Revenue Performance - Total revenue for the year 2022 was RMB 8,817,875,000, a decrease of 7.2% compared to RMB 9,498,708,000 in 2021[1] - The sales volume of ethylene oxide decreased by 0.9% to 372,996 tons in 2022 from 376,464 tons in 2021[1] - Glycol revenue decreased by approximately 28.8% due to a reduction in production capacity, resulting in a sales volume drop of 19.9%[6] - Polypropylene revenue decreased by 21.9%, with an average selling price decline of 1.3% and a sales volume decrease of 20.9%[7] - Revenue for the year ended December 31, 2022, was RMB 8,817,875 thousand, a decrease of 7.2% compared to RMB 9,498,708 thousand in 2021[38] - Total revenue from industrial product sales for 2022 was RMB 8,726,024,000, a decrease of 7.3% from RMB 9,415,116,000 in 2021[64] - Total revenue from processing services increased to RMB 75,751,000 in 2022, up 15.8% from RMB 65,664,000 in 2021[64] - The total revenue from customer contracts for 2022 was RMB 8,801,775,000, down 7.1% from RMB 9,480,780,000 in 2021[73] Profitability and Loss - The company reported a gross loss of RMB 59,704 thousand, compared to a gross profit of RMB 652,585 thousand in the previous year, representing a decline of 109.1%[38] - The net loss attributable to shareholders was RMB 307,880 thousand, a significant decrease of 180.9% from a profit of RMB 380,611 thousand in 2021[38] - Basic loss per share was RMB 26.18, down 180.9% from earnings of RMB 32.36 per share in the prior year[38] - The gross loss margin was (0.7)%, a decline of 7.6% from a gross profit margin of 6.9% in 2021[38] - The company recorded a net loss attributable to shareholders of approximately RMB 307.9 million, with a basic loss per share of about RMB 26.18, representing a decrease of approximately 180.9% compared to the previous year[40] - The company did not recommend a final dividend for the year ended December 31, 2022, due to the recorded net loss[40] - The dividend payout ratio based on total payments for the year was 0%, down from 48.0% in the previous year[38] Financial Position - Cash and bank balances as of December 31, 2022, were approximately RMB 224.6 million, down from RMB 593.7 million in 2021[10] - Interest-bearing borrowings increased to approximately RMB 10,498.7 million in 2022 from RMB 6,249.5 million in 2021, resulting in a debt-to-asset ratio of 57.5%[12] - The company's total liabilities reached RMB 13,932,901 thousand in 2022, compared to RMB 9,537,681 thousand in 2021, indicating a rise of approximately 46.0%[55] - The net asset value decreased to RMB 4,325,695 thousand in 2022 from RMB 4,740,566 thousand in 2021, a decline of about 8.8%[55] - The company's total non-current assets increased to RMB 13,339,478 thousand in 2022 from RMB 10,760,640 thousand in 2021, reflecting a growth of about 24.0%[53] - Current assets rose to RMB 4,919,118 thousand in 2022, up from RMB 3,517,607 thousand in 2021, representing an increase of approximately 39.9%[53] - The group's net current liabilities as of December 31, 2022, were approximately RMB 5,689,703,000[61] Debt and Borrowing - The debt-to-asset ratio increased to 57.5%, up from 43.8% in the previous year, indicating a rise of 13.7%[38] - The company has established a loan agreement with several banks for a total loan amount of RMB 3,160,000,000 to support its production facility expansion[137] - Total bank loans increased significantly to RMB 10,498,651,000 in 2022 from RMB 6,249,548,000 in 2021, marking an increase of about 68.0%[132] - The company has RMB 2,833,614,000 in bank loans secured by collateral in 2022, compared to RMB 993,778,000 in 2021, indicating a significant increase[126] Operational Changes and Future Outlook - The company plans to expand production facilities in the coming years, which may impact the debt-to-asset ratio due to the time lag between construction and profitability[12] - The company expects a significant improvement in gross margin in 2023 due to a favorable market environment and the anticipated commercial operation of the sixth phase ethylene oxide/ethylene glycol production facility[44] - The sixth phase production facility is expected to double the company's market share in the East China region for ethylene oxide/ethylene glycol and lead to an overall revenue increase of over 50%[46] - The company plans to rebalance its raw material composition from the current 20%-10%-70% (ethylene, propylene, and methanol) to a target of 70%-30% (naphtha, ethane, and propane) by the third quarter of 2023[46] - The company anticipates that the one-time events negatively impacting financial performance in 2022, such as impairment provisions and the suspension of the joint venture with Lotte Chemical, are unlikely to recur in the following year[44] Governance and Compliance - The audit committee reviewed the financial reporting processes and internal controls for the year ended December 31, 2022[21] - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange regulations, ensuring compliance throughout the reporting period[19] Employee and Operational Costs - The company employed 1,160 full-time employees as of December 31, 2022, an increase from 1,110 employees in 2021[16] - Employee benefits expenses rose to RMB 103,234 thousand in 2022 from RMB 71,990 thousand in 2021, marking a 43.3% increase[87] - Depreciation of property, plant, and equipment for the year was RMB 488,366 thousand, up from RMB 459,915 thousand in 2021, reflecting a 6.5% increase[87] Other Financial Metrics - The company reported a foreign exchange loss of RMB 125,434,000 in 2022, compared to no loss in 2021[80] - Other income for 2022 totaled RMB 820,149,000, an increase of 32.1% from RMB 620,769,000 in 2021[80] - The average market prices of upstream raw materials, methanol and ethylene, increased by approximately 1.6% and decreased by 2.3% respectively, affecting the pricing dynamics of the company's products[41]

Revenue and Financial Performance - The company's revenue slightly increased by approximately 1.8% during the six months ended June 30, 2022, due to stable average selling prices and production capacity compared to the same period in 2021[6]. - Revenue for the six months ended June 30, 2022, was RMB 4,864,325 thousand, an increase from RMB 4,776,597 thousand in the same period of 2021, representing a growth of approximately 1.84%[27]. - The company reported a significant increase in revenue, achieving a total of 28 million in the first half of 2022, reflecting a growth of 15% year-over-year[142]. - The company expects overall revenue to increase by over 50% following the commercial operation of the new production facilities[9]. - Sales of goods contributed RMB 4,822,234 thousand, up from RMB 4,732,682 thousand, while service revenue slightly increased to RMB 34,564 thousand from RMB 34,312 thousand[68]. Profitability and Loss - The overall gross margin of the group decreased by about 8.8% to approximately 2.0%, with a net loss attributable to shareholders of approximately RMB 627 million, representing a decrease of about 119.1% compared to the same period in 2021[6]. - Gross profit for the same period was RMB 99,160 thousand, significantly down from RMB 517,149 thousand in 2021, indicating a decline of approximately 80.85%[27]. - The company reported a net loss of RMB 75,258 thousand for the period, contrasting with a profit of RMB 350,521 thousand in the same period of 2021[29]. - The net loss attributable to shareholders for the first half of 2022 was RMB 75,258,000, compared to a loss of RMB 61,747,000 in the same period last year[56]. - Basic and diluted loss per share was RMB (5.37), compared to earnings of RMB 27.85 per share in the previous year[27]. Production and Operational Capacity - The company has maintained normal operations and production during the review period, ensuring overall utilization of production facilities[10]. - The company anticipates that the new production facilities for ethylene oxide/ethylene glycol, with an annual capacity of 1,000,000 tons, will be operational in early 2023, potentially doubling its market share in East China[9]. - Ethylene oxide production increased by approximately 4.8% during the review period due to full operational capacity after maintenance in 2021[15]. - Glycol production increased by approximately 2.6%, contributing to revenue growth in this segment[16]. Market Conditions and Demand - The management predicts an improvement in downstream product demand due to the community adapting to the new normal of the COVID-19 pandemic, which is expected to enhance trade, production, and logistics[9]. - The company experienced a decrease in demand from downstream industries due to ongoing COVID-19 measures, affecting overall sales[18]. - The average market prices of upstream raw materials, methanol and ethylene, increased by approximately 12.3% and 12.9% respectively, which exceeded the price increases of the company's main products[7]. Financial Position and Assets - Total current assets increased to RMB 4,652,852 thousand from RMB 3,517,607 thousand, reflecting a growth of approximately 32.26%[22]. - Total current liabilities rose to RMB 9,289,605 thousand, up from RMB 7,539,114 thousand, marking an increase of approximately 23.26%[22]. - The company's total assets as of June 30, 2022, were RMB 4,542,914,000, reflecting a decrease from RMB 4,666,020,000 at the end of the previous period[56]. - Cash and cash equivalents at the end of the period decreased to RMB 342,806 thousand from RMB 593,708 thousand, a decline of approximately 42.24%[32]. Liabilities and Cash Flow - The net cash flow from operating activities was negative RMB 604,775 thousand, compared to a positive RMB 1,055,768 thousand in the prior year[32]. - The total non-current liabilities increased to RMB 2,738,589 thousand from RMB 1,998,567 thousand, representing a rise of approximately 37.01%[24]. - The company maintained a net current liability of approximately RMB 4,636,753,000 as of June 30, 2022, indicating potential liquidity challenges[63]. Employee and Operational Management - The group employed a total of 986 full-time employees as of June 30, 2022, with various employee benefits including housing allowances and stock incentive plans[127]. - Administrative expenses included employee-related costs and various local taxes, impacting overall financial performance[19]. Future Outlook and Strategic Initiatives - The company provided a positive outlook for the second half of 2022, projecting a revenue growth of 10% to 15%[142]. - New product launches are expected to contribute an additional 5 million in revenue by the end of 2022[142]. - The company is investing in new technology development, allocating 2 million for R&D in innovative chemical products[142]. - Market expansion plans include entering two new regions in China, aiming for a 25% increase in market share[142]. - The company is considering strategic acquisitions to enhance its product portfolio, with a budget of 10 million allocated for potential mergers[142]. Compliance and Reporting - The company’s financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, ensuring compliance with local regulations[62]. - The audit committee reviewed the group's interim performance for the six months ended June 30, 2022, ensuring compliance with accounting standards and internal controls[134].

