Annual Report 2022 To be a Global Leading Crop Protection Company
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Annual Report 2022 To be a Global Leading Crop Protection Company
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Annual Report 2022 To be a Global Leading Crop Protection Company
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Annual Report 2022 To be a Global Leading Crop Protection Company
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Annual Report 2022 To be a Global Leading Crop Protection Company
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Annual Report 2022 To be a Global Leading Crop Protection Company
Summary of Annual Report 2022 (English Version)
Contents
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Annual Report 2022 To be a Global Leading Crop Protection Company
Section I. Company Information and Key Financial Indicators
I. Company Information
Short form of the stock 润丰股份 Stock code 301035
Chinese name of the
山东潍坊润丰化工股份有限公司
Company
Chinese abbreviation of the
润丰股份
Company
Name of the Company in
SHANDONG WEIFANG RAINBOW CHEMICAL CO.,LTD
English (if any)
Abbreviation of the Company
RAINBOW CHEMICAL
in English (if any)
Legal representative of the
Wicky Wang
Company
Registered address No.03001 Lvjian Road, Binhai Economic Development Zone, Weifang City, Shandong Province
Postal code of registered
address
Previous changes of
registered address of the N/A
Company
Business address
Shandong Province
Postal code of business
address
Company website www.rainbowagro.com
E-mail rfzqb@rainbowagro.com
II. Contact Person and Contact Information
Secretary of the board Securities affairs representative
Name Xing Bingpeng Hu Dongju
Contact address Financial Business Center, High-tech Financial Business Center, High-tech
Zone, Jinan City, Shandong Province Zone, Jinan City, Shandong Province
Tel 0531-83199916 0531-83199916
Fax 0531-83191676 0531-83191676
E-mail rfzqb@rainbowagro.com rfzqb@rainbowagro.com
III. Information Disclosure and Place of Report
Website of the stock exchange for release of the Annual
Shenzhen Stock Exchange: http://www.szse.cn
Report
Securities Times, China Securities Journal, Shanghai Securities
Name and website of the media for release of the Annual
News, Securities Daily, Economic Information Daily, CNINFO
Report
(www.cninfo.com.cn)
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Annual Report 2022 To be a Global Leading Crop Protection Company
Place where the Annual Report is available for inspection
Center, High-tech Zone, Jinan City, Shandong Province
IV. Other Relevant Information
Accounting firm engaged by the Company
Shangkuai Certified Public Accountants (Special General
Name of the accounting firm
Partnership)
Business address of the accounting firm 25th Floor, No. 755 Weihai Road, Jing'an District, Shanghai
Name of certified accountants Yu Renqiang, Yin Zuoyong
The sponsor institution engaged by the Company to perform continuous supervision during the reporting period
? Applicable ? Not applicable
Name of the sponsor Business address of the Name of sponsor Duration of continuous
institution sponsor institution representative supervision
No. 6666 Shengtai Street, From July 28, 2021 to
Northeast Securities Co.,Ltd Wang Zhengang, Liu Junjie
Changchun December 31, 2024
The financial consultant engaged by the Company to perform continuous supervision during the reporting period
? Applicable ? Not applicable
V. Key Accounting Data and Financial Indicators
Whether the Company needs to retroactively adjust or restate the accounting data of previous years
? Yes ? No
Operating income (RMB) 14,460,175,154.41 9,797,107,551.38 47.60% 7,289,831,535.13
Net profit attributable to
shareholders of the 1,413,238,278.11 799,718,982.72 76.72% 437,634,530.57
Company (RMB)
Net profit attributable to
shareholders of the
Company excluding non- 1,417,676,562.72 798,010,406.55 77.65% 438,276,863.19
recurring gains and losses
(RMB)
Net cash flow from
operating activities (RMB)
Basic earnings per share
(RMB/Share)
Diluted earnings per share
(RMB/Share)
Weighted average return on
net assets
End of 2022 End of 2021 Year-on-year change End of 2020
Total assets (RMB) 11,598,874,181.42 10,311,655,543.89 12.48% 7,293,867,946.37
Net assets attributable to
shareholders of the 6,184,265,166.56 4,908,724,302.71 25.99% 2,801,888,242.99
Company (RMB)
The lower of the Company's net profit before and after deduction of non-recurring gains and losses for the last three fiscal years is
negative, and the audit report for the latest year shows that there is uncertainty about the Company's ability to continue op erating
? Yes ? No
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Annual Report 2022 To be a Global Leading Crop Protection Company
The lower of the Company's net profit before and after deduction of non-recurring gains and losses is negative
? Yes ? No
VI. Key Quarterly Financial Indicators
Unit: RMB
First quarter Second quarter Third quarter Fourth quarter
Operating income 3,119,046,203.43 4,659,528,809.61 4,137,087,681.52 2,544,512,459.85
Net profit attributable to
shareholders of the Company
Net profit attributable to
shareholders of the Company
excluding non-recurring gains
and losses (RMB)
Net cash flow from operating
-224,220,205.58 910,413,665.00 1,429,625,638.82 -745,163,689.99
activities
Whether there is any material difference between the above financial indices or their total and the relevant financial indices
disclosed by the Company in the quarterly report and semi-annual report
? Yes ? No
VII. Items and Amounts of Non-recurring Gains and Losses
? Applicable ? Not applicable
Unit: RMB
Item Amount of 2022 Amount of 2021 Amount of 2020 Notes
Gain and loss on disposal of non-current
assets (including the write-off portion of -24,471,080.42 -25,602,738.28 -14,803,882.23
asset impairment provision)
Government subsidies included in current
gains and losses (closely related to normal
operational business of the Company,
excluding the continuous government
subsidies of certain amount or quota
complying with national policies)
Gains and losses arising from changes in the
fair value of financial assets held for trading
and financial liabilities held for trading, and
the investment returns obtained from the
disposal of financial assets held for trading, 3,467,771.89
financial liabilities held for trading, and
financial assets available for sale, other than
the effective hedging business related to the
normal operation of the Company
Rollback of impairment provisions for
receivables that are separately tested for 308,619.60
impairment
Other non-operating revenue and
expenditure other than those mentioned 3,910,755.03 12,074,283.42 -10,200,580.06
above
Less: affected amount of income tax -675,243.78 339,152.38 26,515.88
Affected amount of minority
shareholders' equity (after tax)
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Annual Report 2022 To be a Global Leading Crop Protection Company
Total -4,438,284.61 1,708,576.17 -642,332.62 --
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Annual Report 2022 To be a Global Leading Crop Protection Company
Section II. Discussion and Analysis of Management of the
Company
I. The situation of the industry during the reporting period
The Company shall comply with the disclosure requirements of "related business of the chemical industry" in the
Guidelines of SZSE for Self-Discipline Regulation of Listed Companies No.3 – Industrial Information Disclosure
The Company is categorized into the industry of chemical pesticide manufacturing (C2631) in chemical raw materials
and chemical manufacturing (C26). Pesticides are also commonly known as crop protection products in the industry,
which refer to products with a broader scope, including non-chemical pesticides (such as bio-pesticides, and bio-
stimulants). Pesticides are known as preparations for the prevention and control of crop diseases and insect pests.
Pesticide products actually used are pesticide preparations made from pesticide active compound and pesticide
auxiliaries. The active compound takes effect, and it is also called active ingredients or active constitute. In addition,
depending on the targets, the pesticides can also be categorized into herbicide, insecticide, fungicide, plan t growth
regulator, etc.
(I) The development and trend of crop protection industry:
From the global perspective, the crop protection industry is an existing market that has rigid demands and is steadily
growing in market shares. The demand for crop protection is closely related to the demands of humans for food and
other crops. In recent years, with the increase in the population of the world, and the continuous occurrence of pests
and diseases, the scale of global crop protection market is constantly expanding. According to the data of Phillips
McDougall, a British market research company, the global crop protection market scale increased from USD 35.575
billion to USD 69.886 billion, with annual compound growth rate of 5% from 2006 to 2020. It is not an industry
featuring rapid growth in terms of the total growth rate, and it is also an industry that lacks change or strong growth
dynamic due to the limitation of the non-linear improvement of new compound development costs, but it still has
three clear structural growth opportunities: First, the continuous expansion of the market share of non -patented crop
protection products. Second, with the continuous expansion of non-patented crop protection market share, excellent
multinational generic companies grow rapidly (such as UPL in India). Third, with the promotion of different transgenic
seeds and the resistance of different varieties, the prohibition policy from the government has brought about the
change of usage amount of different varieties (such as glufosinate-ammonium, diquat, propithiazole and
chlorfenamide gained rapid growth in the global market in the past few years).
companies grow fast
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Annual Report 2022 To be a Global Leading Crop Protection Company
With the continuous expansion of the non-patented crop protection market shares, excellent multinational non-
patented crop protection companies have grown rapidly. The most eye-catching case in the industry in past few years
is how Indian company UPL rapidly strengthened itself and expanded its market share internationally by purchasing
Arysta and other companies with strong channel brands and constantly investing in the self-production of important
non-patented active ingredients. Excellent multinational non-patented crop protection companies with high growth
rate must have the following five features:
(1) Fast response and decision-making mechanism (quick response to the rapid changes in the supply-end, cost-end
and market-end globally is needed);
(2) Light structure and low-cost rate (fierce homogeneous competition in non-patented crop protection markets will
make gross profit margin of the market channels constantly decline);
(3) Diversified and complete product portfolio for providing an integrated crop solution (not relying too much on a
single product);
(4) The broad global market coverage and channel, and the construction of the brand (not relying too much on a
single market, and having a good brand channel);
(5) Be able to exert the impact on a number of important active ingredients (advanced manufacturing of important
active components to form the complete industrial chain from the factory to the farm, thus stabilizing the supply and
cost advantage, and supporting further expansion of the global market).
With the promotion of different transgenic seeds, the prohibition/ restriction policies of government, and the
resistance of different varieties, the usage amount is changing rapidly among different varieties.
(1) With the promotion of transgenic seeds, the growth rate of global use of glufosinate-ammonium and 2,4D was
significantly higher than that of other varieties in the past three years.
(2) The prohibition or restriction policies of the government have a great impact on the use of different varieties: For
example, the prohibition of paraquat in China, Brazil, Vietnam, Thailand and other mark ets has prompted significant
increase of its alternatives varieties such as glufosinate-ammonium and diquat; To give another example, the
prohibition of chlorpyrifos in Argentina, Vietnam, the EU, Myanmar, the United States and other markets directly has
led to a significant decline in the global use of chlorpyrifos, and promoted the rapid growth of other alternative
varieties; Another example is the prohibition of chlorothalonil in the EU directly has led to the serious excess of
chlorothalonil production.
(3) The resistance changes of different varieties require the mixed use of several alternatives for the same target
diseases, insects and weeds: For example, countries such as Vietnam and Pakistan in South Asia have habitually used a
single insecticide frequently and intensively, resulting in the rapid rise of its insecticide resistance and the frequent
changes of different varieties; For another example, the fungicide resistance of Brazil to prevent soybean Asian rust
changes rapidly, and it needs to be used alternately or mixed among different varieties.
The rapid change in such different varieties enables manufacturers who are relying too much on a single active
ingredients to face significant opportunities or major crises.
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Annual Report 2022 To be a Global Leading Crop Protection Company
rate is different, and emerging markets are growing rapidly.
In the past five years, the growth rate of the crop protection products market in different regions of the worl d has
been different, and the growth rate in emerging markets is faster, which is represented as follows:
(1) The Latin American region continues to grow rapidly: Latin America has become an increasingly important source
of agricultural production and supply in the world. In the past five years, Latin America has sustained rapid growth,
especially in Brazil.
