,607.89
Note 6.53 R&D expenditure
Item Amount incurred in current year Amount incurred in previous year
Direct input cost 533,064,525.62 219,624,282.26
Staff remuneration 88,592,180.79 85,841,604.65
Depreciation charge 22,475,912.22 12,299,524.80
Technical development service fee 6,552,285.65 11,734,405.96
Other expenses 36,295,313.70 22,469,490.26
Total 686,980,217.98 351,969,307.93
Note 6.54 Financial expenses
Item Amount incurred in current year Amount incurred in previous year
Interest expense 2,098,777,291.01 1,857,374,805.92
Minus: Interest income 166,560,838.30 185,855,314.84
Profit or loss on exchange -26,965,852.84 206,643,585.24
Bank charges 228,325,949.07 125,987,241.29
Total 2,133,576,548.94 2,004,150,317.61
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Hengyi Petrochemical 2021 Annual Report
Note 6.55 Other incomes
Amount incurred in Amount incurred Amount of non-recurring gains
Item
current year in previous year and losses of the current year
Government grants related to daily activities
330,605,860.76 369,221,330.90 277,170,340.76
of the Company
Return of charges for withholding and
1,658,393.07 2,595,730.83 0.00
remitting individual income tax for others
Total 332,264,253.83 371,817,061.73 277,170,340.76
Among them, the details of government grants related to the daily activities of the Company are as
follows:
Amount of
Related to
Amount incurred in Amount incurred non-recurring gains
Item assets/ Related
current year in previous year and losses of the
to income
current year
Related to
Government grants related to assets 15,136,473.43 12,088,146.74 15,136,473.43
assets
“Leader programme” policy support Related to
40,558,800.00 0.00 40,558,800.00
rewards income
Related to
Rewards for high-tech enterprise 630,000.00 0.00 630,000.00
income
Related to
Environmental protection subsidies 17,771,700.00 12,254,966.00 17,771,700.00
income
Related to
Rewards for infrastructure 18,053,400.00 11,672,300.00 18,053,400.00
income
Subsidies for merger and Related to
5,000,000.00 0.00 5,000,000.00
reorganization of enterprises income
Subsidies for scientific and Related to
93,325,163.22 101,523,400.00 93,325,163.22
technological innovation income
Related to
Rewards for trade companies 18,527,895.20 9,810,177.00 18,527,895.20
income
Subsidies for high-quality enterprise Related to
900,000.00 2,302,200.00 900,000.00
management income
Rewards for issuance of enterprise Related to
2,000,000.00 1,000,000.00 2,000,000.00
bonds income
Related to
Reduction and refund of taxes 53,583,569.78 53,069,661.71 148,049.78
income
Related to
Employment-related subsidies 5,775,947.22 20,181,341.01 5,775,947.22
income
Related to
Policy support funds 38,965,364.85 16,684,391.98 38,965,364.85
income
Related to
Intelligent manufacturing support fund 90,000.00 38,890,660.00 90,000.00
income
Related to
Subsidies for the return of headquarters 13,665,500.00 18,715,600.00 13,665,500.00
income
Special fund for promoting industrial 0.00 16,154,945.00 0.00 Related to
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Hengyi Petrochemical 2021 Annual Report
Amount of
Related to
Amount incurred in Amount incurred non-recurring gains
Item assets/ Related
current year in previous year and losses of the
to income
current year
restructuring income
Subsidies for resumption of work and Related to
0.00 49,337,031.84 0.00
production after epidemic income
Related to
Other 6,622,047.06 5,536,509.62 6,622,047.06
income
Total 330,605,860.76 369,221,330.90 277,170,340.76 -
Note: Please refer to Note 6.40 “Deferred Income” for details of government grants related to assets.
Note 6.56 Investment income
Amount incurred Amount incurred
Item
in current year in previous year
Long-term equity investment income accounted by the equity method 625,843,764.66 1,326,696,982.37
Investment income from disposal of long-term equity investment 5,800,392.52 33,595,128.40
Investment income received from the disposal of transactional financial assets 437,755,991.43 331,329,598.58
Total 1,069,400,148.61 1,691,621,709.35
Note 6.57 Gain from changes of fair value
Amount incurred in Amount incurred in
Source of gains from changes of fair value
current year previous year
Financial assets at fair value through profit or loss 45,191,254.26 155,023,482.10
Of which: gains from changes of fair value derived from
45,191,254.26 155,301,702.10
derivative financial instruments
Financial liabilities measured by fair value and whose changes
-1,039,942.85 1,399,903.27
included in current profits and losses
Hedging operations -1,179,643.73 0.00
Total 42,971,667.68 156,423,385.37
Note 6.58 Impairme nt loss on credit assets
Item Amount incurred in current year Amount incurred in previous year
Bad debt losses of receivables 553,207.17 -579,235.36
Bad debt loss from other receivables -470,449.11 14,491,569.54
Total 82,758.06 13,912,334.18
Note 6.59 Impairme nt loss on assets
Item Amount incurred in current year Amount incurred in previous year
Loss due to decline in value -133,864,415.82 -18,111,009.54
Loss due to impairment of fixed assets -13,112,874.03 0.00
Total -146,977,289.85 -18,111,009.54
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Note 6.60 Income from the disposal of assets
Amount incurred in Amount incurred in Amount of non-recurring gains and
Item
current year previous year losses of the current year
Gains or losses from
-16,639,589.77 -4,357,509.27 -16,639,589.77
disposal of fixed assets
Gains or losses from
17,953.45 0.00 17,953.45
disposal of intangible assets
Total -16,621,636.32 -4,357,509.27 -16,621,636.32
Note 6.61 Non-operating income
Amount of
Amount Amount
non-recurring
Item incurred in incurred in
gains and losses of
current year previous year
the current year
Gains from scrapping of non-current assets 6,027.52 213,667.29 6,027.52
Where: fixed asset 6,027.52 213,667.29 6,027.52
Intangible assets 0.00 0.00 0.00
Government grants unrelated to daily activities of the Company 668,904.68 1,967,561.84 668,904.68
Indemnity and fines income 8,419,939.76 7,266,071.78 8,419,939.76
Non-payable current accounts 18,342,279.33 3,074,128.35 18,342,279.33
Other 4,590,072.98 1,706,139.22 4,590,072.98
Total 32,027,224.27 14,227,568.48 32,027,224.27
Among them, the details of government grants are as follows:
Amount incurred in Amount incurred in Related to assets /
Subsidized Items
current year previous year Related to income
IRAS Jobs Support Scheme - COVID19 568,096.34 1,967,561.84 Related to income
Others 100,808.34 0.00 Related to income
Total 668,904.68 1,967,561.84 -
Note 6.62 Non-operating expenses
Amount of non-recurring
Amount incurred in Amount incurred in
Item gains and losses of the
current year previous year
current year
Loss on disposal of non-current assets 1,719,238.76 2,597,420.63 1,719,238.76
Where: fixed asset 1,719,238.76 2,597,420.63 1,719,238.76
Intangible assets 0.00 0.00 0.00
Expenditure of liquidated damages 0.00 1,776,430.69 0.00
Donation expenditure 16,325,574.78 12,763,598.45 16,325,574.78
Overdue fine and penalty 911,181.49 422,111.29 911,181.49
Extraordinary loss 244,316.31 2,380,975.92 244,316.31
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Amount of non-recurring
Amount incurred in Amount incurred in
Item gains and losses of the
current year previous year
current year
Others 511,786.27 1,002,557.89 511,786.27
Total 19,712,097.61 20,943,094.87 19,712,097.61
Note 6.63 Income tax expenses
Note 6.63.1 Table of income tax expenses
Item Amount incurred in current year Amount incurred in previous year
Income tax expenses in current year 367,901,689.65 684,111,777.20
Deferred income tax expenses -23,311,243.62 20,855,674.41
Total 344,590,446.03 704,967,451.61
Note 6.63.2 Adjustment process of accounting profit and income tax expense
Item Amount incurred in current year
Total profit 4,302,889,568.29
Income tax expense at legal/applicable tax rate 1,075,722,392.07
Impact of the different tax rate applicable to subsidiaries -652,429,804.44
Impact of income tax adjusted in previous period -7,935,309.42
Impact of non-taxable income -90,552,553.98
Impact of non-deductible cost, expense and loss 8,745,391.42
Impact of using deductible loss previously not recognized as deferred income tax
-79,219,440.72
assets
Impact of deductible temporary differences or deductible losses recognized as
133,352,590.22
deferred income tax assets at the end of the year
Tax rate adjustments lead to changes in balance of deferred income tax
0.00
assets/liabilities at the beginning the period
The impact of weighted deduction of costs, expenses and other deductions
-39,978,145.86
allowed by tax laws
Others -3,114,673.26
Income tax expenses 344,590,446.03
Note 6.64 Other comprehensive income
Please refer to Note 6.45 for details.
