# EDGAR Filing Document

**Accession Number:** 0000908732
**File Stem:** 0001193125-23-011602
**Filing Date:** 2023-1
**Character Count:** 406826
**Document Hash:** c679bbaf98d659476bedb0d3bc9600a3
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-23-011602.hdr.sgml**: 20230120

**ACCESSION NUMBER**: 0001193125-23-011602

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 10

**CONFORMED PERIOD OF REPORT**: 20220930

**FILED AS OF DATE**: 20230120

**DATE AS OF CHANGE**: 20230120

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SINOPEC SHANGHAI PETROCHEMICAL CO LTD
- **CENTRAL INDEX KEY:** 0000908732
- **STANDARD INDUSTRIAL CLASSIFICATION:** PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821]
- **IRS NUMBER:** 000000000
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-12158
- **FILM NUMBER:** 23539313

**BUSINESS ADDRESS:**
- **STREET 1:** JINSHAWEI SHANGHAI
- **STREET 2:** 48 JINVI RD
- **CITY:** SHANGHAI
- **STATE:** F4
- **ZIP:** 200540
- **BUSINESS PHONE:** 862157943143

**MAIL ADDRESS:**
- **STREET 1:** JINSHAWEI SHANGHAI
- **STREET 2:** 48 JINVI RD
- **CITY:** SHANGHAI
- **STATE:** F4
- **ZIP:** 200540

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SHANGHAI PETROCHEMICAL CO LTD
- **DATE OF NAME CHANGE:** 19930707

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**SECURITIES AND EXCHANGE COMMISSION** 

**Washington D.C. 20549** 

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**FORM 6-K** 

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**REPORT OF FOREIGN PRIVATE ISSUER** 

**PURSUANT TO RULE 13a-16 OR 15d-16** 

**UNDER THE SECURITIES EXCHANGE ACT OF 1934** 

**For the month of September 2022** 

**Commission File Number: 1-12158** 

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## Sinopec Shanghai Petrochemical Company Limited
**(Translation of registrant's name into English)** 

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**No. 48 Jinyi Road, Jinshan District, Shanghai, 200540** 

**The People's Republic of China** 

**(Address of principal executive offices)** 

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Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

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EXHIBITS

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| | |
|:---|:---|
| Exhibit<br> Number |  |
| 99.1 | [Resignation of Chairman](d426890dex991.htm) |
| 99.2 | [2022 Interim Report](d426890dex992.pdf) |
| 99.3 | [Notification Letter to Non-Registered Holders of Shares with Request Form - Notice of Publication of Interim Report 2022](d426890dex993.htm) |
| 99.4 | [Notification Letter to Shareholders with Change Request Form—Notice of Publication of Interim Report 2022](d426890dex994.htm) |

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***Disclaimer—Forward-Looking Statements***

We may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, expectations, developments and business strategies. Words such as "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "endeavor", "target", "forecast" and "project" and similar expressions are intended to identify such forward-looking statements but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections, and other forward-looking statements will not be achieved. If one or more of these risks materialize, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors and others are discussed more fully under the section titled "Item 3. Key Information—C. Risk Factors" in our most recent annual report on Form 20-F filed on April 28, 2022, and in other filings with the United States Securities and Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

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**SIGNATURES** 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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| | | |
|:---|:---|:---|
|  | SINOPEC SHANGHAI PETROCHEMICAL COMPANY LIMITED | SINOPEC SHANGHAI PETROCHEMICAL COMPANY LIMITED |
| Date: January 20, 2023 | By: | /s/ Wan Tao |
|  | Name: | Wan Tao |
|  | Title: | Chairman of the Board of Directors |

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## Exhibit 99.1

**Exhibit 99.1** 

*Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.*![LOGO](g426890dsp004.jpg)

*(A joint stock limited company incorporated in the People's Republic of China)* 

**(Stock Code: 00338)** 

**Resignation of Chairman** 

Sinopec Shanghai Petrochemical Company Limited (the "**Company**") announces that on 8 September 2022, the board of the Company (the "**Board**") received the notices from Mr. Wu Haijun tendering resignation from his positions as Chairman, executive director, chairman of the strategy committee and member of the nomination committee of the Company due to the work arrangement. The resignation of Mr. Wu Haijun will not cause the number of the Board members to fall below the statutory minimum number of members.

According to the PRC Company Law and Articles of Association of the Company, the resignation of Mr. Wu Haijun will take effect once the notice of resignation is sent to the Board on 8 September 2022. The resignations of Mr. Wu Haijun will not affect the normal operation of the Company. Mr. Wu Haijun has confirmed that he has no disagreement with the Board and there is no matter relating to his resignation that needs to be brought to the attention of the shareholders of the Company.

During his term of office, Mr. Wu Haijun performed his duties diligently and conscientiously. He played an important role in enhancing the governance standards of the Company, helping it to fulfill social responsibilities, promoting the integrated development of the Company and local communities, promoting the Company's sustainable development and regional joint development. The Board would like to express their appreciation for the outstanding contributions made by Mr. Wu Haijun to the Company.

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| |
|:---|
| By Order of the Board |
| **Sinopec Shanghai Petrochemical Company Limited** |
| **Liu Gang** |
| *Joint Company Secretary* |

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Shanghai, the PRC, 8 September 2022

*As at the date of this announcement, the executive directors of the Company are Wan Tao, Guan Zemin, Du Jun and Huang Xiangyu; the non-executive directors of the Company are Xie Zhenglin and Peng Kun; and the independent non-executive directors of the Company are Li Yuanqin, Tang Song, Chen Haifeng, Yang Jun and Gao Song.*

## Exhibit 99.3

**Exhibit 99.3**![LOGO](g426890page005.jpg)

(A joint stock limited company incorporated in the People's Republic of China) （在中華人民共和國註冊成立之股份有限公司） （Stock Code股份代號：00338） N O T I F I C AT I O N L E T T E R 通 知 信 函 16 September 2022 Dear Shareholders, Sinopec Shanghai Petrochemical Company Limited (the "Company") – Notice of Publication of the 2022 Interim Report (the "Current Corporate Communications") The English and Chinese versions of the Current Corporate Communication s are available on the Company's website at www.spc.com.cn and the HKEXnews website of The Stock Exchange of Hong Kong Limited (the "HKEX") at www.hkexnews.hk. You may access the Current Corporate Communication by clicking "Investor Relations" on the home page of the Company's website or browsing through the HKEXnews website. If you have chosen to receive the Corporate Communications (Note) in printed form, the selected language version(s) of the Current Corporate Communications is enclosed. Please note that you are entitled at any time to change your choice of language and means of receipt of all future Corporate Communications or to receive the Current Corporate Communications by giving reasonable notice in writing or simply completing the Change Request Form on the reverse side and send it to the Company's H share registrar, Hong Kong Registrars Limited (the "H Share Registrar") by using the mailing label at the bottom of the Change Request Form (a stamp is not needed if posted in Hong Kong). The address of H Share Registrar is 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong. You may also send an email with a scanned copy of the completed Change Request Form to spc.ecom@computershare.com.hk. The Change Request Form may also be downloaded from the Company's website at www.spc.com.cn or the HKEXnews website at www.hkexnews.hk. Even if you have chosen (or are deemed to have consented) to read the website version of the Current Corporate Communications posted on the Company's website but for any reason you have difficulty in receiving or gaining access to such website version, the Company will promptly upon your request send the Current Corporate Communications in printed form to you free of charge. Should you have any queries relating to any of the above matters, please call the Company's telephone hotline at (852) 2862 8688 during business hours from 9:00 a.m. to 6:00 p.m. Monday to Friday, excluding public holidays or send an email to spc.ecom@computershare.com.hk. By order of the Board Sinopec Shanghai Petrochemical Company Limited Liu Gang Joint Company Secretary Note: Corporate Communications include but not limited to (a) the directors' report, its annual accounts together with a copy of the auditors' report and, where applicable, its summary financial report; (b) the interim report and, where applicable, summary interim report; (c) a notice of meeting; (d) a listing document; (e) a circular; and (f) a proxy form. 各位股東： 中國石化上海石油化工股份有限公司 （「本公司」） —2 0 2 2年半年度報告 （「本次公司通訊文件」）之發佈通知 本次公司通訊文件的中、英文版本現已登載於本公司網站 www.spc.com.cn 及香港聯合交易所有限公司 (「香港交易所」)披露易網站 www.hkexnews.hk，歡迎瀏覽。 閣下可在本公司網站主頁按「投資者關係」一項以下載或閲覽本次公司通訊文件 ，或 (附註) 在香港交易所披露易網站瀏覽該等文件。如 閣下已選擇收取公司通訊文件印刷本 ，本函附有 閣下選定的本次公司通訊文件語言版本。 敬請注意 ： 閣下如欲更改今後所有公司通訊文件之語言版本及收取方式 ，或欲收取本次公司通訊文件 ， 閣下有權在任何時間發出合理書面通知或簡單透過填寫背面的變更申請表 ，並使用變更申請表下方的郵寄標籤 （如在香港投寄無需貼上郵票 ），寄回本公司 H股股份過戶登記處 ，香港證券登記有限公司 （「 H股股份過戶登記處」），地址為香港灣仔皇后大道東 1 8 3號合和中心 1 7 M樓。 閣下亦可把已填妥之變更申請表的掃描副本電郵到 spc.ecom@computershare.com.hk。變更申請表亦可於本公司網站 www.spc.com.cn 或香港交易所披露易網站 www.hkexnews.hk 內下載。

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![LOGO](g426890page008.jpg)

Request Form申請表格 To: Sinopec Shanghai Petrochemical Company Limited 致： 中國石化上海石油化工股份有限公司（「本公司」） (the "Company") (A joint stock limited company incorporated in the People's （在中華人民共和國註冊成立之股份有限公司） Republic of China) （股份代號：00338） (Stock Code: 00338) 經香港證券登記有限公司 c/o Hong Kong Registrars Limited 香港灣仔皇后大道東 183號 17M Floor, Hopewell Centre, 183 Queen's Road East, 合和中心 Wanchai, Hong Kong 17M樓 I/We would like to receive the Current Corporate Communications\* of the Company in the manner as indicated below: 本人／我們希望以下列方式收取 貴公司之公司通訊文件\*： (Please mark ONLY ONE（X）of the following boxes) (請從下列選擇中，僅在其中一個空格內劃上「X」號) to receive the printed English version ONLY; OR 僅收取英文印刷本；或 to receive the printed Chinese version; OR 僅收取中文印刷本；或 to receive both printed English and Chinese versions. 同時收取英文及中文印刷本。 Name of Non-registered holder 非登記持有人姓名 Contact Telephone Number Signature(s) 聯絡電話號碼 簽名 Date 日期 Notes附註： 0 1. Please complete all your details clearly. 請 閣下清楚填妥所有資料。 2. This letter is addressed to Non-registered holders ("Non-registered holder" means such person or company whose shares are held in The Central Clearing and Settlement System (CCASS) and who has notified the Company from time to time through Hong Kong Securities Clearing Company Limited to receive Corporate Communications). 1 此函件乃向本公司之非登記持有人("非登記持有人"指股份存放於中央結算及交收系統的人士或公司，透過香港中央結算有限公司不時向本行發出通知，希望收到公司通訊)發出。 3. Any form with more than one box marked(X), with no box marked(X), with no signature or otherwise incorrectly completed will be voided. 如在本表格作出超過一項選擇、或未有作出選擇、或未有簽署、或在其他方面填寫不正確，則本表格將會作廢。 4. The above instruction will apply to the Corporate Communications to be sent to you until you not ify to the Company c/o H Share Registrar to the contrary or unless you have at anytime ceased to have holdings in the Company. 上述指示適用於發送予 閣下之所有公司通訊，直至 閣下通知本公司之 H股股份過戶登記處另外之安排或任何時候停止持有本行的股份。 5. For the avoidance of doubt, we do not accept any other instruc tion given on this Request Form. 為免存疑，任何在本申請表格上的額外指示，本行將不予處理。 Personal Information Collection Statemen t 收集個人資料聲明 : 1. "Personal Data" in this statement has the same meaning as "personal data" in the Personal Data (Privacy) Ordinance, Chapter 4 86 of the laws of Hong Kong ("PDPO"). 16092022 本聲明中所指的「個人資料」具有香港法例第 486章《個人資料（私隱）條例》（「《私隱條例》」）中「個人資料」的涵義。 2. Your supply of Personal Data to the Company is on a voluntary basis. If you fail to provide sufficient information, the Company may not be able to pr ocess your instructions and/or requests as stated in this form. 閣下是自願向本公司提供個人資料。若 閣下未能提供足夠資料，本公司可能無法處理 閣下在本表格上所述的指示及â•±或要求。 3. Your Personal Data may be disclosed or transferred by the Company to its subsidiaries, its H Share Registrar, and/or other companies or bodies for any of the stated purposes, and retained for such period as may be necessary for verification and record purposes. 本公司可就任何所說明的用途，將 閣下的個人資料披露或轉移給本公司的附屬公司、H股股份過戶登記處，及â•±或其他公司或團體，並將在適當期間保留該等個人資料作核實及記錄用途。 4. You have the right to request access to and/or correction of your Pe rsonal Data in accordance with the provisions of the PDPO. Any su ch request for access to and/or correction of your Personal Data should be made in writing to the Personal Data Privacy Officer of Hong Kong Registrars Limited at 17M Floor, Ho pewell Centre, 183 Queen's Road East, Wanchai, Hong Kong. 閣下有權根據《私隱條例》的條文查閱及â•±或修改 閣下的個人資料。任何該等查閱及â•±或修改個人資料的要求均須以書面方式向香港證券登記有限公司（地址為香港灣仔皇后大道東 183號合和中心 17M樓）的個人資料私隱主任提出。 \* Corporate Communications includes but not limited to (a) the directors' report, its annual accounts together with a copy of the auditors' report and, where applicabl e, its summary financial report; (b) the interim report and, where applicable, summary interim report; (c) a notice of meeting; (d) a listing document; (e) a circul ar; and (f) a proxy form. \* 公司通訊文件包括但不限於：(a)董事會報告、年度財務報表連同核數師報告及如適用，財務摘要報告； (b)中期報告及如適用，中期摘要報告；(c)會議通告； (d)上市文件；(e)通函；及 (f)委任代表表格。 ï€¢ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ Mailing Label 郵寄標籤 Please cut the mailing label and stick it on an envelope Get in touch with us 與我們聯繫 Hong Kong Registrars Limited to return this Request Form to us. Send us an enquiry 垂詢 No postage is necessary if posted in Hong Kong. Rate our service 評價 香港證券登記有限公司 Lodge a complaint 投訴 Contact Us 當 閣下寄回本申請表格時，請將郵寄標籤剪貼於信封上。 聯繫我們 Freepost No. 簡便回郵號碼：37 Hong Kong 香港 如在本港投寄， 閣下無需支付郵費或貼上郵票。 www.computershare.com/hk/contact ï€¢

## Exhibit 99.4

**Exhibit 99.4**![LOGO](g426890page007.jpg)

(A joint stock limited company incorporated in the People's Republic of China) （在中華人民共和國註冊成立之股份有限公司） （Stock Code股份代號：00338） N O T I F I C AT I O N L E T T E R 通 知 信 函 16 September 2022 Dear Non-registered holder(1), Sinopec Shanghai Petrochemical Company Limited (the "Company") – Notice of Publication of the 2022 Interim Report (the "Current Corporate Communications") The English and Chinese versions of the Company's Current Corporate Communications are available on the Company's website at www.spc.com.cn and the HKExnews website of The Stock Exchange of Hong Kong Limited (the "HKEX") at www.hkexnews.hk. You may access the Current Corporate Communications by clicking "Investor Relations" on the home page of our website, then selecting "Name of document" and viewing them through Adobe® Reader® or browsing through the HKExnews website. If you want to receive a printed version of the Current Corporate Communications, please complete the Request Form on the reverse side and return it to the Company c/o Hong Kong Registrars Limited (the "H Share Registrar") by using the mailing label at the bottom of the Request Form . If you post the enclosed request form in Hong Kong, you may use the freepost mailing label provided when returning the request form. If you are mailing from overseas, please affix an appropriate stamp. The address of the H Share Registrar is 17M Floor, Hopewell Centre, 183 Queen's R oad East, Wanchai, Hong Kong. The Request Form may also be downloaded from the Company's website at www.spc.com.cn or the HKExnews website at www.hkexnews.hk. Should you have any queries relating to any of the above matters, please call the Company's telephone hotline at (852) 2862 8688 during business hours from 9:00 a.m. to 6:00 p.m. Monday to Friday, excluding public holidays , or send an email to spc.ecom@computershare.com.hk. By order of the Board Sinopec Shanghai Petrochemical Company Limited Liu Gang Joint Company Secretary Note: (1) This letter is addressed to Non registered holders ("Non registered holder" means such person or company whose shares are held in The Central Clearing and Settlement System (CCASS) and who has notified the Company from time to time through Hong Kong Securities Clearing Company Limited to receive Corporate Communications). If you have sold or transferred your shares in the Company, please disregard this letter and the Request Form on the reverse side. (2) Corporate Communications include but not limited to (a) the directors' report, its annual accounts together with a copy of the auditors' report and, where applicable, its summary financial report; (b) the interim report and, where applicable, summary interim report; (c) a notice of meeting; (d) a listing document; (e) a circular; and (f) a proxy form. (1) 各位非登記持有人 ： 中國石化上海石油化工股份有限公司 （「本公司」） – 2 0 2 2年半年度報告 （「本次公司通訊文件」）之發佈通知 本公司的本次公司通訊文件的英文及中文版本已上載於本公司網站 www.spc.com.cn及香港聯合交易所有限公司(「香港交易所」)披露易網站®® www.hkexnews.hk，歡迎瀏覽。請在本公司網站主頁按「投資者關係」一項，選擇「通訊文件案名稱」並使用 Adobe Reader開啟查閱或在香港交易所披露易網站瀏覽有關文件。 如 閣下欲收取本次公司通訊文件之印刷本，請填妥在本函背面的申請表格，並使用隨附之郵寄標籤寄回本公司經香港證券登記有限公司（「H股股份過戶登記處」）。倘 閣下於香港投寄隨附申請表格，可使用所提供之免郵費郵寄標籤將申請表格寄回。若 閣下於海外投寄則請貼上適當郵票。H股股份過戶登記處地址為香港灣仔皇后大道東 183號合和中心 17M樓。申請表格亦可於本公司網站 www.spc.com.cn 或香港交易所披露易網站 www.hkexnews.hk 內下載。 如對本函內容有任何疑問，請致電本公司電話熱線 (852) 2862 8688，辦公時間為星期一至五（公眾假期除外）上午 9時正至下午 6時正或電郵至 spc.ecom@computershare.com.hk。 承本公司董事會命 中國石化上海石油化工股份有限公司 聯席公司秘書 劉剛 2 0 2 2年 9月 1 6日 附註：（1） 此函件乃向本公司之非登記持有人("非登記持有人"指股份存放於中央結算及交收系統的人士或公司，透過香港中央結算有限公司不時向本公司發出通知，希望收到公司通訊)發出。如果 閣下已經出售或轉讓所持有之本公司股份，則無需理會本函件及所附申請表格。 （2） 公司通訊文件包括但不限於：(a)董事會報告、年度財務報表連同核數師報告及如適用，財務摘要報告；(b)中期報告及如適用，中期摘要報告；(c)會議通告；(d)上市文件；(e)通函；及(f)委任代表表格。

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![LOGO](g426890page006.jpg)

Name(s) and Address of Registered Shareholder(s): 登記股東之姓名及地址: ccs3071 ssphChange Request Form 變更申請表 To: Sinopec Shanghai Petrochemical Company Limited (the "Company") 致： 中國石化上海石油化工股份有限公司（「本公司」） (A joint stock limited company incorporated in the People's Republic of China) （在中華人民共和國註冊成立之股份有限公司） (Stock Code: 00338) （股份代號：00338） c/o Hong Kong Registrars Limited 經香港證券登記有限公司 17M Floor, Hopewell Centre, 183 Queen's Road East, 香港灣仔皇后大道東 183號 Wanchai, Hong Kong 合和中心 17M樓 I/We have already received a printed copy of the Current Corporate Communication s in Chinese and/or English or have chosen (or are deemed to have consented) to read the Current Corporate Communications posted on the Company's website: 本人／我們已收取本次公司通訊文件之中文及／或英文印刷本或已選擇（或被視為已同意）閱覽 貴公司網站所登載之本次公司通訊文件： Part A—I/We would like to receive the Current Corporate Communications in the manner as indicated below: 甲 部 本人／我們現欲以下述方式收取本次公司通訊文件： (Please mark ONLY ONE（ X） of the following boxes 請從下列選擇中，僅在其中一個空格內劃上「X」號) I/We would like to receive a printed copy in English. â–¡ 本人／我們希望收取一份英文印刷本。 I/We would like to receive a printed copy in Chinese. â–¡ 本人／我們希望收取一份中文印刷本。 I/We would like to receive both the printed English and Chinese copies. â–¡ 本人／我們希望收取英文和中文各一份印刷本。 Part B— I/We would like to change the choice of language and means of receipt of future Corporate Communications of the Company as indicated below: 乙 部 本人／我們現欲更改以下列方式收取 貴公司日後公司通訊文件之語言版本及收取途徑： (Please mark ONLY ONE（ X） of the following boxes 請從下列選擇中，僅在其中一個空格內劃上「X」號) to read all future Corporate Communications published on the Company's website at www.spc.com.cn (the "Website Version") in place of receiving printed copies, â–¡ and to receive a written notification by post for the publication of the relevant Corporate Communications on the Company's website; OR 閱覽所有日後在本公司網站 www.spc.com.cn登載之公司通訊文件(「網上版本」)，以代替收取印刷本，並以郵遞方式收取有關公司通訊文件已在本公司網站登載之通知信函；或 to receive the printed English version of all future Corporate Communications ONLY; OR â–¡ 僅收取所有日後公司通訊文件之英文印刷本；或 to receive the printed Chinese version of all future Corporate Communications ONLY; OR â–¡ 僅收取所有日後公司通訊文件之中文印刷本；或 to receive both the printed English and Chinese versions of all future Corporate Communications. â–¡ 同時收取所有日後公司通訊文件之英文及中文印刷本。 0 Signature(s) Contact telephone number Date 簽名 聯絡電話號碼 日期 1 Notes附註： Please complete all your details clearly. Please specify your name and address clearly in ENGLISH BLOCK LETTER on the top left corner in this Change Request Form if you download this form from the web. 1. 請 閣下清楚填妥所有資料。倘若 閣下從網上下載本變更申請表，請於本表格左上方用英文正楷清楚註明 閣下的姓名及地址。 By electing to read the Website Version of the Corporate Communications published on the Company's website in place of receiving printed copies, you have expressly consented to waive the right to receive the 2. Corporate Communications in printed form. 在選擇瀏覽在本公司網站發出之公司通訊文件網上版本以代替收取印刷本後， 閣下已明示同意放棄收取公司通訊文件印刷本的權利。 3. If your shares are held in joint names, the shareholder whose name stands first on the register of members of the Company in respect of the joint holding should sign on this Change Request Form in order to be valid. 如屬聯名股東，則本變更申請表須由該名於本公司股東名冊上就聯名持有股份其姓名位列首位的股東簽署，方為有效。 Any form with more than one box marked (X), with no box marked (X), with no signature or otherwise incorrectly completed will be void. 4. 如在本表格作出超過一項選擇、或未有作出選擇、或未有簽署、或在其他方面填寫不正確，則本表格將會作廢。 16092022 The above instruction will apply to all future Corporate Communication s to be sent to shareholders of the Company until you notify otherwise by reasonable notice in writing or by email to 5. spc.ecom@computershare.com.hk to the Company c/o Company's H Share Registrar, Hong Kong Registrars Limited, 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong. 上述指示適用於將來寄發予本公司股東之所有公司通訊文件 ，直至 閣下發出合理時間的書面通知或以電郵方式到 spc.ecom@computershare.com.hk 予本公司之 H股股份過戶登記處香港證券登記有限公司，地址為香港灣仔皇后大道東 183號合和中心 17M樓另作選擇為止。 Shareholders are entitled to change the choice of means of receipt and language of the Corporate Communication s at any time by reasonable notice in writing or by email to spc.ecom@computershare.com.hk to the 6. Company c/o the Company's H Share Registrar. 股東有權隨時發出合理時間的書面通知或以電郵方式到 spc.ecom@computershare.com.hk 予本公司之H股股份過戶登記處 ，要求更改公司通訊文件之收取方式及語言版本。 For the avoidance of doubt, we do not accept any special instructions written on this Change Request Form. 7. 為免存疑，任何在本變更申請表上的額外手寫指示，本公司將不予處理。 ï€¢ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ï€ Mailing Label 郵寄標籤 Please cut the mailing label and stick it on an envelope Get in touch with us 與我們聯繫 Hong Kong Registrars Limited to return this Change Request Form to us. Send us an enquiry 垂詢 No postage is necessary if posted in Hong Kong. Rate our service 評價 香港證券登記有限公司 Lodge a complaint 投訴 Us 閣下寄回本變更申請表時，請將郵寄標籤剪貼於信封上。 Contact 聯繫我們 Freepost No. 簡便回郵號碼：37 如在本港投寄， 閣下無需支付郵費或貼上郵票。 www.computershare.com/hk/contact Hong Kong 香港 ï€¢ï€

### Attached PDF Documents

**Attachment 1:** `d426890dex992.pdf`

Exhibit 99.2

![img-0.jpeg](img-0.jpeg)

# 2022
INTERIM REPORT

![img-1.jpeg](img-1.jpeg)

中國石化上海石油化工股份有限公司
SINOPEC SHANGHAI PETROCHEMICAL COMPANY LIMITED

(A joint stock limited company incorporated in the People's Republic of China)
Stock code: 00338 Hong Kong 600688 Shanghai

# CONTENTS

2 IMPORTANT MESSAGE
3 DEFINITIONS
4 CORPORATE INTRODUCTION AND MAJOR FINANCIAL INDICATORS
7 REPORT OF THE DIRECTORS
28 MAJOR EVENTS
42 CHANGE IN SHARE CAPITAL OF ORDINARY SHARES AND SHAREHOLDERS
46 DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND OTHERS

50 Report on Review of Interim Financial Information prepared under International Financial Reporting Standards

A. Condensed Consolidated Interim Financial Information Prepared under International Financial Reporting Standards (unaudited)

51 Consolidated Statement of Profit or Loss for the six months ended 30 June 2022
52 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the six months ended 30 June 2022
53 Consolidated Statement of Financial Position at 30 June 2022
56 Consolidated Statement of Changes in Equity for the six months ended 30 June 2022
58 Condensed Consolidated Cash Flow Statement for the six months ended 30 June 2022
60 Notes to the unaudited interim financial report

B. Interim Financial Statements Prepared under China Accounting Standards for Business Enterprises (unaudited)

95 Consolidated and Company Balance Sheets As At 30 June 2022
97 Consolidated and Company Income Statements For The Six Months Ended 30 June 2022
99 Consolidated and Company Cash Flow Statements For The Six Months Ended 30 June 2022
101 Consolidated Statement of Changes In Shareholders' Equity For The Six Months Ended 30 June 2022
102 Statement of Changes In Shareholders' Equity For The Six Months Ended 30 June 2022
103 Notes to The Financial Statements

254 C. Supplementary Information to The Financial Statements

257 Written Confirmation Opinions of Directors, Supervisors and Senior Management on the Company's 2022 Interim Report
259 Corporate Information

2022 Interim Report

1

# IMPORTANT MESSAGE

1. The Board, the Supervisory Committee of Sinopec Shanghai Petrochemical Company Limited (the “Company” or “SPC”) and the Directors, Supervisors and senior management warrant the truthfulness, accuracy and completeness of the information contained in this 2022 interim report, and warrant that there are no false representations or misleading statements contained in, or material omissions from, the 2022 interim report of the Company, and severally and jointly accept responsibility.

2. Director(s) who has/have not attended the Board meeting for approving the 2022 interim report of the Company is/are:

| Name of Director | Position | Reasons for Absence | Name of Proxy |
| --- | --- | --- | --- |
| Wu Haijun (Resigned on 8 September 2022) | Chairman | Business Engagement | Guan Zemin |

3. The interim financial report for the six months ended 30 June 2022 (the “Reporting Period”) is unaudited.

4. Mr. Wu Haijun, Chairman and the responsible person of the Company; Mr. Du Jun, Director, Vice President and Chief Financial Officer overseeing the accounting department; and Ms. Yang Yating, person in charge of the Accounting Department (Accounting Chief) and Director of Finance Department hereby warrant the truthfulness and completeness of the financial statements contained in the 2022 Interim report.

5. The Company did not distribute the half-year profit for 2022 nor was there any capitalization of capital reserves.

6. The statements regarding the Company’s plans for future development and operation are forward-looking statements and do not constitute any commitments to investors. Investors should pay attention to the relevant investment risks.

7. There was no incident of appropriation of funds by the controlling shareholder of the Company and its connected persons for non-operational purposes.

8. The Company did not provide external guarantees in violation of the required decision-making procedures.

9. Reminder of Major Risks

Potential risks are elaborated in this interim report. Please refer to “Management Discussion and Analysis” in section 2 of the “Report of the Directors” in chapter 3 for details of the potential risks arising from the future development of the Company.

