Financial report
I. Auditor’s Report
To all shareholders of Hengli Petrochemical Co., Ltd.:
I. Opinion
We have audited the financial statements of Hengli Petrochemical Co., Ltd. (hereinafter "the
Company"), which comprise the consolidated and company balance sheets as at 31 December
flow statements and consolidated and company statements of changes in equity for the year then
ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the consolidated and company financial positions as at 31 December 2022, and their financial
performance and their cash flows for the year then ended in accordance with the requirements of
Accounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our
responsibilities under those standards are further described in the Auditor's Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the
Company and have fulfilled our other ethical responsibilities in accordance with the China
Code of Ethics for Certified Public Accountants. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matter
Key audit matter is the matter that, in our professional judgment, was of most significance in
our audit of the financial statements for the year ended 31 December 2022. This matter was
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on this matter.
(I) Revenue recognition
Key audit matter Addressed in the context of our audit
Revenue recognition
As mentioned in note to the financial In the audit of the financial statements for the
statements of the Company, the operating year, we have implemented the following
revenue for the period was RMB 222.32 billion. procedures for the matter of revenue
The primary revenue sources and recognition recognition: 1. Evaluate and test the design
criteria are shown in note to the financial and operation effectiveness of key internal
statements of the Company. Since revenue is controls related to revenue recognition of the
one of the key performance indicators of the Company; 2. Understand the various types of
Company, there is an inherent risk that income of the Company and their recognition
management will manipulate revenue conditions, and evaluate whether the income
recognition in order to achieve specific goals recognition policy meets the requirements of
or expectations. Therefore, we recognize the accounting standards; 3. Combined with
revenue recognition as a key audit matter. the comparison of gross profit margins of
companies in the same industry, an analysis
procedure is performed on the Company's
revenue, costs and gross profit margins to
analyze the rationality of the gross profit
margin change trend; 4. Select sample and
inspect the Company's various types of
income related contracts, invoices, income
confirmation documents and other
documents to test the authenticity of income;
recognized around the balance sheet date to
assess whether the sales revenue is
recognized in the appropriate accounting
period; 6. Carry out confirmation procedure
on the income amount of the Company's
major customers and the balances of
receivable.
Provision for decline in value of inventories
As mentioned in note to the financial In the audit of the financial statements for the
statements of the Company, the inventories year, we have implemented the following
balance as of balance sheet date is RMB procedures for the matter of Provision for
decline in value of inventories is RMB 3.13 test the design and operation effectiveness of
billion, with the carrying amount of inventories key internal controls related to provision for
of RMB 37.84 billion. The carrying amount of decline in value of inventories of the Company;
inventories is a material amount. The 2. Check whether the calculation and
Company's inventories are mainly crude oil accounting treatment of provision for decline
and refining-related products, which are in value of inventories is correct, whether
greatly affected by the macroeconomic and provision or write-off for the year is consistent
crude oil market price fluctuations. Whether with the relevant amount of profit and loss
the provision for decline in value of inventories account; 3. Evaluate the estimations used by
is sufficient or not has a significant impact on the management when calculating provision
the financial statements, and the Company's for decline in value, such as the estimated
provision for decline in value of inventories is selling price and expected selling expenses
subject to the judgment of the management and related custom duties, etc., and consider
involved in the determination of the net the possibility of errors or management bias;
realizable value. Therefore, we recognize 4. for inventories on the balance sheet date,
provision for decline in value of inventories as obtain new or further evidence on selling price
a key audit matter. subsequent to year end, and consider its
impact on the net realizable value; 5. Evaluate
the appropriateness of management's
financial statement disclosure of provision for
decline in value of inventories.
IV. Other Information
Management is responsible for the other information. The other information comprises the
information included in the Company’s 2022 annual report, but does not include the financial
statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this
regard.
V. Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management of the Company is responsible for the preparation of the financial statements to
achieve fair presentation in accordance with Accounting Standards for Business Enterprises, and
for the design, implementation and maintenance of such internal control as management
determine is necessary to enable the preparation of the financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company's ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless management either
intend to liquidate the Company or to cease operations, or have no realistic alternative but to
do so.
Those charged with governance are responsible for overseeing the Company's financial
reporting process.
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with auditing standards will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company's ability to continue
as a going concern. If we conclude that a material uncertainty exists, the auditing standards
require us to draw attention to users of the financial statements in our auditor's report to the
related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
report. However, future events or conditions may cause the Company to cease to continue as a
going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Company to express an opinion on the financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor's report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Zhonghui Certified Public Accountants Chinese Certified Public Accountant: Han Jian
(special general partnership) (Engagement partner)
Chinese Certified Public Accountant: Fang Sai
China·Hangzhou Report date: 26 April 2023
II. Financial statements
Consolidated Balance Sheet
As at 31/12/2022
Prepared by: Hengli Petrochemical Co., Ltd. Unit: Yuan Currency: RMB
Item Note As at 31/12/2022 As at 31/12/2021
Current assets:
Cash and bank balances 28,076,405,879.84 15,986,052,894.48
Settlement reserve
Due from banks and other
financial institutions
Financial assets held for 604,414,444.44 814,371,626.26
trading
Derivative financial assets
Notes receivable
Accounts receivable 372,445,926.69 2,643,843,371.51
Receivable financing 2,287,271,229.26 3,419,957,708.03
Prepayments 1,997,468,820.54 2,636,915,914.02
Insurance premium
receivables
Reinsurance premium
receivables
Reserve receivable for
reinsurance
Other receivables 701,520,929.51 851,677,558.80
Including: Interest
receivables
Dividend
receivables
Financial assets purchased
under agreements to resell
Inventories 37,835,511,471.41 33,553,002,801.39
Contract assets
Assets held-for-sale
Non-current assets due
within one year
Other current assets 4,468,726,603.40 5,274,219,295.85
Total current assets 76,343,765,305.09 65,180,041,170.34
Non-current assets:
Loans and advances
Debts investment 20,427,397.26
Other debts investment
Long-term receivables
Long-term equity 559,215,493.16
investments
Other equity instruments 199,800,000.00
investment
Other non-current financial
assets
Investment properties 164,271,812.80 170,531,320.40
Fixed assets 118,718,591,050.99 122,731,048,012.02
Construction in progress 27,287,491,499.08 7,782,853,597.20
Productive biological
assets
Oil and gas assets
Right-of-use assets 87,844,283.36 99,832,568.84
Intangible assets 8,924,775,668.34 7,341,732,386.19
Development cost
Goodwill 77,323,123.69 77,323,123.69
Long-term deferred 2,027,293,324.85 2,621,643,788.93
expenses
Deferred tax assets 892,227,246.46 188,827,083.44
Other non-current assets 6,327,248,356.84 3,902,592,546.65
Total non-current assets 165,086,709,256.83 145,116,184,427.36
TOTAL ASSETS 241,430,474,561.92 210,296,225,597.70
Current Liabilities:
Short-term loans 69,316,898,813.08 55,590,693,332.04
Borrowings from central
bank
Deposits and placements
from banks and other
financial institutions
Financial liabilities held for 346,020,729.70 296,817,004.51
trading
Derivative financial
liabilities
Notes payable 20,603,775,870.27 16,050,294,580.41
Accounts payable 8,869,309,998.90 10,689,214,747.52
Receipts in advance
Contract liabilities 12,090,983,326.47 6,126,546,843.89
Financial assets sold under
agreements to repurchase
Due to customers and
banks
Securities brokering
Securities underwriting
Employee benefits 476,509,780.18 483,000,867.62
payable
Taxes payable 1,036,013,713.16 1,276,893,624.38
Other payables 382,263,173.05 439,952,644.33
Including: Interest
payables
Dividends payable 4,882,110.00
Fees and commissions
payable
Reinsurance premium
payable
Liabilities held-for-sale
Non-current liabilities due 9,349,028,245.01 5,423,226,970.81
within one year
Other current liabilities 3,382,127,557.85 1,399,269,151.61
Total current liabilities 125,852,931,207.67 97,775,909,767.12
Non-current liabilities:
Claims reserve of
insurance contract
Long-term loans 58,347,153,350.72 52,122,314,344.25
Bonds payable
Including: Preferred
shares
Perpetual bonds
Lease liabilities 55,750,879.91 62,777,270.39
Long-term payables 858,833,333.34 21,899,253.29
Long-term employee
benefits payable
Provisions 13,000,000.00
Deferred income 3,376,501,714.84 2,998,678,284.64
Deferred tax liabilities 18,914,506.94 927,466.51
Other non-current
liabilities
Total non-current 62,657,153,785.75 55,219,596,619.08
liabilities
TOTAL LIABILITIES 188,510,084,993.42 152,995,506,386.20
Owners’equity (or Shareholders’equity):
Paid-in capital (or Share 7,039,099,786.00 7,039,099,786.00
capital)
Other equity instruments
Including: Preferred
shares
Perpetual bonds
Capital reserve 18,686,516,127.76 18,455,844,491.64
Less: Treasury shares 228,626,593.18
Other comprehensive -50,052,317.06 -150,616,377.30
income
Specific reserve 1,602,239.79 139,116,306.31
Surplus reserve 905,565,700.75 858,111,239.40
General risk reserve
Undistributed profits 26,279,812,029.77 31,118,454,108.29
Total owners’equity (or 52,862,543,567.01
shareholders’equity) 57,231,382,961.16
attributable to the parent
Minority interests 57,846,001.49 69,336,250.34
Total owners’equity (or 52,920,389,568.50 57,300,719,211.50
shareholders’equity)
Total liabilities and 241,430,474,561.92 210,296,225,597.70
owners’equity (or
shareholders’equity)
Legal representative: Fan Hongwei Person in charge of financial function: Liu Xuefen Prepared by: Zheng Minxia
Parent Company Balance Sheet
As at 31/12/2022
Prepared by: Hengli Petrochemical Co., Ltd. Unit: Yuan Currency: RMB
Item Note As at 31/12/2022 As at 31/12/2021
Current assets:
Cash and bank balances 31,980,728.03 54,180,520.50
Financial assets held for
trading
Derivative financial assets
Notes receivable
Accounts receivable
Receivable financing
Prepayments 1,271,836.74 151,294.55
Other receivables 811,162,769.45 1,203,854,808.69
Including: Interest
receivables
Dividend 800,000,000.00 1,200,000,000.00
receivables
Inventories
Contract assets
Assets held-for-sale
Non-current assets due
within one year
Other current assets 42,450,791.47 38,321,150.31
Total current assets 886,866,125.69 1,296,507,774.05
Non-current assets:
Debts investment
Other debts investment
Long-term receivables
Long-term equity 44,316,275,704.93 43,317,275,704.93
investments
Other equity instruments
investment
Other non-current financial
assets
Investment properties 37,900,752.88 39,171,412.60
Fixed assets 2,852,515,397.82 1,544,172,730.17
Construction in progress 34,483,864.48 744,990.30
Productive biological
assets
Oil and gas assets
Right-of-use assets
Intangible assets
Development cost
Goodwill
Long-term deferred
expenses
Deferred tax assets
Other non-current assets
Total non-current assets 47,241,175,720.11 44,901,364,838.00
TOTAL ASSETS 48,128,041,845.80 46,197,872,612.05
Current Liabilities:
Short-term loans
Financial liabilities held for
trading
Derivative financial
liabilities
Notes payable 20,337,770.04
Accounts payable 1,001,201.98 460,000.00
Receipts in advance
Contract liabilities 275,393,889.34
Employee benefits 2,400,000.00 2,100,000.00
payable
Taxes payable 7,588,420.83 5,101,190.67
Other payables 6,593,083,472.18 5,552,789,186.72
Including: Interest
payables
Dividends payable
Liabilities held-for-sale
Non-current liabilities due 2,030,618,280.89
within one year
Other current liabilities 35,801,205.61
Total current liabilities 8,655,029,145.92 5,871,645,472.34
Non-current liabilities:
Long-term loans
Bonds payable
Including: Preferred
shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee
benefits payable
Provisions
Deferred income
Deferred tax liabilities
Other non-current
liabilities
Total non-current
liabilities
TOTAL LIABILITIES 8,655,029,145.92 5,871,645,472.34
Owners’equity (or Shareholders’equity):
Paid-in capital (or Share 7,039,099,786.00 7,039,099,786.00
capital)
Other equity instruments
Including: Preferred
shares
Perpetual bonds
Capital reserve 24,142,978,843.34 23,989,306,711.37
Less: Treasury shares 228,626,593.18
Other comprehensive
income
Specific reserve
Surplus reserve 2,679,861,592.27 2,092,463,830.38
Undistributed profits 5,611,072,478.27 7,433,983,405.14
Total owners’equity (or 39,473,012,699.88 40,326,227,139.71
shareholders’equity)
Total liabilities and 48,128,041,845.80 46,197,872,612.05
owners’equity (or
shareholders’equity)
Legal representative: Fan Hongwei Person in charge of financial function: Liu Xuefen Prepared by: Zheng Minxia
Consolidated Income Statement
For the year ended 31 December 2022
Unit: Yuan Currency: RMB
Item Note 2022 2021
I. Total revenue from operations 222,372,593,675.48 197,996,549,201.17
Including: Revenue from operations 222,323,583,969.88 197,970,344,885.30
Interest income 26,648,486.54 11,794,813.84
Premium earned
Fees and commissions 22,361,219.06 14,409,502.03
income
II. Total cost of operations 218,462,766,541.73 179,170,933,901.38
Including: Cost of operations 204,077,597,066.45 167,518,086,060.40
Interest expenses
Fees and commissions
expenses
Cash surrender amount
Net expenses of claim
settlement
Net provisions for insurance
contract reserves
Insurance policies dividend
expenses
Reinsurance expenses
Taxes and surcharges 6,631,019,180.66 3,440,428,415.46
Selling expenses 392,769,176.78 291,365,785.46
Administrative expenses 1,889,298,663.76 1,985,395,698.86
Research and development 1,184,711,003.40
expenses
Financial expense 4,287,371,450.68 4,916,205,574.31
Including: Interest expenses 4,632,905,829.96 4,700,106,102.45
Interest income 332,736,566.09 108,112,244.03
Add: Other income 1,595,543,126.20 759,858,866.70
Investment income (”-” for -322,324.78 19,231,050.43
loss)
Including: Gains from
investments in associates and joint
ventures
Gain from
derecognition of financial assets at
amortized cost
Foreign exchange gain (”-” for
loss)
Gain from net exposure of
hedging (”-” for loss)
Gains from changes of fair -45,679,570.72 356,140,714.22
value (”-” for loss)
Credit impairment loss (”-” for -2,373,806.12 -17,289,998.54
loss)
Assets impairment loss (”-” for -3,128,732,830.34 -154,662,546.51
loss)
Gain from disposal of assets -3,332,571.69 1,788,290.01
(”-” for loss)
III. Operating profit (”-” for loss) 2,324,929,156.30 19,790,681,676.10
Add: Non-operating income 105,330,717.22 58,627,931.62
Less: Non-operating expenses 20,681,258.19 21,252,623.94
IV. Total profit (”-” for loss) 2,409,578,615.33 19,828,056,983.78
Less: Income tax expenses 91,541,665.11 4,289,878,953.49
V. Net profit (”-” for loss) 2,318,036,950.22 15,538,178,030.29
(I) Classified by continuity of operations
operations (”-” for loss)
operations (”-” for loss)
(II) Classified by attribution to ownership
shareholders of the parent (”-” for 15,531,076,723.36
loss)
minority interests (”-” for loss)
VI. Other comprehensive income - 105,052,177.39 -50,897,138.73
after tax
(I) Other comprehensive income - 100,564,060.24 -49,792,414.77
after tax attributable to owners of the
parent
not reclassified into profit or loss
subsequently
(1)Changes in remeasurement of
defined benefit plan
(2)Share of other comprehensive
income of the equity method
investments
(3)Changes in fair value of other
equity instruments investment
(4)Changes in fair value of the
Company’s own credit risks
that will be reclassified into profit or
loss subsequently
(1)Share of other comprehensive
income of associates and joint
ventures under equity method
(2)Changes in the fair value of
other debt investments
(3)Reclassification of financial
assets recognised as other
comprehensive income
(4)Credit impairment loss of other
debt investments
(5)Cash flow hedging reserve -6,398,442.57 -136,689,188.58
(6)Translation of foreign currency 106,962,502.81 86,896,773.81
financial statements
(7)Others
(II) Other comprehensive income - 4,488,117.15 -1,104,723.96
after tax attributable to minority
interests
VII. Total comprehensive income 2,423,089,127.61 15,487,280,891.56
(I) Total comprehensive income 2,418,867,226.93 15,481,284,308.59
attributable to owners of the parent
(II) Total comprehensive income 4,221,900.68 5,996,582.97
attributable to minority interests
VIII. Earnings per share:
(I) Basic earnings per share (RMB 0.33
per share)
(II) Diluted earnings per share 0.33
(RMB per share)
For the business combination under common control in this period, the net profit realized by the
acquiree before the merger is: 0 yuan, and the net profit realized by the acquiree in the previous
period is: 0 yuan.
Legal representative: Fan Hongwei Person in charge of financial function: Liu Xuefen Prepared by: Zheng Minxia
Parent Company Income Statement
For the year ended 31 December 2022
Unit: Yuan Currency: RMB
Item Note 2022 2021
I. Revenue from operations 1,633,324.64 2,310,851.89
Less: Cost of operations 1,270,659.72 952,994.79
Taxes and surcharges 22,046,809.69 12,141,530.05
Selling expenses
Administrative expenses 95,862,573.23 130,424,237.24
Research and development 20,952,230.72
expenses
Financial expense 33,033,234.46 54,347,063.00
Including: Interest expenses 34,113,823.35 54,706,662.38
Interest income 1,099,802.78 384,375.40
Add: Other income 1,787,238.79 18,043,306.79
Investment income (”-” for 6,022,872,521.63 8,420,000,000.00
loss)
Including: Gains from
investments in associates and joint
ventures
Gain from
derecognition of financial assets at
amortized cost
Gain from net exposure of
hedging (”-” for loss)
Gains from changes of fair
value (”-” for loss)
Credit impairment loss (”-” -102,189.08 -465,814.46
for loss)
Assets impairment loss (”-”
for loss)
Gain from disposal of assets 35,537.55
(”-” for loss)
II. Operating profit (”-” for loss) 5,873,977,618.88 8,221,105,825.97
Add: Non-operating income
Less: Non-operating expenses
III. Total profit (”-” for loss) 5,873,977,618.88 8,221,105,825.97
Less: Income tax expenses
IV. Net profit (”-” for loss) 5,873,977,618.88 8,221,105,825.97
(I) Net profit from continuing 5,873,977,618.88 8,221,105,825.97
operations (”-” for loss)
(II) Net profit from discontinued
operations (”-” for loss)
V. Other comprehensive income -
after tax
(I) Other comprehensive income
not reclassified into profit or loss
subsequently
of defined benefit plan
comprehensive income of the
equity method investments
other equity instruments
investment
Company’s own credit risks
(II) Other comprehensive income
that will be reclassified into profit or
loss subsequently
comprehensive income of
associates and joint ventures under
equity method
other debt investments
assets recognised as other
comprehensive income
other debt investments
currency financial statements
VI. Total comprehensive income 5,873,977,618.88 8,221,105,825.97
VII. Earnings per share:
(I) Basic earnings per share
(RMB per share)
(II) Diluted earnings per share
(RMB per share)
Legal representative: Fan Hongwei Person in charge of financial function: Liu Xuefen Prepared by: Zheng Minxia
Consolidated Cash Flows Statement
For the year ended 31 December 2022
Unit: Yuan Currency: RMB
Item Note 2022 2021
I. Cash flows from operating activities:
Cash received from sales of 267,426,902,574.47 212,351,925,115.56
goods or rendering of services
Net increase in deposits
from customers and inter-
banks
Net increase in due to
central bank
Net increase in fund
borrowings from other
financial institutes
Cash received from
insurance premium of original
insurance contracts
Net cash received from
reinsurance business
Net increase in insured’s
deposits and investments
Cash received from 52,563,354.96 27,965,319.27
interests, fees and
commissions
Net increase of placement
from banks and other financial
institutions
Net increase in fund of
repurchase business
Net cash received in
securities brokerage agency
Tax refund received 5,562,889,817.74 552,572,461.99
Other cash received relating 5,936,292,171.41 4,719,525,033.29
to operating activities
Sub-total of cash inflows 278,978,647,918.58 217,651,987,930.11
Cash paid for goods and 234,363,054,837.45 181,578,139,486.63
services
Net increase in issued loans
and advance
Net increase in deposits in
central bank and inter-banks
Cash paid for claims of
original insurance contracts
Net increase in due from
banks and other financial
institutions
Cash paid for interest, fees
and commission
Cash paid for policy
dividends
Cash paid to and on behalf 3,736,263,307.53 3,532,628,843.05
of employees
Payments of all types of 11,290,319,184.00 9,820,452,805.72
taxes
Other cash paid relating to 3,635,039,806.17 4,050,593,050.60
operating activities
Sub-total of cash 253,024,677,135.15 198,981,814,186.00
outflows
Net cash flows from 25,953,970,783.43 18,670,173,744.11
operating activities
II. Cash flows from investing activities:
Cash received from 2,882,252,002.75 1,438,264,672.10
disposal of investments
Cash received from returns
on investments
Net cash received from 7,064,483.56 8,423,344.25
disposal of fixed assets,
intangible assets and other
long-term assets
Cash received from
disposal of subsidiaries and
other business units
Other cash received relating 347,902,490.45 281,403,186.19
to investing activities
Sub-total of cash inflows 3,237,218,976.76 1,728,091,202.54
Cash paid to acquire fixed 25,714,852,414.63 13,391,395,161.48
assets, intangible assets and
other long-term assets
Cash paid to acquire 2,503,807,796.91 939,228,172.71
investments
Net increase in pledged
loans
Cash paid to acquire
subsidiaries and other
business units
Other cash paid relating to 1,315,628,697.98 495,190,393.63
investing activities
Sub-total of cash 29,534,288,909.52 14,825,813,727.82
outflows
Net cash flows from -26,297,069,932.76
-13,097,722,525.28
investing activities
III. Cash flows from financing activities :
Cash received from capital 6,300,000.00
contribution
Including: Cash received 6,300,000.00
from investment by minority
interests of subsidiaries
Cash received from 97,969,621,917.23 72,179,717,682.00
borrowings
Cash received relating to 3,735,166,378.16 10,949,520,513.01
other financing activities
Sub-total of cash inflows 101,711,088,295.39 83,129,238,195.01
Cash repayments of 74,702,848,106.14 67,818,014,305.56
amounts borrowed
Cash payments for interest 12,120,673,280.05 9,984,438,506.54
expenses and distribution of
dividends or profits
Including: Dividend paid to 2,653,648.05
minority interests of
subsidiaries
Other cash payments 4,482,150,476.99 12,714,372,824.46
relating to financing activities
Sub-total of cash 91,305,671,863.18 90,516,825,636.56
outflows
Net cash flows from 10,405,416,432.21
-7,387,587,441.55
financing activities
IV. Effect of foreign 671,837,669.76 -89,431,227.90
exchange rate changes on
cash
V. Net increase in cash and 10,734,154,952.64 -1,904,567,450.62
cash equivalents
Add: Opening balance of 9,589,548,876.75 11,494,116,327.37
cash and cash equivalent
VI. Closing balance of cash 20,323,703,829.39 9,589,548,876.75
and cash equivalent
Legal representative: Fan Hongwei Person in charge of financial function: Liu Xuefen Prepared by: Zheng Minxia
Parent Company Cash Flows Statement
For the year ended 31 December 2022
Unit: Yuan Currency: RMB
Item Note 2022 2021
I. Cash flows from operating activities:
Cash received from sales of
goods or rendering of services
Tax refund received 65,555,330.97 44,265,082.26
Other cash received relating 993,485,513.95 910,731,814.54
to operating activities
Sub-total of cash inflows 1,059,040,844.92 954,996,896.80
Cash paid for goods and
services
Cash paid to and on behalf of 7,320,727.56 6,422,177.03
employees
Payments of all types of 19,550,279.49 9,320,023.36
taxes
Other cash paid relating to 119,160,048.56 1,736,414,544.10
operating activities
Sub-total of cash outflows 146,031,055.61 1,752,156,744.49
Net cash flows from 913,009,789.31 -797,159,847.69
operating activities
II. Cash flows from investing activities:
Cash received from disposal 577,647.63
of investments
Cash received from returns 6,423,294,874.00 11,569,955,000.00
on investments
Net cash received from 100,000.00
disposal of fixed assets,
intangible assets and other
long-term assets
Cash received from disposal
of subsidiaries and other
business units
Other cash received relating
to investing activities
Sub-total of cash inflows 6,423,872,521.63 11,570,055,000.00
Cash paid to acquire fixed 1,458,394,502.24 718,503,491.24
assets, intangible assets and
other long-term assets
Cash paid to acquire 1,000,000,000.00 405,030,000.00
investments
Cash paid to acquire
subsidiaries and other business
units
Other cash paid relating to
investing activities
Sub-total of cash outflows 2,458,394,502.24 1,123,533,491.24
Net cash flows from 3,965,478,019.39 10,446,521,508.76
investing activities
III. Cash flows from financing activities :
Cash received from capital
contribution
Cash received from 1,998,113,207.54
borrowings
Cash received relating to 382,298,725.15 733,671,060.00
other financing activities
Sub-total of cash inflows 2,380,411,932.69 733,671,060.00
Cash repayments of 1,000,000,000.00
amounts borrowed
Cash payments for interest 7,111,099,533.86 5,476,226,684.76
expenses and distribution of
dividends or profits
Other cash payments 170,000,000.00 3,880,275,628.39
relating to financing activities
Sub-total of cash outflows 7,281,099,533.86 10,356,502,313.15
Net cash flows from -4,900,687,601.17 -9,622,831,253.15
financing activities
IV. Effect of foreign exchange
rate changes on cash
V. Net increase in cash and -22,199,792.47 26,530,407.92
cash equivalents
Add: Opening balance of 54,180,520.50 27,650,112.58
cash and cash equivalent
VI. Closing balance of cash 31,980,728.03 54,180,520.50
and cash equivalent
Legal representative: Fan Hongwei Person in charge of financial function: Liu Xuefen Prepared by: Zheng Minxia
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Unit: Yuan Currency: RMB
Item 2022
TOTAL
Minority
Equity attributable to the parent company OWNERS’E
interests
QUITY
Ge
ner
Paid-in Other
Less: al Ot
capital (or Other equity Capital compreh Specific Surplus Undistribu
Treasury risk her Subtotal
Share instruments reserve ensive reserve reserve ted profits
shares res s
capital) income
erv
e
Pref
Perp
erre Ot
etual
d her
bon
shar s
ds
es
I. 7,039,09 18,455,8 228,62 - 139,116, 858,111, 31,118,45 57,231,38 69,336, 57,300,71
Balance 9,786.00 44,491.6 6,593.1 150,616, 306.31 239.40 4,108.29 2,961.16 250.34 9,211.50
at end
of
previou
s year
Add:
Change
s in
account
ing
policies
Co
rrection
of
errors
Bu
siness
combin
ation
under
commo
n
control
Ot
hers
II. 7,039,09 18,455,8 228,62 - 139,116, 858,111, 31,118,45 69,336, 57,300,71
Balance 9,786.00 44,491.6 6,593.1 150,616, 306.31 239.40 4,108.29 250.34 9,211.50
in 57,231,38
beginni 2,961.16
ng of
year
III. 230,671, - 100,564 - 47,454, - - - -
Movem 636.12 228,62 ,060.24 137,514, 461.35 4,838,64 4,368,83 11,490, 4,380,32
ent
over
the year
( “- “for
decrea
se)
(I) Total 100,564 2,318,30 2,418,867 4,221,9 2,423,08
compre ,060.24 3,166.69 ,226.93 00.68 9,127.61
hensive
income
(II) 230,671, - 459,298, - 445,343,
Owner’ 636.12 228,62 229.30 13,954, 306.92
s
contrib
utions
and
decrea
se of
capital
Capital
contrib
ution
from
owner
Increas
e in
owners’
equity
resulte
d from
other
equity
instrum
ents
Increas 49.00 49.00 9.00
e in
owners’
equity
resulte
d from
share-
based
paymen
ts
Others 87.12 228,62 80.30 13,954, 57.92
(III) 47,454, - - - -
Approp 461.35 7,156,94 7,109,49 1,757,2 7,111,248,
riation
of
profits
Transfe 461.35 47,454,4
r to
surplus
reserve
Transfe
r to
general
risk
reserve
Distribu 7,109,49 7,109,49 1,757,2 7,111,248,
tion to
owners
(or
shareh
olders)
Others
(IV)
Transfe
r within
equity
Capital
reserve
convert
ing into
share
capital
(or
Share
capital)
Surplus
reserve
convert
ing into
share
capital
(or
Share
capital)
Surplus
reserve
cover
the
deficit
Change
s of
equity
from
the
revaluat
ion of
defined
benefit
plan
compre
hensive
income
transfer
to
retaine
d
earning
s
Others
(V) - - -
Specific 137,514, 137,514,0 137,514,0
reserve
Approp ,171.73 71.73 71.73
riation
for the
year
in the 8,238.2 238.25 238.25
year
(VI)
Others
IV. 7,039,099, 18,686,51 - - 1,602,23 905,56 26,279,8 52,862,5 57,846, 52,920,3
Balance 786.00 6,127.76 50,052, 9.79 5,700.7 12,029.77 43,567.0 001.49 89,568.5
at end
of year
Item 2021
TOTAL
Minority
Equity attributable to the parent company OWNERS’
interests
EQUITY
Ge
ner
Paid-in Other
Less: al Ot
capital (or Other equity Capital compreh Specific Surplus Undistribut
Treasury risk her Subtotal
Share instruments reserve ensive reserve reserve ed profits
shares res s
capital) income
erv
e
Pref
Perp
erre Ot
etual
d her
bon
shar s
ds
es
I. 7,039,09 18,350,11 324,811, - 77,581, 743,268 21,120,64 46,905,0 119,314, 47,024,3
Balance 9,786.00 5,179.65 781.18 100,823 307.23 ,339.04 8,008.95 76,877.16 084.65 90,961.81
at end
,962.53
of
previou
s year
Add: - - -
Change 5,201,03 5,201,038 5,201,03
s in
account
ing
policies
Co
rrection
of
errors
Bu
siness
combin
ation
under
commo
n
control
Ot
hers
II. 7,039,09 18,350,11 324,811, - 77,581, 743,268 21,115,44 46,899,8 119,314, 47,019,18
Balance 9,786.00 5,179.65 781.18 100,823 307.23 ,339.04 6,970.05 75,838.26 084.65 9,922.91
in
,962.53
beginni
ng of
year
III. 105,729,3 - - 61,534, 114,842, 10,003,0 10,331,50 - 10,281,52
Movem 11.99 96,185,1 49,792, 999.08 900.36 07,138.24 7,122.90 49,977, 9,288.59
ent
over
the year
( “- “for
decreas
e)
(I) Total - 15,531,07 15,481,28 5,996,5 15,487,28
compre 49,792, 6,723.36 4,308.59 82.97 0,891.56
hensive
income
(II) 105,729,3 - 201,914,4 - 149,498,
Owner’ 11.99 96,185,1 99.99 52,415, 739.47
s
contrib
utions
and
decreas
e of
capital
Capital
contrib
ution
from
owner
Increas
e in
owners’
equity
resulted
from
other
equity
instrum
ents
Increas 13.19 13.19 36,361. 51.47
e in
owners’
equity
resulted
from
share-
based
paymen
ts
Others 628,801. 96,185,1 86.80 52,379, 88.00
(III) 114,842, - - - -
Approp 900.36 5,528,06 5,413,226 3,558,6 5,416,78
riation
of
profits
Transfe 900.36 114,842,9
r to
surplus
reserve
Transfe
r to
general
risk
reserve
Distribu 5,413,226 5,413,226 3,558,6 5,416,78
tion to
,684.76 ,684.76 56.76 5,341.52
owners
(or
shareho
lders)
Others
(IV)
Transfe
r within
equity
Capital
reserve
converti
ng into
share
capital
(or
Share
capital)
Surplus
reserve
converti
ng into
share
capital
(or
Share
capital)
Surplus
reserve
cover
the
deficit
Change
s of
equity
from
the
revaluat
ion of
defined
benefit
plan
compre
hensive
income
transfer
to
retaine
d
earning
s
Others
(V) 61,534, 61,534,99 61,534,9
Specific 999.08 9.08 99.08
reserve
Approp 652.03 52.03 52.03
riation
for the
year
in the ,652.95 52.95 52.95
year
(VI)
Others
IV. 7,039,09 18,455,8 228,62 - 139,116, 858,111, 31,118,45 69,336, 57,300,71
Balance 9,786.00 44,491.6 6,593.1 150,616, 306.31 239.40 4,108.29 57,231,38 250.34 9,211.50
at end 2,961.16
of year
Legal representative: Fan Hongwei Person in charge of financial function: Liu Xuefen Prepared by: Zheng Minxia
Parent Company Statement of Changes in Equity
For the year ended 31 December 2022
Unit: Yuan Currency: RMB
Item 2022
Paid-in Other
Less: Undistrib TOTAL
capital (or Capital compreh Specific Surplus
Other equity instruments Treasury uted OWNERS’
Share reserve ensive reserve reserve
shares profits EQUITY
capital) income
Preferred Perpetual
Others
shares bonds
I. Balance at end of previous 7,039,09 - - - 23,989,3 228,626, 2,092,4 7,433,9 40,326,2
year 9,786.00 06,711.37 593.18 63,830. 83,405.1 27,139.71
Add: Changes in accounting
policies
Correction of errors
Others
II. Balance in beginning of 7,039,09 23,989,3 228,626, 2,092,4 7,433,9 40,326,2
year 9,786.00 06,711.37 593.18 63,830. 83,405.1 27,139.71
III. Movement over the year -
( “- “for decrease) - -
- - - - 228,626, - - 853,214,
(I) Total comprehensive 5,873,97 5,873,97
income 7,618.88 7,618.88
(II) Owner’s contributions 153,672,1 - 382,298,
and decrease of capital 31.97 228,626, 725.15
owner
resulted from other equity
instruments
resulted from share-based
payments
(III) Appropriation of profits 587,397, - -
shareholders) 7,109,49 7,109,49
(IV) Transfer within equity
into share capital (or Share
capital)
converting into share capital
(or Share capital)
deficit
the revaluation of defined
benefit plan
income transfer to retained
earnings
(V) Specific reserve
(VI) Others
IV. Balance at end of year 7,039,09 - - - 24,142,9 - - - 2,679,86 5,611,07 39,473,0
Item 2021
Paid-in Other
Less: Undistrib TOTAL
capital (or Capital compreh Specific Surplus
Other equity instruments Treasury uted OWNERS’
Share reserve ensive reserve reserve
shares profits EQUITY
capital) income
Preferred Perpetual
Others
shares bonds
I. Balance at end of previous 7,039,09 23,794,7 324,811,7 1,270,35 5,448,21 37,227,6
year 9,786.00 48,212.7 81.18 3,247.78 4,846.5 04,311.8
Add: Changes in
accounting policies
Correction of errors
Others
II. Balance in beginning of 7,039,09 23,794,7 324,811,7 1,270,35 5,448,21 37,227,6
year 9,786.00 48,212.7 81.18 3,247.78 4,846.5 04,311.8
III. Movement over the year 194,558, - 822,110, 1,985,76 3,098,6
( “- “for decrease) 498.67 96,185,1 582.60 8,558.61 22,827.8
(I) Total comprehensive 8,221,10 8,221,10
income 5,825.9 5,825.97
(II) Owner’s contributions 194,558, - 290,743,
and decrease of capital 498.67 96,185,1 686.67
owner
resulted from other equity
instruments
resulted from share-based 498.67 498.67
payments
(III) Appropriation of profits 822,110, - -
reserve 582.60 822,110,
shareholders) 5,413,22 5,413,22
(IV) Transfer within equity
converting into share
capital (or Share capital)
converting into share
capital (or Share capital)
deficit
the revaluation of defined
benefit plan
income transfer to retained
earnings
(V) Specific reserve
(VI) Others
IV. Balance at end of year 7,039,09 23,989,3 228,626, 2,092,4 7,433,9 40,326,2
Legal representative: Fan Hongwei Person in charge of financial function: Liu Xuefen Prepared by: Zheng Minxia
III. Company information
Hengli Petrochemical Co., Ltd. (hereinafter referred to as ”the Company”) is formerly known as
Dalian Rubber & Plastics Machinery Co., Ltd. (hereinafter referred to as ”DXS”), whose name was
changed on 27 May 2016. The Company was founded on 9 March 1999. The Company's shares
were listed on the Shanghai Stock Exchange on 20 August 2001 with stock name: Hengli
Petrochemical and stock code: 600346. The unified social credit code of the Company is
Office Building, No.298 Changsong Road, Lingang Industrial Zone, Changxing Island, Dalian,
Liaoning Province. The legal representative is Fan Hongwei. The Company’s registered capital is
RMB 7,039,099,786.00 with total number of shares of 7,039,099,786 shares with par value of RMB
On 27 January 2016, China Securities Regulatory Commission approved the Company’s major
asset restructuring through document “Approval of Dalian Rubber & Plastics Machinery Co., Ltd.’ s
major asset restructuring and issue shares to Hengli Group Co., Ltd. to raise capital for assets
purchasing” (Securities Regulatory approval [2016] No.187). The major asset restructuring includes:
(1) DXS’s previous holding company Dalian State-owned Assets Investment and Operation Group
Co., Ltd. (hereinafter referred to as ”DGJ”) transferred 200,202,495 shares (29.98% of DXS’s total
capital) of DXS’s shares to Hengli Group Co., Ltd. (hereinafter referred to as ”Hengli Group”) with a
price of RMB 5.8435 per share;(2) DXS sold all assets and liabilities as of 30 June, 2015 to Dalian
Yinghui Machinery Manufacturing Co., Ltd. and received cash as consideration;(3) The Company
issued 1,906,327,800 shares by private placement to acquire 85% shares in Jiangsu Hengli
Chemical Fiber Co., Ltd. (hereinafter referred to as ”Hengli Chemical Fiber”) which were held by
Hengli Group, Dechengli International Group Co. (hereinafter referred to as the ”Dechengli”),
Jiangsu Hegao Investment Co., Ltd. (hereinafter referred to as ”Hegao Investment”) and Hailaide
international investment Ltd. (hereinafter referred to as ”Hailaide”), and paid in cash to acquire 14.99%
shares of Hengli Chemical Fiber which were held by Hegao investment. The issuance of shares
mentioned above were verified by Ruihua Certified Public Accountants (LLP) and issued capital
verification reports Ruihua YanZi No.33030006 [2016] . After the issuance of shares, the number of
total outstanding shares of the Company increased to 2,574,114,642 shares;(4) The Company
issued 251,572,300 shares by private placement to Jiangsu Soho Investment Group Co. Ltd.,
Xiamen Xiangyu Co. ,Ltd. and other six specific investors to raise supporting funds for this assets
purchasing. The issuance of shares in above was verified by Ruihua Certified Public Accountants
(LLP) and issued capital verification reports Ruihua Yan Zi No.33030014 [2016] . After the issuance
of shares, the number of total outstanding shares of the Company increased to 2,825,686,942
shares.
On 31 January 2018, according to the ”Approval on Purchase of Assets by issuance of shares
to Fan Hongwei and others, and Raising of Supporting Funds by Hengli Petrochemical Co., Ltd.”
(Zheng Jian Xu Ke [2018] No.235) issued by China Securities Regulatory Commission, the Company
implemented the assets restructuring which included (1) The Company issued 1,719,402,983 shares
by private placement to Fan Hongwei, Hengneng Investment (Dalian) Co., Ltd. (hereinafter referred
to as ”Hengneng Investment”) and Hengfeng Investment (Dalian) Co., Ltd. (hereinafter referred to
as ”Hengfeng Investment”) to acquire 100% shares of Hengli Investment (Dalian) Co., Ltd.
(hereinafter referred to as ”Hengli Investment”) and 100% shares of Hengli Petrochemical (Dalian)
Refining Co., Ltd. (hereinafter referred to as ”Hengli Refining”). The share issuance mentioned above
were verified by Ruihua Certified Public Accountants (LLP) and issued capital verification reports
Ruihua YanZi No.33050001 [2018] . After the issuance of shares, the number of total outstanding
shares of the Company increased to 4,545,089,925 shares; (2) The Company issued 507,700,000
shares by private placement to Ping An Asset Management Co., Ltd., Beixin Ruifeng Fund
Management Co., Ltd., and other six specific investors to raise supporting funds for this assets
purchasing. The share issuance mentioned above were verified by Ruihua Certified Public
Accountants (LLP) and issued capital verification reports Ruihua Yan Zi No.33050002 [2018] . After
the issuance of shares, the number of total outstanding shares of the Company increased to
On 30 April 2019, the Company’s annual shareholders meeting of 2018 resolved the ”Proposal
of the Company’s profit distribution and conversion of capital reserve to share capital of 2018”.
Based on the total number of outstanding shares of 4,965,774,651 shares (being total shares of
converted to share capital by issuance of 0.4 shares for each share held by all shareholders and the
total shares increased by 1,986,309,861 shares. Share registration date was 26 June 2019. After the
increment in shares, the number of total outstanding shares of the Company increased to
The primary organizational structure of the Company: In accordance with the provisions of
national laws and regulations and the Company's articles of association, a standardized multi-level
governance structure consisting of shareholders’ general meeting, the board of directors, the
board of supervisors and the management has been established; the board of directors has
strategy committee, audit committee and remuneration committee, nomination committee and the
board office. The Company has sales department, purchasing department, general manager's
office, personnel department, production department, quality control department, finance
department, securities department and other major functional departments.
The Company engages in petrochemical industry. The business scope is: production and sales
of chemical fibers (excluding chemical dangerous goods); sales of purified terephthalic acid (PTA);
import and export of goods. The main products are oil refining products, chemical products, PTA,
polyester chips, polyester fibers and films, etc.
The financial statements and notes to the financial statements have been approved to issue
by the Board of Directors on 26 April 2023.
There are total 87 subsidiaries in the scope of consolidation of the Company in 2022. Details
refer to ”Interests in other entities”. Comparing with previous year, the scope of consolidation of the
Company increased 21 entities and decrease of 7 deregistered entities and there was no transfer of
entities, details refer to ”Changes in scope of consolidation”.
II. Basis of preparation of financial statements
The financial statements of the Company are prepared on going concern basis and in
compliance with Accounting Standards for Business Enterprises and guidelines, interpretations
and other related provisions promulgated by the Ministry of Finance (collectively,” Accounting
Standards for Business Enterprises”). In addition, the Company also discloses relevant financial
information according to Information Disclosures Regulations for Companies that Offering Shares
in Public No.15 - General Provision of Preparing Financial Report (revised in 2014) issued announced
by China Securities Regulatory Commission.
