Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Announcement No. 2023-022
Yunnan Energy New Material Co., Ltd.
2022 Annual Report
March 2022
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
2022 Annual Report
Section 1 Important Notes, Contents and Definitions
The Board of Directors and its members, the Supervisory Committee and its members and the senior management warrant that the
contents of the Annual Report are truthful, accurate and complete, without any false statement, misrepresentation or major omission, and
that they are jointly and severally liable for them.
Paul Xiaoming Lee (the Company’s person in charge), Li Jian (the person in charge of finance) and Deng Jinhuan (the person in charge
of the accounting department) hereby declare and warrant that the contents of the financial statements in this Annual Report are truthful,
accurate and complete.
All Directors were present at the Board meeting to review this Annual Report.
The future plans, development strategies and other forward-looking descriptions in this report do not constitute material commitments
of the Company to investors. Investors and related persons should be fully aware of the risks in connection therewith and should understand
the difference between plan, forecast and commitment. Investors are advised to pay attention to investment risks.
For details, please refer to the “3. Risks the Company May Face” under the “XI. Outlook for the Company’s Future Prospects” in the
Section 3 “Management Discussion and Analysis” of this report.
1. Risks of China’s policies on the regulating lithium battery separator
In recent years, various countries have intensively introduced industry policies to support the development of new energy vehicle
industry. Benefiting from policy support, the production value of new energy vehicle industry rapidly increased, driving the rapid
development of the upstream lithium battery industry. If there are significant adverse changes in carbon emissions, renewable energy
application and other relevant industry policies in the future, the relevant policies may have a negative impact on the development of the
whole industry chain of new energy vehicle, thus having an adverse impact on the upstream lithium battery separator industry and the
Company’s operation results.
2. Risks of fierce market competition
The rapid growth of the new energy vehicle industry has driven the fast development of lithium-ion battery separator in the upstream
part. With the high gross profit margin of lithium-ion battery separator, many domestic enterprises are attracted to invest in this segment.
Massive investment funds are driving the rapid increase in production capacity, and this segment is currently becoming increasingly
competitive. The increasingly fierce competition will have an adverse impact on the results of the Company if it can’t deeply understand the
law of industrial development and make constant efforts for technological innovation and operational management improvement to improve
product quality and reduceproduction costs.
3. Risks of price fluctuation in key raw materials
The key raw materials used by the Company are subjected to price fluctuation to some extent, especially polypropylene and polyethylene,
whose prices are affected by the strong fluctuations in the international crude oil price. The results of the Company may be adversely
affected by the gross profit margin which may be affected to some extent if the prices of key raw materials fluctuate sharply due to the
macroeconomic developments, the demand and supply relation for enterprises in the upstream and downstream parts and other factors.
4. Risks relating to construction in progress
The Company needs a great amount of investment funds for the under-construction projects in the production bases, such as Jiangxi
Enpo, Chongqing Energy, Jiangsu Energy, Hubei Energy, Jiangsu Ruijie and Hungary Energy. If the Company fails to raise sufficient funds
in time, or complete the projects and put into operation on schedule, the production, operation and profitability will be adversely affected.
5. Risks of technology leakage and talent outflow
An enterprise engaging in lithium battery separator requires advanced technology and process, rich management experience and deep
understanding of the industry. To ensure the ability of constant innovation and the steady growth of business, the Company should have
teams consisting of steady high-quality employees in scientific research, management and sales. The Company constantly improves the
mechanisms for talent cultivation, incentive, promotion and restriction, but there is still the possibility of the outflow of core employees from
the Company. In case of leakage of the core technology or the departure of core employees, the production and operation of the Company
may be adversely affected.
6. Risks of technological progress and alternatives
Lithium-ion battery is mainly used for mobile phones, computers, new energy vehicles and energy storage power stations. After
development for many years, lithium-ion batteries have been superior to traditional secondary batteries, such as nickel-cadmium batteries,
nickel-hydrogen batteries and lead-acid batteries with respect to volumetric specific energy, gravimetric specific energy, gravimetric specific
power, cycle life, charge/discharge efficiency, becoming a new energy industry with priority support and key development from the
governments. Although the lithium-ion battery is currently the first choice for electronics and pure electric vehicles, and other emerging
batteries like all-solid-state batteries and other technologies are not yet mature and still need a long time before commercialization, the
market demand for lithium-ion battery will be affected when emerging batteries such as all-solid-state batteries break the technical
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
bottlenecks, achieve mass production and are fully commercialized, and the lithium-ion battery separator in the industry chain will also be
affected adversely.
7. Risks of exchange rate fluctuation
The export sales volume of the Company increases constantly as it expands its business scale and gradually strengthens the development
in the international market. If the RMB exchange rate and the foreign exchange rate in the countries where our products were sold fluctuate
sharply in the future, the results of the Company may be affected to some extent.
8. Risks of China-US trade frictions
Since 2018, China-US trade disputes have occurred frequently. The U.S. has restricted the import of Chinese products by means of tariff
increases toreduce the trade deficit with China. Lithium-ion batteries are also among the products subject to the tariff increase. From the
perspective of industry chain, the total revenue of the Company has been affected by the China-US trade disputes only to a slight extent
because the exports to US account for an extremely small proportion in the total revenue of the Company. However, if the demands of the
downstream customers change due to the China-US trade frictions, the results of the Company may be affected adversely. In addition, some
of the Company’s raw materials and mechanical equipment are imported from overseas. If the trade frictions between the U.S. and China
intensifies and results in changes in the global trade environment, but the Company fails to make timely adjustments, the stability of the
Company’s supply chain may be adversely affected.
9. Management risks arising from the expansion of business scale
With the development of the Company’s business, the scale of the Company’s assets and business will be further expanded, which raises
higher requirements for the management level of the Company than ever before. The management risk arises if the capabilities of the
Company to manage the production, sales, quality control and risks can’t meet the requirements for scale expansion, and the systems for
talent cultivation, organization pattern and management are not further improved.
The Company plans not to make profit distribution for the time being. After the completion of the non-public issuance of A-shares, the
Company will consider the profit distribution plan for 2022 in accordance with the requirements of relevant laws and regulations and the
provisions of the Articles of Association as soon as possible.
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Contents
Section 1 Important Notes, Contents and Definitions ........................................................................ 2
Section 2 Company Profile & Key Financial Indicators .................................................................... 8
Section 3 Management Discussion and Analysis ...............................................................................12
Section 4 Corporate Governance ........................................................................................................48
Section 5 Environment and Social Responsibility .............................................................................66
Section 6 Significant Events ................................................................................................................ 71
Section 7 Share Changes and Shareholder Details ......................................................................... 105
Section 8 Details about Preferred Shares ...................................................................................113
Section 9 Details about bonds ......................................................................................................114
Section 10 Financial Report .............................................................................................................. 118
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Documents Available for Inspection
I. Financial statements signed and sealed by the legal representative, the person in charge of finance and the person in charge of the accounting
department of the Company.
II. The original copies of all documents and announcements of the Company which have been publicly disclosed in newspapers designated by the
China Securities Regulatory Commission during the Reporting Period.
III. The original text of the 2022 annual report signed by the chairman of the Board of Directors.
IV. The place where the above documents are maintained: the Company’s Securities Department.
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Definitions
Terms Definitions
Energy Technology, this Company, the Company Yunnan Energy New Material Co., Ltd.
Actual controller, Paul Xiaoming Lee family Paul Xiaoming Lee, Li Xiaohua, Yan Ma, YanYang Hui, Sherry Lee, Jerry Yang Li
Hongta Plastic Yunnan Hongta Plastic Co., Ltd., a wholly-owned subsidiary of the Company
Dexin Paper Yunnan Dexin Paper Co., Ltd., a wholly-owned subsidiary of the Company
Hongchuang Packaging Yunnan Hongchuang Packaging Co., Ltd., a controlled subsidiary of the Company
Shanghai Energy Shanghai Energy New Material Technology Co., Ltd., a controlled subsidiary of the Company
Zhuhai Energy Zhuhai Energy New Material Technology Co., Ltd., a subsidiary of the Company
Wuxi Energy Wuxi Energy New Material Technology Co., Ltd., a subsidiary of the Company
Jiangsu Energy Jiangsu Energy New Materials Technology Co., Ltd., a subsidiary of the Company
Chongqing Energy Chongqing Energy New Material Technology Co., Ltd., a subsidiary of the Company
Newmi Tech Chongqing Energy Newmi Technological Co., Ltd., a subsidiary of the Company
Jiangxi Tonry Jiangxi Tonry New Energy Technology Development Co., Ltd., a subsidiary of the Company
Jiangsu Ruijie Jiangsu Ruijie New Materials Technology Co., Ltd., a subsidiary of the Company
Suzhou GreenPower Suzhou GreenPower New Energy Materials Co., Ltd., a subsidiary of the Company
SEMCORP Hungary KFT SEMCORP Hungary Korlátolt Felelsség Társaság (Hungary), a subsidiary of the Company
Heyi Investment Yuxi Heyi Investment Co., Ltd., a shareholder holding more than 5% of the Company’s shares
Heli Investment Yuxi Heli Investment Co., Ltd., a shareholder of the Company
General Meeting of Shareholders The general meeting of shareholders of Yunnan Energy New Material Co., Ltd.
Board of Directors The Board of Directors of Yunnan Energy New Material Co., Ltd.
Board of Supervisors The Board of Supervisors of Yunnan Energy New Material Co., Ltd.
CSRC China Securities Regulatory Commission
SZSE Shenzhen Stock Exchange
Company Law Company Law of the People’s Republic of China
Securities Law Securities Law of the People’s Republic of China
Articles of Association Articles of Association of Yunnan Energy New Material Co., Ltd.
Designated information disclosure media China Securities Journal, Shanghai Securities Journal, Securities Times, SecuritiesDaily, Cninfo
(www.cninfo.com.cn)
RMB, RMB10 thousand, RMB100 million RMB, RMB10 thousand, RMB100 million
Reporting Period, this Reporting Period January 1, 2022 to December 31, 2022
Same period last year January 1, 2021 to December 31, 2021
Lithium-ion battery, lithium battery Rechargeable battery, which mainly depends on the lithium ion moving between the positive and
negative electrodes. It generally uses materials containing lithium as the electrodes, and is the
representative of modern high-performancebatteries
Lithium battery separator, the separator In the structure of lithium battery, the separator is one of the key inner components. Its main
function is to separate the positive and negative electrodes of the battery, preventing the short
circuit arising from the contact between the two electrodes, current conduction and overheating
Base film, base separator The separator immersed in the electrolyte of lithium battery is widely distributed with nano-scale
micropores on its surface for lithium ions to move freely between the positive and negative
electrodes
Coating film, coated separator The separator with coating treatment
Wet-process, Wet-processing A process technique of lithium battery separator, also known as phase separation process or
thermally induced phase separation process, is to add small molecules with high boiling point as
porogen to polyolefin, heat and melt them into a uniform state, extrude the casting sheet by screw,
extract the porogen with organic solvent after simultaneous or sequential biaxial stretching, and
then obtain microporous separator material through post-processing such as stretching heat setting
process
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Dry-process, Dry-processing Also known as melt-stretching process, including unidirectional stretching process, biaxial
stretching process and blow molding process. It refers to a preparation process of melting and
extruding polyolefin resin into crystalline thin polymer film, which is crystallized and annealed
to obtain a high crystallinity structure, and then further stretching at high temperature to peel
off the crystalline interface to form porous structure
Cigarette label Cigarette packaging, commonly known as “cigarette pack”
Aseptic packaging Composite packaging materials for aseptic filling of dairy products or non-carbonated soft
drinks
Specialty paper Specialty paper refers to the paper with special functions, a general term for all kinds of
special purpose paper or art paper. The term “specialty paper” in this report mainly refers to
special packaging paper
BOPP film The separator made by stretching and processing (such as corona, coating, etc.) the thick film
made of polymer polypropylene melt at a certain temperature and speed in a special stretcher
Cigarette film BOPP film used for the packaging of cigarette, also known as “BOPP cigarette film”
Flat film BOPP film for general packaging, also known as “BOPP flat film”
Aluminum laminated film Aluminum laminated composite film for lithium-ion pouch cell, a packaging material for
lithium-ion batteries, which protects the internal materials of lithium-ion batteries
Convertible Bonds, Energy Convertible Bonds The convertible corporate bonds of RMB1.6 billion issued on February 11, 2020 with a code of
128095
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Section 2 Company Profile & Key Financial Indicators
I. Corporate Information
Stock Name Energy Technology Stock Code 002812
The stock exchange where the shares are listed Shenzhen Stock Exchange
Name of the Company inChinese 云南恩捷新材料股份有限公司
Short Name of the Company inChinese 恩捷股份
Name of the Company inEnglish (If any) YUNNAN ENERGY NEW MATERIAL CO., LTD.
Short Name of the Company inEnglish (If any) ENERGY TECHNOLOGY
Legal Representative of theCompany Paul Xiaoming Lee
Registered Address No.125, Fuxian Road, High-tech Zone, Yuxi City, Yunnan Province
Postal Code for RegisteredAddress 653100
Historical Changes of the Registered No
Address of the Company
Office Address No.125, Fuxian Road, High-tech Zone, Yuxi City, Yunnan Province
Postal Code for Office Address 653100
Official Website www.semcorp.com
Email groupheadquarter@cxxcl.cn
II. Contact Information
Board Secretary Securities Affairs Representative
Name Yu Xue
Correspondence Address No.125, Fuxian Road, High-tech Zone, Yuxi City, Yunnan Province
Telephone 0877-8888661
Fax 0877-8888677
Email groupheadquarter@cxxcl.cn
III. Information Disclosure and the Place Where the Annual Report is Kept
The website of the stock exchange where the
Shenzhen Stock Exchange (www.szse.cn)
Company discloses its annual report
The names and websites of the media where Securities Times, China Securities Journal, Shanghai Securities Journal, Securities Daily and
the Company discloses the annual report Cninfo (www.cninfo.com.cn)
The place where the annual report is kept Securities Department of the Company
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
IV. Changes of Registration
Organization
91530000727317703K
Code
When the Company was listed, its main businesses were divided into two categories: (1) packaging materials: BOPP films
Changes of main (cigarette film and flat film) and specialty paper products (laser transfer anti-counterfeiting paper, direct plating paper and
businesses since cellophane); (2) packaging printing products: mainly including cigarette label products and aseptic packaging products.
the Company’s Upon the completion of major asset restructuring in 2018, the Company’s main businesses were divided into three
listing (if any) categories: (1) film products (lithium battery separator, cigarette film and flat film); (2) packaging printing products
(cigarette label and aseptic packaging); and (3) packaging products (specialty papers, holographic anti-counterfeiting
electrochemical aluminum and other products).
Mr. Paul Xiaoming Lee and Ms. Sherry Lee, who are shareholders and de facto controllers of the Company and
Changes of members of Xiaoming Lee’s family, signed the Power of Attorney for Shareholding on January 14, 2020. Pursuant to
controlling the Power of Attorney, Ms. Sherry Lee fully delegated the shareholders’ rights, such as rights to address inquiries,
shareholders (ifany) propose and vote, in connection with all the shares she held in the Company, to her father Mr. Paul Xiaoming Lee, for
a period of three years from the date of the Power of Attorney. After the signing of the above-mentioned Power of
Attorney for Shareholding, Mr. Paul Xiaoming Lee has become the single shareholder of the Company with the largest
number of shares with voting right, and the controlling shareholder of the Company changed from Heyi Investment to
Mr. Paul Xiaoming Lee. The above-mentioned Power of Attorney for Shareholding expired. At present, Mr. Paul
Xiaoming Lee is still the controlling shareholder of the Company.
V. Other Relevant Information
The accounting firm engaged by the Company
The name of the accounting firm Dahua CPAs (SGP)
The office address of the accounting firm 12/F, Building 7, 16 Xi Si Huan Zhong Road, Haidian District, Beijing
The names of the accountants Kang Wenjun and Yao Rui
The sponsor engaged by the Company to perform continuous supervision duties during the Reporting Period
□Applicable N/A
The financial adviser engaged by the Company to perform continuous supervision duties during the Reporting Period
□Applicable N/A
VI. Key Accounting Data and Financial Indicators
Whether the Company is required to retroactively adjust or restate prior years’ accounting data
□Yes No
YoY increase
2022 2021 2020
ordecrease
Operating revenue (RMB) 12,590,925,529.68 7,982,426,810.59 57.73% 4,283,007,589.11
Net profits attributable to 4,000,461,964.37 47.20%
shareholders of the listed 2,717,628,798.01 1,115,604,020.47
company (RMB)
Net profits attributable to 3,839,792,123.08 49.58%
shareholders of the listed
company(excluding non- 2,567,054,537.19 990,507,177.08
recurring profit and loss) (RMB)
Net cash flows from operating 503,587,598.66 -64.50%
activities (RMB) 1,418,645,377.82 1,055,180,013.19
Basic earnings per share
(RMB/share) 4.48 3.06 46.41% 1.34
Diluted earnings per share
(RMB/share) 4.46 3.05 46.23% 1.34
Weighted average return on net
assets 25.39% 21.85% 3.54% 17.15%
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
End of 2022 End of 2021 YoY increase or End of 2020
decrease
Total assets (RMB) 38,622,731,492.57 26,122,184,844.54 47.85% 20,572,234,846.40
Net assets attributable to 17,726,202,872.37
shareholders of the listed 13,831,866,927.31 28.15% 11,102,880,648.67
company (RMB)
The lower of the Company’s net profits before and after the deduction of non-recurring gains or losses for the last three fiscal years are negative, and
the audit report for the latest year shows that Company’s ability to continue as a going concern is uncertain
□ Yes No
The lower of the net profit before and after the deduction of non-recurring gains or losses is negative
□ Yes No
VII. Accounting Data Differences Under Domestic and Foreign Accounting Standards
1. Difference between the net profit and net assets of the financial report disclosed in accordance with the
international accounting standards and in accordance with the Chinese accounting standards
□ Applicable N/A
2. Difference between the net profit and net assets of the financial report disclosed in accordance with the
overseas accounting standards and in accordance with the Chinese accounting standards
□ Applicable N/A
VIII. Key Financial Indicators by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 2,592,318,997.05 3,164,115,457.27 3,523,208,079.14 3,311,282,996.22
Net profits attributable to 774,461,370.37
915,710,134.51 1,103,989,794.51 1,206,300,664.98
shareholders of the listed company
Net profits attributable to 727,864,449.82
shareholders of the listed company
(excluding non-recurring profit 878,373,867.17 1,062,548,124.73 1,171,005,681.36
and loss)
Net cash flows from operating -364,328,309.17
activities 180,070,569.45 372,808,664.92 315,036,673.46
Whether the above financial indicators or their sums are materially different from those disclosed in the quarterly and interim reports of the Company
□ Yes No
IX. Items and Amounts of Non-Recurring Gains or Losses
Applicable □ N/A
Unit: RMB
Item Amount in 2022 Amount in 2021 Amount in 2020 Description
Gains and losses from
the disposal of non- -4,869,891.53 -1,303,244.16 -144,872.28
current assets
Government subsidies
recognized in current
gains or losses (except
for those closely related
to the Company’s
business and are either 171,995,624.29 140,888,128.01 139,305,009.71
in fixed amounts or
determined under
quantitative methods in
accordance with the
national standard)
Gains representing the
difference between 673,727.72
investment costs for
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
acquisition of
subsidiaries, associates
and joint ventures by
the Company and its
share of fair value of
identifiable net assets of
the investee on
investment
Gains or losses on
entrusted investments or 27,838,099.70 25,422,322.79 7,111,089.67
assets management
Gains or losses from
changes in fair value
arising from the holding
of trading financial
assets and trading
financial liabilities, and
investment income from
disposal of trading
financial assets, trading 21,836,255.17 137,194.34 10,951,914.18
financial liabilities and
available-for-sale
financial assets,
excluding the effective
hedging business related
to the Company’s
normal business
operations
Reversal of the
provisions for
impairment of 2,078,410.35 11,749,733.34
receivables subject to
separate impairment test
Non-operating income
and expenses other than 818,785.95 4,316,746.86 -4,201,996.76
above-mentioned items
Other items within the
definition of non- 5,824,344.40 5,038,461.95 357,802.66
recurring gains or losses
Less: effect of the 56,380,407.08 27,937,401.47 23,107,901.22
income tax
Effect of minority 8,471,379.96 7,737,680.84 5,847,930.29
equities
Total 160,669,841.29 150,574,260.82 125,096,843.39 --
Details of other profit or loss items that fall within the meaning of non-recurring gain or loss:
□ Applicable N/A
There was no other profit or loss item of the Company that fall within the meaning of non-recurring gain or loss
The reason for the Company to define the non-recurring profit or loss items illustrated in the Information Disclosure and Presentation
Rules for Companies Making Public Offering of Securities No. 1 – Non-recurring Profit or Loss as recurring profit or loss items
□ Applicable N/A
The Company did not define the non-recurring profit or loss items illustrated in the Information Disclosure and Presentation Rules for Companies
Making Public Offering of Securities No. 1 – Non-recurring Profit or Loss as recurring profit or loss items
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Section 3 Management Discussion and Analysis
I. Industry Overview of the Company during the Reporting Period
The Company is required to comply with the disclosure requirements for “rubber and plastic product manufacturing” in
“chemical industry-related business” set forth in the Self-Regulatory Guidelines for Listed Companies of the Shenzhen Stock
Exchange No. 3 – Industry Information Disclosure.
I. Industry conditions and the industry position of the Company
In 2022, the global NEV market underwent a period of rapid growth. Major countries around the world have been consistently
increasing investment in new energy industries focusing on lithium battery technology. Against the backdrop of China’s national
strategic objectives of carbon neutrality and carbon peaking, China’s NEV and energy storage industries will also continue to develop
rapidly. As one of the four key components of lithium batteries, separators are playing an important role in the development of new
energy industries in China and even the world.
The Company is a world leader in the lithium battery separator industry, capable of competing on the global scale in terms of
production capacity, product quality, cost efficiency and technological R&D. The Company has been integrated into the supply chain
systems of most mainstream lithium battery manufacturers around the world, supplying products covering the key application fields
of power lithium batteries, consumer lithium batteries and energy storage lithium batteries. The Company experienced rapid growth
in 2022 as production capacity and revenue grew substantially, ranking first in the world in terms of production capacity and
shipments of separators. In order to actively seize development opportunities in the industry, the Company will continue to expand
production capacity and diligently explore domestic and foreign markets, thereby meeting the demand of global mid-to-high-end
lithium battery manufacturing enterprises and vehicle enterprises for the Company’s highly consistent and safe wet-process separator
products and services.
II.Industry development trends
The high-speed growth of NEVs worldwide and expanding market scale of the lithium battery industry have brought broad
market prospects and historic development opportunities to the lithium battery separator industry.
According to the survey of GGII, the shipment volume of lithium battery separators in China was 12.4 billion square meters,
representing a year-on-year increase of 59%. The wet-process separators accounted for 75% of the shipment volume. The rapid
growth of the energy storage market will further bring about the wet and dry-process separator incremental markets.
(1) Downstream lithium battery manufacturing enterprises continue to increase their production capacity requirements of
separator companies.
With the rapid growth of the NEV and energy storage markets, the capacity and output of lithium battery manufacturers expand
continuously. According to the analysis and prediction of Soochow Securities Research Institute, the global demand for lithium
batteries will exceed 2700GWh by 2025. Lithium battery separators are an indispensable and important raw material for lithium
battery manufacturing, and stable and the reliable production capacity is an important prerequisite for separator companies to
undertake large-scale orders from downstream customers. Therefore, separator manufacturers with production capacity advantages
can deepen the cooperation with important customers continuously, which is conducive to further increasing market share.
(2) The proportion of coating films in lithium-ion battery applications is on the rise. The lithium battery is one of the core
components in new energy vehicles. As the new energy vehicle market is switching from being policy-oriented to market-driven,
manufacturers have continuously raised their requirements of the key indicators such as battery safety, battery life and service life.
The puncture resistance and heat resistance of lithium battery separator can be effectively enhanced by coating inorganic ceramic
materials, PVDF, and aramid on the base film, thereby increasing electrolyte absorption capacity, improving battery safety, service
life and other performances. Therefore, the shipment of coating films occupies an increasing proportion of lithium battery separators.
This trend provides greater future development space for separator companies that have mastered the core formulation and processing
of high-quality separator coatings. In addition, with safety guaranteed, separators are becoming thinner and lighter. Thin and light
lithium-ion battery separators effectively raise the energy density in lithium-ion batteries so that more electrode materials can be
accommodated in the battery per volume or weight, thereby improving battery life. Therefore, whether being used in the batteries of
portable consumer electronics or electric vehicles, thinner and lighter separators are an important trend in the development of lithium
battery separator industry under the premise of ensuring safety, service life and high-rate and high-power charging/discharging. In
addition, polypropylene, polyethylene and other polyolefin materials are the main base materials of separator materials, which are
also further expanded. It is a key direction in the R&D of the base material to improve the temperature resistance of the base material
through chemical modification or by adding inorganic filler and other composite materials based on the existing base material system.
In addition, because the polarity of polyolefin material is greatly different from that of electrolyte, it is also an important direction in
the R&D of base material for power lithium battery separator to improve the electrolyte affinity of polyolefin separator by chemical
and physical approaches.
(3) The importance of product quality, production efficiency and cost control is highlighted. Against the backdrop of the rapid
growth in downstream demand, lithium battery manufacturers have put forward higher requirements for the product quality of
upstream separator manufacturers than ever before in order to ensure the competitiveness of their products in terms of quality and
stability. With the rapid increase in overall production capacity of the lithium battery separator industry, competition industry-wide
has become increasingly fierce. In this context, the importance of product quality, production efficiency and cost control to
separator companies has become increasingly prominent.
In addition, the Company has extensive product offerings in other segments such as BOPP film, aseptic packaging, cigarette
packs, specialty papers and aluminum laminated film. Over the last three decades, the BOPP film industry in China has undergone
technological advancements and intensified market competition. The future development of the industry is trending towards
producing differentiated products that meet customer demand, such as cigarette pack wrapping film and laser film, which are used in
cigarettes, food and other packaging segments with broad development prospects. The continuous development of these end markets
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
will drive growth in the BOPP film industry. With the advancement in recent years, China’s aseptic packaging market has established
a product system with mature technologies, complete product mixes, and adaptability for the aseptic filling of various liquids. The
downstream industries of aseptic packaging are primarily food and consumer goods such as liquid dairy products and non-carbonated
beverages. With China’s sustained and rapid economic growth and the rise in the disposable income of urban residents, together with
the increasingly sophisticated consumption and health concepts, dairy products and non-carbonated beverages have been enjoying a
booming market. As the government and consumers pay increasing attention to food safety, the food and beverage industries have
raised their requirements and demand for packaging materials, particularly aseptic packaging. Although international packaging
giants still occupy a leading position by leveraging the first-mover advantage in the market, in recent years, with the continuous
progress of material technology and production technology of domestic manufacturers, China’s aseptic packaging market began to
grow rapidly. Based on the existing trend, domestic manufacturers will gradually enter high-end aseptic packaging market from the
medium and low-end market in the future thanks to the cost-effective advantages, and the market share of domestic aseptic packaging
manufacturers will gradually increase. The cigarette label printing industry is a sub-segment of the packaging and printing industry,
and is characterized by advanced technologies, complex printing processes and high added value. Its development is highly aligned
with the development and changes of the larger cigarette industry, i.e., the stable development of the cigarette industry ensures stable
demand for cigarette labels. The cigarette label printing industry is constantly innovating in terms of printing materials, ink materials
and technical processes to remain relevant in the ever-developing cigarette industry. With the increased scrutiny of environmental
protection and energy conservation in modern society, the scope of specialty packaging paper used in downstream industries such as
tobacco, alcohol, cosmetics and food are becoming more and more extensive, and market application will develop towards
differentiation to meet the unique demands of different customers. China’s specialty paper industry is developing in the direction of
improving and enhancing the special functions of products, enriching product varieties, reducing consumption, vigorously advocating
comprehensive development and utilization of resources, and high-quality, high-value-added and serialized production and
processing.
As the packaging material used in pouch cells, aluminum laminated film is one of the most technically difficult links in the
pouch cell industry chain, and has a crucial impact on the quality of the pouch cell. Compared with cylindrical cell and prismatic cell,
pouch cell has certain advantages in energy density, cycle life, safety, flexibility, etc. Pouch cell has become the mainstream in the
field of consumer electronics with high capacity and thin development trend. Pouch cell has accounted for more than 80% of mobile
phone and laptop batteries, and its penetration rate in tablet batteries has basically reached 100%. In the field of traction batteries, the
European and American new energy vehicle markets prefer pouch cell traction batteries;According to the statistics of Topsperity
Securities and other third parties, the shipment of pouch cells in 2022 is 171.4GWh, with a year-on-year growth of more than 20%,
and the shipment is expected to exceed 400GWh in 2025, with a CAGR of up to 32% in 2021-2025. IHS shows that among the top
20 mainstream electric vehicle models in overseas sales in 2022, 11 models including Volkswagen, Audi, Polestar and Ford have
adopted the pouch cell solution. With the steady growth of the consumer electronics market represented by 5G communications and
emerging consumer electronics products and the rapid increase in sales of NEVs from European and American manufacturers, the
market demand for pouch cells and aluminum laminated film will continue to expand. The Lithium Battery Aluminum Laminated
Film Industrialization Project of the Company has expanded its footprint in the pouch cell field, diversified its product line,
strengthened its cooperation with downstream manufacturers, and enhanced its overall competitiveness, which were important steps
for deepening its industrial penetration in the field of new energy materials.
III. Industry policies
The Company’s main product, lithium battery separators, is one of the key components of lithium batteries, and stands as one of
the national key support industries. Relevant industrial policies promulgated by the State in recent years include:
Date Issuing Authority Name of Policy or Regulation Main Content
February 2017 MIIT、NDRC, Plan of Action for Promoting the Development
“By 2020, key materials and components such as positive and negative electrodes,
MOST and MOF of Automotive Battery Industry
separators and electrolytes will reach world-class status The upstream industrial chain
will achieve balanced and coordinated development, and innovative backbone
enterprises with core competitiveness will be formed.”
June 2017 MIIT Includes high-performance lithium battery separators to the first batch of application
Catalogue of the First Batch of Application
Demonstration Guidance forKey New Materials demonstration guidelines for key new materials
(2017 Edition)
December 2017 NDRC Focuses on the development of functional film materials such as flexible packaging
Implementation Plan for the Industrialization of
films for lithium batteries
Key Technologies forNew Materials
June 2018 SAMR, National Standards for PolyolefinSeparators for
Specifies the terms and definitions, classifications, requirements, test methods,
Standardization Lithium-ion Separators
Administration of inspection rules, packaging, marking, transportation and storage of polyolefin
China separators for lithium-ion batteries.
September 2018 MIIT Includes nonwoven ceramic separators for high-performance lithium-ion batteries in
Catalogue of the First Batch of Application
the first batch of application demonstration guidelines for key new materials
Demonstration Guidance for Key New Materials
(2018 Edition)
January 2019 MIIT
Specifications for Lithium-ion Battery IndustryFurther improves the criteria that relevant enterprises need to meet, and adds relevant
requirements for R&D expenditure and actual output; in addition, encourages
(2018 Edition) enterprises to engage in intelligent manufacturing and green manufacturing, proposes
to reduce operating costs and improve production efficiency through intelligent
manufacturing, and establishes resource-saving and eco-friendly purchase,
production, marketing, recycling and logistics systems through green manufacturing to
produce green products.
13
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Date Issuing Authority Name of Policy or Regulation Main Content
August 2019 NDRC Continues to include “functional separator materials” in the encouraged category
Catalogue for Guiding IndustryRestructuring
(2019 Edition)
December MIIT Includes ultrafine alumina material for lithium battery separator coating in the first
Catalogue of the First Batch ofApplication
2019 batch of application demonstration guidelines for key new materials
Demonstration Guidance for Key New Materials
(2019 Edition)
November State Council
New Energy Vehicle IndustrialDevelopment PlanThe plan proposes to implement battery technology breakthrough initiatives in core
2020
(2021-2035) technology research projects on new energy vehicles. Research should be carried out
on critical technologies such as positive and negative electrodes, electrolytes,
separators and membrane electrodes. Technical research on technologies for high-
strength, lightweight, high-safety, low-cost, and long-lasting traction batteries and
fuel cell systems should be strengthened, and R&D and industrialization of solid-
state traction battery technology should be accelerated.
December NDRC, MOST, Catalogue of Promoted GreenTechnologies
Accelerates the promotion and application of advanced green technologies; the
2020 MIIT and MNR (2020)
promotional catalogue includes single large-capacity and solid-state polymer lithium-
ion battery technologies packaged with aluminum laminated film
June 2021 MIIT China Electric Vehicle StandardizationRoadmap
Focuses on key areas and accelerates the development of automotive standards in
(2021)
strategic emerging areas. In the field of new energy vehicles, the roadmap mainly
includes strengthening the safety guarantee of electric vehicles, focusing on improving
the overall performance of electric vehicles, focusing on the use of fuel cell electric
vehicles, supporting the innovative development of battery swapping models and
supporting the green development of electric vehicles
July 2021 China Plastics
Guiding Opinions on Scientific and Incorporates “anti-hydrolysis, anti-aging flame retardant film for traction batteries,
Processing Industry
Association Technological Innovation for the Plastics ultra-thin high-temperature resistant separators, BOPA film for lithium battery
Processing Industry in the 14th Five-Year Plan packaging, and multi-purpose coating separator material” into the development
direction of battery film during the 14th Five-Year Plan
July 2021 NDRC and NEA Guiding Opinions on Accelerating the
Proposes to “promote research on energy storage theories and key materials, units,
Development of New Energy Storage
modules and weak technologies in the system, accelerate the realization of autonomy
of core technologies, and strengthen research on electrochemical energy storage safety
technology, while adhering to the diversification of energy storage technologies, and
promoting continuous cost reduction and commercialization of
mature new energy storage technologies such as lithium-ion batteries.”
July, 2021 MIIT Three-year Action Plan for the Development of It proposes to "support the exploration and utilization of lithium batteries, hydrogen
New Data Centers (2021-2023) storage and flywheel energy storage as diversified energy storage and backup power
in the data center and strengthen the promotion and application of cascade utilization
of traction batteries."
February, 2022 NDRC and the Implementation Plan for the Development of It proposes to "promote the development of diversified technologies, carry out
National Energy New Energy Storage in the "14th Five-Year research on key core technologies, equipment and integrated optimization design, such
Administration Plan" as sodium-ion batteries, new lithium-ion batteries, lead carbon batteries, flow
batteries, compressed air, hydrogen energy storage in ammonia, thermal (cryogenic)
energy storage, focus on tackling key problems in energy storage technologies such as
superconductivity and super capacitors and research and develop new generation high
energy density energy storage technologies such as liquid metal batteries, solid-state
lithium-ion batteries and metal air batteries."
April, 2022 The National Energy The "14th Five-Year Plan" for Scientific and Lead the construction of a new power system with a gradually increasing share of new
Administration and Technological Innovation in the Energy Field energy
the Ministry of
Science and
Technology
June, 2022 Nine departments Renewable Energy Development Plan for the Define the market position of new energy storage and innovate the business model of
including NDRC and 14th Five-Year Plan energy storage development
the National Energy
Administration
II. Main Businesses of the Company during the Reporting Period
(I)Main businesses and products of the Company
During the Reporting Period, the Company’s main products are divided into three categories: (1) film products, mainly including lithium-ion
battery separator (base film and coated film), BOPP film (cigarette film and flat film); (2) packaging printing products, mainly including cigarettelabel
and aseptic packaging; (3) paper packaging, mainly including specialty paper products (laser transfer anti-counterfeiting paper, direct plating paperand
coated paper), holographic anti-counterfeiting electrochemical aluminum, transfer film and other products.
The wet-process lithium-ion battery separator produced by the Company is mainly used for manufacturing lithium-ion battery for the new
energy vehicle, 3C products and energy storage. Cigarette film is mainly used for cigarette manufacturing. Flat film is mainly used for printing, food,
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
cosmetics and other industries. Cigarette label is applied to cigarette packing materials. Aseptic packaging is mainly applied to milk boxes, beverage
boxes, etc.. Among specialty paper products, laser transfer anti-counterfeiting paper is mainly applied to cigarette labels, cosmetic boxes, toothpaste
boxes, pharmaceutical boxes, etc.. Direct plating paper is mainly used for lining of cigarette label, and packing chocolate and other food. Coated paper
is mainly applied to tobacco, food, pharmaceutical, cosmetic and food industries.
The Company's main customers are domestic and foreign large-scale lithium battery manufacturers, tobacco companies, food and beverage
companies, plastic packaging enterprises, printing enterprises, etc. The main customers of the Company's wet-process lithium-ion battery separator
products include Panasonic, LGES, Samsung, CATL, CALB, Gotion High-tech, EVE, BYD, Farasis Energy, LISHEN and other domestic mainstream
lithium battery enterprises. The Company is a non-exclusive A-level supplier of cigarette materials in Yunnan Province. The main customers of
cigarette label products are large domestic tobacco companies, including Yunnan China Tobacco Materials (Group) Co., Ltd., Sichuan China Tobacco,
Chongqing China Tobacco, etc. The products are widely used in domestic well-known cigarette brands such as "YUXI", "Hongtashan", "Yunyan",
"HONGHE", "Snow World", "Greatwall (Chunya Milk)", "LONGFENG CHENGXIANG", etc. The main customers of the Company's smoke film
products include Yunnan China Tobacco Materials (Group) Co., Ltd., Sichuan China Tobacco, Chongqing China Tobacco, Anhui China Tobacco,
Hubei China Tobacco, Guizhou China Tobacco, Heilongjiang River Tobacco, Jiangxi China Tobacco, Gansu Tobacco, Henan China Tobacco,
Shanghai China Tobacco, HONG TA Liaoning Tobacco and many other well-known tobacco companies of the Group. The main customers of the
Company's aseptic packaging products include Yili, Mengniu, New Hope Dairy, Bright Dairy&Food, Royal Group, Guizhou Haoyiduo Dairy, Dali
Group, Eastroc, Yunnan Ouya Dairy Products, Yunnan Huangshi Lesson Dairy Industry, Nanjing Weigang Dairy Industry, Shenzhen Chenguang
Dairy and other dairy and beverage enterprises. During the Reporting Period, Shanxi Jiuniu Animal Husbandry, Vitasoy, Henan Baole Dairy Industry,
Sichuan Xuebao Dairy, Jinhua Jiayuan Milk Industry and other customers.
(II) Business models
The Company adopts different business models for different products. Customization applies to wet-process lithium-ion battery separators,
aluminum laminated film products, cigarette labels, aseptic packaging, specialty papers and cigarette films, subject to the customer requirements,
while flat films are produced based on sales prospects, with appropriate number of inventory stocked up.
1. Purchase mode: the Supply Department of the Company makes a List of Qualified Suppliers (or a List of Qualified Suppliers/Materials) after
evaluating and selecting suppliers. The materials listed on the purchase list can only be purchased from suppliers included on the List of Qualified
Suppliers. For each type of materials, at least 2 suppliers should be selected. The Company conducts a comprehensive supplier evaluation every year
and updates the List of Qualified Suppliers (or the List of Qualified Suppliers/Materials) in time.
2. Production mode: the Company carries out production based on orders and centralized scheduling so as to reasonably control the costs and
improve the efficiency. The Production Scheduling Department makes the production schedule based on orders and sales plan, and manages the
production and quality in a unified manner so as to ensure the completion of production tasks within the standards in terms of quality, quantity and
time frame.
3. Sales mode: direct selling is adopted for wet-process lithium-ion battery separator, and the salespersons of the Marketing Department are
responsible for the sale, promotion and order solicitation; customization is adopted for cigarette label and cigarette film whose production and saleare
organized based on the orders the Company obtains through the participation in the nationwide bids called for by the downstream cigarette enterprises
in the cigarette label printing industry according to Administrative Measures for Cigarette Materials Purchase; flat films are produced based on sales
prospects, with appropriate number of inventory stocked up; aseptic packaging and specialty paper products are customized pursuant to the customer
requirements.
(III) Market position of the Company’s products
1. Film products
The Company's film products are divided into two major categories: lithium battery separators and BOPP films. In terms of the global lithium
battery separator market, the Company has successfully entered the supply chain of global mainstream battery manufacturers by virtue of technology
accumulation and expansion of industrial scale. The Company and leading foreign lithium battery manufacturers (e.g. Panasonic, Samsung, LGES and
ACC of France), some overseas large automobile enterprises and China's mainstream lithium battery enterprises (e.g. CATL, CALB, BYD, Gotion,
EVE, Farasis Energy, LISHEN and SVOLT) have established good cooperative relations. With the improvement of technology and capacity scale of
domestic lithium battery manufacturers, domestic separators basically have been localized. With the fierce competition in the lithium-ion battery
separator industry, the development space of lithium-ion battery separator manufacturers that do not have the ability to independently research,
develop and design will gradually shrink. The competition in the domestic separator industry will mainly focus on raw materials formulation process,
micropore preparation technology, complete equipment design capability, product quality and other aspects. The market share of lithium-ion battery
separator manufacturers with independent core technology and stable product quality will steadily increase. Relying on the accurate judgment of the
management team on the market and the technical advantages of its own R&D team, the Company is currently in the leading position of the industry
in the field of wet-process lithium battery separator, and has global competitiveness in terms of capacity scale, product quality, cost efficiency and
technological R&D. The Company has set up separator production bases in Shanghai, Wuxi, Jiangxi, Zhuhai, Suzhou, Chongqing, Changzhou, Yuxi,
Jingmen, Xiamen and other places, and built the first overseas lithium battery separator production base in Hungary. The Company expanded overseas
markets to meet the global demand of high-end lithium battery customers for the Company's highly consistent and safe wet-process separator products
and services. The Company's wet-process separator products have stable quality, and we have established a good brand image in the global high-end
separator market. In addition, as an excellent backup power supply, energy storage power stations are gradually becoming one of the key technologies
to build modern power systems. Lithium-ion battery are the most widely used energy storage batteries at present. With the growth of new energy
vehicles worldwide and the rapid rise of the energy storage market, the demand for dry-process lithium battery separator in the subdivisions of
traction battery and energy storage fields that do not require high energy density will rapidly expand. The dry-process separator production base
jointly invested in by the Company and Celgard was completed during the Report Period, and the first production line has been installed and put
through a preliminary test.
Shanghai Energy is a "National Individual Manufacturing Champion" and a "National Enterprise Technology Center". It has undertaken the
"National Key R&D Program of China", the "National Industrial Revitalization and High-Quality Development Projects in Manufacturing Industry"
and the "National Industrial Revitalization and Technological Transformation Projects". As the president of "separator branch of China Industrial
Association of Power Sources", it actively organizes and participates in various experience exchange meetings and technical seminars, shapes the
industry model image and leads the healthy development of China's separator industry.
BOPP films are produced by Hongta Plastic and its subsidiary Chengdu Hongta Plastic, which are among the few Chinese enterprises with
ability to produce BOPP cigarette films and anti-counterfeit printing cigarette films. The production scale of BOPP films ranked among the best of its
kind in the Southwest China.
2. Packaging printing products
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
The Company is one of the important cigarette label suppliers in China and Class-A suppliers of the non-exclusive cigarette materials in Yunnan,
and its major customers are large domestic well-known cigarette manufacturers. Its products have been widely used by domestic famous cigarette
brands.
The Company independently develops roll-form aseptic brick package, pre-made aseptic brick package, A-type gable top package (mainly used
for fresh milk) and B-type gable top package (mainly used for tea drinks, fruit juice and non-carbonated beverages), making it become one of the few
enterprises able to produce roll-form aseptic brick package, pre-made aseptic brick package and gable top package. The Company's aseptic packaging
product quality and service have been recognized by many customers. Domestic famous large diary and beverage producers are the key customers of
HongChuang Packaging, such as Yili, Mengniu, Bright Dairy, New Hope Dairy, Dali, Dongpeng and Royal Group.
3. Specialty papers and other products
Dexin Paper mainly produces specialty paper products, holographic anti-counterfeiting electrochemical aluminum products and transfer films.
They are widely used for the cigarette labels for domestic famous cigarette brands, such as “Yunyan (purple)”, “Yunyan Special Titbit”,
“Hongtashan”, “Yuxi”, “Jiaozi”, “Chunghwa”, etc. Thanks to the Company’s strong capability in product development, excellent product quality and
good adaptability, the specialty paper products have developed rapidly and fill the gap of no specialty paper deep processing enterprise in Southwest
China where a large number of packaging printing enterprises operate. As a national high-tech enterprise, Dexin Paper has won recognition of
downstream customers by virtue of the seam avoidance technology of laser transfer paper, the positioning and transfer technology of pre-printed
cursor, and the transfer technology of water-based films.
(IV) Main performance drivers
The Company focuses its development on lithium battery separator products and actively exploits in the fields of aluminum laminated film,
BOPP films, cigarette labels, aseptic packaging, specialty paper products, etc. Making in-depth cooperation with customers in the lithium-ion battery
separator business, the Company’s revenue from lithium battery separator products increased substantially in the wake of growth of market demands
and continuous development of new products. The Company has carried out in-depth cooperation with customers in the lithium battery separator
product business. With the increase of market demand, the continuous development of new products and the expansion of capacity scale, the
Company's lithium battery separator product revenue has increased significantly. The Company gathers extensive experience in the industry, puts
forth efforts to introduce and cultivate advanced technical talents and invest more in the technological R&D, while giving quick responses to provide
customized products and service solutions for customers. The Company has a strict quality control system and rigorous quality control measures,
ensuring its products meet the higher industrial requirements and be recognized by customers from various business areas, so as to keep long-term and
stable relationships with customers.
III. Core Competitiveness Analysis
1. Scale advantage
As of the end of the Reporting Period, the Company has the world’s first production scale of wet-process lithium battery separator, with the
world’s largest supply capacity. The Company is the world's largest supplier of lithium battery separator, and its market share is also the first in the
world. The scale advantage of the Company is mainly reflected in cost control and sales expansion. The Company is able to meet the demand of large-
scale orders from key customers such as LGES, CATL, CALB and Gotion High-tech. Furthermore,the Company’s scale advantage also improves the
production efficiency and purchase advantages, and effectively reduces the cost. In terms of cost control, the Company’s scale advantage firstly creates
the cost advantage for raw materials purchase. Large-scale centralized purchase makes the cost of raw materials lower than that of the competitors in
this industry. Secondly, the Company’s huge sales scale brings a large number of orders to the Company, so that the Company can effectively reduce
the frequency of downtime during production and effectively reduce the cost caused by downtime through reasonable production scheduling. As a
result, the Company has the largest operating rate and capacity utilization rate. In terms of sales development, the industry concentration of the
lithium battery is increasing day by day. The existing and under-construction production lines of domestic first-class lithium battery manufacturers
boast huge production scale. Therefore, whether they have a supply capacity to meet the current and future demands of international first-class lithium
battery manufacturers is the first consideration in their selection of suppliers. As the world’s largest lithium battery separator supplier, the Company
has a competitive advantage thanks to its sufficient supply capacity.
2. Cost advantage
The Company has long been committed to the development and improvement of production technology for advanced wet-process lithium-ion
battery separator. Thanks to the continuous improvement of production equipment and process technique by the Company’s production management
and technical teams, the Company’s output from a single production equipment line of lithium battery separator ranks the best in the industry to
further reduce the cost in unit depreciation, energy consumption and labor. Moreover, thanks to the Company’s continuous improvement of
production technology and production management, the Company’s yield coefficient and first pass yield of lithium battery separator rank the best in
the industry. Besides, the Company improves the recovery efficiency of auxiliary materials continuously, so that the consumption of auxiliary
materials is far lower than that of the competitors in the industry. On the whole,the Company’s cost advantage is brought forth by the integration of
continuous improvement of production equipment, continuous improvement of production technology, continuous investment in R&D, constant
improvement of production management, strong market development ability and huge production scale, giving the Company a long-term competitive
edge.
3. Product advantage
The Company has long been committed to the R&D of lithium battery separator and creating value for customers with high-quality products and
excellent service. Mainstream lithium battery manufacturers, especially international first-class lithium battery manufacturers, have strict requirements
for material quality. As one of the core materials for lithium batteries, the separator has high technical barrier and its performance directly affects the
discharge capacity, cycle life and safety of lithium battery. Lithium battery manufacturing requires strong properties of separators, such as the size,
distribution uniformity and consistency of separator micropores. Mainstream lithium battery manufacturers apply a long system verification process
covering product, technology and production flow to bring in material suppliers. The Company has successfully cooperated with most domestic
mainstream lithium battery manufacturers, and we have a hand in the most demanding overseas traction battery supply chain system. The product
quality has been recognized by many lithium battery manufacturers. In addition, the Company invests in the development of new products and carries
out product research and forward-looking technical reserve in a sustained way while meeting customized needs. The Company has become a supplier
with the most diversified lithium battery separator products to meet various demands of different customers.
4. R&D advantage
The Company has established a R&D team with sound system through years of accumulation. The R&D scope covers the separator and coating
production equipment, separator preparation process, raw & auxiliary materials improvement, coating technique, slurry formula, recovery and energy
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
saving technologies and the R&D for forward-looking technical reserve projects.The Company’s R&D team of lithium battery separator has made a
series of achievements in improving production efficiency, enhancing the quality of lithium battery separator and developing new products. The
Company now has 343 effective patents (including 18 international patents) and 281 ongoing patent applications (including 95 international patent
applications). The Company's first online coating technology further improves the quality and production efficiency of coating film products. The
Company’s R&D team of lithium battery separator can not only customize a variety of new products for downstream customers, but also jointly
develop products with downstream customers to meet their diversified demands.
5. Talent advantage
The lithium battery separator is currently an emerging industry in China with a history of only over a decade. With the rapid globalgrowth of
energy industry in recent years, there are insufficient talents and no qualified professionals in the whole industry of lithium battery separator. The
Company relies on the talents accumulated in more than 20 years in BOPP film industry that is similar to the lithium battery separator industry. The
Company has established a good talent incentive mechanism and also recruited talents worldwide. As of the end of the Reporting Period, the
Company has more than 140 professionals with master’s degree or above who are responsible for the business of lithium battery separator, and we
have established a core technological R&D team composed of professional R&D staff from the United States, Japan,South Korea and other countries.
Furthermore, through long-term efforts, the Company has established a complete professional team in production management, system construction,
quality control, market expansion and equipment design, installation and maintenance, etc. All teams of the Company have achieved fruitful results in
their respective professional fields to jointly take the Company to the level of an internationally competitive leader in the lithium battery separator.
6. Advantage of market and customer resources
In 2022, the Company still maintained the leading position in the market of wet-process lithium battery separator. So far, the Company has
entered the supply chain system of most mainstream lithium-ion battery manufacturers in the world, including overseas lithium battery production
giants (e.g. Panasonic, Samsung, LGES and a large overseas automobile manufacturer) and domestic mainstream lithium battery enterprises (e.g.
CATL, CALB Co., Ltd., BYD, Gotion High-tech, Farasis Energy and Lishen. The Company has established stable and good cooperation relations
with downstream customers, and we had an in-depth technical exchange with them during cooperation. Therefore, the Company has a profound
understanding of customer needs, and we are able to quickly respond to customer needs and provide corresponding services. With the rapid
development of the industry and continuous release of the capacity, the Company will grow along with the rapid growth of downstream customers.
IV. Analysis on Main Businesses
1. Overview
In 2022, the global new energy electric vehicle market and energy storage market showed a sustained vigorous development trend, and the
industry market scale and market demand expanded, driving the rapid growth of demand in the separator industry. During the Reporting Period, under
the leadership of the Board and the joint efforts of all employees, the Company worked hard to overcome the impact of the pandemic, seized the
opportunity of the new energy industry, focused on the lithium battery separator business in a sustained way, promoted the capacity construction as
planned, continuously improved the internal management level and operating efficiency, ensured that the stable supply of high-quality lithium battery
separator products to downstream customers and ensured that downstream customers’ demand for high-quality lithium battery separator products be met
in a timely way. Cost reduction and efficiency increase were realized through the improvement and upgrading of technology, process and equipment.
During the Reporting Period, the Company's business scale, profitability and market position improve continuously. In 2022, we achieved consolidated
operating revenue of RMB12.591 billion, representing a year-on-year increase of 57.73%. The net profit attributable to shareholders of the listed
company was RMB4 billion, representing a year-on-year increase of 47.20%.
(1) Separator products
The Company focuses on separator business, increases capacity investment continuously, actively expands domestic and overseas markets,
strengthens our market position and core competitiveness.
Benefiting from the rapid growth of the market in the field of new energy vehicles and energy storage in recent years, the revenue scale and
profitability of the Company's lithium battery separator business increased significantly, and the Company's market share remained at the leading level
in the industry. In 2022, the operating revenue of Shanghai Energy was RMB10.996 billion, and the net profit attributable to the listed company was
RMB3.688 billion. With the accelerated development of the industry, the capacity and output of domestic and foreign lithium battery manufacturers
have been continuously expanded. Having stable and reliable capacity has become an important prerequisite for the Company to ensure large-scale order
supply for downstream customers. The Company's production capacity is the largest in the world. We have set up separator production bases in
Shanghai, Zhuhai, Wuxi, Jiangxi, Suzhou, Chongqing and other places with a production capacity of 7 billion square meters.
During the Reporting Period, the Company promoted the construction of domestic and foreign production lines continuously. Wuxi Energy
Lithium Battery Project (Phase II), Jiangxi Tonry Lithium Battery Expansion Project (Phase I), Chongqing Energy High-performance Lithium-ion
Battery Microporous Separator Project (Phase I) and Suzhou GreenPower Lithium Battery Coating Separator Project with an annual output of 200
million square meters have been completed and put into operation. Other production line construction projects are progressing as planned: the equipment
of Chongqing Energy High Performance Lithium-ion Battery Microporous Separator Project (Phase II) was being installed and tested. Part of the
infrastructure of Jiangsu Energy Lithium Traction Battery Separator Industrialization Project was completed. The infrastructure of the lithium battery
separator project in Hungary was completed, and the equipment was being installed. The infrastructure of Yuxi Energy Lithium Battery Separator
Project was underway. With the implementation of the Company's new projects, the Company's capacity will be gradually released, and the Company's
share in the global market is expected to be further improved.
The Company's lithium battery separator product quality has excellent stability and consistency, and there are 180 product categories, which can
meet the customized and diversified needs of customers. We have entered the supply chain systems of most mainstream lithium battery manufacturers in
the world. Based on the strong demand of the separator market brought by the rapid growth of the new energy industry, the Company, by virtue of its
competitive advantages in products, technology, cost and other aspects, actively explores domestic and overseas markets, and strengthens the
cooperation with downstream strategic customers in a deep-going way. During the Reporting Period, the Company cooperated with CATL (the leader in
the global lithium battery industry), and our Xiamen Energy Lithium Battery Separator Project was undergoing preliminary preparations. The
infrastructure of Hubei Jingmen Lithium Battery Separator Project, a joint venture project with EVE (a leading enterprise in the lithium battery industry)
was being constructed, and some plants and supporting facilities were basically completed. The Company signed the 2023 separator supply guarantee
agreements with a number of high-end customers such as CALB, SVOLT and Gotion High-tech to continuously strengthen the long-term cooperation
with key customers and enhance the Company's market competitiveness.
The Company has been deeply rooted in the separator industry for many years, and we have established leading competitive advantages in terms
of capacity scale, product quality, technological R&D and market expansion. Against the background of increasingly fierce competition in the industry,
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Yunnan Energy New Material Co., Ltd. 2022 Annual Report
the importance of production efficiency and cost control has become increasingly prominent. We have advanced equipment and sufficient orders from
high-quality customers, maximizing the continuous output efficiency of single line. We take measures in terms of auxiliary material recovery efficiency
and other aspects to reduce production costs. We rely on technical advantages to continuously improve equipment and optimize processes, aiming to
improve production efficiency, further reduce costs and enhance the comprehensive competitiveness of products.
During the Reporting Period, the Company strengthened its R&D investment and consolidated its technical advantages in a sustained way. In
terms of production and manufacturing, the Company has continuously reduced costs and increased efficiency by equipment transformation, process
optimization, technological upgradation and other ways. With the continuous promotion and application of the Company's first inline coating technology,
the production efficiency and product quality of the Company's coated film products have been further improved. In order to improve production
efficiency, the Company has established the MES intelligent factory cloud platform, realized production line networking, system interoperability and
data exchange, established the lithium battery coating film industry internet platform and realized BI big data analysis. Suzhou GreenPower won the
award of Suzhou Intelligent Factory in 2022, Chongqing Energy "Lithium-ion Battery Microporous Separator Production Digital Workshop" was
honored with the title of Chongqing Digital Workshop in 2022. In addition, in order to further improve the production management level, the Company
promoted the QMS in each factory during the Reporting Period to optimize the quality management operation, effectively avoid the quality risk and
improve the quality standardization and the accuracy and timeliness of data. In terms of forward-looking technology, the production line of the all solid
state electrolyte coating separator project was being installed and tested. Such all solid state electrolyte coating separator is developed by the Company,
Beijing WeLion New Energy Technology Co., Ltd. and Liyang Tianmu Pilot Battery Material Technology Co., Ltd., and it can be applied to semi-solid
state batteries.
With the release of the Implementation Plan for the Development of New Energy Storage in the "14th Five-Year Plan" issued by the NDRC and
the National Energy Administration, the market prosperity of the energy storage field has improved continuously. In response to the future demand from
the energy storage market, the Company promoted the construction of a dry-process lithium battery separator project with Celgard continuously during
the Reporting Period. The equipment of Company's first dry-process separator production line was being installed and tested, and it is expected to
gradually form production capacity in 2023, bringing lots of cost-effective products to the market.
During the Reporting Period, the Company's BOPP film business developed steadily. As of the end of the Reporting Period, the production plant
of Hongta Plastic's 70,000 tons/year BOPP film reconstruction and expansion project was completed, and the new production line equipment was being
tested.
(2) Packaging and printing products and specialty paper products
The aseptic packaging business of the Company is operating well. The Company mainly serves large dairy enterprises and regional well-known
dairy enterprises. Through continuous development of new products, it provides customized services for customers to achieve rapid growth in sales of
aseptic packaging products. In 2022, the Company's aseptic packaging business increased steadily, achieving an operating revenue of RMB0.620 billion,
representing a year-on-year increase of 7.22%. The sales volume of the Company was 3.222 billion units, representing a year-on-year increase of
11.19%. The Company's aseptic packaging products have excellent heat sealability, strong adaptability to different machines, low filling loss and other
characteristics, and the product quality and performance indicators have reached the industry-leading level. The Company will strengthen market
development, seize market growth opportunities with large dairy enterprises and achieve rapid development of aseptic packaging business. During the
Reporting Period, while strengthening the development of the existing aseptic packaging market, the Company actively carried out the research,
development and promotion of new products such as Al-PE-Pa complex packaging materials engineered to protect edible oil against moisture, light and
air and scratch and sniff gable top packaging. By launching eco-friendly, innovative, interesting products with unprecedentedly great performance and
quality, the Company improved the market competitiveness of its aseptic packaging products and developed a diversified market covering dairy
products, beverages, oil products, soy sauce and other condiments. The Company will develop packaging and printing products in a deep-going way and
expand its market share with good product design, material optimization, customized response ability and timely after-sales service ability.
During the Reporting Period, our cigarette label business increased steadily and its operating revenue was RMB0.129 billion, representing a
year-on-year increase of 11.86%. During the Reporting Period, the specialty papers products recorded a slight decrease with an operating revenue of
RMB0.193 billion, representing a year-on-year decrease of 5.3%. The Company actively developed the market, rapidly responded to customer needs,
strengthened internal refined management and reduced costs while increasing efficiency continuously.
(3) Review of other aspects
Raising not more than RMB12.8 billion by the Company through non-public issuance of A shares in 2021 was approved by the Reply on
Approving the Non-public Issuance of A shares by Yunnan Energy New Material Co., Ltd. (No.1343 [2022] of the CSRC) issued by the China
Securities Regulatory Commission on June 28, 2022, which was effective within 12 months from the date on which the issuance was approved.
18
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
In order to further attract and retain outstanding talents, stimulate team vitality and effectively combine the interests of the Company with the
personal interests of the core team, the Company implemented the 2022 Stock Option and Restricted Stock Incentive Plan during the Reporting Period,
covering more than 800 incentive objects such as the Company's middle and senior management and core staff.
Multiple breakthroughs in technological innovation were achieved during the Reporting Period. As at the end of the Reporting Period, the
Company and its subsidiaries obtained 520 patents in total, including 365 utility model patents, 143 invention patents (including 18 international patents)
and 12 design patents. In addition, the Company emphasizes the development of overseas patents. The applications for the registration of 95
international patents and 196 domestic patents have been accepted.
2. Revenue and cost
(1) Breakdown of operating revenue
Unit: RMB
2022 2021
Year-on-year
Proportion in the Proportion in the increase or decrease
Amount Amount
operating operating
revenue revenue
Total operating 12,590,925,529.68 100% 7,982,426,810.59 100% 57.73%
revenue
By industry
Manufacturing 12,217,521,522.39 97.03% 7,866,428,440.28 98.55% 55.31%
Other businesses 373,404,007.29 2.97% 115,998,370.31 1.45% 221.90%
By product
Film products 11,250,255,657.25 89.35% 6,913,272,941.66 86.61% 62.73%
Cigarette label 129,096,161.72 1.03% 115,404,633.29 1.45% 11.86%
Aseptic packaging 619,760,249.96 4.92% 578,035,152.65 7.24% 7.22%
Specialty papers 192,672,092.83 1.53% 203,465,665.68 2.55% -5.30%
Other Products 25,737,360.63 0.20% 56,250,047.00 0.70% -54.24%
Other businesses 373,404,007.29 2.97% 115,998,370.31 1.45% 221.90%
By region
Southwest 1,713,083,683.51 13.61% 1,055,816,267.84 13.23% 62.25%
East 5,797,739,284.92 46.05% 3,940,320,948.30 49.36% 47.14%
North 162,432,864.37 1.29% 220,578,356.55 2.76% -26.36%
South Central 3,248,090,813.64 25.80% 1,525,714,178.36 19.11% 112.89%
Northwest 290,175,100.70 2.30% 295,656,593.50 3.70% -1.85%
Northeast 47,590,945.63 0.38% 38,818,315.58 0.49% 22.60%
Abroad 1,331,812,836.91 10.58% 905,522,150.46 11.34% 47.08%
By sales model
Direct marketing 12,590,925,529.68 100.00% 7,982,426,810.59 100.00% 57.73%
19
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
(2) Industries, products, regions and sales models that account for more than 10% of the Company's operating
revenue or operating profit
√ Applicable □ N/A
Unit: RMB
Year-on-year Year-on-year Year-on-year
Operating increase or increase or increase or
Operating cost Rate of gross
revenue decrease in decrease in decrease in the
margin
operating operating cost rate of gross
revenue margin
By industry
Manufacturing 12,217,521,522 6,360,676,130.
47.94% 55.31% 59.88% -1.49%
.39 43
By product
Film products 11,250,255,657 5,581,677,836.
50.39% 62.73% 72.56% -2.83%
.25 84
By region
Southwest 1,713,083,683.
994,579,500.37 41.94% 62.25% 37.35% 10.52%
51
East
5,797,739,284.
2,802,761,992. 51.66% 47.14% 67.13% -5.78%
92
76
South Central 3,248,090,813. 1,896,375,323.
41.62% 112.89% 101.90% 3.18%
64 26
Abroad 1,331,812,836.
626,875,994.42 52.93% 47.08% 61.16% -4.11%
91
By sales model
Direct marketing
12,590,925,529
6,568,148,382. 47.83% 57.73% 64.12% -2.03%
.68
65
Under the circumstances that the statistic specifications for the Company’s main business data adjusted during the Reporting Period, the Company’s
main business data of this past year is calculated based on the adjusted statistic specifications at the end of the Reporting Period.
□ Applicable N/A
(3) Whether the Company's revenue from the sale of physical products is higher than the revenue from service
charges
Yes □ No
Year-on-year
By industry Item Unit 2022 2021
increase or decrease
Sales Ton 102,765.07 78,666.40 30.63%
Film products Volume of production Ton 106,761.27 78,928.36 35.26%
Inventory Ton 11,056.90 7,060.70 56.60%
Sales 10,000 boxes 49.27 43.12 14.26%
Cigarette label Volume of production 10,000 boxes 42.97 49.01 -12.32%
Inventory 10,000 boxes 3.18 9.48 -66.46%
Sales 10,000 322,228.15 289,803.12 11.19%
Aseptic packaging Volume of production 10,000 328,252.96 288,974.57 13.59%
Inventory 10,000 31,866.74 25,841.93 23.31%
Sales Ton 11,791.64 13,821.64 -14.69%
Specialty paper Volume of production Ton 10,877.02 15,701.69 -30.73%
Inventory Ton 2,448.57 3,363.19 -27.20%
Reasons for the data with a year-on-year change of more than 30%
Applicable □ N/A
20
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
During the Reporting Period, the production, sales and inventory of separator products increased significantly, mainly because of the expansion of the
scale of the Company's lithium battery separator business. The significant reduction in the inventory of cigarette label products is mainly because of the
shortening of the delivery cycle. The decline in the production of special paper products was mainly caused by the decrease in orders.
(4) Execution of material contracts of sale and material contracts of purchase signed by the Company as ofthe
Reporting Period
Applicable □ N/A
Execution of material contracts of sale signed by the Company as of the Reporting Period
□ApplicableN/A
Unit: RMB’0,000
Contract subject Counterparty Total Total Amount Amount Whether it Amount of Recovery of
contract amount paid to be paid was accumulated sales accounts
amount paid during the executed revenue receivable
Reporting normally recognized during
Period the Reporting
Period
Lithium battery LGES Less than Yes As of the end of the
separator US$617 reporting period,
million account receivables
amounted to
RMB225 million. As
of the end of
February 2023,
174,525.5 61,774. 226,524
174,525.52 accumulated
2 29 .48
collections after the
period amounted to
RMB[*],
representing [*]%,
the progress of
collection was
normal.
Lithium battery Yes
Ultium Cells,
separator LLC
Lithium battery Contemporary Yes
separator
Amperex
Technology Co.,
Limited
Lithium battery A large overseas Yes
separator
automobile
manufacturer
Lithium battery China Lithium Yes
separator
Battery
Technology Co.,
Ltd.
Yes
Lithium battery Automotive Cells
separator Company SE
Execution of material contracts of purchase signed by the Company as of the Reporting Period
□ Applicable N/A
(5) Breakdown of operating cost
Product category
Unit: RMB
2022 2021
Year-on-year
By product Item Percentage in the Percentage in the increase or
Amount total operating Amount total operating decrease
cost cost
Raw material 2,930,223,822.90 52.50% 2,082,659,169.66 64.39% 40.70%
Labor 397,348,373.24 7.12% 154,825,073.99 4.79% 156.64%
21
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Film products Manufacturing
cost 1,430,735,154.33 25.63% 671,396,304.17 20.76% 113.10%
Energy and power 823,370,486.37 14.75% 325,666,363.37 10.07% 152.83%
Raw material 41,880,099.43 71.44% 59,056,240.47 88.33% -29.08%
Labor 11,385,802.91 19.42% 1,641,719.57 2.46% 593.53%
Cigarette label Manufacturing
cost 4,178,744.59 7.13% 5,555,699.73 8.31% -24.78%
Energy and power 1,175,089.60 2.00% 604,911.23 0.90% 94.26%
Raw material 470,085,737.08 89.62% 442,144,630.94 91.70% 6.32%
Aseptic Labor 32,097,913.00 6.12% 22,368,092.22 4.64% 43.50%
packaging Manufacturing
cost 15,219,790.08 2.90% 13,133,577.93 2.72% 15.88%
Energy and power 7,101,183.51 1.35% 4,492,472.93 0.93% 58.07%
Raw material 147,911,968.89 91.80% 147,608,537.66 93.00% 0.21%
Labor 4,623,428.02 2.87% 3,842,056.17 2.42% 20.34%
Specialty paper Manufacturing
cost 5,838,040.00 3.62% 4,932,633.82 3.11% 18.36%
Energy and power 2,757,448.91 1.71% 2,328,616.99 1.47% 18.42%
Raw material 20,402,468.26 58.72% 32,072,764.23 88.88% -36.39%
Labor 4,119,488.87 11.86% 1,480,837.59 4.10% 178.19%
Other Products Manufacturing
cost 8,371,308.39 24.09% 1,540,063.23 4.27% 443.57%
Energy and power 1,849,782.05 5.32% 992,484.33 2.75% 86.38%
Notes:
1. “Film products” include BOPP cigarette film, BOPP flat film and lithium battery separator products.
2. “Other products” referred to in the “Breakdown of operating revenue” and “Breakdown of operating cost” in Section IV of this report mainly include
holographic hot stamping foils, film products, packaging films for wrapping by hand, aluminum laminated films, other miscellaneous products and
clearance products. These products account for a small volume of business, and the percentage of the sales of such products in the total sales is low.
Thus, such products belong to the category of other products of main businesses.
3. “Other businesses” referred to in the “Breakdown of operating revenue” in Section IV of this report mainly refers to the Company’s revenue from the
sale of materials, leased assets and the sale of leftover bits and pieces. Other businesses do not belong to the category of the Company’s main
businesses.
22
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
(6) Changes of the scope of the combined financial statements during the Reporting Period
Yes □ No
During the Reporting Period, ten new companies were added to the combined financial statements of the Company: Xiamen Energy New Materials Co.,
Ltd., Yuxi Energy New Materials Co., Ltd.*(玉溪恩捷新材料有限公司), Shanghai Energy New Material Research Co., Ltd.*( 上海恩捷新材料研究有
限公司), Hongchuang Packaging (Jiangsu) Co., Ltd., Energy (Zhuhai Hengqin) New Materials Technology Co., Ltd.*(恩捷（珠海横琴）新材料科技
有限公司), Shanghai Energy Trading Co., Ltd.*(上海恩尔捷贸易有限公司), Jiangsu Energy Trading Co., Ltd.*(江苏恩捷贸易有限公司), SEMCORP
Properties Kft., SEMCORP America Inc. and SEMCORP Manufacturing USA LLC. All of these companies were newly established during the Reporting
Period. The registration of Foshan Donghang Opto-Electric Technology Co., Ltd. was cancelled during the Reporting Period.
(7) Major changes or adjustments in the business, products or services during the Reporting Period
□ Applicable N/A
(8) Key customers and suppliers
The Company's key customers
Total sales of the top five customers (RMB) 7,577,905,075.31
Proportion of total sales of the top five customers over total sales for the year 60.19%
Proportion of sales of connected parties in the top five customers over total sales for the year 0.00%
Information on the top five customers
Percentage in the total sales for the Year
No. Customer Name Sales (RMB)
1 Customer 1 3,971,064,695.00 31.54%
2 Customer 2 1,467,854,687.91 11.66%
3 Customer 3 1,187,589,649.36 9.43%
4 Customer 4 502,110,106.70 3.99%
5 Customer 5 449,285,936.33 3.57%
7,577,905,075.31 60.19%
Total --
Other information on key customers
Applicable □ N/A
The Company had no connected relationship with the top five customers. Directors, supervisors, senior management, core technicians, shareholders
holding more than 5% of the shares, de facto controllers and other related parties of the Company do not directly or indirectly hold their interests in the
top five customers.
The Company’s key suppliers
Total sales of the top five suppliers (RMB) 2,909,302,979.98
Proportion of total sales of the top five suppliers over total sales for the year 28.15%
Proportion of sales of connected parties in the top five suppliers over total sales for the year 0.00%
Information on the top five suppliers
Percentage in the total purchase amount for the
No. Supplier Name Purchase Amount (RMB)
Year
1 Supplier 1 981,905,175.40 9.50%
2 Supplier 2 783,855,928.68 7.58%
3 Supplier 3 594,738,761.59 5.75%
4 Supplier 4 274,895,182.78 2.66%
5 Supplier 5 273,907,931.53 2.65%
Total -- 2,909,302,979.98 28.15%
Other information on key suppliers
Applicable □ N/A
23
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
The Company had no connected relationship with the top five suppliers. Directors, supervisors, senior management, core technicians, shareholders
holding more than 5% of the shares, de facto controllers and other related parties of the Company do not directly or indirectly hold their interests in the
top five suppliers.
3. Expense
Unit: RMB
Year-on-year
2022 2021 increase or Explanations of material changes
decrease
Selling expenses 74,455,043.47 0.57%
74,035,002.36
Administrative expenses 323,291,931.01 49.44% mainly attributable to the equity incentives
carried out by the Company during the
reporting period, and the growth of the
216,333,939.36
Company's business scale, and the
corresponding increase in employee
compensation and bonus
Financial expenses Mainly attributable to the increase in bank
borrowings as result of the increase in capital
211,531,870.97 152,982,055.47 38.27% demand for daily operating activities due to
the growth of business volume of the
Company
R&D expenses Mainly attributable to the increase in the
related R&D material and personnel
724,297,699.66 409,178,730.28 77.01%
expenses as the increase in the investment in
R&D activities by the Company
4. Investments in R&D
Applicable □ N/A
Expected impacts on the
Names of key Objectives to be
Project purposes Project progress Company's future
R&D projects achieved
development
Improving the
Homogenization of competitiveness and sales
Development of Entering the supply
base film volume of the Company's
low moisture and chain of local battery
microstructure and separator products, entering
high heat resistance enterprises in Europe Shipment
development of high the supply chain of overseas
ceramic coating and realizing batch
heat resistance and high-quality customers and
products supply
low moisture coating increasing the Company's
market share
Improving the sales volume
Development of All physical properties
of the Company's separator
base films with have met the needs of
products, improving the
high safety by Batch supply for a the customer, and we Mass production and
stickiness of overseas high-
using simultaneous Japanese customer are waiting for the shipment
quality key customers and
biaxial stretching signing of
establishing stable
process specifications.
cooperative relations
The added value of the
The physical properties
product is higher than that of
have basically met the
conventional coated film.
needs of the customer,
Aramid coating Batch supply for a Mass production and The product helps us enter
and the separator has
separators Japanese end customer shipment the supply chain of overseas
been put through a
high-end customers and
preliminary test
improve the Company's
successfully
market share
Developing ultra-thin The physical properties Improving the
have basically met the
Ultra-thin high- 5μm separator for high Mass production and competitiveness and sales
needs of customers,
strength separators energy density lithium and the separator has shipment volume of the Company's
battery been put through a separator products and
24
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
preliminary test increasing the Company's
successfully market share
The physical properties With the aid of technical
have basically met the innovation, meeting the
Developing high needs of the customer,
Mass production of demand for lithium batteries
energy density and and the separator has
semi-solid state been put through a with high energy density and
high safety lithium Mass production and
lithium-ion preliminary test high safety, enhancing the
battery separator with shipment
conductivity successfully Company's technical
an energy density of
separators leadership and
above 250 wh/kg
comprehensive
competitiveness
Design and The physical properties Improving the
development of the Reducing the shutdown have basically met the competitiveness and sales
third generation
temperature and customer's needs, and Mass production and volume of the Company's
base films with low
shutdown improving the safety of we are waiting for the shipment separator products and
temperature and separators customer to further increasing the Company's
high safety adjust his/her needs market share
With the aid of technical
Basic development
We have the ability to innovation, comprehensively
of base films with
Increasing meltdown send samples and improving the safety of
ultra-high Mass production and
temperature to enhance cooperate with separators and enhancing the
meltdown shipment
the safety of separators customers to mass competitiveness of the
temperature and
produce Company's products and
high safety
technical advantages
The base film has been
Improving the sales volume
put through a
of the Company's separator
Mass production and preliminary test
Mass production of products, improving the
shipment for domestic successfully, and we Mass production and
high porosity/high- stickiness to high-quality
and foreign end continuously improve shipment
strength base films customers at home and
customers the performance of
abroad and establishing
mass production
stable cooperative relations
products
The physical properties
Mass production of
have met the Reducing costs, improving
new generation Mass production and
customer's separator bonding
coated films with shipment for domestic Mass production and
requirements, and the performance and increasing
low cost, high and foreign end shipment
product performance the competitiveness of the
adherence and high customers
has been continuously Company's products
heat-resistance
improved
The physical properties
Expanding the have basically met the Expanding the application
Research of ultra-
Company's business needs of customers, scenarios of separators, the
small pore size Mass production and
and increasing the and separators have Company's scope of business
special filtration shipment
application scenarios of been put through a and comprehensive
membranes
separators preliminary test competitiveness
successfully
Development of Expanding separator
Expanding the The pilot test is Determining
membranes for application scenarios and the
Company's business underway, and it has Operation mode and
municipal and Company's scope of business
and increasing entered the mass starting mass
industrial and enhancing the
wastewater separator application production preparation production and
Company's comprehensive
treatment scenarios stage shipment
competitiveness
Three kinds of Realizing mass Comprehensively improving
aluminum-plastic film production and the product performance,
Development of Expanding the scope of products with a high delivery, reaching the global advanced
aluminum business of the degree of formability, a continuously level, laying a good
laminated films Company high degree of improving product foundation for entering the
durability and a high performance and high-end market and
degree of insulation entering high-end enhancing the Company's
25
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
have been launched customer supply comprehensive
and promoted. They chain competitiveness.
are used by two high-
end customers
Conforming to the
requirements of ecological
environment protection,
relevant regulations and
R&D of new Meeting market policies, fulfilling social
Going through a Making film material
degradable film demand with the aid of responsibilities, improving
preliminary test be degradable
materials technical reserve the market competitiveness
of the Company's products
and improving the
Company's economic
benefits and corporate image.
Replacing
Going with the development
petroleum-based
concept of "ecological and
polymer materials
environmental protection,
with bio-based
The samples have been energy conservation and
R&D of bio-based Meeting market polymer materials to
sent out, and the carbon reduction" and laying
polyethylene demand with the aid of achieve 100%
plastic caps project is in the the foundation for the
technique reserve natural degradation
popularization stage Company's aseptic packaging
of packaging
products to develop the
materials and
market of Gable top
achieve sustainable
packaging (with a lid).
development.
Making the
conventional
packaging
Making the packaging
interesting.
The samples have been materials for liquid novel and
Scratch and sniff Expanding the market Customers can smell
sent out, and the attractive and enhancing the
gable top of the packaging the fragrance after
project is in the market competitiveness of
packaging materials for liquid scratching the
popularization stage the Company's aseptic
designated area,
packaging products.
improving the
experience of end
customers
The material has a good
barrier against light, water
Replacing traditional vapor and oxygen, improving
High barrier oil
Expanding the market packaging for edible the sealing of the Company's
packing materials First order has been
of edible oil, soy sauce oil with molded pulp aseptic packaging products
with Al-PE-Paper placed
and other condiments packaging to reduce and laying a foundation for
complex structure
the use of plastics the Company's aseptic
packaging products to
develop diversified markets.
Information on the Company’s R&D personnel
2022 2021 Year-on-year change (%)
Number of R&D personnel 512 409 25.18%
Percentage of R&D personnel in total employees
6.87% 6.87% 0.00%
Educational background structure of R&D personnel
Bachelor’s degree and below 408 334 22.16%
Master’s degree and above 104 75 38.67%
Age structure of R&D personnel
Under 30 183 140 30.71%
26
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Aged 30-40 252 199 26.63%
Information on the investment in R&D
2022 2021 Year-on-year change (%)
Amount of the investment in R&D
724,297,699.66 409,178,730.28 77.01%
(RMB)
Percentage of the investment in
R&D in operating revenue
5.75% 5.13% 0.62%
Capitalized investment in R&D
(RMB)
0.00 0.00 0.00%
Percentage of the capitalized
Investment in R&D in the 0.00% 0.00% 0.00%
investment in R&D
Reasons for and impacts of significant changes of the composition of the Company’s R&D personnel
□ Applicable N/A
Reasons for significant year-on-year changes of the percentage of the investment in R&D in the operating revenue
□ Applicable N/A
Reasons and justification for significant changes of the capitalization rate of the investment in R&D
□ Applicable N/A
5. Cash flow
Unit: RMB
Item 2022 2021 Year-on-year increase or decrease
Subtotal of cash inflows from operating
activities
8,891,273,722.39 6,846,043,812.83 29.87%
Subtotal of cash outflows from operating
activities
8,387,686,123.73 5,427,398,435.01 54.54%
Net cash flows from operating activities 503,587,598.66 1,418,645,377.82 -64.50%
Subtotal of cash inflows from investment
activities
72,299,752.44 1,814,884,845.70 -96.02%
Subtotal of cash outflows from investment
activities
5,757,926,436.30 5,530,360,175.52 4.11%
Net cash flows from investment activities -5,685,626,683.86 -3,715,475,329.82 --
Subtotal of cash inflows from financing
activities
14,379,311,728.60 6,116,519,647.62 135.09%
Subtotal of cash outflows from financing
activities
7,600,203,806.51 4,503,459,616.59 68.76%
Net cash flows from financing activities 6,779,107,922.09 1,613,060,031.03 320.26%
Net increase in cash and cash equivalents 1,602,756,557.41 -685,616,215.95 --
Main reasons for significant year-on-year changes of the relevant data
Applicable □ N/A
(1) The cash outflow from operating activities increased significantly on a year-on-year basis, and the net cash flow from operating activities
decreased significantly on a year-on-year basis, mainly because of the business growth of the Company during the Reporting Period, the
corresponding increase in operating payments, taxes and payroll expenses, and the significant increase in cash outflow from operating activities.