Note 6.65 Items in cash flow statement
Note 6.65.1 Cash received from other related operating activities
Amount incurred in current Amount incurred in
Item
year previous year
Account current 32,860,194.35 1,072,000,000.00
Cash deposit 15,225,395.26 38,572,498.73
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Hengyi Petrochemical 2021 Annual Report
Amount incurred in current Amount incurred in
Item
year previous year
Government grants 328,935,252.74 438,096,929.36
Interest income 150,359,760.74 131,442,106.44
Indemnities and fines 8,419,939.76 7,266,071.78
Judicial freezing 7,336,220.00 4,279,494.72
Others 11,441,776.27 5,062,746.91
Hedging instrument margin 0.00 174,328,394.73
Total 554,578,539.12 1,871,048,242.67
Note 6.65.2 Cash paid for other related operating activities
Amount incurred in previous
Item Amount incurred in current year
year
Account current 50,990,396.24 1,097,488,830.85
Office expenses 13,338,968.05 12,164,681.81
Import and export expenses 77,410,944.06 87,223,211.47
Bank service charges 224,690,871.29 125,987,241.29
Business entertainment 10,060,273.88 6,957,852.64
Vehicle cost 15,400,166.54 16,520,348.00
Environmental protection cost 14,482,753.74 11,850,664.75
Security deposit 95,747,559.13 7,819,343.73
Operating license fee 11,025,525.45 1,709,125.55
Intermediary agency expenses 24,425,724.39 20,806,234.27
Travel expense 15,478,849.87 10,746,271.87
Rental fee 66,464,158.90 71,219,105.68
Judicial frozen amount 9,596,271.15 1,881,515.45
Margin for arbitrage tool 0.00 996,873,170.73
Repair costs 117,276,476.32 68,902,650.22
Property insurance premium 31,318,221.28 21,782,408.76
Transportation, storage and handling charges 72,085,821.87 53,665,747.24
Donation expenditure 16,325,574.78 12,763,598.45
Others 81,900,679.08 71,837,789.02
Total 948,019,236.02 2,698,199,791.78
Note 6.65.3 Cash received from other related investing activities
Amount incurred in Amount incurred in
Item
current year previous year
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Hengyi Petrochemical 2021 Annual Report
Amount incurred in Amount incurred in
Item
current year previous year
Interest income from entrusted loans and related party funds borrowing 52,406,117.49 43,496,979.18
Total (principal + interest of capital lent by Wan Yong) 0.00 511,829,486.67
Total 52,406,117.49 555,326,465.85
Note 6.65.4 Cash paid for other related investing activities
Amount incurred in current Amount incurred in
Item
year previous year
L/G deposit 276,000,000.00 0.00
Net cash received by disposal of subsidiary (negative) 14,354,735.85 0.00
Total 290,354,735.85 0.00
Note 6.65.5 Cash received from other related financing activities
Amount incurred in current Amount incurred in
Item
year previous year
Recovering monetary capital of financial pledge 977,985,563.01 953,452,966.94
Collection of financing leaseback 1,300,000,000.00 396,000,000.00
Funds borrowing and lending of Hengyi Group 3,369,661,700.09 553,420,000.00
Others 14,314,978.66 6,783,381.50
Total 5,661,962,241.76 1,909,656,348.44
Note 6.65.6 Cash paid for other related financing activities
Amount incurred in Amount incurred in
Item
current year previous year
Monetary capital of financial pledge 1,322,103,655.96 540,727,965.35
Repayment of the principal and interest of Hengyi Group’s borrowed funds 3,369,661,700.09 574,520,000.00
Share repurchase 368,331,313.73 350,013,157.87
Rental expenses paid for financing leaseback 854,479,952.84 782,309,036.86
Loan handling fee 10,290,077.78 25,300,054.45
Rental fee paid for lease liabilities 35,555,412.10 0.00
Others 5,277,897.56 11,333,890.61
Total 5,965,700,010.06 2,284,204,105.14
Note 6.66 Supple mentary information of cash flow statement
Note 6.66.1 Supplementary information of cash flow statement
Amount incurred in current Amount incurred in
Supplementary information
year previous year
1. Reconciliation of net profit to cash flow from
operating activities:
Net profit 3,958,299,122.26 3,814,601,983.90
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Amount incurred in current Amount incurred in
Supplementary information
year previous year
Add: assets impairment provision 146,977,289.85 18,111,009.54
Impairment loss on credit assets -82,758.06 -13,912,334.18
Depreciation of fixed assets 2,749,483,318.60 2,219,594,687.78
Depreciation of right-of-use assets 35,985,260.79 -
Intangible assets amortization 75,354,585.36 82,927,125.36
Amortization of long-term deferred expenses 91,023,892.22 112,914,481.65
Loss from the disposal of fixed assets, intangible assets
16,621,636.32 4,357,509.27
and other long-term assets (income to be marked by “-”)
Loss from fixed assets retirement (income be marked
1,713,211.24 2,383,753.34
by “-”)
Loss from changes of fair value (income to be marked
-42,971,667.68 -156,423,385.37
by “-”)
Financial expenses (income to be marked by “-”) 1,688,684,989.15 2,199,804,202.55
Loss on investments (income to be marked by “-”) -1,069,400,148.61 -1,691,621,709.35
Decrease in deferred income tax assets (increase to be
-457,377.92 30,798,668.24
marked by “+”)
Increase in deferred income tax liabilities (decrease to
-22,853,865.70 -11,892,474.98
be marked by “-”)
Decrease in inventory (increase to be marked by “-”) -2,514,129,620.10 -515,731,328.66
Decrease in operating receivables (increase to be
-3,745,742,471.25 1,025,906,081.61
marked by “-”)
Increase in operating payables (decrease to be marked
6,392,922,234.48 -2,110,038,907.75
by “-”)
Others -6,556,111.39 1,993,415.00
Net cash flow from operating activities 7,754,871,519.56 5,013,772,777.95
2. Significant investment and financing activities
involving no cash receipts and disbursements:
Conversion of 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 period ended 10,244,736,951.84 7,186,325,948.17
Less: balance of cash at the beginning of the year 7,186,325,948.17 4,473,080,680.52
Add: balance of cash equivalents at the end of the year 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 3,058,411,003.67 2,713,245,267.65
Note 6.66.2 Net cash on subsidiary disposal received in current period
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Item Amount
Cash or cash equivalents on subsidiary disposal received in current period 210,000,000.00
Of which: Ningbo Hengyi Industry Co., Ltd. 210,000,000.00
Hangzhou Jingxin Supply Chain Management Co., Ltd. 0.00
Minus: Cash and cash equivalents held by subsidiary on the date of losing control right 51,220,378.43
Wherein: Ningbo Hengyi Industry Co., Ltd. 36,865,642.58
Hangzhou Jingxin Supply Chain Management Co., Ltd. 14,354,735.85
Net cash received by subsidiary disposal 158,779,621.57
Note 6.66.3 Composition of cash and cash equivalents
Ending balance of Ending balance of
Item
current period previous period
I. Cash 10,244,736,951.84 7,186,325,948.17
Of which: Cash on hand 1,296,711.32 1,351,988.81
Bank deposit ready for payment 9,525,027,347.46 6,319,478,358.41
Other monetary capital ready for payment 718,412,893.06 865,495,600.95
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 three (3) months 0.00 0.00
III. Balance of cash and cash equivalents at the end of the period 10,244,736,951.84 7,186,325,948.17
Of which: cash & cash equivalents with restricted right to use
0.00 0.00
for parent company or subsidiaries under the Group
Note 6.67 Assets with restricted ownership or right to use
Item Ending book value of current period Reason for restriction
Monetary capital 4,067,592,301.51 Security deposit
Monetary capital 10,387,540.47 Judicial freeze
Notes receivable and receivables financing 341,723,232.79 Acceptance bills pledged
Long-term equity investments 5,649,517,951.90 Mortgage loan
After-sale leaseback
Fixed assets 2,778,519,991.94
finance lease
Fixed assets 24,595,917,514.15 Mortgage loan
Intangible assets 826,376,620.82 Mortgage loan
Construction in progress 1,785,315,463.26 Mortgage loan
Intangible assets 18,490.57 Finance lease guarantee
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Item Ending book value of current period Reason for restriction
Inventory 1,014,909,209.79 Mortgage loan
Total 41,070,278,317.20 -
Note 6.68 Monetary items in foreign currencies
Monetary items in foreign currencies
Ending balance in foreign Conversion Ending balance in
Item
currency exchange rate RMB
Monetary funds
Including: HKD 72,444.11 0.8176 59,230.31
USD 547,247,784.70 6.3757 3,489,087,700.91
EUR 14,593.87 7.2197 105,363.37
BND 27,826,214.79 4.7179 131,281,298.76
SGD 1,400,856.72 4.7179 6,609,092.42
Accounts receivable
Of which: USD 840,996,762.49 6.3757 5,361,943,058.61
BND 22,453,475.80 4.7179 105,933,253.48
Other receivables
USD 6,236,866.48 6.3757 39,764,389.61
BND 4,584,383.96 4.7179 21,628,665.08
SGD 254,587.35 4.7179 1,201,117.66
Short-term loans
Of which: USD 1,227,099,050.80 6.3757 7,823,615,418.19
BND 51,695,100.00 4.7179 243,892,312.29
Accounts payable
Of which: USD 1,154,481,981.82 6.3757 7,360,630,771.49
EUR 65,600,704.75 7.2197 473,617,408.08
BND 10,642,043.33 4.7179 50,208,096.22
Other payables
Of which: USD 201,240.96 6.3757 1,283,051.99
BND 593,591.35 4.7179 2,800,504.63
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Ending balance in foreign Conversion Ending balance in
Item
currency exchange rate RMB
Non-current liabilities due within one year
Of which: USD 119,955,234.38 6.3757 764,798,587.84
BND 1,212,324.09 4.7179 5,719,623.82
Lease liabilities
Wherein: BND 80,360,757.05 4.7179 379,134,015.70
Long-term payables
Of which: USD 4,086,552.93 6.3757 26,054,635.52
Long-term loans
Of which: USD 943,120,000.00 6.3757 6,013,050,184.00
EUR 113,805,069.00 7.2197 821,638,456.66
Long-term receivables
Of which: USD 518,788.46 6.3757 3,307,639.58
Note 6.69 Hedge
Please refer to Note 6.3 “Derivative Financial Assets”.
Note 6.70 Governme nt grants
Basic information about government grants
Representatio Amount included in
Category Amount
n Item current profit and loss
Government grants related to income and used to 315,433,822.56 Other incomes 315,433,822.56
compensate the company for related costs or losses Non-operating
incurred. 668,904.68 668,904.68
income
Government grants related to income and used to
Deferred
compensate related costs or losses of the Company in 3,878,200.00 35,564.77
income
future periods
Deferred
Government grants related to assets 220,774,798.48 15,136,473.43
income
Total 540,755,725.72 331,274,765.44
Note 7 Changes in the Scope of Consolidation
Note 7.1Combination of businesses under common control
In current period, the Company has no combination of businesses under the same control.
Note 7.2Disposal of subsidiaries
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Hengyi Petrochemical 2021 Annual Report
A single disposal of investment in a subsidiary company when the control right is lost
The difference
between the disposal
price and the share
Basis for
Equity Equity of the net assets of
Equity disposal Time point of determining time
Name of subsidiary disposal disposal the subsidiary at the
price loss of control point of losing
ratio (%) method consolidated
control right
statement level
corresponding to the
disposal investment
Hangzhou Jingxin
Supply Chain 0.00 11.00 Transfer 04/03/2021 Equity delivery -932,500.42
Management Co., Ltd.
Ningbo Hengyi Industry
210,000,000.00 100.00 Transfer 06/30/2021 Equity delivery 6,830,067.12
Co., Ltd.
(Contd.)