The Company has no events or circumstances that have caused significant doubts about the
assumption of going concern within 12 months after the end of the reporting period.
III. Significant accounting policies and accounting estimates
Specific accounting policies and accounting estimates:
The Company and its subsidiaries determines certain specific accounting policies and
accounting estimates for impairment of receivables, depreciation of fixed assets, amortization of
intangible assets and revenue recognition according to the characteristics of the production and
operation. Specific accounting policies refer to the note to financial statements.
The financial statements have been prepared in compliance with the Accounting Standard for
Business Enterprises to truly and completely reflect the Company’s financial positions, operating
results and cash flows.
The financial year of the Company is from 1 January to 31 December of each calendar year.
The normal business cycle refers to the period from the purchase of assets for processing to
the realization of cash or cash equivalents. The Company considers 12 months as an operating
cycle and apply it as a standard for the liquidity of assets and liabilities.
The Company and domestic subsidiaries use Renminbi (“RMB”) as functional currency.
Overseas subsidiaries of the Company determine its functional currency as US dollar in
accordance with its primary economic environment of the business location and converted into
RMB in preparation of consolidated financial statements.
The financial statements of the Company have been prepared in RMB.
A business combination is a transaction or event that brings together two or more separate
entities into one reporting entity. Business combinations are classified into business combinations
involving enterprises under common control and business combinations not involving enterprises
under common control.
A business combination involving enterprises under common control is a business
combination in which all of the combining enterprises are ultimately controlled by the same party
or parties both before and after the combination, and that control is not transitory.
Assets acquired and liabilities assumed by acquirer in the business combination are
measured at their carrying amounts of the acquiree in the consolidated financial statements of the
ultimate controlling party at the combination date, except for adjustments due to different
accounting policies. The difference between the carrying amount of the consideration paid for the
combination (or total par value of shares issued) and the carrying amount of the net assets
acquired is adjusted to capital reserve. If the capital reserve is not sufficient to absorb the
difference, any excess is adjusted to retained earnings.
Business combinations involving entities under common control achieved in stages and
involved multiple transactions, the difference between the carrying amount of the net assets
acquired and the sum of carrying amount of investment prior to combination date and carrying
amount of new considerations paid for the combination at the combination date is adjusted to
capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess is
adjusted against retained earnings. The profit or loss, other comprehensive income and changes
in other owner’s equity recognized by the acquirer during the period from the later of initial
investment date and the date that the acquirer and acquiree both under common ultimate control
to the combination date are offset the opening retained earnings or profit for loss for the current
period in the comparative statements, except for other comprehensive income arising from the
remeasurement of the net benefit or net asset change of the defined benefit plan by the investee.
A business combination involving enterprises not under common control is a business
combination in which all of the combining enterprises are not ultimately controlled by the same
party or parties both before and after the business combination.
Where the cost of combination exceeds the acquirer’s interest in the fair value of the
acquiree’s identifiable net assets, the difference is recognized as goodwill. Where the cost of
combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets, firstly the acquirer shall reassess the measurement of the fair values of the acquiree’s
identifiable assets, liabilities and contingent liabilities and measurement of the cost of combination,
and then if the cost of combination is still less than the acquirer’s interest in the fair values of the
acquiree’s identifiable net assets after that reassessment, the acquirer shall recognize the
remaining difference immediately in profit or loss for the current period.
If, at the date of combination or the end of the current period, due to various factors, the fair
value of each asset paid as consideration for the combination or the fair value of the identifiable
assets and liabilities of the purchased party is obtained during the combination cannot be
reasonably determined, the Company calculates the value of business combination based on the
temporarily determinable value. If, within the 12 months after acquisition, additional information
can prove the existence of related information at acquisition date and the contingent
consideration need to be adjusted, it is deemed to happen on the date of combination and
retrospectively adjusted. Any adjustment of consideration for the combination or value of
identifiable assets or liabilities made after 12 months of combination, the adjustment should follow
Accounting Standard for Business Enterprise No.28 – Changes in accounting policies, accounting
estimates and correction of error.
Where the temporary difference obtained by the acquirer was not recognized due to
inconformity with the conditions applied for recognition of deferred income tax, if, within the 12
months after acquisition, additional information can prove the existence of related information at
acquisition date and the expected economic benefits on the acquisition date arising from
deductible temporary difference by the acquiree can be achieved, relevant income tax assets can
be recognized, and goodwill can be adjusted accordingly. If the goodwill is not sufficient, the
difference is recognized as profit or loss for the current period. Apart from above, the differences
is taken into profit or loss of the current period if the recognition of deferred income tax assets is
related to the business combination.
For business combinations involving entities not under common control achieved in stages
that involves multiple transactions, the Company determine whether the multiple transactions
belongs to a single transactions in accordance with accounting standards. If the terms, conditions
and economic impact of the disposal comply with any cases as following, the multiple transactions
should be accounted as if a single transaction. ① These transactions are concluded
simultaneously or affected by each other. ② To reach a complete business results, these
transactions is as a whole. ③ Whether one transaction happening or not is up to another
transaction. ④ To assess one transaction separately is not economical but assess along with other
transactions, they are economically justified.
In a business combination achieved in stages and considered as a single transaction, the
transactions should be regard all as one acquisition. For those cannot be considered as a single
transaction, the combination cost is the sum of consideration paid at acquisition date and fair value
of the acquiree's equity investment held prior to acquisition date; the cost of equity of the acquiree
held prior to acquisition date shall be re-measured at the fair value at acquisition date, the
difference between the fair value and the carrying amount shall be recognized as investment
income or loss for the current period. Other comprehensive income and changes of investment
equity related with acquiree's equity held prior to acquisition date shall be transferred to
investment profit or loss for current period at acquisition date, besides there is other
comprehensive income incurred by the changes of net assets or net liabilities due to the
remeasurement of defined benefit plan.
The overhead for the business combination, including the expenses for audit, legal services,
valuation advisory, and other administrative expenses, are recorded in profit or loss for the current
period when incurred. The transaction costs of equity or debt instruments issued as the
considerations of business combination are included in the initial recognition amount of the equity
or debt instruments.
The scope of consolidated financial statements is determined on the basis of control. Control
exists when the Company has power over the investee; is exposed, or has rights to variable
returns from its involvement with the investee; and has the ability to use its power to affect its
returns. A subsidiary is an entity that is controlled by the Company (including enterprise, a portion
of an investee as a deemed separate entity, and structured entity controlled by the enterprise).
The consolidation scope of consolidated financial statements is determined on the basis of
control, including the financial statements of the Company and all of its subsidiaries. In preparing
consolidated financial statements, subsidiaries adopt the same accounting period and accounting
policies as those of the Company.
All assets, liabilities, interests, income, fees and cash flows resulting from intra-group
transactions are eliminated on consolidation in full.
Where a subsidiary or business has been acquired through a business combination involving
enterprises under common control in the reporting period, the subsidiary or business is deemed to
be included in the consolidated financial statements from the date they are controlled by the
ultimate controlling party. Their operating results and cash flows are included in the consolidated
income statement and consolidated cash flow statement respectively from the date they are
controlled by the ultimate controlling party. During the reporting period, the opening balance of
the consolidated balance sheet was being adjusted, and the related items of the comparative
statement were being adjusted as if the reporting entity has exercised control since the time when
the ultimate controlling party began to control.
Where a subsidiary has been acquired through a business combination involving entities not
under common control, the opening balances of the consolidated balance sheet shall not be
adjusted for the subsidiary or the business, the subsidiary's revenue, expenses and profit shall be
included in the consolidated income statement, and cash flows shall be included in the
consolidated cash flow statement from the acquisition date to the end of the reporting date.
The shareholders’ equity of the subsidiaries that is not attributable to the Company is
presented under shareholders’ equity in the consolidated balance sheet as minority interest. The
portion of net profit or loss of subsidiaries for the period attributable to minority interest is
presented in the consolidated income statement under the profit or loss attributable to minority
interest. When the amount of loss attributable to the minority shareholders of a subsidiary exceeds
the minority shareholders’ portion of the opening balance of owners’ equity of the subsidiary, the
excess amount shall be allocated against minority interest.
losing control
Where the Company acquires a minority interest from a subsidiary’s minority shareholders or
disposes of a portion of an interest in a subsidiary without a change in control, the transaction is
treated as equity transaction, and the book value of shareholder’s equity attributed to the
Company and to the minority interest is adjusted to reflect the change in the Company’s interest in
the subsidiaries. The difference between the proportion interests of the subsidiary’s net assets
being acquired or disposed and the amount of the consideration paid or received is adjusted to
the capital reserve (share premium) in the consolidated balance sheet, with any excess adjusted to
retained earnings.
When the Company disposes of a subsidiary, the income, expenses, and profit of the
subsidiary from the beginning of current period to the disposal date are included in the
consolidated income statement; the cash flows of the subsidiary from the beginning of current
period to the disposal date is included in the consolidated cash flow statement. For the loss of
control over a subsidiary due to disposal of a portion of the equity investment or other reasons, the
remaining equity is measured at fair value on the date when the control is lost. The difference
arising from the sum of consideration received for disposal of equity interest and the fair value of
remaining equity interest over the share of net assets of the former subsidiary calculated
continuously since the purchase date based on the shareholding percentage before disposal are
recognised as investment income in the period when the control is lost. Other comprehensive
income related to equity investment in the subsidiary is accounted for on the same accounting
treatment as direct disposal of relevant asset or liability by the acquiree at the time when the
control is lost (i. e. to be transferred to investment income, except for the changes arising from
remeasuring net assets or net liabilities of defined benefit plan of the subsidiary using the equity
method). The remaining equity interests are measured subsequently according to ”Accounting
Standard for Business Enterprises No.2 – Long-term Equity Investments” or ”Accounting Standard
for Business Enterprises No.22 – Recognition and Measurement of Financial Instruments”.
See ”Long-term equity investments” or ”Financial instruments” for details.
When the Company disposes of equity investment in a subsidiary by a stage-up approach
with multiple transactions until the control over the subsidiary is lost, it shall determine whether
these multiple transactions related to the disposal of equity investment in a subsidiary until the
control over the subsidiary is lost belong to ”A single transaction”.
For those arrangements qualified as a single transaction, the carrying amount of long-term
equity investments relating to each transaction of disposal is derecognized, the difference
between the consideration received and the carrying amount of disposed long-term equity
investments is recognized as other comprehensive income, and finally is recognized in profit or
loss for the current period at the date of losing control.
For those arrangements are not regarded as a single transaction, the accounting treatment
shall follow “disposal of interests in subsidiary without losing control” and “for the loss of control
over a subsidiary due to disposal of a portion of the equity investment or other reasons” as
appropriate. The difference between each consideration received and the share of carrying value
of net assets in proportion to disposed portion of shareholding percentage in the subsidiary is
recognized in capital reserve as an equity transaction. Capital reserve is not transferred to profit or
loss for the current period when losing control.
Cash as presented in cash flow statement refers to cash on hand and deposit on demand for
payment. Cash equivalents refer to short-term (generally refers to the expiration within 3 months
from the purchase date), highly liquid investments that can be readily converted to cash and that
are subject to an insignificant risk of changes in value.
currencies
Foreign currency transactions are translated into the functional currency of the Company at
the spot exchange rates (as announced by the People’s Bank of China) on the dates of the
transactions. However, the Company’s foreign currency exchange business or transactions
involving foreign currency conversion are converted into the amount of the recording currency
according to the actual exchange rate.
At the balance sheet date, Items in foreign currencies are translated using the spot exchange
rates at the balance sheet date. All the resulting exchange differences are taken to profit or loss,
except for (1) those relating to foreign currency borrowings specifically for acquisition and
construction of assets qualified for capitalisation, which are capitalised in accordance with the
principle of capitalisation of borrowing costs; (2) non-monetary foreign currency items are
designated as part of the hedge of the Company’s net investment of a foreign operation are
recognised in other comprehensive income until the net investment is disposed of, at which the
cumulative amount is reclassified to the profit or loss for the current period; and (3) non-monetary
foreign currency items measured at historical cost shall still be translated at the spot exchange
rates prevailing on the transaction dates, while the amounts denominated in the functional
currencies do not change.
Non-monetary foreign currency items measured at historical cost shall still be translated at
the spot exchange rates prevailing on the transaction dates, while the amounts denominated in
the functional currencies do not change. Non-monetary foreign currency items measured at fair
value are translated at the spot exchange rates prevailing on the date on which the fair values are
determined. The resulting exchange differences are recognised in profit or loss or as other
comprehensive income for the current period, depending on the nature of the non-monetary item.
The financial statements denominated in foreign currency of a foreign operation are
translated to RMB in compliance with the following requirements: assets and liabilities on the
balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;
owner’s equity items except for “undistributed profits” are translated at the spot exchange rates at
the dates on which such items arose; income and expenses items in the income statement are
translated at the average exchange rate for the period in which the transaction occurred. The
undistributed profits brought forward are reported at the prior year’s closing balance; the
undistributed profits as at the end of the year are presented after translated the profit
appropriation items; differences between the aggregate of asset and liability items and owners’
equity items are recognised as ”translation differences arising on the translation of financial
statements denominated in foreign currencies” in other comprehensive income. On disposal of
foreign operations and loss of control, exchange differences arising from the translation of
financial statements denominated in foreign currencies related to the disposed foreign operations
which has been included in owners’ equity in the balance sheet, shall be transferred to profit or
loss in whole or in proportionate share in the period in which the disposal took place.
Items of the cash flow statement are translated using the spot exchange rate when it incurs.
Effects arising from changes of exchange rates on cash and cash equivalents is presented
separately as ”Effect of changes in exchange rates on cash and cash equivalents” in the cash flow
statement.
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a
financial liability or equity instrument of another enterprise. Financial instruments include financial
assets, financial liabilities and equity instruments.
(1) Recognition and initial measurement of financial assets and liabilities
Financial asset or financial liability will be recognised when the Company became one of the
parties under a financial instrument contract. For the purchase or sale of financial assets in a
conventional way, the Company recognizes the assets received and liabilities assumed on the
transaction day.
Financial assets and liabilities are measured at fair value upon initial recognition. For financial
assets measured at fair value through profit or loss, relevant transaction costs are directly
recognised in profit or loss for the period. For other categories of financial assets and liabilities,
relevant transaction costs are included in the amount initially recognised. Accounts receivable
without significant financing component are initially recognised based on the transaction price
expected to be entitled by the Company.
(2) Classification and measurement of financial assets
The Company classifies the financial assets according to the business model for managing
the financial assets and characteristics of the contractual cash flows as follows: financial assets
measured at amortised cost, financial assets measured at fair value through other comprehensive
income, and financial assets measured at fair value through profit or loss.
A financial asset is measured at amortised cost if it meets both of the following conditions:
①The Company’s business model for managing such financial assets is to collect contractual cash
flows;② The contractual terms of the financial asset stipulate that cash flows generated on
specific dates are solely payments of principal and interest on the principal amount outstanding.
Subsequent to initial recognition, such financial assets are measured at amortised cost using
the effective interest method. A gain or loss on a financial asset that is measured at amortised cost
shall be recognised in profit or loss for the current period when the financial asset is derecognised,
amortised using the effective interest method or with impairment recognised.
For financial assets at amortized costs, it is recognized on the initially recognized amount
adjusted by: (1) after deducting the already paid principal; (2) after multiplying or subtracting the
accumulative amount of amortization incurred from amortizing the balance between the initially
recognized amount and the amount of the maturity date by employing the actual interest rate
method; and (3) after deducting the impairment losses that have actually incurred (applicable to
financial assets only).
The effective interest method refers to the method whereby the post-amortization costs and
the interest incomes of different installments or interest expenses are calculated according to the
effective interests of the financial asset or financial liabilities (including a set of financial assets or
financial liabilities). The effective interest refers to the interest rate used to cash the future cash
flow of a financial asset or financial liability within the predicted term of existence or within a
shorter applicable term into the current carrying amount of the financial asset or financial liability.
When determining the effective interest, the future cash flow shall be predicted on the basis of
taking into account all the contractual stipulations concerning the financial asset or financial liability
(including the right to repay the loans ahead of schedule, call options, similar options, etc.), but the
future credit losses shall not be taken into account.
The Company recognizes interest income based on the calculation of financial asset book
balance multiplied by the effective interest rate, except for the following circumstances: ① For
purchased or originated financial assets that have incurred credit impairment, from the initial
recognition, their interest income is determined on the financial asset amortization costs and
credit-adjusted effective interest rates; ② For the purchased or originated financial assets without
credit impairment, but become credit impaired in the subsequent period, the interest income is
determined according to the amortized cost and effective interest rate of the financial asset. If the
financial instrument has no credit impairment due to the improvement of its credit risk in the
subsequent period, and this improvement can be objectively related to an event that occurs after
the application of the above regulations, interest income should be determined by multiplying the
effective interest rate and the financial asset book balance.
Financial asset is classified as measured at fair value through other comprehensive income if
it meets both of the following conditions: ①The Company’s business model for managing such
financial assets is achieved both by collecting collect contractual cash flows and selling such
financial a. ② The contractual terms of the financial asset stipulate that cash flows generated on
specific dates are solely payments of principal and interest on the principal amount outstanding.
Subsequent to initial recognition, such financial assets are subsequently measured at fair
value. Interest calculated using the effective interest method, impairment losses or gains and
foreign exchange gains and losses are recognised in profit or loss for the current period, and other
gains or losses are recognised in other comprehensive income. On derecognition, the cumulative
gain or loss previously recognised in other comprehensive income is reclassified from other
comprehensive income to profit or loss.
For non-trading equity instrument investment, the Company can irrevocably designate the
financial assets measured at fair value through other comprehensive income. Such designation is
made on individual basis of each non-trading equity instrument investment which also qualified as
equity instruments in the issuer’s perspective. Subsequent to such designation, dividend (except
for return of portion of investment costs) is recognized as profit or loss for the current period,
other gains or losses (including exchange gain or loss) are recognized in other comprehensive
income. On derecognition, the cumulative gain or loss previously recognised in other
comprehensive income is reclassified from other comprehensive income to profit or loss.
The Company classifies the financial assets other than those measured at amortised cost and
measured at fair value through other comprehensive income as financial assets measured at fair
value through profit or loss. Upon initial recognition, the Company irrevocably designates certain
financial assets that are required to be measured at amortised cost or at fair value through other
comprehensive income as financial assets measured at fair value through profit or loss in order to
eliminate or significantly reduce accounting mismatch.
Subsequent to initial recognition, such financial assets are subsequently measured at fair
value, any differences are gains or losses recorded in profit or loss for the current year.
(3) Classification and measurement of financial liabilities
The Company’s financial liabilities includes financial liabilities measured at fair value through
profit or loss, financial liabilities that arise when a transfer of a financial asset does not qualify for
derecognition or continuing involvement, financial guarantee contracts and financial liabilities at
amortized cost.
Financial liabilities measured at fair value through profit or loss includes trading financial
liabilities (including financial liabilities with embedded derivatives) and designated financial
liabilities measured at fair value through profit or loss. In a business combination involving
enterprises not under common control, if the Company, as a buyer, recognizes a financial liability
from the contingent consideration, the financial liability shall be accounted for at fair value through
profit or loss.
After initial recognition, financial liabilities measured at fair value through profit or loss are
subsequently measured at fair value. Any gains or losses generated are recognized in profit or loss
for the current period.
The amount of change in fair value of designated financial liabilities measured at fair value
through profit or loss due to changes in the Company’s own credit risk is included in other
comprehensive income unless the treatment causes or expands accounting mismatches in profit
or loss. Other changes in fair value of this financial liability are included in profit or loss for the
current period. Upon derecognition, the accumulated gains or losses previously included in other
comprehensive income are transferred out of other comprehensive income and included in
retained earnings.
derecognition or continuing involvement
Such financial liabilities are measured in according to the accounting policies of Transfer of
financial assets.
Financial guarantee contracts are contracts that require the issuer to make specified
payments to reimburse the contract holder for a loss the holder incurs because a specified debtor
fails to make payment when due in accordance with the terms of a debt instrument.
Financial guarantee contracts are not belonging to the above 1) or 2), they are subsequently
measured at the higher of the following: ① the amount of loss provision determined according to
the impairment method of financial instruments; ② the balance of the initial recognition amount
after deducting the accumulated amortization amount determined in accordance with the income
recognition method.
Apart from the above 1), 2) or 3), the Company classifies the remaining financial liabilities as
financial liabilities at amortized cost.
Such financial liabilities are measured at amortized cost using the effective interest rate
method after initial recognition, and the resulting gains or losses are included in profit or loss for
the current period when they are derecognized or amortized in accordance with the effective
interest rate method.
(4) Equity instruments
Equity instruments refer to contracts that can prove the ownership of the Company's
remaining equity in assets after deducting all liabilities. The Company issues (including
refinancing), repurchases, sells or cancels Equity instruments as a change in equity. Transaction
costs related to equity transactions are deducted from equity. The Company's various
distributions to equity instruments holders (excluding stock dividends) reduce shareholder equity.
The Company does not recognise the fair value changes of equity instruments.
The distinction between financial liabilities and equity instruments
Financial liabilities refer to liabilities that meet one of the following conditions:
party under potentially adverse conditions.
equity instruments in the future, under which the firm will deliver a variable number of its own
equity instruments.
instruments in the future, except for a derivative contract in which a fixed number of its own equity
instruments are to be exchanged for a fixed amount of cash or other financial assets.
If the Company cannot unconditionally avoid fulfilling a contractual obligation by delivering
cash or other financial assets, such contractual obligation meets the definition of a financial
liability.If a financial instrument has to be settled with or can be settled with the Company's own
equity instruments in the future, consideration needs to be given to whether the Company's own
equity instruments used to settle the instrument is to be used as a substitute for cash or other
financial assets, or to give the holder of the instrument the remaining interest in the issuer's assets
after deduction of all liabilities. If it is the former, the instrument is a financial liability of the
Company; if it is the latter, the instrument is an equity instrument of the Company.
(5) Derivative instruments and embedded derivative instruments
Derivative financial instruments include forward exchange contract, currency exchange rate
swap agreement, interest rate swap agreement and foreign currency option contract etc.
Derivative financial instruments are initially measured at the fair value of the date a derivative
contract entered into and subsequently measured at their fair value. Any gains or losses arising
from changes in fair value are directly recognized to profit or loss for the current period.
Embedded derivatives refer to derivatives embedded in non-derivatives (ie, host contracts).
For the hybrid contract composed of embedded derivatives and the host contract, if the host
contract is a financial asset, the Company does not split the embedded derivative from the hybrid
contract, but applies the hybrid contract as a whole to the Company's accounting policies in
classification of financial assets. If the host contract included in the hybrid contract is not a financial
asset and meets the following conditions at the same time, the Company will split the embedded
derivative from the hybrid contract and treat it as a separate derivative:
the economic characteristics and risks of the host contract.
definition of derivative.
loss for the current period for accounting treatment.
If the embedded derivative is split from the hybrid contract, the Company will account for the
host contract of the hybrid contract in accordance with the applicable accounting standards. If the
Company cannot reliably measure the fair value of the embedded derivative according to the
terms and conditions of the embedded derivative, the fair value of the embedded derivative is
determined based on the difference between the fair value of the hybrid contract and the fair
value of the host contract. After using the above method, if the fair value of the embedded
derivative on the acquisition date or the subsequent balance sheet date cannot be measured
separately, the Company designates the hybrid contract as a whole as financial assets at fair value
through profit or loss.
Transfer of financial assets refers to the transference or deliverance of financial assets (or its
cash flows) to the other party (the transferee) other than the issuer of financial assets. The
derecognition of financial assets means that the Company transfers the previously recognized
financial assets from its balance sheet.
The financial assets that meet one of the following conditions will be derecognized by the
Company: (1) the contractual right to receive cash flows of the financial asset is expired; (2) the
financial asset has been transferred, and almost all risks and rewards of ownership of the financial
asset transferred to the transferee; (3) the financial asset has been transferred by the Company
foregone the control of the financial assets although the Company has neither transferred nor
retained almost all the risks and rewards of ownership of the financial asset.
If the Company neither transfers nor retains almost all the risks and rewards of ownership of
financial assets, and retains control of the financial assets, it will continue to recognize the relevant
financial assets to the extent that they are continuing to be involved in the transferred financial
assets and recognises the relevant liabilities. The degree of continuing involvement in the
transferred financial assets refers to the level of risk on the exposed impact in changes in value of
financial asset to the Company.
If the transfer of an entire financial asset satisfies the conditions for derecognition, the
difference between the amounts of the following two items are included in profit or loss: (1) the
carrying amount of the transferred financial asset as of the date of derecognition; (2) the sum of
consideration received from the transfer of the financial asset, and the accumulative amount of the
changes of the fair value originally included in other comprehensive income proportionate to the
transferred financial asset (financial assets transferred refer to debt instrument investments at fair
value through other comprehensive income). If the transfer of financial asset partially satisfies the
conditions to derecognition, the entire carry amount of the transferred financial asset is, between
the portion which is derecognized and the portion which is not, apportioned according to their
respective relative fair value, and the difference between the amounts of the following two items
are included into profit or loss: (1) the carrying amount of the portion which is derecognized; (2) the
sum of consideration of the portion which is derecognized, and the portion of the accumulative
amount of the changes in the fair value originally included in other comprehensive income which is
corresponding to the portion which is derecognized (financial assets transferred refer to debt
instrument investments at fair value through other comprehensive income). For non-trading equity
instruments designated by the Company to be measured at fair value and whose changes are
included in other comprehensive income, if the whole or part of the transfer meets the conditions
for derecognition, the difference calculated according to the above method is included in retained
earnings.
If the current obligation of a financial liability (or part of it) has been discharged, the Company
derecognizes the financial liability (or part of it). If the Company (borrower) and the lender sign an
agreement to replace the original financial liability by assuming a new financial liability, and the
contract terms of the new financial liability and the original financial liability are substantially
different, the original financial liability is derecognized and a new financial liability is recognized
simultaneously. If the Company makes substantial amendments to the original financial liabilities
(or part of them) contract terms, the original financial liabilities shall be derecognized, and a new
financial liability shall be recognized in accordance with the revised terms.
If the financial liability (or part of it) is derecognized, the Company shall include the difference
between its book value and the consideration paid (including non-cash assets transferred out or
liabilities assumed) into profit or loss for the current period. If the Company repurchases part of its
financial liabilities, the book value of the financial liabilities as a whole will be allocated according to
the proportion of their respective fair values at the repurchase date and the total fair value at the
repurchase date. The difference between the book value allocated to the derecognized portion
and the consideration paid (including non-cash assets transferred out or liabilities assumed) is
included in profit or loss for the current period.
For the method for determining the fair value of financial assets and financial liabilities, see
notes to the financial statements.
The Company accounts for impairment of financial assets at amortised cost, contract assets,
debt instrument investment at fair value through other comprehensive income, lease receivables
and financial guarantee contracts as mentioned in this note. ECLs are the weighted average of
credit losses of financial instruments weighted by the risk of default. Credit losses refer to the
difference between all contractual cash flows receivable according to the contract and
discounted according to the original effective interest rate and all cash flows expected to be
received, i. e. the present value of all cash shortages.
For purchased or originated financial assets that have suffered credit impairment, the
Company only recognizes the cumulative changes in expected credit losses for the entire duration
of the period since initial recognition as loss provisions on the balance sheet date.
For the receivables or contract assets and lease receivables arised from transactions
under ”Accounting Standards for Business Enterprises No.14-Revenue”, the Company uses a
simplified measurement method to measure the loss allowance based on the expected credit loss
during the lifetime period.
For receivables or contract assets recognized on transactions under "Accounting Standards
for Business Enterprises No. 14 - Revenue" without significant financing components, the
Company uses simplified measurement methods to calculate the expected credit loss equivalent
to the lifetime period.
For financial instruments other than the above measurement methods, the Company
measures loss allowance in accordance with the general method and assesses on each balance
sheet date whether its credit risk has increased significantly since initial recognition. If the credit
risk has increased significantly since the initial recognition, the Company measures the loss
allowance based on the amount of expected credit loss throughout the lifetime; if the credit risk
has not increased significantly since the initial recognition, the Company will predict the credit loss
of the financial instruments within the next 12 months and recognize the loss allowance.
The expected credit loss for lifetime period refers to the expected credit loss caused by all
possible default events during the entire expected duration of the financial instrument. Expected
credit loss in the next 12 months refers to the event of financial instrument default that may occur
within 12 months after the balance sheet date (if the expected duration of the financial instrument
is less than 12 months, then the expected duration) which is a portion of expected credit losses for
the entire duration.
The Company considers all reasonable and reliable information, including forward-looking
information, by comparing the risk of default of a financial instrument on the balance sheet date
with the risk of default on the initial recognition date to determine the relative changes in default
risk of the financial instrument during the expected lifetime and to assess whether the credit risk of
financial instruments has increased significantly since initial recognition. For financial instruments
that cannot obtain sufficient evidence of a significant increase in credit risk at a reasonable cost at
the level of individual instruments, the Company considers whether the credit risk has increased
significantly on a portfolio basis. If the Company determines that a financial instrument has only a
low credit risk on the balance sheet date, it is assumed that the credit risk of the financial
instrument has not increased significantly since initial recognition.
The Company remeasures the expected credit losses on each balance sheet date, and the
resulting increase or reversal of the loss allowance is included in profit or loss for the current
period as an impairment loss or gain. For financial assets measured at amortised cost, the loss
allowance offsets the book value of the financial asset presented in the balance sheet; for debt
instrument investments measured at fair value through other comprehensive income, the
Company recognises loss allowance in other comprehensive income and does not offset the book
value of the financial asset presented in the balance sheet.
Financial assets and liabilities are offset and the net amount reported in the balance sheet
when there is a legally enforceable right to offset the recognized amounts and there is an intention
to settle on a net basis or realize the asset and settle the liability simultaneously. Otherwise,
financial assets and financial liabilities are separately shown in the balance sheet and not allowed
to offset.
Recognition and accounting treatment of expected credit loss of notes receivable
The Company determines the expected credit losses of bills receivable according to the
simplified measurement method described in this note and makes accounting treatment. On the
balance sheet date, the Company measures the credit loss of bills receivable based on the present
value of the difference between the contractual cash flow that should be received and the cash
flow expected to be received. When the expected credit loss information of a single bill receivable
cannot be assessed at a reasonable cost, the Company divides the bill receivable into several
groups based on the characteristics of credit risk. On the basis of referring to historical credit loss
experience, combining the current situation and considering forward-looking information, the
Company estimates the expected credit loss on group basis. The basis for determining the groups
is as follows:
Name of group Determination basis
Bank acceptance bills group Acceptors are banks with low credit risk
Commercial acceptance bills group Acceptors are enterprises with high credit risk
Determination method and accounting treatment of expected credit loss of accounts
receivable
Determination method and accounting treatment of expected credit loss of accounts receivable
The Company determines the expected credit losses of accounts receivable and makes
accounting treatment in accordance with the simplified measurement method described in this
note. On the balance sheet date, the Company measures the credit losses of accounts receivable
based on the present value of the difference between the contractual cash flow that should be
received and the cash flow expected to be received. When the expected credit loss information of
a single accounts receivable cannot be assessed at a reasonable cost, the Company divides the
accounts receivable into several groups based on credit risk characteristics. On the basis of
referring to historical credit loss experience, combining the current situation and considering
forward-looking information, the Company estimates expected credit losses on group basis. The
basis for determining the groups is as follows:
Name of group Determination basis
Accounts receivable with similar credit risk characteristics by
Ageing group
ageing
Group of related parties in Receivables from related parties within the scope of
the scope of consolidation consolidation have similar credit risk characteristics
Group of high credit rating Accounts receivable of Fortune 500 clients within credit term
The Company determines the expected credit losses of receivables financing and makes
accounting treatment in accordance with the general method described in this note. On the
balance sheet date, the Company measures the credit loss of receivables financing based on the
present value of the difference between the contractual cash flow due and the expected cash
flow received. When the expected credit loss information of a single item of receivables financing
cannot be assessed at a reasonable cost, the Company divides receivables financing into several
groups based on the characteristics of credit risk. On the basis of referring to historical credit loss
experience, combining the current situation and considering forward-looking information, the
Company estimates the expected credit losses on group basis. The basis for determining the
groups is as follows:
Name of group Determination basis
Group of low credit Including bank acceptance bills with low credit risk, letters of credit and
risk other receivables financing with low credit risk characteristics
Determination method and accounting treatment of expected credit loss of other receivables
The Company determines the expected credit losses of other receivables and makes accounting
treatment in accordance with the general method described in this note. On the balance sheet
date, the Company measures the credit losses of other receivables based on the present value of
the difference between the contractual cash flow that should be received and the expected cash
flow received. When the expected credit loss information of single other receivables cannot be
assessed at a reasonable cost, the Company divides the other receivables into several groups
based on the characteristics of credit risk. On the basis of referring to the historical credit loss
experience, combining the current situation and considering forward-looking information, the
Company estimates on the expected credit losses on group basis. The basis for determining the
groups is as follows:
Name of group Determination basis
Ageing group Other receivables with similar credit risk characteristics by ageing
Group of related parties
Receivables from related parties within the scope of consolidation
in the scope of
have similar credit risk characteristics
consolidation
Group of related parties
Receivables from related parties outside the scope of consolidation
outside the scope of
have similar credit risk characteristics
consolidation
Group of government Other receivables such as government grants receivable and
receivables various tax refunds have similar credit risk characteristics
process products in the production process, materials and materials consumed in the production
process or the provision of labor services, in-transit materials and subcontracting processing
materials.
purchased inventory is the purchase cost of the inventory, and the inventory cost obtained
through further processing is composed of the purchase cost and processing cost. (2) The book
value of inventory obtained in settlement under debt restructuring is determined on the fair value
of the forfeited creditor's rights and the relevant taxes and fees that can be directly attributed to
the inventory when the inventory reaches the current position and status. (3) Under the
presumption that the exchange of non-monetary assets has commercial substance and the fair
value of the assets swapped in or out can be reliably measured, the book value of inventory
swapped in the exchange of non-monetary assets is usually determined on the basis of the fair
value of the assets swapped out, unless there is strong evidence that the fair value of the swapped
assets is more reliable; for non-monetary asset exchanges that do not meet the above
presumption, the book value of the swapped assets and related taxes payable are used as the
cost of swapped in inventory. (4) The inventory acquired by the combination of enterprises under
common control is determined based on the book value of the acquiree; the inventories acquired
by the combination of enterprises not under common control are determined by the fair value.
method.
Low-value consumables are one-off amortized when taken for use.
Packaging materials are one-off amortized when taken for use.
value. The net realizable value of inventories is the amount after the estimated selling price of
inventories minus the estimated costs to be incurred to completion, the estimated selling
expenses and related taxes. When determining the net realizable value of inventories, based on
the reliable evidence obtained, taking into account the purpose of holding the inventory and the
impact of events after the balance sheet date, except for clear evidence that the market price on
the balance sheet date is abnormal, the net realizable value of inventory items at the end of the
current period is determined on the basis of the market price on the balance sheet date, of which:
(1) The inventory of finished goods, commodities and materials used for sale, such as
commodities directly used for sale, is determined by the amount of the estimated selling price of
the inventory minus the estimated selling expenses and related taxes during normal production
and operation ;
(2) For the inventory of materials that need to be processed, in the normal production and
operation process, the net realizable value is determined based on the estimated selling price of
the finished product minus the estimated cost at the time of completion, the estimated selling
expenses and related taxes. On the balance sheet date, if a part of the same inventory has a
contract price agreement and other parts do not have a contract price, the net realizable value is
determined separately and compared with its corresponding cost to determine the amount of
provision for or reversal of decline in value of inventory.
At period end, the provision for decline in value is calculated according to a single inventory
item; but for a large number of inventories with low unit prices, the provision for decline in value is
calculated according to the inventory category; For the product series produced and sold in the
same region, has the same or similar end user, and difficult to measure the inventory separately
from other items, the provision for the decline in value in inventory is combined.
After accruing the provision for decline in value in inventory, if the factors that previously
reduced the value of the inventory have disappeared and the net realizable value of the inventory
is higher than its book value, it will be reversed within the original provision for decline in value, and
reversal amount is included in profit or loss for the current period.
(1). Determination method and accounting treatment of expected credit loss of other debt
investments
Long-term equity investments referred to in this section refer to Long-term equity
investments that the Company has control, joint control or significant influence over the investee,
including equity investments in subsidiaries, joint ventures and associates.
Joint control refers to the common control of an arrangement in accordance with the relevant
agreement, and related activities of the arrangement must be agreed upon by the parties sharing
control rights before they can make decisions. If the Company and other joint venturers jointly
exercise joint control over the investee and jointly control the investee and have rights to the net
assets of the investee, the investee is a joint venture of the Company. When judging whether there
is joint control, the protective rights enjoyed are not considered.
Significant influence refers to the power to participate in the decision-making of an
enterprise's financial and operating decisions, but it cannot control or jointly control the
formulation of these policies with other parties. If the Company can exert significant influence on
the investee, the investee is an associate of the Company. When determining whether it can exert
significant influence on the invested unit, consider that the investor directly or indirectly holds the
voting shares of the invested unit and the current executable potential voting rights held by the
investor and other parties are assumed to be converted into the investee, the impact includes the
current convertible warrants, stock options and convertible corporate bonds issued by the
investee.
(1) If the combination is formed under a business combination under common control, the
merger party pays cash, transfers non-cash assets, assumes debt or issues equity securities as the
acquisition consideration, and the share of owner’s equity of the acquiree on the consolidated
financial statements of the ultimate controlling party on the acquisition date as its initial investment
cost. The difference between the initial investment cost of long-term equity investments and the
cash paid, non-cash assets transferred, the book value of the debt assumed or the total face value
of the shares issued adjusts the capital reserve; if the capital reserve is insufficient to offset, the
retained earnings are adjusted. Step by step acquisition of the equity of the acquiree under
common control through multiple transactions, and ultimately forming a business combination
under common control, it should be treated separately as whether ”single transaction”: if it
belongs to a ” single transaction”, each transaction is treated collectively as a single transactions
on obtaining control rights. If it does not belong to a ”single transaction”, the initial investment costs
of long-term equity investments is the share of the book value of the owner’s equity in the
acquiree’s consolidated financial statements. The difference between the cost and the book value
of long-term equity investments before the combination plus the book value of the new
consideration paid for the shares on the acquisition date is adjusted to the capital reserve; if the
capital reserve is insufficient to offset, the retained earnings are adjusted. The equity investment
held before the acquisition date by equity method or other comprehensive income recognized for
other equity instruments investment is temporarily not subject to accounting treatment.
(2) If a business combination is not formed under common control, the Company determines
the combination cost as the initial investment cost of long-term equity investments according to
the purchase date. The combination cost is the fair value of the assets paid, liabilities incurred or
assumed by the purchaser to obtain control of the purchased party on the purchase date, and the
equity securities issued. Overhead expenses such as auditing, legal services, evaluation and
consulting and other related Administrative expenses incurred by the purchaser for the business
merger are included in profit or loss for the current period; The transaction cost of the equity
securities or debt securities issued by the purchaser as the combination consideration is included
in the initial recognition amount of equity securities or debt securities. The Company regards the
contingent consideration stipulated in the acquisition agreement as part of the transfer
consideration for the business combination, and it is included in the cost of the business
combination according to its fair value on the date of purchase. For a business combination not
under common control that is realized step-by-step through multiple transactions, it is determined
whether the multiple transactions belong to a ”single transaction” in accordance with the
accounting standards for the enterprise. In the case of a ”single transaction”, each transaction is
treated as a whole transaction that obtains control. If it does not belong to a ”single transaction”,
the initial investment cost of long-term equity investments calculated based on the cost method
shall be the sum of the original holding equity amount of the acquiree’s equity investment plus the
newly added investment cost; If the equity is accounted for using the equity method, the relevant
other comprehensive income will not be accounted for temporarily; if the original equity
investment is invested by other equity instruments, the difference between the fair value and the
carrying amount, and the cumulative change in fair value originally included in other
comprehensive income, are transferred to directly to retained earnings.
(3) Except for long-term equity investments formed by business combination, other equity
investments are initially measured at cost: if they are obtained by paying cash, the actual purchase
price is used as their initial investment cost; if they are obtained by issuing equity securities, they
are stated at the fair value of equity securities as its initial investment cost. The expenses directly
related to the issuance of equity securities are determined in accordance with the relevant
provisions of Accounting Standards for Enterprises No.37-Presentation of Financial Instruments.
On the presumption that the fair value of the commercial substance and swapped-in assets or
swapped-out assets can be reliably measured, the initial investment cost of long-term equity
investments swapped in for non-monetary assets are based on the fair value of swapped assets
and related taxes payable, unless there is solid evidence that the fair value of the swapped assets
is more reliable; for non-monetary asset exchanges that do not meet the above presumption, the
carrying amount of the swapped assets and related taxes payable shall be used as the Initial
investment cost of long-term equity investments. The initial investment cost of long-term equity
investments obtained through debt restructuring is determined on the basis of the fair value of the
waived claims. The expenses, taxes and other necessary expenses directly related to the
acquisition of long-term equity investments are also included in the investment cost.
For the additional investment that can exert significant influence on the invested unit or
implement joint control but does not constitute control, the cost of long-term equity investments is
the original holding determined in accordance with ”Accounting Standards for Business
Enterprises No.22-Recognition and Measurement of Financial Instruments”. The sum of the fair
value of equity investment plus the newly added investment cost is used as the initial investment
cost under equity method. If the originally held equity investment is classified as other equity
instruments investment, the difference between its fair value and carrying amount, and the
cumulative fair value change originally included in other comprehensive income should be
transferred to directly to retained earnings.
(1) Long-term equity investments measured at cost
The Company uses the cost method to account for long-term equity investments in
subsidiaries. Apart from the cash dividends or profits declared but not yet paid that included in the
acquisition of the investment, the Company recognizes the investment income in accordance with
the cash dividends or profits declared to be issued by the investee in the current period.
(2) Long-term equity investments under equity method
For long-term equity investments in associates and joint ventures, the equity method is used.