(2) The significant year-on-year decrease in the cash inflow from investment activities and the net cash flow from investment activities is mainly
because of the expansion of the scale of the Company's lithium battery separator business, the increase in funds used to construct fixed assets, the
redemption of due wealth management funds and the reduction of income generated.
(3) The relatively large year-on-year growth of cash flow from financing activities is mainly because of the growth of the Company's business
during the Reporting Period, the increased demand for funds from daily operating activities, the increase in bank borrowings, and the increase in
repayment of loans and interest.
(4) The net year-on-year increase in cash and cash equivalents is mainly due to the increase in net cash flows from financing activities during the
Reporting Period.
Main reasons for the marked difference between net cash flow from operating activities during the Reporting Period and net profit for the Year
Applicable □ N/A
Mainly due to expenses on fixed asset such as devices directly paid by bills received by the Company.
27
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
V. Analysis of Non-main Businesses
□ Applicable N/A
VI. Analysis of Assets and Liabilities
1. Significant changes of the composition of assets
Unit: RMB
End of 2022 Beginning of 2022
Percentage
Percentage Percentage change Reasons for significant changes
Amount in the total Amount in the total
assets assets
Monetary capital Mainly attributable to the increase in
3,954,316,82 income collection as the increase in
10.24% 1,833,450,205.69 7.02% 3.22%
9.31 payment and business volume during
the reporting period
Accounts
6,559,717,11
receivable 16.98% 4,405,436,085.52 16.86% 0.12%
7.36
Contract assets
0.00% 0.00% 0.00%
2,463,490,23
Inventories 6.38% 1,681,448,170.29 6.44% -0.06%
8.80
Investment
8,399,300.54 0.02% 8,933,531.66 0.03% -0.01%
properties
Long-term equity
5,017,642.31 0.01% 3,545,984.21 0.01% 0.00%
investments
Mainly due to the increase in payment
Fixed assets for construction of fixed assets as a
14,306,873,3 10,877,888,212.9
37.04% 41.64% -4.60% result of the expansion of the
99.88 1 Company’s lithium battery separator
business during the reporting period
Projects under Mainly due to the increase in
construction 3,584,554,50 engineering construction as a result of
9.28% 1,752,915,718.82 6.71% 2.57% the expansion of production capacity
9.73 of lithium battery separator by the
Company during the reporting period
Right-of-use assets 3,926,781.90 0.01% 0.00% 0.01%
Short-term Mainly due to the increase in bank
borrowings 9,527,853,43 borrowings as a result of the increase
24.67% 4,116,148,340.30 15.76% 8.91% in capital demand for daily operating
4.55
activities due to the growth of
business volume of the Company
Contract liabilities 24,596,154.1
0.06% 761,923,312.38 2.92% -2.86%
5
Long-term 4,179,264,74
10.78% 2,803,108,832.30 10.73% 0.05%
borrowings 6.86
Lease liabilities
1,331,485.16 0.00% 0.00% 0.00%
High percentage of overseas assets
□ Applicable N/A
2. Assets and liabilities measured at fair value
Applicable □ N/A
Unit: RMB
Profit and
Accumulate Impairment Amount of Amount of
loss from
Amount d fair value provided purchase sale during Other Amount as at
Item the fair
as at the changes during the during the the changes the end of the
value
beginnin recognized Reporting Reporting Reporting Reporting
changes
g of the through Period Period Period Period
28
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Reportin during the equity
g Period Reporting
Period
Financialassets
1.
Financial
assets
held for
trading 5,137,194.34 5,137,194.34 0.00
(excludin
g
derivative
financial
assets)
2.
Derivativ
e 9,850,069.59 9,850,069.59
financial
assets
3. Other
investme
nt in
debts
4. Other
investme
nt in 110,000,000.00 110,000,000.00
equity
instrumen
ts
Sub-total
of 115,137,194.34 9,850,069.59 5,137,194.34 119,850,069.59
financial
assets
Others
526,473,335.53 692,286,629.08 526,473,335.53 692,286,629.08
Including
: Bank 412,477,885.83 692,286,629.08 412,477,885.83 692,286,629.08
acceptanc
e bills
Commerc
ial
acceptanc
e bills
Accounts
receivabl 113,995,449.70 113,995,449.70
e
Total
641,610,529.87 9,850,069.59 692,286,629.08 531,610,529.87 812,136,698.67
Financial
0.00 94,394.79 94,394.79
liabilities
Other changes
Are there any significant changes of the measurement attributes of the Company’s major assets during the Reporting Period
□Yes No
3. Restriction of asset rights as of the end of the Reporting Period
Item Balance Reasons for restriction
Bank draft margin, letter of credit margin, letter of guarantee margin, performance deposit,
Monetary funds 982,223,348.31
security deposits for lock exchange, deposit regulated by banks
Receivables financing 4,227,939.20 Bank loans and bank acceptance through pledge
Bills receivables 775,359,141.70 Bank loans through pledge
Other non-current assets 292,390,109.05 Bank loans through pledge
29
Yunnan Energy New Material Co., Ltd. 2022 Annual Report
Non-current assets within Bank loans through pledge
28,105,438.78
one year
Bills receivables 311,247,569.39 Comprehensive bank credit and loan through mortgage
Intangible assets 53,697,916.67 Comprehensive bank credit and loan through mortgage
Total 2,447,251,463.10 -
VII. Analysis of Investments
1. Summary
Applicable □ N/A
Total investment amount during the Reporting Total investment amount during the same period of last year (RMB) Change (%)
Period (RMB)
7,648,313,351.79 6,676,555,356.59 14.55%
2. Substantial equity investments obtained during the Reporting Period
□ Applicable N/A
3. Substantial ongoing non-equity investments during the Reporting Period
Applicable □ N/A
30
Unit: RMB
Reasons
for
Accumulat failing to
ed realized make
Industries revenue as planned
Whether Amount of Accumulated progress
related to the at the end
it is an investments actual investment and
Investm Project Projecte of the
investment during the as of the end of the Disclosure date
Project name ent investme Source of progress d generate Index to disclosure (if any)
project Reporting Period Reporting (if any)
mode nt in Reporting funds revenue projected
Period
fixed Period revenue
assets
Wuxi Energy New Self- Yes Lithium battery 1. self-owned N/A July 4, 2018 Please refer to the Announcement on
Material Industrial construc separator and self-raised Implementation of Wuxi Energy New
Base tion 2,060,110,764. funds; 2. raise -- 662,811,743. Material Industrial Base by Wuxi Energy
25,277,048.23 funds by 100.00%
32 66 (No.: 2018-062) disclosed on the Cninfo
convertible website.
bonds
Wuxi Energy New Self- Yes Lithium battery 1. self-owned N/A July 2, 2019 Please refer to the Announcement on
Material Industrial construc separator and self-raised Capital Increase by Shanghai Energy to
Base Phase II tion funds; 2. raise Wuxi Energy and Investment in Wuxi
2,367,902,997. funds by way -- 444,623,814. Energy New Material Industrial Base
800,803,932.15 93.28%
59 of non-public 48
Phase II - Lithium Battery Separator
offering in Film (No.: 2019-076) disclosed on the
2020 Cninfo website.
Zhuhai Energy Self- Yes Lithium battery Self-owned and N/A March 15, 2019 Please refer to the Announcement on
Phase II construc separator self-raised Investment by Zhuhai Energy in
1,381,005,891. funds 1,363,610,36
tion 42,107,637.76 100.00% -- Lithium Battery Separator Project
50 9.49
Phase II (No.: 2019-024) disclosed on the
Cninfo website.
Jiangxi Tonry Self- Yes Lithium battery 1. self-owned N/A November 2, Please refer to the Announcement on A
Phase I construc separator and self-raised 2018 Controlled Subsidiary’s Acquisition of
tion 1,739,610,313. funds; 2. raise --
969,102,733. 100% Equity of Jiangxi Tonry New Energy
2,246,661.94 99.65%
02 funds by 79 Technology Development Co., Ltd. (No.:
convertible 2018-141) disclosed on the Cninfo website.
bonds
Jiangxi Tonry Self- Yes Lithium battery 1. self-owned N/A March 24, 2020 Please refer to the Announcement on Plan
Phase I Expansion construc separator and self-raised for Non-public Offering of A Shares in
tion funds; 2. raise 2020 (No.: 2020-050) disclosed on the
2,471,737,219. -- 483,115,481.
838,429,945.98 funds by way 91.35% Cninfo website.
12 94
of non-public
offering in
2020
Hungary Lithium Self- Yes Lithium battery Self-owned and N/A November 11, Please refer to the Announcement on
Battery Separator construc separator self-raised 2020 Construction of Wet-process Lithium
979,491,095.1 funds -- Battery Separator Project in Hungary
Film tion 898,509,595.22 40.00% 0.00
7
(No.: 2020-204) disclosed on the Cninfo
website.
Chongqing Energy Self- Yes Lithium battery Self-owned and N/A November 23, Please refer to the Announcement on Plan
662,328,512.3 self-raised -- 106,190,908. 2021
High-performance construc separator 424,019,221.74 100.00% for Non-public Offering of A Shares in
6 funds 17
2021 (No.: 2021-188) disclosed on the
31
Lithium Battery tion Cninfo website.
Micropore
Separator
(Phase I)
Chongqing Energy Self- Yes Lithium battery Self-owned and N/A November 23, Please refer to the Announcement on Plan
High-performance construc separator self-raised 2021 for Non-public Offering of A Shares in
Lithium Battery tion funds 2021 (No.: 2021-188) disclosed on the
668,846,162.8 -- 23,362,512.1
667,767,335.47 70.00% Cninfo website.
Micropore 3 7
Separator
(Phase II)
Chongqing Energy Self- Yes Lithium battery Self-owned and N/A December 8, Please refer to the Announcement on the
High-performance construc separator self-raised 2021 Progress of Chongqing Energy
Lithium Battery tion funds High-performance Lithium Battery
42,154,520.91 42,488,988.83 90.00% -- 0.00 Micropore Separator Project (No.:
Micropore
Separator 2021-203) disclosed on the Cninfo website.
(Phase III)
Jiangsu Energy EV Self- Yes Lithium battery Self-owned and N/A November 23, Please refer to the Announcement on Plan
Lithium Battery construc separator self-raised 2021 for Non-public Offering of A Shares in
Separator tion 245,785,358.6 funds -- 2021 (No.: 2021-188) disclosed on the
245,661,329.92 15.00% 2,616,032.96
1 Cninfo website.
Industrialization
Project
Jiangsu Ruijie EV Self- Yes Aluminum Self-owned and N/A November 23, Please refer to the Announcement on Plan
Lithium Battery construc laminate self-raised 2021 for Non-public Offering of A Shares in
Aluminum tion d film funds 2021 (No.: 2021-188) disclosed on the
334,566,119.2 --
Laminated Film 334,080,915.06 36.00% 0.00 Cninfo website.
5
Industrialization
Project
Suzhou Self- Yes Lithium battery Self-owned and N/A November 23, Please refer to the Announcement on Plan
GreenPower construc separator self-raised 2021 for Non-public Offering of A Shares in
Annual Production tion funds 2021 (No.: 2021-188) disclosed on the
of 200 Million Cninfo website.
451,556,502.6 261,256,493.
449,506,414.88 51.06% --
Square Meters of 0 23
Lithium-ion Battery
Coating Separators
Project
Yuxi Energy Self- Yes Lithium battery Self-owned and N/A March 30, 2022 Announcement on the progress on Yuxi
construc separator self-raised Municipal
lithium battery funds People’s Government
tion
separator Signing the Strategic Cooperation Framework
production line Agreement (Announcement
construction No.: 2022-044) disclosed on the Cninfo
website.
project with an 2,410,889.35 2,410,889.35 3.31% -- 0.00
annual
production
capacity of 1.6
billion square
meters
Dry-process other Yes Lithium battery Self-owned and N/A February 1, 2021 Announcement on Gaoan Municipal
329,789,637.7 self-raised -- People’s Government in Jiangxi Province
Lithium-ion separator (Dry- 276,509,230.59 8.49% 0.00
0 funds Signing the Contract for the Construction
32
Battery Separator process) of Dry-process Lithium-ion Battery
Films Separators Project (Announcement
Project No.: 2021-018) disclosed on the Cninfo
website.
Hubei Energy other Yes Lithium battery N/A August 3, 2021 Announcement on the Plan to Set Up a Joint
EV Lithium separator Venture with EVE to Construct a Wet-
Processing
Battery Separator -- Lithium Battery Separator Film Project
57,700,414.85 57,700,414.85 1.11% 0.00
Industrialization (Announcement
Project No.: 2021-128) disclosed on the Cninfo
website.
Total
-- -- 13,795,330,86 4,316,690,08 --
-- 5,107,185,094.05
7.10
-- -- 0.00
9.89
-- --
33
4. Financial asset investments
(1) Investments in securities
□ Applicable √ N/A
No investments in securities during the Reporting Period.
(2) Investments in derivatives
√ Applicable □ N/A
1） Investments in derivatives for hedging during the Reporting Period
Applicable □ N/A
Unit: RMB’0,000
Proportion of the
amount of
Amount of Amount of investment at the
Profit and loss from Accumulated
purchase during sale during Closing end of the period in
Type of derivative investment Initial investment amount changes of fair value in changes of fair value
the Reporting the Reporting amount the Company's net
the current period included in equity
Period Period assets at the end of
the Reporting
Period
Forward foreign exchange contract 0 975.57 0 133,912.3 108,570.53 27,247.85 0.00%
Total 0 975.57 0 133,912.3 108,570.53 27,247.85 0.00%
Accounting policies and specific principles of
accounting for hedging business during the Accounting is carried out in accordance with the relevant provisions of Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement
Reporting Period, and details of whether there of Financial Instruments, Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments, Accounting Standards for Business
are significant changes as compared with the Enterprises No. 39 – Measurement of Fair Value, etc.. There are no significant changes as compared with the previous Reporting Period.
previous Reporting Period
Actual profit and loss during the Reporting
The actual profit and loss of the Company's forward foreign exchange contract is RMB 12.0806 million.
Period
With the increasing transparency of the RMB pricing mechanism and the acceleration of the market-oriented reform of the exchange rate, the volatility of
Hedging Effect
exchange rate and interest rate has been increasing, and the uncertainty of foreign exchange market has become increasingly prominent. With the development
34
of the Company's global business layout, the Company's export business revenue increase continuously, foreign currency business is involved in daily
operation, and a certain amount of foreign exchange assets and foreign exchange liabilities are held. In order to lock costs and prevent the risk of exchange rate
fluctuations, it is necessary for the Company to carry out the foreign exchange derivatives trading business related to the daily business needs according to the
specific situation, in order to reduce the risk of exchange rate or interest rate fluctuations that the Company faces. The foreign exchange derivatives trading
business carried out by the Company is closely related to the daily operation needs, which can further improve the Company's ability to deal with the risk of
foreign exchange fluctuations, avoid and prevent the risk of foreign exchange rate and interest rate market fluctuations better, and enhance the Company's
financial stability. The relevant hedging business carried out by the Company this year achieved the expected results.
Capital source of derivative investment Own funds
The Company's foreign exchange derivatives trading business shall follow the principles of legality, prudence, safety and effectiveness, and shall not carry out
speculative and pure arbitrage trading. However, the foreign exchange derivatives trading operation still has the following risks, including but not limited to:
1. Market risks: the difference between the exchange rate and interest rate of the contract and the actual exchange rate and interest rate on the maturity date of
foreign exchange derivatives trading will generate trading profits and losses. During the duration of foreign exchange derivatives, revaluation gains and losses
will be generated in each accounting period. The cumulative value of revaluation gains and losses till the maturity date is equal to the trading gains and losses.
2. Liquidity risks: foreign exchange derivatives are based on the Company's foreign exchange assets and liabilities and match with the actual foreign exchange
receipts and payments to ensure that there are sufficient funds for clearing at the time of delivery, so as to reduce the cash flow demand on the maturity date. 3.
Performance risk: The counterparties of the Company's foreign exchange derivatives transactions are banks with good credit and have established long-term
business relations with the Company, so the performance risk is low. 4. Operational risks: when conducting transactions, if the operators fail to conduct foreign
Risk analysis and control measures of derivative exchange derivatives trading according to the prescribed procedures or fail to fully understand the derivatives information, it will bring operational risks. 5.
during the Reporting Period (including but not Legal risks caused by contract terms: if the terms of the transaction contract are not clear, it may bring legal risks.
limited to market risks, liquidity risks, credit
risks, operational risks, legal risks, etc.) Risk control measures taken by the Company for foreign exchange derivatives transactions:
1. The Company has formulated the Foreign Exchange Derivatives Trading Business Management System, which clearly stipulates the operation principles,
approval authority, management and internal operation process, information isolation measures, internal risk reporting system, risk handling procedures,
information disclosure and other measures of the foreign exchange derivatives trading business to control the transaction risks. 2. The foreign exchange
derivatives transactions carried out by the Company are aimed at locking costs, avoiding and preventing exchange rate and interest rate risks, and any risk
speculation is prohibited. 3. The Company will carefully review the contract terms signed with banks to prevent legal risks. 4. The Finance Department of the
Company will track the changes in the open market price or fair value of foreign exchange derivatives continuously, timely assess the changes of the risk
exposure of foreign exchange derivatives transactions, and regularly report to the management of the Company, timely report any abnormalities found, and
warn the management of risks and implement emergency measures. 5. The internal audit department of the Company shall supervise and inspect the
compliance of the decision-making, management and execution of foreign exchange derivatives transactions.
Changes of the market price or fair value of the
derivative products invested in during the
Reporting Period, the analysis of the fair value of The Company's foreign exchange hedging transactions are mainly forward foreign exchange contracts, and the fair value of the contract is the price in the
derivatives should disclose the specific methods valuation notice of each bank
used and the setting of relevant assumptions and
parameters
Litigations (if applicable) N/A
Disclosure date of announcement of the Board of
Directors for approval of derivative investments April 12, 2022
(if any)
Special opinions on independent directors on the
Company's derivative investments and risk The Company has issued a feasibility analysis report on the proposed foreign exchange derivative trading business. The main purpose of the foreign exchange
35
control derivative trading business is to avoid the foreign exchange risks caused by the fluctuation of the RMB exchange rate, effectively control the cost uncertainty
caused by the foreign exchange risks, and meet the needs of the Company's operation and development. The Company has formulated the Foreign Exchange
Derivatives Trading Business Management System and relevant risk control measures, which are conducive to strengthening the risk management and control
of foreign exchange derivatives trading. This foreign exchange derivative trading business has performed the corresponding decision-making procedures and
information disclosure obligations, conforms to the relevant provisions of the Guidelines for the Standardised Operation of Listed Companies on the SME
Board of Shenzhen Stock Exchange, and does not harm the interests of the Company and all shareholders, especially the small and medium-sized shareholders.
We approve the foreign exchange derivative trading business of the Company.
2）Investments in derivatives for speculation during the Reporting Period
□ Applicable N/A
No investments in derivatives for speculation during the Reporting Period.
5. Use of funds raised
Applicable □ N/A
(1) Overall use of funds raised
Applicable □ N/A
Unit: RMB’0,000
Year of Way of Total Total The Total amount Total Percentage of the Total amount Use and Amount of funds
raising raising funds amount of amount of accumula of funds accumulate total accumulated of unused whereabouts of raised that have been
funds funds funds used ted raised with d amount of amount of funds funds unused funds idle for more than
raised during the amount of changes of funds raised raised with changes two years
Reporting funds use during the with of use in the total
Period used Reporting changes of amount of funds
Period use raised
Initial Deposited to
2016
public a special
offering 74,776.7 0 64,188.02 0 10,588.68 14.16% 10,588.68 bank account 10,588.68
for raised
funds
36
Public offering
ofconvertible
2020
corporate
158,612.26 0 158,612.26 0 0 0.00% 0 N/A 0
bonds in 2020
Non-public
Deposited to
2020 offering of
a special
sharesin 2020 498,250.46 14,536.38 503,663.58 0 0 0.00% 0 bank account 0
for raised
funds
Total -- -
731,639.42 14,536.38 726,463.86 0 10,588.68 1.45% 10,588.68 10,588.68
-
Explanations of the overall use of the funds raised
I. Initial Public Offering
With the approval of CSRC ZJXK [2016] No. 1886, the Company made its initial public offering of 33.48 million RMB-denominated ordinary shares. China Merchants Securities Co., Ltd., the main underwriter,
issued 33.48 million shares by combining offline enquiry and allotment to investors and online subscription based on market value to public investors. All of the shares issued are new shares, without transfer of old
shares. Among them, 3.348 million shares were allotted offline, 30.1320 million shares were issued online at a price of RMB23.41 per share. In addition, after deducting RMB3,599.98 of newly increased external
expenses directly related to the issuance of equity securities, such as online issuance fee, prospectus printing fee, accountancy fees relating to filing taxes, counsel fee and valuation fee, the net amount of raised
funds was RMB747.767 million. The availability of the above raised funds was verified by Dahua CPAs (SGP) with the capital verification report of “DHYZ [2016] No. 000897”. As of September 30, 2016, the
self-owned funds invested in the projects by which funds were raised reached RMB236.6591 million, which was audited by Dahua CPAs (SGP). Dahua CPAs (SGP) issued the report of DHHZ No. [2016] 004562.
In 2017, the total amount of used funds was RMB26,067,736.89. In 2018, the total amount of used funds was RMB36,288,006.85. In 2019, the total amount of used funds was RMB24,728,775.11. From 2020 to
2021, the total amount of used funds was RMB0.00. During the Reporting Period, the total amount of used funds was RMB0.00. As of December 31, 2022, the balance of funds raised was RMB116,104,516.17
(including the net interest income of the special bank account of RMB10,217,752.22 (after deducting handling charges)).
II. Public Offering of Convertible Corporate Bonds in 2020
Upon approval from the CSRC with the Reply on to Approve the Public Offering of Convertible Corporate Bonds of Yunnan Energy New Material Co., Ltd. (ZJXK No. [2019] 2701), the Company publicly issued
16 million convertible corporate bonds on February 11, 2020, with a face value of RMB100 each bond and a total amount of RMB1,600,000,000. After deducting the underwriting and sponsorship fees (pre-tax) of
RMB9,433,962.26 and other offering expenses (pre-tax) of RMB4,443,396.23 from the total amount of proceeds from public offering of convertible corporate bonds, the net amount of proceeds from offering by
the Company was RMB1,586,122,641.51. The availability of funds raised this time was verified by Dahua CPAs (SGP) with the capital verification report of “DHYZ No. [2020] 000047”. As of March 16, 2020,
before the availability of funds raised, the self-collected funds invested in the projects by which funds were raised reached RMB1,697,984,425.54, which was fully replaced with the funds raised by issuing
convertible corporate bonds with an amount of RMB 1,586,122,641.51. Such financial activities were audited by Dahua CPAs (SGP), and Dahua CPAs (SGP) issued a report of DHHZ No. [2020] 001799. As of
December 31, 2020, the funds raised from convertible corporate bonds by the Company were all replaced, and the balance of the special account was RMB0.00. The Company has cancelled the special account.
III. Non-public Offering of Shares in 2020
Upon approval from the CSRC with the Reply on Approving the Non-public Offering of Shares of Yunnan Energy New Material Co., Ltd. (ZJXK No. [2020] 1476), the Company non-publicly issued 69,444,444
RMB-denominated ordinary shares to 22 specific investors on August 17, 2020, with a face value of RMB 1.00 each share, at the offering price of RMB72.00 per share, and the total amount of the funds raised
from this offering was RMB4,999,999,968.00. After deducting the underwriting and sponsorship fees (pre-tax) of RMB14,150,943.40 and other offering expenses (pre-tax) of RMB3,344,470.11 from the total
amount of the funds raised from this offering, the net amount of funds raised from this offering by the Company was RMB4,982,504,554.49. The availability of funds raised by this offering was verified by Dahua
CPAs (SGP) with the capital verification report of “DHYZ No. [2020] 000460”. Before the funds raised were available, the self-collected funds invested in the projects by which funds were raised reached RMB
254,221,260.11, which was audited by Dahua CPAs (SGP). Dahua CPAs (SGP) issued the report of DHHZ No. [2020] 007436. The amount of used funds was RMB1,999,307,646.21 in 2020. The amount of used
funds was RMB2,637,743,136.15 in 2021. As of December 31, 2022, the balance in the account of funds raised was RMB0.00, and the Company has cancelled the special account of raised funds.
37
(2) Projects in which the Company undertakes to invest the funds raised
√ Applicable □ N/A
Unit: RMB’0,000
Projects in which the Company undertakes to invest the Whether the project has Total Total Investment Accumulated Investment Date on Benefits Whether Whether the
funds raised and the whereabouts of the over raised funds been changed, including amount of investmen amount during investment progress as which the achieved the feasibility
changes of some parts of funds the t amount the Reporting amount as of of the end project was during the estimated of the
the project Company after Period the end of the of the ready Reporting benefits project has
undertakes adjustmen Reporting Reporting Period have been changed
to invest t (1) Period (2) Period (3) achieved significantl
＝(2)/(1) y
Projects in which the Company undertakes to invest
1. Reconstruction and expansion project of color
No August 15, No No
packaging boxes with annual production output of 3 28,414.7 28,414.7 0 28,414.7 100.00% 2019 4,209.32
billion pieces
2. Reconstruction and expansion project of high-grade
environmental-friendly specialty papers with annual Yes N/A Yes
10,684.57 3,617.5 0 3,617.5 100.00% —
production output of 13,000 tons
38
3. R&D center construction project Yes 4,993.17 1,471.56 0 1,471.56 100.00%— N/A Yes
4. Repayment of bank loans No 20,000 20,000 0 20,000 100.00%— N/A No
5. Addition to current capital (IPO) No 10,684.26 10,684.26 0 10,684.26 100.00%— N/A No
6. Lithium battery separator project (Phase I) of Jiangxi Tonry New
Energy Technology Development Co., Ltd. with an annual December31, 56,959.
No 58,612.26 58,612.26 0 58,612.26 100.00% No No
production output of 400 million square meters 2019 36
7. Wuxi Energy New Material Industrial Base project
September30, 37,074.
No 100,000 100,000 0 100,000 100.00% No No
2020 22
8. Expansion of lithium battery separator project (Phase I) of July 31, 2022 46,279.
No 148,250.46 148,250.46 149,909.24 100.00% No No
Jiangxi Tonry New Energy Technology Development Co., Ltd. 48
9. Expansion of Wuxi Energy New Material Industrial Base Phase II
October 31, 39,892.
No 200,000 200,000 14,536.38 203,754.34 100.00% 2022 No No
5
10. Addition to current capital (non-public offering in 2020) No 150,000 150,000 0 150,000 100.00% — N/A No
Subtotal of the projects in which the Company undertakes to invest --
731,639.42 721,050.74 14,536.38 726,463.86 -- -- 184,414 -- --
.88
Whereabouts of the over raised funds
N/A 0 0 0 0 0.00 % 0
Subtotal of whereabouts of over raised funds
-- 0 0 0 0 -- 0 -- --
--
--
Total
731,639.42 721,050.74 14,536.38 726,463.86 -- -- 184,4 -- --
14.88
The estimated benefit is the estimated annual net profit when the project is ready for use and the capacity is fully released. As of the end of the
According to the situation of each project, explain the reasons for not
Reporting Period, the "reconstruction and expansion project of color packaging boxes with an annual production output of 3 billion pieces"
achieving the planned progress and estimated benefits (including
"whether the estimated benefits have been achieved" and the reasons reached its capacity. However, due to the impact of the increase in price of bulk raw materials and Covid pandemic, and the benefits of the
Reporting period did not reach the expected benefit. Under the “Lithium battery separator project (Phase I) with an annual production output
for selecting "N/A")
of 400 million square meters of Jiangxi Tonry New Energy Technology Development Co., Ltd.”, “Wuxi Energy New Material Industrial
Base”, “Expansion of lithium battery separator project (Phase I) of Jiangxi Tonry New Energy Technology Development Co., Ltd.” And
“Expansion of Wuxi Energy New Material Industrial Base Phase II”, base film had release their capacities, but coating film did not release the
capacities, and did not reach the estimated benefits for the year.
39
I. Initial Public Offering 1. The “reconstruction and expansion project of high-grade environmental-friendly specialty papers with an annual
production output of 13,000 tons” was planned by the Company based on the market situation and the Company’s production capacity before
listing. As time goes by, the market has changed dramatically. Since 2016, the purchase mode of downstream tobacco manufacturers for
specialty paper products has been adjusted from quantity allocation by cigarette manufacturers to the independent purchasing mode through
centralized bidding or commercial negotiation by cigarette label printing enterprises. Cigarette-related enterprises can expand the bargaining
range from region to the whole country by means of bidding or the commercial negotiation mode of public market inquiry and price
Significant changes of the feasibility of the project negotiation by themselves, breaking the original competition pattern featuring fixed share and region. As a result, specialty paper
manufacturers took active competition strategies like price reduction to seize orders, and the industry pattern changed. As a result of the
above industrial policy adjustment, the specialty paper industry has formed a new pattern featuring full market competition, with more
fierce market competition and sharp drop in price. If the project went on as scheduled previously, it may face the risks that the utilization
rate of raised funds may decline and the expected investment objective may not be achieved. Therefore, the Company terminated the
implementation of this project in 2019. 2. “R&D center construction project” was to meet the demand of the R&D for the main businesses
before listing. With the completion of the Company’s major asset restructuring in 2018, the Company’s main businesses covered lithium
battery separator, which has high technological requirements. The manufacturing of lithium-ion battery has a high requirement for the
characteristics of separator materials, especially the consistency, and also for the uniformity of the size and distribution of separator
micropores. Based on the Company’s business development plan and market demand, in order to better implement the Company’s
development strategy, the Companyplanned to integrate the technology centers currently scattered in each subordinate company, so as to
ensure that the Company’s R&D technology further improve production efficiency, product quality and new product development capacity.
The above change was considered and adopted at the 27th meeting of the third Board of Directors of the Company, the 22nd meeting of the
third Supervisory Committee and the 2018 General Meeting of Shareholders.
40
N/A
Amount, use and status of over raised funds
Applicable
In the past
Upon the deliberation and approval for the Proposal on Changing Some Projects with Investments out of the Funds Raised at the 27th
meeting of the 3rd Board of Directors of the Company, it was agreed to terminate the “reconstruction and expansion project of high-grade
Changes of the locations to implement the projects with
environmental-friendly specialty papers with annual production output of 13,000 tons” and the “R&D center construction project”, and
investments out of the funds raised
invest the balance of the funds raised for these two projects, totaling RMB105.8868 million, and the interest income, in the new project -
Energy Technology Research Institute. The Company will invest to establish a wholly-owned subsidiary (which has not been registered so
far, subject to the approval of the business registry) as the entity to implement the project of Energy Technology Research Institute, and
lease theexperimental building in the factory area of Shanghai Energy. The location to implement the project is changed to 155 Nanlu Road,
Pudong New Area, Shanghai.
N/A
Adjustment to the implementation method of projects with
investment out of funds raised
Applicable
I. Initial Public Offering
With the deliberation and approval at the 18th meeting of the second Board of Directors of the Company on the Proposal on Use of Funds
Raised to Replace the Preliminarily Invested Self-collected Funds, it is agreed to replace the self-collected funds of RMB236.6591 million
that have been invested in the projects for which the funds were raised. RMB197.9357 million was preliminarily invested in the “the
reconstruction and expansion project of color packaging boxes with an annual production output of 3 billion pieces”, RMB24.2138 million
Preliminary investment in projects and replacement with the funds was preliminarily invested in the “reconstruction and expansion project of high-grade environmental-friendly specialty papers with annual
raised production output of 13,000 tons”, and RMB14.5096 million was preliminarily invested in the “R&D center construction project”.
II. Public Offering of Convertible Corporate Bonds in 2020
At the 42nd meeting of the third Board of Directors of the Company, the Proposal on the Use of Proceeds from Convertible Corporate Bonds
to Replace Self-collected Funds Preliminarily Invested in Fund-raising Investment Projects was deliberated and approved, and it was
agreed that the Company used the funds raised from this offering to replace part self-collected funds already invested in the projects by
which the funds were raised. As of March 16, 2020, the Company accumulatively used self-collected funds of RMB1,697.9844 million for
the projects, and the net amount of funds raised from this offering of convertible corporate bonds was RMB1,586.1226 million, which was
used fully to replace the preliminarily invested self-collected funds, including RMB596.8886 million invested in “Wuxi Energy New
Material Industrial Base” and replaced with the funds raised of RMB5,86.1226 million; RMB1,101.0959 million invested in the “lithium
battery separator project (Phase I) with an annual production output of 400 million square meters of Jiangxi Tonry New Energy Technology
Development Co., Ltd.” and replaced with the funds raised of RMB 1,000 million.
III. Non-public Offering of Shares in 2020
At the 11st meeting of the fourth Board of Directors and the 11st meeting of the fourth Supervisory Committee, the Proposal on
Replacement of Preliminarily Invested Self-collected Funds with the Proceeds from the Non-public Offering of A Shares in 2020 was
deliberated and approved, and it was agreed to replace the self-collected funds of RMB254.2213 million already invested in the projects
with the funds raised RMB157.1693 million was preliminarily invested in the “expansion project of lithium battery separator (Phase I) of
Jiangxi Tonry New Energy Technology Development Co., Ltd.”; RMB97.052 million was preliminarily invested in the “expansion project
of Wuxi Energy New Material Industrial Base Phase II”.
41
Applicable
I. Initial Public Offering
On February 24, 2020, at the 41st meeting of the third Board of Directors, and the 36th meeting of the third Supervisory Committee, the
Proposal on Use of Some Idle Funds Raised to Temporarily Supplement the Current Capital was deliberated and approved, and it was agreed
to use the idle funds raised to the extent of not more than RMB110 million to temporarily supplement the current capital within 12 months
from the date the above proposal was approved, and the independent directors and sponsor also expressed the opinion to agree upon the
proposal. On August 26, 2020, the Company transferred the above RMB110 million to a special account for the funds raised, and informed
Idle funds raised temporarily added to current capital the sponsor CITIC Securities and its representative of such transfer.
II. Non-public Offering of Shares in 2020
On September 7, 2020, at the 11st meeting of the fourth Board of Directors and the 11st meeting of the fourth Supervisory Committee, the
Proposal on Use of Some Idle funds raised to Temporarily Supplement the Current Capital was deliberated and approved, and it was agreed
to use the idle funds raised from the non-public offering of shares in 2020 to the extent of not more than RMB800 million to temporarily
supplement the current capital for the production and operation related to the main business within 12 months from the date the sixth
Extraordinary General Meeting of Shareholders of 2020 approved the proposal. The independent directors and sponsor also expressed the
opinion to agree upon the proposal. As of June 1, 2021, the Company returned the idle raised capital of RMB800 million used to temporarily
supplement the working capital to the Company's special account for raised capital, and we timely informed the sponsor CITIC Securities
and the sponsor representative of the return of the raised capital.
Amount of and reasons for any balance of the funds raised after N/A
the project implementation Deposited to a special bank account for raised funds
Defects and other problems in utilization and disclosure of the
None
raised funds
(3) Project with changed use of funds raised
Applicable □ N/A
42
Unit: RMB’0,000
Total amount
Actual
of intended Investment Date of Whether the
Actual accumulative
investment progress as at project Benefits Whether the feasibility of
Project investment investment
from the the end of the reaching achieved expected the changed
after Project before change amount amount as at
funds raised Reporting intended during the benefits are project has
change during the the end of the
in the Period usable Reporting achieved changed
Reporting Reporting
changed (3)=(2)/(1) condition Period significantly
Period Period (2)
project (1)
Project of 1. Reconstruction and expansion project of high-grade --
Energy environmental-friendly specialty papers with annual
0
Technolo production output of 13,000 tons; 2. R&D center
10,588.68 0.00% N/A Yes
gy construction project 0 0
Research
Institute
Total -- 10,588.68 -- -- 0 -- --
0 0
1. The “reconstruction and expansion project of high-grade environmental-friendly specialty papers with annual production output of
13,000 tons” was planned by the Company based on the market situation and the Company’s production capacity before listing. As time
goes by, the market has changed dramatically. Since 2016, the purchase mode of downstream tobacco manufacturers for specialty paper
products has been adjusted from quantity allocation by cigarette manufacturers to the independent purchasing mode through centralized
bidding or commercial negotiation by cigarette label printing enterprises. Cigarette-related enterprises can expand the bargaining range
from region to the whole country by means of bidding or the commercial negotiation mode of public market inquiry and price
negotiation by themselves, breaking the original competition pattern featuring fixed share and region. As a result, specialty paper
manufacturers took active competition strategies like price reduction to seize orders, and the industry pattern changed. As a result of the
above industrial policy adjustment, the specialty paper industry has formed a new pattern featuring full market competition, with more
fierce market competition and sharp drop in price. If the project went on as scheduled previously, it may face the risks that the
utilization rate of raised funds will decline and the expected investment objective may not be achieved. Therefore, the Company
Reason for change, decision making procedure and information disclosure terminated the implementation of this project in 2019. 2. “R&D center construction project” was to meet the demand of the R&D for
(by specific project) the main business before listing. With the completion of the Company’s major asset restructuring in 2018, the Company’s main
business covered lithium battery separator, which has high technological requirements. The manufacturing of lithium-ion battery has a
high requirement for the characteristics of separator materials, especially the consistency, and also for the uniformity of the size and
distribution of separator micropores. Based on the Company’s business development plan and market demand, in order to better
implement the Company’s development strategy, the Company planned to integrate the technology centers currently scattered in each
subordinate company, so as to ensure that the Company’s R&D technology can further improve production efficiency, product quality
and new product development capacity. The above change was approved at the 27th meeting of the third Board of Directors of the
Company, the 22nd meeting of the third Supervisory Committee and the 2018 General Meeting of Shareholders. For details, please refer
to the Announcement on Changing Part Investment Projects for Which Funds Were Raised (Announcement No.2019-041) published by
the Company on the Cninfo website on April 26, 2019.
Status of and reason for the failure to make planned progress or projected
N/A
earnings (by specific project)
Description of major changes in project feasibility after changes N/A
43
VIII.Sale of Significant Assets and Equity Interests
1. Sale of significant assets
□ Applicable N/A
The Company did not sell any significant assets during the Reporting Period.
2. Sale of significant equity interests
□ Applicable N/A
IX. Analysis of Major Holding Companies and Joint Stock Companies
Applicable □ N/A
Major subsidiaries and joint stock companies that contribute over 10% of net profits to the Company
Unit: RMB 100 million
Company Main Registered Operating Operating
Company Type Total Assets Net Assets Net Profit
name Business Capital revenue Profit
Lithium
Shanghai battery 110. 109. 43.8 38.8
Subsidiary
separator
3.89 359.25
Energy 88 96 5 4
Acquisition and disposal of subsidiaries during the Reporting Period
Applicable □ N/A
Acquisition or disposal of subsidiaries Impact on overall production operations and
Company name
during the Reporting Period performance
Hongchuang Packaging (Jiangsu) Co., Ltd. Established by investment No impact so far
Shanghai Energy New Material Research Established by investment No impact so far
Co., Ltd.
Energy (Zhuhai Hengqin) New Materials Established by investment No impact so far
Technology Co., Ltd.
Established by investment No impact so far
Xiamen Energy New Materials Co., Ltd.
Established by investment No impact so far
Yuxi Energy New Materials Co., Ltd.
Established by investment No impact so far
Shanghai Energy Trading Co., Ltd.
Established by investment No impact so far
Jiangsu Energy Trading Co., Ltd.
SEMCORP Properties Kft. Established by investment No impact so far
SEMCORP America Inc. Established by investment No impact so far
SEMCORP Manufacturing USA LLC Established by investment No impact so far
Foshan Donghang Optic-Electric Deregistered No significant impact
Technology Co., Ltd.
Explanation on major holding companies and joint-stock companies
Shanghai Energy is a controlled subsidiary of the Company. As at the end of the Reporting Period, the Company held its 95.22% equity, its major product is
lithium battery separator, and its major subordinate companies include Zhuhai Energy, Wuxi Energy, Jiangxi Tonry, Suzhou GreenPower, Newmi Tech and
Chongqing Energy. With the constant increase of the production capacity of the Company in lithium battery separator, Shanghai Energy achieved an operating
revenue of RMB10,996 million in 2022, representing an increase of 70.82% year on year, and a net profit attributable to the owner of the parent company of
RMB3,874 million, representing an increase of 50.43% year on year.
X. Structured Bodies Controlled by the Company
□ Applicable N/A
44
XI. Outlook for the Company’s Future Prospects
1. Corporate strategy
The Company will focus on the lithium battery separator sector, march towards the vision to become a “world-class polymer material research,
development and production enterprise” and bear in mind the philosophy of creating values for customers with quality, price and service. The
Company will continuously scale up the capacity, improve product quality, and strengthen R&D. The Company will enrich the product matrix, seek
cost reduction and benefit enhancement through lean management, build up technical innovation capacity to identify new profit growth drives. The
Company will integrate global technical and professional resources, actively expand domestic and overseas markets, improve the core market
competitiveness, actively capture development opportunities in the new energy sector, and dedicate itself to creating values for customers. In addition
to the world's largest output, we strive to be the first in the world in terms of cost, efficiency and quality. The Company will attack the, sterile package,
cigarette label, BOPP film, specialty paper and aluminum laminated film sectors to become the most competitive new material producer in China.
2. Operating plan for 2023
The global new energy sector has been thriving. As a leader in the wet-process lithium battery separator sector, the Company offers products
covering the markets of power lithium battery separator and lithium battery separator in the 3C field. Meanwhile, the Company continued to carry
forward the dry-process separator project in cooperation with Celgard, the global leader in the dry-process separator sector, to edge into the energy
storage market, and further improve the Company’s strategic presence in the separator field. The Company continuously pays attention to and attaches
importance to the development of cutting-edge technologies, carries out projects such as all solid state electrolyte coating separators and further
improves the Company's strategic layout in the separator field. In addition, the Company further improved its core competitiveness by actively edging
into the aluminum laminated film business and enriching the product lines.
In the future, the Company will continue to expand the capacity, continue independent R&D and continuous innovation and consolidate its
industrial position with its comprehensive advantages in technology, capacity, product quality, cost and market. (1) The Company will procure the
world’s most advanced production equipment and build ten separator production bases in China and overseas regions. In 2023, according to the plan,
the Company will further expand the capacity for lithium battery separator by accelerating the Jiangsu Energy EV Lithium Battery Separator
Industrialization Project, the Chongqing Energy High-performance Lithium-ion Battery Micropore Separator Project, the wet-process lithium battery
separator production line and supporting plant project in Hungary, the dry-process separator project in cooperation with Jiangxi Enpo, andproject in
cooperation with Hubei Energy, etc. The expansion plan of the Company matches its major downstream customers’ large-scale expansion plans in the
future. After the completion of these projects, the Company’s market share will be further improved and its leading position in the industry will be
consolidated. (2) In 2023, the Company will actively promote the Jiangsu Ruijie and Jiangxi Ruijie EV Lithium Battery Aluminum Laminated Film
Industrialization Project to further enrich its product lines. Besides, the ability to supply multiple types of materials will further deepen the partnership
between the Company and its downstream lithium battery customers, thereby raising its profitability as well as consolidating and strengthening its
market position. (3) The Company continuously promotes refined management, and the budget management platform has entered the trial operation
stage. We will promote the construction of SAP system, financial sharing center, etc. to ensure the Company's internal management efficiency be
improved and the medium and long-term development goals be achieved. In addition, the Company will continuously improve its equipment, process
and quality to ensure it can increase the production efficiency and enhance the product quality without cease. The Company will continue to scale up
the R&D spending, cooperate with domestic research institutes and universities, reinforce the technical research, development and conversion
capacity and gradually establish an integral and high-efficiency R&D system to ensure the Company can further increase the production efficiency
through technical R&D, enhance the product quality and new product development capacity, provide a mighty technical support for the Company’s
implementation of functional polymer separator products and provide new profit growth engines powering the future development.
3. Risks the Company may face
(1) National regulatory risk relating to lithium battery separator business
In recent years, various countries have intensively introduced industry policies to support the development of new energy vehicle industry.
Benefiting from policy support, the production value of new energy vehicle industry rapidly increased, driving the rapid development of the upstream
lithium battery industry. If there are significant adverse changes in carbon emissions, renewable energy application and other relevant industry
policies in the future, the relevant policies may have a negative impact on the development of the whole industry chain of new energy vehicle, thus
having an adverse impact on the upstream lithium battery separator industry and the Company’s operation result.
Countermeasures: By actively investing in the R&D of new applications of film, the Company will explore its new commercial application
market. At the same time, the Company also invests resources to distribute new product projects to diversify business risks and reduce the impact of
policy fluctuations on the Company to a certain extent.
(2) Intensified market competition risk
The rapid growth of the new energy vehicle industry has driven the development of lithium battery separator in the upstream part, and the
lithium battery separator industry has attracted many domestic enterprises due to its higher gross margin, with a lot of funds invested in it,increasing
its capacity rapidly. Currently, the domestic competition in this segment is becoming increasingly fierce. The increasingly fierce competition will
have an adverse impact on the results of the Company if it can’t deeply understand the law of industrial development and make constant efforts for
technological innovation and operational management improvement to improve product quality and reduce production costs.
Countermeasures: The Company’s lithium-ion battery film business has formed certain advantages in production capacity, R&D capacity,
product quality, lean management, business channels and other aspects. The company will continue to reduce costs and increase efficiency, improve
the product quality and reduce the production costs through technological innovation, and develop diversified customer groups in domestic and
overseas markets to reduce the impact of domestic and foreign market fluctuations on the Company’s performance.
(3) Risk of price fluctuation of major raw materials
The major raw materials used by the Company are subjected to price fluctuation to some extent, especially polypropylene and polyethylene,
whose prices are affected by the strong fluctuations of the international crude oil price. The results of the Company may be adversely affected by the
gross profit margin which may be affected to some extent if the prices of major raw materials fluctuate sharply due to the macroeconomic fluctuations,
the demand and supply relation for enterprises in the upstream and downstream parts and other factors.
45
Countermeasures: The Company has established long-term and stable cooperative relations with major suppliers, established a strategic
purchase system as a whole, and improved the bargaining power and reduced the cost of raw materials by means of large-scale purchase. The
Company will also reduce the proportion of raw material cost in production cost through technological innovation, process equipment process
transformation, production efficiency improvement and loss reduction.
(4) Risk relating to construction in progress
Current construction in progress includes Jiangxi Enpo, Chongqing Energy, Jiangsu Energy, Hubei Energy, Xiamen Energy, Jiangsu Ruijie,
Hungary Energy and US Energy and other production bases, which require a large amount of capital. If the Company fails to raise funds in time,
complete and put into operation on schedule, it will have a negative impact on the subsequent production and operation and future profits.
Countermeasures: The Company will make reasonable arrangements for future investment plans (including funds) by making private offering of
A shares and increasing cooperation with financial institutions, and improving bank credit lines.
(5) Risk of technical loss and loss of core personnel
An enterprise engaging in lithium battery separator requires advanced technology and process, rich management experience and deep
understanding of the industry. To ensure the ability of constant innovation and the steady growth of business, the Company should have teams
consisting of steady high-quality employees in scientific research, management and sale. The Company constantly improves the mechanisms for
talent cultivation, incentive, promotion and restriction, but there is still the possibility of the outflow of core employees from the Company. In case of
leakage of the core technology or the departure of core employees, the production and operation of the Company may be adversely affected.
Countermeasures: The Company has implemented equity incentive to the core employees, so that the employees can share the value of the
growth of the enterprise, but also make the interests of the Company and the interests of employees deeply tied. The Company will continue to
increase the introduction and training of core technical personnel, further maintain the stability of core employees, continue to maintain the
company’s industry-leading technical level.
(6) Technological progress and product substitution risk
Lithium-ion battery is mainly used for mobile phones, computers, new energy vehicles, power station for energy storage and other industries.
After development for many years, lithium-ion batteries have been superior to traditional storage batteries such as nickel-cadmium batteries, nickel-
metal hydride batteries, lead-acid batteries in terms of volumetric specific energy, gravimetric specific energy, gravimetric specific power, cycle life,
charge/discharge efficiency, etc., becoming a new energy industry with priority support and key development from national governments. Although
the lithium-ion battery is the first choice for electronic products and pure electric vehicles, and it will take quite a long time to commercialize other
emerging batteries such as all-solid-state batteries which are immature technically, the market demands for lithium-ion batteries will be affected when
emerging batteries such as all-solid-state batteries break the technical bottleneck, achieve mass production and are fully commercialized, and the
lithium battery separator in the industry chain will also be affected adversely.
Countermeasures: After years of R&D investment and technology accumulation, the Company has strong research on new products and
prospective technology reserves. The R&D Department of the Company continues to pay attention to the market development trend, and organizes a
discussion group on film technology development, develops project development plans for R&D, and actively develops other new products and
technologies of functional film. In addition, the Company strengthens strategic cooperation with well-known lithium-ion battery manufacturers at
home and abroad, develops products together with customers in-depth cooperation, timely grasps the technical development trend and complies with
the market demand.
(7) Risk of exchange rate fluctuation
The export sales volume of the Company increases constantly as the Company expands its business scale and gradually strengthens the
development in the international market. If the RMB exchange rate and the foreign exchange rate in the countries where our products were sold
fluctuate sharply in the future, the results of the Company may be affected to some extent.
Countermeasures: The Company will minimize the exchange risk with such measures as closely watching the exchange rate, adjusting the
product prices in time based on the exchange rate to guarantee the product profit, strengthening cost control and conducting the foreign exchange
derivatives trading for the purpose of hedging.
(8) Risk of China-US trade frictions
Since 2018, China-US trade disputes have occurred frequently. The U.S. has restricted import of Chinese products by means of tariff increases
to reduce the trade deficit with China. Lithium-ion batteries are also among the products subject to the tariff increase. From the perspective of industry
chain, the total revenue of the Company has been less affected by the China-US trade disputes because the exports to US account for a very small
proportion in the total revenue of the Company. However, if the demands of the downstream customers change due to the China-US trade frictions,
the results of the Company may be affected adversely. In addition, some of the Company’s raw materials and mechanical equipment are imported
from overseas. If the trade frictions between the U.S. and China intensifies and results in changes in the global trade environment, but the Company
fails to make timely adjustments, the stability of the Company’s supply chain may be adversely affected.
Countermeasures: While paying close attention to the relevant policies of China and the United States, the Company will continuously pay
attention to the R&D efforts and technical improvement of products of various business systems, improve product quality and production efficiency,
constantly consolidate and strengthen its competitive advantages in technological R&D, capacity scale, product quality, cost efficiency and other
aspects, and reduce costs and increase efficiency on the premise of ensuring product quality. We will also continuously expand market development in
domestic and overseas regions and actively establish stable cooperative relations with global customers.
(9) Management risk after expansion of business scale
With the development of the Company’s business, the scale of the Company’s assets and business will be further expanded, which raises higher
requirements for the management level of the Company. The management risk arises if the capabilities of the Company to manage the production,
sales, quality control and risks can’t meet the requirements for scale expansion, and the systems for talent cultivation, organization pattern and
management are not further improved.
Countermeasures: The Company will continuously improve the management system, ensure the efficient operation of production, quality control,
sales, management and other business links, establish an effective incentive system, attract talents through the Company's broad development
platform and effective incentive systems, strengthen talent training and deliver talents for the Company's development through targeted training and
training measures for employees and managers at all levels.
46
XII. Reception of Visitors to the Company for Purposes of Research, Communication,Interview during
the Reporting Period
Applicable □ N/A
Type of
Major Discussion and Index to Main
Reception Date Reception Place Reception Mode Received Received Visitor
Materials Provided Enquiry
Visitor
Information
April 12, 2022 An institute The Company's production 2021 Annual Results
and operation, development Briefing disclosed at
Investors participating in the and ESG in 2021, www.cninfo.com.cn
Live streaming Others conference through live preparations for the
streaming pandemic and the progress
of inline coating
June 22, 2022 Shanghai Telephone An institute The Company's future The record of Investor
Energy communication strategic development goals, Relations Activities on
Conference cooperation with upstream June 22, 2022
Room equipment manufacturers, disclosed at
Galaxy Securities, JP Morgan, profitability, etc. www.cninfo.com.cn
Green Court Capital, Yufu
Fund, Panze Investment, D1
Capital and other investors
August 31, Shanghai Telephone An institute Temasek, BlackRock Funds, Self-developed equipment, The record of Investor
2022 Energy communication Pictet Asset Management, judgment on the future Relations Activities on
Conference Schroders Fund, Morgan market, views on energy August 31, 2022
Room Stanley, Credit Suisse storage, etc. disclosed at
Securities, UBS, Macquarie, www.cninfo.com.cn
D. E. Shaw Investment, CICC,
E Fund, GF Fund, Lombarda
China Fund Management,
China Universal, Sequoia
Capital, Greenwoods Asset
and other investors
November 22, Shanghai Telephone BlackRock Funds, Goldman Description of major issues 002812 Energy
2022 Energy communication Sachs International, Citigroup, of the Company, Technology Survey
Conference Fidelity, AXA, BNP, D1 arrangement of private Activity Information
Room Capital, Point 72, Sequoia placement, direction of disclosed at
Capital, Greenwoods Asset, future R&D investment and www.cninfo.com.cn
Loyal Valley Capital, company capital
Genharmony Capital, Banxia
Investment, E Fund, Tianhong
Asset Management, Harvest
An institute
Fund, Bank Of
Communications
Schroder Fund, Minsheng
Royal Fund, Ping An Asset
Management, CICC, Pacific
Asset Management, Dajia
Asset Management, China
Southern Fund, Sinolink
Securities and other investors
47
Section 4 Corporate Governance
I. Basic Information of Corporate Governance
During the Reporting Period, the Company established and improved the modern enterprise system in strict accordance with the Company Law,
Securities Law, Shenzhen Stock Exchange Listing Rules, Code of Corporate Governance for Listed Companies in China and other relevant laws and
regulations, and constantly improved the corporate governance structure, improved the internal control system and standardized the Company’s
operation. During the Reporting Period, the Company held 4 shareholders’ general meetings, 13 board meetings, 12 meetings of the Supervisory
Committee. The procedures for holding the meetings are legal and the resolutions are legal and effective.
Were there any significant differences between the Company’s actual governance status and laws, administrative regulations, and the regulations
issued by CSRC on listed company governance
□ Yes √ No
There was no difference between the Company’s actual governance status and laws, administrative regulations, and the regulations issued by CSRC
on listed company governance.
II. Details of the Company’s Separation from the Controlling Shareholder and Actual
Controller with Respect to Corporate Assets, Personnel, Finance, Organization, Business, etc.
The Company is independent of its shareholders in terms of business, assets, personnel, institutions, financial affairs, etc., has an independent
and complete business system and market-oriented independent operation ability, and has a complete supply, production and sales system.
1. Assets integrity
The Company has independent and complete business assets that can be used for business activities. The Company has complete sites,
facilities, instruments and equipment, trademarks, patents, etc. required for production independent of shareholders and other related parties. The
Company’s assets are strictly separated from the shareholders and actual controller, and there is no case that the shareholders and actual controller
encroach on theCompany’s assets.
2. Personnel independence
The General Manager, Deputy General Manager, Chief Financial Officer, Secretary of the Board and other senior managers of the Company
are all full-time working in the Company and receiving remuneration, and there is no case that they hold any post other than director or supervisor at
the controlling shareholder, actual controller and other enterprises under their control, or hold any position in other enterprises with the same or
similar business with the Company. The Company’s financial personnel are not doing part-time job in the controlling shareholders, actual controllers
and other enterprises under their control. The Company is completely independent in terms of social security and salary.
3. Finance independence
The Company has set up an independent financial department, and established an independent and complete financial accounting system
according to the current accounting standards and relevant laws and regulations, which can help make financial decisions independently. The
Company has a standardized financial accounting system and financial management system. The Company has set up an independent bank account
and, as an independent taxpayer, has gone through tax registration with the tax bureau of Yuxi High-tech Zone. The Company does not guarantee the
debts of shareholders or other related parties with the Company’s assets, interests or reputation. The Company has complete control over all assets,
and there isno case that monetary funds or other assets are occupied by shareholders and damage the Company’s interests.
4. Institutional independence
The Company has a production and operation place and organization independent of the controlling shareholder, and there is no mixed
operation or joint office with the controlling shareholder. There is no interference of the controlling shareholder and any other units or individuals in
the Company’s organizational structure. In accordance with the requirements of the Company Law, the Company has established and improved the
organizational structure system of the general meeting of shareholders, the Board of Directors, the Supervisory Committee, and the management, and
is completely independent of the affiliated enterprises in terms of institutional setting. The shareholder unit nominates directors to participate in the
management of the Company in accordance with the provisions of the Company Law and the Articles of Association, and does not directly interfere
with the production and operation activities of the Company.
5. Business independence
The Company has an independent production, supply and marketing system, and independently carries out various businesses. There is no case
of relying on or entrusting shareholders or other related parties to sell products, or relying on or entrusting shareholders or other related parties to
purchase raw materials. There is no horizontal competition with the controlling shareholder, actual controller and the enterprises under their control.
III. Horizontal Competition
□ Applicable √ N/A
48
IV. Details about the Annual General Meeting and Extraordinary General Meeting of
Shareholders Convened during the Reporting Period
1. Details about the shareholders’ general meeting during the Reporting Period
Investor
Meeting Meeting Type Date Convened Disclosure Date Meeting Resolution
Participation
Extraordinary Announcement on Resolutions of
First Extraordinary General Meeting of the First Extraordinary General
General Meeting of Shareholders 64.48% January 17, 2022 January 18, 2022 Meeting of Shareholders in 2022
Shareholders in 2022 (Announcement No.2022-008) on
www.cninfo.com.cn
Extraordinary Announcement on Resolutions of
Second
General Meeting of the Second Extraordinary General
Extraordinary
Shareholders 60.10% February 14, 2022 February 15, 2022 Meeting of Shareholders in 2022
General Meeting of
(Announcement No.2022-026) on
Shareholders in 2022
www.cninfo.com.cn
Announcement on Resolutions of
Annual General Annual General the Annual General Meeting of
Meeting of Meeting of 61.21% May 5, 2022 May 5, 2022 Shareholders of 2021
Shareholders of 2021 Shareholders (Announcement No.2022-080) on
www.cninfo.com.cn
Extraordinary Announcement on Resolutions of
Third Extraordinary General Meeting of the Third Extraordinary General
General Meeting of Shareholders 58.15% May 9, 2021 May 10, 2022 Meeting of Shareholders in 2022
Shareholders in 2022 (Announcement No.2022-089) on
www.cninfo.com.cn
2. Extraordinary general meeting requested by the preferred shareholder with restituted voting rights
□ Applicable N/A
V. Details on Directors, Supervisors, and Senior Management
1. Basic information
Name Title Service Gender Age Start date End date Shares Quantity Other Quantity Reason
status held at the of shares Quantity increase of shares for share
beginning increase of shares d or held at the increase/d
of the d in the decrease decrease end of the ecrease
period current d in the d period
(share) period current changes (share)
(share) period (share)
(share)
Paul Chairman Current Male April 20, April 7,
Xiaoming 2011 2023 126,192, 126,192,
65
257 257
Lee
Li Xiaohua Vice Chairman Current Male April 20, April 7, Own
and General 2011 2023 69,837,8 2,918,50 66,919,3 demand
61
Manager 89 0 89 for funds
Yan Ma Director Current Female April 20, April 7,
64 2011 2023
Alex Cheng Director Current Male April 8, April 7,
65 2020 2023
49
Ma Weihua Director Current Male November April 7,
56 22, 2021 2023
Feng Jie Director Current Male January 4, April 7,
59 2017 2023
Lu Jiankai Independent Current Male April 20, April 7,
Director 45 2017 2023
Tang Independent Current Male April 8, April 7,
Changjiang Director 53 2020 2023
Zheng Independent Current Female April 8, April 7,
Haiyang Director 60 2020 2023
Zhang Tao Chairman of the Current Male January 3, April 7,
Supervisory 46 2019 2023
Committee
Chen Tao Supervisor Current Male April 20, April 7,
45 2011 2023
Kang Supervisor Current Female April 8, April 7,
Wenting 36 2020 2023
Yu Xue Vice General Current Female November 4, April 7, 2022 Stock
Manager and 2021 2023 Option and
Board Secretary Restricted
36 41,100 40,000 81,100
Stock
Incentive
Plan
Li Jian Chief Financial Current Male September April 7,
Officer 45 30, 2020 2023
Total -- -- -- -- -- -- 196,071, 2,918,50 193,192, --
40,000
246 0 746
During the reporting Period, did any Director or Supervisor leave office or were any senior executive dismissed?
□Yes No
50
Changes of Directors, Supervisors, and Senior Executives
□Applicable N/A
2. Positions Held
Professional background, main working experience and main duties in the Company of current directors, supervisors, and senior executives of the
Company
(I) Members of the Board of Directors
1. Paul Xiaoming Lee, Chairman of the Company, male, born in 1958, American nationality with the right of residence in foreign country, and
master’s degree. Joined Kunming Plastic Research Institute of China in 1982, acted as the Vice President from 1984 to 1989, graduated from the
polymer material discipline at the University of Massachusetts of America in December 1992, served as the Manager of the Technical Department of
Inteplast Corporation in America from 1992 to 1995. Since April 1996, he has successively served as the Vice General Manager, General Manager,
Vice Chairman and Chairman of Hongta Plastic, Chairman and General Manager of Dexin Paper, and Chairman of Chengdu Hongta Plastic (成都红
塑). Joined Innovative Color Printing as the Chairman in 2006. Now, serves as the Chairman of the Company.
2. Li Xiaohua, Vice Chairman of the Company, male, born in 1962, Chinese nationality with the right of residence in foreign country, and master’s
degree. Graduated from the polymer material discipline at the University of Massachusetts of America in February 1993, and worked at World-Pak
Corporation in the US from 1993 to 1996. Since April 1996, he has successively served as the Vice General Manager and Vice Chairman of Hongta
Plastic, the Vice Chairman of Dexin Paper, and the General Manager and Vice Chairman of Chengdu Hongta Plastic. Joined Innovative Color
Printing as the General Manager and Vice Chairman in 2006. Now, serves as the General Manager and Vice Chairman of the Company.
3. Yan Ma, Director of the Company, female, born in 1959, American nationality with the right of residence in foreign country, and junior college
education. Worked at Kunming Yan’an Hospital from 1981 to 1990, and since April 2011, served as the Director of the Company.
4. Alex Cheng, Director of the Company, male, born in 1958, American nationality with the right of residence in foreign country, master’s degree in
plastic engineering conferred by the University of Massachusetts, and doctor’s degree conferred by the Northeast Agricultural University. Acted as
the Technical Manager of Inteplast Corporation in the US from September 1993 to September 2011. Served as the General Manager of Shanghai
Energy from February 2012 to June 2019. Now, serves as the Director and Senior Vice President of the Company.
5. Ma Weihua, Director of the Company, male, born in 1967, Chinese nationality, bachelor’s degree, engineer. From 1989 to 1997, successively
served as Deputy Section Chief of Equipment Section of Zhenyuan Gold Mine, Yunnan Province, and technician of Equipment Section of Yuxi
Hydropower Equipment Factory; from 1997 to 2016, successively served as the Director of Production Department, Vice General Manager and
Director of Hongta Plastic. He is now the General Manager of Shanghai Energy.
6. Feng Jie, Director of the Company, male, born in 1964, Chinese nationality, bachelor’s degree and medium industrial economist. Served in Simao
Industrial and Commercial Bank of China from 1981 to 1984; served as a statistician of the Comprehensive Management Section, Director of the
Computer Center and the Secretary of the Communist Youth League at Yunnan Optical Instrument Factory from 1989 to 1997; served as a technician,
statistical officer and Director of the General Manager’s Office at Hongta Plastic from 1997 to 2005; served as the Director of Chengdu Office of
Hongta Plastic from 2005 to 2009; since 2009, has successively served as the Director of the Sales Department, the Vice General Manager and
General Manager of Chengdu Hongta Plastic. He is now the Director of the Sales Department and the General Manager and a Director of Chengdu
Hongta Plastic.
7. Lu Jiankai, Independent Director of the Company, male, born in 1978, Chinese nationality, master’s degree, Chinese Certified Public Accountant.
He worked at Ernst & Young Dahua Accounting Firm (Shanghai) as an auditor in 2001 to 2004. He worked at Deloitte Huayong Accounting Firm
(Shanghai) as an auditor in 2004 to 2008. He served as the Vice President of the Real Estate and Equity Investment Division of Zhejiang Longsheng
Group Co., Ltd. in 2009 to 2011. He served as the Officer of the Investment and Financing Department of Jiangsu Changfa Group Co., Ltd. in 2011
to 2013. He served as the Investment Officer of Shanghai Jingbang Equity Investment Management Co., Ltd. in 2013 to 2015. Now is an Independent
Director of the Company.
8. Tang Changjiang, Independent Director of the Company, male, born in 1970, Chinese nationality, Executive Master of Business Administration
(EMBA) at Tsinghua University and Master of Business Administration (MBA) at the University of Victoria of Switzerland. Served as the Vice
General Manager of Kelin Side (Huizhou) Co., Ltd. from August 1994 to October 1996. Served as the Deputy Secretary-General of Shenzhen
Electronic Industry Association from March 1998 to May 2002. Served as the Managing Director of Shenzhen Tangshi Electronic Co., Ltd. from
January 2003 to June 2013. Served as the Director of Shenzhen Xinyuhuan Test Co., Ltd. from July 2013 to May 2019. Now is an Independent
Director of the Company.
9. Zheng Haiying, Independent Director of the Company, female, born in 1963, Chinese nationality, Doctor, Master’s Tutor and Professor at the
Accounting School of the Central University of Finance and Economics, Chinese Certified Public Accountant and a senior member of the Association
of Chartered Certified Accountants (ACCA and FCCA). Taught at the Accounting Department of the Central Fiscal Management Cadres’ College
from July 1988 to April 1994 and worked on a part-time basis at the former Zhongzhou Certified Public Accountants in the same period. Engaged in
the audit work at M.B.LEE & CO LTD of Hong Kong from April 1994 to April 1996. Taught at the Accounting Department of the Central Fiscal
Management Cadres’ College from April 1996 to April 1999. Since April 1999, has taught at the Accounting School of the Central University of
Finance and Economics with the interest in financial accounting. Now is an Independent Director of the Company.
(II)Members of the Supervisory Committee
1. Zhang Tao, Chairman of the Supervisory Committee of the Company, male, born in 1977, Chinese nationality, bachelor’s degree. Worked as a
financial analyst at the Financial Center of Beijing Marketing Company of Haci Co., Ltd. from July 2000 to January 2001; worked as an accountant at
the Finance Department of Yunnan Hongta Plastic Co., Ltd. from August 2001 to August 2006; and has served as the Manager of the Finance
Department of Yunnan Dexin Paper Co., Ltd. from September 2006 to March 2019. He has served as the supervisor of Yuxi Kunshasi Plastic
Masterbatch Co., Ltd. From October 2021 to the present, he serves as the Deputy Chief Financial Officer, and has served as Chairman of the
Supervisory Committee of the Company.
2. Chen Tao, Supervisor of the Company, male, born in 1978, Chinese nationality, junior college education. Served as the technician of Global
Color Printing from 1998 to 2003, joined Innovative Color Printing in 2004, and has successively acted as the technical supervisor, Deputy Director
and Director of the Technical Center. Now is the Vice General Manager of Yunnan Hongchuang Package Co., Ltd. and a Supervisor of the Company.
3. Kang Wenting, Supervisor of the Company, female, born in 1987, Chinese nationality, bachelor’s degree. Served as the Personnel Supervisor
of Kunming Xinghe Spa Resort & Hotel from 2013 to 2014, and from 2015 to March 2019, has successively served as the Personnel Supervisor of the
Human Resources Department of the Company. He serves as the manager of the Operation Support Department and Administrative Department from
51
October 2019 to the present. Now he is the Supervisor of the Company.
(III) Senior Management
1. Li Xiaohua, Vice Chairman of the Company, male, born in 1962, Chinese nationality with the right of residence in foreign country, and
master’s degree. Graduated from the polymer material discipline at the University of Massachusetts in February 1993, and worked at World-Pak
Corporation in the US from 1993 to 1996. Since April 1996, has successively served as the Vice General Manager and Vice Chairman of Hongta
Plastic, the Vice Chairman of Dexin Paper, and the General Manager and Vice Chairman of Chengdu Hongta Plastic. Joined Innovative Color
Printing as the General Manager and Vice Chairman in 2006. Now, serves as the General Manager and Vice Chairman of the Company.
2. Yu Xue, Vice General Manager of the Company, Secretary of the Board of Directors, female, born in 1987, Chinese nationality, master’s
degree. Served as the Company’s Securities Affairs Representative from March 2013 to November 2021. Now, serves as the Chairman of Hunan
Semcorp, Vice General Manager and Secretary of the Board of Directors of the Company.
3. Li Jian, Chief Financial Officer of the Company, male, Han, born in 1978, Chinese nationality, bachelor’s degree, Chinese Certified Public
Accountant and Chinese Certified Tax Agent. From 1997 to October 2016, has served as the General Budget Accountant at Liujiaqiao Fiscal Office of
the Finance Bureau of Chongren County, Jiangxi Province, the Financial Manager of Shunde Ouyadian Building Material Co., Ltd., the Project
Manager of Shenzhen Pengcheng Accounting Firm, the Assistant to the Chief Financial Officer of Jiangsu Safety Steel Rope Co., Ltd. and the Chief
Financial Officer of Suzhou ALTON Electric Industry Co., Ltd. Since October 2016, has served as the Chief Financial Officer of Shanghai Energy
New Material Technology Co., Ltd. Now, serves as the Chief Financial Officer of the Company.
Positions held at the shareholder’s entity
Applicable □ N/A
Receiving
Position in remuneration
Name Shareholder’s Name Start date End date
shareholder and allowance
at shareholder
Paul Xiaoming Lee Yuxi Heyi Investment Chairman November 3, 2010 December 28, 2022 No
Co., Ltd.
Paul Xiaoming Lee Yuxi Heli Investment Director December 8, 2010 June 6, 2022 No
Co., Ltd.
Li Xiaohua Yuxi Heyi Investment Director November 3, 2010 December 28, 2022 No
Co., Ltd.
Li Xiaohua Yuxi Heli Investment Chairman December 8, 2010 June 6, 2022 No
Co., Ltd.
Description of positions held at the shareholder’s entity None
Positions held at other entities
Applicable □ N/A
Positions in other Receiving
Name Other Entity Names organizations Start date End date remuneration and
allowance at other
entities
Shanghai Ruiji New Director January 20, 2020 March 3, 2023
Paul Xiaoming Lee Material Technology No
Co., Ltd.
Yuxi Kunshasi Plastic Vice Chairman May 1, 1996 March 3, 2023
Paul Xiaoming Lee No
Masterbatch Co., Ltd.
Shanghai Ruiji New Chairman January 20, 2020 March 3, 2023
Li Xiaohua Material Technology No
Co., Ltd.
Yuxi Kunshasi Plastic Director and General May 1, 1996 March 3, 2023
Li Xiaohua No
Masterbatch Co., Ltd. Manager
Suzhou Jiesheng Executive Director October 29, 2021 March 3, 2023
Li Xiaohua No
Technology Co., Ltd. and General Manager
Suzhou RS Chairman February 24, 2022 March 3, 2023
Li Xiaohua No
Technology Co., Ltd.
52
Jiangsu Jiesheng Executive Director November 26, 2021 March 3, 2023
Li Xiaohua Intelligent Equipment and General Manager No
Technology Co., Ltd.
Changshu Juxing Executive Director May 12, 2022 March 3, 2023
Li Xiaohua No
Machinery Co., Ltd. and General Manager
Shanghai Ruiji New Director January 20, 2020 March 3, 2023
Alex Cheng Material Technology No
Co., Ltd.
Suzhou RS Director February 24, 2022 March 3, 2023
Alex Cheng No
Technology Co., Ltd.
Fuzhou Shanghe Director November 5, 2015 March 3, 2023
Lu Jiankai No
Electronics Co., Ltd.
Anqiu Huahang Executive Director October 13, 2021 March 3, 2023
Lu Jiankai Environmental and General Manager No
Technology Co., Ltd.
Dezhou Shayun Director October 30, 2019 March 3, 2023
Lu Jiankai Electronic Commerce No
Co., Ltd.
Qingdao Huahang Chairman June 19, 2017 March 3, 2023
Lu Jiankai Environmental No
Technology Co., Ltd.
Shanghai Yangyue Executive Director February 13, 2019 March 3, 2023
Investment and General Manager
Lu Jiankai Yes
Management Co.,
Ltd.
Shanghai Shengu Executive Director August 16, 2012 March 3, 2023
Investment
Lu Jiankai No
Management Co.,
Ltd.
Shanghai Qikai Executive Director May 18, 2012 March 3, 2023
Investment
Lu Jiankai No
Management Co.,
Ltd.
Shanghai Oufang Executive Director March 15, 2022 March 3, 2023
Investment and General Manager
Lu Jiankai No
Management Co.,
Ltd.
Qingdao Bopu Executive Director August 3, 2016 November 9, 2022
Lu Jiankai Photoelectric and General Manager No
Technology Co., Ltd.
Guangdong Battery Secretary General June 29, 2019 March 3, 2023
Tang Changjiang Yes
Association
Tianjin Guoan Independent Director October 12, 2021 March 3, 2023
Mengguli New
Tang Changjiang Yes
Materials Science &
Technology Co., Ltd.
Shenzhen Nengyi Director June 15, 2015 March 3, 2023
Tang Changjiang No
Testing Co., Ltd.
Shenzhen Yifang Executive Director August 3, 2022 March 3, 2023
Tang Changjiang Baihui Technology and General Manager No
Co., Ltd.
Shenzhen Huachi Director October 27, 2022 March 3, 2023
Tang Changjiang New Energy No
Technology Co., Ltd.
Shenzhen AGC Director September 13, 2013 December 15, 2022
Tang Changjiang Standard Technology No
Co., Ltd.
Orient Group Independent Director December 23, 2019 March 3, 2023
Zheng Haiying Yes
Incorporation
53
Central China Land Independent Director April 21, 2017 March 3, 2023
Zheng Haiying Yes
Media Co., Ltd.
Beijing Automic Director March 9, 2018 March 3, 2023
Zheng Haiying Yes
Technology Co., Ltd.
Shandong Keyuan Director April 23, 2019 March 3, 2023
Zheng Haiying Pharmaceutical Co., Yes
Ltd.
Arizon RFID Director April 23, 2019 April 28, 2022
Zheng Haiying Yes
Technology Co., Ltd.
Yuxi Kunshasi Plastic Supervisor October 11, 2021 March 3, 2023
Zhang Tao No
Masterbatch Co., Ltd.
Explanation on None
positions in other
entities
Penalties to the current directors, supervisors and senior management of the Company and those leaving office during the Reporting Period by
securities regulatory agencies in the past three years
□ Applicable N/A
3. Remuneration for Directors, Supervisors, and Senior Management
Decision-making procedures, determination basis and actual payment of remuneration for directors, supervisors, and senior management
1. Decision-making procedure for remunerations of directors, supervisors and senior management: The Remuneration & Evaluation Committee
of the Board of Directors of the Company studies and establishes the evaluation standard, remuneration policy and plan for the directors, General
Manager and other senior management members of the Company, the Board of Directors reviews the remunerations for the senior management, the
General Meeting of Shareholders reviews the remunerations of the directors and the supervisors, and the Human Resources Department and the
Finance Department of the Company assist the Remuneration & Evaluation Committee of the Board of Directors to implement the remuneration plan
for the directors and the senior management of the Company.
2. Basis for determining the remunerations of directors, supervisors and senior management: The remunerations for the directors and supervisors
are determined in line with the actual working status of the Company and in combination of the current market situation. The remunerations of the
senior management are determined in line with related provisions of the Company and in combination of the operating objectives of the Company in
2022 and specific job responsibilities the senior management members of the Company take to complete the annual operating objectives.
3. Actual payment of remunerations to the directors, supervisors and senior management: The remunerations of the Independent Directors are
paid to personal accounts based on the standard and schedule every quarter. The remunerations of other people are paid based on respective evaluation
result on a monthly basis or at the time specified by the remuneration payment policy.
Remuneration for directors, supervisors, and senior management during the Reporting Period
Unit: RMB0’000
Total pre-tax Whether remuneration was
Name Title Gender Age Service status remunerations received received from related parties
from the Company of the Company
54
Paul Xiaoming 389.78
Chairman Male 65 Incumbent No
Lee
Vice Chairman 333.90
Li Xiaohua and General Male 61 Incumbent No
Manager
Yan Ma Director Female 64 Incumbent 0.00 No
Alex Cheng Director Male 65 Incumbent 170.84 No
Ma Weihua Director Male 56 Incumbent 92.68 No
Feng Jie Director Male 59 Incumbent 42.48 No
Lu Jiankai Independent Male Incumbent 5.00 No
45
Director
Tang Changjiang Independent Male Incumbent 5.00 No
53
Director
Zheng Haiying Independent Female Incumbent 5.00 No
60
Director
Chairman of the 34.69
Zhang Tao Supervisory Male 46 Incumbent No
Committee
Chen Tao Supervisor Male 45 Incumbent 24.44 No
Kang Wenting Supervisor Female 36 Incumbent 12.90 No
Vice General 71.17
Yu Xue Manager and Female 36 Incumbent No
Board Secretary
Li Jian Chief Financial Male Incumbent 156.72 No
45
Officer
VI. Performance of Directors during the Reporting Period
1. Meetings of the Board of Directors during the Reporting Period
Meeting Date Convened Disclosure Date Meeting Resolution
The 41st meeting January 24, 2022 January 25, 2022 The meeting considered and adopted the Resolution on No Early Redemption of
of the 4th Board of
"Energy Convertible Corporate Bonds", the Resolution on Anticipated Daily
Directors
Connected Transactions in 2022, the Resolution on Termination of Repurchase
of Stock of the Company, the Resolution on the Company's 2022 Stock Option
and Restricted Stock Incentive Plan (Draft) and Its Abstract, the Resolution on
Formulating the Check-up Management Measures for the Implementation of the
Company's 2022 Stock Option and Restricted Stock Incentive Plan, the
Resolution on Submitting to the General Meeting of Shareholders for
Authorizing the Board of Directors to Handle Matters Relating to Equity
Incentive and the Resolution on Convening the Second Extraordinary General
Meeting of Shareholders in 2022
The 42nd meeting February 16, 2022 February 17, 2022 The meeting considered and adopted the Resolution on Signing the Cooperation
of the 4th Board of
Directors Agreement on the New Energy Battery Whole Industry Chain Project
The 43rd meeting March 7, 2022 March 8, 2022 The meeting considered and adopted the Resolution on Adjusting the List of
of the 4th Board of
Stock Option Incentive Objects and the Number of Granted Options in the 2022
Directors
Stock Option and Restricted Stock Incentive Plan and the Resolution on
Granting Stock Options to the Incentive Objects of the 2022 Stock Option and
Restricted Stock Incentive Plan
The 44th meeting March 29, 2022 March 30, 2022 The meeting considered and adopted the Resolution on Signing the Investment
of the 4th Board of
Agreement and Supplementary Agreement with the People's Government of
Directors
Hongta District, Yuxi
The 45th meeting April 11, 2022 April 12, 2022 The meeting considered and adopted the Resolution on the Work Report of the
of the 4th Board of Board of Directors for 2021, the Resolution on the Company's 2021 General
Directors Manager Work Report, the Resolution on the Company's 2021 Annual Financial
Settlement Report, the Resolution on 2021 Profit Distribution Plan, the
55
Resolution on the Company's Internal Control Evaluation Report for 2021, the
Resolution on the Company's Self-check List for the Implementation of Internal
Control Rules for 2021, the Resolution on the Company's Annual Report for
2021 and its Abstract, the Resolution on the Company's 2021 Annual
Environmental, Social and Governance Report (ESG Report), the Resolution on
Renewing the Employment of Dahua CPAs (SGP) as the Company's Financial
Auditor and Internal Control Auditor in 2022, the Resolution on the Deposition
and Use of Raised Funds of the Company in 2021, the Resolution on Directors'
Remuneration of the Company for 2021, the Resolution on the Remuneration of
the Senior Management the Company for 2021, the Resolution on Applying for
the General Credit Limit in Banks in 2022, the Resolution on the Amount of
Guarantee Within the Scope of the Company's Consolidated Statements In 2022,
the Resolution on Anticipated Deposit, Loan and Guarantee Business in
Associated Banks in 2022, the Resolution on Using Some of the Idle Self-owned
Funds to Purchase Investment Quotas of Financial Products in Banks, the
Resolution on Providing Financial Assistance to Subsidiaries of the Holding
Company and their Subsidiaries, the Resolution on Changes of Accounting
Policies, the Resolution on Developing Foreign Exchange Derivatives Trading
Business and the Resolution on Convening the Company's 2021 Annual General
Meeting of Shareholders
The 46th meeting April 20, 2022 April 21, 2022 The meeting considered and adopted the Resolution on the Company's Report
of the 4th Board of
for the First Quarter of 2022, the Resolution on Proposed Change of Company
Directors
Name, Amendment of the Articles of Association and Handling of Industrial and
Commercial Change, the Resolution on Amending the Rules of Procedure of the
General Meeting of Shareholders, the Resolution on Amending the Rules of
Procedure of the Board of Directors and the Resolution on Convening the
Company's Third Extraordinary General Meeting in 2022
The 47th meeting May 5, 2022 May 5, 2022 The meeting considered and adopted the Resolution on Investment and
of the 4th Board of
Directors Construction of Lithium Battery Separator Project in the United States
The 48th meeting May 6, 2022 May 7, 2022 The meeting considered and adopted the Resolution on Change of Registered
of the 4th Board of
Capital, Amendment of the Articles of Association and Handling of Industrial
Directors
and Commercial Change Registration
The 49th meeting May 9, 2022 May 10, 2022 The meeting considered and adopted the Resolution on Adjusting Matters
of the 4th Board of
Relating to the Restricted Stock in the 2022 Stock Option and Restricted Stock
Directors
Incentive Plan and the Resolution on Granting Restricted Stock to Incentive
Objects of the 2022 Stock Option and Restricted Stock Incentive Plan
The 50th meeting May 20, 2022 May 23, 2022 The meeting considered and adopted the Resolution on Connected Transactions
of the 4th Board of
Involved in the Implementation of the Equity Incentive Plan by the Subsidiaries
Directors
of the Holding Company and the Abandonment of Rights by the Company
The 51st meeting July 14, 2022 July 15, 2022 The meeting considered and adopted the Resolution on Anticipated Matters of
of the 4th Board of
Directors Daily Connected Transactions in 2022
The 52nd meeting August 30, 2022 August 31, 2022 The meeting considered and adopted the Resolution on the Company's Interim
of the 4th Board of
Report for 2022 and its Summary and the Resolution on the Deposition and Use
Directors
of Raised Funds of the Company in the First Half Year of 2022
The 53rd meeting October 24, 2022 October 25, 2022 The meeting considered and adopted the Resolution on the Company's Third
of the 4th Board of
Directors Quarterly Report for 2022
2. Details of directors’ attendance at board meetings and shareholders’ general meetings
Details of directors’ attendance at board meetings and shareholders’ general meetings
Meetings
Attendance by Whether non- Attendance in
required to Entrusted
Attendance in way of Abs attendance in shareholders’
Name of director attend during presence
person (times) telecommunic enc person for two general
the Reporting (times)
ation (times) e consecutive times meeting
Period (times)
(ti or not
mes
)
Paul Xiaoming Lee No 4
13 0 13 0 0
56
Li Xiaohua 13 4 9 0 0 No 4
Yan Ma 13 5 8 0 0 No 4
Alex Cheng 13 2 11 0 0 No 4
Ma Weihua 13 6 7 0 0 No 4
Feng Jie 13 6 7 0 0 No 4
Lu Jiankai 13 0 13 0 0 No 4
Tang Changjiang 13 0 13 0 0 No 4
Zheng Haiying 13 0 13 0 0 No 4
Explanations for non-attendance in person for two consecutive times
N/A
3. Details on directors’ objection to relevant matters
Did directors object to relevant matters of the Company
□ Yes √ No
During the Reporting Period, no directors objected to relevant matters of the Company.