10. The 2022 interim report is published in both Chinese and English. In the event of any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

2

Sinopec Shanghai Petrochemical Company Limited

# DEFINITIONS

## 1. Definitions

In this report, unless the context otherwise specifies, the following terms shall have the following meanings:

| “Company” or “Sinopec Shanghai” | refers to | Sinopec Shanghai Petrochemical Company Limited |
| --- | --- | --- |
| “Board” | refers to | the Board of Directors of the Company |
| “Director(s)” | refers to | the Director(s) of the Company |
| “Supervisory Committee” | refers to | the Supervisory Committee of the Company |
| “Supervisor(s)” | refers to | the Supervisor(s) of the Company |
| “PRC” or “China” | refers to | the People’s Republic of China |
| “Reporting Period” | refers to | the six months ended 30 June 2022 |
| “Hong Kong Stock Exchange” | refers to | The Stock Exchange of Hong Kong Limited |
| “Shanghai Stock Exchange” | refers to | The Shanghai Stock Exchange |
| “Group” | refers to | the Company and its subsidiaries |
| “Sinopec Group” | refers to | China Petrochemical Corporation |
| “Sinopec Corp.” | refers to | China Petroleum & Chemical Corporation |
| “Hong Kong Listing Rules” | refers to | The Rules Governing the Listing of Securities on the Hong Kong Stock Exchange |
| “Shanghai Listing Rules” | refers to | The Rules Governing the Listing of Securities on the Shanghai Stock Exchange |
| “Model Code for Securities Transactions” | refers to | the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Hong Kong Listing Rules |
| “Securities Law” | refers to | the PRC Securities Law |
| “Company Law” | refers to | the PRC Company Law |
| “CSRC” | refers to | China Securities Regulatory Commission |
| “Articles of Association” | refers to | the articles of association of the Company |
| “Hong Kong Stock Exchange website” | refers to | www.hkexnews.hk |
| “Shanghai Stock Exchange website” | refers to | www.sse.com.cn |
| “website of the Company” | refers to | www.spc.com.cn |
| “HSE” | refers to | Health, Safety and Environment |
| “LDAR” | refers to | Leak Detection and Repair |
| “COD” | refers to | Chemical Oxygen Demand |
| “VOCs” | refers to | Volatile Organic Compounds |
| “SFO” | refers to | the Securities and Futures Ordinance of Hong Kong (Chapter 571 of the Laws of Hong Kong) |
| “Corporate Governance Code” | refers to | the Corporate Governance Code set out in Appendix 14 to the Hong Kong Listing Rules |
| “Share Option Incentive Scheme” | refers to | the A Share Option Incentive Scheme of the Company |

2022 Interim Report

3

# CORPORATE INTRODUCTION AND MAJOR FINANCIAL INDICATORS

## (1) Major Accounting Data and Financial Indicators (Prepared under China Accounting Standards for Business Enterprises (“CAS”))

Unit: RMB'000

| Major accounting data | The Reporting Period (January to June) | Corresponding period of the previous year | Increase/decrease as compared to the corresponding period of the previous year (%) |
| --- | --- | --- | --- |
| Revenue | 45,900,355 | 37,136,606 | 23.60 |
| Total (loss)/profit | -442,601 | 1,510,713 | -129.30 |
| Net (loss)/profit attributable to equity shareholders of the company | -436,009 | 1,244,189 | -135.04 |
| Net (loss)/profit attributable to equity shareholders of the company excluding non-recurring items | -402,544 | 1,169,426 | -134.42 |
| Net cash used in operating activities | -6,405,122 | -2,389,552 | 168.05 |
|  | As at the end of the Reporting Period | As at the end of the previous year | Increase/decrease at the end of the Reporting Period as compared to the end of the previous year (%) |
| Net assets attributable to equity shareholders of the Company | 28,875,824 | 30,260,172 | -4.57 |
| Total assets | 42,481,112 | 47,038,622 | -9.69 |

4 Sinopec Shanghai Petrochemical Company Limited

# CORPORATE INTRODUCTION AND MAJOR FINANCIAL INDICATORS

| Major Financial Indicators | The Reporting Period (January to June) | Corresponding period of the previous year | Increase/decrease as compared to the corresponding period of the previous year (%) |
| --- | --- | --- | --- |
| Basic (losses)/earnings per share (RMB/Share) | -0.040 | 0.115 | Not applicable |
| Diluted (losses)/earnings per share (RMB/Share) | -0.040 | 0.115 | Not applicable |
| Basic (losses)/earnings per share excluding non-recurring items (RMB/Share) | -0.037 | 0.108 | Not applicable |
| (Loss)/return on net assets (weighted average) (%)* | -1.448 | 4.164 | Decrease by 5.61 percentage points |
| (Loss)/return on net assets after non-recurring items (weighted average) (%)* | -1.337 | 3.913 | Decrease by 5.25 percentage points |

* The above-mentioned net assets do not include non-controlling interests.

## (2) Differences between Financial Statements Prepared under CAS and International Financial Reporting Standards ('IFRS')

Unit: RMB'000

|  | Net (loss)/profit attributable to equity shareholders of the holding company |  | Total equity attributable to equity shareholders of the holding company |  |
| --- | --- | --- | --- | --- |
|  | The Reporting Period | Corresponding period of the previous year | At the end of the Reporting Period | At the beginning of the Reporting Period |
| Prepared under CAS | -436,009 | 1,244,189 | 28,875,824 | 30,260,172 |
| Prepared under IFRS | -426,518 | 1,276,462 | 28,858,796 | 30,242,139 |

For a detailed description of the differences between financial statements prepared under CAS and those prepared under IFRS, please refer to the Supplementary Information to the Financial Statements prepared under CAS contained in the 2022 interim report.

2022 Interim Report

5

# **CORPORATE INTRODUCTION AND MAJOR FINANCIAL INDICATORS**  
*(continued)*

# **(3) Non-recurring Profit and Loss Items (Prepared under China Accounting Standards for Business Enterprises (“CAS”))**

Unit: RMB'000

| Non-recurring profit and loss items | Amount |
| --- | --- |
| Losses on disposal of non-current assets | -5,960 |
| Government grants recorded in profit and loss | 10,905 |
| Employee reduction expenses | -8,251 |
| Losses from changes in fair value of financial assets and liabilities | -8,987 |
| Gains from structured deposits | 9,300 |
| Losses on disposal of derivative financial instruments | -18,618 |
| Losses on selling of financial assets at fair value through other comprehensive income | -2,187 |
| Entrusted loan income | 2,667 |
| Other non-operating income and expenses other than those mentioned above | -20,106 |
| Income tax effect for the above items | 7,706 |
| Effect attributable to non-controlling interests (after tax) | 66 |
| Total | -33,465 |

6 Sinopec Shanghai Petrochemical Company Limited

# REPORT OF THE DIRECTORS

## Section 1: Business Overview

### (1) Description of the Principal Business, Operating Model and Industry in which the Company operated during the Reporting Period

Located at Jinshanwei in the southwest of Shanghai, the Company is a highly integrated petrochemical enterprise which mainly processes crude oil into a broad range of petroleum products, intermediate petrochemicals, resins and plastics, and synthetic fibres. The Company sells most of its products within the PRC domestic market and derives most of its revenues from customers in Eastern China, one of the fastest growing regions in the PRC.

The Company's rapid development is supported by the ever-increasing demand in the PRC for high-quality petrochemical products. Relying on the competitive advantage of its high degree of integration, the Company is optimizing its product mix, improving the quality and variety of its existing products, upgrading technology and increasing the capacity of its key upstream plants.

In the first half of 2022, the outbreak of the Russia Ukraine conflict and the ever-increasing sanctions on Russian energy by Europe and the United States exacerbated the oil supply crunch and sent international energy prices surging. The average price of Brent crude oil futures climbed to its highest level for half-yearly period since the first half of 2014, while the average price of U.S. WTI crude oil futures hit its highest point for half-yearly period since the first half of 2008. The landscape of international crude oil trade reshuffled profoundly with remarkable changes in crude oil trade flows. Intensified competition for resources significantly enhanced the pricing power and market influence of exporting countries, which led to notably higher costs for importing countries. Energy shortages triggered by sanctions have caused the inflation to hit a fresh 40-year records in Europe and the United States.

Demand in domestic petrochemical market outpaced supply, posing greater challenges for market players to retain their market shares and profit margins. On top of this, the multipoint outbreak of coronavirus in China weighed on end-user demand in the second quarter, leading to plummeting sales of refined oil products and downcycle of chemical fiber and plastics sectors. The costs of chemical products could not be effectively passed through in the industrial chain, and the profits of naphtha cracking facilities were significantly compressed. The transformation of energy structure driven by 'carbon neutrality' policy continued to proceed.

Under the 'triple pressure' of shrinking demand, supply shock and weakening expectation, petrochemical enterprises are facing significantly increased difficulties and challenges. Major producers took the initiative to reduce production to prop up product prices, but capital expenditure of leading enterprises continued to increase.

2022 Interim Report

7

# REPORT OF THE DIRECTORS *(continued)*

## (2) Analysis of core competitiveness during the Reporting Period

As one of the major integrated petrochemical enterprises in China with an integrated refinery and petrochemical capacity, the Company possesses competitive business scale and strength, which made it a major manufacturer of refined oil, intermediate petrochemicals, synthetic resins and synthetic fibers in China. The Company also has self-owned utilities and environmental protection systems, as well as sea transport, inland shipping, rail transport and road transport ancillary facilities.

The Company's major competitive advantages include quality, geographical location and its vertically integrated production. The Company has 50 years of petrochemical production and management experience, and has accumulated extensive resources in the petrochemical industry. The Company has won several quality product awards from the central and local governments. Located at the core region of Yangtze River Delta, the most economically active region in China with a strong demand for petrochemical products, the Company has built a comprehensive logistics system and supporting facilities with close geographic proximity with most of its clients which enables the Company to enjoy the convenience of coastal and inland shipping. This gave the Company a competitive edge in terms of transportation costs and timely delivery. The Company has leveraged its advantages in integrated refinery and petrochemical capacity to actively strengthen product structure, while continuously improving products quality and variety. The Company has also improved production technology and boosted capacity of key upstream units to maximize the use and the efficiency in the utilization of its corporate resources, and is therefore able to achieve strong and sustainable development.

## Section 2: Management Discussion and Analysis

### (1) Management Discussion and Analysis of the Overall Operations during the Reporting Period

(The following discussion and analysis should be read in conjunction with the unaudited financial report of the Group and the notes in this interim report. Unless otherwise specified, certain financial data involved hereinafter are extracted from the unaudited interim financial report prepared in accordance with IFRS.)

#### 1. Review of the Company's operations during the Reporting Period

In the first half of 2022, the global economic growth slowed down, and China effectively coordinated COVID-19 prevention and control and economic and social development. The nation managed to achieve the gross domestic product (GDP) growth of 2.5% year-on-year in the first half of this year

8

Sinopec Shanghai Petrochemical Company Limited

# REPORT OF THE DIRECTORS *(continued)*

In the first half of 2022, in the face of high and violent energy prices, increasing industrial competition pressure, supply chain congestion caused by the Shanghai epidemic, and shrinking downstream market demand, the Group adhered to the principle of “pursuing the advanced standards and keeping up with the highest standards”. While taking measures to prevent the pandemic, it ensured that the production and operation was uninterrupted and various operational targets were met in an orderly manner. For the six months ended 30 June 2022, the Group generated revenue of RMB45.859 billion, representing an increase of RMB8.771 billion or a growth rate of 23.65%. Loss before taxation amounted to RMB0.433 billion (1H2021: profit before taxation of RMB1.543 billion), representing a decrease of RMB1.976 billion from the same period of last year. Loss after taxation and excluding non-controlling shareholders’ interests was RMB0.427 billion (1H2021: profit after taxation and excluding non-controlling shareholders’ interests of RMB1.276 billion), representing a decrease of RMB1.703 billion.

Dragged by the pandemic as well as repair and maintenance work, the total volume of goods within the main commodity categories produced by the Group reduced by 8.07% year-on-year to 5.4317 million tons in the first half of 2022. For the period between January and June, it processed a total of 5.7951 million tons of crude oil (of which 172.8 thousand tons were processed on order), down 6.68% year-on-year. Refined oil output amounted to 3.1534 million tons, representing a 12.85% year-on-year decrease. The gasoline production reduced by 0.88% year-on-year to 1.4483 million tons, the diesel production reduced by 15.32% year-on-year to 1.3112 million tons, the jet fuel production cut by 35.32% year-on-year to 393.8 thousand tons, while the liquefied gas production increased by 23.41% year-on-year to 326.3 thousand tons. Ethylene production increased by 16.67% year-on-year to 353.5 thousand tons, p-xylene production jumped by 116.01% year-on-year to 318.4 thousand tons. Production of plastics, resins and copolymers (excluding polyester and polyvinyl alcohol) reduced by 0.16% year-on-year to 450.5 thousand tons, production of raw materials of synthetic fibers reduced by 54.62% year-on-year to 60.9 thousand tons, production of synthetic fiber polymers dropped by 60.09% year-on-year to 68.6 thousand tons, and production of synthetic fibers dropped by 80.55% year-on-year to 10.6 thousand tons. The Group’s product sale rate for the first half of this year was 98.74% and the payment return rate was 100% (excluding connected companies).

The Group focused on epidemic prevention and control to ensure production and operation. In the first half of the year, the Group strictly implemented the epidemic prevention and control measures, and “zero infection” was achieved among the resident employees, successfully completed various anti epidemic tasks. It strongly supported the local anti-epidemic and was highly praised by the local government and medical team members. The Company optimized and adjusted the maintenance equipment and material control, strengthened the balance and operation coordination of public works, and continued to strengthen the process technology management and energy saving management. Among the 56 major technical and economic indicators under monitoring, 17 items reached the advanced level of the industry while the performance of 30 items was better than last year, with a year-on-year progress rate of 53.57%. Practicing the concept of green development, for the period between January and June, the compliance rate of waste water treatment reached 100% and the total mission volume of ammonia, nitrogen and sulphur dioxide dropped by 58.93% and 8.78% year-on-year respectively. The average contraction rate of volatile organic compounds (VOCs) at plant boundary reduced by 25.76% from a year ago. Continuously promoting the implementation of HSE management system, unfortunately, an explosion occurred at the Company’s 1# ethylene glycol equipment on 18 June. Afterwards, the Company’s major production facilities were forced to shut down. Up to now, the cause of the accident is under investigation and the production facilities have resumed production in an orderly manner.

2022 Interim Report 9

# REPORT OF THE DIRECTORS *(continued)*

Persistent efforts were made to construct project and to optimize the operating system. In the first half of the year, the Group persistently pushed for the 48K large tow carbon fiber project, the 250,000 ton/year elastomer project and the plant distributed photovoltaic power generation project, etc. The Group took the effect-oriented approach and insisted on dynamic optimization. By tracking and predicting the crude oil market movement, it adjusted the crude oil mix procured and hence lowering the procurement costs. Refined oil and chemical product structure was vigorously adjusted and the grading of plastic and chemical fiber products was optimized. The diesel-gasoline ratio for the first half was 0.91, representing a year-on-year decrease of 0.15. The market-oriented approach facilitated the linkage between production and marketing. Three-month rolling price forecast was persistently promoted in the practice and application of production optimization. Meanwhile, budget and fee management was enhanced, and the cost input-output efficiency continuously improved, leading to effective fund utilization.

The Group focused on scientific and technological innovation and promoted industrial application. In the first half of the year, efforts to drive breakthroughs in the core technology for carbon fibers and composite materials as well as their application and mass production were sped up, the 100 ton high-performance test device project were steadily promoted and the R&D, mass production and service support tasks of the torch for Beijing 2022 Winter Olympic Games and Winter Paralympic Games were successfully completed. The Group awarded by the Communist Party of China Central Committee and the State Council as “outstanding contribution collective for the Beijing Winter Olympic Games and the Winter Paralympic Games”. The Group deepened the legal and compliance management of scientific research, strengthened the protection of intellectual property rights, a total of 55 items were submitted for patent application and 39 items were granted patent licences. Intelligent construction and data governance were strengthened, and the standards of informatization management were persistently improved. In the first half, the Company produced a total of 65.8 thousand tons of new products. Output of new synthetic resin products and high value-added polyolefin products amounted to 363.4 thousand tons.

While deepening reform, the Group promoted management improvement. In the first half of the year, the Group relentlessly promoted the three-year action plan to deepen reform, and 55 work tasks and 238 action projects were fully completed. The Group strengthened benchmarking and first-class management to improve action process management, and completed all of the 115 action projects. Its management system was optimized and the organization structure was transformed from the one driven by traditional functional management to the one driven by businesses and values. A new carbon fiber business unit was set up and new units for “triple news” (new energy, new materials and new economy) were established to support the development of carbon fibers and new energy operations. The Group comprehensively launched the pilot and promote 5S (SEIRI, SEITON, SEISO, SEIKETSU and SHITSUKE) management work and carried out the “compliance management enhancement year” activity. The Group optimized workforce development, enhanced basic staff trainings, raised operating staff’s awareness of the code on work safety and operation procedures, and strove hard to improve their work safety know-how. It enhanced talent selection and encouraged high-level personnel to exert their potentials. Through standardized management, it stepped up efforts to attract and retain talents.

10

Sinopec Shanghai Petrochemical Company Limited

## REPORT OF THE DIRECTORS *(continued)*

The following table sets forth the Group's sales volume and net sales after business tax and surcharges for the Reporting Period:

|  | For the six months ended 30 June |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2022 |  |  | 2021 |  |  |
|  | Sales volume ('000 tons) | Net sales (RMB million) | % | Sales volume ('000 tons) | Net sales (RMB million) | % |
| Synthetic fibers | 11.3 | 230.0 | 0.6 | 56.2 | 728.7 | 2.3 |
| Resins and plastics | 502.1 | 4,300.4 | 10.7 | 591.2 | 4,657.6 | 14.7 |
| Intermediate petrochemicals | 908.9 | 6,409.2 | 16.0 | 771.3 | 3,839.8 | 12.2 |
| Petroleum products | 3,940.9 | 21,846.7 | 54.4 | 4,528.8 | 17,005.9 | 53.8 |
| Trading of petrochemical products | - | 6,950.7 | 17.3 | - | 5,042.7 | 15.9 |
| Others | - | 405.2 | 1.0 | - | 360.8 | 1.1 |
| Total | 5,363.2 | 40,142.2 | 100.0 | 5,947.5 | 31,635.5 | 100.0 |

In the first half of 2022, the Group achieved a total net sales of RMB40.142 billion, an increase of 26.89% compared with the same period last year, of which the net sales of intermediate petrochemical products, petroleum products and trading of petrochemical products increased by 66.91%, 28.47% and 37.84% respectively. The net sales of synthetic fibers, resins and plastics fell by 68.44% and 7.67% respectively. Affected by plant shutdowns and rising product prices, except for intermediate petrochemical products, the sales volume of each sector dropped significantly. Synthetic fibers, resins and plastics, and petroleum products decreased by 79.89%, 15.07% and 12.89% respectively. The weighted average selling prices of all sectors increased over the same period of last year due to the increase in crude oil prices. In the first half of 2022, the Group's cost of sales was RMB40.681 billion, an increase of 31.95% from the same period last year and accounting for 101.34% of net sales.

In the first half of 2022, the Group's crude oil unit processing cost was RMB4,540.43/ton, an increase of RMB1,691.30/ton or 59.36% compared to the same period last year. The crude oil processing capacity of the Group was 5,795,100 tons (including 172,800 tons of processing materials supplied), a decrease of 415,000 tons from the same period last year (including a decrease of 390,300 tons in the Group's self produced crude oil processing capacity). From January to June this year, the cost of crude oil processing increased by RMB8.397 billion. Among them, the decrease of crude oil processing volume resulting in the cost decreased by RMB1.112 billion, and the unit processing cost increased resulting in the cost increased by RMB9.509 billion. Crude oil costs accounted for 62.75% of the Group's cost of sales in the first half of the year.

2022 Interim Report

11

# REPORT OF THE DIRECTORS *(continued)*

In the first half of 2022, the Group's expenditure on other excipients was RMB4.886 billion, a decrease of 6.22% from the same period last year. During the Reporting Period, the Group's depreciation and amortization expenses and maintenance expenses were RMB876 million and RMB834 million respectively. Depreciation and amortization expenses dropped by 6.60% year-on-year mainly due to the expiration of the depreciation period of some fixed assets from the second half of last year to the first half of this year; maintenance costs decreased by 17.20% year-on-year mainly because a major overhaul was carried out in the same period last year, with a large overhaul expenditure.

In the first half of 2022, the Group recorded sales expenses of RMB174.6 million, a decrease of 16.74% from RMB209.7 million in the same period last year mainly because the freight of RMB54.7 million in the handling and incidental expenses was accounted as the contract performance cost in the sales cost.

In the first half of 2022, the Group's income from other business was RMB47.7 million, a decrease of RMB8.5 million over the same period last year mainly due to a decrease in rental income of RMB7.0 million and a decrease in other income such as government subsidy income of RMB1.5 million during the Reporting Period.

In the first half of 2022, the Group reported a financial net income of RMB279.3 million, compared to financial net income of RMB210.5 million in the same period last year. The increase was mainly due to an increase in interest income of RMB80.5 million during the Reporting Period. In the first half of 2022, the Group achieved a loss after taxation excluding non-controlling interests of RMB426.5 million, a decrease of RMB1,703.0 million from the profit of RMB1,276.5 million in the same period last year.

## Liquidity and Capital Resources

In the first half of 2022, the Group's net cash outflow from operating activities was RMB6,455.6 million, compared with a net cash outflow of RMB2,443.4 million in the same period last year.

In the first half of 2022, the Group's net cash inflow from investment activities was RMB1,776.7 million, compared with a net cash outflow of RMB3,106.4 million in the same period last year. This is mainly due to the net cash inflow of the Group's term deposit, structured deposit investment and recovery during the Reporting Period of RMB2,350 billion, an increase of RMB4,300 billion over the same period of last year, and the dividend received from the joint venture during the Reporting Period of RMB576.1 million, an increase of RMB521.1 million over the same period of last year.

In the first half of 2022, the Group generated a net cash inflow of RMB1,996.8 million from financing activities, compared with a net cash inflow of RMB2.8 million in the same period last year. This is mainly due to the increase of net cash flow generated from borrowings and short-term bonds obtained and repaid by the Group during the Reporting Period of RMB1,999.8 million compared with the same period last year.

12

Sinopec Shanghai Petrochemical Company Limited

# REPORT OF THE DIRECTORS *(continued)*

## Borrowings and Debts

The Group's long-term borrowings are mainly used for capital expansion projects. The Group generally arranges long-term borrowings in accordance with capital expenditure plans. The short-term debt is used to supplement the working capital required by the normal production and operation of the Group. As of 30 June 2022, the total loan balance of the Group increased by RMB500 million from the opening balance to RMB2.760 billion. The balance of the Group's short-term bonds increased by RMB1.510 billion compared with the opening balance of RMB0. The Group's total borrowings at fixed interest rates are RMB3.54 billion.

## Capital Expenditures

In the first half of 2022, the Group's capital expenditure was RMB972 million. It was mainly used for the preliminary work and construction of raw silks (24,000 tons/year) and 48K large tow carbon fiber (12,000 ton/year) project and 100 ton high performance carbon fiber test plant etc.

In the second half of the year, the Group will continue to promote the raw silks (24,000 tons/year) and 48K large tow carbon fiber (12,000 tons/year) project, and 100 ton high performance carbon fiber test plant. The projects to be commenced will include compliance transformation project of control room of synthetic resin department and improvement transformation project of clean water and sewage separation of Shanghai Petrochemical. The planned capital expenditure of the Group can be financed from operating cash and bank credit.

## Gearing Ratio

As of 30 June 2022, the Group's gearing ratio was 31.58% (as of 30 June 2021: 36.65%). The gearing ratio was calculated as: total liabilities/total assets.

## The Group's Employees

As of 30 June 2022, the number of registered employees of the Group was 8,039, among which 4,921 were production personnel, 2,026 were sales, finance and other personnel, and 1,037 were administrative personnel. 61.38% of the Group's employees were college graduates or above.

The Group determines the remuneration of its employees and directors on the basis of their position, performance, experience and current market pay trends. Other benefits include equity incentive plans and state-administered pension plans. The Group also provides professional and vocational training for its employees.

2022 Interim Report

13

# REPORT OF THE DIRECTORS *(continued)*

## Income Tax

The Enterprise Income Tax Law of the PRC took effect from 1 January 2008, subsequent to which the income tax rate for enterprises was uniformly adjusted to 25%. As of the half year ended 30 June 2022, the income tax rate applicable to the Group is 25%.

## Disclosure Required by the Hong Kong Listing Rules

Save as disclosed herein, pursuant to paragraph 40 of Appendix 16 to the Hong Kong Listing Rules, the Company confirms that there were no material differences between the existing information of the Company relating to the matters as set out in paragraph 32 of Appendix 16 to the Hong Kong Listing Rules and the relevant information disclosed in the Company's 2021 annual report.

## 2. Market Outlook and Work Plans for the Second Half of the Year

Looking ahead to the second half of 2022, the risk of global economic stagflation will rise, and China's economic growth is expected to rebound and remain within a reasonable range. As demand recovers and stabilization policies take effect, demand of automobiles, real estate and home appliances is expected to rise. It is expected that the demand for domestic refined oil and chemical products will recover, and the price pass-through of the petrochemical industrial chain will normalize. The overall outlook of the industry is positive. However, due to the increased uncertainty of the international oil price trend, the domestic refining and chemical production capacity is released in a concentrated manner, and the pressure on the Company's efficiency will be further increased.

In the second half of the year, the Group will attach great importance to safety and environmental protection issues, be well prepared for the worst scenarios, implement all aspects of production recovery in a strict, detailed, scientific and orderly manner, devote every effort to reverse the passive situation of safety production, consolidate the Company's high-quality development foundation, and focus on the following four aspects.

1.  Focus on the restore production and strive to keep the production running smoothly. Deeply learn the lessons of the '6-18' accident, pay attention to the implementation of the HSE management system, strictly implement the HSE responsibilities of all employees, strengthen the implementation of safety production measures, pay attention to the restorative maintenance of the unit, implement the commencement plan in stages, and steadily implement all tasks for the recovery of production to ensure the safe and stable operation of the unit. The Group will continue to improve the ability of environmental protection facilities to prevent impact and high standard emissions, put an end to excessive emissions and pollution incidents, and firmly adhere to the bottom line of safe and green development.

14

Sinopec Shanghai Petrochemical Company Limited

## REPORT OF THE DIRECTORS *(continued)*

2. Focus on the “three basics” management and strive to build a solid foundation for development. The Group will pay close attention to basic construction, basic work and basic skills training, persist in concentrating energy and strength at the basic level, fully implement the focus of “three basics” work at the “three basics” level, and promote the improvement of basic management work. The Group will strengthen special projects, organically integrate them with professional management and “three basics” work, establish a responsibility system of joint management, and form a working force. The Group will carry out the construction of intelligent change management system to improve the “three basics” management level intelligently.

3. Focus on dynamic optimization and strive to ensure the improvement of operating efficiency. The Group will resolutely overcome the adverse effects of the “6-18” accident. On the basis of ensuring the smooth start-up and smooth operation of the unit, The Group will track the market dynamics, optimize the procurement strategy, the product structure, the production and marketing connection, and strive to improve the operating efficiency. The Group will deepen the integration of industry and finance, continue to carry out budget management such as rolling prediction of marginal benefits of the product chain, analysis of all factors of production and operation, target control of all staff costs, and internal market simulation, and strictly control costs.

4. Focus on reform and innovation, and strive to promote the high-quality development of the Company. The Group will consolidate the results of the three-year action to deepen reform and constantly enhance the effectiveness of reform in promoting development. In depth implementation of the Company’s continuous benchmarking management improvement plan to achieve normalization of benchmarking improvement. The Group will accelerate the process of tackling key problems of carbon fiber and its composites, promote the safety and environmental protection data governance project, promote the Company’s digital transformation, and give play to the effectiveness of scientific and technological innovation. The Group will strengthen the project construction management to ensure that the large tow carbon fiber project (phase I) is completed and put into operation with high quality, and the 100 ton high-performance carbon fiber test device project is handed over. The Group will accelerate the construction of new energy projects such as photovoltaic.

2022 Interim Report

15

## REPORT OF THE DIRECTORS *(continued)*

### (2) Analysis of the Company's Principal Performance during the Reporting Period (Certain of the following financial data is extracted from the unaudited interim report prepared under CAS)

#### 1. Analysis of Changes in the Company's Related Financial Data

Unit: RMB'000

| Item | For the six months ended 30 June |  | Change (%) | Reason for change |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 |  |  |
| Operating Costs | 39,118,453 | 28,849,768 | 35.59 | The rise of unit price of crude oil and purchased coal led to the rise of raw material cost and power cost. |
| Investment income ('-' for losses) | -50,675 | 602,510 | -108.41 | The operating loss of the associated company resulted in investment losses. |
| Impairment losses of assets | -177,777 | -80,093 | 121.96 | The increase of inventory provision resulted from the gross profit margin of chemical products decreased. |
| Gains from asset disposals ('-' for losses) | -1,062 | 79,085 | -101.34 | Gains from disposal of fixed assets decreased. |
| Income tax (benefits)/ expenses | -11,780 | 261,344 | -104.51 | The Company made losses resulted in income tax benefits |
| Net (loss)/profit attributable to shareholders of the Company | -436,009 | 1,244,189 | -135.04 | In the Reporting Period, the price rise of petrochemical products was less than that of crude oil, resulting in operating losses. |
| Other comprehensive income, net of tax | 273,513 | 52,431 | 421.66 | Price rise of crude oil led to increase of gains in fair value of commodity swap contracts subject to hedge accounting. |
| Net cash used in operating activities | -6,405,122 | -2,389,552 | 168.05 | The cash paid for purchasing goods and receiving services and the taxes paid in the current period increased compared with the same period last year. |
| Net cash flows generated from/(used in) investing activities | 1,776,708 | -3,106,358 | -157.20 | The net investment and recovery of time deposits and structured deposits in the current period increased compared with the same period of last year, and the dividends received from joint ventures in the current period increased compared with the same period of last year. |
| Net cash flows generated from/(used in) financing activities | 1,946,321 | -51,020 | -3,914.82 | The net cash flow generated by borrows and short-term bonds obtained and repaid by the Group during the Reporting Period increased compared with the same period last year. |

16

Sinopec Shanghai Petrochemical Company Limited

## REPORT OF THE DIRECTORS *(continued)*

### (3) Analysis of Business Operations by Industry, Product or Geographical Location Segment

#### 1. Principal Operations by Industry or Product

Unit: RMB'000

| Business Segment/ Product Segment | Revenue | Cost of sales | Gross profit margin (%) | Increase/ decrease in revenue compared to corresponding period of the previous year (%) | Increase/ decrease in cost of sales compared to corresponding period of the previous year (%) | Increase/ decrease in gross profit margin compared to last year (percentage point) |
| --- | --- | --- | --- | --- | --- | --- |
| Synthetic fibers | 230,723 | 388,301 | -68.30 | -68.46 | -55.14 | Decrease 49.96 percentage points |
| Resins and plastics | 4,314,408 | 4,345,070 | -0.71 | -7.71 | 9.10 | Decrease 15.51 percentage points |
| Intermediate petrochemicals | 6,432,577 | 6,361,481 | 1.11 | 66.81 | 87.25 | Decrease 10.80 percentage points |
| Petroleum products | 27,517,541 | 20,704,410 | 24.76 | 22.76 | 35.63 | Decrease 7.14 percentage points |
| Trading of petrochemical products | 6,955,959 | 6,898,958 | 0.82 | 37.82 | 38.67 | Decrease 0.61 percentage points |
| Others | 260,149 | 296,886 | -14.12 | 26.46 | 27.91 | Decrease 1.29 percentage points |

Note: This gross profit margin is calculated according to the price of petroleum products which includes consumption tax. Gross profit margin of petroleum products after consumption tax was 7.95%.