If the initial investment cost of long-term equity investments calculated by the equity method
is greater than the fair value share of the identifiable net assets of the investee when investing, the
initial investment cost of long-term equity investments will not be adjusted; the initial investment
cost of long-term equity investments is less than the fair value share of the investee’s identifiable
net assets at the time of purchase, the difference should be included in profit or loss for the current
period, while adjusting the cost of long-term equity investments. After acquiring long-term equity
investments, if the accounting policy and accounting period adopted by the investee are
inconsistent with the Company, the financial statements of the investee shall be adjusted
according to the Company's accounting policies and accounting period, and recognize the
investment gain or loss and other comprehensive income etc. The investment income and other
comprehensive income shall be the share of the net profit or loss and other comprehensive
income of the investee, and the carrying amount of long-term equity investments is adjusted; The
Company recognizes its share of the investee’s net profits or losses based on the fair values of the
investee’s individual separately identifiable assets at the time of acquisition, after making
appropriate adjustments thereto in conformity with the accounting policies and accounting
periods of the Company. According to the profits or cash dividends declared to be distributed by
the investee, the carrying amount of long-term equity investments is reduced accordingly; adjust
the carrying amount of long-term equity investments and include in owners' equity. The unrealized
internal transaction gains and losses that occur between the Company and associates and joint
ventures are calculated based on the ratio enjoyed by the Company and are offset, and
investment income is recognized on this basis. Unrealized internal transaction losses with the
investee that belong to assets impairment loss are fully recognized.
When the Company confirms that it should share the losses of the investee, it will be
processed in the following order: First, offset the carrying amount of Long-term equity
investments. Secondly, if the carrying amount of long-term equity investments is not enough to
offset, continue to recognise the investment loss and offset the carrying amount of long-term
receivable items to the limit of carrying amounts of other long-term equity that substantially
constitute net investment in the investee. After the above-mentioned treatment, if the Company
still undertakes additional obligations according to the investment contract or agreement, the
estimated liabilities shall be recognized according to the obligations assumed and included in the
current investment losses. If the investee realizes a net profit in a later period, the Company
resumes the recognition of the profit sharing amount after the income makes up for the
unrecognized loss sharing amount.
During the period of holding the investment, the investee is included in the consolidated
financial statements based on the amount attributable to the investee in the consolidated financial
statements' net profit, other comprehensive income and changes in other owners ‘equity.
If the Company’s assets invested in joint ventures and associates constitute a business, and
the investor acquires long-term equity investments but does not obtain control, the fair value of
the investment business is used as the initial basis for the new investment cost of long-term equity
investments. The difference between the initial investment cost and the carrying amount of the
invested business is included in profit or loss for the current period. If the assets sold by the
Company to a joint venture or an associate constitute a business, the difference between the
consideration received and the carrying amount of the business shall be included in profit or loss
for the current period. If the assets purchased by the Company from associates and joint ventures
constitute business, they shall be accounted for in accordance with the provisions of ”Accounting
Standards for Business Enterprises No.20-Business Combinations”, and the profits or losses
related to the transaction shall be fully recognised.
For the disposal of Long-term equity investments, the difference between the Carrying
amount and the actual consideration received shall be included in profit or loss for the current
period.
(1) Disposal of long-term equity investments under equity method
For long-term equity investments that are accounted for using the equity method, if the
remaining equity after disposal is still accounted for using the equity method, when disposing of
the investment, the same basis as the investee directly disposes of related assets or liabilities shall
be used and the relevant share of other comprehensive income in the accounting treatment.
Owners ‘equity confirmed by the investee in addition to changes in net profit and loss, other
comprehensive income and profit distribution, and owners’ equity are carried forward to profit or
loss for the current period according to the sharing.
If the joint control or significant influence on the investee is lost due to the disposal of part of
the equity investment, etc., the remaining equity after disposal shall be accounted according to the
financial instrument recognition and measurement standards. The difference between the fair
value and carrying of the day when the joint control or significant influence is lost the amount is
included in profit or loss for the current period. The other comprehensive income of the original
equity investment confirmed by the equity method of accounting shall be accounted for on the
same basis as the investee ‘s direct disposal of related assets or liabilities when the equity method
of accounting is terminated. Owners ‘equity confirmed by the investee in addition to changes in
Owners’ equity other than net profit and loss, Other comprehensive income and profit distribution,
all transferred to profit or loss for the current period when the equity method of accounting is
terminated.
(2) Disposal of long-term equity investments under cost method
Long-term equity investments that are accounted for using the cost method, and the
remaining equity is still accounted for using the cost method after disposal. Other comprehensive
income recoginsed by adopting equity method accounting or financial instrument recognition and
measurement standard accounting before obtaining control of the investee is treated on the same
basis as the invested unit directly disposes of related assets or liabilities, and is treated according
to share of profit or loss for the current period. Changes in owners’ equity other than net profit and
loss, other comprehensive income and net profit distribution in the investee’s net assets
recognized by the equity method of accounting are carried forward to profit or loss for the current
period according to the share.
When the Company can no longer exercise control over an investee due to dilution of
shareholding by issuance of new shares to other investors by the investee but the Company can
still exercise joint control of or significant influence on the investee, the difference between the
Company’s share of the increment of net assets in investee by the new shareholding percentage
after new share issuance and the pro-rata portion of carrying value of long term equity investment
for the decreased shareholding percentage is recognized in profit or loss in the current period.
The remaining equity investment is accounted for equity method as if it was acquired since initial
acquisition.
When the Company can no longer exercise control over an investee due to partial disposal of
equity investment or other reasons and the remaining equity investment after disposal can
exercise joint control of or significant influence over an investee, the remaining equity investment
is accounted for under equity method and re-measured by equity method as if it has been
acquired since date of acquisition. Where the remaining equity investment can no longer exercise
joint control of or significant influence over an investee, the remaining equity investment is
accounted for in accordance with Accounting Standard for Business Enterprises No.22-
Recognization and Measurement of Financial Instruments and the difference between the fair
value and the carrying amount at the date of the loss of control is charged to profit or loss for the
current period.
The Company's control over an investee is lost through multiple disposals and the multiple
disposals shall be viewed as one single transaction, the multiple disposals is accounted for one
single transaction which result in the Company's loss of control over the investee. Each difference
between the consideration received and the book value of the investment disposed is recognized
in other comprehensive income and reclassified in full to profit or loss at the time when control
over the investee is loss.
Long-term equity investments referred to in this section refer to Long-term equity
investments that the Company has control, joint control or significant influence over the investee,
including equity investments in subsidiaries, joint ventures and associates.
Joint control refers to the common control of an arrangement in accordance with the relevant
agreement, and related activities of the arrangement must be agreed upon by the parties sharing
control rights before they can make decisions. If the Company and other joint venturers jointly
exercise joint control over the investee and jointly control the investee and have rights to the net
assets of the investee, the investee is a joint venture of the Company. When judging whether there
is joint control, the protective rights enjoyed are not considered.
Significant influence refers to the power to participate in the decision-making of an
enterprise's financial and operating decisions, but it cannot control or jointly control the
formulation of these policies with other parties. If the Company can exert significant influence on
the investee, the investee is an associate of the Company. When determining whether it can exert
significant influence on the invested unit, consider that the investor directly or indirectly holds the
voting shares of the invested unit and the current executable potential voting rights held by the
investor and other parties are assumed to be converted into the investee, the impact includes the
current convertible warrants, stock options and convertible corporate bonds issued by the
investee.
(1) If the combination is formed under a business combination under common control, the
merger party pays cash, transfers non-cash assets, assumes debt or issues equity securities as the
acquisition consideration, and the share of owner’s equity of the acquiree on the consolidated
financial statements of the ultimate controlling party on the acquisition date as its initial investment
cost. The difference between the initial investment cost of long-term equity investments and the
cash paid, non-cash assets transferred, the book value of the debt assumed or the total face value
of the shares issued adjusts the capital reserve; if the capital reserve is insufficient to offset, the
retained earnings are adjusted. Step by step acquisition of the equity of the acquiree under
common control through multiple transactions, and ultimately forming a business combination
under common control, it should be treated separately as whether ”single transaction”: if it
belongs to a ” single transaction”, each transaction is treated collectively as a single transactions
on obtaining control rights. If it does not belong to a ”single transaction”, the initial investment costs
of long-term equity investments is the share of the book value of the owner’s equity in the
acquiree’s consolidated financial statements. The difference between the cost and the book value
of long-term equity investments before the combination plus the book value of the new
consideration paid for the shares on the acquisition date is adjusted to the capital reserve; if the
capital reserve is insufficient to offset, the retained earnings are adjusted. The equity investment
held before the acquisition date by equity method or other comprehensive income recognized for
other equity instruments investment is temporarily not subject to accounting treatment.
(2) If a business combination is not formed under common control, the Company determines
the combination cost as the initial investment cost of long-term equity investments according to
the purchase date. The combination cost is the fair value of the assets paid, liabilities incurred or
assumed by the purchaser to obtain control of the purchased party on the purchase date, and the
equity securities issued. Overhead expenses such as auditing, legal services, evaluation and
consulting and other related Administrative expenses incurred by the purchaser for the business
merger are included in profit or loss for the current period; The transaction cost of the equity
securities or debt securities issued by the purchaser as the combination consideration is included
in the initial recognition amount of equity securities or debt securities. The Company regards the
contingent consideration stipulated in the acquisition agreement as part of the transfer
consideration for the business combination, and it is included in the cost of the business
combination according to its fair value on the date of purchase. For a business combination not
under common control that is realized step-by-step through multiple transactions, it is determined
whether the multiple transactions belong to a ”single transaction” in accordance with the
accounting standards for the enterprise. In the case of a ”single transaction”, each transaction is
treated as a whole transaction that obtains control. If it does not belong to a ”single transaction”,
the initial investment cost of long-term equity investments calculated based on the cost method
shall be the sum of the original holding equity amount of the acquiree’s equity investment plus the
newly added investment cost; If the equity is accounted for using the equity method, the relevant
other comprehensive income will not be accounted for temporarily; if the original equity
investment is invested by other equity instruments, the difference between the fair value and the
carrying amount, and the cumulative change in fair value originally included in other
comprehensive income, are transferred to directly to retained earnings.
(3) Except for long-term equity investments formed by business combination, other equity
investments are initially measured at cost: if they are obtained by paying cash, the actual purchase
price is used as their initial investment cost; if they are obtained by issuing equity securities, they
are stated at the fair value of equity securities as its initial investment cost. The expenses directly
related to the issuance of equity securities are determined in accordance with the relevant
provisions of Accounting Standards for Enterprises No.37-Presentation of Financial Instruments.
On the presumption that the fair value of the commercial substance and swapped-in assets or
swapped-out assets can be reliably measured, the initial investment cost of long-term equity
investments swapped in for non-monetary assets are based on the fair value of swapped assets
and related taxes payable, unless there is solid evidence that the fair value of the swapped assets
is more reliable; for non-monetary asset exchanges that do not meet the above presumption, the
carrying amount of the swapped assets and related taxes payable shall be used as the Initial
investment cost of long-term equity investments. The initial investment cost of long-term equity
investments obtained through debt restructuring is determined on the basis of the fair value of the
waived claims. The expenses, taxes and other necessary expenses directly related to the
acquisition of long-term equity investments are also included in the investment cost.
For the additional investment that can exert significant influence on the invested unit or
implement joint control but does not constitute control, the cost of long-term equity investments is
the original holding determined in accordance with ”Accounting Standards for Business
Enterprises No.22-Recognition and Measurement of Financial Instruments”. The sum of the fair
value of equity investment plus the newly added investment cost is used as the initial investment
cost under equity method. If the originally held equity investment is classified as other equity
instruments investment, the difference between its fair value and carrying amount, and the
cumulative fair value change originally included in other comprehensive income should be
transferred to directly to retained earnings.
(1) Long-term equity investments measured at cost
The Company uses the cost method to account for long-term equity investments in
subsidiaries. Apart from the cash dividends or profits declared but not yet paid that included in the
acquisition of the investment, the Company recognizes the investment income in accordance with
the cash dividends or profits declared to be issued by the investee in the current period.
(2) Long-term equity investments under equity method
For long-term equity investments in associates and joint ventures, the equity method is used.
If the initial investment cost of long-term equity investments calculated by the equity method
is greater than the fair value share of the identifiable net assets of the investee when investing, the
initial investment cost of long-term equity investments will not be adjusted; the initial investment
cost of long-term equity investments is less than the fair value share of the investee’s identifiable
net assets at the time of purchase, the difference should be included in profit or loss for the current
period, while adjusting the cost of long-term equity investments. After acquiring long-term equity
investments, if the accounting policy and accounting period adopted by the investee are
inconsistent with the Company, the financial statements of the investee shall be adjusted
according to the Company's accounting policies and accounting period, and recognize the
investment gain or loss and other comprehensive income etc. The investment income and other
comprehensive income shall be the share of the net profit or loss and other comprehensive
income of the investee, and the carrying amount of long-term equity investments is adjusted; The
Company recognizes its share of the investee’s net profits or losses based on the fair values of the
investee’s individual separately identifiable assets at the time of acquisition, after making
appropriate adjustments thereto in conformity with the accounting policies and accounting
periods of the Company. According to the profits or cash dividends declared to be distributed by
the investee, the carrying amount of long-term equity investments is reduced accordingly; adjust
the carrying amount of long-term equity investments and include in owners' equity. The unrealized
internal transaction gains and losses that occur between the Company and associates and joint
ventures are calculated based on the ratio enjoyed by the Company and are offset, and
investment income is recognized on this basis. Unrealized internal transaction losses with the
investee that belong to assets impairment loss are fully recognized.
When the Company confirms that it should share the losses of the investee, it will be
processed in the following order: First, offset the carrying amount of Long-term equity
investments. Secondly, if the carrying amount of long-term equity investments is not enough to
offset, continue to recognise the investment loss and offset the carrying amount of long-term
receivable items to the limit of carrying amounts of other long-term equity that substantially
constitute net investment in the investee. After the above-mentioned treatment, if the Company
still undertakes additional obligations according to the investment contract or agreement, the
estimated liabilities shall be recognized according to the obligations assumed and included in the
current investment losses. If the investee realizes a net profit in a later period, the Company
resumes the recognition of the profit sharing amount after the income makes up for the
unrecognized loss sharing amount.
During the period of holding the investment, the investee is included in the consolidated
financial statements based on the amount attributable to the investee in the consolidated financial
statements' net profit, other comprehensive income and changes in other owners ‘equity.
If the Company’s assets invested in joint ventures and associates constitute a business, and
the investor acquires long-term equity investments but does not obtain control, the fair value of
the investment business is used as the initial basis for the new investment cost of long-term equity
investments. The difference between the initial investment cost and the carrying amount of the
invested business is included in profit or loss for the current period. If the assets sold by the
Company to a joint venture or an associate constitute a business, the difference between the
consideration received and the carrying amount of the business shall be included in profit or loss
for the current period. If the assets purchased by the Company from associates and joint ventures
constitute business, they shall be accounted for in accordance with the provisions of ”Accounting
Standards for Business Enterprises No.20-Business Combinations”, and the profits or losses
related to the transaction shall be fully recognised.
For the disposal of Long-term equity investments, the difference between the Carrying
amount and the actual consideration received shall be included in profit or loss for the current
period.
(1) Disposal of long-term equity investments under equity method
For long-term equity investments that are accounted for using the equity method, if the
remaining equity after disposal is still accounted for using the equity method, when disposing of
the investment, the same basis as the investee directly disposes of related assets or liabilities shall
be used and the relevant share of other comprehensive income in the accounting treatment.
Owners ‘equity confirmed by the investee in addition to changes in net profit and loss, other
comprehensive income and profit distribution, and owners’ equity are carried forward to profit or
loss for the current period according to the sharing.
If the joint control or significant influence on the investee is lost due to the disposal of part of
the equity investment, etc., the remaining equity after disposal shall be accounted according to the
financial instrument recognition and measurement standards. The difference between the fair
value and carrying of the day when the joint control or significant influence is lost the amount is
included in profit or loss for the current period. The other comprehensive income of the original
equity investment confirmed by the equity method of accounting shall be accounted for on the
same basis as the investee ‘s direct disposal of related assets or liabilities when the equity method
of accounting is terminated. Owners ‘equity confirmed by the investee in addition to changes in
Owners’ equity other than net profit and loss, Other comprehensive income and profit distribution,
all transferred to profit or loss for the current period when the equity method of accounting is
terminated.
(2) Disposal of long-term equity investments under cost method
Long-term equity investments that are accounted for using the cost method, and the
remaining equity is still accounted for using the cost method after disposal. Other comprehensive
income recoginsed by adopting equity method accounting or financial instrument recognition and
measurement standard accounting before obtaining control of the investee is treated on the same
basis as the invested unit directly disposes of related assets or liabilities, and is treated according
to share of profit or loss for the current period. Changes in owners’ equity other than net profit and
loss, other comprehensive income and net profit distribution in the investee’s net assets
recognized by the equity method of accounting are carried forward to profit or loss for the current
period according to the share.
When the Company can no longer exercise control over an investee due to dilution of
shareholding by issuance of new shares to other investors by the investee but the Company can
still exercise joint control of or significant influence on the investee, the difference between the
Company’s share of the increment of net assets in investee by the new shareholding percentage
after new share issuance and the pro-rata portion of carrying value of long term equity investment
for the decreased shareholding percentage is recognized in profit or loss in the current period.
The remaining equity investment is accounted for equity method as if it was acquired since initial
acquisition.
When the Company can no longer exercise control over an investee due to partial disposal of
equity investment or other reasons and the remaining equity investment after disposal can
exercise joint control of or significant influence over an investee, the remaining equity investment
is accounted for under equity method and re-measured by equity method as if it has been
acquired since date of acquisition. Where the remaining equity investment can no longer exercise
joint control of or significant influence over an investee, the remaining equity investment is
accounted for in accordance with Accounting Standard for Business Enterprises No.22-
Recognization and Measurement of Financial Instruments and the difference between the fair
value and the carrying amount at the date of the loss of control is charged to profit or loss for the
current period.
The Company's control over an investee is lost through multiple disposals and the multiple
disposals shall be viewed as one single transaction, the multiple disposals is accounted for one
single transaction which result in the Company's loss of control over the investee. Each difference
between the consideration received and the book value of the investment disposed is recognized
in other comprehensive income and reclassified in full to profit or loss at the time when control
over the investee is loss.
(1). If the measurement of cost model is adopted:
Depreciation or Amortization Method
Including land use rights that have been leased, land use rights that are held and ready to be
transferred after value-added, leased buildings (including buildings used for rent after self-
construction or development activities are completed, and future use during construction or
development of leased buildings).
measurement is made using the cost model. For subsequent expenditures related to Investment
properties, if the economic benefits related to the asset are likely to flow in and their costs can be
reliably measured, then they are included in the cost of Investment properties. Other subsequent
expenditures are included in profit or loss for the current period when they occur.
provided using the same method as fixed assets and intangible assets.
change, the Investment properties are converted into fixed assets or intangible assets, and the
carrying amount before conversion is used as the credit value after conversion. When the purpose
of self-used real estate or Inventories is changed to earn rent or capital appreciation, from the date
of change, the Fixed assets or Intangible assets are converted into Investment properties and
converted into Investment properties measured by the cost model to the carrying amount before
conversion As the booked value after conversion; when converted to Investment properties
measured by fair value model, the fair value on the conversion date is used as the booked value
after conversion.
expected that no financial benefits can be obtained from their disposal, the recognition of the
investment properties is terminated. Investment properties sold, transferred, scrapped or
damaged are deducted from their carrying amount and related taxes and are included in profit or
loss for the current period.
(1). Recognition conditions
Fixed assets refer to tangible assets fulfill the following characteristics: (1) held for the
production of goods, provision of labor services, lease or operation and (2) the service life exceeds
one fiscal year.
Fixed assets are recognized if it meet the following conditions: (1) The economic benefits
related to the fixed assets are likely to flow into the enterprise and (2) The cost of the fixed assets
can be measured reliably. Subsequent expenditures related to fixed assets, if they meet the above
recognition conditions, are included in the cost of fixed assets; those that do not meet the above
recognition conditions are included in profit or loss for the current period when incurred.
(2). Depreciation method
Annual
Depreciation Estimate residual
Category Useful life (years) depreciation rate
method value (%)
(%)
Property and Straight line 10-30 5-10 3.00-9.50
buildings method
Specific Straight line 3-20 5-10 4.50-31.67
equipment method
General Straight line 3-15 5-10 6.00-31.67
equipment method
Transportation Straight line 2-15 5-10 6.00-47.50
equipment method
Displacement
Straight line
Ship Tonnage x
method
Expected scrap
price
Note:
(1) The renovation costs of the fixed assets that meet the capitalization conditions will be
accrued separately in the shorter period of the two renovation periods and the useful life of the
fixed assets.
(2) For the fixed assets that have been impaired, the cumulative impairment provision of fixed
assets shall be deducted from the calculation of depreciation rate.
(3) The Company shall review the useful life, estimated net residual value and depreciation
method of the fixed assets at least at the end of the year.
(1) Fixed assets that have been suspended for three consecutive months due to insufficient
construction and natural disasters are recognized as idle fixed assets (except for seasonal
suspension). Idle fixed Assets adopts the same depreciation method as other Fixed Assets of the
same category.
(2) If the fixed assets are in the state of disposal, or if no economic benefits are expected to be
generated through use or disposal, it is derecognised and its depreciation and impairment are
suspended.
(3) The difference between the disposal income of fixed assets sold, transferred, scrapped or
damaged after deducting its book value and related taxes is included in profit or loss for the
current period.
(4) The overhaul costs incurred by the Company's regular inspections of fixed assets, and
there is conclusive evidence that the conditions that meet the recognition conditions of fixed
assets are included in the cost of fixed assets, and those that do not meet the recognition
conditions of fixed assets are included in profit or loss for the current period. Fixed assets are
depreciated during regular maintenance intervals.
(3). Basis for identification, valuation and depreciation methods of fixed assets under financing
lease
be reliably measured are recognised. Construction in progress is measured at the actual cost
incurred before the construction of the asset reaches its intended status of uses.
fixed assets according to the actual cost of the project. If it has reached the expected usable
status but has not yet completed the settlement of completion, it will first be transferred to fixed
assets at the estimated value. After the completion of the final settlement, the original provisional
valuation will be adjusted according to the actual cost, but the original depreciation will not be
adjusted.
Borrowing costs, including interest on borrowings, amortization of discounts or premiums,
other relevant expenses, and exchange differences due to foreign currency borrowings.
Borrowing costs incurred by the Company, which can be directly attributed to the acquisition,
construction or production of assets that meet the capitalization conditions, are capitalized and
included in the cost of related assets. Other Borrowing costs are recognized as expenses based
on the amount incurred when they occur, and are included in profit or loss for the current period.
(1) When the following conditions are met at the same time, capitalization begins: 1) Asset
expenditure has occurred; 2) Borrowing costs have occurred; 3) The purchase, construction or
production activities necessary to make the asset reach the intended use or sale state have begun.
(2) Suspension of capitalization: If an asset that meets the conditions of capitalization is
abnormally interrupted during the acquisition, construction or production process, and the
interruption lasts for more than 3 months, the capitalization of Borrowing costs is suspended;
Borrowing costs incurred during the interruption are recognized as current expenses, until the
purchase or construction of assets or production activities restart. If the interruption is the
necessary procedure for the acquisition or construction or production of assets that meet the
capitalization conditions to reach the intended status of uses or status of sale, borrowing costs will
continue to be capitalized.
(3) Cessation of capitalization: Borrowing costs cease to be capitalized when the assets
purchased or constructed or produced that meet the capitalization conditions reach the intended
use or sale. When part of the assets in the acquisition, construction or production of capitalized
assets are completed separately and can be used separately, the capitalization of borrowing costs
of the partial assets will be ceased. If each part of the purchased or constructed asset is
completed separately, but it cannot be used until it is completed or sold externally, the
capitalization of borrowing costs shall be ceased when the asset is completed.
If specific loans are borrowed for the purchase or construction or production of assets that
meet the capitalization conditions, the interest expenses actually incurred in the current period of
the specific loans (including the amortization of discounts or premiums determined in accordance
with the effective interest rate method), minus the amount of interest income obtained from the
bank or the investment income obtained by making a temporary investment by the unused
borrowing loans, is the amount of interest that should be capitalized; if the general borrowings are
occupied for the purchase or construction or production of assets that meet the capitalization
conditions, the weighted average amount of asset expenditures on the amount of cumulative
asset expenditure exceeding the specific loans is multiplied by the capitalization rate (weighted
average interest rate) of the general borrowing to calculate and determine the amount of interest
that should be capitalized for the general borrowing. During the capitalization period, the amount
of interest capitalized in each accounting period shall not exceed the amount of interest actually
incurred by the relevant borrowings in the current period. The exchange differences on the
principal and interest of foreign currency special borrowings shall be capitalized during the
capitalization period. Other relevant expenses incurred by special borrowings occur before the
assets eligible for capitalization purchased or constructed or produced reach the intended status
of use or sale, they are capitalized; Other relevant expenses incurred in general borrowings are
included in profit or loss for the current period when incurred. If there is a discount or premium on
the loans, the amount of discount or premium that should be amortized in each accounting period
is determined according to the effective interest rate method, and the amount of interest in each
period is adjusted.
(1). Measurement, useful life, impairment test
Intangible assets are initially measured at cost. The cost of externally purchased intangible
assets includes the purchase price, related taxes and other expenses directly attributable to the
asset for its intended use. If the payment for the purchase of intangible assets is delayed beyond
the normal credit conditions and is essentially of a financing nature, the cost of the intangible
assets is determined on the basis of the present value of the purchase price. Debt restructuring
acquires the intangible assets used by the debtor to pay off debts, and the book value is
determined on the basis of the fair value of the waived claims and other costs that can be directly
attributed to the tax and other costs incurred in bringing the asset to its intended use. Intangible
assets obtained from debtor to pay off debts under debt restructuring, its book value is
determined on the basis of the fair value of the waived claims and other costs that can be directly
attributed to the tax and other costs incurred in bringing the asset to its intended use. Under the
presumption that the exchange of non-monetary assets has commercial substance and the fair
value of the assets exchanged in or out can be reliably measured, the intangible assets exchanged
in the swap of non-monetary assets are stated at fair value of the assets swapped and related
taxes as the cost of swapping intangible assets, unless there is strong evidence that the fair value
of the swapped assets is more reliable; for non-monetary asset exchanges that do not meet the
above presumption, the book value of the swapped assets and related taxes payable are used as
the cost of intangible assets, and there is no recognition of any profit or loss.
Expenses related to intangible assets are included in the cost of intangible assets if the
related economic benefits are likely to flow into the Company and the costs can be reliably
measured. Expenditures for other items other than these are included in profit or loss for the
current period when they occur.
The acquired land use rights are usually accounted for as intangible assets. For self-
development and construction of buildings and other buildings, related land use rights
expenditures and building construction costs are accounted for as intangible assets and fixed
assets, respectively. In the case of purchased properties and buildings, the relevant price will be
allocated between the land use rights and the buildings. If it is difficult to allocate them reasonably,
all of them will be treated as fixed assets.
According to the contract rights or other legal rights, industry, history experience, and other
relevant experts to determine a combination of factors, reasonably determine the intangible asset
can bring economic benefits for the Company, as intangible assets with limited useful life; not
Where the intangible assets are reasonably determined to bring economic benefits to the
Company, they are regarded as intangible assets with uncertain service life.
For intangible assets with a finite useful life, the following factors are usually considered when
estimating the useful life: (1) the usual life cycle of the products produced using the asset and the
information available on the service life of similar assets; (2) technology, process, etc. The current
situation of the country and the estimation of the future development trend; (3) the market
demand for the products produced by the asset or the provision of labor services; (4) the
expected actions of current or potential competitors; (5) the maintenance of the asset Expected
maintenance expenditures that bring economic benefits, and the Company's ability to pay for
related expenditures; (6) Relevant legal regulations or similar restrictions on the asset's control
period, such as concession periods, lease periods, etc . ; (7) There is correlation of the useful life of
other assets. The estimated useful life of intangible assets with finite useful life:
Basis of estimated useful
Item Period (years)
life
Software Expected benefit period 5 years
Special technology Expected benefit period 10 years
Registered useful life of
Land use rights 50 years
land use rights
Intangible assets with a finite useful life are amortized systematically and rationally within the
useful life according to the expected realization method of the economic benefits related to the
intangible asset. If the expected realization method cannot be reliably determined, the straight-line
method is used. Intangible assets with uncertain useful life are not amortized, but the useful life of
the intangible assets is reviewed every year and an impairment test is conducted.
At the end of each year, the Company reviews the useful life and amortization method of
intangible assets with a finite useful life. If it is different from the previous estimate, the original
estimate is adjusted and the accounting estimate is changed; it is estimated that an intangible
asset can no longer be given if the enterprise brings future economic benefits, the book value of
this intangible asset will be transferred to profit or loss for the current period.
(2). Accounting policy for internal research and development expenditures
The expenditures of internal research and development projects are divided into
expenditures in the research phase and expenditures in the development phase. Criteria for
dividing research stage and development stage: the planned investigation stage for acquiring
new technologies and knowledge should be determined as the research stage, which has the
characteristics of planning and exploration; The application of research results or other
knowledge to a plan or design before commercial production or use to produce new or
substantially improved materials, devices, products and other stages should be determined as the
development stage, which is targeted and likely to produce results characteristics.
Expenditures for the research phase of internal research and development projects are
included in profit or loss for the current period when they occur. Expenses during the
development phase of an internal research and development project that meet the following
conditions are recognized as intangible assets: (1) it is technically feasible to complete the
intangible asset so that it can be used or sold; (2) it is Intention to use or sell; (3) The way in which
intangible assets generate economic benefits, including the ability to prove that the products
produced using the intangible assets exist in the market or the intangible assets themselves exist
in the market, and the intangible assets will be used internally, can prove their usefulness; (4)
sufficient technical, financial resources and other resources support to complete the development
of the intangible asset and the ability to use or sell the intangible asset; (5) The expenditure
attributable to the development stage of the intangible asset can be reliably measured. If the
above conditions are not met, it will be included in profit or loss for the current period when it
occurs; if there is no way to distinguish between research phase expenditure and development
phase expenditure, all research and development expenditure incurred will be included in profit or
loss for the current period.
Long-term equity investments, investment property and productive biological assets
measured using the cost model, fixed assets, construction in progress, oil and gas assets, right-of-
use assets, intangible assets, goodwill and other long-term assets are subject to impairment if
there are indication of the following:
significantly higher than the expected decline due to the passage of time or normal use;
market in which the assets are located will undergo major changes in the current period or in the
near future, thereby adversely affecting the enterprise;
period, which affects the discount rate of the enterprise's calculation of the present value of the
expected future cash flow, resulting in a substantial reduction in the asset's recoverable amount;
of the asset has been or will be lower than expected, such as the net cash flow created by the
asset or the realized operating profit (or loss) is far below (or higher than) the expected amount,
etc . ;
If there is any indication of impairment of the above-mentioned long-term assets on the
balance sheet date, an impairment test shall be conducted. If the result of the impairment test
indicates that the recoverable amount of the asset is lower than its book value, the impairment
provision shall be made according to the difference and included in the impairment loss. The
recoverable amount is the higher of the net value of the asset's fair value minus disposal costs and
the present value of the asset's expected future cash flow. The method for determining the fair
value is detailed in this note; the disposal expenses include legal expenses related to the disposal
of assets, related taxes, handling fees, and direct expenses incurred to bring the asset to a
saleable status; the expected future cash flow of the asset is determined according to the present
value of expected future cash flow generated during the continuous use of the asset and at the
time of final disposal, and an appropriate discount rate is selected to determine the discounted
amount.
The asset impairment provision is calculated and determined on the basis of individual assets.
If it is difficult to estimate the recoverable amount of an individual asset, the asset group to which
the asset group belongs determines the recoverable amount of the asset group. An asset group is
the smallest asset portfolio that can independently generate cash inflows.
The goodwill presented separately in the financial statements will be allocated to the asset
group or combination of asset groups that is expected to benefit from the synergy effect of the
business combination during the impairment test. If the test results indicate that the recoverable
amount of the asset group or combination of asset groups containing the allocated goodwill is
lower than its book value, the corresponding impairment loss is recognized. The amount of
impairment loss is offset against the book value of goodwill allocated to the asset group or
combination of asset groups, and then proportionally based on the proportion of the book value of
other assets in the asset group or combination of asset groups other than goodwill.
Goodwill and intangible assets with indefinite useful life are tested for impairment at least at
the end of each year.
Once assets impairment loss is recognised, it will not be reversed in the future period.
Long-term deferred expenses are accounted for based on actual expenditures and
amortized evenly over the benefit period or the prescribed period. If the long-term deferred
expense item cannot benefit the future accounting period, all the amortized value of the item that
has not been amortized shall be transferred to profit or loss for the current period, of which:
Improvement expenditures incurred on leased fixed assets shall be amortized evenly over the
remaining useful life of the leased assets if it can be reasonably determined that the ownership of
the leased assets will be obtained at the expiration of the lease term. If it cannot be reasonably
determined that the ownership of the leased asset can be obtained at the expiration of the lease
term, it shall be amortized equally over the shorter of the remaining lease term and the remaining
useful life of the leased asset.
The decoration costs incurred by the leased fixed assets, if it can be reasonably determined
that the ownership of the leased assets will be obtained at the expiration of the lease term, shall be
amortized equally between the interval between two decorations and the shorter period of the
remaining useful life of the leased assets. If it cannot be reasonably determined that the ownership
of the leased asset can be obtained at the expiration of the lease term, the leased asset shall be
amortized equally over the shorter of the interval between two decorations, the remaining lease
term and the remaining useful life of the leased asset.
(1). Recognition method for contract liabilities
Contract liabilities is the Company's obligation to transfer goods to customers for the
consideration that has been received or receivable from customers. The Company presented the
net amount of contract assets offsetting with contract liabilities when they are aroused in the same
contract.
(1). Accounting treatment of short-term employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Company
in exchange for service rendered by employees or for the termination of employment relationship.
Employee benefits include short-term employee benefits, post-employment benefits, termination
benefits and other long-term employee benefits. Benefits provided to the employee’s spouse,
children, dependents, family members of deceased employees, or other beneficiaries are also
employee benefits.
According to their liquidities, employee benefits are presented as ”employee benefits
payable” and “long-term employee benefits payable” on the balance sheet.
In the accounting period in which employees have rendered services, the Company
recognized the employee wages, bonus, social security contributions according to regulations
such as medical insurance, work injury insurance and maternity insurance as well as housing funds
as liability, and charged to profit or loss for the current period or cost of relevant assets. If
employee benefits are non-monetary benefits, if they can be measured reliably, they shall be
measured at fair value. If the liability is not expected to be settled wholly in twelve months after the
balance sheet date, and the amount is significant, the liability is measured at the discounted
amount.
(2). Accounting treatment of Post-employment benefits
Post-employment benefit plan includes defined contribution plans and defined benefit plans.
Defined contribution plans are post-employment benefit plans under which a corporate pays fixed
contributions into an escrow fund and will have no further obligation. Defined benefit plans are
post-employment benefit plans other than defined contribution plans.
(1) Defined contribution plans
The Company pays basic pension insurance and unemployment insurance for employees in
accordance with the relevant regulations of the current government. In the accounting periods
which employees rendered services, the amount of defined contribution plan is recognized as
liability and charged to profit or loss for the current period or cost of relevant assets.
(3). Accounting treatment of employee termination benefits
Termination benefits is recognized on the earlier of either the Company cannot unilaterally
withdraw the termination benefits provided by the labor relationship cancellation plan or the
redundancy proposal, and the Company recognises the costs or expenses related to the
restructuring related to the payment of the termination benefits. Termination benefits expenses
are included in profit or loss for the current period. However, if the termination benefits are not
expected to be fully paid within twelve months after the end of this reporting period, it is treated as
other long-term employee benefits.
Employee internal retirement plans are handled on the same principle as the above dismissal
benefits. The Company will include the salary and social insurance contribution of early retired
personnel from the date when the employee ceases to provide services to the normal retirement
date, and shall be included in profit or loss for the current period (termination benefits) when the
conditions for recognising the estimated liabilities are met. Financial compensation after the
official retirement date (such as the normal pension pension) will be treated as post-employment
benefits.
(4). Accounting treatment of other long-term employee benefits
Other long-term employee benefits provided by the Company to the employees satisfied the
conditions for classifying as a defined contributions plan; those benefits are accounted for in
accordance with the above requirements relating to defined contribution plan, but the movement
of net liabilities or assets in re-measurement of defined benefit plan is recorded in profit or loss for
the current period or cost of relevant assets.
A provision is recognized as a liability when an obligation related to a contingency satisfied all
of the following conditions: (1) The obligation is a present obligation of the Company; (2) It is
probable that an outflow of economic benefits will be required to settle the obligation; (3) The
amount of the obligation can be measured reliably.
Provisions are initially measured at the best estimate of the payment to settle the associated
obligations and consider the relevant risk, uncertainty and time value of money. If the impact of
time value of money is significant, the best estimate is determined as its present value of future
cash outflow. The Company reviews the carrying amount of provisions at the balance sheet date
and adjusts the carrying amount to reflect the best estimate.
The best estimates are divided into the following situations: If the required expenditure exists
in a continuous range (or interval), and the probability of various results in the range is the same,
the best estimate is based on the middle value of the range: namely The average of the lower limit
amount is determined. The required expenditure does not exist in a continuous range (or interval),
or although there is a continuous range, but the possibility of various results in this range is not the
same, if contingencies involve a single item, the best estimate is based on the amount most likely to
occur; if contingencies involve multiple items, the best estimate is calculated and determined
based on various possible results and related probabilities.
If all or part of the expenses required to pay off the provisions of the Company are expected
to be compensated by a third party, when the compensation amount is basically determined to be
received, it is separately recognized as an asset, and the recognized compensation amount does
not exceed the carrying amount of the provisions.
Carrying amount of the provisions are reviewed on each balance sheet date. If there is solid
evidence that the carrying amount cannot reflect the current best estimate, the carrying amount
shall be adjusted according to the current best estimate.
The Company's share-based payment is a transaction that grants equity instruments or
assumes liabilities determined on the basis of equity instruments in order to obtain services
provided by employees (or other parties). Includes Share-based payment settled with equity and
share-based payment settled with cash.
(1) If there is an active market, it shall be determined according to the quoted price the active
market; (2) If there is no active market, it shall be determined by using valuation techniques,
including reference to the prices used in recent market transactions conducted by parties who are
familiar with the situation and voluntarily trade, reference to the current fair value, discounted cash
flow method and option pricing model of other financial instruments that are substantially the
same.
On each balance sheet date during the vesting period, the Company makes the best estimate
based on the latest information on the number of employees with exercisable rights and other
follow-up information, and corrects the number of equity instruments expected to exercise. On
the exercise date, the number of equity instruments expected to be exercised should be
consistent with the actual exercisable amount.
(1) Share-based payment settled by equity
If the equity-settled share-based payment is exchanged for employees to provide services,
and the right is available immediately after the grant, the relevant cost or expense will be included
in the fair value of equity instruments on the grant date, and the capital reserve will be adjusted
accordingly. If the exercise right is available only after completing the service within the vesting
period or meeting the prescribed performance conditions, on each balance sheet date during the
vesting period, based on the best estimate of the number of available rights Equity instruments
and the fair value of the equity instruments on its grant date, the services obtained in the current
period are included in the relevant costs or expenses, and the capital reserve is adjusted
accordingly. After the exercisable date, no adjustment will be made to the recognised costs or
expenses and the total owner’s equity.
For the equity-settled Share-based payment is exchanged for the services of the other party,
if the fair value of the services of the other party can be reliably measured, it is measured
according to the fair value of the service of the other party. If the fair value of the other party’s
services cannot be measured reliably but the equity value of equity instruments can be measured
reliably, it is measured in accordance with the fair value of equity instruments on the date of
service acquisition, included in the relevant costs or expenses, and the owners ‘equity is increased
accordingly.
(2) Share-based payment settled in cash
Share-based payment settled in cash in exchange for employee services, and the right to
exercise immediately after the grant, the Company’s fair value of the liabilities assumed are
included in the relevant costs or expenses on the grant date, and the liabilities are increased
accordingly. Share-based payment settled in cash that can be exchanged for employee services
after completing the services within the waiting period or meeting the prescribed performance
conditions, based on the best estimate of the right to exercise on each balance sheet date during
the vesting period and the fair value of the Company’s liabilities, the services obtained in the
current period are included in the relevant costs or expenses and corresponding liabilities. On
each balance sheet date and settlement date before the settlement of the relevant liabilities, the
fair value of the liabilities is remeasured, and the changes are included in profit or loss for the
current period.
(3) Modify and terminate share-based payment plan
If the modification increases the fair value of equity instruments granted, the Company will
recognise the increase in the cost of services obtained in accordance with the increase in fair
value of equity instruments. If the modification increases the number of equity instruments
awarded, the Company will recognize the increase in the fair value of equity instruments
accordingly as an increase in access to services. If the Company revises the conditions of exercise
rights in a manner beneficial to employees, the Company considers the revised conditions of
exercise rights when dealing with the conditions of exercise rights.
If the modification reduces the fair value of the equity instruments granted, the Company
continues to recognize the services based on amount of fair value of the equity instruments on the
grant date, regardless of the decrease in the fair value of the equity instruments. If the modification
reduces the number of granted equity instruments, the Company treats the reduction as a
cancellation of the granted equity instruments. If the vesting conditions are modified in a way that
is unfavorable to the employees, the modified vesting conditions shall not be considered when
dealing with the vesting.
If the share-based payment settled by equity is cancelled, it will be treated as an accelerated
exercise on the cancellation date, and the unrecognized amount will be recognised immediately
(Amount that should be recognised in the remaining vesting period is immediately included in
profit or loss for the current period, and capital reserve is also recognised). Employees or other
parties can choose to meet the non-feasible rights conditions but not met within the waiting
period, as a cancellation of equity settlement of share-based payment. However, if a new Equity
instrument is awarded, and the equity instruments granted on the grant date of the new equity
instruments are deemed to replace the equity instruments that were cancelled, then the
authorized replacement equity instruments are processed in the same way as the modification of
terms and conditions of the original equity instruments.
consolidation of the Company, between the Company and the actual controlling party or other
shareholders of the Company, or between the Company and other companies in the group to
which the Company belongs, it is accounted in accordance with the relevant provisions of Article 7
of intra-group share-based payment of "Interpretation No. 4 of Accounting Standards for
Business Enterprises".
(1). Accounting policies adopted for revenue recognition and measurement
Under the new revenue standard, the Company determine the timing of revenue recognition
on the basis of transfer of control. The Company recognises revenue when it satisfies a
performance obligation in the contract, i.e. when the customer obtains control of the relevant
goods or services.
If one of the following conditions is fulfilled, the Company performs its performance obligation
within a certain period; otherwise, it performs its performance obligation at a point of time: (1)
when the customer simultaneously receives and consumes the benefits provided by the Company
when the Company performs its obligations under the contract; (2) when the customer is able to
control the goods in progress in the course of performance by the Company under the contract;
(3) when the goods produced by the Company under the contract are irreplaceable and the
Company has the right to receive payment for performance completed to date during the whole
contract term.