4. Other details about the performance of directors
Was advice to the Company from directors adopted
√Yes □No
Explanation on advice to the Company from directors being adopted or not adopted
During the Reporting Period, directors of the Company were diligent, conscientious, honest and self-disciplined, and faithfully performed the
responsibilities as directors. The directors carefully listened to the report of the Company’s relevant principals on project construction, development
strategy, profit distribution plan, effectiveness of internal control, appointment of financial audit institutions, etc., and actively expressed opinions on
the Board of Directors. The independent directors issued independent, fair and objective opinions and prior acknowledgement on issues of the
Company during the Reporting year that need independent directors’ opinions, actively and effectively performed the responsibilities of independent
directors, improved the Company’s supervision mechanism, and safeguarded the legitimate rights and interests of the Company and minority
shareholders.
57
VII. Details on Special Committees under the Board of Directors during the Reporting Period
Other Duty
Numberof Important Opinions and Performance Details on
Committee Name Meetings Meeting Content Information Objection
Members Held Date Suggestions Proposed toMatters
Convened (If Any)
Strategy Committee of the Paul February 15, The meeting considered the Resolution on Signing the Cooperation Agreement Unanimously Nil Nil
4th Board of Directors XiaomingLee, 2022 on the New Energy Battery Whole Industry Chain Project adopted
Li Xiaohua, March 28, The meeting considered the Resolution on Signing the Investment Agreement Unanimously Nil Nil
FengJie, 3 2022 and Supplementary Agreement with the People's Government of Hongta District, adopted
Zheng Yuxi
Haiying, Tang May 4, 2022 The meeting considered the Resolution on Investment and Construction of Unanimously Nil Nil
Changjiang Lithium Battery Separator Project in the United States adopted
Remuneration and Appraisal January 23, The meeting considered the Resolution on the Company's 2022 Stock Option and Unanimously Nil Nil
Committee of the 4th Board Paul 2022 Restricted Stock Incentive Plan (Draft) and its Abstract and the Resolution on adopted
of Directors XiaomingLee, Formulating the Check-up Management Measures for the Implementation of the
Tang 2 Company's 2022 Stock Option and Restricted Stock Incentive Plan
Changjiang, April 10, The meeting considered the Resolution on Directors' Remuneration for 2021 and Unanimously Nil Nil
Zheng Haiying 2022 the Resolution on the Remuneration of the Senior Management the Company for adopted
2021
April 11, The meeting considered the Resolution on the Company's 2021 Annual Audit Unanimously Nil Nil
2022 Report and the Resolution on Renewing the Employment of Da Hua Certified adopted
Public Accountants (Special General Partnership) as the Company's Financial
Li Xiaohua, Lu Auditor and Internal Control Auditor in 2022
Audit Committee of the 4th April 19, The meeting considered the Resolution on the Company's Report for the First Unanimously Nil Nil
Jiankai, Zheng 4
Board of Directors 2022 Quarter of 2022 adopted
Haiying August 29, The meeting considered the Resolution on the Company's Interim Report for Unanimously Nil Nil
2022 2022 and its Summary adopted
October 23, The meeting considered the Resolution on the Company's Third Quarterly Report Unanimously Nil Nil
2022 for 2022 adopted
VIII. Details on the Work of the Supervisory Committee
Were there any risks in the Company according to the supervision of the Supervisory Committee during the Reporting Period
□ Yes √ No
The Supervisory Committee raised no objection to matters under supervision during the Reporting Period.
58
IX. Employees of the Company
1. Number of employees, composition by profession, and educational level
Incumbent staff of parent company at the end of the Reporting Period
(person)
209
Incumbent staff of major subsidiary at the end of the Reporting Period
(person)
5,845
Total incumbent staff at the end of the Reporting Period (person) 7,458
Total staff receiving remunerations in current period (person) 8,927
Number of retirees whose expenses shall be borne by the parent
company and major subsidiaries (person)
0
Composition by profession
Category of profession Number of profession (person)
Production staff 6,121
Sales people 102
Technician 512
Financial staff 100
Administrative staff 623
Total 7,458
Educational level
Category of educational level Number (person)
Doctor’s degree and above 23
Master’s degree 126
Bachelor’s degree 743
Junior college 1,568
Technical secondary school and below 4,998
Total 7,458
2. Remuneration policy
During the Reporting Period, the Company observed the principles of distribution based on labor, efficiency priority combining fairness and
sustainable development, and on this basis, the Company made detailed policies in respect of staff’s remuneration, fringe benefit, performance
evaluation and other aspects. The Company built a new salary architecture featuring a wide range and “hierarchical ladder”, and implemented the two-
level salary distribution mechanism. At the same time, the Company has linked the salary and bonus to the working time at the Company, output, cost,
fixed staff of every position, equipment maintenance and other factors, and established a reasonable evaluation mechanism. The Company has taken
multifaceted measures, including diversification of internal remuneration structure, to motivate employees and attract high-quality human resources.
These measures have helped the Company improve the overall performance, realized a sustainable development of the Company and made the
Company more competitive in the market. The Company has actively explored and continuously deepened the income distribution system. In future,
the Company will make a moderate adjustment to the remuneration system based on its performance, market situation and industry trend.
3. Training plan
During the Reporting Period, the Company kept taking in excellent talents, actively strengthened internal personnel training, established a sound
training system and enhanced the professional development ability of employees. The Company has recorded a total of 3,583 training
events,including 3,515 internal training session and 34 external training sessions, and recorded a total of 77,416 class hours. These trainings have
benefited a total of 75,601 people. These trainings cover new employee training, job skill training, Enterprise strategic objectives training, risk
management training, anti-corruption training, general management training, certification training, safety training and reservetalent training.
59
4. Labor outsourcing
□ Applicable N/A
X. Profit Distribution and Conversion of Capital Reserve into Share Capital
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, during the Reporting Period
Applicable □ N/A
(I) According to the Articles of Association, the Company’s profit distribution policy is as follows:
1. The Company’s profit distribution policy shall focus on the reasonable investment return to investors, take into account the sustainable
development of the Company, reflect the strong awareness of rewarding shareholders, and maintain continuity and stability.
2. Form of profit distribution, proportion of cash dividends: The Company pays dividends in cash or by shares in a positive manner. Where the
Company’s audited net profit is positive with no significant investment plan or significant cash expenditure in a year, the Company shall include the
cash distribution in its profit distribution scheme for that year. The annual cash dividend of the Company shall not be less than 20% of the
distributable profit realized in the current year (excluding the undistributed profit at the beginning of the year). Where available, the Company may
distribute interim cash dividends. If the Company’s revenue grows rapidly and the Board of Directors considers that the stock price of the Company
does not match the size of the Company’s share capital, it may make a Plan for dividend distribution by stock while satisfying the above requirement
for cash dividend distribution.
3. Interval for profit distribution: subject to the satisfaction of the cash dividend conditions stipulated in paragraph 4 below, the Company shall,
in principle, pay cash dividends once a year, and the Board of Directors of the Company may propose interim cash dividends based on the profit
status and capital demands of the Company.
The Board of Directors of the Company shall, taking into account the characteristics of the industry in which it operates, its development stage,
its own business model, its profitability level, and any plan of its significant capital expenditure, distinguish the following circumstances and propose
a differentiated cash dividend policy in accordance with the procedures set forth in the Articles of Association of the Company:
(1) If the Company is in a maturity stage and has no plan of significant expenditure, the proportion of cash dividends in the overall profit
distribution shall account for at least 80%;
(2) If the Company is in a maturity stage and has any plan of significant expenditure, the proportion of cash dividends in the overall profit
distribution shall account for at least 40%;
(3) If the Company is in a growth stage and has any plan of significant expenditure, the proportion of cash dividends in the overall profit
distribution shall account for at least 20%;
If the Company is in an unidentifiable stage and has any plan of significant expenditure, the above paragraphs shall apply.
4. Conditions for distributing cash dividends
(1) The remaining distributable profit of the Company is positive after the profit achieved in the current year is used for making up for the losses
of previous years and making provision for surplus reserves.
(2) The auditor of the Company issues a standard unqualified audit report on the financial statements of the Company in the current year.
(3) The Company has no significant investment plans or significant cash expenditure.
Significant investment plan or significant cash expenditure means that the accumulative expenditure of the Company for the proposed external
investment, assets acquisition or equipment purchase within the next twelve months reaches or exceeds 30% of the Company’s latest audited net
assets and exceeds RMB300 million.
5. Conditions for distributing stock dividends: where the Company is well-run, with rapid growth of operating revenue and net profit, and the
Board of Directors believes that the Company is in the growth stage, the level of the Company’s net assets is high and the stock price does not match
the size of the share capital, it may propose a Plan for stock dividend distribution, subject to the consideration and approval at the general meeting of
shareholders of the Company. Stock dividend may be distributed separately or in conjunction with cash dividend.
(II) The Company will disclose the profit distribution Plan in a timely manner in strict accordance with the relevant provisions of the China
Securities Regulatory Commission and Shenzhen Stock Exchange, and disclose the profit distribution Plan and the implementation of the profit
distribution Plan in the periodic report accordingly.
(III) During the Reporting Period, the Company implemented the 2021 equity distribution in compliance with the relevant provisions of the
Articles of Association, in full consideration of the reasonable demands of investors and with full protection of the legitimate rights and interests of
small and medium-sized investors. On April 11, 2022, the Company held the 45th meeting of the 4th Board of Directors to deliberate and approve
the Proposal on 2021 Profit Distribution Plan. The independent directors expressed their independent opinions to agree upon the Plan. The 2021
general meeting of the Company was held on May 5, 2022 where the Plan was deliberated and approved for implementation. For details, please refer
to the Announcement on 2021 Profit Distribution Plan published on the Cninfo (www.cninfo.com.cn) (announcement No.2022-053).
60
Special explanation on cash dividend distribution policy
Whether or not the policy is in compliance with the provisions of the
Articles of Association or requirements of the resolutions of the Yes
general meeting of shareholders of the Company:
Whether or not the standard and proportion of dividends are clear and Yes
defined:
Whether or not the relevant decision-making process and mechanism Yes
are complete:
Whether or not the independent directors fully perform their duties and Yes
play their roles:
Whether or not minority shareholders have the opportunity to voice Yes
their opinions and demands, and whether or not their legitimate rights
and interests are fully protected:
If the cash dividend policy is adjusted or amended, whether or not the Yes
conditions and procedures are compliant and transparent:
The Company made a profit during the Reporting Period and the profit distributable to the shareholders of the parent Company was positive, but it
didnot put forward a plan for cash dividend distribution to shareholders
Applicable □ N/A
Reasons for the following state of affairs:
The Company generated profits during the Reporting Period. The parent
company generated profits available for distribution to shareholders. The purpose and use plan of the Company's undistributed profits
However, the company has not proposed a cash dividend declaration plan.
According to the provisions of the Measures for the Administration of
Securities Issuance and Underwriting issued by the CSRC, if a listed
company issues securities with a profit distribution plan or a plan for
converting public accumulation funds into share capital that has not been
submitted to the shareholders' meeting for voting or has been approved by
the shareholders' meeting but has not been implemented, the securities shall
be issued after the implementation of the plan. The lead underwriter shall
not underwrite the securities issued by the listed company before the
The Company attaches great importance to repaying investors in the
implementation of the relevant plan. If the Company implements the profit
form of cash dividends. After the implementation of this non-public
distribution for the year 2022, the Company cannot conduct the non-public
offering of A-shares, the Company will review the profit distribution
issuance of A-shares until the profit distribution is complete. In view of the
plan for the year 2022 in accordance with relevant laws, regulations
fact that the Company's non-public issuance of A shares for the year 2021
and the Articles of Association.
has been approved by the CSRC in the document "ZJXK [2022] No.1343",
and is in the process of promotion, taking into account the interests of
shareholders and the development of the Company, in order to promote the
relevant work as soon as possible, after the implementation of the
Company's non-public issuance of A shares, the profit distribution plan for
the year 2022 shall be considered separately in accordance with the
requirements of relevant laws and regulations and the provisions of the
Articles of Association.
Profit distribution and conversion of capital reserve into share capital during the Reporting Period
□ Applicable N/A
The Company plans not to distribute cash dividends, bonus shares or increase share capital with public accumulation funds for the year. After the
implementation of this non-public offering of A-shares, the Company will review the profit distribution plan for the year 2022 in accordance with
relevant laws, regulations and the Articles of Association.
XI. Implementation of any Equity Incentive Plan, Employee Stock Ownership Scheme or
Other Incentive Measures for Employees
Applicable □ N/A
61
1. Equity Incentive
The implementation of the 2022 Stock Option and Restricted Stock Incentive Plan
(1) On January 24, 2022, the 41st meeting of the 4th Board of Directors of the Company considered and adopted the Resolution
on the Company's 2022 Stock Option and Restricted Stock Incentive Plan (Draft) and its Abstract, the Resolution on Formulating the
Check-up Management Measures for the Implementation of the Company's 2022 Stock Option and Restricted Stock Incentive Plan and the
Resolution on Submitting to the General Meeting of Shareholders for Authorizing the Board of Directors to Handle Matters Relating to
Equity Incentive. The independent directors of the Company expressed their independent opinions on the incentive plan and solicited the
voting rights from all shareholders. On January 24, 2022, the 35th meeting of the 4th Board of Supervisors of the Company considered and
adopted the Resolution on the Company's 2022 Stock Option and Restricted Stock Incentive Plan (Draft) and its Abstract, the Resolution on
Formulating the Check-up Management Measures for the Implementation of the Company's 2022 Stock Option and Restricted Stock
Incentive Plan and the Resolution on Verifying the List of Incentive Objects of the 2022 Stock Option and Restricted Stock Incentive Plan
of the Company. Please refer to the Announcement about the Resolution of the 41st Meeting of the 4th Board of Directors (Announcement
No.2022-012), the Announcement about the Resolution of the 35th Meeting of the 4th Board of Supervisors (Announcement No.2022-018),
the Company's 2022 Stock Option and Restricted Stock Incentive Plan (Draft) (Revised) and other announcements disclosed by the
Company on the designated information disclosure media, i.e. Securities Times, China Securities Journal, Securities Daily and Shanghai
Securities Journal on January 25, 2022 for details.
(2) From January 26, 2022 to February 6, 2022, the Company publicized the names and positions of the incentive objects of the
incentive plan on the intranet OA system. Within the period of publicity, the Board of Supervisors of the Company did not receive any
objection from any organization or individual. Please refer to the Verified Opinions and Announcement of the Board of Supervisors of the
List of Incentive Objects of the 2022 Stock Option and Restricted Stock Incentive Plan (Announcement No.2022-022) disclosed by the
Company on the designated information disclosure media on February 7, 2022 for details.
(3) On February 14, 2022, the Second Extraordinary General Meeting of Shareholders of the Company in 2022 considered and
adopted the Resolution on the Company's 2022 Stock Option and Restricted Stock Incentive Plan (Draft) and its Abstract, the Resolution on
Formulating the Check-up Management Measures for the Implementation of the Company's 2022 Stock Option and Restricted Stock
Incentive Plan and the Resolution on Submitting to the General Meeting of Shareholders for Authorizing the Board of Directors to Handle
Matters Relating to Equity Incentive. The Company's implementation of the 2022 Stock Option and Restricted Stock Incentive Plan was
approved, and the Board of Directors was authorized to determine the grant date, grant stock option and restricted stock to the incentive
object when the incentive object met the conditions, and handle all matters necessary for the grant. Please refer to the Announcement about
the Resolution of the Second Extraordinary General Meeting of Shareholders in 2022 (Announcement No.2022-026) disclosed by the
Company on the designated information disclosure media on February 15, 2022 for details.
(4) The Company conducted a self-inspection on the trading of the Company's shares by insiders and incentive objects of the
incentive plan within six months before the public disclosure of the incentive plan (draft) (i.e., from July 23, 2021 to January 24, 2022).
Please refer to the Self-inspection Report on the Trading of the Company's Stock by the Incentive Objects and Insiders of the 2022 Stock
Option and Restricted Stock Incentive Plan (Announcement No.2022-027) disclosed by the Company on the designated information
disclosure media on February 15, 2022 for details.
(5) On March 7, 2022, the 43rd meeting of the 4th Board of Directors and the 37th meeting of the 4th Board of Supervisors of the
Company considered and adopted the Resolution on Adjusting the List of Stock Option Incentive Objects and the Number of Granted
Options in the 2022 Stock Option and Restricted Stock Incentive Plan and the Resolution on Granting Stock Options to the Incentive
Objects of the 2022 Stock Option and Restricted Stock Incentive Plan. The independent directors of the Company expressed their
independent opinions on these resolutions. The Board of Supervisors of the Company reviewed the list of incentive objects on the grant date
of stock options and issued verification opinions. Please refer to the Announcement about Adjusting the List of Stock Option Incentive
Objects and the Number of Granted Options in the 2022 Stock Option and Restricted Stock Incentive Plan (Announcement No.2022-034),
the Announcement about Granting Stock Options to Incentive Objects of the 2022 Stock Option and Restricted Stock Incentive Plan
(Announcement No.2022-035) and the Verified Opinions of the Board of Supervisors of the List of Incentive Objects of the 2022 Stock
Option and Restricted Stock Incentive Plan on the Grant Date of Stock Options (Announcement No.2022-037) disclosed by the Company
on the designated information disclosure media on March 8, 2022 for details.
(6) On March 14, 2022, the Company completed the registration of the grant of stock options in the 2022 Stock Option and
Restricted Stock Incentive Plan. Please refer to the Announcement about the Completion of the Registration of the Grant of Stock Option of
the 2022 Stock Option and Restricted Stock Incentive Plan (Announcement No.2022-040) disclosed by the Company on the designated
information disclosure media on March 15, 2022 for details.
(7) On May 9, 2022, the 49th meeting of the 4th Board of Directors and the 42nd meeting of the 4th Board of Supervisors of the
Company considered and adopted the Resolution on Adjusting Matters Relating to the Restricted Stock in the 2022 Stock Option and
Restricted Stock Incentive Plan and the Resolution on Granting Restricted Stock to Incentive Objects of the 2022 Stock Option and
Restricted Stock Incentive Plan. The independent directors of the Company expressed their independent opinions on these resolutions. The
Board of Supervisors of the Company reviewed the list of incentive objects on the grant date of restricted stock and issued verification
opinions. Please refer to the Announcement about Adjusting Matters Relating to the Restricted Stock in the 2022 Stock Option and
Restricted Stock Incentive Plan (Announcement No.2022-085), the Announcement about Granting Restricted Stock to Incentive Objects of
the 2022 Stock Option and Restricted Stock Incentive Plan (Announcement No.2022-086) and the Verified Opinions of the Board of
Supervisors of the List of Incentive Objects of the 2022 Stock Option and Restricted Stock Incentive Plan on the Grant Date of Restricted
Stock (Announcement No.2022-087) disclosed by the Company on the designated information disclosure media on May 10, 2022 for details.
62
(8) On May 23, 2022, the Company completed the registration of the grant of restricted stock in the 2022 Stock Option and
Restricted Stock Incentive Plan. Please refer to the Announcement about the Completion of the Registration of the Grant of Restricted Stock
of the 2022 Stock Option and Restricted Stock Incentive Plan (Announcement No.2022-098) dated May 24, 2022 for details.
Equity incentives granted to the Company's directors and senior management
Applicable □ N/A
Unit: share
The
exercise
The price of The
The The The The
number the number
The number number market number The The
of number The of The
number of of price at of number number
newly of number newly grant
of stock exercisa exercise the end restricte of of
granted options of stock granted price of
options ble d of the d shares unlocke restricte
stock exercise options restricte restricte
Name Post held at options options Reporti held at d shares d shares
options d during held at d shares d shares
the during during ng the during held at
during the the end during (RMB
beginni the the Period beginni the the end
the Reporti of the the per
ng of Reporti Reporti (RMB ng of current of the
Reporti ng period Reporti share)
the year ng ng per the period period
ng Period ng
Period Period share) period
Period (RMB Period
per
share)
Secretar
y of the
Board
Yu Xue 0 40,000 0 0 40,000 131.29 30,825 0 40,000 64.48 70,825
of
Director
s
Total -- 0 40,000 0 0 -- 40,000 -- 30,825 0 40,000 -- 70,825
The 30,825 restricted shares held by Yu Xue as at the beginning of the period are executive locked-up shares, and the 30,825 executive locked-
Remarks (if any)
up shares are included in the restricted shares held by Yu Xue at the end of the period.
Evaluation mechanism and incentive of senior management
The Company has established a complete performance evaluation system, and the income of senior management is linked to the overall
operating performance. During the Reporting Period, the Board of Directors of the Company evaluated the work performance of senior
management according to the annual operating performance of the Company, the job responsibilities of senior management and the
completion of annual work objectives, and prepared incentive compensation plans for senior management according to the evaluation
results. Such plans were submitted for review in accordance with regulations. The Company encouraged senior management with the equity
incentive plan. The Company formulated implementation check-up management measures for all of the Company’s equity incentive plans.
The Company's check-up indicators are related to the Company's medium and long-term development strategies and annual business
objectives. According to the relevant check-up methods, the Company conducted individual level performance assessment on the incentive
objects according to the key work performance, work ability, work attitude and other indicators, and finally determined the number of
restricted shares or options that should be unlocked by the incentive objects based on the Company level and individual level assessment
results.
2. Implementation of Employee Stock Ownership Plan
□ Applicable Not applicable
3. Other Employee Incentives
□ Applicable Not applicable
XII. Internal Control System Construction and Implementation during the Reporting Period
1. Internal control construction and implementation
During the Reporting Period, the Company, in accordance with the Basic Norms for Enterprises’ Internal Control and related guidelines, updated and
63
perfected its internal control system in due time, and established an internal control system featuring scientific design, simplicity, applicability, and
effective running. The Audit Committee of the Board of Directors and internal audit department jointly formed the Company’s risk management and
internal control organization system to supervise and evaluate the internal control management of the Company. Through the operation, analysis and
evaluation of the internal control system, the Company effectively prevented risks in operational management and promoted the realization of internal
control objectives.
2. Details on material weakness in the Company’s internal control during the Reporting Period
□ Yes No
XIII. Company’s Management and Control of Subsidiaries during the Reporting Period
According to the Company Law, Articles of Association and other relevant laws, regulations and rules, the Company will continue to manage and
supervise the standardized operation, information disclosure, financial capital, operation and other matters of its subsidiaries, and timely track the
financial status of its subsidiaries and other important matters, in order to ensure the legal compliance of operation and management, asset safety, and
the accuracy and completeness of the financial reports and related information, and further improve the operation and management and risk
management capabilities of subsidiaries.
XIV. Internal Control Self-Assessment Report or Internal Control Audit Report
1. Self-assessment report on internal control
Disclosure date of the assessment report on internal control March 3, 2023
Disclosure index of the assessment report on internal 2022 Assessment Report on Internal Control disclosed on
control http://www.cninfo.com.cn/ on March 3, 2023
Ratio of total assets of the unit included in the assessment
scope to the total assets on the Company’s consolidated 100.00%
financial statements
Ratio of operating revenue of the unit included in
theassessment scope to the operating revenue on the 100.00%
Company’s consolidated financial statements
Defect identification criteria
Type Financial report Non-financial report
General defects: There is little General defects: There is little
possibility that a failure to take any possibility that a failure to take any
action will result in potential action will result in potential
Qualitative criteria misstatement, economic loss or misstatement, economic loss or
unachieved business objectives. unachieved business objectives.
Material defects: There is some Material defects: There is some
possibility that a failure to take any possibility that a failure to take any
action will result in potential action will result in potential
64
misstatement, economic loss or misstatement, economic loss or
unachieved business objectives. Major unachieved business objectives. Major
defects: There is the possibility that a defects: There is the possibility that a
failure to take any action will result in failure to take any action will result in
potential misstatement, economic loss potential misstatement, economic loss
or unachieved business objectives. or unachieved business objectives.
General defects: < 0.25% of Total General defects: < 0.25% of Total
Assets, < 0.5% of Operating revenue; Assets, < 0.5% of Operating revenue;
material defects: ≥ 0.25% of Total material defects: ≥ 0.25% of Total
Assets and < 1% of Total Assets, ≥ Assets and <1% of Total Assets, ≥ 0.5%
Quantitative criteria
0.5% of Operating revenue and < 1.5% of Operating revenue and < 1.5% of
of Operating revenue; major defects: ≥ Operating revenue; major defects: ≥ 1%
1% of Total Assets, ≥ 1.5% of of Total Assets, ≥ 1.5% of Operating
Operating revenue. revenue.
Number of major defects in the financial report 0
Number of major defects in the non-financial report 0
Number of material defects in the financial report 0
Number of material defects in the non-financial report 0
2. Audit report on internal control
√ Applicable □ N/A
Audit opinion in the audit report on internal control
According to the identification of major defects in the internal control of the Company’s financial report, there were no major defects in the
internal control of the financial report as of the base date of the internal control assessment report. The Board of Directors believed that the
Company maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise
internal control standard system and related regulations. According to the identification of major defects in the internal control of the Company’s
non-financial report, there were no major defects in the internal control of the non-financial report as of the base date of the internal control
assessment report. From the base date of the internal control assessment report to the issue date of the internal control assessment report, no
factors affecting the assessment conclusion of the effectiveness of internal control occurred.
Disclosure date of the audit report on
March 3, 2023
internal control
Disclosure index of the audit report The Authentication Report on Internal Control of Yunnan Energy New Material Co., Ltd. (Da Hua Nei
on internal control Zi No. [2023] 000079) disclosed by the Company on http://www.cninfo.com.cn/ on March 3, 2023
Type of opinion in the audit report on
Standard unqualified opinion
internal control
Whether there was any major defect
No
in the non-financial report
Did the accounting firm issue a qualified audit report on internal control
□ Yes No
Was the audit report on internal control issued by the accounting firm consistent with the self-assessment report from the Board of Directors
Yes □ No
XV. Rectification of Problems Found in Self-Inspection of the Special Operation on
Improving Corporate Governance of Listed Companies
N/A
65
Section 5 Environment and Social Responsibility
I. Major Environmental Protection Issues
Whether the listed company and its subsidiaries fell into major pollutant-discharge units published by the environmental protection authorities.
Yes □ No
Environmental protection related policies and industry standards
The Company strictly abides by the Environmental Protection Law of the People’s Republic of China, the Environmental Impact Assessment Law of the
People’s Republic of China, the Water Law of the People’s Republic of China, the Energy Conservation Law of the People’s Republic of China, the
Decision of the State Council on Strengthening Energy Conservation (Guo Fa [2006] No. 28) and other national and local laws and regulations in its
daily production and operation. The Group discharges waste gas, waste water and solid waste in accordance with the Integrated Emission Standard of Air
(DB31/933-2015), the Discharge Standard of Pollutants for Synthetic Resin Industry (GB31572-2015), the Discharge Limits of Water Pollutants
(DB44/26-2001) and the National Catalog of Hazardous Wastes (2021 Edition).
Environmental protection administrative permission
The Company and its subsidiaries have completed the Pollutant Discharge Permit and other relevant environmental protection qualification procedures in
accordance with the relevant laws and regulations.
Industry emission standards and specific conditions of pollutant emissions involved in production and operation activities
Name Name Dischar Numb Distrib Conce Pollut Total Total Excess
of the of the ge er of ution ntratio ant Discha Disch Discha
Comp Major Method Disch of n Disch rge arge rge
any Pollut arge Discha /intens arge Appr
or ants Outlet rge ity of Standa (tons) oved
Subsi and s Outlet the rds
diary Specif s Disch Imple (tons/
year)
ic arge mente
Pollut d
ants
Nitrogen Plant area Integrated
oxide
Emission
Standard of
Shanghai Organized 34.17mg/m
8 Air 5.22 8.4953 --
Energy emission 3
Pollutants
DB31/933-
2015
Particulate Plant area Integrated
matter
Emission
Standard of
Shanghai Organized 0.7521mg/
8 Air 0.05 0.1277 --
Energy emission m3
Pollutants
DB31/933-
2015
Non- Plant area Emission
methane
Standard of
total
hydrocarbo Pollutants
n for
Shanghai Organized 3.56
8 Synthetic 1.58 4.2181 --
Energy emission mg/m3
Resin
Industry
GB31572-
2015
Dichlorom Plant area Integrated
ethane
Emission
Standard of
Wuxi Organized 70.2938mg
3 Air 21.94 49.6845 --
Energy emission /m
Pollutants
DB31/933-
2015
66
Nitrogen Plant area Integrated
oxide
Emission
Standard of
Wuxi Organized 19.2618mg
7 Air 3.23 5.88 --
Energy emission /m
Pollutants
DB31/933-
2015
Aulfur Plant area Integrated
dioxide
Emission
Standard of
Wuxi Organized 0.13933mg
7 Air 0.01 3.36 --
Energy emission /m
Pollutants
DB31/933-
2015
Particulate Plant area Integrated
matter
Emission
Standard of
Wuxi Organized 2.70660mg
7 Air 0.21 2.5372 --
Energy emission /m
Pollutants
DB31/933-
2015
Non- Plant area Emission
methane
Standard of
total
hydrocarbo Pollutants
n for
Wuxi Organized 2.1717mg/
2 Synthetic 0.56 0.224 --
Energy emission m
Resin
Industry
GB31572-
2015
COD Sewage Discharge
station
Limits of
Industrial
Zhuhai Water
wastewater 55.5mg/L 0.10 0.2552 --
Energy Pollutants
discharge
DB44/26-
2001
BOD Sewage Discharge
station
Limits of
Industrial
Zhuhai Water
wastewater 1 18.55mg/L 0.00 -- --
Energy Pollutants
discharge
DB44/26-
2001
Petroleum Sewage Discharge
station
Limits of
Industrial
Zhuhai Water
wastewater 0.54mg/L 0.00 -- --
Energy Pollutants
discharge
DB44/26-
2001
Nitrogen Plant area Integrated
oxide
Emission
Standard of
Zhuhai Organized 34.55mg/m
Air 6.49 35.998 --
Energy emission
Pollutants
5 DB31/933-
2015
Sulfur Plant area Integrated
dioxide
Zhuhai Organized Emission
3.66mg/m 0.41 1.96 --
Energy emission Standard of
Air
67
Pollutants
DB31/933-
2015
Non- Plant area Emission
methane
Standard of
total
hydrocarbo Pollutants
n for
Zhuhai Organized
14 2.18mg/m Synthetic 2.95 8.79 --
Energy emission
Resin
Industry
GB31572-
2015
Solid waste Temporary Directory
storage of
Transferred of National
hazardous
Zhuhai by qualified waste Hazardous
- 108.78 -- --
Energy disposal Wastes
units (Version
2021)
Waste Temporary Directory
slurry storage of
Transferred of National
Suzhou hazardous
by qualified waste Hazardous
GreenPowe - - 19.04 50 --
disposal Wastes
r
units (Version
2021)
Sludge Temporary Directory
storage of
Transferred of National
Suzhou hazardous
by qualified waste Hazardous
GreenPowe - - 119.12 150 --
disposal Wastes
r
units (Version
2021)
Waste Storage Directory
paraffin oil tank
Transferred of National
Suzhou
by qualified Hazardous
GreenPowe - - 57.82 100 --
disposal Wastes
r
units (Version
2021)
White clay Temporary Directory
storage of
Transferred of National
Suzhou hazardous
by qualified waste Hazardous
GreenPowe - - 277.00 300 --
disposal Wastes
r
units (Version
2021)
Waste oil Temporary Directory
of grease storage of
Transferred of National
trap hazardous
Newmi by qualified waste Hazardous
- - 18.92 806.4 --
Tech disposal Wastes
units (Version
2021)
Waste Temporary Directory
activated storage of
Transferred of National
carbon hazardous
Newmi by qualified waste Hazardous
- - 2.41 3 --
Tech disposal Wastes
units (Version
2021)
Disposal on Pollution
The Company have formulated the Compilation of environmental and hazardous waste management systems, Exhaust Gas, Wastewater, and Noise
Management Regulations. In accordance with the standards of the local environmental protection authorities, each company conducts internal
management, supervision and feedback on the discharge of exhaust gas, wastewater and waste. Meanwhile, there are external inspections from time to
time to ensure that the emissions meet the standards.
68
1. Exhaust Gas Emission Management
The Group strictly abides by the Law of the People's Republic of China on the Prevention and Control of Air Pollution, Air Pollution Prevention and
Control Action Plan of Yunnan Province and other national and local exhaust emission management regulations and adheres to standards on emission.
The exhaust gas generated by the Group mainly comes from workshop exhaust and boiler exhaust, including VOCs (volatile organic compound)
emissions and nitrogen oxide emissions, among which VOCs mainly come from workshop exhaust. The Group has formulated relevant exhaust gas
management systems, including the Exhaust Gas Emission Management System, Exhaust Gas Absorption System Operating Procedures, etc., and
strictly implemented them. The Group continues to invest in waste gas recovery and treatment devices to reduce emissions. The Group has set up
treatment facilities such as plasma purifiers in the workshops. Jiangxi Ruijie adopts Regenerative Thermal Oxidizer (“RTO”), which can recover waste
heat while treating waste gas. We require the exhaust gas absorption facilities and treatment systems of each workshop to operate normally, and we
regularly maintain related equipment. We have set up monitoring instruments in the workshops, which will alert employees to evacuate once the preset
concentration is exceeded. The VOCs exhaust gas online monitoring system has been put into operation in Wuxi Energy, which can gradually realize
real-time monitoring of emission concentration. In addition, in accordance with the requirements of relevant national laws and regulations, we have
engaged a qualified third party to conduct regular and continuous monitoring of various indicators of exhaust emissions.
2. Wastewater Discharge Management
We discharge wastewater in accordance with the Law of the People’s Republic of China on Prevention and Control of Water Pollution, the Water
Pollution Prevention and Control Work Plan of Yunnan Province and other national and local measures and regulations for managing wastewater
discharge, and adheres to standards on emission. The Group has formulated the Wastewater Discharge Management System and strictly implemented
them. Wastewater discharged by the Group includes production wastewater and domestic wastewater. Production wastewater is treated by sewage
treatment facilities in compliance with the production practices in each region where we operate, and then reused or discharged into the municipal
sewage pipe network. To treat domestic sewage, Group factories are equipped with facilities to treat and regularly monitor domestic sewage. Take
Shanghai Energy as an example, there is a sewage treatment station in the Shanghai Energy, and the wastewater is discharged to the municipal pipe
network after primary precipitation, secondary precipitation, and filtration treatment.
3. Waste management
The Group strictly abides by the Law of the People's Republic of China on the Prevention and Control of Solid Waste Pollution, Solid Waste Pollution
Control Plan of Yunnan Province and other national and local waste management regulations, and adheres to emission and disposal standards. We have
formulated relevant management systems such as General Solid Waste Management System, Hazardous Waste Management System, Hazardous Waste
Pollution Prevention and Control Responsibility System, Hazardous Waste Transfer System, Hazardous Waste Storage Facilities Management System,
Solid Waste Management Regulations, etc. and strictly enforces them. During the production and research and development process, the Group generate
certain types and a small number of hazardous wastes and non-hazardous wastes. We classify and collect waste in accordance with regulations, store
and classify waste in separate areas. Among them, all hazardous wastes are handled by qualified third parties after they are taken away from the
factories. We carefully confirm the relevant qualifications when signing a contract with third-party processing agencies and regularly understand their
actual treatment methods for the Group’s waste. Hazardous waste, such as waste activated carbon, is usually stored in a separate hazardous waste
warehouse and disposed of 2-3 times a year. Among the non-hazardous waste, paper, plastic bottles, etc. will be recycled through the recycling bins set
up in the Group, and domestic waste will be handled by the sanitation department.
Environmental emergency response plan
In accordance with the Environmental Protection Law of the People’s Republic of China, Administrative Measures for Environmental Emergency
Response Plan, and National Environmental Emergency Response Plan, the Company prepared the Environmental Emergency Response Plan and
submitted it to the competent authorities for filing. The Company and its subsidiaries deploy persons in charge of emergency management and
regularly organize comprehensive emergency drills, with complete contingency rescue resources.
Environmental self-monitoring plan
The Company and its subsidiaries developed self-monitoring plans in accordance with the laws and regulations, installed automatic testing facilities
in strict accordance with the plans, and regularly conduct or entrust qualified third parties to organize self-monitoring of pollutants such as the
discharged exhaust gas, wastewater, and noise.
Investment in environmental governance and protection and payment of environmental protection tax
During the reporting period, the Company’s environmental protection expenditure amounted to RMB60,540,000, including investment in
environmental protection equipment and pollutant treatment facilities; Paid environmental protection tax amounted to RMB856,700.
Administrative penalties imposed for environmental issues during the Reporting Period
Applicable □ N/A
In addition to product quality control, we are also committed to creating low-carbon and environmental-friendly products, and implement the concept
in the development, design and production process of the product.
1. Regarding new energy products, the Institute of Recycling and Energy Saving under the Shanghai Energy Research Institute is mainly responsible
for the recycle, improvement and reuse of white oil, dichloromethane, DMAC, acetone and clay used in manufacturing of lithium battery separators,
as well as the research on the recovery and treatment of waste water and waste gas by designing effective plans and using advanced separation and
recovery equipment to ensure the recovery rate of white oil, dichloromethane, DMAC, acetone and white clay. In addition, we have also improved
the recycling rate of wastewater and waste gas to save energy, reduce consumption and contribute to the environmental friendliness of R&D and
product design activities.
2. To improve the yield of BOPP film products, and reduce waste film, resource consumption and environmental pollution, Chengdu Hongta Plastic
takes measures such as increasing the rewards for online trim scrap recovery and for the team that recovers most trim scraps as an incentive to
encourage employees to recover more trim scraps. The separator -making workshop strictly follows the separator Manufacturing Order and the
requirements on the effective width of the parent roll in its manufacturing; while the Technical and Quality Assurance Department strictly controls
the sampling size according to the testing requirements when selecting parent roll samples, oversampling is prohibited and cutting waste is
minimised to reduce wastes in the manufacturing process.
69
3. In terms of packaging products, in response to the ecological civilization construction strategy implemented by the country and in line with the
development ideology of “embrace ecological environmental protection through energy saving and carbon reduction”, we continue to embrace
innovation in packaging materials. During the reporting period, Hongchuang Packaging used special technology and materials to replace traditional
oil packaging with paper-plastic packaging to reduce the use of plastic. In addition, Hongchuang Packaging also reformed the roof packaging design
to reduce the size of trash and improve user-friendliness to promote the green and recyclable development of the industrial chain.
We believe the industry is leading to a greener future, and life cycle assessment assists companies to determine the strategies and direction of green
development. Therefore, we conduct product life cycle environmental impact assessments. Wuxi Energy performs life cycle assessments on the trial
production of lithium-ion battery separator in accordance with the requirements of ISO 14040 and ISO 14044 as the basis for the research on
reducing product carbon footprints.
II. Social Responsibility
For details, please refer to the 2022 Environmental, Social and Governance Report (ESG report) disclosed by the Company on March 3, 2023 at
www.cninfo.com.cn.
III. Specifics of Consolidating and Extending the Achievements of Poverty Alleviation and Rural Revitalization
No actions were carried out during the Reporting Period.
70
Section 6 Significant Events
I. Performance of commitments
1. Commitments of the Company’s actual controller, shareholders, related parties and acquirer, as well as the Company and other commitment makers
performed during the Reporting Period or ongoing at the end of the Reporting Period
Applicable □ N/A
Commitment Commitment Type of Details of commitment Time of Term of Performance
made by commitment commitment commitment of
commitment
1. There are no false records, misleading statements or major omissions in the information disclosed and application documents
submitted by Energy Technology, and those making the commitments shall be jointly and severally liable for the authenticity, accuracy
and integrity of such documents 2. If the information provided or disclosed for this major assets restructuring contains false records,
misleading statements or major omissions, and is put on file by the judicial organ for investigation or by the CSRC for investigation,
before the conclusion of the investigation is made, those making the commitments will not transfer the shares with interests in Energy
Energy
Technology, and will submit the application for suspending the transfer and share accounts to the Board of Directors of the Energy
Technology Commitment
Technology within two trading days after receiving the notice of the investigation, and the Board of Directors shall apply for lockup to Strictly
and all to submit
the stock exchange and the registration and clearing company on behalf of those making the commitments; if the Board of Directors fails June 13, 2017 Long term performed
directors, true, accurate
to submit the lockup application within two trading days, it will authorize the Board of Directors to directly submit the identity and
supervisors and complete
account information of those making the commitments to the stock exchange and the registration and clearing company after verification
and senior information
and apply for lockup; if the Board of Directors fails to submit the identity and account information of those making the commitments to
Commitments management
the stock exchange and the registration and clearing company, those making the commitments will authorize the stock exchange and the
made during registration and clearing company to directly lock up the related shares. If the investigation found that there is any violation of laws or
asset regulations, those making the commitments promise to use voluntarily the shares locked up to compensate the related investors.
restructuring
1. The Company and its controlling shareholder and actual controller have not been investigated by judicial authorities for suspected
crimes or investigated by the CSRC for suspected violations of laws and regulations in recent 3 years; 2. the Company and its Strictly
Commitment
controlling shareholders and actual controllers have not been publicly censured by the stock exchange and have no other major acts of June 13, 2017 performed
The Company on legal Long term
dishonesty in the past 12 months; 3. The Company and its incumbent directors and senior management have not been investigated by
compliance
judicial authorities for suspected crimes or investigated by the CSRC for suspected violations of laws and regulations.
71
Directors and Commitment 1. I hereby commit neither to tunnel to other units or individuals without compensation or under unfair conditions, nor to damage the Strictly
May 25, 2017
senior on dilution of Company’s interests in other ways; 2. I hereby commit to restrict my position-related consumption activities; 3. I hereby commit not to Long term performed
management current return use the Company’s assets for investment and consumption activities not related to execution of my duties; 4. I hereby commit to link the
of Energy and remedial remuneration system formulated by the Board of Directors or the Remuneration Committee or Assessment Committee of the Company
Technology measures with the execution of the return recovery measures; 5. I hereby commit to link the vesting conditions with the implementation of the
return recovery measures if the Company will implement any share incentive scheme in the future; 6. Since the date of this commitment
up to completion of this major asset restructuring, if the CSRC imposes other new regulatory requirements in relation to the return
recovery measures and its commitments and such commitments cannot meet such rules of the CSRC, I commit to issue supplemental
undertakings in accordance with the latest requirements of the CSRC.
The counterparty will timely provide Energy Technology with information related to restructuring, and guarantee the authenticity,
Commitment accuracy and completeness of the information provided. In case of any false record, misleading statement or major omission of the Strictly
to submit information provided, resulting in any loss to Energy Technology or investors, it shall be liable for compensation according to law. In performed
June 13, 2017
Counterparty true, accurate case of any false record, misleading statement or major omission in the information provided or disclosed in this material assets Long term
and complete restructuring, which is put on file by the judicial organ for investigation or by the CSRC for investigation, the counterparty will suspend
information the transfer of the shares with interests in Energy Technology until the case investigation conclusion is clear.
1. Gao Xiang was the CFO of Shanghai Lvxin Packaging Materials Co., Ltd. (Shunhao). Due to Shunhao’s failure to disclose related
transactions with related natural persons according to law, in violation of the relevant provisions on information disclosure in the
Securities Law and the Administrative Measures for Information Disclosure of Listed Companies, on July 27, 2016, Shanghai Securities
Regulatory Bureau issued a warning to Shunhao and related parties, including Gao Xiang, and imposed an administrative penalty of
RMB30,000 on Gao Xiang; on January 5, 2017, Shenzhen Stock Exchange made the Decision on Criticism to Shanghai Shunhao New
Materials Technology Co., Ltd. and Related Parties through Circulating Notices, and circulated notification of criticism to Shunhao and Strictly
Commitment related parties, including Gao Xiang. In addition, other counterparties have not been subject to administrative or criminal penalties performed
related to the securities market in the past five years, and have not involved in major civil litigation or arbitration related to economic June 13, 2017
Counterpartie on legal Long term
s compliance disputes. 2. Counterparties are eligible to purchase shares not publicly offered by Energy Technology, and are not under any
circumstances where they are not allowed to purchase shares not publicly offered by Energy Technology as stipulated by laws,
regulations, rules or normative documents. 3. Over the last five years, the counterparties have not failed to repay a large amount of debts
as scheduled, failed to fulfill its declaration, been subject to administrative measures by the CSRC or disciplined by the stock exchange
and there are no ongoing or threatened administrative or judicial proceedings for investigation against my material violation of laws or
regulations.
72
1. Shares of Shanghai Energy held by counterparties according to law. The counterparty has performed its contribution obligation to
Shanghai Energy in accordance with the law, and there is no false contribution, delayed contribution, withdrawal of capital and other acts
Commitment Strictly
in violation of its obligations and responsibilities as a shareholder, and there is no situation that may affect the legal survival of Shanghai
on integrity June 13, 2017 performed
Counterparties Energy. 2. The equity of Shanghai Energy held by the counterparty is actually legally owned. There is no ownership dispute, there is no Long term
of asset
trust, entrusted shareholding or similar arrangement, and there is no pledge, freezing, sealing, property preservation or other rights
ownership
restrictions on the equity of Shanghai Energy held by the counterparty.
Strictly
Commitment I/the enterprise and its main management do not leak any insider information of Energy Technology or leverage insider information to
June 13, 2017 performed
Counterparties on no insider conduct insider trading. If the above commitments are violated, all losses caused to the listed company will be borne. Long term
trading
After the completion of the major asset restructuring, the enterprises that are controlled by those making the commitments will avoid and
reduce the related transactions with Energy Technology as far as possible. For those related transactions that cannot be avoided or have
reasonable reasons, the enterprises that are controlled by those making the commitments will sign agreements with Energy Technology
and perform legal procedures in accordance with the principles of justice, fairness and compensation for equal value, and shall, in
Commitment accordance with the provisions of relevant laws, regulations, other normative documents and the Articles of Association of Yunnan Strictly
Heyi
to regulate Energy New Material Co., Ltd., perform relevant internal decision-making approval procedures in accordance with the law and timely June 13, 2017 performed
Investment, Long term
related perform information disclosure obligations, guarantee not to trade with Energy Technology under unfair conditions compared with the
Paul
transactions market, guarantee not to illegally transfer the funds and profits of Energy Technology by using related party transactions, and do not use
Xiaoming Lee
such transactions to engage in any behavior that damages the legitimate rights and interests of Energy Technology and other
family
shareholders. If a breach of the above commitment results in damage to the interests of Energy Technology, those making the
commitments will compensate the Energy Technology for the losses caused by the above acts to Energy Technology.
1. At present, those making the commitments are not directly or indirectly engaged in the same or similar business with the existing
business of Energy Technology or Shanghai Energy through other operating entities directly or indirectly controlled by it or in the name
Heyi Commitment of natural person, and do not hold any position or act as any kind of consultant in any operating entity with the main business same as or Strictly
similar to that in Energy Technology or Shanghai Energy, or engage in any other competition with Energy Technology or Shanghai June 13, 2017
Investment, to avoid performed
Energy. 2. The commitment maker guarantees that after the completion of this major asset restructuring, it will not carry out or operate Long term
Paul Xiaoming horizontal
Lee family competition the same or similar business with the main business of Energy Technology or Shanghai Energy in its own way, directly or indirectly
through other business entities under its direct or indirect control; do not hold any position or act as any kind of consultant in any
operating entity with the same or similar business with Energy Technology or Shanghai Energy; do not provide technical services for
existing customers of Energy
73
Technology or Shanghai Energy in the name of other than Energy Technology or Shanghai Energy; avoid any horizontal competition. 3.
If any loss is caused to Energy Technology or Shanghai Energy due to the commitment maker’s breach of the above commitments, the
operating profit obtained shall be owned by Energy Technology and all losses suffered by Energy Technology or Shanghai Energy shall
be compensated.
Commitment Before this major asset restructuring, Energy Technology has been completely separated from other enterprises controlled by the
Heyi on ensuring commitment maker in terms of business, assets, institutions, personnel and finance. Energy Technology’s business, assets, institutions, Strictly
Investment, the personnel and finance are independent. After the completion of this major asset restructuring, the commitment maker undertakes not to June 13, 2017 performed
Long term
Paul Xiaoming independence use the identity of the controlling shareholder or actual controller of Energy Technology to affect the independence of Energy
Lee family of the listed Technology, and to ensure the independence of Energy Technology in business, assets, institutions, personnel and finance as far as
company possible.
There were administrative punishments in fire control and water affairs in Shanghai Energy. As of the date of this letter of commitment,
Shanghai Energy and its subsidiaries do not have any administrative penalty that has not been implemented or rectified. In November
2015, Shanghai Pudong New Area Administration of Work Safety ordered Shanghai Energy to rectify the three dichloromethane storage
Commitment
tanks within a time limit. Shanghai Energy has completed the rectification, but has not completed the safety acceptance after the
on the Strictly
rectification. If the relevant competent departments in the local place where Shanghai Energy and its subsidiaries are located in have
Paul Xiaoming existence of May 25, 2017 performed
made administrative punishment to Shanghai Energy and its subsidiaries for fire control, water service or the three dichloromethane tanks Long term
Lee family previous
at any time, the commitment maker promises to make cash compensation for all economic losses suffered by Shanghai Energy or its
administrativ
subsidiaries within 30 days after the actual punishment or loss amount is determined, so as to ensure that it will not have a material
e penalty
impact on the production, operation and financial situation of Shanghai Energy and its subsidiaries. Joint and several liability shall be
borne by those making the commitments.
Commitment
Strictly
on capital Although I hold the certificate of permanent residence right of the United States, I have not changed my nationality, I am still a Chinese
June 13, 2017 performed
Li Xiaohua source of nationality; my own investment in Shanghai Energy is all China’s income, and does not involve the contribution of foreign exchange or Long term
Shanghai foreign assets.
Energy
Commitment This enterprise is the employee stock ownership platform of Shanghai Energy, and the enterprise does not exist to raise funds in a non-
of the public way to qualified investors. There is no asset management by the fund manager or general partner, nor does it serve as the manager
enterprise not of any private equity fund. Therefore, the enterprise does not belong to the private investment fund or a private fund manager in the Strictly
Zhuhai belonging to Interim Measures for the Supervision and Administration of Private Investment Funds and the Measures for the Registration and Filing of June 13, 2017 performed
Long term
Hengjie private Private Investment Fund Managers (for Trial Implementation), and does not need to follow the Interim Measures for the Supervision and
investment Administration of Private Investment Funds and the Measures for the Registration and Filing of Private Investment Fund Managers (for
funds or a Trial Implementation) and other relevant laws and regulations to fulfill the registration and filing procedures.
private fund
74
manager
Commitment
The Company is not established by raising funds from qualified investors in a non-public way, or doesn’t have the assets managed by the
of the
fund manager or the general partner, or act as the manager of any private investment fund. Therefore, the Company does not belong to
enterprise not
the private investment funds or a private fund manager in the Interim Measures for the Supervision and Administration of Private Strictly
belonging to
Huachen Investment Funds and the Measures for the Registration and Filing of Private Investment Fund Managers (for Trial Implementation), and June 13, 2017 performed
private Long term
Investment does not need to follow the Interim Measures for the Supervision and Administration of Private Investment Funds and the Measures for
investment
the Registration and Filing of Private Investment Fund Managers (for Trial Implementation) and other relevant laws and regulations to
funds or a
fulfill the registration and filing procedures.
private fund
manager
Within the
performanc
During the term of office of Shanghai Energy or within 2 years after the resignation of Shanghai Energy, it will not directly or indirectly
e period,
operate the same or similar business with Energy Technology or Shanghai Energy on its own or in the name of others, nor will it hold
strictly
any post or provide any service in entities with the same or similar business with Energy Technology or Shanghai Energy; if they violate
Paul Xiaoming Non- performed
the aforesaid non-competition commitment, they shall pay a penalty of RMB5 million to Energy Technology, and shall turn over all the Term of service
Lee, Li competition May 2, 2017
operating profits, wages, remuneration and other income earned by them due to the violation of the commitment to Energy Technology. and within two
Xiaohua commitment
If the aforesaid compensation still cannot make up for Energy Technology, Energy Technology has the right to request the breach party years after
to be liable for the loss suffered by Energy Technology. resignation
Within the
performanc
e period
, strictly
Commitment performed
Paul Xiaoming During the term of office at Shanghai Energy, without the consent of Energy Technology, it is not allowed to work part-time (except for
on no
Lee, Li directors and supervisors) in other companies, and the income violating the prohibition of concurrent operation shall be owned by May 2, 2017 Term of service
part-time
Xiaohua Innovation Co., Ltd.
work
75
Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee’s family who is the shareholder and actual controller of the
Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the
Company’s controlling shareholder Heyi Investment of RMB17.955 million. After succession, I directly and indirectly hold 54,655,167
Commitment
shares of the Company through Heyi Investment, accounting for 11.53% of the total share capital of the Company. My directly holding Strictly
to ensure the
shares is acquired by Ms. Wang Yuhua as one of counterparties, through purchasing the equity of Shanghai Energy through issuing shares October 25, performed
Jerry Yang Li independence Long term
2018
of listed of the Company. Therefore, with regard to the independence of listed companies involved in this restructuring, I hereby make the
companies following confirmation and commitment: before this restructuring, Shanghai Energy has been completely separated from other
enterprises under my control in terms of business, assets, institutions, personnel and finance, and Shanghai Energy’s business, assets,
institutions, personnel and finance are independent. After the completion of this restructuring, I promise not to use the identity of the
actual controller of the listed company to affect the independence of the listed company, and to ensure the independence of the listed
company in business, assets, institutions, personnel and finance as far as possible.
Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee’s family who is the shareholder and actual controller of the
Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the
Company’s controlling shareholder Heyi Investment of RMB17.955 million. After succession, I directly and indirectly hold 54,655,167
shares of the Company through Heyi Investment, accounting for 11.53% of the total share capital of the Company. My directly holding
shares is acquired by Ms. Wang Yuhua as one of counterparties, through purchasing the equity of Shanghai Energy through issuing
shares of the Company. In order to reduce and standardize the related transactions that may occur with the listed company, I hereby make
Commitment on the following commitments: after the completion of this restructuring, the enterprises under my control will avoid and reduce the related Strictly
regulating October 25, 2018 performed
Jerry Yang Li transactions with the listed company as much as possible. For the related transactions that cannot be avoided or have reasonable reasons, Long term
related
transactions the enterprises under my control will follow the principles of justice, fairness, equal value and compensation with the listed company in
accordance with the law sign the agreement, perform the legal procedures, and in accordance with the provisions of relevant laws,
regulations, other normative documents and the Articles of Association of Yunnan Energy New Material Co., Ltd., perform the relevant
internal decision-making approval procedures in accordance with the law and timely perform the obligation of information disclosure,
ensure that transactions with listed companies will not be conducted in an unfair manner compared with the market, and that the funds
and profits of listed companies should not be transferred illegally by related transactions, nor will they engage in any act that damages the
legitimate rights and interests of listed companies and other shareholders. If there is any violation of the above commitments, resulting in
damages to the interests of the listed company, I will compensate the listed company for the losses caused by the foregoing behavior to
the listed Company.
Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee’s family who is the shareholder and actual controller of the
Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the
Company’s controlling shareholder Heyi Investment of RMB17.955 million. After succession, I directly and indirectly hold 54,655,167
shares of the Company through Heyi Investment, accounting for 11.53% of the total share capital of the Company. My directly holding
shares is acquired by Ms. Wang Yuhua as one of counterparties, through purchasing the equity of Shanghai Energy through issuing shares
of the Company. Therefore, in order to protect the legitimate rights and interests of the listed company and other shareholders and avoid
horizontal competition with the listed company, I hereby make the following solemn commitment: 1. At present, I have not directly or
Commitment on Strictly
avoiding indirectly engaged in the same or similar business with the existing business of the listed company or Shanghai Energy through other October 25, 2018 performed
Jerry Yang Li horizontal business entities directly or indirectly controlled by me or in the name of natural persons, have not held any position or acted as any kind Long term
competition of consultant in any business entity with the same or similar main business as the listed company or Shanghai Energy, or any other
76
situation of horizontal competition with the listed company or Shanghai Energy. 2. I guarantee that after the completion of this
transaction, I will not carry out or operate the same or similar business with the main business of the listed company and Shanghai
Energy through other business entities directly or indirectly controlled by myself, directly or indirectly; I will not hold any position or
serve as any form of consultant in any business entity with the same or similar business with the listed company or Shanghai Energy; do
not provide technical services for listed companies or existing customers of Shanghai Energy in the name of listed companies or other
than Shanghai Energy; avoid any horizontal competition. 3. If any loss is caused to the listed company or Shanghai Energy due to my
violation of the above commitments, the operating profit obtained shall be owned by the listed company and all losses suffered by
the listed company or Shanghai Energy shall be compensated.
77
I. Company’s commitment: 1. there are no false records, misleading statements or major omissions in the prospectus of the Company’s
initial public offering. 2. If any competent authority finds that the initial prospectus issued by the Company has false records, misleading
statements or major omissions, which will make a significant and substantial impact on judging whether it meets the requirements of the
law, the Company will repurchase all the new shares of the IPO in accordance with the law. 3. Within 10 trading days after the competent
authority determines that the prospectus of the Company has false records, misleading statements or major omissions that have a
significant and substantial impact on the judgment of whether the Company complies with the issuance conditions stipulated by the law,
the Board of Directors of the Company shall formulate the share repurchase plan and submit it to the General Meeting of Shareholders
for deliberation and approval, and after it is approved, reviewed or filed by the relevant competent department (if necessary), share
repurchase measures will be started, and all new shares of the initial public offering will be repurchased according to law; the repurchase
price (in case of ex-right and ex-dividend due to cash dividend, share distribution, conversion to share capital and new share issuance, the
right shall be restored in accordance with the relevant provisions of Shenzhen Stock Exchange, the same below) shall be determined
The Company, Commitment
according to relevant laws and regulations, and shall not be lower than the issuance price of the initial public offering shares. 4. If the
controlling on
prospectus of the Company’s initial public offering contains false records, misleading statements or major omissions, which causes
Commitments shareholders authenticity, Strictly
investors to suffer losses in securities trading, the Company will compensate investors for losses according to law. II. Commitment of the
made at the and the actual accuracy and performed
controlling shareholder and actual controller of the Company: 1. there are no false records, misleading statements or major omissions in September
controller, completeness Long term
time of IPO or the prospectus of the Company’s initial public offering. 2. If any competent authority determines that there are false records, misleading 14, 2016
refinancing directors, of
supervisors and documents statements or major omissions in the prospectus of the Company’s initial public offering, which have a significant and substantial impact
senior related to on the judgment of whether it meets the issuance conditions prescribed by law, Heyi Investment and the family will buy back the
management IPO transferred original restricted shares according to law; Heyi Investment and the family will formulate shares within 10 trading days after
the above matters are identified, the original restricted shares issued by the Company’s shareholders at the time of initial public offering
shall be repurchased in accordance with the law by means of centralized bidding transaction in secondary market, bulk transaction,
agreement transfer, tender offer, etc. The repurchase price is determined according to the negotiated price or secondary market price, but
not lower than the original transfer price and the price determined according to relevant laws and regulations and regulatory rules. If Heyi
Investment and the family buy back the original restricted shares that have been transferred to trigger the tender offer conditions, Heyi
Investment and the family will perform the tender offer procedures in accordance with the law and perform the corresponding
information disclosure obligations. 3. If the prospectus of the Company’s initial public offering contains false records, misleading
statements or major omissions, which causes investors to suffer losses in securities trading, Heyi Investment and the family will
compensate investors for losses according to law. III. Commitment of directors, supervisors and senior managers of the Company: 1. the
prospectus of the issuer’s initial public offering doesn’t contain false records, misleading statements or major omissions, and I am jointly
and severally liable for its authenticity, accuracy and completeness. 2. If the prospectus of the issuer’s initial public offering contains
false records, misleading statements or major omissions, which causes investors to suffer losses in securities trading, I will compensate
investors for losses according to law.
78
I. Commitment of controlling shareholders and actual controllers’ shareholding intention and reduction intention: 1. as the controlling
shareholder and actual controller of the Company, Heyi Investment and the family hold the Company’s shares in strict accordance with
the provisions of laws, regulations, normative documents and regulatory requirements, and abide by the share locking period; after the
expiration of the locking period, the Company’s shares held by Heyi Investment and the family’s reduction shall comply with the
requirements of relevant laws, regulations, normative documents and rules of the stock exchange; 2. Heyi Investment and the family shall
not reduce the shares of the Company directly held within three years after the Company’s listing; after the Company’s listing for three
years, the shares of the Company directly or indirectly held by Heyi Investment and the family transferred each year shall not exceed
25% of the total shares of the Company directly or indirectly held by them 3. Within two years after the expiration of the equity lock-in
period promised by Heyi Investment and the family, the shares of the Company shall be reduced at a price not lower than the issue price
of the Company’s initial public offering shares (in case of ex-right and ex-dividend matters, the issue price shall be treated as ex-right and
ex-dividend accordingly). Within two years after the expiration of the lock-up period, the total number of shares held by Heyi Investment
and the family shall not exceed 30% of the total shares held by Heyi Investment and the family directly or indirectly before the issuance.
Within the
4. Within two years after the expiration of the shareholding lock-in period of Heyi Investment and the family’s commitment, the price of
Controlling performanc
shares of the Company reduced by Heyi Investment and the family through the secondary market will be determined according to the
shareholder, e period
market price at that time on the premise of meeting the commitments made by Heyi Investment and the family, and the specific reduction
actual About , strictly
plan will be formulated according to the market situation at that time. 5. Heyi Investment and the family promise to make an performed
controller, and shareholding announcement through the Company three trading days in advance when carrying out the reduction, and complete the announcement September
Shanghai intention and Share holding
within six months, and fulfill the obligation of information disclosure accurately and completely in accordance with the rules of the stock 14, 2016 period
Guohe, a reduction exchange. Shanghai Guohe’s commitment to shareholding intention and reduction intention: 1. Within two years after the expiration of
shareholder intention the shareholding locking period promised by the Company, the Company intends to reduce its shareholding by means of, including but
holding more
not limited to, centralized competitive trading in the secondary market, block trading, agreement-based transfer, etc. The reduction price
than 5% shares
will not be lower than the price of net assets per share, and the specific reduction price will be determined according to the market price
at the time of the reduction on the premise of meeting the commitments made by the Company; the specific reduction plan will be based
on the market conditions at that time. The specific reduction plan will be formulated in accordance with the market conditions and the
operating condition of the Company. 2. The enterprise commits that it will make an announcement through the Company three days ahead
of schedule in the implementation of the reduction. At the same time, it will fulfill the obligation of information disclosure accurately and
completely in accordance with the rules of the stock exchange, except when it holds shares less than 5% equity of the Company. 3. The
enterprise will strictly fulfill the above commitments, and promise to abide by the following binding measures: (1) if it fails to fulfill the
above commitments, the Company’s cash dividends I should receive will be withheld by the Company and owned by the Company; (2) if
it fails to fulfill the above commitments, it will bear relevant legal liabilities according to laws and regulations.
1. If the Company fails to take the specific measures as promised to stabilize the stock price, the Company undertakes to accept the
Commitment following binding measures: (1) the Company will publicly explain the specific reasons for not taking the above measures in the General Strictly
on remedial Meeting of Shareholders and the newspapers designated by the CSRC, and apologize to the shareholders of the Company and the public
Energy September performed
measures for investors; (2) If the investor suffers losses in the securities trading due to the failure to fulfill the commitments, the Company will Long term
Technology 14, 2016
breaking compensate the investor for the losses according to law after being recognized by the CSRC, the stock exchange or the judicial organ; (3)
faith The commitment of stock price stability is the true meaning of the Company. The responsible parties voluntarily accept the supervision
of the regulatory body, self-discipline
79
organization and the public. In case of the violation of the relevant commitments, the main body will bear corresponding responsibilities
according to law. 2. If the controlling shareholder and the actual controller have delivered the notice of increase to the Company, but fail
to fulfill the obligation of increasing the holdings, the Company has the right to detain the equal amount of the cash dividends payable to
the controlling shareholder and the actual controller until the controlling shareholder and the actual controller fulfill their obligation to
increase. 3. If a company director or senior manager fails to fulfill his obligation to increase his or her holdings, the Company shall have
the right to detain salaries and cash dividends of directors and senior management until the directors and senior managers fulfill their
obligations to increase their holdings. 4. If there are any false records, misleading statements or major omissions in the prospectus of this
public offering of shares, the Company will make a timely announcement, and the Company will disclose in its regular report that the
Company, its controlling shareholders, actual controllers, and its directors, supervisors and senior management buy back shares due to
information disclosure violations, performance of commitments such as acquisition of shares and compensation for losses, as well as
remediation and correction in case of failure to perform commitments. 5. If the Company fails to perform, has failed to perform or fails to
perform on schedule due to objective reasons beyond the control of the Company, such as changes in relevant laws and regulations,
policies, natural disasters and other force majeure, the Company shall take the following measures: (1) Timely and fully disclose the
specific reasons for the Company’s failure, failure to fulfill its commitments or failure to fulfill its commitments on schedule; (2) make
supplementary or alternative commitments to the investors of the Company (relevant commitments shall be subject to relevant approval
procedures in accordance with laws, regulations and the articles of association), so as to protect the rights and interests of investors as
much as possible.
1. If the controlling shareholder and the actual controller have delivered the notice of increase to the Company, but failed to fulfill the
obligation of increasing the holdings, the Company has the right to detain the equal amount of the cash dividends payable to the
controlling shareholder and the actual controller until the controlling shareholder and the actual controller fulfill their obligation to
increase. 2. The controlling shareholder and the actual controller have signed the commitment letter of false record, misleading statement
or major omission in the prospectus of this public offering of shares. The controlling shareholder and the actual controller take the profit
distribution enjoyed by the controlling shareholder and the actual controller in the Company’s profit distribution plan of the current year
and the following years as the performance guarantee of the above commitment, and if the controlling shareholder and the actual
controller fails to fulfill the above-mentioned obligation of acquisition or compensation, the shares of the Company held by the
controlling shareholder and the actual controller shall not be transferred before fulfilling the above-mentioned commitment. 3. The
controlling shareholder and the actual controller have signed the promise of controlling shareholder and actual controller’s shareholding
Commitment intention and reduction intention. The controlling shareholder and the actual controller will strictly carry out the above commitments and
Strictly
Controlling on remedial promise to abide by the following restraint measures: (1) If the above commitments are not performed, the cash dividends to be obtained
September performed
shareholder, measures for by the controlling shareholder and the actual controller shall be withheld by the Company and owned by the Company; (2) if the above Long term
14, 2016
actual controller breaking commitments are not performed, the controlling shareholder and the actual controller shall extend the lock-in period for six months after
faith the lock-in period they promised; (3) The remuneration that the employees in the Company should receive from the Company shall be
withheld by the Company and owned by the Company; (4) if the above commitments are not performed and the investors suffer losses in
the securities trading, the controlling shareholder and the actual controller will compensate the investors for the losses according to law. 4.
If the Company fails to perform, has failed to perform or fails to perform on schedule due to objective reasons beyond the control of the
Company, such as changes in relevant laws and regulations, policies, natural disasters and other force majeure, the Company shall take
the following measures: (1) Timely and fully disclose the specific reasons for the Company’s failure, failure to fulfill its commitments or
failure to fulfill its commitments on schedule; (2) make supplementary or alternative commitments to the investors of the Company
(relevant commitments shall be subject to relevant approval procedures in accordance with laws, regulations and the articles of
association), so as to protect the rights and interests of investors as much as possible.
80
1. If any director or senior management of the Company fails to fulfill his obligation to increase the holdings, the Company shall have
the right to detain directors and senior management salaries and cash dividends until the directors and senior managers fulfill their
obligations to increase their holdings. 2. The directors, supervisors and senior managers have made corresponding commitments on the
information disclosure of IPO and listing. The directors, supervisors and senior managers take the dividend of the Company in the
current year and the following years obtained by holding the Company’s shares directly or indirectly and the salary received from the
Commitment
Directors, Company in the current year and the following years as the performance guarantee of the above commitments. If the director, supervisor Strictly
on remedial
supervisors and or senior manager fails to perform, has failed to perform or fails to perform on schedule due to objective reasons beyond the control of September performed
measures for Long term
senior the director, supervisor or senior manager such as changes in relevant laws and regulations, policies, natural disasters and other force 14, 2016
breaking
managers majeure, the director, supervisor or senior manager shall take the following measures: (1) Timely and fully disclose the specific reasons
faith
for the Company’s failure, failure to fulfill its commitments or failure to fulfill its commitments on schedule; (2) make supplementary or
alternative commitments to the investors of the Company (relevant commitments shall be subject to relevant approval procedures in
accordance with laws, regulations and the articles of association), so as to protect the rights and interests of investors as much as
possible.
1. The undertaker does not, and will not, directly or indirectly engage in any activity that constitutes horizontal competition with the
existing and future business of the Company and its holding subsidiaries, and is willing to assume compensation liability for the
economic losses caused to the Company due to violation of the above commitments. 2. For other enterprises directly and indirectly
controlled by the undertaker, the undertaker will adopt the representative office and personnel (including but not limited to directors,
general managers, etc.) and the controlling position of the undertaker in such enterprises, to ensure that such enterprises perform the
Paul Xiaoming
Commitment same obligations as the undertaker under this letter of commitment, to ensure that such enterprises do not compete with the Company Strictly
Lee family,
on avoiding and its holding subsidiaries in the same industry, and the undertaker is willing to bear all compensation liabilities for the economic losses November performed
Heyi Long term
horizontal caused to the Company due to violation of the above commitments. 3. If the Company further expands its scope of business on the basis 10, 2012
Investment and
competition of its existing business, and the undertaker and the enterprise controlled by the undertaker have carried out production and operation on
Heli Investment
this, the undertaker promises to transfer the possible horizontal competition business or equity held by this enterprise, and agrees that the
Company has the priority to acquire and operate under the same commercial conditions. 4. Except for the investment in the Company,
the undertaker will not invest in or operate the products (or similar products, or products with alternative function) developed, produced
or operated by the Company and its holding subsidiaries in any way in any place. 5. This commitment letter is effective during the
period when the undertaker and the company controlled by the undertaker are related parties of the Company.
1. The Company and its controlling shareholder and the actual controller make a commitment to the Company’s ability to fill in the return
The
The Company, measures. It does not exceed the authority to interfere in the Company’s management activities and does not occupy the Company’s
commitment
controlling interests. 2. Directors and senior managers make a commitment to fulfill the Company’s return measures: (1) Promise not to transfer
that the
shareholder and interests to other units or individuals free of charge or under unfair conditions, and not to damage the interests of the Company in other Strictly
Company’s
actual ways; (2) Promise to restrict the post consumption behavior of directors and senior managers; (3) Promise not to use the Company’s assets September Long term performed
compensatio
controller, to engage in investment and consumption activities unrelated to the performance of its duties; (4) Commit that the remuneration system 14, 2016
n measures
director and formulated by the board of directors or remuneration committee is linked to the implementation of the Company’s measures to fill the
can be
senior return; (5) Promised that the exercise conditions of the Company’s equity incentive to be announced are linked to the implementation of
effectively
management the Company’s compensation measures.
performed
Heyi The undertaker, close relative and the affiliated enterprise under control strictly restrict the funds of the Company and its subsidiary
Investment, a Commitment companies in the operating capital transactions between the Company and its subsidiaries; the Company and its subsidiaries shall not be
controlling on avoiding required to pay wages, welfare, insurance, advertising and other expenses; the Company and its subsidiary funds are not directly or Strictly
shareholder, occupation indirectly provided to the undertaker, close relatives and controlled affiliated enterprises, including: 1. to lend funds to the undertaker, September Long term performed
and family of the close relatives and controlled affiliated enterprises for use with compensation or free of charge; 2. to provide entrusted loans without 14, 2016
members of Company’s commercial substance to the undertaker, close relatives and controlled affiliated enterprises through banks or non-bank financial
Paul Xiaoming funds institutions; 3. Entrust the undertaker, close relatives and controlled affiliated enterprises to carry out investment activities without
Lee, the actual commercial substance; 4. To issue commercial acceptance bills without real transaction background for the undertaker, close relatives
81
controllers of and controlled affiliated enterprises; 5. Repay debts on behalf of the undertaker, close relatives and controlled affiliated enterprises; 6.
the Company Provide funds to the undertaker, close relatives and controlled affiliated enterprises in other ways without consideration for goods and
services; 7. Other methods recognized by China Securities Regulatory Commission.
Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee’s family who is the shareholder and actual controller of the
Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the
Company’s controlling shareholder Heyi Investment of RMB17.955 million. I promise that I will strictly fulfill the commitments
disclosed in the initial public offering and listing prospectus of the controlling shareholder and actual controller. If the commitments of
the controlling shareholder and actual controller are not performed, cannot be performed or cannot be performed on schedule (except for
objective reasons beyond the control of controlling shareholders and actual controllers such as changes in relevant laws and regulations,
policies, natural disasters and another force majeure), I promise to strictly abide by the following measures: 1. If the controlling
shareholder or the actual controller has served the Company with the increase notice but failed to fulfill the increase obligation, the
Company has the right to withhold the cash dividends payable to the same amount until the controlling shareholder or the actual
controller fulfills the increase obligation; 2. The controlling shareholder and the actual controller have signed the commitment letter of
false record, misleading statement or major omission in the prospectus of this public offering of shares. The controlling shareholder and
the actual controller take the profit distribution enjoyed by the controlling shareholder and the actual controller in the Company’s profit
distribution plan of the current year and the following years as the performance guarantee of the above commitment, and if the
controlling shareholder and the actual controller fails to perform the above-mentioned acquisition or compensation obligations, the shares
Commitment on
of the Company held by the controlling shareholder and the actual controller shall not be transferred before the above-mentioned Strictly
Jerry Yang Li remedial October 25, 2018 Long term performed
commitments are performed; 3. The controlling shareholder and the actual controller have signed the commitment of the controlling
measures for
shareholder and the actual controller’s shareholding intention and reduction intention. The controlling shareholder and the actual
breaking faith
controller will strictly perform the above commitments and promise to abide by the following binding measures: (1) If the above
commitments are not performed, the cash dividends to be obtained by the controlling shareholder and the actual controller shall be
withheld by the Company and owned by the Company; (2) if the above commitments are not performed, the controlling shareholder and
the actual controller shall extend the lock-in period for half a year; (3) The remuneration that the employees in the Company should
receive from the Company shall be withheld by the Company and owned by the Company; (4) if the above commitments are not
performed and the investors suffer losses in the securities trading, the controlling shareholder and the actual controller will compensate
the investors for the losses according to law; 4. If the Company fails to perform, has failed to perform or fails to perform on schedule due
to objective reasons beyond the control of the Company, such as changes in relevant laws and regulations, policies, natural disasters and
other force majeure, the Company shall take the following measures: (1) Timely and fully disclose the specific reasons for the
Company’s failure, failure to fulfill its commitments or failure to fulfill its commitments on schedule; (2) make supplementary or
alternative commitments to the investors of the Company (relevant commitments shall be subject to relevant approval procedures in
accordance with laws, regulations and the articles of association), so as to protect the rights and interests of investors as much as
possible.
82
Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee’s family who is the shareholder and actual controller
of the Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the
contribution of RMB17.955 million by Heyi Investment, the Company’s controlling shareholder. With respect to the
Company’s shares indirectly held by me through Heyi Investment, my shareholding intention and reduction intention are as
follows: 1. as the actual controller of the Company, I hold the Company’s shares in strict accordance with the provisions of
laws, regulations, normative documents and regulatory requirements, and abide by the share locking period; after the
expiration of the locking period, I shall reduce my holding of the Company’s shares in accordance with the requirements of
relevant laws, regulations, normative documents and rules of the stock exchange; 2. within three years after the listing of the Within the
Company, I will not reduce the shares of the Company I directly hold; upon expiry of three years after the listing of the performance
Company, I will transfer the shares of the Company I directly hold each year not more than 25% of the total shares of the period
Company I directly hold; 3. within two years after the locking period I committed, the Company’s shares will be reduced at , strictly
Commitment a price not lower than the initial public offering price of the Company. If the Company’s shares are subject to ex-right and performed
October 25,
Jerry Yang Li on reduction ex-dividend during the period, such as dividend distribution, stock distribution, capital reserve converted to share capital, the 2018 Holding period
intention issue price shall be ex-right and ex-dividend accordingly; 4. After two years after the expiration of my commitment to hold
shares, I will, through the reduction of the price of the Company’s shares in the secondary market, meet the commitments
made on the basis of the market price, and the specific reduction plan will be drawn up according to the market situation at
that time; 5. I promise that I will announce the implementation of the reduction through the Company three trading days in
advance, and complete the announcement within six months. At the same time, I will fulfill the obligation of information
disclosure accurately and completely in accordance with the rules of the stock exchange; 6. I will strictly fulfill the above
commitments, and promise to abide by the following binding measures: (1) if I fail to fulfill the above commitments, the
Company’s cash dividends I should receive will be withheld by the Company and owned by the Company; (2) the Company
will own the profits I get from reducing the shares held in violation of the above commitments; (3) The remuneration that
the employees in the Company should receive from the Company shall be withheld by the Company and owned by the
Company; (4) if the above commitments are not performed and the investors suffer losses in the securities trading, I will
compensate the investors for the losses in accordance with the law.