Financial Performance - For the year ended December 31, 2021, China Sanjiang Fine Chemicals Company reported a revenue increase of approximately 14.1% due to a rise in average selling prices of key products, including ethylene oxide, glycol, and polypropylene, which increased by about 8.4% to 37.0%[10] - The overall gross profit margin decreased significantly by approximately 12.3% to about 6.9%, with net profit attributable to shareholders around RMB 381 million, representing a decrease of about 66.1% compared to 2020[10] - The total revenue for the year 2021 was RMB 9,498,708 thousand, representing a 14.1% increase compared to RMB 8,322,716 thousand in 2020[22] - The revenue from ethylene glycol increased by approximately 69.1% in 2021, attributed to increased production capacity, with sales volume rising by 20.7%[26] - The revenue from polypropylene rose by about 15.4%, driven by a 22.9% increase in average selling price, despite a 6.1% decrease in sales volume[27] - The profit attributable to equity shareholders (excluding dividends) for the fiscal year was RMB 380,611,000, a decrease of 66.1% compared to RMB 1,122,931,000 in the previous year[156] Dividend and Shareholder Information - The company proposed a final dividend of HKD 0.06 per share, resulting in a total dividend payout ratio of approximately 48.0% for the year ended December 31, 2021[10] - The interim dividend distributed was HKD 0.125 per share, with the final dividend subject to shareholder approval at the upcoming annual general meeting[37] - As of December 31, 2021, the total issued shares of the company were 1,190,000,000[173] - The company has a significant shareholding structure, with 韩建红 and 管思怡 collectively holding 536,234,000 shares, representing approximately 45.06% of the issued share capital[171] - Sure Capital Holdings Limited holds 516,496,000 shares, accounting for approximately 43.40% of the issued share capital[175] - The board of directors is subject to rotation, with one-third of the directors required to retire at each annual general meeting[164] Production and Operational Efficiency - The company is advancing the construction of a new production facility with an annual capacity of 1,000,000 tons of ethylene oxide/ethylene glycol, expected to commence commercial operations in the second half of 2022, potentially doubling its market share in East China[16] - The company anticipates overall revenue growth of over 50% following the operational launch of the new production facility and its upstream supporting facilities[16] - The company aims to enhance operational efficiency and reduce the impact of external events by positioning itself as a diversified and vertically integrated chemical group[14] - The company has implemented strategies to mitigate various impacts from external events, focusing on maintaining competitive advantages through improved production efficiency[14] - The company continues to operate and produce normally despite disruptions in raw material procurement logistics caused by the COVID-19 pandemic[14] Environmental Impact and Sustainability - The company reported a total wastewater discharge of 404,702 tons in 2021, a decrease from 497,628 tons in 2020, representing a reduction of approximately 18.7%[80] - The industrial water consumption for 2021 was 7,361,900 tons, slightly down from 7,408,780 tons in 2020, indicating a decrease of about 0.6%[80] - The greenhouse gas emissions for Scope 1 were 1,748,460 tons in 2021, compared to 1,715,935 tons in 2020, showing an increase of approximately 1.9%[80] - The company invested RMB 55.7 million in environmental protection in 2021, up from RMB 43.5 million in 2020, reflecting an increase of approximately 28.6%[80] - The harmful waste generated was 2,174 tons in 2021, significantly higher than 266 tons in 2020, indicating a substantial increase[80] - The company is committed to reducing its impact on climate change by optimizing production efficiency and utilizing waste heat for low-pressure steam generation[89] Employee and Workforce Management - The number of full-time employees increased to 1,110 in 2021 from 1,037 in 2020, reflecting the company's growth[36] - Employee turnover rate rose to 9.3% in 2021, compared to 8.4% in 2020, with a notable increase in turnover among employees aged 18-35 to 12.1%[92] - The company provided training to 1,110 employees in 2021, maintaining an average of 96 hours of training for both male and female employees[99] - The total number of employees increased to 1,110 in 2021, up from 1,037 in 2020, with a male to female ratio of 963 to 147[92] Corporate Governance and Compliance - The board of directors believes that good corporate governance strengthens accountability and investor confidence, adhering to the corporate governance code as of December 31, 2021[112] - The board has established various committees, including the Audit Committee, Remuneration Committee, and Nomination Committee, to ensure effective corporate governance[118] - The Audit Committee consists of three independent non-executive directors and is responsible for reviewing the financial reporting process and internal control systems[121] - The board confirmed its responsibility for the preparation of the financial statements for the year ended December 31, 2021, ensuring they present a true and fair view of the group's performance[134] - The company has a zero-tolerance policy against bribery, extortion, fraud, and money laundering, with no known violations reported for the year ending December 31, 2021[110] Supply Chain and Procurement - The number of major suppliers in China (annual procurement amount exceeding RMB 1 million) decreased from 160 in 2020 to 155 in 2021, a decline of approximately 3.1%[103] - The number of overseas suppliers (annual procurement amount exceeding RMB 1 million) decreased from 22 in 2020 to 15 in 2021, a decline of approximately 31.8%[103] - The largest supplier contributed 22.05% to total procurement, with the top five suppliers accounting for 57.60%[183] Market and Pricing Trends - Coal prices increased from approximately RMB 600 per ton at the beginning of 2021 to about RMB 1,000 per ton by September 1, 2021, peaking at around RMB 2,300 per ton on October 15, 2021, before falling to about RMB 1,200 per ton by the end of October[10] - Methanol prices followed a similar trend to coal prices, with fluctuations impacting the overall gross profit margin, as methanol accounts for about 70% of the company's current raw material procurement[10] - Ethylene and propylene prices increased by approximately 38.9% and 27.2% respectively compared to 2020, driven by weather-related shutdowns of key oil cracking plants in the U.S.[14]

[Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) [Overall Business Review](index=4&type=section&id=Overall%20Business%20Review) H1 2021 revenue grew 26.4% from higher product prices, but gross margin fell 5.9% to 10.8% as raw material costs outpaced product price increases, impacting net profit and EPS - China's petrochemical industry faced market challenges due to the COVID-19 pandemic[7](index=7&type=chunk) H1 2021 Key Financial Indicators | Indicator | H1 2021 | H1 2020 | Change | H1 2021 Average Selling Price Increases for Main Products | Product | Average Selling Price Increase | - Gross profit margin declined primarily because raw material price increases (ethylene by **55.4%** and propylene by **40.9%**) outpaced product price increases (ethylene oxide by **7.9%**, ethylene glycol by **29.7%**, and polypropylene by **16.9%**)[8](index=8&type=chunk) - Methanol price increase (**31.2%**) was significantly lower than ethylene and propylene, partially offsetting the adverse impact of their price hikes[8](index=8&type=chunk) [Business Development and Future Outlook](index=5&type=section&id=Business%20Development%20and%20Future%20Outlook) The company is advancing two new production facilities, an ethylene oxide/ethylene glycol plant and a naphtha/ethane/propane-to-ethylene/propylene plant, expected to operate in Q1 and Q4 2022 respectively, aiming to boost capacity, revenue, and long-term gross margin while managing COVID-19 impacts - Construction of the sixth phase ethylene oxide/ethylene glycol production facility is nearing completion, expected to commence commercial operation in Q1 2022, potentially doubling market share in East China and increasing 2022 revenue by over **50%**[10](index=10&type=chunk) - The naphtha/ethane/propane-to-ethylene/propylene production facility is expected to be completed in Q3 2022 and commence commercial operation in Q4 2022, aiming to mitigate raw material price volatility and improve long-term gross profit margin by adjusting feedstock ratios (from 20%-10%-70% to 70%-30%)[11](index=11&type=chunk) - Total capital expenditure for the two new facilities is estimated at approximately **RMB 6.5 billion**, with the gearing ratio projected to peak at **42.0%** by the end of 2021 (compared to **39.4%** as of June 30, 2021)[12](index=12&type=chunk) - The company has implemented stringent measures to address the COVID-19 pandemic, successfully maintaining normal operations and high production facility utilization rates[12](index=12&type=chunk) [Financial Review](index=6&type=section&id=Financial%20Review) This section details H1 2021 revenue, sales volume, average selling price, and gross profit margin across business lines, showing overall revenue growth of 26.4% driven by polypropylene, but declining sales volumes for ethylene oxide and ethylene glycol due to maintenance, and a general decline in gross profit margins for most products due to rising raw material costs, with some improvements in MTBE/C4 and crude pentene H1 2021 Revenue, Sales Volume, Average Selling Price, and Gross Profit Margin by Business Segment | Business Category | H1 2021 Revenue (RMB thousand) | % of Revenue | H1 2020 Revenue (RMB thousand) | % of Revenue | Revenue Change (+/-) | H1 2021 Sales Volume (metric tons) | H1 2020 Sales Volume (metric tons) | Sales Volume Change (+/-) | H1 2021 Average Selling Price (RMB) | H1 2020 Average Selling Price (RMB) | Average Selling Price Change (+/-) | H1 2021 Gross Margin (%) | H1 2020 Gross Margin (%) | Gross Margin Change (+/-) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue (RMB thousand)** | | | | | | | | | | | | | | | | Ethylene Oxide | 1,273,399 | 27% | 1,208,059 | 32% | 5.4% | 190,212 | 201,335 | -5.5% | 6,695 | 6,000 | 11.6% | 13.1% | 22.0% | -8.9% | | Ethylene Glycol | 496,310 | 10% | 404,658 | 11% | 22.6% | 108,690 | 115,899 | -6.2% | 4,566 | 3,491 | 30.8% | 0.2% | 0.3% | -0.1% | | Polypropylene | 2,002,023 | 42% | 1,333,638 | 35% | 50.1% | 273,937 | 204,893 | 33.7% | 7,308 | 6,509 | 12.3% | 10.0% | 18.1% | -8.1% | | Surfactants | 416,876 | 9% | 378,603 | 10% | 10.1% | 52,648 | 52,592 | 0.1% | 7,918 | 7,199 | 10.0% | 10.5% | 27.5% | -17.0% | | MTBE/C4 | 219,540 | 5% | 163,172 | 4% | 34.5% | 45,254 | 46,156 | -2.0% | 4,851 | 3,535 | 37.2% | 11.9% | -12.9% | 24.8% | | Crude Pentene | 176,661 | 4% | 143,396 | 4% | 23.2% | 43,225 | 43,842 | -1.4% | 4,087 | 3,271 | 24.9% | 0.6% | -9.6% | 10.2% | | Polypropylene Processing Services | 13,291 | 0% | 23,418 | 1% | -43.2% | 23,772 | 40,510 | -41.3% | 559 | 578 | -3.3% | 64.8% | 55.0% | 9.8% | | Surfactant Processing Services | 21,021 | 0% | 20,836 | 0% | 0.9% | 70,342 | 71,760 | -2.0% | 229 | 290 | -21.0% | 66.9% | 69.7% | -2.8% | | Others | 157,476 | 3% | 102,520 | 3% | 53.6% | | | | | | | | | | | **Total** | **4,776,597** | **100%** | **3,778,300** | **100%** | **26.4%** | | | | | | | | | | - Ethylene oxide revenue increased by **5.4%**, primarily due to an **11.6%** rise in average selling price, despite a **5.5%** decrease in production volume due to scheduled maintenance[17](index=17&type=chunk) - Ethylene glycol revenue increased by **22.6%**, mainly driven by a **30.8%** increase in average selling price, with production volume decreasing by **6.2%** due to ethylene oxide facility maintenance[18](index=18&type=chunk) - Polypropylene revenue grew by **50.1%**, primarily due to a **12.3%** increase in average selling price and higher production volume (no planned maintenance in 2021)[19](index=19&type=chunk) - Overall gross profit margin decreased by **5.9%**, mainly because raw material price increases (ethylene by **55.4%** and propylene by **40.9%**) outpaced product price increases, with lower methanol price increases partially offsetting the adverse impact[20](index=20&type=chunk) [Unaudited Consolidated Results](index=8&type=section&id=Unaudited%20Consolidated%20Results) [Condensed Consolidated Statement of Financial Position](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2021, total non-current assets grew to RMB 9,381,025 thousand, driven by increases in property, plant, and equipment, while total current assets also rose, but a significant increase in total current liabilities led to an expanded net current liability, with both net assets and total equity showing slight growth Condensed Consolidated Statement of Financial Position Summary (RMB thousand) | Indicator | June 30, 2021 | December 31, 2020 | Change | - Total non-current assets increased by **16.1%** to **RMB 9,381,025 thousand**, primarily due to an increase in property, plant, and equipment[24](index=24&type=chunk) - Net current liabilities expanded from **RMB (2,084,395) thousand** to **RMB (2,848,910) thousand**, reflecting a faster growth in current liabilities than current assets[24](index=24&type=chunk) - Net assets and total equity both showed a slight increase, from **RMB 4,791,691 thousand** to **RMB 4,840,478 thousand**[27](index=27&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2021, the company's revenue increased by 26.4% to RMB 4,776,597 thousand, but a greater increase in cost of sales led to an 18.3% decrease in gross profit, with profit before tax and profit for the period both declining, and profit attributable to owners of the parent decreasing by 12.3%, resulting in basic earnings per share of RMB 27.85 cents, down 11.9% year-on-year Condensed Consolidated Statement of Profit or Loss Summary (RMB thousand) | Indicator | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change | - Revenue increased by **26.4%** year-on-year to **RMB 4,776,597 thousand**[30](index=30&type=chunk) - Gross profit decreased by **18.3%** year-on-year to **RMB 517,149 thousand**, primarily due to a greater increase in cost of sales than revenue[30](index=30&type=chunk) - Profit attributable to owners of the parent decreased by **12.3%** year-on-year to **RMB 327,621 thousand**[30](index=30&type=chunk) - Basic earnings per share were **RMB 27.85 cents**, a year-on-year decrease of **11.9%**[30](index=30&type=chunk) [Condensed Consolidated Statement of Comprehensive Income](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2021, the company's profit for the period was RMB 350,521 thousand, a decrease compared to RMB 380,991 thousand in the same period of 2020, with no other comprehensive income for the period, making total comprehensive income for the period consistent with profit for the period, and total comprehensive income attributable to owners of the parent was RMB 327,621 thousand Condensed Consolidated Statement of Comprehensive Income Summary (RMB thousand) | Indicator | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change | - Profit for the period was **RMB 350,521 thousand**, a year-on-year decrease of **8.0%**[33](index=33&type=chunk) - There was no other comprehensive income for the period, thus total comprehensive income for the period was the same as profit for the period[33](index=33&type=chunk) - Total comprehensive income attributable to owners of the parent was **RMB 327,621 thousand**, a year-on-year decrease of **12.3%**[33](index=33&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash flow from operating activities significantly increased to RMB 1,055,768 thousand, while net cash outflow from