For performance obligations performed within a certain period, the Company recognises
revenue by measuring the progress towards complete of that performance obligation within that
certain period. When the progress of performance cannot be reasonably determined, if the costs
incurred by the Company are expected to be compensated, the revenue shall be recognised at
the amount of costs incurred until the progress of performance can be reasonably determined.
For performance obligation performed at a point of time, the Company recognises revenue at
the point of time at which the customer obtains control of relevant goods or services. To
determine whether a customer has obtained control of goods or services, the Company considers
the following indications: (1) the Company has the current right to receive payment for the goods,
which is when the customer has the current payment obligations for the goods; (2) the Company
has transferred the legal title of the goods to the customer, which is when the client possesses the
legal title of the goods; (3) the Company has transferred the physical possession of goods to the
customer, which is when the customer obtains physical possession of the goods; (4) the Company
has transferred all of the substantial risks and rewards of ownership of the goods to the customer,
which is when the customer obtain all of the substantial risks and rewards of ownership of the
goods to the customer; (5) the customer has accepted the goods; (6) other information indicates
that the customer has obtained control of the goods.
When a contract contains two or more performance obligations, the Company will allocate
the transaction price to each individual performance obligation in accordance with the relative
proportion of the stand-alone selling price of the goods promised by each individual performance
obligation on the commencement date of the contract. Revenue is recognised on the transaction
price allocated to each individual performance obligation. The transaction price is the amount of
consideration that the Company expects to be entitled to receive due to the transfer of goods to
customers. The amount collected by the Company on behalf of a third party and the amount that
the Company expects to return to the customer are accounted for as a liability and not included in
the transaction price. For contracts that contain variable consideration, the Company estimates
the amount of consideration to which it will be entitled using either the expected value method or
the most likely amount. The estimated amount of variable consideration is included in the
transaction price only to the extent that it is highly probable that such an inclusion will not result in a
significant revenue reversal in the future when the uncertainty associated with the variable
consideration is subsequently resolved. For contracts that contain significant financing
components, the Company determines the transaction price based on the amount payable under
the assumption that the customer pays that amount payable in cash when the control of goods or
services is transferred to the customer. The difference between the transaction price and the
contract consideration shall be amortised within the contract period using effective interest rate.
For contracts where the period between payment and transfer of the associated goods or
services is less than one year, the Group applies the practical expedient of not adjusting the
transaction price for any significant financing component.
Based on actual situation, the Company recognizes revenue when the following conditions
are met:
(1) Sales of product: Domestic sales revenue is recognised when the control of the product
has been transferred to the purchaser, the continued management and control of the product is
no longer implemented, the payment has been recovered or the evidence for payment has been
obtained and the relevant economic benefits are likely to flow in, and the cost of the product can
be reliably measured. Export sale revenue is recognised on the export date shown on the export
declaration of the goods after the goods are shipped according to the customer's requirements,
the payment has been recovered or the receipt of the payment has been obtained and the
relevant economic benefits are likely to flow in, the cost of the product can be reliably measured.
(2) Futures brokerage business: The net transaction fee charged by the Company from the
customers (deducting the transaction fee payable by the Company to exchange company) is
recognized as the net fee income when the daily payment is settled with the customer.
(2). Differences in accounting policies for revenue recognition due to the adoption of different
business models for similar businesses
Government grants refer to the Company's obtain of monetary or non-monetary assets from
the government without consideration. It is divided into government grants related to assets and
government grants related to income.
Government grants related to assets refer to government grants acquired by the Company
and used to purchase or construct or form long-term assets, including financial grants for the
purchase of fixed assets or intangible assets, and financial discounts for dedicated loans for fixed
assets, etc . ; Government grants related to income refer to government grants other than
government grants related to assets. Government grants should be distinguished between that
related to assets and related to income and apply different accounting treatment. If it is difficult to
distinguish, the overall classification is classified as government grants related to income
The specific standards adopted by the Company in the classification of government grants
are:
(1) The grant objects specified in the Government grants document are used to purchase or
construct or form long-term assets, or the expenditures of the subsidies are mainly used to
purchase or construct or form long-term assets, they are classified as government grants related
to assets.
(2) The government grants obtained according to the government documents that are all or
mainly used to compensate the expenses or losses in the future period or the government grants
that have occurred, and are classified as government grants related to income.
(3) If the government document does not clearly specify the target of the grant, the
Government grants will be divided into Government grants of Related to assets or Government
grants of Related to income in the following ways: 1) Government documents specify the specific
project targeted by the grant, the expenditure amount is divided by relative ratio of that forming
the asset and the expenditure amount included in the expense according to the budget of this
particular project. The ratio needs to be reviewed on each balance sheet date and changed if
necessary.2) Government documents only use general expressions and do not indicate specific
items, it is regarded as government grants related to income.
The Company usually recognises and measures the government grants according to the
actual amount received when they are actually received. However, for the end of the period, there
is solid evidence that it can meet the relevant conditions stipulated by the financial support policy.
It is expected that the financial support funds can be received, and it is measured according to the
Amount receivable. Government grants measured according to Amount receivable should also
meet the following conditions:
(1) It is based on the financial support item officially released by the local financial department
and proactively disclosed in accordance with the “Government Information Disclosure
Regulations” and its financial fund administrative methods, and its administrative methods should
be inclusive (any enterprise that meets the prescribed conditions can apply), not specifically for
specific enterprises;
(2) The Amount of the subsidy receivable has been confirmed by the authority government
department, or it can be reasonably calculated according to the relevant regulations of the
officially released financial fund management method, and it is expected that there will be no
significant uncertainty in its amount;
(3) The relevant grant approval has clearly promised the payment period, and the payment is
guaranteed by the corresponding financial budget, so it can be reasonably guaranteed that it can
be received within the specified period;
(4) According to the specific situation of the Company and the subsidy, other relevant
conditions (if any) that should be met.
Government grants are monetary assets, measured by the amount received or receivable;
non-monetary assets, measured by the fair value; if the fair value of non-monetary assets cannot
be reliably obtained, measured by the nominal amount. Government grants measured in nominal
amount are directly included in profit or loss for the current period.
The Company adopts the gross method for Government grants, the specific accounting
treatment is as follows:
Government grants related to assets are recognized as deferred income, and are included in
profit or loss for the current period in a reasonable and systematic way within the useful life of the
relevant assets. When related assets are sold, transferred, scrapped or damaged before the end
of the useful life, the relevant deferred income balance is transferred to the profit and loss of the
asset disposal period.
Government grants related to income, which are used to compensate the related cost or loss
of the Company in the future period, are recognized as deferred income, and are included in profit
or loss for the current period during the period when the related cost or loss is recognized. The
compensation for the related costs or losses incurred by the enterprise is directly included in profit
or loss for the current period.
The policy discount loans obtained by the Company are divided into the following two
situations and are separately accounted for:
(1) if the government makes the payment of subsidy to the bank offering the loan, the actual
amount of money received by the loan is recorded as the book amount, and the borrowing costs
are calculated according to the loan principle and the preferential interest rate of the policy.
(2) If the government makes the payment of subsidy directly to the Company, the interest
subsidy is reducing the borrowing costs.
If the recoginsed government grants need to be returned, the returned will be accounted in
the current period for in the following situations:
(1) that initially deducted the carrying amount of the asset, is recognized by increasing the
carrying amount of the asset;
(2) if there exists of the related deferred income balance, then the deferred income balance is
reduced by the amount repayable, any excess is charged to profit or loss for the current period.
(3) In other cases, it is directly included in profit or loss for the current period.
The distinguishing principles of government grants included in different profit and loss items
are: Government grants related to the daily activities of the Company, included in other income or
offsetting related costs according to the economic business substance; Government grants not
related to the daily activities of the Company, included in non-operating income and expenses.
The Company uses the balance sheet liability method to recognize deferred income tax
based on the temporary difference between the carrying amount of assets, liabilities, and the
balance sheet date and the tax base. The Company's current income tax and deferred income tax
are included in profit or loss for the current period as income tax expenses or credit, but excluding
income tax arising from: (1) business combination; (2) transactions or matter recognised directly in
owners' equity; (3) according to the "Accounting Standards for Business Enterprises No. 37 -
Presentation of Financial Instruments" and other regulations, the dividend payment of financial
instruments classified as equity instruments can be deducted before corporate income tax
according to tax policies and the distributed profits come from transactions or matters previously
recognized in owners’ equity.
The Company recognizes a deferred tax asset for the carry forward of deductible temporary
differences, deductible losses and tax credits to subsequent periods, to the extent that it is
probable that future taxable profits will be available against which the deductible temporary
differences, deductible losses and tax credits can be utilized, except for those incurred in the
following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable
profit (or deductible loss) when the transaction occurs;
(2) The deductible temporary differences associated with investments in subsidiaries,
associates and joint ventures, the corresponding deferred tax asset is recognized when both of
the following conditions are satisfied: it is probable that the temporary difference will reverse in
the foreseeable future and it is probable that taxable profits will be available in the future against
which the temporary difference can be utilized.
All the taxable temporary differences are recognized as deferred tax liabilities except for
those incurred in the following transactions:
(1) Initial recognition of goodwill or initial recognition of an asset or liability in a transaction
which is neither a business combination nor affects accounting profit or taxable profit (or
deductible loss) when the transaction occurs;
(2) The taxable temporary differences associated with investments in subsidiaries, associates
and joint ventures, and the Company is able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable
future.
The difference between the carrying amount of assets and liabilities and their tax base (If the
items that have not been recognized as assets and liabilities can be determined in accordance
with the provisions of the tax law, the tax base, the difference between the tax base and the book
amount), is calculate and recognized deferred tax assets or deferred tax liabilities according to the
applicable tax rate during the period when the assets are expected to be recovered or the
liabilities are paid off.
Deferred tax assets recognsied are limited to the amount of taxable income that is likely to be
used to offset the deductible temporary differences. On the balance sheet date, if there is solid
evidence that it is likely to obtain sufficient taxable income in the future period to offset the
deductible temporary difference, the deferred tax assets that have not been recognized in the
previous accounting period are recognized. The carrying amount of deferred tax assets is
reviewed regularly. If it is likely that sufficient taxable income cannot be obtained in the future to
offset the benefits of deferred tax assets, the carrying amount of deferred tax assets will be
written down. When it is likely to obtain sufficient taxable income, the amount written down will be
reversed.
basis or acquire assets and settle liabilities simultaneously, the Company's current income tax
assets and current income tax liabilities are presented in net amounts after offset.
When the Company have the legal right to settle the current income tax assets and current
income tax liabilities in net, and the deferred tax assets and deferred tax liabilities are related to the
income tax levied by the same tax collection department on the same taxpayer or different
taxpayers, but in each future period of significant deferred tax assets and liabilities reversal, the
taxpayer involved intends to settle the current income tax assets and liabilities in net amount or
obtain assets and settle liabilities at the same time and deferred tax liabilities are presented in net
amount after offset.
(1). Accounting treatment for operating leases
(2). Accounting treatment for financing leases
(3). Determination method and accounting treatment of lease under the new lease standard
A lease is a contract that conveys the right to use an asset for a period of time in exchange for
consideration.
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control the use of one or more
identified asset(s) for a period of time in exchange for consideration.
For a contract that contains multiple separate lease, the Company separates and accounts for
each lease component as a lease separately. For a contract that contains lease and non-lease
components, the lessee and lessor separates the lease and non-lease components.
(1) Right-of-use assets
At the commencement date of lease term, the Company recognizes right-of-use assets for
leases (excluding short-term leases and leases of low-value assets). Right-of-use assets are
measured initially at cost. Such cost comprises: the amount of the initial measurement of lease
liability; lease payments made at or before the inception of the lease less any lease incentives
already received (if there is a lease incentive); initial direct costs incurred by the Company; the
costs of the Company expected to be incurred for dismantling and removing the leased asset,
restoring the site on which the leased asset is located or restoring it to the condition as agreed in
the terms of the lease.
The Company accrues depreciation for the right-of-use assets on straight-line method. If
there is reasonable certainty that the Company will obtain the ownership of a leased asset at the
end of the lease term, the Company depreciates the right-of-use asset from the commencement
date to the end of the useful life of the underlying asset; otherwise, the Company depreciates the
leased asset from the commencement date to the earlier of the end of the useful life of the right-
of-use asset or the end of the lease term.
(2) Lease liabilities
At the commencement date of lease term, the Company recognizes lease liabilities for leases
(excluding short-term leases and leases of low-value assets). Lease liabilities are initially measured
based on the present value of outstanding lease payment. Lease payment include: fixed
payments (including in-substance fixed payments), less any lease incentives (if there is a lease
incentive); variable lease payment that are based on an index or a rate; amounts expected to be
payable under the guaranteed residual value provided by the Company; the exercise price of a
purchase option if the Company is reasonably certain to exercise that option; payments of
penalties for terminating the lease option, if the lease term reflects that the Company will exercise
that option. The Company adopts the interest rate implicit in the lease as the discount rate. If that
rate cannot be determined reasonably, the Company’s incremental borrowing rate is used.
The Company shall calculate the interest expenses of lease liabilities over the lease term at
the fixed periodic interest rate, and include it into profit or loss in the period or cost of relevant
assets. Variable lease payments not included in the measurement of lease liabilities are charged to
profit or loss in the period or cost of relevant assets in which they actually arise.
After the commencement date of lease term, if the following circumstances occur, the
Company re-measures the lease liability in accordance with the lease payments after modification:
when the assessment results of the purchase, extension or termination option or the actual
exercise condition changes, or the actual exercise of the lease renewal option or the lease
termination option is inconsistent with the original assessment result; Changes in the expected
payable amount based on guaranteed residual value; Changes in the index or ratio used to
determine lease payments. For the lease modification that cause the lease liabilities to be
remeasured, the Company adjusts the carrying value of the right-of-use assets accordingly. If the
carrying value of the right-of-use asset has been reduced to zero, but the lease liability still needs
to be further reduced, the Company will include the remaining amount in the profit or loss for the
current period.
(3) Short-term leases and leases of low-value assets
The right-of-use asset and lease liability are not recognized by the Company for short-term
leases and leases of low-value assets, and the relevant lease payments are included in profit or
loss in the period or costs of relevant assets in each period of the lease term on a straight-line
basis. Short-term leases are defined as leases with a lease term of not more than 12 months from
the commencement date and excluding a purchase option. Leases of low-value assets are
defined as leases with underlying low value when new. Where the Company subleases or expects
to sublease a leased asset, the original lease shall not belong to a lease of low-value asse
(4) Lease modification
The Company will account for the lease modification as a separate lease if the lease changes
and meets the following conditions: the lease change expands the scope of lease by increasing
the rights to use one or more leased assets; the increased consideration and the individual price of
the expanded part of the lease are equivalent to the amount adjusted for the contract.
If the lease change is not accounted for as a separate lease, the Company shall re-allocate the
consideration of a changed contract, re-determine the lease term, and remeasure the lease
liabilities by the present value calculated from the changed lease payments and revised discount
rate on the effective date of the lease change.
At the commencement date of lease term, the Company classifies leases as financing leases
and operating leases. A financing lease is a lease that transfers substantially all the risks and
rewards incidental to ownership of a leased asset, irrespective of whether the ownership of the
asset is eventually transferred. An operating lease is a lease other than a finance lease.
As a sub-leasing lessor, the Company classifies the sub-leases based on the right-of-use
assets of the original leases. If the original lease is a short-term lease and the Company chooses
not to recognize the right-of-use asset and lease liability for the original lease, the Company
classifies the sublease as an operating lease.
(1) Accounting treatment of operating leases
The lease payments derived from operating leases are recognized as rental income on a
straight-line basis over the respective lease terms. Initial direct costs relating to operating leases to
be incurred by the Company shall be capitalized and then included in the current income by stages
at the same base as the recognition of rental income over the lease term. The variable lease
payments not included in the measurement of lease payments shall be recognized in profit or loss
in the period in which they are occurred.
(2) Accounting treatment of financing leases
At the commencement date of lease term, the Company recognizes financing lease
receivable and derecognizes the underlying assets. The Company initially measures financing
lease receivable in the amount of net investment in the lease. Net investment in the lease is the sum
of present value of unguaranteed residual value and the lease payments receivable at the
commencement date of lease term, discounted at the interest rate implicit in the lease.
The Company calculates and recognizes interest income in each period during the lease
term, based on a constant periodic interest rate. The derecognition and impairment losses of
financing lease receivable are accounted for in accordance with this note. Variable lease
payments not included in the measurement of the net investment in the lease are included in profit
or loss in the period in which they are occurred.
The Company determines whether the asset transfer in the sale and leaseback transaction is
a sale in accordance with principles described in this note.
(1) As a lessee
If the asset transfer in the sale and leaseback transaction is a sale, the Company, as a lessee,
measures the right-of-use assets formed by the sale and leaseback based on the part of the book
value of the original assets related to the use rights obtained from the leaseback, and recognize
relevant gains or losses only for the right to transfer to the lessor; if the transfer of assets in the sale
and leaseback transaction is not a sale, the Company, as a lessee, continues to recognize the
transferred assets and recognizes a financial liability equal to the transfer income. For details of
accounting treatment for financial liabilities, please see this note.
(2) As a lessor
If the transfer of assets in the sale and leaseback transaction is a sale, the Company, as a
lessor, accounts for asset purchase, and accounts for asset lease in accordance with policies in
the aforementioned “2. The Company as a lessor”; if the transfer of assets in the sale and
leaseback transaction is not a sale, the Company, as a lessor, does not recognize the transferred
assets, but recognizes a financial asset equal to the transfer income. For details of accounting
treatment for financial assets, please see this note.
(1)Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The Company
measures related assets or liabilities at fair value assuming the assets or liabilities are exchanged in
an orderly transaction in the principal market; in the absence of a principal market, assuming the
assets or liabilities are exchanged in an orderly transaction in the most advantageous market.
Principal market (or the most advantageous market) is the market that the Company can normally
enter into a transaction on measurement date.
The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, considering the ability of a market
participant to generate an economic benefit from the best use of the asset, or the ability to
generate an economic benefit from the sale of the asset to another market participant who can
put it to the best use, maximizing the use of relevant observable inputs, and using unobservable
inputs only if the observable inputs aren’t available or impractical.
Fair value level for assets and liabilities measured or disclosed at fair value in the financial
statements are determined according to the significant lowest level input to the entire
measurement: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities that the Company can access at the measurement date; Level 2 inputs are inputs other
than quoted prices included within Level 1 that are observable for the assets or liabilities, either
directly or indirectly; Level 3 inputs are unobservable inputs for the assets or liabilities, including
interest rates that cannot be directly observed or verified by observable market data, stock
volatility, future cash flows of disposal obligations assumed in business combinations, financial
forecasts made using own data, etc. On each balance sheet date, the company reassesses the
assets and liabilities that are continuously measured at fair value recognized in the financial
statements to determine whether there is a conversion between the fair value measurement
levels.
(2) Share repurchase
If the shares of the company are purchased for reasons such as reducing registered capital or
rewarding employees, the actual amount paid shall be treated as treasury shares. If the
repurchased shares are canceled, the difference between the total face value of the shares
calculated based on the par value of the canceled shares and the number of canceled shares and
the actual amount paid for the repurchase shall be used to offset the capital reserve, if the capital
reserve is insufficient for offsetting, and offset against retained earnings. If rewarding the
repurchased shares to the employees of the company belongs to equity-settled share payment,
when the employees exercise their rights to purchase the company's shares and receive the price,
the cost of the treasury shares delivered to the employees will be transferred out of the capital
reserve (other capital reserve) cumulative recorded during the waiting period.
(3)Hedging
investment hedging.
are used: (1) The hedging relationship consists only of eligible hedging instruments and hedged
instruments; (2) At the beginning of hedging, the Company formally designated hedging
instrument and hedged items, and prepared written documents on the hedging relationship and
the Company's risk management strategy and risk management objectives for hedging; (3) The
hedging relationship meets the hedging validity requirement.
When the hedging meets the following conditions at the same time, the Company determines
that the hedging relationship meets the requirements for hedging effectiveness: (1) There is an
economic relationship between the hedged item and the hedging instrument; (2) Among the
changes in value caused by the economic relationship between hedged items and hedging
instruments, the impact of credit risk does not dominate; (3) The hedging ratio of the hedging
relationship is equal to the ratio of the actual number of hedged items of the Company to the
actual number of hedging instruments, but does not reflect the imbalance of the relative weight of
the hedged items and hedging instruments.
The Company continuously evaluates whether the hedging relationship meets the
requirements of hedging effectiveness on the hedging start date and later. The hedging
relationship no longer meets the hedging effectiveness requirements due to the hedging ratio, but
if the risk management objectives of the designated hedging relationship have not changed, the
Company will rebalance the hedging relationship.
(a) Fair value hedge
period. If hedging instruments are hedged against non-tradable equity instruments (or their
components) that are selected to be measured at fair value and whose changes are included in
other comprehensive income, the gains or losses generated by the hedging instruments are
included in other comprehensive income.
profit or loss for the current period, while adjusting the carrying amount of the confirmed hedged
item not measured at fair value. Hedged items are debt instruments (or their components) that are
measured at fair value and whose changes are included in other comprehensive income. The
gains or losses resulting from the hedged risk exposure are included in profit or loss for the
current period, without adjustment its carrying amount; If the hedged item is a non-tradable equity
instrument investment (or its component) measured at fair value and its changes are included in
other comprehensive income, the gain or loss resulting from the hedged risk exposure is included
in other comprehensive income, not adjusting its carrying amount.
If the hedged item is an unrecognized commitment (or its component), the cumulative change
in fair value due to the hedged risk after the hedge relationship is designated is recognized as an
asset or liability, and the relevant gains or losses are included profit or loss for each relevant
period. When fulfilling the definite commitment to obtain assets or assume liabilities, the initial
recognition amount of the asset or liability is adjusted to include the cumulative change in the fair
value of the confirmed hedged item.
If the hedged item is a financial instrument (or a component thereof) measured at amortized
cost, the adjustment made by the Company to the carrying amount of the hedged item will be
amortized at the actual interest rate recalculated on the amortization date and included in profit or
loss for the current period. If the hedged item is a debt instrument measured at fair value and its
changes are included in other comprehensive income (components thereof), the accumulated
recognized hedging gains or losses are amortized in the same manner and included in profit or
loss for the current period, but does not adjust the carrying amount of the debt instrument (or its
components).
(b) Cash flow hedge
included in other comprehensive income as a cash flow hedge reserve, and the invalid part is
included in profit or loss for the current period. The amount of cash flow hedge reserve is
recognised according to the lower of the absolute value of the following two items:
①Accumulated gains or losses of hedging instruments since hedging;②The cumulative change in
the present value of the expected future cash flow of the hedged item since hedging.
Company to subsequently recognize a non-financial asset or non-financial liability, or the expected
transaction of non-financial assets and non-financial liabilities forms a certain commitment
applicable to fair value hedge accounting, the Company transfers out the cash flow hedging
reserve amount originally recognized in other comprehensive income and includes it in the initial
recognition amount of the asset or liability.
other comprehensive income, are transferred out during the same period when the hedged
expected transaction affects profit or loss, and are included in profit or loss for the current period.
(c) Net investment hedges for overseas operations
The portion of the gains or losses formed by hedging instruments that are effective hedges is
included in other comprehensive income, and when disposing of overseas operations, they are
transferred out and included in profit or loss for the current period The part of the loss that
belongs to the invalid hedge is included in profit or loss for the current period.
(4) Treasury shares
Repurchase the Company’s shares for reasons such as reducing registered capital or
rewarding employees. Before cancellation or transfer, they are managed as treasury shares. The
amount actually paid is used as the cost of treasury shares, reducing owners ‘equity and
conducting registration for reference. If the treasury shares is transferred, the difference between
the amount actually received and the amount of treasury shares booked is included in the capital
reserve. If the capital reserve is insufficient to offset, the retained earnings are offset. If the treasury
shares are cancelled, share capital is reduced by the par value of the stock and the number of
shares cancelled, and the capital reserve is offset by the difference between the book balance of
the cancelled treasury shares and the face value. If the capital reserve is insufficient, the retained
earnings are offset. When repurchasing, transferring or canceling the Company's shares, no gains
or losses are recognized.
(5) Restricted shares
In the equity incentive plan, the Company grants restricted stock to the motivated employee.
The motivated employee subscribes for the stock first. If the unlocking conditions specified in the
equity incentive plan are not subsequently met, the Company repurchases the stock at the price
agreed in advance. If the restricted stock issued to employees has completed the capital increase
procedures such as registration according to relevant regulations, on the grant date, the Company
will recognise the share capital and capital reserve (Share capital premium) based on the
subscription paid by the employees. Treasury shares and other payables are recognize for the
repurchase obligations.
(6) Significant accounting judgments and estimates
In the process of applying the accounting policy of the Company, due to the inherent
uncertainty of the operating activities, the Company needs to make judgments, estimates and
assumptions on the carrying amount of the report items that cannot be accurately measured.
These judgments, estimates and assumptions are based on the Company's management's past
historical experience and made on the basis of considering other relevant factors. These
judgments, estimates and assumptions will affect the reported amount of income, expenses,
assets and liabilities and the disclosure of contingent liabilities on the balance sheet date.
However, the actual results caused by the uncertainty of these estimates may be different from
the current estimates of the Company's management, which will cause significant adjustments to
the carrying amount of assets or liabilities affected in the future. The Company regularly reviews
the aforementioned judgments, estimates and assumptions on the basis of continuous operation.
If the changes in accounting estimates only affect the current period of change, the number of
impacts will be recognised in the current period of change. If the changes affect both the current
period and the future period, the number of impacts will be confirmed in the current period and
future period of change. As of the balance sheet date, the Company needs to make judgments,
estimates and assumptions on the financial statement items as follows:
When the company acts as a lessor, according to the provisions of the Accounting Standards
for Business Enterprises No. 21 - Leases, leases are classified as operating leases and financial
leases. When determining the classification, management needs to make analysis and judgment
on whether all risks and rewards related to the ownership of leased assets have been substantially
transferred to the lessee.
The Company uses the expected credit loss model to assess impairment of receivables and
debt investments measured at amortized cost, receivables financing measured at fair value and
changes included in other comprehensive income, and other debt investments. The use of the
expected credit loss model involves significant management judgments and estimates. The key
parameters of expected credit loss measurement include default probability, default loss rate and
default risk exposure. The Company considers the quantitative analysis of historical statistical data
and forward-looking information to establish default probability, default loss rate and default risk
exposure model. The difference between the actual financial instrument impairment result and the
original estimate will affect the carrying amount of the financial instrument and the accrual or
reversal of credit impairment losses during the period when the estimate is changed.
According to Inventories accounting policy, the Company measures according to the lower of
cost and net realizable value. For inventories whose cost is higher than net realizable value and
obsolete and unsalable, provision for decline in value of inventories is recognized. Impairment to
net realizable value is based on the assessment of the marketability of Inventories and its net
realizable value. Appraisal of Inventories impairment requires management to make judgments
and estimates based on factors such as the purpose of holding Inventories and the impact of
events after the balance sheet date. The difference between the actual result and the original
estimate will affect the carrying amount of Inventories and the accrual of Inventory Provision for
decline in value or return during the period when the estimate is changed.
On the balance sheet date, the Company judges whether there is any sign of possible
impairment of Non-current assets other than financial assets. For intangible assets with uncertain
service life, in addition to the annual impairment test, when there are signs of impairment, an
impairment test is also conducted. Non-current assets other than financial assets are tested for
impairment when there are signs that their book amount is not recoverable.
When the carrying amount of an asset or asset group is higher than the recoverable amount,
which is the higher of the fair value minus the disposal cost and the present value of the expected
future cash flow, it indicates that an impairment has occurred.
The net value of fair value minus disposal expenses is determined by referring to the sales
agreement price or observable market price of similar assets in fair transactions, minus the
incremental costs that can be directly attributed to the disposal of the asset. When predicting the
present value of future cash flows, it is necessary to make a significant judgment on the output,
selling price, related operating costs of the asset (or asset group), and the discount rate used in
calculating the present value. When estimating the recoverable amount, the Company will use all
relevant information that can be obtained, including the prediction of production, selling price and
related operating costs based on reasonable and supportable assumptions.
The Company assesses whether goodwill is impaired at least annually and requires an
estimate of the use value of the asset group to which goodwill is allocated. When estimating the
value in use, the Company needs to estimate the future cash flow from the asset group, and at the
same time choose an appropriate discount rate to calculate the present value of the future cash
flow.
After considering the residual value of the investment properties measured at cost model,
fixed assets and Intangible assets, the Company depreciates and amortizes it according to the
straight-line method during the service life. The Company regularly reviews the service life to
determine the amount of depreciation and amortization expenses to be included in each reporting
period. The service life is determined by the Company based on the previous experience of similar
assets and the expected technical update. If the previous estimates change significantly, the
depreciation and amortization expenses will be adjusted in the future.
To the extent that there is likely to be enough taxable profits to offset losses, the Company
recognizes deferred tax assets for all unutilized tax losses. This requires the Company's
management to use a lot of judgment to estimate the time and amount of future taxable profits,
combined with tax planning strategies to determine the amount of deferred tax assets that should
be recognised.
In the normal business activities of the Company, there are certain uncertainties in the final tax
treatment and calculation of some transactions. Whether certain items can be paid before taxes
requires the approval of the tax authorities. If the final determination result of these tax matters is
different from the originally estimated amount, the difference will have an impact on the current
income tax and deferred income tax during the final determination period.
Provisions for liability are recognized when the Company has a present obligation as a result
of contingencies such as provision of external guarantee, litigation, product quality warranty, and
loss-making contract, and it is very likely that an outflow of economic benefits will be resulted from
settlement of the obligation, and a reliable estimate of the amount of the obligation can be made.
The recognition and measurement of provisions for liability largely depend on the management’s
judgement. In the process of making judgments, the Company needs to evaluate factors such as
risks, uncertainties and time value of money related to these contingencies.
Certain assets and liabilities of the Company are measured at fair value in the financial
statements. When estimating the fair value of an asset or liability, the Company uses the
observable market data available; if the Level 1 input value is not available, a third-party qualified
assessment agency is employed for valuation. The Company's management works closely with it
to determine the appropriate valuation techniques and input values for related models. Relevant
information about the valuation techniques and input values used in the process of determining
the fair value of various assets and liabilities are disclosed in this note.
(1). Changes in significant accounting policies
Other note
Unless otherwise specified, the figures as shown in this section are in RMB.
(1) The Ministry of Finance issued the "Interpretation No. 15 of Accounting Standards for
Business Enterprises" (Cai Kuai [2021] No. 35, hereinafter referred to as "Interpretation No. 15") on
Treatment for External Sales of Products or By-products Produced by Enterprises Before Their
Fixed Assets Are Ready for Use or During the Research and Development Process" and
"Judgment on Onerous Contracts" .
produced before the fixed assets reach the intended usable state or during the research and
development process (hereinafter collectively referred to as trial operation sales), according to
Interpretation No. 15, the revenue and costs related to trial operation sales should be accounted
for separately in accordance with the "Accounting Standards for Business Enterprises No. 14 -
Revenue" and "Accounting Standards for Business Enterprises No. 1 - Inventory" and included in
the current profit and loss, the net amount after offsetting relevant costs from sales related to trial
operation shall not be used to offset fixed asset costs or R&D expenditures. Before the relevant
products or by-products produced in the trial operation are sold externally, those that meet the
requirements of the Accounting Standards for Business Enterprises No. 1 - Inventory should be
recognized as inventories, and those that meet the relevant asset recognition conditions in other
relevant accounting standards for business enterprises should be recognized as related assets .
From 1 January 2022, the Company adopted Interpretation No. 15 " Accounting Treatment for
External Sales of Products or By-products Produced by Enterprises Before Their Fixed Assets
Are Ready for Use or During the Research and Development Process". The implementation of this
interpretation for the first time has no significant impact on the financial statements between the
beginning of the earliest period in which financial statements are presented and the
implementation date of this interpretation.
that will inevitably occur in fulfilling contractual obligations" are the lower of the cost of fulfilling the
contract and the compensation or penalty for failure to perform the contract. The cost for the
Company to fulfill the contract includes the incremental cost of performing the contract and the
allocated amount of other costs directly related to the performance of the contract, of which, the
incremental cost of performing the contract includes direct labor, direct materials, etc.; the
apportioned amount of other costs directly related to the performance of the contract includes
the apportioned amount of depreciation expenses of fixed assets used to perform the contract,
etc. From 1 January 2022, the Company implemented the provisions of "judgment on onerous
contracts" in Interpretation No. 15. The first implementation of this interpretation has no significant
impact on the financial statements between the beginning of the earliest period in which financial
statements are presented and the implementation date of this interpretation.
(2) The Ministry of Finance issued the "Interpretation No. 16 of Accounting Standards for
Business Enterprises" (Cai Kuai [2022] No. 31, hereinafter referred to as "Interpretation No. 16") on
Treatment for Income Tax Effects of Dividends Related to Financial Instruments Classified as
Equity Instruments by the Issuer" and "Accounting Treatment of Enterprises Changing Cash-
settled Share-based Payments to Equity-settled Share-based Payments".
financial instruments classified as equity instruments by the issuer, Interpretation No. 16 stipulates
that for financial instruments classified as equity instruments by enterprises in accordance with the
"Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments"
and other regulations. If relevant dividend payments are deducted before corporate income tax in
accordance with the relevant provisions of the tax policy, the Company shall recognise the income
tax impact related to the dividend when recognising the dividend payable. The Company shall
include the income tax effect of dividends in the current profit and loss or owner's equity items
(including other comprehensive income items) in a manner consistent with the accounting
treatment adopted for transactions or events that generated distributable profits in the past. From
"Accounting Treatment for Income Tax Effects of Dividends Related to Financial Instruments
Classified as Equity Instruments by Issuers", and the first implementation of this interpretation has
no significant impact on financial statements.
payments to equity-settled share-based payments, Interpretation No. 16 stipulates that the
Company modify the terms and conditions of cash-settled share-based payment agreements, if it
becomes an equity-settled share-based payment, on the date of modification, the Company shall
measure the equity-settled share-based payment according to the fair value on the day when the
equity instrument is granted; if it becomes an equity-settled share-based payment, on the date of
modification, the Company shall measure the equity-settled share-based payment according to
the fair value of the equity instrument granted on the date, and recognise the services obtained in
the capital reserve, simultaneously, derecognize the liabilities recognized on the modification date
of the cash-settled share-based payment, and the difference between the two shall be included in
the current profit and loss. Since 30 November 2022, the Company implemented the provisions of
Interpretation No. 16 "Accounting Treatment for Companies Changing Cash-settled Share-based
Payments to Equity-settled Share-Based Payments", which was the first time that this
interpretation is the first to present financial statements. There is no significant impact on the
financial statements between the beginning of the period and the implementation date of the
interpretation.
(2). Changes in significant accounting estimates
(3). Initial adoption of new accounting standards or standard interpretations effective in 2022
that will involve adjustments to the financial statements at the beginning of the year of
adoption
VI. Taxation
Major taxes and their tax rates
Taxes Tax basis Tax rate %
Value-added tax Value-added generated Calculated and paid according to
during the sale of goods or tax rates of 3%, 5%, 6%, 9%, and
provision of taxable services 13%. The export goods implement
the tax policy of "exemption,
credit and refund", and the tax
refund rate is 13%.
Consumption tax taxable sales volume Gasoline: 1.52 yuan/liter
Fuel oil: 1.20 yuan / liter
Diesel: 1.20 yuan / liter
Light cycle oil: 1.52 yuan/liter
Aviation kerosene: 1.20 yuan / liter
(deferred collection)
Naphtha: 1.52 yuan/liter
Urban maintenance and Turnover tax payable 7%, 5%, etc.
construction tax
Education surcharge Turnover tax payable 3%
Local education Turnover tax payable 2%
surcharges
Enterprise income tax Subject to taxable profit Refer to table below
If there are taxpayers with different corporate income tax rates, the disclosure information as in
below
Entity Income tax rate(%)
Jiangsu Hengli Chemical Fiber Co., Ltd. 15%
Jiangsu Hengke Advanced Materials Co. Ltd. 15%
Jiangsu Deli Chemical Fiber Co., Ltd. 15%
Suqian Deya New Materials Co., Ltd. 20%
Suzhou Hengli Chemical New Material Co., Ltd. 20%
Suzhou Binglin Trading Co., Ltd. 20%
Kanghui New Material Technology Co., Ltd. 15%
Suqian Kanghui New Material Co., Ltd. 20%
Shenzhen Ganghui Trading Co., Ltd. 20%
Hengli Logistics (Dalian) Co., Ltd. 20%
Hengli Petrochemical (Hainan) Co., Ltd. 15%
Hengli Energy (Hainan) Co., Ltd. 15%
Suzhou Hengli Energy Chemical Import & Export 20%
Co., Ltd.
Hengli Aviation Oil Co., Ltd. 20%
Hengli Energy (Jiangsu) Co., Ltd. 20%
Hengli Logistics (Dalian) Co., Ltd. 20%
Dalian Hengzhong Special Materials Co., Ltd. 20%
Suzhou Qianliyan Logistics Technology Co., Ltd. 20%
Suzhou Textile Group Network E-commerce Co., 20%
Ltd.
Suzhou Plastic Group Network E-commerce Co., 20%
Ltd.
Hengli Energy Sales Rudong Co., Ltd. 20%
Hengli Chemical (Suqian) Co., Ltd. 20%
Hengli Oil (Suqian) Co., Ltd. 20%
Hengli Petrochemical Sales (Jiangsu) Co., Ltd. 20%
Hengli Petrochemical Sales (Shanghai) Co., Ltd. 20%
Hengli Tongshang New Energy Co., Ltd. 20%
Hengli Energy Import and Export Co., Ltd. 20%
Hengli New Energy (Shanghai) Co., Ltd. 20%
Hengli Yuanshang Technology (Suzhou) Co., Ltd. 20%
Suzhou Hengli Jinshang Energy Technology Co., 20%
Ltd.
Hengli Petrochemical Sales (Haikou) Co., Ltd. 20%
Hengli Energy Chemical (Sanya) Co., Ltd. 15%
Dalian Henglixing Gemstone Chemical Trading Co., 20%
Ltd.
Dalian Hengli Gaoyuan Sales Co., Ltd. 20%
Hengli Energy Chemical (Shenzhen) Co., Ltd. 20%
Nantong Hengli Maoyuan Petrochemical Trading 20%
Co., Ltd.
Suzhou Hengli New Energy Sales Co., Ltd. 20%
Suzhou Hengli Fine Chemical Sales Co., Ltd. 20%
Hengli Petrochemical Sales (Shenzhen) Co., Ltd. 20%
HENGLI PETROCHEMICAL CO., LIMITED 16.5%
HENGLI PETROCHEMICAL INTERNATIONAL PTE. 5%
LTD.
HENGLI OILCHEM PTE. LTD. 10%
HENGLI SHIPPING INTERNATIONAL PTE. LTD. 0%
Others taxpayers other than the above 25%
According to “Notice on Continuing the Implementation of Part of the Consumption Tax
Policy for Naphtha Fuel Oil” (Cai Shui [2011] No. 87) issued by the Ministry of Finance, the People's
Bank of China and the State Administration of Taxation, "Notice on Improving the Consumption
Tax Rebate Policy for the Production of Vinyl Aromatic Chemical Products from Naphtha Fuel Oil"
(Cai Shui [2013] No. 2) issued by Ministry of Finance, People's Bank of China, General
Administration of Customs and State Administration of Taxation, "Interim Measures for
Consumption Tax Refund (Exemption) for Naphtha and Fuel Oil Used in the Production of Ethylene
and Aromatic Chemical Products" (Announcement of the State Administration of Taxation [2012]
No. 36) issued by the State Administration of Taxation, and "Announcement on Consumption Tax
Refund of Naphtha Fuel Oil Production of Vinyl Aromatic Chemical Products" (Announcement No.
issued by State Administration of Taxation and General Administration of Customs, production
enterprises that implement the fixed-point direct supply plan, sell naphtha and fuel oil within the
planned quantity limit, and issue a special invoice for the value-added tax of the Chinese character
anti-counterfeiting version with the "DDZG" logo, are exempt from consumption tax. Hengli
Petrochemical (Dalian) Refining Co., Ltd. is eligible for tax rebate and enjoys the preferential policy
of consumption tax rebate paid for the procurement process. At the same time, the
implementation of the fixed-point direct supply plan meets the above conditions and enjoys the
preferential policy of exempting consumption tax from the sales process.
According to the "Notice on Continuing to Increase Consumption Tax of Refined Oils" (Cai
Shui [2015] No. 11) issued by the Ministry of Finance and the State Administration of Taxation,
consumption tax for diesel, aviation kerosene and fuel oil has been increased from RMB 1.1 per liter
to RMB 1.2 per liter, and aviation kerosene continued to suspend the collection of consumption tax.
Hengli Petrochemical (Dalian) Refining Co., Ltd. enjoys the preferential policy of suspending the
collection of consumption tax for the sale of aviation kerosene.
Jiangsu Hengli Chemical Fiber Co., Ltd. obtained the "High-tech Enterprise Certificate" (No.:
GR202132007328) issued by Jiangsu Provincial Department of Science and Technology, Jiangsu
Provincial Department of Finance, and Jiangsu Provincial Taxation Bureau of the State
Administration of Taxation on 30 November 2021. The validity period is three years, and the
enterprise income tax rate for the current year is calculated at a reduced rate of 15%.
Jiangsu Hengke Advanced Materials Co. Ltd. obtained the "High-tech Enterprise Certificate"
(No.: GR202232005286) issued by the Jiangsu Provincial Department of Science and
Technology, the Jiangsu Provincial Department of Finance, and the Jiangsu Provincial Taxation
Bureau of the State Administration of Taxation on 22 November 2022. The validity period is three
years, and the enterprise income tax rate for the current year is calculated at a reduced rate of
Jiangsu Deli Chemical Fiber Co., Ltd. obtained the "High-tech Enterprise Certificate" (No.:
GR202032006951) issued by the Jiangsu Provincial Department of Science and Technology, the
Jiangsu Provincial Department of Finance, and the Jiangsu Provincial Taxation Bureau of the State
Administration of Taxation on 2 December 2020. The validity period is three years, and the
enterprise income tax rate for the current year is calculated at a reduced rate of 15%.
Kanghui New Material Technology Co., Ltd. obtained the "High-tech Enterprise Certificate"
(No.: GR202121000541) issued by the Liaoning Provincial Department of Science and Technology,
the Liaoning Provincial Department of Finance, and the Liaoning Provincial Taxation Bureau of the
State Administration of Taxation on 24 September 2021. The validity period is three years, and the
enterprise income tax rate for the current year is calculated at a reduced rate of 15%.
