China Jushi FY2016: Projects and construction progress

In 2016 the report says planning and design were fully underway for Tongxiang Leishi’s 600,000-tonne-per-year pyrophyllite powder expansion. This is a mineral-powder processing project, distinct from glass-fiber yarn output and from the 100,000-tonne unsaturated polyester resin project that had formally started construction. No powder commissioning date or actual production is stated in this management passage. Together with a wind-blade investment, these actions describe intended extension along the materials and composites chain; they do not establish that all the projects had commercial sales. The powder project is recorded here at its 2016 design stage. Comparison with later Leishi project descriptions is needed before treating their budgets, dates and physical capacity as a single continuous project record.

Year-end fixed assets had CNY 15,501,902,278.40 of gross value, CNY 2,726,605,455.28 of accumulated depreciation and CNY 6,766,361.24 of impairment, leaving CNY 12,768,530,461.88 of carrying value. The gross asset categories include CNY 6,331,974,293.15 of platinum-rhodium alloy, rather than only buildings and ordinary machinery. The alloy column has no depreciation amount printed; a blank does not justify inventing a zero expense or reconciling the separate cash-flow depreciation figure. Construction in progress closed at CNY 943,888,082.50, down from CNY 1,726,806,137.51. The important-project movement table covers CNY 845,244,765.92 of closing construction, while the broader construction note also includes other projects of CNY 98,643,316.58. Transfers to fixed assets in the important-project table total CNY 1,945,520,881.46, compared with CNY 2,628,065,671.62 in the complete fixed-asset additions note. Those different table boundaries are not reconciled by treating a transfer as cash spending or new nameplate capacity. Some assets were transferred back into construction for work; such accounting movements do not independently establish a shutdown duration. Land-use rights and mining rights carried CNY 344,891,751.36 and CNY 115,716,312.62 respectively, showing additional operating-resource categories without establishing land area, mineral reserves or current licence validity.

Reported gross fixed assets / 2016 / consolidated

RMB 15,501,902,278.4

Reported net fixed assets / 2016 / consolidated

RMB 12,768,530,461.88

Reported consolidated construction in progress / 2016 / consolidated

RMB 943,888,082.5

Important-project closing subtotal / 2016 / consolidated

RMB 845,244,765.92

Construction transfer to fixed assets / 2016 / consolidated

RMB 2,628,065,671.62

Important-project capitalization subtotal / 2016 / consolidated

RMB 1,945,520,881.46

The 360,000-tonne furnace-drawing technical-upgrade programme has separate phase I and phase II rows in the construction note. Phase II reports a budget of CNY 554,195,000.00, additions and year-end construction of CNY 598,862,634.97, a reported investment-to-budget ratio of 58.03% and engineering progress of 80%. The monetary balance divided by the printed budget does not reproduce the printed ratio. Phase I has a budget of CNY 494,099,600.00, reported investment ratio of 45.40% and engineering progress of 100%; its closing construction cell is blank after the disclosed transfers and other reductions. These source values are preserved without changing the budgets or equating engineering completion with full commercial utilization. A further narrative describes upgrading two 140,000-tonne lines to 180,000 tonnes each, a combined investment of 104,829.46 ten-thousand CNY and a two-year construction period starting in the fourth quarter of 2015. Its combined investment equals the two printed phase budgets, and the two resulting capacities total the programme headline. Those correspondences support comparison, but do not allocate every narrative milestone or cost to a particular phase, nor identify this programme with the separate intelligent-base groundbreaking.

Project budget / 2016 / construction note

RMB 554,195,000

Construction in progress at year-end / 2016 / construction note

RMB 598,862,634.97

Issuer-reported investment-to-budget ratio / 2016 / construction note

58.03 percent

Engineering progress / 2016 / construction note

80 percent

The Egyptian second 80,000-tonne line was described in management discussion as completed and in production during 2016. Its construction accounting row nevertheless reports engineering progress of 90%, a budget of CNY 1,156,526,600.00 and a reported investment ratio of 79.27%. Opening construction of CNY 685,208,632.13 plus additions of CNY 282,766,271.28, less CNY 945,424,101.87 transferred to fixed assets, leaves CNY 22,550,801.54 of construction at year-end. A production milestone and residual project accounting or wider engineering work therefore have different scopes; the report does not provide a reconciliation establishing what the remaining balance covered. It reports CNY 13,611,092.35 of current-period capitalized interest at 5.79%, with funding described as own funds and borrowing. Capitalized interest is a project accounting cost, not another measure of annual output or an additional capacity claim. The phase identifier and earlier 80,000-tonne scope keep this project distinct from Egyptian phase III.

