China Jushi FY2022: Operating risks and business commitments

The FY2022 risk discussion identifies mineral, chemical, electricity and natural-gas supply/prices as manufacturing constraints, alongside foreign-currency export quotations, borrowing rates and liquidity tied up in receivables and inventory. It reports 15% income-tax preferences for Jushi Group and Jiujiang under high-technology eligibility and Chengdu under the western-development preference, and a 13% export VAT rebate for principal glass-fiber products. These are historical issuer disclosures for named entities and products, not current tax advice or one group effective tax rate. Management also describes origin- and product-specific trade measures: the US additional 25% levy on covered Chinese goods; EU combined fabric measures of 99.7% for Chinese bases and 44% for the Egyptian base after a July 2022 change; Chinese-origin yarn at 24.8% and Egyptian-origin yarn at 13.1%; and Turkish measures of 35.75% on relevant Chinese-origin products. Fabric and yarn, Chinese and Egyptian production, and combined versus single measures remain distinct. The listed rates are not summed into one group tariff or presented as current law. The existence of overseas bases does not prove that trade exposure has disappeared. Company risk-management and leadership statements remain attributed assessments rather than independent assurances.

The annual report proposes a gross cash dividend of CNY 5.21 for every ten shares for FY2022, totaling CNY 2,085,634,235.29. It reports this as 31.55% of consolidated net profit attributable to ordinary shareholders of CNY 6,610,015,911.86. The proposal includes no bonus shares or capitalization of reserves, and no cash repurchases counted toward this dividend total. It is a proposal for the reporting year, not evidence that this amount was paid during FY2022. The retained-earnings note separately records CNY 1,921,505,629.44 of ordinary-share dividends in the year’s movement; the two amounts must not be substituted for one another. A cash-flow line combining dividends, profits and interest payments also has broader coverage than cash paid to listed-company ordinary shareholders. The disclosed articles provide for annual cash distributions of at least 20% of the parent company’s distributable profit, or cumulative cash distributions over the latest three years of at least 30% of their average annual distributable profit. That policy has a different profit basis and time horizon from the proposal’s 31.55% ratio to consolidated attributable profit. The report states the policy was not changed during FY2022. This page preserves those disclosed terms without asserting that the proposal ratio alone independently proves compliance with both policy tests, or supplying a payment date from a later filing.

Proposed gross cash dividend per ten shares / FY2022 dividend proposal in annual report; not paid in FY2022 cash or a dividend payment date

5.21 CNY/10 shares

Proposed gross cash dividend total / FY2022 gross cash dividend proposal, not an executed distribution or current year cash outflow

RMB 2,085,634,235.29

Proposed dividend to attributable profit / FY2022 proposed gross dividend/consolidated attributable ordinary share profit; not parent distributable profit policy denominator

31.55 percent

The governance discussion presents the FY2022 cash distribution as a proposal: CNY 5.21 gross for every ten shares and CNY 2,085,634,235.29 in total. The financial statements’ events-after-the-balance-sheet note separately lists that same CNY 2,085,634,235.29 under both proposed profit or dividends and profit or dividends approved and declared after deliberation. These are two disclosure labels for the same amount, not two distributions to add together. Reading only the governance proposal table would omit the approved/declared wording in the financial note. Conversely, that wording does not identify a cash payment date or a particular shareholder approval date in this table. The annual report therefore supports the disclosed proposal and approved/declared states, while neither is substituted for cash paid during FY2022. The year’s ordinary-share dividend movement in retained earnings and the broader cash-flow line for dividends, profits and interest remain different measures. The report’s board approval and submission date is 17 March 2023; subsequent-event information belongs to the FY2022 report’s disclosure context without becoming an event executed before the FY2022 balance-sheet date.

China National Building Material Group, the actual controller, and China National Building Material Company Limited, the controlling shareholder, made undertakings in December 2017 to resolve overlapping glass-fiber businesses within three years. The report describes a two-year extension in December 2020. A proposed restructuring involving China Jushi and Sinoma Science & Technology was terminated on 15 December 2020 because the parties did not agree on core transaction terms. Management says no clear integration plan had been formed by the commitment’s expiry, so the undertaking had not been completed as expected. The FY2022 commitment table shows a period beginning 5 January 2021, marks timely and strict fulfilment as yes, and directs readers to its attached explanation. That table entry is not proof that the overlapping business had actually been integrated: the accompanying narrative explains the outstanding work and further extension. Jushi’s board approved the extension proposal on 16 December 2022; the same annual report says an extraordinary shareholders’ meeting approved it on 4 January 2023. The additional two-year period runs from that shareholder approval, with other undertaking terms unchanged. This is a subsequent-event approval disclosed in the FY2022 report, not completion of an integration in 2022. The company says its existing fiber business would continue while a specific integration solution was studied. Management’s assurances about protecting public shareholders are attributed commitments, not an independently verified absence of competitive or related-party risk.