Proportion Proportion of Proportion of Proportion of Proportion of Proportion of
of remaining remaining remaining remaining equity remaining equity on
remaining equity on the equity on the equity on the on the date of loss the date of loss of
Name of subsidiary equity on date of loss of date of loss of date of loss of of control (%) control (%)
the date of control (%) control (%) control (%)
loss of
control (%)
Hangzhou Jingxin
Trading price
Supply Chain 49.00 4,167,923.62 4,167,923.62 0.00 0.00
agreed
Management Co., Ltd.
Ningbo Hengyi Industry
0.00 - - - - 0.00
Co., Ltd.
Note: Haining Yixin Logistics Co., Ltd. is a wholly-owned subsidiary of Hangzhou Jingxin Supply
Chain Management Co., Ltd. As the Company has lost the right of control over Hangzhou Jingxin
Supply Chain Management Co., Ltd., Haining Yixin Logistics Co., Ltd. will not be recorded into the
Company’s consolidation scope any more.
Note 7.3Change of consolidation scope caused by other reasons
The Company has established three (3) subsidiaries this year as follows:
(1) Zhejiang Xiaoyi Supply Chain Management Co., Ltd. was established by the Company’s
subsidiary – Zhejiang Hengyi Petrochemical Sales Co., Ltd., shareholding ratio: 100%.
(2) Haining Hengqi Environmental Protection Technology Co., Ltd. was established by the
Company’s subsidiary – Haining Hengyi New Materials Co., Ltd., shareholding ratio: 100%.
(3) Ningbo Shengmao Trading Co., Ltd. was established by the Company’s subsidiary – Hong Kong
Yisheng Petrochemical Investment Co., Ltd., shareholding ratio: 100%.
In current period, therefore, above three (3) holding subsidiaries recorded into the scope of
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Hengyi Petrochemical 2021 Annual Report
consolidation are increased in the Company.
Note 7.4Original subsidiaries that are no longer include d in current period
Proportion of
Shareholding
Place of Nature of voting rights of Reasons for no longer becoming
Name of subsidiary ratio of parent
registration business the parent a subsidiary
company (%)
company (%)
Hangzhou Jingxin Supply Supply chain
Chain Management Co., Hangzhou City management 51.00 51.00 Loss of control right
Ltd. services
Ningbo Hengyi Industry Commerce and
Ningbo City 100.00 100.00 Loss of control right
Co., Ltd. trade
Continued
Total assets at the Total liabilities at Owner’s equity
Total assets on Total liabilities Owner’s equity
end of previous the end of at the end of
Name of subsidiary the date of on the date of on the date of
year previous year previous year
disposal disposal disposal
Hangzhou Jingxin Supply
Chain Management Co., 425,889,608.99 417,383,642.41 8,505,966.58 78,768,640.92 78,800,200.00 -31,559.08
Ltd.
Ningbo Hengyi Industry
1,318,687,733.80 1,115,517,800.92 203,169,932.88 1,284,069,945.02 1,229,853,962.61 54,215,982.41
Co., Ltd.
Continued
Income from the beginning of the Total cost from the beginning of Net profit from the beginning of
Name of subsidiary
year to the date of disposal the year to the date of disposal the year to the date of disposal
Hangzhou Jingxin Supply
Chain Management Co., 14,271,610.83 3,227,670.96 8,537,525.66
Ltd.
Ningbo Hengyi Industry
7,286,446,345.96 7,284,027,662.80 -16,469,360.28
Co., Ltd.
Note 8 Equities in Other Equities
Note 8.1Equities in subsidiaries
Note 8.1.1 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 Petrochemical Co., Hangzhou Hangzhou Establishment or
chemical fiber 100.00 0.00
Ltd. City City investment
products
Manufacturing of Combination of
Hangzhou Hangzhou
Zhejiang Hengyi Polymer Co., Ltd. chemical fiber 0.00 60.00 businesses under the
City City
products same control
Zhejiang Yisheng Petrochemical Co., Ningbo City Ningbo City Manufacturing of 0.00 70.00 Combination of
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Hengyi Petrochemical 2021 Annual Report
Shareholding ratio
Main place of Place of
Name of subsidiary Nature of business (%) Method of acquisition
business registration
Direct Indirect
Ltd. petrochemical businesses under the
products same control
Zhejiang Yixin Chemical Fiber Co. Hangzhou Hangzhou Establishment or
Commerce and trade 0.00 70.00
Ltd. City City investment
Hong Kong Yisheng Petrochemical Establishment or
Hong Kong Hong Kong Trade and consulting 0.00 70.00
Investment Co., Ltd. investment
Manufacturing of
Zhejiang Hengyi High-Tech Hangzhou Hangzhou Establishment or
chemical fiber 0.00 90.67
Materials Co., Ltd. City City investment
products
Establishment or
Ningbo Hengyi Trading Co., Ltd. Ningbo City Ningbo City Commerce and trade 0.00 70.00
investment
Hong Kong Tianyi International Trade and Establishment or
Hong Kong Hong Kong 0.00 100.00
Holding Co., Ltd. investment investment
Good Park 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 the
products same control
Combination of
Ningbo Hengyi Engineering Engineering
Ningbo City Ningbo City 0.00 70.00 businesses under the
Management Co. Ltd. management
same control
Hengyi Industry International Co., Establishment or
Singapore Singapore Commerce and trade 0.00 70.00
Ltd. investment
Hengyi Petrochemical International
Establishment or
Co., Ltd. Singapore Singapore Commerce and trade 0.00 100.00
investment
(Singapore)
Zhejiang Hengyi Petrochemical Hangzhou Hangzhou Establishment or
Commerce and trade 0.00 100.00
Sales Co. Ltd. City City investment
Manufacturing of
Haining Hengyi New Materials Co., Establishment or
Haining City Haining City chemical fiber 0.00 100.00
Ltd. investment
products
Electricity & heat
Haining Hengyi Thermal Power Co., Establishment or
Haining City Haining City production and 0.00 90.00
Ltd. investment
supply
Manufacturing of
Establishment or
Suqian Yida New Materials Co., Ltd. Suqian City Suqian City chemical fiber 0.00 88.42
investment
products
Quanzhou Quanzhou Manufacturing of
Establishment or
Fujian Yijin Chemical Fiber Co. Ltd. City, Fujian City, Fujian chemical fiber 0.00 90.00
investment
Province Province products
Wrappage
Shaoxing Shengong Packaging Co., Shaoxing Establishment or
Shaoxing City production and 0.00 51.00
Ltd. City investment
processing
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Hengyi Petrochemical 2021 Annual Report
Shareholding ratio
Main place of Place of
Name of subsidiary Nature of business (%) Method of acquisition
business registration
Direct Indirect
Combination of
Hangzhou Hangzhou Logistics
Zhejiang Hengyi Logistics Co., Ltd. 0.00 100.00 businesses under the
City City transportation
same control
Zhejiang Hengyi International Trade Hangzhou Hangzhou Establishment or
Commerce and trade 100.00 0.00
Co. Ltd. City City investment
Hangzhou Hangzhou Establishment or
Zhejiang Hengkai Energy Co. Ltd. Commerce and trade 0.00 60.00
City City investment
Zhejiang Hengyi Engineering Hangzhou Hangzhou Engineering Establishment or
100.00 0.00
Management Co. Ltd. City City management investment
Manufacturing of
Zhejiang Henglan Technology Co., Hangzhou Hangzhou Establishment or
chemical fiber 100.00 0.00
Ltd. City City investment
products
Manufacturing of Combination of
Jiaxing Yipeng Chemical Fiber Co.,
Jiaxing City Jiaxing City chemical fiber 100.00 0.00 businesses under the
Ltd.
products same control
Manufacturing of Combination of
Taicang Yifeng Chemical Fiber Co.,
Taicang City Taicang City chemical fiber 100.00 0.00 businesses under the
Ltd.
products same control
Manufacturing of Combination of
Zhejiang Shuangtu New Materials Hangzhou Hangzhou
chemical fiber 100.00 0.00 businesses under the
Co., Ltd. City City
products same control
Manufacturing of Combination of
Hangzhou Yijing Chemical Fiber Hangzhou Hangzhou
chemical fiber 0.00 100.00 businesses under the
Co., Ltd. City City
products same control
Hong Kong Hengyi Logistics Co., Logistics Establishment or
Hong Kong Hong Kong 0.00 100.00
Ltd. transportation investment
Hengyi International Logistics Co., Logistics Establishment or
Singapore Singapore 0.00 100.00
Ltd. transportation investment
Zhejiang Yizhi Information Hangzhou Hangzhou Software and IT Establishment or
0.00 100.00
Technology Co. Ltd. City City service industry investment
Haining Junbo Shengming Trading Establishment or
Haining City Haining City Commerce and trade 0.00 100.00
Co., Ltd. investment
Manufacturing of
Hangzhou Yitong New Materials Hangzhou Hangzhou Establishment or
chemical fiber 0.00 60.00
Co., Ltd. City City investment
products
Shaoxing Logistics Establishment or
Shaoxing Hengyi Logistics Co., Ltd. Shaoxing City 0.00 100.00
City transportation investment
Qinzhou City, Qinzhou City,
Guangxi Hengyi Environmental Science and Establishment or
Guangxi Guangxi 0.00 100.00
Technology Co., Ltd. technology service investment
Province Province
Zhejiang Hengyi Hanlin Real Estate Hangzhou Hangzhou Commercial service Establishment or
0.00 75.00
Co. Ltd. City City industry investment
Hainan Hengjing Trading Co. Ltd. Hainan Hainan Commerce and trade 0.00 100.00 Establishment or
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Hengyi Petrochemical 2021 Annual Report
Shareholding ratio
Main place of Place of
Name of subsidiary Nature of business (%) Method of acquisition
business registration
Direct Indirect
Province Province investment
Qinzhou City, Qinzhou City,
Guangxi Hengyi Shunqi Trading Establishment or
Guangxi Guangxi Commerce and trade 0.00 100.00
Co., Ltd. investment
Province Province
Manufacturing of
Haining Lantai New Materials Co., Establishment or
Haining City Haining City chemical fiber 0.00 74.00
Ltd. investment
products
Establishment or
Jiaxing Hengyu Trading Co., Ltd. Jiaxing City Jiaxing City Commerce and trade 0.00 100.00
investment
Qinzhou City, Qinzhou City, Manufacturing of Combination of
Guangxi Hengyi New Materials Co.,
Guangxi Guangxi chemical fiber 0.00 100.00 businesses under the
Ltd.