(2) The growth rate in the Northern American market slows down: The market size of the United States and Canada is
relatively stable, and with the increase in the market share of non-patented crop protection products, competition has
intensified;
(3) Steady and slow growth of the Asia-Pacific market: India, Indonesia, Bangladesh, Vietnam and other markets in the
region are growing relatively fast;
(4) The growth rate in Africa is accelerating: With the development of economy, countries in Africa increase
investment in agriculture, and the market scale of crop protection products grows rapidly;
(5) Accelerated growth of Eastern European market: The growth rate of Russia and Ukraine, in the region, is very
obvious, especially Russia, which has become the seventh largest crop protection product market in the world;
(6) The size of the EU market is stable and slightly decreased: The EU's policy of prohibiting and restricting more and
more active ingredients, and the high product registration and maintenance costs to meet regulatory requirements
have made this market less attractive due to the high risk of registration investment and high amortization cost of
intangible assets, despite its high gross profit margin. The market size in this region is stable and continues to decline
slightly, but the market for bio-pesticide and bio-stimulant will become a growth point.
frequently adjusted and increasingly strict
To enter the market of any country, crop protection products need to obtain a product registration certificate in that
country in accordance with relevant laws and regulations of that country,. Obtaining a product registration in country
A does not mean that it can be sold in country B. That is, even the same product also needs to be sold in accordance
with relevant laws and regulations of each country, to obtain the product registration certificate in the target country.
The management regulations and policies for crop protection products in various countries around the world are
frequently adjusted and increasingly strict, mainly in the following aspects:
(1) Changes in registration policies or approval fees have increased the registration costs of individual products in
various countries: For example, the adjustment of the registration policy of the imported product of India in 2017, has
made the registration fee of a single imported technical drug directly rise from 20,000 USD to around 400,000 USD to
the registration cost of a single original drug of the old variety has increased from about RMB 200,000 to about RMB 5
million now.
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Annual Report 2022 To be a Global Leading Crop Protection Company
(2) Registration policies are being adjusted towards high data standardization and complication, making registration
more difficult: Even countries with very loose requirements are increasingly changing from accepting public data to
requiring GLP experiments reports. The types of reports required are more and more complex, which increases the
types of data required for the registration of a single product, improves the standard, and increases the preparation
time of data, and some of the data is extremely difficult to prepare professionally.
(3) The declining of efficiency in the approval and certification by governments around the world: For example, the
government departments in countries such as Argentina, Bangladesh, Sri Lanka and Malaysia, have limited the annual
number of submissions or the number of approved products of each company, resulting in slow process with
prolonged cycle for new product certification. Many countries, such as Argentina, Bangladesh, Malaysia, and Algeria,
have even introduced policies to limit the number of product registration applications per applicant per year.
(4) The registration process in important crop protection product markets generally takes a long time: The process
takes long in the world's important crop protection product markets such as Brazil, Argentina, Mexico, Russia, India,
China, the EU and etc. In Brazil, it generally takes 5-8 years; in Russia, India, and the EU, it generally takes 4-6 years; in
Argentina, Mexico, and China, it generally takes 3-5 years; in the United States, it generally takes 2-3 years.
The above-mentioned changes in industry management regulations and policies are very beneficial to those
companies that have a registration team that registers KNOW-HOW in various markets around the world, have
efficient decision-making and organizational coordination mechanisms, and have a large number of registrations in
various markets around the world.
(II) 2022 global crop protection market environment
the overall demand for crop protection products is strong
The food security concerns and the demand for biofuel recovery resulting from the on-going global COVID-19
pandemic and Russia-Ukraine conflict, as well as the weather-related agricultural supply problems, have boosted the
global demand for bulk agricultural products. High bulk agricultural product prices and good yields for growers have
led growers to expand acreage and increase agricultural inputs, leading to strong global demand for crop protection
products as a whole.
in the supply and demand of crop protection products
In the fourth quarter of 2021, energy prices skyrocketed due to China's strict “dual control” policy on energy
consumption, which triggered panic buying in all major markets in fear of reduced supply. The trend continued until
the third quarter of 2022. During this period, the demand for most products exceeded supply and the price soared.
After the third quarter of 2022, with the delivery of most of the over-ordered goods and the continuous expansion of
the production capacity of suppliers, the relationship between supply and demand changed suddenly and a period of
oversupply began, and the price of crop protection began to decline, which further led to the hesitation, delay and
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Annual Report 2022 To be a Global Leading Crop Protection Company
destocking of buyers. This aggravated the situation of oversupply, resulting in the continuous decline of crop
protection prices with heavy downward pressure;
This rapid change in the supply and demand and the rapid decline in the prices of most products have brought
challenges to the inventory management and market strategy adjustment of companies. It is particularly important to
respond quickly and make accurate decisions based on the thorough understanding of the whole industrial chain from
factories to farms.
In 2022, although the overall price of crop protection products began to decline rapidly in the fourth quarter, the
overall earnings of companies in the industry was better than the historical average due to panic buying in the first
three quarters.
II. The Main Business of the Company During the Reporting Period
Procurement modes for major raw materials
Unit: RMB
Proportion of
Whether there
procurement
has been any Average price in Average price in
Major raw Procurement amount for major
significant change the 1st half of the the 2nd half of
material mode raw materials in
in the method of year the year
total procurement
settlement
amount of the year
Raw material 1 Price comparison 27.76% No 58,671.54 51,559.74
Raw material 2 Price comparison 6.74% No 51,042.45 49,058.90
Raw material 3 Price comparison 5.71% No 141,568.42 137,258.03
Raw material 4 Price comparison 2.85% No 178,711.46 183,350.49
Raw material 5 Price comparison 2.24% No 22,280.34 22,299.28
Reasons for raw material price changes from the previous reporting period
In 2021, affected by the "dual control” policy on energy consumption, the prices of raw materials used in the chemical
industry rose, breaking an all-time record. In 2022, the market prices fell.
III. Analysis of Core Competitiveness
Globalization of Chinese Brands”
In the early years after the Company's establishment, relying on the experience accumulated by the founding team in
the crop protection product industry, it participated in the global pesticide industry chain as an active compound
manufacturer and supplier. It achieved rapid growth and initial accumulation with the help of the rapid development
of the global crop protection products market and the wave of industrial transfer to emerging countries such as China.
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Annual Report 2022 To be a Global Leading Crop Protection Company
With the changes in the global economic environment, the global crop protection products industry is also undergoing
changes. Especially after the outbreak of the financial crisis in 2008, affected by the decline in overall market demand,
the overcapacity problem of domestic manufacturing industry was more and more prominent due to years of
continuous low-level repeated production. Many products were oversupplied and generated vicious price competition,
which adversely affected the profitability of enterprises in the industry. In response to the challenges brough t about
by changes in domestic and foreign economic and market environments, the Company responded quickly. Since the
second half of 2008, it began to explore and plan the optimization and upgrading of the Company's sales model and
development route. The Company has gradually formed a global marketing network with “team+platform+innovation”
as the basic elements, combining the traditional export mode of crop protection products with the overseas
independent registration mode, and featuring a “fast market access platform”.
The core of the "fast market access platform” is to obtain the registration of a rich and complete product portfolio in
each target country and to adhere to the concept of open platform. The rich and complete product portfolio
registration can provide growers with integrated crop solutions, and the concept of open platform enables the
Company to build its own local team based on the target country platform, to carry out the B-C business model of its
own brand. In addition, the Company adopts flexible way to open the platform to other excellent partners to carry
outB-B operation. Based on this open platform, the Company can rapidly expand market share through multiple
channels including the Company's self-built team and cooperation with industry partners.
In each target country, the Company adheres to the combination of the traditional export model of crop protection
products and the overseas self-registration model. The Company can flexibly adjust and switch between different
market roles such as suppliers, brand owners and service providers according to changes in market scenarios and
product differences. Two models promote and complement each other. The traditional export model provides a solid
customer base and market awareness for business expansion under the overseas self-registration model. The
abundant overseas self-registration not only greatly improves the Company's brand awareness, but also can better
meet customer needs with more various products and improve the intimacy with customers, which is more conducive
to the development of the Company's traditional export business.
At present, the Company's traditional export business model still accounts for a considerable proportion of revenue.
In future, with the continuous increase of the Company's overseas self-registration quantities and the continuous
improvement of the construction of the global marketing network characterized by “fast market entry platform”, the
proportion of revenue of the overseas self-registration model and the proportion of B-C revenue of self-owned brands
will be further increased. In addition, the Company's profitability and capabilities to maintain sustainable and stable
growth and operation will be significantly improved, so as to achieve stable, sustainable and rapid growth in
performance.
According to the mid-term strategic plan, the Company is speeding up and increasing the investment in overseas self-
registration to enrich the product portfolio in each target country, and starting the construction of a “fast market
entry platform” in more target countries. In the meanwhile, the Company also adheres to the characteristics of “light
structure and rapid response” to accelerate the development of its own brand B-C business in each target country.
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Annual Report 2022 To be a Global Leading Crop Protection Company
With its own strength and China's strong supply chain, the Company is striving to achieve “From Made in China to
Globalization of Chinese Brands”.
In 2019, based on the BLM model, with the participation of all core team members, the Company reached a consensus
and determined the mid-term strategic plan for2020-2024 after in-depth and sufficient discussions. The mid-term
strategic plan was formulated based on the guidelines of “Persisting in doing the difficult but correct work, moving
towards the forefront of industrial value chain, and building a complete industrial chain”.
After the mid-term strategic plan is completed, the Company organizes an annual review and update in the middle of
each year to ensure that the key tasks formulated around the plan keep pace with the times. Based on the mid-term
strategic plan, the Company formulates the annual business plan, annual department work plan and personal PBC.
After decoding level by level, it forms a strategic plan implementation map, summarizes, reviews and comments on
the implementation every quarter, and proposes the next improvement plan to ensure that all staff focus on strategic
planning and annual work plans, and work together to achieve the goals.
The Company has nurtured a stable operation team. For more than 20 years, the operation team led by founding
shareholders, Wicky Wang, Sun Guoqing, Qiu Hongbing, Yuan Liangguo and Liu Yuanqiang, has focused on the sector
of crop protection products. They have a profound expertise and rich hands-on experiences with insights into
segmented markets and development trends globally.
The Company's vision is “To be a Global Leading Crop Protection Company” and its mission is “All abo ut Growing". The
core values of the Company are“Customer Oriented; Rapid Response; Constant Effort; Open and Inclusive; Together
We Work; Together We Win”. With the guidance of the vision, mission and core values, and by practicing them, the
Company builds cultural identities and unity of team members. Through continuously improving positions, salaries
and benefits, performances and training systems, the Company builds an international team to facilitate global
business expansion.
To fully implement the core value of “Together We Win”， the Company has launched a restricted share incentive
plan for excellent core members of the operational team other than the founding shareholders in 2021. This will be an
integral part of the Company’s efforts in continuously improving positions, salaries and benefits, performances and
training systems with an aim to build a united international team who will pay collective efforts towards shared goals.
Since the financial crisis in 2008, under the influence of decreasing demands on the market and with aggravated over -
productivity due to continuous low-level repeated construction in the domestic manufacturing sector for years, the
domestic market has seen excessive supplies of the crop protection products and vicious price competition which
exerts negative influences on the profits of the companies in the industry. In response to the challenges brought by
the domestic& foreign economic environment and changes in the market, the operation team determined to invest
limited resources in business expansion and deepening of the global market between 2008 to 2019 after analysis and
discussion, and built a global marketing network which features as“Fast Market Access Platform”.
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Annual Report 2022 To be a Global Leading Crop Protection Company
At this stage, matching with the strategic planning, the Company mostly concentrates its R&D and innovation
resources on development of differentiated formulations oriented by the pain points of the end market. So far, the
Company has set up technologies and a R&D team to facilitate rapid development of formulations of all specifications
in need of clients around the world. The development features as rapid, cost-effective compliant with laws and
regulations of varied countries and globally leading.
Since 2017, with the improvement of national security and environmental protection management requirements and
law enforcement, non-compliant and technological outdated production capacity in the domestic crop protection
manufacturing industry has been cleared out. Large compliant active ingredient manufacturers have gotten into a
favorable development and growth cycle. During this cycle, more and more active ingredients single products are
seeking technological breakthroughs in automatic production, continuity, environmental protection and other aspects
to meet the requirements of laws& regulations and stable production. Once they achieve the breakthroughs, they can
expand the production into larger scale as to dominate the global market in that product.