investing activities decreased, and net cash inflow from financing activities significantly declined, resulting in a net decrease of RMB 90,001 thousand in cash and cash equivalents for the period, with an ending balance of RMB 683,061 thousand Condensed Consolidated Statement of Cash Flows Summary (RMB thousand) | Indicator | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change | - Net cash flow from operating activities significantly increased by **212.4%** year-on-year to **RMB 1,055,768 thousand**[36](index=36&type=chunk) - Net cash outflow from investing activities decreased by **41.1%** to **RMB (1,523,221) thousand**[36](index=36&type=chunk) - Net cash inflow from financing activities significantly decreased by **82.7%** to **RMB 377,452 thousand**[36](index=36&type=chunk) - Cash and cash equivalents at the end of the period amounted to **RMB 683,061 thousand**, a decrease of **RMB 90,001 thousand** from the beginning of the period[36](index=36&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=13&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2021, equity attributable to owners of the parent increased from RMB 4,712,687 thousand at the beginning of the period to RMB 4,738,574 thousand, primarily due to profit for the period, partially offset by dividends paid and appropriations to safety production reserves, with non-controlling interests also increasing Condensed Consolidated Statement of Changes in Equity Summary (RMB thousand) | Indicator | June 30, 2021 | January 1, 2020 | - Equity attributable to owners of the parent increased from **RMB 4,712,687 thousand** as of January 1, 2021, to **RMB 4,738,574 thousand** as of June 30, 2021[38](index=38&type=chunk) - Profit for the period contributed **RMB 327,621 thousand**, but a final dividend of **RMB 297,402 thousand** for 2020 was paid[38](index=38&type=chunk) - Non-controlling interests increased from **RMB 79,004 thousand** to **RMB 101,904 thousand**[38](index=38&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [1 Company Information](index=14&type=section&id=1%20Company%20Information) The company, incorporated in the Cayman Islands in 2009, primarily engages in the production and supply of ethylene oxide, ethylene glycol, polypropylene, MTBE, and surfactants in China, also offering related processing services and other chemical products with broad industry applications - The company was incorporated as a limited liability company in the Cayman Islands on January 30, 2009[42](index=42&type=chunk) - The Group primarily engages in the production and supply of ethylene oxide, ethylene glycol, polypropylene, MTBE, and surfactants in China[43](index=43&type=chunk) - The Group also provides polypropylene, MTBE, and surfactant processing services, and produces and supplies other chemical products such as C4, crude pentene, and industrial gases[43](index=43&type=chunk) [2.1 Basis of Presentation and Preparation](index=14&type=section&id=2.1%20Basis%20of%20Presentation%20and%20Preparation) The Group's unaudited condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and should be read with the 2020 annual financial statements, presented in RMB under the historical cost convention and reviewed by the audit committee; despite net current liabilities, the Board believes the Group can continue as a going concern due to sufficient operating cash inflows and financing capabilities - The unaudited condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting[44](index=44&type=chunk) - The statements are presented in RMB and have been reviewed by the company's audit committee[44](index=44&type=chunk) - Despite net current liabilities of approximately **RMB 2,848,910,000** as of June 30, 2021, the Board prepared the financial statements on a going concern basis, believing the Group has sufficient funds to meet its debt obligations and capital expenditures[45](index=45&type=chunk) [2.2 Changes in Accounting Policies and Disclosures](index=15&type=section&id=2.2%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) This period saw the initial adoption of revised HKFRSs, including Phase 2 amendments related to interest rate benchmark reform and an extension of COVID-19-related rent concessions, which provide practical expedients for financial reporting impacts when alternative risk-free rates replace existing benchmarks and extend the lessee's practical expedient for rent concessions by 12 months, with no significant impact on the Group's financial position or performance - Phase 2 amendments to HKFRS 9, HKAS 39, HKFRS 7, HKFRS 4, and HKFRS 16 regarding interest rate benchmark reform were adopted for the first time this period[47](index=47&type=chunk) - The interest rate benchmark reform amendments provide practical expedients, allowing the update of effective interest rates without adjusting the carrying amount of financial assets and liabilities under specific conditions, and permitting changes to hedge designations[47](index=47&type=chunk) - Amendments to HKFRS 16 extend the practical expedient for lessees regarding COVID-19-related rent concessions by 12 months[51](index=51&type=chunk) - The aforementioned amendments had no impact on the Group's financial position or performance[48](index=48&type=chunk)[51](index=51&type=chunk) [3 Segment Information](index=16&type=section&id=3%20Segment%20Information) The Group's management views the company as a single reportable operating segment, not segmented by products and services, with all external revenue and non-current assets originating from mainland China; H1 2021 revenue from sales of goods was RMB 4,732,682 thousand, and from rendering of services was RMB 34,312 thousand - The Group has only one reportable operating segment, with management monitoring overall operating results[52](index=52&type=chunk) H1 2021 Revenue by Product and Service Category (RMB thousand) | Category | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Sales of goods | 4,732,682 | 3,729,209 | | Rendering of services | 34,312 | 44,254 | | Others | 9,603 | 4,837 | | **Total** | **4,776,597** | **3,778,300** | - All of the Group's external revenue and non-current assets are derived from within mainland China[54](index=54&type=chunk) [4 Revenue, Other Income and Gains, and Other Expenses](index=17&type=section&id=4%20Revenue,%20Other%20Income%20and%20Gains,%20and%20Other%20Expenses) This section details the company's H1 2021 revenue, other income and gains, and other expenses, where revenue represents the net invoiced value of goods sold, other income and gains primarily include interest/investment income, sales of petroleum and chemical products, and government grants, and other expenses mainly comprise cost of sales for trading petroleum and chemical products and impairment provisions for inventories - Revenue represents the net invoiced value of goods sold, after deducting value-added tax and government surcharges, as well as provisions for returns and trade discounts[57](index=57&type=chunk) H1 2021 Other Income and Gains Analysis (RMB thousand) | Category | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Interest/investment income | 68,699 | 83,967 | | Sales of petroleum and chemical products | 84,261 | 69,640 | | Government grants | 14,133 | 39,290 | | Other rental income | 4,101 | 1,930 | | Net foreign exchange loss | 15,436 | — | | Others | 3,831 | 2,092 | | **Total** | **190,461** | **196,919** | H1 2021 Other Expenses Analysis (RMB thousand) | Category | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Impairment provision for inventories — silver (as part of catalyst) | 180 | 14,244 | | Cost of sales for trading petroleum and chemical products | 73,532 | 61,376 | | Net foreign exchange loss | — | 10,027 | | Investment loss from fair value changes of derivative financial instruments | — | 38,083 | | Others | 142 | 1,280 | | **Total** | **73,854** | **125,010** | - Government grants primarily refer to incentives provided by local governments for the Group's operations in Jiaxing City, Zhejiang Province, China[60](index=60&type=chunk) [5 Finance Costs](index=18&type=section&id=5%20Finance%20Costs) For the six months ended June 30, 2021, the Group's total finance costs increased to RMB 75,218 thousand from RMB 70,499 thousand in the prior year, with interest on bank borrowings accounting for the vast majority at RMB 75,062 thousand H1 2021 Finance Costs Analysis (RMB thousand) | Category | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Interest on bank borrowings | 75,062 | 70,239 | | Interest on lease liabilities | 156 | 260 | | **Total** | **75,218** | **70,499** | - Finance costs increased by **6.7%** year-on-year to **RMB 75,218 thousand**[63](index=63&type=chunk) [6 Profit Before Tax](index=18&type=section&id=6%20Profit%20Before%20Tax) The Group's profit before tax is stated after deducting various costs and expenses, including cost of inventories sold of RMB 4,247,807 thousand, depreciation of property, plant and equipment of RMB 244,499 thousand, depreciation of right-of-use assets of RMB 8,387 thousand, and amortisation of intangible assets of RMB 13,839 thousand for the six months ended June 30, 2021 H1 2021 Profit Before Tax Deductions (RMB thousand) | Category | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Cost of inventories sold | 4,247,807 | 3,204,908 | | Cost of services rendered | 11,641 | 20,395 | | Depreciation of property, plant and equipment | 244,499 | 272,397 | | Depreciation of right-of-use assets | 8,387 | 5,855 | | Amortisation of intangible assets | 13,839 | 14,699 | [7 Income Tax Expense](index=18&type=section&id=7%20Income%20Tax%20Expense) For the six months ended June 30, 2021, the Group's total income tax expense significantly decreased to RMB 39,168 thousand from RMB 79,048 thousand in the prior year, mainly due to reduced current period expenditure; the company is exempt from income tax in the Cayman Islands, subject to a 16.5% profits tax rate in Hong Kong, and its mainland China subsidiaries generally face a 25% corporate income tax rate, with some entities enjoying a preferential 15% rate H1 2021 Income Tax Expense Analysis (RMB thousand) | Category | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Current period expense | 39,914 | 80,596 | | Deferred | (746) | (1,548) | | **Total tax expense for the period** | **39,168** | **79,048** | - Income tax expense decreased by **50.5%** year-on-year to **RMB 39,168 thousand**[66](index=66&type=chunk) - The company is not subject to income tax in the Cayman Islands, and the Hong Kong profits tax rate is **16.5%**[67](index=67&type=chunk) - The applicable corporate income tax rate for mainland China subsidiaries is generally **25%**, with some entities enjoying a preferential tax rate of **15%**[69](index=69&type=chunk) [8 Earnings Per Share Attributable to Owners of the Parent](index=19&type=section&id=8%20Earnings%20Per%20Share%20Attributable%20to%20Owners%20of%20the%20Parent) For the six months ended June 30, 2021, profit attributable to ordinary equity holders of the parent was RMB 327,621 thousand, with both basic and diluted earnings per share at RMB 27.85 cents, a decrease from RMB 31.61 cents in the prior year, calculated based on the weighted average number of ordinary shares outstanding during the period H1 2021 Earnings Per Share Calculation Basis (RMB thousand/thousand shares) | Indicator | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the parent | 327,621 | 373,660 | | Weighted average number of ordinary shares outstanding during the period | 1,176,236 | 1,181,931 | | Dilutive effect — share award scheme | — | — | | **Basic and diluted earnings per share** | **27.85 cents** | **31.61 cents** | - Both basic and diluted earnings per share were **RMB 27.85 cents**, representing a year-on-year decrease of **11.9%**[71](index=71&type=chunk) [9 Dividends](index=20&type=section&id=9%20Dividends) The Board has declared an interim dividend of HK 12.5 cents per share for the six months ended June 30, 2021, totaling RMB 123,793 thousand, consistent with the prior year, and additionally, a final dividend of HK 30.0 cents per share for the 2020 financial year, totaling RMB 297,402 thousand, was approved and paid during the period H1 2021 Dividend Declaration and Payment (RMB thousand) | Category | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Proposed interim dividend (HK 12.5 cents per share) | 123,793 | 133,594 | | Final dividend paid for 2020 (HK 30.0 cents per share) | 297,402 | 218,508 | | Final dividend paid for 2019 (HK 20.0 cents per share) | — | 218,508 | - The Board declared an interim dividend of **HK 12.5 cents per share**, consistent with the same period last year[74](index=74&type=chunk) - A final dividend of **HK 30.0 cents per share** for the 2020 financial year, totaling **RMB 297,402 thousand**, was paid during the period[75](index=75&type=chunk) [10 Financial Assets at Fair Value Through Profit or Loss](index=20&type=section&id=10%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) The Group holds investments in wealth management products issued by certain mainland Chinese banks, which are mandatorily classified as financial assets at fair value through profit or loss because their contractual cash flows are not solely payments of principal and interest - The Group holds investments in wealth management products issued by certain mainland Chinese banks[76](index=76&type=chunk) - These investments are mandatorily classified as financial assets at fair value through profit or loss because their contractual cash flows are not solely payments of principal and interest[76](index=76&type=chunk) [11 Inventories](index=20&type=section&id=11%20Inventories) As of June 30, 2021, the Group's total inventories amounted to RMB 809,423 thousand, a decrease from RMB 948,500 thousand as of December 31, 2020, with raw materials constituting the largest portion at RMB 708,463 thousand and finished goods at RMB 100,960 thousand Inventory Composition (RMB thousand) | Category | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Raw materials | 708,463 | 863,161 | | Finished goods | 100,960 | 85,339 | | **Total** | **809,423** | **948,500** | - Total inventories decreased by **14.6%** year-on-year to **RMB 809,423 thousand**[77](index=77&type=chunk) [12 Trade and Bills Receivables](index=21&type=section&id=12%20Trade%20and%20Bills%20Receivables) As of June 30, 2021, the Group's total trade and bills receivables significantly increased to RMB 393,354 thousand from RMB 249,056 thousand as of December 31, 2020, with bills receivables being the largest component; credit terms generally range from 15 to 30 days, extending up to three months, and the Group strictly monitors outstanding receivables and regularly reviews overdue balances Trade and Bills Receivables Composition (RMB thousand) | Category | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Trade receivables | 56,384 | 52,157 | | Bills receivables | 347,853 | 207,937 | | Impairment | (10,883) | (11,038) | | **Total** | **393,354** | **249,056** | - Total trade and bills receivables increased by **57.9%** year-on-year to **RMB 393,354 thousand**[79](index=79&type=chunk) - Credit terms generally range from **15 to 30 days**, with some customers extending up to **three months**, and bills receivables mature within **six months**[79](index=79&type=chunk) Trade Receivables Ageing Analysis (RMB thousand) | Ageing | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | 1 to 30 days | 41,537 | 40,593 | | 31 to 60 days | 11 | 905 | | 61 to 90 days | 1,521 | 367 | | 91 to 360 days | 3,251 | 475 | | Over 360 days | 10,064 | 9,817 | [13 Cash and Cash Equivalents and Pledged Deposits](index=22&type=section&id=13%20Cash%20and%20Cash%20Equivalents%20and%20Pledged%20Deposits) As of June 30, 2021, the Group's cash and cash equivalents totaled RMB 683,061 thousand, with pledged deposits amounting to RMB 1,227,000 thousand, primarily for bills payable and bank loan collateral; time