China Jushi FY2020: Operating risks and business commitments

At 31 December 2020, China National Building Material Company Limited (CNBM Company) held 944,653,675 China Jushi shares, or 26.97%, and was identified as the controlling shareholder. The report identifies China National Building Material Group Co., Ltd. (CNBM Group) as the actual controller; its ownership diagram traces state supervision through China’s State-owned Assets Supervision and Administration Commission. CNBM Company and CNBM Group are distinct entities, not two additive direct stakes in Jushi. The disclosed controlling shareholder and controller did not change during the year. Zhenshi Holding Group held 546,129,059 shares, or 15.59%, with 510,039,981 pledged. That is a pledge of a shareholder’s Jushi shares, not automatically a borrowing or guarantee by Jushi itself. The issuer says CNBM Company and Zhenshi are not related parties or parties acting in concert; it reports other shareholders’ relationships as unknown. Hong Kong Securities Clearing Company appears with 255,378,838 shares, or 7.29%, but this table does not identify the underlying beneficial investors and is not used to infer a single end-investor. The report shows shared senior roles with the major shareholders: chairman Cao Jianglin held CNBM roles, while vice-chairman and president Zhang Yuqiang chaired Zhenshi’s board. This identifies overlapping governance interests; it does not establish misconduct. Routine shareholder fund rankings and extended biographies are condensed.

CNBM Company direct holding / 2020 / FY2020 issuer disclosure; explicit ownership, guarantee, treasury, workforce or emissions entry scope. Original units, balances/flows, mixed period lists and proposal timing retained; not project allocation.

944,653,675 shares

CNBM Company direct holding percentage / 2020 / FY2020 issuer disclosure; explicit ownership, guarantee, treasury, workforce or emissions entry scope. Original units, balances/flows, mixed period lists and proposal timing retained; not project allocation.

26.97%

Zhenshi direct holding / 2020 / FY2020 issuer disclosure; explicit ownership, guarantee, treasury, workforce or emissions entry scope. Original units, balances/flows, mixed period lists and proposal timing retained; not project allocation.

546,129,059 shares

Zhenshi direct holding percentage / 2020 / FY2020 issuer disclosure; explicit ownership, guarantee, treasury, workforce or emissions entry scope. Original units, balances/flows, mixed period lists and proposal timing retained; not project allocation.

15.59%

Zhenshi pledged shares / 2020 / FY2020 issuer disclosure; explicit ownership, guarantee, treasury, workforce or emissions entry scope. Original units, balances/flows, mixed period lists and proposal timing retained; not project allocation.

510,039,981 shares

The controlling CNBM entities had committed in December 2017 to resolve competition between Jushi and other glass-fiber businesses under their control within three years. The report describes a proposed restructuring involving Jushi and Sinoma Science & Technology, using cash, asset exchanges, share exchanges or combinations to acquire all or part of Taishan Glass Fiber and Zhongfu Lianzhong. Trading was suspended from 2 December 2020 while terms were discussed. On 15 December the two listed companies terminated the proposed transaction because the parties could not agree on core terms. The original commitment was therefore not completed as expected; a table marker suggesting timely performance must be read together with this explanatory narrative. Jushi retained its existing fiber business. The report then records a two-year extension starting on 5 January 2021, following shareholder approval, with the other commitments unchanged. That extension is a subsequent commitment, not evidence that an acquisition, business combination, capacity transfer or customer integration occurred in 2020. This matters to minority investors because potentially competing businesses remained within the controlling group, while any later transaction would require its own terms and evidence. No value, synergy or outcome is invented, and research is not extended into the counterparties.

The board’s assessment as at 31 December 2020 states that no material financial-reporting internal-control deficiency was identified and that financial-reporting controls were effective in all material respects. The annual report separately says Tianzhi International issued an unmodified internal-control audit opinion, referring readers to the standalone control report. This entry records that disclosure; it does not claim to have independently examined the standalone report or tested each control. The report also says no major difference from the regulator’s governance requirements was disclosed, while explicitly retaining the unresolved competition and integration commitment discussed elsewhere. Standard governance procedures, meeting counts and full director biographies are condensed because they do not by themselves answer an operating or shareholder-risk question. A clean disclosed control assessment does not prove that every transaction is conflict-free, that all commercial risks are absent, or that SinoFilings’s translated research has received independent editorial approval.

