Content
Pages
I.Auditor’s report 1-6
II. Financial Statements 7-25
(1) Consolidated Balance Sheet 7-8
(2) Consolidated Income Statement 9-10
(3) Consolidated Cash flows Statement 11-12
(4) Consolidated Statement of Changes in Equity 13-15
(5) Company Balance Sheet 16-17
(6) Company Income Statement 18-19
(7) Company Cash flows Statement 20-21
(8) Company Statement of Changes in Equity 22-25
III. Notes to Financial Statements 26-228
Auditor’s Report
Zhong Hui Kuai Shen [2022] No. 1513
To all shareholders of Hengli Petrochemical Co., Ltd.：
I. Opinion
We have audited the financial statements of Hengli Petrochemical Co., Ltd. (hereinafter "the
Company"), which comprise the consolidated and company balance sheets as at 31 December 2021,
and the consolidated and company income statements, consolidated and company cash flow
statements and consolidated and company statements of changes in equity for the year then ended,
and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the consolidated and company financial positions as at 31 December 2021, and their financial
performance and their cash flows for the year then ended in accordance with the requirements of
Accounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our
responsibilities under those standards are further described in the Auditor's Responsibilities for
the Audit of the Financial Statements section of our report. We are independent of the
Company and have fulfilled our other ethical responsibilities in accordance with the China
Code of Ethics for Certified Public Accountants. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
III. KeyAudit Matter
Key audit matter is the matter that, in our professional judgment, was of most significance in
our audit of the financial statements for the year ended 31 December 2019. This matter was
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 this matter.
During the course of our audit, we identified the following matters as key audit matter:
(1) Revenue recognition
Key audit matter Addressed in the context of our audit
Revenue recognition
As mentioned in Note V(39) of the In the audit of the financial statements
financial statements of the Company, the for the year, we have implemented the
operating revenue for the period was RMB following procedures for the matter of
152.37 billion. The primary revenue sources revenue recognition:
and recognition criteria are shown in Note 1. Evaluate and test the design and
III(29) of the financial statements of the operation effectiveness of key internal
Company. controls related to revenue recognition of the
Since revenue is one of the key Company;
performance indicators of the Company, 2. Understand the various types of
there is an inherent risk that management will income of the Company and their recognition
manipulate revenue recognition in order to conditions, and evaluate whether the income
achieve specific goals or expectations. recognition policy meets the requirements of
Therefore, we recognize revenue recognition the accounting standards;
as a key audit matter.
3. Combined with the comparison of
gross profit margins of companies in the
same industry, an analysis procedure is
performed on the Company's revenue, costs
and gross profit margins to analyze the
rationality of the gross profit margin change
trend;
4. Select sample and inspect the
Company's various types of income related
contracts, invoices, income confirmation
documents and other documents to test the
authenticity of income;
5. Perform a sample test on the revenue
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