China Jushi FY2021: Operating risks and business commitments

Management’s strategy centres on glass fiber, a more secure upstream supply chain and downstream composite applications, supported by industrial investment funds. It describes establishing markets before factories and balancing domestic and foreign manufacturing/sales. FY2022 operating plans in this FY2021 filing are intentions, not achieved FY2021 outcomes. The annual industry discussion attributes strong demand to automotive, electronics and wind applications, but also describes wind-fabric adjustment after earlier installation activity and cost pressure on smaller downstream composite producers. Industry estimates and historical charts are not Jushi orders or customer mix. The risk discussion identifies electricity, natural gas, minerals and chemical supplies, export currency quotations, borrowing rates and capital tied up in receivables/inventory. It reports 15% tax treatment for the named Group, Jiujiang and Chengdu entities and 13% export VAT rebate for main fiber products, with eligibility/subsidy changes a risk. These are historical issuer tax descriptions, not current guidance or a group effective tax rate. It lists US additional 25% levies on covered Chinese goods and EU measures with different dates, product/origin scopes: fabric anti-dumping and anti-subsidy measures on China/Egypt, including modified Chinese fabric anti-dumping 34.0–69.0% and anti-subsidy 17–30.7%, Egyptian fabric 20% and 10.9%, and Egyptian-origin yarn 13.1% after a June 2020 change. These are not combined into one tariff or represented as current law. Overseas factories do not prove trade risks are removed.

China National Building Material Group Co., Ltd. (CNBM Group) and China National Building Material Company Limited (CNBM Limited) originally undertook in December 2017 to resolve competing glass-fiber businesses within three years. A proposed combination involved China Jushi and Sinoma Science & Technology acquiring all or part of Taishan Fiberglass and Lianyungang Zhongfu Lianzhong through cash, share exchanges or other arrangements. Jushi suspended trading on 2 December 2020, then terminated the restructuring on 15 December because agreement on core terms had not been reached. The original undertaking was not completed as expected. The extended undertaking gives two years from 5 January 2021 to develop and implement a solution. The FY2021 report describes proposals still being studied within that extended period while the existing businesses continue. The commitments table marks performance as timely, but that label does not establish a completed acquisition or removal of competitive overlap. The disclosed undertaking to compensate qualifying losses is a promise, not evidence of compensation already paid. This matters to manufacturing strategy and shareholder interests because the group has overlapping fiber businesses; no future combination, capacity consolidation or benefit is assumed here.

The report describes skills assessments for glass-fiber drawing, winding and mechanical maintenance, and an electrical apprenticeship with Tongxiang Technical College that alternates study and work with trainers from both organizations. These are specific workforce arrangements relevant to keeping production equipment operating; the report does not quantify resulting output improvements, savings or retention. Separately, the board considered the 2021–2023 excess-profit-sharing plan on 17 August 2021 and shareholders approved it on 3 September. The plan creates an incentive and profit-allocation framework. Its existence does not demonstrate that recipients caused the year’s earnings improvement, and it is not described as a listed-share issue. The employee-remuneration note, explained in this guide’s funding section, records CNY 725,901,387.31 of annual profit-sharing additions and CNY 728,931,116.59 outstanding at year-end. Approval of the plan, an expense or accrual and a cash payment remain different events. Broad training-event counts and promotional claims are condensed because they do not establish those operating or shareholder outcomes.

The annual report identifies senior roles spanning Jushi, CNBM and Zhenshi. Chang Zhangli became Jushi chairman on 21 October 2021 after Cao Jianglin left for work-adjustment reasons; Chang also holds senior CNBM roles. Zhang Yuqiang combines Jushi vice-chairman and general-manager roles with leadership of Jushi Group and chairmanship of Zhenshi, a major Jushi shareholder. Zhang Jiankan holds Jushi and Zhenshi positions, while Ni Jinrui became deputy general manager and chief financial officer on 18 March 2021. These disclosed overlaps explain why related-party governance and minority-shareholder oversight matter; they do not themselves prove improper transactions. Chang’s biography and appointment table use different executive classifications for a CNBM Limited role, so that classification is not resolved by assumption. Reported remuneration paid to directors, supervisors and senior management totals CNY 33,102,000, originally 3,310.20 ten-thousand CNY. The note says payments include the 2020 annual bonus and 2021 basic remuneration and benefits; the total is not exclusively FY2021 earnings-related pay, total group payroll or the separately disclosed employee profit-sharing account. Routine biographies and meeting-attendance logs are condensed.

Remuneration paid to directors supervisors and senior management / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

RMB 33,102,000

The strategy committee considered and unanimously passed a set of proposals on 18 March 2021: a 120,000-tonne Egyptian glass-fiber technological upgrade, a 50,000-tonne high-performance fiber upgrade at Jushi Group, a new 100,000-tonne electronic-yarn line and a new 150,000-tonne chopped-fiber line. On 17 August it considered an Egyptian 120,000-tonne new line with supporting works, a Jushi Group 100,000-tonne fiber cold-repair and upgrade, and an equipment-manufacturing center. It considered a fiber-packaging-materials line on 22 October. The March Egyptian upgrade and August Egyptian new-line proposal are different disclosures, even though their capacity labels match. Likewise, a cold repair or technological upgrade is not automatically net additional capacity. Committee deliberation is not commissioning, customer qualification, a completed environmental permit or final execution of every proposal. The Group 150,000-tonne chopped-fiber proposal does not identify Chengdu in these rows, so it is not merged with a Chengdu project merely because the capacity matches. The construction-account section preserves the separate seven important project rows, budgets and balances without converting these committee decisions into new cash expenditure or counting their capacity twice.