The strategic committee’s 2022 record identifies proposals that affect the manufacturing programme. On 8 February it considered and unanimously passed proposals to terminate the Indian 100,000-tonne-per-year alkali-free glass-fiber furnace drawing-line project and to build a Chengdu 150,000-tonne-per-year chopped-strand line. On 18 March it considered and passed the Jiujiang intelligent base’s 400,000-tonne-per-year glass-fiber programme and a Tongxiang gas station with supporting pipelines. On 25 April the proposals covered a Jushi Group 200,000-tonne-per-year furnace line’s cold repair and technical upgrade; a 50,000-tonne-per-year electronic-yarn and 160-million-metres-per-year electronic-fabric line’s cold repair and upgrade; and Jiujiang Calcium’s processing project for 200,000 tonnes per year of glass-fiber-grade calcium oxide and 75,000 tonnes per year of calcium carbonate. The calcium products and gas infrastructure support manufacturing; their output is not extra glass-fiber tonnage. On 29 December the committee considered and passed a Huai’an high-performance glass-fiber base and related works with a 400,000-tonne-per-year programme, described by the issuer as zero-carbon, alongside a proposal to invest in a new-energy subsidiary. The table reports committee consideration and unanimous passage of proposals. It does not by itself prove final project completion, customer qualification, achieved output or the emissions performance implied by the zero-carbon label. A cold repair or upgrade is also different from adding the full stated capacity as a wholly new line. The operating narrative and construction accounts provide separate evidence of execution; differently named projects, base programmes, individual lines and energy infrastructure require their own identities rather than being merged solely by capacity.

The annual report describes the 8 September 2022 renewal of the board and supervisory board following the end of their previous terms. It lists nine newly elected directors, including three independent directors, and a three-member supervisory board comprising two shareholder representatives and one employee representative. The disclosed term-end departures are not described as dismissals for misconduct. The appointment tables also show links across shareholder businesses. Chairman Chang Zhangli holds CNBM Group and CNBM Limited positions and is a director of Sinoma Science & Technology. Vice-chairman and general manager Zhang Yuqiang chairs Zhenshi Holding; Jushi director Zhang Jiankan is Zhenshi Holding’s president and holds board positions at several related businesses. Jushi finance chief Ni Jinrui is also a director of Guangrongda Financial Leasing. These disclosed shared appointments help explain why shareholder relationships, related purchases and downstream sales need to be read alongside the board’s structure. They do not by themselves prove a specific improper transaction or identify an otherwise anonymous major customer. The reported CNY 35.2237 million of company-paid pretax director, supervisor and senior-management remuneration includes salary, housing-fund contributions, annuities and excess-profit-sharing actually paid that year. It is not solely profit sharing, all group payroll or total remuneration from every affiliated employer. Routine biographies, ages and attendance counts are condensed; named roles and payment scope remain visible.

For 31 December 2022, the board’s internal-control self-assessment says there were no material weaknesses in financial-reporting controls and concludes those controls were effective in all material respects. The annual report also says Zhongshen Zhonghuan issued an unqualified internal-control audit opinion, referring readers to the separately issued control report. These are attributed disclosures about financial-reporting controls; the underlying separate report is not reproduced as an independent review of this English research. The company describes requiring subsidiaries to report related transactions, guarantees and investments in advance, while delegating operating responsibilities by business and objectives. That control framework does not independently demonstrate that each particular transaction complied with its process. The annual report’s auditor table shows the former firm, Tianzhi International, with thirteen years of service and Zhongshen Zhonghuan with one. The issuer attributes the change to the long previous tenure, audit independence and its business and future audit needs, and says it communicated with the predecessor without objection to the change. This explanation is not evidence of an undisclosed audit dispute. Both listed financial-audit fees are CNY 1.1 million, with a separate CNY 0.2 million internal-control audit fee for the new firm. An unqualified control opinion and a change of auditor do not resolve every operating, site-permit, related-party or content-verification question.