Province Province products same control
Zhejiang Xiaoyi Supply Chain
Management Co., Ltd. (Zhejiang Hangzhou Hangzhou Commercial service Establishment or
0.00 100.00
Xiaoyi Supply Chain Management City City industry investment
Co., Ltd.)
Sci-tech extension
Haining Hengqi Environmental and Establishment or
Haining City Haining City 0.00 100.00
Protection Technology Co., Ltd. application service investment
industry
Establishment or
Ningbo Shengmao Trading Co., Ltd. Ningbo City Ningbo City Commerce and trade 0.00 70.00
investment
Note 8.1.2 Important non-wholly owned subsidiaries
Gains and losses
Shareholding ratio Dividends declared to Balance of minority
attributable to minority
Name of subsidiary of minority minority shareholders in interest at the end of
shareholders in current
shareholders (%) current period the period
year
Ningbo Hengyi Trading Co., Ltd. 30.00 -68,871,147.09 15,750,000.00 152,717,835.39
Zhejiang Hengyi Polymer Co., Ltd. 40.00 43,807,532.06 80,000,000.00 367,011,967.17
Zhejiang Yisheng Petrochemical
30.00 114,801,831.03 0.00 2,804,696,869.04
Co., Ltd.
Hengyi Industries Sdn. Bhd. 30.00 416,999,254.81 26,819,520.00 2,788,676,410.79
Zhejiang Hengyi High-Tech
9.33 31,783,321.09 35,486,111.11 464,480,779.02
Materials Co., Ltd.
Note 8.1.3 Major financial information of important non-wholly owned subsidiaries Currency: RMB 10,000
Ending balance of current period
Name of subsidiary Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liabilities
Ningbo Hengyi Trading Co., Ltd. 55,810.48 289,585.73 345,396.21 281,265.96 0.00 281,265.96
Zhejiang Hengyi Polymer Co., Ltd. 221,425.25 71,922.42 293,347.67 197,246.45 348.23 197,594.68
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Hengyi Petrochemical 2021 Annual Report
Name of subsidiary Ending balance of current period
Zhejiang Yisheng Petrochemical
1,392,502.93 401,523.04 1,794,025.97 790,186.03 90,707.08 880,893.11
Co., Ltd.
Hengyi Industries Sdn. Bhd. 1,449,167.73 2,604,312.88 4,053,480.61 2,272,381.31 931,734.37 3,204,115.68
Zhejiang Hengyi High-Tech
740,333.77 518,461.75 1,258,795.53 682,879.60 78,080.15 760,959.75
Materials Co., Ltd.
(Contd.)
Ending balance of previous period
Name of subsidiary Current Non-current Current Non-current
Total assets Total liabilities
assets 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
1,115,094.69 450,392.51 1,565,487.20 619,229.88 74,734.77 693,964.65
Co., 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.)
Ending balance of current period Ending balance of previous period
Cash
Cash
Name of subsidiary Total inflow Total
Operating Operating inflow from
Net profit comprehensive from Net profit comprehensive
income income operating
income operating income
activities
activities
Ningbo Hengyi Trading
1,332,702.94 -22,957.05 -23,059.95 87,274.06 1,431,043.73 67,946.74 68,567.00 71.32
Co., Ltd.
Zhejiang Hengyi Polymer 81,745.69
381,008.64 10,951.88 10,951.88 349,464.95 10,768.95 10,768.95 49,137.40
Co., Ltd.
Zhejiang Yisheng
3,030,842.32 38,267.28 41,610.31 29,567.27 2,352,467.70 109,630.01 106,765.78 222,553.67
Petrochemical Co., Ltd.
Hengyi Industries Sdn.
3,594,810.02 124,738.48 115,121.98 337,126.12 2,321,258.54 47,747.33 -34,060.82 168,216.90
Bhd.
Zhejiang Hengyi
High-Tech Materials Co., 1,320,748.04 34,065.72 40,450.19 137,858.39 988,395.09 32,287.47 22,920.21 -186,077.82
Ltd.
Note 8.2Trade that still controls the subsidiary after its owner's equity share changes
Note 8.2.1 On July 16, 2021, Suqian Industrial Development Fund (limited partnership)
(hereinafter referred to as “Suqian Development Fund”) contributed an amount of RMB 180 million
to Suqian Yida New Material Co., Ltd. (hereinafter referred to as “Suqian Yida”) – a subsidiary of
the Company. Suqian Yida’s registered capital is increased by RMB 180 million. After such capital
increase, Suqian Development Fund has held 11.58% stocks of Suqian Yida. In accordance with
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Hengyi Petrochemical 2021 Annual Report
related capital increase agreement, after such capital increase, Suqian Development Fund will enjoy
Suqian Yida’s net assets by its shareholding ratio.
Note 8.2.2 In accordance with the agreement signed by Hengyi Limited – a subsidiary of the
Company and Zhejiang Yitong New Materials Co., Ltd. (hereinafter referred to as “Zhejiang Yitong”)
in December 2021, Zhejiang Yitong shall transfer its 25% stocks of Fujian Yijin Chemical Fiber Co.,
Ltd. (hereinafter referred to as “Fujian Yijin”) – a subsidiary of the Company - to Hengyi upon the
transfer price of RMB 70.72 million. Hengyi Limited already paid all equity transfer funds in
December 2021. After the completion of equity transfer, the Company will hold 90% stocks of
Fujian Yijin.
Note 8.3Equities in joint ventures and associated enterprises
Note 8.3.1 Important joint ventures or associates
Name of joint venture and Name of Name of joint Name of joint venture and Shareholding
Accounting treatment
associated enterprise joint venture venture and associated enterprise ratio (%)
methods of joint
and associated
venture or associated
associated enterprise Direct Indirect
enterprise
enterprise
Chemical raw materials and
Zhejiang Baling Hengyi
Xiaoshan Xiaoshan chemical products 0.00 50.00 Equity method
Caprolactam Co., Ltd.
manufacturing industry
Dalian Yisheng Investment
Dalian Dalian Trade and investment 0.00 30.00 Equity method
Co., Ltd.
Chemical raw materials and
Hainan Yisheng
Hainan Hainan chemical products 0.00 50.00 Equity method
Petrochemical Co., Ltd.
manufacturing industry
China Zheshang Bank Co.,
Hangzhou Hangzhou Finance 0.00 3.52 Equity method
Ltd.
Chemical raw materials and
Zhejiang Yisheng New
Ningbo Ningbo chemical products 0.00 49.00 Equity method
Materials Co., Ltd.
manufacturing industry
Note: The Company holds 3.52% of shares of China Zheshang Bank Co., Ltd., and has assigned
representatives to its BOD, 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 8.3.2 Major financial information of important associated enterprises
Unit: RMB 10,000
Ending balance of current Ending balance of previous
period/amount incurred in current period/amount incurred in current
Item
period period
Caprolactam Hainan Yisheng Caprolactam Hainan Yisheng
Current assets 180,585.16 569,269.63 128,815.54 472,043.34
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Hengyi Petrochemical 2021 Annual Report
Ending balance of current Ending balance of previous
period/amount incurred in current period/amount incurred in current
Item
period period
Caprolactam Hainan Yisheng Caprolactam Hainan Yisheng
Wherein: cash and cash
16,799.78 83,224.96 18,410.34 71,907.83
equivalents
Non-current assets 520,779.04 576,141.87 455,214.59 549,701.51
Total assets 701,364.20 1,145,411.50 584,030.14 1,021,744.86
Current liabilities 381,545.90 580,110.26 312,232.77 552,299.55
Non-current liabilities 58,417.43 83,564.34 42,835.33 71,720.27
Total liabilities 439,963.33 663,674.60 355,068.10 624,019.82
Minority shareholders’ equity 0.00 0.00 0.00 0.00
Shareholders’ equity attributable
261,400.87 481,736.89 228,962.04 397,725.04
to parent company
Net assets calculated by
130,700.43 265,868.45 114,481.02 176,496.23
shareholding ratio
Events adjusted 0.00 0.00 0.00 0.00
- Goodwill 0.00 0.00 0.00 0.00
- Unrealized profit of internal
0.00 -725.76 0.00 -829.44
transaction
- Others 2,010.08 9,733.73 2,010.08 0.00
Book value of equity investment
132,710.51 274,876.42 116,491.10 175,666.79
in joint ventures
Fair value of cooperative
enterprise equity investment with 0.00 0.00 0.00 0.00
public quotation
Operating income 788,167.12 1,680,459.55 537,192.95 1,808,764.93
Financial expenses 11,763.95 18,707.82 11,703.79 11,036.04
Income tax expenses 10,721.31 3,215.56 6,629.69 16,978.12
Net profit 32,438.83 34,217.72 21,365.03 98,267.26
Net profits of discontinued
0.00 0.00 0.00 0.00
operation
Other comprehensive income 0.00 -205.86 0.00 1,240.52
Total comprehensive income 32,438.83 34,011.86 21,365.03 99,507.78
Dividends from joint venture
5,414.50 5,250.00 7,414.50 29,750.00
during the year
Note 8.3.3 Major financial information of important associated enterprises
Unit: RMB 10,000
Ending balance of current period/amount Ending balance of previous period/ amount
Item
incurred in current period incurred in previous period
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Hengyi Petrochemical 2021 Annual Report
China China
Yisheng Yisheng New Yisheng Yisheng New
Zheshang Zheshang
Investment Materials Investment Materials
Bank Bank
Current assets 771,555.31 270,105.44 0.00 792,315.14 62,092.27 0.00
Non-current assets 890,924.47 887,130.26 0.00 889,697.28 560,427.34 0.00
228,672,300.0 204,822,500.0
Total assets 1,662,479.78 1,157,235.71 1,682,012.42 622,519.61
0 0
Current liabilities 838,736.64 546,549.00 0.00 866,438.91 340,963.68 0.00
Non-current liabilities 108,767.35 305,592.48 0.00 44,057.90 96,288.46 0.00
211,984,000.0 191,568,200.0
Total liabilities 947,503.99 852,141.47 910,496.82 437,252.15
0 0
Minority equity 107,711.92 0.00 271,400.00 118,276.34 0.00 203,100.00
Shareholders’ equity attributable to
607,263.87 305,094.23 16,416,900.00 653,239.26 185,267.46 13,051,200.00
parent company
Net assets calculated by
182,179.16 149,496.17 577,874.88 195,971.78 92,633.73 459,402.24
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 from
0.00 0.00 0.00 0.00 0.00 0.00
intra-group trading
- Others 5,494.45 0.00 -142,884.69 5,494.45 0.00 -54,954.97
Book value of equity investment in
187,673.61 149,496.17 434,989.92 201,466.23 92,633.73 404,447.00
associates
Fair value of equity investment in
0.00 0.00 261,824.25 0.00 0.00 305,212.27
associates with public quotation
Operating income 2,940,215.69 748,476.21 5,447,100.00 2,536,416.86 250,291.51 4,770,300.00
Net profit -51,297.63 27.46 1,291,600.00 109,206.53 4,953.63 1,255,900.00
Net profits of discontinuing
0.00 0.00 0.00 0.00 0.00 0.00
operation
Other comprehensive income 7.82 0.00 29,600.00 0.00 0.00 -200,700.00
Total comprehensive income -51,289.81 27.46 1,321,200.00 109,206.53 4,953.63 1,055,200.00
Dividends received from associated
enterprise in current year 1,575.00 0.00 12,043.92 8,925.00 0.00 17,953.66
Note 8.3.4 Summary financial information of unimportant joint ventures associated enterprises
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Hengyi Petrochemical 2021 Annual Report
Unit: RMB 10,000
Ending balance of current Ending balance of previous
Item period/amount incurred in period/ amount incurred in
current period previous period
Joint venture:
Total book value of investments 0.00 0.00
The total of the following items calculated
based on shareholding ratio
- Net profit 0.00 0.00
- Other comprehensive incomes 0.00 0.00
- Total comprehensive income 0.00 0.00
Associated enterprises:
Total book value of investments 29,554.58 15,543.60
The total of the following items calculated
based on shareholding ratio
- Net profit 729.12 856.52
- Other comprehensive incomes 0.00 0.00
- Total comprehensive income 729.12 856.52
Note 8.3.5 Excess losses in cooperative enterprise or associated enterprise
As of December 31, 2021, he Company has no excess deficit of joint venture or associated
enterprise..
