Annual Report 2023
Company Code: 600873 Short name: Meihua Bio
Meihua Holdings Group Co. Ltd.Annual Report 2023
This is an English translation from the Annual Report 2023 in case of any
inconsistency the Chinese Version shall prevail.
1 / 282Annual Report 2023
Important Information
I. The Company’s board of directors board of supervisors directors supervisors and officers
guarantee that the contents of this annual report are true accurate and complete without any false
records misleading statements or material omissions and bear joint and several legal liability.II. All of the Company’s directors have attended the board meeting.III. Da Hua CPAs LLP (special general partnership) has issued an unqualified audit report for the
Company.IV. Wang Aijun the principal of the Company Wang Lihong the accounting principal and Wang
Ailing the principal of the accounting body (the accounting officer) hereby declare that they
guarantee the truthfulness accuracy and completeness of the financial report in the annual report.V. Profit distribution plan or capital reserve conversion plan for the Reporting Period as approved
by the Board
Upon deliberation and approval of the 9th meeting of the 10th session of the board of directors the profit
distribution plan (proposal) for 2023 is as follows: with the total share capital registered on the registration
date of equity distribution as the basis (before deducting the number of shares in the share repurchase
account the Company has a total of 2943426102 shares in share capital; there are 69634252 shares in
the share repurchase account and after deducting those shares the number of shares is 2873791850) a
dividend of 4.17 yuan (inclusive of tax) for every 10 shares is to be distributed to all shareholders and a
total of approximately 1.2 billion yuan (inclusive of tax) in cash dividend is estimated to be distributed. The
plan is yet to be submitted to the general meeting for deliberation. The amount that is actually distributed
will be subject to the notification on equity distribution published by the Company. If there is any change
in the Company’s total share capital before the registration date of equity distribution the total amount to
be distributed will remain unchanged and the distribution proportion per share will be adjusted accordingly.VI. Risk Disclosure on Forward-Looking Statements
√ Applicable □ Not applicable
This annual report involves forward-looking descriptions such as future plans and such statements do not
constitute material commitments for investors. Investors are reminded to pay attention to the risk of
investment.VII. Any occupation of funds by the controlling shareholder or other affiliates for non-operating
purposes
No
VIII. Any external guarantee that violates the decision-making procedures
No
IX. Is it the case that more than half of the directors cannot guarantee the truthfulness accuracy
and completeness of the annual report disclosed by the Company
No
X. Warning of Key Risks
For the details of the risks facing the Company refer to the “Potential Risks” part in “Section 3 Discussionand Analysis by the Management” and the “Risks Related to Financial Instruments” part in “Section 10Financial Report”.XI. Miscellaneous
□ Applicable √Not applicable
2 / 282Annual Report 2023
Contents
Section 1 Definitions................................ 4
Section 2 Company Overview and Key Financial Indic... 7
Section 3 Discussion and Analysis by the Managemen.. 12
Section 4 Corporate Governance ..................... 47
Section 5 Environmental and Social Responsibility .. 66
Section 6 Significant Matters ...................... 80
Section 7 Share Changes and Shareholders ........... 96
Section 8 Information on Preferred Shares ......... 103
Section 9 Information on Securities ............... 103
Section 10 Financial Report ....................... 104
Financial statements signed and sealed by the Company’s principal the accounting principal and
the principal of the accounting body (the accounting officer)
List of documents for The original of the audit report sealed by the CPAs firm and signed and sealed by the certified
reference public accountants
The originals of the Company’s documents and announcements disclosed on the website of the
Shanghai Stock Exchange during the Reporting Period
3 / 282Annual Report 2023
Section 1 Definitions
I. Definitions
In this report the terms below have the following meanings unless the context otherwise requires:
Definitions of common terms
Company the Company the
listed company Meihua Meihua Holdings Group Co. Ltd. whose stock name is “Meihua Bio” and
means
Bio Meihua Group or stock code is 600873.Meihua Company
Xinjiang Meihua Amino Acid Co. Ltd. a wholly-owned subsidiary of the
Xinjiang Meihua means
Company.Xinjiang Base or Xinjiang the production base in the Wujiaqu Industry Park located in the Xinjiang Uygur
means
Company autonomous region where Xinjiang Meihua is located.Tongliao Meihua Biotech Co. Ltd. a wholly-owned subsidiary of the
Tongliao Meihua means
Company.Tongliao Jianlong Acid Production Co. Ltd. a wholly-owned subsidiary of
Tongliao Jianlong means
Tongliao Meihua.Tongliao Base or Tongliao the production base located in Tongliao of the Inner Mongolia autonomous
means
Company region as formed by Tongliao Meihua and Tongliao Jianlong.Jilin Meihua Amino Acid Co. Ltd. a wholly-owned subsidiary of the
Jilin Meihua means
Company.Jilin Base Baicheng Base the production base located in Baicheng of Jilin where Jilin Meihua Amino
means
or Jilin Company Acid Co. Ltd. is located.Three production bases or the Company’s production bases in Tongliao of Inner Mongolia Wujiaqu of
means
all production bases Xinjiang and Baicheng of Jilin.Meihua Group International Trade (Hong Kong) Co. Ltd. a wholly-owned
Hong Kong Meihua means
subsidiary of the Company.Zhuhai Hengqin Meihua Biotech Co. Ltd. a wholly-owned subsidiary of the
Hengqin Meihua means
Company.Hong Kong Plum Holding Limited a wholly-owned subsidiary of Hengqin
Hong Kong Holdings means
Meihua.Cayman Plum Holding Limited a wholly-owned subsidiary of Hong Kong
Cayman Company means
Holdings.Plum Biotechnology Group Pte. Ltd. a wholly-owned subsidiary of Cayman
Singapore Company means
Company.Lhasa Meihua Bio-investment Holdings Co. Ltd. a wholly-owned subsidiary
Lhasa Meihua means
of the Company.Da Hua or Da Hua CPAs means Da Hua CPAs LLP (special general partnership)
CSRC means the China Securities Regulatory Commission.SSE or the Stock Exchange means the Shanghai Stock Exchange.CSDC Shanghai means China Securities Depository and Clearing Co. Ltd. Shanghai Branch.the Ministry of Ecology and Environment of the People’s Republic of China
Environmental authorities means
and the environmental authorities authorized by it.Amino acids for animal the amino acids used as feed supplement for animal nutrition which can
means
nutrition enhance the effects of feed improve the utilization of feed and supplement and
4 / 282Annual Report 2023
balance nutrition. The amino acids for animal nutrition produced by the
Company include lysine threonine methionine and valine.
26-Diaminohexanoic acid the only amino acid with side-chain primary amine
in proteins. It is an amino acid and ketogenic amino acid essential for
mammals. The common L-lysine is one of the 20 amino acids that make up
proteins. Depending on content lysine is classified into L-lysine hydrochloride
Lysine means (commonly known as the 98% lysine) and L-lysine sulfate (commonly known
as the 70% lysine). The addition of lysine to feed improves meat quality
increases the ratio of lean and refines meat texture. It increases the utilization
of feed proteins and reduce the dosage of crude protein. It also reduces piglet
diarrhea cuts feeding costs and increases economic returns.
2-Amino-3-hydroxybutanoic acid an aliphatic α-amino acid that contains an
alcoholic hydroxyl. It is an amino acid and ketogenic amino acid essential for
mammals. The common L-threonine is one of the 20 amino acids that make up
Threonine means
proteins. Threonine is an essential amino acid. Threonine is often added to the
feed for piglets and poultry. It is the first limiting amino acid in pig feed and
the third limiting amino acid in poultry feed.
2-amino-3-methylbutanoic acid a branched-chain non-polar α-amino acid that
contains five carbon atoms. It is an amino acid and glycogenic amino acid
Valine means essential for mammals. The common L-valine is one of the 20 amino acids that
make up proteins. The addition of valine to sow feed can help increase lactation
yield. It also helps improve animals’ immunity and affects endocrine.Corn gluten meal is a byproduct of the manufacture of starch from maize grain
in the food industry or its purification in the brewing industry. It is rich in
Starch byproduct protein protein nutrients has a special taste and color and can be used as feed. Corn
powder feed fiber germ means husk powder (feed fiber) is a byproduct of the manufacturing process of
mycoprotein etc. manufacturers engaged in the deep processing of corn. It is produced from
maize grains being soaked put into starch production washed squeezed and
dried. Its main components include fiber starch and proteins.The food additives (flavor enhancers) produced by the Company. It refers to
Food taste and trait artificial or natural substances that are added to food for the purpose of
means
improving products improving food quality color smell and taste as well as for preservation and
processing.
99% MSG refers to monosodium glutamate. The key composition of MSG is
glutamic acid monosodium salt which is produced from the microbial
fermentation purification and refinement of saccharic or starch raw materials.MSG means The finished product is white columnar crystal or crystalline powder. As a basic
flavoring agent MSG not only enhances the taste of dishes and stimulates
appetite but also stimulates the secretion of digestive juice thereby helping
food digestion and absorption in human bodies.a substance composed of disodium 5’-inosine (IMP) and disodium 5’-
Disodium 5’-ribonucleotide means guanosine (GMP) in a 1:1 proportion. It is mostly used in condiments or
condiment blends with MSG to enhance taste.is a flavor enhancer produced from glucose as the key raw material through
Disodium inosinate means
microbial fermentation extraction and refinement.
5 / 282Annual Report 2023
a safe and reliable natural sugar with the superb ability to maintain cell viability
and biomacromolecular activity. It is known as the “sugar of life” in the science
community. With a moderately sweet taste it serves as a unique food ingredient
Trehalose means that prevents food deterioration inhibits nutrient deterioration preserves food
flavors and improves food quality. It is also an important ingredient for
cosmetics that maintain cell viability and preserve moisture. It is generally
recognized as safe (GRAS) by the FDA.are also known as pharmaceutical amino acids. The Company’s pharmaceutical
amino acids are mainly divided into two parts. One is amino acid products
including L-glutamine branched-chain amino acids (L-isoleucine L-valine
and L-leucine) and L-proline etc. which are mainly used as upstream raw
Amino acids for human
means materials for sports nutrition food food for special medical purposes and
medical purposes
drugs. The other part is pharmaceutical intermediate raw materials including
L-proline and nucleoside (inosine guanosine and adenosine) which are
mainly used as upstream raw materials for drugs that treat chronic diseases
(such as hypertension diabetes hepatitis B etc.).L-proline (known as proline for short) is one of the 18 amino acids for the
human body to synthesize proteins. It is an important raw material for amino
acid transfusions as well as a key intermediate for synthesizing first-line
Proline means antihypertensive drugs such as captopril and enalapril. It is widely applied in
food and pharmaceutical industries. The Company produces L-proline through
corn fermentation which is free of all the chemical reagents added in synthesis
and is thus safer.with the scientific name of 2-amino-4-formamide butyric acid is the amide of
glutamic acid. L-glutamine is the coding amino acid in protein synthesis and
an amino acid essential for mammals. In vivo it can be converted from glucose.Glutamine prevents muscle breakdown and promotes muscle growth. It is an
Glutamine means
important nutrition supplement for bodybuilders and bodybuilding enthusiasts.It also improves human immunity and antioxidant capacity. It has superb
healthcare and even medical effects for the gastrointestinal and digestive
systems.L-isoleucine is one of the 20 common amino acids that make up proteins. It
Isoleucine means contains two asymmetric carbon atoms and is an amino acid and ketogenic
amino acid essential for mammals.L-leucine is one of the 20 common amino acids that make up proteins. It is an
amino acid and a ketogenic and glycogenic amino acid essential for mammals.Leucine isoleucine and valine are all branched-chain amino acids which help
Leucine means
promote muscle recovery after training. In particular leucine is a very effective
branched-chain amino acid that effectively prevents muscle loss as it is able to
break down faster into glucose.a water-soluble polysaccharide produced from the fermentation of
Aureobasidium pullulans. Pullulan can be processed into a variety of products.Pullulan means With superb film-forming properties it forms highly stable pullulan film. It
also has excellent oxygen isolation performance. In pharmaceutical and food
industries it is widely used in capsule molding agents thickeners adhesives
6 / 282Annual Report 2023
and food packaging. Pullulan has been used as food accessories for more than
20 years in Japan and is generally recognized as safe (GRAS) by the FDA.
a monospore polysaccharide from the fermentation of pseudoxanthomonas. It
offers many functions due to its special macromolecular structure and colloidal
characteristics. It is widely used in different fields as emulsifiers stabilizers
Xanthan gum means
gel thickeners impregnating compounds and film molding agents. Xanthan
gum is a microbial polysaccharide in mass production with broad applications
around the world.the fertilizers containing organic substances that provide multiple inorganic
Bio-organic fertilizers means
and organic nutrients for crops and fertilize and improve soil.a reaction process in which massive metabolites are produced and accumulated
Fermentation means through the growth and chemical changes of microorganisms (or animal/plant
cells).mainly involves matrix conversion (the converted matrix is the product itself).Traditional fermentation gives unique tastes and nutrients to the product and
changes the texture of the product such as the fermentation process involved
in the production of wine bread yogurt fermented beancurd and pickled
Traditional fermentation means vegetables. Traditional fermentation is generally natural fermentation. In this
case there are many kinds of fermentation microorganisms and it is usually
impossible to conduct pure culture. The specific microorganism types and
proportions are not even known. There is also traditional fermentation
involving pure microorganisms.a process that uses microorganisms as cell factories to produce specific
functional components. In general terms precision fermentation is a process of
Precision fermentation means genetic reprogramming. It is synthetic biology. Scientists change the genes of
selected microorganisms based on specific designs and their genes are
programmed to produce specific fermentation products.Section 2 Company Overview and Key Financial Indicators
I. Company Information
Chinese name 梅花生物科技集团股份有限公司
Short Chinese name 梅花生物、梅花集团
English name MeiHua Holdings Group Co. Ltd
Abbreviation MEIHUA BIO MeiHua Group
Legal representative Wang Aijun
II. Contact Person and Contact Information
Board Secretary
Name Liu Xianfang
Address 66 Huaxiang Road Langfang Economic and Technological Development Zone Hebei Province
Tel 0316-2359652
Fax 0316-2359670
Email mhzqb@meihuagrp.com
7 / 282Annual Report 2023
III. Basic Profile
Registered Address Unit 5 Building 11 Yangguang Xincheng 158 Jinzhu West Road Lhasa Xizang Autonomous Region
189 Jinzhu West Road Lhasa (announcement published on January
Changes in the registered address 23 2018; change approved at the fourth extraordinary general
meeting of 2017)
Office address 66 Huaxiang Road Langfang Economic and Technological Development Zone Hebei Province
Postal code of the office address 065001
Website http://www.meihuagrp.com
Email mhzqb@meihuagrp.com
IV. Places of Information Disclosure and Report Placement
Names and websites of media where the Company Shanghai Securities News Securities Times the website of Shanghai
discloses annual reports Stock Exchange
The stock exchange website where the Company
discloses annual reports www.sse.com.cn
Place where the Company prepares and keeps annual
reports The Company’s securities department and Shanghai Stock Exchange
V. Company’s Stock Information
Company’s Stock Information
Stock Exchange for the
Stock type listing of the Stock name Stock code Stock name before
Company s stock change ’
A-share Shanghai Stock Exchange Meihua Bio 600873 Meihua Group
VI. Other Relevant Information
Name Da Hua CPAs LLP (special general partnership)
CPA firm appointed by the Company Office address Floor 12 Building 7 Courtyard 16 Xisihuan Middle
(domestic) Road Haidian District Beijing
Names of signing
accountants Gong Chenyan Li Qianqian
VII. Key Accounting Data and Financial Indicators for the Last Three Years
(I) Key Accounting Data
Unit: yuan Currency: RMB
Key accounting 2023 2022 + (%) 2021 data After adjustment Before adjustment After adjustment Before adjustment
Revenue 27760612259.07 27937152798.85 27937152798.85 -0.63 23060956394.50 23060956394.50
Net profit
attributable to the
shareholders of 3180949695.48 4406241981.92 4406312397.53 -27.81 2402174994.05 2402247556.46
the listed
company
Net profit
attributable to the
shareholders of
the listed
company after 3083801516.17 4220155225.29 4220225640.90 -26.93 2092383169.07 2092455731.48
deducting non-
recurring profit or
loss
Net cash flows
from operating 5228937084.88 5654954446.36 5654954446.36 -7.53 3734331862.05 3734331862.05
activities
8 / 282Annual Report 2023
At the end of 2022 At the end of 2021
At the end of 2023 + (%)
After adjustment Before adjustment After adjustment Before adjustment
Net assets
attributable to the
shareholders of 14163014813.67 13515990374.75 13516133352.77 4.79 10672616672.10 10672689234.51
the listed
company
Total assets 23157179855.25 24491133112.07 24490222471.46 -5.45 20979912384.01 20979450562.75
(II) Key Financial Indicators
20222021
Key financial indicators 2023 + (%)
After Before After Before
adjustment adjustment adjustment adjustment
Basic earnings per share (yuan/share) 1.06 1.44 1.44 -26.39 0.78 0.78
Diluted earnings per share (yuan/share) 1.06 1.43 1.43 -25.87 0.78 0.78
Basic earnings per share after
deducting non-recurring profit or loss 1.03 1.38 1.38 -25.36 0.68 0.68
(yuan/share)
Decrease by
Weighted average return on equity (%) 23.48 35.95 35.95 12.47 percentage 26.77 26.77
points
Weighted average return on equity Decrease by
after deducting non-recurring profit or 22.76 34.43 34.43 11.67
loss (%) percentage
23.6123.61
points
Notes to the Company’s key accounting data and financial indicators for the last three years as at the end
of the Reporting Period
□ Applicable √Not applicable
VIII. Differences in Accounting Data under Domestic and Foreign Accounting Standards
(I) Differences in the net profit and the net profit attributable to the shareholders of the listed
company in the financial report disclosed in accordance with both the international accounting
standards and the Chinese accounting standards
□ Applicable √Not applicable
(II) Differences in the net profit and the net profit attributable to the shareholders of the listed
company in the financial report disclosed in accordance with both the foreign accounting standards
and the Chinese accounting standards
□ Applicable √Not applicable
(III) Explanation of differences between domestic and foreign accounting standards
□ Applicable √Not applicable
9 / 282Annual Report 2023
IX. Key Financial Indicators for 2023 by Quarter
Unit: yuan Currency: RMB
Q4
Q1 Q2 Q3
(October-
(January-March) (April-June) (July-September)
December)
Revenue 6950072385.57 6638198131.66 6937900936.52 7234440805.32
Net profit attributable to the
shareholders of the listed 800793127.47 570050837.41 789669986.19 1020435744.41
company
Net profit attributable to the
shareholders of the listed
company after deducting non- 786151871.17 620341263.47 691979710.43 985328671.10
recurring profit or loss
Net cash flows from operating
activities 333494806.92 1936997486.40 2613793889.22 344650902.34
Explanation of differences between the quarter-based data and the data in the disclosed periodic reports
□ Applicable √Not applicable
X. Non-recurring Items and Amounts
√ Applicable □ Not applicable
Unit: yuan Currency: RMB
Amount for Notes (if Amount for Amount for
Non-recurring item
2023 applicable) 2022 2021
Gains or losses from the disposal of non-current assets
including the write-offs of the accrued provisions for asset -38915902.24 -14259233.56 274464740.54
impairment
Government grants recognized in the profit or loss
excluding government grants that are closely related to the
Company’s normal operations conform with national
240560349.82176066538.9289462801.04
policies are enjoyed in accordance with established
standards and have continuous impact on the Company’s
profit or loss
Gains or losses from fair value changes arising from the
financial assets and financial liabilities held by non-financial
enterprises and gains or losses from the disposal of financial -35150749.48 46017976.33 17149045.52
assets and financial liabilities except for the effective
hedging associated with the Company’s normal operations
Fund possession fees collected from non-financial
enterprises that are recognized in the profit or loss
Gains or losses from the entrusted investment or
management of assets
Gains or losses from external entrusted loans
Losses on assets arising from force majeure factors such as
natural disasters
Reversal of provisions for the impairment of accounts
receivable for which the impairment test is conducted 1861963.30
separately
10 / 282Annual Report 2023
Gains from the investment costs of the Company for the
acquisition of subsidiaries associates and joint ventures
being less than the fair value of the investees’ identifiable
net assets due to the Company at the acquisition of
investment
Net profit or loss of subsidiaries formed through business
combinations under common control for the period from the
beginning of the Reporting Period to the combination date
Gains or losses from the exchange of non-monetary assets
Gains or losses from debt restructuring
Non-recurring expenses of the Company arising from the
discontinuation of relevant operating activities such as
expenses for staff resettlement
Once-off effect of adjustments to tax and accounting laws
and regulations on the profit or loss
Share payment expenses recognized once off due to the
cancellation or change of the share incentive plan
For share payment in cash gains or losses from changes in
the fair value of staff remuneration payable after the vesting
date
Gains or losses from changes in the fair value of investment
property that is subsequently measured in the fair value
model
Gains from transactions with obviously unfair transaction
prices
Gains or losses from contingencies irrelevant to the
-45888616.17
Company’s normal operations
Trusteeship income from trusteeship business
Other non-operating income and expenditure than the above -1380228.88 11936886.89 -14002962.34
Other profit or loss items that fall within the definition of
-
the non-recurring profit or loss
Less: effect of income tax 23938637.04 33675411.95 56455088.73
effect of minority interest (after tax) - 826711.05
Total 97148179.31 186086756.63 309791824.98
If the Company defines any items not listed in the Explanatory Announcement on Information Disclosure
for Companies Offering Their Securities to the Public No.1 – Non-recurring Gains or Losses as non-
recurring items which involve significant amounts or defines any non-recurring items listed in the
Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the
Public No.1 – Non-recurring Gains or Losses as recurring items the Company should provide the reasons.□ Applicable √Not applicable
11 / 282Annual Report 2023
XI. Items Measured at Fair Value
√ Applicable □ Not applicable
Unit: yuan Currency: RMB
Amount of impact
Item Opening balance Closing balance Change
on the profit
Financial assets held for trading 175624337.11 172376801.33 -3247535.78 14201175.30
Derivative financial assets 15431100.00 200000.00 -15231100.00
-55005897.14
Derivative financial liabilities - 250000.00 250000.00
Other equity instrument investments 1255463900.59 512691350.00 -742772550.59 6934595.00
Accounts receivable financing 118425206.87 60013169.98 -58412036.89 5621428.73
Total 1564944544.57 745531321.31 -819413223.26 -28248698.11
XII. Miscellaneous
□ Applicable √Not applicable
Section 3 Discussion and Analysis by the Management
I. Discussion and Analysis of Business Performance
In the face of complicated domestic and foreign environments during the Reporting Period the
Company continued to focus on its main business under the leadership of the Board centered around the
strategic goal of building a leading enterprise in synthetic biology. The Company made efforts to improve
both technology and management and develop high-end manufacturing through standard automatic and
fine management and operations thereby achieving high-quality development.During the Reporting Period the Company increased R&D spending and beefed up technological
upgrades. New strains for the production of glutamic acid anaerobic valine and glutamine were put into
production at the production bases and new techniques for the production of lysine and threonine achieved
technological improvements reducing production costs substantially. During the Reporting Period the
Company’s new projects concerning xanthan gum threonine and raw material ammonia reached the
planned capacity and efficiency contributing to the continuous expansion of the Company’s business and
further improving its competitiveness. In 2023 the Company used the Manufacturing Execution System
(MES) to create opportunities refined the production management policies and processes built the whole-process monitoring of production order and continuously implemented the concept of “operationscreation and sharing by all” thus achieving growth shared by the Company and its employees.During the Reporting Period the Company registered a revenue of 27.761 billion yuan basically
equal the previous year. The net profit attributable to the shareholders of the listed company reached 3.181
billion yuan down 27.81% year-on-year. The decrease in revenue and in net profit was mainly caused by
declining product prices. By product during the Reporting Period the sales volumes of the knockout
products which are lysine hydrochloride (98% lysine) lysine sulfate (70% lysine) and threonine
increased by 6.91% 3.93% and 24.33% respectively but their selling prices decreased by 16.75%
10.41% and 5.25% year-on-year respectively. The falling prices caused a reduction in main business
12 / 282Annual Report 2023
revenue and profit. While experiencing industrial adjustments and price falls for its knockout products
the Company continued to strengthen the sales of star products including xanthan gum and minor amino
acids. In 2023 both the sales volume and price of xanthan gum increased with its sales volume up 26.86%
year-on-year and its average selling price up 5.85% year-on-year. The sales volumes of medical amino
acids such as glutamine and proline grew by 12.74% and 13.40% year-on-year respectively while the
sales volume of valine rose by 31.69%. During the Reporting Period the Company maintained relative
stability in revenue based on its matrix of multiple products.(I) Significant breakthroughs in new projects new products and new technologies through the
hiring of research professionals and the increase of R&D spending
In 2023 the Company successfully hired nearly 40 professionals from prestigious domestic and
foreign universities including the Chinese Academy of Sciences (Tianjin Institute and the Institute of
Microbiology) Tsinghua University and Shanghai Jiao Tong University. They come from a variety of
cutting-edge fields including gene editing metabolic pathway design fermentation engineering
enzymatic catalysis and artificial intelligence. The Company completed the distribution of research forces
across the whole industrial chain of synthetic biology by setting up doctoral laboratory teams named after
the doctors’ names and building high-calibre supporting platforms that cover metabolic pathway design
gene editing and bacteria strain construction enzyme engineering modifications production application
development and precision fermentation.During the Reporting Period the Company continued to increase R&D spending and strengthen
technological upgrades thereby steadily advancing the development of new projects new products and
new technologies. Through constant scientific research new strains for the production of glutamic acid
anaerobic valine and glutamine as well as new techniques for the production of lysine and threonine were
successfully put into production at the production bases in 2023 bringing an additional annualized return
of nearly 200 million yuan. The new bacterium for the production of glutamic acid independently
developed by the Company was put into production at all production bases within a quarter cutting the
production cost per ton by nearly 100 yuan and providing substantial support for boosting product
competitiveness on the market. During the Reporting Period the anaerobic fermentation technology
developed by the Company in collaboration with external research institutions markedly improved the
metabolism efficiency of microbial strains to an industrial leading level. Compared with traditional
technologies the new technology features a more streamlined process and brings higher production
efficiency and excellent product quality while having a considerably lower impact on the environment.Through the mechanism of developing and selecting R&D professionals the Company leveraged its
platform and policy edges to motivate the creativity of its team members and further consolidate its core
competitiveness.During the Reporting Period the Company included intellectual property distribution and protection
as a critical part of its corporate strategy in its R&D work. In 2023 the Company participated in global
intellectual property distribution through deep cooperation with domestic and foreign professional
institutions which effectively strengthened the whole-chain protection and management efficacy of
13 / 282Annual Report 2023
intellectual property globally. In 2023 the Company had 11 new patents for invention and 8 granted
patents. Centered around the Company’s core products including glutamic acid lysine and threonine the
newly granted patents helped build a defense line for the whole life cycle of intellectual property from
product design development and mass production to marketing. In 2023 the project entitled“Development and Application of Key Technology for the Green and Intelligent Manufacturing andIndustrial Upgrading of Xanthan Gum” which was submitted jointly by the Company and Nankai
University was awarded the First Prize of the Scientific and Technological Progress Award by the China
National Light Industry Council. The achievements of the project reduce 33% of the alcohol consumption
and 50% of the detergent consumption in the industrial production of xanthan gum. For some characteristic
products decolorants are totally removed which substantially cuts the consumption of relevant raw
materials relieves environmental treatment pressure and thus provides strong technical and product
support for China’s eco-friendly and low-carbon development.(II) Sound development of main business; implementation of new projects contributing to
continuous business expansion and further improvement in competitiveness
Over the years the Company has maintained the sound development of its main business and
cultivated the “amino acid+” strategy in depth. For products with cost advantages continuous
technological upgrades and room to be developed for market demand the Company has steadfastly and
rapidly expanded its production capacity to constantly consolidate its leading position in the industry. In
recent years the Company has expanded the production capacity for advantaged products including MSG
lysine threonine xanthan gum valine glutamine and isoleucine and increased the market share of the
products. While expanding its business the Company enjoys a more stable leading position in the amino
acid industry with lower comprehensive costs and stronger core competitiveness brought by mass
production.During the Reporting Period based on the Company’s edges in cost control for xanthan gum and
threonine upon an adequate market evaluation the xanthan gum project in Jilin was commissioned in
March last year and reached the designed capacity and efficiency in June last year; the threonine project
in Tongliao underwent a pilot test and quickly reached the design capacity and efficiency in July last year;
and the anaerobic valine project achieved production at full capacity in the fourth quarter last year. The
production expansion for xanthan gum threonine and valine has laid the foundation for the Company to
gain stable revenue and profit.In 2024 the Company will continue to expand production complete the MSG project at Tongliao
Base and the project of technological improvements for isoleucine at Xinjiang Base as per the plan and
meet the conditions for the commencement of the lysine project at Jilin Base.Changes in key financial data for the past five years are shown as follows:
Unit: hundred million yuan
14 / 282Annual Report 2023
Changes in revenue for the past five years Changes in revenue for the past five years by segment
20192020202120222023
20192020202120222023
Flavor enhancer Feed amino acid Medical amino acid Bulk raw material byproduct Others
Changes in net profit attributable to the parent company for the
past five years Net profit margin and ROE for the past five years
20192020202120222023
Net
profit margin
Liabilities to assets ratio Period expense rate
(III) Using MES to create opportunities and promoting standardization in production supply
and sales to assist in the development of a “lighthouse factory” as soon as possible
During the Reporting Period the Company initiated the MES (Manufacturing Execution System)
project at the headquarters and Jilin Base. With a view to maintaining continuous stability in production
the Company built intelligent production lines established a dispatch center and used the MES to create
opportunities for refining its production management policies and processes and building the whole-
process monitoring of production order. In terms of production planning the Company followed the seven-
step method to work out the planning logic and restraints go through the management process for planning
changes and collate standard documentation to enable the whole-process monitoring of production plans.In terms of energy management the Company went through production planning generated an energy
balance sheet offline achieved coordination between production planning and energy planning and
15 / 282Annual Report 2023
promoted the stability of production order through the mechanism of energy quota control and deviation
correction. In terms of lye management the Company exercised quota control and reused waste lye
thereby saving 6.5473 million yuan in lye management. In terms of sugar warehouse management with
the warehouse at the center the Company developed operation rules and an error adjustment mechanism
stabilized starch and fermentation and promoted stable production order. In terms of report management
the Company sorted out the production order management report and made anomalies traceable and
reviewable by tracking them with data.During the Reporting Period the Company continued to focus on its main business. With the
strategic goal of “becoming a leading company in synthetic biology” the Company kept up with the
national pace for high-quality growth and worked towards high-standard bio-manufacturing. In production
purchase and sales the Company established standard management models to improve its operations. In
terms of production standardization the Company enabled online real-time workshop management
through the MES by carrying out a pilot project at Jilin Company. This has changed the management of
process equipment safety environment and quality from post-incident management into preventive
management thus enhancing production efficiency and product quality. In terms of purchase
standardization the Company implemented a system of daily clearance and settlement exposed problems
through daily meetings revealed facts through business performance and faithfully reflected the
conditions of suppliers and the market. The conformity of daily deliveries increased by 22% year-on-year.In terms of sales standardization the Company basically realized the transformation of the marketing
system targeting the business division by promoting “six shaping.” The transformation is expected to
effectively fasten market response in the future laying the foundation for improving sales quality and
customer stability.During the Reporting Period all production bases established an environmental civilization office by
aligning at benchmark factories. They increased spending to keep improving hardware facilities and built
garden-type factories and “environmentally civilized” lighthouse factories. The implementation of the
MES project has boosted the Company’s automation and intelligentization and the continuous
advancement of standardization in each business segment has laid the foundation for building smart and
lighthouse factories.(IV) Attaching importance to talent development and responding to the call for common
prosperity by increasing staff income and achieving reciprocal and win-win results between staff
and the Company
The Company upholds the concept of “operations creation and sharing by all.” The Company
attracts talents by virtue of a competitive remuneration and incentive mechanism develops talents using
all-round multi-dimensional and effective systematic approaches smooths promotion channels creates
an equal diverse and inclusive cultural environment for staff and accelerates the pace of high-quality
talent development to achieve common growth between staff and the Company.During the Reporting Period the Company built a talent development system for management
trainees in collaboration with an external consulting firm. The Company selected a group of postgraduates
16 / 282Annual Report 2023
with a master’s degree or a PhD from top universities and developed T-shaped skilled talents by means of
executive coaching and project-based practice. In 2023 the Company hired nearly 600 fresh graduates
through on-campus recruitment including 103 management trainees with a master’s degree or a PhD from
double first-class universities. By means of one-to-one executive coaching and project-based practical
training the Company developed potential middle and senior management talents with interdisciplinary
skills. In terms of mid-level and technical talents the Company has established long-term cooperation
with Tianjin University Jiangnan University and other colleges and universities that are highly
compatible with the Company set up targeted training classes and hired lecturers from universities laying
a solid foundation for developing talents and future leaders.During the Reporting Period the Company further refined the information technology system
introduced Feishu as a collaborative office platform and integrated daily work-related software thereby
building a convenient and fast office environment.During the Reporting Period the Company continued to improve working conditions increase staff
income through a continuous increase in spending and refine staff benefits in response to the country’s
call for “common prosperity.” As of the end of the Reporting Period the Company paid nearly 63 million
yuan in housing allowance to more than 480 employees under its housing allowance policy. In 2023 the
Company continued to raise the income for junior staff with expenses for salary and staff welfare
increasing by about 170 million yuan.II. Industry Overview
(I) Industry
Based on the Guiding Catalogue of Key Products and Services for Strategic Emerging Industries
(2016 Edition) issued by the National Development and Reform Commission (NDRC) the Company’s
main products fall within the “bio-manufacturing industry of the biological industry.” Hence the Company
is in the bio-manufacturing industry. According to the industrial classification results for listed companies
as published by the China Association for Public Companies the Company is in the food production
industry of the manufacturing industry.Meihua Bio is a company engaged in the whole chain of synthetic biology covering everything from
genome editing to product implementation. By virtue of its superb capabilities in bacteria strain
construction process optimization engineering design and application development the Company has
achieved high-speed delivery of new industrial technologies and products from laboratories to customers.The fast upgrading of products and technologies is a representative element in the Company’s development
of synthetic biology.At present synthetic biology enables product manufacturing mainly based on biosynthesis in place
of product manufacturing through traditional chemical engineering or extraction. With the development
of synthetic biotechnology and the maturation of large-scale bio-manufacturing technology more and
more bio-manufactured products will have advantages in cost environmental protection and energy
consumption and replace the traditional manufacturing process. Synthetic biology is regarded as one of
17 / 282Annual Report 2023
the few new technologies that are most likely to change the world in the future. The continuous integration
of AI technology and biotechnology and the constant development of new bio-editing technologies will
further promote the advanced development of synthetic biology and give rise to new technical platforms
new applications and new products.The Company has large-scale bio-manufacturing capabilities which are essential to application
development and product implementation in synthetic biology and are scarce resources in synthetic
biology globally. The Company is a globally leading enterprise engaged in the mass production of amino
acids through synthetic biotechnology. Its powerful application development capability enables the
Company to quickly commercialize its technological achievements. The fast advancement of synthetic
biotechnology has brought substantial improvements in the Company’s strain construction and testing
capabilities thereby providing important opportunities for the Company to increase construction
efficiency to meet the changeable and diverse market demand. The rapid development of breeding fine
strains for the production of amino acids provides powerful support for the Company to manufacture bulk
amino acids with high efficiency at low costs and to develop market for high value-added minor amino
acids.In the future the Company will strengthen cooperation with global top biotech companies and
institutions and comb through technology-wise and product-wise opportunities in basic synthetic
biotechnology precision fermentation and non-grain fermentation technology. Based on its globally
leading capabilities for underlying engineering process amplification and mass production the Company
will continue to promote the absorption and implementation of advanced production and R&D technology
and new products.(II) Competent Authorities and Industrial Policies
1. Competent authorities
At present competent authorities administering the Company include the National Development and
Reform Commission the Ministry of Industry and Information Technology the Ministry of Agriculture
and Rural Affairs the State Administration for Market Regulation the National Health Commission of the
People’s Republic of China and competent local authorities. The industrial self-regulatory organizations
include the China Biotech Fermentation Industry Association the China Feed Industry Association and
the China Condiment Association among others.
2. Key laws regulations and industrial policies published in the past five years that have
significant impact on the development of the industry
Latest Laws and Promulga
Core content and impact on the industry
amendment regulations ting body
Core content: It further specifies the goal and pathway for the reduction and substitution
Three- of soybean meal. The action plan proposes the goal of continuously reducing the
Year Action Pla Ministry of proportion of soybean meal strengthening the development and utilization of protein n for the Reducti Agriculture feed resources and increasing the supply of quality feed grass. April 2023 on and Substituti and Rural Industrial impact: The implementation of the action plan is expected to a certain extent on of Soybean Affairs to reduce the use of soybean meal in animal feed and increase the use of mixed meal Meal in Animal thus reducing reliance on imported soybeans and guaranteeing national food security. It
Feed will improve the sustainable development capacity self-sufficiency capacity and
competitiveness of the domestic feed industry; enhance the competitiveness and stabilize
18 / 282Annual Report 2023
the industrial chain of the domestic husbandry industry; and promote food conservation
for the breeding industry which is conducive to green development. The proposal for the
reduction of soybean meal in animal feed has increased demand for minor amino acids
for animal feed and opened up space for the use of formulation thereby bringing new
development opportunities for the biological fermentation industry that the Company is
engaged in.Core content: It is a systematic plan for accelerating the innovative development
of the bio-based material industry based on the actual situation of the industrial
technology. According to the action plan by 2025 a green circular and low-carbon
innovative development ecosystem featuring a strong independent innovation
Ministry capability and an ever-richer product system will be basically formed for the non-
of grain bio-based material industry. By then the technology for the utilization and
Industry application of non-grain biomass raw materials will basically mature; the Three-Year and competitiveness of some non-grain bio-based products will be comparable to that of Action Plan for Informati fossil-based products; and a high-quality sustainable supply and consumption
January Accelerating the Innovative on
system will be built.
2023 Development of Technolo
Industrial impact: The implementation of this action plan will accelerate the
gy innovative development of the non-grain bio-based material industry expand the Non-grain Bio- NDRC application of bio-based materials in all areas and improve China’s international based Materials Ministry competitiveness in the global bio-based material industry. It will promote
of technological innovation in synthetic biology which is beneficial to the
Finance development of technological platform companies in the domestic synthetic biology industry. It will also help reduce reliance on non-renewable resources such as
petroleum cut environmental pollution promote the development of the green
economy and enhance the stability and safety of energy supply. The action plan has
provided policy or plan support for the Company to develop non-grain fermentation
technology and increase the secondary performance growth curve in the future.Core content: As China’s first five-year plan for the bioeconomy it proposes
developing bio-breeding technologies in an orderly way including genome-wide
selection systems biology synthetic biology and artificial intelligence and
developing synthetic biotechnology.
14th Five-Year Industrial impact: It will promote the high-quality development of China’s
Plan for bioeconomy accelerate the development of a modern industry system with May 2022 Bioeconomic NDRC biotechnology at its core and improve the innovation capabilities and
Development competitiveness of the bioeconomy. It will help promote the innovation of synthetic biotechnology improve the industrial structure favorably contribute to the
development of technological platform companies in the domestic synthetic biology
industry and accelerate the formation of enterprises and brands with international
competitiveness. The plan is beneficial to the future development of the Company
as a leading company in the industry.
14th Five-Year
Plan (2021- Core and relevant content: It proposes promoting the integration and innovation
2025) for of biotechnology and information technology expediting the development of bio-
National pharmaceutical bio-breeding bio-material and bio-energy industries and making
Economic and the bioeconomy bigger and stronger.March 2021 Social State Industrial impact: The inclusion of making the bioeconomy bigger and stronger in Development Council the 14th five-year plan is beneficial to the development of the biology industry that
and the Long- the Company is engaged in. On the basis of biological fermentation the Company
Range may further extend to areas such as bio-materials based on technological
Objectives development and market demand changes thereby expanding the boundaries of its
Through the industrial development.Year 2035
Guiding Core content: It proposes increasing investment in bio-security and emergency
Opinions on areas strengthening the development of the national innovation platform for the
Expanding inspection and verification of bio-products and supporting the development of the
Investment in cytogenetics and genetic breeding technology R&D center the synthetic
Strategic biotechnology innovation center and the bio-drug technology innovation center.Emerging Industrial impact: It will drive all industries towards stronger innovation boost the September Industries and NDRC level of industrial technology and promote the optimization or transformation of 2020 Cultivating the industrial structure. For example strategic emerging industries such as new
Strengthened energy new materials and bio-pharmaceuticals will welcome stronger
New development and the traditional manufacturing industry will shift towards
Growth Points intelligent and green manufacturing. It will also promote the clustered development
and Growth of emerging industries promote the coordinated development of the industrial
Poles chain and speed up the formation of competitive industrial clusters with complete industrial chains.
19 / 282Annual Report 2023
III. Overview of the Company’s Businesses during the Reporting Period
(I) Main business
The Company deeply cultivates the “amino acid+” strategy. As a company engaged in whole-chain
synthetic biology producing amino acid products the Company is equipped with core capabilities that
cover the entire chain from strain design construction fermentation separation and extraction to
products. Based on more than 20 years of transcendence and innovation the Company’s integrated
abilities including R&D production and sales have advanced to the industrial leading position. The
products produced by the Company include:
? Amino acids for animal nutrition: lysine threonine tryptophan feed-grade lysine MSG residue
starch byproduct feed fiber corn germ mycoprotein etc.? Food taste and trait improving products: glutamic acid monosodium glutamate Disodium 5’-
ribonucleotide disodium inosinate food-grade xanthan gum trehalose natamycin etc.? Amino acids for human medical purposes: glutamine proline leucine isoleucine pharmaceutical
valine inosine guanosine adenosine pullulan Vitamin B2 etc.? Other products: petroleum-grade xanthan gum bio-organic fertilizers etc.See the following figure for the main products and the upstream and downstream of the
industrial chain:
Bu业sin务ess板 块 Ma主in 要pro产du品cts Prod产uc品t a用ppl途ications
Dow下ns游trea应m 用app领lic域ation
areas
segments
Lysi赖ne 氨酸
Raw原 m材at料erials Energy 苏氨酸能源 A动mi物no营 ac养ids氨 Threonine A动ni物mal feed
Bre养edi殖ng畜 and牧
fo基r a酸nim类a产l 品 supple饲me料nts添 加剂 husbandry 色氨酸
Corn nutrition Tryptophan 玉米
饲Fee料d-级gra缬de氨 酸
valine Foo食d p品rod制uc造tion Food taste and
食品味觉性 MSG味精
Flavor鲜 en 味
han剂cers
trait improving
p状rod优uc化ts 产品 I+G Food and beverage Com复po合un调d 味品 con餐sum饮pt消ion费
condiments
Glu谷ta氨mi酰ne 胺
Branched-chain Sport运s su动pp补lem剂ents
H保ea健lth食 fo品od
A人mi类no 医ac用ids氨 for am支in链o a氨cid基 酸
hu基m酸an 类me产dic品al Treatment of hepatic
purposes 肝脏、心血管、 Pha医rm药aceutical Prol脯ine氨 酸 cardiovascular and
g肠ast胃roi等nte疾stin病al 治dise疗ases
G基ene因 ed编iti辑ng
Nucl核eo苷sid类e Oil drilling and石油钻采
St菌rai种n design production 设计 T合ec成hn生ica物l p学latform for Oil and gas Xant黄ha原n g胶um Stabilizers and 油气
sy技nth术et平ic b台iology t稳hic定ken剂ers、 增稠剂
C细ell 胞scr筛een选ing Colloid Sweeteners and Fo食od品
pol胶ysa体cch多ar糖ide Trehalose 甜pre味剂海藻糖 servat
、ive防s 腐剂
Fe发rm酵en培tat养ion Be美au容ty
cultivation Co化sm妆eti品c m保ois湿tur剂izers P普ull鲁ula兰n 多糖
C被oa膜tin剂g a、gen增ts a稠nd剂
thickeners Agr农iculture Oth其er他 pr产oducts业
品 B生io-物org有an机ic 肥 Fertilize肥rs 料
fertilizers
Data source: Company’s marketing department and Huatai Securities’ research report
(II) Business Model
The Company adopts a business model that combines R&D production and sales.There was no material change in the Company’s business model during the Reporting Period.
20 / 282Annual Report 2023
In terms of R&D the Company deeply cultivated synthetic biotechnology and biological
fermentation technology and further advanced the “amino acid+” strategy. The Company has R&D centers
in Langfang and Shanghai respectively. The R&D center in Langfang is equipped with a strain R&D
laboratory a fermentation technology laboratory and a product application laboratory. It has more than
100 synthetic biological engineers and advanced research instruments and equipment including new-
generation genome sequencing instruments LC-MS and parallel bio-reactors. It has mastered the E. coli
fermentation platform the C. glutamicum fermentation platform and anaerobic fermentation technology.The headquarters has a research institute for production technology to focus on the research and
implementation of technologies throughout the entire industrial chain. The institute continuously
promoted innovation in production technology increased the utilization of resources reduced energy
consumption and cut carbon footprints. Through gene editing metabolic pathway modification and
computer-aided cell design the Company built a multi-product microbial cell factory dominated by amino
acids. The Company creatively developed a series of engineering technologies to address key
technological challenges for high production high conversion rates and high production intensity in the
engineering industry. These technologies were applied in the Company’s industrial mass production of
fermented products. By establishing long-term cooperation with top universities and research institutions
such as the Chinese Academy of Sciences and Jiangnan University the Company promoted the delivery
of technological breakthroughs in key scientific issues in intelligent bio-manufacturing and the industrial
implementation of them.In terms of purchase the Group’s purchase department and the purchase offices of the production
bases continued to implement the goal of standardizing purchases and building an outstanding purchase
system. The headquarters has a purchase department and the production bases in Tongliao Xinjiang and
Jilin have purchase offices. The purchase department is responsible for developing purchase standards and
guiding the production bases towards implementation. By studying the market in depth and following the
market trend closely the purchase department develops market sensitivity to improve its forecast of long-
term trends. It grasps market opportunities and implements the best strategies for the purchase of raw
materials. In terms of corn purchase based on their geographical locations and market characteristics the
production bases adopt a combination of purchase models including collection and storage market
purchase participation in the auctions of state-owned grain depots and direct purchase from farmers. The
proportion of each model in total purchases can be adjusted timely. In view of the unique location and
corn supply of the Xinjiang production base from the fourth quarter of 2022 to the third quarter of 2023
the base purchased corn in the collection and storage model to ensure the supply of raw materials required
for routine production. Upon the end of the purchase season the market price of corn dropped causing
the storage cost to be higher than the spot price of corn. As a result the corn purchase at the Xinjiang
production base failed to outperform the market. Tongliao and Baicheng production bases are closer to
the major corn production areas of the northeast and have a longer purchase season. On the basis of
collection and storage the Company flexibly used a variety of models including market purchase auction
21 / 282Annual Report 2023
and direct purchase from farmers which counteracted the impact of storage costs on production costs to a
certain extent.The production bases are responsible for producing the Company’s products and they are located in
Tongliao of Inner Mongolia Wujiaqu of Xinjiang and Baicheng of Jilin respectively. The three
production bases are all equipped with integrated production lines that make comprehensive use of
resources. The Company assigns production tasks to the production bases in consideration of their
geographical locations and resources. With the goal of achieving standard automatic and intelligent
production management as well as the integration of supporting management throughout the entire
industrial chain all production bases maintained a valid status for the ISO 9001 quality management
system and the ISO 22000 food safety management system in 2023.In terms of sales the Company carries on the core value of “winning business through trust.” The
Company combines the model of production-based sales with the model of sales-based production. By
building a market data analysis system the Company improves stability for key accounts’ continuous
purchases selling as much as production. During the Reporting Period the Company continuously refined
the customer ecosystem service system to better meet global customers’ differentiated needs and providebetter more effective and more professional services. Upholding the service philosophy of “stability inthree aspects” the Company established a win-win cooperation model with customers to provide them
with services featuring “stable quality stable supply and relatively stable prices.” Meanwhile the
Company optimized the supporting service mechanism increased service efficiency and timeliness and
improved customer service quality.IV. Analysis of Core Competitiveness during the Reporting Period
√ Applicable □ Not applicable
(I) Cost advantage brought by the standard management and high-efficiency operations of
product scale and whole business chain
In 2023 the xanthan gum raw material ammonia and threonine projects were put into trial and
production. In parallel with the continuous expansion of its business size the Company enjoyed a more
stable leading position in the amino acid industry. Mass production brought lower comprehensive costs.Meanwhile the high utilization of production capacity for the Company’s products and the advantage
from the sale of product combos strengthened the Company’s competitiveness in the biological
fermentation area.Over the years the Company’s business divisions including all production bases the purchase
department and the sales department have stabilized production order improved production indicators
and enhanced the management efficiency thereby constantly boosting the Company’s operation indicators.The Company’s inventory turnover maintained at around 60 days. The Company sold most of its products
by means of spot cash and advance payment. The accounts receivable turnover maintained within 10 days.The high operation efficiency saved the overall management cost. Over the years the Company’s business
divisions including all production bases the purchase department and the sales department have
22 / 282Annual Report 2023
stabilized production order improved production indicators and enhanced management efficiency
thereby constantly boosting the Company’s operation indicators. The Company’s inventory turnover was
maintained at around 60 days. The Company sold most of its products by means of spot cash and advance
payments. The accounts receivable turnover was maintained within 10 days. The high operation efficiency
saved on overall management costs.(II) Accumulation of R&D laboratory amplification of R&D results and rapid advancement
of industrialization
In recent years the Company has increased spending on R&D in the application of synthetic
biotechnology. During the Reporting Period the Company spend 834 million yuan on R&D. The
accumulative spending on basic R&D and application R&D brought continuous improvements in
technical indicators and conversion efficiency. In terms of product technology upgrading it takes only six
to nine months for the Company to upgrade the performance of a generation of bacterial strains by virtue
of its continuous R&D spending and strong strain construction capability. This has ensured that the
Company is always in a leading position for its existing product technologies.One of the Company’s advantages lies in its laboratory amplification of R&D results and rapid
advancement of industrialization. By virtue of a strong capability for application R&D the Company can
quickly commercialize technological achievements. With a capability for independent engineering design
the Company is able to build an intelligent and digital “lighthouse” factory as soon as possible. To maintain
advanced manufacturing and consolidate its foundation the Company has set up an institute for production
technology to conduct research on technologies for the whole industrial chain. The institute has continued
to lead technological revolutions in pursuit of higher energy efficiency and lower energy consumption.All the Company’s production bases use equipment manufactured by renowned manufacturers at home
and abroad. Their key production equipment reaches the international advanced level allowing the
Company to control parameters stably and effectively save energy. The Company’s engineering
department has fostered a group of engineering teams with extensive experience in building production
lines for biological fermentation. This has equipped the Company with unique technical edges and
processes in engineering design engineering construction the control of technical indicators
environmental protection and comprehensive and circular utilization.(III) Stronger resistance to cycle risk with rich product varieties and large supplies
Both the amino acid industry for animal nutrition and the MSG industry are segmented areas of the
biological fermentation industry. The Company persists in both quality improvements and quantity
increases. All product groups are developing in coordination with balanced and good product structures
and continuous increases in the quantity of star products. Products of the biological fermentation industry
can be applied in a broad range of areas. Downstream applications include the processing of agricultural
products basic chemical engineering food processing feed-based breeding medical and healthcare
purposes daily consumption and bio-based materials. Each category is applied to different downstream
application areas. The multi-product layout not only guarantees the continuous development of the
Company’s overall business scale but also improves the Company’s resistance to cycle risk.
23 / 282Annual Report 2023
(IV) Persistence in “operations creation and sharing by all” to build an organizational culture
of openness co-creation and win-win results
Over the years the Company has upheld the concept of “operations creation and sharing by all.”
The Company deeply binds corporate interests with the personal interests of its core teams and builds an
organizational culture of co-creation sharing and win-win results. By offering high rewards for strong
business performance the Company motivates top talents to create top performance and encourages staff
to deliver greater achievements thereby gaining more profits and providing generous rewards for core
personnel who are willing to shoulder more responsibilities. As of the Reporting Period the Company has
built an all-round performance traction system from top to bottom. Every year the Company implements
an employee stock ownership plan to link financial results with team and personal incomes. The Company
refines the incentive policy in a number of aspects including salary performance bonus pool project
bonus share incentives and stock ownership plan and encourages staff to create better financial results
and gain more interest driven by strong performance. The creation of a sharing-based organizational
culture has provided important support for the Company to achieve strategic development fulfill business
goals and stabilize its core management teams.V. Major Business Performance during the Reporting Period
During the Reporting Period the Company registered a revenue of 27.761 billion yuan down 0.63%
year-on-year; the net profit attributable to the shareholders of the listed company was 3.181 billion yuan
down 27.81% year-on-year.(I) Analysis of Main Business
1. Analysis of changes in relevant items in the profit statement and the cash flow statement
Unit: yuan Currency: RMB
Amount for the current Amount for the corresponding Item Change (%) period period in the previous year
Revenue 27760612259.07 27937152798.85 -0.63
Operating costs 22297122025.25 20915783841.63 6.60
Selling expenses 413512921.96 441189063.68 -6.27
General and administrative expenses 924598280.87 1010824495.08 -8.53
Financial expenses -33426675.32 83876800.66 -139.85
R&D expenses 314222682.89 279682517.92 12.35
Net cash flows from operating
5228937084.88 5654954446.36 -7.53 activities
Net cash flows from investment
-1509146234.23 -1738221543.73 13.18 activities
Net cash flows from financing
-3108097192.17 -3093970372.78 -0.46 activities
Explanation of change in revenue: During the Reporting Period the Company registered a revenue
of 27.761 billion yuan representing a slight decrease year-on-year. Main reasons: With the release of
production capacity from the new projects of the Company’s subsidiaries the sales volume of threonine
and xanthan gum increased but the prices of MSG threonine lysine and other feed products declined
thus causing a drop in revenue.
24 / 282Annual Report 2023
Explanation of change in operating costs: During the Reporting Period the Company’s operating
costs reached 22.297 billion yuan up 6.6% year-on-year. Main reasons: The increased sales volume of the
Company’s threonine xanthan gum and lysine caused an increase in operating costs.Explanation of change in selling expenses: During the Reporting Period the Company’s selling
expenses dropped by 6.27% year-on-year. Main reasons: Product allocations from external warehouses
decreased during the Reporting Period causing a drop in transportation costs along with declines in
promotion costs labor costs and share incentive costs.Explanation of change in general and administrative expenses: During the Reporting Period the
Company’s general and administrative expenses fell by 8.53% year-on-year. Main reasons: Labor costs
and share incentive costs decreased.Explanation of change in financial expenses: During the Reporting Period the Company’s
financial expenses dropped by 139.85% year-on-year. Main reasons: The financing amount and interest
expenses decreased and exchange gains and interest income increased.Explanation of change in R&D expenses: During the Reporting Period the Company’s R&D
expenses increased by 12.35% year-on-year. Main reasons: The Company increased spending on R&D
during the Reporting Period.Explanation of change in net cash flows from operating activities: During the Reporting Period
the Company’s net cash flows from operating activities dropped by 7.53% year-on-year. Main reasons:
Sales revenue decreased during the Reporting Period.Explanation of change in net cash flows from investment activities: During the Reporting Period
the Company’s net cash flows from investment activities increased by 13.18% year-on-year. Main reasons:
During the Reporting Period project investments decreased and investments in financing were recovered.Explanation of change in net cash flows from financing activities: During the Reporting Period
the Company’s net cash flows from financing activities decreased by 0.46% year-on-year. Main reasons:
During the Reporting Period repayments for borrowings and expenditures for share repurchases increased.Detailed explanation of significant changes in the Company’s business type profit composition or profit
sources during the Reporting Period
□ Applicable √ Not applicable
2. Analysis of Revenue and Costs
√ Applicable □ Not applicable
During the Reporting Period the Company realized a revenue of 27.761 billion yuan down 0.63
percentage points year-on-year; operating costs reached 22.297 billion yuan down by 1.558 billion yuan
representing a decrease of 5.45 percentage points year-on-year.Key factors for the change in revenue: With the release of production capacity from the new projects
of the Company’s subsidiaries the sales volume of threonine and xanthan gum increased but the prices
of main products including MSG threonine lysine and other feed products declined thus causing a drop
in main business revenue.
25 / 282Annual Report 2023
During the Reporting Period the prices of the Company’s main products including MSG threonine
lysine and other feed products dropped thus causing a drop in both gross profit and gross profit margin
year-on-year.
(1) Main Business Performance by Industry Product Region and Sales Model
Unit: yuan Currency: RMB
Main business performance by industry
Gross Change in Change in operating Change in gross
By industry Revenue Operating costs profit revenue profit margin margin from prior costs from prior year from prior year (%) year (%) (%) (%)
Biological Down 5.43
fermentation 26875853508.58 21622873608.16 19.55 -1.16 6.00 percentage points
Pharmaceutical and Down 6.56
health 562658107.07 409339493.72 27.25 2.25 12.40 percentage points
Main business performance by product
Gross Change in Change in operating Change in gross
By product Revenue Operating costs profit revenue margin from prior costs from
profit margin
prior year from prior year (%) year (%) (%) (%)
Amino acids for Down 10.98
animal nutrition 14539372320.25 12763217281.69 12.22 -2.46 11.49 percentage points
Amino acids for Down 6.56
human medical 562658107.07 409339493.72 27.25 2.25 12.40 percentage
purposes points
Food taste and trait Up 1.25
improving products 9832306593.11 7578210297.47 22.93 -2.64 -4.19 percentage points
Down 3.52
Others 2504174595.22 1281446029.00 48.83 14.46 22.92 percentage
points
Main business performance by region
Gross Change in Change in operating Change in gross
By region Revenue Operating costs profit revenue profit margin margin from prior costs from from prior year
(%) year (%) prior year (%) (%)
Down 6.53
Domestic 18966892718.66 15754837487.69 16.94 -0.66 7.82 percentage
points
Down 2.97
Foreign 8471618896.99 6277375614.19 25.90 -2.06 2.03 percentage
points
Main business performance by sales model
Gross Change in Change in
profit revenue operating
Change in gross
Sales model Revenue Operating costs costs from profit margin margin from prior
(%) year (%) prior year
from prior year
(%)(%)
Down 7.55
Direct sales 16074229725.88 13305934621.21 17.22 -5.50 3.99 percentage points
Sales via agency
Down 2.55
11364281889.77 8726278480.67 23.21 5.88 9.51 percentage points
26 / 282Annual Report 2023
Explanation of main business performance by industry product region and sales model
1) During the Reporting Period the Company’s revenue from the sales of amino acids for animal
nutrition was down by 2.46 percentage points year-on-year and gross profit margin down 10.98
percentage points year-on-year. Main reasons: The prices of threonine lysine and byproducts of major
raw materials dropped causing a decrease in revenue and gross profit margin.
2) During the Reporting Period the Company’s revenue from the sales of amino acids for human
medical purposes was up by 2.25 percentage points year-on-year and gross profit margin down 6.56
percentage points year-on-year. The increased sales volumes of products such as glutamine and proline
brought an increase in revenue. The drop in gross profit margin was caused by falling product prices during
the Reporting Period.
3) During the Reporting Period the Company’s revenue from the sales of food taste and trait
improving products was down by 2.64 percentage points year-on-year and gross profit margin up 1.25
percentage points year-on-year. The decrease in revenue was mainly caused by falling product prices and
technological improvements caused a drop in costs thereby increasing the gross profit margin.
4) During the Reporting Period the Company’s revenue from the sales of other products was up by
14.46 percentage points year-on-year and gross profit margin down 3.52 percentage points. The increase
in revenue was mainly caused by an increase in both the sales volume and price of petroleum-grade
xanthan gum and the drop in gross profit margin was mainly caused by a drop in fertilizers and the price
of liquid ammonia and an increase in costs.
(2) Analysis of Production and Sales
√ Applicable □ Not applicable
Change in Change in Change in
Main products Unit Production Sales Inventory
production sales from inventory
from prior prior year from prior
year (%) (%) year (%)
Amino acids for
animal nutrition ton 2610484 2635319 63053 4.47 7.47 -28.26
Amino acids for
human medical ton 10713 9962 1742 6.64 5.01 75.76
purposes
Food taste and trait
improving ton 1042596 1046713 33412 0.88 1.41 -10.97
products
Explanation of production and sales
1) Reasons for change in the production sales and inventory of amino acids for animal nutrition:
The new project released production capacity for threonine during the Reporting Period causing an
increase in the production of threonine and corn byproducts which drove sales to increase; the inventory
of products such as lysine dropped;
2) Reasons for change in the inventory of amino acids for human medical purposes: The increased
production of products such as glutamine and proline caused an increase in sales and inventory.
27 / 282Annual Report 2023
(3) Performance of Significant Purchase Contracts and Significant Sales Contracts
□ Applicable √ Not applicable
(4) Analysis of Costs
Unit: yuan
By industry
Percentage Amount for the Percentage Percentage
Cost Amount for the Expla
By industry in total costs corresponding period in total costs of change
composition current period nation
(%) in prior year (%) (%)
Raw materials 16648593644.08 74.67 16051220505.56 76.74 3.72
Energy 3091052434.82 13.86 2349819566.69 11.23 31.54
Labor 575261550.75 2.58 404486178.27 1.93 42.22
Biological Manufacturing
fermentation 1307965978.52 5.87 1594319963.25 7.62 -17.96 overhead
Total product
manufacturing 21622873608.16 96.98 20399846213.77 97.53 6.00
costs
Product
Pharmaceutical
manufacturing 409339493.72 1.84 364196692.27 1.74 12.40
and healthcare
costs
Sales of
materials and 264908923.37 1.18 151740935.59 0.73 74.58
others
Total 22297122025.25 100.00 20915783841.63 100.00 6.60
By product
Percentage Amount for the Percentage Percentage
Cost Amount for the Expla
By product in total costs corresponding period in total costs of change
composition current period nation
(%) in prior year (%) (%)
Raw materials 10111486972.12 45.35 9182225489.93 43.9 10.12
Energy 1647784617.63 7.39 1275339079.10 6.1 29.20
Labor 270485094.51 1.21 180647042.79 0.86 49.73
Amino acids for Manufacturing
animal nutrition 733460597.43 3.29 809454797.74 3.87 -9.39 overhead
Total product
manufacturing 12763217281.69 57.24 11447666409.56 54.73 11.49
costs
Amino acids for Product
human medical manufacturing 409339493.72 1.84 364196692.27 1.74 12.40
purposes costs
Raw materials 6068929235.15 27.22 6558364576.05 31.36 -7.46
Energy 873192281.80 3.92 582317796.14 2.78 49.95
Labor 211491210.59 0.95 145632960.09 0.7 45.22
Food taste and
trait improving Manufacturing 424597569.93 1.9 623343306.03 2.98 -31.88
products overhead
Total product
manufacturing 7578210297.47 33.99 7909658638.32 37.82 -4.19
costs
Product
Others manufacturing 1281446029.00 5.75 1042521165.89 4.98 22.92
costs
Sales of
materials and 264908923.37 1.18 151740935.59 0.73 74.58
others
Total 22297122025.25 100.00 20915783841.63 100 6.60
28 / 282Annual Report 2023
Other information regarding the analysis of costs
None
(5) Change in Consolidation Scope Caused by Share Changes in Key Subsidiaries during the
Reporting Period
□ Applicable √ Not applicable
(6) Significant Changes or Adjustments to the Company’s Businesses Products or Services during
the Reporting Period
□ Applicable √ Not applicable
(7) Information of Key Customers and Suppliers
A. Information of the Company’s key customers
√ Applicable □ Not applicable
Sales to the top five customers amounted to 2898029000 yuan accounting for 10.45% of the total sales
for the year; in particular among sales to the top five customers sales to related parties were 0 yuan
accounting for 0% of the total sales for the year.No. Customer name Sales (yuan) Percentage in the total sales for the year (%)
1 No. 1 731748004.84 2.64
2 No. 2 629438959.04 2.27
3 No. 3 572111547.60 2.06
4 No. 4 491154232.14 1.77
5 No. 5 473576288.40 1.71
6 Total 2898029032.02 10.45
Circumstance during the Reporting Period where sales to a single customer exceeded 50% of the total
sales there was any new customer among the top five customers or the Company relied heavily on a
minority of customers
□ Applicable √ Not applicable
B. Information of the Company’s key suppliers
√ Applicable □ Not applicable
Purchases from the top five suppliers amounted to 1856911000 accounting for 10.33% of the total
purchases for the year; in particular among purchases from the top five suppliers purchases from related
parties were 0 yuan accounting for 0% of the total purchases for the year.No. Name of supplier Purchase amount (yuan) Percentage in the annual total purchase (%)
1 No. 1 612358561.72 3.41
2 No. 2 413869146.56 2.3
3 No. 3 289667990.55 1.61
4 No. 4 287940175.81 1.6
5 No. 5 253075110.49 1.41
6 Total 1856910985.13 10.33
29 / 282Annual Report 2023
Circumstance during the Reporting Period where purchases from a single supplier exceeded 50% of the
total sales there was any new supplier among the top five suppliers or the Company relied heavily on a
minority of suppliers
□ Applicable √ Not applicable
Other information
None
3. Expenses
√ Applicable □ Not applicable
During the Reporting Period the Company’s selling expenses were down by 6.27% year-on-year.Main reasons: Product allocations from external warehouses decreased during the Reporting Period
causing a drop in transportation costs along with declines in promotion costs labor costs and share
incentive costs.During the Reporting Period the Company’s general and administrative expenses were down by 8.53%
year-on-year. Main reasons: Labor costs and share incentive costs decreased.During the Reporting Period the Company’s financial expenses were down by 139.85% year-on-
year. Main reasons: The financing amount and interest expenses decreased and exchange gains and
interest income increased.
4. R&D Spending
(1) Information of R&D spending
√ Applicable □ Not applicable
Unit: yuan
Expensed R&D spending for the period 833917914.99
Capitalized R&D spending for the period
Total R&D spending 833917914.99
Percentage of total R&D spending in revenue (%) 3.00
Proportion of capitalized R&D spending (%) 0
(2) Information of R&D personnel
√ Applicable □ Not applicable
Number of R&D personnel 372
Percentage of R&D personnel in total headcount (%) 2.86
Educational structure of R&D personnel
Educational level Number of personnel
PhD 17
Master 73
Bachelor 133
Diploma 149
30 / 282Annual Report 2023
Age structure of R&D personnel
Age group Number of personnel
Below 30 (not inclusive of 30) 154
30-40 (inclusive of 30 and not inclusive of 40) 149
40-50 (inclusive of 40 and not inclusive of 50) 61
50-60 (inclusive of 50 and not inclusive of 60) 8
60 and above 0
(3) Explanation
□ Applicable √ Not applicable
(4) Reasons for significant changes in the structure of R&D personnel and impact on the Company’s
future development
□ Applicable √ Not applicable
5. Cash flows
√ Applicable □ Not applicable
During the Reporting Period the Company’s net cash flows from operating activities were 5.229
billion down 7.53% year-on-year. Main reasons: Sales revenue decreased during the Reporting Period.During the Reporting Period the Company’s net cash flows from investment activities were -1.509
yuan up 13.18% year-on-year. Main reasons: During the Reporting Period project investments decreased
and investments in financing were recovered.During the Reporting Period the Company’s net cash flows from financing activities were -3.108
billion yuan down 0.46% year-on-year. Main reasons: During the Reporting Period repayments for
borrowings and expenditures for share repurchases increased.(II) Explanation of Significant Changes in Profit Caused by Business Other than Main Business
□ Applicable √ Not applicable
(III) Analysis of Assets and Liabilities
√ Applicable □ Not applicable
1.Assets and liabilities
Unit: ten thousand yuan
Change
Amount as at Amount as at
the end of the Percentage the end of the Percentage
from the
Item in total previous in total previous Reporting Explanation
Period assets (%) reporting assets (%)
reporting
period period (%)
Derivative Decrease in forward business as
financial assets 20.00 - 1543.11 0.06 -98.70 of the end of the Reporting Period
Accounts Increase in revenue from
receivable 64112.79 2.77 34085.26 1.39 88.10 customers during payment days of the Reporting Period
Accounts
receivable 6001.32 0.26 11842.52 0.48 -49.32 Addition of held-to-maturity
financing contractual cash flows
31 / 282Annual Report 2023
Other Non-recovery of export tax
receivables 5138.45 0.22 10092.89 0.41 -49.09 rebates during the Reporting Period
Non-current Addition of recovery of
assets due 1935.60 0.08 - - Not investments in Huier Agriculture
within one year applicable in installments
Long-term Increase in deposits for finance
receivables 36.49 - 25.42 - 43.55 lease during the Reporting Period
Other equity Effect of change in the fair value
instrument 51269.14 2.21 125546.39 5.13 -59.16 of other equity instrument
investment investment
Construction in Conversion of completed
progress 16196.17 0.70 174614.32 7.13 -90.72 projects into fixed assets during the Reporting Period
Short-term
borrowings 154386.91 6.67 107049.86 4.37 44.22
Increase in borrowings during
the Reporting Period
Derivative Not Fluctuations in the closing financial 25.00 - - - applicable undelivered fair value of forward liabilities business
Staff Decrease in non-payment of
remuneration 32295.96 1.39 46615.22 1.90 -30.72 staff remuneration payable
payable during the Reporting Period
Taxes payable 25647.25 1.11 36966.92 1.51 -30.62 Decrease in income tax payable
Non-current
liabilities due 53508.53 2.31 26542.96 1.08 101.59 Increase in borrowings due
within one year within one year
Other current
liabilities 11868.87 0.51 24116.95 0.98 -50.79 Increase in unmatured notes
Long-term
borrowings 199996.30 8.64 367601.14 15.01 -45.59 Repayment for borrowings due
Lease liabilities 259.03 0.01 501.90 0.02 -48.39 Decrease in remaining lease term
Estimated Not Estimated losses from creditor’s
liabilities 4588.86 0.20 - - applicable rights and debts in the original share transfer
Decrease in the fair value of
Deferred tax
liabilities 2149.56 0.09 18128.54 0.74 -88.14
other equity instrument
investment during the Reporting
Period
Capital reserve 103270.78 4.46 192926.01 7.88 -46.47 Cancellation of treasury stock for the previous reporting period
Other
comprehensive 568.76 0.02 54107.26 2.21 -98.95 Change in the fair value of other
income equity instrument investment
Increase in the accrual of safety
Special reserve 395.24 0.02 206.04 0.01 91.83 costs during the Reporting
Period
Other information
None
2. Overseas assets
√ Applicable □ Not applicable
(1) Asset size
The Company’s overseas assets reached 1.032 (unit: billion yuan currency: RMB) accounting for
4.46% of the total assets.