The board’s evaluation at 31 December 2021 reports no material weakness in financial-reporting internal control. The annual report also refers to an unqualified internal-control audit opinion by Tianzhi International; the separate full control-audit report has not been reviewed for this entry. It describes requirements for subsidiaries to report related transactions, guarantees and investments in advance. These procedures help explain oversight but do not independently establish compliance for every contract, factory or project. The major-matters section proposes changing the 2022 financial and internal-control auditor to Zhongshen Zhonghuan after 13 years with Tianzhi, citing independence and stating that the prior firm had no objection. This is a proposal disclosed in the FY2021 report, not evidence here that the 2022 appointment was completed or that the previous audit was adverse. The financial-audit section retains its own opinion and key matters. Neither that audit nor the issuer’s control statements constitute independent editorial approval of SinoFilings translations.

The policy described in the FY2021 report calls for annual cash distributions of at least 20% of the parent’s distributable profit, or aggregate cash distributions over the latest three years of at least 30% of average annual distributable profit over those three years. The source uses an alternative condition, not a requirement that both tests must always be added together. The parent-company profit denominator is distinct from consolidated profit attributable to shareholders, subsidiary profits and group operating cash. The report says this policy was unchanged during FY2021. A stated policy is not a guarantee of future payments, the year’s actual cash distribution or approval of a later dividend proposal. Actual equity-account distributions, cash payments and the FY2021 profit-distribution proposal must be read with their own dates and financial-note scopes. Routine policy-process narrative is condensed while the economically relevant conditions are retained.

At 31 December 2021, CNBM Limited holds 1,079,739,151 Jushi shares, or 26.97%, and is identified as the controlling shareholder. Zhenshi Holding Group holds 624,225,514 shares, or 15.59%, with 361,498,840 shares marked pledged. That pledge is a subset of Zhenshi’s holding, not extra ownership, Jushi debt or evidence that enforcement occurred. Hong Kong Securities Clearing Company Limited is the registered holder of 382,396,182 shares, or 9.55%. Its registered stake does not identify each underlying beneficial investor or independently measure foreign net buying. The report says CNBM Limited and Zhenshi have no related-party relationship and are not acting in concert under the cited rules; relations among other holders are unknown to the issuer. Some smaller-holder labels are repeated or shifted in the printed unrestricted-share table, so no repaired minor-holder ranking is invented. The major three named holdings are clear in the original top-shareholder table. Registered annual changes also include the effects of the capital-reserve share conversion and should not all be labeled purchases. Routine lists of small funds are condensed while the major stakes, pledge and unresolved original-table labels remain available for governance research.

Registered holding by named shareholder / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

1,079,739,151 shares

Registered holding percentage by named shareholder / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

26.97%

Registered holding by named shareholder / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

624,225,514 shares

Registered holding percentage by named shareholder / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

15.59%

Registered holding by named shareholder / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

382,396,182 shares

Registered holding percentage by named shareholder / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

9.55%

Reported registered-holder pledged shares / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

361,498,840 shares

The report distinguishes CNBM Limited, Jushi’s direct controlling shareholder, from CNBM Group, its actual controller. CNBM Group is reported to hold 43.02% of CNBM Limited through domestic and H shares; that percentage concerns the upper company, not a 43.02% direct stake in Jushi. The original diagram on page 59 places the State-owned Assets Supervision and Administration Commission of the State Council above CNBM Group and intermediary companies, ending at CNBM Limited’s 26.97% Jushi holding. Its 53.86% public-investor line enters CNBM Limited, not Jushi, and is not Jushi free float. Rounded intermediate percentages are not multiplied or summed into an independently verified effective Jushi ownership figure. The report does not mark a controlling-shareholder or control change as applicable during FY2021. Separately, the issued-share table reconciles 3,502,306,849 opening shares plus 500,829,879 from a capital-reserve conversion to 4,003,136,728 closing shares. The conversion of 1.43 shares per ten existing shares creates additional shares from reserves, not a new cash receipt, operating profit or factory investment. It also helps explain why changes in registered share counts need not represent market purchases. The long lists of other CNBM investments are condensed; competition undertakings and related operating transactions retain separate treatment.

Issued shares at reporting date / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

4,003,136,728 shares

Shares added by capital reserve conversion / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

500,829,879 shares

Actual controller interest in upper controlling company / 2021 / FY2021 issuer disclosure; named organizational scope and original unit retained. Historical reported values are not independent compliance, beneficial ownership or operational verification.