Note 8.3.6 Unconfirmed commitment related to the investment of joint venture
As of December 31, 2021, there is no unconfirmed commitment related to cooperative enterprise
investment in the Company. the Company has no unconfirmed commitment related to the investment
of joint venture.
Note 8.3.7 Contingent liabilities related to the investment of joint venture or associated enterprise
As of December 31, 2021, the Company has no contingent liabilities related to the investment of
joint venture or associated enterprise.
Note 8.4Equity 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.
Note 9 Risks associated with financial instrume nts
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 6. “Risks”
relating to these financial instruments, together with risk management policies taken by the Company
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Hengyi Petrochemical 2021 Annual Report
to lower these risks, are as follows. The management personnel of the Company 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.
Note 9.1 Risk management objective 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.
Note 9.1.1 Market risk
Note 9.1.1.1 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, 2021, 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 and cash equivalents 547,247,784.70 27,826,214.79 597,549,974.09 30,852,704.59
Accounts receivable 840,996,762.49 22,453,475.80 418,190,365.11 28,951,031.41
Other receivables 6,236,866.48 4,584,383.96 426,581.80 4,330,630.67
Long-term receivables 518,788.46 0.00 0.00 0.00
Accounts payable 1,154,481,981.82 10,642,043.33 445,000,009.92 10,180,771.52
Other payables 201,240.96 593,591.35 266,250.00 2,951,839.39
Short-term loans 1,227,099,050.80 51,695,100.00 822,806,683.23 0.00
Non-current liabilities due
119,955,234.38 1,212,324.09 1,952,936.28 0.00
within one year
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Hengyi Petrochemical 2021 Annual Report
Ending balance Beginning balance
Item
USD BND USD BND
Long-term loans 943,120,000.00 0.00 1,154,550,000.00 0.00
Lease liabilities 0.00 80,360,757.05 0.00 0.00
Long-term payables 4,086,552.93 0.00 6,077,830.61 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 are based on normal
production and operation, and rely 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 current period and the shareholders' equities are as follows:
Pre-tax impact on current profit & loss and
Exchange rate shareholders' equity
Item
movement
Current period Previous period
USD-monetary assets 88,941,027.89 66,303,875.42
1% appreciation
USD monetary liabilities -219,894,326.49 -158,597,723.93
against RMB
Net influence -130,953,298.60 -92,293,848.50
USD-monetary assets -88,941,027.89 -66,303,875.42
1% appreciation
USD monetary liabilities 219,894,326.49 158,597,723.93
against RMB
Net influence 130,953,298.60 92,293,848.50
Currency monetary assets 2,588,432.17 3,162,722.16
1% appreciation
Currency monetary liabilities -6,817,545.53 -647,621.57
against RMB
Net influence -4,229,113.35 2,515,100.58
Currency monetary assets -2,588,432.17 -3,162,722.16
1% depreciation
Currency monetary liabilities 6,817,545.53 647,621.57
against RMB
Net influence 4,229,113.35 -2,515,100.58
Note 9.1.1.2 Interest rate risk – risk for cash flow changes
The risk of changes in fair value of financial instruments caused by changes in interest rates of the
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Hengyi Petrochemical 2021 Annual Report
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 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.
Profit increase in Profit decrease in
Item Interest rate change
current period current period
Short-term borrowings and
medium-and long-term debts Upward trend of interest rates, with
192,199,290.41 —
bearing interest at fixed interest an increase of 50 basis points
rates
Short-term borrowings and
medium-and long-term debts Downward trend of interest rates,
— 192,199,290.41
bearing interest at fixed interest with a decrease of 50 basis points
rates
Medium and long-term debt
Upward trend of interest rates, with
bearing interest at the floating — 81,515,331.79
an increase of 50 basis points
interest rate
Medium and long-term debt
Downward trend of interest rates,
bearing interest at the floating 81,515,331.79 —
with a decrease of 50 basis points
interest rate
Note 9.1.1.3 Other price risks
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Hengyi Petrochemical 2021 Annual Report
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 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 BOD 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.
Note 9.1.2 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.
Note 9.1.3 Liquidity risk
In managing the liquidity risk, the Company, to meet its managing demand, should keep and
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Hengyi Petrochemical 2021 Annual Report
supervise enough cash and cash equivalent which approved by the management. Meanwhile, it
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, 2021, the bank credit
line of the Company was RMB 26.901 billion (December21, 2020: RMB 23.378 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 three years
Non-derivative financial assets
and liabilities:
Notes receivable 222,193,687.94 35,821,190.92 0.00 0.00
Short-term loans 27,208,392,002.95 6,570,302,674.29 0.00 0.00
Notes payable 440,900,000.00 0.00 0.00 0.00
Long-term loans mature within
2,146,897,469.86 1,672,053,817.84 0.00 0.00
one year
Long-term loans 0.00 0.00 7,915,016,398.31 8,081,213,288.00
Accounts receivable financing 457,515,279.35 30,037,777.80 0.00 0.00
Derivative financial assets and
liabilities:
Forward exchange contract -940,620.17 0.00 0.00 0.00
Futures contract 338,815,565.38 25,707,306.63 0.00 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 6 to financial statements.
Note 9.2Financial assets transfer
Note 9.2.1 Financial assets transferred but not confirme d wholly
Financial assets transferred but not confirmed wholly of this year that the Company need not disclose
Note 9.2.2 Transferred financial assets that have been derecognized wholly but the transferor
still continues to involve in
In current period, the Company cashed the banker's acceptance of RMB 6,435,173,167.33 bank
acceptance bills (RMB 2,262,383,251.48 in 2020) 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, 2021, the cashed but not
mature banker’s acceptance was 31, 2021 (on December 31, 2020: RMB 924,028,209.32).
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Hengyi Petrochemical 2021 Annual Report
Note 10 Disclosure of fair value
Note 10.1 Period-end fair values of assets and liabilities measured at fair value
Ending Fair value of the period
Item Fair value Fair value Fair value
measurement at measurement at measurement at Total
Level 1 Level 2 Level 3
1. Continuous fair value measurement
1.1 Financial assets held for trading 388,958,054.67 0.00 0.00 388,958,054.67
1.1.1. Financial assets at fair value through
388,958,054.67 0.00 0.00 388,958,054.67
profit or loss
(1) Investment in debt instruments 0.00 0.00 0.00 0.00
(2) Investment in equity instruments 0.00 0.00 0.00 0.00
(3) Derivative financial assets 388,958,054.67 0.00 0.00 388,958,054.67
1.1.2. Specified as financial assets at fair value
0.00 0.00 0.00 0.00
through profit or loss
(1) Investment in debt instruments 0.00 0.00 0.00 0.00
(2) Investment in equity instruments 0.00 0.00 0.00 0.00
1.2 Derivative financial assets 0.00 0.00 0.00 0.00
1.3 Financial liabilities held for trading 1,670,361.85 0.00 0.00 1,670,361.85
Among which: issued bonds held for trading 0.00 0.00 0.00 0.00
Derivative financial liabilities 1,670,361.85 0.00 0.00 1,670,361.85
Others 0.00 0.00 0.00 0.00
Note 10.2 Basis of determining the market price of continuous and non-continuous level-1
fair value measure ment 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.
Note 11 Related parties and connected transactions
Note 11.1 Information about the Company’s parent company
Parent
Parent
company’s
company’s
Place of Registered proportion of
Name of parent company Nature of business shareholding
registration capital voting rights in
ratio in the
the Company
Company (%)
(%)
Zhejiang Hengyi Group Co., Investment and RMB 51.8
Hangzhou 40.61 47.60
Ltd. trade million
Note: The ultimate controller of the Company is Qiu Jianlin.
Note 11.2 Information about the Company’s subsidiaries
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Hengyi Petrochemical 2021 Annual Report
Please refer to Note 8.1 “Equities in Subsidiary”.
Note 11.3 Introduction to joint ventures and associated enterprises of the Company
Name of joint Shareholding Accounting
venture and Main place of Nature of ratio (%) treatment methods of
Place of registration
associated business business joint venture or
Direct Indirect
enterprise associated enterprise
Ningbo Jinhou
Investment
Industry
Hangzhou Ningbo and 25.00 0.00 Equity method
Investment Co.
consulting
Ltd.
Hangzhou
Jingxin Supply Commercial
Chain Hangzhou Hangzhou service 0.00 49.00 Equity method
Management industry
Co., Ltd.
Dongzhan Water
Shipping Co. Zhoushan Zhoushan transport 0.00 30.00 Equity method
Ltd. industry
As for important joint ventures or associated enterprise of the Company,, please refer to Note 8.3
“Equities in Joint Ventures and Associated Enterprise”.