(2) Explanation of a high proportion of overseas assets
□ Applicable √ Not applicable
3. Restrictions over major assets as of the end of the Reporting Period
√ Applicable □ Not applicable
32 / 282Annual Report 2023
Unit: yuan Currency: RMB
Item Book value Reasons for restriction
Monetary fund 172543312.10 Refer to VII. Note 1 to the Financial Report in Section X for more detail
Fixed assets 423641966.22 Mortgage
Total 596185278.32
4. Other information
□ Applicable √ Not applicable
(IV) Analysis of Industrial Business Information
√ Applicable □ Not applicable
1. Main raw materials - analysis of change in corn market
The Company produces products using corn as a raw material and coal as an energy sourceto provide
the heat required for production. Corn accounts for more than 50% of all materials. Hence changes in the
corn price have a direct impact on the production costs of the Company’s products.The corn price trend is associated with a number of factors including the national collection and
storage policy the prices of feed substitutes including soybeans/wheat/barley the demand of the
downstream breeding industry the international political and economic situations and even changes in
ethanol/gasoline prices. The Company acquires the corn required for production mainly through domestic
purchases.Changes in the average price of corn during the period from 2010 until now are shown as follows:
China: Spot price (average price): corn price trend
Data source: Wind
According to a Boyar report China produced 289 million tons of corn in 2023 hitting a record with
the per unit yield growing by 1.5%. Meanwhile to avoid geopolitical risk China is continuously
promoting the import of corn from diverse sources. During the Reporting Period Brazilian corn entered
the Chinese market and became China’s top import country in place of the United States; imports of South
African corn increased. In the context of falling global grain prices and the tight balance between supply
and demand in China domestic and foreign grain prices were closely associated. In 2023 the domestic
corn price fell with great volatility. In the first half of 2023 China imported massive amounts of corn from
the United States and Brazil. Coupled with the concentrated release of bearish factors including the
increased supply of moist grain in grassroots production areas and the wheat price drop to 1.3 yuan/jin
the domestic corn price fell for five consecutive months. In May 2023 the average corn price dropped by
more than 150 yuan/ton compared with the price at the beginning of the year. In the third quarter the price
quickly soared due to the supply shortage period. In September the average corn price soared to 2879
33 / 282Annual Report 2023
yuan/ton reaching its peak in the year; in the fourth quarter with the release of new grain alongside an
expected harvest the market bearish sentiment became stronger with future and spot prices of corn
dropping substantially. In December dominant contracts fell to 2364 yuan/ton and the spot price
approached 2500 yuan/ton a record low for three years. Overall the domestic average corn price was
2775 yuan/ton in 2023 down 1.39% year-on-year.
In terms of corn purchase based on the geographical locations and market characteristics of its
production bases the Company adopts a combination of purchase models including collection and storage
market purchase participation in the auctions of state-owned grain depots and direct purchase from
farmers. The proportion of each model in total purchases can be adjusted timely. Corn consumption by
the Xinjiang Base is estimated to account for about 30% of the local annual corn supply. Also in view of
the unique location and corn supply of the Xinjiang Base from the fourth quarter of 2022 to the third
quarter of 2023 the base purchased corn in the collection and storage model to ensure the supply of raw
materials required for routine production. Upon the end of the purchase season the market price of corn
dropped causing the storage cost to be higher than the spot price of corn. As a result the corn purchase at
the Xinjiang production base failed to outperform the market. Tongliao and Baicheng production bases
are closer to the major corn production areas of the northeast and have a longer purchase season. On the
basis of collection and storage the Company flexibly used a variety of models including market purchase
auction and direct purchase from farmers which counteracted the impact of storage costs on production
costs to a certain extent.For the industry that the Company is engaged in a sufficient corn supply is conducive to the
sustainable and stable development of the industry. However great fluctuations in the corn price might
result in increasing uncertainties in the cost of raw materials for the industry.
2. Analysis of changes in products
Both the amino acid industry for animal nutrition and the MSG industry which the Company is
engaged in are segmented areas of the biological fermentation industry. Products of the biological
fermentation industry can be applied in a broad range of areas. Downstream applications include the
processing of agricultural products basic chemical engineering food processing feed-based breeding
medical and healthcare purposes daily consumption and bio-based materials. At present the products
that have been applied on a mass scale in the industry mainly include four categories. The first category
is amino acids for animal nutrition including lysine threonine methionine valine and tryptophan; the
second category is food additives including flavor enhancers such as MSG and I+G; the third category is
bio-based materials including emerging materials such as cadaverine and polylactic acid; the fourth
category is medical amino acids and others including minor amino acids such as glutamine leucine
isoleucine pharmaceutical valine and proline as well as nucleoside products such as inosine guanosine
and adenosine.The Company’s product lines cover the amino acids for animal nutrition and food additives in the
aforementioned four categories. At the same time the company also expands its business to include amino
acids for human medical purposes and other categories. The Company’s main products include feed and
34 / 282Annual Report 2023
food additives and flavor-enhancing condiments such as lysine threonine and MSG as well as byproducts
such as organic fertilizers.On April 12 2023 the Ministry of Agriculture and Rural Affairs published the Three-Year Action
Plan for the Reduction and Substitution of Soybean Meal in Animal Feed (hereinafter referred to as the
“Action Plan”) which further specifies the goal and pathway for the reduction and substitution of soybean
meal. The Action Plan proposes the goal of continuously reducing the proportion of soybean meal
strengthening the development and utilization of protein feed resources and increasing the supply of
quality feed grass. The implementation of the plan will help build a feed formula structure that fits the
national conditions and resource characteristics of China and establish a usable feed resource database
system a low-protein high-quality feed standard system a high-efficiency feed processing and
application technology system and a feed industrial grain-saving policy support system. Therefore the
feed conversion efficiency in the livestock and poultry breeding industry will be substantially improved
and obvious achievements will be delivered in grain conservation and reduction for the breeding industry.While ensuring stability in the production efficiency of livestock and poultry the dosage of soybean meal
in feed should drop by more than 0.5 percentage points every year. By 2025 it should drop to less than
13%. A reduction in the dosage of soybean meal in feed will cause an increase in the dosage of mixed
meal. The addition of feed amino acids should be increased to ensure the overall amino acid balance in
feed and improve feed efficiency. The soybean meal reduction plan has increased demand for feed amino
acids. With technological improvements and the expansion of production capacity demand for minor
amino acids will grow rapidly upon the decrease in their costs thereby developing more space for
formulation dosage.
(1) Lysine
According to the preliminary statistics of Boyar the global production capacity for lysine (converted
to 98% lysine which applies hereinafter) was 4.593 million tons in 2023 up 14.5%; China’s production
capacity for lysine was 3.502 million tons up 16.9% year-on-year. According to estimation the global
production of lysine was 3.461 million tons in 2023 up 2.7% year-on-year; China’s production of lysine
was 2.825 million tons up 10.7% year-on-year which accounted for 81.6% of the global production up
5.9 percentage points compared with 2022. In 2023 the operating rate for the global lysine industry was
about 75.4% down 8.7 percentage points year-on-year; the operating rate for China’s lysine industry was
80.7% down 4.6 percentage points year-on-year.
According to the estimation of Boyar the number of lysine manufacturers around the world reached
20 in 2023. With production expansion in the existing enterprises and capacity optimization in some
manufacturers the overall production capacity maintained growth and industrial competition was fierce
and market prices were weak. In the first half of 2023 lysine exports declined and the average price of
98% lysine was 8.69 yuan/kg down 8.72% from the previous period and down 28.65% year-on-year; the
average price of 70% lysine was 5.58 yuan/kg down 13.49% from the previous period and down 15.84%
year-on-year. In the second half of 2023 under the impact of the supply and demand landscape and
manufacturers’ sales strategies the prices and profitability of lysine hydrochloride (98% lysine) and lysine
35 / 282Annual Report 2023
sulfate (70% lysine) presented different trends. Exports of 98% lysine increased causing the price to
rebound and the industry to make profits. The supply of 70% lysine increased causing a continuous
decrease in the price and the industry remained at a loss for most of the months of the year (without the
offset of byproducts).The Company is the enterprise with the biggest production capacity for lysine. The falling lysine
price caused a decrease in the Company’s main business revenue and profit. In the future the Company
will capitalize on its advantages in the production technology and sales of lysine to improve the overall
profitability of the lysine industry.
(2) Threonine
According to the statistics of Boyar the global production capacity for threonine was 1.235 million
tons in 2023 up 17.3% year-on-year; China’s production capacity for threonine was 1.145 million tons
up 20.5% year-on-year. The global production of threonine was 950000 tons up 3.3% year-on-year;
China’s production of threonine was 900000 tons up 7.1% year-on-year accounting for 95% of the global
production of threonine. European customers overbought threonine previously. Hence they mainly
digested their inventory in the first half of 2023. With the consumption of inventory in the first half of
2023 China’s exports of threonine recovered. Hence the exports were weak in the first half of 2023 and
strong in the second half. According to estimation China exported 540000 tons of threonine in 2023
representing a slight decrease of 0.9% year-on-year; the domestic supply was 360000 tons up 22% year-
on-year.The threonine industry features a high concentration with its supply concentration CR4 maintaining
between 88% and 91% for five years in a row. To improve the profitability of the industry the leading
enterprises raised the price and adopted a strategy of tie-in sales. The market price of threonine was
adjusted to a higher level from the third quarter onwards causing the whole industry to make profits and
the profits were getting bigger gradually with the annual average profit growing by approximately 33%
year-on-year.During the Reporting Period a new production line at the Tongliao Base was put into production.After it was put into production the Company’s market share of threonine globally was estimated to be
40% to 45%. To sell as much as production and improve profits from products the Company made plans
in advance. Based on changes in supply and demand the Company grasped favorable market opportunities
to raise the price providing support for gaining stable income and profits in 2023.
(3) Valine
The promotion of low-protein diet technology and the reduction and substitution of soybean meal are
further boosting rapid growth in the consumption of minor amino acids including tryptophan arginine
valine and isoleucine. With technological improvements and the expansion of production capacity the
prices of minor amino acids are getting reasonable developing space for formulation dosage.In 2023 the valine industry welcomed explosive growth in production capacity. According to the
statistics of Boyar as of the end of 2023 there were 13 valine manufacturers and the production capacity
increased to about 281000 tons causing the market supply to further exceed demand. In terms of the
36 / 282Annual Report 2023
product price in the first half of 2023 the valine price remained high. From the third quarter onwards
due to an increase in market supply the valine price at the end of July fell to 17 yuan/kg; in the same
month due to an increase in the soybean meal price manufacturers’ quotations rebounded instead of
dropping further. However due to the continuously weakening end-user demand end users did not have
a strong intention to place more orders. As of mid-to-late December some manufacturers offer a quotation
of less than 16 yuan/kg. In 2023 the average market price of valine was 23.03 yuan/kg down 0.42% year-
on-year. It is estimated that the production capacity for valine will continue to increase in 2024.During the Reporting Period the anaerobic fermentation technology developed by the Company in
collaboration with external research institutions was implemented in production. It markedly improved
the metabolism efficiency of microbial strains to an industrial leading level. Compared with traditional
technologies the new technology features a more streamlined process and brings higher production
efficiency and excellent product quality while having a considerably lower impact on the environment.The fact that anaerobic valine products were put into production is a hallmark that the Company has
mastered both aerobic and anaerobic fermentation technologies in valine technology and production. The
increase in production capacity for valine has enriched the Company’s product spectrum and improved its
competitiveness in the amino acid industry.It is estimated that production capacity for minority amino acids will be at a stage of rapid growth in
the coming two years. While some projects might stagnate due to fast market changes a substantial
increase in production capacity is bound to happen. Competition will drive technological improvements
and a decrease in cost and price thus further developing room for more consumption of minority amino
acids.
37 / 282Annual Report 2023
Analysis of Business Information in the Food Industry
1 Composition of Main Business during the Reporting Period
√ Applicable □ Not applicable
Unit: yuan Currency: RMB
Main business performance during the Reporting Period by product
Change in Change in Change in Gross operating operating gross
Product Operating revenue Operating costs profit profit margin revenue costs from from prior prior year margin (%) year (%) (%) from prior year (%)
Flavor enhancer 8750162248.82 7062998745.11 19.28 -5.99 -5.94 -0.04
Feed amino acid 10323499472.69 9160000784.01 11.27 -0.77 6.48 -6.04
Pharmaceutical
amino acid 562658107.07 409339493.72 27.25 2.25 12.40 -6.56
Major raw material
byproduct 4872429249.28 4075179642.71 16.36 -7.11 22.26 -20.10
Others 2929762537.79 1324694436.33 54.78 31.03 38.70 -2.50
Subtotal 27438511615.65 22032213101.88 19.70 -1.10 6.11 -5.45
Main business performance during the Reporting Period by sales model
Gross Change in Change in
Change in
operating operating gross
Sales model Operating revenue Operating costs profit margin revenue costs from
profit
(%) from prior prior year
margin
year (%) (%) from prior year (%)
Direct sales 16074229725.88 13305934621.21 17.22 -5.50 3.99 -7.55
Sales via agency 11364281889.77 8726278480.67 23.21 5.88 9.51 -2.55
Subtotal 27438511615.65 22032213101.88 19.70 -1.10 6.11 -5.45
Main business performance during the Reporting Period by region
Gross Change in Change in
Change in
profit operating operating
gross
Region Operating revenue Operating costs revenue costs from profit margin
(%) from prior prior year
margin
year (%) (%) from prior year (%)
Domestic 18966892718.66 15754837487.69 16.94 -0.66 7.82 -6.53
Foreign 8471618896.99 6277375614.19 25.90 -2.06 2.03 -2.97
Subtotal 27438511615.65 22032213101.88 19.70 -1.10 6.11 -5.45
Total 27438511615.65 22032213101.88 19.70 -1.10 6.11 -5.45
2 Profit from Online Sales Channels during the Reporting Period
□ Applicable √ Not applicable
38 / 282Annual Report 2023
(V) Analysis of Investment
Overall analysis of external equity investment
√ Applicable □ Not applicable
Proportion of shareholding Book balance
Investee
in investee (%) Opening balance Increase Decrease Closing balance
Bank of Tibet 4.2414 157000000.00 157000000.00
Xinjiang Huier Agriculture Group Co. Ltd. 9.4044 30000000.00 30000000.00 -
AIM Vaccine Corporation 4.1286 1062991300.00 -707299950.00 355691350.00
SenseUp GmbH 5472600.59 5472600.59 -
Tongliao Desheng Bio-tech Co. Ltd. 49 12005325.58 214371.65 12219697.23
Beitun Zefeng Agricultural Development Co.
33.336890969.081631564.331800000.006722533.41
Ltd.Total 1274360195.25 -705454014.02 37272600.59 531633580.64
1. Significant equity investment
□ Applicable √ Not applicable
2. Significant non-equity investment
□ Applicable √ Not applicable
3. Financial assets measured at fair value
√ Applicable □ Not applicable
Unit: yuan Currency: RMB
Gains or losses on Accumulated Impairment
Opening amount changes in fair
fair value
changes accrued during Purchase amount for
Sales/repurchase
Asset type value for the the Reporting the Reporting Period amount for the Other changes Closing amount
Reporting Period included in Period Reporting Period equity
Trust
products 29747999.99 9861128.57 550000000.00 589609128.56 -
39 / 282Annual Report 2023
Private
equity 45174193.03 -15207391.70 29966801.33
Derivatives 15431100.00 -54755897.14 -39524797.14 200000.00
Others 1474591251.55 -693567411.59 6691350.00 -5621428.73 2766387860.96 2773885144.05 -48422870.62 715114519.98
Total 1564944544.57 -753669571.86 6691350.00 -5621428.73 3316387860.96 3323969475.47 -48422870.62 745281321.31
Securities investment
□ Applicable √ Not applicable
Explanation of securities investment
□ Applicable √ Not applicable
Private equity investment
□ Applicable √ Not applicable
Derivatives investment
□ Applicable √ Not applicable
40 / 282Annual Report 2023
4. Progress of the restructuring and integration of material assets during the Reporting Period
□ Applicable √ Not applicable
(VI) Sale of Material Assets and Equity
□ Applicable √ Not applicable
(VII) Analysis of Major Holding and Joint Stock Companies
√ Applicable □ Not applicable
The Company’s subsidiary Tongliao Meihua mainly produces MSG and amino acids which is
classified as the manufacturing industry. Its registered capital is 1.8 billion yuan and its legal
representative is Gong Hua. As of December 31 2023 Tongliao Meihua had 7.362 billion yuan in total
assets and 4.736 billion yuan in net assets and realized a revenue of 10.02 billion yuan and net profits of
1.01 billion yuan.
The Company’s subsidiary Xinjiang Meihua mainly produces amino acids which is classified as the
manufacturing industry. Its registered capital is 2.5 billion yuan and its legal representative is Wang You.As of December 31 2023 Xinjiang Meihua had 6.149 billion yuan in total assets and 4.815 billion yuan
in net assets and realized a revenue of 8.096 billion yuan and net profits of 1.539 billion yuan.The Company’s subsidiary Jilin Meihua mainly produces MSG and amino acids which is classified
as the manufacturing industry. Its registered capital is 2 billion yuan and its legal representative is Zhang
Jinlong. As of December 31 2023 Jilin Meihua had 6.295 billion yuan in total assets and 3.079 billion
yuan in net assets and realized a revenue of 7.928 billion yuan and net profits of 421 million yuan.(VIII) Structured Entities Controlled by the Company
□ Applicable √ Not applicable
VI. The Company’s Discussion and Analysis of its Future Development
(I) Industrial Landscape and Trend
√ Applicable □ Not applicable
In recent years the amino acid industry has developed rapidly with a strong impetus for the
expansion of the global production capacity and increasingly fiercer industrial competition. By product
the industrial landscape for threonine and glutamic acid is relatively stable while it requires further
integration for lysine because of the great number of manufacturers at home and abroad. For major amino
acids the existing enterprises have a stronger voice in the industry due to their first mover’s advantage
scale advantage and cost advantage; for minor amino acids the promotion of low-protein diet technology
and the reduction and substitution of soybean meal further drive fast growth in the dosage of minor amino
acids including tryptophan arginine valine and isoleucine. With technological improvements and the
expansion of production capacity demand for minor amino acids will grow rapidly upon the decrease in
their costs thereby developing more space for formulation dosage. It is estimated that production capacity
for minority amino acids will be at a stage of rapid growth in the coming two years. While some projects
might stagnate due to fast market changes a substantial increase in production capacity is bound to happen.With the development of synthetic biotechnology and the increasingly maturation of mass bio-
manufacturing technology enterprises are paying greater attention to spending on R&D technology and
41 / 282Annual Report 2023
intellectual property protection. The production of products is developing towards the high-quality
manufacturing industry and leading enterprises are starting to push for the development of information-
based intelligent and standard factories.(II) The Company’s Development Strategy
√ Applicable □ Not applicable
The Company’s development strategy remains unchanged: 1) focusing on the high-quality growth of
the main business striving to become a leading enterprise in synthetic biology ensuring the sustainable
growth of profitability and becoming the most competitive industrial leader and building a smart factory
and a lighthouse factory in the amino acid industry; 2) driven by both technology and management
strengthening the Company’s defense line through the concerted efforts of its R&D supply production
sales and all functional departments; 3) persisting in creation and sharing sticking to a customer-centered
approach and upholding the principle of integrity.The Company has large-scale bio-manufacturing capabilities which are essential to application
development and product implementation in synthetic biology and are scarce resources in synthetic
biology globally. Its large-scale bio-manufacturing capabilities cover a number of areas including
biotechnology process capabilities engineering capabilities and production management. In the future
the Company will strengthen cooperation with global top biotech companies and institutions and comb
through technology-wise and product-wise opportunities in basic synthetic biotechnology precision
fermentation and non-grain fermentation technology. Based on its globally leading capabilities for
underlying engineering process amplification and mass production the Company will continue to
promote the absorption and implementation of advanced production and R&D technology and new
products.Later on the Company will promote project progress flexibly by a combination of means and
establish cooperation using different models based on the different development stages technical features
and business models of the projects. In addition to the traditional technology licensing model the
Company will establish project-based cooperation by means of joint ventures minority equity investment
and M&A in a bid to expand strategic channels for the acquisition of new technologies and new products.(III) Business Plan
√ Applicable □ Not applicable
In 2024 the Company will continue to increase input on organizational development institutional
improvements and technology R&D promote the standardization of production purchase sales and
finance improve production automation perform fine operations and management and complete
construction projects as per the plan to achieve sustainable growth in sales revenue.In 2024 the Company will strive to boost internal cultural development while accomplishing the
budget goal. In terms of organizational development the Company will carry on the organizational culture
of “creation and sharing” continuously improve its HR management system give play to the subjective
42 / 282Annual Report 2023
initiative of leaders and employees at all levels reform the performance appraisal by adding a process
performance design and step up efforts to build the reserve talent pool thereby building a talent team for
the construction of factories overseas. In terms of the distribution of production capacity the Company
will complete the survey and selection of overseas sites. In 2024 the MSG production expansion project
at Tongliao Base and the project of technological improvements for isoleucine at Xinjiang Base will be
completed and put into production and the conditions will be met for the commencement of the lysine
project at Jilin Base.(IV) Potential Risks
√ Applicable □ Not applicable
1. Fluctuations in the prices of main products and risk of market competition
The prices of the Company’s main products including threonine lysine and xanthan gum
experienced great fluctuations during the Reporting Period. At present the market competition pattern of
the industry that the Company is engaged in is relatively stable. However all enterprises in the industry
are expanding business vertically and horizontally to increase their market share of existing products and
gain the first mover’s advantage for new products. The Company also has a plan to improve technology
or expand production capacity in 2024. In the future product prices might drop substantially due to a
variety of factors including the prices of raw materials fiercer market competition and changes in
downstream demand which will have an adverse impact on the Company’s profitability.As the Company’s business volume increases its asset size will increase and its service capabilities
will improve which will pose new tests to the Company’s existing management level organizational
structure and business processes. In the future if the Company’s management capabilities cannot keep up
with the expansion of its business scale or maintain high efficiency it might be subject to risks such as
rising operating costs and declining profitability.
2. Risk of overseas market sales
During the past three years the Company’s revenue from overseas sales was 6.229 billion yuan 8.65
billion yuan and 8.472 billion yuan respectively accounting for 27.68% 31.18% and 30.87% of the
main business revenue respectively. For overseas sales the Company is required to comply with the laws
and regulations of the countries and regions where the customers are located meet the local requirements
for supplier qualifications and conform to the customers’ requirements for products.
(1) Additional trade restrictions increasing costs and sanctions will have a negative impact on the
Company’s business in overseas regions. Specifically the factors include imposing additional tariffs and
import duties setting quotas and other non-tariff barriers import and export restrictions license
restrictions and exercising sanctions as well as other retaliatory measures. The negative impact of such
events on the Company might involve multiple aspects including reputation and product sales as well as
existing legal and financial arrangements thus adversely impacting the Company’s business development.For example the European Union the U.S. Indonesia and Vietnam have launched anti-dumping
investigations against China for the export of MSG.
43 / 282Annual Report 2023
(2) The trade tension between China and the U.S. might affect the export of some products. As the
U.S. government imposes restrictions on commodities and trade with China the prospects for future tradebetween the two countries are uncertain. The U.S. President signed the “Uyghur Forced Labor PreventionAct” (hereinafter referred to as the “Act”) on December 23 2021 (U.S. time). After the Act was passed
the U.S. imposed restrictions on the import of products produced in Xinjiang to the U.S. Further
escalations in the China-U.S. trade tension and other tensions or news or rumors on such escalations may
bring uncertainties to export thereby affecting the Company’s business operations.
3. Risk of environmental compliance
The Company’s subsidiaries Tongliao Meihua Xinjiang Meihua and Jilin Meihua are all classified
as key pollutant discharge entities by the environmental authorities. The Company’s main products are
produced through biological methods and the production process will produce certain amounts of waste
water waste gas and waste residue. The Company strictly implements the laws and regulations
represented by the Environmental Protection Law of the People’s Republic of China. Based on the actual
status of its environmental protection the Company has published the Management Policy for Odors to
Steadily Achieve Standards and the Management Policy for the Stable Operations of Wastewater
Workshops. Al production bases strictly implement the Company’s requirements and have formulated
internal management documents including the Management Policy for Environmental Protection the
Policy for the Monitoring of Environmental Protection the Policy for Education and Training on
Environmental Protection and the Policy for the Inspection of Environmental Protection. They perform
environmental management in accordance with the principles of prioritizing prevention controlling
pollution sources performing end treatment discharging up to standards and the accountability system.If the Company has any major accident of environmental pollution due to factors such as inadequate
management or force majeure it will be subject to the punishments of the environmental authorities and
even be required to suspend production and make rectifications thus having an adverse impact on the
Company’s operations. In addition if the national environmental policies put forward stricter requirements
the Company must increase spending on environmental protection to meet the regulatory requirements of
national and local environmental authorities for companies’ daily operating activities. Hence the
Company’s operating costs might also rise.During the Reporting Period the Xinjiang Company was given multiple administrative punishments
by the local environmental authority due to the excessive unorganized emissions of boundary odors. The
incidents reflected the fact that the production management personnel at the production base slacked off
were not serious enough with management and failed to run environmental facilities according to the
Company’s standards. The Company attached great importance to the incidents and strictly implemented
the accountability system. It addressed all problems further inspected the factory identified the location
of odors allocated funds for treatment developed solutions and specified the rectification goal measures
responsible personnel and time limit for deep treatment of the odors.
4. Risk of production safety
44 / 282Annual Report 2023
It takes long production processes to produce the Company’s main products. From corn sieving and
soaking at the start to the fermentation and extraction of amino acids it requires the use of steam with the
specified pressure power supply facilities with various voltage levels and special equipment. Further the
production involves the storage and use of such liquids as liquid ammonia and vitriol. The Company has
formulated the Management Policy for Production Safety strictly in accordance with the requirements for
internal control implements safety accountability for all departments and subsidiaries and has established
comprehensive policies and processes for production safety. However with the continuous expansion of
its business scale and the aging of its facilities and equipment in the future if the Company cannot strictly
implement all safety management measures at all times continuously improve staff abilities and
awareness for production safety or maintain and update relevant facilities and equipment it will still face
a risk of safety accidents which will cause significant losses to employees’ personal safety and the
Company’s property safety thereby having an adverse impact on the Company’s operations. In the event
of a serious accident it might cause disruption to the Company’s business operations and increase
operating costs thus affecting its business performance.
5. Risk of change in the industrial regulatory environment
The Company is mainly engaged in the R&D production and sales of amino acid products and the
products are mainly applied in food feed-based breeding pharmaceutical and health and daily chemical
areas. In its industry the Company is subject to the regulation of such competent authorities as the NDRC
the Ministry of Industry and Information Technology and the Ministry of Agriculture and Rural Affairs.To ensure the safety effectiveness and controllability of products China has formulated a suite of legal
and regulatory documents that stipulate strict standards for the production licensing quality management
and registration management of relevant products. Also developed countries and regions such as the EU
have developed higher access requirements for the products entering them. If there is any significant
change in the industrial policies or access policies in relevant countries or regions in the future or if the
Company is unable to make timely operational adjustments to adapt to the change it will have an adverse
impact on the Company’s normal production and operating activities.
6. Technical risk
(1) Risk of the leakage of core technology or the loss of core technical personnel
The Company has developed an advantage in core technology in strain culture fermentation control
separation and extraction and purification and accumulated rich experience in industrialization. The
Company has gained satisfying economic returns by promoting the effective commercialization of
scientific and technological improvements. Meanwhile the patents that the Company has been granted
and the patents that it is applying for cover a spectrum of production stages including strain culture
fermentation control separation and extraction application extension and the whole chain of core
technology. In consideration of the importance of core technology the Company attaches great importance
to technological innovation and development. It has set up a designated research team equipped with
designated research personnel to take charge of its technological development. The Company retains its
core technical team by entering into long-term contracts and offering competitive remuneration and
45 / 282Annual Report 2023
benefits and signs a non-disclosure agreement with staff members who have knowledge of core
technology to prevent the leakage of core technology. However with the expansion of its business scale
the Company still faces a risk from the diffusion of its core technology thus having an adverse impact on
its business performance. With the burgeoning of the biological industry in China high-calibre technical
talents are in increasing shortage and are being competed for by the Company’s competitors. If the
Company has a serious brain drain and cannot guarantee a stable technical team internally it might have
an adverse impact on the Company’s product development production and operations.
(2) Risk of the development and promotion of new products
The development and promotion of new products help the Company maintain its competitive edge.The Company always values independent innovation and technological development. In the future the
Company will continue to develop more products that are technologically leading and can be applied in
different areas through technological innovation and development. However the development of new
technologies and new products has inherent risks such as long cycles and heavy investments. While the
Company has built a mature system for technological development and hired professional R&D personnel
the possibility of failure in product R&D cannot be ruled out. In addition the question of whether a new
product upon successful development can be quickly introduced to the market depends on a variety of
internal and external factors including the Company’s marketing capabilities as well as the downstream
application market. Hence the Company faces uncertainties in terms of whether it can gain economic
returns from new products as soon as possible. If the Company cannot gain accurate knowledge of the
trend of technological development or reduce various risks in product and technology development in the
future it might face such risks as failed product development failure to launch new products as per the
plan or products failing to meet market requirements which will have an adverse impact on the
Company’s operations.
7. Financial risk
(1) Risk of fluctuations in exchange rate
The Company’s exports are mainly settled in US dollars. In 2023 the Company realized a revenue
of 8.472 billion yuan. The Company is engaged in the trading of financial derivatives to reduce the risk of
fluctuations in dollar-currency exchange rates. The Company has credit lines for financial derivative
business with multiple cooperating banks. The Company trades financial derivatives by occupying credit
lines. The occupied credit lines are associated with the product term and category and the Company
operates within the bank’s credit line. Exchange rates usually change with changes in domestic and foreign
political situations and the global economic environment and thus present great uncertainties. If there are
greater fluctuations in exchange rates and the Company cannot match its foreign trade and forward
exchange settlement it will have an adverse impact on the Company’s business performance.
(2) Risk of change in corporate income tax policies
The Company’s wholly-owned subsidiaries Tongliao Meihua and Xinjiang Meihua are entitled to
the corporate income tax at a rate of 15% for encouraged industrial enterprises incorporated in the western
region from January 1 2021 to December 31 2030 in accordance with the provisions of the
46 / 282Annual Report 2023
Announcement on Extending the Corporate Income Tax Policy for Western Development (2020 No. 23)
published by the Ministry of Finance the State Taxation Administration and the NDRC. On September
28 2021 Jilin Meihua was recognized as a hi-tech enterprise by the Jilin Provincial Leadership Group for
Managing the Recognition of Hi-Tech Enterprises and obtained a hi-tech enterprise certificate with the
document No. GR202122000280 which is valid from September 28 2021 to September 27 2024. In
2023 Jilin Meihua was entitled to a corporate income tax rate of 15%. If there is any change to the
aforementioned tax preference policies in the future or if the Company cannot be continuously recognized
as a hi-tech enterprise upon the expiration of the tax preference it will cause an increase in the Company
tax payment which in turn has an adverse impact on the Company’s performance.
8. Risk of dispute on intellectual property
Industrially leading enterprises that have mastered advanced technologies usually set high access
barriers by means such as patent applications to maintain their technological advantages and
competitiveness and prevent the risk of the leakage of technology. The Company always prioritizes the
development of independent intellectual property and has thus built a science-based R&D system and an
intellectual property protection system. Given the increasingly fiercer competition among companies in
the industry if the Company fails to protect its self-owned intellectual property from being infringed upon
or if the Company infringes upon others’ intellectual property in the process of schematic design or product
development due to management omissions or other factors the Company might face the risk of litigation
or disputes on intellectual property. Additionally if any competent authority holds that the Company
infringes upon intellectual property or if any intellectual property owned by the Company is held to be
invalid it may also affect the production and sales of the Company’s relevant products thereby having an
adverse impact on the Company’s business development.(V) Miscellaneous
□ Applicable √ Not applicable
VII. Explanation of circumstances where the Company does not disclose information according to
the standards due to special reasons such as the standards not applicable to the Company or the
information classified as state secret or trade secret and the reasons
□ Applicable √ Not applicable
Section 4 Corporate Governance
I. Information of Corporate Governance
√ Applicable □ Not applicable
In 2023 based on the annual key work plan for audit the Company used the internal control method
to perform closed-loop inspections on its important business areas including funds entrusted storage
purchases sales assets inventory costs engineering and human resources oriented towards risk control.The Company mainly diagnosed deficiencies and omissions in daily management in business process
compliance waste and losses and assisted in controlling reducing transferring and averting risks for
business thereby effectively reducing and avoiding business risks. At the same time the Company
47 / 282Annual Report 2023
continued to improve its internal control system and risk management which played a positive supporting
role in its operations management.During the Reporting Period the Company strengthened inspections and supervision over the
management of entrusted corn storage projects at the three production bases and strictly implemented the
management standards for entrusted corn storage. Meanwhile the Company advised the purchase
department to take advantage of market opportunities and choose to cooperate with high-quality suppliers
which reduced the cooperation risk to a certain extent. The inspection results showed that the outgoing
quality of corn under entrusted storage and the storage facilities and equipment were improving year by
year. The Company also conducted training and made rectifications for problems that were identified and
improved the management mechanism for the approval process for storage location changes.During the Reporting Period the Company’s audit department and asset management performed a
joint inspection of assets. The inspection results and rectifications were included in the quarterly appraisal
management of the asset management office which effectively promoted the closed-loop management of
the accounting process and problems with assets at the production bases consolidated the basic
management of assets and basic work for ensuring consistency between accounting records and reality
and strengthened the daily performance of duties in asset accounting. The inspection results showed that
the foundation for asset management at the production bases was getting stronger. For the problems
identified the audit department will continue to strengthen control and perform inspections and
monitoring in 2024.During the Reporting Period the Company conducted special audit checks of accounts receivable for
its sales and accounts payable for its purchases. The results showed that the risk of the sales business was
basically controllable. The Company constantly strengthened daily compliance management and job
training and consolidated internal control and basic management of sales. The purchase risk at the three
production bases was concentrated in the hardware engineering and corn businesses. The purchase offices
of the production bases strictly implemented the management processes and requirements of the Purchase
Handbook of the Company and the Supplier Quality Management Policy to strengthen the internal control
and management of purchases. They also built a daily internal inspection mechanism to immediately
correct any deviations in daily activities.Based on the Company’s sustainable development planning the audit department identified and
teased out the planning supporting operations assessment and improvement processes required for the
anti-bribery management system in accordance with the ISO 37001:2016 standard. The audit department
specified the requirements for the operational control of bribery risk and established the Anti-bribery
Management System and the Management Process which stipulated the assessment and rating of bribery
risk. By organizing risk assessments the Company formed a sheet containing the criteria for the levels of
bribery risk. The Company successfully passed the external review three months after the trial of the
system which strengthened internal and external compliance management to a certain extent.During the Reporting Period the audit department proactively organized and assisted Da Hua CPAs
LLP in conducting an inspection and evaluation of internal control for 2023 and no major defects were
48 / 282Annual Report 2023
identified. For general defects that were identified the audit department developed rectifications with the
business divisions and all rectifications were completed.In 2023 the Company kept developing and improving internal control policies and effectively
implemented them in accordance with the requirements of the Basic Specifications for Internal Control of
Enterprises and based on its operational characteristics. The policies fit the Company’s existing
management requirements and development needs and could provide a beneficial guarantee for the sound
operations of its business and the control of its operational risk. Overall the Company’s internal control
was complete reasonable and effective without any major defects. It played a managerial and controlling
role in all the Company’s operations management processes and key links thus ensuring the long-term
and stable development of the Company.Are there any significant differences between the Company’s corporate governance and the laws
administrative regulations and the CRSC’s rules on the governance of listed companies If yes state the
reasons.□ Applicable √ Not applicable
II. The Company’s controlling shareholder’s and actual controller’s specific measures that ensure
the Company’s independence in assets personnel finance institution and business as well as
solutions work progress and subsequent work plans that affect the Company’s independence
□ Applicable √ Not applicable
Circumstances where the controlling shareholder the actual controller or other entities under their control
are engaged in the same or similar business as the Company or the impact of the competitive business or
a substantial change in the competitive business on the Company the countermeasures taken the progress
of the countermeasures and subsequent plans for solving the issue
□ Applicable √ Not applicable
III. Overview of General Meetings
Search index of the Resolution
Meeting Date designated website on which disclosure Resolutions
the resolution was published date
The Proposal on the Company’s Employee Stock
Ownership Plan for 2023 and its Summary the
1st Proposal on Management Measures for the
extraordinary January 6
general meeting 2023 http://www.sse.com.cn
January 7 Company’s Employee Stock Ownership Plan for
2023 2023 and relevant proposals on the election of
of 2023 the directors supervisors and officers for the
10th session were deliberated and approved at the
meeting.The Proposal on the Work Reports of the Board
of Directors and the Board of Supervisors for
Annual general March 28
meeting of 2022 2023 http://www.sse.com.cn
March 29 2022 the Proposal on the Annual Report of 2022
2023 and its Summary the Proposal on the Financial
Report of 2022 the Proposal on the Company’s
Profit Distribution Plan for 2022 the Proposal on
49 / 282Annual Report 2023
Estimated Guarantees Provided to Wholly-
owned Subsidiaries in 2023 the Proposal on
Engagement in the Trading of Financial
Derivative Business and the Proposal on the
Company’s Major Investment Plans for 2023
were deliberated and approved at the meeting.The Proposal on Changing the Company’s
Registered Capital the Proposal on Amending
2nd Some Terms of the Articles of Association the
extraordinary April 28 http://www.sse.com.cn April 29
Proposal on Repurchasing the Company’s
general meeting 2023 2023 Shares by Means of Centralized Bidding and the
of 2023 Proposal on Requesting Authorization from the Annual General Meeting for Handling the
Repurchase of the Company’s Shares were
deliberated and approved at the meeting.Any extraordinary general meeting convened at the request of preferred shareholders with restored
voting rights
□ Applicable √ Not applicable
Explanation of general meetings
√ Applicable □ Not applicable
During the Reporting Period the Company held three general meetings including one annual general
meeting and two extraordinary general meetings. There was no rejection of proposals at the general
meetings.
50 / 282Annual Report 2023
IV. Information of Directors Supervisors and Officers
(1) Changes in the shares held by and remuneration of the directors supervisors and officers currently in office and those who resigned during the Reporting
Period
√ Applicable □ Not applicable
Unit: share
Total before-tax
End date of Number of Number of Change Reasons remuneration
Any
remuneration
Name Position Gender Age Start date of term of shares held as shares held term of office at the beginning as at the end in the for the
received from the
office shares change Company during the
received from a
of the year of the year Reporting Period related party of
(‘0000 yuan) the Company
Wang
Aijun Chairman F 52
January 16 January 6
2017 2026 71316274 71316274 0 1226 No
He Jun Director and General January 16 January 6 Manager M 50 2017 2026 23449758 23449758 0 1145 No
Liang Director and Deputy January 16 January 6
Yubo General Manager M 60 2017 2026 53668518 53668518 0 1083 No
Lu
Chuang Independent Director M 44
January 6 January 6
2023 2026 0 0 0 20 No
Liu
Xinghua Independent Director M 57
January 6 January 6
2023 2026 0 0 0 20 No
Chang Chairman of Board of January 16 January 6
Libin Supervisors M 55 2017 2026 0 0 0 1773 No
Liu
Qiang Supervisor M 54
January 6 January 6
2023 2026 0 0 0 66 No
Liu January 6 January 6
Xiaojing Staff Supervisor F 49 2023 2026 0 0 0 54 No
Wang Deputy General January 16 January 6
You Manager M 49 2017 2026 294600 294600 0 568 No
Wang
Lihong CFO F 43
September 6 January 6
2019 2026 62400 62400 0 119 No
Liu
Xianfang Board Secretary F 40
January 16 January 6
2017 2026 156600 156600 0 97 No
Total / / / / / 148948150 148948150 0 / 6171 /
Explanation of the statistical basis for the “total before-tax remuneration received from the Company during the Reporting Period:” In previous annual reports the
statistical basis is the remuneration (before tax) paid to the directors supervisors and officers in the payroll for a complete accounting year. In the 2023 annual
report 2023 the accrual basis is used. In other words the total before-tax remuneration (before tax) of the directors supervisors and officers for 2023 is not
inclusive of the amount deferred to the Reporting Period but is inclusive of the amount deferred to subsequent years.
51 / 282Annual Report 2023
Name Main working experience
Wang Aijun Her previous positions include general manager of Meihua MSG and director and general manager of Meihua Group. She is the chairman of Meihua Group now.His previous positions include plant director and department manager at Meihua MSG and director and general manager of Meihua Group. He is a director and the general
He Jun
manager of Meihua Group now.His previous positions include department manager and general manage of the marketing center at Meihua MSG and director and deputy general manager of Meihua Group.Liang Yubo
He is a director and the deputy general manager of Meihua Group now.He was born in 1967 and is a Chinese national and of the Han ethnic group. He is a member of the CPC and a distinguished professor at TongJi University. He holds a PhD in
management. From November 2021 until now he has been a distinguished professor at TongJi University and has been engaged in the research and teaching of economic
Liu
theories. Mr. Liu Xinghua has served as Independent Director at Lihuayi Weiyuan Chemical Co. Ltd. (short stock name: Weiyuan; stock code: 600955) since December 2021.Xinghua
Mr. Liu Xinghua is not associated with the Company’s actual controller and does not hold any shares in any listed companies. He has obtained the qualification certificate for
independent directors from the Shanghai Stock Exchange. He is an independent director at the Company now.He was born in 1980 and is a Chinese national and of the Han ethnic group. He is a member of the CPC. He holds a PhD in management. He has been a professor at the School
of Accountancy at the Central University of Finance and Economics since 2015. Mr. Lu Chuang has been an independent director at Beijing Bashi Media Co. Ltd. (short stock
name: Beiba Media; stock code: 600386) since June 28 2022; an independent director at Ourpalm Co. Ltd. (short stock name: Ourpalm; stock code: 300315) since January
Lu Chuang 25 2021; an independent director at China Isotope & Radiation Corporation (short stock name: CIRC 01763.HK) since February 25 2021; and an independent director at
Huiying Medical Technology (Beijing) Co. Ltd. (short stock name: Huiying Medical; stock code: 874245) since December 17 2021 and he resigned in May 2023. Mr. Lu
Chuang is not associated with the Company’s actual controller and does not hold any shares in any listed companies. He has obtained the qualification certificate for independent
directors from the Shanghai Stock Exchange. He is an independent director at the Company now.He was born in 1969 and is a Chinese national and of the Han ethnic group. He joined the former Meihua Group in February 2005 and served as head of engineering at the
Chang Libin Company’s Tongliao Base head of project technology at Xinjiang Company and head of the engineering company. Now he serves as head of the minority product business
division and chairman of the board of supervisors of the Company.He was born in 1970 and is a Chinese national and of the Han ethnic group. He joined the former Meihua Group in 1999 and served as executive deputy general manager of
Liu Qiang the marketing center head of the food raw materials office at the sales company and head of the sales department for domestic sales of food. Now he serves as sales manager
at the sales company and supervisor at the Company.She was born in 1975 and her native place is Baoding Hebei. She joined Meihua Hebei in 2001. Her previous positions include senior manager of the finance office at
Liu
Tongliao Meihua and head of the finance office at Tongliao Meihua. Now she serves as project head at the asset management office of the finance department and staff
Xiaojing
supervisor of the Company.
52 / 282Annual Report 2023
He was born in 1975 and is a Chinese national. He holds a bachelor’s degree and is a member of the CPC. He joined Meihua MSG in July 2002. His previous positions include
Wang You manager of the production office manager of the amino acid project department production manager for eastern Tongliao and deputy general manager at Tongliao Meihua.Now he serves as general manager of the Xinjiang Base and deputy general manager of the Company.She was born in 1981 and is a Chinese national. She is a member of the CPC. She graduated from Tianjin University of Commerce as a major in accounting. She is a certified
Wang
public accountant. Since 2005 she has served as an accountant accounting supervisor accounting manager and general ledger accountant in the finance department of Meihua
Lihong
Group. She has extensive experience and expertise in financial accounting financial analysis and financial management. Now she is the CFO of the Company.Liu She was born in 1984 and is a Chinese national. She holds a bachelor’s degree. She joined the Company in July 2006. Her previous positions include information disclosure
Xianfang specialist information disclosure supervisor and corporate securities representative in the securities department of the Company. She is the board secretary of the Company.Other information
√ Applicable □ Not applicable
Due to the expiration of the term of the ninth session of the board of directors and the board of supervisors the Company held the first extraordinary general
meeting of 2023 on January 6 2023. Directors for the tenth session of the board of directors and supervisors for the tenth session of the board of supervisors were
elected at the meeting. On the same day the Company held the first meeting of the tenth session of the board of directors and the first meeting of the tenth session of
the board of supervisors where the chairman for the tenth session of the board of directors the chairman for the tenth session of the board of supervisors and
members for the special committees under the board of directors were elected and officers were appointed. For details refer to the related announcements published
by the Company on the website of the Shanghai Stock Exchange.
53 / 282Annual Report 2023
(2) Positions held by the directors supervisors and officers currently in office and those who
resigned during the Reporting Period
1. Positions held in shareholders
□ Applicable √ Not applicable
2. Positions in other entities
√ Applicable □ Not applicable
Name of personnel Name of entity Position in the Start date of the End date of the entity term of office term of office
Ourpalm Co. Ltd. Independent Director January 25 2021
China Isotope & Radiation Corporation Independent
Lu Chuang Director
February 25 2021
Beijing Bashi Media Co. Ltd. Independent Director June 28 2022
Huiying Medical Technology (Beijing) Independent
Co. Ltd. Director December 17 2021 May 2023
Liu Xinghua Lihuayi Weiyuan Chemical Co. Ltd. Independent Director December 22 2021
Wang Aijun AIM Vaccine Corporation Director September 2017
Chang Libin Tongliao Desheng Bio-tech Co. Ltd. Supervisor March 2019
Liu Xiaojing Tongliao Desheng Bio-tech Co. Ltd. Supervisor March 2019 April 2023
Liu Qiang Tibet Hezhong Investment Co. Ltd. Director and General Manager July 4 2014
Explanation of positions
in other entities
(3) Remuneration of directors supervisors and officers
√ Applicable □ Not applicable
The remuneration for the Company’s directors and non-staff supervisors is determined by
the general meeting after being reviewed and approved by the board of directors. The
Procedures for determining the
remuneration for officers is determined by the board of directors after being submitted by
remuneration of directors supervisors and
the general manager’s office to the remuneration and appraisal committee of the board. The
officers
remuneration for staff supervisors is determined based on their positions and position levels
and in accordance with the Company’s internal HR management policy.Do the directors avoid participating in the
Yes
discussion of their own remuneration
Circumstances where the remuneration
and appraisal committee or any meetings At the 2nd meeting of 2024 of the Company’s remuneration and appraisal committee the
of independent directors issue opinions on performance appraisal and remuneration payment proposals for directors supervisors and
the remuneration of directors supervisors officers for 2023 were deliberated and submitted to the board of directors for review.and officers
Directors supervisors and officers who receive pay from the Company and actually assume
management duties are subject to the annual salary system that combines position-based
remuneration and performance appraisals. According to the Company’s performance
Basis for determining the remuneration of
appraisal management total remuneration is comprised of basic salary position-based
directors supervisors and officers
salary performance pay and incentives. The remuneration and appraisal committee
determines remuneration based on comprehensive evaluations including job responsibilities
and performance.
54 / 282Annual Report 2023
On an accrual basis the directors supervisors and officers received a total remuneration of
Actual payment of the remuneration of 61.71 million yuan (before tax) from the Company in 2023. During the Reporting Period
directors supervisors and officers the monthly salary and performance pay were paid. Some annual pay and incentives were
paid in March 2024.Total remuneration actually received by all The total remuneration actually received from the Company by the directors supervisors
directors supervisors and officers as of and officers in 2023 was 75.99 million yuan (before tax) inclusive of deferments from
the end of the Reporting Period previous periods to the Reporting Period.
(4) Changes in directors supervisors and officers
□ Applicable √ Not applicable
(5) Explanation of punishments by securities regulatory bodies during the last three years
□ Applicable √ Not applicable
(6) Miscellaneous
□ Applicable √ Not applicable
V. Information of Board Meetings Held during the Reporting Period
Meeting Date Resolutions
The proposal on the appointment of directors supervisors and
officers for the new session the proposal on the election of
1st meeting of the tenth members for the nomination committee the remuneration and
session of the board of January 6 2023 appraisal committee the audit committee and the strategy
directors committee of the tenth session of the board of directors and the
Proposal on Cancelling Tongliao Meihua Amino Acid Co. Ltd.were deliberated and approved at the meeting.The Proposal on the Work Report of the Board of Directors for
2022 the Proposal on the Annual Report of 2022 and its
Summary the Proposal on the Financial Report of 2022 the
2nd meeting of the tenth Proposal on the Profit Distribution Plan for 2022 the Proposal on
session of the board of March 6 2023 Engagement in the Trading of Financial Derivatives the Proposal
directors on the Performance Appraisal and Remuneration Payment
Scheme for Directors Supervisors and Officers for 2022 and the
Proposal on Engagement in Corn Futures Trading were
deliberated and approved at the meeting.The Proposal on Changing the Company’s Registered Capital the
Proposal on Amending Some Terms of the Articles of
3rd meeting of the tenth Association the Proposal on Repurchasing the Company’s Shares
session of the board of April 8 2023 by Means of Centralized Bidding and the Proposal on Requesting
directors Authorization from the Annual General Meeting for Handling the
Repurchase of the Company’s Shares were deliberated and
approved at the meeting.
4th meeting of the tenth
session of the board of April 28 2023 The Proposal on the Q1 Report of 2023 was deliberated and
directors approved at the meeting.
5th meeting of the tenth The Proposal on the Semi-annual Report of 2023 and its Summary
session of the board of August 18 2023 and the Proposal on the Establishment of Wholly-Owned
directors Subsidiaries and Sub-subsidiaries through Outbound Investment were deliberated and approved at the meeting.
6th meeting of the tenth
session of the board of October 18 2023 The Proposal on the Q3 Report of 2023 was deliberated and
directors approved at the meeting.
7th meeting of the tenth
session of the board of December 21 2023 The Proposal on Extending the Employee Stock Ownership Plan
directors of 2021 was deliberated and approved at the meeting.
55 / 282Annual Report 2023
VI. Duty Performance of Directors
(I) Directors’ participation in board meetings and general meetings
Participation in
Whether the Attendance at board meetings general
Name of director is meetings
director an Due Attend Attendance by Failed to attend independent attendance ance means of Attendance Abs two consecutive Attendance at
director for the in telecommunic by proxy ence meetings in general
year person ation person meetings
Wang Aijun No 7 7 0 0 0 No 3
He Jun No 7 7 2 0 0 No 3
Liang Yubo No 7 7 3 0 0 No 3
Lu Chuang Yes 7 7 3 0 0 No 3
Liu Xinghua Yes 7 7 3 0 0 No 3
Explanation of failure to attend two consecutive meetings in person
□ Applicable √ Not applicable
Number of board meetings held in the year 7
including: number of onsite meetings 2
number of meetings held by means of telecommunication 2
number of meetings held onsite and by means of telecommunication 3
(II) Circumstances where directors raised an objection to any matter
□ Applicable √ Not applicable
(III) Miscellaneous
□ Applicable √ Not applicable
VII. Information of Specialized Committees under the Board of Directors
√ Applicable □ Not applicable
(1) Members of the specialized committees under the board of directors
Type of special committee Member names
Audit Committee Lu Chuang Liu Xinghua Wang Aijun
Nomination Committee Liu Xinghua Lu Chuang Wang Aijun
Remuneration and Appraisal Committee Liu Xinghua Lu Chuang Wang Aijun
Strategy Committee Wang Aijun He Jun Liang Yubo Lu Chuang Liu Xinghua
(2) The audit committee held five meetings during the Reporting Period.
Date Content Important opinions and suggestions Other duty performance
A number of proposals were
reviewed including the
Annual Report of 2022 the The meeting agreed to submit the relevant
March 6 2023 Duty Performance of the Audit
proposals to the board of directors for
Committee for 2022 the deliberation and focused on matters such as
Internal Control Evaluation the write-off of bad debts in the financial
Report and the Annual Profit report.Distribution Plan for 2022.The Q1 report of 2023 prepared by the
Company faithfully and fairly reflected the
April 28 2023 The Q1 report of 2023 was Company’s business performance during reviewed at the meeting. the first quarter of 2023 and the meeting
agreed to submit it to the board of directors
for deliberation.
56 / 282Annual Report 2023
The content and format of the semi-annual
report conformed to the rules of the CSRC
The semi-annual report of and the Shanghai Stock Exchange and
August 18 2023 2023 was reviewed at the truthfully and fairly relected the
meeting. Company’s operations management and financial conditions for the first half of
2023 and the meeting agreed to submit it
to the board of directors for deliberation.They participated in
the quarterly
summary meeting
The Q3 report of 2023 prepared by the listened to the
Company faithfully and fairly reflected the analysis and
October 18 2023 The Q3 report of 2023 was Company’s business performance during summary of the reviewed at the meeting. the first quarter of 2023 and the meeting operations of all
agreed to submit it to the board of directors business models
for deliberation. and gained a deeper
understanding of the
Company’s
business.At the meeting the participants studied the
latest comparison between the
The first extraordinary management measures for independent
meeting of 2023 was held. The directors before and after amendments. The
participants studied the latest meeting agreed that the Company
December 13 2023 comparison between the systematically amend the work rules for the
management measures for audit committee and the working
independent directors before procedures for the annual report of the
and after amendments. audit committee according to relevant regulatory rules and submit it to the board
of directors for deliberation as soon as
possible.
(3) The remuneration and appraisal committee held two meetings during the Reporting Period.
Date Content Important opinions and suggestions Other duty performance
The 2022 remuneration scheme for The meeting agreed to submit the
March 6 2023 directors supervisors and officers scheme to the board of directors for
was deliberated and approved. deliberation.The Proposal on Extending the
December 21 2023 Employee Stock Ownership Plan of
The meeting discussed the reasons for
2021 was deliberated and approved at extension and agreed to submit it to the
the meeting. board of directors for deliberation.
(4) The strategy committee held two meetings during the Reporting Period.
Date Content Important opinions and suggestions Other duty performance
The meeting reviewed the Company’s
The meeting discussed the future
March 6 2023 major project investment plans for
investment scale.
2023.
The meeting reviewed the Company’s The meeting discussed future overseas
August 18 2023 investment in subsidiaries and sub- market plans and the reasons for
subsidiaries. establishing overseas subsidiaries.
(5) Circumstances where an objection was raised to any matter
□ Applicable √ Not applicable
57 / 282Annual Report 2023
VIII. Explanation of Circumstances Where the Board of Supervisors Identified Risks in the
Company
□ Applicable √ Not applicable
The board of supervisors had no objections to supervised matters during the Reporting Period.IX. Staff Overview of the Parent Company and Key Subsidiaries as at the end of the Reporting
Period
(I) Staff overview
Headcount of the parent company 985
Headcount of key subsidiaries 12044
Total headcount 13029
Number of retirees for whom the parent company and key
subsidiaries are required to bear costs
Speciality
Type of specialty Number of employees
Production personnel 9672
Sales personnel 330
Technical personnel 603
Financial personnel 356
Administrative personnel 103
Management personnel 1965
Total 13029
Educational level
Educational level Number of employees
Master’s degree and above 238
Bachelor’s degree 1864
Diploma 4307
High school and below 6620
Total 13029
(II) Remuneration policy
√ Applicable □ Not applicable
The Company adheres to the remuneration concept of fairness and attractiveness. Specifically in a
fair equal and open environment the Company strives to offer the highest pay locally and in the industry
with the highest per capita productivity at the lowest manual cost per ton of products thus attracting
excellent talents.The remuneration offered by the Company is based on a number of indicators including the
Company’s size operating conditions performance goals working abilities and industrial and regional
remuneration levels. It should reflect the level of competition and the actual situation of the Company.Staff salaries include the basic salary the performance pay and the annual bonus. The Company sticks to
the guidelines of “operations creation and sharing by all” and strengthens work planning and
effectiveness through the implementation of the performance management process. By adopting
58 / 282Annual Report 2023
reasonable working methods the Company drives employees to improve their abilities and deliver better
performance and guides and motivates all employees to create value in their respective areas towards
better business performance for the Company.(III) Training plan
√ Applicable □ Not applicable
1. In terms of talent development the Company upgraded its talent development based on the
integration and standardization of “recruitment selection development and retainment” under the
Zhiyuan Program last year. In 2023 the Company hired 103 management trainees with a master’s degree
or a PhD. Further the Company strengthened cooperation with Tianjin University Jiangnan University
and other universities and majors that are highly compatible with the Company. They offer excellent
graduates to the Company laying the foundation for building a talent pool and developing leaders. At the
same time the Company is developing and improving a talent development mechanism always putting
people at the center. Through the Trot Program the Company develops qualified undergraduates
identifies highly potential employees and promotes them quickly. During the Reporting Period there were
220 employees and 330 fresh graduates in the Trot Program with more than 70 highly potential employees
selected to enter the reserve talent pool. By improving the workers ability certification system on the basis
that the promotion channels for workers and shift foremen have been opened up the Company organized
a workshop interest class for the production system to develop professional skills and assist workers in
developing towards a specialized technical system thereby helping build a talent pool for the production
and technical systems.
2. In 2023 the Company run training classes for employees at different levels including fresh
graduates shift foremen supervisors and managers. Meanwhile the Company developed a process for
standard leader development that covers the whole process from theory teaching and case studies to
practical training and practice at work. The Company used a combination of models including training at
school apprenticeship training by external trainers job rotation and tutoring by officers and established
a mechanism for trainer certification and starred trainer assessment in “training process control” and
“trainer management.”
Through the training of production leaders at all levels during the last three years including managers
supervisors and shift foremen the Company has continuously improved the standard training handbook.During the Reporting Period the Company used realistic cases that had occurred in the departments of the
Company for the last three years as the main content of the training class and updated all training courses
to make leaders draw lessons from the cases accumulate abilities and be relaxed and happy management
leaders. The training included skill training working ability training and leadership training to develop
reserve leaders’ abilities in all aspects laying the foundation for them to become competent for their jobs.In the training the Company applied the training content better faster and more accurately to the practice
and selected outstanding leaders as reserve talents. In 2023 the Company selected and trained more than
240 excellent managers supervisors and shift foremen.
59 / 282Annual Report 2023
(IV) Labor outsourcing
√ Applicable □ Not applicable
Total man hours of labor outsourcing 1768000.00
Total remuneration paid for labor outsourcing 58686680.29
X. Plans for Profit Distribution or the Conversion of Capital Reserve
(I) Formulation implementation or adjustment to the cash dividend policy
√ Applicable □ Not applicable
The Articles of Association has very specific provisions on the cash dividend policy.According to the Articles of Association the Company will distribute dividends in cash and in
principle pay cash dividends once every year. The Company’s board of directors may propose paying
mid-term cash dividends based on the Company’s profitability and need for funds. The specific
distribution plans shall be made by the board of directors within its authority based on the Company’s
actual operating and financial status and shall be submitted to the general meeting for approval.Before the deliberation of the specific cash dividend plans at the general meeting the Company shall
communicate and exchange with its shareholders through multiple channels in particular the minorityshareholders fully listen to their opinions and appeals and immediately respond to their concerns.”
The Company’s profit distribution plan conforms to the relevant provisions of the Articles of
Association. In the future the Company will continue to increase returns to shareholders through cash
dividends and the cancellation of buybacks combined.Upon deliberation and approval of the 9th meeting of the 10th session of the board of directors the
profit distribution plan (proposal) for 2023 is as follows: with the total share capital registered on the
registration date of equity distribution as the basis (before deducting the number of shares in the share
repurchase account the Company has a total of 2943426102 shares in share capital; there are 69634252
shares in the share repurchase account and after deducting those shares the number of shares is
2873791850) a dividend of 4.17 yuan (inclusive of tax) for every 10 shares is to be distributed to all
shareholders and a total of approximately 1.2 billion yuan (inclusive of tax) in cash dividend is estimated
to be distributed. The plan is yet to be submitted to the general meeting for deliberation. The amount that
is actually distributed will be subject to the notification on equity distribution published by the Company.If there is any change in the Company’s total share capital before the registration date of equity
distribution the total amount to be distributed will remain unchanged and the distribution proportion per
share will be adjusted accordingly.(II) Explanation of specific matters related to the cash dividend policy
√ Applicable □ Not applicable
Did it conform to the provisions of the articles of association or the requirements of the
√ Yes □ No
general meeting’s resolution
Were the distribution standard and proportion specified and clear √ Yes □ No
Were the relevant decision-making procedures and mechanism complete √ Yes □ No
Did the independent directors perform their duties and play their due roles √ Yes □ No
60 / 282Annual Report 2023
Did the minority shareholders have adequate chance to express their opinions and appeals
√ Yes □ No
Were their legitimate rights and interested protected fully
(III) For the circumstance where the Company made a profit and the parent company’s profit
distributable to shareholders was positive but no cash profit distribution plan was proposed during
the Reporting Period the Company should disclose the reasons as well as the use and use plan of
the retained profit in detail.□ Applicable √ Not applicable
(IV) Plans for profit distribution and the conversion of capital reserve during the Reporting Period
√ Applicable □ Not applicable
Unit: yuan Currency: RMB
Number of bonus shares per 10 shares (share) 0
Amount of dividends per 10 shares (yuan) 4.17
Number of shares for conversion per 10 shares (share) 0
Amount of cash dividends (inclusive of tax) 1198371201.45
Net profit distributable to the common shareholders of the listed company in the consolidated
3180949695.48
statements for the year of dividend distribution
Percentage in the net profit distributable to the common shareholders of the listed company in
37.67
the consolidated statements (%)
Amount of share buybacks in cash that are included in cash dividends 891788014.84
Total dividends (inclusive of tax) 2090159216.29
Percentage of total cash dividends in the net profit attributable to the common shareholders of
65.71
the Company in the consolidated statements (%)
XI. Information of the Company’s Share Incentive Plan Employee Stock Ownership Plan or Other
Staff Incentives and Their Impact
(I) Relevant incentives that were disclosed in the provisional announcement and had no progress or
change in subsequent implementation
□ Applicable √ Not applicable
(II) Incentives that were not disclosed in the provisional announcement or made progress
subsequently
Share incentives
□ Applicable √ Not applicable
Other information
□ Applicable √ Not applicable
Employee stock ownership plan
√ Applicable □ Not applicable
1. Employee stock ownership plan for 2021
61 / 282Annual Report 2023
The Company held the 14th meeting of the ninth board of directors and the first extraordinary general
meeting of 2021 on January 14 2021 and February 1 2021 respectively. At the meetings the Proposal
on the Company’s Employee Stock Ownership Plan (Draft) for 2021 and its Summary the Proposal on
the Management Measures for the Company’s Employee Stock Ownership Plan for 2021 and the Proposal
on Requesting Full Authorization from the Annual General Meeting for the Board of Directors to Handle
Matters Related to the Company’s Employee Stock Ownership Plan were deliberated and approved. For
details refer to the relevant announcements published by the Company on the website of the Shanghai
Stock Exchange (http://www.sse.com.cn) on January 15 2021 and February 2 2021 respectively. 50
million of the Company’s shares held in its designated securities account were transferred to the
Company’s securities account for the employee stock ownership plan for 2021 by means of non-
transaction transfer on February 9 2021. According to the rules of the employee stock ownership plan for
2021 the lockup period for the plan shall start on the date the Company announces that the last underlying
shares have been transferred to the account for the employee stock ownership plan and the shares shall
be released in two phases 12 months after lockup. The lockup period shall be 24 months at maximum.As of February 10 2023 all shares under the Company’s employee stock ownership plan had been
released. On February 1 2024 the Company held its first extraordinary general meeting of 2024 where
the Proposal on Extending the Employee Stock Ownership Plan for 2021 was deliberated and approved.Given that the employee stock ownership plan for 2021 would expire on February 11 2024 for the
purpose of maintaining the share price the plan was extended for 36 months until February 11 2027
based on confidence in the Company’s sustainable development in the future and the judgment of its share
value. As of the end of the Reporting Period there were 25000000 shares in the Company’s account for
employee stock ownership plan.
2. Employee stock ownership plan for 2022
The Company held the 27th meeting of the ninth board of directors and the second extraordinary
general meeting of 2021 on December 15 2021 and December 31 2021 respectively. At the meetings
the Proposal on the Company’s Employee Stock Ownership Plan (Draft) for 2022 and its Summary the
Proposal on the Management Measures for the Company’s Employee Stock Ownership Plan for 2022 and
the Proposal on Requesting Full Authorization from the Annual General Meeting for the Board of
Directors to Handle Matters Related to the Company’s Employee Stock Ownership Plan were deliberated
and approved. For details refer to the relevant announcements published by the Company on the website
of the Shanghai Stock Exchange (http://www.sse.com.cn) on December 16 2021 and January 1 2022
respectively.On January 7 2022 the Company bought 35.42 million of Meihua Bio’s shares by means of block
trade through its account for the employee stock ownership plan for 2022. The transaction amount was
247.94 million yuan and the average transaction price was 7 yuan/share. The number of shares bought
accounted for 1.14% of the Company’s total shares at the time (3098619928 shares). According to the
proposal approved at the second extraordinary general meeting of 2021 the Company completed the
purchase plan under the employee stock ownership plan for 2022. Hence the shares bought were locked
62 / 282Annual Report 2023
up according to the rules from the date of disclosure through announcement and would be released in two
phases after 12 months and 24 months of lockup. The maximum lockup period shall be 24 months and
the proportions of the underlying shares to be released for each phase shall be 50% and 50% respectively.As of the end of the Reporting Period there were 32932200 shares in the Company’s account for
employee stock ownership plan for 2022 accounting for 1.12% of the Company’s total shares at the time
(2943426102 shares). As of the release of this report the lockup period for the employee stock
ownership plan for 2022 had expired and all shares had been released from lockup.
3. Employee stock ownership plan for 2023
The Company held the 35th meeting of the ninth board of directors and the first extraordinary general
meeting of 2023 on December 21 2022 and January 6 2023 respectively. At the meetings the Proposal
on the Company’s Employee Stock Ownership Plan (Draft) for 2023 and its Summary the Proposal on
the Management Measures for the Company’s Employee Stock Ownership Plan for 2023 and the Proposal
on Requesting Full Authorization from the Annual General Meeting for the Board of Directors to Handle
Matters Related to the Company’s Employee Stock Ownership Plan were deliberated and approved. For
details refer to the relevant announcements published by the Company on the website of the Shanghai
Stock Exchange (http://www.sse.com.cn) on December 22 2022 and January 9 2023 respectively.As of January 28 2023 the Company had bought 28260800 of Meihua Bio’s shares in total through
the account for the employee stock ownership for 2023 by means of centralized bidding on the secondary
market. The transaction amount was 295296438 and the average transaction price was 10.45 yuan/share.The number of shares bought accounted for 0.93% of the Company’s total shares at the time
(304246544). According to the proposal approved at the first extraordinary general meeting of 2023 the
Company completed the purchase plan under the employee stock ownership plan for 2023. Hence the
shares bought were locked up according to the rules from the date of disclosure through announcement
and would be released in two phases after 12 months and 24 months of lockup. The maximum lockup
period shall be 24 months and the proportions of the underlying shares to be released for each phase shall
be 50% and 50% respectively.As of the end of the Reporting Period there were 28260800 shares in the Company’s account for
employee stock ownership plan for 2023 accounting for 0.96% of the Company’s total shares at the time
(2943426102 shares). As of the release of this report the Phase I release conditions under the employee
stock ownership plan for 2023 had been satisfied and 50% of the shares had been released from lockup.
4. Employee stock ownership plan for 2024
The Company held the 8th meeting of the tenth board of directors and the first extraordinary general
meeting of 2024 on January 16 2024 and February 1 2024 respectively. At the meetings the Proposal
on the Company’s Employee Stock Ownership Plan (Draft) for 2024 and its Summary the Proposal on
the Management Measures for the Company’s Employee Stock Ownership Plan for 2024 and the Proposal
on Requesting Full Authorization from the Annual General Meeting for the Board of Directors to Handle
Matters Related to the Company’s Employee Stock Ownership Plan were deliberated and approved. For
63 / 282Annual Report 2023
details refer to the relevant announcements published by the Company on the website of the Shanghai
Stock Exchange (http://www.sse.com.cn) on January 17 2024 and February 2 2024 respectively.As of the release of this report the Company’s account for the employee stock ownership plan for
2024 was opened payments for employee subscriptions were made and verification was completed. There
are 227 participants and 191750800 under the plan. The Company has yet to purchase shares through the
account. The Company will keep watch on the implementation progress of the plan and duly perform its
disclosure obligations in accordance with relevant laws and administrative regulations.Other incentives
□ Applicable √ Not applicable
(III) Information of share incentives granted to directors and officers during the Reporting Period
□ Applicable √ Not applicable
(IV) Appraisal mechanism for officers during the Reporting Period as well as the establishment and
implementation of the incentive mechanism
√ Applicable □ Not applicable
The Company builds an overall performance management system centered around two operation
concepts which are “operations creation and sharing by all” and “using financial results as the ultimatecriteria for appraising leaders.” For its officers the Company implements an annual salary system that
combines position-based remuneration and performance appraisals. By time frame incentives are divided
into short-term mid-term and long-term incentives. Short-term incentives are based on month including
basic salaries and monthly performance pay; mid-term incentives are based on quarter including quarterly
performance pay; and long-term incentives are based on year including annual performance pay share
incentives employee stock ownership incentives and incentive bonuses.The Company has set up a remuneration and appraisal committee under the board of directors to
develop and supervise the implementation the remuneration and performance appraisal scheme for officers.The remuneration and appraisal committee is responsible for developing the remuneration and appraisal
scheme for officers organizing and conducting the annual business performance appraisal of officers and
supervising the implementation of the scheme. The remuneration and performance appraisal scheme
proposed by the remuneration and appraisal committee must be deliberated and approved by the board of
directors before being implemented. In terms of the design of the appraisal mechanism the Company
follows the principle of matching personal remuneration with position value and responsibilities. The
Company links the remuneration of officers with the Company’s performance and working goals to ensure
the sustainable growth of its main business prevent short-term conduct and promote sustainable
operations and development.From 2017 until now the Company has implemented five sessions of the employee stock ownership
plan and one session of restricted share incentives for its officers. The Company has set challenging
corporate performance goals and personal appraisal targets for each session combining corporate
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development and personal growth. For one it motivated the enthusiasm and creativity of key leaders; for
another it ensured sustainable growth in the Company’s revenue and profits.XII. Development and Implementation of Internal Control Policies during the Reporting Period
√ Applicable □ Not applicable
In 2023 in accordance with the management requirements of the Basic Specifications for Internal
Control of Enterprises and the Company’s Management Policy for Internal Control and based on the
Company’s annual business targets and actual development needs the Company conducted internal
control tests and evaluations for fund activities the circulation of purchases and payment inventory
management costing and control the circulation of sales and payment collection engineering project
management asset management comprehensive budget management human resource management and
financial reporting. During the Reporting Period based on its operational characteristics the Company
kept developing and improving internal control policies and effectively implemented them. The policies
fit the Company’s existing management requirements and development needs and could provide a
beneficial guarantee for the sound operations of its business and the control of its operational risk. Overall
the Company’s internal control was complete reasonable and effective without any major defects. It
played a managerial and controlling role in all the Company’s operations management processes and key
links thus ensuring the long-term and stable development of the Company.Explanation of major defects in internal control during the Reporting Period
□ Applicable √ Not applicable
XIII. Management and Control of Subsidiaries during the Reporting Period
√ Applicable □ Not applicable
In accordance with the requirements of the Management Policy for internal control the Company
has set up an audit committee under the board of directors as a leading body to inspect and supervise the
implementation of the Company’s internal control policies. The Company has an audit department to
inspect and supervise the implementation of the Company’s internal control policies under the guidance
of the audit committee.Important subsidiaries of the Company include Tongliao Meihua Biotech Co. Ltd. Xinjiang Meihua
Amino Acid Co. Ltd. and Jilin Meihua Amino Acid Co. Ltd. among others. The Company’s departments
guide supervise and support the corresponding departments of its subsidiaries and control risk through
the standard operation human resource management financial management internal audit information
disclosure investment and financing management and operational appraisal of its subsidiaries. The
Company improves the overall operation efficiency and anti-risk capabilities and ensures the security
preservation and appreciation of assets according to its overall development strategy and planning.All subsidiaries implement the standards and policies published by the Company and establish the
corresponding business plans and risk management procedures according to the Company’s overall
development strategy and planning as well as the annual overall business plan.