deposits earn interest at relevant short-term rates, and all deposits are held with reputable banks Cash and Cash Equivalents and Pledged Deposits (RMB thousand) | Category | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and bank balances | 683,061 | 775,849 | | Time deposits | 1,227,000 | 767,338 | | **Total** | **1,910,061** | **1,543,187** | | Less: Pledged time deposits | | | | Pledged for bills payable | 1,002,000 | 298,736 | | Pledged for bank loans | 225,000 | 468,602 | | **Total pledged time deposits** | **1,227,000** | **767,338** | | **Cash and cash equivalents** | **683,061** | **775,849** | - Total pledged deposits increased from **RMB 767,338 thousand** to **RMB 1,227,000 thousand**, primarily for bills payable collateral[82](index=82&type=chunk) - Bank cash earns interest at floating rates, and pledged short-term time deposits have maturity periods consistent with the related pledged bills payable, letters of credit, and bank loans[82](index=82&type=chunk) [14 Trade and Bills Payables](index=23&type=section&id=14%20Trade%20and%20Bills%20Payables) As of June 30, 2021, the Group's total trade and bills payables significantly increased to RMB 1,615,646 thousand from RMB 961,017 thousand as of December 31, 2020, with a notable rise in bills payable; trade payables are interest-free with an average credit period of three months, and all bills payable mature within one year Trade and Bills Payables Composition (RMB thousand) | Category | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Trade payables | 635,266 | 474,233 | | Bills payables | 980,380 | 486,784 | | **Total** | **1,615,646** | **961,017** | - Total trade and bills payables increased by **68.1%** year-on-year to **RMB 1,615,646 thousand**[84](index=84&type=chunk) Trade and Bills Payables Ageing Analysis (RMB thousand) | Ageing | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Within 3 months | 1,103,143 | 708,540 | | 3 to 6 months | 504,683 | 242,400 | | 6 to 12 months | 5,103 | 6,973 | | 12 to 24 months | 2,159 | 1,783 | | 24 to 36 months | 6 | 782 | | Over 36 months | 552 | 539 | | **Total** | **1,615,646** | **961,017** | - Trade payables are interest-free with an average credit period of **three months**, and all bills payable mature within **one year**[84](index=84&type=chunk) [15 Interest-Bearing Bank Borrowings](index=24&type=section&id=15%20Interest-Bearing%20Bank%20Borrowings) As of June 30, 2021, the Group's total interest-bearing bank borrowings increased to RMB 4,955,512 thousand from December 31, 2020, with RMB 3,303,512 thousand repayable within one year; borrowings are secured by various assets including leasehold land, property, plant and equipment, financial assets, and pledged deposits, and are guaranteed by related parties, with the company also entering into a RMB 3,160,000 thousand syndicated loan agreement for a new ethylene oxide/ethylene glycol production facility Interest-Bearing Bank Borrowings Analysis (RMB thousand) | Category | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Current** | | | | Bank loans — secured | 250,000 | 100,000 | | Bank loans — unsecured | 969,511 | 1,599,591 | | Discounted bills receivables | 473,000 | 879,301 | | Discounted letters of credit | 1,301,001 | 456,987 | | **Total current** | **3,303,512** | **3,035,889** | | **Non-current** | | | | Bank loans — secured | 1,652,000 | 1,162,000 | | **Total non-current** | **1,652,000** | **1,162,000** | | **Total** | **4,955,512** | **4,197,889** | | **Analysis of bank loans repayable** | | | | Within one year | 3,303,512 | 3,035,889 | | In the third to fifth year | 872,000 | — | | Over five years | 780,000 | 1,162,000 | - Total interest-bearing bank borrowings increased from **RMB 4,197,889 thousand** to **RMB 4,955,512 thousand**[87](index=87&type=chunk) - Borrowings are secured by leasehold land, property, plant and equipment, financial assets at fair value through profit or loss, and pledged deposits, among others[89](index=89&type=chunk) - Some borrowings are guaranteed by Lotte Chemical Corporation and related company Hangzhou Haoming Investment Co, Ltd[89](index=89&type=chunk) - The Group has entered into a syndicated loan agreement for **RMB 3,160,000 thousand** to construct additional ethylene oxide/ethylene glycol production facilities, of which **RMB 1,652,000 thousand** has been drawn down[90](index=90&type=chunk) [16 Amounts Due from Related Parties](index=26&type=section&id=16%20Amounts%20Due%20from%20Related%20Parties) As of June 30, 2021, the Group's total amounts due from related parties were RMB 570,142 thousand, primarily from Zhejiang Meifu Petrochemical Co, Ltd, and these amounts are unsecured, interest-free, and repayable on demand Amounts Due from Related Parties (RMB thousand) | Related Party | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Sure Capital Holdings Limited | 1 | 1 | | Zhejiang Meifu Petrochemical Co, Ltd | 569,721 | 593,713 | | Zhejiang Jiahua Import and Export Co, Ltd | 376 | 320 | | Jiaxing Hangzhou Bay Petrochemical Logistics Co, Ltd | 44 | 100 | | **Total** | **570,142** | **595,138** | - Total amounts due from related parties were **RMB 570,142 thousand**, primarily from Zhejiang Meifu Petrochemical Co, Ltd[93](index=93&type=chunk) - Balances due from related parties are unsecured, interest-free, and repayable on demand[95](index=95&type=chunk) [17 Amounts Due to Related Parties](index=26&type=section&id=17%20Amounts%20Due%20to%20Related%20Parties) As of June 30, 2021, the Group's total amounts due to related parties significantly increased to RMB 130,263 thousand from December 31, 2020, primarily owed to Zhejiang Jiahua Energy Chemical Co, Ltd and Haoxin Development Limited, and these amounts are also unsecured, interest-free, and repayable on demand Amounts Due to Related Parties (RMB thousand) | Related Party | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Zhejiang Jiahua Energy Chemical Co, Ltd | 90,002 | 47,997 | | Zhejiang Zhapu Meifu Terminal Storage Co, Ltd | 9,319 | 8,454 | | Jiaxing Hangzhou Bay Petrochemical Logistics Co, Ltd | 3,281 | 4,010 | | Haoxin Development Limited | 20,128 | 2,209 | | Zhejiang Jiahua Group Co, Ltd | 78 | 711 | | Jiaxing Xinggang Heat Network Co, Ltd | 670 | 388 | | Zhejiang Haoxing Energy Saving Technology Co, Ltd | 3,010 | 1,136 | | Jiaxing Port Area Gangan Industrial Equipment Installation Co, Ltd | 3,176 | 1,567 | | Zhejiang Jiafu New Material Technology Co, Ltd | 525 | 300 | | Jiaxing Zhapu Construction Investment Co, Ltd | 63 | 63 | | Jiaxing Jianghao Ecological Agriculture Co, Ltd | 11 | 140 | | **Total** | **130,263** | **67,203** | - Total amounts due to related parties increased by **93.8%** year-on-year to **RMB 130,263 thousand**[96](index=96&type=chunk) - Balances due to related parties are unsecured, interest-free, and repayable on demand[97](index=97&type=chunk) [Other Information](index=27&type=section&id=Other%20Information) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company and its Associated Corporations](index=27&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares,%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20and%20its%20Associated%20Corporations) As of June 30, 2021, Ms Han Jianhong and Ms Guan Siyi held approximately 44.22% interest in the company's shares, primarily through trust and corporate interests, while Mr Rao Huatao and Ms Chen Xian held minor personal interests; additionally, Ms Han and Ms Guan held approximately 42.56% interest in associated corporation Sure Capital Directors' Interests in the Company's Shares (June 30, 2021) | Director Name | Personal Interest | Family Interest (Number of Shares) | Trust/Corporate Interest (Number of Shares) | Total (Number of Shares) | Approximate % of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | | Han Jianhong | — | 19,738,000 | 506,451,000 | 526,189,000 | 44.22% | | Rao Huatao | 225,000 | — | — | 225,000 | 0.02% | | Guan Siyi | — | 19,738,000 | 506,451,000 | 526,189,000 | 44.22% | | Chen Xian | 1,631,000 | — | — | 1,631,000 | 0.14% | - Ms Han Jianhong's and Ms Guan Siyi's interests are primarily held through Sure Capital Holdings Limited, which is wholly owned by Yihao Development Limited and held by Yihao Trust[98](index=98&type=chunk)[104](index=104&type=chunk) Directors' Interests in Shares of Associated Corporations of the Company (June 30, 2021) | Director Name | Name of Associated Corporation | Personal Interest | Family Interest (Number of Shares) | Trust/Corporate Interest (Number of Shares) | Total (Number of Shares) | Approximate % of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | | Ms Han | Sure Capital | — | — | 506,451,000 | 42.56% | | Ms Guan | Sure Capital | — | — | 506,451,000 | 42.56% | [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company](index=28&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2021, Vistra Trust (Singapore) Pte Ltd, Yihao Development Limited, and Sure Capital Holdings Limited were all listed as substantial shareholders, each holding 506,451,000 shares, representing approximately 42.56% of the issued share capital, with all these interests held through trusts and controlled corporations Substantial Shareholders' Interests in the Company's Shares (June 30, 2021) | Shareholder Name | Capacity | Number of Shares | Approximate % of Issued Share Capital | | :--- | :--- | :--- | :--- | | Vistra Trust (Singapore) Pte. Ltd | Trustee | 506,451,000 | 42.56% | | Yihao Development Limited | Interest of controlled corporation | 506,451,000 | 42.56% | | Sure Capital | Interest of controlled corporation | 506,451,000 | 42.56% | - Vistra Trust (Singapore) Pte Ltd, Yihao Development Limited, and Sure Capital Holdings Limited all hold the same number of shares, with identical sources of interest, all held through Yihao Trust[106](index=106&type=chunk) [Changes in Directors' Information](index=29&type=section&id=Changes%20in%20Directors'%20Information) As of the report date, Ms Guan Siyi and Ms Chen Xian were appointed as executive directors, effective August 26, 2021, with no other significant changes to directors' information since the date of the last annual report - Ms Guan Siyi and Ms Chen Xian were appointed as executive directors, effective August 26, 2021[109](index=109&type=chunk) - Apart from the aforementioned changes, there have been no other significant changes to directors' information since the date of the last annual report for the year ended December 31, 2020[109](index=109&type=chunk) [Capital Commitments](index=29&type=section&id=Capital%20Commitments) As of June 30, 2021, the Group's capital commitments amounted to approximately RMB 4,309.9 million, primarily for the construction of additional production capacity, purchase of plant and machinery, and regular maintenance and upkeep - As of June 30, 2021, the Group's capital commitments amounted to approximately **RMB 4,309.9 million**[110](index=110&type=chunk) - Capital commitments are primarily related to the purchase of plant and machinery for additional production capacity and regular maintenance and upkeep[110](index=110&type=chunk) [Contingent Liabilities](index=29&type=section&id=Contingent%20Liabilities) As of June 30, 2021, the Group had no significant contingent liabilities that were not provided for in the financial statements - As of June 30, 2021, the Group had no significant contingent liabilities that were not provided for in the financial statements[111](index=111&type=chunk) [Employees and Remuneration Policy](index=29&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2021, the Group employed a total of 1,006 full-time employees, with employee benefits including housing subsidies, bonuses, and social security contributions; the Remuneration Committee annually reviews remuneration packages, and executive directors receive emoluments in the form of salaries, bonuses, and other allowances - As of June 30, 2021, the Group employed a total of **1,006** full-time employees[112](index=112&type=chunk) - Employee benefits include housing subsidies, shift allowances, bonuses, allowances, medical examinations, staff accommodation, social security contributions, housing provident fund contributions, and a share award scheme[112](index=112&type=chunk) - The Remuneration Committee reviews remuneration packages annually or as needed, and executive directors receive emoluments in the form of salaries, bonuses, and other allowances[112](index=112&type=chunk) [Liquidity and Financial Resources](index=29&type=section&id=Liquidity%20and%20Financial%20Resources) The Group's gearing ratio was 39.4% as of June 30, 2021, a slight increase from 38.1% as of December 31, 2020, but still well below the 66.7% guideline ceiling; inventory turnover days, trade and bills receivables turnover days remained low, and trade and bills payables turnover days remained at a similar level - The Group's gearing ratio (total interest-bearing borrowings to total assets) was **39.4%** as of June 30, 2021, compared to **38.1%** as of December 31, 2020[113](index=113&type=chunk) - Management believes this ratio is a better measure than total interest-bearing borrowings to total equity, given the rapid expansion of multiple production facilities in the coming years[113](index=113&type=chunk) Turnover Days Indicators | Indicator | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Inventory turnover days | 37.8 days | 49.6 days | | Trade and bills receivables turnover days | 12.3 days | 17.9 days | | Trade and bills payables turnover days | 55.4 days | 51.4 days | [Interim Dividend](index=29&type=section&id=Interim%20Dividend) The Board has declared an interim dividend of HK 12.5 cents per share for the six months ended June 30, 2021, payable on September 24, 2021, to shareholders on the register of members as of September 17, 2021 - The Board has declared an interim dividend of **HK 12.5 cents per share** for the six months ended June 30, 2021[115](index=115&type=chunk) - The interim dividend will be paid on September 24, 2021, to shareholders on the register of members as of September 17, 2021[115](index=115&type=chunk) [Closure of Register of Members](index=30&type=section&id=Closure%20of%20Register%20of%20Members) To determine eligible shareholders for the interim dividend, the company will suspend its share transfer registration from September 16 to September 17, 2021, inclusive, with all transfer documents required to be lodged by 4:30 p.m. on September 15, 2021, with the share registrar - The company will suspend its share transfer registration from September 16 to September 17, 2021 (both days inclusive)[118](index=118&type=chunk) - To be eligible for the interim dividend, all transfer documents, accompanied by the relevant share certificates, must be lodged with Tricor Investor Services Limited by **4:30 p.m.