Note 11.4 Other related parties
Name of other related parties Relationship between other related parties and the Company
Corporate shareholders holding more than 5% of the Company's shares
Hangzhou Hengyi Investment Co., Ltd.
and wholly-owned subsidiaries of the parent company
Zhejiang Hengyi Polyamide Co., Ltd. A holding subsidiary of the ultimate parent company
Hengyi JAPAN A holding subsidiary of the ultimate parent company
Hangzhou Yichen Chemical Fiber Co., Ltd. A holding subsidiary of the ultimate parent company
Shaoxing Keqiao Hengming Chemical
Associated company of ultimate parent company
Fiber Co., Ltd.
Haining Yixin Logistics Co., Ltd. Wholly-owned subsidiary of the associated enterprise
Zhejiang Rongtong Chemical Fiber New
Holding subsidiary of the associated enterprise
Materials Co., Ltd.
Yisheng Dahua Petrochemical Co., Ltd. Holding subsidiary of the associated enterprise
Hong Kong Yisheng Dahua Co., Ltd. Holding subsidiary of the associated enterprise
Hong Kong Yisheng Co., Ltd. Wholly-owned subsidiary of the associated enterprise
Hangzhou Wanyong Industrial Investment
Senior management: associated natural person
Co., Ltd.
Hangzhou Yibo Investment Management
Company controlled by associated natural person
Co. Ltd.
Note 11.5 Related-party transaction
Note 11.5.1 Connected transactions for purchase and sale of goods, provision and acceptance of
386
Hengyi Petrochemical 2021 Annual Report
services
① Purchasing goods or receiving labor services
Contents of
Related parties connected Current period Previous period
transactions
Goods
Hainan Yisheng Petrochemical Co., Ltd. 162,724,539.89 364,528,944.69
procurement
Receiving labor
Hainan Yisheng Petrochemical Co., Ltd. 0.00 270,152.21
services
Goods
Yisheng Dahua Petrochemical Co., Ltd. 3,736,570,569.02 3,217,687,757.97
procurement
Goods
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 395,843,216.27 403,774,807.18
procurement
Goods
Zhejiang Hengyi Polyamide Co., Ltd. 0.00 110,164.61
procurement
Receiving labor
Ningbo Qingzhi Chemical Pier Co., Ltd. - 59,917,129.31
services
Goods
Hangzhou Yichen Chemical Fiber Co., Ltd. 16,168,663.69 8,920,172.05
procurement
Goods
Zhejiang Yisheng New Materials Co., Ltd. 2,118,416,389.92 0.00
procurement
Receiving labor
Haining Yixin Logistics Co., Ltd. 8,924,840.50 0.00
services
Goods
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 4,398,340,883.38 3,022,628,921.27
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 1,335,024,533.02 670,705,898.26
Zhejiang Baling Hengyi Caprolactam Co., Ltd. Labor provision 41,807,660.81 32,214,927.63
Hainan Yisheng Petrochemical Co., Ltd. Selling goods 1,125,429,557.32 1,691,872,715.08
Hainan Yisheng Petrochemical Co., Ltd. Labor provision 55,779.82 15,521,892.37
Zhejiang Hengyi Polyamide Co., Ltd. Selling goods 4,266,819.10 1,295,293.80
Zhejiang Hengyi Polyamide Co., Ltd. Labor provision 7,442,086.17 7,579,045.74
Yisheng Dahua Petrochemical Co., Ltd. Labor provision 21,702.83 202,233.49
Yisheng Dahua Petrochemical Co., Ltd. Selling goods 85,171,783.96 28,277,321.68
Hangzhou Yichen Chemical Fiber Co., Ltd. Labor provision 22,936,669.38 25,362,366.14
Hangzhou Yichen Chemical Fiber Co., Ltd. Selling goods 3,011,757.35 2,577,034.44
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. Selling goods 242,895,119.50 62,637,805.44
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. Labor provision 45,497,278.60 37,335,011.58
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. Trademark 5,728,849.96 5,565,160.26
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Hengyi Petrochemical 2021 Annual Report
Contents of
Related parties connected Current period Previous period
transactions
licensing
expenses
Zhejiang Yisheng New Materials Co., Ltd. Selling goods 716,350,522.64 0.00
Zhejiang Yisheng New Materials Co., Ltd. Labor provision 10,810,130.56 0.00
Note 11.5.2 Information about related trusteeship management/ entrusted management
The Company as trustee
Custody
Entrustm
fee
Entrusted assets ent
Name of entrusting party Name of trustee confirmed
Type Starting
in this
date
period
Shaoxing Keqiao Hengming Chemical Zhejiang Hengyi Petrochemical Operation 2018-7-2 1,698,113
Fiber Co., Ltd. Co., Ltd. trusteeship 5 .21
Note: Zhejiang Hengyi Petrochemical Co., Ltd., a subsidiary of the Company, was entrusted to
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.
Note 11.5.3 Introduction about associated lease
① The Company as a lessee
Rental recognized in Rental recognized in
Name of lessor Type of leased assets
current period previous year
Hangzhou Yichen Chemical Fiber Co., Ltd. Warehouse property 196,243.04 0.00
Zhejiang Baling Hengyi Caprolactam Co., Ltd. House property 69,314.29 0.00
② On January 1, 2021, the Company signed a house-leasing contract with Shaoxing Keqiao
Hengming Chemical Fiber Co., Ltd., with the lease term from January 1, 2021 to December 31, 2023
and annual rental of RMB 1.28 million.
Note 11.5.4 Guarantee of related parties
① The Company as a guarantor
Amount (RMB
Guarantee Starting date Expiring date Finished or not
10,000)
Zhejiang Yisheng New Materials Co., Ltd. 44,150.00 2020-4-14 2026-2-15 No
② The Company as a guarantee
Whether
Does the
Amount the
Company
Guarantor Guarantee (RMB Debit date Repayment date guarantee
provide
10,000) has been
collateral
fulfilled
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Hengyi Petrochemical 2021 Annual Report
Whether
Does the
Amount the
Company
Guarantor Guarantee (RMB Debit date Repayment date guarantee
provide
10,000) has been
collateral
fulfilled
Zhejiang Hengyi Group
Hengyi Industries Sdn. Bhd. 373,920.00 2018-08-23 2030-8-22 Yes No
Co., Ltd. and Qiu Jianlin
Zhejiang Hengyi Group
Hengyi Industries Sdn. Bhd. $97,584 2018-08-23 2030-8-22 Yes No
Co., Ltd. and Qiu Jianlin
Zhejiang Hengyi Group Hengyi Industry International Co.,
$557.70 2021-12-17 2022-02-15 No No
Co., Ltd. Ltd.
Zhejiang Hengyi Group Hengyi Industry International Co.,
$3,575.71 2021-8-24 2022-2-25 No No
Co., Ltd. Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi Polymer Co.,
4,000.00 2016-3-14 2023-3-13 No No
Co., Ltd. Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi Petrochemical
2,000.00 2015-12-30 2023-12-29 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Hangzhou Yijing Chemical Fiber
6,440.00 2019-12-9 2022-12-10 Yes No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group
Hengyi Industries Sdn. Bhd. $12,773.28 2021.10.04 2022-04-20 No No
Co., Ltd.
Zhejiang Hengyi Group
Hengyi Industries Sdn. Bhd. $600 2019-6-25 2024-9-25 Yes No
Co., Ltd.
Zhejiang Hengyi Group Suqian Yida New Materials Co.,
1,260.00 2019-11-26 2022-11-20 Yes No
Co., Ltd. Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi High-Tech
73,022.86 2021-3-8 2024-12-17 Yes No
Co., Ltd. Materials Co., Ltd.
Zhejiang Hengyi Group Zhejiang Shuangtu New Materials
800.00 2019-5-9 2022-5-9 Yes No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Haining Hengyi New Materials
40,000.00 2021-09-13 2022-09-21 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Haining Hengyi New Materials
7,400.00 2021-05-12 2022-05-12 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Hangzhou Yijing Chemical Fiber
10,000.00 2021-03-10 2022-03-10 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Hangzhou Yijing Chemical Fiber
33,990.00 2017-04-01 2022-9-30 Yes No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Hangzhou Yijing Chemical Fiber
25,000.00 2021-07-22 2022-07-22 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group
Hengyi Petrochemical Co., Ltd. 19,975.00 2021-7-8 2022-1-7 No No
Co., Ltd.
Zhejiang Hengyi Group
Hengyi Industries Sdn. Bhd. 32,500.00 2020-09-09 2022-03-04 No No
Co., Ltd.
Zhejiang Hengyi Group
Hengyi Industries Sdn. Bhd. $25,800.00 2020-12-18 2022-03-14 No No
Co., Ltd.
Zhejiang Hengyi Group Jiaxing Yipeng Chemical Fiber
20,000.00 2021-11-22 2022-08-25 No No
Co., Ltd. Co., Ltd.
389
Hengyi Petrochemical 2021 Annual Report
Whether
Does the
Amount the
Company
Guarantor Guarantee (RMB Debit date Repayment date guarantee
provide
10,000) has been
collateral
fulfilled
Zhejiang Hengyi Group Jiaxing Yipeng Chemical Fiber
10,000.00 2021-03-12 2022-03-11 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group
Ningbo Hengyi Trading Co., Ltd. 30,100.00 2021-09-01 2022-6-29 No No
Co., Ltd.
Zhejiang Hengyi Group Suqian Yida New Materials Co.,
5,000.00 2021-04-01 2022-03-31 No No
Co., Ltd. Ltd.
Zhejiang Hengyi Group Taicang Yifeng Chemical Fiber
53,800.00 2021-2-5 2022-12-08 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Taicang Yifeng Chemical Fiber
13,000.00 2021-09-13 2022-09-26 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Hong Kong Tianyi International
$4,291.55 2021-06-11 2022-06-10 No No
Co., Ltd. Holding Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi High-Tech
90,930.00 2021-03-09 2024-11-10 No No
Co., Ltd. Materials Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi High-Tech
10,000.00 2021-11-16 2022-5-16 No No
Co., Ltd. Materials Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi Polymer Co.,
10,000.00 2021-03-09 2022-03-09 No No
Co., Ltd. Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi Petrochemical
20,000.00 2021-08-19 2022-07-31 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi Petrochemical
96,000.00 2021-9-29 2022-06-21 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Zhejiang Shuangtu New Materials
20,000.00 2021-03-01 2022-11-29 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Zhejiang Shuangtu New Materials
6,910.80 2021-08-04 2022-3-8 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Zhejiang Yisheng Petrochemical
271,308.49 2021-1-2 2024-4-6 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Zhejiang Yisheng Petrochemical
14,443.00 2021.7.5 2022.6.2 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Zhejiang Yisheng Petrochemical
$12,107.60 2020-2-18 2022-9-7 No No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Haining Hengyi New Materials
280,800.00 2020-01-14 2024-12-30 Yes No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group Taicang Yifeng Chemical Fiber
12,000.00 2017-11-09 2022-11-08 Yes No
Co., Ltd. Co., Ltd.