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XIV. Explanation of Relevant Information about the Internal Control Audit Report
√ Applicable □ Not applicable
The Company appointed Da Hua CPAs LLP (special general partnership) to audit the Company’s
internal control for the Reporting Period. The internal control audit report (Document No.: DHNZ [2024]
No. 0011000137) was issued. According to the audit report as of December 31 2023 the Company had
maintained effective internal control of the financial report in all material aspects in accordance with the
Basic Specifications for Internal Control of Enterprises and relevant regulations.Whether the internal control audit report is disclosed: Yes
Type of opinion of the internal control audit report: Standard Unqualified
XV. Rectification of Self-identified Problems in Special Action for the Governance of Listed
Company
At the beginning of 2021 the Company performed a self-inspection that covered the implementation
of the articles of association the duty performance of the board of shareholders the board of directors
and the board of supervisors the management of information disclosure the management of corporate
seals the execution of contracts the management of significant investments the independence and
fairness of related-party transactions external guarantees and the occupation of funds in accordance with
the requirements of the Notice on Special Actions for the Governance of Listed Companies (ZZJF [2020]
No. 230) published by the CRSC Xizang Commission. In the first half of 2023 through the coordination
and communication of multiple parties CDH Bio-Tech (HK) Limited successfully paid the dividends for
2016. The problems identified in the self-inspection have been rectified.
XVI. Miscellaneous
□ Applicable √ Not applicable
Section 5 Environmental and Social Responsibility
I. Environmental Information
Whether there is an environmental protection-related mechanism Yes
Spending on environmental protection during the Reporting Periiod (unit: ‘0000 yuan) 38000
(I) Information on the environmental protection of the Company and its key subsidiaries if the
Company is classified as a key pollutant discharge entity by the environmental authorities
√ Applicable □ Not applicable
1. Information of pollutant discharge
√ Applicable □ Not applicable
The three key subsidiaries under Meihua Group are classified as key pollutant discharge entities by
the environmental authorities. The pollutants discharged mainly include wastewater and waste gas. The
key monitoring indicators for waste gas are fume SO2 and NOx and those for wastewater are COD and
ammonia nitrogen.
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Tongliao Company has four detection ports for waste gas emissions and two detection ports for
wastewater discharge. For waste gas the actual emission concentration for fume is controlled below 30
mg/m3 that for SO2 is controlled below 200 mg/m3 and that for NOx is controlled below 200 mg/m3. For
wastewater the emission concentration for COD is controlled below 200 mg/L and that for ammonia
nitrogen is controlled below 50 mg/L.Xinjiang Company has two detection ports for waste gas emissions and one detection port for
wastewater discharge. For waste gas the actual emission concentration for fume is controlled below 10
mg/m3 that for SO2 is controlled below 35 mg/m3 and that for NOx is controlled below 50 mg/m3. For
wastewater the emission concentration for COD is controlled below 300 mg/L and that for ammonia
nitrogen is controlled below 35 mg/L.Jilin Company has four detection ports for waste gas emissions and one detection port for wastewater
discharge. For waste gas the actual emission concentration for fume is controlled below 30 mg/m3 that
for SO2 is controlled below 100 mg/m3 and that for NOx is controlled below 100 mg/m3. For wastewater
the emission concentration for COD is controlled below 30 mg/L and that for ammonia nitrogen is
controlled below 35 mg/L.During the Reporting Period the verified total discharge of Tongliao Company Xinjiang Company and
Jilin Company did not exceed the permitted total discharge and the pollutant discharge concentrations at all
discharge outlets are within the national limits.
2. Construction and operation of pollution prevention control facilities
√ Applicable □ Not applicable
The Company actively responds to the country’s call for environmental protection by striving to build
an environmentally friendly and resource-saving enterprise that aims to achieve economic development
and environmental protection simultaneously.
(1) Wastewater treatment
For high-concentration organic wastewater the Company extracts feed mycoprotein from the
flocculation and flotation of high-concentration organic wastewater and evaporates and concentrates the
thin liquid to produce organic fertilizers through spray granulation. For low-concentration wastewater the
Company reduces the exploitation of fresh water by means of internal recycling at wastewater workshops
and cross-workshop coordination and reusing; in wastewater treatment the Company has introduced the
IC reactor and the ANAMMOX bio-removal of nitrogen from the Dutch company Paques. At present
Tongliao Company has two wastewater treatment workshops that use IC anaerobic reaction aeration
aerobiotic reaction and ANAMMOX bio-removal of nitrogen technologies. After treatment the water
quality is far below the execution limits. To save the previous resource of underground water and reduce
wastewater discharge the Company has set up two workshops to reuse reclaimed water. 15000 m3 of
reclaimed water is produced daily and reused in power plant boilers and production cooling which cuts the
consumption of water resources and the total external discharge of wastewater.Likewise Xinjiang Company also reduces water consumption through the combination of tiered
utilization and recycling. The high-concentration wastewater produced by Xinjiang Company is rich in
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nitrogen phosphorus and potassium as well as organic matter. It can be used to produce organic fertilizers
through spray granulation and help interact with corn farmers through complimentary fertilizers. Organic
high-efficiency fertilizers can be used in corn planting to form a virtuous cycle. Xinjiang Company uses the
most advanced wastewater treatment technology from the Dutch company Paques—an IC circular anaerobic
reactor ANAMMOX bio-removal of nitrogen and A/O technology—and achieves automatic control. Hence
the Company enjoys a top position in terms of wastewater treatment technology with its wastewater discharge
far below the national limits. While meeting the discharge requirements the Company’s ANAMMOX sludge
is sold both at home and abroad making it the biggest supplier of ANAMMOX sludge globally. The Company
reuses wastewater to produce methane gas through the IC reactor and provides production plants with clean
energy saving more than 10000 tons of coal every year. The Company is equipped with a reclaimed water
recycling workshop with a daily capacity of 15000 m3. The workshop uses the V-shaped filter ultrafiltration
and anti-penetration technology which saves water consumption by 10000 m3 every day.Jilin Company’s wastewater treatment workshop treats wastewater using anaerobic reaction aerobiotic
reaction A/O and the five-tiered bio-treatment of coagulation and sedimentation. For the anaerobic reactor
the workshop uses the latest Gen-3 ICX reactor from the Dutch company Paques which features a treatment
efficiency higher than other reactors by 20% with a designed treatment capacity of 30000 m3 per day.Meanwhile to better implement Meihua Group’s concept for building an “environmentally friendly energy-saving innovation-driven and quality safety” enterprise Jilin Company always vigorously encourages energy
conservation emission reduction and clean production based on original designs. It proactively develops
innovative technologies and identifies points for technological improvements to ensure economic feasibility
while protecting the environment and achieving discharge standards. In 2023 Jilin Company reduced
discharge by nearly 2000 m3 per day on average and reached a globally leading position in terms of clean
production.The wastewater treatment workshops of Tongliao Company Xinjiang Company and Jilin Company all
have online surveillance equipment for their discharge outlets which is connected with the networks of
environmental authorities to monitor the Company’s wastewater discharge in real time.
(2) Waste gas treatment
1) Treatment of fume from boilers:
In treating fume from boilers the Company uses electrostatic fabric filter ammonia desulfurization
and SNCR denitration technologies. Upon treatment the fume emission concentration is far below thelimits set by the Emission Standard of Air Pollutants for Thermal Power Plants thus achieving the “ultra-low discharge” standard. The denitration technology used by the Company converts NOx into N2 and H2O
through reaction without causing secondary pollution. The ammonia desulfurization technology uses NH3
and SO2 reaction as the basis and in the multi-functional fume desulfuration absorber tower ammonia
absorbs SO2 from fume and oxidizes it into ammonium sulfate. The byproducts happen to be usable in the
Company’s production of amino acids. It brings double benefits to the Company: meeting the requirements
of pollutant discharge and recycling resources.The fume discharge outlets of Tongliao Company Xinjiang Company and Jilin Company all have
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online surveillance equipment which is connected with the networks of environmental authorities to
monitor the Company’s fume discharge in real time.
2) Treatment of organized odors:
In treating organized odor emissions the Company uses a combination of advanced treatment
technologies including dedusting washing cooling and dewatering catalytic oxidation cryocondensation
DDBD (double dielectric barrier discharge) photoelectrocatalysis and activated carbon adsorption. All
odors are discharged through three to nine tiers of treatment. In 2023 Xinjiang Company spent 200 million
yuan on the deep treatment of odors. On the basis of the original odor treatment facilities Xinjiang
Company installed facilities such as washing towers and dedusters in a bid to make the odor concentrations
at the discharge outlets achieve the requirements of the Emission Standard for Odor Pollutants (Exposure
Draft) ahead of the deployment by the Ministry of Ecology and Environment. At the same time the
Company continuously develops creative methods using domestic and foreign advanced technologies
including multi-tiered washing cooling and dewatering electrostatic defogging low-temperature plasma
treatment microwave photo-oxidation deep oxidation and activated carbon absorption to treat
fermentation odors and the exhaust from product drying. The Company also achieves automatic control
making the treatment process more precise and stable.
3) Treatment of unorganized odors:
In treating unorganized odor emissions the Company has installed closed collection devices to treat
unorganized waste gas from production equipment and storage tanks and equipment. The collected waste
gas is discharged after being treated by environmental devices which solves the impact of unorganized waste
gas emissions on ambient air quality. Further through the continuous improvement of its internal
management the Company strives to eliminate the locations of unorganized diffusion and reduce indoor and
outdoor odor concentrations.In 2023 Xinjiang Base was given administrative punishments by the local environmental authority
due to the excess concentration of boundary unorganized odors. To thoroughly treat odors Xinjiang
Company spent a total of 180 million yuan on 37 air pollution treatment projects including the treatment
of unorganized dust and odors from the organic fertilizer workshop the treatment of waste gas from
drying by the starch workshop the treatment of exhaust from the fluidized beds in monosodium
glutamate Production Line 7 (Extraction Workshop 7) the treatment of unorganized waste gas from
starch soaking the treatment of dust from grain purification by starch the treatment of waste gas from
fermentation and the treatment of unorganized dust from coal sheds. The projects have been put into
operation. Upon the implementation of the treatment measures Xinjiang Company engaged a third-
party testing company to conduct tests and the test results showed that all odor emissions met the limit
requirements of the Emission Standard for Odor Pollutants (GB14554-93). All indicators of 32
discharge outlets involving odorous waste gas including particulate matter sulfur dioxide hydrogen
sulfide hydrogen chloride non-methane hydrocarbon and odor concentration met the requirements of
the Integrated Emission Standard of Air Pollutants (GB16297-1996) the Emission Standard for Odor
Pollutants (GB14554-93) and the pollutant discharge licenses.
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Jilin Base spent 2783900 yuan to install external PSCR denitration reaction equipment on four
units of high-temperature and high-pressure circulating fluidized bed boilers at Production Line 5 of the
heating station reducing the boiler discharge index to less than 50 mg/Nm3 which reached the ultra-
low discharge standard. Upon the implementation of the treatment measures Jilin Company engaged a
third-party testing company to conduct tests and the test results showed the indicators of discharge
outlets involving odorous waste gas including particulate matter sulfur dioxide and NOx met the
requirements of the Integrated Emission Standard of Air Pollutants (GB16297-1996) and the pollutant
discharge licenses.
4) Treatment of unorganized dust:
The Company spent hundreds of millions of yuan to reduce the unorganized dust produced from the
storage and transportation of coal by building three completely closed coal yards. The yards are equipped
with high-pressure fog ejectors that eject fog into the yards to prevent dust. In the plants coals are
transported in a fully closed way. The car dumper system has dry fog-based dust prevention devices to
automatically eject fog when unloading coals. The transportation and storage of coal thoroughly eliminate
the impact of unorganized dust.
(3) Management of solid waste
Through the constant reduction comprehensive utilization and hazard-free treatment of solid
waste the Company prevents solid waste from polluting the environment and harming human health
during its production storage transportation and treatment. The Company strictly complies with
national laws and regulations during its production and operations and implements relevant policies
including the Management Policy for Pollutant Discharge and the Management Regulations on
Hazardous Waste (Trial) to ensure the stable operation of pollutant treatment facilities. The Company’s
discharge of all air pollutants and wastewater meets the standards and all waste is treated in a proper
manner.
3. Environmental impact assessment for construction projects and other administrative licensing
for environmental protection
√ Applicable □ Not applicable
1) Tongliao Meihua
Overall Tongliao Company has completed the environmental impact assessment and inspection for its
projects. In 2023 it obtained environmental approval for the threonine-to-valine technological improvement
project.
2) Xinjiang Meihua
Overall Xinjiang Company has completed the environmental impact assessment and inspection for its
projects.
3) Jilin Meihua
Overall Xinjiang Company has completed the environmental impact assessment and inspection for its
projects. In 2023 it completed the environmental impact assessment and inspection for its xanthan gum
project.
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Tongliao Company Xinjiang Company and Jilin Company have obtained the pollutant discharge license
according to the national regulations on the issue of the pollutant discharge license.
4. Environmental emergency response plan
√ Applicable □ Not applicable
The Company complies with the requirements of the Emergency Response Law of the People’s
Republic of China the National Environmental Emergency Response Plan the Environmental Protection
Law of the People’s Republic of China the Water Pollution Prevention and Control Law of the People’s
Republic of China and the Air Pollution Prevention and Control Law of the People’s Republic of China
to prevent and actively respond to potential environmental emergencies handle such emergencies in a
rapid affective and orderly manner and maintain the normal work order of the Company. In accordance
with the latest national laws and regulations as well as relevant requirements the Company observes theprinciple of “prioritizing prevention and self-rescue unifying command and coordination implementingaccountability and combining corporate self-rescue and social rescue” based on its actual situation in a
bid to avoid and minimize the impact of emergencies on personnel equipment property and in particular
the environment. The Company strives to improve its capabilities for preventing environmental pollution
accidents emergency responses and aftermath handling. Tongliao Company Xinjiang Company and
Jilin Company have all developed emergency rescue plans for environmental pollution accidents filed
them with the local environmental authorities and organized emergency drills according to the
requirements.In 2023 the three production bases conducted six emergency drills in total. Tongliao Base conducted
two including one for fire caused by threonine extraction and one for the leakage of liquid ammonia from
the ammonia synthesis line; Jilin Base conducted two including one for the leakage of sulfuric acid from
the lysine extraction workshop and one for the leakage of liquid ammonia from the ammonia synthesis
line; Xinjiang Base conducted two including one for leakage from liquid ammonia tanks and one for
leakage from hazardous chemical workshops. The drills were conducted strictly according to the steps.The results of each drill were analyzed and summarized and the response and handling abilities of staff
members at all levels were improved through the practice of emergency plans.
5. Environmental self-monitoring plan
√ Applicable □ Not applicable
Tongliao Company Xinjiang Company and Jilin Company have developed self-test plans in
accordance with the Measures on Self-Monitoring and Information Disclosure for State-Monitored Key
Enterprises (Trial) and the Management Measures for Pollutant Discharge Licensing to regularly test the
wastewater and waste gas in the factories. For wastewater they use the online CODcr analyzer and the online
ammonia nitrogen analyzer to perform continuous automatic tests. The monitored items are pH value COD
and ammonia nitrogen and the flow monitoring frequency is once every two hours. For waste gas they have
installed online testers on the desulfurizer outlets to automatically test fumes SO2 and NOx. All the
automatic monitoring equipment used by the Company has passed inspection by the environmental
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authorities. In addition the Company strengthens the management of equipment operation and maintenance
to ensure its normal operations and normal data transmission. The Company also appoints qualified
monitoring entities to monitor relevant indicators including fumes wastewater and boundary noise to
ensure the truthfulness and effectiveness of their values. At the same time the Company has developed
emergency environmental monitoring plans to immediately monitor environmental pollution accidents and
cooperate with local environmental monitoring agencies in emergency monitoring.The local environmental authorities perform the supervisory monitoring of wastewater and waste gas
on a periodic basis and the Company tests wastewater and waste gas on a monthly quarterly and annual
basis internally. All production bases manage pollutant discharge and the operation of environmental
facilities by area with the workshops designating personnel to manage them. The Company sets the
environmental award organizes the “monthly joint inspections” every month and focuses the inspection
on its environmental protection system operation. The Group takes the lead in organizing environmental
compliance checks for the production bases every quarter.
6. Administrative punishments due to environmental problems during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period Xinjiang Company was given the following administrative
punishments by the local environmental authority:
On April 5 2023 the concentration of Xinjiang Company’s boundary unorganized odor exceeded
the limit in the pollutant discharge license by 0.25 fold and the Bureau of Ecology and Environment of
the Sixth Division of the Xinjiang Production and Construction Corps decided to impose an administrative
penalty of 652100 yuan on Xinjiang Company;
On May 3 2023 the concentration of Xinjiang Company’s boundary unorganized odor exceeded the
limit in the pollutant discharge license by 0.85 fold and the Bureau of Ecology and Environment of the
Sixth Division of the Xinjiang Production and Construction Corps decided to impose an administrative
penalty of 1 million yuan on Xinjiang Company;
On May 9 2023 due to the serious damage to the waste gas pipe for drying in the starch workshop
in Xinjiang Company waste gas diffused in the factory without being treated by washing and desulfuration
equipment and was directly discharged through the rectangular outlet on the building roof and the Bureau
of Ecology and Environment of the Sixth Division of the Xinjiang Production and Construction Corps
decided to impose an administrative penalty of 452200 yuan on Xinjiang Company;
On June 12 2023 the desulfurizing tower SO2 value of Xinjiang Company’s power plant exceeded
the limit and Xinjiang Company only marked it without disclosing the excess value. An administrative
penalty of 106400 yuan was imposed on Xinjiang Company;
On June 12 2023 the peak value of Xinjiang Company’s boundary odor concentration exceeded the
odor concentration limit in the pollutant discharge license by 0.9 fold and the Bureau of Ecology and
Environment of the Sixth Division of the Xinjiang Production and Construction Corps decided to impose
an administrative penalty of 1 million yuan on Xinjiang Company;
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On September 12 2023 Xinjiang Company discontinued the operation of the odor treatment facilities
(photoelectric deodorization equipment) at Zone 10 in the sewage treatment station without reporting the
situation to the bureau of ecology and environment. No sealing measures were taken for the mixer at the
top of the regulating pond at the sewage treatment station and a circular opening with a diameter of 10
cm on the top cement slab discharged gas outward directly; the regulating pond did not have the effect of
collecting negative pressure; the site fast test device showed an odor concentration of 8953 with a marked
odor in surrounding areas. The swirler gasket of Tank A of the IC reactor at the sewage treatment station
broke down and intermittent discharge of gas could be heard onsite; the site fast test device showed an
odor concentration of 8926 with no effective measures taken to prevent the discharge of odors. The
Bureau of Ecology and Environment of the Sixth Division of the Xinjiang Production and Construction
Corps decided to impose an administrative penalty of 74800 yuan on Xinjiang Company.The above administrative penalties add up to 3.2855 million yuan.The above incidents reflected the fact that the production management personnel at the production
base slacked off were not serious enough with management and failed to run environmental facilities
according to the Company’s standards. The Company attached great importance to the incidents and
strictly implemented the accountability system. It addressed all problems further inspected the factory
identified the location of odors allocated funds for treatment developed solutions and specified the
rectification goal measures responsible personnel and time limit for deep treatment of the odors. During
the treatment the Company set up a rectification leadership group led by key responsible personnel to
inspect the whole factory in all aspects and immediately rectify all identified problems with the goal of
satisfying local residents. During the Reporting Period the Company spent 200 million yuan to thoroughly
eliminate odors. On the basis of the original odor treatment facilities the Company installed facilities such
as washing towers and dedusters and completed a total of 37 air improvement projects including the
treatment of unorganized dust and odors from the organic fertilizer workshop the treatment of waste gas
from drying by the starch workshop the treatment of exhaust from the fluidized beds in monosodium
glutamate Production Line 7 (Extraction Workshop 7) the treatment of unorganized waste gas from starch
soaking the treatment of dust from grain purification by starch the treatment of waste gas from
fermentation and the treatment of unorganized dust from coal sheds. Upon the implementation of all
treatment measures the Company appointed a third-party environmental institution or testing company to
conduct tests and analysis. In November 2023 the Company completed the phased construction of the
rectification projects. The bureau of ecology and environment of the corps sent relevant technical experts
to conduct a site survey in December 2023 and complete the inspection.
7. Other environmental information that should be disclosed
√ Applicable □ Not applicable
The Company calculates and duly pays the environmental protection tax in full according to relevant
laws including the Environmental Protection Tax Law.
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To ensure the effective implementation of environmental management and develop comprehensive
environmental audit policies the Company constantly fulfills its responsibility for environmental
protection as a corporate entity. The Group’s HSE management department holds environmental briefings
and thematic meetings on a periodic basis and works with the production bases to develop environmental
protection plans and examine the environmental protection sources for construction reconstruction and
expansion projects thereby managing Meihua Bio’s environmental protection on all fronts.The Company regularly conducts training on environmental protection for all employees to raise their
environmental awareness and strengthen their understanding of the Company’s environmental concept
and their technical abilities for environmental protection. In addition the Company requires publishing
environmental protection knowledge and cases of safety accidents in its newsletters and workshops’
bulletins to strengthen staff’s legal awareness of environmental protection.As of the end of the Reporting Period the three production bases under Meihua Bio had all obtained
the ISO 14001 certification representing a certification ratio of 100%.The Company has built a carbon emission management system to incorporate carbon emissions into
its daily management. The Company monitors carbon emissions regularly captures the data according to
the standards cooperates in third-party inspections duly performs the protocol and clears the emission
quota.Upholding the principle of “combining self-audits with assisted external audits” the Company
engages a third-party consulting institution to assist in the audit of clean production survey the Company’s
production energy consumption and emission reduction during recent years prepare the Clean
Production Audit Report and file it with the local environmental authority.(II) Environmental information of the Company other than the information as a key pollutant
discharge entity
√ Applicable □ Not applicable
1. Administrative punishments for environmental problems
□ Applicable √ Not applicable
2. Disclosure of other environmental information by reference to the standards for key pollutant
discharge entities
□ Applicable √ Not applicable
3. Reasons for not disclosing other environmental information
√ Applicable □ Not applicable
Except for Tongliao Meihua Xinjiang Meihua and Jilin Meihua other wholly-owned subsidiaries
of the Company are not key pollutant discharge entities as classified by the environmental authorities.Those subsidiaries include Langfang Meihua Condiments Co. Ltd. and Tongliao Meihua Condiments Co.Ltd. which are engaged in the packaging and sales of condiments; Lhasa Meihua which is engaged in
external investment; Xinjiang Meihua Investment Company which is engaged in the foreign sales of
products and the import and export of goods; Hong Kong Meihua which is a trading company responsible
for exporting the Company’s products; Meihua (Shanghai) Biotech Co. Ltd. which is engaged in
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technology development; and the newly established Hengqin Meihua Hong Kong Holdings and Cayman
Company which are engaged in outbound investment.(III) Information favorable to ecological conservation pollution control and the fulfillment of
environmental responsibility
√ Applicable □ Not applicable
The Company always prioritizes management and spending on environmental protection sticks to
the sustainable development path of energy conservation environmental protection and emission
reduction and strives to build an environmentally friendly and energy-saving company with the goal of
achieving economic development and environmental protection simultaneously. In the macro-context of
carbon neutrality promotion during the “14th Five-Year” Plan period the Company has set up a sustainable
development committee to further improve the production process roadmaps for all production lines in the
Company through the research of the dual control system of total energy consumption and energy intensity
grasp strategic opportunities from the national adjustment to the industrial structure and advance further
towards green manufacturing bio-manufacturing and intelligent manufacturing.
1. Water resource management
In 2023 Meihua Bio identified the water resource risk level for all operation sites based on the water
risk analysis tool of the Water Resources Institute (WRI). The Company found that 100% of the water
used came from high-risk areas. In addition the proportion of crops purchased by the Company from areas
with a high or very high pressure of benchmark water consumption reached 80% to 100%. These risk
results have become a continuing driver that drives the Company to continuously improve the utilization
of water resources. The Company promises to reduce the use of water resources and conducts regular
performance appraisals to check the accomplishment of the targets. The Company will protect water
resources through tangible action and take a suite of measures including improving production processes
and recycling water to effectively control the risk of water resources and achieve water conservation.The Company has formulated the Management Measures of Meihua Bio Company for Water
Resources set up a strategy committee under the board of directors as the Company’s top body for water
resource management and built a three-tiered water resource management structure consisting of the
Company the production bases and the production units. In its policy the Company specifically requires
Meihua Bio to make overall plans for the water resources used in the whole company strengthen the
conservation protection and science-based use of water resources increase the recycling ratio of water
expand the use of non-conventional water resources in the industry and build a water-saving industrial
enterprise. In 2023 none of Meihua Bio’s production bases committed water-related violations.
2. Progress of the ESG project
With the assistance of a third-party consulting institution the Company has launched an ESG
consulting project to improve its overall ESG (environmental social and governance) management level
on all fronts meet the requirements of broad stakeholders for the Company’s ESG management refine
the Company’s internal governance structure define the ESG-related duties of staff members at all levels
and effectively deliver more achievements in social responsibility and ESG management. During the
75 / 282Annual Report 2023Reporting Period the Company first released “developing synthetic biotechnology and nourishing peopleand the environment towards a harmonious future” as the strategic goal for sustainable development.Using “green responsible low-carbon and healthy” as the four pillars for sustainable development the
Company solidly implements the concept of sustainable development in its day-to-day production and
operations step by step through the ESG management system. While making continuous breakthroughs
the Company sticks to the principle of sustainable development in pursuit of win-win economic
environmental and social development.During the Reporting Period with Jilin Meihua as the pilot site the Company obtained the carbon
footprint certificate for MSG and lysine respectively and completed the water footprint certification
work for lysine. At present the Company is carrying out the greenhouse gas emission check and the
carbon neutrality implementation standard. During the Reporting Period Tongliao Base obtained the
energy management system certificate.(IV) Measures taken to reduce carbon emissions during the Reporting Period and the effects
Carbon reduction measures in place or not Yes
Reduction of the emission of CO2 equivalent (unit:
313683
ton)
The Company made improvements in energy supply equipment
Carbon reduction measures (such as using clean
and process management such as rooftop PV power the
energy for power generation using carbon reduction
improvement of low-pressure steam pipe networks the
technology during production and developing new
improvement of xanthan gum technology and the improvement
products that help reduce carbon emissions
of energy-saving technology for starch evaporators.Specific information
√ Applicable □ Not applicable
In 2023 Meihua Bio took a solid step in the “dual carbon” strategy. With Jilin Base as the pilot site the
Company built a model factory obtained the carbon footprint certificate for MSG and lysine respectively
and carried out the greenhouse gas emission check and the carbon neutrality implementation standard
laying the foundation for the full coverage of carbon neutrality later. During the Reporting Period Tongliao
Base obtained the energy management system certificate laying a solid foundation for the Company to
accomplish the low-carbon strategic goal.To standardize the calculation of greenhouse gas emissions for the biological fermentation industry
Meihua Bio led in the formation of the Requirements for the Calculation and Reporting of Greenhouse Gas
Emissions -- Manufacturers in Biological Fermentation a collective standard proposed by the China Biotech
Fermentation Industry Association and participated in the drafting of the Evaluation Standards for Model
Energy-Saving and Environmentally Friendly Enterprises in the Biological Fermentation Industry a
collective standard proposed by the China Biotech Fermentation Industry Association. It has made
outstanding contributions to environmental management in the industry.To improve employees’ professional abilities for addressing climate risk saving energy and reducing
carbon the Company conducts training on energy-saving strategies policies and standards. In 2023 Meihua
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Bio conducted four sessions of training on addressing climate change as well as energy conservation and
emission reduction strategies. The training covered a number of topics including the interpretation of the
trend of national carbon neutrality development horizontal energy saving and emission reduction strategies
the current status of the Company’s energy consumption and energy conservation and emission reduction
plans and strategies. The training was attended by 150 trainees and the total hours of participation exceeded
600.
During the Reporting Period to further reduce carbon emissions the Company’s production bases
carried out work related to energy conservation and emission reduction in many aspects including
production process management technological improvements for heating stations and PV power.Some cases of energy conservation and emission reduction are as follows:
1. Project of technological improvements for energy supply
(1) Project of improving the operation of low-pressure steam pipe networks at Xinjiang Heating Station:
Xinjiang Base aligned the overall use of the steam pipe networks and the design identified points for
improvements and reduced the power plant’s steam consumption by 0.2 kg/KWH by adjusting the pressure
of steam for external supply. It is estimated that the project saved about 33800 tons of standard coal and
reduced carbon emissions by 87800 tons throughout the year.
(2) PV power generation in Tongliao and Jilin factories: In response to the call of the national clean
energy development strategy the Company developed PV projects in Tongliao Base and Jilin Base
respectively based on the concept of green and sustainable development. The projects were completed and
put into use. It is estimated that the projects generated a total green power of 35.52 million KWH and reduced
carbon emissions by 10900 tons throughout the year.
2. Equipment improvements and production process management
(1) Improvement of energy conservation technology for start evaporators at Xinjiang Base: An
additional set of the evaporation tower system was installed on the evaporators at the starch workshop in
Xinjiang Base. The recycling of heat from exhaust saves steam consumption by 9 T/h. It is estimated that the
project saved about 10100 tons of standard coal and reduced carbon emissions by 26260 tons throughout
the year.
(2) Improvement of xanthan gum technology: Jilin Base built new xanthan gum production lines used
new extraction technology and improved evaporators. The project reduces steam consumption for single
products by 11% and saves about 54000 tons of steam annually. It is estimated that the project saved about
7700 tons of standard coal and reduced carbon emissions by 20000 tons throughout the year.
II. Social Responsibility-Related Work
(1) Whether the social responsibility report the sustainable development report or the ESG report
was disclosed separately
√ Applicable □ Not applicable
The Company’s environmental social and governance reports were disclosed on the website of the
Shanghai Stock Exchange on the same day as this report. The disclosure website is http://www.sse.com.cn.
77 / 282Annual Report 2023
(2) Information of social responsibility-related work
√ Applicable □ Not applicable
External donations and charity projects Amount/content Remark
Total spending (‘0000 yuan) 471.67
including: funds (‘0000 yuan) 314.35
value of supplies (‘0000 yuan) 157.32
Number of beneficiaries 1431728
Specific information
√ Applicable □ Not applicable
During the Reporting Period Tibet Meihua’s charity foundation donated anti-flood supplies to the
Bazhou Red Cross Society of Hebei (30000 cartons of instant noodles and 9600 cartons of water) which
are worth 1.4712 million yuan. Upon arrival in Bazhou all supplies were distributed to the flood-stricken
towns and villages through the reasonable arrangement of local authorities to immediately solve the
shortage of anti-flood supplies locally. 1 million yuan was donated for the infrastructure construction of
Chunhua Garden in Baicheng as part of its contribution to improving the local environment providing
residents with places for leisure and recreational activities and enriching their lives. 500000 yuan was
donated to the Baicheng Industry Zone to assist in post-disaster reconstruction. 500000 yuan was donated
to the Shanghai Spring Youth Development Center for a research-based study project. 250000 yuan was
donated to the Xiasasu Community Pargor Subdistrict Chengguan District Lhasa Tibet for the upgraded
donation of the office area on Floor 1 at Xiasasu Community to assist in community development. The
decoration involved the re-planning and renovation of venues including the People’s Service Hall the
Mass Meeting Room and the Archives Room. 250000 yuan was donated to the SOS children’s village.
180000 yuan was donated to 50 students from families with financial problems in Nyemo County Lhasa
Tibet. 137000 yuan was donated to Quxia Village Lhatse County Shigatse Lhasa Tibet. Coal was
donated to Guoke Village Tibet and was worth 102000 yuan. 100000 yuan was donated to 15 college
students from families with financial problems in the SOS children’s village in Lhasa Tibet. 54000 yuan
was donated to the School of Chemical Engineering and Technology Tianjin University. When the charity
foundation conducted a charity project survey in Changzhi Shanxi it provided 40000 yuan in financial
aid to 20 seniors in high school at Qinxian Middle School and Changzhi No. 2 Middle School in Shanxi.Jilin Meihua donated 109000 yuan to impoverished children through the China Charity Federation
and subsequently donated 23544 yuan to 108 impoverished children in Taobei District Baicheng through
Tibet Meihua’s charity foundation.As an important part of its sustainable development campaign the Company will make full use of
the charity foundation platform in the future build up its image as a responsible brand enhance staff
cohesion align with global top companies and develop into a responsible enterprise.
78 / 282Annual Report 2023
III. Consolidation and Expansion of Achievements in Poverty Alleviation and Work Related to
Rural Revitalization
√ Applicable □ Not applicable
Poverty alleviation and rural revitalization projects Amount/content Remark
External donations and charity projects 130.9
Total spending (‘0000 yuan) 120.7
including: funds (‘0000 yuan) 10.2
value of supplies (‘0000 yuan) 7320
Form of support (such as industrial poverty alleviation
poverty alleviation through employment opportunities Poverty alleviation
poverty alleviation through education etc.) through education
Specific information
√ Applicable □ Not applicable
While striving for rapid development and bigger economic returns the Company leverages the
industrial advantage to actively support the cause of charity by organizing various activities that cover
rural revitalization donations and poverty alleviation through education. The Company persists in giving
back to society with benevolence and helping others through good deeds as part of its social responsibility
for “making the world better.”
In 2023 Tibet Meihua’s charity foundation donated 500000 yuan to the Shanghai Spring Youth
Development Center for a research-based study project. The Company plans to introduce the project
jointly with Spring Youth to the schools in the places where the Company and its subsidiaries are located
to develop the Research-Based Study course and create open space and classes for students. 250000 yuan
was donated to the SOS children’s village. 180000 yuan was donated to 50 students from families with
financial problems in Nyemo County Lhasa Tibet. 137000 yuan was donated to Quxia Village Lhatse
County Shigatse Lhasa Tibet. Coal was donated to Guoke Village Tibet and was worth 102000 yuan.
100000 yuan was donated to 15 college students from families with financial problems in the SOS
children’s village in Lhasa Tibet. When the charity foundation conducted a charity project survey in
Changzhi Shanxi it provided 40000 yuan in financial aid to 20 seniors in high school at Qinxian Middle
School and Changzhi No. 2 Middle School in Shanxi. The Company has been deepening poverty
alleviation through education and assisting in rural revitalization through tangible action.
79 / 282Annual Report 2023
Section 6 Significant Matters
I. Fulfillment of Commitments
(I) Commitments of relevant parties including the Company’s actual controller shareholders
related parties acquirers and the Company
√ Applicable □ Not applicable
Whether If it is not fulfilled in If it is not Date Whether it is fulfilled in
Commitment Type of Commitment Content of commitment of there is Deadli strictly
due due course
background commitment made by comm a ne fulfilled course state the state the itment deadline in due plan for the
course specific reasons next step
During the period when Mr.Meng Qingshan and the
persons acting in concert
serve as the Company’s
controlling shareholder and
actual controller effective
measures will be taken and
Meng Mr. Meng Qingshan or the Solving holding subsidiaries under July
horizontal Qingshan and Mr. Meng Qingshan and the 19 No Yes Not Not
competition persons acting persons acting in concert 2010 applicable applicable in concert will be caused to take
effective measures not to be
engaged in or involved in
any business that may
compete with the business
engaged in by the listed
company or its holding
subsidiaries.Upon completion of the
restructuring Mr. Meng
Commitments Qingshan and the persons
related to the acting in concert will avoid
restructuring related-party transactions
of major with the listed company
assets wherever possible. If there is
any unavoidable related-
party transaction Mr. Meng
Qingshan and the persons
acting in concert will enter
into agreements with the
Solving Meng listed company in
related- Qingshan and accordance with laws July Not Not
party persons acting perform lawful procedures 19 No Yes applicable applicable
transactions in concert fulfill the duty of 2010
information disclosure and
go through formalities to
obtain approval in
accordance with relevant
laws regulations and the
Articles of Association.They undertake not to harm
the legitimate rights and
interests of the listed
company and other
shareholders through
related-party transactions.
80 / 282Annual Report 2023
Upon completion of the
transaction they will
maintain the independence
Meng of the listed company
Others Qingshan and observe the principle of
July Not Not
persons acting separation in personnel 19 No Yes applicable applicable
in concert finance institution and 2010
business and run the listed
company in accordance with
the relevant CRSC rules.(II) Whether the Company reached the original profit forecast in respect of any asset or project if
there was a profit forecast for the asset or project and it was still the profit forecast period during
the Reporting Period and statement of the reasons
□ Yes □ No √ Not applicable
(III) Accomplishment of committed performance and its impact on the goodwill impairment test
□ Applicable √ Not applicable
81 / 282Annual Report 2023
II. Occupation of Funds by Controlling Shareholder and Other Related Parties for Non-operating Purposes during the Reporting Period
□ Applicable √ Not applicable
III. Guarantees in Violation of Regulations
□ Applicable √ Not applicableAnnual Report 2023
IV. Notes of the Board of Directors on the “Modified Audit Report” from the CPA Firm
□ Applicable √ Not applicable
V. Analysis of the Reasons for Changes in Accounting Policies or Accounting Estimates or
Correction of Material Accounting Errors and the Effect
(I) Analysis of the reasons for changes in accounting policies or accounting estimates and the effect
√ Applicable □ Not applicable
1．Changes in accounting policies
Review and approval
Changes in accounting policies and the reasons Remark
procedures
On January 1 2023 the Company started to implement the Interpretation of Accounting
Standards for Business Enterprises No. 16 (ASBE Interpretation No. 16) published by the 2nd meeting of the tenthMinistry of Finance in 2022. According to the interpretation “accounting treatment session of the board of (1)exempted from initial recognition does not apply to deferred income tax associated with directorsassets and liabilities arising from a single transaction.”
(1) Effect of the implementation of the ASBE Interpretation No. 16 on the Company
On December 31 2022 the Ministry of Finance published the ASBE Interpretation No. 16 (CK [2022]
No. 31 hereinafter referred to as “Interpretation No. 16”). The provision that “accounting treatmentexempted from initial recognition does not apply to deferred income tax associated with assets andliabilities arising from a single transaction” was implemented on and as of January 1 2023. Enterprises
are allowed to implement it in the publishing year in advance. The Company performed the relevant
accounting treatment in 2023.The lease liabilities and right-of-use assets recognized due to the applicability of Interpretation No.
16 as at the beginning of the earliest period (which is January 1 2022) and the recognized estimated
liabilities related to the retirement obligation as well as the corresponding assets were presented in the
financial statements prepared after the first implementation of Interpretation No. 16. Where any deductible
temporary difference or taxable temporary difference arose the Company adjusted the retained profits at
the beginning of the earliest period (which is January 1 2022) and other relevant items in the financial
statements according to the accumulated effects.In accordance with the relevant provisions of Interpretation No. 16 the Company adjusted the
relevant items in the financial statements according to the accumulated effects:
January 1 2022 January 1 2022
Amount of accumulated effects
Item Original amount presented Amount presented after
(yuan)
(yuan) adjustment (yuan)
Deferred income tax
111413131.73461821.26111874952.99
assets
Deferred income tax
40626900.28534383.6741161283.95
liabilities
Surplus reserve 958921722.12 （7256.24） 958914465.88
Retained profits 4599883309.24 （65306.17） 4599818003.07
83 / 282Annual Report 2023
For the lease liabilities and right-of-use assets recognized from single transactions subject to
Interpretation No. 16 that occurred between the beginning of the earliest period (which is January 1 2022)
and the implementation date of Interpretation No. 16 (December 31 2022) and the recognized estimated
liabilities related to the retirement obligation as well as the corresponding assets presented in the financial
statements after the first implementation of Interpretation No. 16 the Company treated them in accordance
with Interpretation No. 16.
(2) In accordance with the relevant provisions of Interpretation No. 16 the Company adjusted the
relevant balance sheet items as follows:
December 31 2022
Balance sheet item Amount of accumulated
Before change (yuan) After change (yuan)
effects (yuan)
Deferred income tax assets 135669154.91 910640.61 136579795.52
Deferred income tax
180231753.151053618.63181285371.78
liabilities
Surplus reserve 1142518851.07 （14297.80） 1142504553.27
Retained profits 7605768999.02 （128680.22） 7605640318.80
In accordance with the relevant provisions of Interpretation No. 16 the Company adjusted the
profit or loss items as follows:
2022
Profit or loss item Amount of accumulated
Before change (yuan) After change (yuan)
effects (yuan)
Income tax expenses 746482646.86 70415.61 746553062.47
Net profits 4406312397.53 （70415.61） 4406241981.92
2．Changes in accounting estimates
There was no change in key accounting estimates during the Reporting Period.(II) Analysis of the reasons for correction of material accounting errors and the effect
□ Applicable √ Not applicable
(III) Communication with previously appointed CPA firms
□ Applicable √ Not applicable
(IV) Review and approval procedures and other information
√ Applicable □ Not applicable
The above changes in accounting policies were deliberated and approved at the 2nd meeting of the
tenth session of the board of directors.VI. Appointment and Dismissal of CPA Firms
Unit: yuan Currency: RMB
84 / 282Annual Report 2023
Current CPA firm in service
Name of domestic CPA firm Da Hua CPAs LLP (special general partnership)
Remuneration for domestic CPA firm 1400000.00
Limit on years of audit by domestic CPA firm 14
Names of CPAs from domestic CPA firm Gong Chenyan Li Qianqian
Total years of audit service by CPAs from domestic CPA
Gong Chenyan (3 years) Li Qianqian (2 years)
firm
Name Remuneration
Da Hua CPAs LLP (special general
CPA firm for internal control audit 800000.00
partnership)
Explanation of appointment and dismissal of CPA firm
√ Applicable □ Not applicable
As deliberated and approved at the annual general meeting of 2022 the Company continued to
appoint Da Hua CPAs LLP (special general partnership) as the audit firm for auditing the Company’s
2023 annual financial report and internal control.
Explanation of appointment of another CPA firm during the audit period
□ Applicable √ Not applicable
Explanation of a reduction in audit fees by more than 20% (inclusive) from prior year
□ Applicable √ Not applicable
VII. Delisting Risk
(I) Causes of delisting risk warning
□ Applicable √ Not applicable
(II) Countermeasures planned by the Company
□ Applicable √ Not applicable
(III) Termination of listing
□ Applicable √ Not applicable
VIII. Bankruptcy and Restructuring-Related Matters
□ Applicable √ Not applicable
IX. Significant Litigation and Arbitration
√ The Company had significant litigation or arbitration in the year □ The Company did not have
significant litigation or arbitration
85 / 282Annual Report 2023
(I) Circumstance where any litigation or arbitration was disclosed in provisional announcements
but did not progress subsequently
□ Applicable √ Not applicable
(II) Circumstance where any litigation or arbitration was not disclosed in provisional
announcements or progressed subsequently
□ Applicable √ Not applicable
(III) Other information
√ Applicable □ Not applicable
1. Litigation related to former Dalian Hanxin Bio-Pharmaceuticals Co. Ltd.
According to the Share Transfer Agreement for the transfer of 100% of the shares of Dalian Hanxin
Bio-Pharmaceuticals Co. Ltd. (former name and now known as AIM Honesty Bio-Pharmaceuticals Co.Ltd. hereinafter referred to as “AIM Honesty”) by the Company’s wholly-owned subsidiary Lhasa
Meihua Bio-investment Holdings Co. Ltd. to Liaoning AIM Bio-vaccine Technology Group Co. Ltd.(former name and now known as AIM Vaccine Co. Ltd.) Lhasa Meihua Bio-investment Holdings Co.Ltd. undertakes that except for the liabilities specifically stated in the audit report and the financial
statements provided to the acquirer and the liabilities that occurred abnormally in the normal course of
business of AIM Honesty and its subsidiaries after the audit benchmark date and has been disclosed to
the acquirer AIM Honesty and its subsidiaries did not have any other debts or contingent debts. In the
event that it violates the undertaking it shall bear compensation liability for all the direct or indirect
economic losses suffered by other parties due to the violation. In accordance with the aforementioned
provision the Company has performed the obligation for partial compensation. For more details refer to
the Company’s previous annual reports.As of December 31 2022 the Company’s other receivables—Zhuang Enda debt— reached
91112286.66 yuan which was a historical debt. According to the agreements between the Company and
AIM Honesty’s former actual controllers who were Tibet Yiyuan Industry and Zhuang Enda Lhasa
Meihua has the right to claim compensation from Tibet Yiyuan Industry and Zhuang Enda. Based on
investigations Tibet Yiyuan Industry had no industrial entity or property for enforcement. The Wuhua
District People’s Court of Kunming and the Kunming Intermediate People’s Court also imposed
consumption restrictions on Zhuang Enda who had no property under his name for enforcement. The
Company accrued bad debt provisions for all the aforementioned accounts receivable which were
deliberated and approved at the 2nd meeting of the tenth session of the board of directors. The above bad
debts have been written off and the write-off will not have significant effects on the Company’s profits.Pending litigation related to AIM Honesty that continued until the Reporting Period is as follows:
The Company’s subsidiary Lhasa Meihua Bio-investment Holdings Co. Ltd. (hereinafter referred to
as “Lhasa Meihua”) received the Notice on Repaying Debts from AIM Honesty on October 13 2020.
86 / 282Annual Report 2023
According to (2015) DMSCZ No. 438 Civil Judgement issued by the Dalian Intermediate People’s Court
of Liaoning Kunming Sunwise Measure and Control Technology Co. Ltd. (hereinafter referred to as
“Sunwise Measure and Control”) used the right of use of Parcels 17-1-3 17-2 and five above-ground
properties located in the industrial base at Kunming Economic and Technological Development Zone
under its name to provide the guarantee for AIM Honesty to borrow loans from Bank of Jilin Co. Ltd.Dalian Branch under the Renminbi Borrowings Contract (2014 LJZ DL1114010272). The judicial sale of
the above land parcels and properties pledged was done on April 19 2018. The payment from the sale will
be used to repay the bank loans and Sunwise Measure and Control has the right of recourse against AIM
Honesty.According to relevant agreements including the Agreement on the Transfer of the Shares of Dalian
Hanxin Bio-Pharmaceuticals Co. Ltd. between the Company’s subsidiary Lhasa Meihua and AIM
Vaccine Co. Ltd. Lhasa Meihua shall be responsible for solving the realization of the non-operating
creditor’s right and the settling of debts for AIM Honesty in respect of its former shareholder Tibet Yiyuan
Industry Co. Ltd. (hereinafter referred to as “Tibet Yiyuan”). Based on that AIM Honesty gave the
aforementioned Notice on Repaying Debts to Lhasa Meihua. According to relevant documents including
the share transfer agreement between Lhasa Meihua and AIM Honesty’s former shareholder Tibet Yiyuan
Tibet Yiyuan shall be responsible for realizing the non-operating creditor’s rights and settling debts for
AIM Honesty. Based on the aforementioned relevant agreements the related parties have agreed that Tibet
Yiyuan and its related parties shall inherit the aforementioned debts arising from the right of recourse and
the interest.In December 2021 according to the copy of the complaint the notice of appearance and other
relevant documents forwarded by AIM Honesty from the service of the Kunming Intermediate People’s
Court regarding the case of contractual dispute in which Kunming Sunwise Industry Co. Ltd. (holding
100% of the shares of Sunwise Measure and Control hereinafter referred to as “Sunshine Industry”) filed
a lawsuit against AIM Honesty and the third person Sunwise Measure and Control as the shareholder of
Sunwise Measure and Control Sunwise Industry entered the bankruptcy and liquidation proceedings as
ruled by the Kunming Intermediate People’s Court on March 15 2019 and the court designated Yunnan
Zhenxu Law Firm as the administrator. The administrator for Sunwise Industry filed a lawsuit citing the
fact that Sunwise Measure and Control failed to claim compensation from AIM Honesty after performing
the guarantee obligation and demanded payment from AIM Honesty to Sunwise Measure and Control for
the receivables as well as the interest and the fund occupation fee. As aforementioned in accordance with
the provisions of relevant agreements the Company has reached an agreement with all related parties that
Tibet Yiyuan and its related parties inherit all debts arising from the right of recourse and the interest.On October 18 2022 the Kunming Intermediate People’s Court entered the following judgement: 1)
the Defendant AIM Honesty Bio-Pharmaceuticals Co. Ltd. repay 28967179.55 yuan to the third person
Kunming Sunwise Measure and Control Technology Co. Ltd. within 10 days of the entry into force of
the judgement; 2) the Defendant AIM Honesty Bio-Pharmaceuticals Co. Ltd. pay the fund occupation fee
to the third person Kunming Sunwise Measure and Control Technology Co. Ltd. within 10 days of the
87 / 282Annual Report 2023
entry into force of the judgement using 28967179.55 as the basis for the period from August 17 2021
to the payment date according to the loan prime rate published by the National Interbank Funding Center;
and 3) other claims made by the Plaintiff Kunming Sunwise Industry Co. Ltd. be rejected.On June 30 2023 the Yunnan High People’s Court issued a judgement with Document No. (2023)
YMZ No. 324 that rejected the appeal and affirmed the original judgement. AIM Honesty has filed for a
retrial with the Supreme People’s Court in respect of the dispute. On December 4 2023 the Supreme
People’s Court issued the notice of acceptance.According to the Share Transfer Agreement for the transfer of 100% of the shares of AIM Honesty
by the Company’s wholly-owned subsidiary Lhasa Meihua Bio-investment Holdings Co. Ltd. to AIM
Vaccine Co. Ltd. Lhasa Meihua Bio-investment Holdings Co. Ltd. undertakes that except for the
liabilities specifically stated in the audit report and the financial statements provided to the acquirer and
the liabilities that occurred abnormally in the normal course of business of AIM Honesty and its
subsidiaries after the audit benchmark date and has been disclosed to the acquirer AIM Honesty and its
subsidiaries did not have any other debts or contingent debts. In the event that it violates the undertaking
it shall bear compensation liability for all the direct or indirect economic losses suffered by other parties
due to the violation. During the Reporting Period based on the judgement of the Yunnan High People’s
Court the Company accrued 30888616.17 yuan in estimated compensation for liabilities and the interest.
2. Litigation related to Shandong Fufeng Fermentation Co. Ltd.
Shandong Fufeng Fermentation Co. Ltd. filed a lawsuit against the Company and its subsidiary
Xinjiang Meihua regarding the infringement of the trade secret for the production of xanthan gum.Through multiple trials of the court the Supreme People’s Court entered the final judgement on January
9 2024: 1) Xinjiang Meihua Amino Acids Co. Ltd. Meihua Holdings Group Co. Ltd. and Zhang Wei
immediately discontinue the infringement of Shandong Fufeng Fermentation Co. Ltd.’s trade secret for
the production of xanthan gum including not disclosing using or allowing others to use the said trade
secret for the production of xanthan gum; 2) Xinjiang Meihua Amino Acids Co. Ltd. Meihua Holdings
Group Co. Ltd. and Zhang Wei compensate Shandong Fufeng Fermentation Co. Ltd. for an economic
loss of 15 million yuan within ten days of the entry into force of the judgement.On March 5 2024 the Jinan Intermediate People’s Court of Shandong issued a notice of enforcement
with Document No. (2024) LU 01 ZHI No. 573. According to the notice the judgement with Document
No. (2022) ZGFZMZ No. 64 made by the Supreme People’s Court has come into force legally. The
applicant Shandong Fufeng Fermentation Co. Ltd. filed for enforcement with the court demanding 1) the
performance of the obligations specified in the aforementioned legal instrument that has come into force;
2) double payment for the debt interest for the period of delayed performance; and 3) payment for the
enforcement fee of 500 yuan. In accordance with laws and regulations such as the civil procedure law
judgement that has come into force shall be executed. Hence the Company immediately executed all the
content of the judgement of second instance after receiving the judgement. 1) Xinjiang Meihua performed
the obligation of compensation according to Item 2) of the judgement. On February 1 2024 it paid 15
million yuan to Shandong Fufeng Fermentation Co. Ltd. and accrued 15 million yuan in estimated
88 / 282Annual Report 2023
liabilities for the compensation of economic losses based on the aforementioned judgement. 2) The
judgement of second instance by means of presumption holds that the Company and Xinjiang Meihua
bear joint and several liability for compensation for the infringement of the trade secret for the production
of xanthan gum due to the Zhang Wei case. Based on the lawyer’s professional opinions the Company
holds that Xinjiang Meihua has lawful sources for the secret points of its xanthan gum production process
and the process routes of relevant production lines and equipment. In actual production processes Xinjiang
Meihua is not engaged in any behavior that infringes upon the said trade secret for the production of
xanthan gum. The questions of whether the technical information actually used by Xinjiang Meihua in its
current operations is the same as the said trade secret for the production of xanthan gum and whether
Xinjiang Meihua should discontinue the use of it should be determined by the people’s court through trials
in a separate case according to the law. Based on the professional opinions as well as a comprehensive
evaluation the Company holds that there is a low chance for the judgement to have a material effect on
the Company’s production and operations.The Company and Xinjiang Meihua insist that Xinjiang Meihua is not engaged in the infringement
of any trade secret in its xanthan gum production and sales processes. The Company will file for a retrial
of the valid judgement of second instance in accordance with the law.X. Alleged Violations of and Punishments on the Listed Company as well as its Directors
Supervisors Officers Controlling Shareholder and Actual Controller and the Rectifications
□ Applicable √ Not applicable
XI. Credit Statuses of the Company as well as its Controlling Shareholder and Actual Controller
during the Reporting Period
□ Applicable √ Not applicable
XII. Significant Related-Party Transactions
(I) Related-party transactions related to day-to-day operations
1. Matters that were disclosed in provisional announcements and did not progress or change
subsequently
□ Applicable √ Not applicable
2. Matters that were disclosed in provisional announcements but progressed or changed
subsequently
√ Applicable □ Not applicable
89 / 282Annual Report 2023
1) Related-party transactions concerning the
purchase of commodities or the receiving of labor Unit: yuan Currency: RMB
services
Amount Amount
Content of related-party incurred in the incurred in the
Related party
transaction current period previous period
(yuan) (yuan)
Beitun Zefeng Agricultural Development Co. Ltd. Raw materials 66368711.12 56824273.31
Tacheng Lvhe Agricultural Development Co. Ltd. Raw materials 1292257.14 76502378.90
Total 67660968.26 133326652.21
* The shares of Tacheng Lvhe Agricultural Development Co. Ltd. held by Xinjiang Agriculture were transferred in
March 2022.
2) Related-party transactions concerning the sales
of commodities or the provision of labor services
Amount Amount
Content of related-party incurred in the incurred in the
Related party
transaction current period previous period
(yuan) (yuan)
Tongliao Desheng Bio-tech Co. Ltd. Commodities 66793916.44 46287976.83
Tongliao Desheng Bio-tech Co. Ltd. Services 23899.93 13141.56
Total 66817816.37 46301118.39
3) Related-party leases
Where the Company is the lessor
Rental income Rental income
recognized in recognized in
Name of lessee Type of leased asset
the current the previous
period (yuan) period (yuan)
Tongliao Desheng Bio-tech Co. Ltd. Housing 2200057.73 1356055.99
Total 2200057.73 1356055.99
3. Matters not disclosed in provisional announcements
□ Applicable √ Not applicable
(II) Related-party transactions concerning the purchase or sales of assets or shares
1. Matters that were disclosed in provisional announcements and did not progress or change
subsequently
□ Applicable √ Not applicable
2. Matters that were disclosed in provisional announcements but progressed or changed
subsequently
□ Applicable √ Not applicable
90 / 282Annual Report 2023
3. Matters not disclosed in provisional announcements
□ Applicable √ Not applicable
4. Where it involves agreements on performance targets the Company should disclose the
accomplishment of performance targets during the Reporting Period
□ Applicable √ Not applicable
(III) Significant related-party transactions concerning joint outbound investment
1. Matters that were disclosed in provisional announcements and did not progress or change
subsequently
□ Applicable √ Not applicable
2. Matters that were disclosed in provisional announcements but progressed or changed
subsequently
□ Applicable √ Not applicable
3. Matters not disclosed in provisional announcements
□ Applicable √ Not applicable
(IV) Related-party dealings of creditor’s right and debts
1. Matters that were disclosed in provisional announcements and did not progress or change
subsequently
□ Applicable √ Not applicable
2. Matters that were disclosed in provisional announcements but progressed or changed
subsequently
□ Applicable √ Not applicable
3. Matters not disclosed in provisional announcements
□ Applicable √ Not applicable
(V) Finance business between the Company and related finance companies the Company’s holding
finance companies and related parties
□ Applicable √ Not applicable
(VI) Miscellaneous
□ Applicable √ Not applicable
XIII. Major Contracts and Performance
(I) Trusteeship contracting and lease matters
1. Trusteeship
□ Applicable √ Not applicable
91 / 282Annual Report 2023
2. Contracting
□ Applicable √ Not applicable
3. Leases
□ Applicable √ Not applicable
92 / 282Annual Report 2023
(II) Guarantees
√ Applicable □ Not applicable
Unit: yuan Currency: RMB
The Company’s external guarantees (excluding guarantees for subsidiaries)
Total balance of guarantees at the end of the Reporting Period (A) (excluding
guarantees for subsidiaries)
The Company’s and its subsidiaries’ guarantees for subsidiaries
Total amount of guarantees incurred during the Reporting Period 2818604221.77
Total balance of guarantees for subsidiaries at the end of the Reporting Period (B) 1499402021.77
The Company’s total guarantees (including guarantees for subsidiaries)
Total guarantees (A+B) 1499402021.77
Proportion of total guarantees in the Company’s net assets (%) 10.59
(III) Cash asset management through trusteeship
1. Entrusted financing
(1) Overview of entrusted financing
√ Applicable □ Not applicable
Unit: ‘0000 yuan Currency: RMB
Overdue balance not
Type Fund source Transacted amount Balance undue
recovered
Bank financing Self-owned funds 77556.67 3701.00
Trust financing Self-owned funds 42000.00 -
Brokerage
Self-owned funds 1000.00 -
products
Others Self-owned funds 55000.00 15540.00
Other information
□ Applicable √ Not applicable
(2) Single entrusted financing
□ Applicable √ Not applicable
Other information
□ Applicable √ Not applicable
(3) Impairment provisions for entrusted financing
□ Applicable √ Not applicable
2. Entrusted loans
(1) Overview of entrusted loans
□ Applicable √ Not applicable
Other information
□ Applicable √ Not applicable
93 / 282Annual Report 2023
(2) Single entrusted loans
□ Applicable √ Not applicable
Other information
□ Applicable √ Not applicable
(3) Impairment provisions for entrusted loans
□ Applicable √ Not applicable
3. Other information
□ Applicable √ Not applicable
(IV) Other major contracts
□ Applicable √ Not applicable
XIV. Progress of the use of raised funds
□ Applicable √ Not applicable
XV. Other Important Matters That Have a Major Effect on Investors’ Value Judgement and
Investment Decision-Making
√ Applicable □ Not applicable
1. Progress of share repurchases
The Company held the 3rd meeting of the tenth session of the board of directors and the 2nd
extraordinary general meeting of 2023 on April 8 2023 and April 28 2023 respectively. The Proposal
on Repurchasing the Company’s Shares by Means of Centralized Bidding was deliberated and approved
at the meetings. On April 29 2023 the Company disclosed the Repurchase Report of Meihua Holdings
Group Co. Ltd. on the Repurchase of Shares by Means of Centralized Bidding. On May 10 2023 the
Company carried out the first repurchase. For details refer to the relevant announcement published by the
Company on the website of the Shanghai Stock Exchange (www.sse.com.cn).As of the end of February 2024 the Company repurchased 69634252 shares accounting for 2.37%
of the Company’s total shares (2943426102) at present. The lowest repurchase price was 8.42 yuan/share
and the highest was 10.28 yuan/share. The total amount paid was 638189200 yuan (not inclusive of the
transaction fees). The repurchase met the requirements of the Company’s repurchase plan. Subsequently
the Company will carry out share repurchases and timely perform the duty of information disclosure in
strict accordance with relevant regulations including Guidelines No.7 for Self-Regulatory Supervision on
Listed Companies of the SSE — Share Repurchase.
2. Progress of the incorporation of Hengqin Company
As deliberated and approved at the 5th meeting of the tenth session of the board of directors to further
meet the Company’s need for expanding the international market deploying for international trade and
developing industrial business the Company spent 50 million yuan to establish a new wholly-owned
subsidiary. The name of the new company is Zhuhai Hengqin Meihua Biotech Co. Ltd. (hereinafter
referred to as “Hengqin Meihua”). Its legal representative is Wang Aijun and the type of the Company is
94 / 282Annual Report 2023
limited liability company (natural person’s sole proprietorship or holding legal person’s sole
proprietorship). On September 12 2023 Hengqin Meihua completed the formalities for business
registration and collected the business license.Hengqin Meihua’s 2-tiered subsidiary Hong Kong Company was registered on October 30 2023.The full name of the company is Hong Kong Plum Holding Limited (hereinafter referred to as “HongKong Holding”); Hong Kong Company’s 3-tiered subsidiary Cayman Plum Holding Limited (“CaymanCompany”) was registered on November 8 2023; Cayman Company’s 4-tiered subsidiary Plum
Biotechnology Group Pte. Ltd. (“Singapore Company”) was registered on January 8 2024.
3．Implementation of the share increase plan
On January 8 2024 according to the notice from the Company’s directors supervisors officers and
other core management (hereinafter referred to as “the management”) based on the core competitiveness
established by the Company in synthetic biology as well as the forecast of the great industrial prospect
the Company’s management is full of confidence in the Company’s inherent value and future development
potential and is able to constantly create value for investors. Hence the Company’s management plans to
increase the holding of shares in the Company by means permitted by the trading system of the Shanghai
Stock Exchange (including but not limited to centralized bidding and block trading) within six months of
the date of notice. The amount intended for the increase will be no less than 80 million yuan (inclusive of
transaction fees). There is no price cap for the share increase plan. For more details refer to the relevant
announcement disclosed by the Company on the website of the Shanghai Stock Exchange.According to verification as of February 29 2024 the management securities account for the
committed share increase plan was opened but the purchase of the Company’s share was yet to be done.Subsequently the Company will follow up on the implementation of the plan and perform the duty of
information disclosure strictly in accordance with relevant regulatory requirements.
95 / 282Annual R eport 2023
Section 7 Share Changes and Shareholders
I. Changes in Share Capital
(I) Table of share changes
1. Table of share changes
Unit: share
Before the change Increase/decrease (+ -) After the change
Shares
New Bonus converted Proportion Proportion
Quantity shares shares from Others Subtotal Quantity (%) (%)
issued reserve
funds
I. Restricted shares
1. Shares held by the
state
2. Shares held by
state-owned legal
persons
3. Shares held by
other domestic
investors
of which: shares held
by domestic non-
state-owned legal
persons
shares held by
domestic natural
persons
4. Shares held by
foreign investors
of which: shares held
by foreign legal
persons
shares held by foreign
natural persons
II. Non-restricted
3042465447100-99039345-990393452943426102100
outstanding shares
1. RMB ordinary
3042465447100-99039345-990393452943426102100
shares
2. Domestically listed
foreign shares
3. Overseas listed
foreign shares
4. Others
III. Total shares 3042465447 100 -99039345 -99039345 2943426102 100
96 / 282Annual R eport 2023
2. Explanation of share changes
√ Applicable □ Not applicable
The Company held the 31st meeting of the ninth session of the board of directors and the annual
general meeting of 2021 on May 22 2022 and June 9 2022 respectively. The Proposal on Repurchasing
the Company’s Shares by Means of Centralized Bidding was deliberated and approved at the meetings.On June 10 2022 the Company disclosed the Repurchase Report of Meihua Holdings Group Co. Ltd. on
the Repurchase of Shares by Means of Centralized Bidding. The repurchased shares were canceled to
reduce the registered capital The Company carried out the first repurchase on July 26 2022. As of the
closing time on April 10 2023 the Company completed the repurchase. The number of repurchased shares
was 99039345 accounting for 3.26% of the Company’s total shares (3042465447) at the time. The
lowest repurchase price was 9.07 yuan/share and the highest was 11.35 yuan/share. The average
repurchase price was 10.09 yuan/share and the total amount of funds used was 999500000 yuan. The
Company completed the cancellation of all the repurchased shares. Upon cancellation the Company’s
total shares changed from 3042465447 to 2943426102.
3. Effect of share changes on financial indicators for the last one year and the last one period
including earnings per share and net assets per share (if applicable)
□ Applicable √ Not applicable
4. Other information that the Company deems necessary to disclose or as required by the securities
regulatory body
□ Applicable √ Not applicable
(II) Changes in restricted sales
□ Applicable √ Not applicable
II. Issue and Listing of Securities
(I) Issue of securities as of the Reporting Period
√ Applicable □ Not applicable
Unit: share Currency: RMB
Type of shares
Quantity
and their Date of Issue price (or Date of End date
Issued quantity approved for
derivative issue interest rate) listing of trading
listing
securities
Type of ordinary share
Ordinary A-shares 2013-3-29 6.27 399990000 2014-3-30 399990000
Bonds (including enterprise bonds debentures and non-financial business debt financing instruments)
Debenture 2015-7-31 4.47% 15000000000
Debenture 2015-10-31 4.27% 15000000000
97 / 282Annual R eport 2023
Explanation of the issue of securities as of the Reporting Period (for bonds with different interests rates
during the term please provide explanation separately):
□ Applicable √ Not applicable
(II) Changes in the Company’s total shares shareholder structure and asset and liability structure
□ Applicable √ Not applicable
(III) Existing internal staff shares
□ Applicable √ Not applicable
III. Overview of Shareholders and Actual Controller
(I) Total number of shareholders
Total number of ordinary shareholders as of the end of the Reporting Period 78717
Total number of ordinary shareholders as of the end of the month immediately prior to the
72492
disclosure date of the annual report
(II) Shares held by the top ten shareholders and the top ten holders of tradable shares (or holders
of non-restricted shares) as of the end of the Reporting Period
Unit: Share
Shares held by the top ten shareholders (excluding the shares lent through refinancing)
Number of Pledged marked or
Increase/decrease Number of
Shareholder’s name shares held at Proportion frozen shares Nature of
during the restricted
(full name) the end of the (%) Share shareholder
Reporting Period shares held Quantity
period status
Domestic
Meng Qingshan 854103033 29.02 None
natural person
Beijing Royal Fortune Co.Ltd. -- Royal Fortune
Huichen Strategic Investment 125876969 4.28 None Other
Private Securities Investment
Fund
Domestic
Hu Jijun 99721451 3.39 None
natural person
China Merchants Bank Co.Ltd. -- Xingquan Herun
75962297 2.58 None Other
Mixed Securities Investment
Fund
Domestic
Wang Aijun 71316274 2.42 None
natural person
Domestic
Liang Yubo 53668518 1.82 None
natural person
Hong Kong Securities
48695011 1.65 None Other
Clearing Company Limited
98 / 282Annual R eport 2023
China Merchants Bank Co.Ltd. -- Xingquan Herun
Flexible Allocation Mixed 47727936 1.62 None Other
Securities Investment Fund
(LOF)
Meihua Holdings Group Co.Ltd. -- 2022 Employee Stock 32932300 1.12 None Other
Ownership Plan
ZheShang Bank Co. Ltd. --
Guotai China Securities
32791021 1.11 None Other
Animal Husbandry ETF
Securities Investment Fund
Shares held by the top ten holders of non-restricted shares
Quantity of non- Type and quantity of shares
Name of shareholder restricted tradable shares
Type Quantity
held
Meng Qingshan 854103033 RMB ordinary share 854103033
Beijing Royal Fortune Co. Ltd. -- Royal Fortune Huichen Strategic
125876969 RMB ordinary share 125876969
Investment Private Securities Investment Fund
Hu Jijun 99721451 RMB ordinary share 99721451
China Merchants Bank Co. Ltd. -- Xingquan Herun Mixed Securities
75962297 RMB ordinary share 75962297
Investment Fund
Wang Aijun 71316274 RMB ordinary share 71316274
Liang Yubo 53668518 RMB ordinary share 53668518
Hong Kong Securities Clearing Company Limited 48695011 RMB ordinary share 48695011
China Merchants Bank Co. Ltd. -- Xingquan Herun Flexible
47727936 RMB ordinary share 47727936
Allocation Mixed Securities Investment Fund (LOF)
Meihua Holdings Group Co. Ltd. -- 2022 Employee Stock Ownership
32932300 RMB ordinary share 32932300
Plan
ZheShang Bank Co. Ltd. -- Guotai China Securities Animal
32791021 RMB ordinary share 32791021
Husbandry ETF Securities Investment FundThe Company’s repurchase account is not presented in the “Sharesheld by the top ten holders of non-restricted shares” section. As of the
Information of the repurchase account among the top ten shareholders end of the Reporting Period there were 63590552 of the Company’s
shares held in the repurchase account accounting for 2.16% of the
Company’s total shares at present.Among the above shareholders Meng Qingshan Hu Jijun Wang
Aijun and Liang Yubo have no voting trust voting trusteeship and
Information of voting trust voting trusteeship and abstention of voting
abstention of voting rights. The information of voting trust voting
rights for the above shareholders
trusteeship and abstention of voting rights for other shareholders is
not known.Information of relationships or acting in concert of the above Among the above shareholders Meng Qingshan and Wang Aijun are
shareholders persons acting in concert.Information of preferred shareholders with restored voting rights and the
None
number of shares held by them
99 / 282Annual R eport 2023
Notes:
1. As of the end of the Reporting Period the shareholder Meng Qingshan held 704103033 shares
through the ordinary account and 150000000 shares through the credit securities account; Wang Aijun
held 56316274 shares through the ordinary account and 15000000 shares through the credit securities
account.Information of the top ten shareholders’ participation in refinancing to lend shares
□ Applicable √ Not applicable
Changes in the top ten shareholders as compared with the previous period
□ Applicable √ Not applicable
Number of shares held by the top ten holders of restricted shares and the restrictions
□ Applicable √ Not applicable
(III) Strategic investors or general legal persons becoming top ten holders due to the allotment of
new shares
□ Applicable √ Not applicable
IV. Information of Controlling Shareholder and Actual Controller
(I) Information of controlling shareholder
1. Legal person
□ Applicable √ Not applicable
2. Natural person
√ Applicable □ Not applicable
Name Meng Qingshan
Nationality Chinese
Whether a resident status in other countries
No
or regions is obtained
Major occupation and position He served as Chairman of the Company from March 2009 to January 2017.
3. Explanation of circumstance where the Company does not have a controlling shareholder
□ Applicable √ Not applicable
4. Explanation of changes in controlling shareholder during the Reporting Period
□ Applicable √ Not applicable
100 / 282Annual R eport 2023
5. Diagram of the property right and control relationship between the Company and its controlling
shareholder
√ Applicable □ Not applicable
Meng Qingshan
Meihua Holdings Group Co. Ltd.(II) Information of actual controller
1. Legal person
□ Applicable √ Not applicable
2. Natural person
√ Applicable □ Not applicable
Name Meng Qingshan
Nationality Chinese
Whether a resident status in other countries or
No
regions is obtained
He served as Chairman of the Company from March 2009 to
Major occupation and position
January 2017.Information of any domestic or foreign holding
None
listed company during the past 10 years
Name Wang Aijun
Nationality Chinese
Whether a resident status in other countries or
No
regions is obtained
She served as Chairman of the Company from January 16 2017 as
Major occupation and position
of now.Information of any domestic or foreign holding
None
listed company during the past 10 years
Name He Jun
Nationality Chinese
Whether a resident status in other countries or
No
regions is obtained
He served as Director and General Manager of the Company from
Major occupation and position
January 16 2017 as of now.Information of any domestic or foreign holding
None
listed company during the past 10 years
3. Explanation of circumstance where the Company does not have an actual controller
□ Applicable √ Not applicable
101 / 282Annual R eport 2023
4. Explanation of changes in the Company’s control during the Reporting Period
□ Applicable √ Not applicable
5. Diagram of the property right and control relationship between the Company and its actual
controller
√ Applicable □ Not applicable
Meng Qingshan and the persons acting in concert
(Meng Qingshan Wang Aijun and He Jun)
Meihua Holdings Group Co. Ltd.