(1) Except for the capital occupation disclosed in writing to the relevant intermediary institutions, there is no other capital
occupation that shall be disclosed but not disclosed in accordance with the laws and regulations and the relevant provisions
Commitment of the CSRC for the time being by the undertaker, close relatives, controlled affiliated enterprises and the Company and its
on avoiding subsidiaries; (2) The undertaker, close relatives and controlled affiliated enterprises will strictly limit the occupation of Strictly
capital funds of the Company and its subsidiaries in the operational capital transactions with the Company and its subsidiaries; (3) October 25, performed
Jerry Yang Li 2018 Long term
occupation The undertaker, close relatives and controlled affiliated enterprises shall not require the Company and its subsidiaries to
of Energy advance wages, welfare, insurance, advertising and other expenses, or require the Company and its subsidiaries to bear costs
Technology and other expenses on behalf of them; (4) The undertaker, close relatives and controlled affiliated enterprises do not seek to
provide the funds of the Company and its subsidiaries directly or indirectly to the undertaker, close relatives and controlled
affiliated enterprises in the following ways, including: a. To lend funds to the undertaker, close relatives and controlled
83
affiliated enterprises for use with compensation or free of charge; b. Provide entrusted loans without commercial substance
to the undertaker, close relatives and controlled affiliated enterprises through banks or non-bank financial institutions; c.
Entrust the undertaker, close relatives and controlled affiliated enterprises to carry out investment activities without
commercial substance; d. To issue commercial acceptance bills without real transaction background for the undertaker,
close relatives and controlled affiliated enterprises; e. Repay debts on behalf of the undertaker, close relatives and controlled
affiliated enterprises; f. Provide funds to the undertaker, close relatives and controlled affiliated enterprises in other ways
without consideration for goods and services; g. Other methods recognized by China Securities Regulatory Commission; (5)
If the undertaker, close relatives and controlled affiliated enterprises occupy the funds of the Company and its subsidiaries
and require the Company and its subsidiaries to provide guarantees in violation of laws and regulations, the Company’s
board of directors shall not transfer the shares of the Company held and controlled before all the occupied funds are
returned and all the illegal guarantees are released, and handle the procedures of share locking for the relevant parties. The
board of directors of the Company shall, within 5 trading days from the date of knowing the fact that the undertaker, close
relatives and controlled affiliated enterprises occupy the funds of the Company and its subsidiaries, and the Company and
its subsidiaries provide guarantees in violation of laws and regulations, handle the locking procedures for the relevant
parties.
84
Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee’s family who is the shareholder and actual controller
of the Company, I, as one of the heirs, inherited 15,624,033 shares of the Company held by her according to her will and the
contribution of RMB9.045 million by Heyi Investment, the Company’s controlling shareholder. Before inheritance, I have
held 27,593,884 shares of the Company, of which 15,997,000 shares were held at the time of IPO and listing of the
Company, 11,596,884 shares of the Company acquired by the Company’s issuance of shares to purchase shares of Shanghai
Energy. After inheritance, I hold directly and hold 65,503,802 shares of the Company indirectly through Heyi Investment,
accounting for 13.82% of the total share capital of the Company. With respect to locking period for the Company’s shares
directly and indirectly held by me, I commit as follows: 1. as the actual controller of the Company, I hold the Company’s Within the
shares in strict accordance with the provisions of laws, regulations, normative documents and regulatory requirements, and performanc
abide by the share locking period; after the expiration of the locking period, I shall reduce my holding of the Company’s e period
shares in accordance with the requirements of relevant laws, regulations, normative documents and rules of the stock , strictly
Commitment on exchange; 2. within three years after the listing of the Company, I will not reduce the shares of the Company I directly hold; October 25, performed
Sherry Lee reduction 2018 Share holding period
upon expiry of three years after the listing of the Company, I will transfer the shares of the Company I directly hold each
intention
year not more than 25% of the total shares of the Company I directly hold; 3. within two years after the locking period I
committed, the Company’s shares will be reduced at a price not lower than the initial public offering price of the Company.
If the Company’s shares are subject to ex-right and ex-dividend during the period, such as dividend distribution, stock
distribution, capital reserve converted to share capital, the issue price shall be ex-right and ex-dividend accordingly; 4. After
two years after the expiration of my commitment to hold shares, I will, through the reduction of the price of the Company’s
shares in the secondary market, meet the commitments made on the basis of the market price, and the specific reduction plan
will be drawn up according to the market situation at that time; 5. I promise that I will announce the implementation of the
reduction through the Company three trading days in advance, and complete the announcement within six months. At the
same time, I will fulfill the obligation of information disclosure accurately and completely in accordance with the rules of
the stock exchange; 6. I will strictly fulfill the above commitments, and promise to abide by the following binding measures:
(1) if I fail to fulfill the above commitments, the Company’s cash dividends I should receive will be withheld by the
Company and owned by the Company; (2) the Company will own the profits I get from reducing the shares held in violation
of the above commitments; (3) The remuneration that the employees in the Company should receive from the Company
shall be withheld by the Company and owned by the Company; (4) if the above commitments are not performed and the
investors suffer losses in the securities trading, I will compensate the investors for the losses in accordance with the law.
85
1. Neither to tunnel to other units or individuals without compensation or under unfair conditions, nor to damage the
Company’s interests in other ways; 2. to restrict my position-related consumption activities; 3. not to use the Company’s
Commitment
assets for investment and consumption activities not related to execution of my duties; 4. to link the remuneration system
on dilution
formulated by the Board of Directors or the Remuneration Committee or Assessment Committee of the Company with the
on current
execution of the return recovery measures; 5. to link the vesting conditions with the implementation of the return recovery
returns as a
measures if the Company will implement any share incentive scheme in the future; 6. since the date of this commitment up
result of the
Directors and to completion of this public offering of convertible corporate bonds, if the CSRC imposes other new regulatory Strictl
public
senior requirements in relation to the return recovery measures and its commitments and such commitments cannot meet such rules May 14, 2019 y
offering of Long term
management of of the CSRC, I commit to issue supplemental undertakings in accordance with the latest requirements of the CSRC. In order perfor
convertible med
the Company to ensure the proper implementation of the return recovery measures, I commit to strictly perform the above commitments.
corporate
If I breach or refuse to fulfill the above commitments, I will perform obligations of interpretation and apology as required
bonds, and
under the Guiding Opinions on Matters relating to the Dilution on Current Returns as a result of Initial Public Offering,
the return
Refinancing and Major Asset Restructuring (CSRC Announcement No. [2015] 31), and agree that relevant regulatory or
recovery
self-regulation measures shall be imposed or taken in accordance with the relevant provisions and rules specified or
measures
published by CSRC and Shenzhen Stock Exchange; if the Company or investors suffered losses as a result of my breach or
refusal, I am willing to assume relevant liability for compensation.
Commitment
on dilution 1. Not interfere with the operation and management activities of the Company beyond the authority, and not encroach on the
on current interests of the Company; 2. since the date of this commitment up to completion of the convertible corporate bonds, if the
returns as a CSRC imposes other new regulatory requirements in relation to the return recovery measures and its commitments and such
result of the commitments cannot meet such rules of the CSRC, I commit to issue supplemental undertakings in accordance with the
Company’s Strictl
public latest requirements of the CSRC. In order to ensure the proper implementation of the return recovery measures, I commit to
actual controller May 14, 2019 y
offering of strictly perform the above commitments. If I breach or refuse to fulfill the above commitments, I will perform obligations of Long term perfor
and controlling
convertible interpretation and apology as required under the Guiding Opinions on Matters relating to the Dilution on Current Returns as med
shareholder
corporate a result of Initial Public Offering, Refinancing and Major Asset Restructuring (CSRC Announcement No. [2015] 31), and
bonds, and agree that relevant regulatory or self-regulation measures shall be imposed or taken in accordance with the relevant
the return provisions and rules specified or published by CSRC and Shenzhen Stock Exchange; if the Company or investors suffered
recovery losses as a result of my breach or refusal, I am willing to assume relevant liability for compensation.
measures
Commitment
on the
authenticity,
accuracy and
Strictl
All directors of completeness All directors of the Company commit that the report on this offering and the announcement on listing don’t contain false
September 3, y
Energy of records, misleading statements or major omissions, and they will jointly and severally liable for its authenticity, accuracy 2020 Long term perfor
Technology information and completeness. med
submitted in
connection
with the
non-public
86
offering of A
shares in
2020
Commitment
on dilution
on current 1. I promise not to interfere with the operation and management activities of the Company beyond the authority, and not
returns as a encroach on the interests of the Company; 2. I commit to properly implementation of the current return recovery measures
Controlling result of the formulated by the Company and fulfill any commitment I make in relation to the current return recovery measures, and Strictl
non-public assume the liability for compensation to the Company or investors according to law if I violate such commitments and as a March 23, y
shareholder and Long term
actual controller offering of A result cause any loss to the Company or investors; 3. since the date of this commitment up to completion of this non-public 2020 perfor
shares in offering of shares by Energy Technology, if the CSRC imposes other new regulatory requirements in relation to the return med
2020, and recovery measures and its commitments and such commitments cannot meet such rules of the CSRC, I commit to issue
the return supplemental undertakings in accordance with the latest requirements of the CSRC.
recovery
measures
Commitment
on dilution 1. I promise not to tunnel to other units or individuals without compensation or under unfair conditions, or to damage the
on current Company’s interests in other ways; 2. I commit to restrict my position-related consumption activities; 3. I commit to not use
returns as a the Company’s assets for investment and consumption activities not related to execution of my duties; 4. I commit to link
Directors and result of the the remuneration system formulated by the Board of Directors or the Remuneration Committee or Assessment Committee of Strictl
non-public the Company with the execution of the return recovery measures; 5. I commit to link the vesting conditions with the November 21, y
senior Long term
offering of A implementation of the return recovery measures if the Company will implement any share incentive scheme in the future; 6. 2021 perfor
management
shares in since the date of this commitment up to completion of this non-public offering of shares, if the CSRC imposes other new med
2021, and regulatory requirements in relation to the return recovery measures and its commitments and such commitments cannot meet
the return such rules of the CSRC, I commit to issue supplemental undertakings in accordance with the latest requirements of the
recovery CSRC.
measures
87
Commitment
on dilution
on current I promise not to interfere with the operation and management activities of the Company beyond the authority, and not
returns as a encroach on the interests of the Company; I commit to properly implementation of the current return recovery measures
Controlling result of the formulated by the Company and fulfill any commitment I make in relation to the current return recovery measures, and Strictl
shareholders non-public assume the liability for compensation to the Company or investors according to law if I violate such commitments and as a November Long term y
and actual offering of A result cause any loss to the Company or investors; since the date of this commitment up to completion of this non-public 21, 2021 perfor
controller shares in offering of shares by the Company, if the CSRC imposes other new regulatory requirements in relation to the return med
2021, and recovery measures and its commitments and such commitments cannot meet such rules of the CSRC, I commit to issue
the return supplemental undertakings in accordance with the latest requirements of the CSRC.
recovery
measures
Strictly
The period when the Company’s performe
Other Not to offer loans or any other form of financial aids to the incentive objects for them to obtain related stock options or January 24,
Commitment 2022 Stock Option and Restricted d
The Company commitments restricted shares according to this incentive plan, including guaranteeing the loans. 2022
on stock Stock Incentive Plan was
ownership implemented
incentive Strictly
In case of any false record, misleading statement or major omission in the information disclosed by the Company, resulting in
scheme performe
Other incompliance with the arrangements for granting or exercising the interests, the incentive objects will, upon acknowledgment of January 24, Long term d
Incentive objects commitments any false record, misleading statement or major omission existing in any related information disclosure document, return all 2022
interests obtained from the equity incentive plan.
The Company pays dividends in cash or by shares in a positive manner. Where the Company’s audited net profit is positive
and no significant investment plan or significant cash expenditure in a year, the Company shall include the cash distribution
Shareholder in its profit distribution scheme for that year. The annual cash dividend of the Company shall not be less than 20% of the
The Company return plan March 23, March 23, 2020 – March 23, performe
distributable profit realized in the current year (excluding the undistributed profit at the beginning of the year). Where
for the next available, the Company may distribute interim cash dividends. If the Company’s revenue grows rapidly and the Board of
2020 2022 d
three years Directors considers that the stock price of the Company does not match the size of the Company’s share capital, it may make
Other
(2020- a plan for dividend distribution by stock while satisfying the requirement for cash dividend distribution.
commitments
2022)
to small and
medium
shareholders of Withi
the Company n the
The Company pays dividends in cash or by shares in a positive manner. Where the Company’s audited net profit is positive and perfor
no significant investment plan or significant cash expenditure in a year, the Company shall include the cash distribution in its mance
Shareholder profit distribution scheme for that year. The annual cash dividend of the Company shall not be less than 20% of the period
The Company return plan for distributable profit realized in the current year (excluding the undistributed profit at the beginning of the year). Where November 21, November 21, 2021 – November
2021 21, 2024 ,
the next three available, the Company may distribute interim cash dividends. If the Company’s revenue grows rapidly and the Board of
strictl
years (2021- Directors considers that the stock price of the Company does not match the size of the Company’s share capital, it may make a y
2023) plan for dividend distribution by stock while satisfying the requirement for cash dividend distribution. perfor
med
Whether the
commitment is Yes
performed on
time
88
If the
commitments
are overdue
and have not
been fulfilled,
the specific N/A
reason for
non-fulfilment
and further
work plan
shall be
explained in
detail
2. Where any earnings forecast was made for any of the Company’s assets or projects and the Reporting Period is still within the forecast period, the Company
shall explain whether the performance of the asset or project reaches the earnings forecast and the reason
□ Applicable √ N/A
89
II. Occupation of the Listed Company’s Capital by the Controlling Shareholder or Its Related Parties for Non-Operating
Purposes
□ Applicable √ N/A
In the Reporting Period, no controlling shareholder or its related party occupied capital of the listed company for non-operating purposes.
III. Illegal external guarantee
□ Applicable √ N/A
The Company didn’t provide any illegal external guarantee during the Reporting Period.
IV. Explanation of the Board of Directors Regarding the “Non-standard Audit Report” Issued for the Latest Period
□ Applicable √ N/A
V. Explanation of the Board of Directors, the Supervisory Committee and Independent Directors (If Any) Regarding the
“Non-standard Audit Report” Issued by the Accounting Firm for the Reporting Period
□ Applicable √ N/A
VI. Reason for Changes in Accounting Policies or Accounting Estimates and Correction of Major Accounting Errors as
Compared to the Financial Report for the Previous Fiscal Year
√ Applicable □ N/A
On January 30, 2023, the Company held the 54th meeting of the 4th Board of Directors and the 47th meeting of the 4th Supervisory Committee to consider and adopt the Resolution on the Changes of Accounting
Policies. Since January 1, 2023, the Company has implemented the content on the "Accounting Treatment of Deferred Income Tax Related to Assets and Liabilities Generated by a Single Transaction Not
Applicable to Initial Recognition Exemption" as set forth in the Accounting Standards for Business Enterprises No. 16; since December 13, 2022, the Company has implemented the regulations on the
“Accounting Treatment of the Income Tax Impact on the Dividends Related to Financial Instruments Categorized as Equity Instruments by the Issuers (Referring to the Enterprises)” and “Accounting Treatment
of Modification from Cash-based Share Payment to Equity-based Share Payment by the Enterprises” as set forth in the Accounting Standards for Business Enterprises No. 16. These changes in accounting
policies are reasonable changes in accordance with the relevant regulations promulgated by the Ministry of Finance, which is in line with relevant regulations of the supervision and the actual situation of the
Company, and have no significant impact on the Company's financial status, operating results and cash flow. For details, please refer to the Announcement on Changes in Accounting Policies disclosed on
www.cninfo.com.cn. by the Company on January 31, 2023 (Announcement No. 2023-010).
VII. Reason for Changes in Scope of the Consolidated Financial Statements as Compared to the Financial Report for the
Previous Fiscal Year
√ Applicable □ N/A
In the Reporting Period, there were ten companies newly added to the scope of the consolidated statements: Xiamen Energy New Material Co., Ltd., Yuxi Energy New Material Co., Ltd., Shanghai Energy New
Material Research Co., Ltd., Hongchuang Packaging (Jiangsu) Co., Ltd., Energy (Zhuhai Hengqin) New Material Technology Co., Ltd., Shanghai Energy Trade Co., Ltd., Jiangsu Energy Trade Co., Ltd.,
SEMCORP Properties Kft., SEMCORP America Inc. and SEMCORP Manufacturing USA LLC, all were invested and newly established during the Reporting Period; One company was deleted: Foshan
Donghang Photoelectric Technology Co., Ltd., it was written off during the Reporting Period.
VIII. Engagement and Disengagement of CPAs Firm
CPA firm engaged at present
Name of the domestic CPA firm Dahua CPAs (SGP)
Remuneration of the domestic CPA firm (RMB0’000) 265
Consecutive years of audit services provided by the domestic auditor 11 years
Names of the certified public accountants from domestic accounting
Kang Wenjun, Yao Rui
firm
Consecutive years of audit services provided by the Certified Public Kang Wenjun and Yao Rui provide audit services for two years and
Accountants from domestic accounting firm three years respectively
Whether the CPAs firm was changed in the current period
□ Yes √ No
Engagement of any CPAs firm, financial advisor or sponsor for internal control and audit
√ Applicable □ N/A
The Company hired Dahua CPAs (SGP) as the auditing and accounting firm for internal control during the Reporting Period; the Company engaged CITIC Securities Co., Ltd. as the sponsor for the non-public
offering of A shares to raise not more than RMB 12.8 billion; the Company engaged Shanghai Realize Investment Consulting Co., Ltd. as independent financial consultant in 2022.
IX. Possibility of Delisting after Disclosure of this Annual Report
□ Applicable √ N/A
X. Matters Related to Bankruptcy and Reorganization
□ Applicable √ N/A
The Company was not bankrupt and reorganized during the Reporting Period.
XI. Material Litigation and Arbitration
□ Applicable √ N/A
There was no material litigation or arbitration against the Company during the Reporting Period. During the Reporting Period, the total amount involved in other lawsuits of the Company was
RMB32.8074 million, of which RMB6.7532 million had not been settled by the end of the Reporting Period, which would not form estimated liabilities.
XII. Punishments and Rectifications
□ Applicable √ N/A
The Company made no punishment or rectification during the Reporting Period.
XIII. Credit Conditions of the Company as well as Its Controlling Shareholder and Actual Controller
√ Applicable □ N/A
During the Reporting Period, the Company and its controlling shareholder and the actual controller were in good standing, and there were no cases of non-performance of court judgments in force or
large debts due but unpaid.
XIV. Significant related transactions
1. Related transactions arising from routine operation
√ Applicable □ N/A
Related Relation Type of related transaction Details of Pricing Related Related Proportion in Approved Whether the Settlement Obtainable Disclosure Disclosure Index
transaction
transaction party related principle of the transacti transaction the total transaction exceeded mode for market price for date
transaction related on price amount amount of limit the related the transact ion
transaction (RMB0 ’000) transaction of (RMB0 ’0 approved transaction of the same
limit or not
the same type 00) type
A company Bank For details,
invested in Purchase raw materials deposit please refer to
Purchase RNB18.80/k January
by the from related parties -- 3,957.12 52.95% 5,000 No or the
additives g 25, 2022
Company acceptan Announceme
ce draft nt on the
A company Agreed by Bank Expected
Sell products and
invested in both parties deposit Routine
Kunshasi commodities to related Sell raw RMB8.88/k January
by the based on -- 1,136.25 60.44% 2,000 No or Related
parties materials g 25, 2022
Company market price acceptan Transactions
ce draft in 2022 (No.:
A company 2022-014)
invested in Lease to related parties Lease Bank January disclosed on
-- 2.4 1.55% 2.4 No ——
by the workshop deposit 25, 2022 the Cninfo
Company website.
A
Agreed by
shareholder
Heyi Lease to related parties both parties Bank January
of the Lease office -- 0.33 0.21% 0.33 No ——
Investment based on deposit 25, 2022
Company
market price
A
Agreed by
shareholder
Heli Lease to related parties both parties Bank January
of the Lease office -- 0.24 0.15% 0.24 No ——
Investment based on deposit 25, 2022
Company
market price
Suzhou A company Bank
Jiesheng invested in Purchase Agreed by deposit
Purchase equipment and
Technology by the equipment both parties or January
spare parts from related -- 11,714.8 3.63% 20,000 No ——
Co., Ltd. and Company and spare based on acceptan 25, 2022
parties
its parts market price ce
subsidiaries draft
A company Bank For details,
invested in deposit please refer to
Purchase materials from
by the Purchase or July 15, the
related parties -- 10,520.81 5.64% 13,626 No ——
Company materials acceptan 2022 Announceme
ce nt on the
Zhuhai
Agreed by draft Expected
Chenyu New
A company both parties New Routine
Material
invested in based on Bank Related
Technology
by the market price deposit Transactions
Co., Ltd. Sell packaging Sell
Company or July 15, in 2022 (No.:
materials and others to packaging -- 14.18 0.00% 26.5 No ——
acceptan 2022 2022-123)
related parties materials
ce disclosed on
draft the Cninfo
website.
The spouse Market For details,
of Ms. pricing, not please refer to
Zheng Apply for loans higher than the
Industrial and Haiying (including applying for the loan Announceme
Commercial (Independen general credit limits, benchmark nt on the
January
Bank of t Director) is acceptance bill, letter of Loan interest rate -- 79,153.93 5.46% 528,500 No N/A —— Expected
25, 2022
China a Non- credit, letter of for the same Deposit, Loan
Limited executive guarantee, etc.) from period or and
Director of related banks the market Guarantee
the ICBC interest rate with Related
level under Bank in 2022
the same (No.: 2022-
conditions 060)
Market disclosed on
Deposits with related pricing, not the Cninfo
banks (including higher than website.
demand deposits, time the deposit January
Deposit -- 16,588.16 4.20% 200,000 No N/A ——
deposits, call deposits, benchmark 25, 2022
etc.) interest rate
for the same
period
Mutual guarantees
between companies for
Agreed by
the purpose of the
both parties January
Company’s Guarantee -- 401,690 13.87% 528,500 No N/A ——
based on 25, 2022
consolidated financial
market price
statements through the
related banks
Total 524,778.2 1,297,65
-- -- -- -- -- -- -- --
2 5.47
Details of any sales return of a large amount No
Give the actual situation during the Reporting Period (if any) where a The actual routine transaction amount between the Company and the related parties did not exceed the total amount of routine related
forecast had been made for the total amounts of routine related transactions estimated by the Company by type.
transactions by type to occur in the current period
Reason for any significant difference between the transaction price and
the market reference price (if applicable) N/A
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
2. Related-party transactions relevant to acquisition and sales of assets or equities
□ Applicable √ N/A
The Company didn’t acquire or sell assets or equities during the Reporting Period.
3. Related-party transactions in connection with joint external investments
□ Applicable √ N/A
The Company had no related-party transaction in connection with joint external investments during the Reporting Period.
4. Credits and liabilities with related parties
√ Applicable □ N/A
Whether there were any credits or liabilities with related parties for non-operating purposes
□ Yes √ No
There were no credits or liabilities with related parties for non-operating purpose during the Reporting Period.
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
5. Dealing with related financial companies
□Applicable √N/A
There was no deposit, loan, credit granting or other financial business between the Company and the related financial companies and the related
parties.
6. Dealing between the financial companies controlled by the Company and the related parties
□Applicable √N/A
There was no deposit, loan, credit granting or other financial business between the financial companies controlled by the Company and the related
parties.
7. Other significant related party transactions
□Applicable √N/A
No other significant related party transactions during the Reporting Period.
XV. Significant contracts and their execution
1. Trusteeships, Contracts, and Leases
(1) Trusteeships
□ Applicable √ N/A
There was no trusteeship during the Reporting Period.
(2) Contracts
□ Applicable √ N/A
No such cases during the Reporting Period.
(3) Leases
□Applicable √N/A
No leases of the Company during the Reporting Period
2. Significant guarantees
√ Applicable □ N/A
Unit: RMB0’000
External guarantees provided by the Company and its subsidiaries (excluding those for subsidiaries)
Guaranteed party Disclosure date Guarantee Actual Actual Type of guarantee Period Perform Guarantee
of the guarantee line occurrence guarantee of ed or not for a related
line date amount guarante party or not
announcement e
Guarantees provided by the Company for its subsidiaries
Guaranteed party Disclosure date Guarantee Actual Actual Type of guarantee Period Perform Guarantee
of the guarantee line occurrence guarantee of ed or not for a related
line date amount guarante party or not
announcement e
96
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Hongta Plastic April 12, 2022 4,400 May 18, 3,000 joint-liability 1 Year No No
2022 guarantee
Hongta Plastic April 12, 2022 4,000 May 17, 2,000 joint-liability 3 Years No No
2022 guarantee
Hongta Plastic April 12, 2022 21,000 November 9,232.08 joint-liability 5 Years No No
10, 2020 guarantee
Hongta Plastic April 12, 2022 4,000 November 9, 0 joint-liability 5 Years No No
2020 guarantee
Hongta Plastic April 12, 2022 3,490 March 18, 3,490 joint-liability 2 Years No No
2021 guarantee
Hongta Plastic April 12, 2022 4,000 October 29, 4,000 joint-liability 2 Years No No
2021 guarantee
Hongta Plastic April 12, 2022 7,800 November 6,000 joint-liability 3 Years No No
29, 2021 guarantee
Hongta Plastic April 12, 2022 8,000 January 12, 7,000 joint-liability 1 Year No No
2022 guarantee
Hongta Plastic April 12, 2022 5,165 May 5, 2022 5,000 joint-liability 3 Years No No
guarantee
Hongta Plastic, April 12, 2022 37,191 November 37,000 joint-liability 7 Years No No
Hongchuang 30, 2020 guarantee
Packaging,
Shanghai Energy
Hongta Plastic April 12, 2022 8,000 October 24, 3,000 joint-liability 1 Year No No
2022 guarantee
Dexin Paper April 12, 2022 800 March 30, 0 joint-liability 3 Years No No
2021 guarantee
Dexin Paper April 12, 2022 2,000 January 12, 1,800 joint-liability 1 Year No No
2022 guarantee
Dexin Paper April 12, 2022 1,000 June 7, 2022 1,000 joint-liability 2 Years No No
guarantee
Dexin Paper April 12, 2022 1,000 October 24, 0 joint-liability 1 Year No No
2022 guarantee
Dexin Paper April 12, 2022 2,000 November 110.5 joint-liability 3 Years No No
13, 2019 guarantee
Hongchuang April 12, 2022 6,600 May 18, 0 joint-liability 1 Year No No
Packaging 2022 guarantee
Hongchuang April 12, 2022 8,000 January 12, 4,217.52 joint-liability 1 Year No No
Packaging 2022 guarantee
Hongchuang April 12, 2022 5,000 February 23, 0 joint-liability 5 Years No No
Packaging 2022 guarantee
Hongchuang April 12, 2022 3,000 March 1, 382.67 joint-liability 3 Years No No
Packaging 2022 guarantee
Hongchuang April 12, 2022 5,600 March 15, 3,614.19 joint-liability 3 Years No No
Packaging 2022 guarantee
Hongchuang April 12, 2022 16,200 March 21, 900 joint-liability 3 Years No No
Packaging 2022 guarantee
Hongchuang April 12, 2022 4,000 May 1, 2022 0 joint-liability 2 Years No No
Packaging guarantee
Hongchuang April 12, 2022 930.56 June 23, 930.56 joint-liability 1 Year No No
Packaging 2022 guarantee
Hongchuang April 12, 2022 10,000 July 8, 2022 0 joint-liability 1 Year No No
Packaging guarantee
Hongchuang April 12, 2022 4,000 July 21, 2022 3,221.64 joint-liability 3 Years No No
Packaging guarantee
Hongchuang April 12, 2022 1,285 September 1,028 joint-liability 1 Year No No
Packaging 30, 2022 guarantee
Hongchuang April 12, 2022 850 October 21, 850 joint-liability 1 Year No No
Packaging 2022 guarantee
Hongchuang April 12, 2022 12,000 October 21, 3,909.63 joint-liability 1 Year No No
Packaging 2022 guarantee
Chengdu Hongta April 12, 2022 7,500 May 11, 1,210 joint-liability 1 Year No No
Plastic 2022 guarantee
Shanghai Energy April 12, 2022 85,600 September 73,600 joint-liability 7 Years No No
30, 2020 guarantee
97
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Shanghai Energy April 12, 2022 30,000 October 23, 16,800 joint-liability 1 Year No No
2020 guarantee
Shanghai Energy April 12, 2022 28,000 March 5, 0 joint-liability 3 Years No No
2021 guarantee
Shanghai Energy April 12, 2022 48,900 March 16, 43,910 joint-liability 5 Years No No
2021 guarantee
Shanghai Energy April 12, 2022 51,000 July 14, 2021 0 joint-liability 5 Years No No
guarantee
Shanghai Energy April 12, 2022 11,000 September 0 joint-liability 2 Years No No
15, 2021 guarantee
Shanghai Energy April 12, 2022 10,000 January 1, 200 joint-liability 2 Years No No
2022 guarantee
Shanghai Energy April 12, 2022 66,000 February 7, 60,000 joint-liability 5 Years No No
2022 guarantee
Shanghai Energy April 12, 2022 30,000 February 14, 30,000 joint-liability 3 Years No No
2022 guarantee
Shanghai Energy April 12, 2022 10,000 February 14, 7,817.60 joint-liability 2 Years No No
2022 guarantee
Shanghai Energy April 12, 2022 20,000 February 15, 20,000 joint-liability 1 Year No No
2022 guarantee
Shanghai Energy April 12, 2022 20,000 March 8, 20,000 joint-liability 1 Year No No
2022 guarantee
Shanghai Energy April 12, 2022 80,000 March 21, 35,000 joint-liability 1 Year No No
2022 guarantee
Shanghai Energy April 12, 2022 5,000 March 17, 2,264 joint-liability 3 Years No No
2022 guarantee
Shanghai Energy April 12, 2022 11,000 November 10,000 joint-liability 1 Year No No
30, 2021 guarantee
Shanghai Energy, April 12, 2022 33,567 May 10, 26,000 joint-liability 3 Years No No
Zhuhai Energy 2022 guarantee
Shanghai Energy April 12, 2022 24,000 June 5, 2022 20,000 joint-liability 3 Years No No
guarantee
Shanghai Energy April 12, 2022 90,000 June 9, 2022 74,000 joint-liability 3 Years No No
guarantee
Shanghai Energy April 12, 2022 20,000 April 18, 20,000 joint-liability 5 Years No No
2022 guarantee
Shanghai Energy April 12, 2022 10,000 July 21, 2022 10,000 joint-liability 2 Years No No
guarantee
Shanghai Energy April 12, 2022 4,622.59 June 10, 0 joint-liability —— No No
2022 guarantee
Shanghai Energy April 12, 2022 20,000 July 21, 2022 20,000 joint-liability 2 Years No No
guarantee
Shanghai Energy April 12, 2022 16,500 September 2, 11,400 joint-liability 1 Year No No
2022 guarantee
Shanghai Energy April 12, 2022 60,000 September 1, 43,908.80 joint-liability 1 Year No No
2022 guarantee
Shanghai Energy April 12, 2022 60,600 September 40,438.32 joint-liability 1 Year No No
21, 2022 guarantee
Shanghai Energy April 12, 2022 25,500 September 0 joint-liability 2 Years No No
16, 2022 guarantee
Shanghai Energy April 12, 2022 80,000 October 14, 80,000 joint-liability 4 Years No No
2022 guarantee
Shanghai Energy April 12, 2022 45,000 March 5, 25,000 joint-liability 5 Years No No
2021 guarantee
Shanghai Energy April 12, 2022 20,000 October 27, 0 joint-liability 1 Year No No
2022 guarantee
Shanghai Energy, April 12, 2022 10,000 December 5,000 joint-liability 2 Years No No
Wuxi Energy 28, 2022 guarantee
Zhuhai Energy April 12, 2022 5,000 December 0 joint-liability 5 Years No No
11, 2019 guarantee
Zhuhai Energy April 12, 2022 20,000 November 20,000 joint-liability 4 Years No No
30, 2021 guarantee
Zhuhai Energy April 12, 2022 5,000 May 21, 0 joint-liability 2 Years No No
2021 guarantee
Zhuhai Energy April 12, 2022 10,000 May 18, 0 joint-liability 4 Years No No
2021 guarantee
98
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Zhuhai Energy April 12, 2022 3,000 June 24, 0 joint-liability 3 Years No No
2021 guarantee
Zhuhai Energy April 12, 2022 11,285 September 1, 0 joint-liability 4 Years No No
2021 guarantee
Zhuhai Energy April 12, 2022 22,000 September 1, 3,600 joint-liability 2 Years No No
2021 guarantee
Zhuhai Energy April 12, 2022 30,000 January 19, 13,200.58 joint-liability 1 Year No No
2022 guarantee
Zhuhai Energy April 12, 2022 27,000 February 7, 19,500 joint-liability 3 Years No No
2022 guarantee
Zhuhai Energy April 12, 2022 5,500 March 30, 5,247.99 joint-liability 1 Year No No
2022 guarantee
Zhuhai Energy April 12, 2022 7,000 May 18, 7,000 joint-liability 1 Year No No
2022 guarantee
Zhuhai Energy April 12, 2022 10,000 July 8, 2022 7,318.38 joint-liability 4 Years No No
guarantee
Zhuhai Energy April 12, 2022 3,200 September 0 joint-liability 1 Year No No
23, 2022 guarantee
Zhuhai Energy April 12, 2022 30,000 September 7, 3,661.43 joint-liability 1 Year No No
2022 guarantee
Zhuhai Energy April 12, 2022 20,000 October 27, 0 joint-liability 1 Year No No
2022 guarantee
Wuxi Energy, April 12, 2022 80,000 May 1, 2021 0 joint-liability 2 Years No No
Jiangxi Tonry, guarantee
Chongqing
Energy, Jiangxi
Enpo New
Materials Co.,
Ltd., Jiangxi Ruijie
New Material
Technology Co.,
Ltd.
Wuxi Energy April 12, 2022 10,000 August 7, 7,168 joint-liability 3 Years No No
2021 guarantee
Wuxi Energy April 12, 2022 7,000 January 5, 7,000 joint-liability 1 Year No No
2022 guarantee
Wuxi Energy, April 12, 2022 150,000 April 11, 64.1 joint-liability 2 Years No No
Jiangxi Tonry, 2022 guarantee
Suzhou
GreenPower,
Chongqing
Energy, Jiangsu
Energy, Jiangsu
Ruijie, Jiangxi
Enpo New
Materials Co.,
Ltd., Hubei Energy
New Material
Technology Co.,
Ltd., Jiangsu
Sanhe Battery
Material
Technology Co.,
Ltd., Yuxi Energy
New Material Co.,
Ltd., Jiangxi Ruijie
New Material
Technology Co.,
Ltd.
Wuxi Energy, April 12, 2022 180,000 June 10, 17.24 joint-liability 3 Years No No
Jiangxi Tonry, 2021 guarantee
Suzhou
GreenPower,
Chongqing
Energy, Jiangsu
Energy, Jiangsu
Ruijie, Jiangxi
Enpo New
Materials Co.,
99
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Ltd., Hubei Energy
New Material
Technology Co.,
Ltd., Yuxi Energy
New Material Co.,
Ltd.
Wuxi Energy April 12, 2022 5,000 May 30, 4,073.94 joint-liability 1 Year No No
2022 guarantee
Wuxi Energy April 12, 2022 20,000 August 12, 19,630.49 joint-liability 1 Year No No
2022 guarantee
Wuxi Energy April 12, 2022 10,000 October 8, 7,000 joint-liability 1 Year No No
2022 guarantee
Wuxi Energy April 12, 2022 15,000 November 1, 10,604.20 joint-liability 1 Year No No
2022 guarantee
Jiangxi Tonry April 12, 2022 13,500 January 22, 10,000 joint-liability 3 Year No No
2021 guarantee
Jiangxi Tonry April 12, 2022 10,000 October 17, 10,000 joint-liability 1 Year No No
2022 guarantee
Jiangxi Tonry April 12, 2022 5,000 October 28, 5,000 joint-liability 1 Year No No
2022 guarantee
Jiangxi Tonry April 12, 2022 25,000 September 727.05 joint-liability 1 Year No No
17, 2021 guarantee
Suzhou April 12, 2022 15,000 July 1, 2020 0 joint-liability 3 Years No No
GreenPower guarantee
Suzhou April 12, 2022 10,000 November 9,253.76 joint-liability 5 Years No No
GreenPower 30, 2021 guarantee
Suzhou April 12, 2022 10,000 April 8, 2021 3,938.81 joint-liability 2 Years No No
GreenPower guarantee
Suzhou April 12, 2022 10,400 March 9, 0 joint-liability 5 Years No No
GreenPower 2022 guarantee
Suzhou April 12, 2022 10,000 May 30, 4,841.38 joint-liability 1 Year No No
GreenPower 2022 guarantee
Suzhou April 12, 2022 10,000 October 8, 10,000 joint-liability 1 Year No No
GreenPower 2022 guarantee
Chongqing April 12, 2022 130,000 November 1, 0 joint-liability 1 Year No No
Energy, Jiangsu 2021 guarantee
Energy, Jiangsu
Ruijie
Chongqing April 12, 2022 70,000 May 6, 2022 0 joint-liability 2 Years No No
Energy, Jiangsu guarantee
Energy, Jiangsu
Ruijie, Jiangxi
Enpo New
Materials Co.,
Ltd., Yuxi Energy
New Material Co.,
Ltd.
Jiangsu Energy, April 12, 2022 200,000 May 5, 2022 0 joint-liability 1 Year No No
Jiangsu Ruijie, guarantee
Hubei Energy New
Material
Technology Co.,
Ltd., Chongqing
Energy
SEMCORP April 12, 2022 100,000 July 14, 2021 10,124.78 joint-liability 5 Years No No
guarantee
Hungary KFT
SEMCORP April 12, 2022 45,000 December 2,923.25 joint-liability 4 Years No No
27, 2021 guarantee
Hungary KFT
SEMCORP April 12, 2022 21,389.38 April 13, 9,318.31 joint-liability 1 Year No No
2022 guarantee
Hungary KFT
Jiangsu Energy April 12, 2022 100,000 May 17, 37,446.16 joint-liability 1 Year No No
2022 guarantee
Yuxi Energy New April 12, 2022 50,000 November 0 joint-liability 3 Years No No
24, 2022 guarantee
Material Co., Ltd.
100
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Jiangxi Ruijie New April 12, 2022 20,000 June 10, 0 joint-liability 2 Years No No
Material 2021 guarantee
Technology Co.,
Ltd.
Zhuhai Energy April 12, 2022 100,000 August 14, 0 joint-liability 6 Years No No
2017 guarantee
Zhuhai Energy April 12, 2022 75,000 August 1, 42,000 joint-liability 6 Years No No
2019 guarantee
Zhuhai Energy April 12, 2022 20,000 May 8, 2020 0 joint-liability 3 Years No No
guarantee
Zhuhai Energy April 12, 2022 20,000 June 9, 2022 20,000 joint-liability 2 Years No No
guarantee
Wuxi Energy April 12, 2022 116,000 December 1, 63,893.29 joint-liability 9 Years No No
2020 guarantee
Jiangxi Tonry April 12, 2022 150,000 September 60,800 joint-liability 5 Years No No
17, 2019 guarantee
Chongqing Energy April 12, 2022 160,000 April 26, 107,087.30 joint-liability 6 Years No No
2022 guarantee
Suzhou April 12, 2022 55,000 May 24, 23,444.04 joint-liability 5 Years No No
GreenPower 2022 guarantee
Total line of guarantees granted to Total actual amount of guarantees in
subsidiaries during the Reporting 258,500 favour of subsidiaries during the 76,225.83
Period (B1) Reporting Period (B2)
Total line of guarantees granted to Total actual amount of guarantees in
subsidiaries as at the end of the favour of subsidiaries as at the end of the
258,500 76,225.83
Reporting Period (B4)
Reporting Period (B3)
Guarantees provided by subsidiaries for subsidiaries
Guaranteed party Disclosure date of Guarante Actual Actual Type of guarantee Period of Perform Guarantee
the guarantee line e line occurrence guarantee guarante ed or not for a related
announcement date amount e party or not
Shanghai Energy, April 12, 2022 20,000 September 0 joint-liability 2 Years No No
Zhuhai Energy, 10, 2021 guarantee
Wuxi Energy,
Jiangxi Tonry
Wuxi Energy April 12, 2022 5,000 August 11, 5,000 joint-liability 1 Year No No
2022 guarantee
Jiangxi Tonry April 12, 2022 7,000 May 27, 2022 7,000 joint-liability 1 Year No No
guarantee
Jiangxi Tonry April 12, 2022 8,000 May 27, 2022 8,000 joint-liability 1 Year No No
guarantee
Jiangxi Tonry April 12, 2022 15,000 May 27, 2022 15,000 joint-liability 1 Year No No
guarantee
Jiangsu Energy April 12, 2022 160,000 June 30, 2022 20,256 joint-liability 3 Years No No
guarantee
Jiangsu Ruijie April 12, 2022 43,500 June 30, 2022 20,969.83 joint-liability 3 Years No No
guarantee
Total line of guarantees granted to 4,692,500 Total actual amount of guarantees 1,475,452.98
subsidiaries during the Reporting in favour of subsidiaries during the
Period (C1) Reporting Period (C2)
Total line of guarantees granted to subsidiaries 4,692,500 Total actual amount of guarantees 1,364,119.99
as at the end of the in favour of subsidiaries as at the
Reporting Period (C3) end of the Reporting Period (C4)
Total guarantee amount provided by the Company (sum of the aforesaid three categories)
101
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Total actual
amount of
Total line of guarantees
guarantees granted 4,951, during the
1,551,678.81
during the Reporting 000 Reporting
Period (A1+B1+C1) Period
(A2+B2+C
2)
Total actual
amount of
Total line of guarantees
guarantees granted as as at the
at the end of the 4,951,
end of the 1,440,345.82
Reporting Period 000
Reporting
(A3+B3+C3) Period
(A4+B4+C
4)
Actual total
guarantees
(A4+B4+C4) in
81.26%
proportion to net
asset of the
Company
Including:
Balance of guarantees given for shareholders, actual controllers and
0
their related parties (D)
Balance of debt guarantees direct or indirectly given for guarantee
1,517,889.38
parties with gearing ratio of over 70% (E)
Amount of total guarantees in excess of 50% of net assets (F) 4,064,726.14
Total of the above three guarantee amounts (D+E+F) 4,064,689.86
For unexpired guarantees, descriptions about the guarantee liabilities
or possible joint and several liabilities of repayment occurred during Nil
the Reporting Period (if any)
External guarantees in breach of procedural requirements (if any) Nil
102
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Explanation on guarantees provided by combined mode
Not applicable
3. Entrusted cash assets management
(1) Entrusted wealth management
√ Applicable □ N/A
Overview of entrusted wealth management during the Reporting Period
Unit: RMB0’000
Impairment of
Source of capital Amount of the
Overdue amount not overdue wealth
Type under the entrusted Entrusted wealth Undue amount
management recovered management not
wealth
recovered
management
Bank wealth Self-owned fund 0 0
management products 90,692.75 80,192.75
Total 90,692.75 80,192.75 0 0
Particulars of high-risk entrusted wealth management with significant single amount or low security and low liquidity
□ Applicable √ N/A
Whether there is the case where the principal cannot be recovered at maturity or other case where impairment may occur
□ Applicable √ N/A
(2) Entrusted loans
□ Applicable √ N/A
There was no entrusted loan of the Company during the Reporting Period.
4. Other major contracts
□Applicable √N/A
The Company has no other major contracts during the Reporting Period.
XVI. Explanation for Other Significant Events
√Applicable □N/A
On January 24, 2022, the Company held the 41st meeting of the 4th Board of Directors to consider and adopt the Resolution on Terminating the Repurchase of the
Company's Shares, because the total transaction amount of the Company's share repurchase was RMB204,444,302.78 (excluding commission charges), the total
repurchase amount exceeded the lower limit of the total amount as set forth in the share repurchase plan; meanwhile, in view of the Company's plan to implement
an equity incentive plan, the Company decided to terminate the share repurchase scheme upon careful deliberation. For details, please refer to the Announcement
on Terminating the Repurchase of the Company's Shares (Announcement No. 2022-015) disclosed by the Company on www.cninfo.com.cn.
103
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
XVII. Significant Events of the Company and Its Subsidiaries
√Applicable □N/A
1. On February 11, 2022, Hongta Plastic and Yuxi High-tech Zone Management Committee signed the Newly Added Project Land Investment Agreement for
BOPP Film Project on the matters such as the addition of 20 acres of project land for the construction of production warehouses and auxiliary buildings. For details,
please refer to the Announcement on the Progress of the BOPP Film Reconstruction and Expansion Project of the Wholly-owned Subsidiary Hongta Plastic
disclosed by the Company on www.cninfo.com.cn (Announcement No. 2022-025).
2. On February 16, 2022, the Company held the meeting of Board of Directors to consider and adopt the Resolution on Signing the "Cooperation Agreement for
the Whole Industry Chain Project of New Energy Battery" and agreed to sign the Cooperation Agreement for the Whole Industry Chain Project of New Energy
Battery, which stipulates that all parties will jointly establish two joint venture companies in Yuxi, with the People's Government of Yuxi County, EVE Energy,
Zhejiang Huayou Holding and YUNTIANHUA On March 29, 2022, the Company held the meeting of Board of Directors to consider and adopt the Resolution on
Signing an Investment Agreement and Supplementary Agreement with the People's Government of Hongta District, Yuxi County, and agreed to build a lithium
battery separator production project with a production capacity of 1.6 billion square meters in Yuxi with total investment of about RMB 4.5 billion. Yuxi Energy,
the main body for the project implementation, has completed the industrial and commercial registration procedures and finished the project filing formalities. For
details, please refer to the Announcement on the Progress of Signing Strategic Cooperation Framework Agreement with the People's Government of Yuxi County
(Announcement No. 2022-030, 2022-044, 2022-051, 2022-118) disclosed by the Company on www.cninfo.com.cn.
3. On May 20, 2022, the Company held the 50th meeting of the 4th Board of Directors to consider and adopt the Resolution on the Implementation of Equity
Incentive Plans of Holding Subsidiaries Involving Related Transactions and the Company's Waiver of Rights, and agreed that the Company's holding subsidiary
Hongchuang Packaging provides equity incentives for its core employees through the employee shareholding platform. Hongchuang Packaging has completed the
formalities for industrial and commercial registration changes and filing of related matters and obtained a renewed Business License. In addition, due to
comprehensive consideration of capital planning and other aspects, the Advanced Manufacturing Fund intends to reduce its investment in Hongchuang Packaging.
After the capital reduction, the registered capital of Hongchuang Packaging is RMB 131,363,636. For details, please refer to the Announcement on the
Implementation of Equity Incentive Plans of Holding Subsidiaries Involving Related Transactions and the Company's Waiver of Rights (Announcement No. 2022-
096), Announcement on the Progress of Implementing Equity Incentive Plans of Holding Subsidiaries Involving Related Transactions and the Company's Waiver
of Rights (Announcement No. 2022-102), Announcement on the Progress of Capital Reduction and Investor Introduction of Holding Subsidiaries (Announcement
No. 2022-105) disclosed by the Company on www.cninfo.com.cn.
104
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Section 7 Share Changes and Shareholder Details
I. Changes in Shares
1. Changes in shares
Unit: shares
Before the change Increase or decrease (+/-) After the change
New Convers
share Bonus ion of
Number of Proportion s issuan reserve Others Subtotal Number of Proporti
shares ce shares on
issue into
d share
I. Shares subject to
restrictions on sale 16.85
150,387,108 16.85% -19,731 -19,731 150,367,377
%
1. Shares held by
state 0 0.00
0 0.00%
%
2. Shares held by 0.00
state-owned legal 0 0.00% 0
persons %
3. Shares held by 6.24
other domestic 54,542,615 6.11% 1,171,736 1,171,736 55,714,351
investors %
Including: Shares held 0.00
by domestic legal 0 0.00% 0
persons %
Shares held by domestic
natural persons 6.24
54,542,615 6.11% 1,171,736 1,171,736 55,714,351
%
4. Shares held by
overseas investors 10.61
95,844,493 10.74% -1,191,467 -1,191,467 94,653,026
%
Including: Shares held 0.00
by overseas legal 0 0.00% 0
persons %
Shares held by overseas
natural persons 10.61
95,844,493 10.74% -1,191,467 -1,191,467 94,653,026
%
II. Shares not subject to
restrictions on Sale 83.15
742,019,714 83.15% 24,599 24,599 742,044,313
%
1. Renminbi 83.15
denominated common 742,019,714 83.15% 24,599 24,599 742,044,313
shares %
2.Domestically-listed
0.00
foreign shares 0 0.00% 0
%
3. Foreign shares
listed overseas 0 0 0.00
0.00%
%
4. Others 0.00
0 0.00% 0
%
III. Total shares 100.00
892,406,822 100.00% 4,868 4,868 892,411,690
%
Reason for changes in shares
√ Applicable □ N/A
1. Conversion of convertible corporate bonds into shares
Under the approval granted by China Securities Regulatory Commission under the Approval of Convertible Corporate Bonds by Yunnan Energy
New Material Co., Ltd. (CSRC License No. [2019] 2701), the Company made a public offering of 16 million convertible corporate bonds (bonds
abbreviation: Energy Convertible Bond, bonds code: 128095) on February 11, 2020 and started trading at Shenzhen Stock Exchange on February 28,
2020. The conversion period of “Energy Convertible Bonds” started on August 17, 2020. During the Reporting Period, a total of 4,868 shares were
converted from the bonds, and by the end of the Reporting Period, a total of 17,619,596 shares were converted from the bonds.
2. 2022 Stock Option and Restricted Stock Incentive Plan
On March 7, 2022, the Company held the 43rd meeting of the 4th Board of Directors to consider and adopt the Resolution on Granting the
105
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Stock Options to the Incentive Objects of Stock Options and Restricted Shares, on May 23, 2022, the Company completed the registration of
1,585,437 restricted shares of 2022 Stock Option and Restricted Stock Incentive Plan, the shares derived from A shares repurchased by the Company
from the secondary market. After the completion of the grant registration, the nature of the above shares changed from unlimited sale condition shares
to equity incentive restricted shares.
3. Reasons for other changes
The shares held by the directors and senior managers of the Company have been locked in accordance with the Listing Rules of Shenzhen Stock
Exchange, Guidelines on the Self-Regulation of Listed Companies of Shenzhen Stock Exchange No. 1 -- Standardized Operation of Listed Companies
on the Main Board, the Several Provisions Regarding Share Reduction by Shareholders, Directors, Supervisors and Senior Executives of Listed
Companies, the Implementation Rules of Shenzhen Stock Exchange Regarding Share Reduction by Shareholders, Directors, Supervisors and Senior
Executives of Listed Companies and other related provisions.
Approval of changes in shares
√ Applicable □ N/A
1. Conversion of convertible corporate bonds into shares
Under the approval granted by China Securities Regulatory Commission under the Approval of Convertible Corporate Bonds by Yunnan Energy
New Material Co., Ltd. (CSRC License No. [2019] 2701), the Company made a public offering of 16 million convertible corporate bonds (bonds
abbreviation: Energy Convertible Bond, bonds code: 128095) on February 11, 2020 and started trading at Shenzhen Stock Exchange on February 28,
2020. The conversion period of “Energy Convertible Bonds” started on August 17, 2020.
2. 2022 Stock Option and Restricted Stock Incentive Plan
In order to further improve the Company's long-term incentive mechanism and fully mobilize the enthusiasm of core employees, on March 17,
2021, the Company held the 24th meeting of the 4th Board of Directors to consider and adopt the Resolution on Repurchasing the Company's Shares,
agreeing that the Company would use its own funds to repurchase the Company's public shares through centralized bidding trade. The repurchased
shares were used to implement equity incentive or employee shareholding plans. On January 24, 2022 and February 14, 2022, the Company held the
41st meeting of the 4th Board of Directors and the 2nd Provisional General Meeting of Shareholders 2022 to consider and adopt the Resolution on the
Company's 2022 Stock Option and Restricted Stock Incentive Plan (Draft) and its Summary as well as other relevant motions. On March 14, 2022, the
Company completed the grant of stock options, granting 1,585,437 stock options to 877 stock option incentive objects; On May 23, 2022, the
Company completed the grant of restricted shares, granting 1,585,437 restricted shares to 826 stock option incentive objects.
Transfer of share ownership
√ Applicable □ N/A
1. Conversion of convertible corporate bonds into shares: a total of 4,868 shares were converted from “Energy Convertible Bonds” during the
Reporting Period, and a total of 17,619,596 shares were converted by the end of the Reporting Period
2. Grant of restricted shares: during the Reporting Period, the Company completed the registration for the grant of 1,585,437 restricted shares
according to 2022 Stock Option and Restricted Stock Incentive Plan, the total shares of the Company remained the same with decrease of
1,585,437 treasury shares.
Effects of changes in shares on the basic EPS, diluted EPS, net assets per share attributable to ordinary shareholders of the Company, and other
financial indicators for the prior year and the last Reporting Period
√ Applicable □ N/A
During the Reporting Period, the conversion of 4,868 shares from the “Energy Convertible Bonds” had less impact on the basic earnings per
share and the diluted earnings per share and the net assets.
Other contents that the Company considers are necessary, or are required by the securities regulatory authorities, to disclose
□ Applicable √ N/A
2. Changes in restricted shares
√ Applicable □ N/A
106
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Unit: Shares
Number of Increase of Number of Number of Reason for restriction Date of relief
restricted shares restricted restricted shares restricted
Name of
at the beginning shares in the unlocked in the shares at the
shareholder
of period current period current period end of period
Paul Xiaoming Locked-up shares held A director can unlock 25% of the total
95,844,493 1,200,300 94,644,193
Lee by senior executives shares he or she holds every year
Locked-up shares held A director can unlock 25% of the total
Li Xiaohua 52,378,417 52,378,417
by senior executives shares he or she holds every year
①As a Board Secretary, she may have
①Locked-up shares
25% of the total shares of the
held by senior
Company she holds unlocked every
executives;
Year; ②The restricted shares of the
② Restricted shares of
Yu Xue 30,825 40,000 70,825 Company's 2022 Stock Option and
the Company's 2022
Restricted Stock Incentive Plan will be
Stock Option and
exercised and released in three
Restricted Stock
installments 12 months after the
Incentive Plan
completion of the grant registration
He resigned from the position of the
Board Secretary in November 2021,
and during the term determined when
he held the position and within six
months after the expiration of the term,
Locked-up shares held
Xiong Wei 270,000 67,500 202,500 he shall not transfer the Company’s
by senior executives
shares he holds within half a year after
resignation, and the shares transferred
every year shall be not more than 25%
of the total shares of the Company he
holds
He resigned from the position of the
Chief Financial Officer in September
2020, and during the term determined
when he held the position and within
Locked-up shares held six months after the expiration of the
Pang Qizhi 247,500 750 248,250 by senior term, he shall not transfer the
executives Company’s shares he holds within half
a year after resignation, and the shares
transferred every year shall be no
more than 25% of the total shares of
the Company he holds
He resigned from the position of the
director in November 2021, and during
the term determined when he held the
position and within six months after
Locked-up shares held
the expiration of the term, he shall not
Xu Ming 1,615,873 65,850 403,968 1,277,755 by senior
transfer the Company’s shares he
executives
holds within half a year after signation,
and the shares transferred every year
shall be not more than 25% of the total
shares of the Company he holds.
Total number Restricted shares of
Will be exercised and released in three
of other the Company’s 2022
installments 12 months after the
incentive 0 1,545,437 1,545,437 Stock Option and
completion of the grant registration
objects (825 Restricted Stock
(May 23, 2022)
persons) Incentive Plan
Total 150,387,108 1,652,037 1,671,768 150,367,377 -- --
107
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
II. Issuance and Listing of Securities
1. Issuance of securities (excluding preferred shares) during the Reporting Period
□ Applicable √ N/A
2. Statement on changes in total shares and shareholder structure of the Company, and changes in assets and
liabilities of the Company
√ Applicable □ N/A
At the beginning of period, the Company recorded the total share capital of 892,406,822 shares and the asset-liability ratio of 44.35%. During
the Reporting Period, the “Energy Convertible Bonds” were converted into 4,868 shares. As at the end of the Reporting Period, the Company
recorded the total share capital of 892,411,690 shares and the asset-liability ratio of 51.18%.
3. Existing shares held by internal employees of the Company
□ Applicable √ N/A
III. Details of Shareholders and Actual Controllers
1. Number of shareholders and their shareholdings
Unit: shares
Total common Total ordinary Total preferred Total preferred
shareholders at the shareholders shareholders shareholders resuming
end of the at the end of 75,356 resuming voting voting right at the end
Reporting Period 53,785 the previous right at the end 0 of the previous month 0
month before of the Reporting before annual report
annual report Period (if any) disclosure date (if any)
disclosure (see Note 8) (see Note 8)
date
Shareholders holding more than 5% of shares or shareholdings of the top 10 shareholders
Name of Nature of Shareholding Number of Increase or Number of Number of Pledged, tagged or
shareholder shareholder ratio shares held at decrease of restricted unrestricted frozen
the end of the shares during shares held shares held
Reporting the Reporting Status Number
Period Period of of shares
shares
Paul Xiaoming Overseas natural
Lee person 14.14% 126,192,257 94,644,193 31,548,064
Domestic non-
Heyi Investment state-owned legal 13.39% 119,449,535 119,449,535 Pledged 46,160,000
person
Hong Kong Overseas legal
Securities Clearing person 9.02% 80,455,994 -16,862,311 80,455,994
Company Limited
Sherry Lee Overseas natural
person 7.99% 71,298,709 -2,171,750 71,298,709
Li Xiaohua Domestic natural
person 7.50% 66,919,389 -2,918,500 52,378,417 14,540,972 Pledged 7,000,000
Kunming Huachen Domestic non-
Investment Co., state-owned legal 2.06% 18,426,613 62,151 18,426,613
Ltd. person
Zhang Yong Domestic natural
person 1.78% 15,922,907 -241,100 15,922,907
108
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Overseas natural
JERRY YANG LI
person 14,735,75
1.65% 14,735,754 -2,971,483
4
Shanghai Hengzou Domestic non-
Shanghai Hengzou state-owned legal
Enterprise person 11,645,17
1.30% 11,645,173 -3,881,644
Management Office 3
(Limited
Partnership)
Heli Investment Domestic non-
state-owned legal 0.80% 7,169,086 -2,389,600 7,169,086
person
Strategic investors or general legal
persons who have become top 10 None
shareholders due to new share allotment
(if any) (see Note 3)
Paul Xiaoming Lee, Sherry Lee, Li Xiaohua and JERRY YANG LI are all the family members of the
Statement on related party relationship or Company’s actual controller Paul Xiaoming Lee and represent the persons acting in concert. Heyi Investment
concerted action between above- is the enterprise under control by the family of the actual controller Paul Xiaoming Lee. Heli Investment is a
mentioned shareholders related party of the Company. The other shareholders are not known as to whether they have the related party
relationships between them or constitute the persons acting in concert.
Mr. Paul Xiaoming Lee and Ms. Sherry Lee signed the Power of Attorney for Shareholding on January 14,
Explanation of delegation/acceptance of
2020, by which Ms. Sherry Lee fully delegated the shareholders’ rights, such as rights to question, proposal
voting right and waiver of voting right
and vote, in connection with 73,470,459 shares she held in the Company, to her father Mr. Paul Xiaoming
involving the above shareholders
Lee, for a period of three years from the date of the Power ofAttorney.
Special explanation on the existence of
special repurchase account among the N/A
top 10 shareholders (if any) (see Note
10)
Top 10 shareholders holding unrestricted shares
Type of shares
Number of unrestricted shares held at the
Name of shareholder end of the Reporting Period Number of
Type of shares
shares
Heyi Investment 119,449,535 Renminbi denominated common shares 119,449,535
Hong Kong Securities Clearing Company Renminbi denominated common shares 80,455,994
Limited
80,455,994
Sherry Lee 71,298,709 Renminbi denominated common shares 71,298,709
Paul Xiaoming Lee 31,548,064 Renminbi denominated common shares 31,548,064
Kunming Huachen Investment Co., Ltd. 18,426,613 Renminbi denominated common shares 18,426,613
Zhang Yong 15,922,907 Renminbi denominated common shares 15,922,907
JERRY YANG LI 14,735,754 Renminbi denominated common shares 14,735,754
Li Xiaohua 14,540,972 Renminbi denominated common shares 14,540,972
Shanghai Hengzou Shanghai Hengzou Renminbi denominated common shares
Enterprise Management Office (Limited 11,645,173 11,645,173
Partnership)
Heli Investment 7,169,086 Renminbi denominated common shares 7,169,086
Paul Xiaoming Lee, Sherry Lee, Li Xiaohua and JERRY YANG LI are all the family members of the
Statement on related party relationships or
Company’s actual controller Paul Xiaoming Lee and represent the persons acting in concert. Heyi Investment
concerted action between top 10
is the enterprise under control by the family of the actual controller Paul Xiaoming Lee. Heli Investment is a
circulating shareholders without sales
related party of the Company. The other shareholders are not known as to whether they have the related party
restriction and between top 10 circulating relationships between them or constitute the persons acting in concert.
shareholders without sales restriction and
top 10 shareholders
N/A
Statement on top 10 ordinary
shareholders’ participation in securities
margin trading business (if any) (see Note
4)
109
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Did any of the top 10 ordinary shareholders or top 10 ordinary shareholders with unrestricted shares of the Company conduct any transactions on
agreed repurchase during the Reporting Period
□ Yes√ No
Top 10 ordinary shareholders and top 10 ordinary shareholders without sales restriction didn’t conduct transactions on agreed repurchase during the
Reporting Period.
2. Details about the controlling shareholder
Nature of controlling shareholder: The nature of the controlling entity is unclear
Type of controlling shareholder: Natural person
Acquisition of right of residence in other countries or
Controlling shareholder’s name Nationality
regions
Paul Xiaoming Lee American Yes
Yan Ma American Yes
Sherry Lee American Yes
Li Xiaohua Chinese Yes
Yanyang Hui American Yes
JERRY YANG LI American Yes
Paul Xiaoming Lee serves as the Chairman of the Company. Li Xiaohua serves as the Vice
Chairman and General Manager of the Company. Yan Ma serves as the Director of the
Major Occupation and Position
Company. Yanyang Hui, Sherry Lee and JERRY YANG LI take no positions at the
Company.
Equities in other domestic and overseas listed
companies under control and with participation None
during the Reporting Period
Change of controlling shareholder during the Reporting Period
□ Applicable √ N/A
The controlling shareholder of the Company has not changed during the Reporting Period.
3. Details about the actual controller and persons acting in concert
Nature of actual controller: Domestic natural person; overseas natural person
Type of actual controller: Natural person
Acquisition of right of
Name of actual controller Relationship with actual controller Nationality residence in other countries
or regions
Act in concert (including agreement, kinship
Paul Xiaoming Lee American Yes
and common control)
Act in concert (including agreement, kinship
Yan Ma American Yes
and common control)
Act in concert (including agreement, kinship
Sherry Lee American Yes
and common control)
Act in concert (including agreement, kinship
Li Xiaohua Chinese Yes
and common control)
Act in concert (including agreement, kinship
Yanyang Hui American Yes
and common control)
Act in concert (including agreement, kinship
Jerry Yang Li American Yes
and common control)
Major Occupation and Position Paul Xiaoming Lee serves as the Chairman of the Company. Li Xiaohua serves as the Vice Chairman
and General Manager of the Company. Yan Ma serves as the Director of the Company. Yanyang Hui,
Sherry Lee and JERRY YANG LI take no positions at the Company.
Control over domestic and overseas None
listed companies over past 10 years
Change of actual controller during the Reporting Period
□ Applicable √ N/A
The actual controller of the Company has not changed during the Reporting Period.
A block diagram of the property rights and control relationship between the Company and the actual controller
110
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Controlling shareholders, actual controllers and related parties
The actual controller controls the Company through trust or other asset management methods
□ Applicable √ N/A
111
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
4. The accumulated number of pledged shares of the Company’s controlling shareholder or the largest
shareholder of the Company and its persons acting in concert account for 80% of the Company’s shares held
□ Applicable √ N/A
5. Other corporate shareholders holding more than 10% of the shares
√ Applicable □ N/A
Name of
Legal
legal
Representative/Princi Date of Incorporation Registered Capital Major operating activities or management activities
person
pal of Organization
shareholder
Conduct venture capital activities with free capital; make project
Heyi investment and manage investment project; investment
Investment Yan Ma November 10, 2010 RMB30 million
management, investment consulting and social and economic
consultation.
6. Details about restrictions on reduction of shareholdings of controlling shareholders, actual controllers,
restructuring parties, and other entities making commitments
□ Applicable √ N/A
IV. Information on implementation of share repurchase during the Reporting Period
Progress in implementation of share repurchase
√ Applicable □ N/A
Ratio of shares
Number of Percentag
Intended Number of repurchased to the
Scheme shares e of the Amount intended to Repurchase
repurchase shares underlying shares under
disclosure date intended to be general be repurchased purpose
period repurchased the stock incentive plan (if
repurchased capital
any)
Used for
implementatio
Not less than
1,111,111 shares n of the stock
to 2,222,222 RMB200 million March 17, 2021
March 18, 2021 0.12% to incentive or
shares (inclusive) and not to March 16, 1,585,437 100.00%
0.25% employee
more than RMB400 2022
stock
million (inclusive)
ownership
plan
Progress of centralized bidding for reduction of shares repurchased
□ Applicable √ N/A
112
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Section 8 Details about Preferred Shares
□ Applicable √ N/A
During the Reporting Period, there were no preferred shares in the Company.
113
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
Section 9 Details about bonds
√ Applicable □ N/A
I. Corporate bonds
□ Applicable √ N/A
During the Reporting Period, there were no corporate bonds of the Company.
II. Debentures
□ Applicable √ N/A
During the Reporting Period, there were no debentures of the Company.
III. Debt financing instruments of non-financial enterprises
□ Applicable √ N/A
During the Reporting Period, there were no non-financial enterprise debt financing tool of the Company.
IV. Convertible corporate bonds
√ Applicable □ N/A
1. All Previous Adjustments to the Conversion Price
Upon the approval of the file "Securities Regulatory License No. [2019]2701" promulgated by China Securities Regulatory Commission, the
Company publicly issued 16 million convertible bonds on February 11, 2020, with face value of RMB 100 each, total issue amount of RMB1.6 billion,
and a term of 6 years. With the approval of the file "Shenzhen Securities No. [2020]109" of Shenzhen Stock Exchange, the Company's convertible
bonds of RMB1.6 billion would be listed and traded in Shenzhen Stock Exchange from February 28, 2020. The bond is referred to as "Energy
Convertible Bond" and the bond code is "128095". The initial conversion price of "Energy Convertible Bond" is RMB 64.61/share.
In May 2020, the Company implemented the annual profit distribution plan for 2019: Based on the total share capital of the Company, namely
805,370,770 shares, distribute RMB1.25 in cash (inclusive of tax) for every 10 shares to all shareholders, distribute a total cash dividend of
RMB100,671,346.25 (inclusive of tax), distribute no dividend shares, convert no surplus reserve into share capital, and set the ex-dividend date as
May 21, 2020. Pursuant to related articles concerning the adjustment of the conversion price for the convertible corporate bonds, the Company has
made corresponding adjustment to the conversion price of “Energy Convertible Bonds” from RMB64.61/share before the adjustment to
RMB64.49/share after adjustment, and the conversion price after adjustment took effect on May 21, 2020.
In September 2020, under the approval granted by China Securities Regulatory Commission under the Approval of Private Share Offering by
Yunnan Energy New Material Co., Ltd. (CSRC License No. [2020] 1476), the Company made a private offering of 69,444,444 shares (A shares) to 22
specific investors. These shares started trading at an issuing price of RMB72.00/share at Shenzhen Stock Exchange on September 4, 2020. Pursuant to
related articles concerning the adjustment of the conversion price for the convertible corporate bonds, the Company has made corresponding
adjustment to the conversion price of “Energy Convertible Bonds” from RMB64.49/share before the adjustment to RMB65.09/share after adjustment,
and the conversion price after adjustment took effect on September 4, 2020.
In September 2020, the Company repurchased and canceled a total of 23,120 restricted shares held by 4 participants with a personal assessment
rating of “good” when the 2017 Restricted Stock Incentive Plan was unlocked for the third time. The repurchase price was RMB8.426 per share. The
cancellation for repurchase was completed on September 28, 2020. Due to the small number of shares canceled in this repurchase, the conversion
price of “Energy Convertible Bonds” remained unchanged at RMB65.09 per share after calculating in accordance with the relevant terms regarding
the adjustment to the conversion price of convertible corporate bonds.
In April 2021, the Company implemented the annual profit distribution plan for 2020: Based on the total share capital of the Company, namely
888,160,636 shares, distribute RMB1.696948 in cash (inclusive of tax) for every 10 shares to all shareholders, distribute a total cash dividend of
RMB150,716,245.67 (inclusive of tax), distribute no dividend shares, convert no surplus reserve into share capital, and set the ex-dividend date as
April 30, 2021. Pursuant to related articles concerning the adjustment of the conversion price for the convertible corporate bonds, the Company has
made a corresponding adjustment to the conversion price of “Energy Convertible Bonds” from RMB65.09/share to RMB64.92/share, and the
conversion price after adjustment took effect on April 30, 2021.
In May 2022, the Company implemented the 2021 annual profit distribution plan: based upon the 890,823,196 shares equal to 892,408,633
shares of the Company's total capital on the share registration date (i.e. May 13, 2022) minus 1,585,437 shares in the special securities account for
repurchase, RMB 3.030904 (including tax) in cash will be paid to all shareholders for every 10 shares without bonus shares. No capital reserve shall
be converted as capital increase. In accordance with relevant provisions on the adjustment to the conversion price of convertible corporate bonds, the
conversion price of "Energy Convertible Bond" was adjusted from RMB 64.92 per share to RMB 64.62 per share, and the adjusted conversion price
would take effect from May 16, 2022.
114
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
2. Cumulative Share Conversion
√ Applicable □ N/A
Abbreviation Start and end Total volume Total amount Cumulative Cumulative Ratio of the Amount of Ratio of
for date of share of bond of issuance conversion number of number of shares not amount of
convertible conversion issuance amount shares shares yet shares not
bond (number of (RMB) converted converted to converted yet
bonds) (shares) the total (RMB) converted to
issued the total
shares of the amount of
Company issuance
before the
start of the
conversion
August 17,
Energy
2020 to 1,600,000,000 1,146,231,800 453,768,200.0
Convertible February 11, 16,000,000 17,619,596 2.19% 28.36%
.00 .00 0
Bonds 2026
3. Top Ten Holders of Convertible Bonds
Unit: shares
Name of holder of convertible bonds Nature of Number of Amount of Percentage of
SN holder of convertible convertible convertible bonds
convertibl bonds held at bonds held at held at the end of
e bonds the end of the the end of the the Reporting
Reporting Reporting Period
Period (number Period (RMB)
of convertible
bonds)
China Everbright Bank Co., Ltd. - Boshi convertible bond &
1 Other 300,008 30,000,800.00 6.61%
enhanced bond securities investment fund
Agricultural Bank of China Limited - Penghua convertible
2 Other 261,356 26,135,600.00 5.76%
bond securities investment fund
Dajia Asset Management - China CITIC Bank - Dajia
3 Other
Asset Management Houkun No. 40 collective assets 194,901 19,490,100.00 4.30%
management products
Industrial and Commercial Bank of China Limited - Fuguo
4 Other 179,144 17,914,400.00 3.95%
income and enhanced bond securities investment fund
China Minsheng Banking Corp. Limited - Jinying Min'an
5 Other 172,392 17,239,200.00 3.80%
return one-year fixed open hybrid securities investment fund
Corporation pension plan of China National Petroleum
6 Other
Corporation - Industrial and Commercial Bank of China 155,170 15,517,000.00 3.42%
Limited
7 Agricultural Bank of China Limited - Qianhai Kaiyuan Other
124,939 12,493,900.00 2.75%
convertible bond sponsored securities investment fund
8 China Construction Bank Limited - Huashang Credit enhanced Other
117,410 11,741,000.00 2.59%
bond securities investment fund
9 China Everbright Bank Co., Ltd. - Bodao Jiatai return hybrid Other
101,620 10,162,000.00 2.24%
securities investment fund
Agricultural Bank of China Limited -BOCOM
10 Other
Schroders advanced manufacturing hybrid securities 100,510 10,051,000.00 2.22%
investment fund
115
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
4. Significant Changes in the Guarantor’s Profitability, Asset Status, and Credit Status
□ Applicable √ N/A
5. The Company’s Liabilities and Credit Changes at the End of the Reporting Period, and Cash Arrangements
for Debt Repayment in Future Years
(1) The Company’s liabilities: relevant indicators such as the asset-liability ratio, interest coverage multiple, and loan repayment rate at the end
of the Reporting Period, and year-on-year changes are detailed in the “VIII. Major Accounting data and financial indicators of the Company in the
recent two years as at the end of the Reporting Period”.
(2) Changes in the Company’s credit standing: According to the Follow-up Rating Report on Public Offering of Convertible Corporate Bonds
by Yunnan Energy New Material Co., Ltd. (No. Follow-up Rating on Corporate Bonds by Shanghai Brilliance (2020) 100053, Follow-up Rating on
Corporate Bonds by Shanghai Brilliance (2021)100043, Follow-up Rating on Corporate Bonds by Shanghai Brilliance (2022)100280）) issued by the
credit rating agency - Shanghai Brilliance Credit Rating & Investors Service Co, Ltd., the credit rating of the Company on the whole was AA, the
credit rating of “Energy Convertible Bonds” was AA, and the said bonds were affirmed with a “stable” outlook. The above-mentioned follow-up
rating results have not changed compared with the previous rating results. For details about the above-mentioned follow-up rating reports, refer to
http://www.cninfo.com.cn/.
(3) Cash arrangements for debt repayment in future years: The Company’s credit status is good, the asset-liability structure is reasonable, and
banks and other financial institutions grant sufficient comprehensive credit to the Company. The Company can quickly and effectively obtain
financing support from financial institutions. The Company has stable operations and good performance, and can obtain stable operating cash flow
through endogenous growth. At the same time, the Company actively promotes the implementation of fundraising projects through convertible
corporate bonds to further enhance its profitability. If the Company meets the put provision and redemption clauses and repayment of principal and
interest when due as disclosed in the prospectus of convertible corporate bonds, the Company can pay the bondholders’ principal and interest with its
own funds and financing.
V. Losses in the scope of consolidated statements during the Reporting Period exceeding 10%
of the net assets as at the end of the prior year
□ Applicable √ N/A
VI. Overdue repayment of interest-bearing debt other than bonds as at the end of the
Reporting Period
□ Applicable √ N/A
VII. Violation of rules and regulations during the Reporting Period
□ Yes √ No
116
2021 Annual Report of Yunnan Energy NewMaterial Co., Ltd.
VIII. Major Accounting data and financial indicators of the Company in the recent two years
as at the end of the Reporting Period
Unit: RMB’0,000
Item At the end of the Reporting At the end of the prior year Increase or decrease at the end
Period of the current Reporting Period
compared with the end of prior
year
Current Ratio 1.1038 1.3647 -19.12%
Asset-Liability Ratio 51.18% 44.35% 6.83%
Quick ratio 0.8757 1.0308 -15.05%
The corresponding period of Increase or decrease of the
The Reporting Period prior year Reporting Period compared with
the corresponding period of
prior year
Net profit after deduction of
non-recurring gains and losses 383,979.21 256,705.45 49.58%
Debt-to-EBITDA ratio 30.99% 36.66% -5.67%
Interest coverage ratio 15.26 14.24 7.16%
Cash interest coverage ratio 4.21 8.16 -48.41%
EBITDA interest coverage ratio 18.50 17.58 5.23%
Loan repayment rate 100.00% 100.00% 0.00%
Interest coverage rate 100.00% 100.00% 0.00%
117
Section 10 Financial Report
I. Audit Report
Type of audit opinion Standard unqualified opinion
Signature date of audit report March 2
, 2023
Audit organization name Dahua CPAs (SGP)
Audit report No. Da Hua Shen Zi No. [2023] 000299
Name of Certified Public Accountant Kang Wenjun, Yao Rui
Body of the audit report
To all shareholders of Yunnan Energy New Material Co., Ltd.:
I. Audit Opinions
We have audited the financial statements of Yunnan Energy New Material Co., Ltd., (“Energy Technology”), including the consolidated and the
parent company’s balance sheets as of December 31, 2022, the consolidated and parent company’s income statement, the consolidated and the parent
company’s cash flow statement, the consolidated and the parent company’s statement of changes in equity for 2022, and the relevant notes to financial
statements.
In our opinion, the enclosed financial statements were prepared in accordance with the Accounting Standards for Business Enterprises in all
material aspects and fairly reflected the Energy Technology’s consolidated and the parent company’s financial positions as of December 31, 2022 as
well as the consolidated and the parent company’s operation results and cash flow for 2022.
II. Basis for Audit Opinions
We carried out the audit work according to the Auditing Standards for Chinese CPA. Our responsibilities under the Standards are further
described under the section titled “responsibilities of CPA for auditing financial statements” in this audit report. We are independent from Energy
Technology and have fulfilled the obligations in terms of professional ethics according to Code of Professional Conduct for Chinese CPAs. We believe
that the evidences we obtained are adequate and proper, and lay a solid foundation for the audit opinion.
III. Key Audit Matters
Key audit matters are those that we believe are of most significance in the audit of the financial statements of the current period based on
professional judgment. These matters are 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 determined that the following matters are key audit matters to be communicated in the audit report.
1. Revenue recognition
2. Provision for bad debts of accounts receivable
(I) Revenue recognition
1. Description of matters
Please refer to Note IV-(33) and Note VI-44 of the consolidated financial statements for the accounting policies and book amount information
of the revenue recognition of Energy Technology in this year.
The operating revenue of Energy Technology in 2022 amounted to RMB12,590,925,500, which was the main source of its profit and affects its
key performance indicators. In addition, according to the industry practice, after signing the sales order with customer, Energy Technology arranges
production based on customer’s requirements, delivers it to customers pursuant to the agreed delivery method, obtains the customer’s evidence on the
transfer of the ownership of goods, and then recognizes the sales revenue. Since the time of revenue recognition is later than the product delivery, and
the delivery time and delivery document recognition are all dependent on the customer, there may be significant risk of misstatement if the sales
revenue is fully included in the appropriate accounting period.Therefore, we recognize revenue as a key audit matter.
118
2. Audit Response
Our key audit procedures for revenue recognition include:
(1) Understand and evaluate the design of internal control of revenue recognition by the management, and test the effectiveness of key control
implementation;
(2) Obtain a major business contract, identify terms and conditions related to the transfer of commodity ownership, and assess whether the
income recognition policy of Energy Technologyis in line with the relevant provisions of the enterprise accounting standards;
(3) Perform analytical review procedures on revenue and gross profit based on the product types and customer conditions of Energy
Technology, and determine the reasonableness of the changes in sales revenue and gross profit margin;
(4) Understand the background and basic information of the main customers, identify whether they are related parties, and confirm the accounts
receivable balance and sales amount of the main customers by confirmation letters;
(5) Select samples from the sales revenue ledger, check the relevant documents such as contracts (orders), invoices, delivery documents, pay
attention to the delivery time, and check the revenue recognition time point;
(6) Check the sales revenue recognized before and after the balance sheet date with supporting documents of sales revenue recognition, and
implement the cut-off test and subsequent inspection procedures for revenue recognition;
(7) Assess whether the management’s disclosure of income statement is appropriate.
According to the audit procedures and the evidence we have obtained, we believe that the income of Energy Technology is real and recorded
correctly during the accounting period.
(II)Provision for bad debts of accounts receivable
1. Description of matters
Please refer to Note IV-(12) and Note VI-4 of the consolidated financial statements for the accounting policies and book value amount of
accounts receivables of Energy Technology in this year.
On December 31, 2022, the original book value of accounts receivable of Energy Technology was RMB6,693,895,600, the bad debt provision
was RMB 134,178,500 and the net value was RMB6,559,717,100 , accounting for 16.92% of the total assets at the end of the period.
Based on the financial situation of the counterparty, the management evaluates the guarantee obtained to the accounts receivable, the aging of
the accounts receivable, the credit rating and historical repayment record of the counterparty, and with reference to the historical credit loss experience,
combined with the current situation and the forecast of the future economic situation, the management considers to accrue bad debt for the accounts
receivable according to the expected credit loss in the whole duration. As the determination of the amount of bad debt provision requires the
management to use significant accounting estimates and judgments, and accounts receivable is important to the financial statements, therefore, we
regard the bad debt provision of accounts receivable as a key audit matter.
2. Audit response
(1) Understand and evaluate the management’s key internal control over the daily management and provision for accounts receivable, and carry
out the corresponding walk through test;
(2) For accounts receivable with significant single amount and credit impairment occurred after initial recognition, the bases for the
management’s assessment of the expected future available cash flow shall be reviewed to analyze whether it is reasonable;
(3) For the accounts receivable of bad debt provision withdrawn by the management according to the combination of credit risk characteristics,
combined with the credit risk characteristics and aging analysis, evaluate the rationality of the withdrawal of bad debt provision by the
management;
(4) The adequacy of the management’s provision for bad debt is evaluated in combination with the check of payment collection after the period;
(5) Assess whether the management’s disclosure of accounts receivable financial statements is appropriate.