2022 Interim Report

17

## REPORT OF THE DIRECTORS *(continued)*

### 2. Revenue by Geographical Location

Unit: RMB'000

| Geographical location segment | Revenue | Increase/decrease in revenue as compared to the same period last year (%) |
| --- | --- | --- |
| Eastern China | 40,160,926 | 24.21% |
| Other regions in the PRC | 527,859 | -15.18% |
| Exports | 5,022,572 | 26.29% |

### (4) Analysis of Assets and Liabilities

Unit: RMB'000

| Item | As at 30 June 2022 |  | As at 31 December 2021 |  | Change of amount on 30 June 2022 compared to 31 December 2021 (%) | Main reason for change |
| --- | --- | --- | --- | --- | --- | --- |
|  | Amount | % of total assets | Amount | % of total assets |  |  |
| Derivative financial assets | 240,953 | 0.57 | 81,405 | 0.17 | 195.99 | The fair value at the end of the period of the commodity swap contract subject to hedge accounting increased. |
| Financial assets at fair value through profit or loss | 1,009,300 | 2.38 | - | - | - | The structured deposits purchased during the Reporting Period amounted to RMB1 billion. The structured deposits were redeemed at maturity with no balance at the end of the previous reporting period. |
| Other receivables | 192,186 | 0.45 | 108,728 | 0.23 | 76.76 | The export increased during the Reporting Period, and the export tax refund receivable increased; Receivables related to hedging instruments increased. |
| Other current assets | 582,136 | 1.37 | 17,329 | 0.04 | 3,259.32 | The value-added tax to be deducted increased significantly. |

18 Sinopec Shanghai Petrochemical Company Limited

## REPORT OF THE DIRECTORS *(continued)*

| Item | As at 30 June 2022 |  | As at 31 December 2021 |  | Change of amount on 30 June 2022 compared to 31 December 2021 (%) | Main reason for change |
| --- | --- | --- | --- | --- | --- | --- |
|  | Amount | % of total assets | Amount | % of total assets |  |  |
| Right-of-use assets | 20,697 | 0.05 | 4,879 | 0.01 | 324.21 | New lease contracts were added in the current period, resulting in an increase in the right-of-use assets - houses and buildings. |
| Derivative financial liabilities | - | - | 23,804 | 0.05 | -100.00 | As of the end of the current period, all derivative financial liabilities have been settled. |
| Bills payable | 152,564 | 0.36 | 830,006 | 1.76 | -81.62 | Bills payable matured in the current period. |
| Employee benefits payable | 552,062 | 1.30 | 260,096 | 0.55 | 112.25 | The employee benefits payable of the Reporting Period increased. |
| Taxes payable | 79,705 | 0.19 | 4,070,663 | 8.65 | -98.04 | Taxes paid in the current period. |
| Other payables | 2,590,054 | 6.10 | 1,287,064 | 2.74 | 101.24 | At the end of the period, the dividend payable increased by RMB1.082 billion. |
| Other current liabilities | 2,789,182 | 6.57 | 1,441,320 | 3.06 | 93.52 | The balance of short-term bonds increased by RMB1.510 billion. |
| Lease liabilities | 10,350 | 0.02 | 1,384 | 0.01 | 647.83 | With the increase of the leased right-of-use assets in the current period, the lease liabilities also increased accordingly. |
| Other comprehensive income | 181,121 | 0.43 | 59,425 | 0.13 | 204.79 | Price rise of crude oil led to increase of gains in fair value of commodity swap contracts subject to hedge accounting. |

As of the end of the Reporting Period, there was no case where the Company's main assets were sealed up, seized, frozen, mortgaged or pledged, and there was no case or arrangement where the possession, use, income and disposal rights of main assets were subject to other restrictions.

### Overseas assets

During the Reporting Period, the Group's overseas assets were RMB15,758 thousand, accounting for 0.04% of the total assets.

2022 Interim Report

19

# REPORT OF THE DIRECTORS *(continued)*

## (5) Analysis of Investments

### 1. Entrusted Wealth Managements and Entrusted Loans

#### (i) Entrusted Wealth Managements

The Company did not engage in entrusted wealth management during the Reporting Period.

#### (ii) Entrusted Loans

During the Reporting Period, the Company provided entrusted loans to Shanghai Jinshan Baling New Material Co., Ltd. ('Baling New Materials') through Sinopec Finance Co., Ltd., with a total loan amount of RMB300 million, which was used for styrene thermoplastic elastomer project. The loan term is 6 months and the annual interest rate is 3.80%. During the six months ended June 30 2022, the entrusted loan of RMB150 million has been issued.

### 2. Projects Funded by Fund Raising Capital

During the Reporting Period, the Company did not raise funds, nor has it used the funds raised from the previous reporting periods.

20

Sinopec Shanghai Petrochemical Company Limited

# REPORT OF THE DIRECTORS *(continued)*

### 3. Analysis of the Companies in which the Company has Controlling Interests or Investment Interests

As at 30 June 2022, the Company had more than 50% equity interest in the following principal subsidiaries:

| Company name | Place of registration | Principal activities | Place for principal activities | Type of legal person | Percentage of equity held by the Company (%) | Percentage of equity held by the Group (%) | Registered capital (RMB'000) | Net (loss)/ profit for the year 2022 (RMB'000) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Shanghai Petrochemical Investment Development Company Limited ('Shanghai Investment Development') | China | Investment management | China | Limited company | 100.00 | 100.00 | RMB2,100,000 | 61 |
| China Jinshan Associated Trading Corporation (Jinshan Associated Trading) | China | Import and export of petrochemical products and equipment | China | Limited company | 67.33 | 67.33 | RMB25,000 | 13,351 |
| Shanghai Jinchang Engineering Plastics Company Limited ('Shanghai Jinchang') | China | Production of polypropylene compound products | China | Limited company | - | 74.25 | USD9,154 | (12,977) |
| Shanghai Golden Phillips Petrochemical Company Limited ('Shanghai Golden Phillips') | China | Production of polypropylene products | China | Limited company | - | 100.00 | RMB415,623 | (11,301) |
| Shanghai Jinshan Trading Corporation ('JMGJ') | China | Import and export of petrochemical products and equipment | China | Limited company | - | 67.33 | RMB100,000 | 12,757 |
| Zhejiang Jinlian Petrochemical Storage and Transportation Co., Ltd. ('Jinlian') | China | Trading of Petrochemical Products | China | Limited company | - | 100.00 | RMB400,000 | (6,975) |

Note: None of the subsidiaries have issued any debt securities.

The Group's share of interests in associates comprises a 38.26% interest in the Shanghai Chemical Industry Park Development Co., Ltd. ('Chemical Industrial Park') established in the PRC in the amount of RMB2,085.3 million, and a 20% interest in the Shanghai SECCO Petrochemical Company Limited ('Shanghai SECCO') established in the PRC in the amount of RMB587.2 million. The principal businesses of the Chemical Industry Park include the planning, development and operation of a chemical industrial park located in Shanghai of the PRC. The principal business of the Shanghai SECCO is the production and distribution of petrochemical products.

2022 Interim Report **21**

## REPORT OF THE DIRECTORS *(continued)*

### **(1) Explanation of profits of major controlling companies and investing companies affecting more than 10% of the net profit of the Group**

In the first half of 2022, Shanghai SECCO recorded a revenue of RMB12.9273 billion, and its loss after tax reached RMB663.0 million, among which RMB132.6 million was attributed to the Company.

In the first half of 2022, Chemical Industrial Park recorded a revenue of RMB815.9 million, and its profit after tax reached RMB247.5 million, among which RMB84.3 million was attributed to the Company.

### **(2) Analysis of operational performance of major controlling companies and investing companies with a 30% or more year-on-year change**

- (a) In the first half of 2022, the operating results of Shanghai Investment Development decreased by 99.95% year on year, which was mainly due to the decrease of investment income in the current period, resulting in a decrease in the operating profit in the first half of 2022.
- (b) In the first half of 2022, the operating results of Shanghai Jinchang decreased by 71.45% year on year which was primarily due to the increase in price of the raw materials required by Shanghai Jinchang. This resulted in a decrease in operating results for the first half of 2022.
- (c) In the first half of 2022, the operating results of Shanghai Golden Phillips has seen a decrease of 182.37% year on year, which was mainly due to the increase in price of raw materials required by Shanghai Golden Phillips. This resulted in a decrease in operating results for the first half of 2022.
- (d) In the first half of 2022, the operating results of JMGJ has seen an increase of 88.76% year on year, which was mainly due to the increase in export sales in the current period. This resulted in an increase in operating results for the first half of 2022.

22

Sinopec Shanghai Petrochemical Company Limited

## REPORT OF THE DIRECTORS *(continued)*

### 4. Projects Funded by Non-fund Raising Capital

| Major Project | Estimated total project investment | Estimated total project investment in the Reporting Period | Status as at 30 June 2022 |
| --- | --- | --- | --- |
| Shanghai Jinshan Baling New Material Co., Ltd. | 400,000 | 50,000 | Paid in RMB100 million |
| Shanghai Shidian Energy Co., Ltd. | 400,000 | 80,000 | Paid in RMB400 million |
| Sinopec Shanghai 24000 T/A precursor fiber and 12000 T/a 48K large tow carbon fiber project | 3,489,638 | 604,470 | Under construction |
| 100 ton high performance carbon fiber test plant | 566,183 | 54,026 | Under construction |
| Controlling room project of 1#, 2#, 3#, 4# refining combined unit of oil refining department | 97,689 | 37,862 | Under construction |
| Sinopec Shanghai test line project of aviation carbon fibre reinforced thermoplastic composite material | 87,682 | 15,458 | Under construction |
| Rectification project of hidden danger in central control room of olefin Department | 44,298 | 16,152 | Under construction |
| Oil refining department upgrading project of high pressure air cooling materials for medium pressure hydrocracking unit | 32,829 | 15,941 | Under construction |

2022 Interim Report

23

# REPORT OF THE DIRECTORS *(continued)*

## 5. Financial Assets Measured at Fair Value

Unit: RMB'000

| Project | Opening amount | Closing amount | Profit and loss from changes in fair value in the current period | Cumulative changes in fair value included in equity | Impairment accrued in the current period | Source of funds |
| --- | --- | --- | --- | --- | --- | --- |
| Trading financial assets |  |  |  |  |  |  |
| - Structured deposit | - | 1,009,300 | 9,300 | - | - | own capital |
| Financial assets measured at fair value with changes included in other comprehensive income |  |  |  |  |  |  |
| - Receivables financing | 1,072,690 | 680,269 | - | - | - |  |
| - Investment in other equity instruments | 5,000 | 5,000 | - | - | - | own capital |
| Derivative financial assets |  |  |  |  |  |  |
| - Commodity swap contract | 81,405 | 240,953 | -8,987 | 394,762 | - |  |
| Total | 1,159,095 | 1,935,522 | 313 | 394,762 | - |  |

## (6) Other Disclosure Items

### 1. Possible Risks

(i) **The cyclical characteristics of the petroleum and petrochemical products market and price volatility in crude oil and petrochemical products may have an adverse impact on the Group's operations.**

A large part of the Group's operating income is derived from the sales of refined oil and petrochemical products. Historically, such products have been cyclical in nature and relatively sensitive to macroeconomic changes. Additionally, changes in regional and global economic conditions, productivity and output, prices and supply of raw materials, consumer demand and prices and supply of substitutes also have an effect. From time to time, these factors have a material impact on the prices of the Group's products in regional and global markets. Given the reduction of tariffs and other import restrictions as well as the relaxation of control by the PRC government over the distribution and pricing of products, a substantial number of the Group's products will increasingly be subject to the cyclical impact in the regional and global markets. In addition, the prices of crude oil and petrochemical products will remain volatile, and uncertain. Higher crude oil prices and lower petrochemical products prices are likely to have an adverse impact on the Group's business, operating results and financial condition.

24

Sinopec Shanghai Petrochemical Company Limited

# REPORT OF THE DIRECTORS *(continued)*

(ii) **The Group may be exposed to risks associated with the procurement of imported crude oil and may not be able to pass on all increased costs due to rising crude oil price.**

At present, the Group consumes a significant amount of crude oil for the production of petrochemical products. More than 95% of the crude oil consumption is imported. In recent years, crude oil prices have been subject to significant fluctuations due to a variety of factors, and the Group cannot rule out the possibility of any major unexpected event which may cause a suspension in crude oil supply. The Group has attempted to mitigate the effects of increased costs from rising crude oil prices by passing them on to the customers, but the ability to do so is limited because of market conditions and government control over the pricing of refined oil products. Since there is a time-lag between increases in crude oil prices and increases in petrochemical product prices, higher costs cannot be totally offset by raising the selling prices. In addition, the State also imposes control over the distribution of some petroleum products within China. For instance, some of the Group's petroleum products are required to be sold to designated customers (such as subsidiaries of Sinopec Corp). Hence, when crude oil prices are high, the higher costs cannot be totally offset by raising the selling prices of the Group's petroleum products.

(iii) **Substantial capital expenditures and financing requirements are required for the Group's development plans, presenting a number of risks and uncertainties.**

The petrochemical industry is a capital-intensive industry. The Group's ability to maintain and raise income, net income and cash flows is closely connected with ongoing capital expenditures. The Group's estimated capital expenditures is estimated to amount to approximately RMB3,500.0 million in 2022, which will be met by internal funding and by bank loans. The Group's effective capital expenditures may vary significantly due to the Group's ability to generate sufficient cash flows from operations, investments and other factors that are beyond control. Furthermore, there is no assurance as to the completion, cost or outcome of the Group's fund raising projects.

The Group's ability to secure external financing in the future is subject to a number of uncertainties which include the Company's operating results, financial conditions and cash flow in the future; China's economic conditions and the market conditions for the Group's products; financing costs and conditions of the financial market, and issuance of government approval documents, as well as other risks associated with the development of infrastructure projects in China and so forth. The Group's failure to secure sufficient financing required for its operations or development plans may have an adverse impact on the Group's business, operating results and financial condition.

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25

# REPORT OF THE DIRECTORS *(continued)*

(iv) **The Group’s business operations may be affected by existing or future environmental protection regulations.**

The Group is subject to a number of environmental protection laws and regulations in China. Waste products (waste water, waste gas and waste residue) are generated during the Group’s production operations. Currently the Group’s operations fully comply with all applicable Chinese environmental protection laws and regulations. However, the Chinese government may further enforce stricter environmental standards, and the Group cannot assure that the central or local governments will not issue more regulations or enforce stricter regulations which may cause the Group to incur additional expenses on environmental protection measures.

(v) **Changes in the monetary policy and fluctuations in the value of Renminbi may have an adverse impact on the Group’s business and operating results.**

The exchange rate of the Renminbi against the US Dollar and other foreign currencies may fluctuate and is subject to alterations due to changes on the Chinese political and economic situations. In July 2005, the PRC government overhauled its policy of pegging the value of the Renminbi to the US dollar by permitting the Renminbi to fluctuate within a certain band against a basket of foreign currencies. Since the adoption of this new policy, the value of the Renminbi against the US dollar fluctuates daily. In addition, the Chinese government has been under international pressure to further ease its exchange rate policy, and may as a result further change its currency policy. A small portion of our cash and cash equivalents are denominated in foreign currencies, including the US dollar. Any increase in the value of Renminbi against other currencies, including the US dollar, may decrease the Renminbi value of our cash and cash equivalents that are denominated in foreign currencies. On the other hand, most of our revenue is denominated in Renminbi, but a major part of our procurement of crude oil, certain equipment and certain debt repayments are denominated in foreign currencies. Any devaluation of Renminbi in the future will increase our costs and jeopardize profitability. Any devaluation of Renminbi may also have an adverse impact on the value of dividends payable in foreign currencies by the Group for H shares and American Depository Securities.

26 Sinopec Shanghai Petrochemical Company Limited

# REPORT OF THE DIRECTORS *(continued)*

# **(vi) Connected transactions may have an adverse impact on the Group's business and economic efficiency.**

The Group will, from time to time, continue to conduct transactions with the Group's controlling shareholder Sinopec Corp. and Sinopec Corp.'s controlling shareholder Sinopec Group as well as their connected parties (subsidiaries or associates). These connected transactions include the provision of the following services by such connected parties to the Group: raw materials purchases, agency sale of petrochemical products, construction, installation and engineering design services, petrochemical products industry insurance services and financial services, and the sale of petroleum and petrochemical products by the Group to Sinopec Corp. and its connected parties. These connected transactions and services conducted by the Group are carried out under normal commercial terms and in accordance with the relevant agreements. However, if Sinopec Corp. and Sinopec Group refuse to conduct such transactions or revise the agreements between the Group and itself in a manner unfavorable to the Group, the Group's business and business efficiency will be adversely impacted. Furthermore, Sinopec Corp. has an interest in certain sectors that are directly or indirectly competing with or which may compete with the Group's business. Since Sinopec Corp. is the controlling shareholder of the Group and its own interests may conflict with those of the Group, it may act for its own benefit regardless of the Group's interests.

# **(vii) Risks associated with control by the majority shareholder**

Sinopec Corp., the controlling shareholder of the Company, owns 5,459,455,000 shares of the Company, which represents 50.44% of the total number of shares of the Company and gives it an absolute controlling position. Sinopec Corp. may, by using its controlling position, exercise influence over the Group's production operations, fund allocations, appointment or removal of senior staff and so forth, thereby adversely affecting the Group's production operations as well as minority shareholders' interests.

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## MAJOR EVENTS

### (1) Brief Introduction of General Meeting

| Session of the meeting | Convening date | Title of the motions | Status of the resolutions | Designated websites for publication of resolutions | Date of publication of resolutions |
| --- | --- | --- | --- | --- | --- |
| The First Extraordinary General Meeting for 2022, the First A Shareholders Class Meeting for 2022 and the First H Shareholders Class Meeting for 2022 | 30 March 2022 | 1. THAT waived the pre-emptive right over the equity transfer of non-controlled company be considered and approved as an ordinary resolution. 2. THAT the Board repurchases domestic shares and/or overseas-listed foreign shares be considered and approved as a special resolution. | Passed | Websites of the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the Company | 31 March 2022 |
| The 2021 Annual General Meeting, the Second A Shareholders Class Meeting for 2022 and the Second H Shareholders Class Meeting for 2022 | 22 June 2022 | 1. THAT the 2021 Work Report of the Board of Directors of the Company be considered and approved; 2. THAT the 2021 Work Report of the Supervisory Committee of the Company be considered and approved; 3. THAT the 2021 Audited Financial Statements of the Company be considered and approved; 4. THAT the 2021 Profit Distribution Plan of the Company be considered and approved; 5. THAT the 2022 Financial Budget Report of the Company be considered and approved; 6. THAT the re-appointment of KPMG Huazhen LLP and KPMG as the domestic and international auditors, respectively, of the Company for the year 2022 and the authorization of the board of directors to fix their remuneration be considered and approved; 7. THAT the authorization to the Board of Directors to decide on the registration and issuance of ultra short-term financing bonds be considered and approved; and 8. THAT the proposal to the shareholders at the general meeting to authorize the Board of Directors to repurchase domestic shares and/or overseas-listed foreign shares of the Company be considered and approved. | Passed | Websites of the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the Company | 23 June 2022 |

For details of the above meetings, please refer to the resolution announcement published by the Company in Shanghai Securities News, China Securities Journal, Securities Times, the website of Shanghai Stock Exchange and the website of Hong Kong Stock Exchange.

28 Sinopec Shanghai Petrochemical Company Limited

# MAJOR EVENTS *(continued)*

## (2) Plan for Profit Distribution or Capital Reserves Capitalization

### 1. Implementation of or Amendment to Profit Distribution Plan during the Reporting Period

The 2021 Profit Distribution Plan was considered and approved at the 2021 Annual General Meeting held on 22 June 2022 to distribute a dividend of RMB0.1 per share (including tax) totaling RMB1,082,381,350 based on the total issued share of 10,823,813,500 as at dividend payout date. The relevant announcement was published in Shanghai Securities News, China Securities Journal and Securities Times on 23 June 2022 and was uploaded to the websites of the Hong Kong Stock Exchange and Shanghai Stock Exchange on 22 June 2022. The Final Dividend was distributed on or around Thursday, 28 July 2022 to shareholders whose names appear on the register of members of the Company's H shares at the close of business on Tuesday, 5 July 2022. On 20 July 2022, the Company published an announcement on the implementation of profit distribution for A shares for the year 2021. The record date for A shares dividend payment was 27 July 2022 and the ex-dividend date was 28 July 2022. The dividend payment date for A shares was 28 July 2022. The Profit Distribution Plan was implemented as scheduled.

### 2. Plan for Profit Distribution or Capital Reserves Capitalization during the Reporting Period

Nil.

## (3) Performance of Undertakings

### 1. Undertakings Made by De Facto Controller, Shareholders, Connected Parties, Purchaser and the Company during the Reporting Period or Continuing up to the Reporting Period

#### Undertakings about share reform

The Company disclosed The Explanatory Memorandum for the Share Reform Scheme of the Company (the Revised Draft) on 20 June 2013, in which the Company's controlling shareholder, Sinopec Corp., made the following major undertakings that continued up to the Reporting Period:

Sinopec Corp. shall continue to support the development of the Company upon the completion of the share reform scheme, and shall use the Company as a platform for the development of related businesses in the future.

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# MAJOR EVENTS *(continued)*

For details, please refer to 'The Explanatory Memorandum for the Share Reform Scheme of the Company' (the Revised Draft) (Full Version) published in Shanghai Securities News and China Securities Journal on 20 June 2013, as well as the relevant announcements uploaded to the websites of the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the Company.

The share reform scheme was reviewed and approved at the A shares shareholders' meeting held on 8 July 2013. After the implementation of the share reform scheme on 20 August 2013, the Company's A shares resumed trading, and non-circulating shares previously held by non-circulating shares shareholders attained the right of circulation. For details of the implementation of the share reform scheme, please refer to the 'Implementation Report of Sinopec Shanghai Petrochemical Company Limited Share Reform Scheme' published in China Securities Journal and Shanghai Securities News on 14 August 2013 and the relevant announcement uploaded to the websites of the Shanghai Stock Exchange and the Hong Kong Stock Exchange.

With regard to the aforementioned undertakings, the Company did not notice any violation in fulfilling the above undertakings by Sinopec Corp.

## (4) Appointment and Dismissal of Accounting Firm

During the Reporting Period, the Company had not changed its auditors.

## (5) Material Lawsuits or Arbitration

During the Reporting Period, the Company had no material lawsuits or arbitration.

## (6) Punishment and Reprimand of the Company and its Directors, Supervisors, Senior Management, Controlling Shareholder, De Facto Controller and Purchaser

During the Reporting Period, the Company and its Directors, Supervisors, senior management, controlling shareholder, de facto controller and purchasers had not been investigated, administratively punished, publicly criticized by the CSRC or publicly censured by the stock exchanges on which the Company is listed.

## (7) Credit Status of the Company and its Controlling Shareholder and De Facto Controller during the Reporting Period

During the Reporting Period, the Company and its controlling shareholder and de facto controller of the Company were not involved in any events regarding failure to perform obligations under a judgement of courts, nor have they had any relatively large amount of debts which have become due and outstanding.

30

Sinopec Shanghai Petrochemical Company Limited

# MAJOR EVENTS *(continued)*

## (8) Share Option Incentive Scheme

During the Reporting Period, the Company did not grant A-share stock options under the share option incentive plan, nor did the granted persons exercise A-share stock options, and no A-share stock options were cancelled or lapsed, no H-share stock options were granted, cancelled or lapsed.

## (9) Major Connected Transactions of the Company

### 1. Connected Transactions in relation to Daily Operations

#### Continuing connected transactions under Chapter 14A of the Hong Kong Listing Rules

During the Reporting Period, pursuant to the Mutual Product Supply and Sales Services Framework Agreement entered into with the controlling shareholder of the Company, Sinopec Corp., and the de facto controller, Sinopec Group on 23 October 2019, and the Comprehensive Services Framework Agreement entered into with the Sinopec Group on 23 October 2019, the Company purchased raw materials from Sinopec Group, Sinopec Corp. and their associates and sold petroleum products and petrochemical products and leased properties to Sinopec Corp. and its associates, and Sinopec Corp. and its associates provided agency sales services for petrochemical products to the Company. Pursuant to the Comprehensive Services Framework Agreement entered into with the Company's de facto controller Sinopec Group on 23 October 2019, the Company obtained construction and installation, engineering design, petrochemical industry insurance and financial services from Sinopec Group and its associates. The Mutual Product Supply and Sales Services Framework Agreement and the Comprehensive Services Framework Agreement shall be valid for three years until 31 December, 2022.

The transactions under the abovementioned Mutual Product Supply and Sales Services Framework Agreement and the Comprehensive Services Framework Agreement constituted continuing connected transactions under Chapter 14A of the Hong Kong Listing Rules and constituted ongoing connected transactions under the Shanghai Listing Rules. The Company disclosed the two agreements and the respective continuing connected transactions (i.e. ongoing connected transactions, same below) under the agreements in an announcement dated 23 October 2019 and a circular dated 13 November 2019. These two agreements and the respective continuing connected transactions under the agreements together with the associated annual caps from 2020 to 2022 were considered and approved at the first extraordinary general meeting for 2019 held on 10 December 2019.

During the Reporting Period, the relevant continuing connected transactions were conducted in accordance with the terms of the Mutual Product Supply and Sales Services Framework Agreement and the Comprehensive Services Framework Agreement. The transaction amounts of the relevant connected transactions did not exceed the caps in relation to the respective continuing connected transactions approved at the first extraordinary general meeting for 2019.

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## MAJOR EVENTS *(continued)*

The table below sets out the amounts of the continuing connected transactions of the Company with Sinopec Corp. and Sinopec Group during the Reporting Period:

| Unit:RMB'000 |  |  |  |  |
| --- | --- | --- | --- | --- |
| Type of connected transaction | Connected person | Annual cap for 2022 | Transaction amount during the Reporting Period | Percentage of the transaction amount of the same type of transaction (%) |
| Mutual Product Supply and Sales Services Framework Agreement |  |  |  |  |
| Purchases of raw materials | Sinopec Group, Sinopec Corp. and their associates | 78,591,000 | 38,879,702 | 78.40% |
| Sales of petroleum products and petrochemicals | Sinopec Corp. and its associates | 71,274,000 | 30,243,960 | 65.95% |
| Property leasing | Sinopec Corp. and its associates | 37,000 | 17,255 | 41.93% |
| Agency sales of petrochemical products | Sinopec Corp. and its associates | 169,000 | 58,868 | 100.00% |
| Comprehensive Services Framework Agreement |  |  |  |  |
| Construction, installation and engineering design services | Sinopec Group and its associates | 1,004,000 | 706,002 | 50.47% |
| Petrochemical industry insurance services | Sinopec Group and its associates | 140,000 | 52,906 | 100.00% |
| Financial services | Sinopec Group and its associates | 200,000 | 2,808 | 0.85% |
| Storage services agreement |  |  |  |  |
| Storage services | Associate of Sinopec Group (Baishawan Branch) | 114,000 | 58,056 | 92.59% |

32

Sinopec Shanghai Petrochemical Company Limited

# MAJOR EVENTS (continued)

The Company entered into an oil tanks lease agreement with the Sinopec Reserve and the Baishawan Branch on 31 December 2020, pursuant to which the Baishawan Branch provides storage services to the Company for a term of three years commencing from 1 January 2021 to 31 December 2023. The annual aggregate amount payable by the Company to the Baishawan Branch in 2021, 2022 and 2023 shall not exceed RMB114.0 million (VAT inclusive). The oil tanks lease agreement was considered and approved at the fourth meeting of the tenth session of the Board of Directors held on 8 December 2020. The relevant announcement was published on the websites of the Shanghai Stock Exchange and the Hong Kong Stock Exchange, respectively, on 8 December 2020 and 11 December 2020, and was published on the Shanghai Securities News and the China Securities Journal on 9 December 2020.

The transactions between the Company and Sinopec Group, Sinopec Corp. and their associates as disclosed in Note 20 to the financial statements prepared under IFRS in the 2022 Interim report of the Company constituted continuing connected transactions under Chapter 14A of the Hong Kong Listing Rules. The above-mentioned continuing connected transactions have been disclosed in accordance with Chapter 14A of the Hong Kong Listing Rules.

## 2. Credits and Liabilities with Connected Parties

Unit: RMB'000

| Connected party | Connected relationship | Funds provided to connected parties |  |  | Funds provided by connected parties to the listed company |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | Opening balance | Amount of transaction | Closing balance | Opening balance | Amount of transaction | Closing balance |
| Sinopec Corp., its subsidiaries, joint ventures and associates & Sinopec Group and its subsidiaries | Controlling shareholder, de facto controller and their related parties | 61,131 | 196,400 | 257,531 | 981,669 | 773,063 | 1,754,732 |

Note 1: The period-end balance of the funds provided by the Group to the connected parties was mainly unsettled receivables arising from the provision of services and pipeline leases to Sinopec Corp., its subsidiaries and associates, and entrusted loans provided by the Group to the joint venture.

Note 2: The period-end balance of the funds provided by the connected parties to the Group was mainly unsettled payables arising from the provision of construction, installation and engineering design services by Sinopec Group and its subsidiaries, and long-term borrowings arising from the Group's acceptance of loans from Sinopec Corp and its subsidiaries.

The prices of the continuing connected transactions conducted by the Company with Sinopec Group, Sinopec Corp. and their associates were determined, upon negotiations between both parties, on the basis of (i) state tariffs; (ii) state guidance prices; or (iii) market prices. Such connected transactions were entered into in line with the Company's production and operational needs. Accordingly, the aforementioned continuing connected transactions did not have a significant adverse impact on the Company's independence.

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## MAJOR EVENTS *(continued)*

### 3. Financial Business between the Company and the Related Financial Company, the Company's Holding Financial Company and Related Parties

#### (1) Deposit business

Unit: RMB'0,000

| Related Party | Relationship | Maximum daily deposit limit | Deposit interest rate range | Opening balance | Amount incurred in the current period |  | Ending balance |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  | Total deposit amount in the current period | Total withdrawn amount in current period |  |
| Sinopec Finance Co., Ltd | Subsidiaries of the ultimate holding company | None | 0.35%-1.61% | 324.30 | 7,301,466.14 | 7,301,529.20 | 261.24 |
| Total | / | / | / | 324.30 | 7,301,466.14 | 7,301,529.20 | 261.24 |

Note: as of 30 June 2022, the deposit amount and ending balance between the Company and its subsidiaries and Sinopec Finance Co., Ltd. were all current deposits.

#### (2) Loan business

Unit: RMB'0,000

| Related Party | Relationship | Loan limit | Loan interest rate range | Opening balance | Amount incurred in the current period |  | Ending balance |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  | Total loan amount in the current period | Total repayment amount of the current period |  |
| Sinopec Finance Co., Ltd | Subsidiaries of the ultimate holding company | None | 1.08% | 70,000.00 | - | - | 70,000.00 |
| Total | / | / | / | 70,000.00 | - | - | 70,000.00 |

34

Sinopec Shanghai Petrochemical Company Limited

## MAJOR EVENTS *(continued)*

### (3) Credit business or other financial business

Unit: RMB'0,000

| Related Party | Relationship | Business type | Total amount | Actual amount |
| --- | --- | --- | --- | --- |
| Sinopec Finance Co., Ltd | Subsidiaries of the ultimate holding company | Issue acceptance bill | 47,500.00 | 0.00 |
| Sinopec Finance Co., Ltd | Subsidiaries of the ultimate holding company | Bill discount | 0.00 | 5,175.98 |

## (10) Material Contracts and Their Performance

### 1. Entrustments, Sub-contracts and Lease Arrangements

During the Reporting Period, the Company had no entrustments, sub-contracts or lease arrangements that generated 10% or more (including 10%) of the gross profit of the Company for the said period.

### 2. Guarantees

The Company did not provide guarantees during the Reporting Period.

### 3. Other Material Contracts

There were no other material contracts during the Reporting Period.

## (11) Environmental Information and Social Responsibilities

### 1. Environmental protection situation of key pollutant-discharging companies and their subsidiaries as announced by the Ministry of Environmental Protection

The Company is one of the polluting enterprises under Intensive Monitoring and Control by the State proclaimed by the Ministry of Environmental Protection. According to the Measures for Self-Monitoring and Information Disclosure of the Enterprises subject to Intensive Monitoring and Control by the State (Trial Implementation), the Company has disclosed to the public on the website of the National Pollution Source Monitoring Information Management and Sharing Platform about the sites of the pollution sources, the types and concentration of pollutants which are subject to intensive monitoring and control by the state.

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# MAJOR EVENTS *(continued)*

The Company, as a manufacturing enterprise in the petrochemical industry, consistently places environmental protection as its priority. It has continually received ISO14001 Environmental Management System Certification. In January 2013, it obtained the certifications from the Shanghai Audit Center of Quality in different areas, including quality (GB/T19001:2008), environment (GB/T24001: 2004) and occupational health and safety (GB/T28001: 2011). On 16 September 2019, it was approved the continuing use of the title of “All-China Environmentally Friendly Enterprise”. On 27 December 2019, the Company was awarded the title of “Sinopec Green Enterprise for 2019” by the HSSE Committee of China Petrochemical Corporation. In 2020, the Company retained the title of “Sinopec Green Enterprise”.