6. Actual controller controlling the Company through trust or other asset management methods
□ Applicable √ Not applicable
(III) Other information of controlling shareholder and actual controller
□ Applicable √ Not applicable
V. Total number of pledged shares of the Company’s controlling shareholder or top shareholder and
the persons acting in concert accounting for more than 80% of the Company’s total shares
□ Applicable √ Not applicable
VI. Corporate shareholders holding more than 10% of the shares
□ Applicable √ Not applicable
VII. Explanation of decrease of holding of shares due to share restrictions
□ Applicable √ Not applicable
VIII. Implementation of Share Repurchase during the Reporting Period
√ Applicable □ Not applicable
Unit: yuan Currency: RMB
Name of the share repurchase plan Share Repurchase Plan of Meihua Holdings Group Co. Ltd.Disclosure date of the share repurchase
May 23 2022
plan
Number of shares planned to repurchase
2.69
and the proportion in the total shares (%)
Planned amount of repurchase 800 million yuan - 1 billion yuan
Less than 12 months from the date the repurchase plan is approved at the
Planned period of repurchase
Company’s general meeting
Purpose of repurchase Cancellation - to reduce the registered capital
102 / 282Annual R eport 2023
Repurchased quantity (share) 99039345
Proportion of repurchased shares in the
underlying shares involved in the share Not applicable
incentive plan (%) (if applicable)
Progress of decrease of the holding of
repurchased shares by means of centralized Not applicable
bidding
Name of the share repurchase plan Share Repurchase Plan of Meihua Holdings Group Co. Ltd.Disclosure date of the share repurchase
April 10 2023
plan
Number of shares planned to repurchase
2.74
and the proportion in the total shares (%)
Planned amount of repurchase 800 million yuan - 1 billion yuan
Less than 12 months from the date the repurchase plan is approved at the
Planned period of repurchase
Company’s general meeting
Purpose of repurchase Cancellation - to reduce the registered capital
Repurchased quantity (share) 63590552
Proportion of repurchased shares in the
underlying shares involved in the share Not applicable
incentive plan (%) (if applicable)
Progress of decrease of the holding of
repurchased shares by means of centralized Not applicable
bidding
Section 8 Information on Preferred Shares
□ Applicable √ Not applicable
Section 9 Information on Securities
I. Enterprise Bonds Debentures and Non-financial Business Debt Financing Instruments
□ Applicable √ Not applicable
II. Information of Convertible Debentures
□ Applicable √ Not applicable
103 / 282Annual R eport 2023
Section 10 Financial Report
I. Audit Report
?Applicable □ Not Applicable
DHSZ [2024] No. 0011004004
To all shareholders of Meihua Holdings Group Co. Ltd.:
I. Audit Opinion
We have audited the financial statements of Meihua Holdings Group Co. Ltd. (hereinafter referred
to as "Meihua Bio") including the consolidated and parent Company’s balance sheets as of December 31
2023 as well as the consolidated and parent Company’s income statements the consolidated and parent
Company’s cash flow statements the consolidated and parent Company’s statement of changes in
shareholders’ equity and related notes to the financial statements for the year 2023.We believe that the accompanying financial statements have been formulated in accordance with the
Accounting Standards for Business Enterprises in all material respects and present fairly the consolidated
and parent Company’s financial position of Meihua Bio as of December 31 2023 and the consolidated
and parent Company’s operating results and cash flows for the year 2023.II. Basis for Audit Opinion
We conducted our audit in accordance with the provisions specified in the Auditing Standards for
Certified Public Accountants of China. The section "Responsibilities of Certified Public Accountants for
the Audit of Financial Statements" of the audit report further explains our responsibilities under these
standards. In accordance with the China Code of Ethics for Certified Public Accountants we are
independent of Meihua Bio and have fulfilled our other professional ethics responsibilities. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.III. Key Audit Matters
Key audit matters are those matters that in our professional judgment were of most significance in
our audit of the financial statements for the current period. These matters were addressed in the context of
our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide
a separate opinion on these matters.We identified revenue recognition as a key audit matter that needed to be communicated in our audit
report.
1. Matter Description
Meihua Bio is primarily engaged in the production of amino acid products with operating revenue
for the year 2023 amounting to RMB 27760612259.07 yuan. For accounting policies related to revenue
please refer to Paragraph 34 Revenue of Sub-Section V of this Section and for the carrying amount of
operating revenue please refer to Paragraph 61 Operating Revenue and Operating Costs of Sub-section
VII of this Section. As revenue is one of the key performance indicators for Meihua Bio there is inherent
risk that the Company’s management may manipulate revenue recognition to achieve specific targets or
104 / 282Annual R eport 2023
expectations. Therefore we identified revenue recognition as a key audit matter.
2. Audit Response
Key audit procedures we’ve carried out for revenue recognition include:
(1) Understanding assessing and testing the management's internal control over the recognition of
operating revenues;
(2) Selecting samples to examine sales contracts and conducting interviews with the management to
identify contract terms related to the transfer of control of goods and to evaluate whether revenue
recognition policies comply with the Accounting Standards for Business Enterprises;
(3) Selecting samples to examine supporting documents related to the recognition of revenue from
the main businesses including sales contracts sales invoices shipping documents export customs
declaration forms bills of lading and bank payment connection records to assess whether revenue
recognition complies with the Company's accounting policies for revenue recognition;
(4) Performing independent confirmation procedures for sales revenue from significant customers to
confirm the authenticity and completeness of revenue;
(5) With regard to the main business revenue transactions recorded before and after the balance sheet
date selecting samples to examine sales contracts sales invoices shipping documents and other
supporting documents to assess whether revenue from the main business is recognized in the appropriate
accounting period;
(6) Conducting examinations of sales revenue after the balance sheet date to identify whether there
are instances of revenue reversal or substantial sales returns;
(7) Sampling to examine the payment collection after the balance sheet date.
Based on the audit work we’ve conducted we believe that management's judgments on the
recognition of operating revenue are reasonable.IV. Responsibilities of the Management and Governance for Financial Statements
The management of Meihua Bio is responsible for preparing financial statements in accordance with
the Accounting Standards for Business Enterprises to ensure fair presentation and for designing
implementing and maintaining necessary internal controls to prevent material misstatements in the
financial statements arising from fraud or error.In preparing the financial statements the management of Meihua Bio is responsible for assessing the
Company's ability to continue as a going concern disclosing matters related to going concern (if
applicable) and applying the going concern assumption unless the management intends to liquidate the
Company cease operations or has no realistic alternative.The governance is responsible for overseeing the financial reporting process of Meihua Bio.V. Responsibilities of Certified Public Accountants for the Audit of Financial Statements
Our objective is to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatements arising from fraud or error and to issue an audit report containing audit
opinion. Reasonable assurance is a high level of assurance but it does not guarantee that an audit
conducted in accordance with the auditing standards will always detect a material misstatement when it
105 / 282Annual R eport 2023
exists. Misstatements can arise from either fraud or error and it is reasonably expected that individual or
aggregated misstatements may affect the economic decisions made by users based on the financial
statements such misstatements are generally considered material.During the audit in accordance with the auditing standards we exercise professional judgment and
maintain professional skepticism. Additionally we perform the following procedures:
1. Identify and assess the risks of material misstatement of the financial statements due to fraud or
error design and implement audit procedures to address these risks and obtain sufficient and appropriate
audit evidence as the basis for our audit opinion. The risk of failing to detect a material misstatement due
to fraud is higher than the risk of failing to detect one due to error as fraud may involve collusion forgery
intentional omissions misrepresentations or override of internal controls.
2. Understand the internal controls relevant to the audit in order to design appropriate audit
procedures.
3. Evaluate the appropriateness of the accounting policies selected by the management and the
reasonableness of accounting estimates and related disclosures.
4. Come to a conclusion regarding the appropriateness of the management's utilization of the going
concern assumption. Additionally based on the audit evidence obtained conclude whether significant
uncertainties exist regarding matters or conditions that may cast significant doubt on the Company's ability
to continue as a going concern. If we conclude that there is a significant uncertainty the auditing standards
require us to draw attention to users of the report in our audit report to the relevant disclosures in the
financial statements; if the disclosures are inadequate we should issue a qualified opinion. We come to
our conclusion based on information available up to the date of our audit report. However future events
or conditions may result in the Company being unable to continue as a going concern.
5. Evaluate the overall presentation structure and content of the financial statements and whether
they fairly reflect the relevant transactions and events.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of Meihua
Bio’s entities or business activities to express an opinion on the financial statements. We are responsible
for directing supervising and performing the group audit and bear full responsibility for the audit opinion.We communicate with the governance about matters related to the planned scope of the audit timing
schedule and significant audit findings including the communication of significant internal control
deficiencies identified during the audit.We also provide the governance with a statement regarding compliance with professional ethics
requirements related to independence and communicate to the governance all relationships and other
matters that might reasonably be seen as compromising our independence as well as relevant preventive
measures (if applicable).From the matters communicated with the governance we determine those matters that are of most
significance in the audit of the financial statements for the current period and therefore constitute the key
audit matters. We describe these matters in our audit report unless laws or regulations preclude public
disclosure about the matter or when in extremely rare circumstances we determine that a matter should
106 / 282Annual R eport 2023
not be communicated in the audit report if doing so would reasonably be expected to outweigh the public
interest benefits of such communication.Da Hua Certified Public Accountants (Special General
Partnership) Chinese Certified Public Accountant:
(Project Partner) Gong Chenyan
Beijing China Chinese Certified Public Accountant:
Li Qianqian
March 18 2024
107 / 282Annual R eport 2023
II. Financial Statements
Consolidated Balance Sheet
December 31 2023
Prepared by: MeiHua Holdings Group Co. Ltd
Unit: Yuan Currency: RMB
Items Notes December 31 2023 December 31 2022
Current Assets:
Monetary assets Note 1 4969794482.39 4333600657.71
Deposit reservation for balance - -
Placements with banks and other
financial institutions - -
Financial assets held for trading Note 2 172376801.33 175624337.11
Derivative financial assets Note 3 200000.00 15431100.00
Notes receivable Note 4 129231952.45 140801190.26
Accounts receivable Note 5 641127885.22 340852588.85
Receivables Financing Note 7 60013169.98 118425206.87
Prepaid accounts Note 8 252089088.23 342067912.46
Premiums receivable - -
Reinsurance accounts receivable - -
Reinsurance contract reserves receivable - -
Other receivables Note 9 51384535.97 100928891.88
Including: Interest receivable 1575000.00 1575000.00
Dividend receivable - -
Financial assets purchased under
agreements to resell
Inventories Note 10 2922518782.97 4068549529.35
Contract assets Note 6 - -
Assets held for sale Note 11 - -
Non-current assets due within one year Note 12 19356000.00 -
Other current assets Note 13 289218469.96 276302086.82
Total Current Assets 9507311168.50 9912583501.31
Non-current Assets:
Loans and advances
Debt investments Note 14 10500000.00 10500000.00
Other debt investments Note 15 - -
Long-term receivables Note 16 364927.03 254177.25
Long-term equity investments Note 17 18942230.64 18896294.66
Investments in other equity instruments Note 18 512691350.00 1255463900.59
Other non-current financial assets Note 19 - -
Investment properties Note 20 - -
Fixed assets Note 21 11428700356.22 9911708010.15
Construction in progress Note 22 161961713.29 1746143216.57
Productive biological assets Note 23 - -
Oil and gas assets Note 24 - -
Right-of-use assets Note 25 9633644.09 11918092.28
Intangible assets Note 26 1075943303.26 1109406215.35
Development expenditure - -
Goodwill Note 27 11788911.79 11788911.79
Long-term prepaid expenses Note 28 104076824.93 93610022.94
Deferred income tax assets Note 29 106143010.15 136579795.52
Other non-current assets Note 30 209122415.35 272280973.66
Total Non-current Assets 13649868686.75 14578549610.76
Total Assets 23157179855.25 24491133112.07
Current Liabilities:
Short-term borrowings Note 32 1543869058.69 1070498635.74
Borrowings from central bank
Borrowings from banks and other
financial institutions
Financial liabilities held for trading Note 33 - -
Derivative financial liabilities Note 34 250000.00 -
Notes payable Note 35 1183031652.44 1315000000.00
108 / 282Annual R eport 2023
Accounts payable Note 36 1425597196.27 1529597871.74
Advances from customers Note 37 - -
Contract liabilities Note 38 892931047.76 1092850586.56
Financial assets sold for repurchase
Deposits from customers and interbank
Customer brokerage deposits
Securities underwriting brokerage
deposits
Employee benefits payable Note 39 322959640.35 466152243.07
Taxes payable Note 40 256472526.55 369669199.06
Other payables Note 41 249853910.40 322059898.58
Including: Interest payable - -
Dividends payable 405000.00 11238782.40
Handling charges and commissions
payable
Dividend payable for reinsurance
Liabilities held for sale Note 42
Non-current liabilities due within one
year Note 43 535085272.76 265429647.29
Other current liabilities Note 44 118688728.75 241169463.29
Total Current Liabilities 6528739033.97 6672427545.33
Non-current Liabilities:
Insurance contract reserves
Long-term borrowings Note 45 1999963021.77 3676011413.26
Bonds payable Note 46 - -
Including: Preferred shares - -
Perpetual bonds - -
Lease liabilities Note 47 2590305.92 5019015.32
Long-term payables Note 48 10500000.00 10500000.00
Long-term employee benefits payable Note 49 - -
Estimated liabilities Note 50 45888616.17 -
Deferred income Note 51 384988414.73 429899391.63
Deferred income tax liabilities Note 29 21495649.02 181285371.78
Other non-current liabilities Note 52 - -
Total Non-current Liabilities 2465426007.61 4302715191.99
Total Liabilities 8994165041.58 10975142737.32
Owners' Equity (Shareholders' Equity):
Paid-in capital (or stock) Note 53 2943426102.00 3042465447.00
Other equity instruments Note 54 - -
Including: Preferred shares - -
Perpetual bonds - -
Capital reserves Note 55 1032707760.40 1929260092.43
Less: Treasury stock Note 56 576775719.27 747013074.21
Other comprehensive income Note 57 5687647.50 541072642.04
Special reserves Note 58 3952446.88 2060395.42
Surplus reserves Note 59 1326294444.30 1142504553.27
General risk reserves - -
Undistributed profits 9427722131.86 7605640318.80
Total Owners' Equity (or Shareholders'
Equity) Attributable to the Parent Company 14163014813.67 13515990374.75
Minority stockholder's interest - -
Total Owners' Equity (or Shareholders'
Equity) 14163014813.67 13515990374.75
Total Liabilities and Owners' Equity
(or Shareholders' Equity) 23157179855.25 24491133112.07
Head of the Company: Wang Aijun Head of Accounting: Wang Lihong Head of the Accounting
Institution: Wang Ailing
109 / 282Annual R eport 2023
Parent Company’s Balance Sheet
December 31 2023
Prepared by: MeiHua Holdings Group Co. Ltd
Unit: Yuan Currency: RMB
Items Notes December 31 2023 December 31 2022
Current Assets:
Monetary assets 2645832017.55 1718836773.74
Financial assets held for trading - 50702144.08
Derivative financial assets - -
Notes receivable 129231952.45 140201190.26
Accounts receivable Note 1 166039222.60 250749128.40
Receivables Financing 58499269.30 8014437.03
Prepaid accounts 5204039.16 402171988.03
Other receivables Note 2 1727988609.74 2185996210.03
Including: Interest receivable - -
Dividend receivable 1230000000.00 900000000.00
Inventories 99282226.40 107754799.81
Contract assets - -
Assets held for sale - -
Non-current assets due within one year - -
Other current assets 20849368.61 -
Total Current Assets 4852926705.81 4864426671.38
Non-current Assets:
Debt investments - -
Other debt investments - -
Long-term receivables 1289997831.50 2190987939.35
Long-term equity investments Note 3 7637850728.14 7108299692.82
Investments in other equity instruments 157000000.00 157000000.00
Other non-current financial assets - -
Investment properties - -
Fixed assets 134003097.45 144527625.41
Construction in progress 32442084.70 6908243.95
Productive biological assets - -
Oil and gas assets - -
Right-of-use assets 9633644.09 11918092.28
Intangible assets 37969368.52 47055112.55
Development expenditure - -
Goodwill - -
Long-term prepaid expenses 8469060.83 6187458.48
Deferred income tax assets 38096333.83 52867910.50
Other non-current assets 131863080.38 100519469.03
Total Non-current Assets 9477325229.44 9826271544.37
Total Assets 14330251935.25 14690698215.75
Current Liabilities:
Short-term borrowings 918219847.24 620364166.70
Financial liabilities held for trading - -
Derivative financial liabilities - -
Notes payable 1015696430.02 1003600000.00
Accounts payable 2458377219.77 1646583471.07
Advances from customers - -
Contract liabilities 604109374.58 819822984.08
Employee benefits payable 165424073.35 216911504.61
Taxes payable 72309045.89 70422672.41
Other payables 87758510.82 154288504.30
Including: Interest payable - -
Dividends payable 405000.00 11238782.40
Liabilities held for sale - -
Non-current liabilities due within one year 226685272.76 242729647.29
Other current liabilities 198067506.25 237281961.61
Total Current Liabilities 5746647280.68 5012004912.07
Non-current Liabilities:
Long-term borrowings 1063961000.00 1993967816.43
Bonds payable - -
110 / 282Annual R eport 2023
Including: Preferred shares - -
Perpetual bonds - -
Lease liabilities 2590305.92 5019015.32
Long-term payables - -
Long-term employee benefits payable - -
Estimated liabilities - -
Deferred income - -
Deferred income tax liabilities 3575298.08 1158940.24
Other non-current liabilities - -
Total Non-current Liabilities 1070126604.00 2000145771.99
Total Liabilities 6816773884.68 7012150684.06
Owners' Equity (Shareholders' Equity):
Paid-in capital (or stock) 2943426102.00 3042465447.00
Other equity instruments - -
Including: Preferred shares - -
Perpetual bonds - -
Capital reserves 998957892.81 1895510224.84
Minus:Treasury stock 576775719.27 747013074.21
Other comprehensive income - 243628.56
Special reserves - -
Surplus reserves 1326294444.30 1142504553.27
Undistributed profits 2821575330.73 2344836752.23
Total Owners' Equity (or Shareholders'
Equity) 7513478050.57 7678547531.69
Total Liabilities and Owners' Equity
(or Shareholders' Equity) 14330251935.25 14690698215.75
Head of the Company: Wang Aijun Head of Accounting: Wang Lihong Head of the Accounting
Institution: Wang Ailing
Consolidated Income Statement
January to December 2023
Unit: Yuan Currency: RMB
Items Notes 2023 2022
I. Total Operating Revenue 27760612259.07 27937152798.85
Including: Operating revenue Note 61 27760612259.07 27937152798.85
Interest revenue
Earned premiums
Handling charges and commission revenue
II. Total Operating Costs 24158622972.00 22990081416.42
Including: Operating Costs Note 61 22297122025.25 20915783841.63
Interest Expenses
Handling charges and commission expenses
Surrender value
Net claim paid
Net provision of insurance reserve
Policy dividends paid
Reinsurance expenses
Taxes and surcharges Note 62 242593736.35 258724697.45
Sales expenses Note 63 413512921.96 441189063.68
Administrative expenses Note 64 924598280.87 1010824495.08
Research and development expenses Note 65 314222682.89 279682517.92
Financing expenses Note 66 -33426675.32 83876800.66
Including: Interest expenses 115220289.90 149373949.31
Interest revenue 118865910.23 72586918.49
Plus: Other revenues Note 67 248461028.47 165261462.05
Investment gains ("-" for loss) Note 68 7627189.35 24365014.47
Including: Investment gains from associates and
joint ventures 1845935.98 3074284.74
111 / 282Annual R eport 2023
Gains from derecognition of financial assets
measured at amortized cost - -
Exchange gains ("-" for loss) - -
Net exposure hedging gains (Loss indicated by "-
") Note 69 - -
Gains from changes in fair value ("-" for loss) Note 70 -38116002.85 32686957.19
Credit impairment losses ("-" for loss) Note 71 -5225785.54 -3165751.49
Asset impairment losses ("-" for loss) Note 72 -5415349.06 -5957963.00
Asset disposal gains ("-" for loss) Note 73 4073026.92 -82296.20
III. Operating Profit ("-" for loss) 3813393394.36 5160178805.45
Plus: Non-operating revenue Note 74 10357039.99 27353420.94
Minus: Non-operating expenses Note 75 100614814.20 34737182.00
IV. Total Profit ("-" for total loss) 3723135620.15 5152795044.39
Minus: Income tax expenses Note 76 542185924.67 746553062.47
V. Net Profit ("-" for net loss) 3180949695.48 4406241981.92
(I) Classified by Operating Continuity
1. Net profit from continuing operations ("-" for net
loss) 3180949695.48 4406241981.92
2. Net profit from discontinued operations ("-" for
net loss)
(II) Classified by Ownership
1. Net profit attributable to shareholders of the
Parent Company ("-" for net loss) 3180949695.48 4406241981.92
2. Profit or loss attributable to minority
shareholders ("-" for net loss)
VI. Net After-tax Amount of Other Comprehensive
Income -535384994.54 320124307.81
(I) Net After-tax Amount of Other Comprehensive
Income Attributable to Owners of the Parent Company -535384994.54 320124307.81
1．Other comprehensive income not reclassified to
profit or loss -529805827.49 318924064.42
(1) Changes in the defined benefit plan after
remeasurement
(2) Other comprehensive income under Equity
Method that cannot be reclassified to profit or loss
(3) Changes in fair value of other equity instrument
investments -529805827.49 318924064.42
(4) Changes in fair value due to enterprise's own credit
risks
2 Other comprehensive income to be reclassified to
profit or loss -5579167.05 1200243.39
(1) Other comprehensive income under Equity
Method that can be reclassified to profit or loss - -
(2) Changes in fair value of other debt investments - -
(3) Amount of financial assets reclassified to other
comprehensive income - -
(4) Credit impairment reserves other debt investments - -
(5) Cash flow hedge reserve - -
(6) Converted difference in foreign currency
statements - -
(7) Others -5579167.05 1200243.39
(II) Net After-tax Amount of Other Comprehensive
Income Attributable to Minority Shareholders
VII. Total Comprehensive Income 2645564700.94 4726366289.73
(I) Total Comprehensive Income Attributable to
Owners of the Parent Company 2645564700.94 4726366289.73
(II) Total Comprehensive Income Attributable to
Minority Shareholders
VIII. Earnings per Share:
(I) Basic Earnings per Share (Yuan/share) 1.06 1.44
(II) Diluted Earnings per Share (Yuan/share) 1.06 1.43
112 / 282Annual R eport 2023
For the current period in cases of merger of enterprises under the same control the net profit realized by
the merged entity prior to the merger is: RMB 0 yuan and the net profit realized by the merged entity in
the previous period is: RMB 0 yuan.Head of the Company: Wang Aijun Head of Accounting: Wang Lihong Head of the Accounting
Institution: Wang Ailing
Parent Company’s Income Statement
January to December 2023
Unit: Yuan Currency: RMB
Items Notes 2023 2022
I. Operating Revenue Note 4 18919490981.95 19680846168.84
Minus: Operating costs Note 4 18389994122.42 18868650961.04
Taxes and surcharges 24154909.06 28254589.41
Sales expenses 195496971.28 173244720.64
Administrative expenses 398322560.12 410759160.18
Research and development Expenses - -
Financing expenses -41298204.55 -892993.08
Including: Interest expenses 11342280.65 9339716.86
Interest revenue 57734925.08 41507608.49
Plus: Other revenues 162071891.14 84245964.11
Investment gains ("-" for loss) Note 5 1742971064.95 1601293987.85
Including: Investment gains from associates and
joint ventures - -
Gains from derecognition of financial assets
measured at amortized cost - -
Net exposure hedging gains ("-" for loss) - -
Gains from changes in fair value ("-" for loss) 5465622.36 14205392.77
Credit impairment losses ("-" for loss) 4628141.89 -4038505.51
Asset impairment losses ("-" for loss) - -
Asset disposal gains ("-" for loss) 1478236.80 -17.27
II. Operating Profit ("-" for loss) 1869435580.76 1896536552.60
Plus: Non-operating revenue 411160.99 2437127.96
Minus: Non-operating expenses 3761852.18 5355488.17
III. Total Profit ("-" for total loss) 1866084889.57 1893618192.39
Minus: Income tax expenses 28185979.24 57717318.52
IV. Net Profit ("-" for total loss) 1837898910.33 1835900873.87
(I) Net profit from continuing operations ("-" for net
loss) 1837898910.33 1835900873.87
(II) Net profit from discontinued operations ("-" for net
loss)
V. Net After-tax Amount of Other Comprehensive
Income -243628.56 -1545054.99
(I) Other comprehensive income that cannot reclassified
to profit or loss - -
1. Changes in the defined benefit plan after
remeasurement - -
2. Other comprehensive income under Equity Method
that cannot be reclassified to profit or loss - -
3. Changes in fair value of other equity instrument
investments - -
4. Changes in fair value due to enterprise's own credit
risks - -
(II) Other comprehensive income to be reclassified to
profit or loss -243628.56 -1545054.99
1. Other comprehensive income under Equity Method
that can be reclassified to profit or loss - -
2. Changes in fair value of other debt investments - -
3. Amount of financial assets reclassified to other
comprehensive income - -
4. Credit impairment reserves for other debt
investments - -
5. Cash flow hedge reserve - -
113 / 282Annual R eport 2023
6. Converted difference in foreign currency statements - -
7. Others -243628.56 -1545054.99
VI. Total Comprehensive Income 1837655281.77 1834355818.88
VII. Earnings per Share:
(I) Basic Earnings per Share (Yuan/share)
(II) Diluted Earnings per Share (Yuan/share)
Head of the Company: Wang Aijun Head of Accounting: Wang Lihong Head of the Accounting
Institution: Wang Ailing
Consolidated Cash Flow Statement
January to December 2023
Unit: Yuan Currency: RMB
Items Notes 2023 2022
I. Cash Flow from Operating Activities
Cash received from sales of goods or rendering of
services 29091346599.25 30104195350.55
Net increase in customer bank deposits and due to
banks and other financial institutions - -
Net increase in borrowings from the central bank - -
Net increase in funds borrowed from other financial
institutions - -
Cash received from premiums on original insurance
contracts - -
Net cash received from reinsurance business - -
Net increase in deposits and investments from
insurers - -
Cash received from interest handling charges and
commissions - -
Net increase in borrowed funds - -
Net increase in repurchase business funds - -
Net cash received from securities trading brokerage
business - -
Refunds of taxes received 598220147.30 533903475.19
Other cash received related to operating activities Note 78 343744773.05 247833352.51
Subtotal cash inflows from operating activities 30033311519.60 30885932178.25
Cash paid for goods and services 21211308539.84 21396082113.82
Net increase in loans and advances to customers - -
Net increase in placements with central bank and due
to banks - -
Cash paid for claims for original insurance contracts - -
Net increase in funds lent - -
Cash paid for interest handling charges and
commissions - -
Cash paid for policy dividends - -
Cash paid to and on behalf of employees 1780261966.43 1413729794.00
Various taxes paid 1131976118.37 1269329374.37
Other cash paid related to operating activities Note 78 680827810.08 1151836449.70
Subtotal cash outflows from operating activities 24804374434.72 25230977731.89
Net cash flow from operating activities 5228937084.88 5654954446.36
II. Cash Flow from Investing Activities
Cash received from recovery of investments 88628666.67 6280000.00
Cash received from investment income 31215210.80 48068847.03
Net cash received from disposal of fixed assets
intangible assets and other long-term assets 4600429.92 -
Net cash received from disposal of subsidiaries and
other business units - -
Other cash received related to investing activities - -
Subtotal cash inflows from investing activities 124444307.39 54348847.03
Cash paid for acquisition and construction of fixed
assets intangible assets and other long-term assets 1333258499.81 1459431930.56
Cash paid for investments 266053482.02 276074870.00
Net increase in pledge loans - -
114 / 282Annual R eport 2023
Net cash paid for acquisition of subsidiaries and
other business units - -
Other cash paid related to investing activities Note 78 34278559.79 57063590.20
Subtotal cash outflows from investing activities 1633590541.62 1792570390.76
Net cash flow from investing activities -1509146234.23 -1738221543.73
III. Cash Flow from Financing Activities
Cash received from capital injections - -
Including: cash received from minority
shareholders' investments of subsidiaries - -
Cash received from borrowings 4065122989.15 3023985000.00
Other cash received related to financing activities Note 78 441674397.67 314573624.18
Subtotal cash inflows from financing activities 4506797386.82 3338558624.18
Cash paid for debt repayment 4984013700.00 3861137798.71
Cash paid for distribution of dividends profits or
interest repayment 1325273487.51 1402718885.56
Including: Dividends or profits paid to minority
shareholders by subsidiaries - -
Other cash paid related to financing activities Note 78 1305607391.48 1168672312.69
Subtotal cash outflows from financing activities 7614894578.99 6432528996.96
Net cash flow from financing activities -3108097192.17 -3093970372.78
IV. Effect of Exchange Rate Changes on Cash and
Cash Equivalents 40121088.53 51054639.28
V. Net Increase in Cash and Cash Equivalents 651814747.01 873817169.13
Plus: Beginning balance of cash and cash equivalents 4128799695.72 3254982526.59
VI. Ending Balance of Cash and Cash Equivalents 4780614442.73 4128799695.72
Head of the Company: Wang Aijun Head of Accounting: Wang Lihong Head of the Accounting
Institution: Wang Ailing
Parent Company’s Cash Flow Statement
January to December 2023
Unit: Yuan Currency: RMB
Items Notes 2023 2022
I. Cash Flow from Operating Activities:
Cash received from sales of goods or rendering of
services 20090046833.31 21143687300.26
Refunds of taxes received 63342809.62 44867287.39
Other cash received related to operating activities 964120633.59 1005985610.63
Subtotal cash inflows from operating activities 21117510276.52 22194540198.28
Cash paid for goods and services 16803682337.39 19264741419.10
Cash paid to and on behalf of employees 334818484.66 213083534.32
Various taxes paid 168669190.85 177295484.92
Other cash paid related to operating activities 1920048159.29 1335764021.59
Subtotal cash outflows from operating activities 19227218172.19 20990884459.93
Net cash flow from operating activities 1890292104.33 1203655738.35
II. Cash Flow from Investing Activities:
Cash received from recovery of investments - -
Cash received from investment income 1415342664.72 952393986.54
Net cash received from disposal of fixed assets
intangible assets and other long-term assets 38347.42 -
Net cash received from disposal of subsidiaries and
other business units - -
Other cash received related to investing activities - -
Subtotal cash inflows from investing activities 1415381012.14 952393986.54
Cash paid for acquisition and construction of fixed
assets intangible assets and other long-term assets 46443046.89 6831605.00
Cash paid for investments 498644666.66 150000000.00
Net cash paid for acquisition of subsidiaries and other
business units - -
Other cash paid related to investing activities - -
Subtotal cash outflows from investing activities 545087713.55 156831605.00
Net cash flow from investing activities 870293298.59 795562381.54
115 / 282Annual R eport 2023
III. Cash Flow from Financing Activities:
Cash received from capital injections - -
Cash received from borrowings 1395000000.00 2001450000.00
Other cash received related to financing activities 4313903940.13 5494843671.65
Subtotal cash inflows from financing activities 5708903940.13 7496293671.65
Cash paid for debt repayment 2771354500.00 2231529450.00
Cash paid for distribution of dividends profits or
interest repayment 1260995005.10 1310535320.09
Other cash paid related to financing activities 3493971399.61 5167770726.57
Subtotal cash outflows from financing activities 7526320904.71 8709835496.66
Subtotal cash outflows from financing activities -1817416964.58 -1213541825.01
IV. Effect of Exchange Rate Changes on Cash and
Cash Equivalents 464418.27 -1423210.03
V. Net Increase in Cash and Cash Equivalents 943632856.61 784253084.85
Plus: Beginning balance of cash and cash equivalents 1545675811.75 761422726.90
VI. Ending Balance of Cash and Cash Equivalents 2489308668.36 1545675811.75
Head of the Company: Wang Aijun Head of Accounting: Wang Lihong Head of the Accounting
Institution: Wang Ailing
116 / 282Annual Report 2023
Consolidated Statement of Changes in Owner's Equity
January to December 2023
Unit: Yuan Currency: RMB
2023
Equity Attributable to Owners of the Parent Company Equ
ity
Other Equity Instruments Gener of O Min
Items Other a; t orit Total Owners’
Paid-in Capital Prefer Perpet Minus: Treasury Special Undistributed h
Oth Capital Reserve Comprehensive Surplus Reserve Risk Subtotal y Equity e
(or stock) red ual Stock Reserve Profits Sha
ers Income Reser r reho
Shares Bonds s lder
ve s
I. Balance at End of Last Year 3042465447.00 1929260092.43 747013074.21 541072642.04 2060395.42 1142504553.27 7605640318.80 13515990374.75 - 13515990374.75
Plus: Changes in accounting policies - - - - - - -
Correction of prior period errors -
Others -
II. Balance at Beginning of the Current Year 3042465447.00 - - - 1929260092.43 747013074.21 541072642.04 2060395.42 1142504553.27 - 7605640318.80 13515990374.75 - 13515990374.75
III. The Amount Changes during the Current Period ("-" for
decrease) -99039345.00 -896552332.03 -170237354.94 -535384994.54 1892051.46 183789891.03 1822081813.06 647024438.92 - 647024438.92
(I) Total Comprehensive Income -535384994.54 3180949695.48 2645564700.94 - 2645564700.94
(II) Owners' Contributions and Decrease of Capital -99039345.00 -896552332.03 -170237354.94 -825354322.09 - -825354322.09
1．Ordinary shares contributed by owners - - -
2 ． Capital contributed by holders of other equipment
instruments - - -
3．Amount of share-based payments recognized in owners' 3933692.75 -62500000.00 66433692.75 66433692.75
equity
4．Others -99039345.00 -900486024.78 -107737354.94 -891788014.84 -891788014.84
(III) Profit Distribution 183789891.03 -1361160331.83 -1177370440.80 -1177370440.80
1．Withdrawal of surplus reserve 183789891.03 -183789891.03 - -
2．Withdrawal of General Risk Reserve - -
3．Distribution to Owners (or Shareholders) -1177370440.80 -1177370440.80 -1177370440.80
4．Others - -
(IV) Internal Transfer of Owners' Equity 2292449.41 2292449.41 2292449.41
1．Capital (or stock) increased by capital reserve transfer - -
2．Capital (or stock) increased by surplus reserve transfer - -
3．Transfer of surplus reserve to offset losses - -
4．Transfer of changes in defined benefit plans to retained
earnings - -
5． Transfer of other comprehensive income to retained
earnings 2292449.41 2292449.41 2292449.41
6．Others - -
(V) Special Reserves - - - - - - - 1892051.46 - - - - 1892051.46 - 1892051.46
1. Withdrawal during the Current Period 24824346.77 24824346.77 24824346.77
2．Usage during the Current Period 22932295.31 22932295.31 22932295.31
(VI) Others - - -
IV. Balance at End of the Current Period 2943426102.00 1032707760.40 576775719.27 5687647.50 3952446.88 1326294444.30 9427722131.86 14163014813.67 14163014813.67Annual Report 2023
2022
Equity Attributable to Owners of the Parent Company Eq
Other Equity uity
Instruments of
Gener
O Mi
Items t nor
Paid-in Capital Pre Capital Reserve Minus: Treasury
Other
Comprehensive Special
a; Total Owners’ Equity
(or stock) ferr Perpet Stock Reserve Surplus Reserve Risk
Undistributed h Subtotal ity
Oth Income Reser Profits e Shaed ual r reh
Sha Bonds ers ve s old
res ers
I. Balance at End of Last Year 3098619928.00 2193974681.56 400952728.36 220948334.23 1293987.72 958921722.12 4548727413.48 10621533338.75 10621533338.75
Plus: Changes in accounting policies -7256.24 51090589.59 51083333.35 51083333.35
Correction of prior period errors
Others
II. Balance at Beginning of the Current Year 3098619928.00 - - -
2193974681.56400952728.36220948334.231293987.72958914465.88-4599818003.0710672616672.10-10672616672.10
III. The Amount of Changes during the Current Period ("-"
for decrease) -56154481.00 -264714589.13 346060345.85 320124307.81 766407.70 183590087.39 3005822315.73 2843373702.65 - 2843373702.65
(I) Total Comprehensive Income 320124307.81 - - - 4406241981.92 4726366289.73 4726366289.73
(II) Owners' Contributions and Decrease of Capital -56154481.00 0.00 -264714589.13 346060345.85 0.00 0.00 0.00 0.00 0.00 -666929415.98 -666929415.98
1．Ordinary shares contributed by owners - -
2 ． Capital contributed by holders of other equipment
instruments - -
3．Amount of share-based payments recognized in owners'
equity 0.00 0.00 55285046.93 -62500000.00 0.00 0.00 0.00 0.00 0.00 117785046.93 117785046.93
4．Others -56154481.00 -319999636.06 408560345.85 -784714462.91 -784714462.91
(III) Profit Distribution 183590087.39 0.00 -1400419666.19 -1216829578.80 -1216829578.80
1．Withdrawal of surplus reserve 183590087.39 0.00 -183590087.39 - -
2．Withdrawal of General Risk Reserve
3．Distribution to Owners (or Shareholders) -1216829578.80 -1216829578.80 -1216829578.80
4．Others
(IV) Internal Transfer of Owners' Equity - -
1．Capital (or stock) increased by capital reserve transfer - -
2．Capital (or stock) increased by surplus reserve transfer - -
3．Transfer of surplus reserve to offset losses - -
4．Transfer of changes in defined benefit plans to retained
earnings - -
5． Transfer of other comprehensive income to retained
earnings - -
6．Others - -
(V) Special Reserves 766407.7 766407.70 766407.70
1. Withdrawal during the Current Period 47054109.25 47054109.25 47054109.25
2．Usage during the Current Period 46287701.55 46287701.55 46287701.55
(VI) Others
IV. Balance at End of the Current Period 3042465447.00 0.00 0.00 1929260092.43 747013074.21 541072642.04 2060395.42 1142504553.27 0.00 7605640318.80 13515990374.75 13515990374.75
Head of the Company: Wang Aijun Head of Accounting: Wang Lihong Head of the Accounting Institution: Wang AilingAnnual Report 2023
Parent Company’s Statement of Changes in Owner’s Equity
January to December 2023
Unit: Yuan Currency: RMB
2023
Other Equity
Instruments Capital Reserve
Items Paid-in Capital Prefe Perpe Minus: Treasury Other
(or stock) rred tual Other Stock Comprehensiv
Special Surplus Reserve Undistributed Total Owners’ Reserve Profits Equity
Share Bond s e Income
s s
I. Balance at End of Last Year 3042465447.00 - - - 1895510224.84 747013074.21 243628.56 - 1142504553.27 2344836752.23 7678547531.69
Plus: Changes in accounting policies - - - - - - - - -
Correction of prior period errors -
Others -
II. Balance at Beginning of the Current Year 3042465447.00 - - - 1895510224.84 747013074.21 243628.56 - 1142504553.27 2344836752.23 7678547531.69
III. The Amount of Changes during the Current Period ("-" for
decrease) -99039345.00 -896552332.03 -170237354.94 -243628.56 183789891.03 476738578.50 -165069481.12
(I) Total Comprehensive Income -243628.56 1837898910.33 1837655281.77
(II) Owners' Contributions and Decrease of Capital -99039345.00 -896552332.03 -170237354.94 -825354322.09
1．Ordinary shares contributed by owners -
2．Capital contributed by holders of other equipment instruments -
3．Amount of share-based payments recognized in owners' equity - 3933692.75 -62500000.00 66433692.75
4．Others -99039345.00 -900486024.78 -107737354.94 -891788014.84
(III) Profit Distribution - - - - - - - - 183789891.03 -1361160331.83 -1177370440.80
1．Withdrawal of surplus reserve 183789891.03 -183789891.03 -
2．Distribution to Owners (or Shareholders) -1177370440.80 -1177370440.80
3．Others -
(IV) Internal Transfer of Owners' Equity -
1．Capital (or stock) increased by capital reserve transfer -
2．Capital (or stock) increased by surplus reserve transfer -
3．Transfer of surplus reserve to offset losses -
4．Transfer of changes in defined benefit plans to retained earnings -
5．Transfer of other comprehensive income to retained earnings -
6．Others -
(V) Special Reserves - - - - - - - - - - -
1．Withdrawal during the Current Period -
2．Usage during the Current Period -
(VI) Others - - -
IV. Balance at End of the Current Period 2943426102.00 998957892.81 576775719.27 - 1326294444.30 2821575330.73 7513478050.57Annual Report 2023
2022
Other Equity Instruments Capital Reserve Speci
Items Paid-in Capital Preferr Perpetu Ot Minus: Treasury
Other
Comprehensive al Undistributed Total Owners’ (or stock) ed al her Stock Income Reser
Surplus Reserve Profits Equity
Shares Bonds s ve
I. Balance at End of Last Year 3098619928.00 2160224813.97 400952728.36 1788683.55 958921722.12 1909420850.72 7728023270.00
Plus: Changes in accounting policies -7256.24 -65306.17 -72562.41
Correction of prior period errors 0.00 0.00 0.00
Others 0.00 0.00 0.00
II. Balance at Beginning of the Current Year 3098619928.00 2160224813.97 400952728.36 1788683.55 958914465.88 1909355544.55 7727950707.59
III. Amount of Changes during the Current Period ("-" for
decrease) -56154481.00 -264714589.13 346060345.85 -1545054.99 183590087.39 435481207.68 -49403175.90
(I) Total Comprehensive Income -1545054.99 0.00 1835900873.87 1834355818.88
(II) Owners' Contributions and Decrease of Capital -56154481.00 -264714589.13 346060345.85 0.00 0.00 -666929415.98
1．Ordinary shares contributed by owners 0.00 0.00 0.00 0.00 0.00
2．Capital contributed by holders of other equipment instruments 0.00 0.00 0.00 0.00 0.00
3．Amount of share-based payments recognized in owners' equity -56154481.00 55285046.93 -62500000.00 0.00 0.00 61630565.93
4．Others -319999636.06 408560345.85 0.00 0.00 -728559981.91
(III) Profit Distribution 183590087.39 -1400419666.19 -1216829578.80
1．Withdrawal of surplus reserve 183590087.39 -183590087.39 0.00
2．Distribution to Owners (or Shareholders) -1216829578.80 -1216829578.80
3．Others
(IV) Internal Transfer of Owners' Equity
1．Capital (or stock) increased by capital reserve transfer
2． Capital (or stock) increased by surplus reserve transfer
3．Transfer of surplus reserve to offset losses
4．Transfer of changes in defined benefit plans to retained earnings
5．Transfer of other comprehensive income to retained earnings
6．Others
(V) Special Reserves
1．Withdrawal during the Current Period
2．Usage during the Current Period
(VI) Others
IV. Balance at End of the Current Period 3042465447.00 - - - 1895510224.84 747013074.21 243628.56 - 1142504553.27 2344836752.23 7678547531.69
Head of the Company: Wang Aijun Head of Accounting: Wang Lihong Head of the Accounting Institution: Wang AilingAnnu al Report 2023
III. Basic Information of the Company
1.Overview of the Company
?Applicable □ Not Applicable
(I) Registered Address Organizational Form and Headquarter Address of the Company
Meihua Holdings Group Co. Ltd. (hereinafter referred to as "Company" or "The Company") formerly
known as Wuzhou Minovo Co. Ltd. (hereinafter referred to as "Wuzhou Minovo") was listed on Shanghai
Stock Exchange on February 17 1995 underwent a name change from Wuzhou Minovo Co. Ltd. to its current
name following the absorption and merger with the original Meihua Holdings Group Co. Ltd. (hereinafter
referred to as "Original Meihua Group") and completed the business change registration on March 3 2011.The Company’s unified social credit code is 91540000219667563J.The Original Meihua Group formerly known as Hebei Meihua MSG Group Co. Ltd. was established
with investment from natural persons Meng Qingshan Yang Weiyong and Hu Jijun. It obtained the Business
License of Legal Entity No. 131081000002308 issued by the Hebei Administration for Industry and Commerce
on April 23 2002.Wuzhou Minovo was established as a stock corporation through fundraising following the issuance of 30
million shares to the public on January 6 1995 with Chengdu Tibet Hotel Tibet Autonomous Region Trust
Investment Company and Tibet Xingzang Industrial Development Company as sponsors. It was officially
registered in Lhasa Tibet Autonomous Region on February 9 1995 with a Business License of Legal Entity
number of 5400001000327 and a total share capital of 73 million shares. On February 17 of the same year
with the approval of the China Securities Regulatory Commission the Company's public shares were listed for
trading on the Shanghai Stock Exchange under the stock code 600873.On August 12 1995 the Shareholders' Meeting of the Company approved the Dividend Distribution Plan
and implemented the 1994 Distribution Plan of granting 3 shares for every 10 shares held to all shareholders
on August 21 1995. Based on a foundation of 73 million shares a total of 21.9 million shares were distributed
elevating the Company's total share capital to 94.9 million shares.On December 19 1996 the Company deliberated and approved the Rights Issue Plan at the Extraordinary
Shareholders' Meeting for the Year 1996 and implemented the rights issue plan of granting 3 shares for every
10 shares to all shareholders on August 12 1997. Based on a foundation of 94.90 million shares a total of
13336603 shares (including 1436603 transfer right shares) were distributed elevating the Company's total
share capital to 108236603 shares.On February 16 2003 Shandong Wuzhou Investment Group Co. Ltd. and Weifang Bohai Industry Co.Ltd. respectively entered into agreements with the Tibet Autonomous Region State-owned Assets Management
Company (whose shares were obtained through gratuitous transfer by the Tibet Autonomous Region State-
owned Assets Management Bureau) whereby Shandong Wuzhou Investment Group Co. Ltd. acquired
27102445 shares of the Company's state-owned legal person shares from Tibet Autonomous Region State-
owned Assets Management Company representing 25.04% of the Company's total share capital and became
the Company's largest shareholder; Weifang Bohai Industry Co. Ltd. acquired 21535555 shares accounting
for 19.90% of the Company's total share capital. The aforementioned equity transfer was formally approved
121 / 282Annu al Report 2023
by the State-owned Assets Supervision and Administration Commission of the State Council through document
"State-owned Assets Ownership Letter [2003] No. 25" on May 29 2003. On August 11 2003 the Company
entered into the Asset Exchange Agreement with Shandong Wuzhou Investment Group Co. Ltd. and Shandong
Wuzhou Electric Co. Ltd. and executed a significant asset exchange. Following the completion of this
exchange the total share capital remained unchanged.On May 22 2006 the Company convened the "Shareholders Meeting Related to the Split-Share Reform"
where the Company's split-share reform plan was deliberated and approved. All non-tradable shareholders of
the Company granted 2.8 shares for every 10 shares to all tradable shareholders. The Company completed the
implementation of the aforementioned split-share reform plan on June 2 2006.On December 22 2010 with the approval of the China Securities Regulatory Commission through the
document ZJXK [2010] No. 1888 "Approval of Wuzhou Minovo Co. Ltd.'s Major Asset Sale and Merger with
Meihua Holdings Group Co.Ltd. by Issuing New Shares" the Company issued 900000000 RMB ordinary
shares to the Original Meihua Group for the acquisition of all equity enjoyed by its shareholders. On December
24 2010 BDO CHINA LI XIN DA HUA. Certified Public Accountants CO. LTD. issued the document
LXDHYZ [2010] No. 200 "Capital (Contribution) Verification Report" for this change in the share capital. On
December 31 2010 the Company obtained the Certificate of Securities Change Registration Issued by the
Shanghai Branch of China Securities Depository and Clearing Co. Ltd. with the registered share capital for
securities of 1008236603 shares.On March 28 2011 the Company approved the implementation of the capital reserve conversion to share
capital plan during the Annual Shareholders Meeting for the Year 2010. Based on a foundation of
1008236603 shares every 10 shares were converted into 16.861 shares leading to a total share capital of
2708236603 shares post-conversion. On April 12 2011 the Company completed the share change
registration at the Shanghai Branch of China Securities Depository and Clearing Co. Ltd. with the registered
share capital for securities of 2708236603 shares.According to the resolutions of the Fifth Meeting of the Sixth Board of Directors on April 22 2011 the
Fourteenth Meeting of the Sixth Board of Directors on February 22 2012 the 2011 Annual Shareholders
Meeting held on March 22 2012 and the provisions specified in the amended articles of association along
with the approval of the China Securities Regulatory Commission through the document ZJXKZ [2012] No.
1262 "Approval of Meihua Holdings Group Co. Ltd.'s Private Issuance of Stocks" the Company agreed to
privately issue up to 400 million RMB ordinary shares (A shares). On March 26 2013 the Company privately
issued 399990000 RMB ordinary shares (A shares) to specific investors resulting in a total share capital of
3108226603 shares after this issuance. On March 29 2013 the Company completed the registration and
custody procedures at the Shanghai Branch of China Securities Depository and Clearing Co. Ltd.According to the resolutions of the Fifteenth Meeting of the Eighth Board of Directors on May 30 2018
the Seventeenth Meeting of the Eighth Board of Directors on June 20 2018 and the annual shareholders
meeting held on June 20 2018 the Company established a stock incentive plan by offering 34534865 treasury
shares at a price of RMB 2.46 yuan per share. These shares were granted to a total of 109 incentive recipients
including directors senior executives key management personnel and core technical staff working for Meihua
122 / 282Annu al Report 2023
Bio with no change in the registered capital.According to the resolutions of the 22nd Meeting of the Eighth Board of Directors on December 7 2018
and the First Extraordinary Shareholders Meeting in 2018 the Company processed the cancellation of 51565
subscribed shares that were relinquished. After the cancellation the total share capital of the Company
amounted to 3108175038 shares.According to the resolutions of the 28th Meeting of the Eighth Board of Directors in June 2019 and the
2018 Annual Shareholders Meeting on June 24 2019 the Company repurchased 3.8854 million restricted
shares for cancellation due to the departure of incentive recipients and incomplete individual performance
assessments. After the cancellation the total share capital of the Company amounted to 3104289638 shares.According to the resolutions of the Fourth Meeting of the Ninth Board of Directors on April 22 2020
and the 2019 Annual Shareholders Meeting on May 20 2020 the Company repurchased 4.267790 million
restricted shares for cancellation due to the departure of incentive recipients and incomplete individual
performance assessments. After the cancellation the total share capital of the Company amounted to
3100021848.00 shares.
According to the resolutions of the Seventeenth Meeting of the Ninth Board of Directors on May 12 2021
and the 2020 Annual Shareholders Meeting on May 26 2021 the Company repurchased 1.40192 million
restricted shares for cancellation due to the departure of incentive recipients and incomplete individual
performance assessments. After the cancellation the total share capital of the Company amounted to
3098619928 shares.
According to the resolutions of the 27th Meeting of the Ninth Board of Directors on December 15 2021
the Second Extraordinary Shareholders Meeting for the year 2021 on December 31 2021 and the 2021 Annual
Shareholders Meeting on June 9 2022 the Company canceled a total of 56154481 shares repurchased
previously. After the cancellation the total share capital of the Company amounted to 3042465447 shares.According to the resolutions of the Third Meeting of the Tenth Board of Directors on April 8 2023 and
the Second Extraordinary Shareholders Meeting for 2023 held on April 28 2023 the "Proposal to Change the
Company's Registered Capital" was deliberated and approved. According to the "Proposal to Repurchase the
Company’s Shares through Centralized Bidding Transactions" deliberated and approved at the 2021 Annual
Shareholders Meeting the repurchased shares were exclusively used for cancellation to reduce the Company's
registered capital. The Company has completed the repurchase and has physically repurchased 99039345
shares. After the cancellation of these shares the total share capital of the Company will change from
3042465447 shares to 2943426102 shares.
Over the years through the distribution of bonus shares sale of new shares conversion of share capital
and issuance of new shares the Company had accumulated a total share capital of 2943426102 shares as of
December 31 2023 with a total capital amount of RMB 2943426102 yuan. Registered address: Room 5
Building 11 Yangguang Xincheng No. 158 Jinzhu West Road Lhasa. Actual controlling person: Meng
Qingshan.(II) The Company’s Business Nature and Major Operating Activities
Positioned within the food manufacturing industry the Company specializes in the products and services
123 / 282Annu al Report 2023
including amino acid series monosodium glutamate and glutamic acid.(III) Scope of Consolidated Financial Statements
during the Current Period a total of 18 subsidiaries were included in the scope of consolidation as detailed
in paragraph 1. (1) of Sub-Section X. Notably there has been an increase of 3 subsidiaries and a decrease of
1subsidiary compared to the previous period. Further details regarding the changes in the scope of
consolidation entities are available in Section IX.(IV) Approval for Issuance of Financial Statements
These financial statements were approved for issuance by the Company's Board of Directors on March
182024.
IV. Preparation Basis for Financial Statements
1. Preparation Basis
The financial statements of the Company are prepared on a going concern basis.The Company recognizes and measures the actual transactions and matters based on the Accounting
Standards for Business Enterprises—Basic Standards issued by the Ministry of Finance specific Accounting
Standards for Business Enterprises application guidelines for the Accounting Standards for Business
Enterprises interpretations of the Accounting Standards for Business Enterprises and other relevant provisions
(hereinafter referred to as "The Accounting Standards for Business Enterprises") and prepares its financial
statements in accordance with these standards along with the provisions specified in the Rules for the
Information Disclosure and Compilation by Companies Offering Securities to the Public No.24—General
Provisions on Financial Reports (2023 revision).
2. Going Concern
?Applicable □ Not Applicable
The Company has evaluated its ability to continue as a going concern for the 12 months following the
end of the reporting period and has not identified any matters or circumstances casting doubt on its ability to
continue as a going concern. Therefore these financial statements are prepared on the basis of a going concern
assumption.V. Significant Accounting Policies and Estimates
Specific accounting policies and estimates indicate:
?Applicable □ Not Applicable
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company comply with the requirements specified in the
Accounting Standards for Business Enterprises and provide a true and complete view of the Company's
financial position operating results changes in shareholders’ equity cash flows etc..
2. Accounting Period
The Company's accounting year runs from January 1 to December 31 of the Gregorian calendar.
124 / 282Annu al Report 2023
3. Operating Cycle
?Applicable □ Not Applicable
The operating cycle refers to the period from the acquisition of assets for processing to the realization of
cash or cash equivalents. The Company uses 12 months as its operating cycle and as the criterion for the
classification of liquidity of assets and liabilities.
4. Functional Currency
The Company chooses RMB as its functional currency.
5. Determination Method and Selection Basis for Materiality Standards
?Applicable □ Not Applicable
Items Materiality Standards
The amount of individual provision for bad debts accounts for
Accounts receivable with material individual provision for more than 10% of the total amount of various accounts
bad debts receivable with provision for bad debts and exceeds RMB 20
million yuan.Accounts receivable with provision for bad debts and with The amount of recovery or reversal of individual provision
material amounts recovered or reversed during the Current for bad debts accounts for more than 10% of the total account
Period and receivable and exceeds RMB 20 million yuan.The write-off amount of individual account receivable
accounts for more than 10% of the total provision for bad
Significant write-offs of accounts receivable
debts for various accounts receivable and exceeds RMB 20
million yuan.Individual advance payments accounts payable contract
Advance payments accounts payable contract liabilities and
liabilities and other account payable amount to more than
other accounts payable with material amounts outstanding for
10% of the total amount of such accounts and exceed RMB
over one year
20 million yuan.
The budget amount for individual construction in progress
Material construction in progress
project exceeds RMB 100 million yuan.Individual investing activities account for more than 10% of
Material cash flows related to investing activities the total cash inflows or outflows received or paid for the
investing activities and exceed RMB 200 million yuan.The book value of long-term equity investments in an
individual invested party accounts for more than 5% of the
consolidated net assets and exceeds RMB 100 million or the
Material joint ventures
investment gains or losses recognized under the equity
method for long-term equity investments account for more
than 10% of the consolidated net profit.Any single type of estimated liability accounts for more than
Material contingent matters 10% of the total estimated liabilities and exceeds RMB 100
million.
6. Accounting Treatment Method for Merger of Enterprises under the Same Control and Different
Controls
?Applicable □ Not Applicable
125 / 282Annu al Report 2023
1．If the terms conditions and economic impacts of various transactions involved in the staged
implementation of the enterprise merger meet one or more of the following criteria treat the multiple
transactions as a package deal for accounting treatment.
(1) These transactions are concluded simultaneously or taking into account their mutual impacts;
(2) These transactions collectively achieve a complete business outcome;
(3) The occurrence of one transaction depends on the occurrence of at least one other transaction;
(4) A transaction is uneconomical when considered alone but becomes economical when considered
together with other transactions.
2．Enterprise merger under the same control
Enterprises participating in the merger are subject to the same ultimate control by one party or multiple
parties and such control is not temporary constituting a merger of enterprises under the same control.The assets and liabilities obtained by the Company in the enterprise merger are measured at the carrying
amounts of the merged party's assets and liabilities (including goodwill formed by the ultimate controlling
party from the acquisition of the merged party) in the consolidated financial statements of the ultimate
controlling party as of the merger date. In case of any difference between the carrying amount of net assets
obtained in the merger and the carrying amount (or total face value of shares issued) of the consideration paid
for the merger the share premium in the capital reserve will be adjusted and if the share premium in the capital
surplus is insufficient to offset the retained earnings will be adjusted.If there are contingent considerations requiring the recognition of estimated liabilities or assets and the
difference between the amount of these estimated liabilities or assets and the subsequent settlement amount of
contingent considerations the capital surplus (capital premium or share premium) will be adjusted. If the
capital surplus is insufficient the retained earnings will be adjusted.For enterprise mergers achieved through multiple transactions ultimately forming a package deal each
transaction within it should be accounted for as one acquisition of control. For transactions not constituting a
package deal on the day control is acquired the capital reserve is adjusted based on the difference between
the initial investment cost of long-term equity investments and the book value of the long-term equity
investments before the merger plus the book value of the consideration newly paid for further acquisition of
shares on the merger date with retained earnings being adjusted for any shortfall in the capital reserve.Regarding equity investments held before the merger date other comprehensive income accounted for by the
equity method or recognized by financial instruments and accounted for and recognized by the measurement
standards will not undergo accounting treatment until the investment is disposed of at which time it will be
accounted for based on the same principles as directly disposing of assets or liabilities associated with the
invested party. Any changes in the owners’ equity excluding net profit and loss other comprehensive income
and profit distribution in the net assets of the invested party accounted and recognized through the equity
method will not be accounted for until the disposal of the investment at which point they are transferred to
the profit and loss for the current period.
3．Enterprise merger not under the same control
Enterprises participating in the merger are not subject to the same ultimate control by one party or multiple
126 / 282Annu al Report 2023
parties before and after the merger constituting a merger of enterprises not under the same control.On the acquisition date the assets paid as consideration for the enterprise merger and the liabilities
incurred or assumed are measured at fair value and the difference between the fair value and their carrying
amounts is recognized in the profit and loss for the current period.The difference between the merger cost and the identifiable fair value share of net assets acquired from
the acquired entity in the merger if positive is recognized as goodwill; if negative it is recognized in the profit
and loss for the current period after thorough review.For enterprise merger not under the same control achieved through multiple exchanges and transactions
in a phased manner constituting a package deal each transaction within it should be accounted for as one
acquisition of control. Where transactions do not constitute a package deal and equity investments held prior
to the merger date are accounted for using the equity method the initial investment cost of those investments
should be the aggregate of the book value of the equity investments in the acquired entity as of the acquisition
date and any newly added investment made on the acquisition date. Other comprehensive income from equity
investments held prior to the acquisition date and accounted for and recognized using the equity method should
be accounted for upon disposal of the investment based on the same basis as directly disposing of the relevant
assets or liabilities of the invested party. For equity investments recognized using financial instruments and
accounted for using the measurement standards the initial investment cost on the merger date should be the
sum of the equity investment's fair value on the merger date and the newly added investment cost. The
difference between the fair value and book value of the originally held equity along with the accumulated fair
value changes previously recognized in other comprehensive income should all be transferred to investment
income for the current period as of the merger date.
4．Expenses related to the merger
Intermediary expenses such as audit legal services evaluation consultation and other directly related
expenses incurred for the enterprise merger are recognized in the profit and loss for the current period at the
time of occurrence. Transaction costs for issuing equity securities for the enterprise merger can be directly
attributed to equity transactions and deducted from equity.
7. Determination Criteria for Controls and Preparation Method for Consolidated Financial Statements
?Applicable □ Not Applicable
1．Determination criteria for controls
Control refers to the power held by the investing party over the invested party enjoying variable returns
by involvement in the relevant activities carried by the invested party and having the ability to influence the
amount of returns through exercising power over the invested party.The Company makes judgments on whether it controls the invested party based on a comprehensive
consideration of all relevant facts and circumstances. Once changes in relevant facts and circumstances lead to
changes in the elements involved in defining control the Company will conduct a reassessment. The relevant
facts and circumstances mainly include:
(1) The purpose of establishing the invested party.
(2) The invested party's relevant activities and how decisions are made regarding those activities.
127 / 282Annu al Report 2023
(3) Whether the rights enjoyed by the investing party currently allow it to dominate the invested party's
relevant activities.
(4) Whether the investing party gains variable returns by involvement in the invested party's relevant
activities.
(5) Whether the investing party has the ability to influence the amount of returns through exercising power
over the invested party.
(6) The relationship between the investing party and other parties.
2．Consolidation Scope
The consolidation scope of the Company's consolidated financial statements is determined based on
control and all subsidiaries (including separate entities controlled by the Company) are included in the
consolidated financial statements.
3．Consolidation Procedures
The Company prepares the consolidated financial statements based on the financial statements of the
Company and its subsidiaries and other relevant information. When preparing the consolidated financial
statements the Company views the enterprise group as a single accounting entity and reflects the overall
financial position operating results and cash flows of the enterprise group in accordance with the recognition
measurement and reporting requirements of relevant Accounting Standards for Business Enterprises and the
unified accounting policies.The accounting policies and periods adopted by all subsidiaries included in the consolidation scope of the
consolidated financial statements are consistent with those of the Company. In instances where a subsidiary's
accounting policies or periods differ from those of the Company necessary adjustments should be made in the
preparation of the consolidated financial statements to align with the Company's accounting policies and
periods.When preparing the consolidated financial statements the impact of internal transactions between the
Company and its subsidiaries as well as between subsidiaries on the consolidated balance sheet consolidated
income statement consolidated cash flow statements and consolidated statement of changes in equity is offset.If there are differences in the recognition of the same transaction from the perspective of the consolidated
financial statements of the enterprise group and from the perspective of the Company or a subsidiary as the
accounting entity adjustments are made from the perspective of the enterprise group for such transactions.The portions of subsidiary owners' equity current net profit and current comprehensive income
attributable to minority shareholders are separately presented under the owner's equity item in the consolidated
balance sheets as well as under the net profit item and in the total comprehensive income item in the
consolidated income statements. If the portion of the current losses borne by minority shareholders exceeds
the balance of minority shareholders' equity derived from their initial ownership interests in the subsidiary
minority shareholders’ interest will be deducted accordingly.For subsidiaries acquired through enterprise merger under the same control their financial statements are
adjusted based on the fair value of their assets and liabilities (including goodwill formed by the ultimate
controlling party from acquisition of the subsidiary) in the financial statements of the ultimate controlling party.
128 / 282Annu al Report 2023
For subsidiaries acquired through enterprise merger not under the same control their financial statements
are adjusted based on the fair value of identifiable net assets as of the acquisition date.
(1) Addition of Subsidiaries or Businesses
If subsidiaries or businesses are added due to enterprise merger under the same control during the
reporting period the beginning balance in the consolidated balance sheet are adjusted; the income expenses
and profits from the beginning of the current period of subsidiary or business merger to the end of the reporting
period are included in the consolidated income statement; the cash flows from the beginning of the current
period of subsidiary or business merger to the end of the reporting period are included in the consolidated cash
flow statement and related items in the comparative statements are adjusted with the reporting entity after the
merger being considered as having existed since the point when control commenced by the ultimate controlling
party.If control can be exercised over the invested party under the same control due to additional investments
or other reasons it is deemed that all parties involved in the merger existed in their current state and performed
adjustment as of the commencement of control by the ultimate controlling party. For equity investments held
before the control over the merged party is obtained any profit or loss other comprehensive income and other
changes in net assets recognized between the acquisition date of the original equity or the date when the
merging party and the merged party are under common control whichever is later are offset against retained
earnings or the profit and loss for the current period at the beginning of the comparative reporting period.If during the reporting period subsidiaries or businesses are added due to the enterprise merger not under
the same control the beginning balance in the consolidated balance sheet remain unchanged. The revenues
expenses and profits of the subsidiaries or businesses from the acquisition date to the end of the reporting
period are included in the consolidated income statement while the cash flows from the acquisition date to the
end of the reporting period of the subsidiaries or businesses are included in the consolidated cash flow
statement.If control can be exercised over the invested party not under the same control the Company remeasures
the equity interests held in the acquired party prior to the acquisition date at their fair value on the acquisition
date with the difference between the fair value and their book value recognized in the investment income for
the current period. For the equity interests held in the acquired party before the acquisition date that involve
other comprehensive income accounted for using the equity method and other changes in owner's equity
excluding net profits and losses other comprehensive income and profit distribution other comprehensive
income and other changes in owner's equity related to them are transferred to the investment income for the
current period as of the acquisition date except for other comprehensive income arising from the invested
party’s remeasurement of the changes in the net liabilities or assets in the defined benefit plan.
(2) Disposal of Subsidiaries or Businesses
1) Regular disposal method
During the reporting period if the Company disposes of subsidiaries or businesses the revenue expenses
and profits of the subsidiaries or businesses from the beginning of the period to the disposal date are included
in the consolidated income statement while the cash flows of the subsidiaries or businesses from the beginning
129 / 282Annu al Report 2023
of the period to the disposal date are included in the consolidated cash flow statement.When control over the invested party is lost due to the disposal of a portion of equity investments or other
reasons the Company remeasures the remaining equity investments at their fair value on the date such control
is lost. The sum of the consideration received from the disposal of equity and the fair value of the remaining
equity reduced by the proportionate share of net assets and goodwill continuously calculated based on the
original ownership percentage since the acquisition or merger date is recognized in the investment income for
the period such control is lost. Other comprehensive income or other changes in owner's equity (excluding net
profit and loss other comprehensive income and profit distribution) related to the equity investments of the
original subsidiary are transferred to the current investment income when control is lost except for other
comprehensive income arising from the invested party’s remeasurement of the changes in the net liabilities or
assets in the defined benefit plan.
2) Phased disposal of subsidiaries
When the disposal of equity investments in subsidiaries is performed through multiple transactions in a
phased manner until control is lost if the terms conditions and economic impact of each transaction related
to the disposal of equity investments in subsidiaries meet one or more of the following criteria it indicates that
the multiple transaction matters should be accounted for as a package deal:
A. These transactions are concluded simultaneously or taking into account their mutual impacts;
B. These transactions collectively achieve a complete business outcome;
C. The occurrence of one transaction depends on the occurrence of at least one other transaction;
D. A transaction is uneconomical when considered alone but becomes economical when considered
together with other transactions.When transactions involving the disposal of equity investments in subsidiaries until control is lost are part
of a package deal the Company accounts for each transaction as a single disposal of the subsidiary and loss of
control. However the difference between the proceeds from each disposal and the proportionate share of net
assets of the subsidiary as related to the disposal of investment is recognized as other comprehensive income
in the consolidated financial statement prior to the loss of control and is subsequently transferred to the profit
or loss for the period when control is lost.When transactions involving the disposal of equity investments in subsidiaries until control is lost are not
part of a package deal the Company accounts for them according to the relevant policies for partially disposing
of equity investments in subsidiaries without losing control before control is lost and according to the regular
disposal method for disposal of subsidiaries when control is lost.
(3) Acquisition of minority equity in subsidiary
For the difference between the long-term equity investment newly acquired due to the acquisition of
minority equity by the Company and the proportionate share of net assets continuously calculated based on the
increased ownership percentage since the acquisition date (or merger date) the share premium in the capital
reserve in the consolidated balance sheet is adjusted to offset. If the share premium is insufficient to offset the
difference the retained earnings are adjusted to offset.
(4) Partial disposal of equity investments in subsidiaries without losing control
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For the difference between the disposal proceeds from partial disposal of long-term equity investments in
subsidiaries without losing control and the proportionate share of net assets held in subsidiaries continuously
calculated from the acquisition or merger date due to the disposal of long-term equity investments adjustments
are made to the share premium in the capital reserve in the consolidated balance sheet. If the share premium is
insufficient to offset the difference adjustments are made to the retained earnings.
8. Classification of Joint Arrangements and Accounting Treatment Method for Joint Operations
?Applicable □ Not Applicable
1．Classification of joint arrangements
Based on factors such as the structures and legal forms of joint arrangements terms agreed upon and
other relevant facts and circumstances the Company classifies joint arrangements into joint operations and
joint ventures. Joint operations refer to joint arrangements in which the parties involved share the assets and
liabilities related to the arrangements. Joint ventures refer to joint arrangements in which the parties involved
have rights solely to the net assets of the arrangements.
2．Accounting treatment method for joint operations
The Company recognizes the following items related to its interests in joint operations and accounts for
them in accordance with relevant Accounting Standards for Business Enterprises:
(1) Recognition of assets held separately and recognition of jointly held assets based on proportional
ownership.
(2) Recognition of liabilities held separately and recognition of jointly held liabilities based on
proportional ownership.
(3) Recognition of revenue from the sale of its share of output from joint operations.
(4) Recognition of revenue from the sale of output from joint operations based on proportional ownership.
(5) Recognition of expenses incurred separately and recognition of expenses incurred by joint operations
based on proportional ownership.When the Company contributes or sells assets (excluding those constituting a business) to a joint operation
it recognizes only the portion of the profit or loss attributable to other parties involved in the joint operation
until the assets are sold to a third party by the joint operation. If any assets contributed or sold incur impairment
losses as per the Accounting Standards for Business Enterprises No. 8 - Asset Impairment the Company
recognizes the full amount of such loss.When the Company acquires assets (excluding those constituting a business) from a joint operation it
recognizes only the portion of the profit or loss attributable to other parties involved in the joint operation until
the assets are sold to a third party by the joint operation. If any assets acquired incur impairment losses as per
the Accounting Standards for Business Enterprises No. 8 - Asset Impairment the Company recognizes the loss
in proportion to its share.The Company does not exercise joint control over joint operations. If the Company shares the assets and
liabilities related to the joint operations it should account for them in accordance with the principles described
above; otherwise it should account for them in accordance with the provisions specified in the relevant
Accounting Standards for Business Enterprises.
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9. Determination Criteria for Cash and Cash Equivalents
When preparing the cash flow statements the Company recognizes cash on hand as well as deposits that
are readily available for payment as cash and investments meeting the following criteria as cash equivalents:
short-term maturity (generally within three months from the date of acquisition) strong liquidity cash easily
convertible into known amounts and minimal risk of value changes.
10. Translation of Foreign Currency Transactions and Foreign Currency Financial Statements
?Applicable □ Not Applicable
For foreign currency transactions the Company uses the spot exchange rate on the transaction date to
convert them into Renminbi for accounting purposes upon initial recognition.Monetary items denominated in foreign currencies are translated at the spot exchange rate on the balance
sheet date. Any exchange differences arising from this except for those related to foreign currency borrowings
specifically incurred for the acquisition and construction of qualifying assets and treated under the principle of
capitalizing borrowing costs are recorded in the profit or loss for the current period. Non-monetary items
denominated in foreign currencies and measured at historical cost are still translated using the spot exchange
rate on the transaction date without altering their recorded functional currency amount.For non-monetary items denominated in foreign currencies and measured at fair value the Company uses
the spot exchange rate on the fair value determination date for translation. The difference between the translated
functional currency amount and the original functional currency amount is treated as changes in fair value
(including changes in exchange rate) and recorded in the profit or loss for the current period or recognized as
other comprehensive income.