Based on the audit procedures we have implemented and the evidence we have obtained, we believe that the accounting estimates of the bad
debt provision of accounts receivable made by Energy Technology are fully reasonable.
IV. Other Information
Energy Technology’s management is responsible for the other information. The other information comprises all of the information included in
the financial report other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance 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 our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report
that fact. We have nothing to report in this regard.
119
V. Responsibilities of Management and Those Charged with Governance for Financial
Statements
Energy Technology’s management is responsible for the preparation of the financial statements that give a fair view in accordance with CAS,
and for designing, implementing and maintaining such internal control as the management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Energy Technology’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either
intends to liquidate Energy Technology or to cease operations, or have no realistic alternative but to doso.
Those charged with governance are responsible for overseeing Energy Technology’s financial reporting process.
VI. Responsibilities of CPA for Auditing Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with CAS will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
management.
4. Conclude on the appropriateness of the management’s use of the going concern basis of accounting. Based on the audit evidence obtained,
conclude on whether a material uncertainty exists related to events or conditions that may cast significant doubt on Energy Technology’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to draw users’ 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, future events or conditions may cause
Energy Technology to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, 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 Energy
Technology to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the
Company audit and 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 noteworthy deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of
the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
II. Financial Statements
The unit of notes to financial statements is: RMB
120
1. Consolidated balance sheet
Prepared by: Yunnan Energy New Material Co., Ltd.
December 31, 2022
Unit: RMB
Item December 31, 2022 January 1, 2022
Current assets:
Monetary funds 3,954,316,829.31 1,833,450,205.69
Settlement reserves
Loans to banks and other financial institutions
Held-for-trading financial assets 9,850,069.59 5,137,194.34
Derivative financial assets
Notes receivable 637,755,156.47 368,575,191.23
Accounts receivable 6,559,717,117.36 4,405,436,085.52
Receivable financing 692,286,629.08 526,473,335.53
Prepayments 220,239,470.09 226,474,516.69
Premiums receivable
Reinsurance premium receivable
Reinsurance contract provision receivable
Other receivables 20,596,472.81 8,119,316.74
Including: Interest receivable
Dividends receivable
Financial assets held under resale agreements
Inventories 2,463,490,238.80 1,681,448,170.29
Contractual assets
Held-for-sales assets
Non-current assets due within one year 87,029,166.67
Other current assets 321,998,218.33 407,556,013.80
Total current assets 14,967,279,368.51 9,462,670,029.83
Non-current assets:
Loans and advances to customers
Debt investment
Other debt investment
Long-term receivables
Long-term equity investments 5,017,642.31 3,545,984.21
Investments in other equity instruments 111,000,000.00 110,000,000.00
Other non-current financial assets
121
Investment properties 8,399,300.54 8,933,531.66
Fixed assets 14,306,873,399.88 10,877,888,212.91
Construction in progress 3,584,554,509.73 1,752,915,718.82
Productive biological assets
Oil and gas assets
Right-of-use assets 3,926,781.90
Intangible assets 1,054,043,010.42 560,863,178.11
Development expenditures
Goodwill 520,230,679.65 520,230,679.65
Long-term unamortized expenses 1,317,972.74 3,559,617.17
Deferred income tax assets 315,538,499.73 252,854,470.86
Other non-current assets 3,744,550,327.16 2,568,723,421.32
Total non-current assets 23,655,452,124.06 16,659,514,814.71
Total assets 38,622,731,492.57 26,122,184,844.54
Current liabilities:
Short-term borrowings 9,527,853,434.55 4,116,148,340.30
Borrowings from the central bank
Placements from banks and other financial institutions
Held-for-trading financial liabilities 94,394.79
Derivative financial liabilities
Notes payable 609,315,699.02 487,407,828.53
Accounts payable 1,720,586,992.11 650,545,657.28
Advances from customers
Contractual liabilities 24,596,154.15 761,923,312.38
Financial assets sold under repurchase agreements
Customer bank deposits and due to banks and other financial institutions
Customer brokerage deposits
Securities underwriting brokerage deposits
Employee benefits payable 54,164,141.80 33,329,916.78
Taxes payable 279,461,730.79 190,156,537.78
Other payables 209,680,232.86 70,277,422.63
Including: Interest payable
Dividends payable 9,778,239.09 9,778,239.09
Fees and commissions payable
122
Reinsurance amounts payable
Hold-for-sale liabilities
Non-current liabilities due within one year 858,495,954.79 383,397,992.10
Other current liabilities 275,222,986.34 240,737,724.26
Total current liabilities 13,559,471,721.20 6,933,924,732.04
Non-current liabilities:
Insurance contract reserves
Long-term borrowings 4,179,264,746.86 2,803,108,832.30
Bonds payable 425,795,937.76 413,239,181.29
Including: preferred shares
Perpetual bonds
Lease liabilities 1,331,485.16
Long-term payables
Long-term payroll payable
Estimated liabilities
Deferred income 823,467,109.47 754,958,659.55
Deferred income tax liabilities 236,759,482.43 141,144,032.72
Other non-current liabilities 542,217,694.55 538,517,694.55
Total non-current liabilities 6,208,836,456.23 4,650,968,400.41
Total liabilities 19,768,308,177.43 11,584,893,132.45
Owners’ equity:
Share capital 892,411,690.00 892,406,822.00
Other equity instruments 50,317,083.84 50,352,323.80
Including: preferred shares
Perpetual bonds
Capital reserve 7,685,332,598.80 7,635,639,929.52
Less: treasury stock 101,753,346.66 204,444,302.78
Other comprehensive income 7,774,250.92 -3,746,198.57
Special reserve
Surplus reserve 191,644,843.59 173,392,922.26
General risk provision
Undistributed profits 9,000,475,751.88 5,288,265,431.08
Total owners’ equity attributable to parent company 17,726,202,872.37 13,831,866,927.31
Minority interests 1,128,220,442.77 705,424,784.78
123
Total owners’ equity 18,854,423,315.14 14,537,291,712.09
Total liabilities and owners’ equity 38,622,731,492.57 26,122,184,844.54
Legal representative: Paul Xiaoming Lee Financial Controller: Li Jian Financial Manager: Deng Jinhuan
2. Balance sheet of the parent company
Unit: RMB
Item December 31, 2022 January 1, 2022
Current assets:
Monetary funds 264,731,171.00 227,525,602.97
Held-for-trading financial assets
Derivative financial assets
Notes receivable 700,000.00 3,800,000.00
Accounts receivable 33,130,270.37 11,098,038.20
Receivable financing 500,000.00
Prepayments 1,340,081.33 178,525.89
Other receivables 6,831,112,472.90 6,692,163,939.27
Including: Interest receivable
Dividends receivable 211,040,000.00 241,040,000.00
Inventories 9,356,812.38 23,374,673.75
Contractual assets
Held-for-sales assets
Non-current assets due within one year
Other current assets 7,931,629.01
Total current assets 7,140,870,807.98 6,966,072,409.09
Non-current assets:
Debt investment
Other debt investment
Long-term receivables
Long-term equity investments 4,750,066,580.90 4,658,382,761.62
Investments in other equity instruments 111,000,000.00 110,000,000.00
Other non-current financial assets
Investment properties
Fixed assets 61,119,717.03 68,543,765.10
Construction in progress 1,219,946.39
124
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 38,206,008.22 11,017,155.74
Development expenditures
Goodwill
Long-term unamortized expenses
Deferred income tax assets 110,400.07 37,462.01
Other non-current assets 259,030.00 29,841,986.94
Total non-current assets 4,961,981,682.61 4,877,823,131.41
Total assets 12,102,852,490.59 11,843,895,540.50
Current liabilities:
Short-term borrowings 194,346,485.13 88,118,518.90
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 200,000.00
Accounts payable 7,831,403.74 22,796,504.02
Advances from customers
Contractual liabilities 217,893.81
Employee benefits payable 328.46
Taxes payable 60,535,712.47 919,028.71
Other payables 374,372,490.35 195,116,109.42
Including: Interest payable
Dividends payable
Hold-for-sale liabilities
Non-current liabilities due within one year 120,063,422.78 89,570,152.48
Other current liabilities 500,000.00 3,828,326.19
Total current liabilities 757,649,842.93 400,766,533.53
Non-current liabilities:
Long-term borrowings 116,000,000.00
Bonds payable 425,795,937.76 413,239,181.29
Including: preferred shares
Perpetual bonds
Lease liabilities
125
Long-term payables
Long-term payroll payable
Estimated liabilities
Deferred income
Deferred income tax liabilities 250,000.00
Other non-current liabilities
Total non-current liabilities 426,045,937.76 529,239,181.29
Total liabilities 1,183,695,780.69 930,005,714.82
Owners’ equity:
Share capital 892,411,690.00 892,406,822.00
Other equity instruments 50,317,083.84 50,352,323.80
Including: preferred shares
Perpetual bonds
Capital reserve 9,738,751,318.24 9,749,414,509.20
Less: treasury stock 101,753,346.66 204,444,302.78
Other comprehensive income 750,000.00
Special reserve
Surplus reserve 163,892,332.60 145,640,411.27
Undistributed profits 174,787,631.88 280,520,062.19
Total owners’ equity 10,919,156,709.90 10,913,889,825.68
Total liabilities and owners’ equity 12,102,852,490.59 11,843,895,540.50
3. Consolidated income statement
Unit: RMB
Item 2022 2021
I. Total operating revenue 12,590,925,529.68 7,982,426,810.59
Including: Operating revenue 12,590,925,529.68 7,982,426,810.59
Interest income
Earned premium
Fee and commission incomes
II. Total operating cost 7,959,405,882.79 4,891,681,674.54
Including: operating cost 6,568,148,382.65 4,002,023,714.23
Interest expense
Fee and commissions expenses
126
Cash surrender amount
Net payments for insurance claims
Net provision for insurance liability contract reserves
Policy dividend expenses
Reinsurance expenses
Taxes and surcharges 57,680,955.03 37,128,232.84
Selling expenses 74,455,043.47 74,035,002.36
Administrative expenses 323,291,931.01 216,333,939.36
R&D expenses 724,297,699.66 409,178,730.28
Financial expenses 211,531,870.97 152,982,055.47
Including: Interest expense 287,498,131.60 221,206,595.88
Interest income 26,258,474.95 20,299,433.23
Add: Other income 156,434,027.51 134,079,448.78
Investment income (loss is indicated with “-”) 22,731,466.27 27,109,413.02
Including: Income from investment in associates and
joint ventures 1,471,658.10 1,687,090.23
Derecognized financial assets measured by amortized
cost -18,658,871.90 -9,956,624.13
Exchange gain (loss is indicated with “-”)
Net exposure hedging income (loss is indicated with “-
”)
Income from changes in fair value (loss is indicated
with “-”) 9,755,674.80 137,194.34
Credit impairment losses (loss is indicated with “-”) -8,324,053.71 -24,846,360.74
Asset impairment losses (loss is indicated with “-”) -42,921,534.91 -10,663,472.55
Income from disposal of assets (loss is indicated with
“-”) 223,345.22 308,957.41
III. Operating profit (loss is indicated with “-”) 4,769,418,572.07 3,216,870,316.31
Add: Non-operating revenue 1,962,503.26 5,349,575.50
Less: Non-operating expenses 6,236,954.06 2,645,030.21
IV. Total profit (total loss is indicated with “-”) 4,765,144,121.27 3,219,574,861.60
127
Less: Income tax expense 553,009,563.88 332,720,824.45
V. Net profit (net loss is indicated with “-”) 4,212,134,557.39 2,886,854,037.15
(I) Classified according to operating continuity
1. Net profit from continuing operations (net loss is
indicated with “-”) 4,212,134,557.39 2,886,854,037.15
2. Net profit from discontinuing operations (net loss is
indicated with “-”)
(II) Classified according to attribution of the
ownership
1. Net profit attributable to shareholders of the parent
company 4,000,461,964.37 2,717,628,798.01
2. Profit or loss of minority interest 211,672,593.02 169,225,239.14
VI. Other comprehensive income, net of tax 12,061,121.08 -3,934,256.01
Other comprehensive income attributable to owners of
parent company, net of tax 11,520,449.49 -3,746,198.57
(I) Other comprehensive income that cannot be
reclassified to profit or loss 750,000.00
1. Changes arising from re-measurement of the defined
benefit plan
2. Other comprehensive income that cannot be
reclassified into profit or loss under the equity method
3. Changes in fair value of other equity instrument
investments 750,000.00
4. Changes in fair value of the enterprise’s credit risk
5. Others
(II) Other comprehensive income that will be
reclassified subsequently to profit or loss 10,770,449.49 -3,746,198.57
1. Other comprehensive income that can be
reclassified into profit or loss under the equity method
2. Changes in fair value of other debt investments
3. Amount of the financial asset reclassified into other
comprehensive income
4. Provision for credit impairment of other debt
investment
5. Cash flow hedging reserve
6. Exchange differences from translation of statements
denominated in foreign currencies 11,527,018.37 -4,502,767.45
7. Others
8. Provision for credit impairment of receivables -756,568.88 756,568.88
financing
128
Other comprehensive income attributable to minority
interests, net of tax 540,671.59 -188,057.44
VII. Total comprehensive income 4,224,195,678.47 2,882,919,781.14
Total comprehensive income attributable to owners of
parent company 4,011,982,413.86 2,713,882,599.44
Total comprehensive income attributable to minority
interests 212,213,264.61 169,037,181.70
VIII. Earnings per share:
(I) Basic earnings per share 4.48 3.06
(II) Diluted earnings per share 4.46 3.05
Legal representative: Paul Xiaoming Lee; Financial Controller: Li Jian; Financial Manager: Deng Jinhuan
4. Income statement of parent company
Unit: RMB
Item 2022 2021
I. Operating revenue 150,233,416.05 157,499,622.94
Less: Operating cost 85,513,828.29 103,455,015.75
Taxes and surcharges 5,613,303.27 2,141,286.64
Selling expenses 666,580.27 819,867.31
Administrative expenses 17,079,899.57 18,055,936.74
R&D expenses 7,274,587.70 7,542,189.37
Financial expenses -203,997,298.76 -195,072,440.78
Including: Interest expense 35,182,103.58 47,201,667.42
Interest income 239,246,217.64 242,290,969.91
Add: Other income 2,595,991.42 2,643,407.78
Investment income (loss is indicated with “-”) 60,270,487.08
Including: Income from investment in associates and joint
ventures
Derecognized financial assets measured by amortized cost (loss is
indicated with “-”)
Net exposure hedging income (loss is indicated with “-”)
129
Income from changes in fair value (loss is indicated with “-”)
Credit impairment losses (loss is indicated with “-”) -50,423.38 7,031,935.64
Asset impairment losses (loss is indicated with “-”)
-141,430.14
Income from disposal of assets (loss is indicated with “-”)
26,910.57 6,430.44
II. Operating profit (loss is indicated with “-”) 240,513,564.18 290,510,028.85
Add: Non-operating revenue 454,747.63 22,407.40
Less: Non-operating expenses 10,000.00 130,596.96
III. Total profit (total loss is indicated with “-”) 240,958,311.81 290,401,839.29
Less: Income tax expense 58,439,098.55 35,979,262.54
IV. Net profit (net loss is indicated with “-”) 182,519,213.26 254,422,576.75
(I) Net profit from continuing operations (net loss is indicated
with “-”) 182,519,213.26 254,422,576.75
(II) Net profit from discontinuing operations (net loss is indicated
with “-”)
V. Other comprehensive income, net of tax 750,000.00
(I) Other comprehensive income that cannot be reclassified to
profit or loss 750,000.00
1. Changes arising from re-measurement of the defined benefit
plan
2. Other comprehensive income that cannot be reclassified into
profit or loss under the equity method
3. Changes in fair value of other equity instrument investments 750,000.00
4. Changes in fair value of the enterprise’s credit risk
5. Others
(II) Other comprehensive income that will be reclassified
subsequently to profit or loss
1. Other comprehensive income that can be reclassified into profit
or loss under the equity method
2. Changes in fair value of other debt investments
130
3. Amount of the financial asset reclassified into other
comprehensive income
4. Provision for credit impairment of other debt investment
5. Cash flow hedging reserve
6. Exchange differences from translation of statements
denominated in foreign currencies
7. Others
VI. Total comprehensive income
183,269,213.26 254,422,576.75
VII. Earnings per share:
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated cash flow statement
Unit: RMB
Item 2022 2021
I. Cash flows from operating activities:
Cash received from the sale of goods or rendering of services 8,308,323,229.28 6,192,723,975.82
Net increase in deposits from customers and placements from
corporations in the same industry
Net increase in borrowings from the central bank
Net increase in placements from other financial institutions
Cash received for receiving premium of original insurance
contract
Net cash received from reinsurance business
Net increase in deposits of the insured and investment
Cash received from interests, fees and commissions
Net increase in placements from banks and other financial
institutions
Net increase in repurchasing
Net cash received from acting sale of securities
Receipts of tax refunds 280,936,013.05 357,117,868.83
Other cash receipts related to operating activities 302,014,480.06 296,201,968.18
131
Subtotal of cash inflows from operating activities 8,891,273,722.39 6,846,043,812.83
Cash payments for goods purchased and services received 6,268,851,123.90 3,844,341,884.47
Net increase in loans and advances
Net increase in deposits in the Central Bank and other financial
institutions
Cash paid for claim settlements on original insurance contract
Net increase in placements to banks and other financial
institutions
Cash paid for interests, fees and commissions
Cash paid for policy dividends
Cash paid to and on behalf of employees 883,089,073.20 653,147,819.25
Payments of all types of taxes 900,675,889.00 705,344,941.58
Other cash payments relating to operating activities 335,070,037.63 224,563,789.71
Subtotal of cash outflows due to operating activities 8,387,686,123.73 5,427,398,435.01
Net cash flows from operating activities 503,587,598.66 1,418,645,377.82
II. Cash flows from investment activities:
Cash received from disposal of investments 55,000,000.00 1,770,600,000.00
Cash received from procuring investment income 12,217,774.71 39,541,818.23
Net amount of cash received from disposal of fixed assets,
intangible assets and other long-term assets 5,081,977.73 4,743,027.47
Net cash received from disposals of subsidiaries and other
business units
Other cash received relating to investment activities
Subtotal of cash inflows from investment activities 72,299,752.44 1,814,884,845.70
Cash paid for acquisition of fixed assets, intangible assets and
other long-term assets 5,257,761,880.77 3,995,963,251.24
Cash paid for acquisition of investments 350,000,000.00 1,059,810,518.38
Net increase in pledge loans
Net cash payments for acquisitions of subsidiaries and other
business units
Other cash paid relating to investment activities 150,164,555.53 474,586,405.90
132
Subtotal of cash outflows due to investment activities 5,757,926,436.30 5,530,360,175.52
Net cash flows from investment activities -5,685,626,683.86 -3,715,475,329.82
III. Cash flows from financing activities:
Cash received from absorbing investment 372,446,946.93 41,323,782.65
Including: Cash received from subsidiaries’ absorbing minority
shareholder investment 270,693,600.27 41,323,782.65
Cash received from borrowings 14,006,864,781.67 6,075,195,864.97
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities 14,379,311,728.60 6,116,519,647.62
Cash paid for debt repayment 6,748,216,372.27 3,759,907,508.21
Cash paid for distributing dividends and profits or paying
interests 595,877,608.26 387,731,899.73
Including: Dividends and profits paid to minority shareholders
by subsidiaries
Cash payments relating to other financing activities 256,109,825.98 355,820,208.65
Subtotal of cash outflows from financing activities 7,600,203,806.51 4,503,459,616.59
Net cash flows from financing activities 6,779,107,922.09 1,613,060,031.03
IV. Effect of changes in exchange rate on cash and cash
equivalents 5,687,720.52 -1,846,294.98
V. Net increase in cash and cash equivalents 1,602,756,557.41 -685,616,215.95
Add: Opening balance of cash and cash equivalents 1,369,299,568.60 2,054,915,784.55
VI. Closing balance of cash and cash equivalents 2,972,056,126.01 1,369,299,568.60
6. Cash flow statement of parent company
Unit: RMB
Item 2022 2021
I. Cash flows from operating activities:
Cash received from the sale of goods or
rendering of services 145,968,617.09 148,332,356.97
Receipts of tax refunds 8,852,166.05 2,400,340.22
Other cash receipts related to operating activities 12,817,429.72 38,811,850.08
133
Subtotal of cash inflows from operating activities 167,638,212.86 189,544,547.27
Cash payments for goods purchased and services
received 20,871,988.83 57,469,797.54
Cash paid to and on behalf of employees 24,270,586.06 23,671,850.65
Payments of all types of taxes 44,796,093.76 24,606,426.06
Other cash payments relating to operating
activities 21,244,359.26 64,565,222.66
Subtotal of cash outflows due to operating
activities 111,183,027.91 170,313,296.91
Net cash flows from operating activities 56,455,184.95 19,231,250.36
II. Cash flows from investment activities:
Cash received from disposal of investments 30,000,000.00 1,203,711,110.00
Cash received from procuring investment income 164,200.00 70,285,903.74
Net amount of cash received from disposal of
fixed assets, intangible assets and other long-term 2,717,733.88
assets
Net cash received from disposals of subsidiaries
and other business units
Other cash received relating to investment
activities 589,627,793.34 1,318,235,358.19
Subtotal of cash inflows from
activities 619,791,993.34 2,594,950,105.81
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets 2,527,820.95 35,192,771.85
Cash paid for acquisition of investments
110,000,000.00
Net cash payments for acquisitions of
subsidiaries and other business units
Other cash paid relating to investment activities 530,126,014.26 3,410,258,479.43
Subtotal of cash outflows due to investment
activities 532,653,835.21 3,555,451,251.28
Net cash flows from investment activities 87,138,158.13 -960,501,145.47
III. Cash flows from financing activities:
Cash received from absorbing investment 101,753,346.66
Cash received from borrowings
218,200,000.00 108,000,000.00
Other cash received relating to financing
activities 200,800,000.00 918,990,595.87
Subtotal of cash inflows from financing activities
520,753,346.66 1,026,990,595.87
134
Cash paid for debt repayment
219,010,000.00 130,000,000.00
Cash paid for distributing dividends and profits
or paying interests 278,706,732.17 166,972,238.46
Cash payments relating to other financing
activities 131,740,024.60 891,825,843.08
Subtotal of cash outflows from financing
activities 629,456,756.77 1,188,798,081.54
Net cash flows from financing activities -108,703,410.11 -161,807,485.67
IV. Effect of changes in exchange rate on cash and
cash equivalents
V. Net increase in cash and cash equivalents 34,889,932.97 -1,103,077,380.78
Add: Opening balance of cash and cash
equivalents 226,841,047.92 1,329,918,428.70
VI. Closing balance of cash and cash equivalents
261,730,980.89 226,841,047.92
135
2021 Annual Report of Yunnan Energy New Material Co., Ltd.
7. Consolidated statement of changes in owners’ equity
Amount of current period
Unit: RMB
2022
Owner’s equity attributable to parent company Minority Total owners’
Item Other equity instruments Capital Less: Other Spec Surplus Gene Undistribute Oth Subtotal interests equity
Share Prefe Perp Other reserve treasury comprehen ial reserve ral d profits er
capital rred etual stock sive reser risk
stock bond income ve provi
s sion
I. I. Closing balance of
the previous year 892,406,8 50,352,32 7,635,639,929.5 204,444,302.7 -3,746,198.57 5,288,265,431.0 13,831,866,927. 705,424,784.7 14,537,291,712.
173,392,922.26
22.00 3.80 2 8 8 31 8 09
II. Opening balance of
the current year 892,406,8 50,352,32 7,635,639,929.5 204,444,302.7 -3,746,198.57 5,288,265,431.0 13,831,866,927. 705,424,784.7 14,537,291,712.
173,392,922.26
22.00 3.80 2 8 8 31 8 09
III. Increase/decrease for
the period (decrease is -
- 3,712,210,320.8 3,894,335,945.0 422,795,657.9 4,317,131,603.0
indicated with “-”) 4,868.00 49,692,669.28 102,690,956.1 11,520,449.49 18,251,921.33
35,239.96 0 6 9 5
2
(I) Total comprehensive
income 4,000,461,964.3 4,011,982,413.8 212,213,264.6 4,224,195,678.4
11,520,449.49
7 6 1 7
(II) Contribution and
withdrawal of capital by -
- 210,582,393.3
owners 4,868.00 49,692,669.28 102,690,956.1 152,353,253.44 362,935,646.82
35,239.96 8
2
1. Common shares
invested by owner 253,057,480.6
-35,462,199.34 -35,462,199.34 217,595,281.32
6
2. Capital invested by
other equity instrument -
holders 4,868.00 343,945.88 313,573.92 313,573.92
35,239.96
3. Amount of share
payment credited to -
owner’s equity 84,810,922.74 102,690,956.1 187,501,878.86 7,117,549.88 194,619,428.74
2
136
2021 Annual Report of Yunnan Energy New Material Co., Ltd.
4. Other
-
-49,592,637.16
49,592,637.16
(III) Profit distribution
-
18,251,921.33 -269,999,722.24 -269,999,722.24
288,251,643.57
1. Withdrawal of surplus
reserve
18,251,921.33 -18,251,921.33
2. provision for general
risk -
-269,999,722.24 -269,999,722.24
269,999,722.24
IV. Closing balance for
the period 892,411,6 50,317,08 7,685,332,598.8 101,753,346.6 7,774,250.92 9,000,475,751.8 17,726,202,872. 1,128,220,442 18,854,423,315.
191,644,843.59
90.00 3.84 0 6 8 37 .77 14
Amount of previous period
Unit: RMB
2021
Minority Total
Owner’s equity attributable to parent company interests owners’
Item equity
SharOther equity instruments Capital Less: Other Spec Surplus Genera Undistribute Oth Subtotal
e Prefe Perp Other reserve treasury comprehen ial reserve l risk d profits er
capit
rred etual stock sive reser provisi
al stock bond income ve on
s
I. Closing balance of the 886,566 92,433,13 7,229,135,825.8 147,950,664.5 2,746,794,868.1 11,102,880,648. 492,864,637.1 11,595,745,285.
previous year ,151.00 9.11 3 8 5 67 8 85
II. Opening balance of the 886,566 92,433,13 7,229,135,825.8 147,950,664.5 2,746,794,868.1 11,102,880,648. 492,864,637.1 11,595,745,285.
current year ,151.00 9.11 3 8 5 67 8 85
III. Increase/decrease for -
5,840,6 204,444,302.7 2,541,470,562.9 2,728,986,278.6 212,560,147.6 2,941,546,426.2
the period (decrease is 42,080,81 406,504,103.69 -3,746,198.57 25,442,257.68
71.00 8 3 4 0 4
indicated with “-”) 5.31
(I) Total comprehensive 2,717,628,798.0 2,713,882,599.4 169,037,181.7 2,882,919,781.1
-3,746,198.57
income 1 4 0 4
(II) Contribution and -
5,840,6 204,444,302.7
withdrawal of capital by 42,080,81 406,504,103.69 165,819,656.60 45,429,631.79 211,249,288.39
71.00 8
owners 5.31
1. Common shares invested
-13,222,553.45 -13,222,553.45 44,546,336.10 31,323,782.65
by owner
137
2021 Annual Report of Yunnan Energy New Material Co., Ltd.
2. Capital invested by other -
5,840,6
equity instrument holders 42,080,81 402,130,963.38 365,890,819.07 365,890,819.07
71.00
5.31
3. Amount of share
204,444,302.7
payment credited to 17,595,693.76 -186,848,609.02 883,295.69 -185,965,313.33
8
owner’s equity
(III) Profit distribution -
25,442,257.68 -150,715,977.40 -1,906,665.89 -152,622,643.29
176,158,235.08
1. Withdrawal of surplus
25,442,257.68 -25,442,257.68
reserve
2. Provision for general risk -
-150,715,977.40 -1,906,665.89 -152,622,643.29
150,715,977.40
IV. Closing balance for the 892,406 50,352,32 7,635,639,929.5 204,444,302.7 173,392,922.2 5,288,265,431.0 13,831,866,927. 705,424,784.7 14,537,291,712.
-3,746,198.57
period ,822.00 3.80 2 8 6 8 31 8 09
138
2021 Annual Report of Yunnan Energy New Material Co., Ltd.
8. Statement of changes in owners’ equity of parentcompany
Amount of current period
Unit: RMB
2022
Item Share capital Other equity instruments Capital reserve Less: treasury Other Special Surplus reserve Undistributed Othe Total owners’
Preferre Perpetua Other stock comprehensiv reserve profits r equity
d stock l bonds e income
I. Closing balance of the 10,913,889,825.6
892,406,822.00 50,352,323.80 9,749,414,509.20 204,444,302.78 145,640,411.27 280,520,062.19
previous year 8
II. Opening balance of the 10,913,889,825.6
892,406,822.00 50,352,323.80 9,749,414,509.20 204,444,302.78 145,640,411.27 280,520,062.19
current year 8
III. Increase/decrease
for the period (decrease is 4,868.00 -35,239.96 -10,663,190.96 -102,690,956.12 750,000.00 18,251,921.33 -105,732,430.31 5,266,884.22
indicated with “-”)
(I) Total comprehensive
750,000.00 182,519,213.26 183,269,213.26
income
(II) Contribution and
withdrawal of capital by 4,868.00 -35,239.96 -10,663,190.96 -102,690,956.12 91,997,393.20
owners
1. Common shares invested
-102,690,956.12 -102,690,956.12
by owner
2. Capital invested by other
4,868.00 -35,239.96 343,945.88 313,573.92
equity instrument holders
3. Amount of share
payment credited to 91,683,819.28 -102,690,956.12 194,374,775.40
owner’s equity
(III) Profit distribution
18,251,921.33 -288,251,643.57 -269,999,722.24
1. Withdrawal of surplus
18,251,921.33 -18,251,921.33
reserve
2. Distribution to
-269,999,722.24 -269,999,722.24
owners (or shareholders)
IV. Closing balance for 10,919,156,709.9
892,411,690.00 50,317,083.84 9,738,751,318.24 101,753,346.66 750,000.00 163,892,332.60 174,787,631.88
the period 0
139
2021 Annual Report of Yunnan Energy New Material Co., Ltd.
Amount of previous period
Unit: RMB
2021
Item Share Other equity instruments Capital reserve Less: treasury Other Special Surplus reserve Undistributed Other Total owners’
capital Preferred Perpetual Other stock comprehensive reserve profits equity
stock bonds income
I. Closing balance of the 886,566,151.0 92,433,13
9,347,283,545.82 120,198,153.59 202,255,720.52 10,648,736,710.04
previous year 0 9.11
II. Opening balance of 886,566,151.0 92,433,13
9,347,283,545.82 120,198,153.59 202,255,720.52 10,648,736,710.04
the current year 0 9.11
III. Increase/decrease -
for the period (decrease 5,840,671.00 42,080,81 402,130,963.38 204,444,302.78 25,442,257.68 78,264,341.67 265,153,115.64
is indicated with “-”) 5.31
(I) Total comprehensive
254,422,576.75 254,422,576.75
income
(II) Contribution and -
withdrawal of capital by 5,840,671.00 42,080,81 402,130,963.38 204,444,302.78 161,446,516.29
owners 5.31
2. Capital invested by -
other equity instrument 5,840,671.00 42,080,81 402,130,963.38 365,890,819.07
holders 5.31
3. Amount of share
payment credited to 204,444,302.78 -204,444,302.78
owner’s equity
(III) Profit distribution
25,442,257.68 -176,158,235.08 -150,715,977.40
1. Withdrawal of surplus
25,442,257.68 -25,442,257.68
reserve
2. Distribution to owners
-150,715,977.40 -150,715,977.40
(or shareholders)
IV. Closing balance for 892,406,822.0 50,352,32
9,749,414,509.20 204,444,302.78 145,640,411.27 280,520,062.19 10,913,889,825.68
the period 0 3.80
140
III. Corporate Information
(i) Company registration address, organization form and headquarters address
Yunnan Energy New Material Co., Ltd. (hereinafter referred to as the “Company” or “our Company”) was formerly Yunnan Yuxi Innovation
Color Printing Co., Ltd. with the approval of Department of Commerce of Yunnan Province document YSZ [2011] No.50, the shareholders of the
Company signed the sponsor agreement on March 28, 2011, unanimously agreed to change the Company as a whole into a company limited by share,
and obtained the business license of enterprise legal person No.530400400000009 issued by Yunnan Provincial Administration for Industry and
Commerce, which is now changed to the unified social credit code 91530000727317703K, with the registered address and headquarters address of
No.125, Fuxian Road, High-tech Zone, Yuxi City, Yunnan Province. The Company’s legal representative is PAUL XIAOMING LEE.
In accordance with the resolution of the first extraordinary general meeting of shareholders in 2014 held in March 2014 and the revised articles of
association of the Company, and the Approval of Initial Public Offering of Shares of Yunnan Innovative New Materials Co., Ltd. (ZJXK [2016] No.
1886) issued by China Securities Regulatory Commission, the Company issued RMB-denominated ordinary shares (A shares) of 33,480,000 to the
public. It was priced and issued to the public investors on September 6, 2016, with a par value of RMB1.00 per share, a subscription price of
RMB23.41 per share, and a total of RMB783,766,800.00 raised funds. After deducting the issuance related expenses of RMB35,999,800.00, the actual
net amount of raised funds is RMB747,767,000.00 yuan, which is included share capital of RMB33,480,000.00 and capital reserve-share capital
premium of RMB714,287,000.00. All the above contributions have been paid in place and have been verified by Dahua CPAs (SGP) issuing the capital
verification report (DHYZ No. [2016] 000897).
According to the Notice on the Listing of RMB-denominated Ordinary Shares of Yunnan Innovative New Materials Co., Ltd. (SZS No. (2016)
618) issued by Shenzhen Stock Exchange, the shares of the Company were listed on Shenzhen Stock Exchange on September 14, 2016.
According to the fourth meeting of the third board of directors held on June 1, 2017, which deliberated and passed the Resolution on Granting
Restricted Shares to Participants of 2017 Restricted Stock Incentive Plan of the Company, the Company issued 2.57 million RMB-denominated
ordinary shares (issue price: RMB28.65/share) to 84 employees qualified for participants of equity incentive plan, among them: the amount of share
capital is RMB2,570,000.00, and capital reserve-share capital premium is RMB71,060,500.00. All the above capital contributions have been
subscribed in place and have been verified by Dahua CPAs (SGP) issuing the capital verification report (DHYZ No. [2017] 000338).
Whereas the Company has completed capital reserve converted to share capital, according to the resolution of the second extraordinary general
meeting of shareholders in 2018 held on May 10, 2018 and the revised articles of association, the registered capital of the Company has increased
from RMB136,450,000.00 to RMB272,900,000.00.
In accordance with the resolution of the fourteenth meeting of the third board of directors held by the Company on July 20, 2018 and the revised
articles of association, and approved by China Securities Regulatory Commission (hereinafter referred to as “CSRC”) ZJXK No. [2018] 671 and
Ministry of Commerce of the People’s Republic of China (hereinafter referred to as “Ministry of Commerce”) SZCH No. [2018] 225, the Company
issued 201,023,712 A-shares in private to Paul Xiaoming Lee, Li Xiaohua, Wang Yuhua, Kunming Huachen Investment Co., Ltd., Sherry Lee, Future
Industry Investment Fund (Limited Partnership), Shanghai Hengzou Enterprise Management Firm (Limited Partnership), Huang Shuhua, Zhang Tao,
Gao Xiang, He Baohua, Huang Yuchen, Hu Jiadong, Wang Chizhou, Jiang Xinmin, Zhang Fang, Zhang Fan, Zheng Mei, Liu Wei, Du Jun and Cao
Ben, with a par value of RMB1.00 per share and a subscription price of RMB24.87 per share. After the issuance of the shares, the shareholders’ equity
assets of RMB4,999,459,975.00 were actually received, and the registered capital of RMB201,023,712.00 was actually paid, and the mode of
contribution was equity capital contribution. The newly increased share capital is RMB201,023,712.00, the newly increased capital reserve (share
capital premium) is RMB4,798,436,263.00, and the registered capital after the change is RMB473,923,712.00, which has been verified by Dahua
CPAs (SGP) with the capital verification report (DHYZ No. [2018] 000430).
According to the resolution of the fourth extraordinary general meeting of shareholders of 2018 held by the Company on September 3, 2018 and
the revised articles of association of the Company, the Company canceled the repurchase of part of incentive shares, repurchased the shares
subscribed by seven natural persons in the form of monetary capital, totaling RMB799,335.00, including: reducing share capital by RMB55,800.00,
reducing capital reserve-share capital premium by RMB743,535.00. It has been verified by the capital verification report (DHYZ No. [2018] 000514)
issued by Dahua CPAs (SGP).
According to the resolution of the 19th meeting of the third board of directors held by the Company on September 28, 2018 and the revised
articles of association, the Company changed its name from Yunnan Innovative New Material Co., Ltd. to Yunnan Energy New Material Co., Ltd.
Whereas the Company has completed the conversion of capital reserve to share capital, according to the resolution of the sixth extraordinary
general meeting of shareholders in 2019 held on July 29, 2019 and the revised articles of association, the registered capital of the Company has
increased from RMB473,867,912.00 to RMB805,575,450.00.
According to the resolution of the sixth extraordinary general meeting of shareholders of 2019 held by the Company on July 29, 2019, the
resolution of the seventh extraordinary general meeting of shareholders of 2019 held on August 15, 2019 and the amended articles of association, the
Company canceled the repurchase of part of incentive shares, repurchased the shares subscribed by 17 natural persons in monetary funds, with a total
amount of RMB1,151,665.68, including: reduction of share capital by RMB136,680.00, reducing capital reserve-share capital premium by
RMB1,014,985.68. In addition, according to the resolution of the seventh extraordinary general meeting of shareholders in 2019 held on August 15,
2019 and the revised articles of association, the Company canceled the share buyback of the resigned participants, and repurchased the shares
subscribed by one natural person in the form of monetary capital, with a total amount of RMB601,580.59, including a decrease of share capital of
RMB68,000.00 and a decrease of capital reserve-share capital premium of RMB533,580.59. It has been verified by the capital verification report
(DHYZ No. [2019] 000324) issued by Dahua CPAs (SGP).
According to the resolutions of the 43rd meeting of the third board of directors held on March 23, 2020, the resolutions of the 2020 first
extraordinary general meeting of shareholders held on April 9, 2020, and the resolutions of the third meeting of fourth board of directors held on June
12, 2020 and the Approval of the Non-public Issuance of Shares by Yunnan Energy New Material Co., Ltd.” (ZJXK No. [2020] 1476) issued by China
Securities Regulatory Commission, the Company’s non-public issuance shall not exceed 241,611,231 RMB-denominated ordinary shares. The
Company non-publicly issued 69,444,444 RMB-denominated ordinary shares (A shares) to specific investors on August 17, 2020, with a par value of
RMB1.00 per share, and a subscription price of RMB72.00 per share. A total of RMB4,999,999,968.00 was raised. Excluding the cost of
RMB17,495,413.51 related to the issuance, the Company’s actual net funds raised were RMB4,982,504,554.49, of which RMB69,444,444.00 was
included in the share capital and RMB4,913,060,110.49 was included in the capital reserve-share capital premium. All the above capital contributions
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have been subscribed in place and have been verified by Dahua CPAs (SGP) issuing the capital verification report (DHYZ No. [2020] 000460).
Approved by the Reply on Approval of Yunnan Energy New Material Co., Ltd. to Issue Convertible Corporate Bonds Publicly (ZJXK No. [2019]
2701) issued by China Securities Regulatory Commission, the Company publicly issued 16 million convertible corporate bonds on February 11, 2020.
The conversion period of convertible corporate bonds shall start from the first trading day six months after the end of the issuance to the maturity date
of the convertible corporate bonds, that is, from August 17, 2020 to February 11, 2026. As of December 31, 2022, a total of 17,619,596 shares of
convertible corporate bonds were converted cumulatively into shares.
According to the resolution of the fourth extraordinary general meeting of shareholders of 2020 held by the Company on July 30, 2020 and the
revised articles of association of the Company, the Company canceled the repurchase of part of incentive shares, repurchased the shares subscribed by
four natural persons in the form of monetary capital, totaling RMB194,809.12, including: reducing share capital by RMB23,120.00, reducing capital
reserve-share capital premium by RMB171,689.12. It has been verified by the capital verification report (DHYZ No. [2020] 000561) issued by Dahua
CPAs (SGP).
According to the provisions of the Resolution on the Company's 2022 Stock Option and Restricted Stock Incentive Plan (Draft) and Its Abstract,
the Resolution on the Formulation of the Company's 2022 Stock Option and Restricted Stock Incentive Plan Implementation Assessment
Management Measures, and the Resolution on Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Handle Matters
Related to Equity Incentive, which were reviewed and approved at the 2nd Extraordinary General Meeting of 2022 held by Energy Technology on
February 14, 2022, the Company granted a total of 1,585,437.00 restricted shares to 826 natural persons including Yu Xue at a grant price of RMB
64.18 per share. The capital contribution of RMB 101,753,346.66 has been paid in full amount, which has been verified by Da Hua Certified Public
Accountants (Special General Partnership) through the capital verification report (DHYZ No. [2022] 00L00001). The source of the restricted stock
incentive plan in the current period is the common stocks repurchased by Energy Technology from the secondary market. After the implementation of
this restricted stock incentive plan, the total share capital of Energy Technology remains unchanged.
After years of distribution of bonus shares, allotment of new shares, conversion of share capital and issuance of new shares, as of December 31,
2022, the Company has issued a total number of 892,411,690.00 shares, with a registered capital of RMB892,411,690.00.
(ii) Business nature and main business activities of the Company
The scope of business of the Company mainly includes: Packaging and decoration and other printing products printing; commodity trademark
printing (including tobacco and drug trademarks), trademark design; packaging box production, processing and sales; color printing; paper products
(excluding paper making), plastic products and other supporting products production, processing and sales; production, processing and sales of
printing raw materials and auxiliary materials; production, processing, sale of laminated film and modified plastics; production, processing and sale of
laser transfer paper, gold and silver card paper, liquid packaging paper, electrified aluminum, high-grade packaging paper; production, processing and
marketing of anti-counterfeiting labels, anti-counterfeiting materials; packaging machinery, packaging machinery spare parts design, manufacture,
processing and marketing; production, processing and sale of new energy materials and corresponding new technologies and new products
development; import and export of goods (except those with national restrictions and prohibition). (the above projects do not involve special
management measures for foreign investment access) (approvals from competent authorities shall be obtained for the operation of the activities
requiring approval in accordance with the laws)
The Company is a rubber and plastic products industry, and the main products can be divided into three categories: (1) film products, mainly
including lithium-ion separator, BOPP film and specialty paper. Lithium-ion separator products include base film and coating film, and BOPP film
products include smoke film and flat film; (2) packaging and printing products, mainly including cigarette label and aseptic packaging; (3) paper
products packaging mainly includes specialty paper products, holographic anti-counterfeiting electrified aluminum, transfer film and other products.
Specialty paper products include laser transfer anti-counterfeiting paper, direct plating paper and coated paper.
(iii) Authorization of financial statements for issue
These financial statements were authorized for issue by the Company’s Board of Directors on March 2, 2023.
(iv) Scope of the Consolidated Financial Statements
There are 36 subsidiaries included in the consolidated financial statements in this period, including:
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Name of subsidiaries Type of subsidiary Tier Shareholding Voting ratio
ratio (%) (%)
Yunnan Dexin Paper Co., Ltd. Wholly-owned subsidiary Tier 2 100.00 100.00
Yunnan Hongchuang Packaging Co., Ltd. Holding subsidiary Tier 2 60.8997 60.8997
Hongchuang Packaging (Jiangsu) Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Yunnan Hongta Plastic Co., Ltd. Wholly-owned subsidiary Tier 2 100.00 100.00
Hongta Plastic (Chengdu) Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Yuxi Feiermu Trading Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Shanghai Energy New Materials Research Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Shanghai Energy New Material Technology Co., Ltd. Holding subsidiary Tier 2 95.22 95.22
Zhuhai Energy New Material Technology Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Guangdong Energy New Material Institute Co., Ltd. Wholly-owned subsidiary Tier 4 100.00 100.00
Wuxi Energy New Material Technology Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Jiangxi Tonry New Energy Technology Development Wholly-owned subsidiary Tier 3 100.00 100.00
Co., Ltd.
Jiangsu Ruijie New Material Technology Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Jiangxi Ruijie New Material Technology Co., Ltd. Holding subsidiary Tier 4 82.00 82.00
Suzhou GreenPower New Energy Material Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Chongqing Energy Newmi Technological Co., Ltd. Holding subsidiary Tier 3 76.3574 76.3574
Jiangxi Enpo New Materials Co., Ltd. Holding subsidiary Tier 3 51.00 51.00
Jiangxi Energy New Material Technology Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Jiangsu Energy New Material Technology Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Hunan Energy Advanced New Material Technology Holding subsidiary Tier 3 65.00 65.00
Co., Ltd.
Hubei Energy New Material Technology Co., Ltd. Holding subsidiary Tier 3 55.00 55.00
Energy (Zhuhai Hengqin) New Material Technology Wholly-owned subsidiary Tier 3 100.00 100.00
Co., Ltd.
Chongqing Energy New Material Technology Co., Wholly-owned subsidiary Tier 3 100.00 100.00
Ltd.
Ningbo Energy New Material Co., Ltd. Wholly-owned subsidiary Tier 2 100.00 100.00
Xiamen Energy New Material Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Yuxi Energy New Material Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Shanghai Energy Trading Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Jiangsu Energy Trading Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Jiangsu Sanhe Battery Material Technology Co., Ltd. Holding subsidiary Tier 3 51.00 51.00
Hainan Energy Investment Co., Ltd. Wholly-owned subsidiary Tier 3 100.00 100.00
Chuangxin New Material (Hong Kong) Co., Ltd. Wholly-owned subsidiary Tier 4 100.00 100.00
SEMCORP Global Holdings Kft. Wholly-owned subsidiary Tier 5 100.00 100.00
SEMCORP Hungary Kft. Wholly-owned subsidiary Tier 6 100.00 100.00
SEMCORP Properties Kft. Wholly-owned subsidiary Tier 6 100.00 100.00
SEMCORP America Inc. Wholly-owned subsidiary Tier 6 100.00 100.00
SEMCORP Manufacturing USA LLC Wholly-owned subsidiary Tier 7 100.00 100.00
For the reason why the proportion of shareholding of the subsidiary is different from the proportion of the voting rights, and holding half or
below the voting right but still controlling the invested unit, please refer to “IX 1. Interests in Subsidiaries”.
Compared with the last period, ten new entities were included in and one entity were removed from the consolidated financial statements this
period. Please refer to “VIII. Change of consolidation scope” for details of the subject in the scope of consolidated financial statements.
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IV. Basis for Preparation of Financial Statements
1. Basis for preparation
The preparation of financial statements of the Company is based on the actual transactions and events in accordance with the Accounting
Standards for Business Enterprises - Basic Standards published by the Ministry of Finance and specific corporate accounting standards, application
guidelines for corporate accounting standards, corporate accounting standards interpretations and other relevant regulations (hereinafter collectively
referred to as “corporate accounting standards”) for confirmation and measurement, combining the provisions of “Regulations on the Information
Disclosure and Compilation of Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports” (revised in 2014)
published by CSRC.
2. Going concern basis
The Company has evaluated the ability to continue as a going concern for 12 months from the end of the Reporting Period and has not identified
any issues or circumstances that result in significant doubts about its ability to continue as a going concern. Therefore, the financial statements have
been prepared on a going concern basis.
3. Accounting base and valuation principle
The Company takes the accrual basis as its accounting base. The financial statements use historical cost as the basis of measurement, except for
certain financial instruments that are measured at fair value. If the assets are impaired, the corresponding provision for impairment shall be made
according to relevant regulations.
V. Significant Accounting Policies and Accounting Estimates
Reminders on specific accounting policies and accounting estimates:
1. Statement of compliance with the accounting standards for business enterprises
The financial statements are in compliance with the requirements of accounting standards for business enterprises, and truly and completely
reflect the financial status, operating results, cash flow and other relevant information of the Company during the Reporting Period.
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2. Accounting period
The Company’s accounting year starts on 1 January and ends on 31 December.
3. Operating cycle
Operating cycle refers to the period from the purchase of assets for processing to the realization of cash or cash equivalents. The Company takes
12 months as an operating cycle and uses it as the standard for dividing the liquidity of assets and liabilities.
4. Functional currency
The Company’s functional currency is Renminbi (RMB).
Overseas subsidiaries take the currency in the main economic environment in which they operate as the recording currency and are converted
into RMB during the preparation of financial statements.
5. Accounting treatments for merger of enterprises under common control and not under common control
(1) When the terms, conditions and economic influence of transactions in the process of a step-by-step combination conform to one or
more of the following, accounting for multiple transactions is treated as a package transaction.
1) These transactions are made simultaneously or with consideration of influence on each other;
2) These transactions can only achieve a complete business outcome when treated as a whole;
3) The occurrence of a transaction depends on the occurrence of at least one of the other transactions;
4) Atransaction is uneconomical when treated alone, but is economical when considered together with other transactions.
(2) Business combination under common control
The assets and liabilities acquired by the Company in business combinations are measured in accordance with the book value of assets and
liabilities of the combined party in the ultimate controller’s consolidated financial statements on the date of combination (including the goodwill of
the ultimate controlling party resulting from the acquisition of the combined party). The difference between the book value of net assets acquired in
the combination and the book value of the consideration paid for the combination (or the total par value of shares issued) is used to adjust the capital
stock premium in the capital reserve, and when the capital stock premium in the capital reserve is insufficient for offset, it is used to adjust the
retained earnings.
If there is a contingent consideration and it is necessary to confirm the estimated liabilities or assets, the difference between the estimated amount
of liabilities or assets and the settlement amount of subsequent contingent consideration is used to adjust the capital reserve (capital premium or
premium on capital stock), and when the capital reserve is insufficient, it is used to adjust the retained earnings.
For a business combination that is ultimately realized through multiple transactions, if it is a package transaction, each transaction is treated as a
transaction that acquires control; if it is not a package transaction, on the date of acquisition of control, the difference between the initial cost of long-
term equity investment and the book value of long-term equity investment before the combination plus the book value of the new paid consideration
on the date of combination is used to adjust the capital reserve; and when the capital reserve is insufficient for offset, it is used to adjust the retained
earnings. For equity investments held prior to the date of combination, no accounting treatment is carried out for other comprehensive income
recognized by equity accounting or financial instrument confirmation and measurement standards, and up to the disposal of the investment, the
accounting treatment shall be based on the same basis as the direct disposal of the assets or liabilities of the invested entity; other changes in owner’s
equity other than net profit or loss, other comprehensive income or profit distribution of net assets of the invested company recognized by equity
method are not subject to accounting, and will be transferred to the current profit and loss until the disposal of the investment.
(3) Business combination not under the common control
Purchase date refers to the date when the Company actually obtains the control right over the acquire, that is, the date when the control right over
the net assets or production and operation decision is transferred to the Company. When the following conditions are met at the same time, the
Company generally considers that the transfer of control right has been realized:
① The business combination contract or agreement has been approved by the internal authority of the Company.
② The business combination matters that need to be considered and approved by the relevant competent departments of the state have been approved.
③ Necessary procedures for transfer of property rights have been completed.
④ The Company has paid most of the merger price, and has the ability and plan to pay the remaining amount.
⑤ In fact, the Company has controlled the financial and operational policies of the acquiree, enjoyed corresponding benefits and assumed
corresponding risks.
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The assets paid and liabilities incurred or assumed of the Company as a consideration for the business combination are measured at fair value on
the date of purchase, and the difference between the fair value and the book value is recognized in profit or loss.
The difference between the higher combination cost and lower fair value of identifiable net assets of the acquiree gained in the combination is
recognized as goodwill by the Company. In case that the cost of combination is less than the fair value of the identifiable net assets of the acquiree
gained in the combination, the difference is included in the current profit and loss by the Company after review.
For the case where a business combination involving enterprises not under common control is finally realized through multiple transactions step
by step, if it is a package transaction, each transaction is treated as a transaction for acquiring control; if it is not a package transaction, if the equity
investment held before the date of combination is accounted for by equity method, the book value of equity investment of the acquiree held before the
date of acquisition plus the new investment cost on the date of acquisition is recognized as the initial cost of the investment; the other comprehensive
income confirmed by equity method before the date of acquisition is accounted for, when the investment is disposed, on the same basis as those the
invested party adopted directly to dispose the relevant assets or liabilities. If the equity investment held before the date of combination is accounted
for by financial instrument recognition and measurement criteria, the fair value of equity investment on the date of combination plus the new
investment cost is taken as the initial investment cost on the date of combination. The difference between the fair value and the book value of the
original equity interest, and the accumulated fair value changes originally included in other comprehensive income should be transferred to
investment income in the current period of combination date.
(4) Related expenses incurred for business combination
The agency fees paid for audits, legal services, assessments and other related expenses incurred in the business combination are recognized in
profit or loss in the period in which they are incurred. The transaction costs for the issuance of equity securities for the business combination that may
be directly attributed to equity transactions can be deducted from equity.
6. Methods for preparation of the consolidated financial statements
(1) The scope of consolidation
The scope of consolidation of the Company’s consolidated financial statements is determined on the basis of control, and all subsidiaries
(including separate entities controlled by the Company as the parent) are included in the consolidated financial statements.
(2) Procedures for consolidation
The Company prepares consolidated financial statements based on the financial statements of itself and its subsidiaries and other relevant
information. While preparing consolidated financial statements, the Company treats the entire enterprise group as an accounting entity, and in
accordance with the requirements for confirmation, measurement and presentation of relevant enterprise accounting standards, and based on unified
accounting policies, reflects the overall financial status, operating results and cash flow of the enterprise group.
The accounting policies and accounting periods adopted by all subsidiaries included in the consolidated financial statements are consistent with
the Company. If the accounting policies or accounting periods adopted by the subsidiaries are inconsistent with the Company, necessary adjustments
will be made in accordance with the Company’s accounting policies and accounting periods when preparing consolidated financial statements.
The impact of internal transactions between the Company and its subsidiaries, and internal transactions between subsidiaries, on the consolidated
balance sheet, consolidated income statement, consolidated cash flow statement and consolidated statement of changes in shareholders’ equity is
offset in the preparation of consolidated financial statements. If the determination of the same transaction is different from the perspective of the
consolidated financial statements of the enterprise group and with the Company or subsidiaries as the accounting entity, the transaction shall be
adjusted from the perspective of the enterprise group.
Subsidiary owners’ equity, current net profit and loss, and current comprehensive income of the minority shareholders are separately presented
under the owner’s equity item in the consolidated balance sheet, the net profit item in the consolidated income statement, and the total comprehensive
income item. If the current losses shared by the minority shareholders of a subsidiary exceed the share enjoyed by the minority shareholder in the
initial owner’s equity of the subsidiary, the excess is deducted from the minority interests.
For subsidiaries acquired from a business combination involving enterprises under common control, the individual financial statements of the
subsidiaries shall be adjusted based on the book value of their assets and liabilities (including the goodwill arising from the ultimate controller’s
acquisition of the subsidiary) in the ultimate controller’s financial statements.
For subsidiaries acquired from a business combination involving enterprises not under common control, the financial statements of the
subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
1) Increase in subsidiary or business
During the Reporting Period, if a subsidiary or business is added due to a business combination under common control, the opening amount of
the consolidated balance sheet shall be adjusted; the income, expenses and profits of the subsidiary or business combination from the beginning of the
current period to the end of the Reporting Period shall be included in the consolidated income statement; the cash flow from the beginning of the
current period to the end of the Reporting Period of the subsidiary or business combination is included in the consolidated cash flow statement, and
the relevant items in the comparative statement are adjusted at the same time, as if the consolidated reporting entity has been in existence since the
ultimate controller begins the control.
If the investee under the common control can be controlled due to additional investment or other reasons, the parties involved in the merger shall
be deemed to have made adjustments in their current state when the ultimate controlling party begins the control. For the equity investment held by
the merging entity prior to obtaining control over the merged entity, the relevant profit and loss, other comprehensive income and other changes to net
assets recognized in the period from the date of acquiring the original equity or the date when the merging entity and merged entity are under common
control, whichever is later, to the date of merger, shall be covered by writing down the opening retained earnings or current profit and loss of the
comparison period.
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During the Reporting Period, if a subsidiary or business is added due to a business combination involving enterprises under non-common control,
the opening balance of the consolidated balance sheet is not adjusted; the income, expenses and profits of the subsidiary and business from the date of
acquisition to the end of the Reporting Period are included in the consolidated income statement; the cash flows of the subsidiary and business from
the date of acquisition to the end of the Reporting Period are included in the consolidated cash flow statement.
If the investee under the common control can be controlled due to additional investment or other reasons, the equity interest held in the acquiree
prior to the date of acquisition is re-measured according to its fair value at the date of acquisition. The difference between the fair value and the book
value is recognized as investment income for the current period. If the equity held in the acquiree held before the acquisition date involves other
comprehensive income under the equity method and other changes in owner’s equity other than net profit and loss, other comprehensive income and
profit distribution, related other comprehensive income, and other changes in owner’s equity are converted into the investment income of the current
period on the acquisition date, except for other comprehensive gains arising from the re-measurement of net liabilities of the defined benefit plan
made by the invested party or changes in net assets.
2) Disposal of subsidiary or business
① General treatment method
During the Reporting Period, if the Company disposes of a subsidiary or business, the income, expenses and profits of the subsidiary or business
from the beginning of the period to the disposal date are included in the consolidated income statement; the cash flows of the subsidiary or business
from the beginning of the Reporting Period to the disposal date are included in the consolidated cash flow statement.
When the Company loses control over the invested party due to disposal of part of the equity investment or other reasons, the remaining equity
investment after disposal will be re-measured according to its fair value by the Company on the date of loss of control. The difference of the sum of
the consideration obtained from the disposal of the equity and the fair value of the remaining equity, less the sum of the share of net assets and
goodwill of the original subsidiary that should be enjoyed in accordance with the original share-holding ratio since the date of acquisition or
combination, is accounted for the investment income in the current period of loss of control. Other comprehensive income related to the equity
investment of the original subsidiary or other changes in owner’s equity other than net profit and loss, other comprehensive income and profit
distribution, will be converted into current investment income when control is lost, except for other comprehensive gains arising from the re-
measurement of net liabilities of the defined benefit plan made by the invested party or changes in net assets.
② Disposal of subsidiaries in steps
If the equity investment in a subsidiary is disposed of in steps through multiple transactions until the loss of control, the terms, conditions, and
economic impact of the disposal of the equity investment in the subsidiary meet one or more of the following conditions, it usually indicates that
multiple transactions shall be accounted as a package deal:
A. These transactions are made simultaneously or with consideration of influence on each other;
B. These transactions can only achieve a complete business outcome when treated as a whole;
C. The occurrence of a transaction depends on the occurrence of at least one of the other transactions;
D. A transaction is uneconomical when treated alone, but is economical when considered together with other transactions.
If all transactions from disposal of equity investment in subsidiaries to loss of control belong to a package deal, each transaction shall be treated
as a transaction for disposal of equity investment in subsidiaries and loss of control. The difference between each disposal price and the share of the
subsidiary’s net assets corresponding to the disposal investment before the loss of the control is recognized as other comprehensive income in the
consolidated financial statements, which is transferred into the current profit and loss when the control is lost.
If the disposal of the equity investment in the subsidiary until the loss of control is not a package deal, before the loss of control, the accounting
treatment shall be carried out in accordance with the relevant policies for partial disposal of the equity investment of the subsidiary without loss of
control; when the control is lost, the accounting treatment shall be carried out in accordance with the general treatment method for the disposal of the
subsidiary.
3) Acquisition of minority’ equity in subsidiary
The difference between the additional long-term equity investment arising from the acquisition of minority equity and the net assets of the
subsidiary, which is calculated according to the new holding proportion since the date of acquisition (or the date of merger) shall be covered by
adjusting the equity premium in capital reserve of the consolidated balance sheet; if the equity premium in capital reserve is not sufficient for write-off,
retained earnings shall be adjusted.
4) Partial disposal of the equity investment of the subsidiary without loss of control
If the parent company disposes of part of its long-term equity investment in the subsidiary without losing its control, the difference between the
disposal price and the net assets of the subsidiary corresponding to the equity investment disposed of since the date of acquisition or the date of
merger shall be covered by adjusting the equity premium in capital reserve of the consolidated balance sheet; if the equity premium in capital reserve
is not sufficient for write-off, retained earnings shall be adjusted.
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7. Classification of joint venture arrangements and accounting treatment method for joint operations
(1) Classification of joint arrangements
The Company divides joint venture arrangements into joint operations and joint ventures based on factors such as the structure, legal form, and
terms in the joint venture arrangement and other relevant facts and circumstances.
Joint venture arrangements that are not reached through separate entities are classified as joint operations; joint arrangements reached through
separate entities are usually classified as joint ventures; there is conclusive evidence that joint arrangements that meet any of the following conditions
and comply with relevant laws and regulations are classified as joint operations:
1) The legal form of the joint arrangement indicates that the joint venture party has the rights and obligations of the related assets and
liabilities in the arrangement.
2) According to contractual terms of the joint arrangement, the joint venture party has the rights and obligations of the related assets and
liabilities in the arrangement
3) Other relevant facts and circumstances indicate that the joint venture party has the rights and obligations of the related assets and liabilities
in the arrangement. For example, the joint venture party enjoys almost all the output related to the joint venture arrangement, and the
settlement of the liabilities in the arrangement continues to rely on the support from the joint venture party.
(2) Accounting treatment for joint operations
The Company recognizes the following items related to the share of interests in joint operations and makes accounting treatment according to the
relevant ASBE:
1) Recognizes the assets held separately, and the assets held jointly according to its proportion;
2) Recognizes the liabilities assumed separately, and the liabilities assumed jointly according to itsproportion;
3) Recognizes the income from the sales of its share in the outputs of joint operation;
4) Recognizes the income from the sales of the outputs of joint operation according to is proportion;
5) Recognizes the expenses incurred separately, and recognize the expenses incurred jointly according to its proportion.
If the Company invests or sells assets, etc. to a joint operation (except that if the asset constitutes a business), before the asset, etc., is sold by the
joint operation to a third party, only the profit and loss arising from the transaction attributable to other participants in the joint operation is recognized.
In the event of asset impairment losses complying with the Accounting Standards for Business Enterprises No. 8 - Asset Impairment and other
provisions of assets invested or sold, the Company shall recognize the loss in full.
If the Company purchases assets, etc. from a joint operation (except that if the asset constitutes a business), before the asset, etc., is sold to a third
party, only the profit and loss arising from the transaction attributable to other participants in the joint operation is recognized. In the event of asset
impairment losses complying with the Accounting Standards for Business Enterprises No. 8 - Asset Impairment and other provisions of assets
purchased, the Company shall recognize the loss based on the share it holds.
The Company does not have joint control over the joint operation. If the Company enjoys the joint operation-related assets and assumes the joint
operation-related liabilities, the accounting treatment shall still be carried out in accordance with the above principles; otherwise, the accounting
treatment shall be carried out in accordance with the relevant corporate accounting standards.
8. Determination standards for cash and cash equivalents
In the preparation of the cash flow statement, the Company’s cash on hand and deposits that can be readily used for payment are recognized as
cash. The investment that has the four conditions of short maturity (generally due within three months from the date of purchase), strong liquidity,
easy conversion into cash of a known amount, and low risk of value changes will be determined as cash equivalents.
9. Foreign currency business and foreign currency statement translation
(1) Foreign currency business
In the initial confirmation of foreign currency transactions, the spot exchange rate on the date of occurrence of the transaction shall be used as the
conversion rate to convert into RMB for accounting.
At the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date, and the resulting
exchange differences are included in the current profit and loss, except for the exchange differences arising from foreign currency special borrowings
related to the acquisition and construction of assets eligible for capitalization, which are treated in accordance with the principle of capitalization of
borrowing costs. The foreign currency non-monetary items measured at historical cost are still translated at the spot exchange rate on the date of
transaction without changing the amount of recording currency.
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Foreign currency non-monetary items measured at fair value shall be translated at the spot exchange rate on the date of determination of fair
value. The difference between the translated amount of recording currency and the original amount of recording currency shall be treated as fair value
changes (including changes in exchange rate), and included in the current profit and loss or recognized as other comprehensive income.
(2) Translation of foreign currency financial statements
The assets and liabilities items in the balance sheet shall be treated at the spot exchange rate on the balance sheet date. Except for the
“undistributed profit” items, other owner’s equity items shall be translated at the spot exchange rate at the time of occurrence. The income and
expense items in the income statement shall be translated at the spot exchange rate on the date of transaction. The exchange differences on translation
of foreign currency financial statements generated in accordance with the above translation shall be included in other comprehensive income.
When disposing of an overseas operation, the difference in translation of the foreign currency financial statements related to the overseas
operation listed in other comprehensive income items in the balance sheet shall be transferred from other comprehensive income items to the profits
and losses of the current period for disposal. When the proportion of overseas business interests held is reduced due to the disposal of part of equity
investment or other reasons but the right of control over overseas business is not lost, the difference of translation of foreign currency statements
related to the disposal part of overseas business will be attributed to minority shareholders’ rights and interests and will not be transferred to current
profit and loss. When disposing of part of the equity of an overseas operation that is an associate or a joint venture, the difference on translation of the
foreign currency statement related to the overseas operation shall be transferred to the disposal of the current profit and loss according to the
proportion of the disposal of the overseas operation.
10. Financial instruments
When the Company becomes a party to a financial instrument, it recognizes a financial asset or liability.
The effective interest method refers to the method of calculating the amortized cost of financial assets or liabilities and allocating interest income
or interest expense into each accounting period.
The effective interest rate refers to the interest rate used to discount the estimated future cash flow of a financial asset or financial liability during
its expected duration to the book balance of the financial asset or the amortized cost of the financial liability. When determining the effective interest
rate, the expected cash flow is estimated on the basis of considering all contract terms of financial assets or liabilities (such as prepayment, extension,
call options or other similar options), but the expected credit loss is not considered.
The amortized cost of a financial asset or financial liability is the accumulated amortization amount formed by deducting the repaid principal
from the initial recognition amount of the financial asset or financial liability, adding or subtracting the difference between the initial recognition
amount and the maturity amount by using the effective interest method, and then deducting the accumulated accrued loss reserve (only applicable to
financial assets).
(1) Classification, recognition and measurement of financial assets
According to the business model of the financial assets under management and the contractual cash flow characteristics of the financial assets,
the Company divides the financial assets into the following three categories:
1) Financial assets measured at amortized cost.
2) Financial assets measured at fair value and whose changes are included in other comprehensive income.
3) Financial assets measured at fair value and whose changes are included in the current profit and loss.
Financial assets are measured at fair value when initially recognized, but if the accounts or notes receivable arising from the sale of goods or the
provision of services do not contain significant financing components or do not consider financing components for no more than one year, the initial
measurement shall be made at the transaction price.
For financial assets measured at fair value and whose changes are included in the current profit and loss, transaction expenses are directly
recognized in the current profit and loss. For other financial assets, transaction expenses are included in the initial recognition amount.
Subsequent measurement of financial assets depends on their classification. All related financial assets affected will be reclassified when and
only when the Company changes its business model of managing financial assets.
1) Financial assets classified as measured at amortized cost
The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the
interest on the amount of outstanding principal, and the business model for managing the financial asset is to collect the contractual cash flow, then
the Company classifies the financial asset as measured at amortized cost. Financial assets of the Company that are classified as measured at amortized
cost include monetary funds, some notes receivable and accounts receivable measured at amortized cost, other receivables, etc.
The Company recognizes interest income from such financial assets with the effective interest method, and carries out subsequent measurement
at amortized cost. Gains or losses arising from impairment or derecognition or modification are included in the current profit and loss. The Company
calculates and determines the interest income based on the book balance of financial assets multiplied by the effective interest rate except for the
following circumstances:
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① For purchased or originated credit-impaired financial assets, the Company calculates and determines their interest income at the amortized
cost of the financial asset and the credit-adjusted effective interest rate since the initial recognition.
② For financial assets that have not been credit-impaired at the time of being purchased or originated but become credit-impaired in the
subsequent period, the Company calculates and determines their interest income at the amortized cost and the effective interest rate of the financial
assets in the subsequent period. If the financial instrument is no longer credit-impaired due to the improvement of its credit risk in the subsequent
period, the Company calculates and determines the interest income by multiplying the effective interest rate by the book balance of the financial asset.
2) Financial assets classified as measured at fair value and whose changes are included in other comprehensiveincome
The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the
interest on the amount of outstanding principal, and the business model for managing the financial asset is both to collect contractual cash flows and
for its sale, then the Company classifies the financial asset as measured at fair value and whose changes are included in other comprehensive income.
The Company recognizes interest income from such financial assets with the effective interest method. Except that the interest income,
impairment loss and exchange difference are recognized as the current profit and loss, other changes in fair value are included in other comprehensive
income. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred
out and included in the current profit and loss.
Notes and accounts receivable measured at fair value with changes included in other comprehensive income are reported as receivables financing,
and such other financial assets are reported as other creditors’ investments. Among them, other creditors’ investments maturing within one year from
the balance sheet date are reported as non-current assets maturing within one year, and other creditors’ investments maturing within one year are
reported as other current assets.
3) Financial assets designated as measured at fair value and whose changes are included in other comprehensiveincome
At the time of initial recognition, the Company may irrevocably designate non-trading equity instrument investments as financial assets
measured at fair value and whose changes are included in other comprehensive income on the basis of individual financial assets.
Changes in the fair value of such financial assets are included in other comprehensive income without provision for impairment. When the
financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred out and included in
the retained earnings. During the investment period when the Company holds the equity instrument, the dividend income is recognized and included
in the current profit and loss when the Company’s right to receive dividends has been established, the economic benefits related to dividends are likely
to flow into the Company, and the amount of dividends can be measured reliably. The Company reported such financial assets under other equity
instrument investment items.
An investment in equity instruments is a financial asset measured at fair value and whose changes are included in the current profit and loss when
it is obtained mainly for recent sale, or is part of the identifiable portfolio of financial assets centrally managed, and objective evidence exists for a
short-term profit model in the near future when initially recognized, or is a derivative (except derivatives defined as financial guarantee contracts and
designated as effective hedging instruments).
4) Financial assets classified as measured at fair value and whose changes are included in the current profit and loss
If failing to be classified as measured at amortized cost or at fair value and whose changes are included in other comprehensive income, or not
designated as measured at fair value and whose changes are included in other comprehensive income, financial assets are all classified as measured at
fair value and whose changes are included in the current profit and loss.
The Company carries out subsequent measurement of such financial assets at fair value, and includes gains or losses arising from changes in fair
value as well as dividends and interest income associated with such financial assets into current profit and loss.
The Company reports such financial assets as trading financial assets and other non-current financial assets according to their liquidity.
5) Financial assets designated as measured at fair value and whose changes are included in the current profit and loss
At the time of initial recognition, the Company may irrevocably designate financial assets as measured at fair value and whose changes are
included in the current profit and loss on the basis of individual financial assets in order to eliminate or significantly reduce accounting mismatches.
If the mixed contract contains one or more embedded derivative instruments and its main contract is not any financial asset as above, the
Company may designate the whole of the mixed contract as a financial instrument measured at fair value and whose changes are included in the
current profit and loss. Except under the following circumstances:
① Embedded derivatives do not significantly change the cash flow of mixed contracts.
② When determining for the first time whether similar mixed contracts need to be split, it is almost clear that embedded derivatives contained in
them should not be split without analysis. If the prepayment right embedded in a loan allows the holder to prepay the loan at an amount close to the
amortized cost, the prepayment right does not need to be split.
The Company carries out subsequent measurement of such financial assets at fair value, and includes gains or losses arising from changes in fair
value as well as dividends and interest income associated with such financial assets into current profit and loss.
The Company reports such financial assets as trading financial assets and other non-current financial assets according to their liquidity.
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(2) Classification, recognition and measurement of financial liabilities
The Company classifies a financial instrument or its components into financial liabilities or equity instruments upon initial recognition according
to the contract terms of and the economic essence reflected by the financial instrument issued, rather than only in legal form, in combination with the
definitions of financial liabilities and equity instruments. Financial liabilities are classified at initial recognition as measured at fair value and whose
changes are included in current profit and loss, or other financial liabilities, or derivatives designated as effective hedging instruments.
Financial liabilities are measured at fair value upon initial recognition. For financial liabilities measured at fair value and whose changes are
included in current profit and loss, relevant transaction expenses are directly included in current profit and loss. For other categories of financial
liabilities, relevant transaction expenses are included in the initial recognition amount.
Subsequent measurement of financial liabilities depends on their classification:
1) Financial liabilities measured at fair value and whose changes are included in the current profit and loss
Such financial liabilities include trading financial liabilities (including derivatives falling under financial liabilities) and financial liabilities
designated as measured at fair value and whose changes are included in current profit and loss upon initial recognition.
The financial liability is a trading financial liability if it is mainly undertaken for recent sale or repurchase, or is part of the identifiable portfolio
of financial instruments centrally managed, and there is objective evidence that the enterprise has recently employed a short-term profit model, or is a
derivative instrument, except derivatives designated as effective hedging instruments and derivatives conforming to financial guarantee contracts.
Trading financial liabilities (including derivatives belonging to financial liabilities) shall be subsequently measured according to fair value. Except in
relation to hedge accounting, all changes in fair value shall be recorded into current profit and loss.
The Company irrevocably designates financial liabilities as measured at fair value and whose changes are included in current profit and loss at
the time of initial recognition in order to provide more relevant accounting information if:
① Such financial liabilities can eliminate or significantly reduce accounting mismatches.
② The financial liability portfolio or the portfolio of financial assets and liabilities is managed and evaluated for performance on the basis of fair
value according to the enterprise risk management or investment strategy stated in the official written documents, and is reported to key management
personnel within the enterprise on this basis.
The Company subsequently measures such financial liabilities at fair value. Except changes in fair value that are brought about by changes in the
Company’s own credit risk are included in other comprehensive income, other changes in fair value are included in current profit and loss. Unless
including such changes in other comprehensive income will cause or expand accounting mismatch in profit or loss, the Company will include all
changes in fair value (including the amount affected by changes in its own credit risk) in current profit and loss.
2) Other financial liabilities
The Company classifies financial liabilities except for the following items as measured at amortized cost. Such financial liabilities are recognized
by the effective interest method and subsequently measured at amortized cost. Gains or losses arising from derecognition or amortization are included
in the current profit and loss:
① Financial liabilities measured at fair value and whose changes are included in the current profit and loss.
② Financial liabilities resulting from the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved
in the transferred financial assets.
③ Financial guarantee contracts that do not fall under the first two categories of this article, and loan commitments that do not fall under
category 1) of this article and lend at a below-market interest rate.
Financial guarantee contracts refer to contracts that require the issuer to pay a specific amount to the contract holder who has suffered losses
when a specific debtor fails to pay the debt in accordance with the original or modified terms of the debt instrument. Financial guarantee contracts that
are not financial liabilities designated as measured at fair value and whose changes are included in current profit and loss are measured after initial
recognition according to the loss reserve amount and of the initial recognition amount, less the accumulated amortization amount during the guarantee
period, whichever is higher.
(3) Derecognition of financial assets and liabilities
1) Financial asset are derecognized, i.e. written off from its account and balance sheet if:
① The contractual right to receive cash flow from the financial asset is terminated; or
② The financial asset has been transferred, which meets the requirements for derecognition of financial assets.
2) Conditions for derecognition of financial liabilities
If the current obligation of a financial liability (or part thereof) has been discharged, such financial liability (or part thereof) is derecognized.
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The existing financial liability is derecognized with a new one recognized, and the difference between the carrying amount and the consideration
paid (including transferred non-cash assets or assumed liabilities) is included in the current profit and loss, if an agreement is signed between the
Company and the lender to replace the existing financial liability by assuming a new one, and the contract terms of these two financial liabilities are
substantially different, or the contract terms of the existing financial liability (or part thereof) are substantially modified.
If the Company repurchases part of a financial liability, the carrying amount of the financial liability shall be distributed according to the
proportion of the fair value of the continuing recognition portion and the derecognition portion to the overall fair value on the repurchase date. The
difference between the carrying amount allocated to the derecognized portion and the consideration paid (including transferred non-cash assets or
liabilities assumed) shall be included in the current profit and loss.
(4) Recognition basis and measurement method of financial asset transfer
When a financial asset is transferred, the Company evaluates the risks and rewards retained of the financial asset ownership:
1) If almost all the risks and rewards of the financial asset ownership are transferred, such financial asset shall be derecognized, and the rights
and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities.
2) If almost all the risks and rewards of the financial asset ownership are retained, such financial asset shall continue to berecognized.
3) In circumstances when the Company neither transfers nor retains almost all the risks and rewards of the financial asset ownership (i.e.
circumstances other than 1) and 2) of this article), according to whether it retains control over such financial asset:
① The financial asset shall be derecognized, and the rights and obligations generated or retained in the transfer shall be separately recognized as
assets or liabilities if such control is not retained; or
② the relevant financial asset shall continue to be recognized to the extent that it continues to be involved in the transferred financial asset, and
the relevant liabilities shall be recognized accordingly if such control is retained. The extent that it continues to be involved in the transferred financial
asset refers to the extent the Company bears the risks or rewards on changes in the value of the transferred financial asset.
When judging whether the transfer of financial assets meets the above conditions for derecognition of financial assets, the principle of substance
over form shall be adopted. The Company divides the transfer of financial assets into overall transfer and partial transfer.
1) If the overall transfer of financial assets meets the conditions for derecognition, the difference between the following two amounts shall be
included in the current profit and loss:
① The carrying amount of the transferred financial asset on the date of derecognition.
② The sum of the consideration received for the transfer of financial assets and the amount of the corresponding derecognized portion of the
accumulated changes in fair value originally included in other comprehensive income directly (the financial assets involved in the transfer are
financial assets measured at fair value and whose changes are included in other comprehensive income).
2) If the financial asset is partially transferred and the transferred part meets the conditions for derecognition, the carrying amount of the
financial asset before transfer shall be allocated between the derecognition portion and the continuing recognition portion (in this case, the
retained service asset shall be regarded as the continuing recognition part of the financial asset) according to the respective relative fair values on
the transfer date, and the difference between the following two amounts shall be included in the current profit and loss:
① The carrying amount of the derecognized portion on the derecognition date.
② The sum of the consideration received for the derecognized portion and the amount of the corresponding derecognized portion of the
accumulated changes in fair value originally included in other comprehensive income (the financial assets involved in the transfer are financial assets
measured at fair value and whose changes are included in other comprehensive income).
If the transfer of a financial asset does not meet the conditions for derecognition, the financial asset shall continue to be recognized and the
consideration received shall be recognized as a financial liability.
(5) Determination of fair value of financial assets and liabilities
The fair value of a financial asset or liability with an active market shall be determined by the quoted price in the active market, unless the
financial asset has a sell-off period for the asset itself. For the financial assets restricted for the assets themselves, the compensation amount demanded
by market participants due to the risk of not being able to sell the financial assets on the open market within the specified period shall be deducted
from the quoted price in the active market. Quoted prices in the active market includes those for related assets or liabilities that can be easily and
regularly obtained from exchanges, dealers, brokers, industry groups, pricing or regulatory agencies, and can represent actual and recurring market
transactions on the basis of fair trade.
The fair value of financial assets initially acquired or derived or financial liabilities assumed shall be determined on the basis of market
transaction price.
The fair value of financial assets or liabilities without an active market shall be determined by valuation techniques. At the time of valuation, the
Company adopts valuation techniques that are applicable under the current circumstances and are supported by sufficient available data and other
information, selects input values consistent with the characteristics of relevant assets or liabilities considered by market participants in the transactions
thereof, and gives priority to the use of relevant observable input values whenever possible. If the relevant observable input value cannot be obtained
or be feasibly obtained, the unobservable input value shall be used.
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(6) Impairment of financial instruments
Based on the expected credit loss, the Company conducts impairment accounting of financial assets classified as measured at amortized cost and
financial assets classified as measured at fair value and whose changes are included in other comprehensive income and recognizes loss reserves.
Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit loss refers
to the difference between all contractual cash flows discounted at the original effective interest rate and receivable according to the contract and all
cash flows expected to be collected of the Company, i.e. the present value of all cash shortfalls. Among them, credit-impaired purchased or originated
financial assets of the Company shall be discounted at the credit-adjusted effective interest rate of such financial assets.
For receivables, contractual assets and lease receivables arising from transactions regulated by the income criteria, the Company uses the
simplified measurement method to measure the loss reserve according to the amount equivalent to the expected credit loss during the entire duration.
For credit-impaired purchased or originated financial assets, only the accumulated changes in the expected credit losses during the entire duration
since the initial recognition are recognized as loss reserves on the balance sheet date. On each balance sheet date, the amount of change in the
expected credit loss during the entire duration is included in the current gains and losses as impairment losses or gains. Even if the expected credit loss
during the entire duration on the balance sheet date is less than that reflected in the estimated cash flow upon initial recognition, the favorable change
in the expected credit loss is recognized as impairment gains.