The Company has spotted this trend on the active ingredient manufacturing early, and thus shifted its resources of
R&D and innovation to the advanced manufacturing of active ingredients single product in 2019. To achieve large-
scale production of active ingredients by utilizing globally leading technologies, on basis of the network built in the
course of the long-term international market expansion and the Company’s international vision, the Company has
actively gathered top experts from varied segmented domains and optimized the R&D work flow. So far, the Company
has set up an international technology team with globally leading expertise and a science-based, rigorous, efficient
and systematic work flow. That has given strong support to the successful execution and stable operation of the active
ingredients synthesis program in the long-term planning.
According to the Company’s medium-term planning, the main measures and focus of the Company in R&D and
innovation are as follows:
(1) Select from expired patents the target products that are instrumental for expanding into multiple markets on the
globe and that have the potential to create a huge market. Another crucial factor is that these products must offer a
large room for technological improvement. The Company refuses to engage in low-level repeated production and
never advances prematurely in blind pursuit of quantity. The Company only invests for active ingredient products
when it is confident that it can take the lead in terms of techniques and production scale of the niche markets
worldwide for these products.
(2) Select active ingredients that are instrumental for the Company's market expansion and that have great market
potential from soon-to-expire patents and be the first to start planning for those ingredients worldwide. The Company
is determined to become the leader in exploring the market of such active ingredients in their post -patent period.
(3) Research, develop and launch differentiated formulations with the guidance of the pain points of end markets
around the globe. This type of programs have seen considerable success on many target markets. The Company has
summarized the methodology from the practice and paid full efforts in implementing the methodology.
The Company's business covers the world, with five manufacturing bases in Wei Fang, Qingdao (Shandong Province,
China), Pingluo (Ningxia Province, China), Argentina and Spain. The Company has set up over 80 subsidiaries overseas
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Annual Report 2022 To be a Global Leading Crop Protection Company
with its businesses in over 80 countries. With strong global registration competence, the Company is expanding its
global marketing network at high speed.
According to the Company’s medium-term strategic plan (updated in 2022), in terms of the construction of “Fast
Market Access Platform”, the Company will complete the preliminary stage of the project in all major markets except
the United States, Canada and Japan by 2024. In addition, the Company will complete the project in all major
markets between 2025 and 2029 to achieve the construction of "Fast Market Access Platform". In terms of running
self-branded business-to-customer by setting up local teams, the Company will implement this plan in no less than 25
new target countries by the end of 2024.
advantages of "light structure, and fast response".
The Company has built a complete industrial chain involving research and development of active ingredients,
manufacturing, branding towards the global market, trading channels, sales and services from the factory to the farm.
The Company also has a thorough understanding of the whole industrial chain and can make values in each section. By
leveraging its own productivity, strong supply chain in China and a global marketing network, the Company responds
to changes on the supply side, cost side and global market rapidly, which features as "light structure, and fast
response". It originates from China and serves the world.
The global marketing network enables the Company to gain insights in the market dynamics and advert risks of blind
investment in R&D and manufacturing side.
The global vision, international professional team and its core values of "Open and Inclusive, Together We Win" also
help the Company successfully integrate the upstream side and downstream side of the global industrial chain as well
as to grow rapidly in the capital market.
IV. Analysis on main businesses
Rainbow’s present medium-term strategic plan (2020-2024) was drawn under the guiding principle of “Persisting in
doing the difficult but correct work, moving towards the forefront of industrial value chain, and building a complete
industrial chain”. On basis of this medium-term strategic plan, the Company will continue focusing on R&D and
innovation-backed advanced manufacturing and improving the global marketing network. Following is the summary of
progresses made in these two aspects in this year.
I. R&D and innovation-backed advanced manufacturing
experienced professionals. 42 new employees were added to the technology team, among which 5 are top-notch
experts. The overall R&D capability was improved. Meanwhile, with a wide expertise network build through years in
the international market and an international vision, the Company has actively integrated top experts in segmented
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Annual Report 2022 To be a Global Leading Crop Protection Company
domains and further improved R&D processes. So far, the Company has preliminarily built an international technology
team with top expertise and a science-based, rigorous, effective and systematic work flow which provides strong
support o successful construction and stable operation of programs in the Company planning.
advantages in sharp market sensitivity and full transparent industrial chain, the Company has selected systematic,
rigorous and targeted products for medium-term product planning. In terms of manufacturing active ingredients,
important active ingredients with expired patents or with soon-to-expire patents were in the process of being handled
by different project teams in steady progress.
optimized processing technologies of manufacturing important active ingredients based on goals of automation,
continuous and environmental protection to make the processing more refined and chemical-based. So far, a first-of-
its-kind full-process continuous green processing chain for an active ingredient built in China has been put into
operation. A project for full-chain continuity transformation of an active ingredient is in the preproduction stage. Two
projects for full-chain continuity transformation of active ingredients have been completed and are ready for
implementation. Two active ingredients are expected to complete development in the second half of 2023 and get
ready for implementation in 2024. One active ingredient is expected to complete development in the second half of
The successful execution and stable operation of each project in the medium-term strategic planning will gradually
improve the whole industrial chain of Rainbow and provide strong support to the expansion of the global market.
II. Improving the Global Marketing Network
domestic universities and colleges, social recruitment and local recruitment in different countries. Especially after
enhancing recruitment of local staff in foreign countries, the set-up and management of international teams has
become more systematic and mature. With more young staff joining the team, the Company has further enriched and
optimized the marketing and registration training scheme and serial training materials. It has successfully organized 4 -
month Xinfei Young Training for new staff recruited at universities and colleges and an annual 1-week intelligence
training camp for on-the-job staff, which achieved the goal of improving unity, sharing lessons learned at work and
educating methodologies of success.
outbound. While deepening the business in existing target markets, the team has continuously expanded new market
and accelerated construction of the global marketing network.
(1) Completed in-depth research on Poland, Belarus, Azerbaijan, Armenia, Iraq, Iran, Oman, Saudi Arabia, the United
Arab Emirates, Jordan, Burkina Faso and Senegal, Rwanda, Burundi, Namibia, Botswana, Mozambique, Algeria and
other markets;
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Annual Report 2022 To be a Global Leading Crop Protection Company
(2) Just established wholly-owned or joint venture subsidiaries or offices in Russia, Kazakhstan, Rwanda, Angola,
Botswana, Iraq, etc.;
(3) Set up local teams in Brazil, Argentina, Mexico, Ecuador, Peru, Dominica, Russia, Kazakhstan, Indonesia, the
Philippines, Thailand, Cote d 'Ivoire, Nigeria, Rwanda, Angola, Iran and other countries, self-built or joint venture, and
started building TO C channels to boost the sales performance of the brand.
(4) Acquired Sarabia of Spain to accelerate its investment and business growth in the EU market;
efforts and accelerates the global registration layout.
(1) Expanded the global registration team rapidly, from 119 team members in 2021 to 169 at present.
(2) Continuously increased input in global registration, with a year-on-year increase of about RMB 36 million for the
first half of 2022 in global registration fees.
(3) Adopted flexible payment method in purchase of registration: To accelerate registration and access to important
markets, the Company has acquired 131 EU registrations through the acquisition of Sarabia.
(4) Acquired 137 new registrations in countries such as Serbia, Egypt, Mali, Cote d 'Ivoire, Tanzania and Uzbekistan in
Malawi, Botswana, Namibia, Togo, Benin, Azerbaijan, Chile, and Japan; invested more resources in existing regist ered
countries and obtained more registrations, to enrich the product portfolio and meet demands in different countries.
(5) As of December 31, 2022, the Company has over 300 registration items in China and over 4,900 registration items
overseas.
The Company is accelerating the construction of global marketing network comprehensively and orderly according to
the mid-term strategic planning.
III. Analysis of the Company's Annual Operations
Each task has been implemented and completed according to the medium-term strategic plan and annual work plan,
but looking forward, there are still obvious gap in the Company capacity.
according to the medium-term strategic plan and annual work plan. Both the progress and quality of each key task
meet the expectation.
major changes in the market, effectively reduce and control operational risks to achieve good business performance.
made in deepening the market end and optimizing the business model.
capability for the advanced manufacturing of important active ingredients supported by R&D and innovation, the
globalized operation capability based on an adapted management system and the capability to build an excellent end -
to-end process system in line with Rainbow Agrosciences' business, and guarantee the implementation of processes.
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Annual Report 2022 To be a Global Leading Crop Protection Company
(1) Composition of operating incomes
Overall operating incomes
Unit: RMB
increase or
Proportion in Proportion in
Amount Amount decrease
operating incomes operating incomes
Total operating
incomes
Industry
Chemical Industry 14,460,175,154.41 100.00% 9,797,107,551.38 100.00% 47.60%
By products
Major product-
Herbicide
Major product-
Insecticide
Major product-
Fungicide
Major product-
Other
Other 136,549,338.29 0.94% 116,513,471.78 1.19% 17.20%
By regions
Foreign 14,161,700,842.29 97.94% 9,488,826,098.84 96.85% 49.25%
Domestic 298,474,312.12 2.06% 308,281,452.54 3.15% -3.18%
Distribution mode
Direct sales 14,460,175,154.41 100.00% 9,797,107,551.38 100.00% 47.60%
Unit: RMB
Year-on-year increase Notes on significant
or decrease changes
Mainly caused by
increase in payroll and
Sales expenses 292,303,865.92 219,514,455.26 33.16% insurance premiums
during the reporting
period
Mainly caused by
increase in payroll and
Management expenses 369,515,096.10 293,698,852.81 25.81% dividend payment
during the reporting
period
Mainly caused by
increase in exchange
gains due to
Financial expenses -345,422,688.78 95,665,159.54 -461.07%
fluctuations of
exchange rates during
the reporting period
R&D expenditures 335,089,330.53 312,438,469.66 7.25%
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Annual Report 2022 To be a Global Leading Crop Protection Company
Unit: RMB
Year-on-year increase or
Item 2022 2021
decrease
Subtotal of cash inflow in
business activities
Subtotal of cash outflow in
business activities
Net cash flow from operating
activities
Subtotal of cash inflow in
investment activities
Subtotal of cash outflow in
investment activities
Net cash flow in investment
-867,309,807.94 -579,730,911.79 -49.61%
activities
Subtotal of cash inflow in
financing activities
Subtotal of cash outflow in
financing activities
Net cash flow from financing
-465,334,189.42 1,121,674,993.60 -141.49%
activities
Net increase in cash and cash
equivalents
Explanation of the main reasons of significant changes in statistics compared with the same period last year
? Applicable ? Not applicable
(1) Cash inflow from operating activities increased by 42.14% over the previous year, which was mainly caused by
increase in collected payments due to year-on-year revenue growth during the reporting period
(2) Cash outflow from operating activities increased by 39.53% compared with the previous year, which was mainly
caused by the year-on-year increase of main business cost due to increased payments for purchasing larger quantities
of raw materials in the reporting period.
(3) Cash outflow from investment activities increased by 37.66% compared with the previous year, which was mainly
caused by the merger with Ningxia Hanrun Biotechnology Co., Ltd and Exclusivas Sarabia, S.A. and impairment of
financial assets measured at fair value with changes recognized in profit and loss.
(4) Cash inflows from financing activities decreased by 67.18% compared with the previous year, which was mainly
caused by a decline in investment funds received and loans obtained during the reporting period.