Suqian Deya New Materials Co., Ltd. and other 32 companies meet the identification
standards of small low-profit enterprises. The part of the taxable profit not exceeding 1 million
yuan shall be included in the taxable profit at a reduced rate of 12.5%, and the enterprise income
tax shall be paid at a tax rate of 20%; The part of the taxable profit exceeding 1 million yuan but not
exceeding 3 million yuan shall be included in the taxable profit at a reduced rate of 25%, and the
enterprise income tax shall be paid at a rate of 20%.
HENGLI PETROCHEMICAL INTERNATIONAL PTE. LTD. is registered in Singapore, and the
income tax rate is 17%. It was approved to enter the Singapore Global Trader Project on 1
September 2018, and enjoys a 5% income tax rate this year.
HENGLI OILCHEM PTE. LTD. is registered in Singapore, and the income tax rate is 17%. It was
approved to enter the Singapore Global Trader Project on 1 May 2020, and enjoys a 10% income
tax rate this year.
HENGLI SHIPPING INTERNATIONAL PTE. LTD. is registered in Singapore, and the income
tax rate is 17%. It received a tax incentive called Maritime Sector Incentive (MSI) on 22 January
Hengli Petrochemical (Hainan) Co., Ltd., Hengli Energy (Hainan) Co., Ltd. and Hengli Energy
Chemical (Sanya) Co., Ltd. are encouraged industrial enterprises registered and operating in
Hainan Free Trade Port. According to the "Notice of the Ministry of Finance and the State
Administration of Taxation on the Preferential Policies for Enterprise Income Tax in Hainan Free
Trade Port" (Cai Shui [2020] No. 31), the enterprise income tax is levied at a reduced tax rate of
VII. Notes to the items of consolidated financial statements
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Cash on hand 1,305,525.78 635,936.65
Cash at bank 19,815,265,793.15 9,204,580,349.21
Other monetary 8,256,950,806.64 6,780,785,866.66
funds
Interest receivables 2,883,754.27 50,741.96
not yet due
Total 28,076,405,879.84 15,986,052,894.48
Including: Total 6,512,853,828.05 3,150,653,685.97
amount of money
deposited abroad
Deposit in financial
company
Other note:
As of 31 December 2022, the Company's time deposits with financial institutions were
RMB858,620,000.00Yuan(31 December 2021: RMB169,900,000.00Yuan)
Item Closing balance Beginning balance
Security deposits of 3,838,471,603.38 3,284,936,253.11
borrowings
Security deposits of
acceptance bills
Deposits for letter of credit 2,414,021,116.76 1,902,558,705.91
Deposits for letter of
guarantee
Security deposits of open
interest futures trading
Security deposits of forward
foreign exchange contract
Deposit investment funds 1,485,313,708.89 673,166,428.88
Others 38,801.57 666,162.01
Total 8,256,950,806.64 6,780,785,866.66
please refer to the description of “Ownership or using rights of assets subject to restriction” in this
note.
of “Items in foreign currencies” in this note.
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Financial assets at fair value through 604,414,444.44 814,371,626.26
profit or loss
Including:
Derivative financial assets 490,430,590.59 696,433,139.56
Debt instruments investment 2,000,000.00
Wealth management products 20,000,000.00
and structured deposits
Fund trust and asset 97,938,486.70
management products
Financial assets designated at fair
value through profit or loss
Including:
Total 604,414,444.44 814,371,626.26
Other note:
(1). Notes receivable by category
(2). Notes receivable pledged by the company at the end of the period
(3). At the end of the period, the company has endorsed or discounted notes receivable on the
Balance sheet date Not yet expiry
(4). At the end of the period, the company transferred the notes to accounts receivable due
(5). Disclosure by method of provision for bad debts
(6). Provision for bad debts
(7). Notes receivable actually written off in this period
(1). Disclosure by ageing
Unit: Yuan Currency: RMB
Ageing Book balance at year end
Within one year
Including: Within one year
Within one year 385,851,852.51
Subtotal of within one year 385,851,852.51
Over 3 years
Over 5 years 1,935,251.49
Less: Provision for bad debts 18,946,943.53
Total 372,445,926.69
(2). Disclosure by method of provision for bad debts
Unit: Yuan Currency: RMB
Cate
Closing balance Beginning balance
gory
Carryin
Provision for Provision for Carrying
Book balance g Book balance
bad debts bad debts amount
amount
Prov Prov
Rat Rat
Amoun Amoun ision Amoun ision
io Amount io
t t ratio t ratio
(%) (%)
(%) (%)
Prov
ision
for
bad
debt
s on
indiv
idual
basi
s
Including:
Prov 391,392 10 18,946, 4.84 372,445 2,666,59 10 22,749, 0.85 2,643,8
ision ,870.22 0.0 943.53 ,926.69 3,358.75 0.0 987.24 43,371.5
for 0 0 1
bad
debt
s on
port
folio
basi
s
Including:
Tota
,870.22 0.0 943.53 ,926.69 3,358.75 0.0 987.24 43,371.5
l
Provision for bad debts on individual basis:
Provision for bad debts on portfolio basis:
Provision for bad debts on portfolio basis: Ageing analysis portfolio, High credit rating portfolio
Unit: Yuan Currency: RMB
Name Closing balance
Provision for bad
Accounts receivable Provision ratio (%)
debts
Ageing analysis 314,567,038.04 18,946,943.53 6.02
portfolio
High credit rating 76,825,832.18
portfolio
Total 391,392,870.22 18,946,943.53 4.84
Confirmation criteria and notes for bad debt provision by portfolio:
Provision for bad debts by ageing portfolio is as below:
Provision for bad
Ageing Book balance Provision ratio (%)
debts
Within one year 309,026,020.33 15,451,301.03 5.00
Over 5 years 1,935,251.49 1,935,251.49 100.00
Subtotal 314,567,038.04 18,946,943.53 6.02
If according to the expected credit loss general model to accrual provision for bad debts, please
refer to other receivables disclosure:
(3). Provision for bad debts
Unit: Yuan Currency: RMB
Categor Beginning Closing
Movement in the year
y balance balance
Transfe
Recover Other
r or
Accrual y or movemen
written-
reversal t
off
Provision - - - - - -
for bad
debts on
individua
l basis
Provision 22,749,987.2 - - - - 18,946,943.5
for bad 4 3,803,043.7 3
debts on 1
portfolio
basis
Total 22,749,987.2 -
Including significant amount of recovery or reversal of provision for bad debts:
(4). Accounts receivable written-off during the year
(5). Accounts receivable due from the top five debtors
The Company’s top five year-end balances for accounts receivable in total of
RMB126,589,006.01, accounting for 32.34% of the total account balance of year-end balances of
accounts receivable, and the corresponding year-end balance of provision for bad debts is
RMB4,853,495.97.
Other note
None
(6). Accounts receivable derecognized due to transfer of financial assets
(7). Transferred accounts receivable and continuing involvement in the formation of assets
and liabilities
Other note:
For details of accounts receivable in foreign currency at year end, please refer to the “Items in
foreign currencies” in this note.
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Bank acceptance bills 2,168,347,608.90 2,248,764,266.83
Letter of credit 118,923,620.36 1,137,793,441.20
Letter of guarantee - 33,400,000.00
Total 2,287,271,229.26 3,419,957,708.03
Changes and fair value changes of receivables financing:
Changes in
Change in cost in
Item Beginning balance Fair value Closing balance
current period
for the year
Bank 2,248,764,266.83
acceptance -80,416,657.93 - 2,168,347,608.90
bills
Letter of credit 1,137,793,441.20 -1,018,869,820.84 - 118,923,620.36
Letter of
guarantee
Total 3,419,957,708.03 -1,132,686,478.77 - 2,287,271,229.26
Continued
Accumulated
loss allowance
Cumulative
Cost in beginning recognized in
Item Cost at year end fair value
of year other
change
comprehensive
income
Bank
acceptance bills
Letter of credit 1,137,793,441.20 118,923,620.36 - -
Letter of
guarantee
Total 3,419,957,708.03 2,287,271,229.26 - -
If according to the expected credit loss general model to accrual provision for bad debts, please
refer to other receivables disclosure:
Other note:
(1) No provision for bad debts on individual item of receivables financing at year end
(2) Provision for bad debts on groups of receivables financing at year end
Provision for bad
Portfolio Book balance Provision ratio (%)
debts
Low risk group 2,287,271,229.26 - -
(3) No loss allowance for significant changes in book balance in the year.
Item Amount pledged at year end
Bank acceptance bills 1,469,571,971.78
and has not yet expired on the balance sheet date
Amount derecognized at year Amount not derecognized at
Item
end year end
Bank acceptance bills 4,843,064,345.95 -
Letter of credit 521,156,000.00 -
Subtotal 5,364,220,345.95 -
foreign currencies” in this note.
(1). Prepayments by ageing
Unit: Yuan Currency: RMB
Ageing Closing balance Beginning balance
Amount Ratio (%) Amount Ratio (%)
Within one 2,635,510,708.10 99.95
year
Over 3 808,000.00 0.03
years
Total 1,997,468,820.54 100.00 2,636,915,914.02 100.00
Note to significant prepayment was ageing over 1 year but not settled:
At the end of the period, there was no significant prepayments with aging over 1 year.
(2). Prepayments due from the top five debtors
The top five of the Company's prepayments balance at year end is in total of
RMB1,289,825,771.47, which accounted for 64.57% of the prepayments balance.
Other note
At the end of the period, there was no obvious indication of impairment in prepayments, so
there was no provision for impairment.
Presented by item
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Interest receivable
Dividends receivable
Other receivables 701,520,929.51 851,677,558.80
Total 701,520,929.51 851,677,558.80
Other receivables
(1). Disclosure by ageing
Unit: Yuan Currency: RMB
Ageing Book balance at year end
Within one year
Including: Within one year
Within a year 165,840,417.30
Subtotal of within one year 165,840,417.30
Over 3 years
Over 5 years 969,186.65
Less: Provision for bad debts 19,968,652.70
Total 701,520,929.51
(2). Disclosure by nature
Unit: Yuan Currency: RMB
Book balance in beginning of
Nature Book balance at year end
year
Deposits and security deposits 173,905,111.33 237,254,235.39
Petty cash 214,479.92 213,364.13
Tax refund receivable 525,512,156.24 598,905,847.00
Others 21,857,834.72 29,095,915.15
Less: Provision for bad debts -19,968,652.70 -13,791,802.87
Total 701,520,929.51 851,677,558.80
(3). Information of provision for bad debts
Unit: Yuan Currency: RMB
Provision for bad
First stage Second stage Third stage Total
debts
Expected Expected credit Expected credit
credit loss loss for lifetime (no loss for lifetime
within next 12 credit impairment (credit impairment
months occurred) has occurred)
Balance of 1 13,791,802.87 13,791,802.87
January 2022
Balance of 1
January 2022
movement in the
year
--transfer to
second stage
--transfer to third
stage
--Reverse to
second stage
--Reverse to first
stage
Provision for the
year
Reversal in the
year
Transfer in the
year
Write-off in the
year
Other movement
Balance of 31
December 2022
Basis for accruing bad debt provision for the current period and assessing whether the credit risk
of financial instruments has increased significantly:
The basis, input values, assumptions and other information used to determine the provision for
bad debts amount and the assessment of whether the credit risk of financial instruments have
increased significantly since initial confirmation are detailed in the note “Credit Risk”.
(4). Provision for bad debts
Unit: Yuan Currency: RMB
Beginning Closing
Category Movement in the year
balance balance
Transfer
Recovery
or Other
Accrual or
written- movement
reversal
off
Provision - - - - - -
for bad
debts on
individual
basis
Provision 13,791,802.87 6,176,849.83 - - - 19,968,652.70
for bad
debts on
portfolio
basis
Total 13,791,802.87 6,176,849.83 - - - 19,968,652.70
(5). Other receivables due from the top five debtors
The Company’s top five year-end balances of other receivables in total is RMB634,664,760.92,
accounting for 87.97% of the total year end balance of other receivables, and the corresponding
year-end balance of provision for bad debts is RMB13,595,130.23.
Other note:
For details of other receivables in foreign currency at year end, please refer to the “Items in
foreign currencies” in this note.
(1). Inventories by category
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Provision
Provision for
for decline decline in
in value of value of
inventories inventori
/ Provision es/
Book Carrying Book Carrying
for Provision
balance amount balance amount
impairmen for
t of impairme
contract nt of
performan contract
ce cost performa
nce cost
Raw 26,646,539, 2,049,373, 24,597,166, 25,739,253, 111,617,39 25,627,635,
materials 686.49 134.60 551.89 039.78 2.02 647.76
Work-in-
progress
Semi- 4,966,032,3 498,854,4 4,467,177,8 2,374,291,0 3,423,93 2,370,867,1
finished 63.76 88.20 75.56 80.05 7.57 42.48
goods
Finished 8,981,114,63 580,505,2 8,400,609, 5,411,106,72 39,621,21 5,371,485,5
goods 6.21 07.54 428.67 6.16 6.92 09.24
Issued 17,047,100.8 - 17,047,100. 125,115,810. 125,115,810.
goods 9 89 39 39
Subcontr 323,903,773 - 323,903,77
acting .78 3.78
processin
g
materials
Reusable 29,606,740. - 29,606,740 57,898,691. 57,898,691.
materials 62 .62 52 52
Consump
tive
biological
assets
Contract
performa
nce cost
Total 40,964,244, 3,128,732,8 37,835,511, 33,707,665, 154,662,5 33,553,002,
[Note] At the end of the period, the carrying amount of inventories subject to restriction is nil.
(2). Provision for decline in value of inventories and provision for impairment of contract
performance cost
Unit: Yuan Currency: RMB
Beginning Closing
Item Increase Decrease
balance balance
Reversal
Accrual Others or written- Others
off
Raw materials 111,617,39 2,049,373 - 111,617,39 - 2,049,373
Work-in-progress
Finished goods 39,621,21 580,505,2 - 39,621,21 - 580,505,
Reusable
materials
Consumptive
biological assets
Contract
performance cost
Semi-finished 3,423,937 498,854,4 - 3,423,937. - 498,854,
goods .57 88.20 57 488.20
Issued goods
Total 154,662,5 3,128,732, - 154,662,5 - 3,128,732,
Other note
Category Specific basis for Reasons for reversal Reversal amount in
determining net of provision for proportion to closing
realizable value decline in value of balance of inventories
inventories and (%)
impairment of
contract performance
cost
Raw materials The estimated selling - -
price of the product
produced minus the
estimated cost to
completion,
estimated selling
expenses and related
custom duty
Finished goods Estimated selling - -
price minus estimated
selling expenses and
related custom duty
Semi-finished goods The estimated selling - -
price of the product
produced minus the
estimated cost to
completion,
estimated selling
expenses and related
custom duty
(1). Information of contract assets
(2). The amount and reasons for major changes in the carrying amount during the reporting
period
(3). Provision for impairment of Contract assets in the period
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Costs of obtaining a contract
Receivables of returned goods
VAT carry forward 1,751,009,054.30 4,850,572,181.85
Value-added tax input tax 114,550,349.25 34,361,762.28
pending for verification
Prepaid enterprise income tax 1,784,931,735.30 -
Receivable settlement guarantee 10,049,607.23 10,049,607.08
Receivable of monetary security 702,583,473.71 132,788,646.40
deposits
Receivable of pledged security 88,252,384.00 81,457,112.00
deposits
Treasury bond reverse 17,349,000.00 164,989,986.24
repurchase
Others 999.61
Total 4,468,726,603.40 5,274,219,295.85
Other note
At the end of the period, there were no obvious indication of impairment of other current
assets, so no provision for impairment was provided.
(1). Information of debts investment
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Provision Provision
Carrying Book Carrying
Book balance for for
amount balance amount
impairment impairment
Corporate 20,427,397.26 - 20,427,397.26
bonds
Total 20,427,397.26 - 20,427,397.26
Unit: Yuan Currency: RMB
Closi
ng
balan
Begi Closi ce of
Invest nning ng provi
Movement in the year
ee balan balan sion
ce ce for
impai
rmen
t
Invest
ment Adju Anno
inco stme unce
me/lo nt of Cha d
Dec Provi
Addit ss othe nges distri
reas sion
ional recog r of butio
e in for Othe
inves nized com othe n of
inve impai rs
tmen under preh r cash
stm rmen
t the ensi equit divid
ent t
equit ve y end
y inco or
meth me profit
od
I. Joint ventures
Subto
tal
II. Associates
Wuxi 559,2 559,2
Xisha 15,49 15,49
ng 3.16 3.16
Bank
Co.,
Ltd.
Subto 559,2 559,2
tal 15,49 15,49
Total 15,49 15,49
Other note
At the end of the period, there was no obvious sign of impairment of long-term equity
investment, so no Provision for impairment.
(1). Information of other equity instruments investment
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Wuxi Xishang Bank Co., Ltd. - 199,800,000.00
Total 199,800,000.00
(2). Information of non-trading equity instruments investment
Other note:
The Company's subsidiary, Jiangsu Hengke Advanced Materials Co. Ltd. acquired by open
bidding the share capital of RMB280 million of Wuxi Xishang Bank Co., Ltd. pledged by the executor
Jiangyin Chengxing Industrial Group Co., Ltd. from Nonexi City Intermediate People's Court of
Jiangsu Province at a price of RMB280 million. On 29 December 2022, Jiangsu Hengke Advanced
Materials Co. Ltd. obtained the shareholding confirmation certificate of Wuxi Equity Registration
and Custody Center Company, and its shareholding in Wuxi Xishang Bank Co., Ltd. increased from
long-term equity investment, and is accounted for using the equity method.
Investment properties measurement model
(1). Investment properties measured at cost model
Unit: Yuan Currency: RMB
Housing and Land use Construction
Item Total
buildings rights in progress
I. Book value
(1)Purchase
(2)Inventories\Fixed 7,499,992.32 7,499,992.32
assets\Transfer from
construction in progress
(3)Addition by
business combination
(1)Disposal
(2)Other decrease 5,627,251.52 352,968.00 5,980,219.52
II. Accumulated depreciation and amortisation
(1)Amortisation for the 7,800,460.68 695,954.71 8,496,415.39
year
(2)Inventories/Fixed 798,739.22 - 798,739.22
assets/Transfer from
construction in progress
(1)Disposal
(2)Other decrease 1,443,515.77 72,358.44 1,515,874.21
III. Provision for impairment
(1) Provision
(1)Disposal
(2)Other decrease
IV. Carrying amount
end
beginning of year
(2). Information of investment properties without property certificate
Unit: Yuan Currency: RMB
Reasons for pending title
Item Carrying amount
certificate
Housing and buildings 36,566,870.88 Still in application process
Other note
properties, so no provision for impairment was provided.
Presented by item
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Fixed assets 118,718,591,050.99 122,731,048,012.02
Fixed assets for disposal
Total 118,718,591,050.99 122,731,048,012.02
Fixed assets
(1). Details of fixed assets
Unit: Yuan Currency: RMB
Machi
Housing nery Transpo General
Special
Item and and rtation equipm Ship Total
equipment
buildings equip tools ent
ment
I. Book value:
nning
,780.82 109.90 108.03 826.53 194.27 2,019.55
balance
ease 234.58 834.50 06.78 91.10 566.96
(1)P 1,514,268,1 156,943,9 22,171,62 77,368,3 1,770,752,1
urchase 84.62 45.41 9.10 76.91 36.04
(2)
Transfer
from 1,467,001, 1,296,880, 2,763,881,
constructi 049.96 622.09 672.05
on in
progress
(3)
Addition
by
business
combinati
on
(4) 783,784,2 97,377.6 1,082,114 784,963,7
Others 67.00 8 .19 58.87
rease 0 .78 55.43 60.98 0.39
(1)
Disposal
or scrap
(2)
Others
sing
balance
II. Accumulated depreciation
nning
balance
ease 05.51 493.33 24.93 37.12 6.22 897.11
(1) 1,361,160,0 7,112,139,4 54,537,8 49,831,9 17,192,43 8,594,861,
Provision 05.51 01.89 25.54 47.46 6.22 616.62
usiness
combinati
on
Others 91.44 9 .66 0.49
rease 8.21 4.45 18.82 9.51
(1)
Disposal 131,138.03
or scrap
(2)
Others
sing
balance
III. Provision for impairment
nning
balance
ease
(1)
Provision
rease
(1)
Disposal
or scrap
sing
balance
IV. Carrying amount
ying value 26,121,306, 91,852,117, 153,203, 167,139, 424,823, 118,718,591
at year 881.17 795.17 005.52 939.17 429.96 ,050.99
end
rying
value at
beginning
of year
[Note ] At the end of the period, fixed assets with cost of RMB7,606,692,807.57 had been fully
depreciated and still in use.
(2). Fixed assets with temporary idle
(3). Fixed assets held under finance leases
Unit: Yuan Currency: RMB
Accumulated Provision for
Item Book value Carrying amount
depreciation impairment
Machinery and 460,861,113.27 201,878,121.46 - 258,982,991.81
equipment
General 292,252.96 258,890.89 - 33,362.07
equipment
Transportation 3,846,633.77 2,366,878.82 - 1,479,754.95
equipment
(4). Fixed assets held under finance leases
Unit: Yuan Currency: RMB
Item Carrying value at year end
Housing and buildings 4,193,707.67
(5). Fixed assets without property certificate
Unit: Yuan Currency: RMB
Reasons for not completing
Item Carrying amount
the certificate of title
Housing and buildings 857,349,977.23 Still in application process
Presented by item
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Construction in progress 25,624,425,938.86 7,237,988,378.63
Construction materials 1,663,065,560.22 544,865,218.57
Total 27,287,491,499.08 7,782,853,597.20
Construction in progress
(1). Information of construction in progress
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
P P
ro ro
vi vi
si si
o o
n n
fo fo
r Carrying r
Book balance Book balance Carrying amount
i amount i
m m
p p
ai ai
r r
m m
e e
nt nt
Annual 5,424,195,784.6 - 5,424,195,784. 1,333,014,615.1 - 1,333,014,615.12
output of 3 63 2
tons of
green
multi-
functional
textile new
materials
project
Annual 1,368,039,931.4 - 1,368,039,931. 2,867,985.23 - 2,867,985.23
output of 0 40
tons of
high-
performan
ce resin
and new
material
projects
tons of 4
simulated
deformed
fiber
technical
transform
ation
project
Annual 8,624,681,423.3 - 8,624,681,423. 2,848,836,293 - 2,848,836,293.2
output of 5 3 33 .22 2
million
tons of
PTA
project
Project 2,241,399,332.7 - 2,241,399,332. 236,665,897.3 - 236,665,897.37
with an 2 72 7
annual
output of
tons of
PBS
biodegrad
able
plastics
An annual 2,161,792,673.5 - 2,161,792,673. 1,642,327,636. - 1,642,327,636.8
output of 7 57 82 2
tons of
multi-
functional
high-
quality
textile new
material
project
High- 105,645,500.26 - 105,645,500.2 2,171,287.14 - 2,171,287.14
performan 6
ce
polyester
project
with an
annual
output of
tons
High- 1,219,769,581.3 - 1,219,769,581.3 95,947,933.40 - 95,947,933.40
performan 0 0
ce
industrial
yarn
project
with an
annual
output of
tons
Project 1,769,790,066.8 - 1,769,790,066. 176,825,999.2 - 176,825,999.27
with an 4 84 7
annual
output of
tons of
functional
polyester
film and
functional
plastics
Annual 157,195,108.43 - 157,195,108.43 - - -
productio
n of
tons of
functional
polyester
film,
functional
film and 3
billion
square
meters of
lithium
battery
diaphrag
m project
Other 1,979,542,321.91 - 1,979,542,321. 471,540,879.3 - 471,540,879.32
sundry 91 2
projects
.86 8.86 63 3
Total
(2). Changes in significant construction in progress
Unit: Yuan Currency: RMB
Pr
o
C
p
a
or
pi
ti
ta
o
li
n
z
O of
at S
t c
io o
h u
Cumul Includ n u
e m
Pr ative ing: r r
Beg Trans r ul
B Closi o amoun intere at c
inni fer to d at
ud Increas ng gr t of st e e
Item ng fixed e iv
ge e bala e interes capita f o
bala asset c e
t nce ss t lised o f
nce s r in
% capital in the r f
e p
isation year th u
a ut
e n
s to
y d
e b
e
u
a
d
r
g
(
et
%
(
)
%
)
Annual 9. 1,333 5,072,4 981,2 - 5,42 6 Pr 261,85 259,0 4. S
output of 1.5 43 ,014, 67,657. 86,48 4,195 9. oj 9,470. 39,63 2 el
million tons bil 615.1 04 7.53 ,784. 2 e 07 6.73 3 f-
of green lio 2 63 4 ct fi
multi- n c n
functional o a
textile new n n
materials st ci
project ru n
ct g
io a
n n
s d
L
o
a
n
s
Annual 19. 2,86 1,365,1 - 1,368 6. Pr 2,152,7 2,152, 4. S
output of 1.6 9 7,98 71,946. ,039, 8 oj 50.00 750.0 5 el
million tons 9 5.23 17 931.4 4 e 0 0 f-
of high- bil 0 ct fi
performance lio c n
resin and n o a
new material n n
projects st ci
ru n
ct g
io a
n n
s d
L
o
a
n
s
tons of 2 89,8 2,982.7 8,620 374, 7. oj el
simulated bil 51.74 3 .00 214.4 18 e f-
deformed lio 7 ct fi
fiber n c n
technical o a
transformati n n
on project st ci
ru n
ct g
io a
n n
s d
L
o
a
n
s
Annual 11. 2,84 5,775,8 - 8,62 7 Pr 102,02 96,72 4. S
output of 5 45 8,83 45,130. 4,681 5. oj 0,680. 1,491.7 5 el
million tons bil 6,29 11 ,423. 3 e 69 4 1 f-
of PTA lio 3.22 33 2 ct fi
project n c n
o a
n n
st ci
ru n
ct g
io a
n n
s d
L
o
a
n
s
Project with 2.1 236, 2,004,7 - 2,241 10 Tr 9,797, 9,797, 4. S
an annual 5 665, 33,435. ,399, 4. ial 456.91 456.9 0 el
output of bil 897. 35 332. 3 pr 1 5 f-
tons of PBS n d n
biodegradab u a
le plastics ct n
io ci
n n
g
a
n
d
L
o
a
n
s
Annual 12. 1,642 945,12 423,4 2, 2,161, 6 Pr 4. S
output of 3 ,327, 6,713.9 31,175 2 792, 2. oj 8 el
tons of multi- bil 82 0, 57 3 ct fi
functional lio 5 c n
high-quality n 01 o a
textile new .5 n n
materials 4 st ci
project ru n
ct g
io a
n n
s d
L
o
a
n
s
High- 4. 2,171, 103,47 - 105, 2. Pr - - - S
performance 0 287.1 4,213.1 645, 6 eli el
polyester 0 4 2 500. 4 m f-
project with bil 26 in fi
an annual lio ar n
output of 2.6 n y a
million tons pr n
e ci
p n
ar g
at a
io n
n d
L
o
a
n
s
High- 3. 95,9 1,159,51 35,69 - 1,219, 3 Pr 47,357 40,121 3. S
performance 20 47,9 2,911.8 1,263. 769, 9. oj ,637.4 ,713.3 5 el
industrial bil 33.4 5 95 581.3 2 e 6 6 0 f-
yarn project lio 0 0 3 ct fi
with an n c n
annual o a
output of n n
tons ru n
ct g
io a
n n
s d
L
o
a
n
s
Project with 11. 176,8 1,592,9 - - 1,769 15 Pr 27,59 26,36 3. S
an annual 13 25,9 64,067. ,790, .9 oj 6,505. 3,967. 8 el
output of bil 99.2 57 066. 9 e 86 46 2 f-
tons of n c n
functional o a
polyester n n
film and st ci
functional ru n
plastics ct g
io a
n n
s d
L
o
a
n
s
Annual 12. - 157,195 - - 157,1 1. Pr 413,33 413,3 3. S
production 4 ,108.43 95,1 2 oj 3.34 33.34 2 el
of 600,000 9 08.4 6 e 0 f-
tons of bil 3 ct fi
functional lio c n
polyester n o a
film, n n
functional st ci
film and 3 ru n
billion square ct g
meters of io a
lithium n n
battery s d
diaphragm L
project o
a
n
s
.7 6,44 954,16 287,5 2 44,8 72,130. 60,46
bil 9.31 0, 6.95
Total
lio 5
n 01
.5
(3). Provision for impairment of construction in progress
Other note
At the end of the period, there were no obvious indication of impairment of construction in
progress, so no provision for impairment was provided.
Construction materials
(4). Information of construction materials
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Provisio Provisio
n for Carrying Book n for Carrying
Book balance
impairm amount balance impairm amount
ent ent
Special 1,662,714,399 1,662,714,399 544,478,391 544,478,391
material .07 .07 .92 .92
s
Special 351,161.15 351,161.15 386,826.65 386,826.65
equipm
ent
Total
Unit: Yuan Currency: RMB
Housing and
Item Others Total
buildings
I. Book value
Leases 20,057,982.66 7,106,282.50 27,164,265.16
Others 3,931,080.52 3,931,080.52
Disposal 10,343,208.09 10,343,208.09
Others
II. Accumulated
depreciation
(1) Provision 32,765,006.79 177,657.06 32,942,663.85
(2)Others 2,660,547.86 2,660,547.87
(1)Disposal 2,862,788.64 2,862,788.64
III. Provision for impairment
(1) Provision
(1)Disposal
IV. Carrying amount
end
beginning of year
(1). Details of intangible assets
Unit: Yuan Currency: RMB
Non-
Pate
patent Non-
Land use nt Software
Item ed patent Total
rights right usage rights
techn technology
s
ology
I. Book value
balance .05 069.76 .58 39
.63 7.00 5 .88
(1)Purch 1,850,702,58 39,554,05 3,561,293.9 1,893,817,940.
ase 9.63 7.00 5 58
(2)In-
house research
and
development
(3)Additi
on by business
combination
(4)Other 352,968.00 74,790.30 427,758.30
s
(1)Dispos 559,829.08 559,829.08
al
balance 6.68 26.76 75 6.19
II. Accumulated amortisation
balance 31 26.10 9 .20
(1) 164,274,271.2 113,273,414 33,562,757. 311,110,443.78
Provision 3 .98 57
(2)Other 72,358.44 19,614.51 91,972.95
s
(1)Disposal
(2)Transf
er to Investment
properties
(3)Other
s
balance 98 41.08 .79 .85
III. Provision for impairment
balance
(1)
Provision
(1)Dispos
al
balance
IV. Carrying amount
value at year 0.70 5.68 6 .34
end
value at 74 3.66 79 19
beginning of
year
At the end of the period, the intangible assets formed through the Company's internal research
and development accounted for 0% of the balance of intangible assets.
(2). Land use rights pending for ownership certificates
Other note:
no provision for impairment was provided.
note“Ownership or using rights of assets subject to restriction”.
(1). Book value of goodwill
Unit: Yuan Currency: RMB
Investee or
Beginning Closing
matters formed Increase Decrease
balance balance
the goodwill
Formation
by
business Others Disposal Others
combinati
on
Hengli Futures 77,323,12 77,323,12
Co., Ltd. 3.69 3.69
Total
(2). Provision for impairment of goodwill
(3). Information about goodwill's Assets group or Assets group Portfolio
Item Hengli Futures Co., Ltd.
Composition of assets group or assets group Assets related to the formation of goodwill by
Portfolio Hengli Futures Co., Ltd., including working
capital, debts investment, fixed assets,
intangible assets, long-term deferred
expenses, other non-current assets and
goodwill
Carrying amount of assets group or assets 667,957,452.17
group portfolio
Determination method of assets group or Hengli Futures Co., Ltd. is mainly engaged in
assets group portfolio futures brokerage business, and there is an
active market which can bring independent
cash flow and can be identified as a separate
assets group.
Whether the assets group or the assets group Yes
portfolio is consistent with the assets group or
the assets group portfolio determined on the
date of purchase and during the goodwill
impairment test of the previous year
(4). Note Goodwill impairment test process, key parameters (such as forecast period growth
rate, stable period growth rate, profit rate, discount rate, forecast period, etc., if applicable)
and confirmation of Impairment loss of goodwill method
(1) Goodwill impairment test situation:
Item Hengli Futures Co., Ltd.
Carrying amount of goodwill ① 77,323,123.69
Balance of provision for impairment of
goodwill②
Carrying amount of goodwill ③＝①-② 77,323,123.69
Value of goodwill attributable to minority
interests not recognised ④
Goodwill that not include the value attributable
to minority interests not recognised ⑤=④+③
Goodwill that not include the value attributable
to minority interests not recognized 77,323,123.69
apportioned to each assets group ⑥
Carrying amount of the assets group⑦ 590,634,328.48
Carrying amount of the Assets group that
contains the overall Goodwill ⑧=⑥+⑦
Recoverable amount of assets group or assets
group portfolio ⑨
Impairment loss of goodwill(⑩ is larger than
zero)⑩=⑧-⑨
Impairment loss of goodwill attributable to the
Company
(2) Determination method and basis of recoverable amount
The recoverable amount of assets group of Hengli Futures Co., Ltd. refers to the Assets
Appraisal Report issued by Tianyuan Assets Evaluation Co., Ltd. on 21 April 2023 (TYPZ [2023] No.
(including goodwill) formed by Hengli Futures Co., Ltd., which is evaluated by the market method.
①Assumption of relatively stable macroeconomic environment: The value of any asset is
directly related to its macroeconomic environment. In this evaluation, it is assumed that the social
industrial policy, tax policy and macro environment remain relatively stable, and there are no major
changes in interest rates and exchange rates, so as to ensure that the evaluation conclusion has a
reasonable period of use.
②Continuing operation assumption; it is assumed that the operating business of the assets
group portfolio business entity is legal and can maintain its continuous operation status in the
future.
③It is assumed that the equipment assets included in the assessment scope are used in situ
and continue to be used.
④Assuming that the property rights trading market is a fair, just, open and effective market,
the transaction price has fully reflected the market participants' expectations of the target
company's operating performance, expected income and other basic factors and risk factors that
affect the transaction price.
⑤Assuming that the current and future operators of the assets group portfolio business
entity are responsible, and their company management has the ability to assume their duties,
steadily promote the company's development plan, and maintain a good business situation.
⑥Assuming that the technical team and senior management personnel of the Assets Group
Portfolio business entity remain relatively stable, there will be no major loss of core professionals
and management personnel.
⑦Assume that the relevant basic information and financial information of the assets group
portfolio business entity and comparable companies in the same industry on which the
assessment is based are true, accurate and complete, and there are no undisclosed events that
have a significant impact on its value near the base date.
Since it is difficult to collect data related to transaction cases, and it is impossible to know
whether there are non-fair value factors, so the transaction case comparison method is not
suitable for this valuation; There are mature listed companies in the futures industry in China, which
can include selecting comparable companies for analysis and comparison, so the comparison
method of listed companies can be used.
Specifically, the listed company comparison method generally first selects listed companies
that are in the same industry as the assets group portfolio and that are actively traded as
comparable companies, and then calculate the market value of the comparable companies based
on the trading stock prices. Secondly, select one or several value ratio parameters of comparable
companies (usually including profitability, assets, revenue and other specific parameters) as
"analysis parameters", Then calculate the Ratio relationship between the Market price value of
comparable companies and the selected analysis parameters - called the ratio multiplier
(Multiples). The ratio multiplier needs to be adjusted before being applied to the corresponding
analysis parameters of the Assets group portfolio to reflect the difference between the
comparable company and the assets group portfolio. Apply the above-mentioned adjusted ratio
multiplier to the corresponding analysis parameters of the assets group portfolio to obtain the fair
value of the evaluation object. Expressed in the formula as follows:
Fair value of assets group portfolio＝Analysis Parameters × Modified Ratio Multiplier
Including: Adjusted ratio multiplier = ratio multiplier of comparable companies ×
comprehensive correction factor
(5). Impact of the Goodwill impairment test
Unit: Yuan Currency: RMB
Item Beginning Increase Amortization Other Closing balance
balance Decrease
Catalyst 2,601,919,212.90 544,345,265.96 672,546,183.47 467,471,307.55 2,006,246,987.84
Renovation 14,108,576.43 5,268,451.66 6,118,188.56 - 13,258,839.53
costs
Others 5,615,999.60 6,839,182.05 4,667,684.17 - 7,787,497.48
Total 2,621,643,788.93 556,452,899.67 683,332,056.20 467,471,307.55 2,027,293,324.85
(1). Deferred tax assets before offsetting
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Deductible Deferred Deductible Deferred
temporary income tax temporary income tax
differences Assets differences Assets
Provision for
impairment of
assets
Unrealized profit 409,148,379.92 82,162,633.20 775,909,868.10 137,481,321.24
of internal
transactions
Deductible tax
loss
Provision for bad 37,255,045.83 6,467,483.08 35,386,977.78 4,001,263.49
debts
Provision for 3,098,438,279.83 771,996,515.83 154,662,546.51 37,942,715.18
decline in value of
inventories
Changes in fair 35,555,513.32 5,428,978.62 1,410,435.00 211,565.25
value included in
current profit and
loss (decrease)
Non-deducted tax 102,511,722.17 15,376,758.33 - -
losses
Government grants 62,610,844.67 10,218,626.70 58,750,856.67 8,812,628.50
Lease contracts 3,329,728.88 576,250.70 1,600,482.28 377,589.78
Total 3,748,849,514.62 892,227,246.46 1,027,721,166.34 188,827,083.44
(2). Deferred tax liabilities before offsetting
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Taxable Deferred Taxable Deferred
temporary income tax temporary income tax
difference liabilities difference liabilities
Increase in value by
assets appraisal of
business combination
not under common
contract
Changes in fair value of
other debt investments
Changes in fair value of
other equity
instrument
investments
Changes in fair value 1,275,910.00 144,415.50 6,061,828.49 927,466.51
included in current
profit and loss
(increase)
Initial investment cost 79,415,493.16 11,912,323.97 - -
of long-term equity
investment calculated
by equity method is
less than the share of
the owner's equity of
the investee
Fixed assets 27,431,069.87 6,857,767.47 - -
accelerated
depreciation
Total 108,122,473.03 18,914,506.94 6,061,828.49 927,466.51
(3). Net amount of deferred tax assets or liabilities after offsetting
(4). Details of unrecognized deferred tax assets
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Deductible temporary
differences
Deductible tax loss
Provision for bad debts 1,660,550.40 1,154,812.33
Provision for decline in value 30,294,550.51
of inventories
Changes in fair value 2,211,972.77 111,926.32
included in current profit and
loss (decrease)
Non-deducted tax losses 635,564,183.92 1,226,783,951.22
Provisions - 13,000,000.00
Lease contracts 169,949.22 88,798.46
Total 669,901,206.82 1,241,139,488.33
(5). Deductible tax loss of unrecognized deferred income tax assets will expire in the following
year
Unit: Yuan Currency: RMB
Amount in
Year Amount at year end Note
beginning of year
Total 635,564,183.92 1,226,783,951.22 /
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Book balance Pr Book balance Pr
o o
vi vi
si si
o o
n n
fo fo
Carrying amount Carrying amount
r r
i i
m m
p p
ai ai
r r
m m
e e
nt nt
Cost
s of
obtai
ning
a
contr
act
Cont
ract
perfo
rman
ce
cost
Retu
rn
cost
recei
vable
Cont
ract
asset
s
Prep 6,212,936,138.56 - 6,212,936,138.56 3,676,058,288.93 3,676,058,288.93
ayme
nt
for
purc
hase
of
long-
term
asset
s
Unre 112,912,218.28 - 112,912,218.28 225,134,257.72 225,134,257.72
alize
d
gains
and
losse
s on
sale
and
lease
back
Futur 1,400,000.00 - 1,400,000.00 1,400,000.00 1,400,000.00
es
mem
bers
hip
Inves
tmen
t
Total 6,327,248,356.84 - 6,327,248,356.84 3,902,592,546.65 3,902,592,546.65
(1). Short-term loans by category
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Pledge loans 1,199,495,332.00 4,067,887,659.56
Mortgage loans 5,128,000,000.00 6,107,000,000.00
Guaranteed loans 24,717,456,740.25 23,649,772,389.15
Unsecured loans 4,994,522,402.75 2,000,000,000.00
Accrued interest 93,285,304.88 106,685,293.38
Discount of commercial 33,184,139,033.20 19,659,347,989.95
acceptance bills
Total 69,316,898,813.08 55,590,693,332.04
(2). Short-term loans that have been overdue and not repaid
Other note
For details of loans in foreign currencies, see the note “Items in foreign currencies”.
Unit: Yuan Currency: RMB
Beginning Closing
Item Increase Decrease
balance balance
Financial liabilities held 296,817,004.51 346,020,729.70 296,817,004.51 346,020,729.70
for trading
Including:
Derivative 296,817,004.51 346,020,729.70 296,817,004.51 346,020,729.70
financial liabilities
Designated as
financial liabilities at
fair value through
profit or loss
Including:
Total 296,817,004.51 346,020,729.70 296,817,004.51 346,020,729.70
(1). Notes payable presented by item
Unit: Yuan Currency: RMB
Category Closing balance Beginning balance
Commercial 8,848,668,508.73 6,700,925,209.94
acceptance bills
Bank acceptance bills 1,250,537,334.72 2,070,998,744.63
Letter of credit 10,504,570,026.82 7,278,370,625.84
Total 20,603,775,870.27 16,050,294,580.41
Bills payable overdue but still unpaid at year end is RMB 0.
(1). Accounts payable presented by item
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Within 1 year 7,538,599,735.57 8,906,745,914.22
Over 3 years 351,879,572.73 112,192,686.92
Total 8,869,309,998.90 10,689,214,747.52
(2). Significant accounts payable aging over 1 year
Other note
For details of accounts payable in foreign currencies, see the note “Items in foreign
currencies”.