In addition to other financial assets adopting the above simplified measurement method and other than the credit-impaired purchased or
originated ones, the Company evaluates whether the credit risk of relevant financial instruments has increased significantly since the initial
recognition, measures its loss reserves and recognizes the expected credit loss and its changes respectively according to the following circumstances
on each balance sheet date:
1) If the credit risk of the financial instrument has not increased significantly since its initial recognition and is in the first stage, its loss
reserve shall be measured according to an amount equivalent to its expected credit loss in the next 12 months, and the interest income shall be
calculated at the book balance and the effective interest rate.
2) If the credit risk of the financial instrument has increased significantly since the initial recognition but no credit impairment has occurred,
it is in the second stage, then its loss reserve shall be measured according to an amount equivalent to its expected credit loss throughout its life,
and the interest income shall be calculated at the book balance and the effective interest rate.
3) If the financial instrument is credit-impaired since its initial recognition, it is in the third stage, and the Company shall measure its loss
reserve according to an amount equivalent to its expected credit loss throughout its life, and calculate the interest income at the amortized cost
and the effective interest rate.
The increase or reversed amount of the credit loss reserve for financial instruments shall be included in the current profit and loss as impairment
losses or gains. Except for financial assets classified as measured at fair value and whose changes are included in other comprehensive income, the
credit loss reserve will offset the carrying amount of the financial assets. For financial assets classified as measured at fair value and whose changes
are included in other comprehensive income, the Company recognizes its credit loss reserve in other comprehensive income without reducing its
carrying amount presented in the balance sheet.
In the previous accounting period, the Company has measured the loss reserve, the amount of which is equivalent to the expected credit loss of
the financial instrument throughout its life. However, on the balance sheet date of the current period, the financial instrument no longer conforms to
the situation of significant increase in credit risk since initial confirmation; on the balance sheet date of the current period, the Company has measured
the loss reserve of the financial instrument, the amount of which is equivalent to the expected credit loss in the next 12 months, and the reversed
amount of the loss reserve thus formed is included in the current profit and loss as impairment profit.
1) Significant increase of credit risk
In order to determine whether the credit risk of financial instruments has increased significantly since the initial recognition, the Company uses
the available reasonable and based forward-looking information and compares the risk of default of financial instruments on the balance sheet date
with the risk of default on the initial confirmation date. When the Company applies provisions on depreciation of financial instruments to financial
guarantee contracts, the initial recognition date shall be regarded as the date when the Company becomes a party to make irrevocable commitments.
For the assessment of whether the credit risk has increased significantly, the Company will consider the following factors
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 undergone significant adverse changes;
③ Whether the following items have changed significantly: the value of collateral as debt mortgage, or the guarantee provided by a third party,
or the quality of credit enhancement; these changes will reduce the debtor’s economic motivation to repay the loan within the time limit stipulated in
the contract or impact the probability of default;
④ Whether the debtor’s expected performance and repayment behavior have changed significantly;
⑤ Whether the Company’s credit management methods for financial instruments have changed, etc.
If, on the balance sheet date, the credit risk of the financial instrument is judged to be low by the Company, the Company assumes that the credit
risk of the financial instrument has not increased significantly since the initial recognition. The financial instrument will be deemed to have lower
credit risk under the following circumstances: the default risk of the financial instrument is lower; the borrower has a strong ability to fulfill its
contractual
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cash flow obligations in a short time; furthermore, even if there are adverse changes in the economic situation and operating environment for a long
period of time, it may not necessarily reduce the borrower’s ability to fulfill its contractual cash flow obligations.
2) Financial assets with depreciation of credit
If one or more events have adverse effects on the expected future cash flow of a financial asset, the financial asset will become a financial asset
that has suffered credit impairment. The following observable information can be regarded as evidence of credit impairment of financial assets:
① The issuer or debtor is in serious financial difficulties;
② The debtor breaches the contract, such as default or overdue payment of interest or principal, etc.;
③ The creditor gives concessions to the debtor due to economic or contractual considerations related to the debtor’s financial difficulties; the
concessions will not be made under any other circumstances;
④ There is a great possibility of bankruptcy or other financial restructuring of the debtor;
⑤ The financial difficulties of the issuer or debtor cause the disappearance of the active market for the financial asset;
⑥ The purchase or origin of a financial asset at a substantial discount that reflects the fact that a credit loss has occurred.
Credit impairment of financial assets may not be caused by separately identifiable events, but may be caused by the combined effect of multiple
events.
3) Determination of expected credit loss
The Company’s assessment of the expected credit losses of financial instruments is based on single items and combinations. During the
evaluation, the Company will take into account reasonable and reliable information about past events, current situation and future economic situation
forecast.
The Company divides financial instruments into different combinations on the basis of common credit risk characteristics. Common credit risk
characteristics adopted by the Company include: type of financial instrument, credit risk rating, aging portfolio, overdue aging portfolio, contract
settlement period, debtor's industry, etc. To understand the individual evaluation criteria and combined credit risk characteristics of relevant financial
instruments, please refer to the accounting policies of relevant financial instruments for details.
The Company adopts the following methods to determine the expected credit losses of relevant financial instruments:
① In terms of financial assets, credit loss is equivalent to the present value of the difference between the contract cash flow that the Company
shall receive and the expected cash flow.
② In terms of lease receivables, credit loss is equivalent to the present value of the difference between the contract cash flow that the Company
shall receive and the expected cash flow.
③ In terms of the financial guarantee contract, credit loss is equal to the expected amount of payment made by the Company to the holder of the
contract for credit loss incurred, less the present value of the difference between the amount expected to be collected from the holder of the contract,
the debtor or any other party.
④ If, on the balance sheet date, a financial asset has suffered credit impairment, but one does not purchase or originate a financial asset that has
suffered credit impairment, the credit loss is equivalent to the difference between the book balance of the financial asset and the present value of the
estimated future cash flow discounted at the original actual interest rate.
Factors reflected in the Company’s method of measuring the expected credit losses for financial instruments include: unbiased probability
weighted average amount determined by evaluating a series of possible results; time value of money; reasonable and reliable information about past
events, current situation and future economic situation forecast that can be obtained on the balance sheet date without unnecessary extra costs or
efforts.
4) Write-off of financial assets
If the Company cannot reasonably expect the contract cash flow of the financial asset to be fully or partially recovered, the book balance of the
financial asset will be written off directly. This write-off constitutes the derecognition of relevant financial assets.
(7) Offset of financial assets and financial liabilities
In the balance sheet, financial assets and financial liabilities are shown separately without offsetting each other. However, if the following
conditions are met at the same time, the net amount after offset will be listed in the balance sheet:
1) The Company has the legal right, which is currently enforceable, to offset the confirmed amount;
2) The Company plans to settle on a net basis, or realize the financial assets and settle the financial liabilities at the same time.
11. Notes receivable
For the determination method and accounting treatment method of the Company for the expected credit losses on notes receivable, please refer to
“10-(6) Impairment of financial instruments” in this section.
The Company separately determines credit losses for notes receivables that have sufficient evidence to assess expected credit losses at a
reasonable cost at the level of a single instrument.
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When sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level of single instrument, the Company will
refer to the experience of historical credit loss, combine the current situation and judgment on future economic situation, divide bills receivable into
several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. The basis for
determining the portfolio is as follows:
Item Basis for determining portfolio Method
Bank acceptance bill Type of bill Refer to the experience of historical credit loss, combine the current situation and
portfolio judgment on future economic situation to measure the expected credit loss
Commercial acceptance Type of bill Refer to the experience historical credit loss, combine the current situation and
bill portfolio judgement on future economic situation, and prepare a comparison table of aging
and expected credit loss rate according to the expected credit loss in the whole
duration, on which the expected credit loss is calculated.
12. Accounts receivable
For the determination method and accounting treatment method of the Company for the expected credit losses on accounts receivable, please
refer to “10-(6) Impairment of financial instruments” in this section.
The Company separately determines credit losses for accounts receivable that have sufficient evidence to assess expected credit losses at a
reasonable cost at the level of a single instrument.
If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at the level of single instrument, the Company will divide the
accounts receivable into several combinations according to the credit risk characteristics, and calculate the expected credit loss on the basis of the
combinations (with reference to the experience of historical credit loss, and in combination with the current situation with the judgment of future
economic situation). The basis for determining the portfolio is as follows:
Item Basis for determining portfolio Method
Aging portfolio Accounts receivable with similar credit risk Referring to historical credit loss experience, combined with the current situation
characteristics by aging and the forecast of future economic situation, according to the expected credit loss
during the entire duration, a comparative table of age and expected credit loss rate
is worked out, based on which the expected credit loss is calculated.
13. Receivables financing
Bills receivable and accounts receivable classified as those measured at fair value and whose changes are included in other comprehensive
income, whose maturity is within one year (including one year) from the initial recognition date, are listed as accounts receivable financing; Those
with a maturity of more than one year from the initial recognition date are listed as other debt investments. Please refer to Note 10. Financial
Instruments for relevant accounting policies.
14. Other receivables
Determination method and accounting treatment method of expected credit loss of other receivables
For the determination method and accounting treatment method of the Company’s expected credit loss on other receivables, please refer to “10-
(6) Impairment of financial instruments” in this section.
The Company separately determines credit losses for other receivables that have sufficient evidence to assess expected credit losses at a
reasonable cost at the level of a single instrument.
If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at the level of single instrument, the Company will divide the
other receivables into several combinations according to the credit risk characteristics, and calculate the expected credit loss on the basis of the
combinations (with reference to the experience of historical credit loss, and in combination with the current situation with the judgment of future
economic situation). The basis for determining the portfolio is as follows:
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Item Basis for determining portfolio Method
Aging portfolio Other receivables with similar credit risk With reference to historical credit loss experience, combined
characteristics by aging with current conditions and forecasts of future economic
conditions, the expected credit loss is calculated through the
default risk exposure and the credit loss rate in the next 12
months or the entire duration
15. Inventories
(1) Classification of inventories
Inventories refer to the finished products or commodities held for sale by the Company in the course of its daily activities, the products being in
the process of production, and the materials and supplies consumed in the process of production or provision of labor services, etc. The Company
classifies inventories into raw materials, turnover materials, entrusted processing materials, work-in-process products, self-made semi-finished
products, finished products (inventory goods), issued goods, etc.
(2) Valuation method of inventories
When the inventories is acquired, it is initially measured at cost, including purchase cost, processing cost and other costs. When the inventories
are delivered, it shall be valued by the first-in, first-out method and weighted average method at the end of the month.
(3) Basis for the determination of the net realizable value of inventories and method for the provision of provision for inventory impairment
Provision for inventory impairment is recognized or adjusted at the lower of costs and the net realizable value after conducting a thorough check
of inventories at the end of the year. For inventories of goods directly used for sale, such as finished goods, merchandise inventories and materials for
sale, in the normal production and operation process, the net realizable value is determined by the amount of the estimated selling price of the
inventory less the estimated sales cost and relevant taxes and fees; for material inventories that need to be processed, in the normal production and
operation process, the net realizable value is determined by the amount of the estimated selling price of finished products produced less the estimated
cost to be occurred at the time of completion, the estimated selling expenses and related taxes; for inventories held for the execution of sales contracts
or labor contracts, the net realizable value is calculated on the basis of the contract price, and if the quantity of inventories held is more than the
quantity specified in sales contracts, the net realizable value of excess inventories is calculated based on the general sales price.
At the end of the year, inventory valuation allowance is accrued according to individual inventory items; but for a large number of inventories
with lower unit prices, inventory valuation allowance is accrued according to inventory category; for inventories related to the product series produced
and sold in the same region with the same or similar end use or purpose, and that is difficult to be measured separately from other items, inventory
valuation allowance is accrued combined with other items.
If the influencing factors of the write-down of inventory value have disappeared, the amount written-down is recovered and reversed to the
amount of inventory valuation allowance already accrued, and the amount reversed is included in the current profit and loss.
(4) Inventory system
A perpetual inventory system is adopted.
(5) Amortization method of low-value consumables and packages
1) Low-value consumables are amortized by the one-off writing-off method;
2) Packages are amortized by the one-off writing-off method.
3) Other turnover materials are amortized by the one-off writing-off method.
16. Contractual assets
Where the Company has transferred goods to customers and has the right to receive consideration, and the right depends on factors other than the
passage of time, it shall be recognized as contract assets. The Company’s unconditional (that is, depending only on the passage of time) right to
collect consideration from customers is separately listed as receivables.
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For the determination method and accounting treatment method of the Company’s expected credit loss on contractual assets, please refer to “10-
(6) Impairment of financial instruments” in this section.
17. Held-for-sales assets
(1) Classified as held-for-sale recognition criteria
The Company recognizes non-current assets or disposal groups that meet the following conditions as held-for-sale components:
1) According to the practice of selling such assets or disposal groups in similar transactions, they can be sold immediately in the current situation;
2) The sale is highly likely to occur, that is, the Company has made a resolution on a sale plan, obtained regulatory approval (if applicable), and
obtained a certain purchase commitment, and it is expected that the sale will be completed within oneyear.
The confirmed purchase commitment refers to the legally binding purchase agreement signed by the Company and other parties. The agreement
includes important terms such as transaction price, time and sufficiently severe penalty for breach of contract, which makes the possibility of
significant adjustment or cancellation of the agreement extremely small.
(2) Accounting method of held for sale
The Company does not accrue depreciation or amortization for non-current assets or disposal groups held for sale. If the book value is higher
than the net amount of fair value minus selling expenses, the book value shall be written down to the net amount of fair value minus selling expenses.
The amount written down shall be recognized as asset impairment loss and included in the current profit and loss, and the assets held for sale
impairment reserves shall be accrued at the same time.
For the non-current assets or disposal groups classified as held for sale on the acquisition date, the initial measurement amount and the net
amount of the fair value less the selling expenses under the condition that they are not classified as held for sale are comparatively assumed in the
initial measurement, whichever is lower.
The above principles apply to all non-current assets, but do not include investment properties that are subsequently measured using the fair value
model, biological assets that are measured using the net amount of fair value less selling expenses, assets formed by employee compensation, deferred
tax assets, financial assets regulated by accounting standards related to financial instruments, and rights generated by insurance contracts regulated by
accounting standards related to insurance contracts.
18. Long-term equity investment
(1) Recognition of initial investment cost
1) For the long-term equity investment formed by the merger of enterprises, the specific accounting policies are detailed in “5. Accounting
treatments for merger of enterprises under common control and not under common control” in this section.
2) Long-term equity investment acquired by other means
For long-term equity investment acquired by cash payment, the actual acquisition price is recognized as initial investment cost. The initial
investment cost includes expenses, taxes and other necessary expenses directly related to the acquisition of the long-term equity investment.
For a long-term equity investment obtained by issuing equity securities, the initial investment cost shall be the fair value of the equity securities
issued. Transaction costs incurred in the issuance or acquisition of one’s own equity instruments those can be directly attributable to the equity
transaction shall be deducted from the equity.
Provided that the non-monetary asset exchange contains commercial substance and the fair value of the assets received or assets surrendered can
be reliably measured, the initial investment cost of the long-term equity investment received with non-monetary assets is determined based on the fair
value of the assets surrendered, except that there is conclusive evidence indicates that the fair value of assets received is more reliable. For non-
monetary asset exchange that do not satisfy the above condition, the book value of assets surrendered and related taxes and fees payable are
recognized as the initial investment cost of the long-term equity investment.
The initial investment cost of a long-term equity investment acquired by debt restructuring is determined on the basis of fair value.
(2) Subsequent measurement and recognition of related profit and loss
1) Cost method
The Company can use the cost method to calculate the long-term equity investment controlled by the invested entity, price it according to the
initial investment cost, and increase or recoup the cost of investment on adjusting a long-term equity investment.
Except for the declared but undistributed cash dividends or profits included in the actual payment or consideration when the investment is
obtained, the Company shall recognize the cash dividends or profits declared to be distributed by the invested entity as current investment income.
2) Equity method
The Company adopts equity method for accounting of long-term equity investments in associates and joint ventures. For the equity investment in
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associates in which part of it is held indirectly through venture capital institutions, mutual funds, trust companies or similar entities including
investment-linked insurance funds, it shall be measured at fair value and its changes shall be recorded into profits and losses.
For the balance that the initial investment cost of long-term equity investments is bigger than the fair value shares of invested units’ distinguished
net assets which shall be enjoyed by the Company, the Company will not adjust the initial investment cost of long-term equity investments; for the
balance that the initial investment cost is smaller than the fair value shares of invested units’ distinguished net assets which shall be enjoyed by the
Company, it shall be included in the current profit and loss.
After the Company obtains long-term equity investment, it shall recognize investment income and other comprehensive income respectively
according to its share of the net profit or loss realized by the invested entity and other comprehensive income, and adjust the book value of long-term
equity investment at the same time. In addition, the part to be enjoyed shall be calculated according to the profit or cash dividend declared by the
invested entity to be distributed, and the book value of long-term equity investment shall be reduced accordingly. For other changes in owners’ equity
other than net profit and loss, other comprehensive income and profit distribution of the invested entity, the book value of long-term equity investment
shall be adjusted and recorded into owners’ equity.
When confirming the shares of invested units’ net gain or loss to be enjoyed, the Company will adjust and confirm the invested units’ net profit
based on the fair value of the invested units’ distinguishable assets when investments are obtained. For the gain or loss on the non-realized internal
transactions between the Company and associates, joint ventures, the part attributing to the Company will be calculated as per the proportion to be
enjoyed, will be written down, and on this basis, the investment profit and loss will be confirmed.
The Company recognizes that the loss suffered by the invested unit should be dealt with in the following order: first, reduce the book value of
long-term equity investments. Secondly, if the book value of long-term equity investments is not sufficient to offset, the book value of other long-term
equity that substantially constitute the net investment in the invested entity shall be used to continue to recognize the investment loss and offset the
book value of long-term receivables. Finally, after the above treatment, according to the investment contract or agreement, the enterprise still assumes
the additional obligations, and it will confirm the provisions according to the expected obligations and shall be included in the current investment
losses.
If the investee makes profits in the future, the Company shall, after deducting the unrecognized loss share, deal with it in the reverse order, write
down the book balance of the confirmed provisions, recover other long-term equity that substantially constitute the net investment to the investee and
the book value of long-term equity investments, and resume the recognition of investment income.
(3)Transformation of accounting method of long-term equity investments
1) Transfer of fair value measurement to equity method
The equity investment originally held by the Company that does not have control, joint control or significant influence on the investee and is
subject to accounting treatment according to the recognition and measurement standards of financial instruments can exert significant influence on the
investee or implement joint control but does not constitute control due to additional investment and other reasons, the sum of the fair value of the
originally held equity investment plus the newly increased investment cost determined in accordance with the Accounting Standards for Business
Enterprises No. 22 - Recognition and Measurement of Financial Instruments shall be regarded as the initial investment cost calculated according to the
equity method.
The initial investment cost calculated by the equity method is less than the difference between the fair value of the identifiable net assets of the
investee on the additional investment date calculated and determined according to the new shareholding ratio after the additional investment, the book
value of long-term equity investments is adjusted and included in the non-operating revenue of the current period.
2) Transfer of fair value measurement or equity method to cost method
The equity investment originally held by the Company that does not have control, joint control or significant impact on the investee and is
subject to accounting treatment in accordance with the recognition and measurement standards of financial instruments, or the long-term equity
originally held by the Company in associates and joint ventures: If the investee under different control can be controlled due to additional investment
and other reasons, when preparing individual financial statements, the book value of equity investment originally held plus new investment cost shall
be taken as the initial investment cost calculated by cost method instead.
The other comprehensive income, which is recognized as equity investment held before the purchase date, is accounted for by the equity method.
When disposing the investment, it adopts the same basis as the relevant assets or liabilities directly disposed of by the invested entity for accounting
treatment.
If the equity investment held before the acquisition date is accounted for in accordance with the relevant provisions of the Accounting Standards
for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, the changes in the accumulated fair value originally
included in other comprehensive income are transferred to the current profit and loss when the cost method is used for accounting.
3) Transfer of equity method to fair value measurement
If the Company loses joint control or significant impact on the invested entity due to disposal of part of equity investment, the remaining equity
after disposal shall be accounted according to Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial
Instruments, and the difference between the fair value and book value on the date of loss of joint control or significant impact shall be included in the
current profit and loss.
The other comprehensive income of the original equity investment recognized due to the use of equity method shall be accounted on the same
basis as the invested unit’s direct disposal of relevant assets or liabilities when the equity method is terminated.
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4) Transfer of cost method to equity method
If the Company loses the control over the investee due to the disposal of part of the equity investment and other reasons, when preparing
individual financial statements, if the residual equity after disposal can exercise joint control or exert significant influence on the investee, the equity
method shall be used for accounting instead, and the residual equity shall be deemed to be adjusted by the equity method when it is obtained.
5) Transfer of cost method to fair value measurement
If the Company loses control over the investee due to the disposal of part of equity investment and other reasons, when preparing individual
financial statements, if the residual equity after disposal cannot exercise joint control or exert significant influence on the investee, the accounting
treatment shall be carried out in accordance with the relevant provisions of the Accounting Standards for Business Enterprises No. 22 - Recognition
and Measurement of Financial Instruments. The difference between the fair value and the book value on the date of loss of control is included in the
current profit and loss.
(4) Disposal of Long-Term Equity Investments
For the disposal of long term equity investments, the difference between the book value and the actually obtained price shall be included in the
current profit and loss. Long-term equity investments accounted by the equity method shall be disposed on the same basis as the investee’s direct
disposal of relevant assets or liabilities, and the part originally included in other comprehensive income shall be accounted according to the
corresponding proportion.
If the terms, conditions and economic impact of the disposal of various transactions of equity investment in subsidiaries meet one or more of the
following conditions, multiple transactions shall be accounted as a package deal:
1) These transactions are made simultaneously or with consideration of influence on each other;
2) These transactions can only achieve a complete business outcome when treated as a whole;
3) The occurrence of a transaction depends on the occurrence of at least one of the othertransactions;
4) A transaction is uneconomical when treated alone, but is economical when considered together with other.
If the control over the original subsidiary company is lost due to the disposal of part of equity investment or other reasons, and it does not belong
to a package deal, the relevant accounting treatment shall be made by distinguishing individual financial statements and consolidated financial
statements:
1) In individual financial statements, for the equity disposed, the difference between the book value and the actually obtained price is
included in the current profit and loss. If the residual equity after disposal can exercise joint control or exert significant influence on the investee,
it shall be accounted by equity method, and the residual equity shall be deemed as adjusted by equity method when it is acquired; If the residual
equity after disposal cannot exercise joint control or exert significant influence on the investee, it shall be accounted in accordance with the
relevant provisions of the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, and
the difference between the fair value and book value on the date of loss of control shall be included in the current profit and loss.
2) In the consolidated financial statements, for the difference between the disposal price and the corresponding share of net assets of the
subsidiary calculated continuously from the purchase date or the merger date for each transaction before the loss of control over the subsidiary,
the capital reserve (share capital premium) shall be adjusted. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted;
if the control right over the subsidiary is lost, the remaining equity shall be remeasured according to its fair value on the date of losing the control
right. The difference between the sum of the consideration obtained from the disposal of equity and the fair value of the remaining equity minus
the share of the net assets of the original subsidiary calculated continuously from the purchase date calculated according to the original
shareholding ratio shall be included in the investment income of the current period when the control right is lost, and goodwill shall be offset at
the same time. Other comprehensive income related to the equity investment of the original subsidiary will be converted into the current
investment income when the control right is lost.
If all transactions from disposal of equity investment in subsidiaries to loss of control belong to a package deal, each transaction shall be treated
as a transaction for disposal of equity investment in subsidiaries and loss of control, and relevant accounting treatment shall be conducted according to
individual financial statements and consolidated financial statements:
1) In individual financial statements, the difference between each disposal price and the long-term equity investment book value
corresponding to the disposed equity before the loss of control right is recognized as other comprehensive income, which is transferred to the loss
and profit of the current period when the control right is lost.
2) In the consolidated financial statements, the difference between each disposal price and the share of the subsidiary’s net assets
corresponding to the disposal investment before the loss of the control right is recognized as other comprehensive income, which is transferred
into the current profit and loss when the control right is lost.
(5) Judgment criteria for joint control and significant impact
If the Company controls an arrangement collectively with other participants in accordance with relevant agreements, and the activity decision-
making that has a significant impact on the return of the arrangement needs to exist after the consensus of the participants sharing the control right, it
is deemed that the Company and other participants jointly control an arrangement, which is a joint venture arrangement.
When the joint venture arrangement is reached by a single body, the individual entity shall be judged as a joint venture and the equity method
shall be used for accounting when the Company has the right to enjoy the net assets of the individual entity according to the relevant agreement. If it is
judged that the Company does not have the right to the net assets of the individual subject according to the relevant agreement, the individual subject
shall be regarded as the joint operation, the Company shall recognize the items related to the share of interests of the joint operation, and carry out
accounting treatment in accordance with the provisions of the relevant accounting standards for business enterprises.
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Significant influence means that the investor has the right to participate in the decision-making of the financial and operational policies of the
investee, but cannot control or jointly control the formulation of these policies with other parties. The Company judges to have a significant impact on
the investee through one or more of the following circumstances and comprehensive consideration of all facts and circumstances: 1) having a
representative on the board of directors or similar authority of the investee; 2) participate in the financial and operational policy-making process of the
investee; 3) there are significant transactions with the investee; 4) dispatch management personnel to the investee; and 5) provide key technical data to
the investee.
19. Investment properties
Measuring mode of investment properties
Measured at cost
Depreciation or amortization method
The Company’s investment property means the property held for the purpose of earning rent or capital appreciation, or both, including the land
use rights that have been leased, the land use rights that are held for transfer upon appreciation, and the leased buildings. In addition, for the vacant
buildings held by the Company for the purpose of leases, if the Board of Directors makes a written resolution that expressly indicates that the
buildings will be used for leases and the intention of holding will not change in a short term, the building will also be reported as investment property.
The Company’s investment properties are recorded at their cost. The cost of outsourcing investment properties includes the purchase price,
relevant taxes and other expenses that can be directly attributable to the asset. The cost of self-construction investment properties is composed of the
necessary expenses incurred before the construction of the asset reaches the expected usable state.
The Company adopts the cost model for subsequent measurement of investment property. Depreciation or amortization is accrued on buildings
and land use rights according to the estimated service life and net residual value rate. The estimated service life, net residual value rate and annual
depreciation (amortization) rate of investment properties are listed as follows:
Type The estimated service life The estimated net residual value Annual depreciation
(Year) rate (%) (amortization) rate (%)
Land use rights service life of land use rights 1/Service life*100
Property and plant 20 5-10 4.50-4.75
When the purpose of investment properties is changed to self-use, from the date of change, the Company will convert the investment properties
to fixed assets or intangible assets. When the purpose of self-use properties is changed to earn rent or capital appreciation, the Company will convert
fixed assets or intangible assets to investment properties from the date of change. In case of conversion, the book value before conversion shall be
taken as the entry value after conversion.
When the investment properties are disposed, or permanently withdrawn from use, and no economic benefits are expected to be obtained from
the disposal, the confirmation of the investment properties shall be terminated. The amount of disposal income from sale, transfer, scrap or damage of
investment properties after deducting its book value and relevant taxes shall be included in the current profit and loss.
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20. Fixed assets
(1) Recognition criteria
Fixed assets mean tangible assets held for the purpose of producing goods, rendering of services, leases or operation management, whose service life
is more than one fiscal year. Fixed assets satisfying the following conditions are recognized:
1) The economic benefits associated with the fixed assets are likely to flow into the enterprise;
2) The cost of the fixed asset can be measured in a reliable way
(2) Initial measurement of fixed assets
The Company’s fixed assets shall be initially measured according to cost.
1) The cost of purchased fixed assets includes the purchase price, import duties and other related taxes, as well as other expenses directly
attributable to the fixed assets incurred before they reach the predetermined usable state.
2) The cost of self-constructed fixed assets consists of the necessary expenditures incurred before the asset is constructed to a predetermined usable
state.
3) The fixed assets invested by the investor shall be recorded at the value agreed upon in the investment contract or agreement, but if the value
agreed upon in the contract or agreement is not fair, it shall be recorded at the fair value.
4) If payments for the purchase of fixed assets are extended beyond the normal credit terms with financing nature, the costs of fixed assets are
determined on the basis of present values of the purchase prices. The difference between the actual price paid and the present value of the
purchase price, except for those that should be capitalized, shall be included in the current profit and loss during the credit period.
(3) Subsequent measurement and disposal of fixed assets
1) Depreciation of fixed assets
Depreciation of fixed assets shall be accrued within the estimated service life after deducting the estimated net residual value from its recorded
value. For fixed assets with provision for impairment, the amount of depreciation shall be determined in the future periods based on the book value
after deduction of the impairment provision and based on the remaining service life; and fixed assets that have been fully depreciated and are still in
use shall not be depreciated.
The Company shall determine the service life and estimated net residual value of the fixed assets according to their nature and usage. At the end
of the year, the service life, estimated net residual value and depreciation method of the fixed assets shall be reviewed, and if there is any difference
from the original estimate, corresponding adjustments shall be made.
The depreciation method, depreciation period and annual depreciation rate of various fixed assets are as follows:
Type Depreciation method Depreciation life Rate of residual value Annual depreciation rate
(year) (%) (%)
Property and plant Straight-line method 20 5-10 4.50-4.75
Machinery and equipment Straight-line method 6-13 5-10 6.92-15.83
Transportation equipment Straight-line method 5 5-10 18.00-19.00
Electronic equipment Straight-line method 5 5-10 18.00-19.00
Office equipment Straight-line method 5 5-10 18.00-19.00
Other equipment Straight-line method 5 5-10 18.00-19.00
2) Subsequent expenditures on fixed assets
Subsequent expenditures related to fixed assets that meet the conditions for the recognition of fixed assets shall be included into the cost of fixed
assets; and those do not meet the conditions for the recognition of fixed assets shall be recorded into the current profit and loss at the time of
occurrence.
3) Disposal of fixed assets
When a fixed asset is disposed of or is not expected to generate economic benefits through use or disposal, the recognition of the fixed asset
shall be terminated. The amount of disposal income from sale, transfer, scrap or damage of fixed assets after deducting its book value and relevant
taxes shall be included in the current profit and loss.
21. Construction in progress
1. Initial measurement of construction in progress
Construction in progress built by the Company is valued at the actual cost, which consists of the necessary expenses incurred before the
construction of the asset is reaches the expected usable status, including engineering materials costs, labor costs, related taxes and fees, borrowing
costs that should be capitalized and indirect costs that should be apportioned.
2. Standards and time points for carrying forward construction in progress to fixed assets
For the construction in progress project, all expenses incurred before the construction of the asset reaches the expected serviceable state shall be
taken as the entry value of fixed assets. If the construction in progress has reached the expected serviceable condition, but the final accounts of
completion have not yet been handled, from the date of reaching the expected serviceable condition, it shall be transferred to fixed assets according to
the estimated value according to the project budget, cost or actual cost of the project, and the depreciation of fixed assets shall be accrued according
to the Company’s fixed assets depreciation policy. The original estimated value shall be adjusted according to the actual cost after the completion of
final accounts, but the amount of depreciation that has been accrued shall not be adjusted.
22. Borrowing costs
1. Recognition principles of capitalization of borrowing costs
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Borrowing costs incurred by the Company that are directly attributable to the acquisition, construction or production of qualifying assets, shall
be capitalized and included in the cost of relevant assets. Other borrowing costs shall be recognized as expenses according to the amount incurred and
included in the profits or losses in the current period.
Assets eligible for capitalization refer to fixed assets, investment properties, inventory and other assets that are expected to be usable or salable
after a considerable period of purchase and construction or production activities.
Capitalization shall commence when:
(1)Expenditures are being incurred, which comprise disbursements incurred in the form of payments of cash, transfer of non-monetary assets or
assumption of interest-bearing debts;
(2)Borrowing costs are being incurred, and;
(3)Purchase, construction or manufacturing activities that are necessary to prepare the assets for their intended use or sale are in progress.
2. Capitalization period for borrowing costs
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its cessation; period of suspension for
capitalization is excluded.
Capitalization of borrowing costs shall cease when the qualifying asset under acquisition, construction or production gets ready for intended use
or sale.
Where part of the project of acquisition, construction or production of qualifying assets has been completed respectively and can be put into use
individually, capitalization of borrowing costs of that part should cease.
Where each part of assets purchased, constructed or manufactured has been completed separately but can be used or sold only after all parts have
been completed, capitalization of borrowing costs shall cease at the completion of all parts of the said assets.
3. Period of suspension for capitalization
Capitalization of borrowing costs shall be suspended during periods in which purchase, construction or manufacturing of assets eligible for
capitalization is interrupted abnormally, and the interruption is for a continuous period of more than 3 months; if the interruption is the necessary
procedure to prepare the assets purchased, constructed or manufactured assets eligible for capitalization for their intended use or sale, the borrowing
costs shall continue to be capitalized. Borrowing costs incurred during the interruption shall be recognized in current profit or loss, and shall continue
to be capitalized when purchase, construction or manufacturing of the relevant assets resumes.
4. Measurement of capitalized amounts of borrowing costs
Interest charges on special borrowings (excluding interest income on unused borrowings deposited in the bank, or investment income on
temporary investment) and their ancillary expenses shall be capitalized before the assets purchased, constructed or produced that meet the
capitalization conditions are ready for intended use or sale.
The amount of capitalized interest on general borrowings is calculated by the weighted average of the excess portion of the accumulative asset
expenditures over the special borrowings multiplied by the capitalization rate of general borrowings. The capitalization rate is determined based on
the weighted average interest rate of general borrowings.
Where there are discounts or premiums on borrowings, the amounts of interest for each accounting period shall be adjusted taking account of
amortizable discount or premium amounts for the period by effective interest method.
23. Right-of-use assets
The Company initially measures the right-of-use assets on the basis of the cost, which includes:
1. The amount of initial measurement of lease liabilities;
2. For the lease payment paid on or before the beginning of the lease term, if there is lease incentive plan, the relevant amount of lease
incentive enjoyed shall be deducted;
3. The initial direct costs incurred by the company;
4. The costs expected to be incurred by the Company to dismantle or remove the leased assets, restore the site where the leased assets are
located or restore the leased assets to the state agreed in the lease terms (excluding the costs incurred for the production of inventories).
After the beginning date of the lease term, the Company adopts the cost model for subsequent measurement of the right-of-use assets.
If it can be reasonably determined that the ownership of the leased asset is obtained at the expiration of the lease term, the Company shall accrue
depreciation within the remaining service life of the leased asset. If it is impossible to reasonably determine that the ownership of the leased asset can
be obtained at the expiration of the lease term, the Company shall accrue depreciation within the shorter term between the lease term and the
remaining service life of the leased asset. For the right-of-use assets with impairment provision, the depreciation shall be accrued on the basis of the
book value after deducting the impairment provision in the future with reference to the aboveprinciples.
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24. Intangible assets
(1) Initial measurement
Intangible assets are non-monetary assets with no physical form that can be identified and owned or controlled by the Company, including land
use right, computer software, patent right, non-patented technology, etc.
Costs of purchased intangible assets include purchase prices, relevant taxes, and other expenditures that are directly attributable to the intangible
assets before they reach working conditions for their intended use. If payments for the purchase of intangible assets are extended beyond the normal
credit terms with financing nature, the costs of intangible assets are determined on the basis of present values of the purchase prices.
For intangible assets obtained from debtors in settlement of their liabilities in case of debt restructuring, the book value is determined based on
the fair value of the intangible assets, and the difference between the book values of debt restructuring and the fair values of the intangible assets used
to pay the debt shall be included in the current profits or losses.
If the exchange of non-monetary assets has commercial substance, and the fair values of the assets received or surrendered can be measured
reliably, the book values of intangible assets received from the exchange of non-monetary assets shall be determined based on the fair values of the
assets surrendered unless there is any conclusive evidence that the fair values of the assets traded in are more reliable. If the exchange of non-
monetary assets does not meet the above criteria, the costs of the intangible assets received shall be the book values of the assets surrendered and
relevant taxes paid, and no profits or losses shall be recognized.
For intangible assets obtained through business absorption or combination under common control, the book value is determined by the carrying
amounts of the combined party. For intangible assets obtained through business absorption or combination not under common control, the book value
is determined by the fair value of the intangible assets.
The costs of internally developed intangible assets include: the materials consumed during the development, labor costs, registration fees,
amortization of other patents and licenses applied during the development, interest expense eligible for capitalization, as well as other direct costs
incurred for the intangible assets to reach working condition for their intended use.
(2) Subsequent measurement
The Company determines the useful life of intangible assets on acquisition, which are classified as intangible assets with limited useful life and
indefinite useful life.
1) Intangible assets with limited useful lives
For the intangible assets with limited service life, they are amortized by the straight-line method within the period of bringing economic benefits
to the enterprise. The estimated life and basis of intangible assets with limited service life are asfollows:
Item Expected service life Basis for estimates
Software 10 years Expected service life
Land use rights 50 years Certificate of land using right
Patent rights 10 years Benefit period
Non-proprietary technology 10 years Benefit period
The service life of the intangible assets with limited service life and its amortization method shall be reviewed at the end of each period. If it
differs from its previous estimate, adjustment will be made accordingly.
After review, the service life and amortization method of the intangible assets at the end of the period this year are not different from that
estimated previously.
2) Intangible assets with uncertain useful lives
Intangible assets with unforeseeable economic benefits to the Company are deemed to be intangible assets with an indefinite useful life.
Intangibles assets with uncertain useful lives are not amortized during the holding period, but are reviewed for remaining useful lives at each
year end. If the useful lives are still uncertain after another review at the end of the year, the impairment tests will continue to be conducted during
each accounting period.
(3) Criteria for classification of research phase and development phase of internal R&D projects of theCompany
Research phase: the phase in which original and planned investigation and research are carried out with purpose of gaining and understanding
new scientific or technical knowledge.
Development phase: before commercial production and utilization, the phase in which the research achievement or other knowledge is applied to
a particular project or design in order to produce new or substantially improved materials, devices, products, etc.
The expenditure of internal R&D projects incurred during research phase is recognized in profit or loss when incurred.
(4) Criteria for expenditures during the development phase qualifying for capitalization
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Expenditures arising from development phase on internal R&D projects must be capitalized if the Company can satisfy all of the following
criteria:
1) There is technical feasibility of completing the intangible assets (so that they will be available for use or sale);
2) There is an intention to complete and use or sell the assets;
3) how the intangible asset will generate economic benefits including there is evidence that the products produced using the intangible asset has a
market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible
asset;
4) There are adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible assets;
5) The expenditure attributable to the development phase of intangible assets can be reliablymeasured.
If the expenditure at the development phase does not meet the above condition, it shall be charged to current profits or losses when occurring.
The development expenditures which have been included in the profit or loss in the previous periods will not be recognized as an asset in the future
period. The capitalized expenditures in the development phase are shown in the balance sheet as development expenditures and are converted into
intangible assets from the date of the project’s intended use.
25. Impairment of long-term assets
On the balance sheet date, the Company judges whether there is any sign of possible impairment of long-term assets. If there is any sign of
impairment of a long-term asset, the recoverable amount shall be estimated on the basis of a single asset; if it is difficult to estimate the recoverable
amount of a single asset, the recoverable amount of the asset group to which the asset belongs shall bedetermined.
The recoverable amount of an asset is estimated based on the higher of the net amount of its fair value less disposal expenses and the present
value of the expected future cash flow of the asset.
If the measurement results of the recoverable amount show that the recoverable amount of the long-term asset is lower than its book value, the
book value of the long-term asset shall be written down to the recoverable amount, and the written-down amount shall be recognized as the
impairment loss of the asset, which shall be recorded into the current profit and loss, and the corresponding asset impairment provision shall be drawn
at the same time. Once the impairment loss of assets is recognized, it shall not be reversed in the future accounting period.
After the asset impairment loss is recognized, the depreciation or amortization expenses of the impaired asset shall be adjusted accordingly in
the future period, so that the adjusted asset book value (deducting the estimated net residual value) will be systematically apportioned over the
remaining service life of the asset.
For goodwill and intangible assets with uncertain service life due to business combination, no matter whether there is any sign of impairment or
not, impairment test shall be carried out every year.
In the impairment test of goodwill, the book value of goodwill would be apportioned to asset group or portfolio of asset group expected to
benefit from the synergy effect of an enterprise merger. When carrying out an impairment test on the relevant asset group or portfolio of asset group
containing goodwill, if there is a sign of impairment on the asset group or portfolio of asset group related to the goodwill, the Company first
calculates the recoverable amount after testing the asset group or portfolio of asset group which does not contain the goodwill for impairment, and
then compares it with the related book value to recognize the corresponding impairment loss. Next, the Company conducts an impairment test on the
asset group or portfolio of asset group which contains the goodwill and compares the book value of the related asset group or portfolio of asset group
(book value includes the share of goodwill) with the recoverable amount. If the recoverable amount of the related asset group or portfolio of asset
group is lower than the book value, the Company will recognize the impairment loss ofgoodwill.
26. Long-term deferred expenses
(1) Amortization method
Long-term deferred expenses refer to expenses that have already been spent by the Company, but shall be apportioned in the current period and
the future periods and the benefit period is over 1 year. Long-term prepaid expenses are amortized using the straight-line method over the period of
projected earnings.
(2) Amortization period
Type Amortization period Notes
Leasehold improvement Expected service life or lease term,
whichever is lower
Power Grid access fee 10 years
Software system implementation fee 5 years
Repair and maintenance fee 2-3 years
27. Contractual liabilities
The Company recognizes as a contractual liability the portion of its obligation to transfer commodities to a customer for which the customer
consideration has been received or is receivable.
28. Employee compensation
(1) Accounting treatment of short-term employee compensation
Short term compensation refers to the employee compensation that shall be paid by the Company within 12 months after the end of the annual
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report period when employees provide relevant services, except for post-employment welfare and dismissal welfare. During the accounting period
when employees provide services, the Company recognizes the short-term benefits payable as a liability and includes the same in the relevant asset
costs and expenses on the basis of the beneficiaries of the services provided by employees.
(2) Accounting treatment for post-employment benefits
Post-employment benefits refer to various forms of remuneration and benefits provided by the Company after employees retire or terminate
labor relations with the enterprise in order to obtain the services provided by employees, except short-term remuneration and dismissal benefits.
All post-employment benefit plans of the Company are defined contribution plans.
The defined contribution plan for post-employment benefits is mainly to participate in the social basic endowment insurance, unemployment
insurance, etc., organized and implemented by local labor and social security institutions. During the accounting period when employees provide
services to the Company, the amount of deposit payable calculated according to the defined deposit plan shall be recognized as liabilities and
included in the current profit and loss or related asset costs.
(3) Accounting treatment for termination benefits
Termination benefits refer to the compensation paid to an employee when the Company terminates the labor relationship with an employee
before the labor contract expires, or offers compensation for encouraging the employee to accept the redundancies voluntarily. The liabilities arising
from the termination of labor relations with the employee are determined, and also included in the current profit and loss, at the time when the
Company cannot unilaterally withdraw the termination of the labor relationship plan or redundancies proposal, or the time when the cost associated
with restructuring involving payment of termination benefits is confirmed, whichever is earlier.
The Company provides early retirement benefits to employees who accept internal retirement arrangements. Early retirement welfare refers to
the wages paid to the employees who fail to reach the retirement age stipulated by the state and voluntarily quit their jobs with the approval of the
Company’s management and the social insurance premiums paid for them. The Company shall pay the internal retirement benefits to the early retired
employees from the commencement date of the internal retirement arrangement to the date when the employees reach the normal retirement age. For
the early retirement welfare, the Company shall carry out accounting treatment according to the termination benefits. When the relevant recognition
conditions of the termination benefits are met, the wages and social insurance premiums to be paid to the early retired employees from the date when
the employees stop providing services to the normal retirement date shall be recognized as liabilities and included in the current profit and loss on a
lump-sum basis. The difference caused by the change of actuarial assumption and the adjustment of welfare standard of early retirement welfare shall
be included in the current profit and loss when it occurs.
29. Lease liabilities
The Company initially measures the lease liabilities according to the present value of the unpaid lease payments at the beginning of the lease
term. When calculating the present value of lease payments, the Company takes the interest rate implicit in lease as the discount rate; If the interest
rate implicit in lease cannot be determined, the incremental borrowing rate of interest of the Company shall be used as the discount rate. Lease
payments include:
(1) The fixed payment amount and actual fixed payment amount after deducting the relevant amount of lease incentive;
(2) Variable lease payments depending on index or ratio;
(3) When the Company reasonably determines that the option will be exercised, the lease payment includes the exercise price of the option;
(4) When the lease term reflects that the Company will exercise the option of terminating the lease, the lease payment includes the payment required to
exercise the option of terminating the lease;
(5) The amount expected to be paid in the light of the guarantee residual value provided by the Company.
The Company determines the expense of the interest of lease liability in each period of the lease term in the light of the fixed discount rate, and
includes it in the current profit and loss or the cost of relevant assets.
The amount of variable lease payments not included in the lease liabilities shall be included in the current profits and losses or relevant asset
costs when actually incurred.
30. Estimated Liabilities
1. Recognition criteria of estimated liabilities
When an obligation related to the contingent events satisfies all the following conditions, it is recognized by the Company as estimated liabilities:
The obligation is the current obligation of the Company;
The performance of obligation is likely to result in the outflow of economic benefits from the Company;
The cost of the obligation can be measured in a reliable way.
2. Measurement of estimated liabilities
The estimated liabilities of the Company are initially measured on the basis of the best estimate of the expenditure required to perform the
relevant current obligations.
When determining the best estimate, the Company considers factors such as risks, uncertainties and time value of money related to contingent
events. Where the time value of money has a significant impact, the best estimate is determined by discounting the relevant future cash outflows.
The best estimates are handled as follows:
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In case that there is a continuous range (or interval) of required expenditures, within which the possibility of occurrence of various results is the
same, the best estimate is determined by the average of the middle value of the range, that is, the average of the upper and lower limits.
In case that there is no continuous range (or interval) of required expenditures, or there is a continuous range but the possibility of various results
in the range is different, if the contingency involves a single item, the best estimate should be determined based on the most probable amount; if a
contingency involves multiple items, the best estimate is determined based on various possible outcomes and associated probabilities.
If all or part of the expenses required by the Company to settle the provisions are expected to be compensated by a third party, the compensation
amount is separately recognized as an asset when it is basically confirmed to be received, and the recognized compensation amount should not exceed
the book value of estimated liabilities.
31. Share-based payments
1. Categories of share-based payments
The share based payment of the Company is divided into equity-settled share-based payment and cash-settled share-based payment.
2. Determination method of fair value of equity instruments
For the granted equity instruments such as options with active market, their fair value shall be determined according to the quoted price in the
active market. For the granted equity instruments without active market, the option pricing model is used to determine their fair value. The following
factors are considered in the option pricing model: (1) the exercise price of the option; (2) the validity period of the option; (3) the current price of the
target share; (4) the expected volatility of the share price; (5) the expected dividend of the share; (6) the risk free interest rate.
When determining the fair value of the equity instrument on the grant date, the impact of market conditions and non-vesting conditions specified
in the share-based payment agreement shall be considered. If there are non-vesting conditions for share-based payment, as long as the employees or
other parties meet all non-market conditions (such as service term, etc.) in all of the vesting conditions, the corresponding cost of the services
received shall be recognized.
3. Basis for determining the best estimate of exercisable equity instruments
At each balance sheet date in the vesting period, the Company would make best estimate in accordance with the newly acquired information
such as changes in the number of employees with exercisable rights, and amend the number of estimated exercisable equity instruments. On the
exercise date, the ultimate estimated number of exercisable equity instruments coincides with the actual number.
4. Accounting treatment
The equity-settled share-based payment shall be measured at the fair value of the equity instrument granted to the employee. If the right is
exercisable immediately after the grant, the relevant cost or expense shall be recorded in accordance with the fair value of the equity instrument on
the grant date, and the capital reserve shall be increased accordingly. If the right is not exercisable until the service within the waiting period is
completed or the performance conditions are met, on each balance sheet date within the waiting period, the services acquired in the current period
shall be included into relevant costs or expenses and capital reserves based on the best estimate of the number of the equity instruments of the
exercisable rights and based on the fair value on the grant date of the equity instruments. No adjustments shall be made after the vesting date for the
related costs or expenses recognized and total owners’ equity.
The cash-settled share-based payment is measured at the fair value of the liabilities borne by the Company and calculated based on shares or
other equity instruments. Where the right is feasible immediately after the grant, the fair value of the liabilities borne by the Company shall be
included into the relevant costs or expenses s at the fair value of the liabilities assumed by the Company on the grant date, and the liabilities shall be
increased accordingly. Where the share-based payment is not exercisable until the service in the vesting period is completed or specified performance
conditions are met, then at each balance sheet date within the vesting period, the service obtained in the current period shall be included in cost or
expenses and in liabilities at the fair value of the Company’s liabilities based on the best estimates of the quantity of exercisable equity instruments
made by the Company. At each balance sheet date and settlement date before relevant liabilities are settled, the fair value of the liabilities is
remeasured and the changes are recognized in profit or loss.
If the granted equity instrument is cancelled in the waiting period, the Company will treat the cancellation of the granted equity instrument as
accelerated exercise, and the amount to be recognized in the remaining waiting period will be included in the current profit and loss immediately, and
capital reserve will be recognized at the same time. If the employee or other parties can choose to meet the non-vesting conditions but fail to meet
them within the waiting period, the Company will treat them as the cancellation of the granted equityinstrument.
32. Preferred stock, perpetual bonds and other financial instruments
The Company classifies the financial instruments and their components at initial recognition into either financial liabilities or equity instruments,
in accordance with the “Financial Instruments Standards”, on the basis of the contract terms of and the economic substances but not only the legal
forms reflected by the preferred stock, perpetual bonds and other financial instruments issued, together with the definitions of financial liabilities and
equity instruments:
1. If one of the following conditions is met, the financial instrument issued shall be classified as a financialliability:
(1) a contractual obligation to deliver cash or other financial assets to another entity;
(2) a contractual obligation to exchange with another entity a financial asset or financial liability under potential unfavorable conditions;
(3) a non-derivative contract, which shall be or may be settled by the Company’s own equity instruments in the future, and that the Company would
deliver a variable number of its own equity instruments;
(4) a derivative contract, which shall be or may be settled by the Company’s own equity instruments in the future, but except for which the Company
would deliver a fixed quantity of its own equity instruments in exchange for a fixed quantity of cash or other financial assets.
2. If all of the following conditions are met, the financial instrument issued shall be classified as an equityinstrument:
(1) The financial instrument does not include those delivering cash or other financial assets to another entity, or contractual obligations under
potential unfavorable conditions to exchange financial assets or financial liabilities with another entity;
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(2) For a financial instrument that shall be or may be settled by the Company’s own equity instruments, if the financial instrument is a non-
derivative instrument, it must not include a contractual obligation to deliver a variable quantity of the Company’s own equity instruments
for settlement; if the financial instrument is a derivative instrument, it can only be settled by the fixed quantity of its own equity
instruments in exchange for a fixed number of cash or other financial assets.
3. Accounting treatment
For the financial instrument classified as an equity instrument, any interest expense or dividend distribution is recognized as profit distribution of
the issuer, the buy-backs and write-offs are recognized as changes in equity, and transaction costs such as handling charges, commissions are
deducted from equity;
For the financial instrument classified as a financial liability, any interest expense or dividend distribution is dealt with as borrowing costs, and
any gain or loss on the buy-backs or redemptions are recognized through profit or loss, and transaction costs such as handling charges, commissions
are included into the initial measurement of the financial instrument issued.
33. Revenue
Accounting policies for recognition and measurement of revenue
(1) General principles of revenue recognition
The Company has fulfilled its obligations under the contract, that is, when the customer acquires control of the relevant goods or services, the
revenue is recognized according to the transaction price apportioned to the performance obligations.
Performance obligation refers to the commitment of the Company in the contract to assign commodities or services that can be clearly
distinguished to the customer.
Obtaining the control right of the related commodity means to be able to dominate the use of the commodity and obtain almost all the economic
benefits from it.
The Company shall evaluate the contract on the commencement date of the contract, identify the individual performance obligations contained in
the contract, and determine whether each individual performance obligation shall be performed within a certain period of time or at a certain point in
time. If one of the following conditions is satisfied, the performance obligation shall be performed within a certain period of time, and the Company
shall recognize the income within a certain period of time according to the performance progress of the Company: (1) the client shall obtain and
consume the economic benefits brought by the performance of the Company as the Company performs the contract; (2) the customer is able to control
the goods under construction during the performance of the Company; and (3) the products produced by the Company during the performance of the
contract are of irreplaceable use, and the Company is entitled to collect payment for the part of the contract which has been completed so far during
the whole term of the contract. Otherwise, the Company recognizes revenue at the time point when the customer acquires control of the relevant
goods or services.
For the performance obligations performed during a certain period of time, the Company will use the output/input method to determine the
appropriate performance schedule based on the nature of the goods and services. The output method determines the performance schedule according
to the value to the customer of the goods that have been transferred to the customer (the input method determines the performance schedule according
to the Company’s input to fulfill the performance obligation). If the performance schedule cannot be reasonably determined and the Company is
expected to be compensated for the costs already incurred, the revenue shall be recognized in accordance with the amount of costs already incurred
until the performance progress can be reasonably determined.
(2) Specific method of income recognition
The timing of revenue recognition of the Company for major products respectively are as follows: (1) For BOPP cigarette films, cigarette labels,
aseptic packaging products, when the products are delivered to the locations designated by the customers, and the delivery is completed and the
evidence of transfer of control of the goods is obtained from the customers. (2) For BOPP flat films and lithium battery separators, when the delivery
has been completed according to the method agreed by the customers, and the evidence of transfer of control of goods is obtained from the customers
or the carriers designated by the customers. (3) For specialty paper products, the products are delivered to the locations designated by the customers,
the delivery is completed and the evidence of conforming requirements from customers is obtained.
(3) Revenue treatment principles for specific transactions.
1) Contracts with sales return clauses
When the customer obtains the control right of the relevant goods, the revenue is recognized according to the amount of consideration expected
to be entitled to receive due to the transfer of goods to the customer (i.e., excluding the amount expected to be refunded due to sales return), and the
liabilities are recognized according to the amount expected to be refunded due to sales return.
When selling goods, the balance of the book value of the goods expected to be returned after deducting the expected cost of recovering the goods
(including the impairment of the value of the returned goods) shall be accounted for under "return cost receivable".
2) Contracts with warranty provisions
Assess whether a warranty provides a customer with a service in addition to the assurance that the product complies with agreed-upon
specifications. If the Company provides additional services, it shall be regarded as a single performance obligation and subject to accounting
treatment in accordance with the revenue standards; otherwise, the warranty responsibility shall be subject to accounting treatment in accordance with
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the accounting standards for contingencies.
3) Sales contracts with additional customer purchase options
The Company evaluates whether the option provides a material right to the customer. Where material rights are provided, the transaction price
shall be apportioned to the performance obligation as a single performance obligation, and the corresponding revenue shall be recognized when the
customer exercises the purchase option to obtain the control right of the relevant goods in the future or when the option expires. If the separate selling
price of the customer's additional purchase option cannot be directly observed, a reasonable estimate shall be made after comprehensively considering
all relevant information such as the difference in discounts obtained by the customer upon exercise and non-exercise of the option and the possibility
of the customer exercising the option.
4) Contracts for granting intellectual property licenses to customers
Assess whether the intellectual property license constitutes a single performance obligation, and further determine whether it is performed within
a certain period or at a certain point in time. If the Company grants an intellectual property license to a customer and agrees to collect royalties
according to the actual sales or use of the customer, the revenue shall be recognized at the later of the following two points: the subsequent sales or
use of the customer occurs; and the Company performs relevant performance obligations.
5) After-sales repurchase
①Contracts with repurchase obligations due to forward arrangements with customers: in this case, the customer does not obtain control of the
relevant goods at the time of sales, so they are accounted for accordingly as lease transactions or financing transactions. Where the repurchase price is
lower than the original selling price, it shall be regarded as a lease transaction and accounted for in accordance with the relevant provisions of the
Accounting Standards for Business Enterprises.; If the repurchase price is not lower than the original selling price, it shall be regarded as a financing
transaction, and the financial liabilities shall be recognized when the customer's payment is received, and the difference between the payment and the
repurchase price shall be recognized as interest expenses during the repurchase period. If the Company does not exercise the repurchase right when it
expires, the financial liabilities shall be derecognized when the repurchase right expires, and the revenue shall be recognized at the same time.
②Contracts with repurchase obligations incurred at the request of customers: if it is assessed that the customer has significant economic drivers,
the after-sales repurchase shall be treated as a lease transaction or a financing transaction and accounted for in accordance with the provisions of 1) of
this article; otherwise, it shall be treated as a sales transaction with sales return clauses.
6) Contracts that charge customers initial fees that do not need to be returned
The initial fee charged to the customer at (or near) the commencement of the contract that is not refundable shall be included in the transaction
price. If the Company assesses that the initial fee is related to the transfer of promised goods to the customer and the goods constitute a single
performance obligation, the revenue shall be recognized according to the transaction price apportioned to the goods when the goods are transferred; If
the initial fee is related to the transfer of promised goods to the customer but the goods do not constitute a single performance obligation when the
single performance obligation containing the goods is performed, the revenue shall be recognized according to the transaction price apportioned to the
single performance obligation; If the initial fee is not related to the transfer of the promised goods to the customer, the initial fee shall be recognized
as the advance receipt for the goods to be transferred in the future and shall be recognized as revenue when the goods are transferred in the future.
Differences in accounting policies for revenue recognition due to different business models for similar businesses
34. Contract cost
(1) Costs to fulfil a contract
For the cost incurred for the fulfillment of a contract, if it does not fall within the scope of other accounting standards for business enterprises
other than the revenue standards and meets all the following criteria, it shall be recognized as an asset from the costs incurred to fulfill a contract
1) The cost is directly related to a current or to an anticipated contract, including direct labor, direct materials, manufacturing expenses (or
similar expenses), costs clearly borne by the customer, and other costs incurred solely due to the contract;
2) The costs enhance resources of the Company that will be used in satisfying performance obligations in the future.
3) The costs are expected to be recovered.
The asset is reported in inventories or other non-current assets based on whether the amortization period exceeds one normal business cycle at
the time of its initial recognition.
(2) Costs to obtain a contract
If the incremental cost incurred by the Company in obtaining the contract is expected to be recoverable, it shall be recognized as an asset of
obtaining a contract. Incremental cost refers to the cost that the Company incurs to obtain a contract with a customer that it would not have incurred if
the contract had not been obtained, such as sales commission. If the amortization period does not exceed one year, it shall be included in the current
profits and losses when it occurs.
(3) Amortization of contract costs
The above assets related to contract costs are amortized at the time of fulfilment of performance obligations or according to the fulfillment
progress of performance obligations on the same basis as the recognition of revenue from goods or services related to the assets and included in
current profits and losses.
(4) Impairment of contract costs
If the book value of the above-mentioned assets related to the contract cost is higher than the difference between the residual consideration
expected to be obtained by the Company due to the transfer of the goods related to the asset and the estimated cost to be incurred for the transfer of
the related goods, the excess shall be provided for impairment and recognized as asset impairment loss.
After the impairment provision is made, if the factors of impairment in the previous period change, making the difference between the above two
items higher than the book value of the asset, the originally made asset impairment provision shall be reversed and included in the current profits and
losses, but the book value of the reversed asset shall not exceed the book value of the asset on the reversal date assuming that no impairment provision
is made.
35. Government grant
(1) Type
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Government subsidies are transfers of monetary or non-monetary assets from the government to the Group at nil consideration. According to the
subsidy targets stipulated in the relevant government documents, government subsidies are classified into government subsidies related to assets and
government subsidies related to income.
The government subsidies related to assets refer to the government subsidies obtained by the Company for purchasing and constructing or
forming long-term assets in other ways. Government subsidies related to income refer to government subsidies other than those related to assets.
(2) Recognition of government subsidies
If there is evidence at the end of the period that the Company can meet the relevant conditions specified in the financial support policy and it is
expected to receive the financial support funds, the government subsidy shall be recognized according to the receivable amount. Otherwise,
government subsidies are recognized when they are actually received.
If a government subsidy is a monetary asset, it is measured at the amount received or receivable. If a government subsidy is a non-monetary asset,
it is measured at fair value. If the fair value cannot be obtained in a reliable way, it is measured at the nominal amount (RMB1). Government subsidies
measured at nominal amounts are recognized directly in the current profit and loss.
(3) Accounting treatment
According to the essence of economic business, the Company determines whether the total amount method or the net amount method should be
used for accounting treatment of a certain type of government subsidy business. Generally, the Company only selects one method for the same or
similar government subsidy business, and consistently uses the method for the business.
The government subsidies related to the assets shall be written off against the book value of the relevant assets or recognized as deferred income.
If the government subsidy related to the asset is recognized as deferred income, it shall be recorded into the profit and loss in stages in accordance
with a reasonable and systematic method during the service life of the asset built or purchased.
If the government subsidy related to the income is used to compensate the relevant expenses or losses of the enterprise in the future period, it
shall be recognized as deferred income and recorded into the current profit and loss, or write down the relevant costs during the period of recognition
of the relevant expenses or losses; If it is used to compensate the related expenses or losses incurred by the enterprise, it shall be directly recorded into
the current profit and loss or write down the relevant costs when obtained.
The government subsidies related to the daily activities of the enterprise shall be included in other income or used to write off related costs and
expenses; Government subsidies not related to the daily activities of the enterprise shall be included in the non-operating revenue and expenditure.
Government subsidies related to the discount interest received from policy-related preferential loans offset the relevant borrowing costs; if the
policy-based preferential interest rate loan provided by the lending bank is obtained, the borrowing amount actually received shall be taken as the
entry value of the borrowings, and borrowing cost should be calculated using the preferential interest rate according to the loan principal and the
policy.
In case that a confirmed government subsidy is required to be returned, the book value of the asset is adjusted if the book value of relevant assets
is offset at the initial recognition; if there is related deferred income, the book balance of deferred income should be offset, and the excess is included
in the current profit and loss; in case of other circumstances, it is directly included in the current profit and loss.
36. Deferred income tax assets/Deferred income tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences arising between the tax bases of assets and
liabilities and their carrying amounts (temporary differences). On the balance sheet date, deferred tax assets and deferred tax liabilities are measured at
the applicable tax rate during the period when the asset is expected to be recovered or the liability is expected to be settled.
(1) Basis for recognition of deferred income tax assets
The Company recognizes the deferred tax assets generated by the deductible temporary differences to the extent that it is likely to obtain the
taxable income that can be used to offset the deductible temporary differences, carry forward the deductible losses and tax credits in the following
years. However, deferred tax assets arising from the initial recognition of assets or liabilities in transactions with the following characteristics shall not
be recognized: (1) the transaction is not a business combination; and (2) the transaction does not affect the accounting profit or taxable income or
deductible loss.
For the deductible temporary differences related to the investment of associated enterprises, if the following conditions are met at the same time,
the corresponding deferred tax assets shall be confirmed: the temporary differences are likely to be reversed in the foreseeable future, and the taxable
income used to deduct the deductible temporary differences is likely to be obtained in the future.
(2) Basis for recognition of deferred income tax liabilities
The Company recognizes the taxable temporary differences that should be paid but not paid in the current period and the previous period as
deferred tax liabilities, excluding:
1) The temporary difference formed by the initial confirmation of goodwill;
2) The transaction or event not formed by business combination, and the occurrence of the transaction or event does not affect the accounting profit or the
temporary difference formed by the taxable income (or deductible loss);
3) For the taxable temporary difference related to the investment in subsidiaries and associated enterprises, the time of reversal of the temporary difference
can be controlled and the temporary difference is unlikely to be reversed in the foreseeable future.
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(3) When the following conditions are met at the same time, the deferred income tax assets and deferred income tax liabilities are
presented at the net amount after offset
1) The enterprise has the legal right to settle the current income tax assets and current income tax liabilities with net amount;
2) The deferred income tax assets and the deferred income tax liabilities may be related to the income tax levied by the same tax office on the same or
different taxpayer. In the latter case, the involved tax payers intend to settle the current income tax assets and current income tax liabilities with net
amount, or obtain assets and pay off debts at the same time in each future period when the important deferred income tax assets and deferred income tax
liabilities are reversed.
37. Leases
(1) Leases
On the commencement date of the contract, the Company evaluates whether the contract is a lease or contains a lease. If one party to the contract
abalienates the right to control the use of one or more identified assets within a certain period in exchange for consideration, the contract is a lease or
contains a lease.
(1) Split of lease contract
If the contract contains multiple separate leases at the same time, the Company will split the contract and carry out accounting treatment for each
separate lease.
When the contract includes both lease and non-lease parts, the Company will split the two parts, the lease part shall be subject to accounting
treatment in accordance with the lease standards, and the non-lease part shall be subject to accounting treatment in accordance with other applicable
accounting standards for enterprises.
(2) Merger of lease contracts
When two or more contracts containing leases concluded by the Company and the same transaction party or its related parties at the same time or
at a similar time that meet one of the following criteria, they will be merged into one contract for accounting treatment:
1) The two or more contracts are concluded based on the overall commercial purpose and constitute a package deal, which cannot be understood
if not considered as a whole.
2) The amount of consideration for one of the two or more contracts depends on the pricing or fulfilment of other contracts.
3) The right to use the assets transferred under the two or more contracts together constitute a separate lease.
(3) Accounting treatment of the Company as the lessee
At the commencement of the lease term, the Company recognizes the right-of-use assets and lease liabilities for leases, except for short-term
leases and low-value asset leases that apply simplified treatment.
1) Short-term lease and low-value asset lease
A short-term lease is a lease that has a lease term of 12 months or less and does not include an option to purchase. Low-value asset lease refers to
the lease with lower value when a single leased asset is a brand-new asset.
2) See Notes 23 and 30 for the accounting policies of right-of-use assets and lease liabilities.
(4) Accounting treatment of the Company as the lessor
1) Classification of leases
Leases are divided by the Company into finance leases and operating leases at the commencement of leases. Finance lease is a lease that has
transferred in substance all the risks and rewards related to the ownership of an asset. The ownership of it may or may not eventually be transferred.
Operating lease refers to a lease other than a financing lease.
Where a lease satisfies one or more of the following criteria, the Company shall recognize it as a finance lease:
① The ownership of the leased asset is transferred to the lessee when the term of lease expires.
② The lessee has the option to buy the leased asset at a price which is expected to be far lower than the fair value of the leased asset at the date
when the option becomes exercisable.
③ Even if the ownership of the asset is not transferred, the lease term covers the major part of the use life of the leased asset.
④ The present value of the minimum lease receipts on the lease beginning date amounts to substantially all of the fair value of the leased asset
on the lease beginning date;
⑤ The leased assets are of a specialized nature that only the lessee can use them without making major modifications.
Where a lease satisfies one or more of the following criteria, the Company may also recognize it as a finance lease:
① If the lessee cancels the lease, the lessee shall bear the losses caused to the lessor by the cancellation of the lease.
②Gains or losses arising from fluctuations in the fair value of residual values of assets are attributable to the lessee.
③The lessee can continue the lease at a rent that is far below the market level until the next period.
2) Accounting treatment for finance leases
On the date when lease starts, the Company recognizes the finance leases as the receivable of the financial lease which is finally derecognized as
the finance leasing assets.
When the finance lease receivables are initially measured, the sum of the unsecured residual value and the present value of the lease receivables
that have not been received on the beginning date of the lease term discounted at the implicit interest rate of the lease shall be taken as the entry value
of the finance lease receivables. Lease receipts include:
①The amount of fixed payment and actual fixed payment amount after deducting the relevant amount of lease incentive;
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②Variable lease payments depending on index or ratio;
③ When it is reasonably determined that the lessee will exercise the options, the received amount of lease includes the exercise price of the
options;
④When the lease term reflects that the lessee will exercise the option to terminate the lease, the lease collection includes the amount to be paid
by the lessee to exercise the option to terminate the lease;
⑤The guaranteed residual value provided by the lessee, the party related to the lessee and the independent third party with the financial ability to
perform the guarantee obligation to the lesser.
The Company calculates and recognizes the interest income during each lease term according to the fixed interest rate implicit in lease, and the
variable lease payment obtained but not included in the measurement of net lease investment is included in the current profits and losses when it
actually arises.
3）Accounting treatment of operating leases
The Company recognizes the lease receipts from operating leases as rental income by the straight-line method or other systematic and reasonable
methods during each lease term; The incurred initial direct costs related to the operating lease shall be amortized over the lease term on the same basis
as the recognition of rental income and included in the current profits and losses by stages; The variable lease payments obtained that are related to the
operating lease but not included in the lease receipts are included in the current profits and losses when they actually arise.
38. Termination of accounting
The Company recognizes the items that meet one of the following conditions and have been disposed of or classified as held for sale and can be
separately distinguished as discontinued items:
(1) This item represents an independent main business or a separate main business area.
(2) This item is part of an associated plan to dispose of an independent main business or a separate main businessarea.
(3) This item is a subsidiary acquired exclusively for resale.
The operating profit and loss as well as the disposal profit and loss such as impairment loss and reversal amount of discontinued operation is
listed in the income statement as discontinued operation profit and loss.
39. Hedge accounting
According to the hedging relationship, the Company divides hedging into fair value hedging, cash flow hedging and overseas net investment
hedging.
(1) Hedging instruments that meet the following conditions at the same time shall be treated with hedging accounting method
1) The hedging relationship is only composed of qualified hedging instruments and hedged items.
2) At the beginning of hedging, the Company formally designated hedging instruments and hedged items, and prepared written documents on
hedging relationship, risk management strategy and risk management objectives for hedging.
3) The hedging relationship meets the requirements of hedging effectiveness.
If the hedging meets the following conditions at the same time, the hedging relationship shall be deemed to meet the requirements of hedging
effectiveness:
① There is an economic relationship between the hedged item and the hedging instrument. This economic relationship makes the value of the
hedging instrument and the hedged item change in the opposite direction due to the same hedged risk.
② In the value changes caused by the economic relationship between the hedged item and the hedging instrument, the impact of credit risk does
not dominate.
③ The hedging ratio of the hedging relationship is equal to the ratio of the actual number of hedged items hedged by the Company to the actual
number of hedging instruments hedged, but does not reflect the imbalance of the relative weight of the hedged items and hedging instruments. This
imbalance will lead to ineffective hedging and may produce accounting results inconsistent with the hedging accounting objectives.
(2) Accounting treatment for fair value hedges
1) Gains or losses arising from hedging instruments shall be included in current profit and loss. If the hedging instrument hedges the non-tradable
equity instrument investment (or its components) that is selected to be measured at fair value and its change is included in other comprehensive
income, the gains or losses generated by the hedging instrument are included in other comprehensive income.
2) Gains or losses of the hedged item arising from the hedged risk exposure are included in the current profit and loss, and the book value of the
hedged item that is not measured at fair value is adjusted. If the hedged item is a financial asset (or its component) measured at fair value and its
change is included in other comprehensive income, the profit or loss generated from the hedged risk exposure is included in the current profit and loss,
and its book value has been measured at fair value without adjustment; the hedged item is the non-tradable equity instrument investment (or its
components) that the company chooses to measure at fair value and its change is included in other comprehensive income, the gains or losses arising
from the hedged risk exposure are included in other comprehensive income, and its book value has been measured at fair value without adjustment.
If the hedged item is an unrecognized firm commitment (or its component), the accumulated change in fair value caused by the hedged risk after
the designation of the hedging relationship shall be recognized as an asset or liability, and the relevant gains or losses shall be included in the profits
and losses of each relevant period. When the asset or liability is acquired by fulfilling the established commitment, the initial recognized amount of
the asset or liability is adjusted to include the fair value cumulative change of the recognized hedged item.
If the hedged item is a financial instrument (or its component) measured at amortized cost, the adjustment of book value of the hedged item shall
be amortized according to the actual interest rate recalculated on the amortization date and included in the current profit and loss. The amortization
can start from the adjustment date, but not later than the time point when the hedging gains and losses are adjusted for the termination of the hedged
item. If the hedged item is a financial asset (or its component) measured at fair value and its change is included in other comprehensive income, the
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accumulated recognized hedging gains or losses shall be amortized in the same way and included in the current profit and loss, but the book value of
the financial asset (or its component) shall not be adjusted.
(3) Accounting for cash flow hedges
1) The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge, which is regarded as the cash flow
hedging reserve, and shall be recognized in other comprehensive income: The amount of the cash flow hedge reserve shall be determined by the lower
of the absolute amount of the following two items:
① the cumulative gain or loss on the hedging instrument from inception of the hedge; and
② the present value of the cumulative change in the hedged expected future cash flows of the hedged item from inception of the hedge.
The amount of the cash flow hedge reserve recognized in the other comprehensive income during each accounting period is the change in the current
cash flow hedge reserve.
2) The portion of gain or loss on the hedging instrument (that is, other gains or losses after deducting other comprehensive income) is hedge
ineffectiveness that shall be recognized in profit or loss.
3) The amount of cash flow hedge reserve shall be accounted for as follows:
① The hedged item is an expected transaction, and the expected transaction causes the company to subsequently results in the recognition of a
non-financial asset or non-financial liability, or the expected transaction of non-financial asset or a non-financial liability becomes a firm commitment
for which fair value hedge accounting is applied, the Company shall remove that amount from the cash flow hedge reserve and include it directly in
the initial cost or other carrying amount of the asset or the liability.
② For cash flow hedges other than those covered by previous clause, that amount shall be reclassified from the cash flow hedge reserve
originally recognized in other comprehensive income to profit or loss as a reclassification adjustment in the same period or periods during which the
hedged expected future cash flows affect profit or loss.
③ However, if that amount is a loss and the Company expects that all or a portion of that loss will not be recovered in one or more future periods,
it shall immediately reclassify the amount that is not expected to be recovered into profit or loss as a reclassification adjustment.
(4) Hedges of a net investment in a foreign operation
Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, shall
be accounted for similarly to cash flow hedges:
1) The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge shall be recognized in other
comprehensive income.
The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been accumulated in the foreign currency
translation reserve shall be reclassified from equity to profit or loss as a reclassification adjustment on the disposal or partial disposal of the foreign
operation; and
2) The ineffective portion shall be recognized in profit or loss.
(5) Termination of hedge accounting
In case of any of the following circumstances, the application of hedge accounting shall be terminated:
1) the hedging relationship no longer meets the risk management objective due to changes in risk management objective.
2) the hedging instrument or instruments have been expired, sold or contract terminated or executed.
3) there is no longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to dominate the value
changes that result from that economic relationship.
4) The hedging relationship does not satisfy other conditions of undertaking hedge accounting. If rebalancing of the hedging relationship applies, the
Company shall consider the rebalancing the hedging relationship first and subsequently assess whether the hedging relationship satisfies the
conditions of undertaking hedge accounting.
The termination of hedging accounting may affect the whole or a part of the hedging relationship. When only a part of it is affected, the
remaining unaffected parts still applies hedging accounting.
(6) Option to designate a credit exposure as measured at fair value
When the credit risk exposure of a financial instrument (or its components) is managed by using a credit derivative instrument measured at fair
value through current profit and loss, the financial instrument (or its components) can be at the time of initial recognition, subsequent measurement or
unconfirmed, it shall be designated as a financial instrument measured at fair value with its changes included in the current profit and loss, and written
records shall be made at the same time, but the following conditions shall be met simultaneously:
1) the name of the credit exposure (for example, the borrower, or the holder of a loan commitment) matches the reference entity of the credit
derivative (‘name matching’); and
2) the seniority of the financial instrument matches that of the instruments that can be delivered in accordance with the credit derivative.
40. Repurchase of shares of the Company
The consideration and transaction expenses paid by the Company for repurchasing its own equity instruments reduce the owner’s equity. If the
Company adopts the method of purchasing the Company’s shares to reduce its capital in accordance with legal procedures, the capital stock shall be
reduced according to the total par value of the cancelled shares, and the owner’s equity shall be adjusted according to the difference between the price
paid for the repurchase of shares (including transaction expenses) and the par value of the shares. The part exceeding the total par value shall be offset
against the capital reserve (capital stock premium), surplus reserve and undistributed profits in turn; If it is lower than the total face value, the part
lower than the total face value will increase the capital reserve (capital stock premium). The Company issues, repurchases, sells or cancels its own
equity instruments without recognizing any gains or losses.
The shares repurchased by the Company shall be managed as treasury shares before cancellation or transfer, and all expenses for repurchasing
shares shall be transferred to the cost of treasury shares.
When treasury shares are transferred, the part of transfer income higher than the cost of treasury shares will increase the capital reserve (capital
stock premium); The part lower than the cost of treasury shares shall be offset against the capital reserve (capital stock premium), surplus reserve and
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undistributed profit in turn.
The treasury shares formed by the Company’s repurchase of its common shares are not included in the Company’s profit distribution, and the
Company lists them as an allowance item of owner’s equity in the balance sheet.
41. Changes in other critical accounting policies and accounting estimates
(1) Changes in accounting policies
Content and reason of accounting policy change Procedures for approval Note
The Company has started to implement the Interpretation No. 15 of Accounting Standards for Approval of the board of
Business Enterprises (“accounting treatment of products or by-products produced by directors 1)
enterprises before the fixed assets reach the expected usable state or during the R&D process
for external sales” and “judgment on onerous contracts”) issued by the Ministry of Finance in
2021 since January 1, 2022.
The Company has started to implement the Interpretation No. 16 of Accounting Standards for Approval of the board of
Business Enterprises ("accounting treatment on the income tax impact of dividends related to directors 2)
financial instruments classified as equity instruments by the issuer" and "accounting treatment
on the change of cash-settled share-based payment to equity-settled share-based payment by
enterprises") issued by the Ministry of Finance in 2022 since December 13, 2022.
Details of the changes of accounting policies:
1) Impact of implementing the Interpretation No. 15 of the Accounting Standards for Business Enterprises on the Company
On December 31, 2021, the Ministry of Finance issued the Interpretation No. 15 of the Accounting Standards for Business Enterprises (CK No.
[2021] 35, hereinafter referred to as "Interpretation No. 15"), which shall be implemented from January 1, 2022 on the “accounting treatment of
products or by-products produced by enterprises before the fixed assets reach the expected usable state or during the R&D process for external sales"
and "judgment on onerous contracts".
The implementation of Interpretation No. 15 has no significant impact on the financial statements during the reporting period.
2) Impact of implementing Interpretation No. 16 of the Accounting Standards for Business Enterprises on the Company
On December 13, 2022, the Ministry of Finance issued the Interpretation No. 16 of the Accounting Standards for Business Enterprises (CK No.
[2022] 31), hereinafter referred to as "Interpretation No. 16"), which explains that the accounting treatment of the three matters of Interpretation No.
16 is: "the accounting treatment of initial recognition exemption is not applicable to the deferred income tax related to assets and liabilities arising
from single transactions" shall be implemented from January 1, 2023, allowing enterprises to implement it in advance since the year of issuance, and
the Company has not implemented the accounting treatment related to this matter in advance this year.; "accounting treatment on the income tax
impact of dividends related to financial instruments classified as equity instruments by the issuer" and "accounting treatment on the change of cash-
settled share-based payment to equity-settled share-based payment by enterprises" shall be implemented from the date of promulgation.
The implementation of Interpretation No. 16 has no significant impact on the financial statements during the reporting period.
(2) Accounting estimate change
The main accounting estimates had not changed during the Reporting Period.
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VI. Taxation
1. Main Tax Types and Tax Rates
Tax type Taxation basis Tax rate
Value added tax (“VAT”) Sales of goods, taxable sales service income, 13%、9%、6%
intangible assets or real estate
City maintenance and construction tax Amount of VAT paid 7%, 5%, 1%
Explanation of disclosure for taxpayers with different corporate income tax rates
Taxpayer Income tax rate
The Company 25%
Yunnan Dexin Paper Co., Ltd. 15%
Yunnan Hongchuang Packaging Co., Ltd. 15%
Yunnan Hongta Plastic Co., Ltd. 15%
Hongta Plastic (Chengdu) Co., Ltd. 15%
Yuxi Feiermu Trading Co., Ltd. 25%
Shanghai Energy New Material Technology Co., Ltd. 15%
Zhuhai Energy New Material Technology Co., Ltd. 15%
Guangdong Energy New Material Institute Co., Ltd. 25%
Wuxi Energy New Material Technology Co., Ltd. 15%
Jiangxi Tonry New Energy Technology Development Co., Ltd. 15%
Jiangsu Ruijie New Material Technology Co., Ltd. 25%
Jiangxi Ruijie New Material Technology Co., Ltd. 25%
Suzhou GreenPower New Energy Materials Co., Ltd 15%
Chongqing Energy Newmi Technological Co., Ltd. 15%
Jiangxi Enpo New Material Technology Co., Ltd. 25%
Jiangxi Energy New Material Technology Co., Ltd. 25%
Jiangsu Energy New Material Technology Co., Ltd. 25%
Hunan Energy Advanced New Material Technology Co., Ltd 25%
Ningbo Energy New Material Co., Ltd. 25%
Chongqing Energy New Material Technology Co., Ltd. 15%
Hainan Energy Investment Co., Ltd. 25%
Hubei Energy New Material Technology Co., Ltd. 25%
Jiangsu Sanhe Battery Material Technology Co., Ltd. 25%
Hongchuang Packaging (Jiangsu) Co., Ltd. 25%
Shanghai Energy New Materials Research Co., Ltd. 25%
Energy (Zhuhai Hengqin) New Material Technology Co., Ltd. 20%
Xiamen Energy New Material Co., Ltd. 25%
Yuxi Energy New Material Co., Ltd. 25%
Shanghai Energy Trading Co., Ltd. 25%
Jiangsu Energy Trading Co., Ltd. 25%
Chuangxin New Material (Hong Kong) Co., Ltd. 16.5%
SEMCORP Global Holdings Kft. 9%
SEMCORP Hungary Kft. 9%
SEMCORP Properties Kft. 9%
SEMCORP America Inc. 20%
SEMCORP Manufacturing USA LLC 20%
174
2. Policy and basis for preferential tax treatment
In accordance with the Announcement on Enterprise Income Tax Issues Related to the In-depth Implementation of the Western Development Strategy
(Announcement No. 12, 2012 of the State Administration of Taxation), the subsidiary Hongchuang Packaging, the sub-subsidiary Chongqing Energy
continue to enjoy the preferential tax policies for the western development this period. The enterprise income tax shall be paid at the reduced tax rate
of 15%.