In the first half of 2022, the Company actively practised the green development concept, stepped up pollution prevention and control efforts, drove clean production, vigorously implemented the “general manager’s order No.1”, carried out green enterprise action plan in a quality manner, restarted green enterprise development and continued to promote green infrastructure construction. It ensured the effective operation of HSE management system and reinforced its capability to execute HSE system. The Company strengthened source control and implemented environmental protection standards which were stricter than national, industrial and local standards, thereby reducing emission volume and intensity as well as preventing related impact. Strict measures were taken to ensure pollutants to be discharged in an orderly manner and meet the discharge standards so as to contribute its efforts to improve the regional ecological environment quality.

## 2. Pollutant treatment information

In the first half of 2022, the chemical oxygen demand and the emissions of ammonia nitrogen, sulphur dioxide and nitrogen oxide arising from the Company’s key pollutants accounted for 50.39%, 19.53%, 39.18% and 46.58% respectively of the limits set out in the responsibility statement. The compliance rate of the Company’s discharged wastewater was 100%, the compliance rate of controlled exhaust gas emission was 100% (excluding the impact of the accident on 18 June), and the proper disposal rate of hazardous waste was 100%. They met the requirements of the environmental protection assessment indicators listed in the energy and environmental responsibility statement of Sinopec Group.

## 3. Construction and operation of pollution prevention facilities

The Company strengthened the supervision of daily operation of environmental protection facilities, and the operating parameters of environmental protection facilities were included in production management indicators. The environmental protection equipment was listed as important production equipment, and the online environmental analyzers were included in the equipment management system.

36

Sinopec Shanghai Petrochemical Company Limited

# MAJOR EVENTS (continued)

The ultra-low emission modification of all thermoelectric boiler of thermal power department had been completed up to November 2018. In the first half of 2022, the emissions of soot, sulphur dioxide and nitrogen oxide produced by the thermoelectric boiler met the requirements of the Air Pollutant Emission Standard for Coal-fired Power Plants in Shanghai (DB31/963-2016) (namely soot≤10mg/m3, SO2≤35 mg/m3, NOx≤50 mg/m3). The sulphur dioxide emissions of 3 sets of sulphur recovery units met the emission standard (SO2≤100 mg/m3) stipulated in the Pollutant Emission Standards for Petroleum Refining Industry (GB31570-2015). The pollutant emissions of the catalytic cracking unit met the emission standards stipulated in the Pollutant Emission Standards for Petroleum Refining Industry (GB31570-2015) (soot≤30mg/m3, SO2≤50 mg/m3, NOx≤100 mg/m3). The pollutant emission of the process heating furnace met the emission standards specified in the Pollutant Emission Standards for Petroleum Refining Industry (GB31570-2015) and Pollutant Emission Standard for Petrochemical Industry (GB31571-2015) (soot≤20mg/m3, SO2≤50 mg/m3, NOx≤100 mg/m3).

Sinopec Shanghai Environmental Protection and Water Supplies Department had two sets of biochemical sewage treatment devices (1# sewage treatment plant and 3# sewage treatment plant), with design sewage treatment capacity of 84,000 tons/day. After the sewage was treated and met the required standards, it was discharged to Hangzhou Bay through the deep-sea discharge pipe.

In the first half of 2022, the Environmental Protection and Water Supplies Department handled 10.9177million tons of sewage through secondary biochemical treatment, which was equivalent to approximately 59,800tons/day. The total effluent concentration of chemical oxygen demand (CODcr) and ammonia nitrogen was 30.42mg/l and 0.58mg/l respectively; the sewage treatment facilities were 100% intact and the operation rate was 100%.

## 4. Environmental Impact Assessment and Other Environmental Protection Administrative Licensing of Construction Projects

According to the requirements of laws and regulations such as the Environmental Impact Assessment Law, the Regulations on Environmental Protection Management of Construction Projects and the Classified Management Directory of Environmental Impact Assessment of Construction Projects, the Company actively promoted the principle that environmental protections facilities were designed, developed and put in operation in tandem with construction projects. In the first half of 2022, the 'thermoplastic elastomer project' was approved by Shanghai Jinshan Ecological Environment Bureau (approval number: jinhuanxu [2022] No.22).

The Company's existing sewage discharge licence is valid from 1 January 2021 to 31 December 2025. In 2022, the Company carried out self-monitoring, reporting of pollutant discharge permit implementation reports and information disclosure to strictly comply with the management requirements of sewage discharge licence.

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# MAJOR EVENTS *(continued)*

### 5. Emergency response plan for emergent environmental incidents

According to the three-year validity requirement in the “Administrative Measures for Emergency Preparedness for Environmental Incidents of Sinopec”, the Company completed the revision of the “Shanghai Petrochemical’s Comprehensive Emergency Response Plan for Environmental Emergencies” and filed a report to Shanghai Municipal Bureau of Ecology and Environment in December 2019. Its comprehensive plan covers 11 areas, including “Corporate Profile”, “Emergency Organization System and Responsibility”, “Environmental Risk Analysis”, “Internal Alarm Mechanism” and “Emergency Response”. The specific emergency plan includes 6 contingency plans, including “Specific Emergency Plan for Water Environment Risk”, “Specific Emergency Plan for Long-Distance Pipeline Leakage”, “Specific Emergency Response Plan for Chemicals (Including Hazardous Waste) Leakage Incident”, “Specific Emergency Response Plan for Oil and Gas Pipeline Leakage Incident”, “Shanghai Petrochemical Specific Emergency Plan for Soil Pollution Prevention”, “Shanghai Petrochemical Specific Emergency Plan for Hazardous Waste Disposal”.

In the first half of 2022, the Company studied the “Notice on Completing Risk Assessment of Environmental Incidents in 2022”, the “Sinopec’s Guide on Risk Assessment of Environmental Incidents (March 2022)” and the “Evaluation Form on Risk Index for Environmental Incidents” issued by Sinopec Group. At present, the Company has 0 extremely high environmental risk source, 17 high environmental risk sources, 52 relatively high environmental risk sources, 76 medium environmental risk sources, and 12 low environmental risk sources. Total environmental risk sources are 157.

The Company carried out regular environmental emergency drills. At 15:10 on 6 May 2022, the Company carried out the drill for leakage and fire emergency at reflux pump E-GA-406B seal of propylene distillation column in 2# olefin complex operated by Shanghai Petrochemical’s Olefin Division. The emergency applied the “On-site Emergency Plan for Leakage of Reflux Pump E-GA-406B of Propylene Distillation Column at Olefin Complex”, the “Comprehensive Emergency Response Plan of Shanghai Petrochemical”, the “Specific Emergency Plan for Fire and Explosion Accidents”, the “Specific Emergency Plan for Hazardous Chemicals (with major hazard sources) Accidents” and the “Shanghai Petrochemical’s Comprehensive Emergency Response Plan for Environmental Emergencies”. The drill proved that the aforementioned emergency plans were sufficient and effective.

**38** Sinopec Shanghai Petrochemical Company Limited

# MAJOR EVENTS (continued)

### 6. Environmental self-monitoring programme

In accordance with Sinopec Shanghai's 'Self-Monitoring Program for Pollutant Discharge Permit', 'Sinopec's Provisions on the Management of Environmental Monitoring' and 'Sinopec Shanghai's Provisions on the Management of Environmental Monitoring', the Company organized and published the Shanghai Petrochemical's 2021 Environmental Monitoring Plan and Emission Implementation Standards at the end of 2020. They covered the following nine areas: water quality (rain water) monitoring plan, air monitoring plan (atmospheric PM$_{10}$, unorganized emission monitoring), exhaust gas monitoring plan, noise monitoring plan, radioactive instrument monitoring plan, water quality (sewage) monitoring plan, soil and groundwater monitoring plan. They monitored the Company's various pollution sources such as sewage, unpolluted water, waste gas, noise and radioactivity, as well as environmental quality monitoring of the atmosphere and groundwater. Daily environmental monitoring was carried out according to the monitoring plan. In the first half of 2022, a total of 10,309 items of water quality data (including 480 items from outsourced projects), 4,753 items of air and waste gas data (including 1,083 items from outsourced projects) and 200 items of noise data were monitored, with the compliance rate of 100%.

### 7. Measures and effects taken to reduce carbon emissions during the reporting period

The Thermal Power Department applied biomass fuel-blended combustion for CFB boiler. In the first half of 2022, 5,045 tons of biomass fuel were used for co-combustion. The cumulative coupled power generation was 9.39 million kWh, and the CO$_{2}$ emission was reduced by 7,668 tons. During the overhaul period in 2022, 3# diesel hydrogenation, 1# delayed coking, air preheater of medium pressure hydrocracking unit, and 5# unit of the thermal power department were renovated for energy-saving. With an emphasis on carbon recovery and carbon capture, the Company sold CO$_{2}$ generated by its ethylene glycol unit to Shanghai Petrochemical Iwatani Gas Development Co., Ltd. for production of food-grade CO$_{2}$. A total of 31,851 tons of CO$_{2}$ were recovered in the first half of the year.

### 8. Administrative penalties for environmental problems during the Reporting Period

During the Reporting Period, the company was not subject to administrative punishment for environmental problems.

### 9. Consolidate and expand the achievements in poverty alleviation and Rural Revitalization

The Company actively participated in the revitalization of rural areas. It cooperated with Jinshan government and focused on poverty alleviation in the impoverished areas of Pu'er City, Yunnan Province. In the first half of 2022, more than RMB3.62 million was raised for the poverty relief through consumption. Moreover, a working group for alleviating poverty through education was established. It partnered with Bange Middle School in Tibet for promoting this cause, and carried out teacher training for paired schools and activities for selection of the best rural teachers.

2022 Interim Report

39

## MAJOR EVENTS (continued)

### (12) Issued Corporate Bonds

#### 1. Basic information of debt financing instruments of non-financial enterprises

| Bond name | Abbreviation | Code | Issue date | Value date | Due date | Bond balance | Interest rate (%) | Repayment of principal and interest | Trading place | Investor suitability arrangements (if any) | Trading mechanism | Is there any risk of termination of listing |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Phase I ultra short term financing bonds of Sinopec Shanghai Petrochemical Co., Ltd. in 2022 | 22 Shanghai Petrochemical SCP001 | 012280265 | 17 January 2022 | 18 January 2022 | 18 May 2022 | 0 | 2.35% | One time repayment of principal and interest upon maturity | Inter bank market clearing house | The investors who subscribe for the current ultra short-term financing bonds are domestic qualified institutional investors (unless otherwise stipulated by national laws, regulations and departmental rules) | The current ultra short-term financing bonds can be circulated and transferred in the national inter-bank bond market on the working day next to the creditor's right registration date. In accordance with the relevant provisions promulgated by the National Interbank Funding Center. | No |
| Phase II ultra short term financing bonds of Sinopec Shanghai Petrochemical Co., Ltd. in 2022 | 22 Shanghai Petrochemical SCP002 | 012280264 | 3 March 2022 | 7 March 2022 | 5 July 2022 | 1.5 billion | 2.01% | One time repayment of principal and interest upon maturity | Inter bank market clearing house | The investors who subscribe for the current ultra short-term financing bonds are domestic qualified institutional investors (unless otherwise stipulated by national laws, regulations and departmental rules) | The current ultra short-term financing bonds can be circulated and transferred in the national inter-bank bond market on the working day next to the creditor's right registration date. In accordance with the relevant provisions promulgated by the National Interbank Funding Center. | No |

40 Sinopec Shanghai Petrochemical Company Limited

## MAJOR EVENTS *(continued)*

### 2. Accounting data and financial indicators of the Group as of the end of the reporting period

RMB'000

| Main indicators | As at 30 June 2022 | As at 31 December 2021 | Change (%) | Main reason for change |
| --- | --- | --- | --- | --- |
| Current ratio | 132.40% | 132.52% | -0.12% |  |
| Quick ratio | 80.15% | 94.63% | -14.48% | Affected by the rise in international crude oil prices, the Company's inventory increased. |
| Asset liability ratio (%) | 31.72% | 35.38% | -3.66% |  |

|  | For the six months ended 30 June 2022 | For the six months ended 30 June 2021 | Change (%) | Main reason for change |
| --- | --- | --- | --- | --- |
| Net profit/(loss) attributable to shareholders of the parent company after deducting non recurring profit and loss | -402,544.00 | 1,169,426.00 | -134.42% | In 2022, the crude oil price rose sharply, the chemical product market continued to be depressed, and the price increase was less than that of raw materials. The Company suffered losses. |
| EBITDA total debt ratio | 0.11 | 0.55 | -80.00% | In 2022, the crude oil price rose sharply, the chemical product market continued to be depressed, and the price increase was less than that of raw materials. The Company suffered losses. |
| Interest cover | -7.84 | 40.45 | -119.38% | In 2022, the crude oil price rose sharply, the chemical product market continued to be depressed, and the price increase was less than that of raw materials. The Company suffered losses. |
| Cash interest cover | -127.87 | -62.39 | -104.95% | In 2022, the crude oil price rose sharply, the chemical product market continued to be depressed, and the price increase was less than that of raw materials. The Company suffered losses. |
| EBITDA interest cover | 9.68 | 64.96 | -85.10% | In 2022, the crude oil price rose sharply, the chemical product market continued to be depressed, and the price increase was less than that of raw materials. The Company suffered losses. |
| Loan repayment rate (%) | 100% | 100% | - | There is no change in the current period |
| Interest coverage rate (%) | 100% | 100% | - | There is no change in the current period |

2022 Interim Report

41

# CHANGE IN SHARE CAPITAL OF ORDINARY SHARES AND SHAREHOLDERS

## (1) Changes in Share Capital of Ordinary Shares during the Reporting Period

### 1. Changes in Share Capital of Ordinary Shares during the Reporting Period

During the Reporting Period, there was no change in the ordinary shares of the Group.

## (2) Issue of Shares

### 1. Issue of Shares during the Reporting Period

Information about the Group's issuing debt financing instruments of non-financial enterprises during the Reporting Period is listed on Page 40. The Group didn't issue any other shares during this Period.

### 2. Changes in the Company's Total Number of Ordinary Shares, Shareholding Structure and the Company's Assets and Liabilities

During the Reporting Period, there was no changes in the Company's total number of shares, shareholding structure and Company's assets and liabilities due to reasons such as stock dividend and allotment of shares.

### 3. Employees Shares

The Company had no employees shares as at the end of the Reporting Period.

## (3) Shareholders

### 1. Total Number of Shareholders

Number of shareholders of ordinary shares as at the end of the Reporting Period

105,475

42 Sinopec Shanghai Petrochemical Company Limited

# CHANGE IN SHARE CAPITAL OF ORDINARY SHARES AND SHAREHOLDERS

## 2. Shareholding of the Top Ten Shareholders as at the End of the Reporting Period

Unit: Shares

Shareholding of the top ten shareholders Unit: Shares

| Name of shareholders (Full name) | Class of shares | Increase/decrease of shareholding during the Reporting Period (shares) | Number of shares held at the end of the Reporting Period (shares) | Percentage of Shareholding (%) | Number of shares held with selling restrictions (shares) | Pledged/frozen |  | Nature of shareholders |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  | Status of shares | Number of shares |  |
| China Petroleum & Chemical Corporation | A shares | 0 | 5,459,455,000 | 50.44 | 0 | None | 0 | State-owned legal person |
| HKSCC (Nominees) Limited | H shares | -1,331,000 | 3,452,508,000 | 31.90 | 0 | Unknown | - | Overseas legal person |
| HKSCC Limited | A shares | -37,758,402 | 77,391,306 | 0.72 | 0 | None | 0 | Overseas legal person |
| Wang Lei | A shares | -11,535,500 | 56,120,300 | 0.52 | 0 | None | 0 | Domestic natural person |
| GF Fund - Agricultural Bank of China - GF CSI Financial Asset Management Plan | A shares | -19,179,415 | 45,222,300 | 0.42 | 0 | None | 0 | Others |
| Dacheng Fund - Agricultural Bank of China - Dacheng CSI Financial Asset Management Plan | A shares | -1,690,831 | 43,531,469 | 0.40 | 0 | None | 0 | Others |
| China Southern Fund- Agricultural Bank of China - China Southern CSI Financial Asset Management Plan | A shares | 0 | 43,083,700 | 0.40 | 0 | None | 0 | Others |
| Yinhua Fund- Agricultural Bank of China - Yinhua CSI Financial Asset Management Plan | A shares | -31,984 | 43,051,716 | 0.40 | 0 | None | 0 | Others |
| E Fund Fund- Agricultural Bank of China - E Fund CSI Financial Asset Management Plan | A shares | -45,050 | 43,038,700 | 0.40 | 0 | None | 0 | Others |
| Bosera Fund - Agricultural Bank of China - Bosera CSI Financial Asset Management Plan | A shares | -855,789 | 42,675,700 | 0.39 | 0 | None | 0 | Others |
| Note on connected relations or acting in concert of the above shareholders | Among the above-mentioned shareholders, China Petroleum & Chemical Corporation ('Sinopec Corp.'), a State-owned legal person, does not have any connected relationship with the other shareholders, and does not constitute an act-in-concert party under the Administrative Measures on Acquisition of Listed Companies. Among the above-mentioned shareholders, HKSCC (Nominees) Limited is a nominee. Apart from the above, the Company is not aware of any connected relationship among the other shareholders, or whether any other shareholder constitutes an acting-in-concert party under the Administrative Measures on Acquisition of Listed Companies. |  |  |  |  |  |  |  |

Note: Sinopec Group held 44,660,000 H shares of the Company through its overseas wholly-owned subsidiary Shengjun International Investment Co., Ltd., accounting for 0.4126% of the total shares of the Company. These shares were included in the total shares held by HKSCC (Nominees) Limited.

2022 Interim Report

43

# CHANGE IN SHARE CAPITAL OF ORDINARY SHARES AND SHAREHOLDERS

## (4) Change in Controlling Shareholder or De Facto Controller

During the Reporting Period, there was no change in the controlling shareholder or the de facto controller of the Company.

## (5) Interests and Short Positions of the Substantial Shareholders of the Company in Shares and Underlying Shares of the Company

As at 30 June 2022, so far as was known to the Directors or chief executive of the Company, the interests and short positions of the Company's substantial shareholders (being those who are entitled to exercise or control the exercise of 5% or more of the voting power at any general meeting of the Company but excluding the Directors, chief executive and Supervisors) in the shares and underlying shares of the Company who are required to disclose their interests pursuant to Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the 'SFO') or as recorded in the register of interests required to be kept under section 336 of the SFO were as set out below:

### Interests in ordinary shares of the Company

| Name of shareholder | Interests held or deemed as held (shares) | Note | Percentage of total issued shares of the Company (%) | Percentage of total issued shares of the relevant class (%) | Capacity |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  | China Petroleum & Chemical Corporation ('Sinopec Corp.') | 5,460,000,000 A shares (L) Shares of legal person |  | (1) | 50.44 (L) | 74.50 (L) | Beneficial owner |
| The Bank of New York Mellon Corporation | 302,534,137 H shares (L) 279,368,500 H shares (S) 23,159,637 H shares (P) | (2) | 2.80(L) 2.58(S) 0.21(P) | 8.66(L) 7.99(S) 0.66(P) | Interests of controlled corporation |  |  |  |  |
| Corn Capital Company Limited | 211,008,000 H shares (L) 200,020,000 H shares (S) | (3) | 1.95 (L) 1.85 (S) | 6.04 (L) 5.72 (S) | Beneficial owner |  |  |  |  |
| Hung Hin Fai | 211,008,000 H shares (L) 200,020,000 H shares (S) | (4) | 1.95 (L) 1.85 (S) | 6.04 (L) 5.72 (S) | Interests of controlled corporation |  |  |  |  |
| Yardley Finance Limited | 200,020,000 H shares (L) | (5) | 1.85 (L) | 5.72 (L) | Secured equity holders |  |  |  |  |
| Chan Kin Sun | 200,020,000 H shares (L) | (5) | 1.85 (L) | 5.72 (L) | Interests of controlled corporation |  |  |  |  |

(L): Long position; (S): Short position; (P): Lending Pool

44

Sinopec Shanghai Petrochemical Company Limited

## CHANGE IN SHARE CAPITAL OF ORDINARY SHARES AND SHAREHOLDERS
(continued)

Note:

(1) Based on the information obtained by the Directors from the website of The Hong Kong Stock Exchange and as far as the Directors are aware, China Petrochemical Corporation directly and indirectly owned 68.31% of the issued share capital of Sinopec Corp as at 30 June 2022. By virtue of such relationship, Sinopec Group is deemed to have an interest in the 5,460,000,000 A shares of the Company directly owned by Sinopec Corp.

(2) All the 302,534,137 H shares (long position) and 279,368,500 H shares (short position) are deemed to be held by The Bank of New York Mellon Corporation, due to control of multiple companies (among which 279,368,500 H shares (short position) are held through physical-settlement unlisted derivatives). Below are the companies indirectly or wholly owned by The Bank of New York Mellon Corporation:

(2.1) All the 6,000 H shares (long position) are held by BNY Mellon, National Association. Since BNY Mellon, National Association is wholly owned by The Bank of New York Mellon Corporation, The Bank of New York Mellon Corporation is deemed to have an interest in the 6,000 H shares (long position) of the Company held by BNY Mellon, National Association.

(2.2) 302,534,137 H shares (long position) and 279,368,500 H shares (short position) of the Company are held directly or indirectly by The Bank of New York Mellon. The Bank of New York Mellon is wholly owned by The Bank of New York Mellon Corporation. Therefore, The Bank of New York Mellon Corporation was deemed to be interested in 302,534,137 H shares (long position) and 279,368,500 H shares (short position) held by The Bank of New York Mellon.

(3) These shares were held by Corn Capital Company Limited. Hung Hin Fai held 100% interests in Corn Capital Company Limited. Pursuant to the SFO, Hung Hin Fai was deemed to be interested in the shares held by Corn Capital Company Limited.

(4) These shares were held by Yardley Finance Limited. Chan Kin Sun held 100% interests in Yardley Finance Limited. Pursuant to the SFO, Chan Kin Sun was deemed to be interested in the shares held by Yardley Finance Limited.

Save as disclosed above, as at 30 June 2022, the Directors have not been notified by any person (other than the Directors, chief executive and Supervisors) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO or as recorded in the register of interests required to be kept by the Company under Section 336 of the SFO.

2022 Interim Report

45

# DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND OTHERS

## (1) Changes in Shareholdings

### 1. Changes in Shareholdings of the Current Directors, Supervisors and Senior Management and those Resigned during the Reporting Period

| Name | Position | Unit:Shares |  |  |
| --- | --- | --- | --- | --- |
|  |  | Number of shares held at the beginning of the Reporting Period | Number of shares held at the end of the Reporting Period | Change in number of shares during the Reporting Period |
| Wan Tao (Appointed on 8 September 2022) | Executive Director and Chairman | Nil | Nil | No change |
| Wu Haijun (Resigned on 8 September 2022) | Executive Director and Chairman | Nil | Nil | No change |
| Guan Zemin | Executive Director, Vice Chairman and President | Nil | Nil | No change |
| Du Jun | Executive Director, Vice President and Chief Financial Officer | Nil | Nil | No change |
| Huang Xiangyu | Executive Director and Vice President | 140,000 | 140,000 | No change |
| Xie Zhenglin | Non-executive Director | Nil | Nil | No change |
| Peng Kun | Non-executive Director | Nil | Nil | No change |
| Li Yuanqin | Independent Non-executive Director | Nil | Nil | No change |
| Tang Song | Independent Non-executive Director | Nil | Nil | No change |
| Chen Haifeng | Independent Non-executive Director | Nil | Nil | No change |
| Yang Jun | Independent Non-executive Director | Nil | Nil | No change |
| Gao Song | Independent Non-executive Director | Nil | Nil | No change |
| Ma Yanhui | Supervisor and Chairman of the Supervisory Committee | Nil | Nil | No change |
| Zhang Feng | Supervisor | 10,000 | 10,000 | No change |
| Chen Hongjun | Supervisor | 31,400 | 31,400 | No change |
| Zhang Xiaofeng | Supervisor | Nil | Nil | No change |
| Zheng Yunrui | Independent Supervisor | Nil | Nil | No change |
| Choi Ting Ki | Independent Supervisor | Nil | Nil | No change |
| Jin Qiang | Vice President | 301,000 | 301,000 | No change |
| Jin Wenmin | Vice President | 175,000 | 175,000 | No change |
| Huang Fei | Vice President | Nil | Nil | No change |
| Liu Gang | Joint Company Secretary, Board Secretary, General Manager Assistant and General Counsel | Nil | Nil | No change |

46 Sinopec Shanghai Petrochemical Company Limited

# DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND OTHERS

### (2) Share Options Held by the Directors, Supervisors and Senior Management during the Reporting Period

During the Reporting Period, the Company's Directors, Supervisors and senior management did not hold Company's share options.

### (3) Changes in Directors, Supervisors and Senior Management during the Reporting Period

| Name | Position | Change | Date of change | Reason |
| --- | --- | --- | --- | --- |
| Jin Qiang | Executive Director | resigned | 15 February 2022 | Job change |
| Jin Wenmin | Executive Director | resigned | 15 February 2022 | Job change |
| Huang Fei | Executive Director | resigned | 15 February 2022 | Job change |

### (4) Interests and Short Positions of the Directors, Chief Executives and Supervisors in the Shares, Underlying Shares and Debentures of the Company or its Associated Corporations

As at 30 June 2022, the interests and short positions of the Directors, chief executive and Supervisors of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or to be recorded in the register of interests required to be kept under Section 352 of the SFO; or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant the 'Model Code for Securities Transactions' set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited ('Hong Kong Listing Rules') were as follows:

2022 Interim Report

47

# DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND OTHERS

## Interests in the Shares and Underlying Shares of the Company

| Name | Position | Number of shares (shares) | Percentage of total issued shares (%) | Percentage of total issued A shares (%) | Capacity |
| --- | --- | --- | --- | --- | --- |
| Huang Xiangyu | Executive Director and Vice President | 140,000 A shares (L) | 0.0013 | 0.0019 | Beneficial owner |
| Zhang Feng | Supervisor | 10,000 A shares (L) | 0.0001 | 0.0001 | Beneficial owner |
| Chen Hongjun | Supervisor | 31,400 A shares (L) | 0.0003 | 0.0004 | Beneficial owner |

(L): Long position

Save as disclosed above, as at 30 June 2022, so far as was known to the Directors, chief executive and Supervisors of the Company, none of the Directors, chief executive or Supervisors of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or its associated corporations which were required to be disclosed or recorded pursuant to the SFO and the Hong Kong Listing Rules as mentioned above.

## (5) Changes in Directors' and Supervisors' Information

During the Reporting Period, disclosure of changes in the information of Directors and Supervisors in accordance with Rule 13.51B(1) of the Hong Kong Listing Rules are set out as below:

1. Mr. Tang Song, independent non-executive director, has no longer served as independent director of Shanghai Qifan Cable Co., Ltd. (listed on Shanghai Stock Exchange, stock code: 605222) since July 2022.

## (6) Audit Committee

On 24 August 2022, the Audit Committee of the Tenth Session of the Board held its eleventh meeting, primarily to review the financial report of the Group for the Reporting Period, and discussed matters relating to the risk management, internal control and financial reporting.

48 Sinopec Shanghai Petrochemical Company Limited

# DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND OTHERS

### **(7) Purchase, Sale and Redemption of the Company's Securities**

During the Reporting Period, the Company did not purchase, sell or redeem any of the Company's securities (for the definition of 'securities', please refer to paragraph 1 of Appendix 16 to the Hong Kong Listing Rules).

### **(8) Compliance with Corporate Governance Code**

During the Reporting Period, the Company applied and complied with all code provisions as set out in the Corporate Governance Code contained in Appendix 14 to the Hong Kong Listing Rules.

### **(9) Compliance with Model Code for Securities Transactions**

The Company has adopted and implemented the Model Code for Securities Transactions to regulate the securities transactions of the Directors and Supervisors of the Company. After making specific enquiries with all Directors and Supervisors of the Company and having obtained written confirmations from each Director and Supervisor, the Company is not aware of any incident of non-compliance with the Model Code for Securities Transactions by the Directors and Supervisors of the Company during the Reporting Period.

The Model Code for Securities Transactions is also applicable to the senior management who may be in possession of unpublished inside information of the Company. The Company is not aware of any incident of non-compliance with the Model Code for Securities Transactions by the senior management of the Company.

2022 Interim Report

49

![img-0.jpeg](img-0.jpeg)

## Review report

to the board of directors of Sinopec Shanghai Petrochemical Company Limited

*(Incorporated in the People’s Republic of China with limited liability)*

## Introduction

We have reviewed the interim financial report set out on pages 51 to 93, which comprises the consolidated statement of financial position of Sinopec Shanghai Petrochemical Company Limited (the “Company”) as of 30 June 2022 and the related consolidated statement of profit or loss, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the condensed consolidated cash flow statement for the six month period then ended and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of an interim financial report to be in compliance with the relevant provisions thereof and International Accounting Standard 34, *Interim financial reporting* issued by the International Accounting Standards Board. The directors are responsible for the preparation and presentation of the interim financial report in accordance with International Accounting Standard 34.

Our responsibility is to form a conclusion, based on our review, on the interim financial report and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

## Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, *Review of interim financial information performed by the independent auditor of the entity*, issued by the Hong Kong Institute of Certified Public Accountants. A review of the interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

## Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial report as at 30 June 2022 is not prepared, in all material respects, in accordance with International Accounting Standard 34, *Interim financial reporting*.

*Certified Public Accountants*

8th Floor, Prince's Building  
10 Chater Road  
Central, Hong Kong

25 August 2022

50

Sinopec Shanghai Petrochemical Company Limited

## A. Condensed Consolidated Interim Financial Information Prepared under International Financial Reporting Standards (unaudited)

### CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE SIX MONTHS ENDED 30 JUNE 2022 - UNAUDITED

(Expressed in Renminbi Yuan)

|  | Note | Six months ended 30 June |  |
| --- | --- | --- | --- |
|  |  | 2022 RMB'000 | 2021 RMB'000 |
| Revenue | 3 | 45,859,205 | 37,088,509 |
| Taxes and surcharges |  | (5,717,033) | (5,453,022) |
| Net sales |  | 40,142,172 | 31,635,487 |
| Cost of sales |  | (40,681,204) | (30,831,925) |
| Gross (loss)/profit | 3 | (539,032) | 803,562 |
| Selling and administrative expenses |  | (179,494) | (209,674) |
| Other operating income |  | 47,661 | 56,169 |
| Other operating expenses |  | (9,448) | (9,689) |
| Other gains - net | 4(b) | (4,522) | 104,556 |
| (Loss)/profit from operations | 3 | (684,835) | 744,924 |
| Finance income | 4(a) | 329,305 | 248,813 |
| Finance expenses | 4(a) | (50,043) | (38,299) |
| Finance income - net |  | 279,262 | 210,514 |
| Share of net (losses)/profits of associates and joint ventures accounted for using the equity method |  | (27,537) | 587,548 |
| (Loss)/profit before taxation |  | (433,110) | 1,542,986 |
| Income tax benefit/(expense) | 5 | 11,780 | (261,344) |
| (Loss)/profit for the period |  | (421,330) | 1,281,642 |
| Attributable to: |  |  |  |
| - Equity shareholders of the Company |  | (426,518) | 1,276,462 |
| - Non-controlling interests |  | 5,188 | 5,180 |
|  |  | (421,330) | 1,281,642 |
| (Losses)/earnings per share |  |  |  |
| Basic | 6 | RMB (0.039) | RMB0.118 |
| Diluted | 6 | RMB (0.039) | RMB0.118 |

The notes on pages 60 to 93 form part of this interim financial report.