V. Non-major Businesses
? Applicable ? Not applicable
Unit: RMB
Proportion of total Whether it is
Amount Causes
profits sustainable
Mainly due to
investment loss
Investment returns -259,460,460.87 -14.80% resulting from disposal No
of financial assets held
for trading
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Annual Report 2022 To be a Global Leading Crop Protection Company
Mainly due to changes
Profits and losses of in fair values of
-171,103,311.09 -9.76% No
changes in fair values financial assets held
for trading
Mainly due to increase
in impairment of fixed
Asset Impairment -6,825,463.24 -0.39% assets and on-going No
projects during the
reporting period
Mainly due to incomes
Non-operating income 6,419,294.11 0.37% from scrapping non- No
current assets
Mainly due to losses
Non-operating
expenses
current assets
Mainly due to the
Credit impairment -56,341,452.37 -3.21% accounts receivable No
credit impairment loss
VI. Analysis on Assets and Debts
Unit: RMB
End of 2022 Beginning of 2022 Increase/Decre Notes on
ase in significant
Proportion in Proportion in proportion changes
Amount Amount
total assets total assets
Monetary
funds
Mainly due to
year-on-year
revenue
growth during
Accounts the reporting
receivable period brought
by the increase
in accounts
receivable from
customers
Contracted
assets
Inventory 1,657,230,533.12 14.29% 1,775,113,092.67 17.21% -2.92%
Investment real
estate
Long-term
equity 1,669,386.12 0.01% 1,810,538.69 0.02% -0.01%
investment
Mainly caused
by transfer of
projects in
progress after
Fixed assets 1,691,830,176.47 14.59% 1,218,635,770.03 11.82% 2.77%
completion
during the
reporting
period
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Annual Report 2022 To be a Global Leading Crop Protection Company
Construction in
progress
Assets with
rights of use
Short-term
loan
Contract
liability
Long-term loan 17,176,777.87 0.15% 25,555,537.87 0.25% -0.10%
Lease liability 8,595,962.05 0.07% 13,312,230.04 0.13% -0.06%
Overseas assets account for a relatively high proportion
? Applicable ? Not applicable
? Applicable ? Not applicable
Unit: RMB ten thousand
Changes of Changes in
gain or loss accumulati Impairmen Purchase Sales
in fair ve fair t accrued amount amount
Opening Other Ending
Item values values that during the during the during the
balance changes Balance
during the are reporting reporting reporting
reporting counted period period period
period into equity
Financial assets
financial
assets
(derivative 20,000.00 854.27 20,000.00 854.27
financial
assets
excluded)
financial 4,892.23 -4,892.23
assets
The above
total
Financial
debts
VII. Vision of Future Development
(I) Rainbow’s present medium-term strategic plan(2020-2024) was drawn under the guiding principle of “Persisting in
doing the difficult but correct work, moving towards the forefront of industrial value chain, and building a complete
industrial chain”. On basis of this medium-term strategic plan, the Company will continue focusing on R&D and
innovation-backed advanced manufacturing and improving the global marketing network. Work progresses the
Company has made in these two aspects in 2022 have been described in detailed in the section of analysis on major
businesses above, which will not be repeated here. The implementation plan of the Company's mid-term strategic
plan and the important work in 2023 about these two aspects are summarized as follows:
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Annual Report 2022 To be a Global Leading Crop Protection Company
In terms of R&D and innovation-backed advanced manufacturing, the Company plans to complete advanced
manufacturing of important active ingredients towards the goals of automation, continuity and environmental
protection during the medium-term strategic planning stage (by the end of 2024). For important active ingredients
whose patent period is about to expire, preliminary preparation is carried out actively to achieve successfully
advanced manufacturing during 2025-2029.
In terms of improving the global marketing network, the Company plans to complete preliminary construction of “Fast
market entry platform”， in all major markets on the globe except the United States, Canada and Japan during the
medium-term strategic planning stage (by the end of 2024) and will complete the construction of “fast market entry
platform” in all major markets on the globe between 2025 and 2029. In terms of running self-branded business-to-
customerby setting up local teams, the Company will implement this plan in no less than 25 new target countries by
the end of 2024.
(1) Continuously intensify the training of core team members' capabilities and values, enforce the qualification
standards for core members to take office, take serious measures for the publicity and practice of core values, and
guarantee that all core members want to "fight", be able to "fight" and win the "fight".
(2) Actively promote process change projects within the Company in collaboration with management consulting
companies, build a complete set of excellent end-to-end process operation system and management system in line
with Rainbow's business to guarantee the execution of processes and the enforcement of the planning for process
construction.
(3) Build such a management system that adapts to the global operation, facilitate the launch of the global SAPERP
project, improve the capability of global operation, and ensure efficient operation, safe operation and stable
development.
(4) Thoroughly understand the information of the whole industrial chain from factory to farm, respond quickly, make
accurate decisions, establish and effectively operate the procurement-and-sale collaborative mechanism with the
characteristics of Rainbow.
(5) Successfully enforce the established advanced manufacturing project of important active ingredients on schedule.
(6) Accelerate business development in more markets, build Model C/C+ in more markets and make them grow fast,
and further improve the global marketing network.
(7) Finish the enforcement of the registration plan in each target country and achieve order-based management
throughout the registration process.
(8) Continuously optimize and efficiently run the delivery system to ensure the fast and timely delivery of ordered
products with high quality.
(1) The global market demand for crop protection products will remain strong: The food security concerns and the
demand for biofuel recovery resulting from the on-going global COVID-19 pandemic and Russia-Ukraine conflict and
the weather-related agricultural supply problems, have boosted the global demand for bulk agricultural products.
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Annual Report 2022 To be a Global Leading Crop Protection Company
High bulk agricultural product prices and good yields for growers have led growers to expand acreage and increase
agricultural inputs, leading to strong global demand for crop protection products as a whole.
(2) There will be a distinct phase of oversupply of global crop protection products: After the third quarter of 2022,
with the delivery of most of the over-ordered goods and the continuous expansion of the production capacity of
suppliers, the relationship between supply and demand changed suddenly and a period of oversupply began, and the
price of crop protection began to decline, which further led to the hesitation, delay and destocking of buyers. This
aggravated the situation, resulting in the continuous decline of crop protection prices wit h heavy downward pressure.
(3) The overall performance of the crop protection industry will decline before picking up: Affected by the distinct
phase of oversupply and destocking in major markets, the crop protection industry will show a decline in busines s
performance. After the destocking in all markets is basically over, the industry will benefit from the higher price of
bulk agricultural products and the overall stronger demand of growers for crop protection products. It is highly likely
that the overall performance of the crop protection industry will be better in the second half of the year than in the
first half of the year.
II. Potential Risks the Company may Face
The Company is categorized into the sub-industry of manufacturing of chemical pesticides under the manufacturing of
chemical raw materials and chemical products. Waste water, waste gas and waste residue will be produced during
production and operation, which requires comparatively high environmental protection. Along with the full
enforcement of the national strategy for sustainable development, the environmental protection policy has become
increasingly strict, and the goal of environmental pollution management has been increasingly raised. The Company
will further intensify its investment in environmental protection, insist on source control, launch digital transformation
of production, and endeavor to control environmental protection risks within a reasonable range.
Counter-measures: The Company will strictly comply with the requirements of relevant laws and regulations on
environmental protection to fulfill the corresponding examination and approval procedures on environmental
protection, enhance relevant pollution treatment facilities, cut down pollutant emissions to a further extent, and
guarantee that the Company's operations conform to relevant environmental requirements. Apart from that, the
Company will increase the research on green technology, apply cleaner production to practice, and continuously
decrease the generated waste and pollutants by use of clean energy, technologies and equipment with high resource
utilization rate and low pollutant discharge, as well as comprehensive utilization technology of waste and harmless
treatment technology of pollutants.
Some raw materials, semi-finished products and finished products of the Company are flammable, explosive, corrosive
or toxic substances, and the production process is made up of high-temperature and high-pressure processes, raising
relatively high requirements for equipment security and appropriateness of manual operation. There exist the risks of
accidents and security incidents as a result of imperfect equipment and technology, improper storage and operation
of goods. The Company has been devoted to enhancing the process routes all along, increasing the degree of
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Annual Report 2022 To be a Global Leading Crop Protection Company
automation control in the process of production, reinforcing management and raising the security awareness of
employees.
Counter-measures: The Company will continue to launch special rectification actions for safety production, perfect the
double prevention mechanism, increase investment in the management of safety production, reinforce the
maintenance of security equipment and facilities, enhance on-site management and security education and training
for employees, build and perfect a variety of security management systems, and control and prevent accidents in an
effective manner.
The Company principally sells its products to the international market, and the exporters in the reporting period
principally cover Argentina, Brazil, Australia, the United States, Thailand, and the like. Since the requirements for
environmental protection in various countries have become increasingly stringent, the major importers of pesticides
on a global scale may take increasingly stringent control measures for the import and use of pesticide products,
including raising the standards for product registration and restricting the import of highly toxic and residual pesticide
varieties, and the like. As a major exporter of pesticide products in the world, China's trade protection measures such
as anti-dumping investigation against China's exported pesticide products will also be adopted from time to time,
leaving a certain adverse influence on the export of domestic manufacturers of pesticides.
Counter-measures: The Company will carry out more information collection and analysis of foreign markets, and
actively keep track of the policy trends of relevant countries and markets. Apart from that, the Company will
continuously raise the level of technology and process, expedite the construction of “Fast Market Access Platform”,
actively probe into the commercial operation mode of brands and channels on the basis of the platform, exploit the
global market to a further extent, and low and disperse the risks of relevant policy changes as well.
Since the second half of 2008, the Company has begun to study and plan the improvement and upgrading of the
Company's sales model and development route, gradually building a sales model integrating the traditional export
model of pesticide products with the overseas independent registration model of pesticide products. By the end of
this reporting period, the Company was in possession of more than 4900 overseas registration certificates for
pesticide products. To register pesticide products independently in various countries, a lot of investment is needed in
product research and development, product experiment, registration, etc. However, resulting from various uncertain
factors such as economic environment and market demand, the Company find it unable to guarantee that all
investment in the registration of overseas pesticide products can attain the expected results in a short period of time.
Counter-measures: In light of the medium-and long-term strategic plan, the Company will launch profound research in
the target country, learn about crops, diseases, pests and terminal medication habits, dig deep into the pain points of
the market, and work out a targeted product registration plan in the target country, including the best -selling
products in the target country, the improved and differentiated new preparations of registered crops, and the like.
After the product registration plan is prepared, the team of the target country will decode the key tasks level by level
to guarantee that the important value in the important market is accurately registered and first acquired, and plan the
market entry strategy six months ahead of the registering expected acquisition time to fulfill commercialization.
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Annual Report 2022 To be a Global Leading Crop Protection Company
The Company's export sales revenue of products makes up a large proportion of the primary business revenue in the
corresponding period, and the payment for export sales of products is mostly priced and settled in USD. Thus, the
change of exchange rate will leave a certain influence on the Company's profit by changing the Company's product
price. Besides, changes in exchange rate will also exert a certain influence on the value of foreign currency assets held
by the Company. Thanks to the expanded scale of the Company's overseas market development, the export sales
revenue will increase to a further degree. If the exchange rate fluctuates greatly in future, it will impose a certain
influence on the Company's performance. The Company will intensify the Company's research on the policies for
international trade and exchange rate. At the same time, it will also strengthen the research on the rules of foreign
exchange fluctuations, timely carry out foreign exchange forward settlement business, and lock in exchange rate
fluctuations.
Counter-measures: The Company will put a high premium on the control of exchange rate risks, and hedge and evade
exchange rate risks by various means while guaranteeing security and liquidity. For the risk exposure of exchange
rates, the Company will actively make use of financial hedging instruments, for example hedging, and reasonably
control the risks without taking speculation as the purpose.