Zhejiang Hengyi Group
Co., Ltd. and Shaoxing Shaoxing Shengong Packaging
3,379.46 2020-1-12 2023-12-31 Yes No
Shengong Machinery Co., Ltd.
Manufacturing Co., Ltd.
Zhejiang Hengyi Group Zhejiang Hengyi Petrochemical
5,000.00 2021-08-23 2022-08-23 No No
Co., Ltd. and Zhejiang Co., Ltd.
390
Hengyi Petrochemical 2021 Annual Report
Whether
Does the
Amount the
Company
Guarantor Guarantee (RMB Debit date Repayment date guarantee
provide
10,000) has been
collateral
fulfilled
Southeast Space Frame
Group Co., Ltd.
Zhejiang Hengyi Group
Co., Ltd. and Zhejiang Zhejiang Hengyi Petrochemical
14,992.50 2021-11-09 2022-05-19 No No
Southeast Space Frame Co., Ltd.
Group Co., Ltd.
Zhejiang Hengyi Group Hong Kong Tianyi International
$6,000 2021-02-09 2022-02-09 Yes No
Co., Ltd. Holding Co., Ltd.
Note 11.5.5 Funds borrowed from related party
Inter-bank
Starting Expiring
Related parties Borrowing and Description
date date
Lending
Borrowing:
Temporary working capital
supplemented by Hengyi Group to
Zhejiang Hengyi Group Co., Ltd. 3,369,661,700.09 - -
the Company, returned already in
current period of borrowing
Lending:
Zhejiang Yisheng New Materials Entrusted loan, lending rate:
1,000,000,000.00 2020-03-16 2021-12-22
Co., Ltd. 4.785%
Zhejiang Yisheng New Materials Entrusted loan, lending rate:
1,078,000,000.00 2021-01-05 2022-12-20
Co., Ltd. 4.785%
Note 11.5.6 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 25,530.26 0.00
Ltd.
Zhejiang Baling Hengyi Caprolactam Co., Ltd. Transferred assets 187,609.38 0.00
Zhejiang Yisheng New Materials Co., Ltd. Asset alienation 0.00 32,943.58
Hangzhou Huixin Zhishi Technology Co., Ltd. Transferred assets - 675,006.60
Zhejiang Hengyi Group Co., Ltd. Transferred assets 0.00 100,000.00
Zhejiang Hengyi Group Co., Ltd. Asset alienation 0.00 1,000,000.00
Note 11.5.7 Remuneration of key management personnel
Item Current year Previous year
Remuneration of key management personnel RMB 12,495,800 RMB 12,667,800
Note 11.5.8 Other related-party transactions
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Hengyi Petrochemical 2021 Annual Report
During the year, the Company conducted paper transactions with Hong Kong Yisheng Co., Ltd. and
Hong Kong Yisheng Dahua Co., Ltd., with a total loss of USD 7,781,880.00 and USD 8,261,880.00
respectively.
By the end of December 31, 2021, the deposit balance of the Company and its subsidiaries in the
related party China Zheshang Bank Co., Ltd. was RMB 87,709,500. At the end of the period, the
amount of discounted bank acceptance bills that have not yet expired was RMB 431,787,500.
Note 11.6 Accounts receivable from and payable to related parties
Note 11.6.1 Receivable items
Ending balance of current Ending balance of
period previous period
Item Bad debt Bad debt
Book balance provisio Book balance provisio
n n
Notes receivable:
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 2,713,741.00 0.00 0.00 0.00
Total 2,713,741.00 0.00 0.00 0.00
Accounts receivable:
Hong Kong Yisheng Co., Ltd. 0.00 0.00 35,140,697.19 0.00
Hainan Yisheng Petrochemical Co., Ltd. 226,858,886.34 0.00 553,876,023.16 0.00
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 6,917,468.74 0.00 214,624.00 0.00
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 12,828,512.13 0.00 229,073.95 0.00
Zhejiang Yisheng New Materials Co., Ltd. 8,759,499.90 0.00 0.00 0.00
Total 255,364,367.11 0.00 589,460,418.30 0.00
Advance payments:
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 10,064.34 0.00 5,083.43 0.00
Zhejiang Rongtong Chemical Fiber New Materials Co.,
15,306,150.00 0.00 0.00 0.00
Ltd.
Zhejiang Yisheng New Materials Co., Ltd. 141,341,842.00 0.00 0.00 0.00
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 821.27 0.00 0.00 0.00
Total 156,658,877.61 0.00 5,083.43 0.00
Other receivables:
Hangzhou Yichen Chemical Fiber Co., Ltd. 0.00 0.00 2,400.00 0.00
Zhejiang Hengyi Group Co., Ltd. 0.00 0.00 1,000,000.00 0.00
Total 0.00 0.00 1,002,400.00 0.00
Dividend receivable:
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 0.00 0.00 54,145,003.24 0.00
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Hengyi Petrochemical 2021 Annual Report
Ending balance of current Ending balance of
period previous period
Item Bad debt Bad debt
Book balance provisio Book balance provisio
n n
Dalian Yisheng Investment Co., Ltd. 79,500,000.00 0.00 63,750,000.00 0.00
Hainan Yisheng Petrochemical Co., Ltd. 265,000,000.00 0.00 212,500,000.00 0.00
Total 344,500,000.00 0.00 330,395,003.24 0.00
Other current assets:
1,079,576,125.8 1,001,440,816.6
Zhejiang Yisheng New Materials Co., Ltd. 0.00 0.00
3 5
1,079,576,125.8 1,001,440,816.6
Total 0.00 0.00
3 5
Note 11.6.2 Payable items
Ending balance of previous
Item Ending balance of current period
period
Accounts payable:
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 32,465,816.85 7,833,213.52
Hangzhou Yichen Chemical Fiber Co., Ltd. 569,077.20 7,871,460.86
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 32,629,365.25 48,740,055.61
Hong Kong Yisheng Dahua Co., Ltd. 28,498,358.89 0.00
Hong Kong Yisheng Co., Ltd. 28,498,358.89 0.00
Total 122,660,977.08 64,444,729.99
Contract liabilities:
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 0.00 9,944,293.55
Hong Kong Yisheng Petrochemical Co., Ltd. 0.00 35,131,486.70
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 56,952,805.17 0.00
Zhejiang Hengyi Polyamide Co., Ltd. 0.00 198,244.97
Zhejiang Yisheng New Materials Co., Ltd. 12,540,078.76
Total 69,492,883.93 45,274,025.22
Other payables:
Zhejiang Hengyi Group Co., Ltd. 0.00 100,000.00
Total 0.00 100,000.00
Non-current liabilities mature within one year:
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 1,174,311.93 0.00
Total 1,174,311.93 0.00
Lease liabilities:
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Hengyi Petrochemical 2021 Annual Report
Ending balance of previous
Item Ending balance of current period
period
Shaoxing Keqiao Hengming Chemical Fiber Co., Ltd. 1,011,507.59 0.00
Total 1,011,507.59 0.00
Note 12 Commitme nts and Contingencies
Note 12.1 Other commitme nts
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:
① Location of leased land: Pulau Muara Besar, Brunei Darussalam
② Area leased: 260 hectares.
③ Term of lease: 30 years, and additional 30 years extended upon expiration.
④ Land 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
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%.
⑤ Land 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.
⑥ Prerequisite 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.
Note 12.2 Contingencies
Note 12.2.1 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
394
Hengyi Petrochemical 2021 Annual Report
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. Losing contact with Wang, Shuangtu Company reported 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 w ith 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 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 froze 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
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Hengyi Petrochemical 2021 Annual Report
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.
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. The other two victims have not submitted a case to the court.
For the reason of compromise with some victims in 2021, the actual repayment of Zhejiang Shuangtu
is smaller than the amount of money involved in the case as affirmed by the court. Based on the
actual expenditures to the settled case, therefore, the Company has reduced RMB 8,555,800
compensations receivable from the former shareholders of Zhejiang Shuangtu (namely Fulida Group
and Xinghui Chemical Fiber Group Co., Ltd.).
Note 12.2.2 As of December 31, 2021, the Company’s debt guarantee is as follows:
Unit: RMB 10,000
Guarantor Guarantee Mode Amount Expiring date
Zhejiang Yisheng New Materials Credit
Hengyi Petrochemical Co., Ltd. 44,150.00 2026-2-15
Co., Ltd. guarantee
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Hengyi Petrochemical 2021 Annual Report
Note 13 Events after the Balance Sheet Date
Note 13.1 Profit distribution
On April 25, 2022, the 17th meeting of the Company’s 11th session of the BOD reviewed and passed
the Proposal about Distribution of Profits in 2021. The Company plans to distribute RMB 2 cash
dividends (tax included) for every ten shares with general capital of 3,666,280,014.00 shares. This
proposal has not been submitted to 2021 Annual General Meeting of Shareholders for deliberation.
Note 13.2 By the end of the issue date of this financial report, in addition to above events, the
Company has no other events after the balance sheet date to be disclosed this year.
Note 14 Other Important Events
Note 14.1 Correction to previous period errors
The Company has no prior-period error correction items that should be disclosed in 2021.
Note 14.2 Segment information
The Company has neither branch management, nor has branch reporting.
Note 14.3 Other important matters
The Company has no other major matters that are necessary to be disclosed during the Reporting
Period.