11. Financial Instruments
?Applicable □ Not Applicable
The Company recognizes a financial asset or financial liability when it becomes a party to a financial
instrument contract.The effective interest rate method refers to the method of calculating the amortized cost of a financial
asset or a financial liability and apportioning the interest income or interest expenses into each accounting
period.The effective interest rate is the rate used to discount estimated future cash flows during the expected life
of a financial asset or financial liability to the book balance of the financial asset or the amortized cost of the
financial liability. In the determination of the effective interest rate the expected cash flows are estimated based
on all contractual terms of the financial asset or financial liability (such as prepayment extension call options
or similar options) excluding expected credit losses.The amortized cost of a financial asset or financial liability is calculated by deducting the principal repaid
from the initially recognized amount adding or deducting the cumulative amortized amount resulting from the
difference between the initially recognized amount and the amount payable at maturity using the effective
interest rate method and then deducting any cumulative provision for impairment losses (applicable only to
financial assets).
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1．Classification Recognition and Measurement of Financial Assets
The Company classifies financial assets into the following three categories based on the business model
for managing financial assets and the contractual cash flow characteristics of the financial assets:
(1) Financial assets measured at amortized cost.
(2) Financial assets measured at fair value with changes recognized in other comprehensive income.
(3) Financial assets measured at fair value with changes recorded in the profit or loss for the current period.
Financial assets are measured at fair value at initial recognition. However if accounts receivable or notes
receivable arising from sales of goods or provision of services do not contain material financing components
or consider financing components not exceeding one year they are measured at transaction price for initial
measurement.For financial assets measured at fair value with changes recorded in the profit or loss for the current period
related transaction costs are directly recorded in the profit or loss for the current period while transaction costs
for other categories of financial assets are recognized in their initially recognized amounts.The subsequent measurement of financial assets depends on their classification and all affected financial
assets are reclassified only when the Company changes the business model for managing financial assets.
(1) Financial assets classified as being measured at amortized cost
When the contractual terms of financial assets specify that cash flows arising on a specific date solely
comprise payments of principal and interest based on the outstanding principal amount and the business model
for managing those financial assets aims to collect contractual cash flows the Company classifies them as
being measured at amortized cost. Financial assets classified as being measured at amortized cost include
money funds and certain notes receivable accounts receivable other receivables debt investments long-term
receivables etc that are measured at amortized cost.The Company recognizes interest income on such financial assets using the effective rate method and
conducts subsequent measurement at amortized cost. The gains or losses incurred from their impairment
derecognition and modification are recorded in the profit or loss for the current period. Except for
circumstances mentioned below the Company determines interest income by multiplying the book balance of
the financial assets by the effective interest rate:
1) For purchased or originated financial assets with credit impairment the Company calculates their
interest income by applying their amortized cost and the effective interest rate adjusted for credit since initial
recognition.
2) For purchased or originated financial assets without incurred credit impairment but becoming credit
impaired in subsequent periods the Company calculates their interest income by applying their amortized cost
and the effective interest rate. If the credit risk of the financial instruments improves in subsequent periods
such that there is no longer any credit impairment the Company calculates the interest income by multiplying
the book balance of the financial assets by the effective interest rate.
(2)Financial assets classified as being measured at fair value with changes recognized in other
comprehensive income
When the contractual terms of financial assets specify that cash flows arising on a specific date consist
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solely of payments of principal and interest based on the outstanding principal amount and the business model
for managing such financial asset aims to both collect contractual cash flows and sell the financial assets the
Company categorizes the financial assets as being measured at fair value with changes recognized in other
comprehensive income.The Company recognizes interest income on such financial assets using the effective rate method. Except
for interest income impairment losses and exchange differences that are recorded in the profit or loss for the
current period all other changes in fair value are recognized in other comprehensive income. When such
financial assets are derecognized the cumulative gains or losses previously recognized in other comprehensive
income are transferred from other comprehensive income and recorded in the profit or loss for the current
period.Notes receivable and accounts receivable measured at fair value with changes recognized in other
comprehensive income are presented as Receivables Financing and other financial assets of this category are
presented as other debt investments. Among them other debt investments due within one year from the balance
sheet date are presented as non-current assets due within one year and other debt investments originally due
within one year are presented as other current assets.
(3) Financial assets designated as being measured at fair value with changes recognized in other
comprehensive income
Upon initial recognition the Company may irrevocably designate non-trading equity instrument
investments as financial assets measured at fair value with changes recognized in other comprehensive income
on a single financial asset basis.Changes in fair value of such financial assets are recognized in other comprehensive income without the
need of provision for impairment reserves. When these financial assets are derecognized the cumulative gains
or losses previously recognized in other comprehensive income are transferred from other comprehensive
income and recognized in retained earnings. During the period in which the Company holds these equity
instrument investments when the Company's right to receive dividends has been established and it is probable
that economic benefits associated with the dividends will flow to the Company and the amount of dividends
can be reliably measured dividend income is recognized and recorded in the profit or loss for the current period.The Company presents these financial assets under the other equity instrument investment item.Equity instrument investments are classified as financial assets measured at fair value with changes
recorded in the profit or loss for the current period if they meet any of the following conditions: the primary
objective of acquiring the financial assets is for near-term sale; at initial recognition they are part of the
identifiable financial asset instrument portfolio under centralized management and there is objective evidence
of a short-term profit pattern; they are derivative instruments (excluding those meeting the definitions listed in
financial guarantee contracts and those designated as effective hedging instruments).
(4) Financial assets classified as being measured at fair value with changes recorded in the profit or loss
for the current period
Financial assets that do not meet the conditions for classification as being measured at amortized cost or
fair value with changes recognized in other comprehensive income and that are not designated as being
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measured at fair value with changes recognized in other comprehensive income are classified as financial
assets measured at fair value with changes recorded in the profit or loss for the current period.The Company subsequently measures these financial assets at fair value with gains or losses arising from
changes in fair value and income from dividends and interest associated with these financial assets recorded in
the profit or loss for the current period.The Company presents these financial assets under the items of financial assets held for trading and other
non-current financial assets based on their liquidity.
(5) Financial assets designated as being measured at fair value with changes recorded in the profit or loss
for the current period
At the time of initial recognition the Company may irrevocably designate financial assets as being
measured at fair value with changes in fair value recorded in the profit or loss for the current period on a single
financial asset basis in order to eliminate or significantly reduce accounting mismatches.If a hybrid contract contains one or more embedded derivative instruments and its main contract does not
fall under the aforementioned financial assets the Company may designate it as a whole as a financial
instrument measured at fair value with changes recorded in the profit or loss for the current period. However
the following exceptions apply:
1)The embedded derivative instruments will not lead to material changes to the cash flows of the hybrid
contract.
2)When determining whether a similar hybrid contract needs to be split it is almost unnecessary to
analyze to determine that the embedded derivative instruments therein should not be split. For example in
cases where the prepayment right for loans is embedded allowing the holder to repay the loan at an amount
close to the amortized cost this prepayment right does not need to be split.The Company subsequently measures such financial assets at fair value with gains or losses arising from
changes in fair value and income from dividends and interest associated with these financial assets recorded in
the profit or loss for the current period.The Company presents these financial assets under the items of financial assets held for trading and other
non-current financial assets based on their liquidity.
2．Classification Recognition and Measurement of Financial Liabilities
At the time of initial recognition the Company classifies the financial instruments or its components as
financial liabilities or equity instruments based on the contractual terms of the financial instruments and their
underlying economic substance rather than solely on legal form taking into consideration the definitions of
financial instruments and equity instruments. At the time of initial recognition financial liabilities are classified
as: Financial assets measured at fair value with changes in fair value recorded in the profit or loss for the current
period other financial assets and derivative instruments designated as effective hedging instruments.At the time of initial recognition financial liabilities are measured at fair value. For financial liabilities
measured at fair value with changes in fair value recorded in the profit or loss for the current period related
transaction costs are directly recorded in the profit or loss for the current period while for other types of
financial liabilities related transaction costs are recognized in the initially recognized amount.
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Subsequent measurement of financial liabilities depends on their classification:
(1) Financial liabilities measured at fair value with changes in fair value recorded in the profit or loss for
the current period:
Such financial liabilities include financial liabilities held for trading (including derivative instruments
falling under financial liabilities) and financial liabilities designated as being measured at fair value with
changes in fair value recorded in the profit or loss for the current period.Financial liabilities are classified as financial liabilities held for trading if they meet any of the following
conditions: The primary purpose of holding the relevant financial liabilities is for sale or repurchase in the near
term; the relevant financial liabilities are part of identifiable financial instrument portfolio under centralized
management and there is objective evidence that the enterprise adopts a short-term profit-taking mode in the
near term; the relevant financial liabilities fall under derivative instruments except those specifically
designated and effective as hedging instruments and meeting the requirements specified in the financial
guarantee contracts. Financial liabilities held for trading (including derivative instruments falling under
financial liabilities) are measured at fair value in the subsequent periods and all changes in fair value except
for those associated with hedge accounting are recorded in the profit or loss for the current period.At the time of initial recognition for the purpose of providing more pertinent accounting information the
Company irrevocably designates financial liabilities meeting any of the following conditions as financial
liabilities measured at fair value with changes in fair value recorded in the profit or loss for the current period:
1) Being able to eliminate or significantly reduce accounting mismatches.
2) Manage and assess portfolios of financial liabilities or portfolios of financial assets and liabilities based
on fair value and in accordance with the enterprise risk management or investment policies specified in the
formal written documentation and report to key management personnel within the Company based on the
management and assessment outcomes.The Company subsequently measures such financial liabilities at fair value. All changes in fair value
excluding those resulting from fluctuations in the Company’s own credit risk and recorded in other
comprehensive income are recorded in the profit or loss for the current period. Unless recording changes in
fair value resulting fluctuations in the Company's own credit risk in other comprehensive income would result
in or exacerbate accounting mismatches in the profit or loss the Company will record all changes in fair value
(including the amount affected by changes in its own credit risk) into the profit or loss for the current period.
(2) Other financial liabilities
The Company classifies financial liabilities excluding those listed below as being measured at amortized
cost subsequently measures them at amortized cost using the effective rate method and record the gains or
losses arising from derecognition or amortization into the profit or loss for the current period:
1) Financial liabilities measured at fair value with changes in fair value recorded in the profit or loss for
the current period.
2) Financial liabilities arising from the financial asset transfer that does not meet the conditions for
derecognition or the continued involvement in the transferred financial assets.
3) Financial guarantee contracts not falling under the first two scenarios outlined in this article and loan
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commitments made at interest rates below market rates and not falling within scenario 1) in this article.Financial guarantee contracts refer to contracts where the issuer is obligated to compensate the contract
holder for a specified amount if a specific debtor is unable to pay its debt in accordance with the original or
modified debt instrument terms when due. Financial guarantee contracts not designated as financial liabilities
measured at fair value with changes in fair value recorded in the profit or loss for the current period are
measured at the loss reserve amount or the initially recognized amount less the cumulative amortization amount
within the guarantee period whichever is higher after the initial recognition.
3．Derecognition of Financial Assets and Financial Liabilities
(1)Financial assets are derecognized and written-off from the accounts and the balance sheet when one
of the following conditions is met:
1) The contractual right to receive cash flows from a financial asset are terminated.
2)The financial asset has been transferred and the transfer meets the criteria for derecognition of financial
assets.
(2) Conditions for derecognition of financial liabilities
If the present obligation of a financial liability (or part thereof) has been discharged the financial liability
(or part thereof) should be derecognized.If the Company enters into an agreement with the lender to replace the original financial liability with a
new one and the terms of the new financial liability are substantially different from those of the original or
substantial modifications are made to the terms of the original financial liability (or part thereof) the original
financial liability should be derecognized and simultaneously a new financial liability should be recognized.The difference between the book value and the consideration paid (including non-cash assets transferred out
or liabilities assumed) should be recorded in the profit or loss for the current period.When the Company repurchases a portion of its financial liabilities it should allocate the overall book
value of the financial liability based on the proportions of the portion requiring continued recognition and the
portion requiring derecognition in the overall fair value on the acquisition date. The difference between the
book value allocated to the portion requiring derecognition and the consideration paid (including non-cash
assets transferred out or liabilities assumed) should be recorded in the profit or loss for the current period.
4. Recognition Basis and Measurement Method for Transfer of Financial Assets
When the Company transfers financial assets it assesses the level of risks and rewards retained in the
ownership of the financial assets and deals with the following situations separately:
(1) If the Company transfers almost all risks and rewards related to the ownership of the financial assets
it should derecognize the financial assets and separately recognize the rights and obligations arising from the
transfer or retention as assets or liabilities.
(2) If the Company retains almost all risks and rewards related to the ownership of the financial assets it
should continue to recognize the financial assets.
(3) If the Company neither transfers nor retains almost all risks and rewards related to the ownership of
the financial assets (i.e. in situations other than those specified in (1) and (2) above) it deals with the following
situations separately based on whether it retains control of the financial assets:
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1) If the Company does not retain control over the financial assets it should derecognize the financial
assets and separately recognize the rights and obligations arising from the transfer or retention as assets or
liabilities.
2) If the Company retains control over the financial assets it should continue to recognize the relevant
financial assets based on the extent of its continued involvement in the transferred financial assets and
correspondingly recognize the relevant financial liabilities. The extent of continued involvement in the
transferred financial assets refers to the extent to which the Company bears the risks or rewards related to the
transferred financial assets.When determining whether the conditions for derecognition of financial assets are met the Company
applies the principle of substance over form. The Company distinguishes the transfer of financial assets as
either complete or partial transfer.
(1) When the complete transfer of financial assets meets the conditions for derecognition the difference
between the following two amounts should be recorded in the profit or loss for the current period:
1) The book value of the transferred financial assets on the derecognition date.
2) The consideration received for the transfer of financial assets plus the cumulative fair value changes
previously recognized in other comprehensive income that correspond to the derecognized portion (financial
assets involving transfer are measured at fair value with changes recognized in other comprehensive income).
(2) When a portion of financial assets is transferred and the transferred portion meets the conditions for
derecognition as a whole the book value of the financial assets as a whole before the transfer is apportioned
between the derecognized portion and the continuously recognized portion (in this case any servicing assets
retained should be treated as part of the continuously recognized financial assets) based on their relative fair
values on the transfer date. The difference between the following two amounts is recorded in the profit or loss
for the current period:
1) The book value of the derecognzied portion on the derecognition date.
2) The consideration received for the derecognized portion plus the cumulative fair value changes
previously recognized in other comprehensive income that correspond to the derecognized portion (financial
assets involving transfer are measured at fair value with changes recognized in other comprehensive income).When the transfer of financial assets does not meet the conditions for derecognition the Company
continues to recognize the financial assets and recognizes the consideration received as a financial liability.
5.Determination Method for Fair Value of Financial Assets and Financial Liabilities
For financial assets or financial liabilities with support by active markets their fair values are determined
based on quoted prices in those markets unless there are lock-up periods specific to them. For financial assets
with specific lock-up periods their fair values are determined by deducting the amount of compensation
demanded by market participants for bearing the risk of being unable to sell the financial assets in the public
market during the specified period from the quoted prices in active markets. Quoted prices in active markets
include those that are easily and regularly obtainable from exchanges dealers brokers industry groups pricing
agencies or regulatory authorities and represent market transactions that actually and frequently occur on a
fair trading basis.
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For financial assets initially acquired or derived or financial liabilities assumed their fair values should
be determined based on the trading prices in the market.For financial assets or liabilities without support by active markets their fair values are determined using
valuation techniques. During valuation the Company employs valuation techniques that are applicable under
current circumstances and supported by sufficient available data and other information selects input values
consistent with the characteristics of assets or liabilities that market participants would consider in transactions
involving such assets or liabilities and prioritizes the use of relevant observable input values whenever possible.When it's not feasible or practical to obtain relevant observable input values unobservable input values are
utilized instead.
6.Impairment of Financial Instruments
The Company accounts for impairment and recognizes provision for losses based on the expected credit
losses for financial assets measured at amortized cost financial assets classified as being measured at fair value
with changes in fair value recognized in other comprehensive income lease receivables contract assets loan
commitments not falling under financial liabilities measured at fair value with changes in fair value recorded
in the profit or loss for the current period and financial liabilities not measured at fair value with changes in
fair value recorded in the profit or loss for the current period and financial guarantee contracts for financial
liabilities arising from the transfer of financial assets that do not meet the derecognition criteria or the continued
involvement in the transferred financial assets.Expected credit losses refer to the weighted average of credit losses on financial instruments weighted by
the risk of default. Credit losses represent the difference between all contractual cash flows discounted by the
Company at the original effective interest rate and receivable by the Company according to the contract and
all cash flows expected to be received by the Company namely the present value of all cash shortfalls. For
financial assets purchased or originated by the Company with incurred credit impairment impairment is
discounted at the effective interest rate adjusted for credit of such financial assets.The Company measures the provision for losses on all contract assets notes receivable and accounts
receivable derived from transactions subject to revenue standards as well as lease receivables/financing lease
receivables/operating lease receivables derived from transactions subject to lease standards at an amount equal
to the expected credit losses over the entire remaining term.For financial assets purchased or originated with incurred credit impairment only the cumulative changes
in expected credit losses over the entire remaining term since initial recognition are recognized as the provision
for losses on the balance sheet date. On each balance sheet date the changes in expected credit losses over the
entire remaining term are recognized as impairment losses or gains to be recorded in the profit or loss for the
current period. Even if the expected credit losses over the entire remaining term determined on the balance
sheet date are lower than the expected credit losses reflected by the estimated cash flows at the time of initial
recognition the favorable changes in expected credit losses are also recognized as impairment gains.Except for the aforementioned financial assets measured using simplified measurement methods and
purchased or originated financial assets with incurred credit impairment the Company assesses the credit risk
of relevant financial instruments on each balance sheet date to determine whether it has significantly increased
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since initial recognition and measures the provision for losses and recognizes expected credit losses and their
changes according to the following circumstances:
(1) If the credit risk of the financial instrument has not significantly increased since initial recognition and
is in Stage 1 the provision for losses should be measured at an amount equal to the expected credit losses
within the next 12 months for the financial instrument and interest income should be calculated based on the
book balance and the effective interest rate.
(2) If the credit risk of the financial instrument has significantly increased since initial recognition but has
not incurred credit impairment it is in Stage 2. The provision for losses should be measured at an amount equal
to the expected credit losses over the entire remaining term for the financial instrument and interest income
should be calculated based on the book balance and the effective interest rate.
(3) If the financial instrument has incurred credit impairment since initial recognition it is in Stage 3. The
Company should measure the provision for losses at an amount equal to the expected credit losses over the
entire remaining term for the financial instrument and calculate interest income based on the amortized cost
and the effective interest rate.The increased or reversed amount of the provision for credit losses of financial instruments is recognized
as impairment losses or gains to be recorded in the profit or loss for the current period. For financial assets
excluding those classified as being measured at fair value with changes in fair value recorded in other
comprehensive income the provision for credit losses should be used to offset their book balance. For financial
assets classified as being measured at fair value with changes recorded in other comprehensive income the
Company recognizes their provision for credit losses in other comprehensive income without reducing their
book value presented in the balance sheet.In cases where the Company had measured the provision for losses at an amount equivalent to the
expected credit losses over the entire remaining term of a financial instrument during the previous accounting
period but as of the current balance sheet date the financial instrument no longer qualifies under the condition
of a significant increase in credit risk since initial recognition the Company should measure the provision for
losses of the financial instrument on the current balance sheet date at an amount equivalent to the expected
credit losses within the next 12 months with the reversed amount of impairment losses arising therefrom as
impairment gains to be recorded in the profit or loss for the current period.
(1) Significant increase in credit risk
The Company utilizes reasonable and substantiated forward-looking information to assess whether the
credit risk of financial instruments has significantly increased since initial recognition by comparing the risk
of default occurring on the balance sheet date with that on the initial recognition date. For financial guarantee
contracts the Company considers the date on which it becomes the party who makes irrevocable commitment
as the initial recognition date when applying the impairment provisions for financial instruments.The Company will consider the following factors in assessing whether the credit risk has significantly
increased:
1) Whether there has been a significant change in the operating performance of the debtor actual or
expected;
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2) Whether there has been a significant adverse change in the regulatory economic or technological
environment in which the debtor operates;
3) Whether there has been a significant change in the value of collateral serving as debt security or in the
quality of guarantees or credit enhancements provided by a third party which is expected to reduce the
economic incentives for the debtor to repay as per the contractual terms or affect the probability of default;
4) Whether there has been a significant change in the expected performance and repayment behavior of
the debtor;
5) Whether there have been any changes in the Company's credit management methods for financial
instruments.If as of the balance sheet date the Company determines that a financial instrument exhibits only low
credit risk it assumes that the credit risk of the financial instrument has not significantly increased since initial
recognition. If the financial instrument carries low default risk the borrower demonstrates a strong ability to
meet its contractual cash flow obligations in the short term and even if there are adverse changes in the
economic and operating environment over an extended period it does not necessarily impair the borrower's
ability to fulfill its contractual cash flow obligations then the financial instrument is considered to carry low
credit risk.
(2) Financial assets with credit impairment
A financial asset is deemed to have become credit impaired in the occurrence of one or more events that
are expected to have an adverse impact on its future cash flows. Evidences for credit impairment of financial
assets include the following observable information:
1) Significant financial difficulties experienced by the issuer or debtor;
2) Breach of contract by the debtor such as default or delay in payment of interest or principal etc.;
3) Concessions granted by the creditor to the debtor for economic or contractual reasons related to the
debtor's financial difficulties which would not otherwise be made under any other circumstances;
4) The debtor is likely to go bankrupt or undergo other financial restructuring;
5) Financial difficulties experienced by the issuer or debtor result in the disappearance of an active market
for the financial asset;
6) Purchasing or originating a financial asset at a significant discount which reflects the occurrence of
credit losses.Credit impairment of financial assets may result from the combined effect of multiple events and may not
necessarily be attributable to individually identifiable events.
(3) Determination of expected credit losses
The Company determines expected credit losses on financial instruments based on individual and
collective assessments. When assessing expected credit losses the Company should consider reasonable and
substantiated information regarding past events current conditions and forecasts of future economic
conditions.The Company classifies financial instruments into different portfolios based on their common credit risk
characteristics. Common credit risk characteristics used by the Company include: types of financial
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instruments aging categories etc. The individual assessment criteria for and collective credit risk
characteristics of relevant financial instruments are detailed in the accounting policies for those financial
instruments.The Company determines expected credit losses on relevant financial instruments as follows:
1) For financial assets credit losses represent the present value of the difference between the contractual
cash flows receivable by the Company and the cash flows expected to be received.
2) For lease receivables credit losses represent the present value of the difference between the contractual
cash flows receivable by the Company and the cash flows expected to be received.
3) For financial guarantee contracts credit losses represent the present value of the estimated payments
that the Company would make to compensate the contract holder for the credit losses incurred minus the
amounts expected to be received from the contract holder the debtor or any other party.
4) For financial assets that have become credit impaired as of the balance sheet date but were not credit
impaired at initial recognition or originated as credit impaired credit losses represent the difference between
the book value of the financial asset and the present value of estimated future cash flows discounted at the
original effective interest rate.The factors reflected in the Company's method for measuring expected credit losses on financial
instruments include: unbiased probability-weighted average amounts determined by evaluating a range of
possible outcomes; the time value of money; reasonable and substantiated information regarding past events
current conditions and forecasts of future economic conditions that are available on the balance sheet date
without incurring undue cost or effort.
(4) Write-down of financial assets
When the Company no longer reasonably expects to recover all or part of the contractual cash flows of a
financial asset the book balance of that financial asset should be written down directly. Such write-down
constitutes the derecognition of the related financial asset.
7.Offsetting Financial Assets and Financial
Financial assets and financial liabilities are separately presented in the balance sheet without offsetting.However the net amount after offsetting is presented in the balance sheet if all of the following conditions are
met:
(1) The Company holds a legal right to offset recognized amounts and such right is currently enforceable;
(2) The Company intends to settle on a net basis or to realize the financial asset and settle the financial
liability simultaneously.
12. Notes Receivable
?Applicable □ Not Applicable
Methods for Determination and Accounting Treatment of Expected Credit Losses on Notes Receivable
?Applicable □ Not Applicable
For the Company’s methods for determination and accounting treatment of expected credit losses on notes
receivable please refer to paragraph (11) 6 - Impairment of Financial Instruments in Section V - Significant
Accounting Policies and Estimates
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Portfolio Categories and Determination Basis for Provision for Bad Debts based on Credit Risk
Characteristics
?Applicable □ Not Applicable
When there is insufficient evidence to assess expected credit losses at the individual instrument level at a
reasonable cost the Company refers to historical credit loss experience taking into consideration current
conditions and judgments about future economic conditions to classify notes receivable into several portfolios
based on credit risk characteristics and then calculate expected credit losses based on a portfolio basis. The
basis for determining the portfolios is as follows:
Portfolio Name Basis for Determining Portfolios Provision Method
Refer to historical credit loss experience and
The issuer exhibits a high credit rating no history of take into consideration current conditions and
Bank
default on bills a very low credit loss risk and a forecasts of future economic conditions to
Acceptance Bill
strong ability to fulfill its cash flow obligations under calculate expected credit losses through default
Portfolio 1
payment contracts. risk exposure and the expected credit loss rate
over the entire duration.Refer to historical credit loss experience and
take into consideration current conditions and
Bank
Acceptors other than those in Bank Acceptance Bill forecasts of future economic conditions to
Acceptance Bill
Portfolio 1 are bank-type financial institutions. calculate expected credit losses through default
Portfolio 2
risk exposure and the expected credit loss rate
over the entire duration.Refer to historical credit loss experience and
take into consideration current conditions and
Commercial forecasts of future economic conditions to
Acceptors are financial companies or non-bank
Acceptance Bill prepare a table comparing the aging of accounts
financial institutions or corporate units.Portfolio receivable with the expected credit loss rate over
the entire duration (similar to accounts
receivable) to calculate expected credit losses.Aging Calculation Method for Determining Portfolios of Credit Risk Characteristics Based on Aging
Analysis
?Applicable □ Not Applicable
Refer to historical credit loss experience and take into consideration current conditions and forecasts of
future economic conditions to prepare a table comparing the aging of accounts receivable with the expected
credit loss rate over the entire duration (similar to accounts receivable) to calculate expected credit losses.Criteria for Individual Provision for Bad Debts at the Individual Level
?Applicable □ Not Applicable
For notes receivable with significantly different credit risks and portfolio credit risks the Company
provisions for expected credit losses on an individual-item basis. The Company separately determines the
credit losses on notes receivable where there is sufficient evidence to assess expected credit losses at the
individual instrument level at a reasonable cost.
13 Accounts Receivable
?Applicable □ Not Applicable
143 / 282Annu al Report 2023
Methods for Determination and Accounting Treatment of Expected Credit Losses on Accounts
Receivable
?Applicable □ Not Applicable
For the Company’s methods for determination and accounting treatment of expected credit losses on
accounts receivable please refer to paragraph (11) 6 - Impairment of Financial Instruments in Section V -
Significant Accounting Policies and Estimates.Portfolio Categories and Determination Basis for Provision for Bad Debts based on Credit Risk
Characteristics
?Applicable □ Not Applicable
When there is insufficient evidence to assess expected credit losses at the individual instrument level at a
reasonable cost the Company refers to historical credit loss experience taking into consideration current
conditions and judgments about future economic conditions to classify accounts receivable into several
categories based on credit risk characteristics and then calculate expected credit losses on a portfolio basis. The
basis for determining the categories is as follows:
Portfolio Name Basis for Determining Portfolios Provision Method
Refer to historical credit loss experience
Aging Analysis This portfolio utilizes the aging of receivables as a credit and take into consideration current
Portfolio risk characteristic. conditions and forecasts of future economic conditions to measure the
provision for bad debts.Refer to historical credit loss experience
Related Party
Portfolio within the This portfolio utilizes the related party portfolio within
and take into consideration current
the consolidation scope as a credit risk characteristic. conditions and forecasts of future Consolidation Scope economic conditions to measure the
provision for bad debts.Aging Calculation Method for Determining Portfolios of Credit Risk Characteristics Based on Aging
Analysis
?Applicable □ Not Applicable
Below is the table for the comparison between aging and expected credit loss rates of aging portfolios:
Aging Expected Credit Loss Rates of Accounts Receivable (%)
Within 1 year 5
1－2 years 10
2－3 years 30
3－4 years 50
4－5 years 80
Over 5 years 100
The aging of accounts receivable is calculated on a first-in first-out basis.Criteria for Identifying Individual Provisions for Bad Debts on an Individual-item Basis
?Applicable □ Not Applicable
For accounts receivable with significantly different credit risks and portfolio credit risks the Company
provisions for expected credit losses on an individual-item basis. The Company separately determines the
credit losses on accounts receivable where there is sufficient evidence to assess expected credit losses at the
individual instrument level at a reasonable cost.
144 / 282Annu al Report 2023
14. Receivables Financing
?Applicable □ Not Applicable
Methods for Determination and Accounting Treatment of Expected Credit Losses on Receivables
Financing
?Applicable □ Not Applicable
Notes receivable and accounts receivable measured at fair value with changes recorded in other
comprehensive income are presented as Receivables Financing if their maturity is within one year (including
one year) from the initial recognition date; and presented as other debt investment if their maturity is over one
year from the initial recognition date. Please refer to Section V (11) for applicable accounting policies.For the Company’s methods for determination and accounting treatment of expected credit losses on
Receivables Financing please refer to paragraph (11) 6 - Impairment of Financial Instruments in Section V -
Significant Accounting Policies and Estimates.Portfolio Categories and Determination Basis for Provision for Bad Debts based on Credit Risk
Characteristics
?Applicable □ Not Applicable
When there is insufficient evidence to assess expected credit losses at the individual instrument level at a
reasonable cost the Company refers to historical credit loss experience taking into consideration current
conditions and judgments of future economic conditions to classify Receivables Financing into several
portfolios based on credit risk characteristics and calculate expected credit losses on a portfolio basis. The basis
for determining portfolios is as follows:
Portfolio Name Basis for Determining Portfolios Provision Method
The Company uses aging to assess the expected credit losses of this
type of portfolio. This portfolio carries similar risk characteristics
This portfolio utilizes the and aging information can reflect the ability of this portfolio to pay
Accounts aging of Receivables when accounts receivable mature. As of the balance sheet date the
Receivable Financing as a credit risk Company refers to historical credit loss experience and takes into
characteristic current conditions and forecasts of future economic conditions to a table comparing the aging of accounts receivable with the expected
credit loss rate over the entire duration (similar to accounts
receivable) to calculate expected credit losses.This portfolio consists of
notes issued by entities with
high credit ratings with no
history of note defaults and Refer to historical credit loss experience and take into consideration Notes very low credit loss risks and current conditions and forecasts of future economic conditions to Receivable with strong ability to fulfill calculate expected credit losses through default risk exposure and
their cash flow obligations the expected credit loss rate over the entire duration.under payment contracts in
the short term
Aging Calculation Method for Determining Portfolios of Credit Risk Characteristics Based on Aging
Analysis
?Applicable □ Not Applicable
Refer to historical credit loss experience and take into consideration current conditions and forecasts of
future economic conditions to prepare a table comparing the aging of accounts receivable with the expected
credit loss rate over the entire duration (similar to accounts receivable) to calculate expected credit losses.
145 / 282Annu al Report 2023
Criteria for Identifying Individual Provisions for Bad Debts on an Individual-item Basis
?Applicable □ Not Applicable
For Receivables Financing with significantly different credit risks and portfolio credit risks the Company
provisions for expected credit losses on an individual-item basis. The Company separately determines the
credit losses on Receivables Financing where there is sufficient evidence to assess expected credit losses at the
individual instrument level at a reasonable cost.
15. Other Receivables
?Applicable □ Not Applicable
Methods for Determination and Accounting Treatment of Expected Credit Losses on Other
Receivables
?Applicable □ Not Applicable
For the Company’s methods for determination and accounting treatment of expected credit losses on other
receivables please refer to paragraph (11) 6 - Impairment of Financial Instruments in Section V - Significant
Accounting Policies and Estimates.Portfolio Categories and Determination Basis for Provision for Bad Debts based on Credit Risk
Characteristics
?Applicable □ Not Applicable
When there is insufficient evidence to assess expected credit losses at the individual instrument level at a
reasonable cost the Company refers to historical credit loss experience taking into consideration current
conditions and judgments of future economic conditions to classify other receivables into several portfolios
based on credit risk characteristics and calculate expected credit losses on a portfolio basis. The basis for
determining portfolios is as follows:
Portfolio Name Basis for Determining Portfolios Provision Method
Provision is made according to the
Aging Portfolio Aging is used as the credit risk characteristic table for comparison between aging and expected credit loss rate (same as
accounts receivable)
Government
Accounts Government accounts receivable
Refer to historical credit loss
experience and take into
Portfolio of consideration current conditions and
Account Current forecasts of future economic
between Related conditions to calculate expected
Parties within Related parties within the consolidation scope of the Company credit losses through default risk
the exposure and the expected credit loss
Consolidation rate over the next 12 months or the
Scope entire duration.Aging Calculation Method for Determining Portfolios of Credit Risk Characteristics Based on Aging
Analysis
?Applicable □ Not Applicable
Refer to historical credit loss experience and take into consideration current conditions and forecasts of
future economic conditions to prepare a table comparing the aging of accounts receivable with the expected
credit loss rate over the entire duration (similar to accounts receivable) to calculate expected credit losses.Criteria for Identifying Individual Provisions for Bad Debts on an Individual-item Basis
?Applicable □ Not Applicable
146 / 282Annu al Report 2023
For other receivables with significantly different credit risks and portfolio credit risks the Company
provisions for expected credit losses on an individual-item basis. The Company separately determines the
credit losses on other receivables where there is sufficient evidence to assess expected credit losses at the
individual instrument level at a reasonable cost.
16. Inventory
?Applicable □ Not Applicable
Categories of Inventory Issuance Valuation Methods Inventory Counting Systems and Amortization
Methods for Low-value Consumables and Packaging
?Applicable □ Not Applicable
1．Classification of Inventory
Inventory refers to finished products or goods held by the Company for sale work in progress products
and materials and supplies consumed in the production process or service provision process. It mainly includes
raw materials work in progress products inventory goods and issued goods.
2．Valuation Method for Inventory
At the time of acquisition inventory is initially measured at cost including purchase cost processing cost
and other costs. The inventory is valued using the Monthly-end Weighted Average Method when it is issued.
3．Inventory Counting System
The perpetual inventory system is used for inventory counting.
4．Amortization Method for Low-value Consumables and Packaging
(1) Low-value consumables are amortized using the one-off write-off method;
(2) Packaging is amortized using the one-off write-off method;
(3) Other turnover materials are amortized using the one-off write-off method.
Recognition Criteria and Provision Method for Inventory Write down
?Applicable □ Not Applicable
Following a comprehensive inventory inspection at the end of the period inventory write-down are
provisioned or adjusted based on the lower of cost or net realizable value of the inventory. For good inventories
directly used for sale such as finished goods goods for resale and materials used for sale the net realizable
value is determined during normal production and operation by subtracting estimated selling expenses and
related taxes from the estimated selling price of the inventory. For material inventory requiring processing the
net realizable value is determined during normal production and operation by subtracting estimated costs at
completion estimated selling expenses and related taxes from the estimated selling price of the finished
products. For inventory held to fulfill sales contracts or service contracts the net realizable value is calculated
based on the contract price. If the quantity of inventory held exceeds the ordered quantity in the sales contract
the net realizable value of the excess inventory is calculated based on the general selling price.The provision for inventory write-down is made on an individual-item basis at the end of the period;
however for inventories with numerous quantities and low unit prices the provision for inventory write-down
is made according to inventory category. For inventories related to product series produced and sold in the
same region with similar or identical ultimate uses or purposes and difficult to measure separately from other
147 / 282Annu al Report 2023
items the provision for inventory write-down is consolidated.Once the factors affecting the write-down of inventory value have disappeared the amount of write-down
should be restored and reversed within the originally provided inventory write-down amount with the reversed
amount recorded in the profit or loss for the current period.Portfolio Categories and Determination Basis for the Provision for Inventory Write-Down on a
Portfolio Basis and Determination Basis for Net Realizable Values of Different Categories of
Inventories
□Applicable ?Not Applicable
Calculation Method and Determination Basis for Net Realizable Values of Various Inventory Age
Portfolios Based on Inventory Age
□Applicable ?Not Applicable
17. Contract Assets
?Applicable □ Not Applicable
Method and Criteria for Recognizing Contract Assets
?Applicable □ Not Applicable
The Company has the right to receive consideration from customers for goods transferred to them and
recognizes the rights depending on factors beyond the passage of time as contract assets. The Company
separately presents the unconditional (i.e. solely dependent on the passage of time) right to receive
consideration from customers as accounts receivable.Methods for Determination and Accounting Treatment of Expected Credit Losses on Contract Assets
?Applicable □ Not Applicable
For the Company’s methods for determination and accounting treatment of expected credit loses on
contract assets please refer to paragraph (11) 6 - Impairment of Financial Instruments in Section V - Significant
Accounting Policies and Estimates.Portfolio Categories and Determination Basis for Provision for Bad Debts based on Credit Risk
Characteristics
□Applicable ?Not Applicable
Aging Calculation Method for Determining Portfolios of Credit Risk Characteristics Based on Aging
Analysis
□Applicable ?Not Applicable
Criteria for Identifying Individual Provisions for Bad Debts on an Individual-item Basis
□Applicable ?Not Applicable
18. Non-current Asset or Disposal Portfolio Held for Sale
□Applicable ?Not Applicable
Recognition Criteria and Accounting Treatment Method for Non-current Assets or Disposal Portfolios
Held for Sale
?Applicable □ Not Applicable
1．Recognition Criteria for Classification as Held for Sale
Non-current assets or disposal portfolios meeting both of the following conditions are recognized as held
for sale:
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(1) According to the usual practice in similar transactions the assets or disposal portfolios can be sold
immediately under current conditions;
(2) The sale is highly probable meaning that the Company has made a decision on a sale plan and obtained
a firm commitment to purchase with the sale expected to be completed within one year.A firm commitment to purchase refers to a legally binding purchase agreement between the Company and
another party which contains significant terms such as the transaction price time and sufficiently severe
penalties for breach minimizing the possibility of significant adjustments or cancellations.
2．Accounting Treatment Method for Classification as Held for Sale
Depreciation or amortization is not provided for non-current assets or disposal portfolios held for sale. If
their book value exceeds the net amount of fair value less selling expenses the book value should be written
down to the net amount of fair value less selling expenses and the written-down amount should be recognized
as impairment loss on assets and recorded in the profit or loss for the current period with the provisions for
impairment of assets held for sale.For non-current assets or disposal portfolios classified as held for sale at the acquisition date the lower
of the initially measured amount if they are not classified as held for sale and the net amount of fair value less
selling expenses should be compared at the initial measurement.The above principles apply to all non-current assets excluding investment properties measured using the
fair value model biological assets measured at net amount of fair value less selling expenses assets arising
from employee compensation deferred income tax assets financial assets regulated by financial instrument-
related accounting standards and rights arising from insurance contracts regulated by insurance contract-
related accounting standards.Recognition Criteria and Presentation Method for Business Termination
□Applicable ?Not Applicable
19. Long-term Equity Investments
?Applicable □ Not Applicable
1．Determination of Initial Investment Cost
(1) For specific accounting policies for long-term equity investments resulting from enterprise merger
please refer to (6) - Accounting Treatment Method for Enterprise Merger under the Same Control and not under
the Same Control in Section V - Significant Accounting Policies and Estimates.
(2) Long-term equity investments acquired through other means
For long-term equity investments acquired via cash payment the initial investment cost is the actually
paid purchase price. It encompasses expenses directly associated with the acquisition of the long-term equity
investments as well as taxes and other necessary expenditures.For long-term equity investments acquired through the issuance of equity securities the initial investment
cost is the fair value of the equity securities issued. Transaction costs incurred in the issuance or acquisition of
equity instruments can be directly attributed to equity transactions and deducted from equity.In non-monetary asset exchanges where there exists commercial substance and the fair value of the assets
received or given up can be reliably measured the initial investment cost of long-term equity investments
149 / 282Annu al Report 2023
received in exchange for non-monetary assets is determined based on the fair value of the assets given up
unless there is conclusive evidence that the fair value of the assets received is more reliable. For non-monetary
asset exchanges that do not meet the above conditions the initial investment cost of the long-term equity
investment received is determined based on the book value of the assets given up and the relevant taxes payable.For long-term equity investments acquired through debt restructuring their initial investment cost is
determined based on their fair value.
2．Subsequent Measurement and Profit/Loss Recognition
(1) Cost Method
The Company may adopt the cost method to account for long-term equity investments in the invested
units over which it exercises control value them based on their initial investment cost and add or withdraw
investment to adjust the cost of long-term equity investments.In addition to the the cash dividends or profits declared but not yet distributed included in the price or
consideration actually paid at the acquisition of investment the Company recognizes the cash dividends or
profits as declared by the the invested units as current investment income.
(2) Equity Method
The Company adopts the equity method to account for long-term equity investments in associates and
joint ventures. Equity investments in associates with a portion indirectly held through venture capital
institutions mutual funds trust companies or similar entities including investment-linked insurance funds
should be measured at fair value with changes therein recorded in profit or loss.If the initial investment cost of a long-term equity investment exceeds the difference between the
Company's share of the fair value of identifiable net assets of the invested unit at the time of investment no
adjustment is made to the initial investment cost of the long-term equity investment. If the initial investment
cost is less than the difference mentioned above it is recorded in the profit or loss for the current period.After acquiring a long-term equity investment the Company separately recognizes investment income
and other comprehensive income based on its share of the net profit and other comprehensive income realized
by the invested unit and adjusts the book value of the long-term equity investment. The Company also reduces
the book value of long-term equity investment correspondingly based on its share of the profits or cash
dividends declared by the invested unit. In case of any other changes in the owners’ equity excluding net profit
other comprehensive income and profit distribution of the invested unit adjustments should be made to the
book value of the long-term equity investment and recorded in the owners’ equity.When recognizing its share of the net profit or loss in the invested unit the Company adjusts and then
recognizes the net profits of the invested unit based on the fair value of various identifiable assets of the
invested unit at the time of investment. The profit or loss from unrealized internal transactions between the
Company and associates or joint ventures are offset based on the Company's proportionate share and
investment income is recognized thereafter.When recognizing the invested unit’s losses to be borne by it the Company take the following steps: (1)
Offset the book value of long-term equity investments; (2) Continue to recognize investment losses at an
amount limited to the book value of the long-term equity that materially represents the net investment in the
150 / 282Annu al Report 2023
invested unit and offset the book value of long-term receivables etc. if the book value of the long-term
investments are insufficient to offset. (3) After the above treatments if the Company still bears additional
obligations according to the investment contract or agreement it should recognize the estimated liabilities
according to the estimated obligations and record them in the investment loss for the current period.If the invested unit realizes profits in subsequent periods the Company after deducting the unrecognized
loss-sharing amount proceeds to the aforementioned steps in reverse order: Write down the book balance of
recognized estimated liabilities restore the book value of long-term equity and long-term equity investment
that materially represent investment in the invested unit and then restore and recognize investment income.
3. Conversion of Accounting Method for Long-term Equity Investments
(1) Conversion from Fair Value Measurement to Equity Method for Accounting
For equity investments held by the Company without control joint control or significant influence over
the invested unit recognized using financial instruments and accounted for using measurement standards
which due to additional investments or other reasons are able to exert significant influence over the invested
unit or exercise joint control without constituting control the initial investment cost for equity investments
accounted for by the equity method is determined by adding the fair value of the originally held equity
investments determined in accordance with the Accounting Standards for Business Enterprises No. 22 -
Recognition and Measurement of Financial Instruments to the additional investment cost.If the initial investment cost accounted for by the equity method is less than the difference between the
newly calculated shares of fair value of identifiable net assets of the invested unit on the date of additional
investment adjustments are made to the book value of long-term equity investments and recorded in the non-
operating income for the current period.
(2) Measurement at Fair Value or Conversion of Equity Method to Cost Method for Accounting
For equity investments previously held by the Company without control joint control or significant
influence over the invested unit recognized using financial instruments and accounted for using measurement
standards or for long-term equity investments previously held in associates or joint ventures which due to
additional investments or other reasons are able to exercise control over invested unit not under the same
control the sum of the book value of equity investments previously held and the cost of additional investments
is treated as the initial investment cost accounted for by the cost method in the preparation of individual
financial statements.Any other comprehensive income recognized in equity investments held prior to the acquisition date and
accounted for using the equity method should be accounted for using the same basis as the invested unit's direct
disposal of related assets or liabilities when disposing of the investment.For equity investments held prior to the acquisition date and accounted for in accordance with the relevant
provisions specified in the Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments cumulative fair value changes previously recorded in other
comprehensive income are transferred to the profit or loss for the current period when converted to the cost
method.
(3) Conversion of Equity Method Accounting to Fair Value Measurement
151 / 282Annu al Report 2023
If the Company loses joint control or significant influence over an invested unit due to the disposal of part
of its equity investments or other reasons the remaining equity after disposal is accounted for in accordance
with the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial
Instruments. The difference between the fair value and the book value on the day of losing joint control or
significant influence is recorded in the profit or loss for the current period.Any other comprehensive income recognized and accounting for by equity method for original equity
investments should be accounted for using the same basis as the invested unit's direct disposal of related assets
or liabilities when terminating the adoption of the equity method for accounting.
(4) Conversion of Cost Method to Equity Method
If the Company loses control over an invested unit due to the disposal of part of its equity investments or
other reasons and the remaining equity after disposal is able to exercise joint control or exert significant
influence over the invested unit the remaining equity should be accounted for using the equity method and
should be adjusted as if it had been accounted for using the equity method from the acquisition date.
(5) Conversion of Cost Method to Fair Value Measurement
If the Company loses control over an invested unit due to the disposal of part of its equity investments or
other reasons and the remaining equity after disposal cannot exercise joint control or exert significant influence
over the invested unit the remaining equity should be accounted for in accordance with the relevant provisions
specified in the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of
Financial Instruments. The difference between the fair value and the book value on the day of losing control
is recorded in the profit or loss for the current period.
4. Disposal of Long-term Equity Investments
The difference between the book value and the actually received price for the disposal of long-term equity
investments should be recorded in the profit or loss for the current period. For long-term equity investments
accounted for using the equity method the same basis as the invested unit's direct disposal of related assets or
liabilities should be used when the investment is disposed of and the portion originally recorded in other
comprehensive income should be accounted for proportionally.When the terms conditions and economic impact of transactions involving the disposal of equity
investments in subsidiaries meet one or more of the following circumstances multiple transaction matters
should be accounted for as a package deal:
(1) These transactions are concluded simultaneously or taking into account their mutual impacts;
(2) These transactions collectively achieve a complete business outcome;
(3) The occurrence of one transaction depends on the occurrence of at least one other transaction;
(4) A transaction is uneconomical when considered alone but becomes economical when considered
together with other transactions.If the control over a subsidiary is lost due to the disposal of part of the equity investment or other reasons
and the transaction does not constitute a package deal individual financial statements and consolidated
financial statements should be distinguished and relevant accounting treatment should be applied:
(1) In individual financial statements the difference between the book value and the actually received
152 / 282Annu al Report 2023
price for the disposed equity should be recorded in the profit or loss for the current period. If the remaining
equity after disposal can exercise joint control or exert significant influence over the invested unit it should be
accounted for using the equity method and should be adjusted as if it had been accounted for using the equity
method from the acquisition date; if the remaining equity after disposal cannot exercise joint control or exert
significant influence over the invested unit it should be accounted for in accordance with the relevant
provisions specified in the Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments and the difference between the fair value and the book value on the
day of losing control should be recorded in the profit or loss for the current period.
(2) In consolidated financial statements for transactions before the loss of control over a subsidiary the
difference between the disposal price and the corresponding share of net assets of the subsidiary calculated
continuously from the acquisition date or merger date should be offset by capital reserve (share premium). If
capital reserve is insufficient to offset the retained earnings should be adjusted. After losing control over a
subsidiary the remaining equity should be remeasured at fair value on the date of loss of control. The sum of
the price received for the disposal of equity and the fair value of the remaining equity minus the proportionate
share of net assets of the original subsidiary calculated from the acquisition date at the original ownership
proportion should be recorded in the investment income for the period of loss of control and offset by goodwill.Other comprehensive income related to the equity investments in the original subsidiary should be transferred
to current investment income upon loss of control.Transactions involving the disposal of equity investments in subsidiaries until control is lost which are
part of a package deal are accounted for as a single transaction for the disposal of equity investments in
subsidiaries and losing control over subsidiaries with separate accounting treatment for individual financial
statements and consolidated financial statements.
(1) In individual financial statements the difference between each disposal price and the book value of
the long-term equity investments corresponding to the disposed equity before the loss of control is recognized
as other comprehensive income and transferred to the profit or loss for the current period when control is lost.
(2) In consolidated financial statements the difference between each disposal value and the share of the
net assets of the subsidiary corresponding to the disposed investment is recognized as other comprehensive
income before the loss of control and transferred to the profit or loss for the current period when control is lost.
5. Judgement Criteria for Joint Control and Significant Influence
If the Company collectively controls an arrangement with other parties in accordance with relevant
agreements and decisions that significantly affect the returns from the arrangement require unanimous consent
of the parties sharing control it is considered that the Company jointly controls the arrangement with other
parties and the arrangement falls under the category of joint arrangements.If a joint arrangement is reached through a separate entity the Company treats the separate entity as a
joint venture and applies the equity method for accounting based on relevant agreements when determining its
right to the net assets of that separate entity. If it is determined based on relevant agreements that the Company
does not have the right to the net assets of that separate entity the separate entity is treated as a joint operation
and the Company recognizes items related to its interest in joint operations and accounts for them in accordance
153 / 282Annu al Report 2023
with relevant Accounting Standards for Business Enterprises.Significant influence refers to the power of the investing party to participate in the decision-making of the
financial and operating policies of the invested unit without control or jointly control with other parties over
the formulation of these policies. The Company determines significant influence on the invested unit based on
one or more of the following circumstances and takes into consideration all facts and circumstances: (1) Having
representatives to the board of directors or similar governing bodies of the invested unit; (2) Participating in
the process of formulating the financial and operating policies of the invested unit; (3) Engaging in significant
transactions with the invested unit; (4) Deploying management personnel to the invested unit; (5) Providing
critical technical information to the invested unit.
20. Investment Properties
Not Applicable
21. Fixed Assets
(1) Recognition Conditions
?Applicable □ Not Applicable
1．Recognition Conditions for Fixed Assets
Fixed assets refer to tangible assets held for the purpose of producing goods providing services renting
or managing operations and whose useful life exceeds one accounting year. Fixed assets are recognized when
both of the following conditions are met:
(1) Economic benefits related to the fixed assets are likely to flow into the enterprise;
(2) The cost of the fixed assets can be reliably measured.
2．Initial Measurement of Fixed Assets
Fixed assets of the company are initially measured based on cost.
(1) The cost of externally acquired fixed assets includes the purchase price import tariffs and other taxes
and fees related to the asset as well as other expenses directly attributable to the asset before it reaches
the intended usable state.
(2) The cost of self-constructed fixed assets consists of necessary expenses incurred before the asset
reaches the intended usable state.
(3) Fixed assets contributed by investors are booked the entry value agreed upon in the investment contract
or agreement but if the value agreed upon in the contract or agreement is not fair it is booked fair value.
(4) If the purchase price of fixed assets exceeds the normal credit terms with deferred payment and has a
substantive financing nature the cost of the fixed assets is determined based on the present value of the
purchase price. The difference between the actually paid price and the present value of the purchase price is
recorded in the current profit or loss during the credit period.
3．Subsequent Measurement and Disposal of Fixed Assets
(1) Depreciation of Fixed Assets
Depreciation of fixed assets is provided over their estimated useful lives after deducting the estimated residual
value from their entry value. For fixed assets for which impairment provisions have been made depreciation
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is is calculated in future periods based on the remaining book value and the estimated remaining useful life
after deducting the impairment provisions. Fixed assets that have been fully depreciated and are still in use are
not subject to further depreciation.For fixed assets arising from expenditure funded by special reserves the cost of these fixed assets is offset
against the special reserves and an equivalent amount of accumulated depreciation is recognized with no
depreciation being provided in subsequent periods.The Company determines the useful life and estimated residual value of fixed assets based on their nature and
usage. At the end of each year the useful life estimated residual value and depreciation method of fixed assets
are reviewed and adjustments are made if there are differences from the original estimates.
(2) Subsequent Expenditures on Fixed Assets
Subsequent expenditures related to fixed assets are recorded in the cost of fixed assets if they meet the
recognition conditions for fixed assets; or recorded in the profit or loss for the current period if they do not
meet the recognition conditions for fixed assets.
(3) Disposal of Fixed Assets
When fixed assets are disposed of or when it is expected that no economic benefits will arise from their
use or disposal such fixed assets are derecognized. The disposal proceeds from the sale transfer scrapping or
damage of fixed assets after the deduction of their book value and relevant taxes are recorded in the profit or
loss for the current period.
(2) Depreciation Method
?Applicable □ Not Applicable
Residual Value Annual Depreciation
Category Depreciation Method Depreciation Period
Rate (%) Rate (%)
Housing and Structures
Housing and
Straight-Line Method 20-40 years 5.00 2.375-9.50
Structures
Architectures 10-20 years
Machinery and
Straight-Line Method 5-20 years 5.00 4.75-19.00
Equipment
Transportation Tools Straight-Line Method 5 years 5.00 19.00
Office and Other
Straight-Line Method 5 years 5.00 19.00
Equipment
22. Construction in Progress
?Applicable □ Not Applicable
1．Initial Measurement of Construction in Progress
Construction in progress self-constructed by the Company is valued at actual cost which comprises
necessary expenses incurred until the asset reaches the intended usable state including cost of materials labor
relevant taxes paid borrowing costs to be capitalized and indirect costs to be allocated.
2．Criteria and Timing for Capitalization of Construction in Progress into Fixed Assets
All expenditures incurred before the intended usable state is achieved for construction in progress projects
are recognized as the entry value of fixed assets. When construction in progress has reached the intended usable
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state but final settlement has not been completed it is capitalized into fixed assets based on the estimated value
determined by project budget construction cost or actual project cost and depreciation is then provided based
on the Company's fixed asset depreciation policy. After the final settlement the estimated value is adjusted
according to the actual cost but previously provided depreciation is not adjusted.
23. Borrowing Costs
?Applicable □ Not Applicable
1．Recognition Principle for Capitalization of Borrowing Costs
Borrowing costs incurred by the Company that are directly attributable to the acquisition or construction
of qualifying assets for capitalization are capitalized and recorded in the cost of related assets; other borrowing
costs are recognized as expenses based on their amounts when incurred.Qualifying assets for capitalization refer to assets such as fixed assets investment properties and
inventories that require a substantial period of time for acquisition or construction activities to reach their
intended usable or saleable status.Borrowing costs are eligible for capitalization when all of the following conditions are met:
(1) Expenditure for the asset has been incurred including payments in cash the transfer of non-cash assets
or the assumption of interest-bearing liabilities for acquisition construction or production of qualifying assets
for capitalization;
(2) Borrowing costs have been incurred;
(3) The necessary acquisition construction or production activities to bring the asset to its intended usable
or saleable state have commenced.
2．Capitalization Period for Borrowing Costs
The capitalization period refers to the duration from the commencement of capitalizing borrowing costs
to the cessation of such capitalization excluding periods when capitalization of borrowing costs is suspended
Capitalization of borrowing costs halts when the qualifying assets for capitalization reaches the intended
usable or saleable status.When parts of a qualifying asset for capitalization are completed and can be used separately capitalization
of borrowing costs for those parts halts.For assets where parts are completed but cannot be used or sold until the entire asset is completed
capitalization of borrowing costs halts when the entire asset is completed.
3．Suspension Period for Capitalization
If there is an abnormal interruption during the acquisition construction or production of a qualifying asset
for capitalization and the interruption lasts continuously for more than three months capitalization of
borrowing costs is suspended. Capitalization will continue if the interruption is necessary for the asset to reach
its intended usable or saleable state. Borrowing costs incurred during the interruption period are recognized as
profit or loss for the current period and their capitalization will continue until the resumption of asset
acquisition construction or production activities.
4．Calculation Method for Capitalized Amount of Borrowing Costs
Interest costs on specific borrowings (net of interest income earned from the deposit of the borrowed
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funds not yet used or from temporary investments) and related auxiliary costs are capitalized until the
qualifying asset for capitalization under acquisition construction or production reaches its intended usable or
saleable state.The amount of interest from general borrowings to be capitalized is calculated by multiplying the
weighted average of accumulated expenditure on the asset over the specific borrowings by the capitalization
rate of the general borrowings. The capitalization rate is determined based on the weighted average interest
rate of general borrowings.If borrowing carries a discount or premium the amount of discount or premium to be amortized during
each accounting period is determined using the effective interest method with adjustments to the interest
amount for each period.
24. Biological Assets
□Applicable ?Not Applicable
25. Oil and Gas Assets
□Applicable ?Not Applicable
26. Intangible Assets
(1) useful life and Its Determination Basis Estimation Amortization Method or Review Procedures
?Applicable □ Not Applicable
Intangible assets refer to identifiable non-monetary assets without physical form controlled or owned by
the Company including land use rights software and licenses for patent usage.
1.Initial Measurement of Intangible Assets
The cost of externally acquired intangible assets includes the purchase price related taxes and other
expenses directly attributable to bringing the asset to its intended use. If the purchase price of intangible assets
exceeds the normal credit terms with deferred payment and has a substantive financing nature the cost of
intangible assets is determined based on the present value of the purchase price.When debt restructuring results in the acquisition of intangible assets used by the debtor to settle debt the
fair value of these intangible assets is used to determine their entry value. The difference between the book
value of the restructured debt and the fair value of the intangible assets used for settlement is recorded in the
profit or loss for the current period.For non-monetary asset exchanges where commercial substance exists and the fair value of the asset
received or given up can be reliably measured the entry value of the intangible assets received in exchange for
non-monetary assets is determined based on the fair value of the asset given up unless there is conclusive
evidence that the fair value of the asset received is more reliable. For non-monetary asset exchanges that do
not meet the above criteria the book value of the asset given up and any related taxes and fees payable are
treated as the cost of the intangible asset received with no profit or loss recognized.The entry value of intangible assets acquired through enterprise merger under the same control is
determined based on the book value of the merged party. The entry value of intangible assets acquired through
enterprise merger not under the same control is determined based on the fair value.
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The cost of internally developed intangible assets includes materials consumed labor costs registration
fees amortization of other patents and licenses used during development interest expenses for meeting the
capitalization conditions and other direct expenses incurred before the intangible asset reaches its intended
use.
2.Subsequent Measurement of Intangible Assets
The company analyzes and assesses the useful life of intangible assets at the time of acquisition and classifies
them as having either finite or indefinite useful lives.
(1) Intangible Assets with Finite Useful Lives
For intangible assets with finite useful lives straight-line amortization is applied over the period during
which the asset is expected to generate economic benefits. The estimated useful lives of such assets and their
basis are as follows:
Item Estimated Useful Life Basis
Land Use Rights 50 years Land Use Certificate
Contractual Agreements and Tax Law
Software 10 years
Provisions
Licenses for Patent Usage 4.75-8.25 years Benefit Period
At the end of each period the useful lives of and depreciation methods for intangible assets with finite
useful lives are reviewed and adjusted when necessary.
(2) Intangible Assets with Indefinite Useful Lives
Intangible assets for which the period of economic benefit cannot be reliably predicted are considered to
have indefinite useful lives.The Company does not have any intangible assets with indefinite useful lives.For impairment testing methods and impairment provision methods for intangible assets refer to (27) -
Impairment of Long-term Assets in Section V - Significant Accounting Policies and Estimates.
(2) Aggregation Scope of of Research and Development Expenditures and Relevant Accounting
Treatment Methods
?Applicable □ Not Applicable
1．Specific criteria for differentiating research and development phases in the Company’s internal
research and development projects
Research Phase: A phase involving innovative planned investigations and research activities to acquire
and comprehend new scientific or technological knowledge.Development Phase: A phase in which research findings or other knowledge are applied to a specific plan
or design before commercial production or use leading to the creation of new or substantially improved
materials devices products etc.Expenditures incurred during the research phase of internal research and development projects are
recorded in the profit or loss for current period when they occur.
2．Specific criteria for capitalization of expenditures during the development phase
Expenditures incurred during the development phase of internal research and development projects are
recognized as intangible assets when they meet all of the following conditions:
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(1) Completion of the intangible asset to enable its use or sale is technically feasible;
(2) There is an intention to complete the intangible asset and use or sell it;
(3) The intangible asset generates economic benefits either by demonstrating the presence of a market
for products produced using the asset or by demonstrating the presence of a market for the asset itself or by
demonstrating its usefulness if it will be used internally;
(4) There are adequate technical financial and other resources to complete the development of the
intangible asset and the Company is able to use or sell it;
(5) Expenditures attributable to the development stage of the intangible asset can be reliably measured.
Expenditures incurred during the development phase that do not meet the above conditions are recorded
in the profit or loss for the current period when they occur. Development expenditures previously recorded in
profit or loss are re-recognized as assets in subsequent periods. Capitalized expenditures during the
development phase are presented on the balance sheet as development expenditures and are reclassified as
intangible assets from the date the project reaches its intended use.
27. Impairment of Long-term Assets
?Applicable □ Not Applicable
The Company assesses whether long-term assets may be impaired as of the balance sheet date. If there
are indicators of impairment for long-term assets the recoverable amount is estimated on an individual asset
basis. If it is difficult to estimate the recoverable amount for an individual asset the recoverable amount of the
asset portfolio to which the asset belongs is used as the basis for determination.The estimation of the recoverable amount of an asset is determined by the net amount of its fair value less
disposal costs or its present value of expected future cash flows whichever is higher.The measurement results of the recoverable amount indicates that if a long-term asset’s recoverable
amount is less than its book value the book value is written down to the recoverable amount and the written-
down amount is recognized as an impairment loss and recorded in the profit or loss for the current period with
the provision for asset impairment being provided accordingly. Once an asset impairment loss is recognized
it cannot be reversed in subsequent accounting periods.After recognition of asset impairment losses the expenses on depreciation or amortization of impaired
assets are adjusted accordingly in future periods to systematically allocate the adjusted book value of the assets
(net of estimated net residual value) over the remaining useful life.For goodwill arising from enterprise merger and intangible assets with indefinite useful lives impairment
tests are conducted annually regardless of whether there are indicators of impairment.When conducting impairment tests on goodwill the book value of goodwill is allocated to the asset
portfolio or asset portfolios that are expected to benefit from the synergy effects of the enterprise merger. When
conducting impairment tests on asset portfolio or asset portfolios containing goodwill if there are indicators
of impairment related to the asset portfolio or asset portfolios containing goodwill impairment tests are first
conducted on asset portfolio or asset portfolios without goodwill and then the recoverable amount is calculated
and compared with the book value to recognize the corresponding impairment loss. Subsequently impairment
tests are conducted on asset portfolio or asset portfolios containing goodwill and the book value (including
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the book value portion of allocated goodwill) of the related asset portfolio or asset portfolios is compared with
their recoverable amount. If the recoverable amount of the related asset portfolio or asset portfolios is lower
than their book value impairment losses on goodwill are recognized.
28. Long-term Deferred Expenses
?Applicable □ Not Applicable
1．Amortization Method
Long-term deferred expenses refer to expenses that have been incurred by the Company but should be
allocated over a period exceeding one year from the current period and subsequent periods. Long-term deferred
expenses are amortized on a straight-line basis over the benefit period.
2．Amortization Period
Category Amortization Period (Years) Remarks
Site Lease Fees 20 Lease Term
Syndicated Arrangement Fees 7.5 Loan Term
Housing Subsidies 9 Service Period
Employee Rewards 5 Service Period
Production Materials 2 Usage Period
Leasehold Improvements 5 Usage Period
29. Contract Liabilities
?Applicable □ Not Applicable
The Company recognizes as contract liabilities the obligation to transfer goods to customers for the
consideration received or receivable from customers.
30. Employee Compensation
(1) Method for Accounting Treatment of Short-term Compensation
?Applicable □ Not Applicable
Short-term compensation refers to the employee compensation that the Company is obligated to pay
within twelve months after the end of the annual reporting period in which the employees provide relevant
services excluding post-employment benefits and termination benefits. During the accounting period in which
employees provide services short-term compensation payable is recognized as a liability and is recorded in
related asset costs and expenses based on the benefits derived from the services provided by employees.
(2) Method for Accounting Treatment of Post-Employment Benefits
?Applicable □ Not Applicable
Post-employment benefits refer to various forms of compensation and benefits provided by the Company
to employees upon retirement or termination of employment with the Company for attaining the services
provided by employees excluding short-term compensation and termination benefits.All of the Company's post-employment benefit plans are defined contribution plans.The Company's defined contribution plan for post-employment benefits primarily include participation in
basic social pension insurance unemployment insurance etc. organized and implemented by local labor and
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social security institutions. During the accounting period in which employees provide services to the Company
the amount payable calculated based on the defined contribution plan is recognized as a liability and is
recorded in the profit or loss for the current period or related asset costs.After making regular payments for the above items in accordance with national standards the Company
no longer has any further payment obligations.
(3) Method for Accounting Treatment of Termination Benefits
?Applicable □ Not Applicable
Termination benefits refer to compensations provided by the Company to employees due to termination
of their employment contracts before their expiration or as incentives for voluntary layoffs. These are
recognized as liabilities arising from compensations for terminating employment contracts when the Company
cannot unilaterally withdraw termination plans or layoff proposals and when costs related to restructuring
involving payments for termination benefits are confirmed whichever occurs earlier and are simultaneously
recorded in the profit or loss for the current period.
(4) Method for Accounting Treatment of Other Long-term Employee Benefits
?Applicable □ Not Applicable
Other long-term employee benefits refer to all employee benefits other than short-term compensation
post-employment benefits and termination benefits.For other long-term employee benefits that meet the conditions of the defined contribution plan the
amount payable is recognized as a liability and recorded in the profit or loss for the current period or related
asset costs during the accounting period in which employees provide services to the Company.
31. Estimated Liabilities
?Applicable □ Not Applicable
1．Recognition Criteria for Estimated Liabilities
The Company recognizes the obligations related to contingent matters as estimated liabilities when all of
the following conditions are met:
The obligation is a present obligation of the Company;
Fulfilling the obligation is likely to result in an outflow of economic benefits from the Company;
The amount of the obligation can be reliably measured.
2．Measurement Method for Estimated Liabilities
The estimated liabilities of the Company are initially measured at the best estimate of the expenditure
required to fulfill the related present obligation.When determining the best estimate the Company takes into account comprehensively factors such as
risks uncertainties and the time value of money related to the contingent liabilities. For contingent liabilities
with significant impact on the time value of money the best estimate should be determined by discounting the
relevant future cash outflows.The best estimate is handled as follows:
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In cases where there is a continuous range (or interval) of expenditures and each possible outcome within
the range occurs with equal probability the best estimate should be determined based on the average of the
upper and lower limits of the range.In cases where there is no continuous range (or interval) of expenditures or although there is a continuous
range the probabilities of occurrence of various outcomes within the range are not equal the best estimate
should be determined based on the most likely amount if the contingent matter relates to a single item and
should be calculated based on various possible outcomes and their probabilities if the contingent liability
involves multiple items.If all or part of the expenditures required to settle the estimated liabilities are expected to be compensated
by a third party the compensation amount should be separately recognized as an asset when it is virtually
certain to be received with the recognized compensation amount not exceeding the book value of the estimated
liabilities.
32. Share-based Payment
?Applicable □ Not Applicable
1．Types of Share-based Payment
The share-based payment by the Company is categorized into share-based payment settled by equity and
share-based payment settled by cash.
2．Method for Determining Fair Value of Equity Instruments
For granted equity instruments such as options with active markets their fair value is determined based
on quotes from such active markets. For granted equity instruments such as options without active markets
their fair value is determined using option pricing model or other methods. The following factors are considered
in the selected option pricing model: (1) exercise price of the option; (2) term of the option; (3) current price
of the underlying shares; (4) expected volatility of share prices; (5) expected dividends of shares; (6) risk-free
interest rate during the term of the option.When determining the fair value on the grant date of equity instruments the Company takes into account
the impact of market conditions and non-market conditions in the exercisable conditions for exercising as
stipulated in the share-based compensation agreement. If non-exercisable conditions exist as long as
employees or other parties meet all non-market conditions among all exercisable conditions (such as service
periods) the corresponding cost of services received is recognized.
3．Basis for Determining the Best Estimate of Exercisable Equity Instruments
On each balance sheet date during the vesting period the best estimate is made based on the latest changes
in the number of eligible employees for exercise and other subsequent information with adjustment to the
estimated quantity of exercisable equity instruments. On the exercise date the final estimated quantity of
exercisable equity instruments matches the actual quantity of such instruments.
4．Accounting Treatment Method
Share-based payment settled by equity is measured at the fair value of equity instruments granted to
employees. Instruments exercisable immediately after grant are recorded in related costs or expenses on the
grant date at their fair value with capital reserves increased accordingly. For instruments exercisable after
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completing the services during the vesting period or achieving specified performance conditions on each
balance sheet date within the vesting period the current services obtained are recorded in related costs or
expenses and capital reserves based on the best estimate of the quantity of exercisable equity instruments at
the fair value on the grant date. No adjustments are made to relevant recognized costs or expenses and total
owners’ equity after the exercise date.Share-based payment settled by cash is measured at the fair value of the liability calculated based on
shares or other equity instruments held by the Company. For instruments exercisable immediately after grant
the fair value of the liability borne by the Company is recorded in related costs or expenses on the grant date
with liabilities increased accordingly. For share-based payment settled by cash exercisable after completing
the services the vesting period or achieving specified performance conditions on each balance sheet date
within the vesting period the current services obtained are recorded in costs or expenses and corresponding
liabilities based on the best estimate of the exercisable situation at the amount of fair value of the liability
borne by the Company. The fair value of the liability is remeasured at each balance sheet date and settlement
date with changes recognized during the Current Period profit or loss.If granted equity instruments are canceled during the vesting period the Company treats the cancellation
of granted equity instruments as accelerated exercise immediately records the amount to be recognized in the
remaining vesting period in the profit or loss for the current period and recognizes capital reserves. If
employees or other parties choose to satisfy non-exercisable conditions but fail to do so within the vesting
period the Company treats it as cancellation of the granted equity instruments.
33. Preferred Shares Perpetual Bonds and Other Financial Instruments
□Applicable ?Not Applicable
34. Revenue
(1). Accounting Policies for Disclosure of Revenue Recognition and Measurement by Business Type
?Applicable □ Not Applicable
The Company's revenue mainly arise from the following business types: sales of food flavor and texture
optimization products animal nutrition amino acids human medical amino acids and related by-products.
1．General Principles of Revenue Recognition
The Company recognizes revenue at the transaction price allocated to that performance obligation when
it fulfills its obligations under contracts i.e. when customers obtains the control over the relevant goods or
services.Performance obligations refer to commitment by the Company in the contract to transfer clearly
identifiable goods or services to the customer..Obtaining control over relevant goods refers to the ability to direct the use of the goods and receive almost
all of the economic benefits from them.The Company evaluates a contract at the commencement date to identify individual performance
obligations and determine whether those obligations are to be fulfilled over a period or at a specific moment.If one of the following conditions is met the obligations are considered to be fulfilled over a period and
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revenue is recognized by the Company over the defined period based on the progression of fulfillment: (1) the
customer simultaneously receives and consumes the benefits derived from the Company's performance; (2) the
customer can exercise control over the goods under construction during the Company's performance; (3) the
goods produced by the Company during performance serve an indispensable purpose and the Company has
the right to receive payment for the cumulative performance up to now over the entire contract period.Otherwise the Company recognize revenue at the moment when the customer obtains control of the relevant
goods or services.For performance obligations fulfilled over a period the Company determines the appropriate progress
using the output method/input method based on the nature of the goods and services. The output method
determines the performance progress based on the value of the goods transferred to the customer (the input
method determines the performance progress based on the Company’s inputs to fulfill its performance
obligations). When the performance progress cannot be reasonably determined and the costs already incurred
is likely to be reimbursed revenue is recognized based on the amount of costs incurred until the performance
progress can be reasonably determined.