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Annual Report 2022 To be a Global Leading Crop Protection Company
Section III. Company Governance
I. Information of Directors, Supervisors and Senior Management
Number
of Number Number
Number Reasons
shares of shares of shares Other
of shares for
held at increased reduced increases
Term start Termination held at increase
Name Position Status Gender Age the in the in the or
date date the end of or
beginnin current current decreases
the period decrease
g of the period period (shares)
(shares) of shares
period (shares) (shares)
(shares)
Friday, Monday,
Wicky Currently
Chairman Male 52 September September 8, 0 0 0 0 0 N/A
Wang in office
Friday, Monday,
Sun Currently
Director Male 51 September September 8, 0 0 0 0 0 N/A
Guoqing in office
Director Friday, Monday,
Qiu Currently
and Vice Female 54 September September 8, 0 0 0 0 0 N/A
Hongbing in office
President 9, 2022 2025
Friday, Monday,
Deputy Currently
Li Xueshi Male 66 September September 8, 0 0 0 0 0 N/A
Chairman in office
Director Friday, Monday,
Yuan Currently
and Vice Male 52 September September 8, 0 0 0 0 0 N/A
Liangguo in office
President 9, 2022 2025
Director Friday, Monday,
Liu Currently
and Vice Male 52 September September 8, 0 0 0 0 0 N/A
Yuanqiang in office
President 9, 2022 2025
Friday, Monday,
Huang Independe Currently
Male 55 September September 8, 0 0 0 0 0 N/A
Fangliang nt director in office
Friday, Monday,
Meng Independe Currently
Male 50 September September 8, 0 0 0 0 0 N/A
Qingqiang nt director in office
Friday, Monday,
Niu Independe Currently
Male 51 September September 8, 0 0 0 0 0 N/A
Hongjun nt director in office
Chairman
Friday, Monday,
Sun of the Currently
Male 69 September September 8, 0 0 0 0 0 N/A
Jianguo Board of in office
Supervisors
Friday, Monday,
Hou Currently
Supervisor Male 48 September September 8, 0 0 0 0 0 N/A
Juzhen in office
Friday, Monday,
Currently
Cai Huan Supervisor Female 40 September September 8, 0 0 0 0 0 N/A
in office
The
equity
Friday, Monday, incentive
Currently
Shen Jie President Female 48 September September 8, 0 0 0 39,920 39,920 plan
in office
Restricted
Shares II
Chief Friday, Monday, The
Xing Currently
Financial Male 42 September September 8, 0 0 0 33,780 33,780 equity
Bingpeng in office
Officer and 9, 2022 2025 incentive
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Annual Report 2022 To be a Global Leading Crop Protection Company
Secretary plan
of the grants
Board of Restricted
Directors Shares II
Total -- -- -- -- -- -- 0 0 0 73,700 73,700 --
I. Whether there were outgoing directors, supervisors and senior management during the reporting period
? Yes ? No
Changes of directors, supervisors and senior management
? Applicable ? Not applicable
Professional background, chief work experience and chief responsibilities of current directors, supervisors and senior
management in the Company
(1) Members of the Board of Directors
Wicky Wang: Male, Chinese nationality, born in 1971, without permanent right of abode overseas, bachelor's degree,
graduated from the major of Fine Chemical Engineering, East China University of Science and Technology. From 1994
to 2000: served as Director, Assistant General Manager and General Manager of Shandong LVYE Workshop; From
for overseas market development as one of the chief founders of the Company; Currently the Chairman of the
Company.
Sun Guoqing: Male, Chinese nationality, born in 1972, without permanent right of abode overseas, bachelor's degree,
graduated from the major of Organic Chemical Engineering, East China University of Science and Technology, and a
senior engineer. From 1995 to 2000: served as Project Manager of R&D Department, Deputy Manager of Production
Department and Manager of Technical Department of Shandong LVYE; From 2001 to 2007: served as the Director and
General Manager of Shandong Rainbow; In 2005, founded the Company as one of the chief founders of the Company
and served as the chairman; currently a director of the Company.
Qiu Hongbing: Female, Chinese nationality, born in 1969, without permanent right of abode overseas, bachelor's
degree, graduated from the major of Fine Chemical Engineering, East China University of Science and Technology, and
an engineer. From 1993 to 1998: served as the Supervisor and Deputy Manager of Shandong LVYE Additives Co., Ltd.;
From 1998 to 2001: served as Manager of Shandong LVYE Department; From 2001 to 2005: served as the Director and
Deputy General Manager of Shandong Rainbow; In 2005: founded the Company as one of the chief founders and
served as Deputy General Manager; Currently the Director and Vice President of the Company.
Li Xueshi: Male, Chinese nationality, born in 1957, without permanent right of abode overseas, Senior Economist,
MBA from School of Management, University at Buffalo(The State University of New York), graduated from the major
of Management Engineering, China University of Petroleum with a bachelor's degree. From 1987 to 1989: serviced as
a lecturer of East China Petroleum Institute; From 1989 to 1999: served as the Chairman of Shandong LVYE; From
served as a Director; Currently the Vice Chairman of the Company.
Yuan Liangguo: male, Chinese nationality, born in 1971, without permanent right of abode overseas, MBA of Beijing
Jiaotong University, engineer, graduated from the major of Applied Chemistry, Shanghai Jiao Tong University with a
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Annual Report 2022 To be a Global Leading Crop Protection Company
bachelor's degree. From 1997 to 2000: director of Shandong LVYE Workshop; From 2001 to 2007: served as the
Director and Deputy General Manager of Shandong Rainbow; In 2005: joined the Company and served as Deputy
General Manager; Currently Director and Vice President of the Company.
Liu Yuanqiang: Male, Chinese nationality, born in 1971, without permanent right of abode overseas, bachelor's degree,
graduated from Shandong University in major of Chemistry, and an engineer From 1994 to 2001: the Manager of
Quality Supervision Department of Shandong LVYE; From 2001 to 2007: served as the Director and Deputy General
Manager of Shandong Rainbow Chemical Co., Ltd.; In 2005: joined the Company and served as Deputy General
Manager; Currently the Director and Vice President of the Company.
Huang Fangliang: Male, Chinese nationality, born in 1968, without permanent right of abode overseas, P h.D. in
Economics, Fudan University. From 1991 to 1999: served as a teacher of Foreign Languages Department of Shandong
Polytechnic University; From 1997 to 2007, served as Senior Project Manager, Assistant General Manager and
Executive Director of investment bank headquarters of Tiantong Securities Co., Ltd.; From 2006 to 2012: served as an
Associate Professor at the School of Finance, Shandong University of Finance and Economics; Since 2012: remained a
professor at School of Finance, Shandong University of Finance and Economics, Director of Capital Management
Institute, and an independent Director of the Company. He also serves as an independent director of Shandong
Sublime China Information Co., Ltd., Mokingran Jewelry Group Co., Ltd., Shandong Denghai Seeds Co., Ltd., and
Shandong Link Science and Technology Co., Ltd..
Meng Qingqiang: Male, Chinese nationality, born in 1973, without permanent right of abode overseas, bachelor's
degree, graduated from Shandong University with major in law. From 2001 to 2002: served as an intern lawyer of
Shandong Dongjian Law Firm; From 2002 to 2004: served as a lawyer of Shandong Anbaihe Law Firm; From 2004 to
Beijing Deheng (Jinan) Law Offices and an independent Director of the Company.
Niu Hongjun: Male, Chinese nationality, born in 1972, without permanent right of abode overseas, Ph.D. in
Management from Renmin University of China, Tutor of master students. From 1995 to 2005: a lecturer at the School
of Economics and Management, Shijiazhuang Tiedao University; From 2005 to 2008: studied for a doctorate in
Management at the Business School of Renmin University of China; Since 2008: remained a lecturer at the Busines s
School of Beijing Technology and Business University and an independent Director of the Company. He also serves as
the supervisor of Huayao Derui (Beijing) Management Consulting Co., Ltd., and the independent director of Shenzhen
Tongye Technology Co., Ltd.
(2) Members of the Board of Supervisors
Sun Jianguo: Male, Chinese nationality, born in 1954, without permanent right of abode overseas, Master of
Management, University of Science and Technology of China, senior economist. From 1981 to 1985: served as Deputy
Secretary of the Youth League Committee of Lixia District, Jinan; From 1985 to 1987: served as Minister of Propaganda
Department of Lixia District Committee of Jinan; From 1987 to 1996: served as Deputy Head of Lixia District People's
Government of Jinan; From 1996 to 1998: served as Deputy Director of Construction Committee of Jinan City; From
and served as a Director; Currently the Chairman of the Board of Supervisors of the Company.
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Annual Report 2022 To be a Global Leading Crop Protection Company
Cai Huan: Female, Han, born on November 18, 1983, Chinese nationality, with no right of abode overseas. In July,
and served as the Purchaser of Shandong Weifang Rainbow Chemical CO., Ltd.; Since February 2022: remained as the
supervisor of Ningxia Hanrun Biotechnology Co., Ltd.
Hou Juzhen, male, Han, born on February 17, 1975, Chinese nationality, with no right of abode overseas. In July, 1997:
graduated from Shandong University of Finance and Economics with a college degree. From September 1997 to
November 2000: served as the Cashier of Shandong Vicome Greenland Chemical Co., Ltd.; From December 20 00 to
July 2007: served as the Financial Manager of Shandong Rainbow Chemical Co., Ltd.; From October 2005 to February
of Shandong Shuimu Qinghua Ecological Technology Co., Ltd. Currently a Supervisor of the Company.
(3) Senior management
Shen Jie: Female, Chinese nationality, born in 1975, without permanent right of abode overseas, bachelor's degree,
graduated from the major of International Enterprise Management, Qingdao University, international business
engineer, human resource manager. From 1997 to 1999: served as an outreach member of Shandong Council for the
Promotion of International Trade; From 1999 to 2001: served as Assistant to the Marketing Director of Dong-E-E-Jiao
Group; from 2001 to 2003: served as the Office Director of SD. EMEDCHINA CN; From 2003 to 2007: served as
Manager of Human Resource Department of Rainbow and Deputy General Manager; In 2005: joined the Company and
served as Deputy General Manager; Currently the President of the Company.
Qiu Hongbing: Refer to the introduction to directors.
Yuan Liangguo: Refer to the introduction to directors.
Liu Yuanqiang: Refer to the introduction to directors.
Xing Bingpeng: Male, Chinese nationality, born in 1981, without permanent right of abode overseas, bachelor's degree,
graduated from the major of Financial Management, Shandong University of Finance and Economics, and a senior
accountant; From 2004 to 2005: worked as a Cashier of Shandong Tongji Technology Development Co., Ltd.; From
Currently the Chief Financial Officer and Secretary of the Board of Directors of the Company.
Decision-making procedures, basis for determination and actual payment of remuneration of directors, supervisors
and senior executives
Decision-making procedures: the remuneration of the Company's directors and supervisors shall be decided by the
Board of Shareholders, and the remuneration of senior executives shall be decided by the Board of Directors; The
remuneration of the directors, supervisors and senior executives who work in the Company shall be paid by the
Company, and the directors and supervisors, with the exception of independent directors, shall not pay any allowance
separately.
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Annual Report 2022 To be a Global Leading Crop Protection Company
Basis for determination: in accordance with the relevant national laws and regulations as well as the provisions of the
Articles of Association and in consideration of the income level of the industry and region and the Company's profit
level, the remuneration shall be comprehensively subject to the performance of duties and annual performance
assessments of directors, supervisors and senior executives.
Actual payment: the gross remuneration of directors, supervisors and senior executives of the Company for the year
of 2022 was RMB 8.236 million.