The important-matters section reports that director Zhang Jiankan bought 50,000 Jushi shares for CNY 789,909 on 10 March 2022 during the restricted period before an annual-report announcement. The issuer attributes the purchase to an operating mistake by account-management personnel; that is its account of the cause. It says the Zhejiang office of the securities regulator issued a warning letter and recorded the matter in the securities and futures integrity record. The report describes commitments not to reduce those newly purchased shares for twelve months and to return any future gain from their sale to the listed company. These are the disclosed commitments, not evidence that a later sale occurred or money was returned. A separate earlier governance item marks securities-regulatory penalties over the preceding three years as not applicable. That label is presented alongside the specifically disclosed warning; it is not used to erase the event or independently reconcile the different classifications. The account concerns a historical director-compliance event, not a conclusion that all transactions were unlawful, a forecast of the company’s share price or a statement of today’s trading rules.

At 31 December 2022, China National Building Material Company Limited, or CNBM Limited, holds 1,079,739,151 Jushi shares,26.97%; the issuer identifies it as the controlling shareholder. Zhenshi Holding Group holds 624,225,514 shares,15.59%, including 344,768,000 marked as pledged in this table. The pledged shares remain a subset of that shareholder’s holding; the pledge is not an extra stake, Jushi borrowing or evidence that enforcement occurred. The table lists Hong Kong Securities Clearing Company Limited at 402,390,565 shares,10.05%, with an annual increase of 19,994,383 shares. This registered holding does not identify each underlying beneficial investor, so it is not treated as a single ultimate owner or added to another holder’s stake without evidence. The report states that CNBM Limited and Zhenshi have no related-party relationship and are not acting in concert under the cited disclosure rules; relationships and concerted action among the other shareholders are unknown to the issuer. Unknown pledge or relationship labels remain unknown rather than a general no-risk conclusion. Routine lists of smaller funds are retained in the source, while these major stakes and the specific pledge explain ownership concentration and potential governance exposure.

Registered holding by named shareholder / 2022 / FY2022 issuer statement or ownership table; exact original CNY, shares or %. Annual flow/year end stock and consolidated/parent/minority scopes separate. Distribution is not inferred cash payment.

1,079,739,151 shares

Registered holding percentage by named shareholder / 2022 / FY2022 issuer statement or ownership table; exact original CNY, shares or %. Annual flow/year end stock and consolidated/parent/minority scopes separate. Distribution is not inferred cash payment.

26.97%

Registered holding by named shareholder / 2022 / FY2022 issuer statement or ownership table; exact original CNY, shares or %. Annual flow/year end stock and consolidated/parent/minority scopes separate. Distribution is not inferred cash payment.

624,225,514 shares

Registered holding percentage by named shareholder / 2022 / FY2022 issuer statement or ownership table; exact original CNY, shares or %. Annual flow/year end stock and consolidated/parent/minority scopes separate. Distribution is not inferred cash payment.

15.59%

Reported registered-holder pledged shares / 2022 / FY2022 issuer statement or ownership table; exact original CNY, shares or %. Annual flow/year end stock and consolidated/parent/minority scopes separate. Distribution is not inferred cash payment.

344,768,000 shares

Registered holding by named shareholder / 2022 / FY2022 issuer statement or ownership table; exact original CNY, shares or %. Annual flow/year end stock and consolidated/parent/minority scopes separate. Distribution is not inferred cash payment.

402,390,565 shares

Registered holding percentage by named shareholder / 2022 / FY2022 issuer statement or ownership table; exact original CNY, shares or %. Annual flow/year end stock and consolidated/parent/minority scopes separate. Distribution is not inferred cash payment.

10.05%

Annual registered holding change by named shareholder / 2022 / FY2022 issuer statement or ownership table; exact original CNY, shares or %. Annual flow/year end stock and consolidated/parent/minority scopes separate. Distribution is not inferred cash payment.

19,994,383 shares

The report separately identifies CNBM Limited as the direct controlling shareholder and China National Building Material Group Co., Ltd., or CNBM Group, as the actual controller. Their similar English names do not make them the same legal entity. The original control diagram shows the State-owned Assets Supervision and Administration Commission of the State Council above CNBM Group, with several intermediate companies in the path to CNBM Limited and its 26.97% Jushi holding. Percentage labels within that upper diagram refer to shares in intermediate companies; for example, the 52.38% public-investor line enters CNBM Limited, not Jushi. They must not be presented as Jushi’s free float or multiplied into a verified effective ownership figure without a defined method and complete chain. The report does not mark a controlling-shareholder or control change as applicable during FY 2022. This is a historical issuer disclosure, not a determination that every related business has already been integrated or that later control arrangements stayed unchanged. CNBM’s long lists of other investments and registered activities are condensed because they do not establish Jushi operating capacity or additional Jushi revenue. Existing competition undertakings and related-party transactions remain separate operating and shareholder questions.