According to the Enterprise Income Tax Law of the People’s Republic of China (2018 Amendment) and Notice of the Ministry of Science and
Technology, the Ministry of Finance, the State Administration of Taxation on the Revision and Printing of the Administrative Measures for the
Recognition of High and New Technology Enterprises (GKFH [2016] No. 32), its subsidiaries Hongta Plastic, Dexin Paper, its sub-subsidiary
Chengdu Hongta Plastic, its subsidiary Shanghai Energy, its sub-subsidiaries Zhuhai Energy, Jiangxi Tonry, Wuxi Energy, Suzhou GreenPower,
Newmi Tech are recognized as high-tech enterprises upon application, and the preferential tax rate for high-tech enterprises shall be 15%.
In accordance to the Notice of the Ministry of Finance and the State Administration of Taxation on the Implementation of Preferential Tax Reduction
and Exemption Policies for Small and Micro-Enterprises (CS [2019] No. 13) and the Announcement of the Ministry of Finance and the State
Administration of Taxation on the Implementation of Preferential Income Tax Policies for Small and Micro Enterprises and Individual Industrial and
Commercial Households (CS [2021] No. 12), the sub-subsidiary Energy (Zhuhai Hengqin) New Material Technology Co., Ltd. meets the criteria for
small and low profit enterprises. The portion of taxable income not exceeding RMB1 million this year shall be included in the taxable income at a
reduced rate of 12.5%, and the enterprise income tax shall be paid at a tax rate of 20%.
175
VII. Notes to Items in Consolidated Financial Statements
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Cash
89,904.57 141,604.43
Cash at bank
2,971,966,221.44 1,369,157,964.17
Other currency fund
982,223,348.31 462,772,214.04
Undue interest receivable 37,354.99 1,378,423.05
Total 3,954,316,829.31 1,833,450,205.69
Including: total amount of funds deposited
165,306,437.54 96,002,990.00
abroad
Other explanations:
Balance of monetary fund of the Company recorded an increase as compared with the beginning of the period mainly due to the increase in the borrowings of the
Company for the period.
The details of restricted monetary funds are as follows:
Item Closing balance Opening balance
Bank acceptance guarantee deposit
564,943,382.12 245,346,224.26
L/C deposit
351,765,721.46 214,219,149.78
L/G deposit
14,600,182.55 3,206,840.00
Performance bond 46,169,473.09
Security deposit for lock exchange 4,500,000.00
Deposits regulated by the bank
244,721.07
Total
982,223,348.31 462,772,214.04
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2. Trading financial assets
Unit: RMB
Item Closing balance Opening balance
Financial assets that are measured at fair value and whose
changes are included in the current profit and loss 9,850,069.59 5,137,194.34
Including:
Derivative financial assets
9,850,069.59
Others (structured deposits)
5,137,194.34
Including:
Total
9,850,069.59 5,137,194.34
Other explanations:
3. Notes receivable
(1) Notes receivable by type
Unit: RMB
Item Closing balance Opening balance
Bank acceptance
373,752,860.32 209,990,660.63
Commercial acceptance
282,058,196.57 167,950,328.02
Less: Provision for bad debts
18,055,900.42 9,365,797.42
Total
637,755,156.47 368,575,191.23
Unit: RMB
Closing balance Opening balance
Book balance Provision for bad Book Book balance Provision for bad debts Book
Type debts value value
Amount Proporti Amount Provisio Amount Proporti Amount Provisio
on n on n
proporti proporti
on on
Including:
Notes receivable with
bad debt reserve
withdrawn as per the 655,811,0 18,055,90 2.75% 637,755,1 377,940,9 100.00% 9,365,797.4 2.48% 368,575,1
100.00%
portfolio of credit risk 56.89 0.42 56.47 88.65 2 91.23
characteristics
Including:
Bank acceptance note
portfolio 373,752,8 56.99% 373,752,8 209,990,6 55.56% 209,990,6
60.32 60.32 60.63 60.63
Commercial acceptance
bill portfolio 282,058,1 18,055,90 264,002,2 167,950,3 9,365,797.4 158,584,5
96.57 43.01% 0.42 6.40% 96.15 28.02 44.44% 2 5.58% 30.60
Total 655,811,0 100.00% 18,055,90 637,755,1 377,940,9 9,365,797.4 368,575,1
56.89 0.42 2.75% 56.47 88.65 100.00% 2 2.48% 91.23
If provision was made for bad debts of notes receivable in accordance with the general expected credit loss model, please disclose relevant
information of provision for bad debts referring to the disclosure of other receivables:
□ Applicable √ N/A
177
□
(2) Provision for bad debts accrued, recovered or reversed during the Reporting Period
Provision for bad debts during the Reporting Period:
Unit: RMB
Type Opening Changes in amount for the period Closing
balance Provision Recovery or Write- Other balance
reverse offs
Notes receivable subject to provision for bad debts
Notes receivable subject to provision for bad debts
by portfolio 9,365,797.42 8,690,103.00 18,055,900.42
Including: Bank acceptance note portfolio
Commercial acceptance bill portfolio 9,365,797.42 8,690,103.00 18,055,900.42
Total
9,365,797.42 8,690,103.00 18,055,900.42
Among them, the important amount of recovery or reverse of bad debt provision for the period:
□ Applicable √ N/A
(3) Notes receivable pledged by the Company at the end of the Reporting Period
Unit: RMB
Item Amount pledged at the end of the Reporting Period
Bank acceptance note
4,227,939.20
Total
4,227,939.20
(4) Notes receivable endorsed or discounted by the Company, which were not yet due on the balance sheet date as at the end of the Reporting
Period
Unit: RMB
Item Derecognized amount at the end of the Recognized amount at the end of the
Reporting Period Reporting Period
Bank acceptance note
256,374,320.32
Total
256,374,320.32
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4. Accounts receivable
(1) Disclosure of accounts receivable by type
Unit: RMB
Closing balance Opening balance
Book balance Provision for bad Book Book balance Provision for bad Book
Type debts value debts value
Amount Proporti Amount Provisio Amount Proporti Amount Provisio
on n on n
proporti proporti
on on
Accounts receivable
with significant single
amount and having 92,553,00 1.38% 92,553,00 100.00% 94,128,00 2.07% 94,128,00 100.00%
bad debt reserve 1.41 1.41 7.83 7.83
independently
Including:
Accounts receivable
with bad debt reserve
withdrawn as per the 6,601,342 41,625,50 6,559,717 4,447,636 42,199,92 4,405,436,0
98.62 0.63% ,014.46 97.93% 8.94 0.95% 85.52
portfolio of credit risk ,626.95 9.59 ,117.36
characteristics
Including:
Aging portfolio
6,601,342 41,625,50 6,559,717 4,447,636 97.93% 42,199,92 0.95% 4,405,436,0
98.62 0.63%
,626.95 9.59 ,117.36 ,014.46 8.94 85.52
Total
6,693,895 134,178,5 6,559,717 4,541,764 100.00% 136,327,9 3.00% 4,405,436,0
100.00 2.01%
,628.36 11.00 ,117.36 ,022.29 36.77 85.52
Provision for bad debts by individual:
Unit: RMB
Closing balance
Name
Book balance Provision for bad Provision Provision reason
debts proportion
OptimumNano Energy Co., Ltd. Estimated to be
32,249,003.26 32,249,003.26 100.00%
uncollectible
Estimated to be
eTrust Power Group Ltd. 17,481,429.49 17,481,429.49 100.00%
uncollectible
Shaanxi OptimumNano New Energy Co., Ltd. Estimated to be
14,847,098.36 14,847,098.36 100.00%
uncollectible
Yunnan Zhongyun Li’ao Package Printing Co., Ltd. Estimated to be
6,062,972.00 6,062,972.00 100.00%
uncollectible
Heilongjiang Longdan Dairy Technology Co., Ltd. Estimated to be
5,075,381.00 5,075,381.00 100.00%
uncollectible
Estimated to be
Jiangxi Far East Battery Co., Ltd. 3,779,397.05 3,779,397.05 100.00%
uncollectible
Chengdu Henglide Food Co., Ltd. Estimated to be
2,780,677.50 2,780,677.50 100.00%
uncollectible
Estimated to be
Zhongshan Yuankangyuan Food Co., Ltd. 2,591,501.42 2,591,501.42 100.00%
uncollectible
Shenzhen Teamgiant New Energy Technology Co., Ltd. 1,470,081.04 1,470,081.04 100.00% Estimated to be
179
uncollectible
Jingzhou Wotema Battery Co., Ltd. Estimated to be
1,175,130.00 1,175,130.00 100.00%
uncollectible
Shenzhen Lukewan Technology Co., Ltd. Estimated to be
1,000,000.00 1,000,000.00 100.00%
uncollectible
Sub-total of less than RMB1 milion Estimated to be
4,040,330.29 4,040,330.29 100.00%
uncollectible
Total 92,553,001.41 92,553,001.41
Provision for bad debts by portfolio: aging portfolio
Unit: RMB
Closing balance
Name
Book balance Provision for bad debts Provision proportion
Less than 1 year 5,861,843,135.75 11,457,882.71 0.20%
1-2 years 643,664,673.63 6,160,473.04 0.96%
2-3 years 64,529,560.05 2,106,676.28 3.26%
3-4 years 3,680,564.44 1,983,260.82 53.88%
4-5 years 19,341,682.90 11,634,206.56 60.15%
Over 5 years 8,283,010.18 8,283,010.18 100.00%
Total 6,601,342,626.95 41,625,509.59
If provision was made for bad debts of accounts receivable in accordance with the general expected credit loss model, please disclose relevant
information of provision for bad debts referring to the disclosure of other receivables:
□ Applicable √ N/A
Disclosure by aging
Unit: RMB
Aging Book balance
Less than 1 year (inclusive)
5,861,888,390.15
1-2 years 643,794,466.73
2-3 years 65,856,575.88
180
Over 3 years 122,356,195.60
3-4 years 15,606,473.84
4-5 years 29,747,534.47
Over 5 years
77,002,187.29
Total 6,693,895,628.36
(2) Provision for bad debts accrued, recovered or reversed during the Reporting
Period
Provision for bad debts during the Reporting Period: Unit: RMB
181
Type Opening balance Changes in amount for the period Closing balance
Provision Recovery or Write-offs Other
reverse
Accounts receivable
subject to provision
91,760,877.25 2,141,405.13 2,078,410.35 1,638,001.20 92,553,001.41
for bad debts
Accounts receivable
subject to provision
for bad debts by 44,567,059.52 -143,332.88 431,086.47 41,625,509.59
portfolio
Total
136,327,936.77 1,998,072.25 2,078,410.35 2,069,087.67 134,178,511.00
Including the significant amount of provision for bad debts recovered or reversed in the current period:
Unit: RMB
Name of unit The amount recovered or reversed via
eTrust Power Group Ltd. 1,114,859.17 Collection of payment
Zhongshan Yuankangyuan Food Co., Ltd.
963,551.18 Collection of payment
Total 2,078,410.35
(3) Actual write-off of accounts receivable for the period
Unit: RMB
Item Amount of write-off
Actual write-off of accounts receivable 2,069,087.67
(4) Top five customers with closing balance of accounts receivable collected by arrear party
Unit: RMB
Company name Closing balance of Percentage of total of closing balance of Closing balance of bad debt
accounts receivable accounts receivable provision
Company 1 1,164,253,975.74 17.39% 4,817,971.99
Company 2 843,339,063.50 12.60% 843,446.14
Company 3 414,854,787.86 6.20% 414,854.79
Company 4 271,459,955.13 4.06% 271,459.96
Company 5 266,304,997.80 3.98% 266,305.00
Total 2,960,212,780.03 44.23%
5. Accounts receivable financing
Unit: RMB
Item Closing balance Opening balance
Bank acceptance 692,286,629.08 412,477,885.83
Accounts receivable factoring 113,995,449.70
Total 692,286,629.08 526,473,335.53
Changes in accounts receivable financing and changes in fair value
√ Applicable □ N/A
The Company believes that for the financing of receivables measured at fair value and whose changes are included in other comprehensive income, as
the remaining maturity is not long and the difference between the actual interest rate and the market interest rate is very small, the fair value and the
book value are similar.
If provision was made for accounts receivable financing in accordance with the general expected credit loss model, please disclose relevant
information of provision for impairment referring to the disclosure of other receivables:
□ Applicable √ N/A
Other explanations:
(1) Provision for bad debts
182
Type Opening balance Changes in amount for the year Closing balance
Provision Recovery or Write-offs Other
reverse
Accounts receivable 934,762.69 934,762.69
factoring
The Company believes that the acceptance bank of the bank acceptance bill it holds has a high credit rating and there is no significant credit risk, so it
has not made provision for impairment.
(2) Endorsed or discounted but undue notes at the balance sheet date
item Closing balance derecognized Closing balance not yet derecognized
Bank acceptance note 2,334,876,623.90
(3) As of December 31, 2022, RMB28,105,438.78 of receivables financing were pledged to secure bank borrowings and for issuance of letters of
credit by the Company.
183
6. Prepayments
(1) Prepayments by aging
Unit: RMB
Aging Closing balance Opening balance
Amount Proportion Amount Proportion
Less than 1 year 219,773,112.71 99.79% 224,732,462.69 99.23%
1-2 years 272,315.21 0.12% 839,484.85 0.37%
2-3 years 43,880.21 0.02% 130,917.56 0.06%
Over 3 years 150,161.96 0.07% 771,651.59 0.34%
Total 220,239,470.09 226,474,516.69
Explanation on why prepayments with aging of more than 1 year and an important amount not settled in time:
(2) Top five suppliers with closing balance of prepayment collected by prepaid entity
Company name Closing balance(RMB) Proportion (%) Time Reason
Company 1 Less than 1 year Contract not been performed
25,115,830.26 11.40
Company 2 18,409,547.85 8.36 Less than 1 year Contract not been performed
Company 3 17,729,638.70 8.05 Less than 1 year Contract not been performed
Company 4 17,180,659.51 7.80 Less than 1 year Contract not been performed
Company 5 12,736,527.00 5.78 Less than 1 year Contract not been performed
Total 91,172,203.32 41.40
Other explanations:
184
7. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 20,596,472.81 8,119,316.74
Total 20,596,472.81 8,119,316.74
(1) Other receivables
1) Other receivables by nature
Unit: RMB
Nature of amount Book balance at the end of the Reporting Book balance at the beginning of the
Period Reporting Period
Guarantees and deposits 13,605,388.98 4,575,537.97
Reserve fund 2,159,379.95 2,119,295.60
Substitute advance 4,229,597.77 1,845,584.33
Other 2,349,468.28 803,662.68
Total 22,343,834.98 9,344,080.58
2) Provision for bad debts
Unit: RMB
Provision for bad debts Stage I Stage II Stage III Total
12-month ECL Lifetime ECL (not credit- Lifetime ECL (credit-
impaired) impaired)
Balance of January 1,
2022 350,193.81 419,078.09 455,491.94 1,224,763.84
Balance of January 1,
2022 for the period
Provision for the period 602,073.41 46,978.08 649,051.49
Write-offs for the period -32,497.00 -93,956.17 -126,453.17
Balance of December 31,
2022 919,770.23 372,100.00 455,491.94 1,747,362.17
185
Changes in book balance with significant changes in loss reserves in the current period
□ Applicable √ N/A
Disclosure by aging
Unit: RMB
Aging Book balance
Less than 1 year (inclusive) 19,545,497.64
1-2 years 717,797.90
2-3 years 782,560.00
Over 3 years 1,297,979.44
3-4 years 91,980.00
4-5 years 24,507.50
Over 5 years 1,181,491.94
Total 22,343,834.98
3) Actual write-off of other receivables for the period:
Unit: RMB
Item Amount of Write-offs
Actual write-off of other receivables 126,453.17
4) Top five customers with closing balance of other receivables collected by arrear party
Unit: RMB
Name of company Nature of other Closing balance Aging Percentage of total of Closing balance of
receivable
closing balance of bad debt provision
other receivables
186
Bureau of Natural Resources and Guarantees and Less than 1
deposits 8,114,200.00 year 36.32% 352,967.70
Planning of Jintan District, Changzhou
Substitute 1,510,407.09 Less than 1
Endowment insurance 6.76% 65,702.72
advance year
Housing fund Substitute Less than 1
1,307,646.80 5.85% 56,882.64
advance year
1,053,230.75
State Administration of Taxation of Tax refund Less than 1
4.71% 45,815.54
Hongta District, Yuxi, Yunnan year
Substitute Less than 1
TEIJINLIELSORTKOREACO.,LTD 846,812.45 year 3.79% 36,836.34
advance
Total 12,832,297.09 57.43% 558,204.94
8. Inventories
Did the Company need to comply with the disclosure requirements of the real estate industry
No
(1) Classification of Inventories
Unit: RMB
Closing balance Opening balance
Book balance Inventory Book value Book balance Inventory Book value
provision reserve provision reserve
Item or contract or contract
performance cost performance cost
depreciation depreciation
reserve reserve
Raw material
732,684,233.61 3,387,999.66 729,296,233.95 379,923,303.99 2,359,919.46 377,563,384.53
Goods in process 8,039,493.75 8,039,493.75 14,457,100.95 415,535.78 14,041,565.17
Finished goods 1,576,705,880.4
2 91,327,179.57 1,485,378,700.85 1,222,739,498.84 77,728,040.78 1,145,011,458.06
Turnover material
76,766,583.56 76,766,583.56 44,421,966.91 44,421,966.91
Goods in transit
118,482,726.44 1,891,361.63 116,591,364.81 63,419,904.52 60,939.65 63,358,964.87
Consigned
processing material 1,854,345.23 1,854,345.23 1,285,888.79 1,285,888.79
Semi-finished goods
48,468,133.40 2,904,616.75 45,563,516.65 36,296,317.09 531,375.13 35,764,941.96
Total 2,563,001,396.4 99,511,157.61 2,463,490,238.80 1,762,543,981.09 81,095,810.80 1,681,448,170.29
1
187
(2) Inventory provision reserve and contract performance cost depreciation reserve
Unit: RMB
Item Opening balance Increase for the period Decrease for the period Closing balance
Provision Others Recovery or reversal Others
Raw material 2,359,919.46 1,309,550.04 281,469.84 3,387,999.66
Goods in process 415,535.78 415,535.78
Finished goods
77,728,040.78 37,408,321.27 23,809,182.48 91,327,179.57
Goods in transit 60,939.65 1,830,421.98 1,891,361.63
Semi-finished
531,375.13 2,373,241.62 2,904,616.75
goods
Total
81,095,810.80 42,921,534.91 24,506,188.10 99,511,157.61
Description of inventory provision reserve: Resales for the year are due to the sale of the inventory of the inventory provision reserve already accrued.
(3) Other description of inventory
The main reason for the larger increase in the ending balance of the Company’s inventories over the opening balance is the rapid growth of the
Company’s business, and the corresponding business volume growth.
9. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Large deposit certificate 82,832,319.38
Undue interest receivable 4,196,847.29
Total 87,029,166.67
10. Other current assets
Unit: RMB
Item Closing balance Opening balance
188
prepayment of tax 23,919,612.73 9,161,159.79
Input tax to be deducted
298,078,605.60 347,827,840.12
Time deposit 50,567,013.89
Total 321,998,218.33 407,556,013.80
Other explanation:
11. Long-term equity investment
Unit: RMB
Opening Increase/Decrease for the period Closing Closing
balance Increase Decreas Investm Adjustme Other Cash Provisio Other balance balance
Name of (book in e in ent nts to changes dividend n for (book of
investee value) investme investme profit or other in equity s or impairm value) provision
s nt nt loss comprehe profit ent for
recogniz nsive declared impairme
ed under income nt
equity
method
I. Joint ventures
II. Associates
Kunshasi 3,545,984. 1,471,658. 5,017,642.
21 10 31
Subtotal 3,545,984. 1,471,658. 5,017,642.
21 10 31
Total 3,545,984.2 1,471,658.1 5,017,642.3
1 0 1
Other explanation:
189
12. Other equity instrument investment
Unit: RMB
Item Closing balance Opening balance
Suzhou Jiesheng Technology Co., Ltd 111,000,000.00 110,000,000.00
Total 111,000,000.00 110,000,000.00
Disclosure by non-transactional equity instrument investment during the period
Unit: RMB
Item Recognized Accumulated gains Accumulated losses Amount transferred Reason for Reason for
dividend income from other designating as a transferring from
comprehensive financial asset other
income to retained measured at fair comprehensive
earnings value and its income to retained
changes are earnings
included in other
comprehensive
income
Suzhou Jiesheng 1,000,000.00 The Company plans
Technology Co., to hold it for a long
Ltd time for strategic
purposes
Other explanation: As evaluated by Shanghai Pan-China Assets Valuation Co., Ltd* (上海众华资产评估有限公司), as of December 31, 2022, the overall
equity value of Suzhou Jiesheng Technology Co., Ltd is RMB 1,100,000,000.00, and the Company holds 10% equity of Suzhou Jiesheng Technology Co., Ltd
and the fair value of the corresponding equity is RMB 111,000,000.00.
13. Investment properties
(1) Adoption of the cost measurement mode for investment properties
√ Applicable □ N/A
Unit: RMB
Item Property and plant Land use rights Construction in progress Total
1. Opening balance
11,871,802.82 11,871,802.82
4. Closing balance 11,871,802.82 11,871,802.82
190
1. Opening balance 2,938,271.16 2,938,271.16
2. Increase for the period 534,231.12 534,231.12
(1) Provision or
amortization 534,231.12 534,231.12
4. Closing balance 3,472,502.28 3,472,502.28
1. Closing book value
8,399,300.54 8,399,300.54
2. Opening book value
8,933,531.66 8,933,531.66
(2) Investment properties not having obtained the title certificate
Unit: RMB
Item Book value Reason for not having obtained the title
certificate
Property and plant 8,399,300.54 Being processed
Other explanation:
14. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 14,306,873,399.88 10,877,888,212.91
Total 14,306,873,399.88 10,877,888,212.91
(1) Fixed assets
Unit: RMB
Item Property and plant Machinery and Transportation Electronic equipment Total
equipment equipment and Other
191
I. Original book value
1. Opening balance
2,446,396,571.68 11,362,410,750.22 32,081,150.31 649,810,804.95 14,490,699,277.16
2. Increase for the period
860,113,555.12 3,482,657,500.63 7,267,349.08 130,696,081.12 4,480,734,485.95
(1) External purchase 3,834,729.92 91,141,651.60 4,350,212.01 93,714,772.81 193,041,366.34
(2) Transfer of construction
856,278,825.20 3,391,515,849.03 2,901,237.14 35,036,723.63 4,285,732,635.00
in progress
(3) Increase in business
combination
Converted difference in
15,899.93 1,944,584.68 1,960,484.61
Foreign Currency Statements
3. Decrease for the period
9,165,472.84 2,341,546.91 222,457.34 11,729,477.09
(1) Disposal or scrapping
9,165,472.84 2,341,546.91 222,457.34 11,729,477.09
4. Closing balance 3,306,510,126.80 14,835,902,778.01 37,006,952.48 780,284,428.73 18,959,704,286.02
II. Accumulative depreciation
1. Opening balance 366,790,097.88 2,873,717,727.98 18,086,215.36 62,379,249.15 3,320,973,290.37
2. Increase for the period 126,465,106.72 861,824,130.83 3,446,900.53 53,663,106.06 1,045,399,244.14
(1) Provision 126,465,106.72 861,824,130.83 3,423,011.53 53,686,387.57 1,045,398,636.65
Converted difference in Foreign
Currency Statements 986.22 -378.73 607.49
3. Decrease for the period 3,237,985.00 1,931,706.55 78,742.64 5,248,434.19
(1) Disposal or scrapping 3,237,985.00 1,931,706.55 78,742.64 5,248,434.19
4. Closing balance 493,255,204.60 3,732,303,873.81 19,601,409.34 115,963,612.57 4,361,124,100.32
III. Provision for impairment
1. Opening balance 291,812,992.62 15,759.89 9,021.37 291,837,773.88
2. Increase for the period
(1) Provision
3. Decrease for the period 130,988.06 130,988.06
(1) Disposal or scrapping
130,988.06 130,988.06
4. Closing balance
291,682,004.56 15,759.89 9,021.37 291,706,785.82
IV. Book value
1. Closing book value 2,813,254,922.20 10,811,916,899.64 17,389,783.25 664,311,794.79 14,306,873,399.88
2. Opening book value 2,079,606,473.80 8,196,880,029.62 13,979,175.06 587,422,534.43 10,877,888,212.91
(2) Fixed assets in temporary idle
Unit: RMB
Item Original book Accumulative Provision Book value Notes
value depreciation for
impairme
nt
192
As of December 31, 2022, the recoverable amount was
Property estimated based on the selling prices of similar houses and
2,105,695.50 967,989.10 1,137,706.40
and plant buildings in the same lot. The recoverable amount was
higher than the book value, so no provision for impairment
of fixed assets was made.
As of December 31, 2022, the recoverable amount was
Machiner
estimated based on the selling price of similar machinery
y and
9,135,247.28 6,324,400.80 2,810,846.48 and equipment. The recoverable amount was higher than
equipmen
the book value, so no provision for impairment of fixed
t
assets was made.
Total
11,240,942.78 7,292,389.90 3,948,552.88
(3) Fixed assets not obtaining the title certificate
Unit: RMB
Item Book value Reason
Property and plant 2,066,962,289.72 Being processed
Other explanations:
The main reason for the larger increase in the ending balance of the Company’s fixed assets over the opening balance is: the increase in assembly lines
completed of the subsidiary Shanghai Energy and its subsidiaries in this year accordingly.
15. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 3,560,975,559.05 1,728,042,052.38
Engineering materials 23,578,950.68 24,873,666.44
Total 3,584,554,509.73 1,752,915,718.82
(1) Construction in progress
Unit: RMB
Item Closing balance Opening balance
Book balance Provision for Book value Book balance Provision for Book value
impairment impairment
Hungarian factory 979,491,095.17 979,491,095.17 80,981,499.95 80,981,499.95
Suzhou GreenPower Project with
an annual output of 200 million
square meters of lithium-ion 451,556,502.60 451,556,502.60 2,050,087.72 2,050,087.72
battery coated separator
Jiangsu Ruijie EV Lithium
Battery Aluminum Laminated 334,566,119.25 334,566,119.25 485,204.19 485,204.19
Film Industrialization Project
Jiangxi Enpo New Material
Co., Ltd. lithium ion battery 320,992,819.79 320,992,819.79 53,280,407.11 53,280,407.11
193
dry process separator film
construction project
Microporous membrane
project of high performance
283,663,955.03 283,663,955.03 88,458,440.15 88,458,440.15
Lithium-ion battery of
Chongqing Energy (phase II)
Jiangsu Energy EV Lithium
Battery Separator 245,785,358.61 245,785,358.61 124,028.69 124,028.69
Industrialization Project
Lithium battery separator
project of Jiangxi Tonry
(phase I expansion) 222,168,970.83 222,168,970.83 501,329,749.43 501,329,749.43
American factory
193,048,364.00 193,048,364.00
Jiangxi Energy SRS project
106,045,779.47 106,045,779.47 102,140,666.17 102,140,666.17
All solid state electrolyte
coating separator phase I 79,766,481.76 79,766,481.76
project of Jiangsu Sanhe
Jiangxi Ruijie No. 1
aluminum laminated film 65,044,683.35 65,044,683.35 51,326,164.11 51,326,164.11
project
Hubei Energy EV Lithium
Battery Separator 57,554,406.26 57,554,406.26
Industrialization Project
Wuxi Energy battery
separator production base 49,564,077.96 49,564,077.96 83,637,399.09 83,637,399.09
phase II Project
Microporous membrane
project of high performance
lithium ion battery of 43,196,070.28 43,196,070.28 1,041,549.37 1,041,549.37
Chongqing Energy (phase III)
Yunnan Hongta Plastic BOPP
film with an annual output of
24,933,899.66 24,933,899.66 127,669,517.48 127,669,517.48
70,000 tons
Jiangxi Ruijie Utilities
23,899,016.02 23,899,016.02 513,625.00 513,625.00
Yuxi Energy lithium battery
project with an annual output 2,410,889.35 2,410,889.35
of 1.6 billion square meters
Microporous membrane
project of high performance
lithium ion battery of 2,400,000.00 2,400,000.00 150,222,596.38 150,222,596.38
Chongqing Energy (phase I)
Lithium battery separator
project of Jiangxi Tonry (phase 2,321,906.20 2,321,906.20 77,669,375.53 77,669,375.53
I)
Jiangsu Hongchuang Packaging
Project of 12 billion packaging 1,668,156.38 1,668,156.38
boxes of liquid beverage
Yunnan Hongchuang Packaging
Project of 1 billion packaging 31,533,066.15 31,533,066.15
boxes of liquid beverage
Zhuhai Energy battery
separator film production 11,207,414.81 11,207,414.81
base phase II Project
5-7 line base film project of
Newmi Tech 354,914,748.53 9,319,496.94 345,595,251.59
Other projects
70,897,007.08 70,897,007.08 18,776,009.46 18,776,009.46
Total 3,560,975,559.05 3,560,975,559.05 1,737,361,549.32 9,319,496.94 1,728,042,052.38
(2) Changes in important projects in progress for the period
Unit: RMB
194
Item Budget Opening Increase Transfer Decrease Closing Proporti Progress Capitaliz Includin Capitaliz Source
balance for the toFixed inother balance on of of the ed g: ation rate of
period assets amount total project accumul Capitaliz of capital
project ated ed interest
for the s for the investme amount amount for the
period period nt in of of period
budget interest interest
for the
period
Hungarian factory - Other
252,378.6 80,981,49 979,491,0
889,848,5 8,661,008.7
0 9.95 95.17 38.81% 40.00%
86.48 4
Suzhou Other
GreenPower Project
with an annual
1,000,000, 2,050,087. 449,506,4 451,556,5 4,239,857. 4,239,857.7
output of 200 million 3.60%
000.00 72 14.88 02.60 51.06% 51.06% 78 8
square meters of
lithium- ion battery
coated separator
Jiangsu Ruijie EV Other
Lithium Battery
Aluminum
1,578,635.6 1,578,635.6
Laminated Film 1,600,000, 485,204.19 334,080,9 334,566,1 34.69% 36.00% 3.58%
1 1
Industrialization 000.00 15.06 19.25
Project
Jiangxi Enpo New Other
Material Co., Ltd.
lithium ion battery
8,796,817.9
dry process separator 2,000,000, 53,280,40 276,509,2 320,992,8 26.57% 8.49% 4,630,436. 4,630,436. 4.54%
000.00 7.11 30.59 1 19.79 72 72
film construction
project
Microporous Other
membrane project of
high performance
lithium-ion battery of
3,000,000, 88,458,440. 667,767,335 472,561,820 283,663,9 70.00% 70.00%
10,936,383. 10,936,383.
3.66%
Chongqing Energy 000.00 15 .47 .59 55.03 72 72
（phase II）
Other
Jiangsu Energy EV
Lithium Battery 5,200,000, 124,028.69 245,661,3 245,785,3 2,208,095.1 2,208,095.1
3.58%
Separator 000.00 29.92 58.61 14.42% 15.00% 2 2
Industrialization
Project
Lithium battery Other
separator project of
Jiangxi Tonry (phase I 9,207,675.0
expansion) 1,750,000, 501,329,7 838,429,9 1,117,590, 222,168,9 91.35% 14,603,28 4.17%
91.54% 1
000.00 49.43 45.98 724.58 70.83 6.12
American factory -
6,379,573, 191,954,5 1,093,770.2 193,048,3 10.00%
3.03%
600.00 93.73 7 64.00
Jiangxi Energy SRS 102,140,666 233,189,955 Other
950,000,0 237,095,0 106,045,7 46.80% 45.00%
project .17 .96
00.00 69.26 79.47
All solid state Other
electrolyte coating
separator phase I 650,000,0 79,766,48 79,766,48 13.92% 13.92%
project of Jiangsu 00.00 1.76 1.76
Sanhe
Jiangxi Ruijie No. 1 Other
aluminum laminated
500,000,0 51,326,16 74,911,46 61,192,94 65,044,68
film project 00.00 4.11 5.58 6.34 3.35 72.65% 63.00%
195
Hubei Energy EV Other
Lithium Battery
Separator 5,200,000, 57,700,41 57,554,40
146,008.5
Industrialization 000.00 4.85 6.26 1.11% 1.11%
9
Project
Wuxi Energy battery Other
separator production
base phase II Project 2,800,000, 83,637,39 800,803,9 834,877,2 49,564,07 22,021,33 7,849,578.
000.00 9.09 32.15 53.28 7.96 96.60% 93.28% 8.32 80 4.26%
Microporous Other
membrane project of
high performance
lithium ion battery of
Chongqing Energy 200,000,0 1,041,549.3 42,154,52 43,196,07
(phase III) 00.00 7 0.91 0.28 90.00% 90.00%
Yunnan Hongta Other
Plastic BOPP film 3,582,772.3 2,982,213.0
360,000,0 127,669,5 117,673,7 220,409,3 24,933,89 84.07% 90.00% 3.73%
with an annual 9 3
00.00 17.48 01.18 19.00 9.66
output of 70,000 tons
Jiangxi Ruijie Utilities Other
130,000,0 23,437,31 23,899,01
513,625.00 51,920.86 83.40% 60.00%
00.00 1.88 6.02
Yuxi Energy lithium Other
battery project with
an annual output of 4,500,000, 2,410,889. 2,410,889.3
1.6 billion square 5 3.31% 3.31%
000.00 35
meters
Microporous Other
membrane project of
high performance 1,500,000, 150,222,5 424,019,221 571,841,8 2,400,000.0
100.00%
lithium ion battery of 000.00 96.38 .74 18.12 0 100.00%
Chongqing Energy
(phase I)
Lithium battery Other
separator project of
Jiangxi Tonry (phase I) 1,750,000, 77,669,37 2,246,661.9 77,594,13 2,321,906.2 10,275,378.
99.65%
000.00 5.53 4 1.27 0 100.00% 94
Jiangsu Hongchuang Other
Packaging Project of 12
billion packaging boxes 787,000,0 1,668,156.3 1,668,156.3
0.00%
of liquid beverage 00.00 8 8 5.20%
Yunnan Hongchuang Other
Packaging Project of 1
billion packaging boxes 75,000,00 31,533,06 13,929,138. 45,462,20
100.00%
of liquid beverage 0.00 6.15 26 4.41 100.00%
Zhuhai Energy battery Other
separator film
production 1,400,000, 11,207,41 42,107,637. 53,315,05 30,172,038.
100.00%
base phase II Project 000.00 4.81 76 2.57 100.00% 88
Wuxi Energy battery Other
separator film
production base phase I 2,200,000, 25,277,048. 25,277,04 68,435,716.
100.00%
Project 000.00 23 8.23 100.00% 63
5-7 line base film project Other
of 750,230,0 354,914,7 345,595,2 9,319,496.9 15,938,122.
100.00%
Newmi Tech 00.00 48.53 51.59 4 47.61% 29
Plant construction of 86,000,00 5,515,173.8 5,515,173. Other
Jiangxi Ruijie 100.00%
0.00 4 84 99.00%
Other projects 18,776,00 264,436,1 212,315,1 70,897,00 Other
9.46 85.48 87.86 7.08
Other
Total 47,722,11 1,737,361, 6,108,911, 4,285,732, 3,560,975, 188,622,0 43,632,87
-435,282.07
7,800.00 549.32 362.66 635.00 559.05 62.52 5.79
(3) Project materials
196
Unit: RMB
Closing balance Opening balance
Item
Book balance Provision for Book value Book balance Provision for Book value
impairment
197
impairment
Engineering materials 11,426,690.84 11,426,690.84 8,384,509.61 8,384,509.61
Equipment not installed
12,152,259.84 12,152,259.84 16,489,156.83 16,489,156.83
Total 23,578,950.68 23,578,950.68 24,873,666.44 24,873,666.44
Other explanations: The increase in the closing balance of construction in progress of the Company as compared with the beginning balance was due to the fact
that Shanghai Energy New Material Technology Co., Ltd., a subsidiary of the Company, and its subsidiaries were in the growth stage, and the new production
lines increased during the period as the Company increased its construction of production lines accordingly.
16. Right-of-use assets
Unit:RMB
Item Property and buildings Other Total
I. Original book value
1. Opening balance
2. Increase for the period 3,828,415.83 1,376,146.80 5,204,562.63
Lease 3,828,415.83 1,376,146.80 5,204,562.63
3. Decrease for the period
4. Closing balance 3,828,415.83 1,376,146.80 5,204,562.63
II. Accumulative depreciation
1. Opening balance
2. Increase for the period 1,208,973.42 68,807.31 1,277,780.73
(1)Provision 1,208,973.42 68,807.31 1,277,780.73
3. Decrease for the period
(1) Disposal
4. Closing balance 1,208,973.42 68,807.31 1,277,780.73
III. Provision for impairment
1. Opening balance
2. Increase for the period
(1)Provision
3. Decrease for the period
(1) Disposal
4. Closing balance
IV. Book value
1. Closing book value 2,619,442.41 1,307,339.49 3,926,781.90
2. Opening book value
Other explanations:
17. Intangible assets
(1) Intangible assets
Unit: RMB
Item Land use rights Patent rights Non-patent Software Total
technology
198
I. Original book value
1. Opening balance
574,145,581.24 26,000,000.00 23,338,200.00 29,643,308.39 653,127,089.63
2. Increase for the period
507,473,945.35 4,854,368.93 5,733,298.98 518,061,613.26
(1) Purchase 507,473,945.35 4,854,368.93 5,733,298.98 518,061,613.26
(2) Internal R&D
(3) Increase in business
combination
3. Decrease for the period
(1) Disposal
4. Closing balance
1,081,619,526.59 30,854,368.93 23,338,200.00 35,376,607.37 1,171,188,702.89
II. Accumulative amortization
1. Opening balance
61,466,357.71 4,766,666.71 19,144,661.64 5,682,727.01 91,060,413.07
2. Increase for the period
16,808,050.12 2,964,077.67 1,548,582.71 3,561,070.45 24,881,780.95
(1) Provision
16,808,050.12 2,964,077.67 1,548,582.71 3,561,070.45 24,881,780.95
3. Decrease for the period
(1) Disposal
4. Closing balance 78,274,407.83 7,730,744.38 20,693,244.35 9,243,797.46 115,942,194.02
III. Provision for impairment
1. Opening balance 1,203,498.45 1,203,498.45
199
2. Increase for the period
(1) Provision
3. Decrease for the period
(1) Disposal
4. Closing balance 1,203,498.45 1,203,498.45
IV. Book value
1. Closing book value 1,003,345,118.76 23,123,624.55 1,441,457.20 26,132,809.91 1,054,043,010.42
2. Opening book value 512,679,223.53 21,233,333.29 2,990,039.91 23,960,581.38 560,863,178.11
The proportion of intangible assets produced through internal research and development of the Company in the balance of intangible assets at the end of the
current period.
(2) Land usage rights not obtaining the title certificate
Item Book value Reason for not obtaining the title certificate
Land usage rights 8,335,426.33 being processed
Other details:
(1) The main reasons why the balance of intangible assets at the end of the year increased significantly as compared with the balance at the beginning of the year are
as follows: the Company's lithium battery separator business expanded. In the current period, several new production bases were built, and land use rights were purchased.
(2) As of December 31, 2022, the Company obtained comprehensive bank credit and loans by pledging intangible assets with an amount of RMB292,390,109.05.
18. Goodwill
(1) Original book value of goodwill
Unit: RMB
Events that may Opening balance Increase for the period Decrease for the period Closing balance
generate goodwill Generated by Disposal
through investee business
names combination
Jiangxi Tonry New 34,483,188.64 34,483,188.64
Energy
Technology
Development Co.,
Ltd.
Chongqing Energy 15,589,757.32 15,589,757.32
Newmi
Technological Co.,
Ltd.
Suzhou
470,157,733.69 470,157,733.69
GreenPower New
Energy Materials
Co., Ltd.
Total 520,230,679.65 520,230,679.65
(2) Provision for impairment of goodwill: none
Related information on asset groups or combination of asset groups containing goodwill
200
(1) Goodwill related to Jiangxi Tonry New Energy Technology Development Co., Ltd.
Goodwill calculation process of Jiangxi Tonry merged by enterprises not under common control:
The acquisition cost minus the fair value of the book identifiable net assets of Jiangxi Tonry on the acquisition date multiplied by the proportion of
acquired equity equals to goodwill, that is, 200,000,000.00 minus 165,516,811.36 multiplied by 100% equals to RMB34,483,188.64.
The Company identified Jiangxi Tonry as an asset group and conducted goodwill impairment test. The recoverable amount of goodwill is calculated
according to the present value of estimated future cash flow. The estimated future cash flow is determined according to the financial budget of the
relevant asset group from 2023 to 2027. After 2027, it will be a perpetual period. It is estimated that the annual cash flow will keep unchanged, and
the recoverable value of the asset group will be calculated according to the discount rate of 11.35%. The recoverable value exceeds the book value of
the asset group including all shareholders goodwill, and there is no goodwill impairment.
(2) Goodwill related to Suzhou GreenPower New Energy Material Co., Ltd.
Goodwill calculation process of Suzhou GreenPower merged by enterprises not under common control:
The acquisition cost minus the fair value of the book identifiable net assets of Suzhou GreenPower on the acquisition date multiplied by the
proportion of acquired equity equals to goodwill, that is, 739,219,511.67 minus 269,061,777.98 multiplied by 100% equals to RMB470,157,733.69.
The Company identified Suzhou GreenPower as an asset group and conducted goodwill impairment test. The recoverable amount of goodwill is
calculated according to the present value of estimated future cash flow. The estimated future cash flow is determined according to the financial budget
of the relevant asset group from 2023 to 2027. After 2027, it will be a perpetual period. It is estimated that the annual growth rate of cash flow will be
1.33%, and the recoverable value of the asset group will be calculated according to the discount rate of 11.33%. The recoverable value exceeds the
book value of the asset group including all shareholders goodwill, and there is no goodwill impairment.
(3) Goodwill related to Chongqing Energy Newmi Technological Co., Ltd.
Goodwill calculation process of Newmi Tech merged by enterprises not under common control:
The acquisition cost minus the fair value of the book identifiable net assets of Newmi Tech on the acquisition date multiplied by the proportion of
acquired equity equals to goodwill, that is, 68,259,500.00 minus 68,977,915.28 multiplied by 76.3574% equals to RMB15,589,757.32.
The Company identified Newmi Tech as an asset group and conducted goodwill impairment test. The recoverable amount of goodwill is calculated
according to the present value of estimated future cash flow. The estimated future cash flow is determined according to the financial budget of the
relevant asset group from 2023 to 2027. After 2027, it will be a perpetual period. It is estimated that the annual cash flow will be stable, and the
recoverable value of the asset group will be calculated according to the discount rate of 7.96%. The recoverable value exceeds the book value of the
asset group including all shareholders goodwill, and there is no goodwill impairment.
19. Long-term unamortized expenses
Unit: RMB
Item Opening balance Increase for the Amortized amount Decrease in other Closing balance
period for the period amounts
Renovation cost 208,200.31 420,000.00 190,417.15 437,783.16
Filling machine 1,504,688.09 1,504,688.09
Power grid access
fee 48,450.16 10,917.82 37,532.34
201
Software
implementation fee 1,061,184.88 568,527.64 492,657.24
Repair and
maintenance fee 737,093.73 737,093.73
Technical service fee 600,000.00 250,000.00 350,000.00
Total 3,559,617.17 1,020,000.00 3,261,644.43 1,317,972.74
Other explanations:
20. Deferred income tax assets/Deferred income tax liabilities
(1) Deferred income tax assets before offset
Unit：RMB
Closing balance Opening balance
Item Deductible temporary Deferred income tax assets Deductible temporary Deferred income tax assets
difference difference
Asset impairment
provision 547,896,879.72 83,770,394.31 530,474,872.66 80,159,045.71
Unrealized profit of
internal transaction 277,615,165.77 58,267,096.82 201,315,638.27 30,197,345.73
Deductible losses 174,757,523.83 35,329,320.47 171,941,875.70 31,092,748.22
Government subsidy 811,175,227.79 124,328,538.97 742,702,208.05 111,405,331.20
Stock incentive 91,108,307.69 13,341,111.40
other 3,346,918.44 502,037.76
Total 1,905,900,023.24 315,538,499.73 1,646,434,594.68 252,854,470.86
(2) Deferred income tax liabilities before offset
Unit: RMB
Closing balance Opening balance
Item
Taxable temporary Deferred income tax Taxable temporary Deferred income tax
difference liabilities difference liabilities
Appraisal and appreciation
of assets in mergers of
73,262,048.87 10,989,307.33 82,490,043.84 12,373,506.58
companies not under
common control
Pre-tax deduction of
equipment and 1,442,317,999.00 223,014,994.83 831,888,785.84 127,083,424.85
instruments at one time
Other 14,937,672.15 2,755,180.27 11,247,341.96 1,687,101.29
Total
1,530,517,720.02 236,759,482.43 925,626,171.64 141,144,032.72
(3) Net amount of offset deferred income tax assets or liabilities
Unit: RMB
Offsetting amount of Closing balance of Offsetting amount of Opening balance of
deferred income tax assets deferred income tax assets deferred income tax assets deferred income tax assets
Item and deferred income tax or liabilities after offset and deferred income tax or liabilities after offset
liabilities at the end of the liabilities at the beginning
Reporting Period of the Reporting Period
Deferred income tax
assets 315,538,499.73 252,854,470.86
Deferred income tax 236,759,482.43 141,144,032.72
202
liabilities
（3） Details of unrecognized deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible loss 5,494,780.64 52,353,965.57
Provision for asset impairment 71,547.21 972.45
total 5,566,327.85 52,354,938.02
(5) Deductible losses for which deferred income tax assets were unrecognized will expire in the following years
Unit: RMB
Year Closing amount Opening amount notes
2024 19,937,896.63
2025 155,294.79 32,416,068.94
2026
2027 5,339,485.85
Total 5,494,780.64 52,353,965.57 --
Other explanations:
Description of one-time pre-tax deduction of equipment and instruments in the deferred income tax liabilities before offset:
1. According to the Notice of the Ministry of Finance and the State Administration of Taxation on the Policy of Deducting the Enterprise Income Tax
of Equipment and Instruments (Cai Shui [2018] No. 54) and Announcement the Ministry of Finance and the State Administration of Taxation on
Extending the Implementation Period of Some Preferential Tax Policies (Announcement of the Ministry of Finance and the State Administration of
Taxation of 2021 No. 6), the Company and its subsidiaries deducted the enterprise income tax of equipment and instruments with the unit value of
below RMB5 million purchased from January 1, 2018 to December 31, 2023 in one time when calculating the taxable income. As a result, taxable
temporary difference is formed and further turned into deferred income tax liabilities.
2. According to the Announcement of the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology on
Strengthening the Pre-tax Deduction in Support of Scientific and Technological Innovation (Announcement No. [2022] 28 of the Ministry of Finance,
the State Administration of Taxation and the Ministry of Science and Technology), the subsidiaries of the Company deducted the enterprise income
tax of equipment and instruments purchased during the fourth quarter of 2022 in one time when calculating the taxable income. As a result, taxable
temporary difference is formed and further turned into deferred income tax liabilities.
21. Other non-current assets
Unit: RMB
Item Closing balance Opening balance
Book balance Provision Book value Book balance Provision for Book value
for impairment
impairmen
t
Advance payment for equipment
2,093,287,184.21 2,093,287,184.21 1,421,784,008.16 1,421,784,008.16
Advance payment for project
682,856,379.07 682,856,379.07 420,103,967.69 420,103,967.69
Quality guarantee (Note 1)
1,350,000.00 1,350,000.00 1,350,000.00 1,350,000.00
Installment for sale of equipment
(Note 2) 13,327,609.02 13,327,609.02 8,083,352.22 8,083,352.22
Advance payment for land
200,000,000.00 200,000,000.00 251,500,000.00 251,500,000.00
Prepayment for house 4,353,231.00 4,353,231.00
Time deposits 753,729,154.86 753,729,154.86 461,548,862.25 461,548,862.25
203
Total 3,744,550,327.16 2,568,723,421.3 2,568,723,421.3
3,744,550,327.16
2 2
Other explanations:
The main reason for the larger increase in the ending balance of the Company’s other non-current assets over the opening balance is: several
production bases of the Company were under construction during the period; the advance payment for construction and equipment increases
accordingly as well as the sub-subsidiary Zhuhai Energy purchase certificates of large deposit which they prepare to hold to maturity.
Note 1: Guizhou Haoyiduo Dairy Co., Ltd. signed an agreement with the Company, and the two parties entered into a long-term strategic partnership.
The Company provided Guizhou Haoyiduo Dairy Co., Ltd. with the above money as its quality guarantee. Guizhou Haoyiduo Dairy Co., Ltd.
promised to purchase no less than 13 million packaging boxes of products from the Company every year, and return the above money after the
termination of the partnership. As long as the cooperation relationship is not terminated, the agreement will automatically continue after expiration.
During the reporting period, Guizhou Haoyiduo Dairy Co., Ltd. has a good cooperation relationship with the Company, and the annual order quantity
to the Company exceeds the agreed quantity in the above agreement. The Company expects that the above agreement will continue.
Note 2: The Company purchases filling machines and auxiliary equipment and sells them to customers by installment sales. The price of the
equipment shall be paid together with the payment for the Company’s products purchased by customers. Until the appointed time, all the payments for
equipment shall be recovered, invoices shall be issued and the property rights of the equipment shall be transferred to customers.
Note 3: As of December 31, 2022, term deposits of RMB375,031,336.94 were pledged to secure bank borrowings.
22. Short-term loans
(1) Classification of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged loan
275,049,783.20 545,992,000.27
Guaranteed loan
9,147,455,802.07 3,487,366,352.00
Credit loan
94,190,000.00 78,000,000.00
Undue interest payables
11,157,849.28 4,789,988.03
Total
9,527,853,434.55 4,116,148,340.30
Explanation for Classification of short-term borrowings:
The main reason for the larger increase in the ending balance of the Company’s short-term loans over the opening balance is: The increase of business volume
of the Company leads to the increase of capital demand for daily business activities and the increase of bank loans.
Pledged loan: the subsidiary Shanghai Energy New Material Technology Co., Ltd. obtained a loan of RMB90,000,000.00 by pledging its own large deposit
certificate of RMB100,000,000.00; the subsidiary Zhuhai Energy New Material Technology Co., Ltd. obtained a loan of Euro24,360,000.00 by pledging its own large
deposit certificate of RMB 200,000,000.00 ; the subsidiary Shanghai Energy New Material Technology Co., Ltd. obtained a loan of RMB4,207,939.20 by pledging its own
notes receivable of RMB4,207,939.20; the subsidiary Suzhou GreenPower New Energy Materials Co., Ltd. obtained a loan of RMB20,000.00 by pledging its own notes
receivable of RMB20,000.00. See note VI -61 assets with restricted ownership or use right for details of pledge.
Guaranteed loans: please refer to XI. Related Parties and Related Party Transactions — (5) Related party transactions — 5. Related party guarantees for details
of the loans guaranteed by the Company's actual controllers, the Company and its subsidiaries.
(2) Overdue and outstanding short-term loans: Nil
204
23. Trading financial liabilities
Unit: RMB
Item Closing balance Opening balance
Including：
Financial liabilities designated as
measured at fair value and whose
94,394.79
changes are included in other
comprehensive income
Including：
Derivative financial liabilities 94,394.79
Total 94,394.79
Other explanation:
24. Notes payable
Unit: RMB
Type Closing balance Opening balance
Commercial acceptance 4,659,463.30 4,205,536.14
Bank acceptance 604,656,235.72 483,202,292.39
Total 609,315,699.02 487,407,828.53
At the end of the current period, the total amount of notes payable due and unpaid is yuan.
25. Accounts payable
(1) Accounts payable
Unit: RMB
Item Closing balance Opening balance
Materials payable 514,269,975.80 337,706,658.17
Engineering equipment payable 1,070,892,790.28 222,569,060.60
Accessories and spare parts payable 37,809,458.76 20,393,593.67
Transportation fee payable 41,599,051.31 42,078,568.47
Other payable 56,015,715.96 27,797,776.37
Total 1,720,586,992.11 650,545,657.28
(2) Major accounts payable aged over one year
Unit: RMB
Item Closing balance Reasons for outstanding or carry-over
Shanghai Suray Information Technology Co., Not mature
Ltd. 7,117,267.59
Chengdu Huicheng Technology Co., Ltd. 4,560,000.00 Not mature
Shenzhen China Progress International Not mature
Forwarding Co., Ltd. 3,498,949.42
Jiangmen Yuxin Paper Products Co., Ltd. 3,468,002.74 Not mature
total 18,644,219.75
The main reason for the larger increase in the ending balance of the Company’s accounts payable over the opening balance is: The Company’s
business grew rapidly this year, the capacities continued to be expanded and capital expenditure increased significantly, thus the relevant accounts payable
205
increased accordingly.
206
26. Contractual liabilities
Unit: RMB
Item Closing balance Opening balance
Advance receivable for goods 22,179,220.18 761,923,312.38
Rebate 2,416,933.97
Total 24,596,154.15 761,923,312.38
27. Employee benefits payable
(1) Employee benefits payable
Unit: RMB
Item Opening balance Increase for the Decrease for the Closing balance
period period
I. Short-term remuneration 32,299,256.27 906,448,213.52 890,121,550.59 48,625,919.20
II. Retirement pension program-defined contribution
1,030,660.51 71,220,946.34 66,713,384.25 5,538,222.60
plan
III. dismissal benefits 523,574.99 523,574.99
Total 33,329,916.78 978,192,734.85 957,358,509.83 54,164,141.80
(2) Short-term benefits
Unit: RMB
Item Opening balance Increase for the Decrease for the Closing balance
period period
1. Wage, bonus, allowance and subsidies 30,694,537.91 780,547,819.99 767,957,477.35 43,284,880.55
2. Employee welfare 50,740,674.52 50,708,670.52 32,004.00
3. Social insurance 665,868.54 39,967,913.06 36,779,798.77 3,853,982.83
Including: medical insurance 655,874.25 36,419,105.49 33,482,216.04 3,592,763.70
Labor injury insurance 9,994.29 2,516,467.12 2,265,242.28 261,219.13
Maternity insurance premium 923,813.65 923,813.65
Supplementary medical insurance 741,497.48 741,497.48
4. Housing fund 416,973.01 30,383,252.70 30,194,913.72 605,311.99
5. Labor union budget and staff education fund 521,876.81 4,808,553.25 4,480,690.23 849,739.83
Total 32,299,256.27 906,448,213.52 890,121,550.59 48,625,919.20
207
(3) Defined contribution plans
Unit: RMB
Item Opening balance Increase for the period Decrease for the period Closing balance
1. Basic pension 999,428.38 69,038,412.34 64,666,312.63 5,371,528.09
2.Unemployment
insurance 31,232.13 2,182,534.00 2,047,071.62 166,694.51
Total 1,030,660.51 71,220,946.34 66,713,384.25 5,538,222.60
28. Taxes payable
Unit: RMB
Item Closing balance Opening balance
VAT 70,699,654.71 21,727,333.15
Corporate income tax 188,809,538.54 160,861,569.98
Personal income tax 1,328,104.94 996,764.35
City maintenance and construction tax 3,176,657.88 1,335,086.63
Property tax 7,997,292.20 2,908,801.04
Land using tax 1,069,578.09 620,797.95
Education surtax 2,720,034.27 1,221,998.41
Vehicle and vessel usage tax 1,378,475.54
Stamp duty 2,071,485.34 422,660.72
Other 210,909.28 61,525.55
Total 279,461,730.79 190,156,537.78
29. Other payables
Unit: RMB
Item Closing balance Opening balance
Dividends payable 9,778,239.09 9,778,239.09
Other payables 199,901,993.77 60,499,183.54
Total 209,680,232.86 70,277,422.63
(1) Interest payables: None
(2) Dividends payable
Unit: RMB
Item Closing balance Opening balance
Common share dividends 9,778,239.09 9,778,239.09
Total 9,778,239.09 9,778,239.09
208
Other explanations, including important dividends payable that have not been paid for more than one year, shall disclose the reasons for nonpayment:
The year-end balance of dividends payable is the dividend payable by the subsidiary Shanghai Energy New Material Technology Co., Ltd. to
minority shareholders.
(3) Other payables
1) Other payables listed by nature of payment
Unit: RMB
Item Closing balance Opening balance
Restricted stock repurchase obligations 101,753,346.66
Equity acquisition 42,736,010.00 42,736,010.00
Deposits and guarantees 44,077,111.71 12,209,228.71
Withholding employees’ social insurance 3,758,967.93 1,861,074.86
Reimbursement 1,865,087.72 997,002.15
Other 5,711,469.75 2,695,867.82
Total 199,901,993.77 60,499,183.54
2) Major other payables aged over one year
Unit: RMB
Item Closing balance Reasons for outstanding or carry-over
Gao’an Kewei investment partnership Payment terms not been met
22,380,000.00
(limited partnership)
DENCOLIMITED 20,356,010.00 Payment terms not been met
Total 42,736,010.00 --
Other explanations:
30. Non-current liabilities due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term loans due within 1 year 842,470,783.32 377,299,907.20
lease liabilities due within 1 year 1,375,995.60
Undue interest payables 14,649,175.87 6,098,084.90
209
Total 858,495,954.79 383,397,992.10
Other explanations:
31. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Output value-added tax payable 2,536,656.79 99,032,756.22
Endorsement of unconfirmed bank
252,146,381.12 130,932,533.60
acceptance bill
Endorsement of unconfirmed commercial
634,570.35
acceptance bill
Endorsement for transfer of unconfirmed
20,539,948.43 10,137,864.09
supply chain voucher
Total 275,222,986.34 240,737,724.26
32. Long-term borrowings
(1) Long-term borrowings by type
Unit: RMB
Item Closing balance Opening balance
Pledged loan 1,175,100,000.00 1,206,100,000.00
Mortgaged loan 833,353,874.05 949,296,159.46
Guaranteed loan 2,707,281,656.13 822,012,580.04
Credit loan 306,000,000.00 203,000,000.00
Undue interest payables 10,668,589.20 3,782,246.30
Long-term loans due within 1 year -853,139,372.52 -381,082,153.50
Total 4,179,264,746.86 2,803,108,832.30
Description for long-term borrowings by type:
Other explanations, including interest rate range:
The main reason for the larger increase in the ending balance of the Company’s long-term borrowings over the opening balance is: the increase in
special loan for project construction by the subsidiary Shanghai Energy and its subsidiaries.
Pledged loans: the subsidiary Shanghai Energy New Material Technology Co., Ltd. will pledge its 100% equity in Suzhou GreenPower and 76.3574%
equity in Newmi Tech to obtain a loan of RMB 1,175,100,000.00.
Mortgaged loan: the subsidiary Hongta Plastic, the sub- subsidiaries Zhuhai Energy, Wuxi Energy, Jiangxi Tonry and Jiangsu Energy, Chongqing Energy
obtained a loan of RMB 833,353,874.05 by pledging their own fixed assets. See “861. Assets with restricted ownership or use right” in VII of this
section for details of pledge.
Guaranteed loan: For details of loans obtained through the guarantee provided by actual controllers of the Company, the Company and its subsidiaries,
please refer to “(4) Related party guarantees” under “5. Related party transactions” in “XII. Related Parties and Related Party Transactions”.
210
33. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Opening balance
Convertible corporate bonds 425,795,937.76 413,239,181.29
Total 425,795,937.76 413,239,181.29
(2) Changes in bonds payable: (excluding preferred shares classified as financial liabilities, perpetual bonds and other financial instruments)
Unit: RMB
Name of bond Par Issue Term Issue Opening Issued in Interest Amortiz Paid in Shares Closing
value date size balance current provisio ation of the converte balance
period ned by discount current d in the
par s and period current
value premium period
s
Convertible 1,600 Febr 1,60 413,239, 12,874,5 - 425,79
corporate ,000, uary 6 years 0,00 181.29 56.47 317,800. 5,937.7
bonds of 000.0 11, 0,00 00 6
Yunnan Energy
New Material 0 2020 0.00
Co., Ltd.
Total —— 1,60
- 425,79
0,00 413,239, 12,874,5
317,800. 5,937.7
0,00 181.29 56.47
00 6
0.00
(3) Explanation on conversion conditions and conversion time of convertible corporate bonds
According to the Listing Rules of Shares on the Shenzhen Stock Exchange Stock and the Prospectus of Yunnan Energy New Material Co., Ltd. on the
Public Issuance of Convertible Corporate Bonds, the debt and share conversion period of Yunnan Energy commences from the first trading day in the
six months after the end of the issuance to the maturity date of the convertible corporate bonds, that is, from August 17, 2020 to February 11, 2026,
and the initial conversion price is RMB64.61 per share.
On May 21, 2020, according to the Announcement on the Adjustment of the Conversion Price of Convertible Corporate Bonds, as the Company
implements the 2019 annual equity distribution plan, the conversion price of debts and shares of Yunnan Energy is adjusted from RMB64.61 per share
to RMB64.49 per share.
On September 3, 2020, according to the Announcement on the Adjustment of the Conversion Price of Convertible Corporate Bonds, as the Company
adopts the non-public issuance of new shares, the conversion price of debts and shares of Yunnan Energy is adjusted to RMB65.09 per share.
As at September 28, 2020, in accordance with the Announcement on the Non-adjustment of Convertible Corporate Bond Conversion Price for the
Repurchase and Cancellation of Some Restricted Shares, the Company repurchased and cancelled the Company’s restricted shares held by the four
incentive objects because the personal assessment grade of the four incentive objects was “good” when the Company’s 2017 Restricted Stock
Incentive Plan was unlocked for the third time. Due to the small proportion of the repurchased and cancelled shares in the Company’s total share
capital, after the repurchase and cancellation, the conversion price of debts and shares of Yunnan Energy remained unchanged at RMB65.09 per share.
On April 30, 2021, according to the Announcement on the Adjustment of the Conversion Price of Convertible Corporate Bonds, as the Company
implements the 2020 annual equity distribution plan, the conversion price of debts and shares of Yunnan Energy is adjusted to RMB64.92 per share.
On May 16, 2022, according to the Announcement on the Adjustment of the Conversion Price of Convertible Corporate Bonds, as the Company
Implemented the 2021 annual equity allocation plan, the conversion price of debts and shares of Yunnan Energy is adjusted to RMB64.62 per share.
(4) Explanation on other financial instruments classified as financial liabilities
Outstanding preferred shares, perpetual bonds and other financial instruments as at the end of the Reporting Period
Table of changes in outstanding preferred shares, perpetual bonds and other financial instruments as at the end of the Reporting Period
Unit: RMB
At the beginning of the
Outstanding Increase for the period Decrease for the period At the end of the period
period
financial
Number of Number of Number of Number of
instruments Book value Book value Book value Book value
shares shares shares shares
The basis for classifying other financial instruments as financial liabilities
Other explanations:
211
34. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Within 1 year 1,375,995.60
1 to 2 years 1,375,995.60
2 to 3 years 229,332.60
Unrecognized financing expenses -273,843.04
Lease liabilities due within one year -1,375,995.60
Total 1,331,485.16
Other explanations:
In the current period, the interest expense of lease liabilities was RMB29,004.11.
212
35. Deferred income
Unit: RMB
Increase for the Decrease for the
Item Opening balance Closing balance Reason
period period
Government subsidies For details, see the
754,958,659.55 139,336,447.03 70,827,997.11 823,467,109.47 table below
Total --
754,958,659.55 139,336,447.03 70,827,997.11 823,467,109.47
Items involving government grants:
Unit: RMB
Amount
that
Grants Non- Other offsets Other
Item related to liabilities Opening increased for operating income costs and chang Closing balance Related to
balance the period income recorded in expenses es assets/income
recorded in the period in the
the period current
period
Support and incentive
payment of the Xishan Related to
Economic and 180,301,293.49 83,422,500.00 16,557,514.46 247,166,279.03 assets
Technological Development
Zone
Equipment subsidies of the Related to assets
Gao’an Municipal People’s 270,372,793.38 25,125,178.56 245,247,614.82
Government
Item subsidy for the Related to
162,487,335.02 14,308,295.40 148,179,039.62
development of advanced assets
equipment manufacturing
industry
Special funds for the
development of provincial Related to
strategic emerging 28,846,153.86 2,307,692.28 26,538,461.58 assets
industries
Subsidies for infrastructure Related to
24,130,800.16 1,340,599.92 22,790,200.24
construction assets
Support fund for imported Related to
equipment industry of 20,095,347.03 1,986,206.32 assets
Gao'an Municipal People’s 18,109,140.71
Government
Enterprise support funds
allocated by Gao’an New Related to
16,098,908.32 692,825.64 15,406,082.68 assets
World Industrial City
Finance Office
213
High-performance
lithiumion battery Related to
separator project with an 13,531,495.92 2,696,405.76 10,835,090.16 assets
output of 90 million square
meters
National import discount Related to assets
11,147,700.00 363,649.22 10,784,050.78
for Wuxi Energy
Municipal technological
transformation project for 1,125,000.00 Related to
10,031,250.00 8,906,250.00 assets
high-quality development
Subsidy with interests of Related to assets
Imported equipment for 9,293,400.00 757,791.35
Jiangxi Tonry 8,535,608.65
land subsidy for Sanhe Related to assets
village, Jiangsu 8,427,500.00 14,092.81 8,413,407.19
Technological
transformation project of the Related to
production line of 9,086,808.46 1,080,781.56 8,006,026.90 assets
lithium-ion battery separator
Land subsidies granted by Related to assets
the Administrative
Committee of Yuxi High-
tech Industrial Development 2,994,871.79 3,950,000.00 178,609.60 6,766,262.19
Zone for the annual
production of 1 billion
liquid packing boxes
Technological
transformation project of the Related to
second batch of industrial 7,350,000.00 900,000.00 6,450,000.00 assets
transformation in 2020
Enterprise development Related to
support funds (subsidy for 6,315,328.00 assets
plant construction of Jiangxi 6,315,328.00
Enpo)
Special funds for 70,000-ton Related to
BOPP projects 5,300,000.00 5,300,000.00 assets
Technical transformation Related to
guidance funds 5,299,515.00 5,299,515.00 assets
Special funds for basic Related to
3,391,025.47 307,692.48 3,083,332.99
projects assets
Special fund for the Related to
development of small assets
and medium-sized
enterprises at the
provincial level in 2,300,000.00 60,101.79
2021 by Yuxi 2,239,898.21
Municipal Bureau of
Industry and
Information
Technology
Related to
Cable trench subsidy 2,521,667.13 339,999.96 2,181,667.17 assets
Boiler upgrading and Related to
2,361,969.28 196,830.72 2,165,138.56
reconstruction projects assets
Low-nitrogen
transformation project Related to
1,000,000.00 71,428.56 928,571.44 assets
subsidy of the Finance
Bureau of Changshou
Special funds for basic Related to
846,154.04 76,922.88 769,231.16
projects assets
Enterprise Related to
development support 769,230.77 61,538.52 707,692.25 assets
funds
Key industrial technology Related to
innovation project funds of 700,000.00 700,000.00 assets
Suzhou
214
Special funds for the
construction of the Yuxi Related to
504,260.00 34,977.60 469,282.40 assets
municipal industrial park in
2017
Subsidies of the Yuxi Related to assets
Municipal Bureau of
528,302.00 113,207.52 415,094.48
Finance for the first major
technical equipment
Reward for Suzhou to build
an intelligent demonstration Related to
395,604.36 65,934.12 329,670.24 assets
workshop of advanced
manufacturing base in 2020
Funds for the preparation of
touring inspection activities
in Yichun and centralized
commencement and Related to
completion activities of 277,226.65 14,720.04 262,506.61 assets
major projects in Yichun,
allocated by Gao’an New
World Industrial City
Finance Office
215
Subsidies for the renovation
of power supporting
projects outside the plants in Related to
the Jiulong district of the 216,666.45 50,000.04 166,666.41 assets
Yuxi High-Tech
Development Zone
Management Committee
Total 754,958,65 823,467,10
139,336,447.03 70,827,997.11
9.55 9.47
216
36. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Government support for lithium battery
455,517,694.55 455,517,694.55
separation film project (Note 1)
Investment in lithium battery separation film 83,000,000.00
86,000,000.00
project (Note 2)
Subsidy for lithium battery separation film
R&D project 700,000.00
Total 542,217,694.55 538,517,694.55
Other explanations:
Note 1: Jiangxi Tonry, a third-level subsidiary of the Company, has built an item production base of lithiumion separator in Gao’an City, Yichun City, Jiangxi
Province, with policy support from the local government. According to the relevant provisions of the investment agreement, the government borrows money in
advance to pay for the purchase of equipment. When each lithium-ion film production line is put into use, the equipment subsidy shall be recognized in batches
according to the corresponding proportion of the value of the imported equipment of the production line that has been put into operation.
Note 2: Chongqing Energy, a third-level subsidiary of the Company, has built a production line base of high-performance lithium-ion battery micropore
separator in Changshou Economic and Technological Development Zone, Chongqing City, with policy support from the local government. According to the
relevant provisions of the investment agreement, the government grants infrastructure construction industry development funds in the form of a government
subsidy, and after the commitment of the investment agreement is fulfilled, the subsidy shall be recognized in batches as the plant and equipment subsidy
according to the corresponding proportion of the value of the plant and equipment.
37. Share capital
Unit: RMB
Increase or decrease (＋,－)
Opening
Closing
Conversion of
balance New issues Bonus Others Subtotal balance
reserve into
issuance
share
Total amount
892,406,822.00 4,868.00 4,868.00 892,411,690.00
of shares
Other explanations:
See “III. Basic information of the Company” in this section. The convertible bonds publicly issued by the Company entered the share transfer
period on August 17, 2020. As of December 31, 2022, the Company’s share capital increased by RMB4,868.00 due to the share transfer.
38. Other equity instruments
(1) Outstanding preferred shares, perpetual bonds and other financial instruments as at the end of the Reporting Period
Under the Approval of the Issuance of Convertible Corporate Bonds by Yunnan Energy New Material Co., Ltd. (Zheng Jian Xu Ke [2019] No. 2701)
issued by the China Securities Regulatory Commission, the Company publicly issued 16 million convertible corporate bonds on February 11, 2020,
which was calculated as the value of the debt instruments of the convertible corporate bonds was RMB1,408,703,126.08, and the value of the equity
instruments was RMB177,419,515.43 by referring to the interest rates of the credit bonds of similar enterprises with AA credit rating and similar
maturities in the market and deducting the bond issuance expenses.
(2) Table of changes in outstanding preferred shares, perpetual bonds and other financial instruments as at the endof the Reporting Period
Unit: RMB
At the beginning of the Increase for the period
Outstanding Decrease for the period At the end of the period
period
financial
instruments Number of Number of Number of Number of
Book value Book value Book value Book value
shares shares shares shares
217
Equity
instrument of
convertible 50,352,323.80 35,239.96 50,317,083.84
corporate
bonds
Total 50,352,323.80 35,239.96 50,317,083.84
Explanations on changes in other financial instruments and reasons thereof as at the end of the Reporting Period, and basis for related accounting
treatment:
In 2022, the Company’s “Energy Convertible Bond” decreased by RMB317,800.00 (3,178.00 bonds) due to the transfer of 4,868.00 shares and
reduced the other equity instrument by RMB35,239.96.
Other explanations:
39. Capital reserve
Unit: RMB
Item Opening balance Increase for the period Decrease for the period Closing balance
Capital premium (capital
stock premium) 7,635,639,929.52 67,572,702.66 102,690,956.12 7,600,521,676.06
Other capital reserve 84,810,922.74 84,810,922.74
Total 7,635,639,929.52 152,383,625.40 102,690,956.12 7,685,332,598.80
Other explanations, including changes and reasons thereof as at the end of the Reporting Period:
Explanations of capital reserve:
1. The capital premium (capital stock) increased by RMB 67,572,702.66 this year, mainly because:
(1) The convertible bonds publicly issued by the Company entered the share transfer period on August 17, 2020. The Company’s capital reserve
increased by RMB343,945.88 due to the share transfer.
(2) The minority shareholders of the sub-subsidiary Jiangxi Enpo New Materials Co., Ltd. injected capital in the current year, resulting in an increase
of RMB134,217.63 in capital reserve.
(3) The change of minority shareholders of the subsidiary Hongchuang Packaging in the current year resulted in the change of the Company's
shareholding ratio and an increase of RMB67,094,539.15 in capital reserve.
2. The capital premium (share capital premium) decreased by RMB102,690,956.12 in this year, mainly due to the restricted shares granted by the
Company to employees with the grant price lower than the share repurchase price in this year.
3. The increase of other capital reserves was RMB84,810,922.74 in this year, mainly due to:
(1) The Company implemented equity incentives for employees and confirmed share-based payment related expenses, resulting in an increase of
RMB84,649,402.6 in other capital reserves.
(2) The subsidiary Hongchuang Packaging implemented equity incentives for employees and confirmed share-based payment related expenses,
resulting in an increase of RMB161,520.14 in other capital reserves.
40. Treasury stock
Unit: RMB
Item Opening balance Increase for the period Decrease for the period Closing balance
Equity incentive
204,444,302.78 204,444,302.78
repurchase
Restricted
share-based 101,753,346.66 101,753,346.66
payment
Total
204,444,302.78 101,753,346.66 204,444,302.78 101,753,346.66
Other explanations, including changes and reasons thereof as at the end of the Reporting Period:
1. Please refer to Note XIII. Share-based payment. Because the Company used the repurchased shares for stock incentive, the treasury shares decreased by
RMB204,444,302.78;
2. The Company shall recognise liabilities for the repurchase obligation of restricted shares issued to employees, and treat them as treasury shares. The
amount of treasury shares shall be calculated and determined according to the number of restricted shares issued and the corresponding repurchase prices.
218
41. Other comprehensive income
Unit: RMB
Amount for the current period
Less:
Less: Amount
Amount included
included into other
Amount into other comprehe After-tax
incurred nsive After-tax
Opening comprehensi amount Closing
before income in Less: amount
Item balance ve income in attributab balance
the the prior Income attributab
the prior le to
income period tax le to the
period and minority
tax in the and expense parent
transferred sharehold
current transferre company
into the ers
period profit and d into the
loss in the retained
current earnings
period in the
current
period
I. Other comprehensive income that
750,000.0
cannot be reclassified subsequently 1,000,000.00 250,000.00 750,000.00
0
to profit or loss
1. Changes in fair value of
750,000.0
investments in other equity 1,000,000.00 250,000.00 750,000.00
0
instruments
II. Other comprehensive income
that will be reclassified -3,746,198.57 11,170,906 - 10,770,449
540,671.59
7,024,2
subsequently to profit or loss .68 140,214.40 .49 50.92
Exchange differences from
translation of statements -4,502,767.45 12,105,669 11,527,018
578,651.00
7,024,2
denominated in foreign currencies .37 .37 50.92
Provision for credit - - -
756,568.88 -37,979.41
impairment of receivable financing 934,762.69 140,214.40 756,568.88
Total other comprehensive income -3,746,198.57 12,170,906 109,785.60
11,520,449
540,671.59
7,774,2
.68 .49 50.92
42. Surplus reserve
Unit: RMB
Item Opening balance Increase for the period Decrease for the period Closing balance
Statutory surplus reserve 150,822,559.89 18,251,921.33 169,074,481.22
Reserve fund 21,153,681.64 21,153,681.64
Enterprise development
fund 1,416,680.73 1,416,680.73
Total 173,392,922.26 18,251,921.33 191,644,843.59
Explanations on surplus reserve, including explanation about the reason of the change: The increase in surplus reserve for the year was due to
the provision of 10% of the net profit of the parent company for the year.