Remuneration of directors, supervisors and senior management of the Company during the reporting period
Unit: RMB ten thousand
Get
Total pre-tax remuneration
remuneration from related
Name Position Gender Age Status
received from parties of the
the Company Company or
not
Wicky Wang Chairman Male 52 Currently in office 198.17 No
Sun Guoqing Director Male 51 Currently in office 0 Yes
Director and Vice
Qiu Hongbing Female 54 Currently in office 129.72 No
President
Li Xueshi Deputy Chairman Male 66 Currently in office 0 Yes
Director and Vice
Yuan Liangguo Male 52 Currently in office 99.58 No
President
Director and Vice
Liu Yuanqiang Male 52 Currently in office 100.23 No
President
Huang Independent
Male 55 Currently in office 10 No
Fangliang director
Meng Independent
Male 50 Currently in office 10 No
Qingqiang director
Independent
Niu Hongjun Male 51 Currently in office 10 No
director
Chairman of the
Sun Jianguo Male 69 Currently in office 0 Yes
Board of Supervisors
Cai Huan Supervisor Female 40 Currently in office 16.22 No
Hou Juzhen Supervisor Male 48 Currently in office 0 No
Shen Jie President Female 48 Currently in office 130.04 No
Chief Financial
Officer and
Xing Bingpeng Male 42 Currently in office 119.64 No
Secretary of the
Board of Directors
Total -- -- -- -- 823.6 --
II. Employees of the Company
Number of on-the-job employees in the parent company at
the end of the reporting period (persons)
Number of on-the-job employees of major subsidiaries at the
end of the reporting period (persons)
Total number of on-the-job employees at the end of the 3,715
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Annual Report 2022 To be a Global Leading Crop Protection Company
reporting period (persons)
Total number of employees receiving salary in the current
period (persons)
Number of retired employees (people) borne by the parent
company and its major subsidiaries
Professional composition
Category of professional composition Number of people of professional composition (persons)
Production personnel 2,183
Sales personnel 473
Technical personnel 509
Financial personnel 115
Administrative personnel 180
Integrated management personnel 255
Total 3,715
Education
Education Category Quantity (persons)
Doctor 5
Master 303
Undergraduate 1,057
Junior college 882
Below junior college 1,468
Total 3,715
III. The Company's profit distribution and conversion of capital reserve fund into share capital
Preparation, enforcement or adjustment of profit distribution policy, particularly the policy for cash dividend within the reporting
period
? Applicable ? Not applicable
During the reporting period, the Company strictly implemented the relevant provisions of the cash dividend policy and
implemented the 2021 equity distribution plan: based on the total share capital of 276,180,000 shares as of December
cash distribution of RMB 230,057,940. The remaining undistributed profits are carried forward to the next year.
Special notes about the policy for cash dividend
Whether it is in line with the requirements of the Articles of
Yes
Association or the resolutions of the Board of Shareholders:
Whether the dividend standard and proportion are clear: Yes
Whether relevant decision-making procedures and
Yes
mechanisms are complete:
Whether the independent directors fulfill their duties
Yes
responsibly and play their due roles;
Whether the minority shareholders are provided with the
opportunity to fully voice their opinions and demands, and Yes
whether their legitimate rights and interests have been fully
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Annual Report 2022 To be a Global Leading Crop Protection Company
protected:
Whether the conditions and procedures are compliant and
transparent if the policy for cash dividend is adjusted or Not applicable
changed:
The Company's profit distribution plan and the plan of conversion of capital reserve into share capital within the reporting period
are in conformity with relevant provisions of the Company's Articles of Association.
Profit distribution and conversion of capital reserve into share capital in current year
Bonus shares per 10 shares (shares) 0
Dividends per 10 shares (RMB) (tax-inclusive) 16.30
Transferred shares per 10 shares (shares) 0
Share capital base of the distribution plan (shares) 277,115,744
Cash dividend amount (RMB) (tax-inclusive) 451,698,662.72
Amount of cash dividends in other ways (such as share
repurchase) (RMB)
Total cash dividends (including other ways) (RMB) 451,698,662.72
Distributable profit (RMB) 2,189,570,288.45
Proportion of total cash dividends (including other ways) in
total distributable profit
Details of the cash dividends distribution
If the development phase of the Company is in the growth phase and there exist material capital expenditure arrangements,
when making profit distribution, the proportion of cash dividends in this profit distribution shall be at least 20%
Details of the plan for profit distribution or capital reserve converted into share capital
Based on the total share capital of 277,115,744 shares, a cash dividend of RMB 16.30 (tax inclusive) is distributed to all
shareholders for every 10 shares, and the remaining undistributed profits are carried forward to the next year. Except for the
above-mentioned cash dividend distribution, no share dividend is distributed this time, and there is no conversion of capital
reserve into share capital.
IV. Implementation of the Company's equity incentive plan, employee stock ownership plan or
other employee incentive measures
? Applicable ? Not applicable
On October 14, 2021, the Company held the 25th meeting of the third Board of Directors, deliberated and approved
the Proposal on the Company's Incentive Plan (Draft) for Restricted Shares (2021) and Its Abstract, the Proposal on
Measures for the Administration of Implementation Assessment of the Company's Incentive Plan for Restricted Shares
(2021), as well as other proposals. As the Company revised part of relevant contents in the original draft of incentive
plan, on October 20, 2021, the Company held the 26th meeting of the third Board of Directors of the Company, which
deliberated and approved the Proposal on the Company's Incentive Plan (Revised Draft) for Restricted Sh ares (2021)
and Its Abstract, the Proposal on Measures for the Administration of Implementation Assessment of the Company's
Incentive Plan for Restricted Shares (2021) (Revised Draft), as well as other proposals. On November 1, 2021, the
Company held the 7th extraordinary shareholders' meeting of 2021, which deliberated and approved the Proposal on
the Company's Incentive Plan (Revised Draft) for Restricted Shares (2021) and Its Abstract, the Proposal on Measures
for the Administration of Implementation Assessment of the Company's Incentive Plan for Restricted Shares (2021)
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Annual Report 2022 To be a Global Leading Crop Protection Company
(Revised Draft), and the Proposal on Requesting the Shareholders' Meeting to Authorize the Board of Directors to
Handle Matters Associated with Equity Incentives, as well as other proposals.
On November 3, 2021, the Company held the 28th meeting of the third Board of Directors, deliberated and approved
the Proposal on Granting Restricted Shares to Incentive Objects for the First Time, consenting to grant 4.9319 million
Restricted Shares II to 153 eligible incentive objects at the price of RMB 25.06/share on November 3, 2021 as the first
grant date.
On October 27, 2022, the Company held the 3rd meeting of the 4th Board of Directors and the 3rd meeting of the 4th
Board of Supervisors. They deliberated and adopted the Proposal to Grant Reserved Restricted Stock to the Target
Employees of the Incentive, the Proposal on the Adjustment of the Price of the Initial Grant of Restricted Stock in 2021
Incentive Plan, the Proposal to Void Some of the Restricted Stock That Has Granted and Not Yet Vested, and the
Proposal on the Performance Objectives to Be Achieved to Meet the Vesting Condition for the First Vesting Period of
the Initial Grant of the Company's 2021 Restricted Stock Incentive Plan. The Board of Directors agreed to reserve
RMB 24.227/share (25.06-0.833) due to the Company's 2021 equity distribution. It agreed to cancel the restricted
shares that have been granted but have not been vested to the target employees who have left the Company or failed
the performance assessment, and the number of canceled shares is 211,116. It agreed that the Company shall handle
matters related to the vesting of the first vesting period of the initial grant in accordance with the relevant provisions
of the 2021 Restricted Stock Incentive Plan. As of November 2, 2022, 146 employees have deposited their vested
funds into the RMB account opened by the Company in Weifang Branch of Industrial and Commercial Bank of China,
with a total amount of RMB 22,670,360.71. On November 3, 2022, Shangkuai Certified Public Accountants (Special
General Partnership) issued the capital verification report (SKSBZ (2022) No. 10496), which examined the contribution
of the employees that met the vesting conditions in the first vesting period of the initial grant of the Company's 2021
Restricted Stock Incentive Plan. The Company has gone through the registration procedures of the vested restricted
shares in Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. The vested restricted shares h ave
been listed and circulated since November 11, 2022.
Equity incentives granted to directors and senior management during the reporting period
? Applicable □ Not applicable
Unit: Share
Number Number Number
Number Exercise Number
of new Number Number of of newly
of stock price of the Market price Number of
stock Exercisable of shares of stock restricted granted
options shares at the end of of shares Grant price restricted
options shares in exercised options shares restricted
held at exercised the unlocked of restricted shares
Name Position granted the during held at held at shares
the during the reporting in the shares held at
during reporting the the end the within
beginning reporting period current (RMB/share) the end
the period reporting of the beginning the
of the period (RMB/share) period of the
reporting period period of the reporting
year (RMB/share) period
period period period
Shen Jie President 0 0 0 0 0 87.10 199,600 39,920 0 24.227 159,680
Secretary
Xing
of the 0 0 0 0 0 0 87.10 168,900 33,780 0 24.227 135,120
Bingpeng
board,
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Annual Report 2022 To be a Global Leading Crop Protection Company
CFO
Total -- 0 0 0 0 -- 0 -- 368,500 73,700 0 -- 294,800
All restricted shares described in the table above fall into Restricted Shares II.
“Number of restricted shares held at the beginning of the period” refers to the number of Restricted Shares II held at the beginning of
the period
“Number of shares unlocked in the current period” refers to the number of Restricted Shares II vested in the current period. As Shen Jie
Note (if any)
and Xing Bingpeng are senior management personnel, according to relevant laws and regulations, 75% of the total number of shares
they hold every year during their tenure are automatically locked.
“Number of newly granted restricted shares within the reporting period” refers to the number of Restricted Shares II granted but not yet
vested in the current period.
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Annual Report 2022 To be a Global Leading Crop Protection Company
Section IV. Financial Report
I. Audit Report
Type of Audit Opinions Standard unqualified opinion
Signing Date of the Audit Report Friday, March 24, 2023
Shangkuai Certified Public Accountants (Special General
Name of the Audit Institution
Partnership)
Audit Report Reference No. SKSBZ (2023) No. 1899
Name of CPAs Yu Renqiang, Yin Zuoyong
Text of Audit Report
Audit Report
SKSBZ (2023) No. 1899
To all shareholders of Shandong Weifang Rainbow Chemical Co., Ltd.,
I. Audit opinions
We have audited the attached financial statements of Shandong Weifang Rainbow Chemical Co., Ltd. (hereinafter
referred to as “Rainbow”), including the consolidated and company balance sheet as of Saturday, December 31, 2022,
consolidated and company income statements, consolidated and company cash flow statements, consolidated and
company statements of changes in owner’s equity and relevant notes to financial statements of 2022.
In our opinion, the attached financial statements are prepared, in all material respects, in accordance with Accounting
Standards for Business Enterprises, and give a fair view of the consolidated and financial position of Rainbow as of
Saturday, December 31, 2022 and its consolidated operating results and cash flow of 2022.
II. Basis of Opinions
We implemented audit in accordance with stipulations of the Auditing Standards for Chinese Certified Public
Accountants. Our responsibilities under those standards are further explained in the part of "CPA's Responsibilities for
the Audit of the Financial Statements" of this audit report. In accordance with the Code of Ethics for Certified Public
Accountants in China, we are independent of Rainbow and fulfill our other ethical responsibilities. We believe that the
audit evidences which we have acquired are sufficient and appropriate, which offer basis for the provision of audit
opinions.
III. Key Matters to be Audited
Key matters to be audited are those that we, in our professional judgment, consider to be the most important for the
audit of the financial statements for the current period. These matters shall be addressed in the context of audit of
the overall financial statements and formation of audit opinion, and we will not express an opinion on these matters
separately. Key audit matters we have identified in our audit include:
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Annual Report 2022 To be a Global Leading Crop Protection Company
(1) Matter description
Rainbow is devoted into the research, development, production and sales of plant friendly products, i.e. p esticide
active compound. As stated in Notes for Consolidated Financial Statements VI. 42. RMB 14,323,625,816.12 is recorded
in main operating income for the year 2022, with an increases of 47.96% compared with the year of 2021. The
Company’s income is a considerable amount and has seen a great increase in the current period. Operating income, as
a key performance indicator of the Company, has inherent risk that the management manipulates the time point of
income recognition in order to achieve a specific goal or expectation. Therefore, we identify income as a key audit
matter.