** on September 15, 2021[118](index=118&type=chunk) [Corporate Governance](index=30&type=section&id=Corporate%20Governance) The company has adopted the Corporate Governance Code as set out in Appendix 14 of the HKEX Listing Rules and confirms its compliance with all code provisions for the six months ended June 30, 2021, up to the date of this report - The company has adopted the code provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[119](index=119&type=chunk) - The Board believes that the company has complied with all code provisions of the Corporate Governance Code for the six months ended June 30, 2021, up to the date of this report[119](index=119&type=chunk) [Standard of Dealings in Securities by Directors](index=30&type=section&id=Standard%20of%20Dealings%20in%20Securities%20by%20Directors) The company has adopted the Model Code set out in Appendix 10 of the Listing Rules as the standard for directors and senior management to deal in securities, and all directors confirm their compliance with the Model Code throughout the review period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules[120](index=120&type=chunk) - All directors confirm their compliance with the Model Code throughout the six months ended June 30, 2021, up to the date of this report[120](index=120&type=chunk) [Audit Committee](index=30&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors with Shen Kaijun as Chairman, is responsible for reviewing and overseeing financial reporting processes and internal control systems, and has reviewed the Group's interim results for the six months ended June 30, 2021 - The Audit Committee comprises three independent non-executive directors: Shen Kaijun (Chairman), Kong Liang, and Pei Yu[121](index=121&type=chunk) - Its primary responsibilities include reviewing and overseeing the Group's financial reporting processes and internal control systems, nominating and monitoring external auditors, and providing advice and recommendations to the Board[121](index=121&type=chunk) - The Audit Committee has reviewed the Group's interim results for the six months ended June 30, 2021[121](index=121&type=chunk) [Remuneration Committee](index=30&type=section&id=Remuneration%20Committee) The Remuneration Committee, composed of Pei Yu (Chairman), Han Jianhong, and Kong Liang, is tasked with evaluating the performance of directors and senior management, making recommendations on their remuneration, and assessing the share award scheme - The Remuneration Committee comprises three members: Pei Yu (Chairman, Independent Non-executive Director), Han Jianhong (Chairman of the Board and Executive Director), and Kong Liang (Independent Non-executive Director)[122](index=122&type=chunk) - Its primary responsibilities include evaluating the performance of directors and senior management and making recommendations on their remuneration packages, as well as assessing the company's share award scheme[122](index=122&type=chunk) [Nomination Committee](index=30&type=section&id=Nomination%20Committee) The Nomination Committee, consisting of Han Jianhong (Chairman), Shen Kaijun, and Ms Pei Yu, is responsible for considering and recommending Board members and regularly reviewing the Board's structure, size, and composition - The Nomination Committee comprises three members: Han Jianhong (Chairman, Chairman of the Board and Executive Director), Shen Kaijun (Independent Non-executive Director), and Pei Yu (Independent Non-executive Director)[123](index=123&type=chunk) - Its primary responsibilities include considering and recommending suitable and qualified individuals for Board membership, and regularly reviewing the Board's structure, size, and composition[123](index=123&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=31&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the six months ended June 30, 2021, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the review period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[125](index=125&type=chunk) [Publication of Interim Report on HKEX and Company Website](index=31&type=section&id=Publication%20of%20Interim%20Report%20on%20HKEX%20and%20Company%20Website) The company's interim report for the six months ended June 30, 2021, will be dispatched to shareholders in due course and simultaneously published on the HKEX website (www.hkex.com.hk) and the company's website (www.chinasanjiang.com) - The company's interim report for the six months ended June 30, 2021, will be dispatched to shareholders[126](index=126&type=chunk) - The interim report will be published on the HKEX website (www.hkex.com.hk) and the company's website (www.chinasanjiang.com)[126](index=126&type=chunk) [Company Information](index=32&type=section&id=Company%20Information) [Board of Directors](index=32&type=section&id=Board%20of%20Directors) The company's Board of Directors comprises executive directors Han Jianhong (Chairman), Rao Huatao, Guan Siyi, and Chen Xian, along with independent non-executive directors Shen Kaijun, Pei Yu, and Kong Liang - Executive Directors include Han Jianhong (Chairman), Rao Huatao, Guan Siyi (appointed August 26, 2021), and Chen Xian (appointed August 26, 2021)[129](index=129&type=chunk) - Independent Non-executive Directors include Shen Kaijun, Pei Yu, and Kong Liang[129](index=129&type=chunk) [Company Secretary](index=32&type=section&id=Company%20Secretary) The company's Company Secretary is Ip Ngai Hang (a Hong Kong practicing accountant) - The Company Secretary is Ip Ngai Hang (a Hong Kong practicing accountant)[129](index=129&type=chunk) [Stock Listing Information](index=32&type=section&id=Stock%20Listing%20Information) The company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited under stock code 2198 - Shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited, stock code **2198**[129](index=129&type=chunk) [Auditor](index=32&type=section&id=Auditor) The company's auditor is Ernst & Young, located at 18th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong - The auditor is Ernst & Young, located at 18th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong[129](index=129&type=chunk) [Legal Adviser](index=32&type=section&id=Legal%20Adviser) The company's Hong Kong legal adviser is Withers, located at 30th Floor, United Centre, 95 Queensway, Hong Kong - The Hong Kong legal adviser is Withers, located at 30th Floor, United Centre, 95 Queensway, Hong Kong[129](index=129&type=chunk) [Principal Place of Business and Headquarters](index=32&type=section&id=Principal%20Place%20of%20Business%20and%20Headquarters) The company's principal place of business and headquarters in China is located at Pinghai Road, Jiaxing Port Area, Zhejiang Province, China, and its principal place of business in Hong Kong is Unit 1702, Infinitus Plaza, 199 Des Voeux Road Central, Sheung Wan, Hong Kong - China Principal Place of Business and Headquarters: Pinghai Road, Jiaxing Port Area, Zhejiang Province, China[129](index=129&type=chunk) - Hong Kong Principal Place of Business: Unit 1702, Infinitus Plaza, 199 Des Voeux Road Central, Sheung Wan, Hong Kong[129](index=129&type=chunk) [Registered Office](index=32&type=section&id=Registered%20Office) The company's registered office is located at Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman, KY1-1111, Cayman Islands - Registered Office: Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands[129](index=129&type=chunk) [Share Registrar and Transfer Office](index=32&type=section&id=Share%20Registrar%20and%20Transfer%20Office) The company's principal share registrar and transfer office in the Cayman Islands is Butterfield Fulcrum Group (Cayman) Limited, and its Hong Kong share registrar and transfer office is Tricor Investor Services Limited - Cayman Islands Principal Share Registrar and Transfer Office: Butterfield Fulcrum Group (Cayman) Limited[129](index=129&type=chunk) - Hong Kong Share Registrar and Transfer Office: Tricor Investor Services Limited, located at 54th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong[129](index=129&type=chunk) [Principal Banks](index=32&type=section&id=Principal%20Banks) The company's principal banks in Hong Kong include Bank of Communications Co, Ltd Hong Kong Branch and Deutsche Bank AG Hong Kong Branch, while in China, they include Agricultural Bank of China, Bank of Communications, Industrial and Commercial Bank of China, Bank of China, China CITIC Bank, and China Construction Bank - Hong Kong Principal Banks: Bank of Communications Co, Ltd Hong Kong Branch, Deutsche Bank AG Hong Kong Branch[129](index=129&type=chunk) - China Principal Banks: Agricultural Bank of China Pinghu Zhapu Sub-branch, Bank of Communications Pinghu City Sub-branch, Industrial and Commercial Bank of China Pinghu City Sub-branch, Bank of China Pinghu City Sub-branch, China CITIC Bank Jiaxing Branch, China Construction Bank Pinghu Zhapu Sub-branch[129](index=129&type=chunk) [Company Website](index=32&type=section&id=Company%20Website) The company's official website is www.chinasanjiang.com - Company Website: www.chinasanjiang.com[129](index=129&type=chunk)

中國三江精細化工有限公司 CHINA SANJIANG FINE CHEMICALS COMPANY UMITED 江化化 ( 於 開 曼 群 島 註 冊 成 立 的 有 限 公 司 ) SANJIANG CHEMICAL 股份代號：2198 2 0 2 0 年 報 © 版權 中國三江精細化工有限公司。本公司保留一切版權。 本產品採用FSCTM認證的和其他受控來源的材料。 149 | --- | --- | |-------|-----------------------| | | 目錄 | | | | | 2 | 主席報告書 | | 6 | 管理層討論及分析 | | 10 | 董事及高級管理層 | | 12 | 環境、 社會及管治報告 | | 24 | 企業管治報告 | | 29 | 董事報告書 | | 47 | 獨立核數師報告 | | | 財務報表 | | 51 | 綜合損益表 | | 52 | 綜合全面收益表 | | 53 | 綜合財務狀況表 | | 55 | 綜合權益變動表 | | 57 | 綜合現金流量表 | | 60 | 財務報表附註 | | | 五年財務摘要 | | | 公司資料 | 150 主 ...

Financial Performance - The overall revenue for the first half of 2020 decreased by approximately 9.8% compared to the same period in 2019, primarily due to the impact of the COVID-19 pandemic[6]. - Total revenue for the six months ended June 30, 2020, was RMB 3,778,300, a decrease of 9.8% compared to RMB 4,190,077 for the same period in 2019[30]. - Revenue from ethylene oxide reached RMB 1,208.1 million, a 14.5% increase compared to RMB 1,054.98 million in the same period of 2019[17]. - Glycol revenue decreased by 22.2% to RMB 404.7 million, primarily due to a 15.0% drop in average selling price[18]. - Polypropylene revenue fell by 20.4%, driven by a 18.4% decline in average selling price[19]. - The group reported a net foreign exchange loss of RMB 10,027,000, down from RMB 16,285,000 in the previous year, indicating an improvement[60]. - The group reported a significant increase in other income and gains to RMB 196,919, compared to RMB 98,447 in the previous year[30]. - The company's net profit attributable to shareholders for the same period was RMB 24.6 million, compared to a loss of RMB 9.8 million in the previous year, indicating a significant turnaround[38]. - The total comprehensive income for the period was RMB 4,182.2 million, up from RMB 3,594.4 million in the prior year, reflecting an increase of about 16.3%[38]. Profitability and Margins - The gross profit margin for the methanol-to-olefins production facility increased significantly to 9.2%, compared to a gross loss margin of -1.9% in the same period of 2019[9]. - The gross profit margin for the polypropylene business line increased by approximately 14.2% to about 18.1% during the review period[9]. - Overall gross margin increased by 11.8%, attributed to lower methanol prices and smaller declines in average selling prices of key products[20]. - Gross profit increased significantly to RMB 632,603, compared to RMB 206,338 in the previous year, reflecting a gross margin improvement[30]. Costs and Expenses - The cost of goods sold decreased to RMB 3,125,302,000 for the six months ended June 30, 2020, down from RMB 3,964,635,000 in 2019, reflecting a reduction of about 21%[64]. - The total tax expense for the period was RMB 79,048,000, compared to RMB 40,347,000 in the previous year, indicating an increase of approximately 96%[66]. - The actual corporate income tax rate was 17.2%, lower than the normal range of 19% to 20%, due to tax incentives related to RMB 18.6 million in R&D expenses[21]. Dividends and Shareholder Returns - The company proposed an interim dividend of RMB 0.125 per share, with a payout ratio of approximately 35.8% based on the profit attributable to shareholders[6]. - The company declared an interim dividend of HKD 0.125 per share for the six months ended June 30, 2020, compared to HKD 0.050 per share in 2019, marking a 150% increase[74]. - The company declared an interim dividend of RMB 133,594 for the period, compared to RMB 53,254 in the previous year[30]. Production and Capacity - The company maintained a relatively high overall capacity utilization rate during the review period, attributed to strict health and safety measures implemented in response to the pandemic[8]. - Ethylene oxide production volume increased by 28.4% due to full capacity operation of the new production facility[17]. - Glycol production volume decreased by 8.5% as the company focused on producing more ethylene oxide[18]. - The company maintained a stable production capacity for key products, including ethylene oxide and glycol, which are essential for various chemical applications[40]. Market and Strategic Positioning - The company’s strategy of becoming a diversified vertically integrated chemical group has proven successful, positioning it ahead of other chemical companies in the industry[10]. - The demand for ethylene oxide remained strong, driven by its role as a core component in the production of disinfectant products[10]. - The company is focused on expanding its market presence in China, particularly in the production and supply of specialty chemicals, which are in high demand[40]. - The company plans to invest in new technologies and product development to enhance its competitive edge in the chemical industry[40]. - The company is exploring potential mergers and acquisitions to further strengthen its market position and expand its product offerings[40]. - The company has set a performance guidance for the next quarter, expecting continued revenue growth driven by increased production and sales volume[40]. Financial Position and Liquidity - Total assets as of June 30, 2020, amounted to RMB 11,752,072, an increase from RMB 10,374,160 as of December 31, 2019[27]. - Current liabilities totaled RMB 7,313,735, up from RMB 6,327,256 at the end of 2019, indicating increased short-term obligations[27]. - The group has sufficient liquidity with net current liabilities of approximately RMB 1,283,960,000 as of June 30, 2020, ensuring it can meet its financial obligations[43]. - The company's cash and cash equivalents as of June 30, 2020, totaled RMB 532,849,000, a decrease from RMB 591,671,000 at the end of 2019, reflecting a decline of about 10%[82]. Debt and Financing - The total interest-bearing bank and other borrowings increased from RMB 4,095,668,000 as of December 31, 2019, to RMB 6,567,479,000 as of June 30, 2020, marking an increase of about 60.5%[89]. - The company has secured bank loans totaling RMB 3,160,000,000 for the construction of additional ethylene oxide/ethylene glycol production facilities, with RMB 1,152,000,000 utilized by June 30, 2020[90]. - The company's debt-to-asset ratio increased to 51.5% as of June 30, 2020, compared to 39.5% as of December 31, 2019, indicating a significant rise in leverage[112]. Employee and Governance - The company employed a total of 980 full-time employees as of June 30, 2020, with a comprehensive employee benefits package including housing subsidies and performance bonuses[111]. - The company’s board consists of four executive directors and three independent non-executive directors, ensuring a diverse governance structure[108]. - The company’s major shareholders include Vistra Trust (Singapore) Pte. Ltd., holding 506,451,000 shares, which accounts for approximately 42.56% of the issued share capital[105]. Inventory and Receivables - The total inventory as of June 30, 2020, was RMB 1,046,705,000, an increase from RMB 878,674,000 at the end of 2019, indicating a growth of approximately 19%[77]. - Accounts receivable decreased to RMB 445,759,000 as of June 30, 2020, from RMB 565,834,000 at the end of 2019, representing a decline of about 21%[78]. - Inventory turnover days remained stable at 55.9 days as of June 30, 2020, compared to 45.7 days as of December 31, 2019[113]. - Accounts receivable turnover days were at a low level of 24.3 days as of June 30, 2020, compared to 21.6 days as of December 31, 2019[113]. Related Party Transactions - The company’s related party payables decreased from RMB 351.8 million as of December 31, 2019, to RMB 117.7 million as of June 30, 2020, representing a reduction of approximately 66.6%[96]. - The company’s related party payables to Zhejiang Jiahu Energy Chemical Co., Ltd. decreased from RMB 219.2 million to RMB 77.3 million, a decline of approximately 64.8%[96]. - The company’s receivables from related parties rose to RMB 583,201,000 as of June 30, 2020, compared to RMB 284,104,000 as of December 31, 2019, indicating an increase of approximately 105.5%[93].