(1). Advance from customers presented by item
(2). Significant advance from customers with ageing over one year
(1). Information of contract liabilities
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Within 1 year 12,042,290,821.83 6,097,462,402.73
Over 3 years 2,369,389.54 11,610,174.22
Total 12,090,983,326.47 6,126,546,843.89
(2). The amount and reasons for major changes in the carrying amount during the reporting
period
(1). Employee benefits payable
Unit: Yuan Currency: RMB
Beginning Closing
Item Increase Decrease
balance balance
I. Short-term employee 482,853,444.7 4,237,186,079. 4,244,850,115. 475,189,408.7
benefits 3 43 43 3
II. Post-employment 147,422.89 245,628,032.9 244,455,084.3 1,320,371.45
benefits -Defined 0 4
contribution plans
III. Termination benefits
IV. Others benefits due
within one year
Total
(2). Short-term employee benefits
Unit: Yuan Currency: RMB
Beginning Closing
Item Increase Decrease
balance balance
I. Salaries, bonus and 482,267,127.8 3,901,842,022. 3,909,309,38 474,799,762.21
allowances 0 98 8.57
II. Staff welfare 77,600,618.55 77,570,905.06 29,713.49
III. Social insurances 79,377.97 140,170,317.76 139,990,277.8 259,417.88
Including: Medical 60,678.39 112,534,721.57 112,358,637.03 236,762.93
insurance
Work injury 10,082.08 16,183,303.82 16,181,271.28 12,114.62
insurance
Maternity 8,617.50 11,452,292.37 11,450,369.54 10,540.33
insurance
IV. Housing fund 499,845.65 84,826,353.01 85,244,742.66 81,456.00
V. Union funds and staff 7,093.31 32,064,226.17 32,052,260.33 19,059.15
education
VI. Vocation leave
VII. Short-term profit
sharing plan
VIII. Compensation for 643,695.96 643,695.96
termination of labor
relations
IX. Others 38,845.00 38,845.00
Total
(3). Defined contribution plans
Unit: Yuan Currency: RMB
Beginning Closing
Item Increase Decrease
balance balance
insurance
Total
Other note:
The Company participates in the pension insurance and unemployment insurance plans
established by government agencies in accordance with the regulations. Apart from this, the
Company no longer undertakes further payment obligations, and the corresponding expenditures
are included in the current profit and loss or the cost of related assets when incurred.
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Value-added tax 12,771,830.29
Consumption tax 709,805,522.32 251,035,969.16
Business tax
Enterprise income tax 106,928,407.84 898,674,310.10
Individual income Tax
Urban maintenance and 49,277,199.63 23,012,479.76
construction tax
Property tax 31,071,196.33 25,524,692.05
Stamp duty 59,377,203.13 32,696,037.05
Land use tax 16,817,664.16 14,876,432.35
Education surcharge 21,118,876.28 9,936,123.99
Local education surcharges 14,079,250.85 6,623,903.41
Withholding individual 11,736,272.81 10,147,486.32
income Tax
Withholding value-added tax - 1,127.64
Environmental protection tax 3,030,289.52 4,365,062.55
Total 1,036,013,713.16 1,276,893,624.38
Presented by item
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Interest payable
Dividends payable 4,882,110.00
Other payables 382,263,173.05 435,070,534.33
Total 382,263,173.05 439,952,644.33
Interest payable
(1). Presented by category
Dividends payable
(2). Presented by category
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Common shares dividend
Dividends on preferred
shares\perpetual bonds
classified as equity
instruments
Dividend of preference
shares\Perpetual bonds-XXX
Dividend of preference
shares\Perpetual bonds-XXX
Dividends payable-Jiangsu 100,010.00
Hegao Investment Co., Ltd.
Dividends payable-Dalian 4,782,100.00
Henghan Investment Co., Ltd.
Total 4,882,110.00
Other payables
(1). Other payables by nature
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Security deposits 135,894,155.27 179,826,101.61
Current accounts 223,906,378.05 245,894,092.52
Others 22,462,639.73 9,350,340.20
Total 382,263,173.05 435,070,534.33
(2). Significant other payables aging over 1 year
Other note:
year.
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Long-term loans due within 7,054,740,475.94 5,171,165,160.28
one year
Bonds payable due within 2,030,618,280.89
one year
Long-term payables due 228,838,610.93 214,238,505.75
within one year
Lease liabilities due within 34,830,877.25 37,823,304.78
one year
Total 9,349,028,245.01 5,423,226,970.81
Other note:
Category Closing balance Beginning balance
Unsecured loans 894,162,223.22 142,124,068.62
Guaranteed loans 510,600,000.00 780,000,000.00
Mortgage loans 5,544,272,629.78 4,136,488,702.00
Pledge loans - 105,000,000.00
Accrued interest 105,705,622.94 7,552,389.66
Subtotal 7,054,740,475.94 5,171,165,160.28
Bond Face value Issua Ter Issuance Begi Accrue Inte Clos Closing
name nce m amount nning d rest ing balance
date balan interest pai bala
ce of for the d nce
intere current for of
st period the inter
paya curr est
bles ent pay
peri able
od
Hengli ,000.00 6/1 year ,000.00 14.45 918.22
Petroch afte
emical r
CP001 bala
nce
she
et
dat
e
Hengli ,000.00 7/25 year ,000.00 58.90 362.67
Petroch afte
emical r
CP002 bala
nce
she
et
dat
e
Subtota 2,000,00 2,000,00 - 32,505, - - 2,030,618
l 0,000.00 0,000.00 073.35 ,280.89
Item Closing balance Beginning balance
Lease payment 267,373,159.72 224,944,807.83
Less: Unrecognized financing
expenses
Subtotal 228,838,610.93 214,238,505.75
Item Closing balance Beginning balance
Lease payment 38,365,988.90 41,429,815.39
Less: Unrecognized financing
expenses
Subtotal 34,830,877.25 37,823,304.78
currencies”.
Information of other current liabilities
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Short-term bonds payable
Payables of returned goods
Output VAT pending for 1,564,174,590.75 750,359,165.17
transfer
Notes receivable not
derecognised
Payable of monetary 1,714,584,516.80 553,414,804.05
security deposits
Payable of pledged 88,252,384.00 81,457,112.00
security deposits
Futures risk reserve 15,076,976.64 14,018,941.87
Payable of Futures Investor 39,089.66 19,128.52
Protection Fund
Total 3,382,127,557.85 1,399,269,151.61
(1). Long term loans by category
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Pledge loans - 490,000,000.00
Mortgage loans 46,526,719,607.47 46,798,918,880.75
Guaranteed loans 5,344,182,213.19 2,017,973,412.87
Unsecured loans 6,476,251,530.06 2,740,611,419.44
Accrued interest - 74,810,631.19
Total 58,347,153,350.72 52,122,314,344.25
Note to long term loans by category:
For details of long term loans in foreign currencies, see the note “Items in foreign currencies”.
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Lease payment 100,679,544.18 107,951,752.97
Less: Unrecognized financing -10,097,787.02 -7,351,177.80
expenses
Less: Lease liabilities due within -34,830,877.25 -37,823,304.78
one year
Total 55,750,879.91 62,777,270.39
Presented by item
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Long-term payables 852,833,333.34 17,899,253.29
Specific payables 6,000,000.00 4,000,000.00
Total 858,833,333.34 21,899,253.29
Long-term payables
(1). Long-term payables by nature
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Finance lease payables 1,163,373,159.72 243,274,222.22
Less: Unrecognized financing -81,701,215.45 -11,136,463.18
expenses
Less: Long-term payables due -228,838,610.93 -214,238,505.75
within one year
Subtotal 852,833,333.34 17,899,253.29
Specific payables
(2). Specific payables by nature
Unit: Yuan Currency: RMB
Beginning Increase Decreas Closing Reason of
Item
balance e balance formation
R&D and 4,000,000.0 2,000,000.0 - 6,000,000.0 Funds
industrializatio 0 0 0 appropriate
n of ultra-high- d by the
strength government
creep- need to be
resistant confirmed
polyester after
industrial acceptance
fibers
Total
Unit: Yuan Currency: RMB
Item Beginning balance Closing balance Reason of formation
External guarantee
Pending litigations 13,000,000.00 -
Product quality
warranties
Restructuring
obligations
Pending loss
contract
Payables of
returned goods
Others
Total 13,000,000.00 - /
Deferred income
Unit: Yuan Currency: RMB
Beginning Closing Reason of
Item Increase Decrease
balance balance formation
Governme
nt grants
received
Governme 2,998,678,284. 694,992,517.5 317,169,087.3 3,376,501,714. relating to
nt grants 64 0 0 84 assets or
relating to
future
earnings
Total
Projects Involving Government Grants:
Unit: Yuan Currency: RMB
Additions Non- Other Other Related
Liability Beginning Closing
during opera income moveme to
item balance balance
the year ting included nt assets/R
incom in current elated to
e period income
includ
ed in
curre
nt
perio
d
Infrastru 2,195,992, 684,992, 173,191,16 2,707,794, Related
cture 654.95 517.50 5.60 006.85 to assets
construc
tion
subsidies
Subsidy 463,896,18 10,000,0 140,063,4 333,832,7 Related
to 1.79 00.00 73.80 07.99 to assets
update
and
transfor
m
producti
on
equipme
nt
Project 5,275,000. 2,400,0 2,875,000. Related
interest 00 00.00 00 to assets
subsidy
Digital 336,283.19 336,283.1 - Related
twin 9 to
project income
subsidy
National 1,178,164.71 1,178,164. - Related
Smart 71 to
Manufac income
turing
Special
Fund
Special 332,000,0 332,000,0 Related
industry 00.00 00.00 to assets
support
funds
Other note:
Please refer to the description of "Government Subsidy" for details of the projects involving
government subsidy and the apportionment method.
Unit: Yuan Currency: RMB
Beginning
Increase or decrease (+, -) Closing balance
balance
Capital
Issuanc Bonu
reserve
e s Other Subtot
converte
New share s al
d to
shares s
shares
Total 7,039,099,786.0 7,039,099,786.0
share 0 0
s
Unit: Yuan Currency: RMB
Item Beginning balance Increase Decrease Closing balance
Capital 18,344,944,996.9 260,011,171.12 - 18,604,956,168.0
premium(Capita 6 8
l premium)
Other capital 110,899,494.68 77,070,049.00 106,409,584.0 81,559,959.68
reserve 0
Total
Other note, including the increase and decrease in the current period, and the reason for the
change:
Explanation on the reasons and basis for the increase and decrease of capital reserve
In this period, due to the recognition of share payment expenses in the employee stock
ownership plan, the company increased the capital reserve by RMB77,070,049.00. Concurrently,
as the fourth employee stock ownership plan was complete and expired in the current period, the
cumulative recognized share-based payment expenses were transferred from other capital
reserves to share premium.
The Company implemented the fifth phase of the employee stock option plan in the current
period. The employee stock option plan obtained the treasury shares repurchased by the
Company in the form of block transactions and non-transaction transfer. The difference between
the transfer price and the repurchase price reduced the capital reserve by RMB153,672,131.97.
In the current period, the Company acquired the equity held by minority shareholders of its’s
subsidiary Hengli Petrochemical (Dalian) Co., Ltd. The difference between the cost of newly
acquired equity and the share of net assets of the shareholding portion acquired since the date of
purchase or merger calculated till the acquisition date is reduced the capital reserve by
RMB70,544.85.
Unit: Yuan Currency: RMB
Beginning
Item Increase Decrease Closing balance
balance
Share 228,626,593.18 2,000,239,525.27 2,228,866,118.45 -
repurchase
Total 228,626,593.18 2,000,239,525.27 2,228,866,118.45 -
Other note , including the increase and decrease in the current period, and the reason for the
change:
According to the "Proposal on Repurchasing Shares through Centralized Bidding
Transactions" deliberated and approved at the twenty-second meeting of the eighth session of
the Board of Directors of the Company and the "Proposal on the Fourth Phase Repurchase Report
of Shares Repurchased by Centralized Bidding Transactions" deliberated and approved at the
twenty-seventh meeting of the eighth session of the Board of Directors, a total of 83,684,459
shares was repurchased in 2022, accounting for 1.19% of the Company's total share capital.
According to the "Hengli Petrochemical Inc. Sixth Employee Stock Ownership Plan (Draft)"
and related matters reviewed and approved by the Company's third extraordinary general
meeting in 2022, the Company had repurchased a total of 100,444,277 shares, accounting for
Company's sixth employee stock ownership plan.
Unit: Yuan Currency: RMB
Beginning Closing
Item Movement during the period
balance balance
Less: Included
in other
Less: comprehensive
Amount Amount
transferred income in the Less:
attributable to attributable
Amount before to profit or previous Income
parent to minority
tax loss in period and tax
company after interests
current transferred to expenses
tax after tax
year retained
earnings in the
current period
I. Other
comprehensive
income not
reclassified into
profit or loss
subsequently
Including:
Changes in
amount on
remeasurement
of defined benefit
plan
Other
comprehensive
income not
reclassified to
profit or loss
under equity
method
Changes in fair
value of other
equity instrument
investments
Changes in the
fair value of the
enterprise’s own
credit risk
II. Other -150,616,377.30 105,052,177.39 100,564,060.24 4,488,117.15 -50,052,317.06
comprehensive
income that will
be reclassified
into profit or loss
subsequently
Including: Other
comprehensive
income that will
be transferred to
profit or loss
under equity
method
Changes in fair
value of other
debt investments
Reclassification
of financial assets
recognized in
other
comprehensive
income
Provision for
credit loss of
other debt
investments
Cash flows -47,664,201.75 -6,398,442.57 -6,398,442.57 - -
hedge reserve 54,062,644.32
Translation -102,952,175.55 111,450,619.96 106,962,502.81 4,488,117.15 4,010,327.26
difference of
foreign currency
financial
statements
Total other -150,616,377.30 105,052,177.39 100,564,060.24 4,488,117.15 -50,052,317.06
comprehensive
income
Other note, including the adjustment of the initial recognition amount of the hedged item for the effective part of the cash flow hedging profit and loss:
Beginning balance and closing balance of other comprehensive income in the balance sheet. Beginning balance + Other comprehensive income =
Closing balance attributable to the parent company after tax. Amount incurred before income tax for the current period - Other comprehensive income of
previous period and transferred to profit or loss in the current year - Other comprehensive income of previous year and transferred directly to retained
earnings in the current year - Income tax expenses = Other comprehensive income attributable to the parent company after tax + Other comprehensive
income attributable to the minority interests.
Unit: Yuan Currency: RMB
Beginning
Item Increase Decrease Closing balance
balance
Safety 139,116,306.31 268,184,171.73 405,698,238.25 1,602,239.79
production fee
Total 139,116,306.31 268,184,171.73 405,698,238.25 1,602,239.79
Unit: Yuan Currency: RMB
Item Beginning balance Increase Decrease Closing balance
Statutory surplus 858,111,239.40 47,454,461.35 - 905,565,700.75
reserve
Discretionary
surplus reserve
Reserve funds
Enterprise
expansion fund
Others
Total 858,111,239.40 47,454,461.35 - 905,565,700.75
Note , including the increase and decrease in the current period, and the reason for the change:
The Company appropriates the statutory surplus reserve at 10% of its net profit in accordance
with the “Company Law” and the Company's articles of association. If the accumulated amount of
the statutory surplus reserve reaches more than 50% of the Company's registered capital, the
appropriation will cease.
Unit: Yuan Currency: RMB
Item Current year Prior year
Closing balance of prior year 31,118,454,108.29 21,120,648,008.95
Add: adjustments on beginning -5,201,038.90
balance of undistributed profits
Beginning balance after 31,118,454,108.29 21,115,446,970.05
adjustment
Add: Net profit attributable to
parent company for the current 2,318,303,166.69 15,531,076,723.36
year
Less: Appropriation of statutory 47,454,461.35 114,842,900.36
surplus reserve
Appropriation of discretionary
surplus reserve
Appropriation of general risk
reserve
Appropriation for dividends to 7,109,490,783.86 5,413,226,684.76
ordinary shares
Dividend to ordinary shares
converted to share capital
Closing balance of undistributed 26,279,812,029.77 31,118,454,108.29
profits
Adjustment of undistributed profits at the beginning of the period:
related new regulations, the Undistributed profits at the beginning of the period was affected
RMB0.
affected RMB 0.
period was affected RMB 0.
at the beginning of the period RMB 0.
(1). Operating income and operating cost
Unit: Yuan Currency: RMB
Item Current year Prior year
Revenue Cost Revenue Cost
Primary 221,683,819,060.46 203,871,767,587.67 197,217,862,664.27 167,223,076,543.28
operations
Other 639,764,909.42 205,829,478.78 752,482,221.03 295,009,517.12
operations
Total 222,323,583,969.88 204,077,597,066.45 197,970,344,885.30 167,518,086,060.40
(2).Revenue from contracts
Unit: Yuan Currency: RMB
Contract classification Current year Total
Product type
Refining products 123,675,336,325.47 123,675,336,325.47
PTA 56,635,858,203.96 56,635,858,203.96
Polyester products 29,136,125,000.36 29,136,125,000.36
Others 12,236,499,530.67 12,236,499,530.67
Classified by geographical region
Domestic 204,494,583,953.00 204,494,583,953.00
Overseas 17,189,235,107.46 17,189,235,107.46
Total 221,683,819,060.46 221,683,819,060.46
(3). Note on performance obligations
(4). Description of apportionment to remaining performance obligations
Other note:
RMB28,201,276,359.97, which accounted for 12.68% of the total operating revenue.
Product name Revenue Cost
Polyester products 233,567,379.29 225,609,758.15
Chemical products 81,538,027.66 57,547,244.04
The trial operation sales in this period are the external sales of products before the fixed assets
reach the intended usable state.
Unit: Yuan Currency: RMB
Item Current year Prior year
Consumption tax 5,424,150,546.27 2,706,754,050.77
Business tax
Urban maintenance and 418,477,747.17 212,698,887.54
construction tax
Education surcharge 179,555,517.95 92,062,226.28
Resource tax
Property tax 130,772,143.92 104,760,826.00
Land use tax 72,788,042.28 65,885,155.48
Vehicle and vessel use tax
Stamp duty 271,455,396.57 175,123,364.88
Local education surcharge 119,701,395.73 61,374,810.80
Environmental protection 13,321,650.94 19,232,134.25
tax
Security for the disabled
Others 796,739.83 2,536,959.46
Total 6,631,019,180.66 3,440,428,415.46
Other note:
Please refer to the explanation of “Taxation” for details of the payment standard.
Unit: Yuan Currency: RMB
Item Current year Prior year
Logistics transportation fee
Staff salaries 177,239,467.21 128,661,172.53
Travel expenses 4,163,862.29 4,431,436.04
Warehousing related costs 180,463,279.95 137,326,438.75
Business entertainment
expenses
Office expenses 22,468,241.55 13,551,948.30
Other expenses 7,206,851.74 6,543,590.93
Total 392,769,176.78 291,365,785.46
Unit: Yuan Currency: RMB
Item Current year Prior year
Staff salaries 849,247,603.21 938,932,278.11
Depreciation and amortization 587,247,400.89 531,643,131.54
Office expenses 368,450,540.43 430,535,357.48
Travel expenses 39,577,984.82 40,023,217.84
Business entertainment expenses 18,400,622.78 11,044,706.78
Other expenses 26,374,511.63 33,217,007.11
Total 1,889,298,663.76 1,985,395,698.86
Unit: Yuan Currency: RMB
Item Current year Prior year
Staff salaries 383,500,164.71 321,151,501.82
Direct materials 512,323,117.51 443,501,007.41
Fuel and power 137,112,098.62 124,768,304.49
Depreciation and amortization 112,721,585.17 82,278,626.66
Others 39,054,037.39 47,752,926.51
Total 1,184,711,003.40 1,019,452,366.89
Unit: Yuan Currency: RMB
Item Current year Prior year
Interest expenses 5,182,887,891.00 4,975,639,908.53
Less: Interest capitalized -549,982,061.04 -275,533,806.08
Less: Interest income -332,736,566.09 -108,112,244.03
Less: Fiscal interest discount -920,070.16
Net exchange gain or loss -333,939,778.59 58,757,355.29
Handling fees and others 321,141,965.40 266,374,430.76
Total 4,287,371,450.68 4,916,205,574.31
Unit: Yuan Currency: RMB
Item Current year Prior year
Government grants received 1,277,081,247.00 445,571,671.54
in current period
Amortization of deferred 314,769,087.30 311,678,754.12
income
Receive Tax Withholding Fee 3,692,791.90 2,608,441.04
Total 1,595,543,126.20 759,858,866.70
Other note:
For details of the government grants included in other income in this period, please refer to
the explanation of “Government grants” in this note.
Unit: Yuan Currency: RMB
Item Current year Prior year
Income from long-term equity
investment by equity method
Gain from disposal of long-term
equity investment
Investment income of financial 4,875.68
assets held for trading during the
holding period
Investment income of other equity
investment instruments during the
holding period
Interest income from debts
investment during the holding period
Interest income from other debt
investments during the holding
period
Gain from disposal of Financial -322,324.78 19,226,174.75
assets held for trading
Investment income from disposal of
other equity instruments investment
Gains from disposal of debts
investment
Gain from disposal of other debt
investments
Gains from debt restructuring
Investment income from financial
products and structured deposits
Total -322,324.78 19,231,050.43
Other note:
The Company does not have any significant restrictions on the return of investment income.
Unit: Yuan Currency: RMB
Source of gains from changes in
Current year Prior year
fair value
Financial assets held for trading 454,544,350.02 729,682,505.00
Including: Gains from changes in 456,756,322.79 729,748,893.98
fair value arising from derivative
financial instruments
Gains from changes in fair -2,211,972.77 -66,388.98
value of non-derivative financial
instruments
Financial liabilities held for trading -500,223,920.74 -373,541,790.78
Investment properties measured
at fair value
Total -45,679,570.72 356,140,714.22
Unit: Yuan Currency: RMB
Item Current year Prior year
Bad debts of notes receivable 228,126.47
Bad debts of accounts receivable 3,803,043.71 -15,529,424.02
Bad debts of other receivables -6,176,849.83 -1,988,700.99
Impairment loss of debts investment
Impairment loss of other debt
investments
Bad debt of long-term receivables
Impairment loss of contract assets
Total -2,373,806.12 -17,289,998.54
Unit: Yuan Currency: RMB
Item Current year Prior year
I. Bad debt loss
II. Impairment loss on decline in -3,128,732,830.34 -154,662,546.51
value of inventories and contract
performance cost
III. Impairment loss of long-term
equity investment
IV. Impairment loss of investment
properties
V. Impairment loss of fixed assets
VI. Impairment loss of
construction materials
VII. Impairment loss of
construction in progress
VIII. Impairment loss of productive
biological assets
IX. Impairment loss of oil and gas
assets
X. Impairment loss of intangible
assets
XI. Impairment loss of goodwill
XII. Others
Total -3,128,732,830.34 -154,662,546.51
Unit: Yuan Currency: RMB
Item Current year Prior year
Gains from disposal of non- -3,332,571.69 1,788,290.01
current assets not classified
as held for sale
Including: Fixed assets -3,494,458.02 1,788,290.01
Right-of-use assets 161,886.33
Intangible assets
Total -3,332,571.69 1,788,290.01
Information of non-operating income
Unit: Yuan Currency: RMB
Amount included in
Item Current year Prior year non-recurring gains
and losses
Total gains on 2,016,853.08 687.90 2,016,853.08
disposal of non-
current assets
Including: Gain 2,016,853.08 687.90 2,016,853.08
from disposal of
fixed assets
Gain from
disposal of
intangible assets
Gains on barter
trade of non-
monetary assets
Accept donation
Government grants
Indemnity income 10,523,745.24 9,215,275.53 10,523,745.24
Carbon emissions 42,472,036.25
trading revenue
Initial investment 79,415,493.16 79,415,493.16
cost of the long-
term equity
investment
calculated by the
equity method is
less than the share
of the owner's
equity of the
investee
Others 13,374,625.74 6,939,931.94 13,374,625.74
Total 105,330,717.22 58,627,931.62 105,330,717.22
Unit: Yuan Currency: RMB
Amount included in
Item Current year Prior year non-recurring gains
and losses
Total losses on 7,478,374.56 4,815,936.41 7,478,374.56
disposal of non-
current assets
Including: Loss on 7,478,374.56 4,815,936.41 7,478,374.56
disposal of fixed
assets
Loss on
disposal of
intangible assets
Losses on barter
trade of non-
monetary assets
External donation 939,000.00 505,200.00 939,000.00
Fines payment 14,125.81 200,000.00 14,125.81
Compensation, 306,000.00 420,973.63 306,000.00
liquidated
damages
Tax late fee 9,966,608.00 2,294,161.35 9,966,608.00
Provision for 13,000,000.00
litigation losses
Others 1,977,149.82 16,352.55 1,977,149.82
Total 20,681,258.19 21,252,623.94 20,681,258.19
(1). Income tax expenses
Unit: Yuan Currency: RMB
Item Current year Prior year
Current income tax 776,954,787.70 4,377,533,825.14
Deferred income tax -685,413,122.59 -87,654,871.65
Total 91,541,665.11 4,289,878,953.49
(2). Reconciliation between income tax expenses and accounting profit
Unit: Yuan Currency: RMB
Item Current year
Profits before tax 2,409,578,615.33
Expected income tax expenses at applicable 602,394,653.86
tax rates
Effect of different tax rates applied by -301,459,522.27
subsidiaries
Adjustment for income tax in previous years -6,423,051.56
Effect of non-taxable income -45,740,265.38
Effect of non-deductible costs, expenses 98,698,640.09
and losses
Effect of using the deductible temporary -6,224,180.18
differences or deductible losses for which
no deferred tax asset was recognized in
previous period
Effect of deductible temporary differences 106,507,644.78
or deductible losses for which no deferred
tax asset was recognized this year
Super deduction of expenses -87,298,154.00
Income tax credit for environmental -268,914,100.23
protection, energy and water conservation,
and purchase of production safety
equipment
Income tax expenses 91,541,665.11
For details of other comprehensive income, please refer to the description of “Other
comprehensive income” in this note.
(1). Cash received from other operating activities
Unit: Yuan Currency: RMB
Item Current year Prior year
Recover of bank security deposits 2,717,429,397.12 3,325,694,179.27
Interest income received 329,903,553.79 108,187,935.45
Revenue from labor services and
rental services received 82,592,034.32 154,058,305.42
Government grants income
received 1,974,073,764.50 584,042,623.70
Security deposit received 155,476,221.27 54,695,544.28
Receive the customer’s futures 622,380,717.69
transaction reserve fund 376,128,694.20
Net amount received from others 54,436,482.72
payments and current accounts 116,717,750.97
Total 5,936,292,171.41 4,719,525,033.29
(2). Cash paid for other operating activities
Unit: Yuan Currency: RMB
Item Current year Prior year
Payment of security deposit to 2,487,038,979.97 2,717,429,397.12
banks
Expenses paid in cash 1,067,439,713.14 981,641,434.92
Payment of security deposits 39,943,686.24 189,845,957.99
Net amount paid for others 40,617,426.82 161,676,260.57
payments and current accounts
Total 3,635,039,806.17 4,050,593,050.60
(3). Cash received from other investing activities
Unit: Yuan Currency: RMB
Item Current year Prior year
Recover of bank security deposits 273,421,460.73 28,128,985.93
Receipts of margin deposit for
futures contract 65,358,947.08 238,453,905.34
Net amount received from others
payments and current accounts 9,122,082.64 14,820,294.92
Total 347,902,490.45 281,403,186.19
(4). Cash paid for other investing activities
Unit: Yuan Currency: RMB
Item Current year Prior year
Payment for margin deposits for
futures contract 129,114,882.39 89,832,448.92
Payment of bank security
deposits 1,165,527,839.07 320,087,625.54
Net amount paid for others
payments and current accounts 20,985,976.52 85,270,319.17
Total 1,315,628,697.98 495,190,393.63
(5). Cash received for other financing activities
Unit: Yuan Currency: RMB
Item Current year Prior year
Recover of bank security deposits 3,352,867,653.01 1,723,399,353.01
Recover security deposits of
financing leases - 25,000,000.00
Received borrowings from Hengli
Group - 9,067,450,100.00
Net amount of cash received from
the sale of treasury shares 382,298,725.15 133,671,060.00
Total 3,735,166,378.16 10,949,520,513.01
(6). Cash paid for other financing activities
Unit: Yuan Currency: RMB
Item Current year Prior year
Payment of principal and interest
of Hengli Group’s borrowings 170,000,000.00 8,897,450,100.00
Payment of security deposit to
banks 4,118,655,079.75 3,358,936,253.11
Payment related to leases 193,495,397.24 398,636,981.00
Buying minority interests in
subsidiaries - 53,008,200.00
Cash paid for other financing
activities - 6,341,290.35
Total 4,482,150,476.99 12,714,372,824.46
(1). Supplement to cash flow statement
Unit: Yuan Currency: RMB
Supplement information Current year Prior year
Net profit 2,318,036,950.22 15,538,178,030.29
Add: Provision for impairment of 3,128,732,830.34 154,662,546.51
assets
Credit impairment loss 2,373,806.12 17,289,998.54
Depreciation of fixed assets, 8,567,512,312.81 8,006,027,632.06
depletion of oil and gas assets, and
depreciation of productive
biological assets
Amortization of right-of-use assets 33,675,038.15 30,020,084.22
Amortization of intangible assets 261,164,423.95 262,239,757.35
Long-term prepaid expenses 680,489,913.08 724,448,769.07
amortization
Losses on disposal of fixed assets, 3,332,571.69 -1,788,290.01
intangible assets and other long-
term assets (Gain as in “-”)
Loss on retirement of fixed assets 5,461,521.48 4,815,248.51
(Gain as in “-”)
Losses on changes in fair value 45,679,570.72 -356,140,714.22
(Gain as in “-”)
Financial expenses (Gain as in “-”) 4,444,197,476.00 4,125,955,698.78
Investment losses (Gain as in “-”) 322,324.78 -19,231,050.43
Decrease in deferred tax assets -703,400,163.02 -79,122,394.94
(Increase as in “-”)
Increase in deferred tax liabilities 17,987,040.43 -8,532,476.71
(Decrease as in “-”)
Decrease in inventories (Increase -7,090,734,574.98 -14,016,541,917.09
as in “-”)
Decrease in operating receivables 5,237,905,008.94 -3,704,780,539.23
(Increase as in “-”)
Increase in operating payables 9,119,876,604.91 7,816,954,831.10
(Decrease as in “-”)
Others -118,641,872.19 175,718,530.31
Net cash flows from operating 25,953,970,783.43
activities
Conversion of debt into capital
Convertible bonds mature within
one year
Fixed assets acquired under 27,164,265.16 434,581,141.81
finance leases
Cash and bank balance as at end 20,323,703,829.39 9,589,548,876.75
of year
Less: cash and bank balance at
beginning of year
Add: cash equivalents at end of
year
Less: cash equivalents at
beginning of year
Net increase in cash and cash 10,734,154,952.64 -1,904,567,450.62
equivalents
(2). Net cash paid for acquisition of subsidiaries during the year
(3). Net cash received from disposal of subsidiaries during the year
(4). Details of cash and cash equivalents
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
I. Cash 20,323,703,829.39 9,589,548,876.75
Including: Cash on hand 1,305,525.78 635,936.65
Cash at bank readily available 18,837,045,793.15 8,915,080,349.21
for payment
Other monetary fund readily 1,485,352,510.46 673,832,590.89
available for payment
Cash at central bank
available on demand
Amounts due from banks
Interbank lending
II. Cash equivalents
Including: bonds investment
mature within 3 months
III. Cash and cash equivalents as at 20,323,703,829.39 9,589,548,876.75
closing balance
Including: Restricted cash and
cash equivalents held by the
Company or subsidiaries of the
Group
Other note:
Closing balance of cash in cash flows statement in 2022 is RMB20,323,703,829.39, and closing
balance of cash and bank balances in the balance sheet on 31 December 2022 is
RMB28,076,405,879.84, the difference is RMB7,752,702,050.45. It is because the closing balance
of cash in cash flows statement deducted those items which do not meet the standard of cash and
cash equivalents, including security deposits for loans of RMB 3,838,471,603.38, deposits for bank
acceptance bills of RMB 506,369,384.04, deposits for letter of credit of RMB 2,414,021,116.76,
deposits for letter of guarantee of RMB 150,000.00, security deposits of forward foreign exchange
contracts of RMB 10,586,192.00, restricted security deposits for futures trading of RMB
bank of RMB 119,600,000.00, and accrued interest receivable of RMB 2,883,754.27.
Closing balance of cash in cash flows statement in 2021 is RMB 9,589,548,876.75, and closing
balance of cash and bank balances in the balance sheet on 31 December 2021 is RMB
cash in cash flows statement deducted those items which do not meet the standard of cash and
cash equivalents, including security deposits for loans of RMB 3,284,936,253.11, deposits for bank
acceptance bills of RMB 853,986,549.44, deposits for letter of credit of RMB 1,902,558,705.91,
deposits for letter of guarantee of RMB 150,000.00, security deposits of forward foreign exchange
contracts of RMB 31,699,719.91, restricted security deposits for futures trading of RMB
bank of RMB 119,600,000.00, and accrued interest receivable of RMB 50,741.96.
Unit: Yuan Currency: RMB
Item Carrying value at year end Reason of restriction
Cash and bank balances 7,617,632,104.18 Pledge cash and bank
balances to obtain
financing credit from
financial institutions
Cash and bank balances 12,586,192.00 Security deposits for
trading in futures and
financial derivatives
Cash and bank balances 119,600,000.00 Freezing funds involved in
litigation
Financial assets held for trading 10,000,000.00 Pledge financial assets
held for trading to obtain
financing credit from
financial institutions
Receivables financing 1,469,571,971.78 Pledge notes receivable to
obtain financing credit
from financial institutions
Fixed assets 85,436,371,528.20 Mortgage fixed assets to
obtain financing credit
from financial institutions
Fixed assets 1,546,266,735.52 Mortgage is used to
provide security for the
sale and leaseback
contract
Intangible assets 3,781,381,873.08 Mortgage intangible
assets to obtain financing
credit from financial
institutions
Construction in progress 675,737,980.77 Mortgage construction in
progress to obtain
financing credit from
financial institutions
Total 100,669,148,385.53 /
(1). Items in foreign currencies
Unit: Yuan
Converted into
Closing balance in
Item Conversion rate RMB at year end
foreign currency
balance
Cash and bank balances - -
Including: Singapore dollar 7,452,079.52 5.1831 38,624,873.36
Japanese Yen 4,909.00 0.0524 257.23
Euro 354,998.58 7.4229 2,635,118.96
Hong Kong Dollar 2,240,357.98 0.8933 2,001,311.78
US Dollar 902,243,934.17 6.9646 6,283,768,103.92
British pounds 72.21 8.3941 606.14
Accounts receivable - -
Including: US Dollar 22,703,649.22 6.9646 158,121,835.36
Euro 24.36 7.4229 180.82
Receivables financing - -
Including: US Dollar 16,956,346.62 6.9646 118,094,171.67
Other receivables - -
Including: US Dollar 19,938,650.82 6.9646 138,864,727.50
Short-term loans
Including: Euro 2,605,573.96 7.4229 19,340,914.95
Notes payable - -
Including: US Dollar 1,366,689,626.12 6.9646 9,518,446,570.08
Euro 111,400,050.00 7.4229 826,911,431.15
Singapore dollar 3,277,698.00 5.1831 16,988,636.50
Japanese Yen 1,613,653,960.00 0.0524 84,555,467.50
Accounts payable - -
Including: Japanese Yen 3,693,293,781.00 0.0524 193,528,594.12
Euro 18,778,592.65 7.4229 139,391,615.38
Swiss Franc 160,006.00 7.5432 1,206,957.26
US Dollar 156,781,013.74 6.9646 1,091,917,048.29
British pounds 6,412.98 8.3941 53,831.20
Other payables - -
Including: US Dollar 26,325,583.34 6.9646 183,347,157.73
Non-current liabilities due - -
within one year
Including: US Dollar 79,883,103.58 6.9646 556,353,863.19
Euro 5,699,597.06 7.4229 42,307,539.02
Long term loans - -
Including: US Dollar 1,050,000,000.00 6.9646 7,312,830,000.00
Euro 39,595,882.64 7.4229 293,916,277.25
(2). Explanation of overseas operating entities, including for important overseas operating
entities, the main overseas business location, bookkeeping functional currency and
selection basis should be disclosed, and the reasons for changes in bookkeeping
functional currency should also be disclosed
Name Place of business Reporting currency Selection basis
HENGLI China Hong Kong US Dollar The currency of the
PETROCHEMICAL primary economic
CO., LIMITED environment in which
the business operates
is US Dollar
HENGLI Singapore US Dollar The currency of the
PETROCHEMICAL primary economic
INTERNATIONAL environment in which
PTE. LTD. the business operates
is US Dollar
HENGLI OILCHEM Singapore US Dollar The currency of the
PTE. LTD. primary economic
environment in which
the business operates
is US Dollar
HENGLI SHIPPING Singapore US Dollar The currency of the
INTERNATIONAL primary economic
PTE. LTD. environment in which
the business operates
is US Dollar
(1). Information of government grants
Unit: Yuan Currency: RMB
Recorded in profit or
Category Amount Item presented loss for the current
period
Infrastructure
construction subsidy
Infrastructure
construction subsidy
Infrastructure
construction subsidy
Infrastructure
construction subsidy
Infrastructure
construction subsidy
Infrastructure
construction subsidy
Infrastructure
construction subsidy
Subsidy to update
and transform
production
equipment
Subsidy to update 40,000,000.00 Deferred income 3,333,333.36
and transform
production
equipment
Subsidy to update
and transform
production
equipment
Special industry
support funds
Special industry
support funds
Project interest
subsidy
National Smart 1,500,000.00 Deferred income
Manufacturing 1,178,164.71
Special Fund
Digital twin project 400,000.00 Deferred income
grants
Digital twin project 600,000.00 Deferred income
grants
"Stay in Wu excellent 293,400.00 Other income
technology" project-
based training
subsidy
Conference Awards
Fund for Business
Development - Import
and Export Credit
Insurance Fund
Project
enterprise R & D
investment subsidy
funds
Enterprise Award
High-skilled
Personnel Cultivation
Units in Shortage
Holiday Subsidy
High Quality
Development Award 50,000.00 Other income 50,000.00
(Industry-University-
Research)
High-quality
Development Award
(High-skilled Talent
Training Base
Training Subsidy)
High Quality
Development Award
(National Standard)
High-Quality
Development Award 200,000.00 Other income 200,000.00
(Integrated Two
Industries)
Safety Production 2,000.00 Other income 2,000.00
Enterprise
The second batch of
Intellectual property 60,000.00 Other income 60,000.00
awards in 2021
enterprise awards 200,000.00 Other income 200,000.00
and subsidy funds
enterprise district-
level certification
incentive funds
Award and Subsidy
Incentive Funds for
Enterprise R&D
Investment
Supporting incentive
funds for high-skilled
talent bases above 500,000.00 Other income 500,000.00
the provincial level in
of trademark strategy
and technical
standard strategy and
reward funds for
construction projects
of strong quality
districts
Industrial
Development
Guidance Fund
(Industrial
Agglomeration) First
Batch of Item Subsidy
Funds
project funds for
municipal industry
development 100,000.00 Other income 100,000.00
guidance funds
(industrial
agglomeration)
Incentive funds for
research and
development 404,700.00 Other income 404,700.00
expenses of Suzhou
enterprises in 2021
funds for promoting
scientific and
technological
innovation and
leading high-quality
development (R&D
investment, R&D
outstanding
contribution award)
Industry-University-
Research Item and 100,000.00 Other income 100,000.00
Carrier Project in
Wujiang District
Industrial High Quality
Development Fund
enterprise R & D
investment subsidy
funds
Special Fund for
Business
Development
Skill Master Studio 100,000.00 Other income 100,000.00
Award Funding
subsidy
Technology Research 300,000.00 Other income 300,000.00
Project Bonus
Economic and Trade
Development Special 312,000.00 Other income 312,000.00
Export Credit
Insurance Subsidy
interest subsidy for
foreign economic and
trade development
insurance premium 412,300.00 Other income 412,300.00
subsidy
champion enterprise
(product) subsidy
funds
Award and Subsidy 4,135.00 Other income 4,135.00
Fund Subsidy
Consumption Online
Monitoring System 40,000.00 Other income 40,000.00
Construction Project
Fund Subsidy
Quality Award
The fourth batch of
special funds for
industrial
transformation and
upgrading in urban
areas in 2022
Municipal Special
Fund for Building an 2,040,000.00 Other income 2,040,000.00
Advanced
Manufacturing Base
Special funds for
awards and 1,000,000.00 Other income 1,000,000.00
supplements for
strong quality
Provincial
Department of
Science and 200,000.00 Other income 200,000.00
Technology Subsidy
after Transformation
of Achievements
Provincial Natural
Science Foundation
of China
Business
Development (Third 63,100.00 Other income 63,100.00
Batch) - Export Credit
Insurance
Assistance Business 1,000,000.00 Other income 1,000,000.00
Relief Project Subsidy
"Unveiling the List" 2,500,000.00 Other income 2,500,000.00
Project Funding
Special Fund for
Business 684,500.00 Other income 684,500.00
Development (Fourth
Batch)
Science and
Technology
Achievement
Transformation Plan
(First Batch) Projects
and Funds
High-quality
Development of
Industrial Policy and
Science and
Technology in
Wujiang District,
Suzhou City (Echelon
Cultivation of R&D
Institutions)
VOCs Volatile Organic
Compounds
Remediation Project
Subsidy
Finance, Industry and
Trade Department
Four-star Cloud
Migration Reward
Industrial
Development 20,000,000.00 Other income 20,000,000.00
Subsidy
Reward for
production and 9,889,754.63 Other income 9,889,754.63
performance
Subsidies for highly
skilled personnel
Industrial Internet
Innovation
Development Project
Subsidy
Haikou City Supports
Several Policy
Awards for
Headquarters
Economic
Development
Hengli 400,000 tons
of high-performance
special industrial yarn
intelligent production
project incentive
funds
Hengli Torch Power
Distribution Project 2,000,000.00 Other income 2,000,000.00
Subsidy
Skills training subsidy 3,390,400.00 Other income 3,390,400.00
Coal Reduction
Bonus Fund
Super-deduction of
input tax credit
High-quality
economic
development support
reward
Employment trainee
subsidy
Expansion subsidy 1,031,500.00 Other income 1,031,500.00
Job retention subsidy 32,280.00 Other income 32,280.00
Job training subsidies 23,250.00 Other income 23,250.00
Matching subsidies 1,030,000.00 Other income 1,030,000.00
Wholesale industry
key enterprise 1,192,870.60 Other income 1,192,870.60
incentives
Pudong New Area
Financial Subsidy
Pudong New Area
Financial Support
Entrepreneur
Conference Award
New Apprenticeship
Subsidies for 519,000.00 Other income 519,000.00
Enterprises
Enterprise R & D
investment incentives
Enterprise
Employment
Incentives and
Subsidies
Subsidy for job skill
improvement of 451,750.00 Other income 451,750.00
enterprise employees
Talent funding- 220,000.00 Other income 220,000.00
postdoctoral living
allowance and
scientific research
funding
Sanya City Promoting
Headquarters
Economic
Development Award
Business and trade
enterprise
management
incentives
Shengze
Comprehensive Law
Enforcement Second 1,713,933.00 Other income 1,713,933.00
Brigade Emission
Reduction Award
Job training 105,300.00 Other income 105,300.00
Job training subsidy 177,600.00 Other income 177,600.00
First batch of reward
funds for the high-
quality development
policy of producer
service industry in
Wujiang District and
preferential policies
for service industry
agglomeration area in
Special Fund for
Digital Liaoning
Manufacturing
Powerful Province
Tax incentives 3,906,063.06 Other income 3,906,063.06
Funding for the 21st
Batch of Science and
Technology
Development Plan of
Suzhou City in 2022 150,000.00 Other income 150,000.00
(Performance
Subsidy for Municipal
Enterprise R&D
Institutions)
Suzhou City 2022 50,000.00 Other income 50,000.00
Fifth Batch of Science
and Technology
Development Plan
(High-tech Enterprise
Recognition Rewards
and Subsidies) Funds
Suzhou government
subsidy
Job stabilization
subsidy
Steady growth
reward
Value-added tax
rebate for sludge 938,655.43 Other income 938,655.43
incineration
Singapore
government grants
New Apprenticeship
Training Subsidy
Subsidies for training
by work
Silver Award Grant
Funding
Emergency
Management Flood 45,000.00 Other income 45,000.00
Prevention Subsidy
Award for Advanced
Enterprises in Risk
Identification and 13,000.00 Other income 13,000.00
Control of Emergency
Management Bureau
Online metering
grants
Government Support
Fund
Government Quality
Award
Support the fight
against the new
crown to help 1,000.00 Other income 1,000.00
companies bail out
subsidies
Intellectual property
standard outstanding
unit award
Vocational skills
competition subsidy
Smart Factory Grants 2,000,000.00 Other income 2,000,000.00
Special Funding for
Patents
Tax subsidies 1,121,680,000.00 Other income 1,121,680,000.00
(2). Return of government grants
VIII. Changes in scope of consolidation Income of the merged party from the beginning of the
current consolidation period to the merger date
(1). Business combination under common control during the period
Unit: Yuan Currency: RMB
Net
Revenu
profit of
Basis e of the
the
for acquire
acquire net
Equity constitu e from Revenu
e from profit of
ratio ting the e of the
Basis for the the
Name acquire busines beginnin acquire
Combin determin beginnin acquire
of d in a s g of the e during
ation ation of g of the e during
acquire busines combin current the
date combina current the
e s ation consolid compar
tion date consolid compar
combin under ation ative
ation ative
ation commo period period
period period
n to the
to the
control combina
combina
tion date
tion date
Kangh 100% Under 25 Complet - - - -
ui the March e the
Nanton control 2022 registrati
g New of both [Note 1] on of
Materia Chen change
l Jianhua of equity
Techno and Fan transfer
logy Hongw
Co., ei
Ltd. before
and
after
the
transac
tion,
and the
control
was not
tempor
ary.