2.Specific Methods for Revenue Recognition
The Company's business of selling products such as food flavor and texture optimization products animal
nutrition amino acids and human medical amino acids typically only involves the obligation to transfer goods.The revenue recognition policy primarily makes a distinction between domestic and export customer
classifications. The specific methods for revenue recognition are as follows:
Domestic Sales: According to the contracts or orders signed with the customer revenue realization is
recognized by the Company at the moment when goods are delivered to the customer and the customer takes
control over the goods upon receipt.Export Sales: According to the contracts or orders signed with the customer sales revenue realization is
recognized by the Company on the export date specified on the custom declaration upon the completion of
loading goods onto the vessel the completion of customs clearance procedures and the transfer of control
transferring over the goods.
3.Revenue Treatment Principles for Specific Transactions
(1) Contracts with Sales Return Provisions
For sales contracts with sales return provisions the Company recognizes revenue when the customer
obtains control of the related goods based on the amount of consideration expected to be received from
transferring goods to the customer (excluding the amount expected to be refunded due to sales returns) and
recognizes liabilities based on the amount expected to be refunded due to sales returns. Additionally the
balance after deducting the estimated cost (including the depreciation in the value of the returned goods) of
returning the goods from the book value of the goods expected to be returned at the time of transfer is
recognized as an asset. Subsequently the net amount after deducting the cost of the asset from the book value
of the goods at the time of transfer is carried forward as cost.
(2) Contracts with Quality Assurance Provisions
For sales contracts with quality assurance provisions if the quality assurance provides a separate service
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beyond assuring that the goods or services sold meet established standards it constitutes a separate
performance obligation. Otherwise the Company accounts for the quality assurance responsibility according
to the Accounting Standards for Business Enterprises No. 13 - Contingencies.
(3) Contracts with Customer Options for Additional Purchases
Customer options for additional purchases include sales incentive measures additional discounts for
future goods or services etc. For options for additional purchases that provide the customer with significant
rights the Company treats them as separate performance obligations and recognizes relevant revenues when
the customer exercises the purchase options to obtain control over relevant goods or services in the future or
when the options expire. When the standalone selling price of customer options for additional purchases cannot
be directly observed the Company estimates it by considering all relevant information including differences
in discounts obtained from exercising and not exercising the options and the likelihood of exercising the
options.
(4) Principal vs. Agent
The Company determines whether it acts as a principal or an agent based on whether it has control over
the goods or services before transferring them to the customer. If the company can exercise control over the
goods or services before transferring them to the customer it acts as a principal and recognizes revenue based
on the total consideration received or receivable. Otherwise the company acts as an agent and recognizes
revenue based on the amount of commission or handling fees expected to be entitled to receive. Such amount
is determined by deducting the amounts payable to other related parties from the total consideration received
or receivable.
(2) Different Revenue Recognition and Measurement Methods for Similar Businesses with Different
Operating Models
□Applicable ?Not Applicable
35. Contract Costs
?Applicable □ Not Applicable
1. Contract Performance Costs
Costs incurred by the Company to perform contracts are recognized as an asset if they meet all of the
following conditions and are not within the scope of other Accounting Standards for Business Enterprises
excluding revenue standards:
(1) The cost is directly related to a contract either currently or expected to be obtained including direct
labor direct materials manufacturing expenses (or similar expenses) costs explicitly borne by the customer
and other costs incurred solely due to the contract;
(2) The cost increases the resources available for the Company to fulfill its performance obligations;
(3) The cost is expected to be recoverable.
This asset is presented under inventories or other non-current assets based on whether the amortization
period exceeds one normal operating cycle at the time of initial recognition.
2. Contract Obtaining Costs
Incremental costs incurred by the Company to obtain contracts and expected to be recoverable are
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recognized as an asset. Incremental costs refer to costs that would not have been incurred if the contract had
not been obtained such as sales commissions. For amortization periods not exceeding one year they are
recorded in the profit or loss for the current period when incurred.
3. Amortization of Contract Costs
Assets related to contract costs mentioned above are amortized based on the same basis as the revenue
recognition for goods or services related to the assets either at the time of performance obligation fulfillment
or based on the progress of performance obligation fulfillment and recorded in the profit or loss for the current
period.
4. Impairment of Contract Costs
If the book value of the aforementioned assets related to contract costs exceeds the difference between
the residual consideration expected to be obtained by the Company from the transfer of goods related to these
assets and the estimated costs to be incurred for the transfer the excess should be set aside impairment
provision and recognized as an impairment loss.After the impairment provision if there are changes in impairment factors in previous periods resulting
in the above difference exceeding the book value of the assets the provision for impairment loss previously
accrued shall be reversed and recorded in the profit or loss for the current period. However the book value of
the assets after reversal should not exceed that on the reversal date under the assumption of no accrual of
impairment provision.
36. Government Grants
?Applicable □ Not Applicable
1．Types
Government grants refer to monetary assets and non-monetary assets obtained by the Company from the
government without charge. According to the beneficiaries stipulated in relevant government documents
government grants are classified into asset-related government grants and revenue-related government grants.Asset-related government grants are those obtained by the Company for the acquisition construction or
formation of long-term assets by other means. Revenue-related government grants refer to government grants
other than asset-related government grants.
2．Recognition of Government Grants
Government grants are recognized at the amount receivable if there is evidence at the end of the period
that the Company can meet the relevant conditions stipulated in the financial support policy and is expected to
receive financial support funds. Otherwise government grants are recognized when actually received.Government grants in the form of monetary assets are measured at the amount received or receivable.Government grants in the form of non-monetary assets are measured at fair value; if fair value cannot be
reliably obtained they are measured at the nominal amount (RMB 1 yuan). Government grants measured at
nominal amounts are directly recorded in the profit or loss for the current period.
3．Accounting Treatment Method
The Company determines whether a certain type of government grant matter should be accounted for
using the gross method or the net method based on the substance of the economic matter. Typically the
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Company selects only one method for same or similar government grant matters and consistently applies that
method to the matter.Items Accounting Content
Category of Government Grants
Government grants related to anything other than loans of discount interest
Accounted for Using the Gross Method
Category of Government Grants
Government grants related to loans of policy-oriented preferential interest rate
Accounted for Using the Net Method
Asset-related government grants should either be offset against the book value of related assets or be
recognized as deferred revenues. Asset-related government grants recognized as deferred revenues should be
reasonably and systematically recorded in profit or loss over the useful life of the constructed or purchased
assets.Revenue-related government grants used to compensate for expenses or losses in future periods are
recognized as deferred revenues and are recorded in profit or loss for the current period or offset against related
costs when the related expenses or losses are recognized. Grants used to compensate for expenses or losses
already incurred by the Company are recorded directly in profit or loss for the current period or offset against
related costs upon receipt.Government grants related to the Company's ordinary activities are recorded in other income or offset
against related costs. Government grants unrelated to the Company's ordinary activities are recorded in non-
operating income and expenses.Government grants received related to loans of policy-oriented preferential interest are offset against
related borrowing costs. If loans of policy-oriented preferential interest rates provided by banks are obtained
the actual amount received is treated as the entry value of the loans and the related borrowing costs are
calculated based on the loan principal and the preferential interest rate.When government grants already recognized need to be refunded adjustments are made to the book value
of related assets if they are offset against the book value of the assets; the book balance of related deferred
revenues is offset if there are balances in the related deferred revenues and the surplus is recorded in the profit
or loss for the current period; and the surplus is recorded directly in profit or loss for the current period if there
are no balances in the related deferred revenues.
37. Deferred Income Tax Assets / Deferred Income Tax Liabilities
?Applicable □ Not Applicable
Deferred income tax assets and deferred income tax liabilities are calculated and recognized based on the
difference between the tax basis and book value of assets and liabilities (temporary differences). As of the
balance sheet date deferred income tax assets and deferred income tax liabilities are measured using the tax
rates applicable during the period when the assets are expected to be recovered or settled.
1．Recognition Basis for Deferred Income Tax Assets
The Company recognizes deferred income tax assets generated from deductible temporary differences to
the extent that it is probable to utilize them against taxable income that can be offset by deductible temporary
differences and can carry forward deductible losses and taxes in the subsequent years. However deferred
167 / 282Annu al Report 2023
income tax assets arising from the initial recognition of assets or liabilities in transactions and exhibiting the
following characteristics are not recognized: (1) the transaction does not qualify as an enterprise merger; (2)
the transaction neither affects accounting profit nor taxable profit or deductible losses when it occurs.For deductible temporary differences related to investments in associates deferred income tax assets are
recognized if the following conditions are met simultaneously: the temporary differences are likely to reverse
in the foreseeable future and taxable profit are likely available in the future to offset deductible temporary
differences.
2．Recognition Basis for Deferred Income Tax Liabilities
The Company recognizes the taxable temporary differences that are due but unpaid in the current and
previous periods as deferred income tax liabilities except to the extent that:
(1) The temporary difference arises from the initial recognition of goodwill;
(2) The temporary difference arises from transactions or matters that didn’t arise from enterprise merger
and neither affected the accounting profits nor taxable profit (or deductible losses);
(3) For taxable temporary differences related to investments in subsidiaries or associates the reversal of
the temporary differences can be controlled and it is probable that the temporary differences will not reverse
in the foreseeable future.
3．When the following conditions are met simultaneously deferred income tax assets and deferred
income tax liabilities are presented as the net amount after offset
(1) The Company has the legal right to settle current income tax assets and liabilities on a net basis;
(2) Deferred income tax assets and deferred income tax liabilities relate either to income taxes levied by the
same tax authority on the same taxable entity or to different taxable entities. However for each significant
period in which deferred income tax assets and deferred income tax liabilities are reversed in the future the
intention of the entity involved is to settle the current income tax assets and liabilities on a net basis or to
simultaneously obtain assets and settle liabilities.
38 Leasing
?Applicable □ Not Applicable
Judgement Basis and Accounting Treatment Method for Simplified Disposal of Short-term Leases and
Leases of Low-value Assets as Lessee
?Applicable □ Not Applicable
At the commencement of the lease term the Company recognizes right-of-use assets and lease liabilities
for leases other than short-term leases and leases of low-value assets subject to simplified disposal.
(1) Short-term Leases and Leases of Low-value Assets
Short-term leases refer to leases that do not include a purchase option with a lease term of no more than
12 months. Leases of low-value assets refer to leases where the individual leased asset when brand new has
a relatively low value primarily including leases of temporary vehicles office equipment etc.The Company does not recognize right-of-use assets and lease liabilities for the following short-term
leases and leases of low-value assets. The related lease payments are recorded in related asset costs or current
profit or loss in each period of the lease term on a straight-line basis or using other systematic and reasonable
methods.
168 / 282Annu al Report 2023
Items Category of Leased Assets Subject to Simplified Disposal
Short-term Leases Lease term is less than or equal to 1 year
Leases of Low-value Assets Leases of office equipment with low unit value etc.The Company recognizes right-of-use assets and lease liabilities for short-term leases and leases of low-
value assets other than those mentioned above.
(2) Right-of-Use Assets
The Company initially measures right-of-use assets at cost which includes:
1. Initially measured amount of lease liabilities;
2. Lease payments made on the commencement date of the lease term or before deducting any relevant
amount of lease incentives already received when there are lease incentives;
3. Initial direct costs incurred by the Company;
4. Estimated costs expected to be incurred by the Company for dismantling and removing leased assets
restoring the leased asset site or restoring leased assets to the conditions specified in the lease agreement
(excluding costs incurred for producing inventory).After the commencement date of the lease term the Company uses the cost model to measure right-of-
use assets subsequently.If it is reasonably certain that the Company will obtain ownership of the leased asset at the end of the
lease term the Company will depreciate the leased asset over its remaining useful life. If it is not reasonably
certain that the Company will obtain ownership of the leased asset at the end of the lease term the Company
will depreciate the leased asset over the lease term or the remaining useful life of the leased asset whichever
is shorter. For right-of-use assets with provision for impairment the Company will depreciate them in future
periods based on the book value after deducting the impairment provision following the above principles.
(3) Lease Liabilities
The Company initially measures lease liabilities at the present value of lease payments not yet paid as of
the lease commencement date. When calculating the present value of lease payments the Company uses the
interest rate implicit in the lease as the discount rate; if the interest rate implicit in the lease cannot be
determined the Company uses its incremental borrowing rate as the discount rate. Lease payments include:
(1) Fixed payments and substantially fixed payments after deducting related amount of the lease
incentives;
(2) Variable lease payments dependent on an index or rate;
(3) In cases where the Company reasonably determines the exercise of the purchase option lease
payments include the exercise price of such option;
(4) If it is evident that the Company will exercise the option to terminate the lease during the lease term
the lease payments include the amount required for exercising the said termination option;
(5) Amounts expected to be paid for guaranteed residual value provided by the Company.
The Company calculates the interest expense of lease liabilities for each period of the lease term using a
fixed discount rate and recognizes it in the profit or loss or related asset cost for the current period.
169 / 282Annu al Report 2023
Variable lease payments not included in the measurement of lease liabilities are recorded in profit or loss
or related asset cost for the period when they occur.Classification Criteria and Accounting Treatment Method for Leases as Lessor
?Applicable □ Not Applicable
(1) Classification of Leases
The Company classifies leases into financing leases and operating leases on the commencement date of
the lease. Financing leases refer to leases that substantially transfer all risks and rewards related to ownership
of the leased asset to the lessee with or without ultimate transfer of the ownership. Operating leases are leases
other than financing leases.The Company generally classifies a lease as a financing lease if it meets one or more of the following
conditions:
(1) At the end of the lease term ownership of the leased asset is transferred to the lessee.
(2) The lessee has the option to purchase the leased asset and the purchase price agreed upon is
sufficiently lower than the fair value of the leased asset at the time the option is expected to be exercised so
that it can be reasonably determined that the lessee will exercise the option on the commencement date of the
lease.
(3) Although ownership of the asset is not transferred the lease term represents a substantial portion of
the useful life of the asset.
(4) On the commencement date of the lease the present value of lease receipts is substantially equal to
the fair value of the leased asset.
(5) The leased asset is of such a specialized nature that only the lessee can use it without major
modifications.The Company may also be classifies a lease as a financing lease if it aligns with one or more of the
following indicators:
(1) If the lessee terminates the lease any loss incurred by the lessor due to the termination is borne by the
lessee.
(2) Gains or losses resulting from fluctuations in the fair value of the residual value of the asset attribute
to the lessee.
(3) The lessee is able to extend the lease for the next term at a rent significantly below the market standard.
(2) Accounting Treatment of Financing Leases
On the commencement date of the lease term the Company recognizes amounts receivable from financing
leases and derecognizes the finance lease assets.At the initial measurement of amounts receivable from financing leases the sum of the unguaranteed
residual value and the present value of lease receipts not yet received as of the commencement date of the lease
term discounted at the interest rate implicit in lease is treated as the entry value of the accounts receivable from
the financing leases. Lease receipts include:
(1) Fixed payments and substantial fixed payments after deducting the related amount of lease incentives;
(2) Variable lease payments dependent on an index or rate.
170 / 282Annu al Report 2023
(3) In cases where it is reasonably certain that the lessee will exercise a purchase option lease receipts
include the exercise price of the purchase option;
(4) If it is evident that the lessee will exercise the option to terminate the lease lease receipts include
amounts payable by the lessee upon exercise of the termination option.
(5) Guaranteed residual value provided by the lessee the party related to the lessee and independent third
parties with the economic capability to fulfill guarantee obligations to the lessor.The Company calculates and recognizes interest income for each period of the lease term using a fixed
lease rate implicit in lease. Variable lease payments not included in the net investment in the lease are recorded
in profit or loss for the period when incurred.
(3) Accounting Treatment of Operating Leases
For each period of the lease term the Company recognizes lease receipt from operating leases using the
straight-line method or other systematical and rational methods as rental income. Initial direct costs incurred
related to operating leases are capitalized and amortized over the lease term on the same basis as the recognition
of rental income and are recorded in the profit or loss for each period. Variable lease payments related to
operating leases but not included in lease receipts are recorded in profit or loss for the period when incurred.
39. Other Significant Accounting Policies and Estimates
?Applicable □ Not Applicable
(1) Repurchase of the Company’s Shares
The consideration and transaction costs paid in the repurchase of the Company’s shares reduce shareholders'
equity. Gains or losses are not recognized during repurchase transfer or cancellation of the Company’s shares.When transferring treasury shares the Company records them in the capital reserve based on the difference
between the amount actually received and the book value of the treasury shares. If the capital reserve is
insufficient to offset they are offset by the surplus reserve and undistributed profits. When canceling treasury
shares the Company reduces share capital based on the book value of shares and quantity of canceled shares
and offsets the difference between the book balance and book value of the canceled treasury shares using the
capital reserve. If the capital reserve is insufficient to offset they are offset by the surplus reserve and
undistributed profits.
(2) Work Safety Fees
Work safety fees withdrawn by the Company as specified by the state are recorded in the costs of the relevant
products or in profit or loss for the current period and simultaneously recorded in the account of "special
reserves". When the withdrawn work safety fees are utilized as expenses they are directly offset against special
reserves. In cases where the work safety fees form fixed assets the expenditures arising from the aggregation
of the account of "construction in progress" are recognized as fixed assets when the safety project is completed
and reaches the intended usable state. Simultaneously the cost of forming fixed assets is offset against special
reserves and the same amount of accumulated depreciation is recognized. Depreciation is no longer provided
for these fixed assets in subsequent periods.
171 / 282Annu al Report 2023
40. Changes in Significant Accounting Policies and Estimates
(1) Changes in Significant Accounting Policies
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Name of
Materially
Content of and Reasons for Changes in Accounting Policies Affected Amount
Affected Statement
Items
The Company has implemented the "Accounting Treatment for Deferred Income
Taxes Related to Assets and Liabilities Arising from Single Transactions Not
Eligible for Initial Recognition Exemption" specified in the Interpretation No. （2） （2）
16 of the Accounting Standards for Business Enterprises issued by the Ministry
of Finance in 2022 from January 1 2023.Other Explanation
(1) Impact of Implementing Interpretation No. 16 of the Accounting Standards for Business Enterprises
on the Company
On December 13 2022 the Ministry of Finance issued Interpretation No. 16 of the Accounting Standards
for Business Enterprises (CK [2022] No. 31 hereinafter referred to as "Interpretation No. 16") which
addresses "Accounting Treatment for Deferred Income Taxes Related to Assets and Liabilities Arising from
Single Transactions Not Eligible for Initial Recognition Exemption." It became effective on January 1 2023
and allows companies to execute it in advance of the publication year. The Company implemented the relevant
accounting treatment for this matter in the current year.For lease liabilities and right-of-use assets recognized due to the application of Interpretation No. 16 on
single transactions in the financial statements at the beginning of the earliest presenting period (January 1
2022) when Interpretation No. 16 was first implemented as well as estimated liabilities for recognized
retirement obligations and corresponding related assets if there are deductible temporary differences and
taxable temporary differences the Company should apply the cumulative effects to adjust the retained earnings
and other relevant financial statement items at the beginning of the earliest presenting period (January 1 2022)
of financial statements according to Interpretation No. 16 and the Accounting Standards for Business
Enterprises No. 18 – Income Taxes.
(2) According to the relevant provisions of Interpretation No. 16 the Company has made the following
adjustments to the cumulative effects to relevant financial statement items:
Original Presented Amount as of Adjusted Presented Amount as
Items Amount of Cumulative Effects
January 1 2022 of January 1 2022
Deferred Income Tax
111413131.73461821.26111874952.99
Assets
Deferred Income Tax
40626900.28534383.6741161283.95
Liabilities
Surplus Reserves 958921722.12 （7256.24） 958914465.88
Undistributed Profits 4599883309.24 （65306.17） 4599818003.07
172 / 282Annu al Report 2023
For lease liabilities and right-of-use assets recognized due to individual transactions subject to
Interpretation No. 16 occurring from the beginning of the earliest presenting period (i.e. January 1 2022) of
the financial statements when this interpretation was first implemented to the implementation date of this
interpretation (December 13 2022) as well as recognized estimated liabilities related to retirement obligations
and corresponding related assets the Company has handled them in accordance with the provisions of
Interpretation No. 16.According to the provisions of Interpretation No. 16 the Company has made the following adjustments to
related balance sheet items:
December 31 2022
Balance Sheet Items
Before Adjustment Amount of Cumulative Effects After Adjustment
Deferred Income Tax
135669154.91910640.61136579795.52
Assets
Deferred Income Tax
180231753.151053618.63181285371.78
Liabilities
Surplus Reserves 1142518851.07 （14297.80） 1142504553.27
Undistributed Profits 7605768999.02 （128680.22） 7605640318.80
According to the provisions of Interpretation No. 16 the Company has made the following adjustments
to related income statement items:
2022
Income Statement Items
Before Adjustment Amount of Cumulative Effects After Adjustment
Income Tax Expense 746482646.86 70415.61 746553062.47
Net Profit 4406312397.53 （70415.61） 4406241981.92
(2) Significant Changes in Accounting Estimates
□Applicable ?Not Applicable
(3) Financial Statements Involving Adjustments to the First-Time Implementation of New Accounting
Standards or Interpretations from 2023 Onward
□Applicable ?Not Applicable
41 Others
□Applicable ?Not Applicable
VI. Taxes
1.Major Tax Types and Tax Rates
Overview of 1.Major Tax Types and Tax Rates
?Applicable □ Not Applicable
Tax Type Basis of Taxation Tax Rate
Value-added Tax Revenue from Sales of Goods and Taxable Sales Service 13% 9% 6% 5% or 3%
Urban Maintenance and
Actually Paid Turnover Tax Amount 7% 5%
Construction Tax
Corporate Income Tax Taxable Income 15% 16.5% 20% 25% 0%
173 / 282Annu al Report 2023
70% or 90% of the Original Value of Property as the
Property Tax 1.2% 12%
basis of taxation Rental Income
Education Surcharge Actually Paid Turnover Tax Amount 3%
Local Education Surcharge Actually Paid Turnover Tax Amount 2%
Elaboration on the disclosure of entities taxed at differing corporate income tax rates.?Applicable □ Not Applicable
Taxpayer Name Income Tax Rate (%)
The Company 15
Meihua Group International Trading (Hong Kong) Limited (hereinafter referred to as "Hong Kong
16.5
Meihua")*
Langfang Meihua Seasoning Co. Ltd. (hereinafter referred to as "Langfang Seasoning") 25
Tongliao Meihua Seasoning Co. Ltd. (hereinafter referred to as "Tongliao Seasoning") 25
Langfang Meihua Bio-Technology Development Co. Ltd. (hereinafter referred to as "Langfang
15
Development")
Langfang BAIAN Technology Co. Ltd. (hereinafter referred to as "Langfang BAIAN") 20
Meihua (Shanghai) Biotechnology Co. Ltd. (hereinafter referred to as "Shanghai R & D") 20
Lhasa Meihua Biological Investment Holding Co. Ltd. (hereinafter referred to as "Lhasa
15
Meihua")
Tongliao Meihua Biotechnology Co. Ltd. (hereinafter referred to as "Tongliao Meihua") 15
Tongliao Jianlong Hyperacidity Co. Ltd. (hereinafter referred to as "Tongliao Jianlong") 25
Tongliao Tongde Starch Co. Ltd. (hereinafter referred to as "Tongde Starch") 20
Xinjiang Meihua Amino Acid Co. Ltd. (hereinafter referred to as "Xinjiang Meihua") 15
Xinjiang Meihua Agricultural Development Co. Ltd. (hereinafter referred to as "Xinjiang
25
Agriculture")
Xinjiang Meihua Investment Co. Ltd. (hereinafter referred to as "Xinjiang Investment") 20
Jilin Meihua Amino Acid Co. Ltd. (hereinafter referred to as "Jilin Meihua") 15
Zhuhai Hengqin Meihua Biotechnology Co. Ltd. (hereinafter referred to as "Hengqin Meihua") 25
HONG KONG PLUM HOLDING LIMITED (hereinafter referred to as "Hong Kong Holdings") 16.5
CAYMAN PLUM HOLDING LIMITED (hereinafter referred to as "Cayman Company") 0
* Subsidiaries of the Company Hong Kong Meihua and Hong Kong Holdings are wholly-owned
subsidiaries registered with the Companies Registry of Hong Kong. The profits tax is based on a two-tiered
tax system with a tax rate of 8.25% for the first HKD 2 million of profits and 16.5% thereafter.
2. Tax Benefits
?Applicable □ Not Applicable
1. Income Tax Benefits
(1) The Company is registered in Lhasa City Tibet Autonomous Region. According to the document
People's Government of Tibet Autonomous Region ZZF [2014] No. 51 - Implementation Measures for
Corporate Income Tax Policies in Tibet Autonomous Region enterprises in the Tibet Autonomous Region are
subject to a unified corporate income tax rate of 15% under the Strategy of the Western Development.
(2) Langfang R & D a subsidiary of the Company was certified as a high-tech enterprise by the Hebei
High-tech Enterprise Certification and Management Working Group on November 22 2022 with certificate
174 / 282Annu al Report 2023
No. GR202213002637. The certificate is valid from November 22 2022 to November 22 2025. Corporate
income tax is levied at a rate of 15% for the fiscal year 2023.
(3) Jilin Meihua a subsidiary of the Company was certified as a high-tech enterprise by the Jilin High-
tech Enterprise Certification and Management Working Group on September 28 2021 with certificate No.GR202122000280. The certificate is valid from September 28 2021 to September 27 2024. Corporate income
tax is levied at a rate of 15% for the fiscal year 2023.
(4) Tongliao Meihua and Xinjiang Meihua subsidiaries of the Company are entitled to a reduced
corporate income tax rate of 15% for enterprises engaged in encouraged industries in the western region as
stipulated in the Announcement No. 23 [2020] of the Ministry of Finance - Announcement of the Ministry of
Finance the State Taxation Administration and the National Development and Reform Commission on the
Continuation of the Corporate Income Tax Policy for the Development of the Western Region from January 1
2021 to December 31 2030.
(5) According to the Announcement No. 6 [2023] of the State Taxation Administration and the Ministry
of Finance - Announcement of the Ministry of Finance on the Income Tax Preferential Policies for Small and
Micro Enterprises and Individual Industrial and Commercial Businesses Tongde Starch a subsidiary of the
Company is entitled to a tax incentive. For the portion of annual taxable income of small-scale and micro-
profit enterprises not exceeding RMB 1 million yuan a reduced rate of 25% is applied to the taxable income
and the corporate income tax is levied at a rate of 20%. According to the Notice Issued by the Party Committee
and People's Government of the Inner Mongolia Autonomous Region (NDF [2018] No. 23) the portion of
local share of corporate income tax (i.e. 40%) is exempted and as stipulated in the Notice on Adjusting the
Implementation Period of Policies Related to the Document NDF [2018] No. 23 (NDBFD [2022] No. 3) the
execution period of the tax preferential policies specified in Article 1 Clause 1 of this document (excluding
stamp duty) is extended until December 31 2025 effective from January 1 2022.
(6) According to the Announcement No. 6 [2023] of the State Taxation Administration and the Ministry
of Finance - Announcement of the Ministry of Finance on the Income Tax Preferential Policies for Small and
Micro Enterprises and Individual Industrial and Commercial Businesses Xinjiang Investment Shanghai R &
D and Langfang BAIAN subsidiaries of the Company are entitled to a tax incentive. For the portion of annual
taxable income of small-scale and micro-profit enterprises not exceeding RMB 1 million yuan a reduced rate
of 25% is applied to the taxable income and the corporate income tax is levied at a rate of 20%.
(7) According to Article V of Document ZZF [2022] No. 11 - Notice of the People’s Government of the
Tibet Autonomous Region on Issuance of the Interim Measures for the Implementation of Corporate Income
Tax Policies in the Tibet Autonomous Region Lhasa Meihua a subsidiary of the Company is entitled to
exemption from the local portion of corporate income tax and should pay corporate income tax at a rate of
15% provided that it absorbs more than 70% of the permanent residents in Tibet and employs more than 15
individuals from January 1 2022 to December 31 2025.
3. Others
□Applicable ?Not Applicable
175 / 282Annu al Report 2023
VII. Notes to Consolidated Financial Statements
1. Monetary Funds
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Cash on Hand
Bank Deposits 4773515435.82 4128792356.29
Other Monetary Funds 179642319.01 204808301.42
Unexpired Interest Receivable 16636727.56
Deposits with Financial Companies
Total 4969794482.39 4333600657.71
Including: Total Amount Deposited
447124553.09306206282.01
Overseas
Other Explanations
1. Details of restricted monetary funds are as follows:
Items Ending Balance Beginning Balance
Bank Acceptance Draft Guarantee
170164905.10203800000.00
Deposit
Securities Account Fund Balance -- 961.99
Letter of Credit Guarantee Deposit -- 1000000.00
Others 2378407.00 --
Total 172543312.10 204800961.99
2. When preparing the cash flow statement the Company deducted the restricted monetary funds from
the ending cash and cash equivalents.
2. Financial Assets Held for Trading
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Reason and
Ending Beginning
Items Basis for
Balance Balance
Designation
Financial Assets Measured at Fair Value with Changes in Fair Value
172376801.33175624337.11/
Recorded in the Profit or Loss for the Current Period
Including:
Others 172376801.33 175624337.11 /
Financial Assets Designated as Being Measured at Fair Value with
Changes in Fair Value Recorded in the Profit or Loss for the Current
Period
Including:
Total 172376801.33 175624337.11 /
Other Explanations:
?Applicable □ Not Applicable
176 / 282Annu al Report 2023
Financial assets held for trading refer to wealth management products purchased by the Company and its
subsidiaries.
3. Derivative Financial Assets
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Subtotal Financial Assets Classified as Being Measured at Fair Value with
Changes in Fair Value Recorded in the Profit or Loss for the Current
Period
Derivative Financial Assets 200000.00 15431100.00
Total 200000.00 15431100.00
Other Explanations:
The fair value changes resulting from the forward foreign exchange trading against RMB conducted by
Hong Kong Meihua a subsidiary of the Company.
4. Notes Receivable
(1) Classified Presentation of Notes Receivable
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Bank Acceptance Notes 129231952.45 140801190.26
Commercial Acceptance Notes
Total 129231952.45 140801190.26
As of December 31 2023 the Company believes that the notes receivable held do not have significant
credit risks and will not incur significant losses due to default by banks or other issuers.
(2) Notes receivable that have been pledged by the Company at the end of the period
□Applicable ?Not Applicable
(3) Notes receivable that have been endorsed or discounted by the Company at the end of the period and
are not due as of the balance sheet date
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount derecognized as at the end of Amount not derecognized as at the end
Items
the period of the period
Bank Acceptance Notes 125062652.45
Commercial Acceptance Notes
Total 125062652.45
(4) Classified Disclosure by the Bad Debt Provision Method
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
177 / 282Annu al Report 2023
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of Significant Changes in the Book Value of Notes Receivable with Changes in Loss Reserves
during the Current Period:
□Applicable ?Not Applicable
(5) Status of Bad Debt Reserves
□Applicable ?Not Applicable
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
Other Explanations:
(6) Notes Receivable Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including write-offs of significant notes receivable:
□Applicable ?Not Applicable
Explanation of Write-offs of Notes Receivable:
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
5. Accounts Receivable
(1) Disclosure by Aging
□Applicable ?Not Applicable
Unit: Yuan Currency: RMB
Aging Ending Book Value Beginning Book Value
Within 1 year
Including: Sub-items for within 1 year
Within 1 year 674710891.63 358792198.79
Within 1 year Subtotal 674710891.63 358792198.79
1 to 2 years 169486.86 --
2 to 3 years
Over 3 years
3 to 4 years
4 to 5 years
Over 5 years
Less: Bad Debt Reserves 33752493.27 17939609.94
Total 641127885.22 340852588.85
(2) Classified Disclosure by Bad Debt Provision Methods
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Category Book Balance Bad Debt Reserves Book Balance Bad Debt Reserves
Amount Ratio(%) Amount Provision Book Value Provision Book Value Ratio (%) Amount Ratio(%) Amount Ratio (%)
Provision
s for Bad
Debt
Reserves
on an
Individual
-item
Basis
Including:
178 / 282Annu al Report 2023
Provision
s for Bad
Debt
Reserves 674880378.49 100.00 33752493.27 5.00 641127885.22 358792198.79 100.00 17939609.94 5.00 340852588.85
on a
Portfolio
Basis:
Including:
Including:
Aging
Analysis 674880378.49 100.00 33752493.27 5.00 641127885.22 358792198.79 100.00 17939609.94 5.00 340852588.85
Portfolio
Total 674880378.49 100.00 33752493.27 5.00 641127885.22 358792198.79 100.00 17939609.94 5.00 340852588.85
Provisions for Bad Debt Reserves on an Individual-item:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
?Applicable □ Not Applicable
Items for Provision on a Portfolio Basic: Including: Aging Analysis Portfolio
Unit: Yuan Currency: RMB
Ending Balance
Name
Accounts Receivable Bad Debt Reserves Provision Ratio (%)
Within 1 year 674710891.63 33735544.58 5.00
1-2 years 169486.86 16948.69 10.00
Total 674880378.49 33752493.27 5.00
Explanation of Provisions for Bad Debt Reserves on a Portfolio Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of Significant Changes in the Book Value of Accounts Receivable with Changes in Loss Reserves
during the Current Period:
□Applicable ?Not Applicable
(3) Status of Bad Debt Reserves
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount of Changes during the Current Period Ending Balance
Beginning Recovered
Category Written Other
Balance Provision or
off Changes
Reversed
Notes Receivable with
Provisions for Bad Debt
Reserves on an Individual-item
Basis
Notes Receivable with
Provisions for Bad Debt
Reserves on a Portfolio Basis
Including: Aging Analysis
17939609.9415812883.33------33752493.27
Portfolio
Total 17939609.94 15812883.33 -- -- -- 33752493.27
179 / 282Annu al Report 2023
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
(4) Accounts Receivable Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including write-off of significant accounts receivable:
□Applicable ?Not Applicable
Explanation of Write-off of Accounts Receivable:
□Applicable ?Not Applicable
(5) Overview of Accounts Receivable and Contract Assets Ranking Top Five in Ending Balances
Aggregated by Debtors
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Ending Balances of Proportion in the Total Ending
Ending Balances
Entity Balances of Accounts Amount of Ending Balances Balances of
of Accounts
Name Contract Receivable and of Accounts Receivable and Bad Debt
Receivable
Assets Contract Assets Contract Assets (%) Reserves
First 89302467.30 89302467.30 13.23 4465123.37
Second 68704682.05 68704682.05 10.18 3435234.10
Third 63700413.96 63700413.96 9.44 3185020.70
Fourth 63686002.18 63686002.18 9.44 3184300.11
Fifth 45197213.29 45197213.29 6.70 2259860.66
Total 330590778.78 330590778.78 48.99 16529538.94
Other Explanations:
?Applicable □ Not Applicable
Accounts receivable derecognized due to non-transfer of financial assets at the end of the period
Amount of assets and liabilities arising from non-transfer of accounts receivable and continued
involvement
At the end of the period there were no amounts receivable from shareholder units holding 5% or more
of the Company’s voting shares. Please refer to (6) in the Section XIV - Related Parties and Related
Transactions for other amounts receivable from related parties.
6. Contract Assets
(1) Status of Contract Assets
□Applicable ?Not Applicable
(2) Amount of and Reasons for Significant Changes in Book Value during the Reporting Period
□Applicable ?Not Applicable
(3) Classified Disclosure by Bad Debt Provision Methods
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Explanation of Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
180 / 282Annu al Report 2023
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of significant changes in the book balance of contract assets with changes in loss reserves during
the current period:
□Applicable ?Not Applicable
(4) Status of Provisions for Bad Debt Reserves for Contract Assets during the Current Period
□Applicable ?Not Applicable
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
(5) Status of Contract Assets Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including write-off of significant contract assets
□Applicable ?Not Applicable
Explanation of Write-off of Contract Assets:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
7. Receivables Financing
(1) Classified Presentation of Receivables Financing
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Notes Receivable 59999269.30 5982000.00
Accounts Receivable 13900.68 112443206.87
Total 60013169.98 118425206.87
(2) Receivables Financing that have been pledged by the Company at the end of the period
□Applicable ?Not Applicable
(3) Receivables Financing that have been endorsed or discounted by the Company at the end of the
period and are not due as of the balance sheet date
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount derecognized as at the end of Amount not derecognized as at the end
Items
the period of the period
Bank Acceptance Notes 503353418.34
Accounts Receivable Factoring 168429461.44
Total 671782879.78
(4) Classified Disclosure by Bad Debt Provision Methods
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Explanation of Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
181 / 282Annu al Report 2023
?Applicable □ Not Applicable
Items for provisions on a portfolio basis: Accounts receivable
Unit: Yuan Currency: RMB
Ending Balance
Name
Receivables Financing Bad Debt Reserves Provision Rate (%)
Accounts Receivable 14632.29 731.61 5.00
Total 14632.29 731.61 5.00
Explanation of Provisions for Bad Debt Reserves on a Portfolio Basis
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of significant changes in the book balance of Receivables Financing with changes in loss reserves
during the current period:
□Applicable ?Not Applicable
(5) Status of Bad Debt Reserves
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount of Changes during the Current Period
Beginning Ending
Category Recovered
Balance Provision Written off Other Changes Balance
or Reversed
Provisions for
Bad Debt
Reserves on an -- -- -- -- -- --
Individual-item
Basis
Provisions for
Bad Debt
5622160.34--5621428.73----731.61
Reserves on a
Portfolio Basis
Including:
Accounts 5622160.34 -- 5621428.73 -- -- 731.61
Receivable
Notes
------------
Receivable
Total 5622160.34 -- 5621428.73 -- -- 731.61
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
(6) Status of Receivables Financing Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including write-off of significant Receivables Financing
□Applicable ?Not Applicable
Write-off Explanation:
□Applicable ?Not Applicable
(7) Fluctuations in Receivables Financing and Changes in Fair Value during the Current Period:
□Applicable ?Not Applicable
182 / 282Annu al Report 2023
(8) Other Explanations:
□Applicable ?Not Applicable
8. Prepayments
(1) Presentation of Prepayments on Aging
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Aging
Amount Ratio (%) Amount Ratio (%)
Within 1 year 250022409.94 99.18 341147004.35 99.73
1 to 2 years 1602075.60 0.64 920908.11 0.27
2 to 3 years 464602.69 0.18
Over 3 years
Total 252089088.23 100.00 342067912.46 100.00
Explanation for significant prepayments with aging exceeding 1 year and not settled timely:
There are no significant prepayments with aging exceeding one year at the end of the period.
(2) Overview of Prepayments Ranking Top Five in Ending Balances Aggregated by Prepayment
Recipients
?Applicable □ Not Applicable
Proportion in Total Amount of Ending
Entity Name Ending Balance
Balances of Prepayments (%)
First 36507125.24 14.48
Second 18048777.16 7.16
Third 16237557.78 6.44
Fourth 14662174.25 5.82
Fifth 12585662.14 4.99
Total 98041296.57 38.89
Other Explanations
At the end of the period there were no prepayments to shareholder units holding 5% or more of the
Company's voting shares. Please refer to (6) in the Section XIV - Related Parties and Related Transactions for
prepayments to other related parties.Other Explanations
□Applicable ?Not Applicable
9. Other Receivables
Presentation of Items
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Interest Receivable 1575000.00 1575000.00
Dividend Receivable
Other Receivables 49809535.97 99353891.88
Total 51384535.97 100928891.88
183 / 282Annu al Report 2023
Other Explanations:
□Applicable ?Not Applicable
Interest Receivable
(1) Classification of Interest Receivable
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Fixed Deposits
Entrusted Loans
Bond Investments
Debt Investments 1575000.00 1575000.00
Total 1575000.00 1575000.00
(2) Significant Overdue Interest
□Applicable ?Not Applicable
(3) Classified Disclosure by Bad Debt Provision Methods
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Explanation of Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
□Applicable ?Not Applicable
(4) Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of Significant Changes in the Book Balance of Interest Receivable with Changes in Loss Reserves
during the Current Period:
□Applicable ?Not Applicable
(5) Status of Bad Debt Reserves
□Applicable ?Not Applicable
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
(6) Status of Interests Receivable Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including write-off of significant interest receivable
□Applicable ?Not Applicable
Write-off Explanation:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
Dividends Receivable
(7) Dividends Receivable
□Applicable ?Not Applicable
(8) Significant Dividends Receivable with Aging Exceeding 1 Year
□Applicable ?Not Applicable
184 / 282Annu al Report 2023
(9) Classified Disclosure by Bad Debt Provision Methods
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Explanation of Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
□Applicable ?Not Applicable
(10) Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of Significant Changes in the Book Balance of Dividends Receivable with Changes in Loss
Reserves during the Current Period:
□Applicable ?Not Applicable
(11) Status of Bad Debt Reserves
□Applicable ?Not Applicable
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
(12) Status of Dividends Receivable Actually Written off during the Current Period
□Applicable ?Not Applicable
Including write-off of significant dividends receivable
□Applicable ?Not Applicable
Write-off Explanation:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
Other Receivables
(13) Disclosure by Aging
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Book Balance at the Beginning of the
Aging Book Balance at the End of the Period
Period
Within 1 year
Including: Sub-items for within 1 year
Within 1 year 48970416.54 81199721.44
Within 1 year Subtotal 48970416.54 81199721.44
1 to 2 years 2723530.38 29784563.76
2 to 3 years 4912130.92 498787.01
Over 3 years
3 to 4 years 450262.05 1521820.00
4 to 5 years 1521820.00 156088.25
Over 5 years 109567343.84 200606834.90
Less: Bad Debt Reserves 118335967.76 214413923.48
Total 49809535.97 99353891.88
(14) Classification of Accounts by Nature
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
185 / 282Annu al Report 2023
Book Balance at the Beginning of the
Account Nature Book Balance at the End of the Period
Period
External Unit Account Current 28178262.18 121185804.79
Guarantee Deposit 8655846.10 4716580.00
Land and Real Estate Account
85672687.0085672687.00
Receivable
Export Tax Refunds Receivable 37750127.66 61036786.35
Others 7888580.79 41155957.22
Less: Bad Debt Reserves 118335967.76 214413923.48
Total 49809535.97 99353891.88
(15) Provisions for Bad Debt Reserves
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Stage One Stage Two Stage Three
Expected Expected Credit
Credit Losses Losses for the Entire
Expected Credit Losses
Bad Debt Reserves Duration (Credit for the Entire Duration Total for the Next 12 (Credit Impairment
Months Impairment Not Yet Occurred) Occurred)
Balance as of January 1
20238487494.09--205926429.39214413923.48
Balance as of January 1
2023 for the Current Period
-- Transferred to Stage
Two
-- Transferred to Stage
Three
-- Reversed to Stage Two
-- Reversed to Stage One
Provision for the Current
Period
Reversal for the Current
Period 3103705.76 -- 1861963.30 4965669.06
Write-Off for the Current
Period
Write-Off for the Current
----91112286.6691112286.66
Period
Other Changes -- -- -- --
Balance as of December
3120235383788.33--112952179.43118335967.76
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of Significant Changes in the Book Balance of Other Receivables with Changes in Loss Reserves
during the Current Period:
□Applicable ?Not Applicable
Basis for the Amount of Provisions for Bad Debt Reserves for the Current Period and for the Assessment of
Significant Increase in Credit Risk for Financial Instruments:
□Applicable ?Not Applicable
(16) Status of Bad Debt Reserves
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
186 / 282Annu al Report 2023
Amount of Changes during the Current Period
Beginning Ending
Category Recovered
Balance Provision Written off Other Changes Balance
or Reversed
Other
Accounts
Receivable
based on
Provisions
for Bad 205926429.39 1861963.30 91112286.66 112952179.43
Debt
Reserves
on an
Individual-
item Basis
Other
Accounts
Receivable
based on
Provisions
for Bad 8487494.09 3103705.76 5383788.33
Debt
Reserves
on a
Portfolio
Basis
Including:
Aging
8487494.093103705.765383788.33
Analysis
Portfolio
Total 214413923.48 4965669.06 91112286.66 118335967.76
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
(17) Status of Other Receivables Actually Written off during the Current Period
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Write-Off Amount
Other Receivables Actually Written off 91112286.66
Including write-off of significant other receivables:
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Procedures Arising from
Nature of Other Write-Off Write-Off Followed for Related
Entity Name Receivables Amount Reason Write-Off Transactions
187 / 282Annu al Report 2023
Approved at the
Second Meeting
External Unit
Zhuang Enda 91112286.66 Unable to Collect of the Tenth No
Account Current
Board of
Directors
Total / 91112286.66 / / /
Explanation of Write-Off of Other Receivables:
□Applicable ?Not Applicable
(18) Overview of Other Receivables Ranking Top Five in Ending Balances Aggregated by Debtors
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Proportion in the
Total Amount of
Account Ending Balance of
Entity Name Ending Balance Ending Balances of Aging
Nature Bad Debt Reserves
Other Receivables
(%)
Land and
Baizhou Metal Real
Over 5
Glass and Furniture 85672687.00 50.95 Estate 85672687.00
years
Industrial Park Accounts
Receivable
External
Kezuo Zhongqi
Unit Over 5
Jucang Grain 22805887.09 13.56 22805887.09
Account years
Trading Co. Ltd.Current
Tongliao Taxation
Export
Bureau State Within 1
21824577.94 12.98 Tax 1091228.90
Taxation year
Refunds
Administration
Lhasa Economic
and Technological
Export
Development Zone Within 1
15925549.72 9.47 Tax 796277.49
Taxation Bureau year
Refunds
State Taxation
Administration
Tangshan Branch
HSBC Bank Guarantee Within 1
5350235.103.18267511.76
(China) Company Deposit year
Limited
Total 151578936.85 90.15 / / 110633592.24
(19) Presented under Other Receivables due to Centralized Fund Management
□Applicable ?Not Applicable
Other Explanations:
188 / 282Annu al Report 2023
?Applicable □ Not Applicable
There were no other receivables involving government grants at the end of the period.There were no other receivables derecognized due to transfer of financial assets at the end of the period.There were no amounts of assets and liabilities formed due to the transfer of other receivables and
continued involvement.Other receivables at the end of the period do not contain the accounts to shareholder units holding 5% or
more of the Company’s voting shares and other accounts to related parties.
10. Inventories
(1) Classification of Inventories
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Inventory Inventory
Write Write
Items Down/Contract down/Contract
Book Balance Book Value Book Balance Book Value
Performance Fulfillment
Cost Write Cost Write
Down Down
Raw
1879948699.842198601.191877750098.652832848792.943381959.582829466833.36
Materials
Work in
374808516.13--374808516.13350356260.94--350356260.94
Progress
Inventory
316474272.814249605.97312224666.84481551298.054218713.99477332584.06
Goods
Goods
357735501.35--357735501.35411393850.99--411393850.99
Issued
Turnover
Materials
Consumable
Biological
Assets
Contract
Performance
Cost
Total 2928966990.13 6448207.16 2922518782.97 4076150202.92 7600673.57 4068549529.35
(2) Inventory Write Down and Contract Performance Cost Write Down
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Decreased Amount for
Beginning Increased Amount for the
Items the Current Period Ending Balance
Balance Current Period
189 / 282Annu al Report 2023
Reversed or
Provision Others Others
Written off
Raw Materials 3381959.58 155133.00 -- 1338491.39 -- 2198601.19
Work in Progress -- -- -- -- -- --
Inventory Goods 4218713.99 5162662.33 -- 5131770.35 -- 4249605.97
Goods Issued
Turnover Materials
Consumable Biological
------
Assets
Total 7600673.57 5317795.33 -- 6470261.74 -- 6448207.16
Reasons for Reversal or Write-off of Inventory Write Down:
?Applicable □ Not Applicable
Reasons for Reversal: Factors affecting the previously written-down inventory value have disappeared
resulting in the net realizable value of the inventory exceeding its book value;
Reasons for Write-off: Inventory consumed/sold during the current period for which inventory write down
was previously made.Provisions for Inventory Write Down on a Portfolio Basis
□Applicable ?Not Applicable
Standards for Provisions for Inventory Write Down on a Portfolio Basis
□Applicable ?Not Applicable
(3) Capitalized Amount of Borrowing Costs Included in Inventory Balance at the End of the Period and
Its Calculation Criteria and Basis
□Applicable ?Not Applicable
(4) Explanation of the Amortization Amount of Contract Performance Costs for the Current Period
□Applicable ?Not Applicable
Other Explanations:
?Applicable □ Not Applicable
Explanation of Inventory Write Down and Contract Performance Cost Write Down:
Specific Basis for Determining Net Realizable Value: The net realizable value is determined by
subtracting estimated costs as of the time of completion estimated selling expenses and relevant taxes from
the estimated selling price of the related finished products.
11. Assets Held for Sale
□Applicable ?Not Applicable
12. Non-Current Assets Due within One Year
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Debt Investments Due within One Year
Other Debt Investments Due within One Year
Long-Term Receivables Due within One Year 19356000.00
Total 19356000.00
190 / 282Annu al Report 2023
Debt Investments Due within One Year
□Applicable ?Not Applicable
Other Debt Investments Due within One Year
□Applicable ?Not Applicable
Other explanations for non-current assets due within one year
13. Other Current Assets
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Cost of Contract Acquisition
Cost of Receivable Returns
Input Tax Credit for Value-Added Tax 163892520.02 269438428.21
Prepaid Taxes and Fees 20862439.54 1605136.13
Deferred Expenses 5761388.16 5258522.48
Large-denomination Certificate of
98702122.24--
Deposit
Total 289218469.96 276302086.82
14. Debt Investments
(1) Status of Debt Investments
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Items Impairment Impairment
Book Balance Book Value Book Balance Book Value
Reserves Reserves
Tongliao
Hailin
10500000.00--10500000.0010500000.00--10500000.00
Biotechnology
Co. Ltd.Total 10500000.00 -- 10500000.00 10500000.00 -- 10500000.00
Changes in Debt Investment Impairment Reserves for the Current Period
□Applicable ?Not Applicable
(2) Significant Debt Investments at the End of the Period
□Applicable ?Not Applicable
(3) Provision for Impairment Reserves
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Impairment Reserves:
Explanation of Significant Changes in Book Balance of Debt Investments with Changes in Loss Reserves
during the Current Period:
□Applicable ?Not Applicable
Basis for the Amount of Provisions for Impairment Reserves and the Assessment of Significant Increase in
Credit Risk of Financial Instruments
□Applicable ?Not Applicable
(4) Status of Debt Investments Actually Written Off during the Current Period
□Applicable ?Not Applicable
191 / 282Annu al Report 2023
Including the write-off of significant debt investments
□Applicable ?Not Applicable
Explanation of Write-off of Debt Investments:
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
15. Other Debt Investments
(1) Status of Other Debt Investments
□Applicable ?Not Applicable
Changes in Impairment Reserves for Other Debt Investments for the Current Period
□Applicable ?Not Applicable
(2) Significant Other Debt Investments at the End of the Period
□Applicable ?Not Applicable
(3) Provisions for Impairment Reserves
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Impairment Reserves:
Explanation of Significant Changes in the Book Balance of Other Debt Investments with Changes in Loss
Reserves during the Current Period:
□Applicable ?Not Applicable
Basis for the Amount of Provisions for Impairment Reserves and the Assessment of Significant Increase in
Credit Risk of Financial Instruments
□Applicable ?Not Applicable
(4) Status of Other Debt Investments Actually Written off during the Current Period
□Applicable ?Not Applicable
Including the write-off of significant other debt investments
□Applicable ?Not Applicable
Explanation of write-off of other debt investments:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
16. Long-term Receivables
(1) Status of Long-term Receivables
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance Range of
Items Bad Debt Bad Debt Discount
Book Balance Book Value Book Balance Book Value
Reserves Reserves Rates
Financing Lease Receivables 364927.03 -- 364927.03 254177.25 -- 254177.25
Including: Unrealized
35072.97--35072.9725822.75--25822.75
Financing Income
Goods Sold on an Installment Basis
Services Provided on an Installment
Basis
Long-term Receivables 19356000.00 -- 19356000.00
Less: Long-term Receivables Due
19356000.00--19356000.00------
within One year
Total 364927.03 -- 364927.03 254177.25 -- 254177.25 /
192 / 282Annu al Report 2023
(2) Classified Disclosure by Bad Debt Provision Methods
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Explanation of Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
□Applicable ?Not Applicable
(3) Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of Significant Changes in Book Balance of Long-term Receivables with Changes in Loss Reserves
during the Current Period:
□Applicable ?Not Applicable
Basis for Amount of Provisions for Bad Debt Reserves and the Assessment of Significant Increase in Credit
Risk of Financial Instruments
□Applicable ?Not Applicable
(4) Status of Bad Debt Reserves
□Applicable ?Not Applicable
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
(5) Status of Long-term Receivables Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including Write-off of Significant Long-term Receivables
□Applicable ?Not Applicable
Explanation of Write-off of Long-term Receivables:
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
17. Long-term Equity Investments
(1) Status of Long-term Equity Investments
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increase/Decrease during the Current Period
Investment Ending
Declaration of
Profit or Adjustments to Provisions Balances
Invested Beginning Other Cash Ending
Increase Decrease Loss Other for of
Unit Balance Equity Dividend or Others Balance
Investment Investment Recognized Comprehensive Impairment Impairment
Changes Profits
under Equity Income Reserves Reserves
Distribution
Method
I. Joint Ventures
Subtotal
II. Associates
Tongliao
Desheng
12005325.58----214371.65--------12219697.23
Bio-Tech
Co. Ltd.
193 / 282Annu al Report 2023
Beitun
Zefeng
Agricultural 6890969.08 -- -- 1631564.33 -- (1800000.00) -- -- 6722533.41
Development
Co. Ltd.Subtotal 18896294.66 -- -- 1845935.98 (1800000.00) -- -- 18942230.64
Total 18896294.66 -- -- 1845935.98 (1800000.00) -- -- 18942230.64
(2) Impairment Testing of Long-term Equity Investments
□Applicable ?Not Applicable
194 / 282Annual Report 2023
18. Other Equity Instrument Investments
(1) Status of Other Equity Instrument Investments
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increase/Decrease During the Current Period Reasons for
Designation as
Dividend Gains Losses
Gains Losses Measured at
Income Cumulatively Cumulatively
Recorded in Recorded in Fair Value with
Beginning Ending Recognized Recorded in Recorded in
Items Increase Decrease Other Other Changes
Balance Others Balance for the Other Other
Investment Investment Comprehensive Comprehensive Recorded in
Current Comprehensive Comprehensive
Income for the Income for the Other
Period Income Income
Current Period Current Period Comprehensive
Income
Bank of Planned for Lo
Tibet Co. 157000000.00 157000000.00 2816000.00 ng-term Holdin
Ltd. g
Xinjiang
Huier Planned for
Agriculture 30000000.00 30000000.00 -- 7374600.00 -- Long-term
Group Co. Holding
Ltd.AIM Planned for
Vaccine 1062991300.00 707299950.00 355691350.00 5687647.50 -- Long-term
Co. Ltd. Holding
Planned for
SenseUp
5472600.59 5472600.59 -- -- 5082150.59 Long-term
GmbH
Holding
Total 1255463900.59 35472600.59 707299950.00 512691350.00 2816000.00 13062247.50 5082150.59 /Annual Report 2023
(2) Explanation of Cases Involving Derecognition During the Current Period
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Cumulative Gains Transferred to Retained Cumulative Losses Transferred to Retained
Items Reason for Derecognition
Earnings Due to Derecognition Earnings Due to Derecognition
Xinjiang Huier Agriculture Group Co. Ltd. 7374600.00 Disposal during the current period
SenseUp GmbH 5082150.59 Disposal during the current period
Total 7374600.00 5082150.59 /
Other Explanations:
?Applicable □ Not Applicable
(1) After being deliberated and approved at the 11th meeting of the 9th Board of Directors Langfang Seasoning signed an equity transfer agreement with Niu
Napeng on December 28 2020 to transfer all its shares in Langfang Development Zone Rongshang Rural Commercial Bank Co. Ltd. to Niu Napeng for RMB 4
million yuan which has been received. Following the completion of the transfer agreement the company repeatedly reminded Langfang Rongshang Rural Commercial
Bank via telephone and email to promptly handle the relevant registration procedures for shareholder changes. As of December 31 2023 according to a search
conducted via Tianyancha Langfang Seasoning remains a shareholder of Langfang Development Zone Rongshang Rural Commercial Bank Co. Ltd.
(2) After mutual consultation as well as deliberation and approval at t the 33rd meeting of the 9th Board of Directors the company agreed to SenseUp GmbH’s
repurchase of the equity held by Langfang Meihua in SenseUp GmbH for 50000 euros. The transfer of equity has been completed and the company no longer holds
any shares in SenseUp GmbH.
(3) After mutual consultation the company agreed to Xinjiang Huier Agriculture Group Co. Ltd.’s repurchase of the 6 million shares of its own stock held by
Xinjiang Meihua. The transfer of equity has been completed.An nual Report 2023
19. Other Non-Current Financial Assets
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
20. Investment Properties
Measurement Model for Investment Properties
Not Applicable
(1) Impairment Testing of Investment Properties Measured at Cost
□Applicable ?Not Applicable
21. Fixed Assets
Presentation of Items
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Fixed Assets 11428700356.22 9911708010.15
Clearance of Fixed Assets
Total 11428700356.22 9911708010.15
Other Explanations:
□Applicable ?Not Applicable
Fixed Assets
(1) Status of Fixed Assets
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Office and
Housing and Machinery and Transportation
Items Other Total
Structures Equipment Tools
Equipmet
I. Original Book Value
1. Beginning
7104572056.4614820162930.9974131024.40220527333.6322219393345.48
Balance
2. Increased
Amount for the 526673373.18 2321913290.05 1818039.82 39390840.60 2889795543.65
Current Period
(1) Acquisition 8374600.22 14144923.16 1746710.60 15708615.01 39974848.99
(2) Transfer from
Construction in 518178153.51 2307768366.89 71329.22 23682225.59 2849700075.21
Progress
(3) Increase from
Enterprise Merger
Others 120619.45 -- -- -- 120619.45
3. Decreased
Amount for the 57782880.28 109929827.91 8501251.40 6016929.51 182230889.10
Current Period
197 / 282An nual Report 2023
(1) Disposal or
55396137.8265880042.848501251.406012681.83135790113.89
Scrapping
Transfer to
Construction in 2386742.46 44049785.07 -- 4247.68 46440775.21
Progress
Disposal of
Subsidiaries
4. Ending
7573462549.3617032146393.1367447812.82253901244.7224926958000.03
Balance
II. Accumulated Depreciation
1. Beginning
2800098388.899273380105.9763127739.67169438308.0612306044542.59
Balance
2. Increased
Amount for the 332822918.23 952937125.15 4258559.36 20992249.89 1311010852.63
Current Period
(1) Provision 332822918.23 952937125.15 4258559.36 20992249.89 1311010852.63
3. Decreased
Amount for the 29965890.91 75557110.20 8019777.24 5678664.75 119221443.10
Current Period
(1) Disposal or
28421332.3149113018.588019777.245675840.1091229968.23
Scrapping
Disposal of
--
Subsidiaries
Transfer to
Construction in 1544558.60 26444091.62 -- 2824.65 27991474.87
Progress
4. Ending
3102955416.2110150760120.9259366521.79184751893.2013497833952.12
Balance
III. Impairment Reserves
1. Beginning
1262740.1615285.88--362766.701640792.74
Balance
2. Increased
Amount for the -- 94111.82 -- 3441.91 97553.73
Current Period
(1) Provision -- 94111.82 -- 3441.91 97553.73
3. Decreased
Amount for the 1262740.16 51914.62 -- -- 1314654.78
Current Period
(1) Disposal or
1262740.1651914.62----1314654.78
Scrapping
4. Ending
--57483.08--366208.61423691.69
Balance
IV. Book Value
198 / 282An nual Report 2023
1. Book Value at
the End of the 4470507133.15 6881328789.13 8081291.03 68783142.91 11428700356.22
Period
2. Book Value at
the Beginning of 4303210927.41 5546767539.14 11003284.73 50726258.87 9911708010.15
the Period
(2) Status of Temporarily Idle Fixed Assets
□Applicable ?Not Applicable
(3) Fixed Assets Leased through Operating Leases
□Applicable ?Not Applicable
(4) Status of Fixed Assets without Property Ownership Certificates
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Reasons for Lack of Property
Items Book Value
Ownership Certificates
Housing and Structures 223190924.17 In Process
Total 223190924.17
5) Impairment Testing of Fixed Assets
□Applicable ?Not Applicable
Other Explanations:
?Applicable □ Not Applicable
The book value of fixed assets used for mortgage at the end of the period is RMB 423641966.22
yuan. Please refer to (1) in Section XVI - Commitments and Contingencies for details.Clearance of Fixed Assets
□Applicable ?Not Applicable
22. Construction in Progress
Presentation of Items
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Construction in Progress 154737172.81 1661558738.59
Engineering Materials 7224540.48 84584477.98
Total 161961713.29 1746143216.57
Other Explanations:
□Applicable ?Not Applicable
199 / 282Annual Report 2023
Construction in Progress
(1) Status of Construction in Progress
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Items
Book Balance Impairment Book Value Book Balance
Impairment
Book Value
Reserves Reserves
Tongliao Meihua West Area
Technological Renovation 4073147.61 -- 4073147.61 10852952.31 -- 10852952.31
Project
Tongliao Meihua East Area
Technological Renovation 3478947.26 -- 3478947.26 1858423.89 -- 1858423.89
Project
Tongliao Meihua Aspartic Acid
and Its Production Supporting -- -- -- 612941264.66 -- 612941264.66
Project
Xinjiang Meihua Technological
Renovation Project 77285449.22 -- 77285449.22 11537050.42 -- 11537050.42
Xinjiang Agriculture Project
Phase II -- -- -- 15990943.78 15990943.78 --
Jilin Meihua Xanthan Gum Phase
IV -- -- -- 286036294.64 -- 286036294.64
Jilin Meihua Technological
Renovation 12265752.98 -- 12265752.98 722740.76 -- 722740.76
The Company’s Renovation 32442084.70 -- 32442084.70 6908243.95 -- 6908243.95
Langfang Pullulan Capsule
Project -- -- -- 38247413.57 -- 38247413.57
Tongliao Jianlong Raw Ammonia
Unit Technical Upgrade and -- -- -- 692454354.39 -- 692454354.39
Transformation Project
Tongliao Meihua Fertilizer
Technological Renovation 25042391.04 -- 25042391.04 -- -- --
Project
Tongliao Jianlong Technological
Renovation Project 149400.00 -- 149400.00 -- -- --
Total 154737172.81 -- 154737172.81 1677549682.37 15990943.78 1661558738.59Annual Report 2023
(2) Changes in Significant Construction in Progress for the Current Period
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Other Percentage Including: Interest
Increased Transferred to Decreased of Accumulated Amount of
Project Name Budget Amount Beginning Amount for the Fixed Assets for Amounts Ending Cumulative Engineering Amount of Capitalized
Capitalization
Balance for the Balance Investment Progress Capitalized Interest for Rate for the
Sources
Current Period the Current Current of Fund
Period Current in Budget Interest the Current Period (%) Period Period (%)
Jilin Meihua
Xanthan Gum 342000000.00 286036294.64 69814623.75 355850918.39 104.90 100.00 3130506.03 1752842.65 3.05 Self-
Phase IV funded
Tongliao
Jianlong Raw
Ammonia Unit
Technical 1109474000.00 692454354.39 390165917.04 1082620271.43 97.58 100.00 14913689.95 9472967.63 3.05
Self-
Upgrade and funded
Transformation
Project
Tongliao
Meihua
Aspartic Acid
and Its 612941264.66 568471476.39 1181412741.05 85.13 100.00 11221908.92 8358436.25 3.06 Self-
Production 1381912000.00 funded
Supporting
Project
Total 2833386000.00 1591431913.69 1028452017.18 2619883930.87 / / 29266104.90 19584246.53 / /An nual Report 2023
(3) Provisions for Impairment Reserves for Construction in Progress for the Current Period
□Applicable ?Not Applicable
(4) Impairment Testing of Construction in Progress
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
Engineering Materials
(5) Status of Engineering Materials
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Items Book Impairment Impairment
Book Value Book Balance Book Value
Balance Reserves Reserves
Engineering
7224540.48--7224540.4884584477.98--84584477.98
Materials
Total 7224540.48 -- 7224540.48 84584477.98 -- 84584477.98
23. Productive Biological Assets
(1) Productive biological assets measured at cost
□Applicable ?Not Applicable
(2) Impairment testing of productive biological assets measured at cost
□Applicable ?Not Applicable
(3) Productive biological assets measured at fair value
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
24. Oil and Gas Assets
(1) Status of Oil and Gas Assets
□Applicable ?Not Applicable
(2) Impairment Testing of Oil and Gas Assets
□Applicable ?Not Applicable
25. Right-of-Use Assets
(1) Status of Right-of-Use Assets
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Housing and Structures Transportation Tools Total
I. Original Book Value
1. Beginning Balance 9450321.70 6132353.95 15582675.65
2. Increased Amount
4355065.25--4355065.25
for the Current Period
Lease 4355065.25 -- 4355065.25
3. Decreased Amount
5633295.46997592.896630888.35
for the Current Period
202 / 282An nual Report 2023
Expiration of
5633295.46997592.896630888.35
Lease
4. Ending Balance 8172091.49 5134761.06 13306852.55
II. Accumulated Depreciation
1. Beginning Balance 2426197.51 1238385.86 3664583.37
2. Increased Amount
2659316.491228964.173888280.66
for the Current Period
(1) Provision 2659316.49 1228964.17 3888280.66
3. Decreased Amount
3286089.01593566.563879655.57
for the Current Period
(1) Disposal 3286089.01 593566.56 3879655.57
4. Ending Balance 1799424.99 1873783.47 3673208.46
III. Impairment Reserves
1. Beginning Balance
2. Increased Amount
for the Current Period
(1) Provision
3. Decreased Amount
for the Current Period
(1) Disposal
4. Ending Balance
IV. Book Value
1. Book Value at the
6372666.503260977.599633644.09
End of the Period
2. Book Value at the
Beginning of the 7024124.19 4893968.09 11918092.28
Period
(2) Impairment Testing of Right-of-Use Assets
□Applicable ?Not Applicable
26. Intangible Assets
(1) Status of Intangible Assets
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Patent Non-patent License for
Items Land Use Right Software Total
Right Technology Patent Usage
I. Original Book Value
1. Beginning Balance 1391158942.26 30214810.16 130247342.94 1551621095.36
2. Increased Amount for
4870120.22--4870120.22
the Current Period
(1) Acquisition 4870120.22 -- 4870120.22
(2) Internal Research
and Development
203 / 282An nual Report 2023
(3) Increase from
Enterprise Merger
3. Decreased Amount for
--1890784.42--1890784.42
the Current Period
(1) Disposal 1890784.42 -- 1890784.42
4. Ending Balance 1391158942.26 33194145.96 130247342.94 1554600431.16
II. Accumulated Amortization
1. Beginning Balance 310775422.52 23337577.63 108101879.86 442214880.01
2. Increased Amount for
27046283.211600120.189074238.4937720641.88
the Current Period
(1) Provision 27046283.21 1600120.18 9074238.49 37720641.88
3. Decreased Amount for
--1278393.99--1278393.99
the Current Period
(1) Disposal -- 1278393.99 -- 1278393.99
4. Ending Balance 337821705.73 23659303.82 117176118.35 478657127.90
III. Impairment Reserves
1. Beginning Balance
2. Increased Amount for
the Current Period
(1) Provision
3. Decreased Amount for
the Current Period
(1) Disposal
4. Ending Balance
IV. Book Value
1. Book Value at the End
1053337236.539534842.1413071224.591075943303.26
of the Period
2. Book Value at the
1080383519.746877232.5322145463.081109406215.35
Beginning of the Period
The ratio of intangible assets generated from the internal research and development by the Company to
the balance of intangible assets at the end of the current period is zero.
(2) Status of Land Use Rights without Property Ownership Certificates
□Applicable ?Not Applicable
(3) Impairment Testing of Intangible Assets
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
27. Goodwill
(1) Original Book Value of Goodwill
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
204 / 282An nual Report 2023
Decreases during
Increases during the
the Current
Name of the Invested Current Period
Period
Unit or Matters Beginning Balance Ending Balance
Arising from
Generating Goodwill
Enterprise Disposal
Merger
Tongliao Jianlong 11788911.79 11788911.79
Total 11788911.79 11788911.79
(2) Goodwill Impairment Reserves
□Applicable ?Not Applicable
(3) Relevant Information of Asset Portfolio or Asset Portfolios Where Goodwill Belongs to
□Applicable ?Not Applicable
Changes in Asset Portfolio or Asset Portfolios
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
(4) Specific Methods for Determining Recoverable Amount
Recoverable amount is determined as the net amount after deducting disposal costs from fair value
□Applicable ?Not Applicable
Recoverable amount is determined based on the present value of expected future cash flows
□Applicable ?Not Applicable
Reasons for differences between the foregoing information and the information used in impairment tests
in previous years or external information
□Applicable ?Not Applicable
Reasons for differences between the information used in impairment tests in previous years and the
actual situation in the current year
□Applicable ?Not Applicable
(5) Performance Commitments and Corresponding Goodwill Impairment
When the goodwill was formed there are performance commitments and the reporting period or the
preceding reporting period was within the performance commitment period.□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
28. Long-term Deferred Expenses
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increased Amortized
Beginning Other Decreased
Items Amount for the Amount for the Ending Balance
Balance Amounts
Current Period Current Period
Site Lease Fees 30389751.27 -- 1525845.24 -- 28863906.03
Syndicated
4334999.96--666666.72--3668333.24
Arrangement Fees
Housing Subsidies 44203225.39 11230000.00 6871245.26 509085.14 48052894.99
Consumption of
Production 14028379.63 23891580.31 17306047.42 -- 20613912.52
Materials
205 / 282An nual Report 2023
Staff Rewards 653666.69 -- 304333.51 -- 349333.18
Leasehold
--2528444.97----2528444.97
Improvements
Total 93610022.94 37650025.28 26674138.15 509085.14 104076824.93
29 Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Unoffset Deferred Income Tax Assets
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Deductible Deferred
Items Deductible Temporary Deferred Income Tax
Temporary Income Tax
Differences Assets
Differences Assets
Asset Impairment
132085052.2819832554.29140720519.5621108133.31
Reserves
Unrealized
Profits from
27136259.934066235.5515075846.042254826.79
Internal
Transactions
Deductible
159208838.9923881325.858883222.472220805.64
Losses
Government Grants 323781716.86 48567257.53 365783981.04 54867597.16
Equity Incentives -- -- 86082439.59 12965268.04
Fair Value Changes 20033198.67 5008299.67 5077806.97 1244251.75
Compensation 6646024.36 996903.65 273388481.44 41008272.22
Difference in
Depreciation 20717695.58 3107654.34 -- --
Periods
Lease Liabilities 4551861.82 682779.27 6070937.43 910640.61
Total 694160648.49 106143010.15 901083234.54 136579795.52
Due to the implementation of Interpretation No.16 the beginning balance of deferred income tax
assets has been adjusted. See (40) in Section V for details.
(2) Unoffset Deferred Income Tax Liabilities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Items Taxable Temporary Deferred Income Tax Taxable Temporary Deferred Income
Differences Liabilities Differences Tax Liabilities
Increment in
valuation of assets
from enterprise
merger not under
the same control
Changes in Fair
Value of Other
Debt Investments
206 / 282An nual Report 2023
Changes in Fair
Value of Other
Equity Investments
Fair Value
6691350.001003702.51714693444.08178603146.62
Changes
Difference in
Depreciation 96781731.29 16114538.19 10857376.85 1628606.53
Periods
Unearned Interest 21626677.80 3421508.34 -- --
Right-of-Use
6372666.50955899.987024124.191053618.63
Assets
Total 131472425.59 21495649.02 732574945.12 181285371.78
Due to the implementation of Interpretation No.16 the beginning balance of deferred income tax
liabilities has been adjusted. See (41) in Section V for details.