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51

# CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2022 - UNAUDITED

(Expressed in Renminbi Yuan)

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 | 2021 |
|  | RMB'000 | RMB'000 |
| (Loss)/profit for the period | (421,330) | 1,281,642 |
| Other comprehensive income for the period (after tax and reclassification adjustments) |  |  |
| Items that are or may be reclassified subsequently to profit or loss |  |  |
| Share of other comprehensive income of associates accounted for using the equity method | (22,558) | 702 |
| Cash flow hedges: net movement in hedging reserve | 296,071 | 51,729 |
| Other comprehensive income for the period | 273,513 | 52,431 |
| Total comprehensive income for the period | (147,817) | 1,334,073 |
| Attributable to: |  |  |
| - Equity shareholders of the Company | (153,005) | 1,328,893 |
| - Non-controlling interests | 5,188 | 5,180 |
| Total comprehensive income for the period | (147,817) | 1,334,073 |

The notes on pages 60 to 93 form part of this interim financial report.

52

Sinopec Shanghai Petrochemical Company Limited

# CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2022 - UNAUDITED

(Expressed in Renminbi Yuan)

|  | Note | At 30 June 2022 RMB'000 | At 31 December 2021 RMB'000 |
| --- | --- | --- | --- |
| Non-current assets |  |  |  |
| Property, plant and equipment | 8 | 10,797,765 | 11,310,032 |
| Right-of-use assets |  | 392,939 | 385,643 |
| Investment property |  | 344,525 | 352,188 |
| Construction in progress | 8 | 4,040,406 | 3,293,177 |
| Investments accounted for using the equity method |  | 3,596,515 | 4,088,888 |
| Deferred tax assets |  | 209,195 | 184,143 |
| Financial assets at fair value through other comprehensive income | 9 | 5,000 | 5,000 |
| Time deposits with banks | 10 | 5,432,203 | 5,581,435 |
| Other non-current assets |  | 849,563 | 787,807 |
|  |  | 25,668,111 | 25,988,313 |
| Current assets |  |  |  |
| Derivative financial assets | 19 | 240,953 | 81,405 |
| Inventories | 11 | 6,547,699 | 5,923,525 |
| Trade receivables | 12 | 67,574 | 77,425 |
| Other receivables | 12 | 138,828 | 47,597 |
| Amounts due from related parties | 12,20(c) | 934,313 | 1,212,331 |
| Prepayments |  | 413,822 | 43,686 |
| Financial assets at fair value through other comprehensive income | 9 | 680,269 | 1,047,690 |
| Financial assets measured at fair value through profit or loss | 13 | 1,009,300 | - |
| Time deposits with banks | 10 | 4,229,565 | 7,386,607 |
| Cash and cash equivalents | 14 | 2,438,650 | 5,112,010 |
|  |  | 16,700,973 | 20,932,276 |

The notes on pages 60 to 93 form part of this interim financial report.

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53

## CONSOLIDATED STATEMENT OF FINANCIAL POSITION *(continued)*

AT 30 JUNE 2022 - UNAUDITED

(Expressed in Renminbi Yuan)

|  | Note | At 30 June 2022 RMB'000 | At 31 December 2021 RMB'000 |
| --- | --- | --- | --- |
| Current liabilities |  |  |  |
| Trade and other payables | 15 | 3,832,648 | 3,095,694 |
| Contract liabilities |  | 371,143 | 424,607 |
| Amounts due to related parties | 15,20(c) | 4,154,686 | 6,304,816 |
| Staff salaries and welfares payable |  | 552,062 | 260,096 |
| Borrowings | 16 | 2,059,600 | 1,559,800 |
| Short-term bonds |  | 1,509,581 | - |
| Lease liabilities |  | 9,894 | 3,229 |
| Derivative financial liabilities | 19 | - | 23,804 |
| Income tax payable |  | 5,994 | 258,466 |
| Current tax liabilities |  | 118,450 | 3,865,231 |
|  |  | 12,614,058 | 15,795,743 |
| Net current assets |  | 4,086,915 | 5,136,533 |
| Total assets less current liabilities |  | 29,755,026 | 31,124,846 |
| Non-current liabilities |  |  |  |
| Borrowings | 16 | 700,000 | 700,000 |
| Lease liabilities |  | 10,350 | 1,384 |
| Deferred tax liabilities |  | 31,947 | 33,344 |
| Deferred income |  | 24,920 | 12,720 |
|  |  | 767,217 | 747,448 |
| NET ASSETS |  | 28,987,809 | 30,377,398 |

The notes on pages 60 to 93 form part of this interim financial report.

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Sinopec Shanghai Petrochemical Company Limited

## CONSOLIDATED STATEMENT OF FINANCIAL POSITION *(continued)*

AT 30 JUNE 2022 - UNAUDITED

(Expressed in Renminbi Yuan)

|  | Note | At 30 June 2022 RMB'000 | At 31 December 2021 RMB'000 |
| --- | --- | --- | --- |
| CAPITAL AND RESERVES |  |  |  |
| Share capital |  | 10,823,814 | 10,823,814 |
| Reserves | 17 | 18,034,982 | 19,418,325 |
| Total equity attributable to equity shareholders of the Company |  | 28,858,796 | 30,242,139 |
| Non-controlling interests |  | 129,013 | 135,259 |
| TOTAL EQUITY |  | 28,987,809 | 30,377,398 |

Approved and authorized for issue by the Board of Directors on 25 August 2022.

**Wu Haijun** *Director*

**Du Jun** *Director*

The notes on pages 60 to 93 form part of this interim financial report.

2022 Interim Report

55

# CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2022 - UNAUDITED

(Expressed in Renminbi Yuan)

|  | Note | Attributable to equity shareholders of the Company |  |  |  | Non- controlling interests RMB'000 | Total equity RMB'000 |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | Share capital RMB'000 | Other reserves RMB'000 | Retained earnings RMB'000 | Total RMB'000 |  |  |
| Balance at 1 January 2021 |  | 10,823,814 | 4,446,339 | 13,927,837 | 29,197,990 | 136,985 | 29,334,975 |
| Changes in equity for the six months ended 30 June 2021: |  |  |  |  |  |  |  |
| Profit for the period |  | - | - | 1,276,462 | 1,276,462 | 5,180 | 1,281,642 |
| Other comprehensive income | 17 | - | 52,431 | - | 52,431 | - | 52,431 |
| Total comprehensive income for the period |  | - | 52,431 | 1,276,462 | 1,328,893 | 5,180 | 1,334,073 |
| Transfer to other reserves |  | - | 2,300,272 | (2,300,272) | - | - | - |
| Dividends proposed and approved | 7 | - | - | (1,082,381) | (1,082,381) | - | (1,082,381) |
| Appropriation of safety production fund | 17 | - | 31,268 | (31,268) | - | - | - |
| Balance at 30 June 2021 and 1 July 2021 |  | 10,823,814 | 6,830,310 | 11,790,378 | 29,444,502 | 142,165 | 29,586,667 |
| Changes in equity for the six months ended 31 December 2021: |  |  |  |  |  |  |  |
| Profit for the period |  | - | - | 796,969 | 796,969 | (2,005) | 794,964 |
| Other comprehensive income | 17 | - | 89,367 | - | 89,367 | - | 89,367 |
| Total comprehensive income for the period |  | - | 89,367 | 796,969 | 886,336 | (2,005) | 884,331 |
| Transfer to other reserves |  | - | 198,536 | (198,536) | - | - | - |
| Amounts transferred from hedging reserve to initial carrying amount of hedged items |  | - | (88,699) | - | (88,699) | - | (88,699) |
| Dividends paid by subsidiaries to non- controlling interests |  | - | - | - | - | (4,901) | (4,901) |
| Appropriation of safety production fund | 17 | - | 9,461 | (9,461) | - | - | - |
| Balance at 31 December 2021 |  | 10,823,814 | 7,038,975 | 12,379,350 | 30,242,139 | 135,259 | 30,377,398 |

The notes on pages 60 to 93 form part of this interim financial report.

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Sinopec Shanghai Petrochemical Company Limited

## CONSOLIDATED STATEMENT OF CHANGES IN EQUITY *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022 - UNAUDITED

(Expressed in Renminbi Yuan)

|  | Note | Attributable to equity shareholders of the Company |  |  |  | Non- controlling interests RMB'000 | Total equity RMB'000 |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | Share capital RMB'000 | Other reserves RMB'000 | Retained earnings RMB'000 | Total RMB'000 |  |  |
| Balance at 1 January 2022 |  | 10,823,814 | 7,038,975 | 12,379,350 | 30,242,139 | 135,259 | 30,377,398 |
| Changes in equity for the six months ended 30 June 2022: |  |  |  |  |  |  |  |
| (Loss)/profit for the period |  | - | - | (426,518) | (426,518) | 5,188 | (421,330) |
| Other comprehensive income | 17 | - | 273,513 | - | 273,513 | - | 273,513 |
| Total comprehensive income for the period |  | - | 273,513 | (426,518) | (153,005) | 5,188 | (147,817) |
| Amounts transferred from hedging reserve to initial carrying amount of hedged items | 19(a)ii | - | (151,817) | - | (151,817) | - | (151,817) |
| Dividends proposed and approved | 7 | - | - | (1,082,381) | (1,082,381) | (11,434) | (1,093,815) |
| Appropriation of safety production fund | 17 | - | 38,672 | (38,672) | - | - | - |
| Others |  | - | 3,860 | - | 3,860 | - | 3,860 |
| Balance at 30 June 2022 |  | 10,823,814 | 7,203,203 | 10,831,779 | 28,858,796 | 129,013 | 28,987,809 |

The notes on pages 60 to 93 form part of this interim financial report.

2022 Interim Report

57

# CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2022 - UNAUDITED

(Expressed in Renminbi Yuan)

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 | 2021 |
|  | RMB'000 | RMB'000 |
| Operating activities |  |  |
| Cash used in operations | (6,035,723) | (2,155,135) |
| Interest paid | (39,711) | (53,828) |
| Income tax paid | (369,399) | (234,417) |
| Net cash used in operating activities | (6,444,833) | (2,443,380) |
| Investing activities |  |  |
| Dividends received from joint ventures and associates | 576,138 | 55,044 |
| Interest received | 218,238 | 235,749 |
| Net proceeds from disposal of property, plant and equipment | 8,882 | 46,860 |
| Cash received from time deposits with maturity less than one year | 5,950,000 | 3,000,000 |
| Cash received from maturity of structured deposits | - | 2,700,000 |
| Cash payment for investment in structured deposits | (1,000,000) | (6,650,000) |
| Cash payment for investment in time deposits | (2,600,000) | (1,000,000) |
| Cash payment for investment in entrusted loans | (150,000) | - |
| Cash payment for investment deposits | (53,500) | - |
| Payment for the purchase of property, plant and equipment and other long-term assets | (1,059,504) | (1,493,860) |
| Payment for investment in an associate and a joint venture | (130,000) | - |
| Other cash flows arising from investing activities | 5,677 | (151) |
| Net cash generated from/(used in) investing activities | 1,765,931 | (3,106,358) |

The notes on pages 60 to 93 form part of this interim financial report.

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Sinopec Shanghai Petrochemical Company Limited

## CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022 - UNAUDITED

(Expressed in Renminbi Yuan)

|  | Note | Six months ended 30 June |  |
| --- | --- | --- | --- |
|  |  | 2022 RMB'000 | 2021 RMB'000 |
| Financing activities |  |  |  |
| Proceeds from borrowings |  | 9,455,000 | 11,879,423 |
| Proceeds from short-term bonds |  | 3,000,000 | - |
| Repayments of borrowings |  | (8,955,200) | (11,867,423) |
| Repayments of short-term bonds |  | (1,500,000) | - |
| Principal elements of lease payments |  | (2,991) | (9,192) |
| Net cash generated from financing activities |  | 1,996,809 | 2,808 |
| Net decrease in cash and cash equivalents |  | (2,682,093) | (5,546,930) |
| Cash and cash equivalents at 1 January |  | 5,112,010 | 6,916,408 |
| Effect of foreign exchange rates changes |  | 8,733 | (2,063) |
| Cash and cash equivalents at 30 June | 14 | 2,438,650 | 1,367,415 |

The notes on pages 60 to 93 form part of this interim financial report.

2022 Interim Report

59

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

(Expressed in Renminbi Yuan unless otherwise indicated)

## 1 General information and basis of preparation

Sinopec Shanghai Petrochemical Company Limited (“the Company”), located in Jinshan District of Shanghai, is one of the largest refining-chemical integrated petrochemical companies in China. It is one of the subsidiaries of China Petroleum & Chemical Corporation (“Sinopec Corp.”). The Company and its subsidiaries (“the Group”) are principally engaged in processing the crude oil into synthetic fibres, resins and plastics, intermediate petrochemical and petroleum products.

This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with International Accounting Standard (“IAS”) 34, *Interim Financial Reporting*, adopted by the International Accounting Standards Board (“IASB”). It was authorized for issue on 25 August 2022.

The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2021 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2022 annual financial statements. Details of any changes in accounting policies are set out in note 2.

The preparation of an interim financial report in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2021 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for a full set of financial statements prepared in accordance with International Financial Reporting Standards (“IFRSs”).

The interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, *Review of interim financial information performed by the independent auditor of the entity*, issued by the Hong Kong Institute of Certified Public Accountants. KPMG’s independent review report to the Board of Directors is included on Page 50.

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Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT** *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 2 Changes in accounting policies

The Group has applied the following amendments to IFRSs issued by the IASB to this interim financial report for the current accounting period:

- Amendments to IAS 16, Property, plant and equipment: *Proceeds before intended use*
- Amendments to IAS 37, *Provisions, contingent liabilities and contingent assets: Onerous contracts - cost of fulfilling a contract*

None of these developments have had a material effect on how the Group's results and financial position for the current or prior periods have been prepared or presented in this interim financial report. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

## 3 Segment information and revenue

### 3.1 Segment information

The Group manages its business by divisions, which are organized by business lines. In view of the fact that the Company and its subsidiaries operate mainly in the PRC, no geographical segment information is presented.

In a manner consistent with the way in which information is reported internally to the Group's chief operating decision maker, Board of Directors, for the purposes of resource allocation and performance assessment, the Group has identified the following five reportable segments. No operating segments have been aggregated to form the following reportable segments.

The basis of segmentation and the basis of measurement of segment profits or losses, and assets and liabilities are consistent with those of the annual financial statements for the year ended 31 December 2021.

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61

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

### 3 Segment information and revenue *(continued)*

#### 3.1 Segment information *(continued)*

| Six months ended 30 June 2022 | Petroleum products | Intermediate petrochemicals | Trading of petrochemical product | Resins and plastics | Synthetic fibres | Others | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 |
| Total segment revenue | 34,221,223 | 11,911,697 | 7,484,773 | 4,350,398 | 230,753 | 730,640 | 58,929,484 |
| Inter segment revenue | (6,703,682) | (5,479,120) | (528,814) | (35,990) | (30) | (322,643) | (13,070,279) |
| Revenue from external customers | 27,517,541 | 6,432,577 | 6,955,959 | 4,314,408 | 230,723 | 407,997 | 45,859,205 |
| Timing of revenue recognition |  |  |  |  |  |  |  |
| - At a point in time | 27,517,541 | 6,432,577 | 6,915,528 | 4,314,408 | 230,723 | 407,997 | 45,818,774 |
| - Over time | - | - | 40,431 | - | - | - | 40,431 |
|  | 27,517,541 | 6,432,577 | 6,955,959 | 4,314,408 | 230,723 | 407,997 | 45,859,205 |
| Segment result - profit/(loss) from operations | 464,776 | (556,193) | 19,821 | (220,997) | (320,684) | (71,558) | (684,835) |
| Impairment of plant and machinery | - | - | - | - | - | - | - |
| As at 30 June 2022 |  |  |  |  |  |  |  |
| Segment assets | 13,099,536 | 4,021,519 | 1,680,894 | 1,288,776 | 2,135,243 | 2,345,589 | 24,571,557 |
| Segment liabilities | 3,798,267 | 1,008,218 | 1,309,209 | 1,226,642 | 549,547 | 38,952 | 7,930,835 |

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Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

(Expressed in Renminbi Yuan unless otherwise indicated)

## 3 Segment information and revenue *(continued)*

### 3.1 Segment information *(continued)*

|  | Petroleum products RMB'000 | Intermediate petrochemicals RMB'000 | Trading of petrochemical product RMB'000 | Resins and plastics RMB'000 | Synthetic fibres RMB'000 | Others RMB'000 | Total RMB'000 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Six months ended 30 June 2021 |  |  |  |  |  |  |  |
| Total segment revenue | 26,212,341 | 9,267,436 | 5,893,808 | 4,731,109 | 781,301 | 667,721 | 47,553,716 |
| Inter segment revenue | (3,796,123) | (5,411,135) | (846,683) | (56,452) | (49,850) | (304,964) | (10,465,207) |
| Revenue from external customers | 22,416,218 | 3,856,301 | 5,047,125 | 4,674,657 | 731,451 | 362,757 | 37,088,509 |
| Timing of revenue recognition |  |  |  |  |  |  |  |
| - At a point in time | 22,416,218 | 3,856,301 | 5,036,097 | 4,674,657 | 731,451 | 362,757 | 37,077,481 |
| - Over time | - | - | 11,028 | - | - | - | 11,028 |
|  | 22,416,218 | 3,856,301 | 5,047,125 | 4,674,657 | 731,451 | 362,757 | 37,088,509 |
| Segment result - profit/(loss) from operations | 942,353 | (92,569) | 33,650 | 300,703 | (374,788) | (64,425) | 744,924 |
| Impairment of plant and machinery | 15,000 | - | - | - | 1,803 | - | 16,803 |
| As at 31 December 2021 |  |  |  |  |  |  |  |
| Segment assets | 13,317,338 | 3,781,785 | 1,348,751 | 1,395,867 | 1,919,194 | 2,700,327 | 24,463,262 |
| Segment liabilities | 9,749,806 | 1,257,436 | 1,257,750 | 1,327,587 | 490,211 | 112,876 | 14,195,666 |

2022 Interim Report

63

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 3 Segment information and revenue *(continued)*

### 3.1 Segment information *(continued)*

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 | 2021 |
|  | RMB'000 | RMB'000 |
| Segment result - (loss)/profit from operations |  |  |
| Petroleum products | 464,776 | 942,353 |
| Intermediate petrochemicals | (556,193) | (92,569) |
| Trading of petrochemical products | 19,821 | 33,650 |
| Resins and plastics | (220,997) | 300,703 |
| Synthetic fibres | (320,684) | (374,788) |
| Others | (71,558) | (64,425) |
| Segment result - (loss)/profit from operations | (684,835) | 744,924 |
| Finance income - net | 279,262 | 210,514 |
| Share of net (losses)/profits of associates and joint ventures accounted for using the equity method | (27,537) | 587,548 |
| (Loss)/profit before income tax | (433,110) | 1,542,986 |

### 3.2 Revenue

The Group's revenue from external customers are substantially all within Mainland China for the six months ended 30 June 2022 and 2021. As at 30 June 2022 and 31 December 2021, assets are also substantially all within Mainland China.

Revenue of approximate RMB29,555,589 thousand (six months ended 30 June 2021: RMB25,082,208 thousand) are derived from a single customer. These revenues are attributable to the petroleum products and other segments.

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Sinopec Shanghai Petrochemical Company Limited

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (continued)

(Expressed in Renminbi Yuan unless otherwise indicated)

### 4 (Loss)/profit before taxation

(Loss)/profit before taxation is arrived at after charging/(crediting):

#### (a) Finance income - net

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 | 2021 |
|  | RMB'000 | RMB'000 |
| Interest income from time deposits with maturity more than 3 months | 261,964 | 202,251 |
| Interest income from time deposits with maturity less than 3 months | 62,652 | 40,451 |
| Others | 4,689 | 6,111 |
| Finance income | 329,305 | 248,813 |
| Interest and finance charges paid/payable for lease liabilities and financial liabilities not at fair value through profit or loss | (60,820) | (41,887) |
| Less: interest expense capitalized into construction in progress | 10,777 | 3,588 |
| Finance expenses | (50,043) | (38,299) |
| Finance income - net | 279,262 | 210,514 |

2022 Interim Report

65

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 4 (Loss)/profit before taxation *(continued)*

### (b) Other gains - net

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Gains from structured deposits (note i) | 9,300 | 45,552 |
| Net (losses)/gains on disposal of property, plant and equipment (note ii) | (5,960) | 62,290 |
| Net gains/(losses) on foreign exchange option/forward contracts | 7,583 | (151) |
| Net losses on commodity swaps contracts not qualified for hedging accounting | (35,188) | - |
| Net foreign exchange gains/(losses) | 20,082 | (1,039) |
| Net losses on selling of financial assets at fair value through other comprehensive income ('FVOCI') | (2,187) | (2,096) |
| Net losses on disposal of inventory (note ii) | (819) | - |
| Gains from entrusted loan receivable | 2,667 | - |
|  | (4,522) | 104,556 |

#### (i) Gains from structured deposits

Structured deposits are financial products issued by banks, return of which are linked to the performance of the embedded index, like foreign exchange rate, interest rate and etc..

#### (ii) The effect of '6.18' No.1 ethylene glycol plant explosion accident

On 18 June 2022, a fire broke out in No.1 ethylene glycol plant of the intermediate petrochemicals segment of the Company, causing a fire on surrounding individual pipelines. The main production facilities of the Group had been shut down after the fire occurred. Net losses due to the fire, including writing off of damaged fixed assets and inventories with amount of RMB7,676 thousand and RMB819 thousand respectively, have been recorded in the account other gains - net, and compensation to casualties amounting to RMB1,010 thousand have been recorded in the account other operating expenses (Six months ended 30 June 2021: Nil).

As of the date of this report, the cause of the accident is under investigation and the production facilities have resumed production.

66

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

(Expressed in Renminbi Yuan unless otherwise indicated)

## 4 (Loss)/profit before taxation *(continued)*

### (c) Other items

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Depreciation of property, plant and equipment | 716,213 | 800,196 |
| Depreciation of right-of-use assets | 16,130 | 17,134 |
| Depreciation of investment properties | 7,661 | 7,663 |
| Amortization of other non-current assets | 136,125 | 112,998 |
| Research and development costs (other than depreciation and amortization) | 34,884 | 25,208 |
| Impairment losses on property, plant and equipment | - | 16,803 |
| Provision of inventory write-down | 177,777 | 63,290 |

## 5 Income tax

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Current tax: |  |  |
| Provision for PRC current income tax for the period | (8,737) | (136,869) |
| Tax filing difference | (54,017) | - |
|  | (62,754) | (136,869) |
| Deferred tax: |  |  |
| Origination and reversal of temporary differences | 74,534 | (124,475) |
|  | 11,780 | (261,344) |

The provision for PRC income tax is calculated at the rate of 25% (six months ended 30 June 2021: 25%) on the estimated taxable income of the six months ended 30 June 2022 determined in accordance with relevant income tax rules and regulations. The Company did not carry out business overseas and therefore does not incur overseas income taxes.

2022 Interim Report

67

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 6 (Losses)/earnings per share

### (a) Basic (losses)/earnings per share

The calculation of basic (losses)/earnings per share is based on the loss attributable to equity shareholders of the Company for the six months ended 30 June 2022 of RMB426,518 thousand (six months ended 30 June 2021: profit of RMB1,276,462 thousand) and 10,823,813,500 shares (six months ended 30 June 2021: 10,823,813,500 shares) in issue during the interim period.

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| (Loss)/profit attributable to equity shareholders of the Company | (426,518) | 1,276,462 |
| Weighted average number of ordinary shares in issue (thousands of shares) | 10,823,814 | 10,823,814 |
| Basic (losses)/earnings per share (RMB per share) | RMB (0.039) | RMB0.118 |

### (b) Diluted (losses)/earnings per share

There were no dilutive potential ordinary shares for the six months ended 30 June 2022 and 2021, therefore diluted (losses)/earnings per share is the same as basic (losses)/earnings per share.

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Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (continued)

(Expressed in Renminbi Yuan unless otherwise indicated)

## 7 Dividends

(i) Dividends payable to equity shareholders of the Company attributable to the interim period

The Board of Directors did not propose any dividend in respect of the six months ended 30 June 2022 (six months ended 30 June 2021: Nil).

(ii) Dividends payable to equity shareholders of the Company attributable to the previous financial year, approved during the interim period

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Final dividend in respect of the previous financial year, approved during the following interim period, of RMB0.10 per ordinary share (six months ended 30 June 2021: RMB0.10 per ordinary share) | 1,082,381 | 1,082,381 |

Pursuant to a resolution passed at the Annual General Meeting held on 22 June 2022, a total dividend of RMB1,082,381 thousand was declared for the year ended 31 December 2021 and subsequently paid in July 2022.

Pursuant to a resolution passed at the Annual General Meeting held on 16 June 2021, a total dividend of RMB1,082,381 thousand was declared for the year ended 31 December 2020 and subsequently paid in July 2021.

## 8 Property, plant and equipment and construction in progress

(a) Acquisitions and disposals of owned assets

During the six months ended 30 June 2022, acquisitions of property, plant and equipment and additions of construction in progress of the Group amounted to RMB59,943 thousand (six months ended 30 June 2021: RMB19,094 thousand) and RMB911,640 thousand (six months ended 30 June 2021: RMB1,173,826 thousand), respectively. Items of property, plant and equipment and construction in progress with an aggregate net book value of RMB15,675,000 were disposed of during the six months ended 30 June 2022 (six months ended 30 June 2021: RMB25,395 thousand), resulting in a loss on disposal of RMB5,960 thousand (six months ended 30 June 2021: gain on disposal of RMB62,290 thousand).

2022 Interim Report

69

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (continued)

(Expressed in Renminbi Yuan unless otherwise indicated)

### 9 Financial assets at fair value through other comprehensive income

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Trade and bills receivable (i) |  |  |
| - Amounts due from related parties (note 12) | - | 25,000 |
| - Others | 680,269 | 1,047,690 |
|  | 680,269 | 1,072,690 |
| Equity investments | 5,000 | 5,000 |
|  | 685,269 | 1,077,690 |

(i) As at 30 June 2022 and 31 December 2021, certain trade receivables and bills receivable were classified as financial assets at FVOCI, as the Group's business model is achieved both by collecting contractual cash flows and selling of these assets.

(ii) As at 30 June 2022, the Group discounted certain bank acceptance bills to banks for cash proceeds and endorsed certain bank acceptance bills to suppliers for settling trade payables of the same amount on a full recourse basis. The Group has derecognized these bills receivable and the payables to suppliers in their entirety. These derecognized bank acceptance bills had a maturity date less than twelve months from the end of the reporting period. In the opinion of the directors, the Group has transferred substantially all the risks and rewards of ownership of these bills to its suppliers, and the Group has limited exposure in respect of the settlement obligation of these bills receivable under the relevant PRC rules and regulations should the issuing banks fail to settle the bills on maturity date. The Group considered the issuing banks of the bills are of good credit rating and the non-settlement of these bills by the issuing banks on maturity is not probable.

As at 30 June 2022, the Group's maximum exposure to loss and undiscounted cash outflow, which is same as the amounts payable by the Group to banks or suppliers in respect of the discounted bills and endorsed bills, should the issuing banks fail to settle the bills on maturity date, amounted to RMB365,224 thousand and RMB274,146 thousand (31 December 2021: RMB156,737 thousand and RMB307,275 thousand) respectively.

70

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 10 Time deposits with banks

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Time deposits with maturity |  |  |
| - More than three months and less than one year | 4,229,565 | 7,386,607 |
| - More than one year | 5,432,203 | 5,581,435 |
|  | 9,661,768 | 12,968,042 |

As at 30 June 2022, interest rates of time deposits with maturity more than three months and less than one year ranged from 3.85% to 4.18% per annum (31 December 2021: 3.40% to 3.50% per annum), which were presented as current assets. Time deposits with maturity of more than one year were time deposits of three years with the interest rates from 3.55% to 4.20% per annum, which were presented as non-current assets in the statement of financial position (31 December 2021: 3.45% to 4.20% per annum).

2022 Interim Report

71

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 11 Inventories

### (a) Inventories in the consolidated statements of financial position comprise:

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Raw materials | 4,123,557 | 4,378,149 |
| Work in progress | 744,423 | 690,341 |
| Finished goods | 1,472,703 | 664,040 |
| Spare parts and consumables | 207,016 | 190,995 |
|  | 6,547,699 | 5,923,525 |

### (b) The analysis of the amount of inventories recognized as expenses and included in profit or loss is as follows:

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Carrying amount of inventories sold | 38,698,220 | 30,768,635 |
| Provision of inventory write-down | 177,777 | 63,290 |
| Cost of inventories directly recognized as research and development expenses | 6,761 | 5,212 |
| Cost of inventories directly recognized as other gains-net | 819 | - |
|  | 38,883,577 | 30,837,137 |

72

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 12 Trade and other receivables

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Trade receivables | 69,721 | 79,413 |
| Less: loss allowance | (2,147) | (1,988) |
|  | 67,574 | 77,425 |
| Amounts due from related parties excluded prepayments and bills receivable | 929,853 | 1,153,111 |
| Less: loss allowance | (2,798) | - |
|  | 927,055 | 1,153,111 |
| Other receivables | 140,898 | 47,737 |
| Less: loss allowance | (2,070) | (140) |
|  | 138,828 | 47,597 |
| Financial assets measured at amortized cost | 1,133,457 | 1,278,133 |
| Amounts due from related parties - prepayments | 7,258 | 34,220 |
| Amounts due from related parties - bills receivables (note 9) | - | 25,000 |
|  | 1,140,715 | 1,337,353 |

Amounts due from related parties mainly represent trade-related balances and dividends receivable, unsecured in nature and bear no interest.

2022 Interim Report

73

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

### 12 Trade and other receivables *(continued)*

The aging analysis based on invoice date of trade receivables and amounts due from related parties excluded prepayments and bills receivable (net of allowance for doubtful debts) is as follows:

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Within one year | 994,629 | 1,230,360 |
| Over one year within two years | - | 27 |
| Over two years | - | 149 |
|  | 994,629 | 1,230,536 |

Movements in the loss allowance account in respect of trade and other receivables during the period is as follows:

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Balance at 1 January | 2,128 | 773 |
| Impairment losses recognized during the period | 4,887 | - |
| Balance at 30 June | 7,015 | 773 |

As at 30 June 2022 and 31 December 2021, no trade receivable was pledged as collateral.

Sales to third parties are generally on cash basis or on letter of credit. Subject to negotiation, credit is generally only available for major customers with well-established trading records.

74

Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT** *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

# **13 Financial assets measured at fair value through profit or loss**

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Structured deposits | 1,009,300 | - |

As at 30 June 2022, financial assets at fair value through profit or loss are mainly structured deposits with banks, which are presented as current assets since they are expected to be collected within 6 months from the end of the reporting period.