Other note:
[Note 1] According to the resolution of the shareholder meeting of the subsidiary Kanghui
Nantong New Material Technology Co., Ltd., the Company and Hengli Group Co., Ltd. signed the
"Equity Transfer Agreement" on 22 March 2022, and the Company was received the 100% equity
of Kanghui Nantong New Material Technology Co., Ltd. transferred from Hengli Group Co., Ltd.
Since Hengli Group Co., Ltd. has not yet paid in its capital contribution, the transfer price is RMB nil.
Since the Company and Hengli Group Co., Ltd. are both ultimately controlled by Chen Jianhua and
Fan Hongwei and the control is not temporary, this merger is a business combination under
common control. Kanghui Nantong New Material Technology Co., Ltd. has completed the industrial
and commercial change registration procedures on 25 March 2022. The Company has already
obtained the actual control, so the combination is determined at 25 March 2022. During the period,
the Company included it in the scope of the consolidated financial statements, and adjusted the
comparative data of the consolidated financial statements accordingly in accordance with the
provisions of "Accounting Standards for Business Enterprises No. 20 - Business Combinations".
(2). Combination cost
Unit: Yuan Currency: RMB
Combination cost Kanghui Nantong New Material Technology
Co., Ltd.
--Cash -
-- Carrying amount of non-monetary assets -
--Carrying amount of debt issued or assumed -
--Face value of issued equity securities -
--Contingent consideration -
(3). The book value of assets and liabilities of the acquiree on the combination date
Other note:
As of the combination date, Kanghui Nantong New Material Technology Co., Ltd. has zero
assets and liabilities because Hengli Group Co., Ltd. has not yet paid in its capital contribution.
Whether there is a situation where a single disposal of investment in subsidiaries results in loss of
control
Explain the changes in the scope of consolidation caused by other reasons (such as the
establishment of new subsidiaries, liquidation of subsidiaries, etc.) and related situations:
Unit: ten thousand yuan
Company name Mode of Equity acquisition Contribution Contribution
acquisition date amount ratio
of equity
Suzhou Hengli Chemical New 2022-2-11 10,000 100%
New Material Co., Ltd. established
Suzhou Hengli Energy New 2022-8-8 US Dollar 100%
Chemical Import & Export established 50.00 million
Co., Ltd.
Hengli Petrochemical New 2022-3-7 30,000 100%
Utilities (Dalian) Co., Ltd. established
Dalian Hengzhong Special New 2022-11-2 1,170 65%
Materials Co., Ltd. established
Hengli New Energy New 2022-1-4 10,000 100%
(Shanghai) Co., Ltd. established
Hengli Yuanshang New 2022-4-13 10,000 100%
Technology (Suzhou) Co., established
Ltd.
Suzhou Hengli Jinshang New 2022-4-14 10,000 100%
Energy Technology Co., Ltd. established
Dalian Hengli Fine Chemical New 2022-6-17 10,000 100%
Sales Co., Ltd. established
Hengli Petrochemical Sales New 2022-6-22 10,000 100%
(Haikou) Co., Ltd. established
Hengli Energy Chemical New 2022-6-22 10,000 100%
(Sanya) Co., Ltd. established
Dalian Hengli Petrochemical New 2022-6-23 10,000 100%
Sales Co., Ltd. established
Dalian Hengli Gold New 2022-7-13 10,000 100%
Merchant Sales Co., Ltd. established
Dalian Hengli New Energy New 2022-7-13 10,000 100%
Sales Co., Ltd. established
Dalian Henglixing New 2022-9-26 10,000 100%
Gemstone Chemical established
Trading Co., Ltd.
Dalian Hengli Gaoyuan New 2022-9-28 10,000 100%
Sales Co., Ltd. established
Hengli Energy Chemical New 2022-10-10 10,000 100%
(Shenzhen) Co., Ltd. established
Nantong Hengli Maoyuan New 2022-10-18 1,000 100%
Petrochemical Trading Co., established
Ltd.
Suzhou Hengli New Energy New 2022-11-08 10,000 100%
Sales Co., Ltd. established
Suzhou Hengli Fine New 2022-11-18 10,000 100%
Chemical Sales Co., Ltd. established
Hengli Petrochemical Sales New 2022-12-2 10,000 100%
(Shenzhen) Co., Ltd. established
Unit: ten thousand yuan
Company name Disposal Disposal date Net assets Net profit from
method of equity on disposal the beginning of
date the period to
date of disposal
Hengli Energy (Jiangsu) Co., Deregistered 2022-8-30
- -0.07
Ltd.
Suzhou Qianliyan Logistics Deregistered 2022-8-31
- -31.50
Technology Co., Ltd.
Suzhou Plastic Group Deregistered 2022-5-17
Network E-commerce Co., - -
Ltd.
Hengli Energy Sales Deregistered 2022-11-21
- 23.33
Rudong Co., Ltd.
Hengli Petrochemical Sales Deregistered 2022-9-1
- 0.86
(Shanghai) Co., Ltd.
Suqian Deya New Materials Deregistered 2022-6-28
- 0.17
Co., Ltd.
Hengli Petrochemical Sales Deregistered 2022-6-15
- -0.14
(Jiangsu) Co., Ltd.
IX. Interests in other entities
(1). Group structure
Name of Place of Place of Nature of Shareholding Acquisition
subsidiary business registration business (%) method
Indirec
Direct
t
Jiangsu Manufacturin 99.99 0.01 Business
No. 1, Hengli Road,
Hengli g combinatio
Nanma Industrial
Chemical n not
China Zone, Shengze
Fiber Co., under
Town, Wujiang City,
Ltd. common
Jiangsu Province
control
Jiangsu Hengli Textile New Manufacturin 100.0 Business
Hengke Material Industrial g 0 combinatio
Advanced Park, Binjiang New n under
China
Materials Co. District (Wuji common
Ltd. Town), Tongzhou control
City, Nantong City
Nantong No. 1, Kaisha Road, Transportati 100.0 Establishe
Teng’an Binjiang New on industry 0 d by
China
Logistics Co., District, Tongzhou investment
Ltd. City, Nantong City
Jiangsu Textile New Manufacturin 100.0 Establishe
Xuanda Material Industrial g 0 d by
Polymer China Park, Wujie Town, investment
Material Co., Tongzhou District,
Ltd. Nantong City
Jiangsu Deli Manufacturin 100.0 Business
No. 599, Huanghe
Chemical g 0 combinatio
South Road,
Fiber Co., n not
China Sucheng Economic
Ltd. under
Development
common
Zone, Suqian City
control
Hengli Other 100.0 Business
Futures Co., financial 0 combinatio
No. 308, Jinkang
Ltd. industry n not
China Road, China
under
(Shanghai) Pilot
common
Free Trade Zone
control
Hengli Floor 7, No. 308, Wholesale 100.0 Establishe
Hengxin China Jinkang Road, and retail 0 d by
Industry and China (Shanghai) investment
Trade Pilot Free Trade
(Shanghai) Zone (nominal
Co., Ltd. floor, actual floor
Suzhou Manufacturin 100.0 Business
Susheng Tanqiu Village, g 0 combinatio
Thermal China Shengze Town, n under
Power Co., Wujiang common
Ltd. control
Suzhou Room 202, Building Wholesale 100.0 Establishe
Binglin 8, No. 1, Hengli and retail 0 d by
Trading Co., Road, Nanma investment
Ltd. China Industrial Zone,
Shengze Town,
Wujiang District,
Suzhou
Sichuan No. 10, Section 2, Manufacturin 100.0 Establishe
Hengli New Lingang Avenue, g 0 d by
Material Co., South Sichuan investment
China
Ltd. Lingang Area,
Sichuan Free Trade
Zone
Hengli New No. 88, Gangcheng Manufacturin 100.0 Establishe
Materials Road, Yangbei g 0 d by
China
(Suqian) Co., Street, Sucheng investment
Ltd. District, Suqian City
Suzhou Room 203, Building Wholesale 100.0 Establishe
Hengli 8, No. 1, Hengli industry 0 d by
Chemical Road, Nanma investment
New Material Industrial Zone,
China
Co., Ltd. Shengze Town,
Wujiang District,
Suzhou City,
Jiangsu Province
Kanghui Manufacturin 66.33 33.67 Business
Yingkou
New Material g combinatio
Xianrendao Energy
Technology China n under
and Chemical
Co., Ltd. common
Industry Zone
control
Comfort Wholesale 100.0 Establishe
Room 201, Building
International and retail 0 d by
Trade China investment
Road, Nanma
(Jiangsu)
Industrial Zone,
Co., Ltd.
Shengze Town,
Wujiang District
Suqian Shop 125, Property Manufacturin 100.0 Establishe
Kanghui 77, Huaihai g 0 d by
New Material Property Material investment
Co., Ltd. China Decoration City,
Suqian Economic
and Technological
Development Zone
Kanghui 1st Floor, Room 4, Manufacturin 100.0 Establishe
Kunshan No. 232 Yuanfeng g 0 d by
New Material China Road, Yushan investment
Technology Town, Kunshan
Co., Ltd. City
Kanghui Complex Building Manufacturin 100.0 Establishe
Dalian New No. 298, g 0 d by
Material Changsong Road, investment
Technology China Changxing IsLand
Co., Ltd. Economic Zone,
Dalian, Liaoning
Province
Jiangsu The Yangtze River Manufacturin 100.0 Establishe
Kanghui Delta Ecological g 0 d by
New Material Green Integration investment
Technology Development
Co., Ltd. Demonstration
China
Zone (No.558
Fenhu Avenue, Lili
Town, Wujiang
District, Suzhou
City)
Kanghui Hengli Textile New Manufacturin 100.0 Business
Nantong Material Industrial g 0 combinatio
New Material China Park, Wujie Town, n under
Technology Tongzhou District, common
Co., Ltd. Nantong City control
Hengli Former Xingang Industrial 100.0 Business
Investment Primary School, Investment 0 combinatio
(Dalian) Co., Xingang Village, n under
Ltd. China Changxing IsLand common
Economic Zone, control
Dalian, Liaoning
Province
Hengli Former Xingang Manufacturin 100.0 Establishe
Petrochemic Primary School, g 0 d by
al (Dalian) Xingang Village, investment
Co., Ltd. China Changxing IsLand
Economic Zone,
Dalian, Liaoning
Province
Hengli Xingang Village, Transportati 100.0 Business
Shipping Changxing IsLand on industry 0 combinatio
(Dalian) Co., Economic Zone, n not
Ltd. China Dalian, Liaoning under
Province (formerly common
Xingang Primary control
School)
Hengli Flat 1906, 19/F, Wholesale 100.0 Establishe
Petrochemic China Harbour Centre, 25 and retail 0 d by
al Hong Harbour Road, investment
Co.,Limited Kong Wanchai, Hong
Kong
Shenzhen Unit 6101-03, Block Wholesale 100.0 Business
Ganghui A, Kingkey 100 and retail 0 combinatio
Trading Co., Property, 5016 n under
Ltd. China Shennan East common
Road, Guiyuan control
Street, Luohu
District, Shenzhen
Hengli No. 298, Transportati 100.0 Establishe
Logistics Changsong Road, on industry 0 d by
(Dalian) Co., Changxing IsLand investment
China
Ltd. Economic Zone,
Dalian, Liaoning
Province
Hengli Xingang Village, Manufacturin 100.0 Business
Concrete Changxing IsLand g 0 combinatio
(Dalian) Co., Economic Zone, n under
Ltd. China Dalian, Liaoning common
Province (formerly control
Xingang Primary
School)
Hengli No. 26, Xiayong Manufacturin 100.0 Establishe
Petrochemic Petrochemical g 0 d by
al (Huizhou) China Avenue Middle, investment
Co., Ltd. Daya Bay, Huizhou
(Plant No. 2 (R&D))
Hengli No. 298, Manufacturin 100.0 Business
Petrochemic Changsong Road, g 0 combinatio
al (Dalian) Changxing IsLand n under
China
Refining Co., Economic Zone, common
Ltd. Dalian, Liaoning control
Province
Hengli 9 STRAITS VIEW Wholesale 100.0 Establishe
Petrochemic #08-11 MARINA and retail 0 d by
al Singapor ONE WEST investment
International e TOWER
Pte. Ltd. SINGAPORE(0189
Hengli 9 STRAITS VIEW Wholesale 79.00 Establishe
Oilchem Pte. #08-11 MARINA and retail d by
Ltd. Singapor ONE WEST investment
e TOWER
SINGAPORE(0189
Hengli 9 STRAITS VIEW Transportati 100.0 Establishe
Shipping #08-11 MARINA on industry 0 d by
International Singapor ONE WEST investment
Pte. Ltd. e TOWER
SINGAPORE(0189
Hengli Room 801, Building Wholesale 100.0 Establishe
Energy A, Sunshine and retail 0 d by
(Hainan) Co., Financial Plaza, investment
China
Ltd. Jiyang District,
Sanya City, Hainan
Province
Hengli Room 205-1328, Wholesale 100.0 Establishe
Petrochemic No.181 Xingyang and retail 0 d by
al (Hainan) Avenue, Jiangdong investment
China
Co., Ltd. New District,
Haikou City, Hainan
Province
Suzhou No. 1801, Pangjin Wholesale 100.0 Establishe
Hengli Road, Wujiang and retail 0 d by
Chemical Economic and investment
Import & China Technological
Export Co., Development
Ltd. Zone, Suzhou City,
Jiangsu Province
Suzhou Wholesale 100.0 Establishe
Hengli Room 301, Building and retail 0 d by
Energy 5, No. 1518, Linhu investment
Chemical China Avenue, Lili Town,
Import & Wujiang District,
Export Co., Suzhou City
Ltd.
Shenzhen No. 5016, Shennan Wholesale 100.0 Business
Shengang East Road, Guiyuan and retail 0 combinatio
Trading Co., Street, Luohu n under
Ltd. District, common
China
Shenzhen ,Unit control
Kingkey 100
Building
Hengli OSBL Project - Wholesale 100.0 Establishe
Refining Public Works and retail 0 d by
Products Office Building No. investment
Sales 298, Changsong
China
(Dalian) Co., Road, Changxing
Ltd. IsLand Economic
Zone, Dalian,
Liaoning Province
Hengli No. 298, Wholesale 100.0 Establishe
Aviation Oil Changsong Road, and retail 0 d by
Co., Ltd. Changxing IsLand investment
China
Economic Zone,
Dalian, Liaoning
Province
Hengli 2302, Property 88, Wholesale 100.0 Establishe
Oilchem Suzhou Central and retail 0 d by
(Suzhou) Co., Plaza, Suzhou investment
Ltd. China Industrial Park,
Suzhou Area, China
(Jiangsu) Pilot Free
Trade Zone
Hengli Room 2301, Wholesale 100.0 Establishe
Energy Property 88, and retail 0 d by
(Suzhou) Co., Suzhou Central investment
Ltd. Plaza, Suzhou
China
Industrial Park,
Suzhou Area, China
(Jiangsu) Pilot Free
Trade Zone
Hengli Complex Building Transportati 100.0 Establishe
Logistics No. 298, on industry 0 d by
(Dalian) Co., Changsong Road, investment
Ltd. China Changxing IsLand
Economic Zone,
Dalian, Liaoning
Province
Suzhou Wholesale 100.0 Establishe
East side of East
Hengli and retail 0 d by
Bridge, Lili Town,
Chemical China investment
Wujiang District,
Polymer Co.,
Suzhou City
Ltd.
Hengli No. 298, Manufacturin 100.0 Establishe
Petrochemic Changsong Road, g 0 d by
al (Dalian) Changxing IsLand investment
China
Chemical Economic Zone,
Co., Ltd. Dalian, Liaoning
Province
Hengli Complex Building Manufacturin 100.0 Establishe
Petrochemic No. 298, g 0 d by
al (Dalian) Changsong Road, investment
New Material China Changxing IsLand
Technology Economic Zone,
Co., Ltd. Dalian, Liaoning
Province
Hengli Complex Building Manufacturin 100.0 Establishe
Petrochemic No. 298, g 0 d by
al Utilities Changsong Road, investment
(Dalian) Co., China Changxing IsLand
Ltd. Economic Zone,
Dalian, Liaoning
Province
Dalian Dispatching Manufacturin 65.00 Establishe
Hengzhong Center, No. 3 g d by
Special Renshan Street, investment
Materials China Changxing Island
Co., Ltd. Economic Zone,
Dalian, Liaoning
Province
Suzhou No. 1, Hengli Road, Wholesale 100.0 Establishe
Textile Nanma Industrial and retail 0 d by
Group China Zone, Shengze investment
Network E- Town, Wujiang
District
commerce
Co., Ltd.
Hengli Room 1688, Wholesale 100.0 Establishe
Petrochemic Property 2, No. 215, and retail 0 d by
al Sales Co., China Lianhe North Road, investment
Ltd. Fengxian District,
Shanghai
Hengli Wholesale 100.0 Establishe
(Eastern and retail 0 d by
Chang’an Road,
China) investment
China Songling Town,
Petrochemic
Wujiang District,
al Sales Co.,
Suzhou City
Ltd.
Hengli No. 1 Yangfan Wholesale 100.0 Establishe
Chemical Avenue, Yangbei and retail 0 d by
China
(Suqian) Co., Town, Sucheng investment
Ltd. District, Suqian City
Hengli Oil No. 1 Yangfan Wholesale 100.0 Establishe
(Suqian) Co., Avenue, Yangbei and retail 0 d by
China
Ltd. Town, Sucheng investment
District, Suqian City
Hengli 3202, Luohu Wholesale 100.0 Establishe
(Southern Business Center, and retail 0 d by
China) 2028 Shennan East investment
Petrochemic Road, Chengdong
China
al Sales Co., Community,
Ltd. Dongmen Street,
Luohu District,
Shenzhen
Hengli Window 1, West Wholesale 100.0 Establishe
(Northern Side of the and retail 0 d by
China) Approval Hall, R&D investment
Petrochemic Property,
al Sales Co., China Xianrendao
Ltd. Economic
Development
Zone, Yingkou,
Liaoning Province
Yuehai Room 1401, Main Wholesale 100.0 Business
Petrochemic Tower Building, and retail 0 combinatio
al Ocean Shipping n not
China
(Shenzhen) Center, No. 59, under
Co., Ltd. Linhai Avenue, common
Nanshan Street, control
Qianhai Shenzhen-
Hong Kong
Cooperation Zone,
Shenzhen 14002-
Hengli Oil 2303, Property 88, Wholesale 100.0 Establishe
Sales Suzhou Central and retail 0 d by
(Suzhou) Co., Plaza, Suzhou investment
Ltd. China Industrial Park,
Suzhou Area, China
(Jiangsu) Pilot Free
Trade Zone
Hengli 2304, Property 88, Wholesale 100.0 Establishe
Chemical Suzhou Central and retail 0 d by
Sales Plaza, Suzhou investment
(Suzhou) Co., China Industrial Park,
Ltd. Suzhou Area, China
(Jiangsu) Pilot Free
Trade Zone
Suzhou Wholesale 100.0 Establishe
Baocheng 558 Fenhu Avenue, and retail 0 d by
Weiye Lili Town, Wujiang investment
China
Petrochemic District, Suzhou
al Trading City
Co., Ltd.
Suzhou Wholesale 100.0 Establishe
No. 1801, Pangjin
Jinzhan and retail 0 d by
Road, Wujiang
Hengyuan investment
China Economic and
Petrochemic
Technological
al Trading
Development Zone
Co., Ltd.
Hengli North No. 3, Unit 1, 21st Wholesale 100.0 Establishe
Energy Sales Floor, Office and retail 0 d by
Co., Ltd. Property B, Victoria investment
Plaza, No.56
China
Gangxing Road,
Zhongshan District,
Dalian City,
Liaoning Province
Hengli Room 813, Free Wholesale 100.0 Establishe
Tongshang Trade Building, and retail 0 d by
New Energy China Dalian Free Trade investment
Co., Ltd. Zone, Liaoning
Province
Hengli Service Apartment, Wholesale 100.0 Establishe
Tongshang Building 14, Suzhou and retail 0 d by
New Material Bay View Garden, investment
Co., Ltd. No. 777, Fengqing
Street, East Taihu
China
Lake Ecotourism
Resort (Taihu New
Town), Wujiang
District, Suzhou
City
Hengli Room F1-A-1026, Wholesale 100.0 Establishe
Energy Building A2, No. 8, and retail 0 d by
Import and Qicun Road, investment
China
Export Co., Suzhou Area, China
Ltd. (Jiangsu) Pilot Free
Trade Zone
Hengli Wholesale 100.0 Establishe
Room 702-7, No.
Nenghua and retail 0 d by
(Shanghai) China investment
Minhang District,
Trading Co.,
Shanghai
Ltd.
Hengli Room 101, Floor 1, Wholesale 100.0 Establishe
Hengyuan Building 1, No. 99, and retail 0 d by
Supply Chain Shuanghui Road, investment
(Shanghai) China Lingang New Area,
Co., Ltd. China (Shanghai)
Pilot Free Trade
Zone
Hengli New Room 502, No. 99, Wholesale 100.0 Establishe
Energy Huangpu Road, and retail 0 d by
China
(Shanghai) Hongkou District, investment
Co., Ltd. Shanghai
Hengli Room 2507, Wholesale 100.0 Establishe
Yuanshang Building 88, and retail 0 d by
Technology Suzhou Central investment
(Suzhou) Co., Plaza, Suzhou
China
Ltd. Industrial Park,
Suzhou Area, China
(Jiangsu) Pilot Free
Trade Zone
Suzhou Room 2506, Wholesale 100.0 Establishe
Hengli Building 88, and retail 0 d by
China
Jinshang Suzhou Center investment
Energy Plaza, Suzhou
Technology Industrial Park,
Co., Ltd. Suzhou Area, China
(Jiangsu) Pilot Free
Trade Zone
Dalian Hengli No. 5, 21st Floor, Wholesale 100.0 Establishe
Fine No. 52, Gangxing and retail 0 d by
Chemical China Road, Zhongshan investment
Sales Co., District, Dalian City,
Ltd. Liaoning Province
Hengli Hefeng Homeland, Wholesale 100.0 Establishe
Petrochemic Meilan District, and retail 0 d by
al Sales Haikou City, No. 63- investment
(Haikou) Co., 1, Qiongshan
China
Ltd. Avenue, Jiangdong
New District,
Haikou City, Hainan
Province-5449
Hengli Room 805, Building Wholesale 100.0 Establishe
Energy A, Yahua Xiangxie, and retail 0 d by
Chemical Sanya Bay Road, investment
China
(Sanya) Co., Tianya District,
Ltd. Sanya City, Hainan
Province
Dalian Hengli No. 4, 21st Floor, Wholesale 100.0 Establishe
Petrochemic No. 52, Gangxing and retail 0 d by
al Sales Co., China Road, Zhongshan investment
Ltd. District, Dalian City,
Liaoning Province
Dalian Hengli No. 62, Changxing Wholesale 100.0 Establishe
Gold Road, Changxing and retail 0 d by
Merchant China Island Economic investment
Sales Co., Zone, Dalian,
Ltd. Liaoning Province
Dalian Hengli No. 62, Changxing Wholesale 100.0 Establishe
New Energy Road, Changxing and retail 0 d by
Sales Co., China Island Economic investment
Ltd. Zone, Dalian,
Liaoning Province
Dalian Wholesale 100.0 Establishe
No. 6, 21st Floor,
Henglixing and retail 0 d by
No. 52, Gangxing
Gemstone investment
China Road, Zhongshan
Chemical
District, Dalian City,
Trading Co.,
Liaoning Province
Ltd.
Dalian Hengli Office Dormitory Wholesale 100.0 Establishe
Gaoyuan Building, No. 6, No. and retail 0 d by
Sales Co., 76, Jinghai Street, investment
Ltd. China Changxing Island
Economic Zone,
Dalian, Liaoning
Province
Hengli Room 3201, Luohu Wholesale 100.0 Establishe
Energy Business Center, and retail 0 d by
Chemical No. 2028, Shennan investment
(Shenzhen) East Road,
Co., Ltd. China Chengdong
Community,
Dongmen Street,
Luohu District,
Shenzhen
Nantong Room 101, Building Wholesale 100.0 Establishe
Hengli 5, Kaisha Village, and retail 0 d by
Maoyuan Wujie Town, investment
China
Petrochemic Tongzhou District,
al Trading Nantong City,
Co., Ltd. Jiangsu Province
Suzhou Room 501-04, Wholesale 100.0 Establishe
Hengli New Building A, Building and retail 0 d by
Energy Sales 1, Taihu East Bank investment
Co., Ltd. Business Center,
China No. 4088 Kaiping
Road, Wujiang
District, Suzhou
City, Jiangsu
Province
Suzhou Room 501-3, Wholesale 100.0 Establishe
Hengli Fine Building A, Building and retail 0 d by
Chemical 1, Taihu East Bank investment
Sales Co., Business Center,
Ltd. No. 4088 Kaiping
China Road, East Taihu
Lake Eco-tourism
Resort (Taihu New
Town), Wujiang
District, Suzhou
City
Hengli No. 1406, Main Wholesale 100.0 Establishe
Petrochemic Tower, Ocean and retail 0 d by
al Sales Shipping Center, investment
(Shenzhen) No. 59, Linhai
Co., Ltd. Avenue, Nanshan
China
Street, Qianhai
Shenzhen-Hong
Kong Cooperation
Zone, Shenzhen-
Reason of difference between shareholding ratio and voting right ratio in the subsidiary:
There are no subsidiaries with a shareholding ratio different from the voting right ratio.
Basis for holding half or less of the voting rights but still controlling the investee:
There were no subsidiaries in the current period that the parent company had half or less of the
voting rights and was included in the scope of the consolidated financial statements.
Basis of control in structured entity included in the scope of the consolidation:
There are no important structured entity included in the scope of the consolidation in this period.
Basis for determining whether a company is an agent or a principal: None
Other note:
In this period, there was no equity investment in which the parent company had more than half of
the voting rights but failed to exercise control.
subsidiary is still controlled
statements
Explanation on structured entities not included in the scope of consolidated financial statements:
On 31 December 2022, the structured entities related to the Company but not included in the
scope of this financial statement are mainly engaged in asset management business, manage
client assets and provide clients with investment management services for securities, futures and
other financial products. The total assets of such structured entities on 31 December 2022 were
RMB227.29 million.
(1) The Company's wholly-owned subsidiary, Suzhou Textile Group Network E-commerce
Co., Ltd. and Jiangsu Hegao Investment Co., Ltd. signed the "Jiangsu Hengli Chemical Fiber Co.,
Ltd. Equity Transfer Agreement" on 12 April 2022. Suzhou Textile Group Network E-commerce
Co., Ltd. acquired 0.01% of the equity of Jiangsu Hengli Chemical Fiber Co., Ltd. held by Jiangsu
Hegao Investment Co., Ltd., and the transfer price was RMB575,467.23. On 12 April 2022, Jiangsu
Hengli Chemical Fiber Co., Ltd. completed the industrial and commercial registration procedures
for the above-mentioned equity transfer. After the completion of this equity transfer, Jiangsu
Hengli Chemical Fiber Co., Ltd. became a wholly-owned subsidiary of the Company.
(2) The Company's wholly-owned subsidiary, Hengli Investment (Dalian) Co., Ltd. and Dalian
Henghan Investment Co., Ltd. signed the "Hengli Petrochemical (Dalian) Co., Ltd. Equity Transfer
Agreement" on 27 April 2022. Hengli Investment (Dalian) Co., Ltd. acquired 0.16978% equity of
Hengli Petrochemical (Dalian) Co., Ltd. held by Dalian Henghan Investment Co., Ltd., and the
transfer price was RMB19.75 million. Hengli Petrochemical (Dalian) Co., Ltd. has completed the
industrial and commercial registration procedures for the above equity transfer on 28 April 2022.
After the completion of this equity transfer, Hengli Petrochemical (Dalian) Co., Ltd. became the
Company's wholly-owned subsidiary.
X. Risk of financial instruments
The Company faces risks of various financial instruments in its daily activities, mainly including
credit risk, market risk and liquidity risk. The Company's main financial instruments include cash
and bank balances, equity investment, debt investment, loans, accounts receivable, accounts
payable, etc. For details of each financial instrument, please refer to the relevant items in this Note.
The risks associated with these financial instruments and the risk management policies adopted
by the Company to reduce these risks are as follows:
The board of directors is responsible for planning and establishing the Company's risk
management structure, formulating the Company's risk management policies and related
guidelines, and supervising the implementation of risk management measures. The Company has
formulated risk management policies to identify and analyze the risks faced by the Company.
These risk management policies specify specific risks and cover many aspects such as market
risk, credit risk and liquidity risk management. The Company regularly assesses changes in the
market environment and the Company's operating activities to determine whether to update risk
management policies and systems. The Company's risk management is carried out by the risk
management committee in accordance with the policies approved by the board of directors. The
Risk Management Committee identifies, evaluates and avoids related risks through close
cooperation with the Company’s other business departments. The Company's internal audit
department conducts regular audits on risk management controls and procedures, and reports
the audit results to the Company's audit committee.
The Company diversifies the risk of financial instruments through appropriate diversified
investments and business portfolios, and reduces risk concentrated on a single industry, a specific
region, or a specific counterparty by formulating appropriate risk management policies.
(I) Market risk
Market risk of financial instruments refers to the risk that the fair value or future cash flow of
financial instruments will fluctuate due to changes in market price, including foreign exchange rate
risk, interest rate risk and other price risk.
Exchange rate risk refers to the risk that the fair value of financial instruments or future cash
flows will fluctuate due to changes in foreign exchange rates. The Company's main operations are
located in China, Hong Kong, Singapore, domestic business is settled in RMB, export business is
mainly settled in US dollar, and overseas operating companies are settled in US dollar, so the
Company's determined foreign currency assets and liabilities and future foreign currency
transactions (Foreign currency assets and liabilities and foreign currency transactions are mainly
denominated in US dollar.) were exposed to foreign exchange rate risk. Related foreign currency
assets and foreign currency liabilities include: Cash and bank balances, Accounts receivable,
Receivable financing, Other receivables, Accounts payable, Notes payable, Other payables, Short-
term loans, and Non-current liabilities due within one year. Amount of financial assets and foreign
currency financial liabilities dominated in foreign currency and converted into RMB can be found in
“Items in foreign currencies” in this note.
The Company pays close attention to the impact of exchange rate changes on the Company's
exchange rate risk, and matches foreign currency income with foreign currency expenditure as
much as possible to reduce foreign exchange risk. In addition, the Company also signed forward
foreign exchange contracts to prevent the exchange risk of the Company's revenue settled in US
dollars. At the end of the current period, the foreign exchange risks faced by the Company mainly
originated from financial assets and liabilities denominated in US dollar. Amount of foreign currency
financial assets and foreign currency financial liabilities converted into RMB is shown in “Items in
foreign currencies” in this note.
Interest rate risk refers to the risk that the fair value of financial instruments or future cash flows
will fluctuate due to changes in market interest rates. The risks faced by the Company in changing
market interest rates are mainly related to the Company's borrowings with floating interest rates.
The Company's interest rate risk mainly arises from long-term interest-bearing debts such as long-
term bank loans and bonds payable. Floating interest rate financial liabilities expose the Company
to cash flow interest rate risk, while fixed interest rate financial liabilities expose the Company to fair
value interest rate risk. The Company determines the relative ratio of fixed rate and floating rate
contracts according to the market environment at that time, and maintains an appropriate
combination of fixed and variable rate instruments through regular review and monitoring.
When other variables remain unchanged, if the borrowing rate calculated at floating interest
rates increases or decreases by 50 basis points, the impact on the company's net profit is as follows:
Interest rate change Impact on Net profit (RMB ten thousand)
Current year
Up 50 basis points -29,996.98
Down 50 basis points 29,996.98
Management believes that 50 basis points reasonably reflects a reasonable range of possible
changes in interest rates over the next year.
The Company does not hold equity investments in other listed companies, and there is no
other price risk.
(II) Credit risk
Credit risk refers to the risk that the counterparty of a transaction fails to perform its
contractual obligations, resulting in financial losses to the Company. The Company's credit risk
mainly arises from Cash at bank and Receivables.
The Company's cash at bank is mainly deposited in state-owned banks and other large and
medium-sized listed banks. The Company does not expect cash at bank to have significant credit
risk.
For Receivables, the Company sets relevant policies to control credit risk exposure in
accordance with the concentration of customer management credit risk. The Company evaluates
the debtor's credit qualifications based on the debtor's financial status, external ratings, possibility
of obtaining guarantees from third parties, credit history and other factors such as current market
conditions, and sets the corresponding arrearage amount and credit period. The Company will
regularly monitor the credit history of the debtor. For debtors with poor credit records, the
Company will use written reminders, shorten the credit period or cancel the credit period to
ensure that the Company's overall credit risk is within control. Since the Company's Receivables
customers are widely dispersed in different regions and industries, there is no significant
concentration of credit risk in the Company.
The Company does not provide any other guarantees that may subject the Company to credit
risk. The largest credit risk exposure undertaken by the Company is the carrying amount of each
financial asset in the balance sheet.
The Company assesses on each balance sheet date whether the credit risk of relevant
financial instruments has increased significantly since initial recognition. When determining
whether the credit risk has increased significantly since the initial recognition, the Company
considers that it can obtain reasonable and evidence-based information without unnecessary
extra cost or effort, including qualitative and quantitative analysis based on the Company's
historical data, external credit risk rating and forward-looking information. When one or more of
the following quantitative and qualitative standards are met, the Company believes that credit risk
has increased significantly:
(1) The contract payment has been overdue for more than 30 days.
(2) According to the results of external public credit ratings, the debtor’s credit rating
dropped significantly.
(3) There are serious problems in the debtor's production or operation, and the actual or
expected results of the operation have dropped significantly.
(4) Significantly adverse changes have occurred in the debtor’s regulatory, economic or
technological environment.
(5) It is expected that the debtor’s business, financial or economic conditions that will meet its
debt-servicing capacity will undergo significant adverse changes.
(6) Other objective evidence shows that financial assets have significantly increased credit
risk.
When evaluating whether the debtor has suffered credit impairment, the Company mainly
considers the following factors:
(1) The issuer or debtor has significant financial difficulties.
(2) The debtor violates the contract, such as interest payment or principal default or overdue,
etc.
(3) Due to economic or contractual considerations related to the debtor’s financial difficulties,
the creditor gives the debtor a concession that would not be made under any other
circumstances.
(4) The debtor is likely to go bankrupt or undergo other financial restructuring.
(5) The issuer or debtor's financial difficulties caused the active market for the financial asset
to disappear.
(6) Purchase or source a financial asset at a substantial discount, the discount reflects the fact
that credit losses have occurred.
The parameters of expected credit loss measurement are based on whether there has been
a significant increase in credit risk and whether credit impairment has occurred. The Company
measures the loss provision for different assets with 12 months or the expected lifetime of the
entire credit period. The key parameters of expected credit loss measurement include default
probability, default loss rate and default risk exposure. The Company considers the quantitative
analysis of historical statistical data and forward-looking information to establish default
probability, default loss rate and default risk exposure model. The relevant definitions are as
follows:
(1) The probability of default refers to the possibility that the debtor will not be able to meet its
repayment obligations in the next 12 months or throughout the remaining duration.
(2) The default risk exposure refers to the amount that the Company should be reimbursed
when a default occurs in the next 12 months or throughout the remaining duration.
(3) The default loss rate refers to the Company's expectation of the degree of loss in default
exposure. Depending on the type of counterparty, the method and priority of recourse, and the
availability of collateral or other credit support, the rate of default loss varies.
The Company determines the expected credit loss by predicting the default probability,
default loss rate and default risk exposure of individual exposures or asset portfolios in the coming
months. During the reporting period, there have been no major changes in the expected credit
loss estimation techniques or key assumptions.
The assessment of a significant increase in credit risk and the calculation of expected credit
losses involve forward-looking information. Through historical data analysis, the Company has
identified relevant information that affects the credit risk and expected credit losses of each asset
portfolio, such as GDP growth rate and other macroeconomic conditions, and industry
development stages such as industry cycle stage. The Company predicts the impact of this
information on the probability of default and the rate of default loss on the basis of considering
changes in the Company's future sales strategy or credit policy.
(III) Liquidity risk
Liquidity risk refers to the risk of a shortage of funds when an enterprise performs its
obligation to settle cash or other financial assets. Liquidity risk is centrally controlled by the
Company's financial department. The finance department monitors cash balances, securities that
can be cashed at any time, and rolling forecasts of cash flows over the next 12 months to ensure
that the Company has sufficient funds to repay debts under all reasonable forecasts, meet the
Company’s operating needs, and reduce the impact of cash flow fluctuations.
The financial liabilities and off-balance sheet guarantee items held by the company are
analyzed according to the maturity period of the undiscounted remaining contractual cash flow
(unit: RMB):
Item Closing balance
Within a year 1 to 2 years 2 to 3 years Over three Total
years
Bank 79,959,083,40 14,425,356,21 9,821,474,77 45,788,303,16 149,994,217,55
borrowi 1.26 3.87 4.56 0.65 0.34
ng
Financia 346,020,729.7 - - - 346,020,729.7
l 0 0
liabilitie
s held
for
trading
Notes 20,603,775,87 - - - 20,603,775,87
payable 0.27 0.27
Accoun 8,869,309,99 - - - 8,869,309,998.
ts 8.90 90
payable
Other 382,263,173.0 - - - 382,263,173.05
payable 5
s
Lease 37,276,525.65 31,641,977.76 15,455,001.4 16,306,039.3 100,679,544.2
liabilitie 0 9 0
s
Bonds 2,030,618,280. - - - 2,030,618,280.
payable 89 89
The financial liability amounts disclosed in the table above represent undiscounted
contractual cash flows and may therefore differ from the carrying amount in the balance sheet.
(IV) Capital management
The goal of the Company's capital management policy is to ensure that the Company can
continue to operate, so as to provide returns for shareholders and benefit other stakeholders,
while maintaining the optimal capital structure to reduce the cost of capital. In order to maintain or
adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The
Company monitors the capital structure on the basis of the asset-liability ratio (ie total liabilities
divided by total assets). As of 31 December 2022, the Company's asset-liability ratio was 78.08%
(31 December 2021: 72.75%).
XI. Disclosure of fair value
Unit: Yuan Currency: RMB
Item Fair value at year end
Level 2 fair
Level 1 fair value Level 3 fair value
value Total
measurement measurement
measurement
I. Recurring fair
value
measurement
(I) Financial
assets held for 492,430,590.59 111,983,853.85 - 604,414,444.44
trading
at fair value
through profit or
loss
(1)Debt
instruments 2,000,000.00 - - 2,000,000.00
investment
(2)Equity
instruments - 46,983,853.85 - 46,983,853.85
investment
(3)Derivative
financial assets
(4)Wealth - 65,000,000.00 - 65,000,000.00
management
products and
structured
deposits
assets
designated at fair - - - -
value through
profit or loss
(1)Debt
instruments - - - -
investment
(2)Equity
instruments - - - -
investment
(II) Other debt
investments
(III) Other equity
instruments
investment
(IV) Investment
properties
for rental
buildings
that are held and
ready to be
transferred after
appreciation
(V) Biological
assets
biological assets
biological assets
(VI) Receivables - - 2,287,271,229.26 2,287,271,229.26
financing
Total assets
measured at fair
value on
recurring basis
(VI) Financial
liabilities held for 346,020,729.70 - - 346,020,729.70
trading
liabilities at fair
value through
profit or loss
Including: Issued
- - - -
trading bonds
Derivative
financial liabilities
Others - - - -
financial liabilities - - - -
at fair value
through profit or
loss
Total liabilities
measured at fair
value on
recurring basis
II. Non-recurring
fair value
measurement
(I) Assets held-
for-sale
Total assets
measured at fair
value on a non-
recurring basis
Total liabilities
measured at fair
value on a non-
recurring basis
fair value measurement
For futures contracts with an active market price, the fair value is determined based on the
quotation on the balance sheet date.
techniques and qualitative and quantitative information on important parameters
For the wealth management products, structured deposits, fund trust and asset management
products held by the Company, valuation techniques are used to determine their fair value. The
valuation model used is a discounted cash flow model, which predicts future cash flows with an
expected rate of return.
techniques and qualitative and quantitative information on important parameters
For receivables financing that is not traded in an active market, the carrying amount is similar
to the fair value, and the carrying amount is used as the fair value.
book value at the beginning and end of the period and sensitivity analysis of unobservable
parameters
period, reasons for the conversions and policies for determining the timing of the
conversions
The Company's financial assets and financial liabilities measured at amortised cost mainly
include: Cash and bank balances, Note receivables, Accounts receivable, Other receivables,
Short-term loans, Notes payable, Accounts payable, Other payables, Non-current liabilities due
within one year, Long term loans, etc. The difference between the carrying amount of the financial
assets and financial liabilities that the Company does not measure at fair value and their fair value
are immaterial.