[Chairman's Report](index=4&type=section&id=Chairman%27s%20Report) The Chairman's Report reviews the Group's 2019 performance, highlighting improved full-year results despite H1 commodity price volatility, success of vertical integration, and initial COVID-19 impact - In H1 2019, due to average selling prices of ethylene glycol and ethylene oxide falling by approximately 36% and 26% respectively, the Group's revenue decreased by approximately 11.6%, gross profit margin dropped from 11.8% to 4.9%, and profit attributable to shareholders significantly declined by approximately **86.8%** to **RMB 32.3 million**[10](index=10&type=chunk) - The Group's diversified vertical integration strategy proved successful by utilizing both crude oil derivatives (ethylene, propylene) and natural gas/coal derivatives (methanol) as raw materials, effectively diversifying market risks[11](index=11&type=chunk) Key Financial Indicators for FY2019 (Year-on-Year Change) | Indicator | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Revenue | Decreased by approx. **4.1%** | - | - | | Overall Gross Profit Margin | Increased by approx. **0.9%** | - | - | | Profit Attributable to Shareholders | Approx. **RMB 550.5 million** | - | Increased by approx. **38.0%** | | Basic Earnings Per Share | Approx. **RMB 46.57 cents** | - | Increased by approx. **19.7%** | | Final Dividend | **HK 20.0 cents** per share | - | - | | Payout Ratio | Approx. **48.9%** | - | - | - Polypropylene sales revenue and sales volume increased by approximately **46.6%** and **44.8%** respectively in 2019 compared to 2018, partially offsetting the impact of declining average selling prices for ethylene oxide and ethylene glycol and reduced ethylene glycol production[16](index=16&type=chunk) - The COVID-19 pandemic had some impact on the Group's business operations, particularly concerning logistics arrangements and delivery of customers' finished products, but the Group believes the impact is temporary and has implemented short-term measures for cost savings and maintaining high liquidity[17](index=17&type=chunk) [Management Discussion and Analysis](index=9&type=section&id=Management%20Discussion%20and%20Analysis) This section details the Group's 2019 financial year performance across business segments, including revenue, sales volume, average selling price, and gross profit margin, analyzing changes in key products and covering overall gross profit margin drivers, administrative expenses, liquidity, capital commitments, contingent liabilities, and employee information [Business and Financial Review](index=9&type=section&id=Business%20and%20Financial%20Review) This section provides detailed 2019 financial year data on revenue, sales volume, average selling price, and gross profit margin by business segment, showing a 4.1% year-on-year decrease in total revenue, strong polypropylene performance, and significant impact on ethylene oxide and ethylene glycol due to price declines FY2019 Revenue, Sales Volume, Average Selling Price, and Gross Profit Margin by Business Segment | Business | 2019 Revenue (RMB thousand) | 2018 Revenue (RMB thousand) | Revenue Change (+/-) | 2019 Sales Volume (tonnes) | 2018 Sales Volume (tonnes) | Sales Volume Change (+/-) | 2019 Average Selling Price (RMB) | 2018 Average Selling Price (RMB) | Average Selling Price Change (+/-) | 2019 Gross Profit Margin (%) | 2018 Gross Profit Margin (%) | Gross Profit Margin Change (+/-) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Ethylene Oxide | 2,441,936 | 2,821,678 | -13.5% | 363,479 | 318,756 | 14.0% | 6,718 | 8,852 | -24.1% | 14.5% | 16.9% | -2.4% | | Ethylene Glycol | 1,080,070 | 2,385,058 | -54.7% | 257,393 | 379,700 | -32.2% | 4,196 | 6,281 | -33.2% | 2.9% | 17.5% | -14.6% | | Polypropylene | 3,670,890 | 2,504,017 | 46.6% | 512,985 | 354,291 | 44.8% | 7,156 | 7,068 | 1.2% | 10.5% | -5.9% | 16.4% | | Surfactants | 859,073 | 756,842 | 13.5% | 108,816 | 173,090 | -37.1% | 7,895 | 4,373 | 80.5% | 19.3% | 13.5% | 5.8% | | MTBE/C4 | 470,839 | 410,961 | 14.6% | 99,154 | 79,283 | 25.1% | 4,749 | 5,183 | -8.4% | 2.5% | 8.4% | -5.9% | | C5 | 340,328 | 276,167 | 23.2% | 89,631 | 59,366 | 51.0% | 3,797 | 4,652 | -18.4% | -2.4% | -1.8% | -0.6% | | Polypropylene Processing Services | 54,455 | 46,760 | 16.5% | 100,152 | 86,290 | 16.1% | 544 | 542 | 0.4% | 66.8% | 50.8% | 16.0% | | Surfactant Processing Services | 34,380 | 34,437 | -0.2% | 118,929 | 105,582 | 12.6% | 291 | 326 | -10.7% | 65.1% | 69.1% | -4.0% | | Others | 238,922 | 349,939 | -31.7% | - | - | - | - | - | - | - | - | - | | **Total** | **9,190,893** | **9,585,859** | **-4.1%** | - | - | - | - | - | - | - | - | - | [Ethylene Oxide Sales](index=10&type=section&id=Ethylene%20Oxide%20Sales) In 2019, ethylene oxide business revenue decreased by approximately 13.5% year-on-year, primarily due to a 24.1% drop in average selling price, despite a 14.0% increase in sales volume driven by production facility adjustments - The average selling price of ethylene oxide fell by approximately **24.1%** due to major commodity price fluctuations in H1 2019[27](index=27&type=chunk) - The Group adjusted its Phase V ethylene oxide/ethylene glycol production facility to maximize ethylene oxide output, leading to a sales volume increase of approximately **14.0%**[27](index=27&type=chunk) [Ethylene Glycol Sales](index=10&type=section&id=Ethylene%20Glycol%20Sales) In 2019, ethylene glycol business revenue significantly decreased by approximately 54.7% year-on-year, mainly because the Group reduced ethylene glycol production capacity at its Phase V ethylene oxide/ethylene glycol facility, resulting in a 32.2% decrease in sales volume - Ethylene glycol sales volume decreased by approximately **32.2%** compared to 2018, primarily due to the Group reducing ethylene glycol production capacity at its Phase V ethylene oxide/ethylene glycol facility[28](index=28&type=chunk) [Polypropylene Sales](index=10&type=section&id=Polypropylene%20Sales) In 2019, polypropylene business revenue increased by approximately 46.6% year-on-year, mainly driven by the full-year operation of the Phase II polypropylene production facility after its capacity upgrade in July 2018, leading to a 44.8% increase in sales volume - Polypropylene business revenue increased by approximately **46.6%**, primarily attributable to the full-year operation of the Phase II polypropylene production facility in 2019, following its capacity upgrade in July 2018, which added **300,000 tonnes** of annual production capacity[29](index=29&type=chunk) - Polypropylene sales volume increased by approximately **44.8%** compared to 2018[29](index=29&type=chunk) [Gross Profit Margin](index=10&type=section&id=Gross%20Profit%20Margin) In 2019, the Group's overall gross profit margin increased by approximately 0.9%, primarily due to a more than 26% decrease in methanol prices, from approximately RMB 3,180 per tonne to approximately RMB 2,330 per tonne - The overall gross profit margin increased by approximately **0.9%**, mainly due to methanol prices falling by over **26%** from approximately **RMB 3,180 per tonne** in 2018 to approximately **RMB 2,330 per tonne** in 2019[30](index=30&type=chunk) [Administrative Expenses](index=10&type=section&id=Administrative%20Expenses) Administrative expenses primarily comprise staff-related costs, local taxes and education surcharges, depreciation, amortization of land use rights, operating lease rental expenses, audit fees, and miscellaneous expenses - Administrative expenses primarily include staff-related costs, various local taxes and education surcharges, depreciation, amortization of land use rights, operating lease rental expenses, audit fees, and miscellaneous expenses[31](index=31&type=chunk) [Liquidity and Financial Resources](index=10&type=section&id=Liquidity%20and%20Financial%20Resources) As of December 31, 2019, the Group's cash and bank balances increased to approximately RMB 591.7 million, interest-bearing bank borrowings rose to approximately RMB 4,095.7 million, and the gearing ratio increased to 39.5%, while inventory turnover days remained stable, trade and bills receivables turnover days slightly increased, and trade and bills payables turnover days slightly decreased Liquidity and Financial Resources Overview | Indicator | December 31, 2019 (RMB million) | December 31, 2018 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 591.7 | 453.6 | Increase | | Interest-Bearing Bank Borrowings | 4,095.7 | 3,059.7 | Increase | | Gearing Ratio | 39.5% | 32.6% | Increase | | Inventory Turnover Days | 45.7 days | 46.2 days | Stable | | Trade and Bills Receivables Turnover Days | 21.6 days | 16.6 days | Increase | | Trade and Bills Payables Turnover Days | 56.1 days | 62.4 days | Decrease | [Capital Commitments](index=11&type=section&id=Capital%20Commitments) As of December 31, 2019, the Group's capital commitments were approximately RMB 702.5 million, a significant increase from RMB 250.0 million in 2018, primarily for the acquisition of plant and machinery to construct additional production capacity Capital Commitments | Indicator | December 31, 2019 (RMB million) | December 31, 2018 (RMB million) | | :--- | :--- | :--- | | Capital Commitments | 702.5 | 250.0 | - Capital commitments are primarily related to the acquisition of plant and machinery for the construction of additional production capacity[36](index=36&type=chunk) [Contingent Liabilities](index=11&type=section&id=Contingent%20Liabilities) As of December 31, 2019, the Group had no bank guarantees for financing granted to related parties, compared to approximately RMB 1,022.7 million in 2018, of which approximately RMB 915.7 million had been utilized Contingent Liabilities (Bank Guarantees for Financing Granted to Related Parties) | Indicator | December 31, 2019 (RMB thousand) | December 31, 2018 (RMB thousand) | | :--- | :--- | :--- | | Bank Guarantees | — | 1,022,702 | | Utilized Amount | — | 915,660 | [Employees and Remuneration Policy](index=11&type=section&id=Employees%20and%20Remuneration%20Policy) As of December 31, 2019, the Group employed 1,012 full-time employees, a decrease from 2018, with total employee remuneration of approximately RMB 164.6 million, a year-on-year increase of approximately 22.0%, and the Group provides various benefits with remuneration packages regularly reviewed by the Remuneration Committee Employees and Remuneration Overview | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Total Number of Employees | 1,012 | 1,086 | | Total Employee Remuneration | Approx. **RMB 164,551,000** | Approx. **RMB 134,911,000** | | Remuneration Growth | Approx. **22.0%** | - | - Employee benefits include housing subsidies, shift allowances, bonuses, allowances, medical examinations, staff dormitories, social insurance contributions, and housing fund contributions[38](index=38&type=chunk) [Directors and Senior Management](index=12&type=section&id=Directors%20and%20Senior%20Management) This section introduces the biographies of China Sanjiang Fine Chemicals Company Limited's Board of Directors (including executive and independent non-executive directors) and senior management, covering their extensive experience in the chemical industry, primary responsibilities, and relationships with each other - Executive Directors include Mr. Guan Jianzhong (Chairman, responsible for overall management and strategy), Ms. Han Jianhong (responsible for business planning, structure, and investor relations), Mr. Han Jianping (responsible for sales), and Mr. Rao Huatao (responsible for project management)[41](index=41&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - Independent Non-Executive Directors include Mr. Shen Kaijun (Chairman of the Audit Committee), Ms. Pei Yu, and Mr. Kong Liang, who possess extensive experience in accounting, law, and higher education in business administration[46](index=46&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - Senior management includes Ms. Chen Xian (Company Secretary and Chief Accountant, responsible for financial management) and Mr. Ding Rongguo (Production Director, responsible for production management, safety assurance, and environmental protection)[50](index=50&type=chunk)[51](index=51&type=chunk) [Environmental, Social and Governance Report](index=14&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) This report details China Sanjiang Fine Chemicals Company Limited's Environmental, Social, and Governance (ESG) policies, strategies, priorities, and objectives, covering emissions management, resource utilization, employment practices, health and safety, training and development, supply chain management, product responsibility, anti-corruption, and community investment, emphasizing the Group's commitment to sustainable development [About This Report](index=14&type=section&id=About%20This%20Report) This report, prepared in accordance with the HKEX ESG Reporting Guide, details the Group's ESG practices in its core businesses in China (ethylene oxide, ethylene glycol, polypropylene, and surfactant production and processing services), affirming its commitment to integrating sustainable development into business operations - This report covers the Group's core businesses in China, namely the production and supply of ethylene oxide, ethylene glycol, polypropylene, and surfactants, as well as the provision of processing services[55](index=55&type=chunk) - The report is prepared with reference to the ESG Reporting Guide, adhering to the principles of materiality, quantification, balance, and consistency[56](index=56&type=chunk) [Stakeholder Engagement and Materiality Assessment](index=15&type=section&id=Stakeholder%20Engagement%20and%20Materiality%20Assessment) The Group maintains close communication with stakeholders including shareholders, customers, suppliers, employees, government, and media through various channels, and conducted a materiality assessment to identify ESG issues with the greatest impact on business operations, such as employee development, remuneration and benefits, greenhouse gas emissions, occupational health and safety, and product safety - The Group maintains close communication with stakeholders including shareholders, customers, suppliers, employees, government and regulatory