Management links its growth strategy to intelligent manufacturing, product and process upgrading, and building markets before factories. Its 2021 plan is a forward-looking intention, not a FY2020 achievement. The India proposal remained conditional on overseas pandemic risks becoming controllable; the disclosed design optimization is not a construction start. Large furnaces, bushings, oxy-fuel combustion, sizing chemicals and glass formulations are described as areas of technical strength, but leadership claims do not establish independently tested performance or quantified cost savings. Management groups four named Chinese subsidiaries under a 15% high-technology enterprise tax preference. The financial notes distinguish the basis: Jushi Group, Jushi Jiujiang and Jushi Panden Electronic Base Materials held three-year high-technology certificates, whereas the stated Chengdu basis was the western-development income-tax programme approved for 1 January 2013 to 31 December 2020. A shared 15% rate does not establish identical qualifications or renewal. The FY2020 subject-rate table separately lists the parent at 25% and Jushi Egypt at 22.50%; these are subject rates, not the consolidated effective tax rate. No later eligibility is inferred. The report describes a fiber export VAT rebate rising to 13% from 20 March 2020 and additional US tariffs on covered Chinese exports. These are historical issuer disclosures, not current tax or trade advice. For the EU, fabric measures and Egypt-origin fiber measures had different product and origin scopes. The issuer says directly exported fabric covered by the investigation was under 1% of product sales volume, but also says most Egyptian plant products fell within the separate fiber investigation; the small fabric percentage cannot be used to dismiss all Egyptian trade exposure. Management describes an Egypt fiber subsidy duty changing from 8.7% to 13.1% in June 2020 and its challenge to the calculation. Alleged WTO-rule violations are the company’s position, not an established court finding. Currency borrowing, imported inputs and forward exchange can mitigate exchange exposure, not prove complete hedging. Interest rates, receivables and inventory affect funding needs. Electricity, natural gas, minerals and chemicals affect production cost and continuity; the report says the continuous furnaces cannot routinely stop and describes gas storage and vehicle backup supply. Its stated emergency-delivery window of two to twelve hours is a management contingency claim, not a verified supply guarantee. No current legal rates, customer deliveries or permit status are inferred.

Parent income-tax subject rate / 2020 / FY2020 consolidated annual notes; explicit closing balance, allowance movement, bill recognition, trial product or tax subject scope. Original CNY/% units; not sales, cash settlement or project allocation.

25%

Parent income-tax subject rate / 2020 / FY2020 consolidated annual notes; explicit closing balance, allowance movement, bill recognition, trial product or tax subject scope. Original CNY/% units; not sales, cash settlement or project allocation.

22.5%

Parent income-tax subject rate / 2020 / FY2020 consolidated annual notes; explicit closing balance, allowance movement, bill recognition, trial product or tax subject scope. Original CNY/% units; not sales, cash settlement or project allocation.

15%

Parent income-tax subject rate / 2020 / FY2020 consolidated annual notes; explicit closing balance, allowance movement, bill recognition, trial product or tax subject scope. Original CNY/% units; not sales, cash settlement or project allocation.

15%

The issuer provided CNY 25,285,262.67 against Juhong construction because adjustment of an ecological red line created uncertainty for production and operation. The term is retained as the report’s environmental-boundary explanation; the note does not itself establish a revoked permit, shutdown duration or replacement raw-material supplier. Separately, the intangible-asset table identifies CNY 108,376,460.90 of current-year impairment in the mining-rights column. Mining rights had CNY 116,979,308.76 of gross cost, CNY 2,567,795.44 of accumulated amortization and CNY 6,035,052.42 of closing net value. That valuation loss is material to understanding assets supporting the business, but the table does not identify the particular mine or explain its cause. The two impairment amounts are not assumed to belong to the same mine. Their amounts match separate construction and intangible-loss categories in the consolidated impairment note. The remaining mineral rights are not a reserve estimate, a production quota or proof that all operations are permitted.