XII. Related party and related party transactions
Unit: ten thousand yuan Currency: RMB
Shareholding
Parent
Name of ratio of parent
Place of Nature of Registered company's
parent company to
registration business capital voting right ratio
company the Company
(%)
(%)
Hengli
Wujiang, Industrial
Group Co., 200,200.00 29.84% 29.84%
Jiangsu Investment
Ltd.
Description of the parent company of the company
The Company’s ultimate controlling party is the couple of Chen Jianhua and Fan Hongwe. Chen
Jianhua and Fan Hongwei directly held 11.24% shares of the Company and through Hengli Group
Co., Ltd. and other 5 companies to hold 63.62% of shares of the Company, and totally held 74.87%
of shares of the Company.
Due to the issuance of exchangeable corporate bonds, Hengli Group Co., Ltd. transferred
Guarantee and Trust Property Account", which accounts for 12.18% shareholding. Hengli Group Co.,
Ltd. held 29.84% in the shareholding and voting rights ratio of the Company is 29.84%, including
Property Account.
The ultimate controlling party of this enterprise is Chen Jianhua and his wife Fan Hongwei.
For the details of the subsidiaries of the company, please refer to the notes
For details of the Company's subsidiaries, please refer to “Interests in subsidiaries”.
Name of other related party Other related party and its relationship with the
Company
Entity controlled by the ultimate controller of the
Jiangsu Hegao Investment Co., Ltd.
Company and the shareholders of the Company
Companies controlled by the actual controlling party
Dalian Henghan Investment Co., Ltd.
of the Company
Guangdong Songfa Ceramics Co., Ltd. Entity controlled by our parent company
Suzhou Wujiang Tongli Lake Tourist Entity controlled by our parent company
Resort Co., Ltd.
Hengli (Shenzhen) Investment Group Entity controlled by our parent company
Co., Ltd.
Suzhou Hengli Real Estate Co., Ltd. Entity controlled by our parent company
Hengli Industrial Investment (Suzhou) Entity controlled by our parent company
Co., Ltd.
Wujiang Chemical Fiber Weaving Entity controlled by our parent company
Factory Co., Ltd.
Suzhou Gufeng Asset Management Co., Entity controlled by our parent company
Ltd.
Nantong Kane Polymer Material Co., Ltd. Entity controlled by our parent company
Hengli Technology (Dalian) Co., Ltd. Entity controlled by our parent company
Hengli Cloud Business Technology Co., Entity controlled by our parent company
Ltd.
Wujiang Huajun Textile Co., Ltd. Entity controlled by our parent company
Jiangsu Boyada Textile Co., Ltd. Entity controlled by our parent company
Jiangsu Deshun Textile Co., Ltd. Entity controlled by our parent company
Jiangsu Dehua Textile Co., Ltd. Entity controlled by our parent company
Hengli (Suzhou) Textile Sales Co., Ltd. Entity controlled by our parent company
Sichuan Hengli Smart Textile Entity controlled by our parent company
Technology Co., Ltd.
Hengli (Guizhou) Textile Intelligent Entity controlled by our parent company
Technology Co., Ltd.
Jiangsu Pejie Textile Intelligent Entity controlled by our parent company
Technology Co., Ltd.
Jiangsu Deya Textile Technology Co., Entity controlled by our parent company
Ltd.
Companies controlled by the actual controlling party
Suqian Kangtai Investment Co., Ltd.
of the Company
Suqian Lishun Property Co., Ltd. Hengli Companies controlled by the actual controlling party
Hotel Branch of the Company
Suqian Bailong Garden Technology Co., Companies controlled by the actual controlling party
Ltd. of the Company
Companies controlled by the actual controlling party
Hengli Real Estate (Dalian) Co., Ltd.
of the Company
Companies controlled by the actual controlling party
Dalian Victoria Property Service Co., Ltd.
of the Company
Companies controlled by the actual controlling party
Dalian Kangjia Property Service Co., Ltd.
of the Company
Wujiang Chunchen Weaving Factory Companies controlled by the actual controlling party
Co., Ltd. of the Company
Companies controlled by the actual controlling party
Suzhou Tongli Red Wine Co., Ltd.
of the Company
Suzhou Tonglihong Electronic Companies controlled by the actual controlling party
Commerce Co., Ltd. of the Company
Companies controlled by the actual controlling party
Suzhou Taihu Brewing Co., Ltd.
of the Company
Suzhou Hengli Intelligent Technology Companies controlled by the actual controlling party
Co., Ltd. of the Company
Suzhou Hengli System Integration Co., Companies controlled by the actual controlling party
Ltd. of the Company
Companies controlled by the actual controlling party
Suzhou Oak Bay No. 9 Catering Co., Ltd.
of the Company
Companies controlled by the actual controlling party
Jiangsu Changshun Textile Co., Ltd.
of the Company
Companies controlled by the actual controlling party
Nantong Jinchuan Logistics Co., Ltd.
of the Company
Companies controlled by the actual controlling party
Nantong Deji Concrete Co., Ltd.
of the Company
Hengli Import and Export Co., Ltd. Entity controlled by our parent company
Hengli Energy Management Service Companies controlled by close family members of
(Jiangsu) Co., Ltd. the actual controlling party of the Company
Jiangsu Wu Jiangsu Zhouwan Hengli Entity controlled by our parent company
International Hotel Co., Ltd.
Companies controlled by the actual controlling party
Suzhou Tongzui Trading Co., Ltd.
of the Company
Companies controlled by the actual controlling party
Hengli Engine (Dalian) Co., Ltd.
of the Company
Hengli Precision Casting (Dalian) Co., Companies controlled by the actual controlling party
Ltd. of the Company
Hengli Green Building Materials (Dalian) Companies controlled by the actual controlling party
Co., Ltd. of the Company
Companies controlled by the actual controlling party
Hengli Shipbuilding (Dalian) Co., Ltd.
of the Company
Hengli Equipment Manufacturing Companies controlled by the actual controlling party
(Dalian) Co., Ltd. of the Company
Hengli Comprehensive Service (Dalian) Companies controlled by the actual controlling party
Co., Ltd. of the Company
Hengli Energy Management Companies controlled by close family members of
(Guangdong) Co., Ltd. Guangzhou the actual controlling party of the Company
Huadu Gas Station
Hengli Energy Management Service Companies controlled by close family members of
(Dalian) Co., Ltd. Yingkou Hehai Bridge the actual controlling party of the Company
Gas Station Branch
(1). Purchase and sale of goods, acceptance and provision of labor services
Procurement of goods / acceptance of labor services
Unit: Yuan Currency: RMB
Whether the
Approved
transaction
Related Nature of transaction
Current year limit is Prior year
party transaction amount (if
exceeded (if
applicable)
applicable)
Jiangsu
Boyada 500,000.0
Others 139,598.21 No 81,210.52
Textile 0
Co., Ltd.
Suzhou
Wujiang
Tongli
Lake Others 32,656.90 No 117,250.92
Tourist
Resort
Co., Ltd.
Hengli
(Shenzhen
)
Others - 50,000.00 No 35,398.24
Investmen
t Group
Co., Ltd.
Hengli
Technolog 11,000,000
Others 1,058,490.57 No 8,895,541.84
y (Dalian) .00
Co., Ltd.
Jiangsu
Deshun 3,000,000.
Others 1,348,731.38 No 809,786.07
Textile 00
Co., Ltd.
Wujiang
Chemical
Fiber
Others - 50,000.00 No 28,928.31
Weaving
Factory
Co., Ltd.
Jiangsu
Dehua 8,000,000.
Others 7,728,404.83 No 602,102.51
Textile 00
Co., Ltd.
Suqian
Lishun
Property
Co., Ltd. Others 326,001.41 No 286,662.72
Hengli
Hotel
Branch
Suqian
Bailong
Garden Fixed assets 940,980.00 No 517,557.50
Technolog
y Co., Ltd.
Dalian
Kangjia
Property Others 8,067,922.44 No 6,569,919.60
Service
Co., Ltd.
Nantong
Jinchuan 100,000.0
Others 72,415.65 No 3,607,583.96
Logistics 0
Co., Ltd.
Suzhou
Taihu 8,000,000.
Others 5,998,351.85 No 1,398,762.96
Brewing 00
Co., Ltd.
Suzhou
Tongli Red 500,000.0
Others 160,796.46 No 81,453.08
Wine Co., 0
Ltd.
Suzhou
Hengli
Intelligent Others 21,655,660.40 No 19,493,200.49
Technolog
y Co., Ltd.
Suzhou
Hengli
Fixed assets, 24,130,000
System 15,183,078.76 No 16,371,079.60
etc .00
Integration
Co., Ltd.
Nantong
Deji Concrete 149,444,036.8 265,000,0
No 87,093,944.57
Concrete mortar 6 00.00
Co., Ltd.
Suzhou
Tonglihon
g 3,130,000.
Others 3,398,870.13 No 235,155.63
Electronic 00
Commerc
e Co., Ltd.
Jiangsu
Changshu
Others - 50,000.00 No 98,000.14
n Textile
Co., Ltd.
Guangdon
g Songfa
Others 42,175.22 50,000.00 No 128,230.08
Ceramics
Co., Ltd.
Jiangsu
Pejie
Textile 2,000,000.
Others 1,620,797.94 No 364,286.14
Intelligent 00
Technolog
y Co., Ltd.
Suzhou
Gufeng
Asset 3,690,000.
Others 2,317,278.91 No 349,396.46
Managem 00
ent Co.,
Ltd.
Suzhou
Oak Bay
No. 9 Others 10,847.00 No 8,284.00
Catering
Co., Ltd.
Suqian
Kangtai 800,000.0
Others 299,311.93 No 373,750.00
Investmen 0
t Co., Ltd.
Hengli
Import
and Others 191,091.30 No -
Export
Co., Ltd.
Hengli
Energy
Managem
ent Others 513,274.34 No -
Service
(Jiangsu)
Co., Ltd.
Jiangsu
Wu
Jiangsu
Zhouwan 1,000,000.
Others 299,685.91 No -
Hengli 00
Internation
al Hotel
Co., Ltd.
Sichuan
Hengli
Smart 6,000,000.
Others 5,962,003.40 No -
Textile 00
Technolog
y Co., Ltd.
Suzhou
Tongzui
Others 10,088.50 20,000.00 No -
Trading
Co., Ltd.
Dalian
Victoria
Property Others 1,624,223.77 No -
Service
Co., Ltd.
Hengli
(Guizhou)
Textile 6,000,000.
Others 5,781,546.55 No -
Intelligent 00
Technolog
y Co., Ltd.
Sales of goods / provision of services
Unit: Yuan Currency: RMB
Related party Nature of transaction Current year Prior year
Jiangsu Boyada Textile 87,580,730.31 81,522,496.89
Polyester Yarn
Co., Ltd.
Jiangsu Boyada Textile 10,558,594.50 9,003,725.19
Steam
Co., Ltd.
Jiangsu Boyada Textile 189,354.31 166,600.04
Others
Co., Ltd.
Suzhou Hengli Real - 4,299.30
Others
Estate Co., Ltd.
Wujiang Huajun Textile 83,788.97 590,902.29
Steam
Co., Ltd.
Wujiang Huajun Textile 358.11 6,658.40
Others
Co., Ltd.
Hengli Industrial - 923.56
Investment (Suzhou) Others
Co., Ltd.
Suzhou Gufeng Asset - 167.72
Others
Management Co., Ltd.
Nantong Kane Polymer - 7,834,042.51
Others
Material Co., Ltd.
Jiangsu Deshun Textile 82,864,669.02 89,316,708.01
Polyester Yarn
Co., Ltd.
Jiangsu Deshun Textile 158,503.41 261,333.61
Others
Co., Ltd.
Wujiang Chemical - 31,408,062.75
Fiber Weaving Factory Polyester Yarn
Co., Ltd.
Wujiang Chemical - 16,979.42
Fiber Weaving Factory Others
Co., Ltd.
Jiangsu Dehua Textile 53,775,042.74 66,301,054.78
Polyester Yarn
Co., Ltd.
Jiangsu Dehua Textile 45,185.47 89,603.51
Others
Co., Ltd.
Sichuan Hengli Smart 178,975,907.35 66,930,091.50
Textile Technology Polyester Yarn
Co., Ltd.
Sichuan Hengli Smart - 33,416.08
Textile Technology Others
Co., Ltd.
Jiangsu Pejie Textile 162,430,422.95 93,633,720.26
Intelligent Technology Polyester Yarn
Co., Ltd.
Jiangsu Pejie Textile 13,602.01 35,239.32
Intelligent Technology Others
Co., Ltd.
Suzhou Hengli - 1,176.23
Intelligent Technology Others
Co., Ltd.
Nantong Deji Concrete 95,650.09 60,425.60
Others
Co., Ltd.
Jiangsu Changshun 915,276.11 5,814,436.79
Polyester Yarn
Textile Co., Ltd.
Jiangsu Changshun - 3,208.38
Others
Textile Co., Ltd.
Hengli (Guizhou) 86,349,012.89 15,645,287.25
Textile Intelligent Polyester Yarn
Technology Co., Ltd.
Hengli Cloud Business 8,616.29 239,150.44
Others
Technology Co., Ltd.
Hengli Engine (Dalian) 1,987,528.30 -
Others
Co., Ltd.
Hengli Precision 1,729,444.34 -
Casting (Dalian) Co., Others
Ltd.
Hengli Green Building 1,061,766.91 -
Materials (Dalian) Co., Others
Ltd.
Hengli Shipbuilding 14,294,980.10 -
Others
(Dalian) Co., Ltd.
Hengli Equipment 1,552,929.25 -
Manufacturing (Dalian) Others
Co., Ltd.
Hengli Comprehensive 2,271,070.75 -
Service (Dalian) Co., Others
Ltd.
Hengli Energy 1,477,353.99 -
Management
(Guangdong) Co., Ltd. Refined oil
Guangzhou Huadu Gas
Station
(2). Related entrusted management/contracting and entrusted management/contracting
The company's entrusted management/outsourcing situation
Unit: Yuan Currency: RMB
Pricing
Custody
Name of basis
Name of Entrustment/Ou fee/outso
entrusting Entrustment/Ou Start date of for
entrusted tsourcing urcing fee
party/contr tsourced Assets Entrustment/Ou custody
party/subco termination included
acting Type tsourced fee/pac
ntractor Date in current
party kage
period
fee
Hengli Hengli Other assets 2022/9/15 2042/9/14 Market 1,834,862.
(Northern Energy custodian price 39
China) Managemen
Petrochem t Service
ical Sales (Dalian) Co.,
Co., Ltd. Ltd. Yingkou
Hehai Bridge
Gas Station
Branch
(3). Rental with related party
The Company’s as lessor:
Unit: Yuan Currency: RMB
Category of lease Rental income included Rental income recognised
Tenant
assets in current period in prior year
Nantong Transportation 848,082.57
Jinchuan equipment
Logistics Co.,
Ltd.
Hengli (Suzhou) Property and real 1,658,583.17
Textile Sales Co., estate 1,705,275.19
Ltd.
Hengli Real Property and real 2,310,851.89
Estate (Dalian) estate 1,633,324.64
Co., Ltd.
The Company’s as leasee:
Unit: Yuan Currency: RMB
Variab
le
lease
paym
Ca
ents
te
not
go
Rental charge of short- includ
ry
Lan term leases and low-value ed in
of Interest expense of lease
dlor asset leases under the Rent paid Increase of Right-of-use assets
lea liabilities
d simplified method (if measu
se
applicable) remen
as
t of
se
lease
ts
liabiliti
es(if
applic
able)
C
P
ur
ri
re
or
Current year Prior year nt Current year Prior year Current year Prior year Current year Prior year
y
y
e
e
ar
ar
Pr
op
Jian
ert
gsu
y
Des
an
hun
d 114,285.71 114,285.71 - - 114,285.71 114,285.71 - 228,480.45 -4,913,558.14 4,913,558.14
Tex
re
tile
al
Co.,
es
Ltd.
tat
e
Pr
op
Jian
ert
gsu
y
Boy
an
ada
d 1,026,248.88 - - - 1,026,248.88 1,885,714.29 - 150,617.27 -5,429,649.95 5,429,649.95
Tex
re
tile
al
Co.,
es
Ltd.
tat
e
Hen Pr
gli op
Indu ert
- - - - 10,965,782.42 10,914,222.16 1,261,139.54 1,691,545.74 - 43,296,707.41
stria y
l an
Inve d
stm re
ent al
(Suz es
hou) tat
Co., e
Ltd.
(4). Guarantee with related parties
The company as the guaranteed party
Unit: Yuan Currency: RMB
Whether the
Start date of Guarantee expiry
Guarantor Guaranteed Amount guarantee has been
guarantee date
fulfilled
Fan Hongwei,
Chen Jianhua 15,032,442,107.08 2022/2/11 2023/12/18 No
[Note 1]
Fan Hongwei,
Chen Jianhua USD198,661,864.36 2022/9/29 2023/3/24 No
[Note 2]
Fan Hongwei,
Chen Jianhua SGD3,277,698.00 2022/12/29 2023/3/16 No
[Note 3]
Fan Hongwei,
Chen Jianhua 3,180,000,000.00 2022/3/4 2023/9/23 No
[Note 4]
Fan Hongwei,
Chen Jianhua 3,099,530,000.00 2020/9/15 2026/12/20 No
[Note 5]
Fan Hongwei,
Chen Jianhua
Fan Hongwei,
Chen Jianhua,
Hengli Group
Co., Ltd. [Note 6]
Fan Hongwei,
Chen Jianhua,
USD264,000.00 2022/11/11 2023/2/20 No
Hengli Group
Co., Ltd. [Note 7]
Fan Hongwei,
Chen Jianhua,
Hengli Group
Co., Ltd. [Note 8]
Fan Hongwei,
Chen Jianhua,
Hengli Group
Co., Ltd. [Note 9]
Fan Hongwei,
Chen Jianhua,
Hengli Group
Co., Ltd.
Fan Hongwei,
Chen Jianhua,
Hengli Group
Co., Ltd. ,
Jiangsu
Boyada Textile
Co., Ltd. ,
Jiangsu
Deshun Textile 27,800,000,000.00 2018/5/3 2033/5/2 No
Co., Ltd.,
Jiangsu Dehua
Textile Co.,
Ltd. , Wujiang
Chemical Fiber
Weaving
Factory Co.,
Ltd. [Note 10]
Fan Hongwei,
Chen Jianhua,
Hengli Group
Co., Ltd. ,
Jiangsu
Boyada Textile
Co., Ltd. ,
Jiangsu
Deshun Textile USD900,000,000.00 2018/5/3 2033/5/2 No
Co., Ltd.,
Jiangsu Dehua
Textile Co.,
Ltd. , Wujiang
Chemical Fiber
Weaving
Factory Co.,
Ltd. [Note 11]
Fan Hongwei,
Chen Jianhua,
Hengli Group
Co., Ltd. ,
Wujiang 375,000,000.00 2022/9/13 2023/3/19 No
Chemical Fiber
Weaving
Factory Co.,
Ltd. [Note 12]
Fan Hongwei,
Chen Jianhua,
Hengli Group
Co., Ltd. ,
Wujiang 440,000,000.00 2022/1/1 2023/6/30 No
Chemical Fiber
Weaving
Factory Co.,
Ltd. [Note 13]
Fan Hongwei,
Chen Jianhua,
Jiangsu
Boyada Textile
Co., Ltd. ,
Jiangsu
Deshun Textile
Co., Ltd., 7,869,500,000.01 2019/12/19 2034/12/19 No
Jiangsu Dehua
Textile Co.,
Ltd. , Wujiang
Chemical Fiber
Weaving
Factory Co.,
Ltd. [Note 14]
Hengli Group
Co., Ltd. [Note 15]
Hengli Group
USD4,386,960.00 2022/10/20 2023/2/20 No
Co., Ltd. [Note 16]
Hengli Group
Co., Ltd. [Note 17]
Hengli Group
Co., Ltd. [Note 18]
Hengli Group
Co., Ltd.
Jiangsu
Deshun Textile USD925,560.00 2022/9/30 2023/1/31 No
Co., Ltd.
Guarantee with related parties
√适用 □不适用
[Note 1]: The Company also placed security deposits to provide pledge guarantee.
[Note 2]: The Company also placed security deposits to provide pledge guarantee.
[Note 3]: The Company also placed security deposits to provide pledge guarantee.
[Note 4]: The Company also provides mortgage security with property and real estate.
[Note 5]: The Company also provides mortgage guarantees with property and real estate, land
use rights.
[Note 6]: The Company also placed security deposits to provide pledge guarantee.
[Note 7]: The Company also placed security deposits to provide pledge guarantee.
[Note 8]: The Company also provides mortgage guarantees with property and real estate, land
use rights and machinery and equipment.
[Note 9]: The Company also provides mortgage guarantees with machinery and equipment.
[Note 10]: The Company also provides mortgage guarantees for property and real estate, land
use rights, machinery and equipment and Construction in progress.
[Note 11]: The Company also provides mortgage guarantees for property and real estate, land use
rights, machinery and equipment and Construction in progress.
[Note 12]: The Company also placed security deposits to provide pledge guarantee with property
and real estate, machinery and equipment.
[Note 13]: The Company also provides mortgage guarantees with property and real estate, land
use rights and machinery and equipment.
[Note 14]: The Company also provides mortgage guarantees for property and real estate, land
use rights, machinery and equipment and Construction in progress.
[Note 15]: The Company also placed security deposits to provide pledge guarantee.
[Note 16]: The Company also placed security deposits to provide pledge guarantee.
[Note 17]: The Company also provides mortgage guarantees with property and real estate, land
use rights.
[Note 18]: The Company also provides mortgage guarantees with land use rights.
(5). Loans and borrowings with related parties
Unit: Yuan Currency: RMB
Borrowing
Related party Start date Maturity date Note
amount
Borrowings by the Company
None - - - In 2022, the
remaining
principal of
RMB
has been
returned to
Hengli Group
Co., Ltd.
Related party Borrowing amount Start date Maturity date Note
Loans provided by the Company
None
(6). Assets transfer and debt restructuring with related parties
Unit: Yuan Currency: RMB
Related party Nature of transaction Current year Prior year
Hengli Real Estate Property and real 1,323,285,775.22 1,558,569,142.86
(Dalian) Co., Ltd. estate, etc.
Jiangsu Deshun Machinery and 135,024.36 -
Textile Co., Ltd. equipment
Jiangsu Deya Textile Land use rights - 15,693,426.00
Technology Co., Ltd.
Hengli (Suzhou) Transportation tools 25,512.50 -
Textile Sales Co., Ltd.
Jiangsu Boyada Machinery and 288,346.30 -
Textile Co., Ltd. equipment
Jiangsu Dehua Machinery and 128,481.40 -
Textile Co., Ltd. equipment
Suzhou Hengli Machinery and 95,398.23 -
System Integration equipment
Co., Ltd.
Suzhou Wujiang Machinery and 55,981.42 -
Tongli Lake Tourist equipment
Resort Co., Ltd.
Nantong Kane Property and real 2,003,608,814.83 -
Polymer Material Co., estate, etc.
Ltd.
(7). Compensation of key management personnel
Unit: ten thousand yuan Currency: RMB
Item Current year Prior year
Compensation of key 804.95 852.26
management personnel
(8). Other related party transactions
(1)The Company purchases and sells for related parties
Unit: Yuan Currency: RMB
Name of related party Transaction content Current year Prior year
Hengli (Suzhou) Electricity
Textile Sales Co., Ltd.
Jiangsu Boyada Electricity
Textile Co., Ltd.
Wujiang Chemical Electricity
Fiber Weaving - 7,571,107.38
Factory Co., Ltd.
Jiangsu Deshun Electricity 76,218,287.89 78,482,146.56
Textile Co., Ltd.
Sichuan Hengli Smart Electricity
Textile Technology 27,779,540.06 -
Co., Ltd.
(2) Related parties purchase and sell for the Company
Unit: Yuan Currency: RMB
Name of related party Transaction content Current year Prior year
Jiangsu Deshun Water and electricity
Textile Co., Ltd.
Wujiang Chemical Electricity
Fiber Weaving - 168,776.51
Factory Co., Ltd.
Jiangsu Boyada Water and electricity
Textile Co., Ltd.
(1). Receivables from related parties
Unit: Yuan Currency: RMB
Item Related party Closing balance Beginning balance
Provision
Book Provision for
Book balance for bad
balance bad debts
debts
Jiangsu
Accounts Deshun
receivable Textile Co.,
Ltd.
Wujiang 127,685.00 6,384.25
Accounts
Huajun Textile 8,275.50 413.78
receivable
Co., Ltd.
Hengli - -
Accounts Shipbuilding
receivable (Dalian) Co.,
Ltd.
Jiangsu - -
Accounts Boyada
receivable Textile Co.,
Ltd.
Jiangsu Pejie - -
Textile
Accounts
Intelligent 261,283.11 13,064.16
receivable
Technology
Co., Ltd.
Suzhou 520,594.50 - 449,237.73 -
Gufeng Asset
Prepayments
Management
Co., Ltd.
Jiangsu 70,000.00 - - -
Boyada
Prepayments
Textile Co.,
Ltd.
Hengli - - 43,556.40 -
Industrial
Other
Investment
receivables
(Suzhou) Co.,
Ltd.
Hengli 26,366,322.00 - - -
Other non- Equipment
current Manufacturing
assets (Dalian) Co.,
Ltd.
(2). Payables to related parties
Unit: Yuan Currency: RMB
Item Related party Book balance at Book balance in beginning
year end of year
Suzhou Hengli 1,405,000.89 1,425,662.68
Accounts payable System Integration
Co., Ltd.
Nantong Deji - 2,669,643.80
Accounts payable
Concrete Co., Ltd.
Suzhou Hengli 7,300.88 7,300.88
Intelligent
Accounts payable
Technology Co.,
Ltd.
Hengli Technology - 3,696,000.00
Accounts payable
(Dalian) Co., Ltd.
Suzhou Oak Bay - 1,786.00
Accounts payable No. 9 Catering Co.,
Ltd.
Jiangsu Changshun 97,788.73 132,050.73
Accounts payable
Textile Co., Ltd.
Suqian Lishun - 186,096.60
Accounts payable Property Co., Ltd.
Hengli Hotel Branch
Jiangsu Dehua 130,931.49 -
Accounts payable
Textile Co., Ltd.
Dalian Kangjia 1,817,017.75 -
Accounts payable Property Service
Co., Ltd.
Hengli (Guizhou) 376,548.67 -
Textile Intelligent
Accounts payable
Technology Co.,
Ltd.
Sichuan Hengli 2,970,917.95 -
Smart Textile
Accounts payable
Technology Co.,
Ltd.
Jiangsu Hegao - 100,010.00
Dividends payable
Investment Co., Ltd.
Dalian Henghan - 4,782,100.00
Dividends payable
Investment Co., Ltd.
Hengli Group Co., 170,000,000.00
Other payables
Ltd.
Dalian Henghan 19,750,000.00
Other payables
Investment Co., Ltd.
Sichuan Hengli 2,220,459.94
Smart Textile
Other payables
Technology Co.,
Ltd.
Jiangsu Boyada - 3,694,552.93
Lease liabilities
Textile Co., Ltd.
Jiangsu Deshun - 3,947,752.88
Lease liabilities
Textile Co., Ltd.
Hengli Industrial 10,516,284.19 31,241,515.14
Lease liabilities Investment
(Suzhou) Co., Ltd.
Contract assets and contract liabilities arising from related party transactions
None
Name of related party Closing balance Beginning balance
Jiangsu Boyada Textile Co., 237,809.14 -
Ltd.
Wujiang Huajun Textile Co., 727.14 2,409.42
Ltd.
Jiangsu Deshun Textile Co., 148,515.44 -
Ltd.
Jiangsu Pejie Textile 770,761.60 -
Intelligent Technology Co.,
Ltd.
Jiangsu Dehua Textile Co., Ltd. 96,717.29 -
Wujiang Chunchen Weaving 10,509.50
Factory Co., Ltd.
Hengli (Suzhou) Textile Sales 68,538.04 68,538.01
Co., Ltd.
Hengli Shipbuilding (Dalian) 1,615.22 -
Co., Ltd.
XIII. Share-based payments
Unit: Shares Currency: RMB
Total amount of equity instruments granted Not applicable
during the year
Total amount of equity instruments exercised Not applicable
during the year
Total amount of equity instruments forfeited Not applicable
during the year
Range of exercise price and residual life of Not applicable
outstanding share options at the end of the year
Range of exercise price and residual life of Not applicable
outstanding other equity instruments at the end
of the year
Unit: Yuan Currency: RMB
Method in determining the fair value of equity
Stock price
instruments at the date of grant
It is expected that the on-the-job employees
Basis in determining the quantity of exercisable
will eventually obtain the corresponding
equity instruments
benefits of the employee share incentive plan
Reasons for the significant difference between
None
the current estimate and the previous estimate
Accumulated amount recorded in capital 294,379,127.68
reserve for equity-settled share-based
payments
The total amount of expenses recognised by 77,070,049.00
equity-settled share-based payment in this
period
XIV. Commitments and contingencies
Important external commitments, nature and amount on the balance sheet date
performed and related financial expenditures
Item Closing balance
Commitment to purchase and build long-term 3,585,319,049.57
assets
Unused letter of credit issued 6,351,652,193.39
Letter of guarantee not due for payment 258,707,203.30
As of the balance sheet date, the future potential cash outflows of the leases that the
company has committed as a lessee but has not yet started are as follows:
Item Closing balance
Undiscounted lease payments:
Thereafter 16,306,039.39
Total 100,679,544.20
(1). Important contingencies existing on the balance sheet date
(2). The company has no important contingencies that need to be disclosed, and it should also
be explained:
None
For bank acceptance bills that have been discounted or endorsed and have not yet expired on
the balance sheet date, please refer to the description of “Receivables financing” in the note.
XV. Event after balance sheet date
XVI. Other significant events
(1). Basis for determining the reporting segment and accounting policies
According to the Company's internal organizational structure, management requirements and
internal reporting system, the Company mainly operates in three business segments:
petrochemical business segment, polyester business segment, headquarters and other business
segments, the Company's management evaluate the operating results of these segments to
determine the allocation of resources and evaluate their performance.
Segment report information is disclosed based on the accounting policies and measurement
standards adopted by each segment when reporting to management. These measurement bases
are consistent with the accounting and measurement bases used in the preparation of financial
statements.
(2). Reporting of segment information
Unit: ten thousand yuan Currency: RMB
Item Petrochemical Polyester Headquarters Elimination Total
segment segment and other between
business segments
segment
Segment 20,002,780.09 3,307,905.14 8,782,427.32 9,855,853.18 22,237,259.37
revenue
Including: 12,396,936.70 3,174,600.33 6,665,722.34 - 22,237,259.37
External
revenue
Inter- 7,605,843.39 133,304.81 2,116,704.98 9,855,853.18 -
segment
sales
Segment 18,497,683.73 3,059,980.52 8,720,572.13 9,870,476.67 20,407,759.71
cost
Segment 162,634.06 57,386.84 494,678.61 473,741.65 240,957.86
profit (loss)
Total assets 19,434,851.59 5,499,569.99 6,044,066.56 6,835,440.68 24,143,047.46
Total 14,632,611.18 4,341,447.85 2,068,940.61 2,191,991.14 18,851,008.50
liabilities
(3). If the company has no reportable segment, or cannot disclose the total assets and total
liabilities of each reportable segment, the reasons shall be explained
(4). Other note
Jianhua, Fan Hongwei
Pledgor Pledgee Pledge period Number of pledged
shares
Hengli Group Co., Hua Xia Bank Co., Ltd. 2021/10/25-2024/10/21
Ltd. Suzhou Branch
Hengli Group Co., China Everbright 2020/7/3-2023/6/23
Ltd. Bank Co., Ltd. 35,000,000.00
Wujiang Sub-branch
Hengli Group Co., CNCB Wealth 2022/3/28-2023/3/30
Ltd. Management Co., 48,000,000.00
Ltd.
Hengli Group Co., Zheshang Bank Co., 2022/4/21-2023/4/30
Ltd. Ltd. Suzhou Wujiang 29,000,000.00
Sub-branch
Hengli Group Co., CNCB Wealth 2022/4/28-2023/4/28
Ltd. Management Co., 49,000,000.00
Ltd.
Hengli Group Co., Hua Xia Bank Co., Ltd. 2022/10/11-2024/10/21
Ltd. Suzhou Branch
Hengli Group Co., China Minsheng [Note ]
Ltd. Bank Co., Ltd.
[Note ] The share pledge of Hengli Group is mainly used to provide pledge guarantee for the
trust plan established by employees of Hengli Group and its related subsidiaries. The specific
pledge expiration date is subject to the actual pledge cancellation registration procedures.
(1) For the original book value, accumulated depreciation and impairment provision of various
right-of-use assets, please refer to the note of "Right-of-Use Assets".
(2)Interest expense on lease liabilities
Unit: Yuan
Item Current year
Interest on lease liabilities included in financial
expenses
(3)Total cash outflow related to leases
Unit: Yuan
Item Current year
Cash paid to repay the principal and interest of
lease liabilities
Cash paid for sale and leaseback 164,012,173.61
Total 193,495,397.24
(4)Gain and loss arising from sale and leaseback transactions
Unit: Yuan
Item Current year
Gain and loss arising from sale and leaseback
transactions
(1)Operating leases
Unit: Yuan
Item Current year
Rental income 20,261,435.88
XVII. Notes on important items of parent company's financial statements
Presented by item
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Interest receivable
Dividends receivable 800,000,000.00 1,200,000,000.00
Other receivables 11,162,769.45 3,854,808.69
Total 811,162,769.45 1,203,854,808.69
Interest receivable
(4). Dividends receivable
Unit: Yuan Currency: RMB
Item (or Investee) Closing balance Beginning balance
Subtotal of book balance 800,000,000.00 1,200,000,000.00
Less: Provision for bad debts - -
Total 800,000,000.00 1,200,000,000.00
(5). Important dividends receivable aged over 1 year
(6). Information of provision for bad debts
Other receivables
(1). Disclosure by ageing
Unit: Yuan Currency: RMB
Ageing Book balance at year end
Within one year
Including: Within one year
Within one year 11,723,262.09
Subtotal of within one year 11,723,262.09
Over 3 years
Over 5 years 362,040.00
Less: Provision for bad debts 1,003,274.04
Total 11,162,769.45
(2). Disclosure by nature
Unit: Yuan Currency: RMB
Nature Book balance at year end Book balance in beginning
of year
Current accounts - -
Deposits and security deposits 456,931.40 459,581.40
Others 11,709,112.09 4,296,312.25
Less: Provision for bad debts 1,003,274.04 901,084.96
Total 11,162,769.45 3,854,808.69
(3). Information of provision for bad debts
Unit: Yuan Currency: RMB
Provision for bad First stage Second stage Third stage Total
debts
Expected Expected credit Expected credit
credit loss loss for lifetime (no loss for lifetime
within next 12 credit impairment (credit impairment
months occurred) has occurred)
Balance of 1 - 901,084.96 - 901,084.96
January 2022
Balance of 1
January 2022 - - - -
during the period
--transfer to
- - - -
second stage
--transfer to third
- - - -
stage
--Reverse to
- - - -
second stage
--Reverse to first
- - - -
stage
Provision for the
- 102,189.08 - 102,189.08
year
Reversal in the
- - - -
year
Transfer in the
- - - -
year
Write-off in the
- - - -
year
Other movement - - - -
Balance of 31
December 2021
(4). Provision for bad debts
Unit: Yuan Currency: RMB
Beginning Closing
Category Movement in the year
balance balance
Recovery Transfer
Other
Accrual or or written-
movement
reversal off
Provision 901,084.96 102,189.08 - - - 1,003,274.04
for bad
debts on
portfolio
basis
Total 901,084.96 102,189.08 1,003,274.04
(5). Actual written-off of other receivables in the year
(6). Other receivables due from the top five debtors
The Company’s top five year-end balances of other receivables in total is RMB12,111,222.08,
accounting for 99.55% of the total year end balance of other receivables, and the corresponding
year-end balance of provision for bad debts is RMB999,491.29.
(7). Receivables involving government grants
(8). Other receivables derecognized due to transfer of financial assets
(9). Amount of assets and liabilities formed by continued involvement on transferred other
receivables
Unit: Yuan Currency: RMB
Item Closing balance Beginning balance
Provisio Provisio
n for Carrying Book n for Carrying
Book balance
impairm amount balance impairm amount
ent ent
Investm 43,317,275,7 43,317,275,7
ent in 44,316,275,7 44,316,275,7 04.93 04.93
subsidia 04.93 04.93
ries
Investm
ent in
associat
es and
joint
ventures
Total -
(1). Investment in subsidiaries
Unit: Yuan Currency: RMB
Closing
Provisio balance
n for of
Beginning Closing
Investee Increase Decrease impairm provisio
balance balance
ent in n for
the year impairm
ent
Jiangsu 10,808,919,00 10,808,919,00 - -
Hengli 0.00 0.00
Chemical - -
Fiber Co.,
Ltd.
Kanghui 937,601,065. 1,937,601,065 - -
New 09 .09
Material -
Technolog
y Co., Ltd.
Suzhou 1,000,000.00 - - -
Qianliyan
Logistics -
Technolog
y Co., Ltd.
Suzhou 2,000,000.00 2,000,000.00 - -
Textile
Group
Network - -
E-
commerc
e Co., Ltd.
Hengli 4,619,719,782. 4,619,719,782. - -
Petroche 89 89
mical
- -
(Dalian)
Chemical
Co., Ltd.
Hengli 17,516,472,09 17,516,472,09 - -
Petroche 3.22 3.22
mical
- -
(Dalian)
Refining
Co., Ltd.
Hengli 9,381,563,763
Investmen .73 9,381,563,763
- -
t (Dalian) .73
Co., Ltd.
Hengli 50,000,000.0
Petroche 0
mical - -
Sales Co.,
Ltd.
Suzhou
Plastic
Group
Network - - -
E-
commerc
e Co., Ltd.
Total
(2). Investment in associates and joint ventures
(1). Operating income and operating cost
Unit: Yuan Currency: RMB
Item Current year Prior year
Revenue Cost Revenue Cost
Primary operations - - - -
Other operations 1,633,324.64 1,270,659.72 2,310,851.89 952,994.79
Total 1,633,324.64 1,270,659.72 2,310,851.89 952,994.79
Unit: Yuan Currency: RMB
Item Current year Prior year
Income from long-term equity
investment by cost method
Income from long-term equity
investment by equity method
Gain from disposal of long-term
-422,352.37
equity investment
Investment income of financial
assets held for trading during the
holding period
Investment income of other equity
instruments investment during the
holding period
Interest income from debts
investment during the holding period
Interest income from other debt
investments during the holding
period
Gain from disposal of Financial
assets held for trading
Investment income from disposal of
other equity instruments investment
Gains from disposal of debts
investment
Gain from disposal of other debt
investments
Gains from debt restructuring
Total 6,022,872,521.63 8,420,000,000.00
XVIII. Supplement information
Unit: Yuan Currency: RMB
Item Amount Note
Gain or loss on disposal of non-current
-8,794,093.17
assets
Overridden approval, or without official
approval document, or incidental tax
return or exemption
Government grants that are included in
the profit and loss (closely related to the
business of the enterprise, except for
government grants that are subject to 1,594,250,334.30
fixed or quantitative quotas in
accordance with national unified
standards)
The capital occupation fee charged to
non-financial enterprises included in
profit or loss for the current period
Gain on investment costs in acquisition of
subsidiaries, associates and joint venture
less than the fair value of identifiable net
assets of the investees
Gain or loss from exchanging non-
monetary assets
Gain or loss from entrusting others to
invest or manage assets
Provision for impairment arising from
force majeure such as natural disasters
Gain or loss on debt restructuring
Enterprise restructuring costs, such as
the cost of relocating employees,
integration costs, etc.
Profit and loss exceeding the Fair value
from a transaction whose transaction
price is obviously unfair
Net profit of subsidiaries for the period
from beginning of the year to date of
acquisition by business combination
under common control
Gain or loss arising from contingencies
that is unrelated to normal business of
the Group
Except for the effective hedging
business related to the Company's
normal business operations, income from
the holding of trading financial assets,
Derivative financial assets, Trading
financial liabilities, and derivative financial
liabilities generates changes in fair value -46,001,895.50
gains and losses, and the disposal of
Trading financial assets, Derivative
financial assets, Trading Investment
income from financial liabilities, derivative
financial liabilities and other debt
investments
Reversal of provision for impairment of
receivables and contract assets that are
individually tested for impairment
Gain on entrusted loans to external
parties
Gain or loss from fluctuation in fair value
of investment property which is
measured at fair value
Effects on current gain or loss from one-
off adjustment on current gain or loss
according requirements in laws and
regulations of tax or accounting
Trustee fee income acquired from
entrusted business
Other non-operating income/(expenses),
net
Other gain or loss items met the definition
of non-recurring item
Less: Impact on income tax 360,240,063.26
Impact on minority interests -
Total 1,273,018,054.78
For the non-recurring profit and loss items defined by the company in accordance with the
"Interpretive Announcement No. 1 on Information Disclosure of Companies Offering Securities to
the Public - Non-recurring Profit and Loss", as well as defining the non-recurring profit and loss
items listed in the "Explanatory Announcement No. 1 on Information Disclosure of Companies
Offering Securities to the Public - Non-recurring Profit and Loss" as recurring profit and loss items,
the reason should be explained.
Weighted
Profit in reporting period average return Earnings per share
on equity (%)
Basic earnings per Diluted earnings per
share share
Net profit attributable to the
Company’s shareholders
Net profit attributable to the
shareholders of the
Company, excluding non-
recurring items
Chairman of the Board: Fan Hongwei
Date of Board Approval and Submission: 28 April 2023
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