# **14 Cash and cash equivalents**

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Cash deposits with a related party (i) | 2,612 | 3,243 |
| Cash at bank and on hand | 2,436,038 | 5,108,767 |
|  | 2,438,650 | 5,112,010 |

i. Cash deposits with a related party were cash deposits at Sinopec Finance Company Limited ("Sinopec Finance").

ii. As at 30 June 2022, cash and cash equivalents situated in Mainland China amounted to RMB2,438,650 thousand (31 December 2021: RMB5,112,010 thousand). Remittance of funds out of Mainland China is subject to relevant rules and regulations of foreign exchange control.

2022 Interim Report

75

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (continued)

(Expressed in Renminbi Yuan unless otherwise indicated)

### 15 Trade and other payables

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Trade payables | 2,166,862 | 1,527,706 |
| Bills payable | 130,464 | 562,593 |
| Amounts due to related parties exclude advances received | 2,915,955 | 4,910,255 |
|  | 5,213,281 | 7,000,554 |
| Dividends payable | 570,512 | 30,577 |
| Construction payable | 348,350 | 487,283 |
| Accrued expenses | 552,070 | 400,391 |
| Other liabilities | 64,390 | 87,144 |
|  | 1,535,322 | 1,005,395 |
| Financial liabilities measured at amortized cost | 6,748,603 | 8,005,949 |
| Amounts due to related parties - advances received | 3,869 | 6,275 |
| Amounts due to related parties - measured at fair value through profit or loss (FVPL) (i) | 1,234,862 | 1,388,286 |
|  | 7,987,334 | 9,400,510 |
| Including: total amount due to related parties (note 20(c)) | 4,154,686 | 6,304,816 |

(i) Amounts due to related parties - measured at FVPL represents the obligation that the Company needs to return the crude oil to its related party with maturity of less than 1 year, which is measured at fair value through profit or loss.

As at 30 June 2022 and 31 December 2021, all trade and other payables of the Group were non-interest bearing, and their fair value, approximated their carrying amounts due to their short maturities.

76

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 15 Trade and other payables *(continued)*

As at 30 June 2022 and 31 December 2021, the ageing analysis of the trade payables (including amounts due to related parties of trading in nature) and bills payable based on invoice date were as follows:

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Within one year | 5,202,374 | 6,990,653 |
| Between one and two years | 1,657 | 9,527 |
| Over two years | 9,250 | 374 |
|  | 5,213,281 | 7,000,554 |

2022 Interim Report

77

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (continued)

(Expressed in Renminbi Yuan unless otherwise indicated)

### 16 Borrowings

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Credit loans due within one year |  |  |
| - Short-term bank loan | 2,059,600 | 1,559,800 |
| Credit loans due over one year but within three years |  |  |
| - Long-term borrowings from a related party (note 20(b)) | 700,000 | 700,000 |
|  | 2,759,600 | 2,259,800 |

#### (a) The analysis of the repayment schedule of borrowings are as follows:

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Within 1 year or on demand | 2,059,600 | 1,559,800 |
| Over one year but within two years | - | - |
| Over two years but within three years | 700,000 | 700,000 |
|  | 2,759,600 | 2,259,800 |

The weighted average interest rate for the Group's short-term bank loan was 2.63% as at 30 June 2022 (31 December 2021: 2.74%). The interest rate of the Group's long-term borrowings was 1.08% as at 30 June 2022 (31 December 2021: 1.08%).

As at 30 June 2022 and 31 December 2021, no borrowings were secured by property, plant and equipment.

78

Sinopec Shanghai Petrochemical Company Limited

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (continued)

(Expressed in Renminbi Yuan unless otherwise indicated)

### 17 Reserves

|  | Legal surplus (note(a)) RMB'000 | Capital surplus (note(b)) RMB'000 | Surplus reserve (note(c)) RMB'000 | Other reserve (note(d)) RMB'000 | Hedging (note 19(a)) RMB'000 | Share premium (note(e)) RMB'000 | Safety production fund (note(f)) RMB'000 | Retained earnings (note(g)) RMB'000 | Total RMB'000 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Balance at 1 January 2021 | 4,072,476 | 13,739 | 101,355 | 6,326 | - | 106,846 | 145,597 | 13,927,837 | 18,374,176 |
| Total comprehensive income for the period attributable to shareholders of the Company | - | - | - | 702 | 51,729 | - | - | 1,276,462 | 1,328,893 |
| Dividends declared and approved in respect of previous year | - | - | - | - | - | - | - | (1,082,381) | (1,082,381) |
| Transfer to legal surplus | 2,300,272 | - | - | - | - | - | - | (2,300,272) | - |
| Appropriation of safety production fund | - | - | - | - | - | - | 31,268 | (31,268) | - |
| Balance at 30 June 2021 and 1 July 2021 | 6,372,748 | 13,739 | 101,355 | 7,028 | 51,729 | 106,846 | 176,865 | 11,790,378 | 18,620,688 |
| Total comprehensive income for the period attributable to shareholders of the Company | - | - | - | 15,937 | 73,430 | - | - | 796,969 | 886,336 |
| Amounts transferred from hedging reserve to initial carrying amount of hedged items | - | - | - | - | (88,699) | - | - | - | (88,699) |
| Transfer to legal surplus | 198,536 | - | - | - | - | - | - | (198,536) | - |
| Appropriation of safety production fund | - | - | - | - | - | - | 9,461 | (9,461) | - |
| Balance at 31 December 2021 and 1 January 2022 | 6,571,284 | 13,739 | 101,355 | 22,965 | 36,460 | 106,846 | 186,326 | 12,379,350 | 19,418,325 |
| Total comprehensive income for the period attributable to shareholders of the Company | - | - | - | (22,558) | 296,071 | - | - | (426,518) | (153,005) |
| Amounts transferred from hedging reserve to initial carrying amount of hedged items | - | - | - | - | (151,817) | - | - | - | (151,817) |
| Dividends declared and approved in respect of previous year | - | - | - | - | - | - | - | (1,082,381) | (1,082,381) |
| Appropriation of safety production fund | - | - | - | - | - | - | 38,672 | (38,672) | - |
| Others | - | 3,860 | - | - | - | - | - | - | 3,860 |
| Balance at 30 June 2022 | 6,571,284 | 17,599 | 101,355 | 407 | 180,714 | 106,846 | 224,998 | 10,831,779 | 18,034,982 |

2022 Interim Report

79

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 17 Reserves *(continued)*

Notes:

(a) Under PRC rules and regulations, the Company and its PRC subsidiaries are required to set aside 10% of the net income determined in accordance with the PRC accounting rules and regulations to a legal surplus reserve. The transfer to this reserve must be made before distribution of any dividend to shareholders.

The legal surplus reserve is non-distributable other than in liquidation and can be used to make good of previous years' losses, if any, and may be utilized for business expansion or converted into ordinary shares by the issuance of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by the shareholders, provided that the balance after such issuance is not less than 25% of the registered capital.

In accordance with PRC rules and regulations, the Company has set aside RMB6,571,284 thousand of legal surplus as of 30 June 2022.

- (b) This reserve represents gifts or grants received from China Petrochemical Corporation, the ultimate parent company and which are required to be included in this reserve fund by PRC regulations.
- (c) The transfer to this reserve from the retained profits is subject to the approval by shareholders at general meetings. Its usage is similar to that of legal surplus reserve.
- (d) Other reserve comprises share of post-acquisition movements in other comprehensive income from associates and joint ventures using the equity methods of accounting with a corresponding adjustment to the carrying amount of the investment.
- (e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
- (f) According to the relevant PRC regulations, the Group is required to transfer an amount to specific reserve for the safety production fund based on the turnover of certain refining and chemicals products. This reserve represents unutilized safety production fund.
- (g) According to the Company's Articles of Association, the reserve available for distribution is the lower of the amount determined under China Accounting Standards for Business Enterprises and the amount determined under IFRS. The Board of Directors did not propose any dividend in respect of the six months ended 30 June 2022 (six months ended 30 June 2021: Nil).

80

Sinopec Shanghai Petrochemical Company Limited

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (continued)

(Expressed in Renminbi Yuan unless otherwise indicated)

### 18 Fair value measurement of financial instruments

The table below analyses the Group's financial instruments carried at fair value as at 30 June 2022 and 31 December 2021 by level of the inputs to valuation techniques used to measure fair value. Such inputs are categorized into three levels within a fair value hierarchy as follows:

- The fair value of financial instruments traded in active markets (such as publicly traded derivatives and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.
- The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
- If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.

|  |  | As at 30 June 2022 |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  | Recurring fair value measurements |  |  |  |
|  | Note | Level 1 | Level 2 | Level 3 | Total |
|  |  | RMB'000 | RMB'000 | RMB'000 | RMB'000 |
| Financial assets |  |  |  |  |  |
| Financial assets measured at fair value through profit or loss |  |  |  |  |  |
| - structured deposits | 13 | - | - | 1,009,300 | 1,009,300 |
| Financial assets at fair value through other comprehensive income |  |  |  |  |  |
| - Trade and bills receivable | 9 | - | 680,269 | - | 680,269 |
| - Equity investments | 9 | - | - | 5,000 | 5,000 |
| - Commodity swaps contracts | 19 | - | 240,953 | - | 240,953 |
|  |  | - | 921,222 | 1,014,300 | 1,935,522 |
| Amounts due to related parties - measured at fair value through profit or loss (FVPL) |  |  |  |  |  |
|  |  | - | 1,234,862 | - | 1,234,862 |

2022 Interim Report

81

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

(Expressed in Renminbi Yuan unless otherwise indicated)

### 18 Fair value measurement of financial instruments *(continued)*

|  |  | As at 31 December 2021 |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  | Recurring fair value measurements |  |  |  |
|  | Note | Level 1 | Level 2 | Level 3 | Total |
|  |  | RMB'000 | RMB'000 | RMB'000 | RMB'000 |
| Financial assets |  |  |  |  |  |
| Financial assets measured at fair value through profit or loss |  |  |  |  |  |
| - Commodity swaps contracts | 19 | - | 32,791 | - | 32,791 |
| Financial assets at fair value through other comprehensive income |  |  |  |  |  |
| - Trade and bills receivable | 9 | - | 1,072,690 | - | 1,072,690 |
| - Equity investments | 9 | - | - | 5,000 | 5,000 |
| - Commodity swaps contracts | 19 | - | 48,614 | - | 48,614 |
|  |  | - | 1,154,095 | 5,000 | 1,159,095 |
| Financial liabilities |  |  |  |  |  |
| Financial liabilities measured at fair value through profit or loss |  |  |  |  |  |
| - Commodity swaps contracts | 19 | - | 23,804 | - | 23,804 |
|  |  | - | 23,804 | - | 23,804 |
| Amounts due to related parties - measured at fair value through profit or loss (FVPL) |  |  |  |  |  |
|  |  | - | 1,388,286 | - | 1,388,286 |

#### Valuation techniques and inputs used in Level 2 fair value measurements

The fair value of commodity swaps contract is the estimated amount that the Group would receive or pay to terminate the swap at the end of the reporting period, taking into account the current interest rates and the current creditworthiness of the swap counterparties.

The fair value of trade and bills receivable is estimated as the present value of the future cash flows, discounted at the market interest rates at the balance sheet date.

The Group uses discounted cash flow model with inputted foreign exchange rate, which were influenced by historical fluctuation and the probability of market fluctuation, to evaluate the fair value of the structured deposits classified as Level 3 financial assets.

82

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 18 Fair value measurement of financial instruments *(continued)*

### Valuation techniques and inputs used in Level 2 fair value measurements *(continued)*

The fair value of amounts due to related parties is the estimated amount that the Group would settle the liability by returning certain quantity of crude oil at the end of the reporting period, referring to market price of the related crude oil. As at 30 June 2022, if market price of crude oil had risen/fallen by 10% while all other variables had been held constant, the Group's net profit would have decreased/increased by approximately RMB83,814 thousand (31 December 2021: RMB89,787 thousand).

During the six month period ended 30 June 2022, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3. The Group's policy is to recognize transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

The following table presents the changes in level 3 items for the period ended 30 June 2022:

|  | Equity investments RMB'000 | Structured deposits RMB'000 | Total RMB'000 |
| --- | --- | --- | --- |
| As at 1 January 2021 | 5,000 | - | 5,000 |
| Acquisitions | - | 6,650,000 | 6,650,000 |
| Disposals | - | (2,700,000) | (2,700,000) |
| Fair value change | - | 23,343 | 23,343 |
| As at 30 June 2021 | 5,000 | 3,973,343 | 3,978,343 |
| Acquisitions | - | 1,500,000 | 1,500,000 |
| Disposals | - | (5,450,000) | (5,450,000) |
| Fair value change | - | (23,343) | (23,343) |
| As at 31 December 2021 | 5,000 | - | 5,000 |
| Acquisitions | - | 1,000,000 | 1,000,000 |
| Disposals | - | - | - |
| Fair value change | - | 9,300 | 9,300 |
| As at 30 June 2022 | 5,000 | 1,009,300 | 1,014,300 |

Financial assets and financial liabilities not measured at fair value mainly represent trade receivables, other receivables, amounts due from related parties excluded prepayments, trade payables, amounts due to related parties, other payables (except for the staff salaries and welfare payables and taxes payables), borrowings and short-term bonds. The carrying amounts of these financial assets and liabilities not measured at fair value are a reasonable approximation of their fair value.

2022 Interim Report

83

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

### 19 Hedging reserves

(a) The Group has the following derivative financial instruments in the following line items in the statement of financial position:

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Current assets |  |  |
| Commodity swaps contracts applied hedge accounting at fair value through other comprehensive income | 240,953 | 48,614 |
| Commodity swaps contracts at fair value through profit or loss | - | 32,791 |
| Total derivative financial assets | 240,953 | 81,405 |
| Current liabilities |  |  |
| Commodity swaps contracts at fair value through profit or loss | - | (23,804) |
| Total derivative financial liabilities | - | (23,804) |

#### (i) Classification of derivatives

Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedge accounting criteria, they are classified as 'held for trading' for accounting purposes and are accounted for at fair value through profit or loss. They are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period.

84

Sinopec Shanghai Petrochemical Company Limited

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

(Expressed in Renminbi Yuan unless otherwise indicated)

### 19 Hedging reserves *(continued)*

(a) The Group has the following derivative financial instruments in the following line items in the statement of financial position: *(continued)*

#### (ii) Hedging reserves

The Group's hedging reserves disclosed in Note 17 relate to the following hedging instruments:

|  | Total cash flow hedge reserve RMB'000 |
| --- | --- |
| Opening balance 1 January 2022 | 36,460 |
| Effective portion of the cash flow hedge recognized in other comprehensive income | 394,762 |
| Reclassified to the cost of inventory | (202,423) |
| Related tax | (48,085) |
| Closing balance 30 June 2022 | 180,714 |

#### (iii) Amounts recognized in profit or loss

In addition to the amounts disclosed in the reconciliation of hedging reserves above, the following amounts were recognized in profit or loss in relation to derivatives:

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Net losses on commodity swaps contracts not qualifying as hedges included in other gains - net | (35,188) | - |
| Net gains/(losses) on foreign exchange option/forward contracts not qualifying as hedges included in other gains - net | 7,583 | (151) |
|  | (27,605) | (151) |

2022 Interim Report

85

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 19 Hedging reserves *(continued)*

(a) The Group has the following derivative financial instruments in the following line items in the statement of financial position: *(continued)*

(iii) Amounts recognized in profit or loss *(continued)*

### *Hedge effectiveness*

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument.

The Group enters into commodity swaps contracts that have similar critical terms as the hedged item, such as reference rate, payment dates, transaction price, crude oil variety and crude oil quantity.

Hedge ineffectiveness for commodity swaps contracts may occur due to the changes in the timing of the hedged transactions. There was no recognized ineffectiveness during the six months ended 30 June 2022 in relation to the commodity swaps (six months ended 30 June 2021: Nil).

As at 30 June 2022, the Group had certain commodity contracts of crude oil designed as qualified cash flow hedges, which will be matured over the next 4 months. The fair value of such cash flow hedges is RMB240,953 thousand recognized as derivative financial assets in the consolidated statement of financial position.

## 20 Related-party transactions

The following is a list of the Group's major related parties:

| Names of related parties | Relationship with the Company |
| --- | --- |
| China Petrochemical Corporation ('Sinopec Group') | Ultimate parent company |
| Sinopec Corp. | Immediate parent company |
| Sinopec Chemical Commercial Holding Company Limited | Subsidiary of the immediate parent company |
| China International United Petroleum and Chemical Company Limited | Subsidiary of the immediate parent company |
| China Petrochemical International Company Limited | Subsidiary of the immediate parent company |
| Sinopec Chemical Commercial Company Limited | Subsidiary of the immediate parent company |
| Sinopec Refinery Product Sales Company Limited | Subsidiary of the immediate parent company |
| Sinopec Petroleum Commercial Reserve Company Limited | Subsidiary of the ultimate parent company |
| Sinopec Finance Company Limited ('Sinopec Finance') | Subsidiary of the ultimate parent company |
| Shanghai Secco Petrochemical Co., Ltd. ('Shanghai Secco') | Associate of the Group |
| Shanghai Nanguang Petrochemical Co., Ltd. | Associate of the Group |
| Linde-SPC Gases Company Limited | Joint venture of the Group |

86

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (continued)

(Expressed in Renminbi Yuan unless otherwise indicated)

## 20 Related-party transactions (continued)

The following is a summary of significant balances and transactions between the Group and its related parties except for the dividends payable as disclosed in Note 7 and Note 15.

Most of the transactions undertaken by the Group during the six months ended 30 June 2022 have been affected on such terms as determined by Sinopec Corp. and relevant PRC authorities.

Sinopec Corp. negotiates and agrees the terms of crude oil supply with suppliers on a group basis, which is then allocated among its subsidiaries, including the Group, on a discretionary basis. Sinopec Corp. also owns a widespread petroleum products sales network and possesses a fairly high market share in domestic petroleum products market, which is subject to extensive regulation by the PRC government.

The Group has entered into a mutual product supply and sales services framework agreement with Sinopec Corp. Pursuant to the agreement, Sinopec Corp. provides the Company with crude oil, other petrochemical raw materials and agent services. On the other hand, the Group provides Sinopec Corp. with petroleum products, petrochemical products and property leasing services.

The pricing policy for these services and products provided under the agreement is as follows:

- if there are applicable State (central and local government) tariffs, the pricing shall follow the State tariffs;
- if there are no State tariffs, but there are applicable State's guidance prices, the pricing shall follow the State's guidance prices; or
- if there are no State tariffs or State's guidance prices, the pricing shall be determined in accordance with the prevailing market prices (including any bidding prices).

(a) Transactions between the Group and Sinopec Corp, its subsidiaries and joint ventures during the six months ended 30 June 2022 and the six months ended 30 June 2021 were as follows:

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 | 2021 |
|  | RMB'000 | RMB'000 |
| Sales of petroleum products | 23,930,464 | 19,501,406 |
| Sales other than petroleum products | 4,512,258 | 3,797,129 |
| Purchases of crude oil | 28,137,012 | 16,960,902 |
| Purchases other than crude oil | 8,244,423 | 4,332,246 |
| Sales commissions | 58,868 | 48,325 |
| Rental income | 17,023 | 17,349 |

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87

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

(Expressed in Renminbi Yuan unless otherwise indicated)

### 20 Related-party transactions *(continued)*

(b) Other transactions between the Group and Sinopec Group and its subsidiaries, associates and joint ventures of the Group during the six months ended 30 June 2022 and the six months ended 30 June 2021 were as follows:

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Sales of goods and service fee income |  |  |
| - Sinopec Group and its subsidiaries | 4,626 | 13,795 |
| - Associates and joint ventures of the Group | 1,796,612 | 2,129,514 |
|  | 1,801,238 | 2,143,309 |
| Purchases |  |  |
| - Sinopec Group and its subsidiaries | 817,614 | 1,644,039 |
| - Associates and joint ventures of the Group | 1,738,709 | 2,102,895 |
|  | 2,556,323 | 3,746,934 |
| Insurance premium expenses |  |  |
| - Sinopec Group and its subsidiaries | 52,906 | 55,693 |
| Addition to right-of-use assets |  |  |
| - Sinopec Group and its subsidiaries | 20,023 | 1,388 |
| Interest expense of lease liabilities |  |  |
| - Sinopec Group and its subsidiaries | 441 | 173 |
| - Joint ventures of the Group | 10 | 13 |
|  | 451 | 186 |

88

Sinopec Shanghai Petrochemical Company Limited

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

(Expressed in Renminbi Yuan unless otherwise indicated)

### 20 Related-party transactions *(continued)*

(b) Other transactions between the Group and Sinopec Group and its subsidiaries, associates and joint ventures of the Group during the six months ended 30 June 2022 and the six months ended 30 June 2021 were as follows: *(continued)*

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Interest income |  |  |
| - Sinopec Finance | 141 | 552 |
| - Joint ventures of the Group | 2,667 | - |
|  | 2,808 | 552 |
| Construction and installation cost |  |  |
| - Sinopec Group and its subsidiaries | 706,002 | 357,978 |
| Rental income |  |  |
| - Associates and joint ventures of the Group | 8,767 | 12,010 |
| - Sinopec Group and its subsidiaries | 232 | - |
|  | 8,999 | 12,010 |
| Entrusted loans (note c(i)) |  |  |
| - Joint ventures of the Group | 150,000 | - |

The directors of the Company are of the opinion that the transactions with Sinopec Corp., its subsidiaries and joint ventures, Sinopec Group and its subsidiaries, associates and joint ventures of the Group as disclosed in Notes 20(a) and 20(b) were conducted in the ordinary course of business, on normal commercial terms and in accordance with the agreements governing such transactions.

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89

## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

(Expressed in Renminbi Yuan unless otherwise indicated)

### 20 Related-party transactions *(continued)*

(c) The relevant amounts due from/to Sinopec Corp., its subsidiaries and joint ventures, Sinopec Group and its subsidiaries, associates and joint ventures of the Group, arising from purchases, sales and other transactions as disclosed in Notes 20(a) and 20(b), are summarized as follows:

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Amounts due from related parties |  |  |
| - Sinopec Corp., its subsidiaries and joint ventures | 680,989 | 1,184,117 |
| - Associates and joint ventures of the Group | 253,324 | 28,214 |
|  | 934,313 | 1,212,331 |
| Amounts due to related parties |  |  |
| - Sinopec Corp., its subsidiaries and joint ventures | 2,485,912 | 4,475,992 |
| - Sinopec Group and its subsidiaries | 1,610,960 | 1,672,439 |
| - Associates and joint ventures of the Group | 57,814 | 156,385 |
|  | 4,154,686 | 6,304,816 |
| Lease liabilities |  |  |
| - Sinopec Group and its subsidiaries | 16,409 | 992 |
| - Joint ventures of the Group | 283 | 435 |
|  | 16,692 | 1,427 |
| Cash deposits, maturing within three months |  |  |
| - Sinopec Finance (i) | 2,612 | 3,243 |
| Long-term borrowings |  |  |
| - Sinopec Finance | 700,000 | 700,000 |

(i) As at 30 June 2022 and 31 December 2021, cash deposits at Sinopec Finance were charged at an interest rate of 0.35% per annum.

90

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

## 20 Related-party transactions *(continued)*

(c) The relevant amounts due from/to Sinopec Corp., its subsidiaries and joint ventures, Sinopec Group and its subsidiaries, associates and joint ventures of the Group, arising from purchases, sales and other transactions as disclosed in Notes 20(a) and 20(b), are summarized as follows: *(continued)*

As at 30 June 2022, entrusted loans of RMB150,000 thousand lent from the Group to its joint venture Shanghai Jinshan Baling New Materials Co., Ltd. ('Baling Materials') at an interest rate of 3.80% per annum, maturing within six months.

Except for cash deposits at Sinopec Finance, entrusted loans to Baling Materials and long-term borrowings from Sinopec Finance, the balances with related parties as above are unsecured, interest-free and repayable on demand.

(d) Key management personnel compensation, post-employment benefit plans and share options

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including directors and supervisors of the Group. The key personnel compensations are as follows:

|  | Six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 RMB'000 | 2021 RMB'000 |
| Short-term employee benefits | 9,428 | 7,954 |
| Post-employment benefits | 318 | 249 |
|  | 9,746 | 8,203 |

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## NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT *(continued)*

*(Expressed in Renminbi Yuan unless otherwise indicated)*

### 20 Related-party transactions *(continued)*

#### (e) Commitments with related parties

##### (i) Construction and installation cost

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Sinopec Group and its subsidiaries | 629,576 | 775,007 |

Except for the above, the Group had no other material commitments with related parties as at 30 June 2022 and 31 December 2021, which are contracted, but not included in the interim financial report.

#### (f) Investment commitments with related parties

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Capital contribution to Shanghai Secco (i) | 111,263 | 111,263 |
| Capital contribution to Shanghai Shidian Energy Company Limited ('Shidian Energy') (ii) | - | 80,000 |
| Capital contribution to Baling Materials (iii) | 300,000 | 350,000 |
|  | 411,263 | 541,263 |

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Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (continued)

(Expressed in Renminbi Yuan unless otherwise indicated)

# 20 Related-party transactions (continued)

# (f) Investment commitments with related parties (continued)

(i) Pursuant to the resolution of the 18th meeting of the 7th term of Board of Directors on 5 December 2013, the Group was approved to make capital contribution of USD30,017,000 (RMB182,804,000 equivalent) to Shanghai Secco, an associate of the Group. As at 30 June 2022, the Company has contributed RMB71,541,000 to Shanghai Secco. According to the approval by Shanghai Municipal Commission of Commerce as issued on 19 October 2015, the rest of the capital contribution to Shanghai Secco should be within 50 years starting from its registration date.

(ii) Pursuant to the articles of association of Shidian Energy in August 2019, Toufa agreed to make capital contribution of RMB400,000,000 to acquire 40% share of Shidian Energy. As at 30 June 2022, Toufa has contributed totally RMB400,000,000 to Shidian Energy.

(iii) Sinopec Baling Petrochemical Co., Ltd. and the Company jointly established Baling Materials on 7 September 2021, each with a cash contribution of RMB400,000 thousand. As at 30 June 2022, the Company has made a paid-up capital contribution of RMB100,000 thousand.

Except for the above disclosed in Notes 20(e) and 20(f), the Group had no other material commitments with related parties as at 30 June 2022, which are contracted, but not included in the financial statements.

# 21 Commitments

Capital commitments outstanding at 30 June 2022 not provided for in the interim financial report

|  | As at 30 June 2022 RMB'000 | As at 31 December 2021 RMB'000 |
| --- | --- | --- |
| Property, plant and equipment contracted for | 1,618,967 | 1,176,168 |

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93

![img-0.jpeg](img-0.jpeg)

## Review Report

畢馬威華振專字第2201471號

To the Shareholders of Sinopec Shanghai Petrochemical Company Limited:

We have reviewed the accompanying interim financial statements of Sinopec Shanghai Petrochemical Company Limited (hereinafter “SPC”), which comprise the consolidated and company balance sheets as at 30 June 2022, and the consolidated and company income statements, the consolidated and company cash flow statements and the consolidated and company statements of changes in shareholders’ equity for the period from 1 January 2022 to 30 June 2022, and the notes to the financial statements. Management of SPC is responsible for the preparation of these financial statements in accordance with the requirements of Accounting Standards for Business Enterprises. Our responsibility is to issue a report on these financial statements based on our review.

We conducted our review in accordance with China Standard on Review No. 2101-Engagements to Review Financial Statements. This standard requires that we plan and perform the review to obtain limited assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of SPC personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared in accordance with the requirements of Accounting Standards for Business Enterprises issued by the Ministry of Finance of the People’s Republic of China, and cannot present fairly, in all material respects, the consolidated and the company’s financial position of SPC as at 30 June 2022, and their financial performance and cash flows for the period from 1 January 2022 to 30 June 2022 in accordance with the requirements of Accounting Standards for Business Enterprises.

KPMG Huazhen LLP

Registered in the People’s Republic of China

Wang Wenli (Engagement Partner)

Beijing, China

Fang Haijie

25 August 2022

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Sinopec Shanghai Petrochemical Company Limited

## B. Interim Financial Statements Prepared under China Accounting Standards for Business Enterprises (unaudited)

### CONSOLIDATED AND COMPANY BALANCE SHEETS

AS AT 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

| Assets | Note | 30 June 2022 (unaudited) Consolidated | 31 December 2021 Consolidated | 30 June 2022 (unaudited) Company | 31 December 2021 Company |
| --- | --- | --- | --- | --- | --- |
| Current Assets |  |  |  |  |  |
| Cash at bank and on hand | V.1 | 6,668,215 | 12,498,617 | 6,282,196 | 12,314,124 |
| Derivative financial assets | V.2 | 240,953 | 81,405 | 240,953 | 81,405 |
| Financial assets at fair value through profit or loss | V.3, XIII.1 | 1,009,300 | - | 1,009,300 | - |
| Accounts receivable | V.4, XIII.2 | 737,098 | 1,169,405 | 441,274 | 1,014,787 |
| Receivables under financing | V.5, XIII.3 | 680,269 | 1,072,690 | 157,249 | 624,584 |
| Prepayments | V.6 | 43,117 | 60,577 | 37,178 | 42,024 |
| Other receivables | V.7, XIII.4 | 192,186 | 108,728 | 143,834 | 69,053 |
| Inventories | V.8 | 6,547,699 | 5,923,525 | 6,245,392 | 5,726,264 |
| Other current assets | V.9 | 582,136 | 17,329 | 559,051 | 4,009 |
| Total Current Assets |  | 16,700,973 | 20,932,276 | 15,116,427 | 19,876,250 |
| Non-Current Assets |  |  |  |  |  |
| Long-term equity investments | V.10, XIII.5 | 3,691,515 | 4,188,888 | 4,915,783 | 5,492,265 |
| Investments in other equity instruments |  | 5,000 | 5,000 | - | - |
| Investment properties | V.11 | 344,525 | 352,188 | 373,343 | 381,540 |
| Fixed assets | V.12, XIII.6 | 10,814,793 | 11,328,065 | 10,446,222 | 10,933,023 |
| Construction in progress | V.13 | 4,040,406 | 3,293,177 | 3,939,223 | 3,201,111 |
| Right-of-use assets | V.14 | 20,697 | 4,879 | 18,893 | 2,205 |
| Intangible assets | V.15 | 382,624 | 392,608 | 267,576 | 273,719 |
| Long-term deferred expenses | V.16 | 785,681 | 775,963 | 779,918 | 769,492 |
| Deferred tax assets | V.17 | 209,195 | 184,143 | 199,935 | 178,084 |
| Other non-current assets | V.18 | 5,485,703 | 5,581,435 | 5,232,014 | 5,381,149 |
| Total Non-current Assets |  | 25,780,139 | 26,106,346 | 26,172,907 | 26,612,588 |
| Total Assets |  | 42,481,112 | 47,038,622 | 41,289,334 | 46,488,838 |
| Liabilities and shareholders' equity |  |  |  |  |  |
| Current Liabilities |  |  |  |  |  |
| Short-term loans | V.20 | 2,040,000 | 1,540,000 | 2,000,000 | 1,500,000 |
| Derivative financial liabilities | V. 2 | - | 23,804 | - | 23,804 |
| Bills payable | V.21 | 152,564 | 830,006 | 75,370 | 720,513 |
| Accounts payable | V.22 | 4,005,985 | 5,888,879 | 2,806,121 | 5,198,489 |
| Contract liabilities | V.23 | 375,012 | 430,882 | 295,080 | 383,624 |
| Employee benefits payable | V.24 | 552,062 | 260,096 | 529,603 | 253,800 |
| Taxes payable | V.25 | 79,705 | 4,070,663 | 62,116 | 4,043,002 |
| Other payables | V.26 | 2,590,054 | 1,287,064 | 3,629,769 | 2,499,313 |
| Non-current liabilities due within one year | V.27 | 29,494 | 23,029 | 9,174 | 1,604 |
| Other current liabilities | V.28 | 2,789,182 | 1,441,320 | 2,782,804 | 1,438,157 |

The notes on pages 103 to 256 form part of these financial statements.