(3) Deferred Income Tax Assets or Liabilities Presented as Net Amounts After Offset
□Applicable ?Not Applicable
(4) Details of Unrecognized Deferred Income TaxAssets
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Deductible Temporary Differences
Deductible Losses 36343282.47 37174236.54
Bad Debt Reserves 26451615.91 99233687.43
Fixed Asset Impairment Reserves 423691.69 1640792.74
Construction in Progress
--15990943.78
Impairment Reserves
Total 63218590.07 154039660.49
Due to the uncertainty of whether sufficient taxable income will be available in the future temporary
deductible differences and deductible losses have not been recognized as deferred income tax assets.
(5) Deductible losses of unrecognized deferred income tax assets will expire in the following years
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Year Ending Balance Beginning Balance Remarks
2023--5633987.70
20247582942.837582942.83
20253216597.753216597.75
2028553866.718553866.71
202712148954.9712186841.55
20284840920.21--
Total 36343282.47 37174236.54 /
Other Explanations:
□Applicable ?Not Applicable
207 / 282An nual Report 2023
30. Other Non-current Assets
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Items Impairment Impairment
Book Balance Book Value Book Balance Book Value
Reserves Reserves
Cost of Contract
Acquisition
Cost of Contract
Performance
Cost of
Receivable
Returns
Contract Assets
Prepaid
Equipment and
22595082.00--22595082.00172280973.66--172280973.66
Engineering
Payments
Fixed Deposits 186527333.35 -- 186527333.35 100000000.00 -- 100000000.00
Total 209122415.35 -- 209122415.35 272280973.66 -- 272280973.66
31. Assets with Restricted Ownership Right or Usage Right
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
End of the Period Beginning of the Period
Items Restriction Restricted Restriction Restricted
Book Balance Book Value Book Balance Book Value
Type Situation Type Situation
Refer to 1
Monetary
172543312.10 172543312.10 Others in Section 204800961.99 204800961.99 Others
Funds
VII
Notes
Receivable
Inventories
Refer to 2
Fixed
827303398.98 423641966.22 Mortgage in Section 1043480883.91 544358137.36 Mortgage
Assets
XVI
Intangible
19297147.5 13282870.03 Mortgage
Assets
Total 999846711.08 596185278.32 / / 1267578993.40 762441969.38 / /
32. Short-Term Borrowings
(1) Classification of Short-Term Borrowings
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
208 / 282An nual Report 2023
Items Ending Balance Beginning Balance
Pledged Borrowings
Mortgaged Borrowings
Guaranteed Borrowings 1223000000.00 869292000.00
Credit Borrowings 100000000.00 200000000.00
Unmatured Acceptance Discount 220391544.80 --
Unmatured Interest Payable 477513.89 1206635.74
Total 1543869058.69 1070498635.74
(1) Details of Guaranteed Borrowings
Guaranteed
Lending Institution Ending Balance Guarantor Term of Borrowing
Party
Business Department of Tibet Branch Tongliao Meihua The
100000000.002023/7/12-2024/7/12
Bank of China Limited Xinjiang Meihua Company
Business Department of Tibet Branch Tongliao Meihua The
150000000.002023/9/7-2024/9/7
Bank of China Limited Xinjiang Meihua Company
Business Department of Tibet Branch Tongliao Meihua The
200000000.002023/10/23-2024/10/23
Bank of China Limited Xinjiang Meihua Company
Langfang Development Zone Sub
The
Branch China Construction Bank 50000000.00 Tongliao Meihua 2023/8/10-2024/1/8
Company
Corporation
Langfang Development Zone Sub
The
Branch China Construction Bank 38000000.00 Tongliao Meihua 2023/9/6-2024/2/5
Company
Corporation
Langfang Development Zone Sub
The
Branch China Construction Bank 50000000.00 Tongliao Meihua 2023/10/25-2024/3/14
Company
Corporation
Langfang Development Zone Sub
The
Branch China Construction Bank 50000000.00 Tongliao Meihua 2023/11/29-2024/4/30
Company
Corporation
Langfang Branch Bank of The
150000000.00 Tongliao Meihua 2023/11/20-2024/2/18
Communications Co. Ltd. Company
Langfang Branch Bank of The
30000000.00 Tongliao Meihua 2023/12/8-2024/6/7
Communications Co. Ltd. Company
Liaotong Branch China Construction Tongliao
120000000.00 The Company 2023/3/17-2024/3/17
Bank Corporation Meihua
Liaotong Branch China Construction Tongliao
80000000.00 The Company 2023/3/23-2024/3/17
Bank Corporation Meihua
Liaotong Branch China Construction Tongliao
100000000.00 The Company 2023/3/30-2024/3/30
Bank Corporation Meihua
Business Department of Baichengshi
Jilin
Branch Agricultural Development 50000000.00 The Company 2023/12/25-2024/12/21
Meihua
Bank of China
Songyuan Branch Bank of Jilin
20000000.00 The Company 2023/6/30-2024/6/30
Communications Co. Ltd. Meihua
209 / 282An nual Report 2023
Guaranteed
Lending Institution Ending Balance Guarantor Term of Borrowing
Party
Baicheng Branch Bank of China Jilin
25000000.00 The Company 2023/6/13-2024/5/5
Limited Meihua
Tongliao Horqin Sub-branch
Tongliao
Agricultural Development Bank of 10000000.00 The Company 2023/11/29-2024/11/26
Meihua
China
Total 1223000000.00
(2) Details of Credit Borrowings
Lending Institution Ending Balance Term of Borrowing
Langfang Branch China Merchants Bank 50000000.00 2023/8/30-2024/2/26
Langfang Branch China Merchants Bank 50000000.00 20223/9/13-2024/3/8
Total 100000000.00
(2) Status of Overdue and Unpaid Short-Term Borrowings
□Applicable ?Not Applicable
The status of significant overdue and unpaid short-term borrowings is as follows:
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
33. Financial Liabilities Held for Trading
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
34. Derivative Financial Liabilities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Derivative Financial Liabilities 250000.00
Total 250000.00
35. Notes Payable
(1) Presentation of Notes Payable
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Types Ending Balance Beginning Balance
Commercial Acceptance Bills
Bank Acceptance Bills 1183031652.44 1315000000.00
Total 1183031652.44 1315000000.00
The total amount of overdue and unpaid notes payable at the end of the period is RMB 0 yuan. The
reason for non-payment upon maturity is: Not Applicable
210 / 282An nual Report 2023
36. Accounts Payable
(1) Presentation of Accounts Payable
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Payments for Engineering and Equipment 539356692.74 636044936.73
Provisional Estimation of Payments 301070630.19 228558886.13
Payments Payable 332235118.51 460609855.58
Other Payments 252934754.83 204384193.30
Total 1425597196.27 1529597871.74
(2) Significant Accounts Payable with an Aging Exceeding 1 Year or Overdue
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Reasons for Being Unpaid
Items Ending Balance
or Carried Forward
Feicheng Jinta Machinery Technology Co. Ltd. 3125600.00 Not Yet Due for Settlement
Unable to Contact Due to
Inner Mongolia Huomei Yicheng Energy Co. Ltd. 3999553.50
Bankruptcy
Jiangsu Grand Drying & Concentrating Equipment Co. Ltd. 4177400.00 Not Yet Due for Settlement
Shandong Beno Cooling Equipment Co. Ltd. 4134000.00 Not Yet Due for Settlement
Tianhong Environmental Technology Co. Ltd. 3156000.00 Not Yet Due for Settlement
Weihai Yuanhang Technology Development Co. Ltd. 3611600.00 Not Yet Due for Settlement
Beijing Electric Power Equipment General Factory Co. Ltd. 3599800.00 Not Yet Due for Settlement
Shenyang Turbine Machinery Co. Ltd. 3612000.00 Not Yet Due for Settlement
Keyang Environmental Engineering (Shanghai) Co. Ltd. 6821500.00 Not Yet Due for Settlement
Liaoning Runfeng Heavy Industry Co. Ltd. 3210000.00 Not Yet Due for Settlement
Total 39447453.50 /
Other Explanations
?Applicable □ Not Applicable
At the end of the period there were no accounts payable to shareholder units holding 5% or more of
the Company’s voting shares and other related parties in the accounts payable.
37. Advance Receipts
(1) Presentation of Advance Receipts
□Applicable ?Not Applicable
(2) Significant Advance Receipts with an Aging Exceeding 1 Year
□Applicable ?Not Applicable
(3) Amount of and Reason for Significant Changes in Book Value During the Reporting Period
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
38. Contract Liabilities
(1) Status of Contract Liabilities
?Applicable □ Not Applicable
211 / 282An nual Report 2023
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Advance Payments for Goods 892931047.76 1092850586.56
Total 892931047.76 1092850586.56
(2) Significant Contract Liabilities with an Aging Exceeding 1 Year
□Applicable ?Not Applicable
(3) Amount of and Reason for Significant Changes in Book Value During the Reporting Period
□Applicable ?Not Applicable
Other Explanations:
?Applicable □ Not Applicable
At the end of the period there were no advance receipts from shareholder units holding 5% or more
of the Company’s voting shares in the contract liabilities. Please refer to (6) in Section XIV - Related
Parties and Related Transactions for details of advance receipts from other related parties.
39. Employee Compensation Payable
(1) Presentation of Employee Compensation Payable
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Beginning Increase during Decrease during
Items Ending Balance
Balance the Current Period the Current Period
I. Short-Term Compensation 461058131.68 1588920044.66 1727018535.99 322959640.35
II. Post-employment Benefits -
5094111.39111313937.42116408048.81--
Defined Contribution Plans
III. Termination Benefits
IV. Other Benefits Due Within
One Year
Total 466152243.07 1700233982.08 1843426584.80 322959640.35
(2) Presentation of Short-Term Compensation
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Beginning Increase during Decrease during
Items Ending Balance
Balance the Current Period the Current Period
I. Salaries Bonuses
458920874.971483975347.501622976559.79319919662.68
Allowances and Subsidies
II. Employee Welfare Expenses -- 6303018.66 6303018.66 --
III. Social Insurance Premiums 24425.87 61391933.82 61416359.69 --
Including: Medical Insurance
24425.8757175987.1957200413.06--
Premiums
Work Injury Insurance
--4215946.634215946.63--
Premiums
Maternity Insurance
Premiums
IV. Housing Provident Fund 145235.00 8469138.52 8614373.52 --
212 / 282An nual Report 2023
V. Union Funds and Employee
1967595.8418360606.1617288224.333039977.67
Education Funds
VI. Short-Term Paid Absence -- 10420000.00 10420000.00 --
VII. Short-Term Profit-Sharing
Plans
Total 461058131.68 1588920044.66 1727018535.99 322959640.35
(3) Presentation of Defined Contribution Plans
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Beginning Increase during Decrease during
Items Ending Balance
Balance the Current Period the Current Period
1. Basic Old-Age Insurance 4876403.52 107610381.80 112486785.32 --
2. Unemployment Insurance
217707.873703555.623921263.49--
Premiums
3. Corporate Pension Contributions
Total 5094111.39 111313937.42 116408048.81 --
Other Explanations:
□Applicable ?Not Applicable
40. Taxes Payable
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Value-added Tax 6718904.45 56253970.44
Consumption Tax
Business Tax
Corporate Income Tax 138281216.82 246321351.32
Personal Income Tax 85396272.23 26600693.50
City Maintenance and Construction Tax 2418469.57 7678860.70
Environmental Protection Tax 1718490.66 1240548.76
Education Surcharge 1897988.98 5893623.21
Water Resource Tax 12528820.00 9181593.59
Stamp Duty 7022025.42 7314599.89
Others 490338.42 9183957.65
Total 256472526.55 369669199.06
41. Other Payables
(1) Presentation of Items
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Interest Payable
Dividend Payable 405000.00 11238782.40
Other Payables 249448910.40 310821116.18
Total 249853910.40 322059898.58
213 / 282An nual Report 2023
Other Explanations:
□Applicable ?Not Applicable
(2) Interest Payable
Classified Presentation
□Applicable ?Not Applicable
Significant Overdue Interest Payable:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
(3) Dividends Payable
Classified Presentation
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Common Stock Dividends 405000.00 11238782.40
Preferred Shares/Perpetual Bond Dividends Classified as
Equity Instruments
Preferred Shares/Perpetual Bond Dividends-XXX
Preferred Shares/Perpetual Bond Dividends-XXX
Dividends Payable-XXX
Dividends Payable-XXX
Total 405000.00 11238782.40
Other explanations: For significant dividends payable overdue for more than 1 year the reasons for
non-payment should be disclosed:
The ending balance represents dividends for the Employee Stock Ownership Plan for 2021; the
beginning balance pertains to overseas shareholders.
(4) Other Payables
Presentation of Other Payables by Nature of Payments
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Accrued Expenses 181138357.90 176499003.24
Guarantee Deposits 57708196.32 61168022.99
Incentive Payments with Repurchase Obligations -- 62500000.00
Others 10602356.18 10654089.95
Total 249448910.40 310821116.18
Significant other payables with an aging exceeding 1 year or overdue
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Reasons for Being Unpaid or
Items Ending Balance
Carried Forward
Xinjiang Hengyuan Water Co. Ltd. 15487076.60 Not Yet Due for Payment
214 / 282An nual Report 2023
Employment Security Funds for the Disabled 6952578.01 Not Yet Due for Payment
Electricity Billing Management Center Urumqi Electric
3412811.03 Not Yet Due for Payment
Power Bureau Xinjiang Electric Power Corporation
Total 25852465.64 /
Other Explanations:
?Applicable □ Not Applicable
At the end of the period there were no accounts payable to shareholder units holding 5% or more of
the Company’s voting shares or other related parties in the other payables.
42. Liabilities Held for Sale
□Applicable ?Not Applicable
43. Non-Current Liabilities Due within 1 Year
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Long-term Borrowings Due Within 1
531634500.00261504500.00
Year
Bonds Payable Due Within 1 Year
Long-Term Payables Due Within 1
Year
Lease Liabilities Due Within 1 Year 3450772.76 3925147.29
Total 535085272.76 265429647.29
44. Other Current Liabilities
Status of Other Current Liabilities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Short-Term Bonds Payable
Return Refunds Payable
Long-tern Loan Interest Repayable
2210728.07--
Within One Year
Sales Tax to be Carried Forward 71806893.03 101068273.03
Notes Endorsed But Not Yet
44671107.65140101190.26
Derecognized
Total 118688728.75 241169463.29
Increase/Decrease in Short-Term Bonds Payable:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
45. Long-Term Borrowings
(1) Classification of Long-Term Borrowings
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
215 / 282An nual Report 2023
Items Ending Balance Beginning Balance
Pledged Borrowings
Mortgaged Borrowings 300000000.00 300000000.00
Guaranteed Borrowings 2181597521.77 3563512221.77
Credit Borrowings 50000000.00 70000000.00
Undue Interest Payable -- 4003691.49
Less: Long-Term Borrowings Due
531634500.00261504500.00
Within One Year
Total 1999963021.77 3676011413.26
Explanation of Classification of Long-Term Borrowings:
(1) Details of Credit Borrowings
Lending Institution Ending Balance Term of Borrowing
Langfang Branch Agricultural Development Bank of China 50000000.00 2022/11/15-2025/11/9
Total 50000000.00
The Company has entered into a working capital loan agreement with the Langfang Branch of the
Agricultural Development Bank of China for a total amount of RMB 400000000.00 yuan with a
principal balance of RMB 50000000.00 yuan as of December 31 2023.
(2) Details of Mortgaged Borrowings
Lending Institution Ending Balance Collateral Term of Borrowing
Xinjiang Meihua Land
Hebei Branch Export-Import Bank of China 300000000.00 2022/8/12-2025/7/26
Property as collateral
Total 300000000.00
(3) Details of Guaranteed Borrowings
Guaranteed
Lending Institution Ending Balance Guarantor Term of Borrowing
Party
Langfang Development Zone Sub-branch The
10000000.00 Tongliao Meihua 2021/9/18-2024/9/18
China Construction Bank Corporation Company
Bazzhou Sub-branch Industrial and The
197000000.00 Xinjiang Meihua 2021/12/28-2024/12/15
Commercial Bank of China Limited Company
Bazhou Shengfang Sub-branch The
66775500.00 Tongliao Meihua 2022/12/14-2025/12/8
Agricultural Bank of China Limited Company
Bazhou Shengfang Sub-branch The
99000000.00 Xinjiang Meihua 2022/12/14-2025/12/8
Agricultural Bank of China Limited Company
Tongliao
Business Department of Tibet Branch The
179000000.00 Meihua 2023/3/31-2026/3/31
Bank of China Limited Company
Xinjiang Meihua
Tongliao
Business Department of Tibet Branch The
39000000.00 Meihua 2023/4/23-2026/3/31
Bank of China Limited Company
Xinjiang Meihua
Tongliao
Business Department of Tibet Branch The
53420000.00 Meihua 2022/6/13-2025/6/13
Bank of China Limited Company
Xinjiang Meihua
216 / 282An nual Report 2023
Guaranteed
Lending Institution Ending Balance Guarantor Term of Borrowing
Party
Tongliao
Langfang Development Zone Sub-branch The
98000000.00 Meihua 2022/3/7-2025/2/24
Bank of China Limited Company
Xinjiang Meihua
The
Langfang Branch Hua Xia Bank Co. Ltd. 196000000.00 Tongliao Meihua 2022/11/17-2025/11/14
Company
Songyuan Branch Bank of Jilin
774778.91 The Company 2021/8/30-2028/12/21
Communications Co. Ltd. Meihua
Songyuan Branch Bank of Jilin
36500000.00 The Company 2021/9/13-2029/8/4
Communications Co. Ltd. Meihua
Songyuan Branch Bank of Jilin
9025000.00 The Company 2021/10/19-2029/8/4
Communications Co. Ltd. Meihua
Songyuan Branch Bank of Jilin
16309090.91 The Company 2021/11/26-2029/8/4
Communications Co. Ltd. Meihua
Songyuan Branch Bank of Jilin
11486363.64 The Company 2021/12/23-2029/8/4
Communications Co. Ltd. Meihua
Songyuan Branch Bank of Jilin
34000000.00 The Company 2022/11/21-2025/10/6
Communications Co. Ltd. Meihua
Songyuan Branch Bank of Jilin
30000000.00 The Company 2023/9/22-2025/9/22
Communications Co. Ltd. Meihua
Baicheng Branch China Construction Jilin
15238690.48 The Company 2021/9/13-2029/8/30
Bank Corporation Meihua
Baicheng Branch China Construction Jilin
21875000.00 The Company 2021/10/22-2029/8/30
Bank Corporation Meihua
Baicheng Branch China Construction Jilin
39772727.27 The Company 2021/11/25-2029/8/30
Bank Corporation Meihua
Baicheng Branch China Construction Jilin
27840909.09 The Company 2021/12/22-2029/8/30
Bank Corporation Meihua
Baicheng Branch China Construction Jilin
104000000.00 The Company 2022/6/28-2025/6/27
Bank Corporation Meihua
Jilin
Baicheng Branch Bank of China Limited 846552.38 The Company 2021/9/2-2029//8/4
Meihua
Jilin
Baicheng Branch Bank of China Limited 41170200.00 The Company 2021/9/18-2029/8/4
Meihua
Jilin
Baicheng Branch Bank of China Limited 10301000.00 The Company 2021/10/22-2029/8/4
Meihua
Jilin
Baicheng Branch Bank of China Limited 18728981.82 The Company 2021/11/26-2029/8/4
Meihua
Jilin
Baicheng Branch Bank of China Limited 13032727.27 The Company 2021/12/24-2029/8/4
Meihua
Tongliao Branch China Construction Bank Tongliao
100000000.00 The Company 2023/5/22-2038/5/8
Corporation Meihua
Tongliao Branch China Construction Bank Tongliao
10000000.00 The Company 2021/9/8-2024/9/8
Corporation Meihua
217 / 282An nual Report 2023
Guaranteed
Lending Institution Ending Balance Guarantor Term of Borrowing
Party
Tongliao Branch China Construction Bank Tongliao
40000000.00 The Company 2021/9/15-2024/9/8
Corporation Meihua
Tongliao Branch China Construction Bank Tongliao
32000000.00 The Company 2021/9/27-2024/9/8
Corporation Meihua
Tongliao Branch China Construction Bank Tongliao
97000000.00 The Company 2022/3/30-2025/3/30
Corporation Meihua
Tongliao Branch China Construction Bank Tongliao
10000000.00 The Company 2021/5/26-2024/5/7
Corporation Meihua
Tongliao Branch China Construction Bank Tongliao
20000000.00 The Company 2023/6/27-2029/5/30
Corporation Jianlong
Hohhot Branch China Merchants Bank Tongliao
50000000.00 The Company 2022/8/3-2032/4/23
Co. Ltd. Jianlong
Hohhot Branch China Merchants Bank Tongliao
40000000.00 The Company 2022/11/9-2032/4/23
Co. Ltd. Jianlong
Hohhot Branch China Merchants Bank Tongliao
53000000.00 The Company 2022/11/23-2032/4/23
Co. Ltd. Jianlong
Hohhot Branch China Merchants Bank Tongliao
12000000.00 The Company 2022/11/25-2032/4/23
Co. Ltd. Jianlong
Huihai Sub-branch Agricultural Bank of Tongliao
49000000.00 Xinjiang Meihua 2021/12/6-2024/11/30
China Limited Meihua
Huihai Sub-branch Agricultural Bank of Tongliao
100000000.00 Xinjiang Meihua 2023/8/28-2038/6/20
China Limited Meihua
Wujiaqu Sub-branch China Construction Xinjiang
9500000.00 The Company 2023/5/23-2026/5/23
Bank Corporation Meihua
Wujiaqu Sub-branch China Construction Xinjiang
11222973.50 The Company 2023/5/25-2026/5/23
Bank Corporation Meihua
Wujiaqu Sub-branch China Construction Xinjiang
28777026.50 The Company 2023/5/29-2026/5/23
Bank Corporation Meihua
Hebei Branch Export-Import Bank of Xinjiang
150000000.00 The Company 2021/7/14-2024/7/14
China Meihua
Less: Long-term Borrowings Due Within
531634500.00
One Year
Total 1649963021.77
Other Explanations:
□Applicable ?Not Applicable
46. Bonds Payable
(1) Bonds Payable
□Applicable ?Not Applicable
2) Specific Status of Bonds Payable: (Excluding other financial instruments such as preferred shares
and perpetual bonds classified as financial liabilities)
□Applicable ?Not Applicable
218 / 282An nual Report 2023
(3) Explanation of Convertible Corporate Bonds
□Applicable ?Not Applicable
Accounting Treatment of and Judgement Basis for Rights to Convert Shares
□Applicable ?Not Applicable
(4) Explanation of Other Financial Instruments Classified as Financial Liabilities
Overview of other financial instruments such as preferred shares and perpetual bonds outstanding at the
end of the period
□Applicable ?Not Applicable
Table of Changes in Financial Instruments such as Preferred Shares and Perpetual Bonds Outstanding at
the End of the Period
□Applicable ?Not Applicable
Explanation of the Basis for Classifying Other Financial Instruments as Financial Liabilities:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
7. Lease Liabilities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Within 1 year 3787177.91 4565811.44
1-2 years 2713869.77 4250353.98
2-3 years -- 1190941.20
Less: Unrecognized Financing Costs 459969.00 1062944.01
Less: Lease Liabilities Due Within One Year 3450772.76 3925147.29
Total 2590305.92 5019015.32
48. Long-Term Payables
Presentation of Items
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Long-term Payables 10500000.00 10500000.00
Special Payables
Total 10500000.00 10500000.00
Other Explanations:
□Applicable ?Not Applicable
Long-term Payables
(1) Long-term Payables Presented by Nature of Payments
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Guarantee Deposits 10500000.00 10500000.00
219 / 282An nual Report 2023
Less: Long-term Payables Due
----
Within One Year
Total 10500000.00 10500000.00
Special Payables
(1) Special Payables Presented by Nature of Payments
□Applicable ?Not Applicable
49. Long-term Employee Compensation Payable
□Applicable ?Not Applicable
50. Estimated Liabilities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Beginning
Items Ending Balance Reasons for Formation
Balance
Guarantees Provided to External Parties
Refer to 2 in Section XVI
Pending Litigation 45888616.17
for details
Product Quality Assurance
Restructuring Obligations
Loss Contracts to be Executed
Return Refunds Payable
Others
Total 45888616.17 /
Other Explanations: Including related significant assumptions for significant estimated liabilities.Estimation Explanation: None
51 Deferred Revenue
Status of Deferred Revenue
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increase during Decrease during
Beginning Reasons for
Items the Current the Current Ending Balance
Balance Formation
Period Period
Asset-related Refer to 2 in
Government 429899391.63 -- 44910976.90 384988414.73 Section X for
Grants details
Total 429899391.63 -- 44910976.90 384988414.73 /
Other Explanations:
?Applicable □ Not Applicable
Refer to 2 in Section XI for details of government grants for the Company.
52 Other Non-current Liabilities
□Applicable ?Not Applicable
220 / 282An nual Report 2023
53. Share Capital
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increase/Decrease (+ -) in the Changes During the Current Period
Capital
Beginning New
Stock Reserves Ending Balance
Balance Shares Others Subtotal
Dividend Conversion
Issued
into Shares
Total
Quantity of 3042465447.00 -- -- -- -99039345.00 -99039345.00 2943426102.00
Shares
Other Explanations:
Refer to Note 1 - Basic Information of the Company for details of changes in share capital.
54. Other Equity Instruments
(1) Overview of other financial instruments such as preferred shares and perpetual bonds
outstanding at the end of the period
□Applicable ?Not Applicable
(2) Table of Changes in Financial Instruments such as Preferred Shares and Perpetual Bonds
Outstanding at the End of the Period
□Applicable ?Not Applicable
Explanation of increase/decrease in other equity instruments during the current period reasons for such
changes and basis for relevant accounting treatments:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
55. Capital Reserves
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increase during the Decrease during the
Items Beginning Balance Ending Balance
Current Period Current Period
Capital Premiums
1838443785.1894750000.00900486024.781032707760.40
(Share Premiums)
Other Capital
90816307.253933692.7594750000.00--
Reserves
Total 1929260092.43 98683692.75 995236024.78 1032707760.40
Other Explanations: Including explanation of increase/decrease in the current period and reasons for
such changes:
The increase in share premiums during the current period is due to the achievement of targets for the
second phase of the employee stock ownership plan with RMB 94750000.00 yuan from other capital
reserves transferred to share premiums.The decrease in share premiums during the current period is due to the resolutions of the Company's
extraordinary shareholders meeting in 2020 and the annual shareholders meeting in 2021 where the
Company used 99039345 shares repurchased and held in the share repurchase special account for
221 / 282An nual Report 2023
cancellation reducing share premiums by RMB 900486024.78 yuan.The increase in other capital reserves during the current period is due to the recognition of share-
based payment settled by equity totaling 3933692.75 yuan.
56. Treasury Shares
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increase during Decrease during
Beginning Ending
Items the Current the Current
Balance Balance
Period Period
Used for Employee Stock Ownership
Plans Equity Incentives and 684513074.21 891788014.84 999525369.78 576775719.27
Cancellations
Restricted Share-based Payment 62500000.00 -- 62500000.00 --
Total 747013074.21 891788014.84 1062025369.78 576775719.27
Other Explanations: Including explanation of increase/decrease in the current period and reasons for
such changes:
1. Increase in Shares Used for Employee Stock Ownership Plans Equity Incentives and
Cancellations for the Current Period
(1) The Company held its 31st meeting of the ninth board of directors and the annual shareholders
meeting for 2021 on May 22 2022 and June 9 2022 respectively where the Proposal for Repurchase of
the Company's Shares Through Centralized Bidding Trading was deliberated and approved with the
Company’s shares repurchased from the secondary market used as treasury shares for cancellation and
reduction of registered capital through centralized bidding trading. As of December 31 2023 the
Company repurchased 99.0394 million shares which accounted for 3.26% of its total shares
(3042465447.00 shares) with a total payment of RMB 999.5254 million yuan.
(2) The Company held its third meeting of the tenth board of directors and the second extraordinary
shareholders meeting for 2023 on April 8 2023 and April 28 2023 respectively where the Proposal for
Repurchase of the Company's Shares Through Centralized Bidding Trading was deliberated and approved
with the Company's shares repurchased from the secondary market used as treasury shares for cancellation
and reduction of registered capital through centralized bidding trading. As of December 31 2023 the
Company repurchased 63.5906 million shares which accounted for 2.16% of its current total share capital
(2943426102.00 shares) with a total payment of RMB 576.6452 million yuan.
2. Decrease in Shares Used for Employee Stock Ownership Plans Equity Incentives and
Cancellations for the Current Period
In April 2023 the Company submitted an application to the Shanghai Stock Exchange for the
cancellation of repurchased shares for cancellation. The 99.0394 million shares repurchased from 2022 to
2023 were canceled on April 10 2023 reducing the treasury shares by RMB 999525369.78 and
correspondingly offsetting the share capital by RMB 99039345.00 and the capital reserves by RMB
900486024.78.
3. Decrease in Treasury Shares used for Restricted Share-based Payment for the Current
222 / 282An nual Report 2023
Period
The Company's first extraordinary shareholders meeting for 2021 approved the Proposal on the
Management Measures for the Company's 2021 Employee Stock Ownership Plan. According to the
relevant provisions of the Company's 2021 Restricted Stock Incentive Plan the second lock-up period of
the restricted shares granted under the current incentive plan has expired resulting in a reduction of other
payables and treasury shares by RMB 62.5 million.
57. Other Comprehensive Income
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amounts Incurred during the Current Period
Less: Amount Less: Amount
Recorded in Recorded in
Other Other
Amounts Comprehensive Comprehensive Income in Attributable to Attributable
Items Beginning Incurred during Income in to the Ending Balance the Current Previous Previous Less: Income the Parent Balance
Period Before Periods and Periods and Tax Expenses Company After
Minority
Transferred to Tax Shareholders Income Tax Transferred to
the Profit or Retained
After Tax
Loss for the Earnings for
Current Period the Current Period
I. Other
Comprehensive
Income That
Cannot Be 535493474.99 (705007500.59) -- 2292449.41 (177494122.51) (529805827.49) 5687647.50
Reclassified to
Profit or Loss
Including:
Amount of
Changes in
Remeasured
Defined
Benefit Plans
Other
Comprehensive
Income That
Cannot Be
Reclassified to
Profit or Loss
Under Equity
Method
Changes in
Fair Value of
Other Equity 535493474.99 (705007500.59) -- 2292449.41 (177494122.51) (529805827.49) 5687647.50
Instrument
Investments
Changes in
Fair Value of
Enterprises’
Own Credit
Risk
II. Other
Comprehensive
Income to Be 5579167.05 (5622160.33) (42993.28) (5579167.05)
Reclassified to
Profit or Loss
Including:
Other
Comprehensive
Income That
Can Be
Transferred to
Profit or Loss
223 / 282An nual Report 2023
Under Equity
Method
Changes in
Fair Value of
Other Debt
Investments
Amount of
Financial
Assets
Reclassified
and Recorded 5579167.05 (5622160.33) (42993.28) (5579167.05)
in Other
Comprehensive
Income
Credit
Impairment
Reserves for
Other Debt
Investments
Cash Flow
Hedging
Reserves
Converted
Differences in
Foreign
Currency
Financial
Statements
Total Other
Comprehensive 541072642.04 (710629660.92) -- 2292449.41 (177537115.79) (535384994.54) 5687647.50
Income
Other explanations including the adjustments to the transfer of effective portion of cash flow hedge
profit or loss to initially recognized amount of hedged items: None
58. Special Reserves
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increase during the Decrease during the
Items Beginning Balance Ending Balance
Current Period Current Period
Work Safety
2060395.4224824346.7722932295.313952446.88
Expenses
Total 2060395.42 24824346.77 22932295.31 3952446.88
Other explanations including explanation of increase/decrease for the current period and reasons for
such changes: None
59. Surplus Reserves
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increase during the Decrease during the
Items Beginning Balance Ending Balance
Current Period Current Period
Statutory Surplus
1142504553.27183789891.03--1326294444.30
Reserves
Discretionary Surplus
Reserves
Reserve Funds
Enterprise Expand
Funds
Others
Total 1142504553.27 183789891.03 -- 1326294444.30
224 / 282An nual Report 2023
Explanations of surplus reserves including including explanation of increase/decrease for the current
period and reasons for such changes:
The increase in surplus reserves for the current period is the statutory surplus reserves provided at
10% of the net profit attributable to the Parent Company.
60 Undistributed Profits
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items For the Current Period For the Previous Period
Undistributed Profits at the End of the Previous Period Before
7605640318.804548727413.48
Adjustment
Total Amount of Undistributed Profits at the Beginning of the
--51090589.59
Adjustment (Increase + decrease－)
Undistributed Profits at the Beginning of the Post-adjustment 7605640318.80 4599818003.07
Plus: Net Profit Attributable to the Owners of the Parent
3180949695.484406241981.92
Company for the Current Period
Minus: Withdrawal of Statutory Surplus Reserves 183789891.03 183590087.39
Withdrawal of Discretionary Surplus Reserves
Withdrawal of General Risk Reserves
Ordinary Share Dividends Payable 1177370440.80 1216829578.80
Ordinary Share Dividends Transferred to Share Capital
Retained Earnings from the Carry-forward of Other
2292449.41
Comprehensive Income
Undistributed Profits at the End of the Period 9427722131.86 7605640318.80
Details of Undistributed Profits at the Beginning of the Adjustment:
1. Due to retrospective adjustments under the Accounting Standards for Business Enterprises and related
new regulations the amount of undistributed profits at the beginning of the impact period is RMB 0
yuan.
2. Due to changes in the accounting standards the amount of undistributed profits at the beginning of the
impact period is RMB 0 yuan.
3. Due to correction of significant accounting errors the amount of undistributed profits at the beginning
of the impact period is RMB 0 yuan.
4. Due to changes in the consolidation scope caused by the same control the amount of undistributed
profits at the beginning of the impact period is RMB 0 yuan.
5. Due to other adjustments the total amount of undistributed profits at the beginning of the impact
period is RMB 0 yuan.Due to the implementation of Interpretation No.16 the items "Total Amount of Undistributed Profits
at the Beginning of the Adjustment (Increase + decrease－) Undistributed Profits at the Beginning of the
Post-adjustment Net Profit Attributable to the Owners of the Parent Company for the Current Period
Withdrawal of Statutory Surplus Reserves and Undistributed Profits at the End of the Period" for the
previous period have been adjusted. Refer to 40 in Section V for details.
225 / 282An nual Report 2023
61. Operating Revenues and Operating Costs
(1) Status of Operating Revenues and Operating Costs
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Period Amount Incurred during the Previous Period
Items
Revenues Costs Revenues Costs
Main Business 27438511615.65 22032213101.88 27742367171.28 20764042906.04
Other Business 322100643.42 264908923.37 194785627.57 151740935.59
Total 27760612259.07 22297122025.25 27937152798.85 20915783841.63
(2) Decomposition Information of Operating Revenues and Operating Costs
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
(3) Explanation of Performance Obligations
□Applicable ?Not Applicable
(4) Explanation of Allocation to Remaining Performance Obligations
□Applicable ?Not Applicable
(5) Significant Changes in Contracts or Significant Adjustments to Transaction Prices
□Applicable ?Not Applicable
Other Explanations:
1．Main Business (by product)
Amount Incurred during the Current Period Amount Incurred during the Previous Period
Items
Revenues Costs Revenues Costs
Food Flavor and Texture
9832306593.117578210297.4710098632623.747909658638.32
Optimization Products
Animal Nutrition Amino
14539372320.2512763217281.6914905702104.6311447666409.56
Acids
Human Medical Amino
562658107.07409339493.72550270593.34364196692.27
Acids
Others 2504174595.22 1281446029.00 2187761849.57 1042521165.89
Total 27438511615.65 22032213101.88 27742367171.28 20764042906.04
2．Main Business (by region)
Amount Incurred during the Current Period Amount Incurred during the Previous Period
Region Name
Operating Revenues Operating Costs Operating Revenues Operating Costs
Domestic Sales 18966892718.66 15754837487.69 19092815275.42 14611639318.35
Export Sales 8471618896.99 6277375614.19 8649551895.86 6152403587.69
Total 27438511615.65 22032213101.88 27742367171.28 20764042906.04
3．Income from the Company’s Top Five Customers
Contribution to Total Operating
Company Name Amount
Revenues (%)
First 731748004.84 2.64
Second 629438959.04 2.27
226 / 282An nual Report 2023
Contribution to Total Operating
Company Name Amount
Revenues (%)
Third 572111547.60 2.06
Fourth 491154232.14 1.77
Fifth 473576288.40 1.71
Total 2898029032.02 10.45
62. Taxes and Surcharges
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Amount Incurred during the
Items
Current Period Previous Period
Consumption Tax
Business Tax
Urban Maintenance and Construction Tax 42460054.73 48884039.06
Education Surcharge 32562320.81 38199488.77
Resource Tax 44956471.41 41348894.34
Property Tax 49652143.48 46143030.26
Land Use Tax 34578742.33 36504811.19
Vehicle and Vessel Usage Tax 45378.29 212763.50
Stamp Duty 26227479.11 26500416.87
Environmental Protection Tax 6556377.55 5538744.92
Others 5554768.64 15392508.54
Total 242593736.35 258724697.45
63 Sales Expenses
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Transportation Expenses 221950304.39 245074109.38
Company Expenses 53079202.42 44017027.40
Promotion Expenses 24025191.89 28214064.97
Employee Expenses 65874971.73 74307431.11
Depreciation and Amortization 14392292.89 13493827.10
Warehousing Expenses 33974810.27 32737533.64
Equity Incentive Expenses 216148.37 3345070.08
Total 413512921.96 441189063.68
64. Administrative Expenses
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Company Expenses 211813309.05 154011763.32
Employee Expenses 585717181.90 702339090.49
227 / 282An nual Report 2023
Depreciation and Amortization 123647918.48 105371553.56
Equity Incentive Expenses 3419871.44 49102087.71
Total 924598280.87 1010824495.08
65. Research and Development Expenses
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Employee Expenses 43670604.00 28254427.64
Material Consumption 219425458.83 207523556.37
Depreciation Expenses 15169996.55 12546206.81
Other Expenses 35885166.14 30357925.84
Equity Incentive Expenses 71457.37 1000401.26
Total 314222682.89 279682517.92
66. Financial Expenses
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Interest Expenses 115220289.90 149373949.31
Less: Interest Income 118865910.23 72586918.49
Exchange Profits and Losses (41114503.87) (6953122.87)
Others 11333448.88 14042892.71
Total (33426675.32) 83876800.66
67. Other Income
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Classification by Nature
Period Period
Government Subsidies 240560349.82 164252213.98
Refunds of Personal Income Tax
1950175.35878256.46
Handling Fees
Additional Deduction of Value-added
5869503.30130991.61
Tax
Value-added Tax Exemption for
81000.00
Retired Veterans
Total 248461028.47 165261462.05
Other Explanations:
Refer to (3) in Section XI for details of government subsidies for the Company
68. Investment Income
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Amount Incurred during the
Items
Current Period Previous Period
228 / 282An nual Report 2023
Investment Income from Long-term Equity
1845935.983074284.74
Investment Accounted for by the Equity Method
Investment Income from the Disposal of Long-term
--5143710.59
Equity Investments
Investment Income from Financial Assets Held for
5814900.022623055.55
Trading during the Holding Period
Dividend Income from Other Equity Instrument
2816000.002816000.00
Investments during the Holding Period
Dividend Income from Debt Investments during the
Holding Period
Dividend Income from other Debt Investments
during the Holding Period
Investment Income from the Disposal of Financial
(8503619.01)5375463.59
Assets Held for Trading
Investment Income from the Disposal of Other
Equity Instrument Investments
Investment Income from the Disposal of Debt
Investments
Investment Income from the Disposal of Other
Debt Investments
Debt Restructuring Gains
Investment Income from Debt Investments during
1535377.362362500.00
the Holding Period
Others 4118595.00 2970000.00
Total 7627189.35 24365014.47
69. Gains from Net Exposure Hedging
□Applicable ?Not Applicable
70. Gains from Changes in Fair Value
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Amount Incurred during the
Sources of Gains from Changes in Fair Value
Current Period Previous Period
Financial Assets Held for Trading (38116002.85) 32686957.19
Including: Gains from Changes in Fair Value
(36309830.06)21389448.01
Arising from Derivative Financial Instruments
Financial Liabilities Held for Trading
Investment Properties Measured at Fair Value
Total (38116002.85) 32686957.19
Other Explanations:
None
71. Credit Impairment Losses
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
229 / 282An nual Report 2023
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Bad Debt Losses on Notes
Receivable
Bad Debt Losses on Accounts
Receivable
Bad Debt Losses on Other
Receivables
Impairment Losses on Debt
Investments
Impairment Losses on Other Debt
Investments
Bad Debt Losses on Long-term
Receivables
Financial Guarantee-related
Impairment Losses
Bad Debt Losses (5225785.54) (3165751.49)
Total (5225785.54) (3165751.49)
71. Asset Impairment Losses
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Amount Incurred during the
Items
Current Period Previous Period
I. Impairment Losses on Contract Assets
II. Inventory Write-down Losses and Contract
(5317795.33)(4695222.84)
Performance Cost Impairment Losses
III. Impairment Losses on Long-term Equity
Investments
IV. Impairment Losses on Investment Properties
V. Impairment Losses on Fixed Assets (97553.73) (1262740.16)
VI. Impairment Losses on Engineering Materials
VII. Impairment Losses on Construction in Progress
VIII. Impairment Losses on Productive Biological
Assets
IX. Impairment Losses on Oil and Gas Assets
X. Impairment Losses on Intangible Assets
XI. Impairment Losses on Goodwill
XII. Others
Total (5415349.06) (5957963.00)
73. Gains from Disposal of Assets
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Gains or Losses from Disposal of 4073026.92 (82296.20)
230 / 282An nual Report 2023
Fixed Assets
Total 4073026.92 (82296.20)
74. Non-operating Revenues
Status of Non-operating Revenues
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amounts Recorded in
Amount Incurred during Amount Incurred during Non-recurring Profits or
Items
the Current Period the Previous Period Losses for the Current
Period
Total Gains from Disposal
of Non-current Assets
Including: Gains from
Disposal of Fixed Assets
Gains from
Disposal of Intangible
Assets
Gains from Exchange of
Non-monetary Assets
Donation Receipts -- 53000.00 --
Government Grants
Revenue from Default
2185396.1215873654.492185396.12
Compensation
Revenue from Outstanding
191568.73--191568.73
Unsolved Matters
Insurance Claims 5691021.62 5603850.59 5691021.62
Others 2289053.52 5822915.86 2289053.52
Total 10357039.99 27353420.94 10357039.99
Other Explanations:
□Applicable ?Not Applicable
75. Non-operating Expenditure
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amounts Recorded in
Amount Incurred during Amount Incurred during Non-recurring Profits or
Items
the Current Period the Previous Period Losses for the Current
Period
Total Losses from Disposal
of Non-current Assets
Including: Losses from
Disposal of Fixed Assets
231 / 282An nual Report 2023
Losses from
Disposal of Intangible
Assets
Losses from Exchange of
Non-monetary Assets
External Donations 6614300.00 4131800.00 6614300.00
Expenditure for
Outstanding Unsolved 13806.01 -- 13806.01
Matters
Abnormal Losses -- 2631440.71 --
Inventory Losses 81455.32 60533.27 81455.32
Losses from Destruction or
Scrapping of Non-current 42988929.16 19687388.53 42988929.16
Assets
Default Losses 329691.76 2746862.75 329691.76
Others 50586631.95 5479156.74 50586631.95
Total 100614814.20 34737182.00 100614814.20
Other Explanations:
Additionally there are provisions for litigation compensation payments of RMB 30888616.17 yuan
related to the former Dalian Hanxin Bio-Pharmaceutical Co. Ltd. and provisions for litigation
compensation payments of RMB 15 million yuan related to the subsidiary Xinjiang Meihua and Fujian
Fufeng Group Company Limited.
76. Income Tax Expenses
(1) Table of Income Tax Expenses
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Current Income Tax Expenses 494001746.26 771689810.73
Deferred Income Tax Expenses 48184178.41 (25136748.26)
Total 542185924.67 746553062.47
Due to the implementation of Interpretation No. 16 the amount incurred during the previous period
has been adjusted. Refer to (40) in Section V for details.
(2) Adjustment Process for Accounting Profits and Income Tax Expenses
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Amount Incurred during the Current Period
Total Profits 3723135620.15
Income Tax Expenses Calculated at Statutory/Applicable
558470343.02
Tax Rates
Impact of Different Tax Rates Applicable to Subsidiaries 4208903.72
232 / 282An nual Report 2023
Impact of Income Tax for the Previous Period Before
3884283.13
Adjustment
Impact of Non-taxable Income (21536609.42)
Impact of Non-deductible Costs Expenses and Losses 10487181.40
Impact of Deductible Losses from Unrecognized
Deferred Income Tax Assets for the Previous Periods （928113.48）
Before Usage
Impact of Deductible Temporary Difference or
Deductible Losses from Unrecognized Deferred Income 1177411.96
Tax Assets for the Current Period
Impact of Additional Deduction of Research and
（13577475.66）
Development Expenses
Income Tax Expenses 542185924.67
Other Explanations:
□Applicable ?Not Applicable
77. Other Comprehensive Income
?Applicable □ Not Applicable
Refer to the notes for details.
78. Cash Flow Statement Items
(1) Cash Related to Operating Activities
Other received cash related to operating activities received
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Interest Income 102290433.65 72591316.49
Income from Government Grants 198687827.92 132301555.04
Other Transactions 42766511.48 42940480.98
Total 343744773.05 247833352.51
Explanation of other received cash related to operating activities: None
Other paid cash related to operating activities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Expense Expenditure 652607761.30 1145852591.22
Temporary Borrowings 1698173.60 858086.88
Other Expenditures 26521875.18 5125771.60
Total 680827810.08 1151836449.70
Explanation of other paid cash related to operating activities: None
(2) Cash Related to Investment Activities
Significant received cash related to investment activities
□Applicable ?Not Applicable
233 / 282An nual Report 2023
Significant paid cash related to investment activities
□Applicable ?Not Applicable
Other received cash related to investment activities
□Applicable ?Not Applicable
Other paid cash related to investment activities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Gains from Exchange Settlement 34278559.79 57063590.20
Total 34278559.79 57063590.20
Explanation of other paid cash related to investment activities: None
(3) Cash Related to Financing Activities
Other received cash related to financing activities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Restricted Monetary Funds 441674397.67 314573624.18
Total 441674397.67 314573624.18
Explanation of other received cash related to financing activities: None
Other paid cash related to financing activities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
Restricted Monetary Funds 409416747.79 378921181.99
Repurchased Shares 891788014.84 784714462.91
Principal and Lease Deposits for
4402628.855036667.79
Lease Liabilities
Total 1305607391.48 1168672312.69
Explanation of other paid cash related to financing activities: None
Changes in Liabilities Arising from Financing Activities
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Increase during the Current Decrease during the Current
Items Beginning Period Period Ending Balance Cash Changes Non-cash Cash Changes Non-cash Balance
Changes Changes
Short-term
Borrowings 1070498635.74 3545122989.15 32593813.24 3089480435.09 14865944.35 1543869058.69
Long-term
Borrowings 3937515913.26 520000000.00 -- 1925918391.49 -- 2531597521.77
Lease Liabilities 8944162.61 -- 5128935.94 4251828.63 3780191.24 6041078.68
Total 5016958711.61 4065122989.15 37722749.18 5019650655.21 18646135.59 4081507659.14
4) Explanation of Presenting Cash Flows at Net Amount
□Applicable ?Not Applicable
234 / 282An nual Report 2023
(5) Significant Events and Financial Effects That Do Not Involve Current Cash Receipts or
Payments but May Affect the Company's Financial Position or May Affect the Company’s Cash
Flows in the Future
□Applicable ?Not Applicable
79. Supplementary Information for Cash Flow Statements
(1) Supplementary Information for Cash Flow Statements
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount for the Amount for the Previous
Supplementary Information
Current Period Period
1．Adjusting Net Profit to Cash Flows from Operating Activities:
Net Profit 3180949695.48 4406241981.92
Plus: Asset Impairment Reserves 5415349.06 5957963.00
Credit Impairment Losses 5225785.54 3165751.49
Depreciation of Fixed Assets Depletion of Oil and Gas Assets and
1311010852.631342547913.54
Depreciation of Productive Biological Assets
Amortization of Right-of-Use Assets 3888280.66 3711861.36
Amortization of Intangible Assets 37303367.68 37201659.78
Amortization of Long-term Deferred Expenses 26321001.29 24580433.16
Losses on Disposal of Fixed Assets Intangible Assets and Other
(2679296.59)82296.20
Long-term Assets ("-" for gains)
Losses on Scrapping of Fixed Assets ("-" for gains) 43033940.23 19320647.95
Losses on Changes in Fair Value ("-" for gains) 38116002.85 -32686957.19
Financial Expenses ("-" for gains) 75739035.49 161057282.64
Investment Losses ("-" for gains) （7627189.35） -24365014.47
Decrease in Deferred Income Tax Assets ("-" for increase) 30436785.37 (24704842.53)
Increase in Deferred Income Tax Liabilities ("-" for decrease) 17704399.74 (155605.90)
Decrease in Inventories ("-" for increase) 1128652537.16 (1109058715.15)
Decrease in Operating Receivables ("-" for increase) (23422883.89) (105293570.95)
Increase in Operating Payables ("-" for decrease) (644846543.75) 892066314.58
Others 3715965.28 55285046.93
Net Cash Flow Arising from Operating Activities 5228937084.88 5654954446.36
2．Significant Investment and Financing Activities not Involving Cash Receipts or Payments:
Debt to Capital
Convertible Corporate Bonds Due Within One Year
Financing Leasing Fixed Assets
3．Net Changes in Cash and Cash Equivalents:
Ending Cash Balance 4780614442.73 4128799695.72
Minus: Beginning Cash Balance 4128799695.72 3254982526.59
Plus: Ending Cash Equivalent Balance
Minus: Beginning Cash Equivalent Balance
Net Increase in Cash and Cash Equivalents 651814747.01 873817169.13
(2) Net Cash Paid for Acquiring Subsidiaries for the Current Period
□Applicable ?Not Applicable
235 / 282An nual Report 2023
(3) Net Cash Received for Disposing Subsidiaries for the Current Period
□Applicable ?Not Applicable
(4) Composition of Cash and Cash Equivalents
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
I. Cash 4780614442.73 4128799695.72
Including: Cash on Hand -- --
Bank Deposits Available for Immediate Payment 4771137028.82 4128792356.29
Other Monetary Funds Available for Immediate
9477413.917339.43
Payment
Deposits with Central Banks Available for Payment
Interbank Deposits
Interbank Placements
II. Cash Equivalents
Including: Bond Investment Due within Three Months
III. Ending Balance of Cash and Cash Equivalents 4780614442.73 4128799695.72
Including: Cash and Cash Equivalents Restricted for Use
172543312.10204800961.99
by the Parent Company or Subsidiaries within the Group
(5) Instances Where Usage is Restricted but Still Classified as Cash and Cash Equivalents
□Applicable ?Not Applicable
(6) Monetary Funds Not Classified as Cash and Cash Equivalents
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
80. Notes to Items in the Statement of Changes in Owner's Equity
Explanation of Name of "Other" Items Adjusted Against the Ending Balance for the Previous Year
Adjusted Amount and Other Matters:
□Applicable ?Not Applicable
81. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
?Applicable □ Not Applicable
Unit: Yuan
Ending Foreign Currency Ending Balance Converted to
Items Conversion Rate
Balance Renminbi
Monetary Funds 399308136.50
Including: US Dollar 56307425.42 7.08 398808602.02
Euro 63442.21 7.86 498605.02
Hong Kong Dollar 684.44 0.91 620.25
British Pound 34.20 9.04 309.21
Accounts Receivable - - 503612570.20
Including: US Dollar 71104522.90 7.08 503612004.34
236 / 282An nual Report 2023
Euro 72.00 7.86 565.86
Other Receivables 7941783.70
Including: US Dollar 1121293.25 7.08 7941783.70
Accounts Payable 4189935.50
Including: US Dollar 591573.20 7.08 4189935.50
Other Payables 658977.95
Including: US Dollar 93040.50 7.08 658977.95
(2) Explanation of overseas operating entities including disclosure of their main overseas operating
locations functional currencies and selection basis for significant overseas operating entities as well
as disclosure of reasons for changes in functional currencies
□Applicable ?Not Applicable
82. Leases
(1) As Lessee
?Applicable □ Not Applicable
Variable lease payments not included in the measurement of lease liabilities
□Applicable ?Not Applicable
Lease expenses on short-term leases or leases of low-value assets with simplified treatment
?Applicable □ Not Applicable
RMB 1725369.59 yuan
Items Amount Incurred during the Current Amount Incurred during the Period Previous Period
Interest of Lease Liabilities 648864.51 641719.58
Expenses on Short-term Leases 1076505.08 546155.83
Sale-leaseback Transactions and Judgement Basis
□Applicable ?Not Applicable
Total cash outflows related to leases: 4402628.85 (Unit: Yuan Currency: RMB)
(2) As Lessor
Operating leases as lessor
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Including: Revenue Related to
Items Revenue from Leases Variable Lease Payments Not
Recorded in Lease Receipts
Housing Structures 14187279.63
Equipment 406686.08
Vehicles 234955.77
Total 14828921.48
Financing leases as lessor
□Applicable ?Not Applicable
Adjustment Table for Undiscounted Lease Receipts and Net Lease Investments
□Applicable ?Not Applicable
Undiscounted Lease Receipts over the Next Five Years
□Applicable ?Not Applicable
237 / 282An nual Report 2023
(3) Recognition of Profits and Losses from Financing Leases as Manufacturer or Dealer
□Applicable ?Not Applicable
83. Others
□Applicable ?Not Applicable
VIII. Research and Development Expenses
(2) Presented by Expense Nature
□Applicable ?Not Applicable
(2) Development Expenditures on Research and Development Projects Qualifying for Capitalization
□Applicable ?Not Applicable
Significant Capitalized Research and Development Projects
□Applicable ?Not Applicable
Development Expenditure Impairment Reserves
□Applicable ?Not Applicable
Other Explanations
None
(3) Significant Outsourced Research Projects
□Applicable ?Not Applicable
IX. Changes in Consolidation Scope
1. Enterprise Merger Not Under the Same Control
□Applicable ?Not Applicable
2. Enterprise Merger Under the Same Control
□Applicable ?Not Applicable
3. Reverse Acquisitions
□Applicable ?Not Applicable
238 / 282Annual R eport 2023
4. Disposal of Subsidiaries
Whether there are transactions or matters resulting in loss of control over subsidiaries during the current
period
□Applicable ?Not Applicable
Other Explanations:
?Applicable □ Not Applicable
Name Reason for Changes
Tongliao Meihua Amino Acid Co. Ltd. Disposal
Whether there are instances in which the disposal of investment in subsidiaries is conducted through
multiple transactions and results in loss of control during the current period
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
5. Changes in Consolidation Scope Due to Other Reasons
Explanation of changes in consolidation scope due to other reasons (such as establishment of new
subsidiaries and liquidation of subsidiaries) and related circumstances:
?Applicable □ Not Applicable
Name Reason for Changes
Zhuhai Hengqin Meihua Bio-Technology Co. Ltd. New Establishment
HONG KONG PLUM HOLDING LIMITED New Establishment
CAYMAN PLUM HOLDING LIMITED New Establishment
6. Others
□Applicable ?Not Applicable
239 / 282Annual R eport 2023
X. Equity in Other Entities
1. Equity in Subsidiaries
(1) Composition of Business Group
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Main Stock Ownership Ratio
Names of Registered Place of Business Acquisition
Operating (%)
Subsidiaries Capital Registration Nature Method
Location Direct Indirect
Investment or
Tongliao Meihua Tongliao 1800000000 Tongliao Manufacturing 100.00 --
Establishment
Investment or
Xinjiang Meihua Wujiaqu 2500000000 Wujiaqu Manufacturing 100.00 --
Establishment
Merger Not
Xinjiang
Wujiaqu 260000000 Wujiaqu Manufacturing -- 100.00 Under the Same
Agriculture
Control
Technological Investment or
Langfang R & D Tongliao 38000000 Tongliao 100.00 --
Development Establishment
Langfang Investment or
Tongliao 250000000 Tongliao Manufacturing 100.00 --
Seasoning Establishment
Hong Kong Hong Investment or
6277900 Hong Kong Trading 100.00 --
Meihua Kong Establishment
Investment or
Lhasa Meihua Lhasa 800000000 Lhasa Investment 100.00 --
Establishment
Merger Not
Tongliao Jianlong Tongliao 133000000 Tongliao Manufacturing -- 100.00 Under the Same
Control
Merger Not
Tongde Starch Tongliao 9400000 Tongliao Manufacturing -- 100.00 Under the Same
Control
Tongliao Investment or
Tongliao 5000000 Tongliao Manufacturing -- 100.00
Seasoning Establishment
Technological Investment or
Shanghai R & D Shanghai 31000000 Shanghai -- 100.00
Development Establishment
Investment or
Jilin Meihua Baicheng 2000000000 Baicheng Manufacturing 100.00 --
Establishment
Xinjiang Investment or
Urumqi 10000000 Urumqi Trading -- 100.00
Investment Establishment
Tongliao Amino Investment or
Tongliao 5000000 Tongliao Manufacturing -- 100.00
Acid Establishment
Investment or
Langfang BAIAN Langfang 25000000 Langfang Warehousing -- 100.00
Establishment
Investment or
Hengqin Meihua Hengqin 50000000 Zhuhai Investment 100.00 --
Establishment
Hong Kong Hong Investment or
50000000 Hong Kong Investment -- 100.00
Holding Kong Establishment
240 / 282Annual R eport 2023
Cayman Investment or
Cayman 5000000 Cayman Investment -- 100.00
Company Establishment
Explanation of the Difference between Ownership Ratio and Voting Rights Ratio in Subsidiaries:
None
Basis for Controlling Invested Units with Half or Less than Half of Voting Rights and Not Controlling
Invested Units with More than Half of Voting Rights:
None
Basis for Controlling Significant Structured Entities Included in the Consolidation Scope:
None
Basis for Determining Whether the Company is an Agent or Principal:
None
Other Explanations:
The registered capital mentioned above represents the subscribed amount with a registered capital
of 50 million Hong Kong dollars for Hong Kong Holding and 5 million US dollars for Cayman Company.
(2) Significant Non-Wholly-Owned Subsidiaries
□Applicable ?Not Applicable
(3) Main Financial Information of Significant Non-Wholly-Owned Subsidiaries
□Applicable ?Not Applicable
(4) Significant Restrictions on the Use of Business Group’s Assets and Settlement of Business
Group’s Debts
□Applicable ?Not Applicable
(5) Financial Support or Other Support Provided for Structured Entities Included in the Scope of
Consolidated Financial Statements
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
2. Transactions where Owners’ Equity Shares in Subsidiaries Change but Control is Maintained
□Applicable ?Not Applicable
3. Equity in Joint Ventures or Associates
?Applicable □ Not Applicable
(1) Significant Joint Ventures or Associates
?Applicable □ Not Applicable
Stock Ownership Ratio Accounting
Names of Joint Main (%) Treatment Methods
Place of Business
Ventures or Operating for Investment in
Registration Nature
Associates Location Direct Indirect Joint Venture or
Associates
Tongliao Desheng
Tongliao Tongliao Manufacturing 49.00 -- Equity Method
Bio-Tech Co. Ltd.Explanation of the Difference between Ownership Ratio and Voting Rights Ratio in Joint Ventures or
Associates:
None
Basis for Holding Less than 20% Voting Rights but Having Significant Influence or Holding 20% or
More Voting Rights but Not Having Significant Influence:
None
(2) Main Financial Information of Significant Joint Ventures
□Applicable ?Not Applicable
241 / 282Annual R eport 2023
(3) Main Financial Information of Significant Associates
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance/ Amount Incurred Beginning Balance/ Amount Incurred
During the Current Period During the Previous Period
Tongliao Desheng Bio- XX Tongliao Desheng Bio- XX
Tech Co. Ltd. Company Tech Co. Ltd. Company
Current Assets 35266317.68 24219130.26
Non-Current Assets 16902235.23 11833045.23
Total Assets 52168552.91 36052175.49
Current Liabilities 25595120.54 10891511.06
Non-Current Liabilities --
Total Liabilities 25595120.54 10891511.06
Minority Shareholders’ Equity
Shareholders’ Equity Attributable
26573432.3725160664.43
to the Parent Company
Net Asset Share Calculated by
13020981.8612328725.57
Stock Ownership Ratio
Adjustments
--Goodwill
--Unrealized Profits on Internal
Transactions
--Others
Book Value of Equity Investments
12219697.2312005325.58
in Associates
Fair Value of Equity Investments
in Associates with Public
Quotation
Operating Revenues 84281037.60 79206292.32
Net Profits 437493.17 6217036.74
Net Profits from Discontinued
----
Operations
Other Comprehensive Income
Total Comprehensive Income 437493.17 6217036.74
Dividends Received from
Associates during the Current Year
(4) Consolidated Financial Information of Insignificant Joint Ventures and Associates
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
242 / 282Annual R eport 2023
Ending Balance/ Amount Incurred Beginning Balance/ Amount Incurred
During the Current Period During the Previous Period
Joint Ventures:
Aggregate Book Value of Investment
Aggregate Amount Calculated Based on Ownership Ratios for the Following Items
--Net Profits
--Other Comprehensive Income
--Total Comprehensive Income
Associates:
Aggregate Book Value of Investment 6722533.41 6890969.08
Aggregate Amount Calculated Based on Ownership Ratios for the Following Items
--Net Profits 1631564.33 532544.67
--Other Comprehensive Income -- --
--Total Comprehensive Income 1631564.33 532544.67
(5) Explanation of Significant Restrictions on the Ability of Joint Ventures or Associates to Transfer
Funds to the Company
□Applicable ?Not Applicable
(6) Excessive Losses Incurred by Joint Ventures or Associates
□Applicable ?Not Applicable
(7) Unrecognized Commitments Related to Investments in Joint Ventures
□Applicable ?Not Applicable
(8) Contingent Liabilities Related to Investments in Joint Ventures or Associates
□Applicable ?Not Applicable
4. Significant Joint Operations
□Applicable ?Not Applicable
5. Equity in Structured Entities Not Included in the Scope of Consolidated Financial Statements
Explanation of Structured Entities Not Included in the Scope of Consolidated Financial Statements:
□Applicable ?Not Applicable
6. Others
□Applicable ?Not Applicable
XI. Government Grants
1. Government Grants Recognized as Receivables at the End of the Reporting Period
□Applicable ?Not Applicable
Reasons for Not Receiving Expected Amounts of Government Grants at the Anticipated Timing
□Applicable ?Not Applicable
2. Items of Liabilities Related to Government Grants
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Newly Amount Amount Other
Financial Added Recorded Beginning Grants in Non- Transferred to Changes Statement Balance for the operating Other Income for the Ending Balance
Asset/Income-
Items related Current Revenue for the Current Current
Period for the Period Period
243 / 282Annual R eport 2023
Current
Period
Deferred
Income 429899391.63 -- -- 44910976.90 384988414.73
Asset-related
Total 429899391.63 -- -- 44910976.90 384988414.73 /
3. Government Grants Recorded in the Profit or Loss for the Current Period
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Types Amount Incurred during the Current Period Amount Incurred during the Previous Period
Asset-related 44910976.90 45036562.17
Income-related 195649372.92 119215651.81
Total 240560349.82 164252213.98
Other Explanations:
1. Government Grants Recorded in the Profit or Loss for the Current Period
Amount Incurred Amount
Grant Items Accounting during the Current Incurred during Subjects Period the Previous
Asset/Income-related
Period
Supporting Subsidies for Other
Infrastructure Income 1260236.72 1260236.72 Asset-related
Subsidy for Production Water Pipeline Other
Construction Projects Income 1599600.00 1599600.00 Asset-related
Subsidy for Boiler Desulfurization Other
Technology Transformation Projects Income 333600.00 333600.00 Asset-related
Subsidy for Electric Bag Composite
Dust Removal Retrofit Project at Other Income 159600.00 159600.00 Asset-related Heating Stations
Infrastructure Subsidy Funds Other Income 48876.00 48876.00 Asset-related
Construction of a Green-Designed
Industrialized Demonstration Line for Other
Lysine Production with an Annual Income 500490.93 501868.70 Asset-related
Capacity of 400000 Tons
Industrial Development Guidance Other
Fund Income 33746870.74 33867120.04 Asset-related
Industrial Development Guidance Other
Fund Income 2831076.03 2831118.24 Asset-related
Technology Transformation Projects Other Income 3996537.00 3997909.20 Asset-related
Building Innovative Capacity - Other
Biomass Portion Income 434089.48 436633.27 Asset-related
Special Fund Incentives for Business Other
Development Income 160738138.85 90640000.00 Income-related
Special Fund for Foreign Trade Other
Development Income 3282987.40 10356929.00 Income-related
Subsidies for Stable Positions in Other
Enterprises Income 2671396.36 2877272.75 Income-related
Social Insurance Subsidies Other Income 7061541.99 4431649.10 Income-related
2020 Baicheng Municipal-Level
Agricultural Industrialization Other Income 1900000.00 -- Income-related Consortium
Government Guidance Funds Other Income 14000000.00 -- Income-related
Green Factory Other Income -- 1398000.00 Income-related
International Logistics Project for Other 1740800.00 -- Income-related
244 / 282Annual R eport 2023
2021 Income
One-time Subsidy for Expansion of Other
Posts in Enterprises Income 1715000.00 297000.00 Income-related
One-time Subsidy for Retained Other
Worker Training Income 29000.00 2980500.00 Income-related
Employment Training Subsidies Other Income 1068570.01 1863006.96 Income-related
Others Other Income 1441938.31 4371294.00 Income-related
Total 240560349.82 164252213.98
2. Government Grants Offset Against the Book Value of Related Assets
Amount Incurred Amount Incurred
Grant Items Type during the Current during the Previous Items of Offset Costs
Period Period
Government Interest Construction in
Asset-related 877777.72 --
Subsidies Progress
Total 877777.72 --
XII. Risks Related to Financial Instruments
1. Risks of Financial Instruments
?Applicable □ Not Applicable
The Company's main financial instruments include monetary funds equity investments debt
investments borrowings receivables payables etc. Various risks of financial instruments faced in daily
activities mainly include credit risk liquidity risk and market risk. The risks associated with these financial
instruments and the risk management policies adopted by the Company to mitigate these risks are as
follows:
The Board of Directors is responsible for planning and establishing the Company's risk management
framework formulating the Company's risk management policies and related guidelines and supervising
the implementation of risk management measures. The Company has formulated risk management policies
to identify and analyze the risks faced by it. These risk management policies provide specific provisions
for specific risks covering various aspects such as market risk credit risk and liquidity risk management.The Company regularly evaluates the market environment and changes in its operations to determine
whether to update risk management policies and systems. The Company's risk management is conducted
by the Risk Management Committee in accordance with policies approved by the Board of Directors. The
Risk Management Committee identifies evaluates and avoids relevant risks through close cooperation
with other business departments of the Company. The Company's Internal Audit Department conducts
regular audits of risk management controls and procedures and reports the audit results to the Company's
Audit Committee. The Company diversifies its investments and business portfolios appropriately to
mitigate financial instrument risks and reduces risks concentrated in a single industry specific regions or
specific counterparties by formulating corresponding risk management policies.
(1) Credit Risk
Credit risk refers to the risk of financial loss incurred by the Company due to the counterparty's failure
245 / 282Annual R eport 2023
to fulfill its obligations under the contract. The management has formulated appropriate credit policies
and maintains ongoing oversight of credit risk exposure.The Company has adopted a policy to conduct transactions solely with counterparties with good
credit standing. In addition the Company evaluates the credit qualifications of customers based on factors
such as their financial position the likelihood of obtaining guarantees from third parties credit records
and other factors such as current market conditions. The Company continuously monitors the balance of
notes receivable accounts receivable and recovery situations. For customers with poor credit records the
Company adopts measures such as written payment reminders shortening credit periods or canceling
credit periods to ensure that it won’t face significant credit losses. Furthermore the Company reviews the
recovery situation of financial assets on each balance sheet date to ensure that sufficient expected credit
loss reserves are provided for relevant financial assets.Other financial assets held by the Company include monetary funds other receivables debt
investments etc. and the credit risk of these financial assets stems from defaults by counterparties with
the maximum credit risk exposure being the book value of each financial asset in the balance sheet. Except
for the financial guarantees made by the Company as disclosed in (1) in Note XII the Company doesn’t
provide any other guarantees that may expose it to credit risk.The monetary funds held by the Company are mainly deposited with financial institutions such as
state-owned holding banks and other large and medium-sized commercial banks. The management
believes that these commercial banks exhibit high credibility and asset conditions and there is no
significant credit risk that may lead to any significant losses due to default by counterparties. The
Company’s policy is to control the amount of deposits in various well-known financial institutions based
on the market reputation operating scale and financial background of these institutions to limit the amount
of credit risk exposure to any single financial institution.As part of the Company's credit risk asset management the Company uses aging to assess impairment
losses on accounts receivable and other receivables. The Company’s accounts receivable and other
receivables involve a significant number of customers and the aging information can reflect the payment
ability and bad debt risk of these customers with respect to accounts receivable and other receivables. The
Company calculates historical actual bad debt rates for different aging periods based on historical data and
makes adjustments to obtain the expected loss rate taking into account the forecasts of current and future
economic conditions such as national GDP growth rate total investment in infrastructure national
monetary policy and other forward-looking information. For long-term receivables the Company
comprehensively considers settlement periods payment periods agreed in the contract the financial
position of debtors and the economic situation of the industry in which the debtors are located and makes
adjusts to reasonably assess the expected credit losses based on the above forward-looking information.As of December 31 2023 the book balance of related assets and the status of expected credit
impairment losses are as follows:
Items Book Balance Impairment Reserves
Notes Receivable 129231952.45 --
246 / 282Annual R eport 2023
Items Book Balance Impairment Reserves
Accounts Receivable 674880378.49 33752493.27
Other Receivables 168145503.73 118335967.76
Debt Investments 10500000.00 --
Long-term Receivables (including those
19720927.03--
due within one year)
Total 1002478761.70 152088461.03
As of December 31 2023 the amount of financial guarantees provided by the Company to external
parties amounted to RMB 1499.402 million yuan. Refer to (5) in Section VIV for details of the financial
guarantee contracts. The Company's management assessed the overdue status of related borrowings under
the guarantees the financial position of the borrowers and the economic situation of their respective
industries and concluded that since the initial recognition of these financial guarantee contracts there has
been no significant increase in credit risk. Therefore the Company measured its impairment reserves based
on the amount equivalent to the expected credit losses within the next 12 months for the aforementioned
financial guarantee contracts. During the reporting period there were no changes in the Company's
assessment methods and significant assumptions. According to the assessment by the Company's
management there were no significant expected impairment reserves for the related financial guarantees.The Company's major customers have reliable and good reputations; therefore the Company believes
that these customers do not pose significant credit risks. Given the extensive range of customers the
Company does not face any significant credit concentration risks.
(2) Liquidity Risk
Liquidity risk refers to the risk of funds shortage when the Company fulfills its obligations for
settlement through cash delivery or other financial assets. Subsidiaries of the Company are responsible for
their respective cash flow forecasts. The Company's Financial Management Department continuously
monitors the short-term and long-term fund requirements of the Company based on the cash flow forecast
results of each subsidiary at the Company level to ensure the maintenance of adequate cash reserves.Additionally it continuously monitors compliance with provisions specified in loan agreements and
obtains commitments from major financial institutions to provide sufficient standby funds to meet short-
term and long-term fund requirements. Furthermore the Company has entered into credit agreements with
major banks involved in its main business to support itself in fulfilling obligations related to commercial
notes. As of December 31 2023 the Company has secured bank credit lines totaling RMB 16.72 billion
yuan from multiple banks in China of which RMB 4.456 billion yuan has been utilized.