bodies, industry associations, and media, collecting feedback through company visits, meetings, feedback mechanisms, and training[58](index=58&type=chunk)[59](index=59&type=chunk) - The materiality assessment identified high-importance issues including employee development and training, employee remuneration and benefits, anti-bribery, greenhouse gas emissions, occupational health and safety, product health and safety, fraud and money laundering, and anti-corruption mechanisms[68](index=68&type=chunk) [Environmental Aspects](index=17&type=section&id=Environmental%20Aspects) The Group actively monitors emission reduction efforts, sets targets for gas emissions, wastewater discharge, and industrial water consumption, and implements waste management and energy-saving measures; in 2019, wastewater discharge, COD, ammonia nitrogen emissions, and non-hazardous waste significantly decreased, while greenhouse gas emissions and hazardous waste increased - The Group has formulated policies to actively monitor emission reduction efforts and set reduction targets, aiming for all gas emissions, wastewater discharge, and industrial water consumption (in tonnes) per RMB 1 million of revenue not to increase by more than **5%** compared to the previous year[71](index=71&type=chunk) - The Group implemented measures such as reusing some heat/gas generated during production, encouraging double-sided printing, and paper recycling to reduce its carbon footprint and environmental impact[71](index=71&type=chunk)[72](index=72&type=chunk)[83](index=83&type=chunk) FY2019 Environmental Key Performance Indicators | Key Performance Indicator | 2019 (tonnes) | 2018 (tonnes) | Change | | :--- | :--- | :--- | :--- | | Wastewater Discharge | 385,463 | 517,547 | -25.5% | | Industrial Water Consumption | 7,280,900 | 7,521,960 | -3.2% | | COD in Wastewater Discharge | 34 | 62 | -45.2% | | Nitrogen Oxides Emissions | 73 | 56 | +30.4% | | Ammonia Nitrogen Emissions | 7 | 13 | -46.2% | | Particulate Matter Emissions | 5 | 4 | +25.0% | | Greenhouse Gas — Scope 1 Emissions | 1,085,605 | 1,041,843 | +4.2% | | Greenhouse Gas — Scope 1 Emissions Intensity (tonnes/RMB 1 million revenue) | 118 | 109 | +8.3% | | Greenhouse Gas — Scope 2 Emissions | 650,482 | 610,641 | +6.5% | | Greenhouse Gas — Scope 2 Emissions Intensity (tonnes/RMB 1 million revenue) | 71 | 64 | +10.9% | | Hazardous Waste | 757 | 187 | +304.8% | | Hazardous Waste Intensity (tonnes/RMB 1 million revenue) | 0.08 | 0.02 | +300.0% | | Non-Hazardous Waste | 2,574 | 5,480 | -53.0% | | Non-Hazardous Waste Intensity (tonnes/RMB 1 million revenue) | 0.28 | 0.57 | -50.9% | | Environmental Investment (RMB million) | 42.2 | 28.9 | +46.0% | FY2019 Resource Utilization Key Performance Indicators | Key Performance Indicator | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Electricity Consumption (kWh) | 794,878,941 | 785,405,147 | +1.2% | | Electricity Consumption Intensity (kWh/RMB 1 million revenue) | 86,484 | 81,933 | +5.6% | | Water Consumption (cubic meters) | 7,621,437 | 7,767,179 | -1.9% | | Water Consumption Intensity (cubic meters/RMB 1 million revenue) | 829 | 810 | +2.3% | | Steam Consumption (tonnes) | 2,922,646 | 1,860,462 | +57.1% | | Steam Consumption Intensity (tonnes/RMB 1 million revenue) | 318 | 194 | +63.9% | - The Group is committed to fine-tuning pipeline structures, utilizing waste heat to generate low-pressure steam, and optimizing production efficiency to save energy and reduce emissions[84](index=84&type=chunk) [Social Aspects](index=20&type=section&id=Social%20Aspects) The Group has established policies for employment, health and safety, development and training, labor standards, supply chain management, product responsibility, anti-corruption, and community investment; in 2019, total employees were 1,012 with a turnover rate of 15.1%, emphasizing safety and health, providing comprehensive training, prioritizing environmental standards in supplier selection, implementing strict customer and supplier vetting, reporting no product recalls or corruption lawsuits, and actively engaging in community investment FY2019 Employment Key Performance Indicators | Key Performance Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Total Number of Employees | 1,012 | 1,086 | | Total Male Employees | 862 | 928 | | Total Female Employees | 150 | 158 | | Employee Turnover Rate | 15.1% | 13.8% | | Male Employee Turnover Rate | 15.8% | 13.6% | | Female Employee Turnover Rate | 11.3% | 15.2% | | Employee Turnover Rate (Age 18–35) | 20.0% | 16.4% | | Employee Turnover Rate (Age 36–55) | 6.7% | 8.4% | | Employee Turnover Rate (Age 55+) | 9.5% | 12.5% | - The Group prioritizes a safe working environment and safe production, launching the "Safety and Health Cup" campaign and an annual health check program[90](index=90&type=chunk) FY2019 Development and Training Key Performance Indicators | Key Performance Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Total Employees Trained | 1,012 | 1,086 | | Total Male Employees Trained | 862 | 928 | | Total Female Employees Trained | 150 | 158 | | Average Training Hours for Male Employees | 96 hours | 96 hours | | Average Training Hours for Female Employees | 96 hours | 96 hours | | Average Training Hours for Senior Management | 160 hours | 160 hours | | Average Training Hours for Middle Management | 160 hours | 160 hours | | Average Training Hours for Other Employees | 96 hours | 96 hours | - The Group implements strict recruitment processes to prevent child labor and forced labor, ensuring compliance with relevant laws and regulations[95](index=95&type=chunk) - Environmental protection is the most important criterion in supplier selection, and suppliers are vetted and registered through an Enterprise Resource Planning (ERP) system[96](index=96&type=chunk) - The Group's main products are crude oil derivatives, standardized, and intermediate products, focusing on long-term recurring customers and implementing a customer ERP system for vetting and registration[101](index=101&type=chunk) FY2019 Product Responsibility Key Performance Indicators | Key Performance Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Percentage of total products sold or shipped recalled due to safety and health reasons | 0% | 0% | | Number of complaints received regarding products and services | — | — | - The Group implements a code of conduct prohibiting bribery, extortion, fraud, and money laundering, and provides regular anti-corruption training[105](index=105&type=chunk) - The Group actively participates in community investment, providing financial assistance for a direct bus route between Zhapu and Shanghai, and maintaining communication with local educational institutions and labor unions to address employment needs[105](index=105&type=chunk) [Corporate Governance Report](index=26&type=section&id=Corporate%20Governance%20Report) The Corporate Governance Report outlines China Sanjiang Fine Chemicals Company Limited's corporate governance framework, including the Board's composition, responsibilities, meeting frequency, and the operations of the Audit, Remuneration, and Nomination Committees, confirming compliance with the HKEX Corporate Governance Code and disclosing policies on directors' securities transactions, financial reporting, internal controls, independent auditor, non-competition undertakings, and communication with shareholders - The Company has complied with all code provisions of the HKEX Corporate Governance Code throughout the 2019 financial year[108](index=108&type=chunk) - The Board comprises four executive directors and three independent non-executive directors, with Mr. Guan Jianzhong (Chairman and Executive Director) and Ms. Han Jianhong (Executive Director) being spouses, and Mr. Han Jianping being Ms. Han Jianhong's elder brother[110](index=110&type=chunk) - The Board holds regular meetings (at least four times annually) and has established an Audit Committee, Remuneration Committee, and Nomination Committee to assist in fulfilling its responsibilities[112](index=112&type=chunk)[113](index=113&type=chunk) - The Audit Committee is responsible for reviewing and overseeing financial reporting procedures and internal control systems, the Remuneration Committee evaluates directors' and senior management's remuneration, and the Nomination Committee handles Board member recommendations and diversity policy[115](index=115&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - The Board confirmed that the Group's internal control system was effective and adequate during the review year, with no significant control issues[125](index=125&type=chunk) - The Company is committed to maintaining continuous communication with shareholders, providing information through annual general meetings and the company website[131](index=131&type=chunk)[132](index=132&type=chunk) [Directors' Report](index=31&type=section&id=Directors%27%20Report) The Directors' Report provides a comprehensive overview of the Group's 2019 financial year, including principal activities, financial results, dividend policy, share capital changes, Board composition and remuneration, major shareholders, customer and supplier information, share option scheme, and detailed disclosures of various continuing connected transactions, also confirming compliance with Listing Rules requirements such as public float and independence of independent non-executive directors - The Group's principal activities are the production and supply of ethylene oxide, ethylene glycol, polypropylene, and surfactants, as well as the provision of processing services[136](index=136&type=chunk) - The Board recommends a final dividend of **HK 20.0 cents** per share for the year, which, together with the interim dividend of **HK 5.0 cents** per share, results in a total payout ratio of approximately **48.9%**[139](index=139&type=chunk) - As of December 31, 2019, the Company's issued share capital was **1,190,000,000 shares**, amounting to **RMB 102,662,000**[159](index=159&type=chunk)[593](index=593&type=chunk) Directors' and Chief Executive's Interests in Company Shares (December 31, 2019) | Director Name | Personal Interests (Number of Shares) | Trust/Corporate Interests (Number of Shares) | Total (Number of Shares) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Guan Jianzhong | 16,632,000 | 506,451,000 | 523,083,000 | 43.96% | | Han Jianhong | 16,632,000 | 506,451,000 | 523,083,000 | 43.96% | Major Shareholders' Interests in Company Shares (December 31, 2019) | Shareholder Name | Capacity | Number of Shares | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Vistra Trust (Singapore) Pte. Ltd | Trustee | 506,451,000 | 42.56% | | Yihao Development Limited | Interest in controlled corporation | 506,451,000 | 42.56% | | Sure Capital | Interest in controlled corporation | 506,451,000 | 42.56% | FY2019 Major Customers and Suppliers Breakdown | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Largest customer as % of Group's total sales | 6.97% | 8.77% | | Top five customers as % of Group's total sales | 23.77% | 25.69% | | Largest supplier as % of Group's total purchases | 18.05% | 10.56% | | Top five suppliers as % of Group's total purchases | 46.33% | 37.12% | - The Company has a share option scheme designed to incentivize eligible participants who contribute to the Group, with a total of **119,000,000 shares** available for issue as of December 31, 2019, representing approximately **10.00%** of the issued share capital[170](index=170&type=chunk)[174](index=174&type=chunk) - The report details **23** continuing connected transactions, including material supply, steam purchases, port services, loan agreements, and energy management agreements, confirming their compliance with Listing Rules requirements[179](index=179&type=chunk)[210](index=210&type=chunk)[213](index=213&type=chunk) [Independent Auditor's Report](index=47&type=section&id=Independent%20Auditor%27s%20Report) The Independent Auditor's Report expresses an unmodified opinion on the consolidated financial statements of China Sanjiang Fine Chemicals Company Limited and its subsidiaries for the year ended December 31, 2019, deeming them to present a true and fair view of the Group's financial position, performance, and cash flows, while highlighting impairment of long-term assets as a key audit matter and outlining the respective responsibilities of directors and auditors - The auditor issued an unmodified opinion on the consolidated financial statements, considering them to present a true and fair view of the Group's financial position and its consolidated financial performance and cash flows for the year ended on that date, in accordance with Hong Kong Financial Reporting Standards[227](index=227&type=chunk) - A key audit matter was the impairment of long-term assets, due to the carrying amount of the Group's net assets exceeding the company's market capitalization, and the estimation process being complex and subjective, involving assumptions such as sales expectations, product prices, raw material prices, gross profit margins, growth rates, and market economic conditions[232](index=232&type=chunk) - In addressing long-term asset impairment, the auditor evaluated management's impairment assessment and cash-generating unit definition, reviewed and tested future projected cash flows and key assumptions, performed sensitivity analysis, and engaged valuation experts to assist in assessing key valuation parameters[233](index=233&type=chunk) [Financial Statements](index=52&type=section&id=Financial%20Statements) This section contains the consolidated financial statements of China Sanjiang Fine Chemicals Company Limited for the year ended December 31, 2019, including the statement of profit or loss, statement of comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows, along with detailed notes to the financial statements, providing comprehensive information on the Group's financial performance, asset and liability position, cash flows, accounting policies, and significant estimates during the reporting period [Consolidated Statement of Profit or Loss](index=52&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For the 2019 financial year, the Group's revenue was RMB 9,190,893 thousand, a 4.1% year-on-year