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95

## CONSOLIDATED AND COMPANY BALANCE SHEETS *(continued)*

AS AT 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

| Assets | Note | 30 June 2022 (unaudited) Consolidated | 31 December 2021 Consolidated | 30 June 2022 (unaudited) Company | 31 December 2021 Company |
| --- | --- | --- | --- | --- | --- |
| Total Current Liabilities |  | 12,614,058 | 15,795,743 | 12,190,037 | 16,062,306 |
| Non-Current Liabilities |  |  |  |  |  |
| Long-term loans | V.29 | 700,000 | 700,000 | 700,000 | 700,000 |
| Lease liabilities | V.30 | 10,350 | 1,384 | 9,612 | 399 |
| Deferred income | V.31 | 119,920 | 112,720 | 119,920 | 112,720 |
| Deferred tax liabilities | V.17 | 31,947 | 33,344 | - | - |
| Total Non-Current Liabilities |  | 862,217 | 847,448 | 829,532 | 813,119 |
| Total Liabilities |  | 13,476,275 | 16,643,191 | 13,019,569 | 16,875,425 |
| Shareholders' equity |  |  |  |  |  |
| Share capital | I, V.32 | 10,823,814 | 10,823,814 | 10,823,814 | 10,823,814 |
| Capital reserve | V.33 | 614,187 | 610,327 | 604,628 | 600,768 |
| Other comprehensive income | V.34 | 181,121 | 59,425 | 181,121 | 59,425 |
| Specific reserve | V.35 | 224,998 | 216,512 | 224,830 | 216,508 |
| Surplus reserve | V.36 | 6,672,639 | 6,672,639 | 6,672,639 | 6,672,639 |
| Retained earnings | V.37 | 10,359,065 | 11,877,455 | 9,762,733 | 11,240,259 |
| Total equity attributable to shareholders of the Company |  | 28,875,824 | 30,260,172 | 28,269,765 | 29,613,413 |
| Non-controlling interests | V.38 | 129,013 | 135,259 | - | - |
| Total Shareholders' Equity |  | 29,004,837 | 30,395,431 | 28,269,765 | 29,613,413 |
| Total Liabilities and Shareholders' Equity |  | 42,481,112 | 47,038,622 | 41,289,334 | 46,488,838 |

These financial statements were approved by the Board of Directors of the Company on 25 August 2022.

Wu Haijun

Chairman

Du Jun

Director and Chief Financial Officer

Yang Yating

Accounting Chief

The notes on pages 103 to 256 form part of these financial statements.

96

Sinopec Shanghai Petrochemical Company Limited

# CONSOLIDATED AND COMPANY INCOME STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

|  | Note | Six months ended 30 June |  | Six months ended 30 June |  |
| --- | --- | --- | --- | --- | --- |
|  |  | 2022 (unaudited) | 2021 (unaudited) | 2022 (unaudited) | 2021 (unaudited) |
|  |  | Consolidated | Consolidated | Company | Company |
| I. Operating income | V.39, XIII.7 | 45,900,355 | 37,136,606 | 39,106,248 | 31,978,683 |
| Less: Operating costs | V.39, XIII.7 | 39,118,453 | 28,849,768 | 32,381,777 | 23,808,137 |
| Taxes and surcharges | V.40 | 5,717,033 | 5,453,022 | 5,710,416 | 5,446,828 |
| Selling and distribution expenses | V.41 | 171,259 | 206,782 | 127,442 | 164,841 |
| General and administrative expenses | V.42 | 1,347,594 | 1,905,002 | 1,292,155 | 1,848,744 |
| Research and development expenses | V.43 | 36,426 | 27,943 | 32,725 | 22,860 |
| Financial expenses (“-” for income) | V.44 | (295,996) | (206,583) | (271,812) | (203,124) |
| Including: interest expense |  | 50,043 | 38,299 | 48,935 | 37,149 |
| interest income |  | 329,305 | 248,813 | 320,891 | 240,798 |
| Add: Other income | V.45 | 5,905 | 6,412 | 4,524 | 6,263 |
| Investment income (“-” for losses) | V.46, XIII.8 | (50,675) | 602,510 | (46,913) | 556,932 |
| Including: Income from investment in associates and joint ventures (“-” for losses) |  | (32,537) | 582,548 | (53,346) | 539,533 |
| Gains from changes in fair value | V.47 | 313 | 23,343 | 313 | 19,151 |
| Credit losses (“-” for losses) | V.48 | (4,887) | - | (4,877) | - |
| Impairment losses of assets (“-” for losses) | V.49 | (177,777) | (80,093) | (177,777) | (80,093) |
| Gains from asset disposals (“-” for losses) | V.50 | (1,062) | 79,085 | - | 79,085 |
| II. Operating profit (“-” for loss) |  | (422,597) | 1,531,929 | (391,185) | 1,471,735 |
| Add: Non-operating income | V.51 | 11,594 | 6,660 | 11,594 | 6,436 |
| Less: Non-operating expenses | V.52 | 31,598 | 27,876 | 31,510 | 27,186 |
| III. Profit before income tax (“-” for loss) |  | (442,601) | 1,510,713 | (411,101) | 1,450,985 |
| Less: Income tax (benefits)/expenses | V.53 | (11,780) | 261,344 | (15,956) | 251,634 |
| IV. Net profit (“-” for net loss) |  | (430,821) | 1,249,369 | (395,145) | 1,199,351 |
| (1) Net profit classified by continuity of operations: |  |  |  |  |  |
| 1. Net profit from continuing operations (“-” for net loss) |  | (430,821) | 1,249,369 | (395,145) | 1,199,351 |
| 2. Net profit from discontinued operations (“-” for net loss) |  | - | - | - | - |
| (2) Net profit classified by ownership: |  |  |  |  |  |
| 1. Shareholders of the Company (“-” for net loss) |  | (436,009) | 1,244,189 | - | - |
| 2. Non-controlling interests (“-” for net loss) |  | 5,188 | 5,180 | - | - |

The notes on pages 103 to 256 form part of these financial statements.

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## CONSOLIDATED AND COMPANY INCOME STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

|  | Note | Six months ended 30 June |  | Six months ended 30 June |  |
| --- | --- | --- | --- | --- | --- |
|  |  | 2022 (unaudited) | 2021 (unaudited) | 2022 (unaudited) | 2021 (unaudited) |
|  |  | Consolidated | Consolidated | Company | Company |
| V. Other comprehensive income, net of tax |  | 273,513 | 52,431 | 273,513 | 52,431 |
| (1) Other comprehensive income (net of tax) attributable to shareholders of the Company |  | 273,513 | 52,431 | 273,513 | 52,431 |
| Items that may be reclassified to profit or loss |  | 273,513 | 52,431 | 273,513 | 52,431 |
| a. Other comprehensive income recognized under equity method |  | (22,558) | 702 | (22,558) | 702 |
| b. Cash flow hedge reserve |  | 296,071 | 51,729 | 296,071 | 51,729 |
| (2) Other comprehensive income (net of tax) attributable to non-controlling interests |  | - | - | - | - |
| VI. Total comprehensive income |  | (157,308) | 1,301,800 | (121,632) | 1,251,782 |
| (1) Attributable to shareholders of the Company |  | (162,496) | 1,296,620 | - | - |
| (2) Attributable to non-controlling interests |  | 5,188 | 5,180 | - | - |
| VII. (Losses)/Earnings per share |  |  |  |  |  |
| (1) Basic (losses)/earnings per share (RMB Yuan) | V.54 | (0.040) | 0.115 | - | - |
| (2) Diluted (losses)/earnings per share (RMB Yuan) | V.54 | (0.040) | 0.115 | - | - |

These financial statements were approved by the Board of Directors of the Company on 25 August 2022.

Wu Haijun Chairman

Director and Chief Financial Officer

Accounting Chief

The notes on pages 103 to 256 form part of these financial statements.

98

Sinopec Shanghai Petrochemical Company Limited

# CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

|  | Note | Six months ended 30 June |  | Six months ended 30 June |  |
| --- | --- | --- | --- | --- | --- |
|  |  | 2022 (unaudited) | 2021 (unaudited) | 2022 (unaudited) | 2021 (unaudited) |
|  |  | Consolidated | Consolidated | Company | Company |
| I. Cash flows from operating activities |  |  |  |  |  |
| Proceeds from sale of goods and rendering of services |  | 50,088,166 | 38,434,207 | 43,170,120 | 33,292,256 |
| Refund of taxes |  | 432,955 | 57,673 | 289,064 | - |
| Proceeds from other operating activities | V.56 | 111,725 | 114,183 | 108,602 | 107,181 |
| Sub-total of cash inflows |  | 50,632,846 | 38,606,063 | 43,567,786 | 33,399,437 |
| Payment for goods and services |  | (45,620,035) | (31,630,427) | (38,852,353) | (26,320,863) |
| Payment to and for employees |  | (1,526,165) | (1,381,271) | (1,443,976) | (1,300,205) |
| Payment of various taxes |  | (9,728,629) | (7,824,819) | (9,693,475) | (7,764,804) |
| Payment for other operating activities | V.56 | (163,139) | (159,098) | (299,371) | (139,895) |
| Sub-total of cash outflows |  | (57,037,968) | (40,995,615) | (50,289,175) | (35,525,767) |
| Net cash flows used in operating activities | V.57, XIII.9 | (6,405,122) | (2,389,552) | (6,721,389) | (2,126,330) |
| II. Cash flows from investing activities |  |  |  |  |  |
| Cash received from structured deposits |  | - | 2,700,000 | - | 2,200,000 |
| Proceeds from capital reduction of an associate |  | - | - | - | - |
| Cash received from returns on investments |  | 584,002 | 54,893 | 561,947 | - |
| Net cash received from disposal of fixed assets and other long-term assets |  | 8,882 | 46,860 | 8,877 | 46,576 |
| Proceeds from other investing activities | V.56 | 6,168,238 | 3,235,749 | 6,164,397 | 3,226,832 |
| Sub-total of cash inflows |  | 6,761,122 | 6,037,502 | 6,735,221 | 5,473,408 |
| Payment for acquisition of fixed assets, intangible assets and other long-term assets |  | (1,048,727) | (1,493,860) | (1,037,357) | (1,475,605) |
| Payment of structured deposits |  | (1,000,000) | (6,650,000) | (1,000,000) | (5,500,000) |
| Payment for establishing of a subsidiary and an associate |  | (130,000) | - | (50,000) | - |
| Payment for other investing activities | V.56 | (2,805,687) | (1,000,000) | (2,750,827) | (800,000) |
| Sub-total of cash outflows |  | (4,984,414) | (9,143,860) | (4,838,184) | (7,775,605) |
| Net cash flows generated from/ (used in) investing activities |  | 1,776,708 | (3,106,358) | 1,897,037 | (2,302,197) |

The notes on pages 103 to 256 form part of these financial statements.

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## CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

|  | Note | Six months ended 30 June |  | Six months ended 30 June |  |
| --- | --- | --- | --- | --- | --- |
|  |  | 2022 (unaudited) | 2021 (unaudited) | 2022 (unaudited) | 2021 (unaudited) |
|  |  | Consolidated | Consolidated | Company | Company |
| III. Cash flows from financing activities |  |  |  |  |  |
| Proceeds from borrowings |  | 9,455,000 | 11,879,423 | 9,435,000 | 11,839,423 |
| Proceeds from short-term bonds |  | 3,000,000 | - | 3,000,000 | - |
| Sub-total of cash inflows |  | 12,455,000 | 11,879,423 | 12,435,000 | 11,839,423 |
| Repayments of borrowings |  | (8,955,200) | (11,867,423) | (8,935,000) | (11,839,423) |
| Repayments of short-term bonds |  | (1,500,000) | - | (1,500,000) | - |
| Payment for dividends, profit distributions or interest |  | (50,488) | (53,489) | (49,419) | (52,429) |
| Including: Dividends paid by subsidiaries to non-controlling interests |  | - | - | - | - |
| Payment for other financing activities | V.56 | (2,991) | (9,531) | (1,115) | (6,879) |
| Sub-total of cash outflows |  | (10,508,679) | (11,930,443) | (10,485,534) | (11,898,731) |
| Net cash flows generated from/(used in) financing activities |  | 1,946,321 | (51,020) | 1,949,466 | (59,308) |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents |  | 8,733 | (2,063) | - | - |
| V. Net increase in cash and cash equivalents (“-” for decrease) |  | (2,673,360) | (5,548,993) | (2,874,886) | (4,487,835) |
| Add: Cash and cash equivalents at beginning of the period | V.57, XIII.9 | 5,112,010 | 6,916,408 | 4,927,519 | 5,460,067 |
| VI. Cash and cash equivalents at the end of the period | V.57, XIII.9 | 2,438,650 | 1,367,415 | 2,052,633 | 972,232 |

These financial statements were approved by the Board of Directors of the Company on 25 August 2022.

Wu Haijun

Chairman

Du Jun

Director and Chief Financial Officer

Yang Yating

Accounting Chief

The notes on pages 103 to 256 form part of these financial statements.

100

Sinopec Shanghai Petrochemical Company Limited

# CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

|  | Note | Attributable to equity shareholders of the Company |  |  |  |  |  |  |  | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | Share capital | Capital reserve | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Sub-total | Non-controlling interests |  |
| I. Balance at 1 January 2022 |  | 10,823,814 | 610,327 | 59,425 | 216,512 | 6,672,639 | 11,877,455 | 30,260,172 | 135,259 | 30,395,431 |
| II. Changes in equity for the six months ended 30 June 2022 (unaudited) (* for decreases) |  |  |  |  |  |  |  |  |  |  |
| 1. Total comprehensive income |  |  |  |  |  |  |  |  |  |  |
| (1) Net profit (* for net loss) |  | - | - | - | - | - | (436,009) | (436,009) | 5,188 | (430,821) |
| (2) Other comprehensive income | V.34 | - | - | 273,513 | - | - | - | 273,513 | - | 273,513 |
| 2. Amounts transferred from hedging reserve to initial carrying amount of hedged items |  | - | - | (151,817) | - | - | - | (151,817) | - | (151,817) |
| 3. Appropriation of profits |  |  |  |  |  |  |  |  |  |  |
| (1) Distributions to shareholders | V.37 | - | - | - | - | - | (1,082,381) | (1,082,381) | (11,434) | (1,093,815) |
| 4. Specific reserve |  |  |  |  |  |  |  |  |  |  |
| (1) Accrued | V.35 | - | - | - | 68,912 | - | - | 68,912 | - | 68,912 |
| (2) Utilized | V.35 | - | - | - | (60,426) | - | - | (60,426) | - | (60,426) |
| 5. Others |  | - | 3,860 | - | - | - | - | 3,860 | - | 3,860 |
| III. Balance at 30 June 2022 (unaudited) |  | 10,823,814 | 614,187 | 181,121 | 224,998 | 6,672,639 | 10,359,065 | 28,675,624 | 129,013 | 29,004,837 |
| I. Balance at 1 January 2021 |  | 10,823,814 | 610,327 | 6,336 | 145,597 | 6,474,103 | 11,157,866 | 29,218,033 | 136,985 | 29,355,018 |
| II. Changes in equity for the six months ended 30 June 2021 (unaudited) (* for decreases) |  |  |  |  |  |  |  |  |  |  |
| 1. Total comprehensive income |  |  |  |  |  |  |  |  |  |  |
| (1) Net profit |  | - | - | - | - | - | 1,244,189 | 1,244,189 | 5,180 | 1,249,369 |
| (2) Other comprehensive income | V.34 | - | - | 52,431 | - | - | - | 52,431 | - | 52,431 |
| 2. Appropriation of profits |  |  |  |  |  |  |  |  |  |  |
| (1) Distributions to shareholders | V.37 | - | - | - | - | - | (1,082,381) | (1,082,381) | - | (1,082,381) |
| 3. Specific reserve |  |  |  |  |  |  |  |  |  |  |
| (1) Accrued | V.35 | - | - | - | 54,842 | - | - | 54,842 | - | 54,842 |
| (2) Utilized | V.35 | - | - | - | (23,574) | - | - | (23,574) | - | (23,574) |
| III. Balance at 30 June 2021 (unaudited) |  | 10,823,814 | 610,327 | 58,757 | 176,865 | 6,474,103 | 11,319,674 | 29,463,540 | 142,165 | 29,605,705 |

These financial statements were approved by the Board of Directors of the Company on 25 August 2022

Wu Haijun

Chairman

Du Jun

Director and Chief Financial Officer

Yang Yating

Accounting Chief

The notes on pages 103 to 256 form part of these financial statements.

2022 Interim Report

101

# STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

|  | Share capital | Capital reserve | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| I. Balance at 1 January 2022 | 10,823,814 | 600,768 | 59,425 | 216,508 | 6,672,639 | 11,240,259 | 29,613,413 |
| II. Changes in equity for the six months ended 30 June 2022 (unaudited) ('-' for decreases) |  |  |  |  |  |  |  |
| 1. Total comprehensive income |  |  |  |  |  |  |  |
| (1) Net profit ('-' for net loss) | - | - | - | - | - | (395,145) | (395,145) |
| (2) Other comprehensive income | - | - | 273,513 | - | - | - | 273,513 |
| 2. Amounts transferred from hedging reserve to initial carrying amount of hedged items | - | - | (151,817) | - | - | - | (151,817) |
| 3. Appropriation of profits |  |  |  |  |  |  |  |
| (1) Distributions to shareholders | - | - | - | - | - | (1,082,381) | (1,082,381) |
| 4. Specific reserve |  |  |  |  |  |  |  |
| (1) Accrued | - | - | - | 65,279 | - | - | 65,279 |
| (2) Utilized | - | - | - | (56,957) | - | - | (56,957) |
| 5. Others | - | 3,860 | - | - | - | - | 3,860 |
| III. Balance at 30 June 2022 (unaudited) | 10,823,814 | 604,628 | 181,121 | 224,830 | 6,672,639 | 9,762,733 | 28,269,765 |
| I. Balance at 1 January 2021 | 10,823,814 | 600,768 | 6,326 | 145,597 | 6,474,103 | 10,535,813 | 28,586,421 |
| II. Changes in equity for the six months ended 30 June 2021 (unaudited) ('-' for decreases) |  |  |  |  |  |  |  |
| 1. Total comprehensive income |  |  |  |  |  |  |  |
| (1) Net profit | - | - | - | - | - | 1,199,351 | 1,199,351 |
| (2) Other comprehensive income | - | - | 52,431 | - | - | - | 52,431 |
| 2. Appropriation of profits |  |  |  |  |  |  |  |
| (1) Distributions to shareholders | - | - | - | - | - | (1,082,381) | (1,082,381) |
| 3. Specific reserve |  |  |  |  |  |  |  |
| (1) Accrued | - | - | - | 51,600 | - | - | 51,600 |
| (2) Utilized | - | - | - | (20,332) | - | - | (20,332) |
| III. Balance at 30 June 2021 (unaudited) | 10,823,814 | 600,768 | 58,757 | 176,865 | 6,474,103 | 10,652,783 | 28,787,090 |

These financial statements were approved by the Board of Directors of the Company on 25 August 2022

Chairman

Director and Chief Financial Officer

Accounting Chief

The notes on pages 103 to 256 form part of these financial statements.

102

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## I. General information

Sinopec Shanghai Petrochemical Company Limited (“the Company”), formerly Shanghai Petrochemical Company Limited, was established in the People’s Republic of China (“the PRC”) on 29 June 1993 with registered capital of RMB4,000,000,000, invested by its holding company-China National Petrochemical Corporation (“Sinopec Group”); these shares were converted from assets of former Shanghai Petrochemical Complex.

H shares were listed on the Hong Kong Stock Exchange on 26 July 1993 and listed on the New York Stock Exchange in the form of American Depositary Shares at the same time; the A shares were listed on the Shanghai Stock Exchange on 8 November 1993.

Sinopec Group completed its reorganisation on 25 February 2000. After the reorganisation, China Petroleum & Chemical Corporation (“Sinopec Corp.”) was established. As part of the reorganisation, Sinopec Group transferred its 4,000,000,000 of the Company’s state-owned legal shares, which represented 55.56 percent of the issued share capital of the Company, to Sinopec Corp. Sinopec Corp. became the largest shareholder of the Company. The Company changed its name to Sinopec Shanghai Petrochemical Company Limited on 12 October 2000.

Ordinary A shares of RMB14,176,600 and RMB9,636,900 were registered on 27 September 2017 and 12 January 2018.

As at 30 June 2022, total share capital of the Company were RMB10,823,813,500, 1 Yuan per share. Detailed changes to share capital refers to Note V.32.

The Company and its subsidiaries (“the Group”) is a highly integrated entity which processes crude oil into synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products.

Details of the Company’s principal subsidiaries are set out in Note VI.

## II. Basis of preparation

### 1. Basis of preparation

The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises and other relevant regulations (collectively referred to as “Accounting Standards for Business Enterprises” or “CAS”) issued by the Ministry of Finance (“MOF”) of the People’s Republic of China (“PRC”).

Except as disclosed in Note III.33, the accounting policies adopted in the financial statements are consistent with those adopted by the Group in preparing the 2021 financial statements. The interim financial statements should be read together with the Group’s 2021 financial statements.

### 2. Going concern

The financial statements have been prepared on the going concern basis.

2022 Interim Report

103

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates

Accounting policies for the provision for impairment of inventories, depreciation of fixed assets, impairment of long-term assets of the Group are adopted according to the specific characteristics of the Company's operations. Please refer to the relevant notes on accounting policies.

### 1. Statement of compliance

The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises or referred to as China Accounting Standards ('CAS') issued by the MOF. These financial statements present truly and completely the consolidated financial position and financial position of the Company as at 20 June 2022, and the consolidated financial performance and financial performance and the consolidated cash flows and cash flows of the Company for the six months from 1 January 2022 to 30 June 2022.

These financial statements also comply with the disclosure requirements of 'Regulation on the Preparation of Information Disclosures by Companies Issuing Securities, No.15: General Requirements for Financial Reports' as revised by the China Securities Regulatory Commission ('CSRC') in 2014.

### 2. Accounting period

The Company's accounting year starts on 1 January and ends on 31 December.

### 3. Operating cycle

The Company takes the period from the acquisition of assets for processing to until the ultimate realization of cash or cash equivalents as a normal operating cycle. The operating cycle of the Company is usually less than 12 months.

### 4. Functional currency

The Company's functional currency is Renminbi and these financial statements are presented in Renminbi. Functional currency is determined by the Company and its subsidiaries on the primary economic environment in which they operate.

104

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 5. Accounting treatments for business combinations involving entities under common control and not under common control

A transaction constitutes a business combination when the Group obtains control of one or more entities (or a group of assets or net assets). Business combination is classified as either business combinations involving enterprises under common control or business combinations not involving enterprises under common control.

For a transaction not involving enterprises under common control, the acquirer determines whether acquired set of assets constitute a business. The Group may elect to apply the simplified assessment method, the concentration test, to determine whether an acquired set of assets is not a business. If the concentration test is met and the set of assets is determined not to be a business, no further assessment is needed. If the concentration test is not met, the Group shall perform the assessment according to the guidance on the determination of a business.

When the set of assets the group acquired does not constitute a business, acquisition costs should be allocated to each identifiable assets and liabilities at their acquisition-date fair values. It is not required to apply the accounting of business combination described as below.

#### (1) Business combinations involving entities under common control

A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. The assets acquired and liabilities assumed are measured based on their carrying amounts in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the carrying amount of the net assets acquired and the consideration paid for the combination (or the total par value of shares issued) is adjusted against share premium in the capital reserve, with any excess adjusted against retained earnings. Any costs directly attributable to the combination are recognized in profit or loss when incurred. The combination date is the date on which one combining entity obtains control of other combining entities. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognized amounts of the equity or debt securities.

2022 Interim Report

105

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 5. Accounting treatments for business combinations involving entities under common control and not under common control *(continued)*

#### (2) Business combinations involving entities not under common control

A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the business combination. Where (1) the aggregate of the acquisition-date fair value of assets transferred (including the acquirer's previously held equity interest in the acquiree), liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree, exceeds (2) the acquirer's interest in the acquisition-date fair value of the acquiree's identifiable net assets, the difference is recognized as goodwill. If (1) is less than (2), the difference is recognized in profit or loss for the current period. The costs of issuing equity or debt securities as a part of the consideration for the acquisition are included in the carrying amounts of these equity or debt securities upon initial recognition. Acquisition-related costs are expensed when incurred. Any difference between the fair value and the carrying amount of the assets transferred as consideration is recognized in profit or loss. The acquiree's identifiable asset, liabilities and contingent liabilities, if the recognition criteria are met, are recognized by the Group at their acquisition-date fair value. The acquisition date is the date on which the acquirer obtains control of the acquiree.

For a business combination involving entities not under common control and achieved in stages, the Group remeasures its previously-held equity interest in the acquiree to its acquisition-date fair value and recognizes any resulting difference between the fair value and the carrying amount as investment income or other comprehensive income for the current period. In addition, any amount recognized in other comprehensive income and other changes in the owners' equity under equity accounting in prior reporting periods relating to the previously-held equity interest that may be reclassified to profit or loss are transferred to investment income at the date of acquisition; Any previously-held equity interest that is designated as equity investment at fair value through other comprehensive income, the other comprehensive income recognized in prior reporting periods is transferred to retained earnings and surplus reserve at the date of acquisition.

106

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 6. Consolidated financial statements

#### (1) General principles

The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its subsidiaries. Control exists when the investor has all of following: power over the investee; exposure, or rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are considered. The financial position, financial performance and cash flows of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Non-controlling interests are presented separately in the consolidated balance sheet within shareholders' equity. Net profit or loss attributable to non-controlling shareholders is presented separately in the consolidated income statement below the net profit line item. Total comprehensive income attributable to non-controlling shareholders is presented separately in the consolidated income statement below the total comprehensive income line item.

When the amount of loss for the current period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders' share of the opening owners' equity of the subsidiary, the excess is still allocated against the non-controlling interests.

When the accounting period or accounting policies of a subsidiary are different from those of the Company, the Company makes necessary adjustments to the financial statements of the subsidiary based on the Company's own accounting period or accounting policies. Intra-group balances and transactions, and any unrealized profit or loss arising from intra-group transactions, are eliminated when preparing the consolidated financial statements. Unrealized losses resulting from intra-group transactions are eliminated in the same way as unrealized gains, unless they represent impairment losses that are recognized in the financial statements. Unrealized profits and losses resulting from the sale of assets by a subsidiary to the Company are eliminated and allocated between net profit attributable to owners of the parent and non-controlling interests in accordance with the allocation proportion of the parent in the subsidiary. Unrealized profits and losses resulting from the sale of assets by one subsidiary to another are eliminated and allocated between net profit attributable to owners of the parent and non-controlling interests in accordance with the allocation proportion of the parent in the subsidiary. If the accounting treatment of a transaction which considers the Group as an accounting entity is different from that considers the Company or its subsidiaries as an accounting entity, it is adjusted from the perspective of the Group.

2022 Interim Report

107

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 6. Consolidated financial statements *(continued)*

##### (2) Subsidiaries acquired through a business combination

Where a subsidiary was acquired during the reporting period, through a business combination involving entities under common control, the financial statements of the subsidiary are included in the consolidated financial statements based on the carrying amounts of the assets and liabilities of the subsidiary in the financial statements of the ultimate controlling party as if the combination had occurred at the date that the ultimate controlling party first obtained control. The opening balances and the comparative figures of the consolidated financial statements are also restated.

Where a subsidiary was acquired during the reporting period, through a business combination involving entities not under common control, the identifiable assets and liabilities of the acquired subsidiaries are included in the scope of consolidation from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.

##### (3) Disposal of subsidiaries

When the Group loses control over a subsidiary, any resulting disposal gains or losses are recognized as investment income for the current period. The remaining equity interests is re-measured at its fair value at the date when control is lost, any resulting gains or losses are also recognized as investment income for the current period.

When the Group loses control of a subsidiary in multiple transactions in which it disposes of its long-term equity investment in the subsidiary in stages, the following are considered to determine whether the Group should account for the multiple transactions as a bundled transaction:

- arrangements are entered into at the same time or in contemplation of each other;
- arrangements work together to achieve an overall commercial effect;
- the occurrence of one arrangement is dependent on the occurrence of at least one other arrangement;
- one arrangement considered on its own is not economically justified, but it is economically justified when considered together with other arrangements.

If each of the multiple transactions does not form part of a bundled transaction, the transactions conducted before the loss of control of the subsidiary are accounted for in accordance with the accounting policy for partial disposal of equity investment in subsidiaries where control is retained (see Note III.6(4)).

108

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 6. Consolidated financial statements *(continued)*

#### (3) Disposal of subsidiaries *(continued)*

If each of the multiple transactions forms part of a bundled transaction which eventually results in the loss of control in the subsidiary, these multiple transactions are accounted for as a single transaction. In the consolidated financial statements, the difference between the consideration received and the corresponding proportion of the subsidiary's net assets (calculated continuously from the acquisition date) in each transaction prior to the loss of control shall be recognized in other comprehensive income and transferred to profit or loss when the parent eventually loses control of the subsidiary.

#### (4) Changes in non-controlling interests

Where the Company acquires a non-controlling interest from a subsidiary's non-controlling shareholders or disposes of a portion of an interest in a subsidiary without a change in control, the difference between the proportion interests of the subsidiary's net assets being acquired or disposed and the amount of the consideration paid or received is adjusted to the capital reserve (share premium) in the consolidated balance sheet, with any excess adjusted to retained earnings.

### 7. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits that can be readily withdraw on demand, and short-term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of change in value.

### 8. Foreign currency transactions

When the Group receives capital in foreign currencies from investors, the capital is translated to Renminbi at the spot exchange rate at the date of the receipt. Other foreign currency transactions are, on initial recognition, translated to Renminbi at the spot exchange rates on the dates of the transactions.

Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at the balance sheet date. The resulting exchange differences are generally recognized in profit or loss, unless they arise from the re-translation of the principal and interest of specific borrowings for the acquisition of qualifying assets (see Note III.15). Non-monetary items that are measured at historical cost in foreign currencies are translated to Renminbi using the exchange rate at the transaction date. Effect of foreign exchange rate changes on cash is presented separately in the cash flow statement.

2022 Interim Report

109

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 9. Financial instruments

Financial instruments include cash at bank and on hand, account receivables, account payables, loans and borrowings, and share capital.

#### (1) Recognition and initial measurement of financial assets and financial liabilities

A financial asset or financial liability is recognized in the balance sheet when the Group becomes a party to the contractual provisions of a financial instrument.

A financial asset or financial liability is measured initially at fair value. For financial assets and financial liabilities at fair value through profit or loss, any related directly attributable transaction costs are charged to profit or loss; for other categories of financial assets and financial liabilities, any related directly attributable transaction costs are included in their initial costs. A trade receivable, without significant financing component or practical expedient applied for one year or less contracts, is initially measured at the transaction price in accordance with Note III.21.

#### (2) Classification and subsequent measurement of financial assets

##### (a) Classification of financial assets

The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. On initial recognition, a financial asset is classified as measured at amortized cost, at fair value through other comprehensive income ('FVOCI'), or at fair value through profit or loss ('FVTPL').