Juhong construction impairment charge / 2020 / FY2020 consolidated production asset notes; explicit component/project scope. Closing values, budgets, additions, asset transfers, progress and allowances differ. Original CNY or ten thousand CNY retained; not cash capex or output.

RMB 25,285,262.67

Mining rights impairment charge / 2020 / FY2020 consolidated production asset notes; explicit component/project scope. Closing values, budgets, additions, asset transfers, progress and allowances differ. Original CNY or ten thousand CNY retained; not cash capex or output.

RMB 108,376,460.9

Gross mining rights cost / 2020 / FY2020 consolidated production asset notes; explicit component/project scope. Closing values, budgets, additions, asset transfers, progress and allowances differ. Original CNY or ten thousand CNY retained; not cash capex or output.

RMB 116,979,308.76

Net mining rights / 2020 / FY2020 consolidated production asset notes; explicit component/project scope. Closing values, budgets, additions, asset transfers, progress and allowances differ. Original CNY or ten thousand CNY retained; not cash capex or output.

RMB 6,035,052.42

The fixed-asset note reports CNY 25,912,993.67 of Jushi Group Beite factory buildings for which title certificates were still being processed at year end. This is a specific property-document status, not evidence that production was suspended or that an operating permit was absent. The note also lists assets leased out, including buildings and platinum; those disclosures identify use arrangements and do not create new fiber capacity. Detailed leased-asset amounts are condensed here because manufacturing investment, precious-metal cost treatment and the title application already answer the material operating questions. The report does not provide a completed title or precise physical address for this item, and neither is invented.

Buildings with title application in progress / 2020 / FY2020 consolidated production asset notes; explicit component/project scope. Closing values, budgets, additions, asset transfers, progress and allowances differ. Original CNY or ten thousand CNY retained; not cash capex or output.

RMB 25,912,993.67

The report presents a proposal based on FY2020 profits to pay CNY 2.24 per ten shares, using 3,502,306,849 shares as the base, for a gross dividend of CNY 784,516,734.18. It also proposes converting capital reserves into 1.43 additional shares per ten shares, totaling 500,829,879 new shares and increasing the total to 4,003,136,728. These are proposed subsequent distributions and share changes, not cash paid or shares issued during 2020. The report says the share total and capital structure did not change during the reporting year. A capital-reserve conversion changes the number of shares and the composition of equity; it is not new operating cash raised. The proposal table’s 32.47% ratio compares the proposed cash distribution with consolidated profit attributable to shareholders, whereas the company’s dividend policy refers to parent-company distributable profits. The denominator and legal entity therefore matter. The events-after-the-balance-sheet note separately lists the same CNY 784,516,734.18 under both proposed profit or dividends and profit or dividends approved and declared after deliberation. These are two labels for the same amount, not two distributions. The table does not identify a cash payment date or a specific shareholder approval date. This additional disclosed state belongs to the annual report’s subsequent-event context and does not turn the proposed cash and share changes into events executed during 2020. The retained-earnings note records CNY 675,945,221.45 of ordinary-share dividends in its annual movement, while the cash-flow line combines dividends, profits and interest. Their scopes and timing differ; neither is replaced by the subsequent FY2020 distribution amount.

Proposed FY2020 cash dividend / FY2020 issuer disclosure; explicit ownership, guarantee, treasury, workforce or emissions entry scope. Original units, balances/flows, mixed period lists and proposal timing retained; not project allocation.

RMB 784,516,734.18

Proposed reserve conversion shares / FY2020 issuer disclosure; explicit ownership, guarantee, treasury, workforce or emissions entry scope. Original units, balances/flows, mixed period lists and proposal timing retained; not project allocation.

500,829,879 shares

Proposed post conversion total shares / FY2020 issuer disclosure; explicit ownership, guarantee, treasury, workforce or emissions entry scope. Original units, balances/flows, mixed period lists and proposal timing retained; not project allocation.

4,003,136,728 shares