decrease, while gross profit was RMB 1,038,888 thousand, a 4.3% year-on-year increase, and profit for the year significantly increased by 91.7% to RMB 577,497 thousand, with profit attributable to owners of the parent being RMB 550,474 thousand, and basic earnings per share at RMB 46.57 cents FY2019 Consolidated Statement of Profit or Loss Key Data | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 9,190,893 | 9,585,859 | -4.1% | | Cost of Sales | (8,152,005) | (8,589,735) | -5.1% | | Gross Profit | 1,038,888 | 996,124 | +4.3% | | Other Income and Gains | 207,455 | 865,867 | -76.0% | | Selling and Distribution Expenses | (34,631) | (25,515) | +35.7% | | Administrative Expenses | (275,991) | (326,948) | -15.6% | | Impairment Losses on Financial Assets | (5,257) | (5,966) | -11.9% | | Net Other Expenses | (68,623) | (945,144) | -92.7% | | Finance Costs | (203,248) | (167,773) | +21.1% | | Profit Before Tax | 658,593 | 389,775 | +69.0% | | Income Tax Expense | (81,096) | (88,583) | -8.4% | | Profit for the Year | 577,497 | 301,192 | +91.7% | | Attributable to Owners of the Parent | 550,474 | 398,915 | +38.0% | | Attributable to Non-Controlling Interests | 27,023 | (97,723) | Turned from loss to profit | | Basic Earnings Per Share | **RMB 46.57 cents** | **RMB 38.89 cents** | +19.7% | [Consolidated Statement of Comprehensive Income](index=53&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) For the 2019 financial year, the Group's profit for the year was RMB 577,497 thousand, with other comprehensive income primarily from fair value changes of equity investments designated at fair value through other comprehensive income, resulting in a gain of RMB 1,063 thousand, and total comprehensive income for the year was RMB 578,560 thousand, of which RMB 551,537 thousand was attributable to owners of the parent FY2019 Consolidated Statement of Comprehensive Income Key Data | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Profit for the Year | 577,497 | 301,192 | +91.7% | | Fair value change of equity investments designated at fair value through other comprehensive income | 1,063 | (665) | Turned from loss to profit | | Total Comprehensive Income for the Year | 578,560 | 300,527 | +92.5% | | Attributable to Owners of the Parent | 551,537 | 398,250 | +38.5% | | Attributable to Non-Controlling Interests | 27,023 | (97,723) | Turned from loss to profit | [Consolidated Statement of Financial Position](index=54&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2019, the Group's total non-current assets were RMB 5,911,924 thousand, total current assets were RMB 4,462,236 thousand, and total current liabilities were RMB 6,327,256 thousand, resulting in net current liabilities of RMB 1,865,020 thousand, with total equity of RMB 4,018,402 thousand, of which RMB 4,001,139 thousand was attributable to owners of the parent FY2019 Consolidated Statement of Financial Position Key Data | Indicator | December 31, 2019 (RMB thousand) | December 31, 2018 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Total Non-Current Assets | 5,911,924 | 5,979,722 | -1.1% | | Property, Plant and Equipment | 4,916,741 | 5,239,614 | -6.2% | | Right-of-Use Assets | 442,197 | — | New | | Total Current Assets | 4,462,236 | 3,402,408 | +31.1% | | Inventories | 878,674 | 1,164,328 | -24.6% | | Trade and Bills Receivables | 565,834 | 522,701 | +8.3% | | Financial Assets at Fair Value Through Profit or Loss | 678,105 | 339,881 | +99.5% | | Pledged Deposits | 1,320,152 | 659,000 | +100.3% | | Cash and Cash Equivalents | 591,671 | 453,556 | +30.5% | | Total Current Liabilities | 6,327,256 | 5,774,605 | +9.6% | | Trade and Bills Payables | 934,294 | 1,570,214 | -40.5% | | Interest-Bearing Bank and Other Borrowings | 4,095,668 | 3,059,725 | +33.9% | | Net Current Liabilities | (1,865,020) | (2,372,197) | Improved | | Total Equity | 4,018,402 | 3,594,375 | +11.8% | | Equity Attributable to Owners of the Parent | 4,001,139 | 3,604,135 | +11.0% | | Non-Controlling Interests | 17,263 | (9,760) | Turned from negative to positive | [Consolidated Statement of Changes in Equity](index=56&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) The Consolidated Statement of Changes in Equity shows the movements in each component of the Group's equity for the year ended December 31, 2019, including issued share capital, share premium, various reserves, and retained profits, with total equity attributable to owners of the parent increasing from RMB 3,604,135 thousand at the beginning of the year to RMB 4,001,139 thousand at year-end - Total equity attributable to owners of the parent increased from **RMB 3,604,135 thousand** on January 1, 2019, to **RMB 4,001,139 thousand** on December 31, 2019[257](index=257&type=chunk) - Consolidated reserves amounted to **RMB 3,898,477 thousand** (2018: **RMB 3,501,473 thousand**)[263](index=263&type=chunk) [Consolidated Statement of Cash Flows](index=58&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the 2019 financial year, the Group's net cash inflow from operating activities was RMB 1,248,837 thousand, a 36.0% year-on-year increase, while net cash outflow from investing activities significantly increased to RMB 2,227,734 thousand, mainly due to increased loans to related parties and purchases of financial assets, and net cash inflow from financing activities was RMB 1,116,305 thousand, a substantial 885.9% year-on-year increase FY2019 Consolidated Statement of Cash Flows Key Data | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | 1,248,837 | 918,243 | +36.0% | | Net Cash Outflow from Investing Activities | (2,227,734) | (853,988) | Outflow increased by 160.9% | | Net Cash Inflow from Financing Activities | 1,116,305 | 113,333 | +885.9% | | Increase in Cash and Cash Equivalents | 137,408 | 177,588 | -22.6% | | Cash and Cash Equivalents at Year-End | 591,671 | 453,556 | +30.5% | - Cash outflow from investing activities significantly increased, primarily due to increased loans to related parties (**RMB 1,866,092 thousand**) and purchases of financial assets at fair value through profit or loss (**RMB 675,896 thousand**)[268](index=268&type=chunk) - Cash inflow from financing activities significantly increased, mainly from new bank borrowings (**RMB 8,167,694 thousand**) and loans from related parties (**RMB 1,799,789 thousand**)[271](index=271&type=chunk) [Notes to the Financial Statements](index=61&type=section&id=Notes%20to%20the%20Financial%20Statements) The Notes to the Financial Statements provide detailed explanations and supplementary information for each item in the consolidated financial statements, including company and group information, basis of preparation, changes in accounting policies and disclosures, significant accounting judgments and estimates, operating segment information, revenue and other income analysis, finance costs, profit before tax breakdown, directors' remuneration, highest paid employees, income tax, earnings per share calculation, property, plant and equipment, leases, intangible assets, financial asset classification, inventories, trade and bills receivables, prepayments, cash and deposits, trade and bills payables, other payables, derivative financial instruments, interest-bearing bank borrowings, deferred tax, share capital, share award scheme, reserves, dividends, cash flow notes, contingent liabilities, pledged assets, commitments, related party transactions, financial instrument classification and fair value hierarchy, financial risk management objectives and policies, company statement of financial position, comparative data, and post-reporting period events (COVID-19 impact) - The Group is primarily engaged in the production and supply of ethylene oxide, ethylene glycol, propylene, polypropylene, methyl tertiary-butyl ether, and surfactants in China, and provides processing services[275](index=275&type=chunk) - The Group first adopted Hong Kong Financial Reporting Standard 16 "Leases" on January 1, 2019, leading to the recognition of right-of-use assets and lease liabilities, impacting the statement of financial position[299](index=299&type=chunk)[311](index=311&type=chunk) - Significant accounting judgments and estimates include expected credit loss provisions for trade receivables, impairment of non-financial assets, net realizable value of inventories, deferred tax assets, income tax, and fair value of unlisted equity investments[453](index=453&type=chunk)[457](index=457&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk)[460](index=460&type=chunk)[464](index=464&type=chunk)[465](index=465&type=chunk) FY2019 Total Revenue by Product and Service | Product and Service | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | Polypropylene | 3,637,070 | 2,490,258 | | Ethylene Oxide | 2,441,936 | 2,821,678 | | Ethylene Glycol | 1,080,070 | 2,385,058 | | Surfactants | 859,073 | 756,842 | | Methyl Tertiary-Butyl Ether | 470,839 | 410,961 | | C4 and Unprocessed Pentene | 341,470 | 276,167 | | Liquid Nitrogen, Ethylene Glycol and Others | 228,270 | 340,551 | | Processing Services | 88,835 | 81,197 | | Propylene | 33,820 | 13,759 | | Rental Income | 9,510 | 9,388 | | **Total** | **9,190,893** | **9,585,859** | - As of December 31, 2019, the Group's interest-bearing bank borrowings were approximately **RMB 4,095,668 thousand**, with most maturing within 12 months, secured by guarantees from Lotte Chemical Corporation, the Group's pledged deposits, financial assets at fair value through profit or loss, and leasehold land[577](index=577&type=chunk) - The Group faces interest rate risk, foreign currency risk, credit risk, and liquidity risk, managed through Board review and agreed policies, including monitoring receivable balances and transacting with reputable third parties[664](index=664&type=chunk)[678](index=678&type=chunk) - Post-reporting period, the COVID-19 pandemic has spread in mainland China and beyond; although the Group successfully maintained normal production, the pandemic will have some impact on business operations, particularly on customers' finished product logistics arrangements and delivery, with the related impact still being assessed[703](index=703&type=chunk) [Five-Year Financial Summary](index=151&type=section&id=Five-Year%20Financial%20Summary) The Five-Year Financial Summary provides an overview of China Sanjiang Fine Chemicals Company Limited's key financial data from 2015 to 2019, including revenue, gross profit, net profit, assets and liabilities, cash flows, earnings per share, and major financial ratios, illustrating the Group's financial performance trends over recent years FY2015-2019 Five-Year Financial Summary | Indicator | 2019 (RMB thousand) | 2018 (RMB thousand) | 2017 (RMB thousand) | 2016 (RMB thousand) | 2015 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 9,190,893 | 9,585,859 | 8,897,143 | 6,647,019 | 4,966,427 | | Gross Profit | 1,038,888 | 996,124 | 1,085,275 | 906,570 | 164,449 | | Profit/(Loss) Before Tax | 658,593 | 389,775 | 743,846 | 692,815 | (164,964) | | Net Profit/(Loss) for the Year | 577,497 | 301,192 | 623,137 | 598,851 | (227,232) | | Profit/(Loss) Attributable to Owners of the Parent | 550,474 | 398,915 | 690,793 | 552,614 | (145,502) | | Non-Current Assets | 5,911,924 | 5,979,722 | 6,216,427 | 6,916,419 | 6,711,126 | | Current Assets | 4,462,236 | 3,402,408 | 2,448,291 | 2,761,678 | 3,956,061 | | Current Liabilities | 6,327,256 | 5,774,605 | 4,536,028 | 5,845,003 | 7,048,488 | | Net Assets/Total Equity | 4,018,402 | 3,594,375 | 3,516,657 | 2,729,170 | 2,248,312 | | Cash Inflow from Operating Activities | 1,248,837 | 918,243 | 965,307 | 1,832,939 | 43,218 | | Cash (Outflow)/Inflow from Investing Activities | (2,227,734) | (853,988) | 576,777 | 293,984 | 6,837 | | Cash Inflow/(Outflow) from Financing Activities | 1,116,305 | 113,333 | (1,608,510) | (1,876,216) | (361,183) | | Basic Earnings Per Share (RMB cents) | 46.57 | 38.89 | 67.30 | 56.09 | (14.79) | | Gross Profit Margin (%) | 11.3 | 10.4 | 12.2 | 13.6 | 3.3 | | Gearing Ratio — Total Interest-Bearing Borrowings to Total Assets (%) | 39.5 | 32.6 | 27.1 | 42.9 | 50.9 | | Inventory Turnover Days | 45.7 | 46.2 | 40.5 | 38.9 | 30.0 | | Trade and Bills Receivables Turnover Days | 21.6 | 16.6 | 10.6 | 24.0 | 37.8 | | Trade and Bills Payables Turnover Days | 56.1 | 62.4 | 65.9 | 86.1 | 97.2 | [Company Information](index=152&type=section&id=Company%20Information) This section provides key company information for China Sanjiang Fine Chemicals Company Limited, including Board members, company secretary, share listing details, auditor, legal advisors, registered office, principal place of business, principal bankers, share registrar, and company website - The Board of Directors includes Executive Directors Guan Jianzhong (Chairman), Han Jianhong, Han Jianping, Rao Huatao, and Independent Non-Executive Directors Shen Kaijun, Pei Yu, Kong Liang[709](index=709&type=chunk) - The Company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited, with stock code **2198**[709](index=709&type=chunk) - The auditor is Ernst & Young, and the Hong Kong Share Registrar is Tricor Investor Services Limited[709](index=709&type=chunk) - The Company's website is www.chinasanjiang.com[709](index=709&type=chunk)

中 期 報 告 2019 0 SANJIANG CHEMICAL 中國三江精細化工有限公司 ching sanling filke chemicals company umited ( 於 院 曼 群 島 註 冊 成 立 的 有 限 公 司 ) 股份代號：2198 © 版權 中國三江精細化工有限公司。本公司保留一切版權。 本產品採用FSCTM認證的和其他受控來源的材料。 el Be 目錄 2 管理層討論及分析 未經審核綜合業績 ６ 簡明綜合財務狀況報表 8 簡明綜合收益表 9 簡明綜合現金流量表 10 簡明綜合權益變動表 11 簡明綜合財務報表附註 25 其他資料 32 公司資料 管理層討論 及分析 截至2019年6月30日止六個月（「回顧期內」），本集團收益減少約11.6%，主要歸因於以下各項的綜合影響：1) 乙二醇（「乙二醇」）產量減少約34.5%，此乃由於第五期環氧乙烷╱乙二醇生產設施因於2019年1月及2月進行定 期維修及保養而暫停運營，且乙二醇於回顧期內的價格波動亦對乙二醇的需求產生抑製作用；2)與2018年同 期 相 比，2019年 上 半 年 環 氧 乙 烷（「環氧乙烷」）、乙 二 醇 及 聚 ...

三江化工 SANJANG CHEMICAL ( 於 開 曼 群 島 註 冊 成 立 的 有 限 公 司 ) 中國三江精細化工有限公司 ching sanjianG fine chemicals company umited 股份代號：2198 N IS NO s 2014/157 FSC" C10206 © 版權 中國三江精細化工有限公司。本公司保留一切版權。 本產品採用FSC™認證的和其他受控來源的材料。 目錄 財務報表 綜合損益表 46 綜合全面收益表 47 綜合財務狀況表 48 綜合權益變動表 50 綜合現金流量表 52 財務報表附註 55 主席報告書 2 管理層討論及分析 6 董事及高級管理層 10 環境、社會及管治報告 12 企業管治報告 18 董事報告書 25 獨立核數師報告 41 五年財務摘要 155 公司資料 156 1 中國三江精細化工有限公司 二零一八年年報 Crist the Aque 17 t : 告 新 書 COS y g Z INC N P I V 主席報告書 主席報告書 本人謹代表中國三江精細化工有限公司（「本公司」）董事（「董事」）會（「董事會」）欣然宣佈本公司及其附屬公司（「 ...