(2) Audit response
The main audit procedures we implement for income confirmation are as follows:
① Understand the key internal controls related to income recognition, evaluate the design of these controls,
determine whether they have
been implemented, and test the operational effectiveness of relevant internal controls;
② Have knowledge of the Company’s business model, obtain the Company’s sales income breakdown, carry out
revenue analysis procedures, analyze income constituents and compare income, cost, gross margin and other
indicators related to main products with the peer data;
③ For the Company’s export income, check accounting vouchers, sales orders, delivery documents, export
declarations, bills of lading, sales invoices and other income recognition basis among major customers. For the
Company’s domestic sales income, check accounting vouchers, sales contracts, delivery documents, shipment records,
customer acceptance records and other income recognition basis among major customers;
④ As per the external confirmations of accounts receivable, send income confirmation requests to selected major
customers to verify the truthfulness of the recognized incomes of the Company;
⑤ Perform a cutoff test for major earnings before and after the balance sheet date to check whether the income is
recorded in the appropriate accounting period.
(1) Matter description
The ending balance of account receivable of Rainbow is a large amount. As stated in Notes for Consolidated Financial
Statements VI. 5, as of Saturday, December 31, 2022, RMB 3,399,159,094.52 was recorded in the ending balance of
account receivable. RMB 197,455,632.99 is recorded in the ending balance of bad debt provision, and the amount of
account receivable is 27.60% of total assets. The management uses significant accounting estimates and judgments in
deciding whether the credit risk of account receivable of the Company increases significantly and measuring expected
credit loss and estimated recoverable amount of account receivable. Thus, we identify the bad debt provision for
accounts receivable as a key audit matter.
(2) Audit response
The main audit procedures we have implemented for the bad debt provision for accounts receivable are as follows:
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Annual Report 2022 To be a Global Leading Crop Protection Company
① Understand and evaluate management and internal controls related to accounts receivable management, and
evaluate the design and operational effectiveness of these internal controls;
② Analyze the rationality of the Company’s accounting estimates for the bad debt provision for accounts receivable,
including the basis for determining risk feature portfolios, and the criteria used in bad debt testing for accounts
receivable on an individual basis;
③ For the accounts receivable which the bad debt provisions have been made by aging, have knowledge of the
Company’s credit policy and its implementation, check the collections of accounts receivable and evaluate the
rationality of the bad debt provisions for accounts receivable, by analyzing the aging of accounts receivable and
customers’ credibility;
④ For the accounts receivable which the bad debt provisions have been made on an individual basis, check the
judgment basis of the management's estimated future recoverable amounts, including but not limited to customers’
credit records, the record of the Company's claims made against China Export & Credit Insurance Corporation, the
record of compensations received, the record of customer default or late payment transactions, and analyze and
review the rationality of the bad debt provisions that have been made on an individual basis.
IV. Other Information
The management of Rainbow is responsible for Other Information, which includes the information covered in the
Our audit opinion on the financial statements does not cover the Other Information, and we do not issue any form of
verification conclusion on Other Information.
In combination with our audit of the financial statements, our responsibility is to read the Other Information. In the
process, WE consider whether the Other Information is materially inconsistent with the financial statements or the
information we learned during the audit, or whether there is a material mis-statement.
Based on the work that we have already done, if we determine that the Other Information contains material mis -
statements, we should report the fact. In this regard, we have nothing to report.
V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
The management of Rainbow is responsible for preparing the financial statements in accordance with the
requirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and designing,
implementing and maintaining necessary internal controls so that there are no material mis -statements caused by
fraud or errors in the financial statements.
In preparing the financial statement, the management is responsible for assessing Rainbow’s capability to continue as
a going concern, disclosing matters related to going concern (if applicable) and using the going concern basis of
accounting, unless the management either intends to liquidate Rainbow or to cease operations, or has no realistic
alternative.
Those charged with governance are responsible for monitoring the financial reporting process of Rainbow.
VI. CPA's Responsibilities for the Audit of the Financial Statements
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Annual Report 2022 To be a Global Leading Crop Protection Company
Our objective is to obtain reasonable assurance that the financial statements as a whole are free of material mis -
statement due to fraud or error, and to issue an audit report that includes our audit opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with audit standards will
always detect a material mis-statement when it exists. The mis-statement may be caused by fraud or errors. If each or
all of the mis-statement could reasonably be expected to influence the economic decisions of users taken on the basis
of these financial statements, it is generally deemed as material mis-statement.
We exercise professional judgment and maintain professional skepticism in carrying out our audit in accordance with
audit standards. At the same time, we also do the following work:
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 mis-statement resulting from fraud is higher than
that resulting from error, as fraud may involve collusion, forgery, intentional omissions, mis-representations, or the
override of internal control.
related disclosures made by the management of Rainbow.
same time, based on the audit evidence obtained, a conclusion shall be drawn on whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the ability of Rainbow to continue as a going
concern. If we conclude that a material uncertainty exists, according to audit standards, we are required to draw
attention in our audit report of related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion.]If we conclude that there is material uncertainty, the audit standards require us to
bring relevant disclosures in our audit report, in order to draw the attention of the financial statements users .If
disclosure is inadequate, we should express unqualified opinions. Our conclusion is based on the information available
as of the audit report date. However, future events or conditions may cause Rainbow to cease to continue as a going
concern.
evaluate whether the financial statements fairly reflect relevant transactions and events.
business activities to express an audit opinion on the consolidated financial statements. We are responsible for
guidance, supervision and implementation of the group audit and take full responsibility for the audit opinions.
We have communicated with those charged with governance regarding the planned scope and schedule of the au dit,
and significant audit matters, including any significant audit deficiencies in internal control that we identify during our
audit.
We have also provided declarations to those charged with governance that we have complied with professional ethics
requirements relating to independence, and communicated with them all relationships and other matters that may
reasonably be considered to affect our independence, as well as relevant preventive measures (where appropriate).
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Annual Report 2022 To be a Global Leading Crop Protection Company
For the matters communicated with those charged with governance, we determine which matters are most important
to the audit of the financial statements for the current period, and thus constituted the key audit matters. We
describe these matters in our audit report, unless the public disclosure of these matters is prohibited by laws and
regulations, or in rare cases, if it is reasonably expected that the negative consequences caused by communication of
certain matters in our audit report outweigh benefits generated in public interest, we confirm that such matters
should not be communicated in our audit reports.
Shangkuai Certified Public Accountants Chinese Certified Public Accountant
(Special General Partnership) (Engagement Partner)
Chinese Certified Public Accountant
Shanghai, China March 24, 2023
II. Financial Statements
The currency of the statements in the financial notes is: RMB
Prepared by: Shandong Weifang Rainbow Chemical Co., Ltd.
Unit: RMB
Item Saturday, December 31, 2022 Saturday, January 1, 2022
Current assets:
Monetary funds 3,793,952,509.17 3,724,744,059.71
Deposit reservation for balance
Lending to banks and other financial institutions
Financial assets held for trading 8,542,688.56 200,000,000.00
Derivative financial assets 48,922,283.50
Notes receivable 59,112,584.14 35,385,609.76
Accounts receivable 3,201,703,461.53 2,328,358,879.35
Receivables financing 680,000.00 100,000.00
Pre-payments 75,294,804.30 77,313,374.04
Premium receivable
Re-insurance accounts receivable
Reserves for re-insurance contract receivable
Other receivables 33,525,890.70 11,576,269.72
Including.: interest receivable
Dividends receivable
Financial assets purchased under resale agreement
Inventory 1,657,230,533.12 1,775,113,092.67
Contracted assets
Assets held for sale
Non-current assets that mature within one year
Other current assets 184,823,557.40 264,431,341.13
Total current assets 9,014,866,028.92 8,465,944,909.88
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Annual Report 2022 To be a Global Leading Crop Protection Company
Non-current assets:
Disbursed loans and advances
Debt investments
Other debt investment
Long-term receivables
Long-term equity investment 1,669,386.12 1,810,538.69
Other equity instrument investment
Other non-current financial assets
Investment real estate 9,136,334.57
Fixed assets 1,691,830,176.47 1,218,635,770.03
Construction in progress 360,840,138.91 281,855,456.95
Productive biological assets
Oil and gas assets
Assets with rights of use 15,379,959.49 18,876,699.07
Intangible assets 226,245,165.26 118,003,684.46
Development expenditure
Goodwill 94,866,025.56 26,949,350.10
Long-term deferred expenses 31,898,939.40 1,972,932.08
Deferred income tax assets 82,525,991.91 46,893,086.34
Other non-current assets 69,616,034.81 130,713,116.29
Total non-current assets 2,584,008,152.50 1,845,710,634.01
Total assets 11,598,874,181.42 10,311,655,543.89
Current liabilities:
Short-term loan 404,206,509.66 550,348,417.31
Borrowings from the central bank
Borrowing from banks and financial institutions
Financial liabilities held for trading
Derivative financial liabilities 122,183,523.97
Notes payable 3,367,152,536.58 3,369,427,627.30
Accounts payable 753,042,513.89 879,276,036.26
Advance receipts 254,920.26 2,624,536.52
Contract liability 46,035,630.83 45,096,633.96
Financial assets sold for repurchase
Deposits and interbank deposits received
Amount received from agency trading of securities
Amount received from agency underwriting of securities
Payroll payable 191,738,722.30 154,700,982.42
Taxes payable 106,896,314.07 83,154,482.55
Other payables 43,899,535.81 29,657,941.65
Including: Interests payable
Dividends payable
Charges and commissions payable
Re-insurance accounts payable
Liabilities held for sale
Non-current liabilities due within one year 21,399,902.40 19,679,032.26
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Annual Report 2022 To be a Global Leading Crop Protection Company
Other current liabilities 59,862,778.90 37,357,003.10
Total current liabilities 5,116,672,888.67 5,171,322,693.33
Non-current liabilities:
Provision for insurance contracts
Long-term loan 17,176,777.87 25,555,537.87
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liability 8,595,962.05 13,312,230.04
Long-term payables
Long-term payroll payable
Accrued liabilities 840,000.00
Deferred income 13,755,569.25 13,950,734.80
Deferred income tax liabilities 55,449,975.77 43,570,565.25
Other non-current liabilities
Total non-current liabilities 94,978,284.94 97,229,067.96
Total liabilities 5,211,651,173.61 5,268,551,761.29
Owner’s equity:
Share capital 277,115,744.00 276,180,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 2,301,293,600.92 2,226,848,878.76
Less: Treasury stock
Other comprehensive income 5,821,782.13 -6,390,755.46
Special reserve 19,551,007.62 14,783,485.63
Surplus reserve 158,674,657.07 158,674,657.07
General risk reserve
Undistributed profit 3,421,808,374.82 2,238,628,036.71
Total owners' equity attributed to parent company 6,184,265,166.56 4,908,724,302.71
Minority shareholder’s interest 202,957,841.25 134,379,479.89
Total owner’s equity 6,387,223,007.81 5,043,103,782.60
Total liabilities and owners’ equity 11,598,874,181.42 10,311,655,543.89
Legal Representative: Wicky Wang Chief Accountant in Charge: Xing Bingpeng Chief of Accounting Institution: Zhang Baolin
Unit: RMB
Item 2022 2021
I. Gross Operating Income 14,460,175,154.41 9,797,107,551.38
Including: Operating income 14,460,175,154.41 9,797,107,551.38
Interest income
Premium earned
Handling charges and commissions income
II. Total Operating Costs 12,202,936,725.77 8,872,442,224.57
Including: Costs of business 11,533,463,087.75 7,938,158,166.90
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Annual Report 2022 To be a Global Leading Crop Protection Company
Interest expenses
Handling charges and commission expenses
Surrender value
Net payments for insurance claims
Net withdrawal of reserve for insurance
responsibility contracts
Expenditures of policy dividend
Re-insurance expense
Taxes and surcharges 17,988,034.25 12,967,120.40
Sales expenses 292,303,865.92 219,514,455.26
Management expenses 369,515,096.10 293,698,852.81
R&D expenditures 335,089,330.53 312,438,469.66
Financial expenses -345,422,688.78 95,665,159.54
Including: Interest expenses 24,117,176.10 26,673,548.50
Interest income 54,422,900.37 30,734,697.16
Add: Other incomes 12,059,027.93 14,634,035.09
Income from investment (“－” for loss) -259,460,460.87 224,428,785.59
Including: Income from investment in
-141,152.57 -15,479.63
associated enterprises and joint ventures
Income recognized at termination of
financial assets measured at amortized cost
Foreign exchange gain ("-" fro loss)
Net exposure hedging income ("-" for loss)
Income from changes in fair value ("-" for loss) -171,103,311.09 -84,356,048.50
Credit impairment losses ("-" for loss) -56,341,452.37 -48,700,774.17
Asset impairment losses ("-" for loss) -6,825,463.24 -14,353,166.10
Gains from asset disposal ("-" for loss) -22,810.39 -3,614,935.21
III. Operating Profit ("-" for loss) 1,775,543,958.61 1,012,703,223.51
Add: Non-operating income 6,419,294.11 8,404,814.92
Less: Non-operating expenses 29,320,723.84 31,719,144.18
IV. Total Profit Before Tax (“-” for total losses) 1,752,642,528.88 989,388,894.25
Less: Income tax expenses 265,130,924.48 143,341,408.16
V. Net Profit ("-" for net loss) 1,487,511,604.40 846,047,486.09
(I) Classification by business continuity
loss)
loss)
(II) Classification by ownership
parent company
VI. Net Amount after Tax of Other Comprehensive Income 27,082,329.50 -13,968,931.28
Net amount of other comprehensive income after tax
attributed to the owners of parent company
(I) Other comprehensive income that cannot be
reclassified into profit or loss
- 47 -
Annual Report 2022 To be a Global Leading Crop Protection Company
benefit plan
converted into profit and loss under the equity method
investments
enterprise
(ii) Other comprehensive income that will be
reclassified into profit and loss
converted to profit or loss under the equity method
bonds
comprehensive income
creditor's rights investment
statement translation
Net amount of other comprehensive income after tax
attributed to minority shareholders
VII. Total Comprehensive Income 1,514,593,933.90 832,078,554.81
Total comprehensive income attributed to parent
company owners
Total comprehensive income attributed to minority
shareholders
VIII. Earnings per Share
(i) Basic earnings per share 5.12 3.39
(ii) Diluted earnings per share 5.07 3.39
For business combination under the same control in the current period, the net profit of the merged party before the business
combination is RMB , and the net profit of the merged party in the previous period is RMB .