219
43. Undistributed profit
Unit: RMB
Item Current period Previous period
Undistributed profit before adjustments at the end of
the prior period 5,288,265,431.08 2,746,794,868.15
Undistributed profit adjusted at the beginning of the
period 5,288,265,431.08 2,746,794,868.15
Add: Net profit attributable to owners of parent
company in the current period 4,000,461,964.37 2,717,628,798.01
Less: Withdrawal of statutory surplus reserve 18,251,921.33 25,442,257.68
Common share dividends payable 269,999,722.24 150,715,977.40
Undistributed profits at the end of the period 9,000,475,751.88 5,288,265,431.08
44. Operating income and operating cost
Unit: RMB
Amount for current period Amount for previous period
Item
Income Cost Income Cost
Main businesses 12,217,521,522.39 6,360,676,130.43 7,866,428,440.28 3,978,342,250.24
Other businesses 373,404,007.29 207,472,252.22 115,998,370.31 23,681,463.99
Total 12,590,925,529.68 6,568,148,382.65 7,982,426,810.59 4,002,023,714.23
Whether the lower of the audited net profit before and after deduction of non-recurring gains or losses is negative
□ Yes √ No
45. Taxes and surcharges
Unit: RMB
Item Amount for current period Amount for previous period
City maintenance and construction tax 10,137,102.35 6,203,284.99
Education surcharge 8,928,750.72 7,160,112.90
Property tax 24,477,126.87 15,622,433.54
Land using tax 6,789,704.51 4,370,191.44
Vehicle and vessel usage tax 25,019.80 31,362.50
Stamp duty 6,466,537.77 3,464,406.34
Other 57,680,955.03 37,128,232.84
Total 10,137,102.35 6,203,284.99
Other explanations:
220
46. Selling expenses
Unit: RMB
Item Amount for current period Amount for previous period
Sales commission 15,749,712.52 22,865,150.56
Labor costs 29,479,359.97 25,226,747.02
Sales agency expense 9,528,124.63 8,068,800.98
Depreciation and amortization 5,805,912.99 5,493,116.99
Entertainment expense 3,459,975.18 3,773,186.15
Travel expense 2,899,891.55 3,023,032.85
Share-based payment 2,293,041.47
Other 5,239,025.16 5,584,967.81
Total 74,455,043.47 74,035,002.36
Other explanations:
221
47. Administrative expenses
Unit: RMB
Item Amount for the current period Amount for previous period
Employee compensation 158,061,912.74 100,006,459.81
Share-based expense 51,022,209.61 18,478,989.45
Depreciation and amortization 43,343,632.86 33,225,957.56
Agencies 14,296,148.37 23,458,610.93
Maintenance costs 4,223,440.57 4,454,582.50
Office expense 7,044,955.89 5,151,563.26
Travel expense 4,088,667.43 3,727,757.41
Entertainment expense 2,531,330.21 3,624,674.68
Environmental protection fee 8,110,686.32 1,082,706.22
Others 30,568,947.01 23,122,637.54
Total 323,291,931.01 216,333,939.36
Other explanations:
222
48. R&D expenses
Unit: RMB
Item Amount for the current period Amount for previous period
Material costs 403,898,381.02 214,385,356.23
Employee compensation 179,390,617.59 117,133,689.98
Depreciation and amortization 44,490,331.35 30,124,498.48
Utility costs 46,238,014.05 20,022,169.55
Others 50,280,355.65 27,513,016.04
Total 724,297,699.66 409,178,730.28
Other explanations:
49. Financial Expenses
Unit: RMB
Item Amount for the current period Amount for previous period
Interest expenses 287,498,131.60 221,206,595.88
interest income -26,258,474.95 -20,299,433.23
Exchange gain/loss -61,184,128.02 -56,196,216.05
Bank charges and other 11,476,342.34 8,271,108.87
Total 211,531,870.97 152,982,055.47
Other explanations:
50. Other Income
Unit: RMB
Other sources of income Amount for the current period Amount for previous period
Government subsidy 155,302,624.29 133,733,928.01
Return of individual income tax service
charge 1,131,403.22 345,520.77
Total 156,434,027.51 134,079,448.78
51. Investment income
Unit: RMB
Item Amount for the current period Amount for previous period
Gain on long-term equity investments subject to
accounting with equity method 1,471,658.10 1,687,090.23
Investment income from disposal of trading
financial assets 12,080,580.37
Proceeds from wealth management products 27,838,099.70 35,378,946.92
Investment income from derecognition of
-18,658,871.90 -9,956,624.13
financial assets at amortized cost
Total 22,731,466.27 27,109,413.02
223
52. Gains on fair value change
Unit: RMB
Source of gains on fair value change Amount for the current period Amount for previous period
Trading financial assets 9,850,069.59 137,194.34
Including: Income from changes in fair value
9,850,069.59
arising from derivative financial instruments
Trading financial liabilities -94,394.79
Total 9,755,674.80 137,194.34
53. Credit Impairment Losses
Unit: RMB
Item Amount for the current period Amount for previous period
Bad debt losses on other receivables -649,051.50 193,877.02
Impairment losses on accounts receivable 80,338.10 -24,618,321.53
Impairment loss on notes receivable -8,690,103.00 -2,109,153.54
Impairment losses on accounts receivable
financing 934,762.69 1,687,237.31
Total -8,324,053.71 -24,846,360.74
54. Asset Impairment Losses
Unit: RMB
Item Amount for the current period Amount for previous period
Inventory falling price losses and contract
performance cost depreciation losses -42,921,534.91 -10,663,472.55
Total -42,921,534.91 -10,663,472.55
55. Gains on disposal of assets
Unit: RMB
Source Amount for the current period Amount for previous period
Disposal of fixed assets 223,345.22 308,957.41
56. Non-operating income
Unit: RMB
Amount of non-recurring gain or
Item Amount for the current period Amount for previous period loss included in the current
period
Accepting donations 111,645.43 33,001.00 111,645.43
Compensation received 249,743.26 293,393.82 249,743.26
224
Payments that do not need to be
614,291.80 4,015,457.76 614,291.80
made upon approval
Others 986,822.77 1,007,722.92 986,822.77
Total 1,962,503.26 5,349,575.50
57. Non-operating Expenses
Unit: RMB
Amount of non-recurring gain or
Item Amount for the current period Amount for previous period loss included in the current
period
Donation 524,578.80 345,894.96 524,578.80
Abandonment losses of
non-current assets 5,093,236.75 1,612,201.57 5,093,236.75
Others 619,138.51 686,933.68 619,138.51
Total 6,236,954.06 2,645,030.21 6,236,954.06
58. Income Tax Expense
(1) Table of income tax expenses
Unit: RMB
Item Amount for the current period Amount for previous period
Current income tax 520,107,429.64 342,073,538.57
Deferred income tax 32,902,134.24 -9,352,714.12
Total 553,009,563.88 332,720,824.45
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
Item Amount for the current period
Total profit 4,765,144,121.27
Income tax expenses calculated based on the statutory (or applicable)
tax rates 1,191,286,030.31
Impact of different tax rates applied to subsidiaries -454,993,628.58
Impact of adjusting income tax in previous periods 1,330,765.93
Impact of non-taxable income -183,762.49
Impact of non-deductible cost, expense and loss 915,701.76
225
Impact of deductible losses not recognized as deferred income tax
assets before utilization -4,290,790.23
Impact of deductible temporary differences or deductible losses not
recognized as deferred income tax assets for the period 1,391,581.97
Impact of R&D expenses plus deduction -106,848,188.53
Impact of income tax credit for investment in special equipment -17,722,810.69
Effect of additional deduction for equipment of high-tech enterprises -42,131,334.43
Impact of tax rate change -14,680,932.38
Others -1,063,068.77
Income tax expenses 553,009,563.88
59. Cash flow statement
(1) Cash received relating to other operating activities
Unit: RMB
Item Amount for the current period Amount for previous period
Interest Income 27,599,543.01 19,716,676.85
Subsidy income 228,642,477.43 263,436,972.90
Recovered deposit 38,768,179.58 8,148,685.49
Other receivables received 5,656,068.58 3,219,994.43
Others 1,348,211.46 1,679,638.51
Total 302,014,480.06 296,201,968.18
(2) Cash payments relating to other operating activities
Unit: RMB
Item Amount for the current period Amount for previous period
Deposit payment 132,561,185.22 9,001,100.64
Other payable paid 1,217,235.92 737,289.34
Paying employee incentive and dividend
46,031,316.80
personal income tax
Administrative expenses and R&D expenses 149,669,000.84 115,193,779.54
Operating expenses 36,248,947.35 42,407,495.96
Service charge 11,476,342.34 8,271,108.87
Donation expenditure 524,578.80 345,894.96
Reserve fund paid 3,101,817.82 1,888,869.92
226
Others 270,929.34 686,933.68
Total 335,070,037.63 224,563,789.71
(3) Cash payments relating to other investing activities
Unit: RMB
Item Amount for the current period Amount for previous period
Payment for debt as an agent for acquisitions
of subsidiaries 473,586,405.90
Payment for acquisition of minority equity 1,000,000.00
Deposit for letter of credit and bill 150,164,555.53
Total 150,164,555.53 474,586,405.90
(4) Cash payments relating to other financing activities
Unit: RMB
Item Amount for the current period Amount for previous period
Payment for equity of minority shareholder 10,000,000.00
Payment for share repurchase 204,444,302.78
Forfaiting Business Deposit 253,459,886.80 139,356,113.20
Lease payment 2,649,939.18 2,019,792.67
Total 256,109,825.98 355,820,208.65
60. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
Unit: RMB
Amount for the current Amount for the
Supplementary information
period previous period
1. Reconciliation of net profit to cash flows from operating activities
Net profit 4,212,134,557.39 2,886,854,037.15
227
Plus: impairment provision for assets 42,921,534.91 10,663,472.55
Credit impairment losses 8,324,053.71 24,846,360.74
Depreciation of fixed assets, depreciation of oil and gas assets, and depreciation
of productive biological assets 1,043,974,672.99 781,727,096.08
Depreciation of right-of-use assets 1,208,973.42
Amortization of intangible assets 20,775,544.18 14,814,730.11
Amortization of long-term unamortized expenses 3,261,644.43 4,899,969.37
Losses from disposal of fixed assets, intangible assets, and other long-term assets
(gain is indicated with “-”) -223,345.22 -308,957.41
Losses from scrapping of fixed assets (gain is indicated with “-”) 5,093,236.75 1,612,201.57
Losses from change of fair value (gain is indicated with “-”) -9,755,674.80 -137,194.34
Financial expenses (gain is indicated with “-”) 275,513,745.88 221,206,595.88
Investment losses (gain is indicated with “-”) -22,731,466.27 -27,109,413.02
Decrease in deferred income tax assets (increase is indicated with”-”) -62,684,028.87 -49,950,474.49
Increase in deferred income tax liabilities (decrease is indicated with”-”) 95,615,449.71 40,737,974.76
Decrease in inventory (increase is indicated with”-”) -824,963,603.42 -535,080,982.13
Decrease in operating receivables (increase is indicated with”-”) -4,529,233,502.65 -3,462,031,254.35
Increase in operating payables (decrease is indicated with”-”) 152,648,586.65 1,487,422,225.90
Others 91,707,219.87 18,478,989.45
Net cash flows from operating activities 503,587,598.66 1,418,645,377.82
2. Significant investment and financing activities not involving cash receipts and
payments:
Conversion of debt into capital
Convertible bonds due within one year
Fixed assets acquired under finance leases
3. Net changes in cash and cash equivalents:
Closing balance of cash 2,972,056,126.01 1,369,299,568.60
Less: opening balance of cash 1,369,299,568.60 2,054,915,784.55
Plus: closing balance of cash equivalents
Less: opening balance of cash equivalents
Net increase in cash and cash equivalents 1,602,756,557.41 -685,616,215.95
228
(2) Total cash outflow related to lease
Total cash outflow related to lease for the current period was RMB2,649,939.18.
(3) Composition of cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
I. Cash 2,972,056,126.01 1,369,299,568.60
Including: Cash on hand 89,904.57 141,604.43
Cash at bank that can be readily drawn
on demand 2,971,966,221.44 1,369,157,964.17
III. Cash and cash equivalents at the end of the
Reporting Period 2,972,056,126.01 1,369,299,568.60
Other explanations:
61. Assets with Restricted Ownership or Use Rights
Unit: RMB
Item Closing book value Reason of restriction
Bank draft margin, letter of credit margin, letter of guarantee
Monetary capital
982,223,348.31 margin, performance deposit, security deposits for lock
exchange, deposit regulated by banks
Notes receivable 4,227,939.20 Bank loans through pledge
Fixed assets 775,359,141.70 Comprehensive bank credit and loan through mortgage
Intangible assets 292,390,109.05 Comprehensive bank credit and loan through mortgage
Accounts receivable financing 28,105,438.78 Bank loans and bank acceptance through pledge
Other non-current assets 311,247,569.39 Bank loans through pledge
Non-current assets due within one year 53,697,916.67 Bank loans through pledge
Total 2,447,251,463.10 --
Other explanations:
In addition to the items listed in the above table, the Company's subsidiary Shanghai Energy pledged its 76.3574% equity interest in Newmi Tech and 100%
equity interest in Suzhou GreenPower to obtain bank loans, which resulted in the above Company's equity interest being restricted assets.
62. Monetary items denominated in foreign currencies
(1) Monetary items denominated in foreign currencies
Unit: RMB
Ending balance of foreign Ending balance converted into
Item Exchange rate
currency RMB
Monetary capital 443,965,089.46
Including: USD 46,025,719.86 6.9646 320,550,628.58
Euro 19.23 0.8934 17.18
229
HKD 16,517,652.37 7.4229 122,608,881.81
JPY 3,159,734.00 0.0524 165,437.42
HUF 34,459,757.22 0.0186 640,124.48
Accounts receivable 374,416,804.55
Including: USD 37,466,622.77 6.9646 260,940,040.94
Euro
HKD
JPY 2,167,324,259.97 0.0524 113,476,763.60
Long-term borrowings
Including: USD
Euro
HKD
Short-term borrowings 56,540,000.00 419,690,766.00
Including: Euro 56,540,000.00 7.4229 419,690,766.00
Accounts payable 2,976,023,159.65 811,688,034.57
Including: USD 93,823,622.35 6.9646 653,444,000.22
Euro 995,555.00 7.4229 7,389,905.20
JPY 2,881,203,982.30 0.0524 150,854,129.15
Other payables 191,134.44 1,331,174.92
Including: USD 191,134.44 6.9646 1,331,174.92
(2) Description of overseas business entities; for material overseas business entities, disclose their major business places overseas, functional
currency and the selection criterion thereof; should there be any change in the functional currency, disclose the reason for such change
□Applicable √N/A
63. Government grant
(1) Details of government grants
Unit: RMB
230
Amount included in current profit
Type Amount Presented items
and loss
Government subsidies recorded See note 35 in Section VII for details
in deferred income 139,336,447.03 70,827,997.11
Government subsidies recorded See note 50 in Section VII for details
in other income 84,474,627.18 84,474,627.18
Government subsidies offset See below note (2) for details
against costs and expenses 16,693,000.00 16,693,000.00
Total 240,504,074.21 171,995,624.29
(2) Details of government subsidies offset against costs and expenses
Grant item Classification Recognized in the Recognized in the Item to be offset
current period prior period against
Interest subsidy of “Ten- related to income Financial expenses
Hundred-Thousand” 7,154,200.00
16,693,000.00
Project
(3) Return of government subsidies
□Applicable √N/A
VIII. Changes in the Consolidation Scope
1. Merger of enterprises not under common control: No business combination not under the same control occurred this
year
2. Merger of enterprises under common control: No business combination under the same control occurred this year
3. Reverse purchase: No reverse purchase occurred this year
4. Disposal of subsidiaries
Whether the right of control is lost after a single disposal of investment in subsidiaries
□Applicable √N/A
Whether the right of control is lost for the current period after disposal of investment in subsidiaries through multiple transactions
□Applicable √N/A
5. Changes in the consolidation scope due to other reasons
Explain the changes in the scope of consolidation caused by other reasons (such as the establishment of new subsidiaries, liquidation of subsidiaries, etc.) and
relevant information:
During the year, the number of entities included into the consolidated financial statement increased by 10 and decreased by 1, including:
(1) Subsidiaries newly included in the consolidation scope in the current year
Name Reason for change
Hongchuang Packaging (Jiangsu) Co., Ltd. New investment
Shanghai Energy New Material Research Co., Ltd. New investment
Energy (Zhuhai Hengqin) New Materials Technology Co., Ltd. New investment
Xiamen Energy New Materials Co., Ltd. New investment
Yuxi Energy New Materials Co., Ltd. New investment
Shanghai Energy Trading Co., Ltd. New investment
Jiangsu Energy Trading Co., Ltd. New investment
SEMCORP Properties Kft. New investment
231
SEMCORP America Inc. New investment
SEMCORP Manufacturing USA LLC New investment
(2) Subsidiaries not included in the consolidation scope in the current year
Name Reason for change
Foshan Donghang Opto-Electric Technology Co.,
De-registration
Ltd.
232
IX. Interests in Other Entities
1. Interests in subsidiaries
(1) Constitution of the enterprise group
Name of Principal place of Place of Nature of Shareholding proportion Method of
subsidiaries business registration business
Direct Indirect acquisition
Yunnan Dexin Paper production Newly
Yuxi, Yunnan Yuxi, Yunnan 100.00%
Paper Co., Ltd. and sales established
Yunnan
Production and Newly
Hongchuang Yuxi, Yunnan Yuxi, Yunnan 60.90%
sales of aseptic established
Packaging Co.,
packing box
Ltd.
Hongchuang Changzhou, Jiangsu Changzhou, Jiangsu 100.00% Newly established
Production and
Packaging
sales of aseptic
(Jiangsu) Co.,
packing box
Ltd.
Bopp film
Yunnan Hongta Yuxi, Yunnan Yuxi, Yunnan 100.00% Newly
production and
Plastic Co., Ltd. established
sales
Hongta Plastic Bopp film
Chengdu, Chengdu, 100.00% Newly
(Chengdu) Co., production and
Sichuan Sichuan established
Ltd. sales
Yuxi Feiermu Newly
Yuxi, Yunnan Yuxi, Yunnan Trading 100.00%
Trading Co., Ltd. established
Ningbo Energy 100.00% Newly
Ningbo, Zhejiang Ningbo, Zhejiang Trading
New Material established
Co., Ltd.
Xiamen Energy Newly
Xiamen, Fujian Xiamen, Fujian Production and 100.00%
New Materials established
sales of new
Co., Ltd. materials
Shanghai Energy 100.00% Newly
Shanghai Shanghai Technical services
New Material established
Research Co.,
Ltd.
Shanghai Energy Production and
Merger of
New Material Shanghai Shanghai sales of lithium 95.22% enterprises under
Technology Co., battery separator
common control
Ltd.
Zhuhai Energy Production and
New Material Zhuhai, Zhuhai, sales of lithium Newly
100.00%
Technology Co., Guangdong Guangdong battery separator established
Ltd.
Guangdong
Energy New Zhuhai, Zhuhai, Technical Newly
Guangdong Guangdong services 100.00% established
Material Institute
Co., Ltd.
Wuxi Energy New Production and
Material sales of lithium Newly
Wuxi, Jiangsu Wuxi, Jiangsu 100.00% established
Technology Co., battery separator
Ltd.
Jiangxi Tonry New
Production and Business
Energy Technology
Development Co., Yichun, Jiangxi Yichun, Jiangxi sales of lithium 100.00% combination not
Ltd. battery separator under the
common control
233
Jiangxi Ruijie New Production and Business
Material sales of combination not
Yichun, Jiangxi Yichun, Jiangxi 82.00%
Technology Co., packaging under the
Ltd. materials common control
Suzhou Production and Business
GreenPower New sales of lithium combination not
Suzhou, Jiangsu Suzhou, Jiangsu 100.00%
Energy Materials battery separator under the
Co., Ltd. common control
234
Chongqing Production and Business
Energy Newmi Chongqing Chongqing sales of lithium 76.36% combination not
Technological battery separator under the
Co., Ltd. common control
Production and
Jiangxi Enpo New Newly
Yichun, Jiangxi Yichun, Jiangxi sales of lithium 51.00%
Material Co., Ltd. established
battery separator
Jiangxi Energy Production and
New Material sales of lithium Newly
Yichun, Jiangxi Yichun, Jiangxi 100.00% established
Technology Co., battery separator
Ltd.
Chongqing
Production and
Energy New Newly
Chongqing Chongqing sales of lithium 100.00%
Material established
battery separator
Technology Co.,
Ltd.
Hainan Energy Chengmai Chengmai Investment and
100.00% Newly
Investment Co., County, Hainan County, Hainan technology
established
Ltd. Province Province services
235
Chuangxin New
Hong Kong Hong Kong Trading 100.00% Newly
Material (Hong
established
Kong) Co., Ltd.
SEMCORP Hungary Hungary Investment and
technology services Newly
Global Holdings 100.00%
established
Kft.
Hungary Hungary Production and sales
SEMCORP of lithium battery Newly
100.00%
Hungary Kft. separator established
Hungary Hungary sale of self-owned
SEMCORP real estate Newly
100.00%
Properties Kft. established
USA USA Investment and
SEMCORP technology services Newly
100.00%
America Inc. established
SEMCORP USA USA Production and sales
of lithium battery Newly
Manufacturing 100.00% established
separator
USA LLC
Production and
Jiangsu Energy sales of lithium
New Material Changzhou, Changzhou, battery separator 100.00% Newly
Technology Co., Jiangsu Jiangsu established
Ltd.
Jiangsu Ruijie New Production and
Material Changzhou, Changzhou, sales of Newly
100.00%
Technology Co., Jiangsu Jiangsu packaging established
Ltd. materials
Hunan Energy
Frontier New Production and
Changsha, Hunan Changsha, Hunan sales of new 65.00% Newly
Material established
Technology Co., materials
Ltd.
Hubei Energy
Production and Newly
New Material Jingmen, Hubei Jingmen, Hubei 55.00%
sales of new established
Technology Co.,
materials
Ltd.
Jiangsu Sanhe
Production and Newly
Battery Material Liyang, Jiangsu Liyang, Jiangsu 51.00%
sales of new established
Technology Co.,
materials
Ltd.
Energy (Zhuhai Trading 100.00%
Hengqin) New Zhuhai, Zhuhai, Newly
Materials Guangdong Guangdong established
Technology Co.,
Ltd.
Yuxi Energy New Yuxi, Yunnan Yuxi, Yunnan Production and 100.00%
Materials Co., Ltd. sales of new Newly
materials established
Shanghai Energy Shanghai Shanghai Trading 100.00% Newly
Trading Co., Ltd. established
Jiangsu Energy Changzhou, Changzhou, Trading 100.00%
Trading Co., Ltd. Jiangsu Jiangsu
Explanation of the difference between shareholding ratio in subsidiaries and voting right ratio:
Basis for the control of an investee while holding its half or less than half voting rights, and the non-control of an investee while holding its more than half
voting rights：
For important structured entities included in the consolidation scope, the basis for control:
Basis for determining whether the company is an agent or principal:
Other explanations:
(2) Key non-wholly owned subsidiaries
236
Unit: RMB
Name of subsidiaries Percentage of shares held Profit or loss attributable Dividends declared to Ending balance of
by minority shareholders to minority shareholders minority shareholders in minority interests
in the current period the current period
Shanghai Energy New
Material Technology Co., 4.78% 185,159,163.60 513,663,976.40
Ltd.
Explanation of the difference between shareholding ratio in subsidiaries and voting right ratio:
Other explanations:
(3) Main financial information of key non-wholly owned subsidiaries
Unit: RMB
Closing balance Opening balance
Name of
Curren Non- Total Curren Non- Total Curren Non- Total Curren Non- Total
subsidiaries t assets curre assets t current liabiliti t assets curre assets t current liabiliti
nt liabiliti liabiliti es nt liabiliti liabiliti es
assets es es assets es es
237
Shanghai
Energy 13,502,6 22,422,4 35,925,0 19,133,0 24,836,8 15,706,2 23,709,1 12,800,5 16,852,5
5,703,84 8,002,93 4,052,00
04,003.2 07,308.9 11,312.2 53,749.4 99,098.7 03,802.0 37,096.9 39,383.2 47,944.2
5,349.32 3,294.88 8,560.95
7 6 3 3 5 6 4 7 2
Unit: RMB
Amount for current period Amount for previous period
Name of Operating Net profit Total Cash flow Operating Net profit Total Cash flow
subsidiaries income comprehensi from income comprehensi from
ve income operating ve income operating
activities activities
Shanghai
Energy
10,995,549,78 3,884,344,520 3,895,655,641 336,486,281.7 6,437,042,499 2,601,194,882 2,597,260,626 973,247,465.4
6.70 .12 .20 2 .54 .51 .50 4
2. Interests in joint arrangement or associates
(1) Important joint ventures or associates
Name of joint Principal place of Place of Shareholding proportion Accounting treatment for
ventures or business registration Nature of business Investments in joint
Direct Indirect ventures or associates
associates
Additive
Yuxi Kunshasi Yuxi, Yunnan Yuxi, Yunnan 40.00% Equity
production
Plastic
Masterbatch Co.,
Ltd.
Explanation of the difference between shareholding ratio in joint ventures or associates and voting right ratio:
Basis for holding less than 20% of the voting rights but having significant influence, or holding 20% or more of the voting rights but not having significant
influence:
(2) Main financial information of important associates
Unit: RMB
Closing balance/Amount for the current Opening balance/Amount for the previous
period period
Current assets 15,373,699.64 10,570,401.00
Non-current assets 134,814.50 156,715.06
Total assets 15,508,514.14 10,727,116.06
Current liabilities 2,964,408.36 1,862,155.53
Non-current liabilities
Total liabilities 2,964,408.36 1,862,155.53
Minority interest
Shareholders’ equity attributable to the parent
company 12,544,105.78 8,864,960.53
Pro rata shares of the net assets calculated 5,017,642.31 3,545,984.21
Adjustment
-- Goodwill
-- unrealized profits from internal transactions
-- Other
238
Book value of equity investments in
associates 5,017,642.31 3,545,984.21
Fair value of equity investment in associates
with public quotation
Operating income 35,018,727.82 34,410,276.56
Net profit 3,679,145.26 4,217,725.58
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income 3,679,145.26 4,217,725.58
Dividends received from associates during the
1,516,314.89
year
Other explanations:
X. Risks Related to Financial Instruments
The Company’s primary financial instruments include cash and cash equivalents, equity investment, loans, receivables, payables and
convertible bonds, etc. In daily business activities, the Company is faced with various risks of financial instruments, mainly including credit risk,
liquidity risk and market risk. The risks associated with these financial instruments and the risk management policies adopted by the Company to
mitigate these risks are described as follows:
The board of directors is responsible for planning and establishing the Company’s risk management framework, formulating risk management
policies and relevant guidelines, and supervising the implementation of risk management measures. The Company has formulated risk management
policies to identify and analyze the risks. These risk management policies clearly stipulated the specific risks, covering market risk, credit risk,
liquidity risk management and many other aspects. The Company regularly evaluates the market environment and changes in its business activities to
determine whether to update its risk management policies and systems. The Company’s risk management is carried out by the risk management
committee in accordance with the policies approved by the board of directors. The risk management committee identifies, evaluates and avoids
relevant risks through close cooperation with other departments. The internal audit department performs regular audit on risk management controls
and procedures, and reports the audit results to the audit committee. The Company disperses the risk of financial instruments through appropriate
diversified investment and business portfolio, and reduces the risks of being concentrated on a single industry, specific region or specific counterparty
by formulating corresponding risk management policies.
1. Credit risk
Credit risk refers to the risk of financial loss to the Company caused by the counterparty’s failure to perform its contractual obligations. The
management has formulated appropriate credit policies and constantly monitors the exposure of credit risk.
The Company has adopted a policy of trading only with credit worthy counterparties. In addition, the Company assesses the credit qualification
of customers and sets corresponding credit period based on their financial status, the possibility of obtaining guarantee from a third party, credit
records and other factors such as current market conditions. The Company continuously monitors the balance and recovery of notes and accounts
receivable. For customers with poor credit records, the Company will use written dunning, shortening credit period or canceling credit period to
239
ensure that the Company will not face significant credit loss. In addition, the Company reviews the recovery of financial assets on each balance sheet
date to ensure that the relevant financial assets are fully prepared for the expected credit loss.
Other financial assets of the Company include cash and cash equivalents, other receivables, etc. The credit risk of these financial assets comes
from the default of the counterparty, and the maximum credit risk exposure is the book amount of each financial asset in the statement of financial
position. The company does not provide any other guarantee that may expose company to credit risk, except for the financial guarantees made by the
Company as stated in Note XII-5.
The cash and cash equivalents held by the Company are mainly deposited in the state-owned holding banks and other large and medium-sized
commercial banks and other financial institutions. The management believes that these commercial banks have high reputation and asset status, there
is no significant credit risk, and there will be no significant loss caused by the default of the other party. The company’s policy is to control the amount
of deposit deposited according to the market reputation, business scale and financial background of each well-known financial institution, so as to
limit the amount of credit risk to any single financial institution.
As a part of the Company’s credit risk asset management, the Company uses account aging to assess the impairment loss of accounts receivable
and other receivables. The accounts receivable and other receivables involve a large number of customers. The aging information can reflect the
solvency and bad debt risk of these customers for accounts receivable and other receivables. Based on historical data, the Company calculates the
historical actual bad debt rate of different account age periods, and takes into account the forecast of current and future economic conditions, such as
national GDP growth, total infrastructure investment, national monetary policy and other forward-looking information to adjust the expected loss rate.
For long term receivables, the Company comprehensively considers the settlement period, payment period agreed in the contract, the financial
situation of the debtor and the economic situation of the debtor’s industry, and reasonably evaluates the expected credit loss after adjusting the
aforesaid forward-looking information.
As of December 31, 2022, the book balance and expected credit impairment loss of related assets are as follows:
Aging Book balance Provision for impairment
Notes receivable 655,811,056.89 18,055,900.42
Accounts receivable 6,693,895,628.36 134,178,511.00
Other receivables 22,343,834.98 1,747,362.17
Other non-current assets 767,056,763.88
Receivable financing 692,286,629.08
Total 8,831,393,913.19 153,981,773.59
As of December 31, 2022, the amount of financial guarantees provided by the Company was 37,298.7553 million. Please refer to XII — 5.
Related-party transactions for details of financial guarantee contracts. The management of the Company has assessed whether the guaranteed loans are
overdue, the financial positions of borrowers and the economic conditions of the industries which the borrowers are in. it is believed that the relevant
credit risks have not increased significantly since the initial recognition of financial guarantee contracts. Therefore, the Company measures its
impairment provision at the amount equivalent to the expected credit loss of the above-mentioned financial guarantee contracts in the next 12 months.
During the Reporting Period, the Company's assessment methods and major assumptions have not changed. According to the assessment of the
Company's management, there are no significant expected impairments of the relevant financial guarantees.
The major clients of the Company have reliable and good reputation. Therefore, the Company does not believe that such customers have
significant credit risks. As the Company has a wide range of customers, there is no significant credit concentration risk.
As the risks of the Company's accounts receivable are dispersed among numerous partners and customers, as of December 31, 2022, 44.23%
(December 31, 2021: 53.38%) of the Company's accounts receivable came from the top five customers in the balance, and the Company has no
significant credit concentration risks.
The maximum credit risk exposure of the Company is the book value of each financial asset in the balance sheet.
In terms of the wealth management products of banks, which are invested in by the Company, the credit rating of the counterparty must be
higher than or the same as that of the Company. In view of the good credit rating of the counterparty, the management of the Company does not
expect that the counterparty will be unable to perform its obligations.
2. Liquidity risk
Liquidity risk refers to the risk of fund shortage when the Company satisfies the obligation of settlement by delivering cash or other financial
assets. Each member of the Company is responsible for their own cash flow forecast. Based on the cash flow forecast results of each member
enterprise, the subordinate financial department of the Company continuously monitors the short-term and long-term capital demand of the Company
at the Company level to ensure that sufficient cash reserves are maintained; at the same time, it continuously monitors whether it conforms to the
provisions of the loan agreement and obtains the commitment of providing sufficient reserve funds from the main financial institutions to meet the
short-term and long-term capital demand. In addition, the Company entered into a financing line credit agreement with major business banks to
provide support for the Company to fulfill its obligations related to commercial bills. As of December 31, 2022, the Company has had a bank credit
line of RMB28,950.7553 million granted by several domestic banks, RMB14,492.6448 million of which has been used.
As of December 31, 2022, all the financial liabilities and off-balance sheet guarantees of the Company are presented at undiscounted
contractual cash flows by maturity date as follows:
Item Closing balance
240
Less than 1 year 1-5 years Total
Non-derivative financial
liabilities
Short-term borrowings 9,527,853,434.55 9,527,853,434.55
Notes payable
609,315,699.02 609,315,699.02
Accounts payable 1,691,457,693.36 29,129,298.75 1,720,586,992.11
Other payables 157,165,983.77 52,514,249.09 209,680,232.86
Long-term borrowings 853,139,372.52 4,179,264,746.86 5,032,404,119.38
Bonds payable 3,980,586.67 425,795,937.76 429,776,524.43
Subtotal of non-derivative
12,842,912,769.89 4,686,704,232.46 17,529,617,002.35
financial liabilities
Derivative financial liabilities 94,394.79 94,394.79
Total 12,842,818,375.10 4,686,704,232.46 17,529,522,607.56
241
3. Market risk
(1) Exchange rate risk
The Company’s major operational activities are carried out in China, and its main business is settled in RMB. However, the recognized assets
and liabilities denominated in foreign currencies and future transactions denominated in foreign currencies (the assets and liabilities denominated in
foreign currencies and transactions denominated in foreign currencies are mainly denominated in USD, EUR and JPY) still have exchange rate risk.
The financial department of the Company is responsible for monitoring the scale of transactions denominated in foreign currencies and assets and
liabilities of the Company denominated in foreign currencies to minimize the exchange rate risk; therefore, the Company may sign forward foreign
exchange contracts or currency swap contracts to avoid exchange rate risk.
1) In the current year, any forward exchange contracts or currency swap contracts signed by the Company are as follows:
In order to avoid the exchange rate risk of the depreciation of the JPY, USD and Euro, the Company signed forward foreign exchange contracts with
banks. At the end of the period, the outstanding forward foreign exchange contracts amounted to JPY2,480 million, USD570,000 and EUR19.58
million.
2) As of December 31, 2022, the financial assets and the financial liabilities denominated in foreign currencies held by the Company, are
expressed in RMB as follows:
Item Closing balance
USD JPY EUR HKD HUF Total
Financial assets
denominated in
foreign currencies:
Monetary capital 320,550,628.58 165,437.42 122,608,881.81 17.18 640,124.48 443,965,089.46
Accounts receivable
260,940,040.94 113,476,763.60 374,416,804.55
Subtotal 581,490,669.52 113,642,201.02 122,608,881.81 17.18 640,124.48 818,381,894.01
Financial liabilities
denominated in
foreign currencies:
Short-term
borrowings 419,690,766.00 419,690,766.00
Accounts payable 7,389,905.20
653,444,000.22 150,854,129.15 811,688,034.57
Other payables 1,331,174.92 1,331,174.92
Sub-total 654,775,175.14 150,854,129.15 427,080,671.20 1,232,709,975.49
3) Sensitivity analysis:
As of December 31, 2022, for all kinds of USD, EUR and JPY financial assets and USD, EUR and JPY financial liabilities of the Company, if
RMB appreciates or depreciates 10% against USD, EUR and JPY, and other factors remain unchanged, the Company will reduce or increase its net
profit by about RMB35.2179 million (about RMB 94.3111 million in 2021).
(2) Interest rate risk
The interest rate risk of the Company mainly derives from bank loans. Financial liabilities at floating interest rate expose the Company to the
interest rate risk of cash flow, and financial liabilities with fixed interest rate expose the Company to the interest rate risk of fair value. The company
determines the relative proportion of fixed rate and floating rate contracts according to the market environment at that time.
The financial department of the Company continuously monitors the interest rate level of company. The rising interest rate will increase the
cost of new interest-bearing debt and the interest expense of the outstanding interest-bearing debt at floating interest rate, and have a significant
242
adverse impact on the financial performance of company. The management will make timely adjustments according to the latest market conditions,
which may be interest rate swap arrangements to reduce interest rate risk.
243
1) The Company had no significant interest rate swap arrangements this year.
2) As of December 31, 2022, the Company’s long-term interest-bearing liabilities were the floating rate contract denominated in RMB,
amounting to RMB5,021.7355 million, as set out in note VI-32.
3) Sensitivity analysis:
As of December 31, 2022, if the loan interest rate on the floating interest rate borrowings rises or falls by 50 basis points, while other factors
remain unchanged, the Company’s net profit will decrease or increase by about RMB 29,618,500 (approximately RMB22,941,300 in 2021).
The above sensitivity analysis assumes that the interest rate has changed on the balance sheet date and has been applied to all borrowings
obtained by the Company at a floating interest rate.
(3) Price risk
Price risk refers to the risk of fluctuation due to the change of market price other than exchange rate risk and interest rate risk, which mainly
comes from the change of commodity price, stock market index, equity instrument price and other risk variables.
XI. Disclosure of Fair Value
1. Fair value of assets and liabilities measured at fair value at the end of the period
Unit: RMB
Closing fair value
Item
Fair value measured at Fair value measured at the Fair value measured at the
Total
the first level second level third level
I. Continuous fair value
-- -- -- --
measurement
(1) Financial assets held for
trading 9,850,069.59 9,850,069.59
Derivative financial assets
9,850,069.59 9,850,069.59
(2) Receivables financing 692,286,629.08 692,286,629.08
(3) Other equity instrument
investment 111,000,000.00 111,000,000.00
Total assets measured at
fair value on a continuous 9,850,069.59 802,286,629.08 812,136,698.67
basis
(4) Financial liabilities held
for trading 94,394.79 94,394.79
Derivative financial
liabilities 94,394.79 94,394.79
Total liabilities
continuously measured at 94,394.79 94,394.79
fair value
2. Determination basis of the market price of the item measured using the first-level continuous and
noncontinuous fair value measurement
None
3. Valuation techniques and qualitative and quantitative information on important parameters adopted for
the second-level continuous and noncontinuous fair value measurement
(1) The derivative financial assets held by the Company were forward foreign exchange contracts. The fair value as at December 31, 2022 was
determined according to the reference valuation provided by financial institutions.
(2) The derivative financial liabilities held by the Company were forward foreign exchange contracts. The fair value as at December 31, 2022
was determined according to the reference valuation provided by financial institutions.
4. Valuation techniques and qualitative and quantitative information on important parameters adopted for
the third-level continuous and noncontinuous fair value measurement
244
The non-trading equity instruments at fair value through other comprehensive income held by the Company, whose fair value is measured at the third
level, are mainly the equity investment projects that are not available for verification by data in observable active markets, for which the financial
forecast is made using their own information,
The receivables financing held by the Company were the bank acceptance bills held by the Company, whose remaining life is short and book value is
close to their fair value.
245
5. Continuous third-level fair value measurement items, adjustment information between the opening and
closing book values and sensitivity analysis of unobservable parameters
6. For the continuous fair value measurement items, if there is a conversion between levels in the current
period, describe the reason for the conversion and the policy for determining the time point of the
conversion
7. Changes in valuation techniques and the cause of changes in the current period
8. Fair value of financial assets and financial liabilities that are not measured at fair value
Financial assets and liabilities not measured at fair value mainly include receivables, short term loans, payables, non-current liabilities maturing
within one year and long-term loans.
The difference between book value and fair value of the above financial assets and liabilities not measured at fair value is very small.
9. Others
XI. Related Parties and Related Party Transactions
1. Information about Parent Company of the Company
As of December 31, 2022, the actual controller of the Company was the Paul Xiaoming Lee family. The Paul Xiaoming Lee family held
45.35% of the Company’s shares directly and indirectly, and actually controlled the Company. The shareholding of Paul Xiaoming Lee’s family is as
follows: his family member Paul Xiaoming Lee holds 14.14% of the shares directly, his family member Li Xiaohua holds 7.50% of the shares directly,
his family member Sherry Lee holds 7.99% of the shares directly, and his family member Jerry Yang Li holds 1.65% of the shares directly. Paul
Xiaoming Lee’s family members indirectly hold 14.07% equity of the Company through Yuxi Heyi Investment Co., Ltd, Yuxi Heli Investment Co.,
Ltd and Shanghai Hengzou Enterprise Management Firm (Limited Partnership).
The ultimate controller of the Company was the Paul Xiaoming Lee family.
2. Information about subsidiaries of the Company
Please refer to Note IX-1. Interest in Subsidiaries for details of the subsidiaries of the Company.
3. Information about joint ventures and associates of the Company
Please refer to Note IX-2.Equity in Joint Ventures or Associates Enterprises for details of joint ventures and associates of the Company.
Information on other associates or joint ventures which have related-party transactions with the Company in the current period or whose related-party
transactions with the Company produced balance in previous years is as follows:
Name of joint venture or associate Relationship with the Company
Yuxi Kunshasi Plastic Masterbatch Co., Ltd. An associate of the Company
4. Information about Other Related Parties
Name of other related party Relationship with the Company
Yuxi Heli Investment Co., Ltd. Shareholder
246
Yuxi Heyi Investment Co., Ltd. Shareholder
Zhuhai Chenyu New Material Technology Co., Ltd. Li Xiaohua, vice chairman and general manager, one of the actual
controllers of the Company, holds 5% of its equity, and Shanghai
Energy New Material Technology Co., Ltd., the holding subsidiary of
the Company, holds 8% of its equity
Suzhou Jiesheng Technology Co., Ltd. Li Xiaohua, vice chairman and general manager, one of the actual
controllers of the Company, serves as its executive director and general
manager
Suzhou Fuqiang Technology Co., Ltd. Li Xiaohua, vice chairman and general manager, one of the actual
controllers of the Company, serves as its chairperson
Changshu Juxing Machinery Co., Ltd. Li Xiaohua, vice chairman and general manager, one of the actual
controllers of the Company, serves as its executive director and general
manager
247
PAUL XIAOMING LEE Main member of the ultimate controller family
Li Xiaohua Main member of the ultimate controller family
YAN MA Main member of the ultimate controller family
YANYANG HUI Main member of the ultimate controller family
SHERRY LEE Main member of the ultimate controller family
JERRY YANG LI Main member of the ultimate controller family
Industrial and Commercial Bank of China Limited The spouse of the independent director of the Company serves as its
non-executive director
Other explanations:
5. Related party transactions
(1) Related party transactions on purchase and sales of goods and rendering and receiving of services
Statement of purchase of goods/acceptance of services
Unit: RMB
Particulars of
Amount for the Approved transaction Whether exceeding the Amount for the
Related party Related party
transaction current period limit transaction limit previous period
Yuxi Kunshasi Plastic
Masterbatch Co., Ltd. Purchase of No 34,410,276.56
additives 35,018,727.82 50,000,000.00
Zhuhai Chenyu New Purchase of materials No
Material Technology
Co., Ltd. 93,132,510.82 136,260,000.00
Suzhou Jiesheng Purchase of No
Technology Co., Ltd. equipment and spare
and its subsidiaries parts 103,670,771.66 200,000,000.00
Total 34,410,276.56
231,822,010.30
Statement of sales of goods/rendering ofservices
Unit: RMB
Particulars of related party
Related party transaction Amount for the current period Amount for the previous period
Yuxi Kunshasi Plastic Masterbatch
Co., Ltd. Sales of raw materials 10,055,309.73 10,463,008.84
Zhuhai Chenyu New Material Sales of packaging materials
Technology Co., Ltd. 125,486.73
Total
10,180,796.46 10,463,008.84
Description of related-party transactions on purchase and sales of goods and rendering and receiving of services
(2) Leases with related parties
The Company as the lessor:
Unit: RMB
Rental income recognized for the Rental income recognized in the
Lessee’s name Type of leased assets
period previous period
Yuxi Heli Investment Co., Ltd. Office 2,285.72 2,285.72
Yuxi Heyi Investment Co., Ltd. Office 3,142.84 3,142.84
248
Yuxi Kunshasi Plastic Masterbatch
Workshop 22,857.14 22,857.14
Co., Ltd.
Total 28,285.70 28,285.70
(3) Related party guarantees
The Company as the guarantor
249
Unit: RMB
Commencement date of Whether the guarantee has
Secured party Guarantee amount guarantee Expiry date of guarantee been fully fulfilled
Yunnan Hongta Plastic Co., Ltd. 44,000,000.00 May 18, 2022 May 5, 2023 No
Yunnan Hongta Plastic Co., Ltd. 40,000,000.00 May 17, 2022 May 17, 2025 No
Yunnan Hongta Plastic Co., Ltd. 210,000,000.00 November 10, 2020 December 31, 2025 No
Yunnan Hongta Plastic Co., Ltd. 40,000,000.00 November 09, 2020 October 23, 2025 No
Yunnan Hongta Plastic Co., Ltd. 34,900,000.00 March 18, 2021 March 18, 2023 No
Yunnan Hongta Plastic Co., Ltd. 40,000,000.00 October 29, 2021 October 29, 2023 No
Yunnan Hongta Plastic Co., Ltd. 78,000,000.00 November 29, 2021 November 29, 2024 No
Yunnan Hongta Plastic Co., Ltd. 80,000,000.00 January 12, 2022 January 12, 2023 No
Yunnan Hongta Plastic Co., Ltd. 51,650,000.00 May 5, 2022 May 4, 2025 No
Yunnan Hongta Plastic Co., Ltd., No
Yunnan Hongchuang Packaging Co.,
371,910,000.00 November 30, 2020 June 16, 2027
Ltd., Shanghai Energy New Material
Technology Co., Ltd.
Yunnan Hongta Plastic Co., Ltd. 80,000,000.00 October 24, 2022 October 23, 2023 No
Yunnan Dexin Paper Co., Ltd. 8,000,000.00 March 30, 2021 December 31, 2024 No
Yunnan Dexin Paper Co., Ltd. 20,000,000.00 January 12, 2022 January 12, 2023 No
Yunnan Dexin Paper Co., Ltd. 10,000,000.00 June 7, 2022 December 31, 2024 No
Yunnan Dexin Paper Co., Ltd. 10,000,000.00 October 24, 2022 October 23, 2023 No
Yunnan Dexin Paper Co., Ltd. 20,000,000.00 November 13, 2019 November 13, 2022 No
Yunnan Hongchuang Packaging Co., May 18, 2022 May 5, 2023 No
66,000,000.00
Ltd.
Yunnan Hongchuang Packaging Co., January 12, 2022 January 12, 2023 No
80,000,000.00
Ltd.
Yunnan Hongchuang Packaging Co., February 23, 2022 February 23, 2027 No
50,000,000.00
Ltd.
Yunnan Hongchuang Packaging Co., March 1, 2022 March 1, 2025 No
30,000,000.00
Ltd.
Yunnan Hongchuang Packaging Co., March 15, 2022 March 15, 2025 No
56,000,000.00
Ltd.
Yunnan Hongchuang Packaging Co., March 21, 2022 March 20, 2025 No
162,000,000.00
Ltd.
Yunnan Hongchuang Packaging Co., May 1, 2022 April 30, 2024 No
40,000,000.00
Ltd.
Yunnan Hongchuang Packaging Co., June 23, 2022 June 22, 2023 No
9,305,610.00
Ltd.
Yunnan Hongchuang Packaging Co., July 8, 2022 July 8, 2023 No
100,000,000.00
Ltd.
Yunnan Hongchuang Packaging Co., July 21, 2022 July 21, 2025 No
40,000,000.00
Ltd.
Yunnan Hongchuang Packaging Co., September 30, 2022 March 30, 2023 No
12,850,000.00
Ltd.
Yunnan Hongchuang Packaging Co., October 21, 2022 October 20, 2023 No
8,500,000.00
Ltd.
Yunnan Hongchuang Packaging Co., October 21, 2022 October 20, 2023 No
120,000,000.00
Ltd.
Hongta Plastic (Chengdu) Co., Ltd. 75,000,000.00 May 11, 2022 May 10, 2023 No
Shanghai Energy New Material September 30, 2020 September 27, 2027 No
856,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material October 23, 2020 October 23, 2023 No
300,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material March 5, 2021 March 5, 2024 No
280,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material March 16, 2021 March 15, 2026 No
489,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material July 14, 2021 July 13, 2026 No
510,000,000.00
Technology Co., Ltd.
250
Shanghai Energy New Material September 15, 2021 September 15, 2023 No
110,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material January 1, 2022 December 31, 2024 No
100,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material February 7, 2022 February 7, 2027 No
660,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material February 14, 2022 February 13, 2025 No
300,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material February 14, 2022 February 14, 2024 No
100,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material February 15, 2022 February 14, 2023 No
200,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material March 8, 2022 March 7, 2023 No
200,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material March 21, 2022 March 14, 2023 No
800,000,000.00
Technology Co., Ltd.
251
Shanghai Energy New Material March 17, 2022 February 28, 2025 No
50,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material November 30, 2021 November 30, 2022 No
110,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material 335,670,000.00 May 10, 2022 May 10, 2025 No
Technology Co., Ltd., Zhuhai
Energy New Material Technology
Co., Ltd.
Shanghai Energy New Material June 5, 2022 June 4, 2025 No
240,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material June 9, 2022 June 8, 2025 No
900,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material April 18, 2022 April 17, 2027 No
200,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material July 21, 2022 July 20, 2024 No
100,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material July 21, 2022 July 20, 2024 No
200,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material September 2, 2022 September 1, 2023 No
165,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material September 1, 2022 July 5, 2023 No
600,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material September 21, 2022 September 12, 2023 No
606,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material September 16, 2022 September 15, 2024 No
255,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material October 14, 2022 October 13, 2026 No
800,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material March 5, 2021 March 5, 2026 No
450,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material October 27, 2022 October 16, 2023 No
200,000,000.00
Technology Co., Ltd.
Shanghai Energy New Material June 10, 2022 No
46,225,860.00
Technology Co., Ltd.
Shanghai Energy New Material December 28, 2022 June 28, 2024 No
Technology Co., Ltd., Wuxi
100,000,000.00
Energy New Material Technology
Co., Ltd.
Zhuhai Energy New Material December 11, 2019 December 11, 2024 No
50,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material November 30, 2021 May 08, 2025 No
200,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material May 21, 2021 December 3, 2023 No
50,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material May 18, 2021 May 18, 2025 No
100,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material June 24, 2021 June 24, 2024 No
30,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material September 1, 2021 August 31, 2025 No
112,850,000.00
Technology Co., Ltd.
Zhuhai Energy New Material September 01, 2021 December 31, 2023 No
220,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material January 19, 2022 January 11, 2023 No
300,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material February 7, 2022 February 6, 2025 No
270,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material March 30, 2022 March 29, 2023 No
55,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material May 18, 2022 January 26, 2023 No
70,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material July 8, 2022 July 8, 2026 No
100,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material September 23, 2022 September 22, 2023 No
32,000,000.00
Technology Co., Ltd.
Zhuhai Energy New Material September 7, 2022 August 29, 2023 No
300,000,000.00
Technology Co., Ltd.
252
Zhuhai Energy New Material October 27, 2022 October 26, 2023 No
200,000,000.00
Technology Co., Ltd.
Wuxi Energy New Material
Technology Co., Ltd., Jiangxi 800,000,000.00 May 1, 2021 May 1, 2023 No
Tonry New Energy Technology
Development Co., Ltd., Chongqing
Energy New Material Technology
Co., Ltd., Jiangxi Mingyang New
Material Technology Co., Ltd.,
Jiangxi Ruijie New Material
Technology Co., Ltd.
Wuxi Energy New Material 100,000,000.00 August 07, 2021 August 07, 2024 No
Technology Co., Ltd.
Wuxi Energy New Material 70,000,000.00 January 5, 2022 November 18, 2022 No
Technology Co., Ltd.
Wuxi Energy New Material 1,500,000,000.00 April 11, 2022 April 11, 2024 No
Technology Co., Ltd., Jiangxi
Tonry New Energy Technology
Development Co., Ltd., Suzhou
GreenPower New Energy
Materials Co., Ltd., Chongqing
Energy New Material Technology
Co., Ltd., Jiangsu Energy New
Materials Technology Co., Ltd.,
Jiangsu Ruijie New Materials
Technology Co., Ltd., Jiangxi
Enpo New Materials Co., Ltd.,
Hubei Energy New Material
Technology Co., Ltd., Jiangsu
Sanhe Battery Material
Technology Co., Ltd., Yuxi
Energy New Material Co., Ltd.,
Jiangxi Ruijie New Material
Technology Co., Ltd.
Wuxi Energy New Material 1,800,000,000.00 June 10, 2021 April 9, 2024 No
Technology Co., Ltd., Jiangxi
Tonry New Energy Technology
Development Co., Ltd., Suzhou
GreenPower New Energy
Materials Co., Ltd., Chongqing
Energy New Material Technology
Co., Ltd., Jiangsu Energy New
Materials Technology Co., Ltd.,
Jiangsu Ruijie New Materials
Technology Co., Ltd., Jiangxi
Enpo New Materials Co., Ltd.,
Hubei Energy New Material
Technology Co., Ltd., Yuxi
Energy New Materials Co., Ltd.
Wuxi Energy New Material May 30, 2022 May 30, 2023 No
50,000,000.00
Technology Co., Ltd.
Wuxi Energy New Material August 12, 2022 June 21, 2023 No
200,000,000.00
Technology Co., Ltd.
Wuxi Energy New Material October 8, 2022 October 7, 2023 No
100,000,000.00
Technology Co., Ltd.
Wuxi Energy New Material November 1, 2022 September 25, 2023 No
150,000,000.00
Technology Co., Ltd.
Jiangxi Tonry New Energy 135,000,000.00 January 22, 2021 January 21, 2024 No
Technology Development Co.,
Ltd.
Jiangxi Tonry New Energy 100,000,000.00 October 17, 2022 October 17, 2023 No
Technology Development Co.,
Ltd.
Jiangxi Tonry New Energy 50,000,000.00 October 28, 2022 October 27, 2023 No
Technology Development Co.,
Ltd.
Jiangxi Tonry New Energy 250,000,000.00 September 17, 2021 September 17, 2022 No
Technology Development Co.,
Ltd.
Suzhou GreenPower New Energy 150,000,000.00 July 01, 2020 July 01, 2023 No
Materials Co., Ltd.
253
Suzhou GreenPower New 100,000,000.00 November 30, 2021 November 30, 2026 No
Energy Materials Co., Ltd.
Suzhou GreenPower New 100,000,000.00 April 8, 2021 April 8, 2023 No
Energy Materials Co., Ltd.
Suzhou GreenPower New March 9, 2022 March 9, 2027 No
104,000,000.00
Energy Materials Co., Ltd.
Suzhou GreenPower New May 30, 2022 May 30, 2023 No
100,000,000.00
Energy Materials Co., Ltd.
Suzhou GreenPower New October 8, 2022 October 7, 2023 No
100,000,000.00
Energy Materials Co., Ltd.
Chongqing Energy New
Material Technology Co., 1,300,000,000.00 November 01, 2021 December 31, 2022 No
Ltd., Jiangsu Energy New
Materials Technology
Co., Ltd., Jiangsu Ruijie
New Materials
Technology Co., Ltd.
Chongqing Energy New 700,000,000.00 May 6, 2022 May 5, 2024 No
Material Technology Co.,
Ltd., Jiangsu Energy New
Materials Technology Co.,
Ltd., Jiangsu Ruijie New
Materials Technology Co.,
Ltd., Jiangxi Enpo New
Materials Co., Ltd., Yuxi
Energy New Materials Co.,
Ltd.
Jiangsu Energy New 2,000,000,000.00 May 5, 2022 December 31, 2023 No
Materials Technology Co.,
Ltd., Jiangsu Ruijie New
Materials Technology Co.,
Ltd., Hubei Energy New
Material Technology Co.,
Ltd., Chongqing Energy
New Material Technology
Co., Ltd.
SEMCORP HUNGARY July 14, 2021 July 13, 2026 No
LIMITED LIABILITY 1,000,000,000.00
COMPANY
SEMCORP HUNGARY December 27, 2021 December 26, 2025 No
LIMITED LIABILITY 450,000,000.00
COMPANY
SEMCORP Hungary April 13, 2022 August 26, 2023 No
Korlatolt Felelossegu 213,893,800.00
Tarsasag
Jiangsu Energy New May 17, 2022 May 16, 2023
Materials Technology Co., 1,000,000,000.00
Ltd.
Yuxi Energy New November 24, 2022 November 23, 2025
500,000,000.00
Materials Co., Ltd.
Jiangxi Ruijie New June 10, 2021 April 09, 2023 No
Material Technology Co., 200,000,000.00
Ltd.
Zhuhai Energy New 1,000,000,000.00 August 14, 2017 August 13, 2023 No
Material Technology Co.,
Ltd.
Zhuhai Energy New 750,000,000.00 August 01, 2019 August 01, 2025 No
Material Technology Co.,
Ltd.
Zhuhai Energy New 200,000,000.00 May 08, 2020 August 23, 2023 No
Material Technology Co.,
Ltd.
Zhuhai Energy New 200,000,000.00 June 9, 2022 December 31, 2024 No
Material Technology Co.,
Ltd.
Wuxi Energy New Material 1,160,000,000.00 December 01, 2020 December 01, 2029 No
Technology Co., Ltd.
Jiangxi Tonry New Energy 1,500,000,000.00 September 17, 2019 December 31, 2024 No
Technology Development
Co., Ltd.
254
Chongqing Energy New April 26, 2022 May 10, 2028 No
Material Technology Co., 1,600,000,000.00
Ltd.
Suzhou GreenPower New May 24, 2022 May 24, 2027 No
550,000,000.00
Energy Materials Co., Ltd.
The Company as the secured party
Unit: RMB
Commencement date of Whether the guarantee
Guarantor Guarantee amount guarantee Expiry date of guarantee
has been fully fulfilled
Yunnan Dexin Paper Co., 30,000,000.00 May 10, 2022 May 10, 2025 No
Ltd.
Shanghai Energy New 60,000,000.00 April 21, 2021 April 21, 2024 No
Material Technology Co.,
Ltd.
Description of related guarantees
255
(4) Remuneration for key management
Unit: RMB
Item Amount for current period Amount for previous period
Remuneration for Key Management
12,889,745.41 6,618,620.68
Personnel
(5) Other related party transactions
Type of transaction Name of related party Amount for the Amount for the Pricing method and
256
current period previous period Procedure for decision-
making
Loans with related banks (including application Industrial and Market price / as approved at
for comprehensive facility, acceptance draft, Commercial Bank of
letter of credit, bank guarantee, etc.) China Limited 791,539,307.31 1,067,919,127.56 the General Meeting of
Shareholders
Deposits with related banks (including demand Industrial and Market price / as approved at
deposits, time deposits, call deposits, etc.) Commercial Bank of 165,881,639.38 120,922,571.29 the General Meeting of
China Limited Shareholders
Mutual guarantees between companies within Industrial and Market price / as approved at
the scope of the company’s consolidated Commercial Bank of the General Meeting of
financial statements through the related banks China Limited 4,016,900,000.00 3,644,900,000.00 Shareholders
6. Amounts due to and due from related parties
(1) Receivable
Closing balance Opening balance
Item Related party Provision for bad Provision for
Book balance Book balance
debt bad debt
Other non-current Changshu Juxing
93,548,000.00
asset Machinery Co., Ltd.
(2) Payables
Unit: RMB
Book balance at the end of the Book balance at the beginning of
Item Related party Reporting Period the Reporting
Yuxi Kunshasi Plastic Masterbatch Co.,
Accounts payable Ltd. 9,291,722.26 7,744,805.24
Accounts payable Suzhou Fuqiang Technology Co., Ltd.
19,539,555.22
Accounts payable Zhuhai Chenyu New Material
Technology Co., Ltd. 44,210,584.04
XII. Share-based Payment
1. General information about share-based payment
√Applicable □N/A
Unit:RMB
Total amount of various equity instruments granted by the Company in
1,585,437.00stock options; 1,585,437.00 restricted shares
the current period
Total amount of various equity instruments exercised by the Company
0.00
in the current period
Total amount of various equity instruments expired in the current
0.00
period
257
The range of the exercise prices of the Company's outstanding stock
Note 1
options at the end of the period and the remaining term of the contract
The range of the exercise prices of other outstanding equity instruments
of the Company at the end of the period and the remaining term of the Note 2
contract
Other details:
Note 1: On March 7, 2022, the 43rd meeting of the fourth Board of Directors and the 37th meeting of the fourth Board of Supervisors of the Company examined
and adopted the Proposal on Adjusting the List of Incentive Objects of Stock Options and the Number of Stock Options Granted in the 2022 Stock Option and
Restricted Stock Incentive Plan and the Proposal on Granting Stock Options to Incentive Objects of the 2022 Stock Option and Restricted Stock Incentive Plan.
According to the above provisions, the Company granted 1,585,437.00 stock options to 877 senior executives, middle managers, core technology and business
backbones of the Company, with the grant date of March 7, 2022 and the exercise price of RMB265.36 per share.
The lock-up periods of stock options granted by this incentive plan are 12 months, 24 months and 36 months from the date of registration. During the lock-up
periods, the stock options granted to the incentive objects shall not be transferred, used to guarantee or repay debts.
The exercise periods of stock options are as follows:
Arrangements of
Exercisable
exercising the stock Exercise time
proportion
options
The first period for From the first trading day after 12 months from the date of completion of
exercising the stock grant registration to the last trading day within 24 months from the date of 40%
options completion of grant registration
The second period for From the first trading day after 24 months from the date of completion of
exercising the stock grant registration to the last trading day within 36 months from the date of 30%
options completion of grant registration
The third period for From the first trading day after 36 months from the date of completion of
exercising the stock grant registration to the last trading day within 48 months from the date of 30%
options completion of grant registration
Stock options that have not applied for exercising within the above-mentioned agreed periods or that cannot apply for exercising because of the failure to meet
the exercise conditions shall be deregistered by the Company.
Note 2: The second extraordinary general meeting of 2022 held on February 14, 2022 examined and adopted the provisions of the Proposal on the Company's
2022 Stock Option and Restricted Stock Incentive Plan (Draft) and its Abstract, the Proposal on the Development of the Company's 2022 Stock Option and
Restricted Stock Incentive Plan Implementation and Evaluation Management Measures, and the Proposal on Submitting the Matter of Authorising the Board of
Directors to Handle Matters Related to Stock Incentive to the General Meeting of Shareholders for Approval, the Company granted a total of 1,585,437.00
restricted shares to 1,012 natural persons, including Yu Xue, at a grant price of RMB64.48 per share. The Company held the 2021 annual general meeting on
May 5, 2022, and examined and adopted the Proposal on the 2021 Annual Profit Distribution Plan. According to the relevant provisions of the 2022 Stock
Option and Restricted Stock Incentive Plan (Draft) of the Company, when the Company declares dividends, the grant price of restricted shares of the incentive
plan shall be adjusted accordingly, and the adjusted grant price is RMB64.18 per share. As of May 8, 2022, 186 incentive objects identified in the incentive plan
voluntarily gave up all the restricted shares that the Company plans to grant to them for personal reasons, and four incentive objects voluntarily gave up part of
the restricted shares that the Company plans to grant to them for personal reasons. The equity abandoned by the above 190 incentive objects shall be distributed
and adjusted among other relevant incentive objects except senior executives. The number of incentive objects to whom the restricted shares of this incentive
plan shall be granted is changed from 1,012 to 826, and the total number of equity granted remain the same. The source of the restricted stock incentive plan in
the current period is the common stocks repurchased by the Company from the secondary market.
The lock-up periods of restricted shares granted by this incentive plan are 12 months, 24 months and 36 months from the date of the registration of the restricted
shares granted to the incentive objects.
The shares and dividends obtained by the incentive objects from the conversion of capital reserve into share capital, distribution of stock dividends and stock
splits, and other shares and dividends because of the granted restricted shares that are still in the lock-up periods shall be locked in accordance with this
incentive plan, and shall not be sold or transferred in the secondary market. The lock-up periods of such shares are the same as those of restricted shares. If the
Company repurchases the restricted shares that are still in the lock-up periods, such shares shall be repurchased together.
When the restrictions on sale are lifted, the Company handles the matters of lifting the restrictions on sale for the incentive objects that meet the conditions for
lifting the restrictions on sale, and the restricted shares held by the incentive objects that do not meet the conditions for lifting the restrictions on sale shall be
repurchased and deregistered by the Company.
The restricted shares granted by this incentive plan are listed in the following table:
258
Proportions of
Arrangements for
shares with
lifting the restrictions Periods for lifting the restrictions on sale
restrictions on
on sale
sale lifted
From the first trading day after 12 months from the date of completion of the
The first period of
first registration to the last trading day within 24 months from the date of 40%
lifting the restrictions
completion of the first registration
The second period of From the first trading day after 24 months from the date of completion of the
lifting the restrictions first registration to the last trading day within 36 months from the date of 30%
completion of the first registration
The third period of From the first trading day after 36 months from the date of initial completion
lifting the restrictions of registration to the last trading day within 48 months from the date of initial 30%
completion of registration
For the restricted shares that have not applied for lifting the restrictions within the above-mentioned agreed periods or cannot apply for lifting the restrictions
because of the failure to meet the conditions for lifting the restrictions, the Company shall repurchase and deregister them according to the principles specified
in the incentive plan.
2. Information on equity-settled share-based payment
√Applicable □N/A
Unit:RMB
(1) The fair value of restricted shares is recognised at the closing price
Determination method of the fair value of equity instruments on the
on the grant date; (2) The fair value of stock options is recognised by
grant date
Black-Scholes model
On each balance sheet date of lock-up periods, the estimation shall be
Basis for determining the number of vested equity instruments made according to the latest number of people whose stock options are
vested, performance indicators and other follow-up information
Reasons for significant differences between the current estimates and
N/A
the previous estimates
Accumulated amount of equity-settled share-based payment included in
84,649,402.60
capital reserve
Total expenses recognised for equity-settled share-based payment in
91,683,819.28
the current period
Other explantions:
The share-based payment of Yunnan Hongchuang Packaging Co., Ltd., a subsidiary of the Company, is as follows:
(1) General information about share-based payment
Item 2022
The total amount of equity instruments granted by the Company during this 15,000,000 shares
period
259
(2) Information on equity-settled share-based payment
Item 2022
Determination method of fair value of equity instruments on the date of grant Confirmed according to the evaluation value
Equity-settled share-based payments included in the cumulative amount of
capital reserve
161,520.14
Total costs of equity-settled share-based settlement recognized during this
period 244,653.34
On May 20, 2022, the second extraordinary general meeting of 2022 of the Company's subsidiary Hongchuang Packaging considered and
approved the Proposal on the Implementation of Equity Incentive by the Company through Capital Injection, and the Proposal on the Employee Equity
Incentive Plan (Draft) and Its Summary of the Company, and agreed that a total of 47 employees of the employee shareholding platform Ningbo Hexi
Enterprise Management Partnership (Limited Partnership) ( "Ningbo Hexi") could increase their capital at the price of RMB5.50 per share, indirectly
hold 15 million shares of Hongchuang Packaging in exchange for services. According to the relevant provisions of “accounting standards for
Enterprises No. 11 - share payment”, the equity incentive is a share settlement based on equity settlement. The fair value of this share-based payment
is determined by reference to the net assets per share of Hongchuang Packaging at RMB5.64/share at April 30, 2022, according to the Evaluation
Report (ZLPBZ (2022) No. 2270) issued by China United Assets Appraisal Group Co., Ltd. Therefore, according to the difference between the
number of shares subscribed by employees multiplied by the fair value of RMB5.64/share and the subscription value of RMB5.50/share, Hongchuang
Packaging recognized it as share-based payment and capital reserve, RMB2,101,832.78 in total. Since Hongchuang Packaging signed a contract with
the incentive object to stipulate the service period and exit mechanism, the share-based payment expenses need to be confirmed by stages within the
employee's service period. In summary, Hongchuang Packaging confirmed the share-based payment expenses of RMB244,653.34 in the current period,
which affected the amount of capital reserve of RMB161,520.14 in the consolidated balance sheet of the current period.
XIII. Commitments and Contingencies
1. Significant commitments
Significant commitments on the balance sheetdate
(1) Mortgage of assets
As of December 31, 2022, the Company has obtained the bank’s comprehensive credit line with the mortgage of property and plant in fixed assets,
machinery and equipment, land use right in intangible assets and construction in progress of RMB1,067,749,300. See note VII-61 for more.
(2) Pledge of assets
As of December 31, 2022, the Company obtained bank loans of RMB 1,450,149,800 by pledging certificate of deposit, notes receivable,
76.3574% equity in its second-tier subsidiary Newmi Tech, and 100% equity interest in its second-tier subsidiary Suzhou GreenPower New Energy
Materials Co., Ltd. For details, see notes 22, 32 and 61 in this section VII.
As at December 31, 2022, except for the disclosures above, there were no other important commitments that are required to be disclosed.
2. Contingencies
(1) Significant contingencies on the balance sheet date
The Company has no important contingencies to disclose.
1) Contingencies arising from external debt guarantee and their financial implications
See note XII-5. Related party transactions for the guarantee provided by the related party
2) Letter of guarantee and letter of credit
As of December 31, 2022, the balance of letters of credit issued by financial institutions for the Company wasRMB1,107,084,864.92, USD4,204,365.92,
JPY15,614,250,000.00 and Euro1,513,480.00, and the amount of the L/G was RMB213,371,094.50.
As at 31 December 2022, except for the disclosures above, there were no other major contingencies that are required to be disclosed.
(2) Where the Company has no discloseable significant contingencies, relevant explanations should be made:
The Company has no significant contingencies to disclose.
260
XIV. Events Subsequent to the Balance Sheet Date
1. Important non-adjustment matters
Unit: RMB
Number of impacts on
Reasons why the number of
Project Content financial status and
impacts cannot be estimated
operating results
The Company held the 38th meeting of the
fourth Board of Directors and the first
extraordinary general meeting of shareholders in
2022 on November 21, 2021 and January 17,
Issuance of shares and 2022, respectively, and examined and adopted
Impossible to estimate The issuance is not complete
bonds the relevant proposals for non-public offering of
shares. The Company plans to raise not more
than RMB12.8 billion of capital by non-public
offering of shares, which was approved by the
CSRC on June 28, 2022
2. Return of goods
There is not a large number of returns of goods after the balance sheet date of the Company.
3. Details of other events after the balance sheet date
Except for the above events after the balance sheet date, as at the date of approval of the financial statements, the Company has no other significant
events after the balance sheet date that need to be disclosed but have not been disclosed.
XV. Other Significant Events
1. Segment information
(1) Determination basis and accounting policy of reporting segments
The Company determines the business segment based on its internal organizational structure, management requirements and internal reporting system.
The operating segments of the Company refer to the components meeting the following conditions at the same time:
1) The component can generate income and expenses in daily activities;
2) The management can regularly evaluate the operation results of the component to decide to allocate resources to it and evaluate its performance;
261
3) The relevant accounting information can be obtained from the financial status, operating results and cash flow of the component.
The Company determines the reporting segment based on the operating segment, and the operating segment meeting one of the following conditions is
determined as the reporting segment:
1) The segment revenue of the business segment accounts for 10% or more of the total revenue of allsegments;
2) The absolute profit (loss) of the segment accounts for 10% or more of the absolute sum of the total profits of all profit segments or the total losses of
all deficit segments.
When the total amount of external transaction revenue of the operating segment of the reporting segment determined according to the above accounting
policies does not account for 75% of the total consolidated revenue, increase the number of reporting segments, and include other operating segments
not as reporting segments into the scope of reporting segments according to the following provisions until the proportion reaches 75%:
1) Determine the operating segment that the management believes the disclosure of the operating segment information is useful to the users of
accounting information as the reporting segment;
2) The business segment is merged with one or more other business segments which have similar economic characteristics and meet the merger
conditions of the business segment as a reporting segment.
The transfer price between segments is determined by referring to the market price, and the assets and related expenses used together with each segment
are distributed among different segments according to the income proportion.
(2) Factors considered in determining the reporting segment, and the types of products and services of the reporting segment:
The report segments of the Company are all business units providing different products and services. As various businesses require different
technologies and market strategies, the Company independently manages the production and operation activities of each reporting segment, and
separately evaluates its operating results to determine its allocation of resources and evaluate its performance.
The Company has 2 reporting segments: the lithium battery separator business segment and the BOPP film business segment. The lithium
battery separator business segment is responsible for the production of lithium battery separator, which is mainly used for the production of EV batteries
and 3C product batteries; the BOPP film business segment is responsible for the production of BOPP film, which is mainly used for the outer
packaging of cigarette boxes, food and other products.
(3) Financial information of reporting segments
Unit: RMB ‘0,000
Lithium battery
Item BOPP film Others Inter-segment Total
separation film
business segment elimination
business segment
I. Operating income 1,099,554.98 63,610.30 100,193.66 -4,266.39 1,259,092.55
Including: Income from
external trade 1,099,554.98 63,610.30 95,927.27 1,259,092.55
Income from inter-segment
trade 4,266.39 -4,266.39
II. Operating cost 671,436.09 57,035.43 69,390.05 -1,920.98 795,940.59
Including: Depreciation and
102,354.39 1,518.83 2,427.97 1,106.50 107,407.69
amortization costs
Income from investment in
joint ventures and associates 147.17 147.17
Asset impairment losses 419.34 36.92 532.67 -156.52 832.41
Credit impairment losses 3,636.94 26.29 628.92 0.00 4,292.15
III. Total profit 438,521.54 10,059.07 30,122.67 -2,188.87 476,514.41
IV. Income tax expense 50,087.10 967.16 6,262.93 -2,016.23 55,300.96
V. Net profit 388,434.44 9,091.91 23,859.74 -172.64 421,213.45
VI. Total assets 3,566,668.81 115,934.30 1,357,341.23 -1,209,325.04 3,830,619.30
262
VII. Total liabilities 2,460,262.40 52,555.70 164,471.64 -724,134.87 1,953,154.87
XVI. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts receivable
(1) Disclosure of accounts receivable by type
Unit: RMB
Closing balance Opening balance
Provision for bad Provision for bad
Type Book balance Book Book balance Book
debts debts
value value
Proporti Proporti Proporti Proporti
Amount Amount Amount Amount
on on on on
Including:
Accounts receivable
subject to provision 33,130,88 33,130,27 11,098,58 11,098,038.
100.00% 617.05 0.002% 100.00% 542.76 0.005%
for bad debts made on 7.42 0.37 0.96 20
a portfolio basis
Including:
Aging portfolio 25,100,63 0.002 25,100,01 2,087,889 2,087,346.3
75.76% 617.05 18.81% 542.76 0.03%
4.86 % 7.81 .08 2
Portfolio of related
parties within the 8,030,252 8,030,252 9,010,691.8
24.24% 81.19% 9,010,691.88
scope of consolidation .56 .56 8
Total 33,130,88 33,130,27 11,098,58 11,098,038.
100.00% 617.05 0.002% 100.00% 542.76 0.005%
7.42 0.37 0.96 20
Provision for bad debts made on a portfolio basis: Aging portfolio
Unit: RMB
Closing balance
Name
Book balance Provision for bad debts Proportion of provision
Less than 1 year 25,062,153.59
1-2 years 32,553.90 68.36 0.21%
2-3 years 5,927.37 548.69 0.21%
Total 25,100,634.86 617.05
263
Explanation on the basis for determining the portfolio:
Provision for bad debts made on a portfolio basis: Portfolio of related parties within the scope of consolidation
Unit: RMB
Closing balance
Name
Book balance Provision for bad debts Proportion of provision
Less than 1 year 8,030,252.56
Total 8,030,252.56 --
If provision was made for bad debts of accounts receivable in accordance with the general expected credit loss model, please disclose relevant information of
provision for bad debts referring to the disclosure of other receivables:
□ Applicable √ N/A
Disclosure by aging
Unit: RMB
Aging Book balance
Less than 1 year (inclusive) 33,092,406.15
1 to 2 years 32,553.90
2 to 3 years 5,927.37
Total 33,130,887.42
(2) Provision for bad debts accrued, recovered or reversed during the Reporting Period
Provision for bad debts during the current period:
Unit: RMB
Changes in amount for the period
Type Opening balance Closing balance
Recovery or
Provision Write-offs Others
reverse
Accounts receivable
subject to provision for
bad debt made on an
individual basis
Accounts receivable
subject to provision for
542.76 74.29 617.05
bad debt made on a
portfolio basis
Related parties portfolio
within the scope of
consolidation
Total 542.76 74.29 617.05
Of which, provision for bad debt recovered or reversed in the current period is significant: none
(3) Actual write-off of accounts receivable in the current period: None
(4) Top five accounts receivable by closing balance of debtors
Unit: RMB
Closing balance of accounts Percentage in total closing Closing balance of provision for
Company name
receivable balance of accounts receivable bad debts
Company 1 21,319,883.88 64.35%
Company 2 7,657,805.12 23.11%
264
Company 3 2,415,600.00 7.29%
Company 4 818,543.75 2.47%
Company 5 300,600.00 0.91%
Total 32,512,432.75 98.13%
2. Other receivables
Unit: RMB
Item Closing balance Opening balance
Dividends receivable 211,040,000.00 241,040,000.00
Other receivables 6,620,072,472.90 6,451,123,939.27
Total 6,831,112,472.90 6,692,163,939.27
(1) Dividends receivable
1) Dividends receivable by type
Unit: RMB
Item (or investee) Closing balance Opening balance
Yunnan Dexin Paper Co., Ltd. 70,000,000.00 100,000,000.00
Shanghai Energy New Material Technology
141,040,000.00 141,040,000.00
Co., Ltd.
Total 211,040,000.00 241,040,000.00
2) Provision for bad debts
□ Applicable √ N/A
(2) Other receivables
1) Other receivables by nature
Unit: RMB
265
Nature of amount Book balance at the end of the period Book balance at the beginning of the period
Security deposit and guarantee deposit 486,939.90 91,639.90
Petty cash 1,464,876.46 850,872.89
Advance money 21,686.80 25,276.80
Others 609,566.09 457,829.48
Capital lending 6,617,788,956.75 6,449,947,524.21
Provision for bad debt -299,553.10 -249,204.01
Total 6,620,072,472.90 6,451,123,939.27
2) Provision for bad debts
Unit: RMB
Stage I Stage II Stage III
Provision for bad debts Total
Lifetime ECL (not credit- Lifetime ECL
12-month ECL
impaired) (credit-impaired)
Balance on January 1,
2022 53,087.51 9,100.00 187,016.50 249,204.01
Balance on January 1,
2022 for the current
period
Provision for the period 50,349.09 50,349.09
Balance on December 31,
2022 103,436.60 9,100.00 187,016.50 299,553.10
Changes in book balance with significant changes in loss reserves in the current period
□ Applicable √ N/A
Disclosure by aging
Unit: RMB
Aging Book balance
Less than 1 year (inclusive) 608,992,319.74
1 to 2 years 4,984,332,772.34
2 to 3 years 1,026,771,717.42
Over 3 years 275,216.50
3 to 4 years 68,200.00
4 to 5 years 20,000.00
Over 5 years 187,016.50
Total 6,620,372,026.00
266
3) Actual write-off of other receivables in the current period: None
4) Top five other receivable by closing balance of debtors
Unit: RMB
As a percentage of Closing balance of
Company name Nature of amount Closing balance Aging total closing balance provision for bad
of other receivables debts
Less than 1 year, 1-2
Wuxi Energy New Capital lending 3,653,985,561.86 55.19%
years
Material Technology
Co., Ltd.
Less than 1 year, 1-2
Jiangxi Tonry New Capital lending
years
Energy Technology 2,273,900,585.89 34.35%
Development Co., Ltd.
Shanghai Energy New Capital lending Less than 1 year
Material Technology 668,000,000.00 10.09%
Co., Ltd.
Yunnan Dexin Paper
Capital lending
Co., Ltd. Less than 1 year
21,902,809.00 0.33%
Gongcheng
Guarantee deposit Less than 1 year
Management 300,000.00 0.005% 13,050.00
and cash deposit
Consulting Co., Ltd.
Total 6,618,088,956.75 99.97% 13,050.00
3. Long-term equity investment
Unit: RMB
Closing balance Opening balance
Item
Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Investment in
subsidiaries 4,750,066,580.90 4,750,066,580.90 4,658,382,761.62 4,658,382,761.62
Total
4,750,066,580.90 4,750,066,580.90 4,658,382,761.62 4,658,382,761.62
(1) Investments in subsidiaries
Unit: RMB
Increase/Decrease for the period Closing
Closing
Name of Opening balance balance of
Increase in Decrease in Provision for balance (book
investee (book value) Others provision for
investment investment impairment value)
impairment
267
162,135,598.40
Yunnan Dexin 162,135,598.40
Paper Co., Ltd.
418,898,313.03
Yunnan Hongta 418,898,313.03
Plastic Co., Ltd.
Yunnan 441,809,808.43
441,809,808.43
Hongchuang
Packaging
Co., Ltd.
Shanghai 36,947,238.31 3,672,486,280.0
3,635,539,041.76
Energy 7
New
Material
Technolo
gy Co.,
Ltd.
Zhuhai
Energy
New
Material 8,155,258.92 8,155,258.92
Technolo
gy Co.,
Ltd.
Jiangxi Tonry
New Energy
Technology 7,181,169.11 7,181,169.11
Development
Co., Ltd.
Jiangxi Enpo
New Materials 321,122.98 321,122.98
Co., Ltd.
Energy (Zhuhai
Hengqin) New
Materials 4,852,881.22 4,852,881.22
Technology
Co., Ltd.
Jiangxi Ruijie
New Material 2,572,109.89 2,572,109.89
Technology
Co., Ltd.
Suzhou
GreenPower
New Energy 9,451,353.93 9,451,353.93
Materials Co.,
Ltd.
Wuxi Energy
New Material 12,792,257.04 12,792,257.04
Technology
Co., Ltd.
Chongqing
Energy Newmi 9,156,039.27 9,156,039.27
Technological
Co., Ltd.
Chongqing
Energy New
Material 33,135.86 33,135.86
Technology
Co., Ltd.
Jiangsu Energy
New Materials 221,252.75 221,252.75
Technology
Co., Ltd.
4,750,066,580.9
Total 4,658,382,761.62 91,683,819.28 0
268
4. Operating income and operating cost
Unit: RMB
Amount for the current period Amount for the previous period
Item
Income Cost Income Cost
Main businesses 145,520,947.85 82,994,977.23 136,620,927.87 83,962,944.68
Other businesses 4,712,468.20 2,518,851.06 20,878,695.07 19,492,071.07
Total 150,233,416.05 85,513,828.29 157,499,622.94 103,455,015.75
5. Investment income
Unit: RMB
Item Amount for the current period Amount for the previous period
Gain from long-term equity investment under
the cost method 38,000,000.00
Interest on finance products 22,270,487.08
Total 60,270,487.08
6. Others
XVII. Supplementary Information
1. Breakdown of non-recurring gain or loss for the current period
√ Applicable □ N/A
269
Unit: RMB
Item Amount Notes
Gains and losses from the disposal of non-current assets -4,869,891.53
Government subsidies recognized in current gains or losses (except for those closely related to the Company’s business and
are either in fixed amounts or determined under quantitative methods in accordance with the national standard) 171,995,624.29
Gains or losses on entrusted investments or assets management 27,838,099.70
Gains or losses from changes in fair value arising from the holding of trading financial assets and trading financial
liabilities, and investment income from disposal of trading financial assets, trading financial liabilities and available-for-sale 21,836,255.17
financial assets, excluding the effective hedging business related to the Company’s normal business operations
Reversal of the provisions for impairment of receivables subject to separate impairment test 2,078,410.35
Non-operating income and expenses other than above-mentioned items 818,785.95
Other items within the definition of non-recurring gains or losses 5,824,344.40
Less: effect of the income tax 56,380,407.08
Effect of minority equities 8,471,379.96
Total 160,669,841.29 --
Details of other profit or loss items that fall within the meaning of non-recurring gain or loss:
□ Applicable √ N/A
There was no other profit or loss item of the Company that fall within the meaning of non-recurring gain or loss
The reason for the Company to define the non-recurring profit or loss items illustrated in the Information Disclosure and Presentation Rules for
Companies Making Public Offering of Securities No. 1 – Non-recurring Profit or Loss as recurring profit or loss items
□ Applicable √ N/A
2. Return on equity and earnings per share
Earnings per share
Profit during the Reporting Period Weighted average return on equity
Basic earnings per share Diluted earnings per share
(RMB/share) (RMB/share)
Net profits attributable to common
stockholders of the Company 25.39% 4.48 4.46
Net profits attributable to common
stockholders of the Company after the
deduction of non-recurring gains and 24.37% 4.30 4.28
loss
3. Accounting data differences under domestic and international accounting standards
(1) Differences in the net profit and in the net assets in the financial statements disclosed in accordance with international accounting
standards and in accordance with the PRC GAAP at the same time
□ Applicable N/A
270
(2) Differences in the net profit and in the net assets in the financial statements disclosed in accordance with overseas accounting standards
and in accordance with the PRC GAAP at the same time
□ Applicable N/A
(3) Descriptions of reasons for accounting data differences occurring under domestic and foreign accounting standards; if adjustment is
made for data audited by an overseas audit institution, the name of the institution shall be provided
4. Others
271