Note 15 Notes to Main Items in Financial Statements
Note 15.1 Other accounts receivable
Ending balance of current Ending balance of previous
Item
period period
Interests receivable 0.00 0.00
Dividends receivable 1,169,772,962.00 1,629,600,000.00
Other receivables 3,571,633,385.78 6,538,165,426.76
Total 4,741,406,347.78 8,167,765,426.76
Note 15.1.1 Dividends receivable
Ending balance of current Ending balance of previous
Item or name of investee
period period
Zhejiang Hengyi Petrochemical Co., Ltd. 1,079,772,962.00 1,209,400,000.00
Jiaxing Yipeng Chemical Fiber Co., Ltd. 15,000,000.00 150,000,000.00
Taicang Yifeng Chemical Fiber Co., Ltd. 35,000,000.00 70,200,000.00
Zhejiang Shuangtu New Materials Co., Ltd. 40,000,000.00 200,000,000.00
Subtotal 1,169,772,962.00 1,629,600,000.00
Less: bad debt provision 0.00 0.00
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Hengyi Petrochemical 2021 Annual Report
Ending balance of current Ending balance of previous
Item or name of investee
period period
Total 1,169,772,962.00 1,629,600,000.00
Note 15.1.2 Other receivables
Note 15.1.2.1 Disclosure based on aging analysis
Ending balance of current Ending balance of previous
Aging
period period
Within one year 19,585,865.33 1,262,247,037.84
1-2 years 1,260,741,815.63 5,275,918,388.92
2-3 years 2,291,315,704.82 0.00
Over three years 2,500.00 2,500.00
Subtotal 3,571,645,885.78 6,538,167,926.76
Less: bad debt provision 12,500.00 2,500.00
Total 3,571,633,385.78 6,538,165,426.76
Note 15.1.2.2 Classification of accounts receivable by nature
Ending balance of current Ending balance of previous
Nature of account
period period
Related party funds within the scope of consolidation 3,571,443,385.78 6,538,165,426.76
Receivables and payables such as advances from
0.00 0.00
entities beyond the scope of consolidation
Combination of consumption taxes and export tax
0.00 0.00
rebates receivable
Combination of tax refunds receivable 0.00 0.00
Portfolio of deposits and security 202,500.00 2,500.00
Employee loan and petty cash 0.00 0.00
Other groups 0.00 0.00
Subtotal 3,571,645,885.78 6,538,167,926.76
Less: bad debt provision 12,500.00 2,500.00
Total 3,571,633,385.78 6,538,165,426.76
Note 15.1.2.3 Bad debt provision
Stage 1 Stage 2 Stage 3
Expected credit loss
Expected credit loss
Bad debt provision Expected credit loss over the lifetime Total
over the lifetime (no
of the future twelve (credit impairment
credit impairment has
months occurred has
occurred)
occurred)
Balance as of January 1, 2021 0.00 0.00 2,500.00 2,500.00
On January 1, 2021, the book
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Hengyi Petrochemical 2021 Annual Report
Stage 1 Stage 2 Stage 3
Expected credit loss
Expected credit loss
Bad debt provision Expected credit loss over the lifetime Total
over the lifetime (no
of the future twelve (credit impairment
credit impairment has
months occurred has
occurred)
occurred)
balance of other receivables
was in this year:
- Transferred to Stage 2 0.00 - - 0.00
- Transferred to Stage 3 0.00 0.00 - 0.00
- Transferred back to Stage 2 - - 0.00 0.00
- Transferred back to Stage 1 - 0.00 0.00 0.00
Withdrawal in current period 10,000.00 0.00 0.00 10,000.00
Recovered or reversed in
0.00 0.00 0.00 0.00
current period
Written-off or cancelled in
0.00 0.00 0.00 0.00
current period
Other changes 0.00 0.00 0.00 0.00
Balance as of December 31,
10,000.00 0.00 2,500.00 12,500.00
2021
Note 15.1.2.4 Bad debt preparation
Amount of changes in current period
Beginning Amount
Category Ending balance
balance Provision recovered or Resell or write off
written back
Related party funds within the
0.00 0.00 0.00 0.00 0.00
scope of consolidation
Receivables and payables
such as advances from entities
0.00 0.00 0.00 0.00 0.00
beyond the scope of
consolidation
Combination of tax refunds
receivable and other 0.00 0.00 0.00 0.00 0.00
government grants
Portfolio of deposits and
2,500.00 10,000.00 0.00 0.00 12,500.00
security
Employee loan and petty cash 0.00 0.00 0.00 0.00 0.00
Other combination 0.00 0.00 0.00 0.00 0.00
Total 2,500.00 10,000.00 0.00 0.00 12,500.00
Note 15.1.2.5 The top five ending amounts (totals by borrower) of other receivables
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Hengyi Petrochemical 2021 Annual Report
Proportions in the Balance of
total other accounts the bad
Nature of receivable at the debt
Name of organization Ending balance Aging
account end of the period provision at
(%) the end of
the period
Receivables and
Zhejiang Hengyi Within 3
payables with 3,305,582,439.28 92.55 0.00
Petrochemical Co., Ltd. years
related parties
Receivables and
Jiaxing Yipeng Chemical
payables with 101,700,000.00 2-3 years 2.85 0.00
Fiber Co., Ltd.
related parties
Receivables and
Suqian Yida New Materials Within 2
payables with 100,000,000.00 2.80 0.00
Co., Ltd. years
related parties
Receivables and
Taicang Yifeng Chemical
payables with 39,440,014.17 2-3 years 1.11 0.00
Fiber Co., Ltd.
related parties
Receivables and
Zhejiang Shuangtu New Within 2
payables with 24,720,932.33 0.69 0.00
Materials Co., Ltd. years
related parties
Total - 3,571,443,385.78 - 100.00 0.00
Note 15.2 Long-term equity investment
Note 15.2.1 Classification of long-term equity investments
Ending balance of current period Ending balance of previous period
Impairme Impairm
Item nt ent
Book balance Book value Book balance Book value
provision provisio
n
Investment in
15,917,768,517.98 0.00 15,917,768,517.98 15,767,268,517.98 0.00 15,767,268,517.98
subsidiaries
Investments in joint
ventures and 14,291,804.11 0.00 14,291,804.11 14,265,101.35 0.00 14,265,101.35
associates
Total 15,932,060,322.09 0.00 15,932,060,322.09 15,781,533,619.33 0.00 15,781,533,619.33
Note 15.2.2 Investment in subsidiaries
Impairm Current
ent balance
Increase in current Decrease in provisio of
Investee Beginning balance Ending balance
year current year n in impairm
current ent
year provision
Zhejiang Hengyi Petrochemica l
9,372,870,750.00 0.00 0.00 9,372,870,750.00 0.00 0.00
Co., Ltd.
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Hengyi Petrochemical 2021 Annual Report
Impairm Current
ent balance
Increase in current Decrease in provisio of
Investee Beginning balance Ending balance
year current year n in impairm
current ent
year provision
Zhejiang Hengyi Internationa l
300,000,000.00 0.00 0.00 300,000,000.00 0.00 0.00
Trade Co. Ltd.
Zhejiang Hengyi Engineering
167,000,000.00 29,000,000.00 0.00 196,000,000.00 0.00 0.00
Management Co. Ltd.
Zhejiang Henglan Technology
38,500,000.00 121,500,000.00 0.00 160,000,000.00 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.
Jiaxing Yipeng Chemical Fiber
2,886,198,482.98 0.00 0.00 2,886,198,482.98 0.00 0.00
Co., Ltd.
Zhejiang Shuangtu New
897,699,306.80 0.00 0.00 897,699,306.80 0.00 0.00
Materials Co., Ltd.
Total 15,767,268,517.98 150,500,000.00 0.00 15,917,768,517.98 0.00 0.00
Note 15.2.3 Investments in joint ventures and associates
Changes of increase or decrease in current period
Additio Negativ
Beginning
Investee nal e 3,681,645,40 Other comprehensive income Changes in other
balance
investm investm 7.00 adjustment equity
ent ent
Associated enterprises
Ningbo Jinhou Industry 14,265,101
0.00 0.00 26,702.76 0.00 0.00
Investment Co. Ltd. .35
(Contd.)
Changes of increase or decrease in current period
Declaring Ending balance
Investee distribution of Ending balance of impairment
Impairment provision Others
cash dividends or provision
profits
Associated enterprises
Ningbo Jinhou Industry Investment Co. Ltd. 0.00 0.00 0.00 14,291,804.11 0.00
Note 15.3 Operating income and operating cost
Amount incurred in current year Amount incurred in previous year
Item
Revenue Cost Revenue Cost
Main business 3,707,241,002.32 3,572,734,835.29 2,586,856,333.35 2,537,833,295.23
Other operations 188,679.25 0.00 0.00 0.00
Total 3,707,429,681.57 3,572,734,835.29 2,586,856,333.35 2,537,833,295.23
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Hengyi Petrochemical 2021 Annual Report
Note 15.4 Investment income
Amount incurred in Amount incurred in
Item
current year previous year
Long-term equity investment income accounted by the cost method 744,772,962.00 1,204,600,000.00
Long-term equity investment income accounted by the equity method 26,702.76 -143,825.70
Income from investment in finance products 0.00 0.00
Total 744,799,664.76 1,204,456,174.30
Note 16 Supple mentary Information
Note 16.1 Statement of non-recurring profit and loss in current year
Item Amount
Profits and losses from disposal of non-current assets -12,534,455.04
Tax refund, reduction or exemption approved ultra vires or without any formal approval or
15,609,249.33
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 277,839,245.44
portion or amount in accordance with national policies
Current net profit or loss from subsidiaries formed by business combination under common
0.00
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
480,727,659.11
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
Transfer back of provisions for impairment of accounts receivable subject to separate
309,000.00
impairment testing
Profit or loss from entrusted loans 49,567,383.65
Income from entrusted operation 1,698,113.20
Other non-operating income and expense in addition to the above 13,359,433.22
Other profit or loss that complies with the definition of non-recurring profit and loss 0.00
Subtotal 826,575,628.91
Effect of income tax 38,805,031.16
Influenced amount of the minority shareholders' equity (after-tax) 138,270,736.78
Total 649,499,860.97
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 No. 1 on Information Disclosures for Companies offering Securities to
402
Hengyi Petrochemical 2021 Annual Report
the Public - Non-Recurring Profits and Losses (ZJHGG [2008] No. 43).
Note 16.2 Return on equity and earnings per share
Earnings per share
Weighted average return on
Profits in report period Basic earnings Diluted earnings per
net assets (%)
per share share
Net profit attributable to holders of ordinary
13.56 0.94 0.91
shares of the Company
Net profit attributable to holders of ordinary
shares of the Company, after deducting 10.97 0.76 0.74
non-recurring profit or loss
Hengyi Petrochemical Co., Ltd.
President: Qiu Yibo
April 26, 2022
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