Legal Representative: Wicky Wang Chief Accountant in Charge: Xing Bingpeng Chief of Accounting Institution: Zhang Baolin
Unit: RMB
Item 2022 2021
I. Cash Flows Generated from Operating Activities:
Cash received from sales of goods and services 13,572,480,618.90 9,623,031,311.61
Net increase in deposit from customers and interbank
Net increase in borrowing from central bank
Net increase in borrowings from other financial
institutions
Cash receipts from premiums under direct insurance
contracts
Net cash receipts from re-insurance business
Net cash receipts from policyholders' deposits and
- 48 -
Annual Report 2022 To be a Global Leading Crop Protection Company
investments
Cash receipts from interest, handling fees and
commissions
Net increase in capital borrowed from banks and other
financial institutions
Net increase in repurchase business capital
Net cash received from securities trading brokerage
Cash receipts from tax refunds 930,849,321.41 577,883,804.65
Cash received relating to other operating activities 71,618,947.34 53,367,659.63
Subtotal of cash inflow in business activities 14,574,948,887.65 10,254,282,775.89
Cash payments for goods acquired and services received 11,389,552,441.41 8,330,141,066.73
Net increase in customer loans and advances
Net increase in deposits in central bank and interbank
Cash payments for original insurance contract claims
Net increase in lending funds from banks and other
financial institutions
Cash payments for interest, fee and commission
Cash payments for insurance policyholder dividends
Cash payments to employees and on behalf of
employees
Cash payments for taxes 594,564,409.51 161,162,768.69
Other cash payments relating to operating activities 633,020,850.90 524,046,664.93
Subtotal of cash outflow in business activities 13,204,293,479.40 9,463,211,166.16
Net cash flow from operating activities 1,370,655,408.25 791,071,609.73
II. Cash Flows from Investing Activities:
Cash receipts from investment withdrawal 200,000,000.00
Cash receipts from return on investments
Net cash receipts from disposals of fixed assets,
intangible assets and other long-term assets
Net cash receipts from disposal of subsidiary or any
other business unit
Other cash receipts relating to investing activities 41,417,851.92 224,444,265.22
Subtotal of cash inflow in investment activities 254,109,998.76 234,884,534.77
Cash payments to acquire or construct fixed assets,
intangible assets and other long-term assets
Cash payments for investment 6,000,000.00 200,000,000.00
Net increase in pledged loans
Net cash payments to acquire subsidiary and other
business units
Other cash payments relating to investment activities 299,038,473.97
Subtotal of cash outflow in investment activities 1,121,419,806.70 814,615,446.56
Net cash flow in investment activities -867,309,807.94 -579,730,911.79
III. Cash Flows from Financing Activities:
Cash received from capital contributions 22,670,360.71 1,428,809,338.64
Including: Cash received from investment of minority
shareholder from subsidiary
Cash receipts from borrowings 848,255,059.80 1,225,034,893.26
Other cash receipts relating to financing activities
- 49 -
Annual Report 2022 To be a Global Leading Crop Protection Company
Subtotal of cash inflow in financing activities 870,925,420.51 2,653,844,231.90
Cash repayments of borrowings 1,075,430,244.63 1,343,683,572.12
Cash payments for distribution of dividends, profits, or
cash payments for interest expenses
Including: Dividends and profits paid to minority
shareholders by subsidiaries
Other cash paid related to financing activities 6,826,457.52 24,732,127.93
Subtotal of cash outflow in financing activities 1,336,259,609.93 1,532,169,238.30
Net cash flow from financing activities -465,334,189.42 1,121,674,993.60
IV. Effect of Exchange Rate Changes on Cash and Cash
Equivalents
V. Net Increase in Cash and Cash Equivalents 43,760,530.28 1,312,659,341.39
Add: Beginning balance of cash and cash equivalents 2,032,302,255.51 719,642,914.12
VI. Closing Balance of Cash and Cash Equivalents 2,076,062,785.79 2,032,302,255.51
Amount in the current period
Unit: RMB
Item
Equity attributed to owners of the parent company
Minority
Total
Other equity instruments Other sharehol
Less: General Undistri owner’s
Share Capital compre Special Surplus der’s
Treasury risk buted Other Subtotal interest equity
capital Preferre Perpetu reserve hensive reserve reserve
Other stock reserve profit
d shares al bonds income
I.
Balance
at the
end of -
the 6,390,75
period 5.46
of
previous
year:
Add:
Changes
in
accounti
ng
policies
Correcti
on of
errors
from
previous
period
Business
combina
tion
under
common
control
Other
II.
Opening
balance 276,180, 2,226,84 14,783,4 158,674, 2,238,62 4,908,72 134,379, 5,043,10
of the 000.00 8,878.76 85.63 657.07 8,036.71 4,302.71 479.89 3,782.60
current
year
III. 935,744. 74,444,7 12,212,5 4,767,52 1,183,18 1,275,54 68,578,3 1,344,11
- 50 -
Annual Report 2022 To be a Global Leading Crop Protection Company
Changes 00 22.16 37.59 1.99 0,338.11 0,863.85 61.36 9,225.21
in
Current
Period
(“-” for
decreas
e)
(I) Total
compre 12,212,5 1,413,23 1,425,45 89,143,1 1,514,59
hensive 37.59 8,278.11 0,815.70 18.20 3,933.90
income
(II)
Capital
contribu
tion and
reductio
n by
owners
Ordinary
shares 935,744. 21,734,6 22,670,3 22,670,3
invested 00 16.71 60.71 60.71
by
owners
Capital
contribu
ted from
other
equity
instrum
ent
holders
Amount
s of
share-
based
payment
s
recogniz
ed in
owners'
equity
(III)
- - - -
Profit
distribut
ion
Appropri
ation of
surplus
reserve
Appropri
ation of
general
risk
reserve
Distribut
ion to - - - -
owners 230,057, 230,057, 20,564,7 250,622,
(or 940.00 940.00 56.84 696.84
sharehol
ders)
(IV)
Internal
carry-
- 51 -
Annual Report 2022 To be a Global Leading Crop Protection Company
over of
owners'
equity
Capital
reserve
converte
d into
capital
(or
share
capital)
Surplus
reserve
converte
d into
capital
(or
share
capital)
Recover
y of
losses by
surplus
reserves
over
retained
earnings
from
defined
benefit
plan
changes
over
retained
earnings
from
other
compre
hensive
income
(V)
Special
reserves
Withdra
wal in 36,202,0 36,202,0 654,659. 36,856,7
the 63.12 63.12 51 22.63
current
period
- - - -
the
current
period
(VI)
Other
IV.
Balance
at the
end of
the
current
period
Amount in the previous period
Unit: RMB
- 52 -
Annual Report 2022 To be a Global Leading Crop Protection Company
Item
Equity attributed to owners of the parent company
Minority
Total
Other equity instruments Other sharehol
Less: General Undistri owner’s
Share Capital compre Special Surplus der’s
Treasury risk buted Other Subtotal interest equity
capital Preferre Perpetu reserve hensive reserve reserve
Other stock reserve profit
d shares al bonds income
I.
Balance
at the
end of -
the 27,063,9
period 44.13
of
previous
year:
Add:
Changes
in 125,207. 125,207. 125,207.
accounti 69 69 69
ng
policies
Correcti
on of
errors
from
previous
period
Business
combina
tion
under
common
control
Other
II.
Opening
balance 207,130, 858,290, 16,936,0 114,159, 1,632,56 2,802,01 125,621, 2,927,63
of the 000.00 440.12 43.63 831.52 1,079.54 3,450.68 702.52 5,153.20
current
year
III.
Changes
in
Current 69,050,0 1,368,55 20,673,1 44,514,8 606,066, 2,106,71 8,757,77 2,115,46
Period 00.00 8,438.64 88.67 25.55 957.17 0,852.03 7.37 8,629.40
(“-” for
decreas
e)
(I) Total
compre 20,673,1 799,718, 820,392, 11,686,3 832,078,
hensive 88.67 982.72 171.39 83.42 554.81
income
(II)
Capital
contribu
tion and
reductio
n by
owners
Ordinary
shares 69,050,0 1,359,75 1,428,80 1,428,80
invested 00.00 9,338.64 9,338.64 9,338.64
by
owners
Capital
contribu
- 53 -
Annual Report 2022 To be a Global Leading Crop Protection Company
ted from
other
equity
instrum
ent
holders
Amount
s of
share-
based
payment
s
recogniz
ed in
owners'
equity
(III)
- - - -
Profit 44,514,8
distribut 25.55
ion
Appropri -
ation of 44,514,8
surplus 25.55
reserve
Appropri
ation of
general
risk
reserve
Distribut
ion to - - - -
owners 149,137, 149,137, 2,875,80 152,013,
(or 200.00 200.00 9.23 009.23
sharehol
ders)
(IV)
Internal
carry-
over of
owners'
equity
Capital
reserve
converte
d into
capital
(or
share
capital)
Surplus
reserve
converte
d into
capital
(or
share
capital)
Recover
y of
losses by
surplus
reserves
- 54 -
Annual Report 2022 To be a Global Leading Crop Protection Company
over
retained
earnings
from
defined
benefit
plan
changes
over
retained
earnings
from
other
compre
hensive
income
(V) - - - -
Special 2,152,55 2,152,55 52,796.8 2,205,35
reserves 8.00 8.00 2 4.82
Withdra
wal in 28,629,0 28,629,0 378,850. 29,007,8
the 21.92 21.92 78 72.70
current
period
- - - -
the
current
period
(VI)
Other
IV.
Balance
at the -
end of 6,390,75
the 5.46
current
period
In the case of any deviation from the explanations presented hereof, the 2022 Annual Report in Chinese
version shall prevail.
SHANDONG WEIFANG RAINBOW CHEMICAL CO.,LTD
Legal representative: Wicky Wang
Date: 04/03/2023
.
- 55 -
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