(3) Market Risk
1. Exchange Risk
Although the Company's main operations are based in China with transactions primarily settled in
Renminbi there still exists exchange risk associated with recognized foreign currency assets liabilities
and future foreign currency transactions (where the US dollar is used as the primary valuation currency).The Company's Financial Management Department is responsible for monitoring the scale of the
247 / 282Annual R eport 2023
Company’s foreign currency transactions and foreign currency assets and liabilities to minimize the
exposure to exchange risk. To this end the Company may enter into forward foreign exchange contracts
or currency swap contracts to avoid the exchange risk.
(1) The forward foreign exchange contracts or currency swap contracts signed by the Company in
this year are as follows:
* Hong Kong Meihua a subsidiary of the Company signed forward foreign exchange contracts
with Standard Chartered Bank (Hong Kong) Limited for USD 4 million and option contracts for USD 5
million.
(2) As of December 31 2023 the amounts of foreign currency financial assets and liabilities held by
the Company converted into Renminbi are as follows:
Ending Balance
Items
USD Items Euro Items HKD Items GBP Items Total
Foreign Currency
Financial Assets:
Monetary Funds 398808602.02 498605.02 620.25 309.21 399308136.50
Accounts Receivable 503612004.34 565.86 -- -- 503612570.20
Other Receivables 7941783.70 -- -- -- 7941783.70
Subtotal 910362390.06 499170.88 620.25 309.21 910862490.40
Foreign Currency
Financial Liabilities:
Accounts Receivable 4189935.50 -- -- -- 4189935.50
Other Receivables 658977.95 -- -- -- 658977.95
Subtotal 4848913.45 -- -- -- 4848913.45
2. Interest Rate Risk
The Company's interest rate risk mainly arises from bank borrowings etc. Financial liabilities with
floating interest rate expose the Company to cash flow interest rate risk while financial liabilities with
fixed interest rate expose the Company to fair value interest rate risk. The Company determines the relative
proportions of fixed-rate and floating-rate contracts based on the prevailing market conditions at the time.The Company’s Financial Management Department continuously monitors the Company’s interest
rate levels. A rise in interest rates would increase the cost of newly added interest-bearing debts and
interest expenditures on outstanding interest-bearing debts with floating rates and pose significant adverse
effects on the Company's financial performance. The management will make timely adjustments based on
the latest market conditions and these adjustments may include interest rate swap arrangements to mitigate
interest rate risk.
(1) The Company’s interest rate swap arrangements for this year are as follows:
The Company had no interest rate swap arrangements for this year.
(2) As of December 31 2023 the Company's long-term interest-bearing debts were mainly floating-
rate contracts denominated in Renminbi with a total amount of RMB 19999630217.77 yuan as detailed
in (45) in Section VII.
248 / 282Annual R eport 2023
3. Price Risk
Price risk refers to the risk of fluctuations caused by market price changes other than exchange rate
risk and interest rate risk mainly arising from changes in commodity prices stock market indices equity
instrument prices and other risk variables.
2. Hedging
(1) The Company conduct hedging transactions for risk management
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
(2) The Company conducts eligible hedging transactions and applies hedging accounting
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
(3) The Company conducts eligible hedging transactions for risk management and expects to
achieve risk management objectives but does not apply hedging accounting
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
3. Transfer of Financial Assets
(1) Classification of Transfer Methods
□Applicable ?Not Applicable
(2) Financial Assets Derecognized Due to Transfer
□Applicable ?Not Applicable
(3) Financial Assets Continuously Involved in Transfer
□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
XIII. Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities Measured at Fair Value
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Fair Value
Items Level 1 Fair Value Level 2 Fair Value Level 3 Fair Value
Total
Measurement Measurement Measurement
I. Continuous Fair Value
Measurement
(I) Financial Assets Held for
200000.00--172376801.33172576801.33
Trading
1. Financial Assets Measured
at Fair Value with Changes
200000.00--172376801.33172576801.33
Recorded in the Profit or
Loss for the Current Period
(1) Debt Instrument
Investments
249 / 282Annual R eport 2023
(2) Equity Instrument
Investments
(3) Derivative Financial
200000.00----200000.00
Assets
(4) Others -- -- 172376801.33 172376801.33
2. Financial Assets
Designated as Measured at
Fair Value with Changes
Recorded in the Profit or
Loss for the Current Period
(1) Debt Instrument
Investments
(2) Equity Instrument
Investments
(II) Other Debt Investments
(III) Other Equity Instrument
355691350.00--157000000.00512691350.00
Investments
(IV) Investment Properties
1. Leased Land Use Rights
2. Leased Buildings
3. Land Use Right Held for
Transfer After Appreciation
(V) Biological Assets
1. Consumable Biological
Assets
2. Productive Biological
Assets
(VI) Receivables Financing -- -- 60013169.98 60013169.98
Total Amount of Assets
Measured at Fair Value on 355891350.00 -- 389389971.31 745281321.31
a Continuous Basis
(VI) Financial Liabilities
Held for Trading
1. Financial Liabilities
Measured at Fair Value with
Changes Recorded in the 250000.00 -- -- 250000.00
Profit or Loss for the Current
Period
Including: Issued Bonds Held
for Trading
Derivative Financial
250000.00----250000.00
Liabilities
Others
2. Financial Liabilities
Designated as Measured at
250 / 282Annual R eport 2023
Fair Value with Changes
Recorded in the Profit or
Loss for the Current Period
Total Amount of Liabilities
Measured at Fair Value on 250000.00 -- -- 250000.00
a Continuous Basis
II. Non-Continuous Fair
Value Measurement
(I) Assets Held for Sale
Total Amount of Assets
Measured at Fair Value on
a Non-Continuous Basis
Total Amount of Liabilities
Measured at Fair Value on
a Non-Continuous Basis
2. Basis for Determining Market Prices for Continuous and Non-continuous Level 1 Fair Value
Measurement Items
?Applicable □ Not Applicable
Level 1: Unadjusted quoted prices for identical assets or liabilities that can be obtained in active
markets on the measurement date;
3. Qualitative and Quantitative Information on Valuation Techniques and Significant Parameters
Adopted for Continuous and Non-continuous Level 2 Fair Value Measurement Items
?Applicable □ Not Applicable
Level 2: Directly or indirectly observable inputs other than quoted prices included in Level 1 for
related assets or liabilities;
Inputs for Level 2 include: 1) Quotations for similar assets or liabilities in active markets; 2)
Quotations for identical or similar assets or liabilities in inactive markets; 3) Other observable inputs
besides quotations including interest and yield curves implied volatility credit spreads observable during
normal quotation intervals etc.; 4) Inputs validated by the market etc.
4. Qualitative and Quantitative Information on Valuation Techniques and Significant Parameters
Adopted for Continuous and Non-continuous Level 3 Fair Value Measurement Items
?Applicable □ Not Applicable
Level 3: Unobservable inputs for related assets or liabilities.
5. Adjustment Information of Beginning and Ending Book Vales and Sensitivity Analysis of
Unobservable Parameters for Continuous Level 3 Fair Value Measurement Items
□Applicable ?Not Applicable
6. Reasons for Transition between Various Levels Occurring during the Current Period and Policies
for Determining Transitioning Timing for Continuous Fair Value Measurement Items
□Applicable ?Not Applicable
7. Changes in Valuation Techniques Occurring During the Current Period and Reasons for Such
Changes
□Applicable ?Not Applicable
251 / 282Annual R eport 2023
8. Status of Fair Value of Financial Assets and Financial Liabilities Not Measured at Fair Value
?Applicable □ Not Applicable
Financial assets and liabilities not measured at fair value mainly include: receivables debt
investments short-term borrowings payables non-current liabilities due within one year long-term
borrowings and equity instrument investments for which there are no quotations in active markets and
whose fair value cannot be reliably measured.The book values of the above financial assets and liabilities not measured at fair value differ only
slightly from their fair values.
9. Others
□Applicable ?Not Applicable
XIV. Related Parties and Related Transactions
1. Information of the Company’s Parent Company
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Parent Company’s
Parent Company’s
Name of Parent Place of Stock Ownership
Business Nature Registered Voting Rights in the
Company Registration in the Company
Company (%)
(%)
Meng
29.02
Qingshan
Explanation of the Status of the Company’s Parent Company
The ultimate controlling party of the Company is Meng Qingshan
Other Explanations: None
2. Information of the Company’s Subsidiaries
Refer to the notes for the details of the Company’s Subsidiaries
?Applicable □ Not Applicable
Refer to (1) in Section X for equity in subsidiaries
3. Information of the Company’s Joint Ventures and Associates
Refer to the notes for the details of the Company’s significant joint ventures or associates
?Applicable □ Not Applicable
For details of the Company’s significant joint ventures or associates refer to 3 - Equity in Joint
Arrangements or Associates in Section X.Other joint ventures or associates with related transactions with the Company during the current period
or with balances formed from related transaction with the Company during the previous period are as
follows:
?Applicable □ Not Applicable
Names of Joint Ventures or Associates Relationship with the Company
Tongliao Desheng Bio-tech Co. Ltd. Associate
Beitun Zefeng Agricultural Development Co. Ltd. Associate
Other Explanations
□Applicable ?Not Applicable
4. Information of Other Related Parties
?Applicable □ Not Applicable
252 / 282Annual R eport 2023
Names of Other Related Parties Relationship with the Company
Hu Jijun Shareholder of the Company
Liang Yubo Shareholder of the Company
Wang Aijun Shareholder of the Company
He Jun Shareholder of the Company
Liu Xinghua Director of the Company
Lu Chuang Director of the Company
Chang Libin Supervisor of the Company
Liu Xiaojing Supervisor of the Company
Liu Qiang Supervisor of the Company
Liu Xianfang Senior Executive of the Company
Wang Lihong Senior Executive of the Company
Wang You Senior Executive of the Company
Luo Qinghua Former Independent Director of the Company
Guo Chunming Former Independent Director of the Company
Cui Lizhi Former Supervisor of the Company
Yang Xuemei Former Supervisor of the Company
The Legal Representative of the company is a direct relative of
Tibet Meihua Charity Foundation
the shareholder of the Company
5. Information of Related Transactions
(1) Related Transactions for Purchasing and Selling Goods/Providing and Accepting Labor Services
Table of Purchasing Goods/Accepting Labor Services
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Exceeding
Approved Amount
Content of Amount Incurred Transaction
Transaction Incurred during
Related Party Related during the Limit or Not
Amount (if the Previous
Transaction Current Period (if
applicable) Period
applicable)
Beitun Zefeng Agricultural Raw
66368711.1256824273.31
Development Co. Ltd. Materials
Tacheng Green
Raw
Agricultural Development 1292257.14 76502378.90
Materials
Co. Ltd. *
Total 67660968.26 133326652.21
*The equity of Tacheng Green Agricultural Development Co. Ltd. held by Xinjiang Agriculture
was transferred in March 2022.Table of Selling Goods/Providing Labor Services
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Content of
Amount Incurred during Amount Incurred during
Related Party Related
the Current Period the Previous Period
Transaction
Tongliao Desheng Bio-tech Co. Ltd. Goods 66793916.44 46287976.83
Tongliao Desheng Bio-tech Co. Ltd. Services 23899.93 13141.56
253 / 282Annual R eport 2023
Total 66817816.37 46301118.39
Explanation of Related Transactions for Purchasing and Selling Goods / Providing and Accepting
Services
□Applicable ?Not Applicable
(2) Information of Related Delegated Management/Contracting and Delegating
Management/Outsourcing
Table of the Delegated Management/Contracting by the Company:
□Applicable ?Not Applicable
Explanation of Related Delegated Management/Contracting
□Applicable ?Not Applicable
Table of Delegating Management/Outsourcing by the Company
□Applicable ?Not Applicable
Explanation of Related Management/Outsourcing
□Applicable ?Not Applicable
(3) Information of Related Leases
The Company as the Lessor:
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Lease Revenue Lease Revenue
Types of Leased
Name of Lessee Recognized during the Recognized during the
Asset
Current Period Previous Period
Tongliao Desheng Bio-tech Co. Ltd. Property 2200057.73 1356055.99
Total 2200057.73 1356055.99
The Company as the Lessee:
□Applicable ?Not Applicable
Explanation of Related Leases
□Applicable ?Not Applicable
(4) Information of Related Guarantee
The Company as the Guarantor
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Start Date of Expiry Date of Whether the Guarantee
Guaranteed Party Guaranteed Amount
Guarantee Guarantee Has Been Fully Fulfilled
Hong Kong Meihua 35410500.00 2021/10/21 2023/9/30 Yes
Hong Kong Meihua 35410500.00 2021/10/21 2023/9/30 Yes
Hong Kong Meihua 70821000.00 2022/7/25 2023/8/8 Yes
Xinjiang Meihua 30750000.00 2021/3/24 2024/3/21 Yes
Xinjiang Meihua 16750000.00 2021/3/26 2024/3/21 Yes
Xinjiang Meihua 48500000.00 2021/3/29 2024/3/21 Yes
Xinjiang Meihua 150000000.00 2021/7/14 2024/7/11 No
Xinjiang Meihua 9500000.00 2023/5/23 2026/5/23 No
Xinjiang Meihua 500000.00 2023/5/23 2026/5/23 Yes
Xinjiang Meihua 11223000.00 2023/5/25 2026/5/23 No
Xinjiang Meihua 28777000.00 2023/5/29 2026/5/23 No
Tongliao Meihua 15500000.00 2021/2/5 2024/2/1 Yes
254 / 282Annual R eport 2023
Tongliao Meihua 27500000.00 2021/2/18 2024/2/1 Yes
Tongliao Meihua 119700000.00 2021/4/1 2024/3/31 Yes
Tongliao Meihua 78500000.00 2021/5/7 2024/5/6 Yes
Tongliao Meihua 62500000.00 2021/5/10 2024/5/7 Yes
Tongliao Meihua 10000000.00 2021/5/26 2024/5/7 No
Tongliao Meihua 51000000.00 2021/5/26 2024/5/7 Yes
Tongliao Meihua 47000000.00 2021/8/19 2024/8/19 Yes
Tongliao Meihua 1000000.00 2021/8/19 2024/8/19 Yes
Tongliao Meihua 1240829.40 2021/9/9 2024/9/7 Yes
Tongliao Meihua 10000000.00 2021/9/9 2024/9/7 No
Tongliao Meihua 1000000.00 2021/9/9 2024/9/7 Yes
Tongliao Meihua 8785755.04 2021/9/15 2024/9/7 Yes
Tongliao Meihua 40000000.00 2021/9/15 2024/9/7 No
Tongliao Meihua 2973415.56 2021/9/27 2024/9/7 Yes
Tongliao Meihua 32000000.00 2021/9/27 2024/9/7 No
Tongliao Meihua 97000000.00 2022/3/30 2025/3/30 No
Tongliao Meihua 2000000.00 2022/3/30 2025/3/30 Yes
Tongliao Meihua 100000000.00 2023/5/22 2038/5/8 No
Tongliao Meihua 120000000.00 2023/3/17 2024/3/17 No
Tongliao Meihua 80000000.00 2023/3/23 2024/3/17 No
Tongliao Meihua 100000000.00 2023/3/30 2024/3/30 No
Tongliao Meihua 38000000.00 2023/5/16 2023/11/9 Yes
Tongliao Meihua 19000000.00 2023/6/27 2023/9/26 Yes
Tongliao Meihua 10000000.00 2023/11/29 2024/11/26 No
Jilin Meihua 15238690.48 2021/9/13 2029/8/30 No
Jilin Meihua 31680000.00 2021/9/13 2029/8/30 Yes
Jilin Meihua 21875000.00 2021/10/22 2029/8/30 No
Jilin Meihua 39772727.27 2021/11/25 2029/8/30 No
Jilin Meihua 27840909.09 2021/12/22 2029/8/30 No
Jilin Meihua 774778.91 2021/8/30 2028/12/21 No
Jilin Meihua 110000.00 2021/8/30 2028/12/21 Yes
Jilin Meihua 36500000.00 2021/9/13 2029/8/4 Yes
Jilin Meihua 5550000.00 2021/9/13 2029/8/4 Yes
Jilin Meihua 9025000.00 2021/10/19 2029/8/4 No
Jilin Meihua 1400000.00 2021/10/19 2029/8/4 Yes
Jilin Meihua 16309090.91 2021/11/26 2029/8/4 No
Jilin Meihua 2600000.00 2021/11/26 2029/8/4 Yes
Jilin Meihua 11486363.64 2021/12/23 2029/8/4 No
Jilin Meihua 1800000.00 2021/12/23 2029/8/4 Yes
Jilin Meihua 846552.38 2021/9/2 2029/8/4 No
Jilin Meihua 253600.00 2021/9/2 2029/8/4 Yes
Jilin Meihua 41170200.00 2021/9/18 2029/8/4 No
Jilin Meihua 12339800.00 2021/9/18 2029/8/4 Yes
Jilin Meihua 10301000.00 2021/10/22 2029/8/4 No
255 / 282Annual R eport 2023
Jilin Meihua 3082400.00 2021/10/22 2029/8/4 Yes
Jilin Meihua 18728981.82 2021/11/26 2029/8/4 No
Jilin Meihua 5604400.00 2021/11/26 2029/8/4 Yes
Jilin Meihua 13032727.27 2021/12/24 2029/8/4 No
Jilin Meihua 3940000.00 2021/12/24 2029/8/4 Yes
Jilin Meihua 104000000.00 2022/6/28 2025/6/26 No
Jilin Meihua 1000000.00 2022/6/28 2025/6/26 Yes
Jilin Meihua 34000000.00 2022/11/21 2025/10/6 No
Jilin Meihua 1000000.00 2022/11/21 2025/10/6 Yes
Jilin Meihua 30000000.00 2023/9/22 2025/9/22 No
Jilin Meihua 70000000.00 2022/6/17 2023/6/16 Yes
Jilin Meihua 30000000.00 2022/12/20 2023/12/20 Yes
Jilin Meihua 40000000.00 2022/12/20 2023/12/20 Yes
Jilin Meihua 100000000.00 2022/11/25 2023/11/15 Yes
Jilin Meihua 20000000.00 2023/4/17 2023/11/15 Yes
Jilin Meihua 20000000.00 2023/3/13 2023/11/15 Yes
Jilin Meihua 50000000.00 2023/3/13 2023/11/15 Yes
Jilin Meihua 50000000.00 2023/12/25 2024/12/21 No
Jilin Meihua 20000000.00 2023/5/22 2024/5/22 Yes
Jilin Meihua 20000000.00 2023/5/29 2024/5/25 Yes
Jilin Meihua 10000000.00 2023/5/30 2024/5/30 Yes
Jilin Meihua 20000000.00 2023/6/30 2024/6/30 No
Jilin Meihua 25000000.00 2023/5/5 2024/5/5 Yes
Jilin Meihua 5000000.00 2023/5/5 2024/5/5 Yes
Jilin Meihua 25000000.00 2023/6/13 2024/5/5 No
Tongliao Jianlong 50000000.00 2022/8/3 2032/4/23 No
Tongliao Jianlong 50000000.00 2022/8/3 2032/4/23 Yes
Tongliao Jianlong 40000000.00 2022/11/9 2032/4/23 No
Tongliao Jianlong 75000000.00 2022/11/23 2032/4/23 Yes
Tongliao Jianlong 53000000.00 2022/11/23 2032/4/23 No
Tongliao Jianlong 12000000.00 2022/11/25 2032/4/23 No
Tongliao Jianlong 20000000.00 2023/6/27 2029/5/30 No
Total 2818604221.77
The Company as the Guaranteed Party
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Whether the Guarantee
Expiry Date of
Guarantor Guaranteed Amount Start Date of Guarantee Has Been Fully
Guarantee
Fulfilled
Xinjiang Meihua 46000000.00 2020/12/25 2023/12/14 Yes
Xinjiang Meihua 46000000.00 2020/12/25 2023/12/14 Yes
Xinjiang Meihua 50000000.00 2021/1/1 2023/12/14 Yes
Xinjiang Meihua 50000000.00 2021/1/1 2023/12/14 Yes
Xinjiang Meihua 197000000.00 2021/12/28 2024/12/15 No
256 / 282Annual R eport 2023
Xinjiang Meihua 1000000.00 2021/12/28 2024/12/15 Yes
Tongliao Meihua 66775500.00 2022/12/14 2025/12/8 No
Tongliao Meihua 674500.00 2022/12/14 2025/12/8 Yes
Xinjiang Meihua 99000000.00 2022/12/14 2025/12/8 No
Xinjiang Meihua 1000000.00 2022/12/14 2025/12/8 Yes
Tongliao Meihua 98500000.00 2021/8/20 2024/8/18 Yes
Xinjiang Meihua 149250000.00 2022/6/24 2025/6/20 Yes
Tongliao Meihua
180000000.00 2021/6/9 2024/6/8 Yes
Xinjiang Meihua
Tongliao Meihua
53420000.00 2022/6/13 2025/6/13 No
Xinjiang Meihua
Tongliao Meihua
4930000.00 2022/6/13 2025/6/13 Yes
Xinjiang Meihua
Tongliao Meihua
179000000.00 2023/3/31 2026/3/31 No
Xinjiang Meihua
Tongliao Meihua
1000000.00 2023/3/31 2026/3/31 Yes
Xinjiang Meihua
Tongliao Meihua
39000000.00 2023/4/23 2026/3/31 No
Xinjiang Meihua
Tongliao Meihua
1000000.00 2023/4/23 2026/3/31 Yes
Xinjiang Meihua
Tongliao Meihua
98500000.00 2021/6/21 2024/6/2 Yes
Xinjiang Meihua
Tongliao Meihua
48500000.00 2021/8/9 2024/8/2 Yes
Xinjiang Meihua
Tongliao Meihua
1000000.00 2022/3/7 2025/2/24 Yes
Xinjiang Meihua
Tongliao Meihua
98000000.00 2022/3/7 2025/2/24 No
Xinjiang Meihua
Tongliao Meihua 10000000.00 2021/9/18 2024/9/17 No
Tongliao Meihua 38500000.00 2021/9/18 2024/9/17 Yes
Tongliao Meihua 98500000.00 2021/9/15 2024/9/12 Yes
Tongliao Meihua 90000000.00 2021/11/26 2024/11/25 Yes
Tongliao Meihua 56000000.00 2022/11/10 2025/5/22 Yes
Tongliao Meihua 78000000.00 2022/11/9 2025/5/22 Yes
Tongliao Meihua 196000000.00 2022/11/17 2025/11/14 No
Tongliao Meihua 4000000.00 2022/11/17 2025/11/14 Yes
Tongliao Meihua 160000000.00 2023/7/31 2023/12/26 Yes
Tongliao Meihua 100000000.00 2023/8/10 2023/12/28 Yes
Tongliao Meihua 50000000.00 2023/8/10 2024/1/8 No
Tongliao Meihua 50000000.00 2023/8/28 2023/9/20 Yes
Tongliao Meihua 50000000.00 2023/8/28 2023/11/20 Yes
Tongliao Meihua 38000000.00 2023/9/6 2024/2/5 No
Tongliao Meihua 50000000.00 2023/10/25 2024/3/14 No
Tongliao Meihua 50000000.00 2023/11/29 2024/4/30 No
257 / 282Annual R eport 2023
Tongliao Meihua 150000000.00 2023/11/20 2024/2/18 No
Tongliao Meihua 30000000.00 2023/12/8 2024/6/7 No
Tongliao Meihua
100000000.00 2022/5/30 2023/5/30 Yes
Xinjiang Meihua
Tongliao Meihua
100000000.00 2022/5/30 2023/5/30 Yes
Xinjiang Meihua
Tongliao Meihua
120000000.00 2022/12/22 2023/12/22 Yes
Xinjiang Meihua
Tongliao Meihua
100000000.00 2022/7/11 2023/7/11 Yes
Xinjiang Meihua
Tongliao Meihua
30000000.00 2023/1/31 2024/1/31 Yes
Xinjiang Meihua
Tongliao Meihua
200000000.00 2023/4/12 2024/4/12 Yes
Xinjiang Meihua
Tongliao Meihua
70000000.00 2022/11/29 2023/5/23 Yes
Xinjiang Meihua
Tongliao Meihua
50000000.00 2023/3/23 2023/6/19 Yes
Xinjiang Meihua
Tongliao Meihua
80000000.00 2023/4/26 2023/6/26 Yes
Xinjiang Meihua
Tongliao Meihua
70000000.00 2023/6/20 2023/11/30 Yes
Xinjiang Meihua
Tongliao Meihua
100000000.00 2023/7/12 2024/7/12 No
Xinjiang Meihua
Tongliao Meihua
150000000.00 2023/9/7 2024/9/7 No
Xinjiang Meihua
Tongliao Meihua
200000000.00 2023/10/23 2024/10/23 No
Xinjiang Meihua
Tongliao Meihua
50000000.00 2023/8/3 2023/11/20 Yes
Xinjiang Meihua
Tongliao Meihua
150000000.00 2023/8/25 2023/9/27 Yes
Xinjiang Meihua
Total 4378550000.00
Explanation of Related Guarantees
□Applicable ?Not Applicable
(5) Fund Borrowing by Related Parties
□Applicable ?Not Applicable
(6) Status of Transfer of Assets and Debt Restructuring by Related Parties
□Applicable ?Not Applicable
(7) Compensation of Key Management Personnel
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items
Period Period
258 / 282Annual R eport 2023
Compensation of Key Management
7599.008470.00
Personnel
(8) Other Related Transactions
□Applicable ?Not Applicable
6. Status of Items Receivable and Payable Unsettled by Related Parties
(1) Items Receivable
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Item Name Related Party Bad Debt Bad Debt
Book Balance Book Balance
Reserves Reserves
Tongliao
Accounts
Desheng Bio- 241064.20 12053.21 211857.93 10592.90
Receivable
tech Co. Ltd.Beitun Zefeng
Advance Agricultural
2930706.86--6988878.44--
Payments Development
Co. Ltd.
(2) Items Payable
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Book
Item Name Related Party Beginning Book Balance
Balance
Tongliao Desheng Bio-tech Co.Contract Liabilities 2466558.36 72389.38
Ltd.Tongliao Desheng Bio-tech Co.Other Current Liabilities 320652.59 9410.62
Ltd.
(3) Other Items
□Applicable ?Not Applicable
7. Commitments by Related Parties
□Applicable ?Not Applicable
8. Others
?Applicable □ Not Applicable
Related Donations
Type of Related Amount Incurred during Amount Incurred during
Lessee Name
Transaction the Current Period the Previous Period
Tibet Meihua Charity
Donation 6500000.00 --
Foundation
Total 6500000.00 --
259 / 282Annual R eport 2023
XV. Share-based Payments
1. Various Equity Instruments
?Applicable □ Not Applicable
Quantity Unit: Ten Thousand Shares Amount Unit: Yuan Currency: RMB
Category of Grants during the Exercises during the Unlocks during the Current Forfeits during the
Grant Current Period Current Period Period Current Period
Recipients Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Stock Options 2500 62500000
Total 2500 62500000
Stock options or other equity instruments outstanding at the end of the period
□Applicable ?Not Applicable
2. Status of Share-based Payments Settled by Equity
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Methods for Determining the Fair Value of Equity Instruments on the
Closing Price on the Grant Date
Grant Date
Significant Parameters for Determining the Fair Value of Equity
Instruments on the Grant Date
Estimation Based on the Actual Quantity of
Basis for Determining the Quantity of Exercisable Equity Instruments
Restricted Stock Recipients
Reasons for Significant Differences between Estimates for the Current
--
Period and Previous Period
Accumulated Amount of Share-based Payments Settled by Equity
240893078.26
Recorded in Capital Reserves
3. Status of Share-based Payments Settled by Cash
□Applicable ?Not Applicable
4. Share-based Payment Expenses during the Current Period
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Share-based Payment Expenses Share-based Payment Expenses
Category of Grant Recipients
Settled by Equity Settled by Cash
Stock Options 3933692.75
Total 3933692.75
5. Modification and Termination of Share-based Payment
□Applicable ?Not Applicable
6. Others
□Applicable ?Not Applicable
XVI. Commitments and Contingencies
1. Significant Commitments
?Applicable □ Not Applicable
260 / 282Annual R eport 2023
Significant Commitments to External Parties as of the Balance Sheet Date and Their Nature and
Amounts
1．Other Significant Financial Commitments
(1) Status of Mortgaged Assets
Collateral Mortgage Certificate No. Original Value Net Value
Xin (2019) Sixth Division Real Estate
Raw Material Storage 9＃ 14990404.00 7691950.89
Ownership No. 0009813
Xin (2019) Sixth Division Real Estate
Raw Material Storage 8＃ 14201059.00 7286918.29
Ownership No. 0009813
Xin (2019) Sixth Division Real Estate
Raw Material Storage 7＃ 13514204.00 6934476.09
Ownership No. 0009813
Xin (2019) Sixth Division Real Estate
Raw Material Storage 6＃ 13583081.00 6969818.58
Ownership No. 0009813
Xin (2019) Sixth Division Real Estate
Raw Material Storage 4＃ 13742814.00 7051781.42
Ownership No. 0009813
Xin (2019) Sixth Division Real Estate
Raw Material Storage 1＃ 20163386.00 9823599.14
Ownership No. 0009813
Xin (2019) Sixth Division Real Estate
Raw Material Storage 5＃ 13503165.00 6928811.52
Ownership No. 0009813
Xin (2019) Sixth Division Real Estate
Raw Material Storage 3＃ 17435333.00 8946505.29
Ownership No. 0009813
Xin (2019) Sixth Division Real Estate
Raw Material Storage 2＃ 18996456.00 9255070.95
Ownership No. 0009813
Drying and Screening Xin (2019) Sixth Division Real Estate
307552.00157812.75
Warehouse Ownership No. 0009813
Drying Workshop Heater Xin (2019) Sixth Division Real Estate
529135.00271512.52
Room 2＃ Ownership No. 0009813
Drying Workshop Heater Xin (2019) Sixth Division Real Estate
516159.00264854.08
Room 1＃ Ownership No. 0009813
Xin (2019) Sixth Division Real Estate
Solid Material Warehouse 1 13079741.00 6372448.21
Ownership No. 0009810
Xin (2019) Sixth Division Real Estate
Solid Material Warehouse 2 10888092.00 5304677.06
Ownership No. 0009810
Finished Product Xin (2019) Sixth Division Real Estate
10717243.005499285.34
Warehouse 1# Ownership No. 0009810
Finished Product Xin (2019) Sixth Division Real Estate
10577682.005427673.16
Warehouse 2# Ownership No. 0009810
Finished Product Xin (2019) Sixth Division Real Estate
10701563.005491239.67
Warehouse 3# Ownership No. 0009810
By-product Warehouse Xin (2019) Sixth Division Real Estate
10866449.005575846.59
3#Warehouse Ownership No. 0009810
By-product Warehouse Xin (2019) Sixth Division Real Estate
11247592.005771420.58
2#Warehouse Ownership No. 0009810
By-product Warehouse Xin (2019) Sixth Division Real Estate
10997633.005358045.47
1#Warehouse Ownership No. 0009810
261 / 282Annual R eport 2023
Collateral Mortgage Certificate No. Original Value Net Value
Xanthan Gum Alcohol Xin (2019) Sixth Division Real Estate
5291336.002655688.26
Distillation Workshop Ownership No. 0009810
Xanthan Gum Extraction Xin (2019) Sixth Division Real Estate
15756703.007908190.11
Workshop Ownership No. 0009810
Xanthan Gum Transformer Xin (2019) Sixth Division Real Estate
1434516.48765597.75
Room Ownership No. 0009810
Protein Separation Xin (2019) Sixth Division Real Estate
13523822.006488234.94
Workshop Ownership No. 0009810
Xin (2019) Sixth Division Real Estate
Natamycin Workshop 8231315.42 4756592.57
Ownership No. 0009810
Five-effect Evaporator Xin (2019) Sixth Division Real Estate
6933282.003369348.37
Workshop Ownership No. 0009810
Raw Material Sugar Xin (2019) Sixth Division Real Estate
634154.00324741.39
Screening Warehouse No. 2 Ownership No. 0009810
Raw Material Soaking Xin (2019) Sixth Division Real Estate
29640460.0015887275.51
Workshop Ownership No. 0009810
Raw Material Sugar By- Xin (2019) Sixth Division Real Estate
17595367.008466049.87
product Packaging Floor Ownership No. 0009810
Raw Material Sugar Xin (2019) Sixth Division Real Estate
13643220.006986501.09
Purification Workshop Ownership No. 0009810
Raw Material Sugar
Xin (2019) Sixth Division Real Estate
Distribution and Air 2117267.00 1084222.71
Ownership No. 0009810
Compression
Raw Material Sugar Xin (2019) Sixth Division Real Estate
37794396.1518430766.20
Glucose Workshop Ownership No. 0009810
Raw Material Sugar Xin (2019) Sixth Division Real Estate
412800.00211389.19
Screening Warehouse 1 Ownership No. 0009810
Raw Material Sugar Xin (2019) Sixth Division Real Estate
3186753.001631891.40
Circulating Pump Room Ownership No. 0009810
Raw Material Main Xin (2019) Sixth Division Real Estate
59616663.8830551553.85
Workshop Ownership No. 0009810
Lysine 4#Gas Distribution Xin (2019) Sixth Division Real Estate
772826.00395753.33
Station Ownership No. 0009809
Xin (2019) Sixth Division Real Estate
Lysine 35KV Substation 1465463.00 750442.92
Ownership No. 0009809
Lysine Circulating Pump Xin (2019) Sixth Division Real Estate
2500247.301439735.32
Room Ownership No. 0009809
Xanthan Gum Power Xin (2019) Sixth Division Real Estate
2222388.001115402.48
Workshop Ownership No. 0009809
Xanthan Gum Fermentation Xin (2019) Sixth Division Real Estate
13000176.709346585.39
Workshop Ownership No. 0009809
Nucleotide Extraction Xin (2019) Sixth Division Real Estate
30728376.7816250052.54
Workshop Ownership No. 0009809
262 / 282Annual R eport 2023
Collateral Mortgage Certificate No. Original Value Net Value
Compound Fertilizer2＃ Xin (2019) Sixth Division Real Estate
580671.00297353.53
Gas Distribution Station Ownership No. 0009809
Heating Station Steam-
Xin (2019) Sixth Division Real Estate
driven Air Compressor 16631588.00 8534083.56
Ownership No. 0009809
Room
Heating Station Circulating Xin (2019) Sixth Division Real Estate
1196729.00614071.71
Pump Room Ownership No. 0009809
Xin (2019) Sixth Division Real Estate
Glutamic Acid Pump Room 1893406.00 920133.52
Ownership No. 0009809
Glutamic Acid Freezing Xin (2019) Sixth Division Real Estate
8183385.003976857.57
Station Ownership No. 0009809
Glutamic Acid Hydrolysis Xin (2019) Sixth Division Real Estate
5154300.002474910.12
Workshop Ownership No. 0009809
Glutamic Acid Extraction Xin (2019) Sixth Division Real Estate
28371495.5013886540.29
Workshop Ownership No. 0009809
Glutamic Acid 35KV Xin (2019) Sixth Division Real Estate
799965.56410164.97
Substation Ownership No. 0009809
Glutamic Acid Xin (2019) Sixth Division Real Estate
17644563.008574680.87
Fermentation Workshop Ownership No. 0009809
Xin (2019) Sixth Division Real Estate
Xanthan Gum Pump Room 4114910.00 2065247.59
Ownership No. 0009809
Sulfuric Acid Pump Room Xin (2019) Sixth Division Real Estate
1210180.00587162.63
(Glutamic Acid ) Ownership No. 0009809
Serine 3＃Gas Distribution Xin (2019) Sixth Division Real Estate
609865.00312303.40
Station Ownership No. 0009809
Xin (2019) Sixth Division Real Estate
Serine Pump Room 2629842.00 1346705.04
Ownership No. 0009809
Serine Fermentation Xin (2019) Sixth Division Real Estate
17609683.008449718.95
Workshop Ownership No. 0009809
Xin (2019) Sixth Division Real Estate
Serine Ingredients 13029695.00 6348065.79
Ownership No. 0009809
Serine Extraction Xin (2019) Sixth Division Real Estate
8510956.004079545.51
Workshop Ownership No. 0009809
Xin (2019) Sixth Division Real Estate
Lysine Power Workshop 4385976.00 2245996.77
Ownership No. 0009809
Lysine Fermentation Xin (2019) Sixth Division Real Estate
40252014.0020612490.29
Workshop Ownership No. 0009809
Lysine Extraction Xin (2019) Sixth Division Real Estate
67382586.5034501467.84
Workshop Ownership No. 0009809
Nucleotide Synthesis into
Xin (2019) Sixth Division Real Estate
Phosphorous Trichloride 3155624.61 1668785.42
Ownership No. 0009809
Workshop
Nucleotide Refining Xin (2019) Sixth Division Real Estate
13480692.347198700.26
Workshop Ownership No. 0009809
263 / 282Annual R eport 2023
Collateral Mortgage Certificate No. Original Value Net Value
Nucleotide Alcohol Tank Xin (2019) Sixth Division Real Estate
224782.09119442.32
Area Pump Room Ownership No. 0009809
Nucleotide Alcohol Xin (2019) Sixth Division Real Estate
2240980.651185095.22
Recovery Workshop Ownership No. 0009809
Xin (2019) Sixth Division Real Estate
Nucleotide Pump Room 4419390.13 2337100.99
Ownership No. 0009809
Nucleotide Fermentation Xin (2019) Sixth Division Real Estate
22545342.6511922627.85
Workshop Ownership No. 0009809
Nucleotide Synthesis Xin (2019) Sixth Division Real Estate
28375495.0215270629.91
Workshop Ownership No. 0009809
Xin (2019) Sixth Division Real Estate
Nucleotide Utility Building 12768362.22 7070158.66
Ownership No. 0009809
Raw Material Weighing Xin (2019) Sixth Division Real Estate
903725.00440294.80
Room Ownership No. 0009811
Xin (2019) Sixth Division Real Estate
Power Distribution Room 430830.00 220622.07
Ownership No. 0009811
Xin (2019) Sixth Division Real Estate
Rainwater Pump Room 1506087.00 771245.98
Ownership No. 0009811
Total 827303398.98 423641966.22
*As of December 31 2023 the related loans have been settled but the mortgages have not been
released.Except for the above commitments the Company has not made other significant commitments that
necessitate disclosure but have not been disclosed as of December 31 2023.
2. Contingencies
(1) Significant Contingencies as of the Balance Sheet Date
?Applicable □ Not Applicable
1．Contingencies Arising from Pending Litigation or Arbitration and Their Financial Impact
(1) Litigation related to the Original Dalian Hanxin Bio-Pharmaceutical Co. Ltd.
As stipulated in the Equity Transfer Agreement signed by Lhasa Meihua Biological Investment
Holding Co. Ltd. a wholly-owned subsidiary of the Company to transfer 100% of the equity held in the
Dalian Hanxin Bio-Pharmaceutical Co. Ltd.. (now known as AIM Honesty Biopharmaceutical Co. Ltd.hereinafter referred to as "AIM Honesty") to Liaoning AIM Biological Vaccine Technology Group Co.Ltd. (now known as AIM Vaccine Co. Ltd.) Lhasa Meihua Biological Investment Holding Co. Ltd.undertakes that except for the liabilities expressly recorded in the audit report and financial statements
provided to the acquirer and liabilities that were abnormally incurred by AIM Honesty and its subsidiaries
in the normal course of business after the audit base date and have been disclosed to the acquirer AIM
Honesty and its subsidiaries have no other debts or contingent debts and agrees that in the event of a
breach of the commitment Lhasa Meihua should bear the compensation liability for all direct or indirect
economic losses suffered by other parties involved due to the breach. In accordance with the above
provisions specified in the Equity Transfer Agreement the Company has already fulfilled some
compensation obligations in advance. Please refer to the Company's previous annual reports for details.
264 / 282Annual R eport 2023
As of December 31 2022 due to the clearance of historical legacy creditor’s rights and debts for the
Company's other receivables Zhuang Enda's debts of RMB 91112286.66 yuan Lhasa Meihua has the
right to seek recovery from Tibet Yiyuan Industry and Zhuang Enda according to the agreements entered
into by and between the Company and the former actual controller of AIM Honesty Tibet Yiyuan Industry
Zhuang Enda etc.. After verification Tibet Yiyuan Industry has no tangible industry and executable assets
and Zhuang Enda has been restricted from consumption by the People's Court of Wuhua District Kunming
City and the Intermediate People's Court of Kunming City many times with no executable assets under
his name. The above receivables have all been provided for bad debt reserves. After being reviewed and
approved by the second meeting of the Tenth Board of Directors of the Company the above bad debts
have been written off and the write-off will not have a significant impact on the Company's profits.As of the reporting period the pending lawsuits related to AIM Honesty are as follows:
Lhasa Meihua Biological Investment Holding Co. Ltd. a subsidiary of the Company received a
Notice of Debt Repayment issued by AIM Honesty on October 13 2020. Pursuant to the Civil Judgment
(2015) DMSCZ No. 438 issued by the Intermediate People's Court of Dalian Liaoning Province Kunming
Sunshine Measurement and Control Technology Co. Ltd. (hereinafter referred to as "Sunshine
Measurement and Control") provided guarantee for the loan under the RMB Loan Contract LJZ No.DL1114010272 signed with Dalian Branch Bank of Jilin Co. Ltd. on behalf of AIM Honesty with the
No. 17-1-3 and 17-2 Land and five properties with right of use above the land in Kunming Economic and
Technological Development Zone as collateral. The above-mentioned mortgaged land and properties were
judicially auctioned on April 19 2018 and the auction proceeds were used to repay the bank loans. Based
on this Sunshine Measurement and Control has the right to recover the debt from AIM Honesty.According to relevant agreements such as the Equity Transfer Agreement of Dalian Hanxin Bio-
Pharmaceutical Co. Ltd. signed between Lhasa Meihua a subsidiary of the Company and AIM Vaccine
Co. Ltd. Lhasa Meihua is responsible for realizing the non-operating creditor’s rights of AIM Honesty
related to its former shareholder Tibet Yiyuan Industry Co. Ltd. (hereinafter referred to as "Tibet Yiyuan")
and clearing the debts. Based on this AIM Honesty issued the aforementioned Notice of Debt Repayment
to Lhasa Meihua. According to the relevant agreements such as the Equity Transfer Agreement signed
between Lhasa Meihua and AIM Honesty's former shareholder Tibet Yiyuan Tibet Yiyuan is responsible
for realizing the non-operating creditor’s rights of AIM Honesty and clearing the debts. Based on the
agreements mentioned above all parties involved have reached a consensus agreement that Tibet Yiyuan
and its affiliates will assume all the debts and their interest generated based on the recovery rights.In December 2021 according to materials such as the copy of the lawsuit and the notice of response
to action filed by Kunming Sunwise Co. Ltd. (hereinafter referred to as "Sunwise") a company holding
100% of the shares of Sunshine Measurement and Control against AIM Honesty and the Third Party
Sunshine Measurement and Control for contract disputes [The Intermediate People's Court of Kunming
Yunnan Province (2021) Y01MC No. 4275] delivered by the Intermediate People's Court of Kunming
Yunnan Province Sunwise as a shareholder of Sunshine Measurement and Control was declared
bankrupt by the Intermediate People's Court of Kunming Yunnan Province on March 15 2019 and
265 / 282Annual R eport 2023
Yunnan Zhenxu Law Firm was appointed as the administrator by the court. The administrator claimed that
AIM Honesty had not pursued recovery from Sunshine Measurement and Control since it fulfilled its
guarantee obligations and demanded AIM Honesty to repay the indemnity and pay the related interest and
funds usage fees to Sunshine Measurement and Control. According to the agreements mentioned above
the Company have reached a consensus agreement with all related parties that Tibet Yiyuan and its
affiliates will assume all the debts and their interest generated based on the recovery rights.On October 18 2022 the Intermediate People's Court of Kunming made the following judgments: 1)
Defendant AIM Honesty Biopharmaceutical Co. Ltd. shall repay RMB 28967179.55 yuan to the Third
Party Kunming Sunshine Measurement and Control Technology Co. Ltd. within ten days from the
effective date of the judgment; 2) Defendant AIM Honesty Biopharmaceutical Co. Ltd. shall pay the fund
usage fees on the basis of RMB 28967179.55 yuan from August 17 2021 to the date of repayment
calculated according to the loan prime rate published by the National Interbank Funding Center within ten
days from the effective date of the judgment; 3) Other litigation requests from the plaintiff Kunming
Sunwise Co. Ltd. were dismissed. Both the plaintiff and the defendant have submitted appeals.On June 30 2023 the Higher People's Court of Yunnan Province issued a judgment with the
document number of [(2023) YMZ No. 324] ruling to dismiss the appeal and uphold the original judgment.AIM Honesty has applied for retrial to the Supreme People's Court regarding the above-mentioned dispute
and on December 4 2023 the Supreme People's Court issued a notice of acceptance.As stipulated in the Equity Transfer Agreement where Lhasa Meihua Biological Investment Holding
Co. Ltd. a wholly-owned subsidiary of the Company transferred 100% equity of AIM Honesty to AIM
Vaccine Co. Ltd. Lhasa Meihua Biological Investment Holding Co. Ltd. that except for the liabilities
expressly recorded in the audit report and financial statements provided to the acquirer and liabilities that
were abnormally incurred by AIM Honesty and its subsidiaries in the normal course of business after the
audit base date and have been disclosed to the acquirer AIM Honesty and its subsidiaries have no other
debts or contingent debts and agrees that in the event of a breach of the commitment Lhasa Meihua
should bear the compensation liability for all direct or indirect economic losses suffered by other parties
involved due to the breach. During the reporting period the Company made a provision for estimated
liability compensation and its interest totaling RMB 30888616.17 yuan in accordance with the judgment
of the Higher People's Court of Yunnan Province.
(2) Litigation Related to Shandong Fufeng Fermentation Co. Ltd.
Shandong Fufeng Fermentation Co. Ltd. initiated legal proceedings against the Company and its
subsidiary Xinjiang Meihua on December 3 2014 for infringement of commercial secrets of xanthan gum
production. After multiple trials the Supreme People's Court issued a final judgment on January 9 2024
with the following rulings: 1) Xinjiang Meihua Amino Acid Co. Ltd. Meihua Holdings Group Co. Ltd.and Zhang Wei are immediately ordered to cease infringing on Shandong Fufeng Fermentation Co. Ltd.’s
commercial secrets of xanthan gum production including refraining from disclosure usage and allowing
others to use the involved commercial secrets; 2) Xinjiang Meihua Amino Acid Co. Ltd. Meihua
Holdings Group Co. Ltd. and Zhang Wei are jointly liable to compensate Shandong Fufeng Fermentation
266 / 282Annual R eport 2023
Co. Ltd. for economic losses amounting to RMB 15 million yuan within ten days from the effective date
of the judgment. On March 5 2024 the Intermediate People's Court of Jinan Shandong Province issued
the Execution Notice under (2024) L0Z No. 573 and the Judgment under (2022)ZGFZMZ No. 64
rendered by the Supreme People's Court has become legally effective. The applicant for execution
Shandong Fufeng Fermentation Co. Ltd. applied to the court for compulsory execution requesting: 1)
Fulfillment of the obligations determined by the aforementioned effective legal documents; 2) Payment
of double interest on the debt during the delay in fulfillment; 3) Bearing the execution costs of RMB 500
yuan. According to the Civil Procedure Law and other laws and regulations an effective judgment shall
be enforced and the Company voluntarily fulfilled all the contents of the second-instance judgment after
receiving it. 1) Xinjiang Meihua has already fulfilled the compensation obligation according to the second
article of the judgment. On February 1 2024 it paid RMB 15 million yuan to Shandong Fufeng
Fermentation Co. Ltd. and accrued an estimated liability of RMB 15 million yuan for economic loss
compensation for the current year based on the above judgment results. 2) The second-instance judgment
presumed that the Company and Xinjiang Meihua should bear joint and several liability for the
infringement of commercial secrets of xanthan gum production in the Zhang Wei case. Based on
professional legal advice from attorneys the Company believes that Xinjiang Meihua's xanthan gum
production technology information process routes on related production lines and equipment all originate
from legitimate sources with no evidence of infringing upon the commercial secrets of xanthan gum
production in the case during actual manufacturing operations. Whether the technical information actually
used by Xinjiang Meihua in current operations is identical to the commercial secrets of xanthan gum
production in the case and whether it needs to cease usage should be determined by the people's court in
a separate case according to law. After comprehensive evaluation based on professional opinions the
Company believes that the judgment is unlikely to have a substantial impact on its production and
operations.Both the Company and Xinjiang Meihua insist that there has been no infringement of commercial
secrets in Xinjiang Meihua's xanthan gum production and sales processes. The Company will file for a
retrial regarding the effective judgement of the second instance according to law. If the judgment is
revoked through the trial supervision procedure the Company reserves the right to request the execution
of reversal.
2．Contingencies Arising from the Provision of Debt Guarantees to External Parties and Their
Financial Impact
Refer to 5(4) - Status of Related Guarantees in Section XIV for details of guarantees provided to
related parties.Except for the above contingencies the Company has no other significant contingencies that require
disclosure but have not been disclosed as of December 31 2023.
(2) Explanation should be also provided even if the Company has no significant contingencies that
require disclosure:
□Applicable ?Not Applicable
267 / 282Annual R eport 2023
3. Others
□Applicable ?Not Applicable
XVII. Matters after the Balance Sheet Date
1. Significant Non-Adjusting Matters
□Applicable ?Not Applicable
2. Status of Profit Distribution
?Applicable □ Not Applicable
Unit: Hundreds of Millions Currency: RMB
Profits or Dividends to be Distributed 12.00
Profits or Dividends Declared for Distribution After Deliberation and Approval
3. Sales Returns
□Applicable ?Not Applicable
4. Explanation of Matters after Other Balance Sheet Dates
?Applicable □ Not Applicable
Except for the aforementioned matters after the balance sheet date the Company has no other
significant matters after the balance sheet date that require disclosure but have not been disclosed as of the
date of approval of the financial report.XVIII. Other Significant Matters
1. Correction of Prior Accounting Errors
(1) Retrospective Restatement
□Applicable ?Not Applicable
(2) Prospective Application
□Applicable ?Not Applicable
2. Significant Debt Restructuring
□Applicable ?Not Applicable
3. Asset Swap
(1) Exchange of Non-monetary Assets
□Applicable ?Not Applicable
(2) Other Asset Swap
□Applicable ?Not Applicable
4. Pension Plans
□Applicable ?Not Applicable
5. Termination of Operations
□Applicable ?Not Applicable
6. Segment Information
(1) Determination Basis and Accounting Policies for Reporting Segments
□Applicable ?Not Applicable
(2) Financial Information of Reporting Segments
□Applicable ?Not Applicable
268 / 282Annual R eport 2023
(3) If the company does not have reporting segments or cannot disclose the total assets and liabilities
of each reporting segment the reasons should be explained.?Applicable □ Not Applicable
The Company determines operating segments based on internal organizational structure
management requirements and internal reporting systems. The operating segments of the Company refer
to components that meet the following conditions:
(1) The component generates revenue and incurs expenses in its daily activities;
(2) The management can evaluate the operating results of the component on a regular basis to decide
the resource allocation for it and assess its performance;
(3) Relevant accounting information such as financial status operating results and cash flows of the
component can be obtained.The Company determines reporting segments based on operating segments and an operating segment
is determined as a reporting segment if it meets one of the following conditions:
(1) The operating segment's revenue accounts for 10% or more of the total revenue of all segments;
(2) The absolute amount of segment profit (or loss) for the segment accounts for 10% or more of
either the total profit of profitable segments or the total loss of loss-making segments whichever is greater.The Company has not disclosed segment reports mainly because: the Company's sales revenue and
gross profit are disclosed based on the segment basis of daily operating management. Additionally items
such as management expenses financial expenses and taxes on the income statement and assets and
liabilities cannot be split and disclosed according to segment requirements.
(1) Tongliao Meihua and Xinjiang Meihua subsidiaries of the Company produce multiple products
across several segments. Therefore management expenses financial expenses income tax and other
items on the income statement including corresponding items of the Company cannot be attributed to
specific products;
(2) The Company is a capital-intensive manufacturing enterprise. Although it produces various
products the manufacturing processes are similar with many fixed assets being shared. Some production
lines also produce multiple kinds of products throughout the year. Hence the fixed assets used for
production cannot be distinguished by segments.
(3) Apart from production lines the Company has numerous shared facilities such as heating stations
sewage treatment and basic chemical production lines. The products and services provided by these
facilities are shared among multiple segments making it impossible to distinguish them by segments.
(4) The Company's debt financing cannot be specifically allocated to specific business segments.
Therefore segment information is not presented in this financial statement.
(4) Other Explanations
□Applicable ?Not Applicable
7. Other Significant Transactions and Matters Affecting Decisions by Investors
□Applicable ?Not Applicable
8. Others
□Applicable ?Not Applicable
269 / 282Annual R eport 2023
XIX. Notes to Main Items on the Parent Company’s Financial Statement
1. Accounts Receivable
(1) Disclosure by Aging
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Aging Ending Book Balance Beginning Book Balance
Within 1 year
Including: Sub-items for within 1 year
Within 1 year 174600238.32 261845607.75
Within 1 year Subtotal 174600238.32 261845607.75
1 to 2 years
2 to 3 years
Over 3 years
3 to 4 years
4 to 5 years
Over 5 years
Less: Bad Debt Reserves 8561015.72 11096479.35
Total 166039222.60 250749128.40
(2) Classified Disclosure by Bad Debt Provision Methods
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Book Balance Bad Debt Reserves Book Balance Bad Debt Reserves
Prov Prov
Category
Ratio ision Book Value Ratio ision Book Value
Amount Amount Amount Amount
(%) Rati (%) Rati
o(%) o(%)
Provisions
for Bad
Debt
Reserves
on an
Individual
-item
Basis
Including:
Provisions
for Bad
Debt
Reserves 174600238.32 100.00 8561015.72 4.90 166039222.60 261845607.75 100.00 11096479.35 4.24 250749128.40
on a
Portfolio
Basis:
Including:
270 / 282Annual R eport 2023
Including:
Related
Party
Portfolio 3379923.96 1.94 -- -- 3379923.96 39916020.67 15.24 -- -- 39916020.67
within the
Consolidat
ion Scope
Aging
Analysis 171220314.36 98.06 8561015.72 5.00 162659298.64 221929587.08 84.76 11096479.35 5.00 210833107.73
Portfolio
Total 174600238.32 / 8561015.72 / 166039222.60 261845607.75 / 11096479.35 / 250749128.40
Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
?Applicable □ Not Applicable
Items for provisions on a portfolio basis: Aging Analysis Portfolio
Unit: Yuan Currency: RMB
Ending Balance
Name
Accounts Receivable Bad Debt Reserves Provision Ratio (%)
Within 1 year 171220314.36 8561015.72 5.00
Total 171220314.36 8561015.72 5.00
Explanation of Provisions for Bad Debt Reserves on a Portfolio Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of significant changes in the book balance of accounts receivable with changes in loss reserves
during the current period:
□Applicable ?Not Applicable
(3) Status of Bad Debt Reserves
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount of Changes in the Current Period
Ending Ending
Category Recovered Written Other
Balance Provision Balance
or Reversed off Changes
Accounts Receivable with
Provisions for Credit Impairment
------------
Losses on an Individual-item
Basis
Accounts Receivable with
Provisions for Credit Impairment
Losses on a Portfolio Basis
Including: Related Party Portfolio
------------
within the Consolidation Scope
Aging Analysis Portfolio 11096479.35 -- 2535463.63 -- -- 8561015.72
Total 11096479.35 -- 2535463.63 -- -- 8561015.72
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
271 / 282Annual R eport 2023
(4) Status of Accounts Receivable Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including write-off of significant accounts receivable
□Applicable ?Not Applicable
Explanation of write-off of accounts receivable:
□Applicable ?Not Applicable
(5) Overview of Accounts Receivable and Contract Assets Ranking Top Five in Ending Balances
Aggregated by Debtors
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Proportion in the
Total Ending
Ending Balance
Ending Balance Ending Balance Balance of Ending Balance
Company of Accounts
of Accounts of Contract Accounts of Bad Debt
Name Receivable and
Receivable Assets Receivable and Reserves
Contract Assets
Contract Assets
(%)
First 24568087.39 24568087.39 14.07 1228404.37
Second 23234089.00 23234089.00 13.31 1161704.45
Third 22014704.10 22014704.10 12.61 1100735.21
Fourth 14599487.00 14599487.00 8.36 729977.89
Fifth 11491737.25 11491737.25 6.58 574586.86
Total 95908104.74 95908104.74 54.93 4795408.78
Other Explanations:
?Applicable □ Not Applicable
At the end of the period there were no accounts receivable derecognized due to the transfer of
financial assets.At the end of the period there were no balances of assets and liabilities formed by the transfer of
accounts receivable and continued involvement.
2. Other Receivables
Presentation of Items
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Ending Balance Beginning Balance
Interest Receivable
Dividends Receivable 1230000000.00 900000000.00
Other Receivables 497988609.74 1285996210.03
Total 1727988609.74 2185996210.03
Other Explanations:
□Applicable ?Not Applicable
Interest Receivable
(1) Classification of Interest Receivable
□Applicable ?Not Applicable
272 / 282Annual R eport 2023
(2) Significant Overdue Interest
□Applicable ?Not Applicable
(3) Classified Disclosure by Bad Debt Provision Methods
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Explanation of Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
□Applicable ?Not Applicable
(4) Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of significant changes in the book balance of interest receivable with changes in loss reserves
during the current period:
□Applicable ?Not Applicable
(5) Status of Bad Debt Reserves
□Applicable ?Not Applicable
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
(6) Status of Interest Receivable Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including write-off of significant interest receivable
□Applicable ?Not Applicable
Write-off Explanation:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
Dividends Receivable
(7) Dividends Receivable
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items (or Invested Units) Ending Balance Beginning Balance
Tongliao Meihua Bio-Tech Co. Ltd. 630000000.00 600000000.00
Xinjiang Meihua Amino Acid Co. Ltd. 400000000.00 300000000.00
Jilin Meihua Amino Acid Co. Ltd. 200000000.00 --
Total 1230000000.00 900000000.00
(8) Significant Dividends Receivable with an Aging Exceeding 1 year
□Applicable ?Not Applicable
(9) Classified Disclosure by Bad Debt Provision Methods
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Explanation of Provisions for Bad Debt Reserves on an Individual-item Basis:
□Applicable ?Not Applicable
Provisions for Bad Debt Reserves on a Portfolio Basis:
273 / 282Annual R eport 2023
□Applicable ?Not Applicable
(10) Provisions for Bad Debt Reserves based on the General Model of Expected Credit Losses
□Applicable ?Not Applicable
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of significant changes in the book balance of dividends receivable with changes in loss
reserves during the current period
□Applicable ?Not Applicable
(11) Status of Bad Debt Reserves
□Applicable ?Not Applicable
Including bad debts with significant amounts to be recovered or reversed during the period:
□Applicable ?Not Applicable
(12) Status of Dividends Receivable Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including write-off of significant dividends receivable
□Applicable ?Not Applicable
Write-off Explanation:
□Applicable ?Not Applicable
Other Explanations:
□Applicable ?Not Applicable
Other Receivables
(13) Disclosure by Aging
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Aging Ending Book Balance Beginning Book Balance
Within 1 year
Including: Sub-items for within 1 year
Within 1 year 498225281.32 1263521314.72
Within 1 year Subtotal 498225281.32 1263521314.72
1 to 2 years 592142.42 7040000.00
2 to 3 years -- 18219765.72
Over 3 years
3 to 4 years 200000.00 --
4 to 5 years -- --
Over 5 years 85842687.00 85892687.00
Less: Bad Debt Reserves 86871501.00 88677557.41
Total 497988609.74 1285996210.03
(14) Classification by Nature of Accounts
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Nature of Accounts Ending Book Balance Beginning Book Balance
Intercompany Account Current 480833286.11 1234083672.23
Deposits 600000.00 420000.00
Receivables for Land and Real Estate 85672687.00 85672687.00
Others 1828587.91 2788764.27
274 / 282Annual R eport 2023
Export Tax Refunds receivable 15925549.72 51708643.94
Less: Bad Debt Reserves 86871501.00 88677557.41
Total 497988609.74 1285996210.03
(15) Provision for Bad Debt Reserves
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Phase 1 Phase 2 Phase 3
Expected Credit
Expected Credit
Bad Debt Reserves Expected Credit Losses for the Total Losses for the entire
Losses over the entire Duration
Duration (without
Next 12 Months (with Credit
Credit Impairment)
Impairment)
Balance as of January 1
3004870.4185672687.0088677557.41
2023
Balance as of January 1
2023 during the Current
Period
--=Transferred to Phase 2
--Transferred to Phase 3
-- Reversed to Phase 2
--Reversed to Phase 1
Provision for the Current
Period
Reversal for the Current
1806056.41----1806056.41
Period
Write-off for the Current
Period
Write-off for the Current
Period
Other Changes
Balance as of December
1198814.0085672687.0086871501.00
312023
Basis for Staging and Provision Ratios for Bad Debt Reserves
Explanation of significant changes in the book balance of other receivables with changes in loss reserves
during the current period:
□Applicable ?Not Applicable
Basis for amount of provisions for bad debt reserves and the assessment of significant increase in credit
risk of financial instruments:
□Applicable ?Not Applicable
(16) Status of Bad Debt Reserves
□Applicable ?Not Applicable
Including bad debt reserves with significant amount reversed or recovered during the current period:
□Applicable ?Not Applicable
275 / 282Annual R eport 2023
(17) Status of Other Receivables Actually Written Off during the Current Period
□Applicable ?Not Applicable
Including write-off of significant other receivables:
□Applicable ?Not Applicable
Explanation of write-off of other receivables:
□Applicable ?Not Applicable
(18) Overview of Other Receivables Ranking Top Five in Ending Balances Aggregated by Debtor
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Proportion in
Total Amount of Ending
Ending Nature of
Company Name Ending Balances Aging Balance of Bad
Balance Accounts
of Other Debt Reserves
Receivables (%)
Intercompany
Jilin Meihua Amino Acid Within 1
480608486.11 82.19 Account --
Co. Ltd. year
Current
Receivables
Bazhou Metal Glass Over 5
85672687.00 14.65 for Land and 85672687.00
Furniture Industrial Park years
Real Estate
Tibet Lhasa Economic and
Technological Export Tax
Within 1
Development Zone 15925549.72 2.72 Refunds 796277.49
year
Taxation Bureau State Receivable
Taxation Administration
Bazhou Work Injury Within 1
1110639.27 0.19 Work Injury 55531.96
Insurance Management year
Expenses
Office 592142.42 0.10 1-2 years 59214.24
Intercompany
Xinjiang Meihua Amino Within 1
224800.00 0.04 Account --
Acid Co. Ltd. year
Current
Total 584134304.52 99.89 / / 86583710.69
(19) Presented Under Other Receivables Due to Centralized Fund Management
□Applicable ?Not Applicable
?Applicable □ Not Applicable
There were no other receivables involving government grants at the end of the period.There were no other receivables derecognized due to transfer of financial assets at the end of the
period.There were no amounts of assets and liabilities formed due to the transfer of other receivables and
continued involvement.
276 / 282Annual R eport 2023
3. Long-term Equity Investments
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Ending Balance Beginning Balance
Items Impairment Impairment
Book Balance Book Value Book Balance Book Value
Reserves Reserves
Investment in
7637850728.14--7637850728.147108299692.82--7108299692.82
Subsidiaries
Investment in
Associates and
Joint Ventures
Total 7637850728.14 -- 7637850728.14 7108299692.82 -- 7108299692.82
(1) Investment in Subsidiaries
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Provisions
Decrease for Ending
Increase during
Beginning during the Impairment Balance of
Invested Units the Current Ending Balance
Balance Current Reserves for Impairment
Period
Period the Current Reserves
Period
Tongliao Meihua
1954856225.51395185.73--1955251411.24--
Bio-Tech Co. Ltd
Xinjiang Meihua
Amino Acid Co. 2521124248.34 361629.17 -- 2521485877.51 --
Ltd.Langfang Meihua
252140088.5227635.35--252167723.87--
Seasoning Co. Ltd.Langfang Meihua
Bio-Technology
41682839.2468298.96--41751138.20--
Development Co.Ltd.Lhasa Meihua
Biological
800000000.00----800000000.00--
Investment Holding
Co. Ltd.Meihua Group
International
6277900.00----6277900.00--
Trading (Hong
Kong) Limited
Meihua (Shanghai)
Bio-Technology 3000000.00 28000000.00 -- 31000000.00 --
Co. Ltd.Jilin Meihua Amino
1529218391.21500448286.11--2029666677.32--
Acid Co. Ltd.
277 / 282Annual R eport 2023
Zhuhai Hengqin
Meihua Bio-
--250000.00--250000.00--
Technology Co.Ltd.Total 7108299692.82 529551035.32 -- 7637850728.14 --
(2) Investment in Associates and Joint Ventures
□Applicable ?Not Applicable
(3) Impairment Testing of Long-term Equity Investments
□Applicable ?Not Applicable
4. Operating Revenues and Operating Costs
(1) Status of Operating Revenues and Operating Costs
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred during the Current Amount Incurred during the Previous
Items Period Period
Revenues Costs Revenues Costs
Main Business 18901240236.28 18372725610.35 19662277591.25 18851397691.61
Other Business 18250745.67 17268512.07 18568577.59 17253269.43
Total 18919490981.95 18389994122.42 19680846168.84 18868650961.04
(2) Decomposition Information of Operating Revenues and Operating Costs
□Applicable ?Not Applicable
Other Explanations:
?Applicable □ Not Applicable
1. Main Business (by products)
Amount Incurred during the Current Period Amount Incurred during the Previous Period
Items
Revenues Costs Revenues Costs
Food Flavor and
Texture
7288717376.807087695867.847691998678.217378745215.10
Optimization
Products
Animal Nutrition
9957628301.139692616383.9710278203231.169884562420.35
Amino Acids
Human Medical
471065908.19460573161.60437068240.01415990475.77
Amino Acids
Others 1183828650.16 1131840196.94 1255007441.87 1172099580.39
Total 18901240236.28 18372725610.35 19662277591.25 18851397691.61
2. Main Business (by regions)
Amount Incurred during the Current Period Amount Incurred during the Previous Period
Region Name
Operating Revenues Operating Costs Operating Revenues Operating Costs
Domestic Sales 18678019409.87 18274817341.61 18955906648.81 18367619241.31
278 / 282Annual R eport 2023
Amount Incurred during the Current Period Amount Incurred during the Previous Period
Region Name
Operating Revenues Operating Costs Operating Revenues Operating Costs
Export Sales 223220826.41 97908268.74 706370942.44 483778450.30
Total 18901240236.28 18372725610.35 19662277591.25 18851397691.61
3. Revenues of the Company’s Top Five Customers
Proportion in the Total Operating
Company Name Amount
Revenues (%)
First 731748004.84 3.87
Second 629438959.04 3.33
Third 473576288.40 2.50
Fourth 433103973.40 2.29
Fifth 373189772.31 1.97
Total 2641056997.99 13.96
(3) Explanation of Performance Obligations
□Applicable ?Not Applicable
(4) Explanation of Allocation to Remaining Performance Obligations
□Applicable ?Not Applicable
(5) Significant Contract Changes or Significant Adjustments to Transaction Prices
□Applicable ?Not Applicable
5. Investment Income
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Amount Incurred
Amount Incurred during
Items during the Previous
the Current Period
Period
Investment Income from Long-term Equity Investments
1730000000.001592000000.00
Accounted for by the Cost Method
Investment Income from Long-term Equity Investments
Accounted for by the Equity Method
Investment Income from the Disposal of Long-term Equity
Investments
Investment Income from Financial Assets Held for Trading
3796166.67--
during the Holding Period
Dividend Income from Other Equity Instrument Investments
2816000.002816000.00
during the Holding Period
Dividend Income from Debt Investments during the Holding
Period
Dividend Income from other Debt Investments during the
Holding Period
279 / 282Annual R eport 2023
Investment Income from the Disposal of Financial Assets Held
2240303.286477987.85
for Trading
Investment Income from the Disposal of Other Equity Instrument
Investments
Investment Income from the Disposal of Debt Investments
Investment Income from the Disposal of Other Debt Investments
Debt Restructuring Gains
Others 4118595.00 --
Total 1742971064.95 1601293987.85
6. Others
□Applicable ?Not Applicable
XX. Supplementary Information
1. Detailed Statement of Non-recurring Profits and Losses for the Current Period
?Applicable □ Not Applicable
Unit: Yuan Currency: RMB
Items Amount Explanation
Profits or losses from disposal of non-current assets including the portion offset
(38915902.24)
against impairment provisions already accrued
Government grants recorded in the profit or loss for the current period excluding
those closely related to the Company's normal operating activities complying with
240560349.82
national policies entitled according to specified standards and having a continuous
impact on the Company's profit or loss
Profits or losses arising from fair value changes of financial assets and financial
liabilities held by non-financial enterprises as well as profits or losses arising from
(35150749.48)
the disposal of financial assets and financial liabilities excluding the effective
hedging business related to the Company’s normal operating activities
Fund usage fees charged to non-financial enterprises and recorded in the profit or
loss for the current period
Profits or losses from entrusting others to invest or manage assets
Profits or losses from loans entrusted to others
Asset losses incurred due to force majeure such as natural disasters
Reversal of impairment reserves for receivables undergoing individual impairment
1861963.30
testing
Income generated when the investment costs borne by the Company in acquisition of
subsidiaries associates and joint ventures are less than the fair value of identifiable
net assets entitled to the Company when the investment is acquired
Net profits or losses of subsidiaries generated from the beginning of the period to the
date of consolidation through enterprise merger under the same control
Profits or losses from non-monetary asset exchanges
Profits or losses from debt restructuring
One-time expenses incurred by enterprises due to discontinuation of related
operating activities such as employee resettlement expenses etc.One-time impact on profit or loss for the current period due to adjustments to tax
accounting and other laws and regulations
280 / 282Annual R eport 2023
Stock-based payment expenses recognized one-time due to cancellation or
modification of equity incentive plans
Profits or losses from changes in the fair value of employee compensation payable
after the exercise date for share-based payments settled by cash
Profits or losses from changes in the fair value of investment properties measured
subsequently using the fair value model
Income from transactions with significant price misalignment
Profits or losses from contingencies unrelated to the Company's normal operating
-45888616.17
activities
Custodian fee income from entrusted operations
Other non-operating revenues and expenditures not mentioned above -1380228.88
Other profit or loss items meeting the definition of non-recurring profits and losses
Less: Income tax impact 23938637.04
Minority shareholders’ equity impact (after tax)
Total 97148179.31
For items not listed in the Explanatory Announcement for Information Disclosure by Companies that Issue
Securities to the Public No. 1 - Non-recurring Profits and Losses but considered as non-recurring profits
and losses with significant amounts as well as items defined as recurring profits and losses in the
Explanatory Announcement for Information Disclosure by Companies that Issue Securities to the Public
No. 1 - Non-recurring Profits and Losses the Company should provide reasons for such classification.□Applicable ?Not Applicable
Other Explanations
□Applicable ?Not Applicable
2. Return on Equity and Earnings per Share
?Applicable □ Not Applicable
Weighted Earnings per Share
Profits during the Reporting Period Average Return Diluted Earnings per
Basic Earnings per Share
on Equity (%) Share
Net profit attributable to ordinary
23.481.061.06
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after
22.761.031.03
deducting non-recurring profits and
losses
3. Differences in Accounting Data under Domestic and Foreign Accounting Standards
□Applicable ?Not Applicable
4. Others
□Applicable ?Not Applicable
281 / 282Annual R eport 2023
Chairman: Wang Aijun
Date Approved by the Board of Directors for Submission: March 18 2024
Revision Information
□Applicable ?Not Applicable