43.02%

The consolidated equity statement records FY2021 distributions of CNY 784,516,734.18 to listed-company owners and CNY 44,012,720.86 to minority owners, totaling CNY 828,529,455.04. These are equity-account distributions. The separate consolidated cash-flow line for dividends, profit distributions and interest together is CNY 1,169,897,690.75, including CNY 6,844,470 of cash paid to minority owners; it cannot be labeled entirely as cash dividends to Jushi shareholders. Parent cash under the combined dividends, profits and interest line is CNY 1,001,368,631.79. Retained earnings reconcile from CNY 9,708,795,418.54 opening, plus CNY 6,028,473,746.53 attributable profit, less CNY 243,976,585.02 transferred to surplus reserve and CNY 784,516,734.18 owner distributions, to CNY 14,708,775,845.87 closing. Moving earnings to reserve changes equity classification rather than creating cash or new operating profit. The share increase from the capital-reserve conversion is explained separately in the ownership section. The consolidated share-investment cash line is blank for 2021; the adjacent CNY 973,041,877.50 belongs to 2020 and is not a 2021 capital receipt.

Equity account distributions / 2021 / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

RMB 784,516,734.18

Equity account distributions / 2021 / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

RMB 44,012,720.86

Equity account distributions / 2021 / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

RMB 828,529,455.04

Transfer from retained earnings to surplus reserve / 2021 / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

RMB 243,976,585.02

Combined cash dividends profits and interest paid / 2021 / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

RMB 1,169,897,690.75

Minority distributions cash paid / 2021 / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

RMB 6,844,470

Combined cash dividends profits and interest paid / 2021 / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

RMB 1,001,368,631.79

Retained earnings / 2021 / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

RMB 14,708,775,845.87

The report’s board-approved proposal uses 4,003,136,728 issued shares and a gross cash dividend of CNY 4.8 per ten shares, producing CNY 1,921,505,629.44 in total. It cites parent FY2021 net profit of CNY 2,439,765,850.19 and CNY 2,225,564,263.74 available for distribution at year-end, rather than consolidated retained earnings as the distribution denominator. The subsequent-event table reports the same dividend amount in its proposed and approved-declaration rows. These disclosures establish the reported proposal and declaration wording, but provide no payment date or complete evidence here of final shareholder approval. The amount is therefore not treated as cash paid during FY2021, and its structured proposal fields have no FY2021 value interval. The parent’s CNY 6,136,097,519.67 capital reserve is cited when proposing no reserve-to-share conversion for FY2021 profits. That proposal concerns a different year from the earlier conversion actually reflected in FY2021 issued shares. Distribution policy, declared amounts, reserve movements and cash payments retain their separate scopes.

Proposed cash dividend total / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

RMB 1,921,505,629.44

Proposed cash dividend per ten shares / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

4.8 CNY/10 shares

Dividend proposal share base / FY2021 issuer disclosure; parent/consolidated, stock/flow and reporting date retained. Cash, accounting gains and internal balances have different scopes. Subsequent proposal fields have no FY2021 value interval.

4,003,136,728 shares

Consolidated capital reserve moves from CNY 3,726,142,081.34 to CNY 3,194,978,470.68, a decrease of CNY 531,163,610.66. The issuer explains three components. Jushi Group Hong Kong purchased the remaining 15.00% minority interest in Jushi Canada Glass Fiber; consideration above the consolidated net-asset share reduced capital reserve by CNY 13,573,250.89. This difference is not the total purchase price or new furnace investment. Jushi Group Hong Kong transferred its Jushi Pandeng Electronic Substrate interest to Jushi Group, and the enterprise income tax paid on that transaction reduced consolidated capital reserve by CNY 16,760,480.77. An internal equity transfer is not an external glass-fiber customer sale, nor is this reserve movement independently identified as a separate income-statement tax charge to subtract again. The third component is CNY 500,829,879.00 transferred from capital reserve into share capital under the bonus share plan. It changes the composition of equity and adds 500,829,879 shares; it is not new cash raised from outside investors. The three components reconcile exactly to the reported reserve decrease, while share capital rises from 3,502,306,849 to 4,003,136,728 shares. The separate subsidiary-perimeter explanation retains the later absorption of Pandeng; these disclosed internal events are not turned into additional acquired operating capacity. No outside investigation or new company identity is added.

Capital reserve reduction / 2021 / FY2021 consolidated issuer statement/note; current year versus prior year, stock versus flow, cash versus income and parent/minority scopes retained.

RMB 531,163,610.66

Canada minority acquisition reserve reduction / 2021 / FY2021 consolidated issuer statement/note; current year versus prior year, stock versus flow, cash versus income and parent/minority scopes retained.

RMB 13,573,250.89

Internal transfer tax reserve reduction / 2021 / FY2021 consolidated issuer statement/note; current year versus prior year, stock versus flow, cash versus income and parent/minority scopes retained.

RMB 16,760,480.77

Closing capital reserve / 2021 / FY2021 consolidated issuer statement/note; current year versus prior year, stock versus flow, cash versus income and parent/minority scopes retained.

RMB 3,194,978,470.68