Project budget / 2016 / construction note

RMB 1,156,526,600

Construction in progress at year-end / 2016 / construction note

RMB 22,550,801.54

Issuer-reported investment-to-budget ratio / 2016 / construction note

79.27 percent

Engineering progress / 2016 / construction note

90 percent

Reported construction carrying-value additions / 2016 / construction note

RMB 282,766,271.28

Reported transfer into fixed assets / 2016 / construction note

RMB 945,424,101.87

Project capitalized interest / 2016 / construction note

RMB 13,611,092.35

The third Egyptian line is a 40,000-tonne high-performance glass fiber project, with construction reported to have started in May 2016. The important-construction table reports a CNY 673,994,800.00 budget, CNY 161,930,881.05 of additions and closing construction, a reported investment ratio of 24.03% and engineering progress of 25%. Funding is described as own funds and borrowing. A separate narrative gives total investment of 10,995.02 ten-thousand US dollars and an approximate one-year construction period, while management expected completion and production in the second half of 2017. These are source-specific currency and timing disclosures; the English account does not invent an exchange-rate conversion, treat the different schedules as actual commissioning, or add the planned capacity to 2016 operating output. A shared Egyptian base does not merge the phase with the two 80,000-tonne lines.

Project budget / 2016 / construction note

RMB 673,994,800

Construction in progress at year-end / 2016 / construction note

RMB 161,930,881.05

Issuer-reported investment-to-budget ratio / 2016 / construction note

24.03 percent

Engineering progress / 2016 / construction note

25 percent

The 100,000-tonne unsaturated polyester resin project is intended to extend the group’s offering alongside glass fiber for composite materials. The construction note reports a CNY 186,417,500.00 budget, CNY 7,650,509.86 of additions and closing construction, a reported investment ratio of 4.10% and engineering progress of 5%, funded by own resources and borrowing. The later narrative repeats total investment as 18,641.75 ten-thousand CNY and says construction started at the end of 2016 with an approximate one-year period. The construction table calls it a production-line modification project, while the narrative describes building a line. The disclosed capacity and matching budget link these descriptions to the existing resin-project record, with the wording difference retained. Product development, process design and equipment selection remained underway in the management discussion. This establishes intended product-chain expansion and spending at an early stage, rather than completed output, customer orders or a demonstrated sales contribution.

Project budget / 2016 / construction note

RMB 186,417,500

Construction in progress at year-end / 2016 / construction note

RMB 7,650,509.86

Issuer-reported investment-to-budget ratio / 2016 / construction note

4.1 percent

Engineering progress / 2016 / construction note

5 percent

The management discussion dates the United States 80,000-tonne-per-year glass-fiber line’s groundbreaking and entry into substantive construction to 8 December 2016 local time. The financial note separately says the US project started construction in the first quarter of 2017. Both descriptions belong to the same stated line capacity, but the annual report does not reconcile the construction wording. They remain dated milestones rather than being forced into one start date. The financial note gives total investment of 205,263.27 ten-thousand CNY, financed by company funds and bank borrowing, with completion expected before the end of 2018. That budget is a plan, not cash spent in 2016, a committed loan facility or an actual completion result. Management’s rationale was to supply overseas customers from local production; a sales network or groundbreaking does not establish commercial US output. This description is attached to the existing US 80,000-tonne project record, without adding its planned capacity a second time.

Reported project narrative budget / 2016 / us 80kt financial note

RMB 2,052,632,700

The financial note describes a Jushi Jiujiang 120,000-tonne-per-year alkali-free glass-fiber furnace-drawing project as having started construction at the end of 2016. It reports investment of 101,295.39 ten-thousand CNY and an approximate one-year construction period. This is a disclosed project start and intended scale, not evidence that the line produced that amount in 2016 or that the planned completion occurred. Separately, Tongxiang Leishi’s 600,000-tonne-per-year pyrophyllite powder project has investment of 33,600.00 ten-thousand CNY, with a first-quarter 2017 start expected and an approximate two-year construction period. The management discussion’s 2016 planning and design therefore must be distinguished from the later expected start. Powder processing supports the mineral-material chain and is not another 600,000 tonnes of glass-fiber yarn. Shared company, location or capacity wording alone does not establish that every later Jiujiang or Leishi project disclosure is the same physical line; unresolved cross-year identity remains separate from the facts reported here. The report supplies no actual completion, customer delivery or utilization result for these two projects in these passages.

Reported business project budget / 2016 / jiujiang 120kt financial note

RMB 1,012,953,900

Reported business project budget / 2016 / leishi 600kt financial note

RMB 336,000,000