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

110 Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 9. Financial instruments *(continued)*

##### (2) Classification and subsequent measurement of financial assets *(continued)*

###### (a) Classification of financial assets *(continued)*

- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

- it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in other comprehensive income, and listed them as other equity instrument investments. This election is made on an investment-by-investment basis. The instrument meets the definition of equity from the perspective of the issuer. The relevant dividend income of such financial assets is included in the current profit and loss.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

The business model refers to how the Group manages its financial assets in order to generate cash flows. That is, the Group's business model determines whether cash flows will result from collecting contractual cash flows, selling financial assets or both. The Group determines the business model for managing the financial assets according to the facts and based on the specific business objective for managing the financial assets determined by the Group's key management personnel.

2022 Interim Report

111

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 9. Financial instruments *(continued)*

#### (2) Classification and subsequent measurement of financial assets *(continued)*

##### (a) Classification of financial assets *(continued)*

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin. The Group also assesses whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

112

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 9. Financial instruments *(continued)*

#### (2) Classification and subsequent measurement of financial assets *(continued)*

##### (b) Subsequent measurement of financial assets

- Financial assets at FVTPL

These financial assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss unless the financial assets are part of a hedging relationship. Those maturing more than one year from the balance sheet date and expected to be held for more than one year shall be listed as other non-current financial assets, while the rest shall be listed as trading financial assets.

- Financial assets at amortized cost

These assets are subsequently measured at amortized cost using the effective interest method. A gain or loss on a financial asset that is measured at amortized cost and is not part of a hedging relationship shall be recognized in profit or loss when the financial asset is derecognized, reclassified, through the amortization process or in order to recognize impairment gains or losses. Such financial assets mainly include cash at bank and on hand, accounts receivable, other receivables and investments in debt securities, etc. The Group shall list the investments in debt securities that is due within one year (including one year) from the date of balance sheet as non-current assets that are due within one year; The investments in debt securities that is due within one year (including one year) at the time of acquisition is listed as other current assets. The investments in debt securities that is due more than one year from the date of balance sheet is listed as other non-current assets.

- Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, impairment and foreign exchange gains and losses are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss. Such financial assets are listed as receivables under financing, other investments in debt securities, and other investments in debt securities that are due within one year (including one year) from the date of balance sheet are listed as non-current assets that are due within one year; Other investments in debt securities with a maturity of one year (including one year) at the time of acquisition are listed as other current assets.

2022 Interim Report

113

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 9. Financial instruments *(continued)*

#### (2) Classification and subsequent measurement of financial assets *(continued)*

##### (b) Subsequent measurement of financial assets *(continued)*

- Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to retained earnings.

#### (3) Classification and subsequent measurement of financial liabilities

Financial liabilities are classified as measured at FVTPL or amortized cost.

- *Financial liabilities at FVTPL*

A financial liability is classified as at FVTPL if it is classified as held-for-trading (including derivative financial liability) or it is designated as such on initial recognition.

Financial liabilities at FVTPL are subsequently measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss, unless the financial liabilities are part of a hedging relationship.

- *Financial liabilities at amortized cost*

These financial liabilities are subsequently measured at amortized cost using the effective interest method.

The financial liabilities of the Group are mainly financial liabilities measured by amortized cost, including bills payable and accounts payable, other payables, loans, etc. Such financial liabilities are initially measured according to their fair value after deducting transaction costs and are subsequently measured by the effective interest rate method. Where the term is less than one year (including one year), it shall be listed as current liabilities; If the term is more than one year, but the term is due within one year (including one year) from the balance sheet date, it shall be listed as non-current liabilities that are due within one year; The rest are shown as non-current liabilities.

114 Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 9. Financial instruments *(continued)*

##### (4) Offsetting

Financial assets and financial liabilities are generally presented separately in the balance sheet and are not offset. However, a financial asset and a financial liability are offset and the net amount is presented in the balance sheet when both of the following conditions are satisfied:

- The Group currently has a legally enforceable right to set off the recognized amounts;
- The Group intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously.

##### (5) Derecognition of financial assets and financial liabilities

Financial asset is derecognized when one of the following conditions is met:

- the Group's contractual rights to the cash flows from the financial asset expire;
- the financial asset has been transferred and the Group transfers substantially all of the risks and rewards of ownership of the financial asset; or;
- the financial asset has been transferred, although the Group neither transfers nor retains substantially all of the risks and rewards of ownership of the financial asset, it does not retain control over the transferred asset.

Where a transfer of a financial asset in its entirety meets the criteria for derecognition, the difference between the two amounts below is recognized in profit or loss:

- the carrying amount of the financial asset transferred measured at the date of derecognition;
- the sum of the consideration received from the transfer and, when the transferred financial asset is a debt investment at FVOCI, any cumulative gain or loss that has been recognized directly in other comprehensive income for the part derecognized.

The Group derecognizes a financial liability (or part of it) only when its contractual obligation (or part of it) is extinguished. The difference between the carrying amount of the part to be recognized and the consideration paid shall be recorded into the profit and loss of the current period.

2022 Interim Report

115

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 9. Financial instruments *(continued)*

##### (6) Impairment

The Group recognizes loss allowances for expected credit loss (ECL) on:

- financial assets measured at amortized cost;
- debt investments measured at FVOCI.

Financial assets measured at fair value, including equity securities designated at FVOCI and derivative financial assets, are not subject to the ECL assessment.

##### *Measurement of ECLs*

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

The maximum period considered when estimating ECLs is the maximum contractual period (including extension options) over which the Group is exposed to credit risk.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the balance sheet date (or a shorter period if the expected life of the instrument is less than 12 months).

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECL. ECLs on these financial assets are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the balance sheet date.

Except for trade receivables and contract assets, the Group measures loss allowance at an amount equal to 12-month ECL for the following financial instruments, and at an amount equal to lifetime ECL for all other financial instruments.

- If the financial instrument is determined to have low credit risk at the balance sheet date;
- If the credit risk on a financial instrument has not increased significantly since initial recognition.

116 Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 9. Financial instruments *(continued)*

##### (6) Impairment *(continued)*

*Financial instruments that have low credit risk*

The credit risk on a financial instrument is considered low if the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

*Significant increases in credit risk*

In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group compares the risk of default occurring on the financial instrument assessed at the balance sheet date with that assessed at the date of initial recognition.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort, including forward-looking information. In particular, the following information is taken into account:

- failure to make payments of principal or interest on their contractually due dates;
- an actual or expected significant deterioration in a financial instrument's external or internal credit rating (if available);
- an actual or expected significant deterioration in the operating results of the debtor; and
- existing or forecast changes in the technological, market, economic or legal environment that have a significant adverse effect on the debtor's ability to meet its obligation to the Group.

Depending on the nature of the financial instruments, the assessment of a significant increase in credit risk is performed on either an individual basis or a collective basis. When the assessment is performed on a collective basis, the financial instruments are grouped based on shared credit risk characteristics, such as past due status and credit risk ratings.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

2022 Interim Report

117

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 9. Financial instruments *(continued)*

##### (6) Impairment *(continued)*

# *Credit-impaired financial assets*

At each balance sheet date, the Group assesses whether financial assets carried at amortized cost and debt investments at FVOCI are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:

- significant financial difficulty of the borrower or issuer;
- a breach of contract, such as a default or delinquency in interest or principal payments;
- for economic or contractual reasons relating to the borrower's financial difficulty, the Group having granted to the borrower a concession that would not otherwise consider;
- it is probable that the borrower will enter bankruptcy or other financial reorganization; or
- the disappearance of an active market for that financial asset because of financial difficulties.

# *Presentation of allowance for ECL*

ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument's credit risk since initial recognition. Any change in the ECL amount is recognized as an impairment gain or loss in profit or loss. The Group recognizes an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for debt investments that are measured at FVOCI, for which the loss allowance is recognized in other comprehensive income.

# *Write-off*

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. A write-off constitutes a derecognition event. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due.

Subsequent recoveries of an asset that was previously written off are recognized as a reversal of impairment in profit or loss in the period in which the recovery occurs.

118 Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 9. Financial instruments *(continued)*

#### (7) Equity instrument

The consideration received from the issuance of equity instruments net of transaction costs is recognized in shareholders' equity. Consideration and transaction costs paid by the Company for repurchasing self-issued equity instruments are deducted from shareholders' equity.

When the Company repurchases its own shares, those shares are treated as treasury shares. All expenditure relating to the repurchase is recorded in the cost of the treasury shares, with the transaction recording in the share register. Treasury shares are excluded from profit distributions and are presented as a deduction under shareholders' equity in the balance sheet.

When treasury shares are cancelled, the share capital should be reduced to the extent of the total par value of the treasury shares cancelled. Where the cost of the treasury shares cancelled exceeds the total par value, the excess is deducted from capital reserve (share premium), surplus reserve and retained earnings sequentially. If the cost of treasury shares cancelled is less than the total par value, the difference is credited to the capital reserve (share premium).

When treasury shares are disposed of, any excess of proceeds above cost is recognized in capital reserve (share premium); otherwise, the shortfall is deducted against capital reserve (share premium), surplus reserve and retained earnings sequentially.

### 10. Inventories

#### (1) Classification and cost

Inventories include raw materials, work in progress, semi-finished goods, finished goods and reusable materials. Reusable materials include low-value consumables, packaging materials and other materials, which can be used repeatedly but do not meet the definition of fixed assets.

Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other expenditure incurred in bringing the inventories to their present location and condition. In addition to the purchase cost of raw materials, work in progress and finished goods include direct labor costs and an appropriate allocation of production overheads.

2022 Interim Report

119

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 10. Inventories *(continued)*

#### (2) Measurement method of cost of inventories

Cost of inventories recognized is calculated using the weighted average method.

Consumables including low-value consumables and packaging materials are charged to profit or loss upon receipt. The amortization charge is included in the cost of the related assets or recognized in profit or loss for the current period.

#### (3) Basis for determining the net realizable value and method for provision for obsolete inventories

At the balance sheet date, inventories are carried at the lower of cost and net realizable value.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes. The net realizable value of materials held for use in the production is measured based on the net realizable value of the finished goods in which they will be incorporated. The net realizable value of the inventory held to satisfy sales or service contracts is measured based on the contract price, to the extent of the quantities specified in sales contracts, and the excess portion of inventories is measured based on general selling prices.

Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for obsolete inventories, and is recognized in profit or loss.

#### (4) Inventory count system

The Group maintains a perpetual inventory system.

120

Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 11. Long-term equity investments

##### (1) Investment cost of long-term equity investments

###### (a) *Long-term equity investments acquired through a business combination*

- The initial cost of a long-term equity investment acquired through a business combination involving entities under common control is the Company's share of the carrying amount of the subsidiary's equity in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the initial investment cost and the carrying amount of the consideration given is adjusted to the share premium in the capital reserve, with any excess adjusted to retained earnings. For a long-term equity investment in a subsidiary acquired through a business combination achieved in stages which do not form a bundled transaction and involving entities under common control, the Company determines the initial cost of the investment in accordance with the above policies. The difference between this initial cost and the sum of the carrying amount of previously-held investment and the consideration paid for the shares newly acquired is adjusted to capital premium in the capital reserve, with any excess adjusted to retained earnings.
- For a long-term equity investment obtained through a business combination not involving entities under common control, the initial cost comprises the aggregate of the fair value of assets transferred, liabilities incurred or assumed, and equity securities issued by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not involving entities under common control and achieved through multiple transactions in stages which do not form a bundled transaction, the initial cost comprises the carrying amount of the previously-held equity investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date.

###### (b) *Long-term equity investments acquired other than through a business combination*

- A long-term equity investment acquired other than through a business combination is initially recognized at the amount of cash paid if the Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity securities.

2022 Interim Report

121

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 11. Long-term equity investments *(continued)*

#### (2) Subsequent measurement of long-term equity investment

##### (a) *Investments in subsidiaries*

In the Company's separate financial statements, long-term equity investments in subsidiaries are accounted for using the cost method for subsequent measurement. Except for cash dividends or profit distributions declared but not yet distributed that have been included in the price or consideration paid in obtaining the investments, the Company recognizes its share of the cash dividends or profit distributions declared by the investee as investment income for the current period.

The investments in subsidiaries are stated in the balance sheet at cost less accumulated impairment losses.

For the impairment of the investments in subsidiaries, refer to Note III.18.

In the Group's consolidated financial statements, subsidiaries are accounted for in accordance with the policies described in Note III.5.

##### (b) *Investment in joint ventures and associates*

A joint venture is an arrangement whereby the Group and other parties have joint control (see Note III.11(3)) and rights to the net assets of the arrangement.

An associate is an entity over which the Group has significant influence (see Note III.11(3)).

An investment in a joint venture or an associate is accounted for using the equity method for subsequent measurement.

122

Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 11. Long-term equity investments *(continued)*

##### (2) Subsequent measurement of long-term equity investment *(continued)*

###### (b) Investment in joint ventures and associates *(continued)*

The accounting treatments under the equity method adopted by the Group are as follows:

- Where the initial cost of a long-term equity investment exceeds the Group's interest in the fair value of the investee's identifiable net assets at the date of acquisition, the investment is initially recognized at cost. Where the initial investment cost is less than the Group's interest in the fair value of the investee's identifiable net assets at the date of acquisition, the investment is initially recognized at the investor's share of the fair value of the investee's identifiable net assets, and the difference is recognized in profit or loss.
- After the acquisition of the investment, the Group recognizes its share of the investee's profit or loss and other comprehensive income as investment income or losses and other comprehensive income respectively, and adjusts the carrying amount of the investment accordingly. Once the investee declares any cash dividends or profit distributions, the carrying amount of the investment is reduced by the amount attributable to the Group. Changes in the Group's share of the investee's owners' equity, other than those arising from the investee's net profit or loss, other comprehensive income or profit distribution (referred to as "other changes in owners' equity"), is recognized directly in the Group's equity, and the carrying amount of the investment is adjusted accordingly.
- In calculating its share of the investee's net profits or losses, other comprehensive income and other changes in owners' equity, the Group recognizes investment income and other comprehensive income after making appropriate adjustments to align the accounting policies or accounting periods with those of the Group based on the fair value of the investee's identifiable net assets at the date of acquisition. Unrealized profits and losses resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group's interest in the associates or joint ventures. Unrealized losses resulting from transactions between the Group and its associates or joint ventures are eliminated in the same way as unrealized gains but only to the extent that there is no impairment.

2022 Interim Report

123

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 11. Long-term equity investments *(continued)*

##### (2) Subsequent measurement of long-term equity investment *(continued)*

###### (b) Investment in joint ventures and associates *(continued)*

- The Group discontinues recognizing its share of further losses of the investee after the carrying amount of the long-term equity investment and any long-term interest that in substance forms part of the Group's net investment in the joint venture or associate is reduced to zero, except to the extent that the Group has an obligation to assume additional losses. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognizing the investment losses and the provisions. If the joint venture or associate subsequently reports net profits, the Group resumes recognizing its share of those profits only after its share of the profits has fully covered the share of losses not recognized.

For the impairment of the investments in joint ventures and associates, refer to Note III.18.

##### (3) Criteria for determining the existence of joint control or significant influence over an investee

Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (activities with significant impact on the returns of the arrangement) require the unanimous consent of the parties sharing control.

The following factors are usually considered when assessing whether the Group can exercise joint control over an investee:

- Whether no single participant party is in a position to control the investee's related activities unilaterally;
- Whether strategic decisions relating to the investee's related activities require the unanimous consent of all participant parties that sharing of control.

Significant influence is the power to participate in the financial and operating policy decisions of an investee but does not have control or joint control over those policies.

124

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 12. Investment properties

Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties are accounted for using the cost model and stated in the balance sheet at cost less accumulated depreciation, amortization and impairment losses. The cost of investment property, less its estimated residual value and accumulated impairment losses, is depreciated or amortized using the straight-line method over its estimated useful life, unless the investment property is classified as held for sale. For the impairment of the investment properties, refer to Note III.18.

| Class | Estimated useful life (years) | Residual value rate (%) | Depreciation rate (%) |
| --- | --- | --- | --- |
| Plant and buildings | 30-40 years | 3% | 2.4%-3.2% |

When an investment property is transferred to owner-occupied properties, it is reclassified as fixed asset or intangible asset at the date of the transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as investment properties at its carrying amount at the date of the transfer.

The investment property's estimated useful life, net residual value and depreciation method applied are reviewed and adjusted as appropriate at each year-end.

An investment property is derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The net amount of proceeds from sale, transfer, retirement or damage of an investment property after its carrying amount and related taxes and expenses is recognized in profit or loss for the current period.

### 13. Fixed assets

#### (1) Recognition of fixed assets

Fixed assets represent the tangible assets held by the Group for use in production of goods or for administrative purposes with useful lives over one accounting year.

The cost of a purchased fixed asset comprises the purchase price, related taxes, and any directly attributable expenditure for bringing the asset to working condition for its intended use. The cost of self-constructed assets is measured in accordance with the policy set out in Note III.14. The fixed assets injected by the state-owned shareholder during the restructuring were initially recorded at the valuated amount approved by the relevant authorities managing state-owned assets.

2022 Interim Report

125

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 13. Fixed assets *(continued)*

#### (1) Recognition of fixed assets *(continued)*

Where the parts of an item of fixed assets have different useful lives or provide benefits to the Group in a different pattern, thus necessitating use of different depreciation rates or methods, each part is recognized as a separate fixed asset.

Any subsequent costs including the cost of replacing part of an item of fixed assets are recognized as assets when it is probable that the economic benefits associated with the costs will flow to the Group, and the carrying amount of the replaced part is derecognized. The costs of the day-to-day maintenance of fixed assets are recognized in profit or loss as incurred.

Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses.

#### (2) Depreciation of fixed assets

The cost of a fixed asset, less its estimated residual value and accumulated impairment losses, is depreciated using the straight-line method over its estimated useful life.

The estimated useful lives, residual value rates and depreciation rates of each class of fixed assets are as follows:

| Class | Estimated useful life (years) | Residual value rate (%) | Depreciation rate (%) |
| --- | --- | --- | --- |
| Buildings | 12-40 years | 0%-5% | 2.4%-8.3% |
| Plant and machinery | 5-20 years | 0%-5% | 4.8%-20.0% |
| Vehicles and other equipment | 4-20 years | 0%-5% | 4.8%-25.0% |

Useful lives, estimated residual values and depreciation methods are reviewed at least at each year-end.

126

Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 13. Fixed assets *(continued)*

(3) For the impairment of the fixed assets, refer to Note III.18.

(4) Disposal of fixed assets

The carrying amount of a fixed asset is derecognized:

- when the fixed asset is holding for disposal; or
- when no future economic benefit is expected to be generated from its use or disposal.

Gains or losses arising from the retirement or disposal of an item of fixed asset are determined as the difference between the net disposal proceeds and the carrying amount of the item, and are recognized in profit or loss on the date of retirement or disposal.

#### 14. Construction in progress

The cost of self-constructed assets includes the cost of materials, direct labour, capitalized borrowing costs (see Note III.15), and any other costs directly attributable to bringing the asset to working condition for its intended use.

A self-constructed asset is classified as construction in progress and transferred to fixed asset when it is ready for its intended use, and depreciation begins from the following month. No depreciation is provided against construction in progress.

Construction in progress is stated in the balance sheet at cost less accumulated impairment losses (see Note III.18).

The Group sells the products or by-products produced before the fixed assets are ready for their intended use. In accordance with CAS No.14 - Revenue, CAS No.1 - Inventory and other standards, the relevant income and cost are accounted for separately and recognized in profit or loss.

2022 Interim Report

127

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 15. Borrowing costs

Borrowing costs incurred directly attributable to the acquisition and construction of a qualifying asset are capitalized as part of the cost of the asset. Other borrowing costs are recognized as financial expenses when incurred.

During the capitalization period, the amount of interest (including amortization of any discount or premium on borrowing) to be capitalized in each accounting period is determined as follows:

- Where funds are borrowed specifically for the acquisition, and construction or production of a qualifying asset, the amount of interest to be capitalized is the interest expense calculated using effective interest rates during the period less any interest income earned from depositing the borrowed funds or any investment income on the temporary investment of those funds before being used on the asset.
- To the extent that the Group borrows funds generally and uses them for the acquisition, and construction or production of a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by applying a capitalization rate to the weighted average of the excess amounts of cumulative expenditure on the asset over the above amounts of specific borrowings. The capitalization rate is the weighted average of the interest rates applicable to the general-purpose borrowings.

The effective interest rate is determined as the rate that exactly discounts estimated future cash flow through the expected life of the borrowing or, when appropriate, a shorter period to the initially recognized amount of the borrowings.

During the capitalization period, exchange differences related to the principal and interest on a specific-purpose borrowing denominated in foreign currency are capitalized as part of the cost of the qualifying asset. The exchange differences related to the principal and interest on foreign currency borrowings other than a specific-purpose borrowing are recognized as a financial expense when incurred.

The capitalization period is the period from the date of commencement of capitalization of borrowing costs to the date of cessation of capitalization, excluding any period over which capitalization is suspended. Capitalization of borrowing costs commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities of acquisition and construction that are necessary to prepare the asset for its intended use are in progress, and ceases when the assets become ready for their intended use. Capitalization of borrowing costs is suspended when the acquisition and construction activities are interrupted abnormally for a period of more than three months.

128

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 16. Intangible assets

Intangible assets are stated in the balance sheet at cost less accumulated amortization (where the estimated useful life is finite) and impairment losses (see Note III.18). For an intangible asset with finite useful life, its cost less estimated residual value and accumulated impairment losses is amortized using the straight-line method over its estimated useful life, unless the intangible asset is classified as held for sale. The intangible assets injected by the state-owned shareholder during the restructuring were initially recorded at the valuated amount approved by the relevant authorities managing state-owned assets.

The respective amortization periods for intangible assets are as follows:

| Item | Amortization period (years) |
| --- | --- |
| Land-use right | 20-50 years |
| Other intangible assets | 2-28 years |

Useful lives and amortization methods of intangible asset with finite useful life are reviewed at least at each year-end.

An intangible asset is regarded as having an indefinite useful life and is not amortized when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for the Group. At the balance sheet date, the Group does not have any intangible assets with indefinite useful lives.

Expenditure on an internal research and development project is classified into expenditure incurred during the research phase and expenditure incurred during the development phase.

Expenditure during the research phase is expensed when incurred. Expenditure during the development phase is capitalized if development costs can be measured reliably, the product or process is technically and commercially feasible, and the Group intends to and has sufficient resources to complete the development. Capitalized development costs are stated in the balance sheet at cost less impairment losses (see Note III.18). Other development expenditure is recognized as an expense in the period in which it is incurred.

For the external sales of products or by-products produced in the research and development process, the relevant income and cost are accounted for separately and recognized in profit or loss in accordance with CAS No.14 - Revenue, CAS No.1 - Inventory and other standards.

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129

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 17. Long-term deferred expenses

Long-term prepaid expenses mainly include the catalyst expenditures, leasehold improvements and other expenditures that have been incurred but should be recognized as expenses over more than one year in the current and subsequent periods.

Long-term deferred expenses are amortized using a straight-line method within the benefit period. The respective amortization periods for such expenses are as follows:

| Item | Amortization period |
| --- | --- |
| Catalysts | 1.5-10 years |
| Leasehold improvements | 15-27 years |

#### 18. Impairment of assets other than inventories and financial assets

The carrying amounts of the following assets are reviewed at each balance sheet date based on internal and external sources of information to determine whether there is any indication of impairment:

- fixed assets
- construction in progress
- right-of-use assets
- intangible assets
- investment properties measured using a cost model
- long-term equity investments
- long-term deferred expenses, etc.

If any indication exists, the recoverable amount of the asset is estimated. In addition, the Group estimates the recoverable amounts of intangible assets not ready for use at least annually at each year-end, irrespective of whether there is any indication of impairment.

The recoverable amount of an asset (or asset group, set of asset groups) is the higher of its fair value (see Note III.19) less costs to sell and its present value of expected future cash flows.

An asset group is composed of assets directly related to cash generation and is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or asset groups.

130 Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 18. Impairment of assets other than inventories and financial assets *(continued)*

The present value of expected future cash flows of an asset is determined by discounting the future cash flows, estimated to be derived from continuing use of the asset and from its ultimate disposal, to their present value using an appropriate pre-tax discount rate.

An impairment loss is recognized in profit or loss when the recoverable amount of an asset is less than its carrying amount. A provision for impairment of the asset is recognized accordingly. Impairment losses related to an asset group or a set of asset groups are allocated first to reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups, and then to reduce the carrying amount of the other assets in the asset group or set of asset groups on a pro rata basis. However, such allocation would not reduce the carrying amount of an asset below the highest of its fair value less costs to sell (if measurable), its present value of expected future cash flows (if determinable) and zero.

Once an impairment loss is recognized, it is not reversed in a subsequent period.

### 19. Fair value measurement

Unless otherwise specified, the Group measures fair value as follows:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

When measuring fair value, the Group takes into account the characteristics of the particular asset or liability (including the condition and location of the asset and restrictions, if any, on the sale or use of the asset) that market participants would consider when pricing the asset or liability at the measurement date, and uses valuation techniques that are appropriate in the circumstances and for which sufficient data and other information are available to measure fair value. Valuation techniques mainly include the market approach, the income approach and the cost approach.

2022 Interim Report

131

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 20. Provisions

A provision is recognized for an obligation related to a contingency if the Group has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Where the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows. The increase in the discounted amount of the provision arising from passage of time is recognized as interest expense. Factors pertaining to a contingency such as the risks, uncertainties and time value of money are taken into account as a whole in reaching the best estimate. Where there is a continuous range of possible outcomes for the expenditure required, and each possible outcome in that range is as likely as any other, the best estimate is the mid-point of that range. In other cases, the best estimate is determined according to the following circumstances:

- Where the contingency involves a single item, the best estimate is the most likely outcome.
- Where the contingency involves a large population of items, the best estimate is determined by weighting all possible outcomes by their associated probabilities.

The Group reviews the carrying amount of a provision at the balance sheet date and adjusts the carrying amount to the current best estimate. The estimated liabilities expected to be paid within one year from the balance sheet date are listed as current liabilities.

#### 21. Revenue recognition

Revenue is the gross inflow of economic benefits arising in the course of the Group's ordinary activities when the inflows result in increase in shareholders' equity, other than increase relating to contributions from shareholders.

Revenue is recognized when the Group satisfies the performance obligation in the contract by transferring the control over relevant goods or services to the customers.

Where a contract has two or more performance obligations, the Group determines the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction price in proportion to those stand-alone selling prices. The Group recognizes as revenue the amount of the transaction price that is allocated to each performance obligation. The stand-alone selling price is the price at which the Group would sell a promised good or service separately to a customer. If a stand-alone selling price is not directly observable, the Group considers all information that is reasonably available to the entity, maximizes the use of observable inputs to estimate the stand-alone selling price.

132

Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 21. Revenue recognition *(continued)*

For the contract with a warranty, the Group analyses the nature of the warranty provided, if the warranty provides the customer with a distinct service in addition to the assurance that the product complies with agreed-upon specifications, the Group recognizes for the promised warranty as a performance obligation. Otherwise, the Group accounts for the warranty in accordance with the requirements of CAS No.13 - Contingencies.

The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties. The Group recognizes the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Where the contract contains a significant financing component, the Group recognizes the transaction price at an amount that reflects the price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods or services when (or as) they transfer to the customer. The difference between the amount of promised consideration and the cash selling price is amortized using an effective interest method over the contract term. The Group does not adjust the consideration for any effects of a significant financing component if it expects, at contract inception, that the period between when the Group transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

The Group satisfies a performance obligation over time if one of the following criteria is met; or otherwise, a performance obligation is satisfied at a point in time:

- the customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs;
- the customer can control the asset created or enhanced during the Group's performance; or
- the Group's performance does not create an asset with an alternative use to it and the Group has an enforceable right to payment for performance completed to date.

For performance obligation satisfied over time, the Group recognizes revenue over time by measuring the progress towards complete satisfaction of that performance obligation. When the outcome of that performance obligation cannot be measured reasonably, but the Group expects to recover the costs incurred in satisfying the performance obligation, the Group recognizes revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.

2022 Interim Report

133

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 21. Revenue recognition *(continued)*

For performance obligation satisfied at a point in time, the Group recognizes revenue at the point in time at which the customer obtains control of relevant goods or services. To determine whether a customer has obtained control of goods or services, the Group considers the following indicators:

- the Group has a present right to payment for the goods or services;
- the Group has transferred physical possession of the goods to the customer;
- the Group has transferred the legal title of the goods or the significant risks and rewards of ownership of the goods to the customer; and
- the customer has accepted the goods or services, etc.

The Group determines whether it is a principal or an agent, depending on whether it obtains control of the specified good or service before that good or service is transferred to a customer. The Group is a principal if it controls the specified good or service before that good or service is transferred to a customer, and recognizes revenue in the gross amount of consideration to which it has received (or receivable). Otherwise, the Group is an agent, and recognizes revenue in the amount of any fee or commission to which it expects to be entitled. The fee or commission is the net amount of consideration that the Group retains after paying the other party the consideration, or is the established amount or proportion.

A contract asset is the Group's right to consideration in exchange for goods or services that it has transferred to a customer when that right is conditional on something other than the passage of time. The Group recognizes loss allowances for expected credit loss on contract assets (see Note III 9(6)). Accounts receivable is the Group's right to consideration that is unconditional (only the passage of time is required). A contract liability is the Group's obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.

The following is the description of accounting policies regarding revenue from the Group's principal activities:

134

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 21. Revenue recognition *(continued)*

#### (1) Sale of goods

Revenue from sale is recognized when all of the general conditions stated above and the following conditions are satisfied: the significant risks and rewards of ownership of goods have been transferred to the buyer, as well as the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold. The Group recognizes revenue when goods are sent to designated place or customer take delivery of the goods from Group's designated warehouse, and confirmed receipt by customers according to the terms of contract.

The Group provides discounts based on the sales amount, and recognizes revenue based on the contract value exclude expected discounts.

#### (2) Rendering of overseas shipping services

Revenue from the rendering of overseas shipping services is recognized using the percentage of completion method, with the stage of completion being determined based on proportion of shipping time incurred to date to the estimated total shipping time.

#### (3) Interest income

Interest income is calculated by the time of lending money and the actual interest rate.

### 22. Contract costs

Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contract with a customer.

Incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (e.g., an incremental sales commission). The Group recognizes as an asset the incremental costs of obtaining a contract with a customer if it expects to recover those costs. Other costs of obtaining a contract are expensed when incurred.

2022 Interim Report

135

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 22. Contract costs *(continued)*

If the costs to fulfil a contract with a customer are not within the scope of inventories or other accounting standards, the Group recognizes an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:

- the costs relate directly to an existing contract or to a specifically identifiable anticipated contract, including direct labor, direct materials, allocations of overheads (or similar costs), costs that are explicitly chargeable to the customer and other costs that are incurred only because the Group entered into the contract;
- the costs generate or enhance resources of the Group that will be used in satisfying performance obligations in the future;
- the costs are expected to be recovered.

Assets recognized for the incremental costs of obtaining a contract and assets recognized for the costs to fulfil a contract (the “assets related to contract costs”) are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relate and recognized in profit or loss for the current period. The Group recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

The Group recognizes an impairment loss in profit or loss to the extent that the carrying amount of an asset related to contract costs exceeds:

- remaining amount of consideration that the Group expects to receive in exchange for the goods or services to which the asset relates; less
- the costs that relate directly to providing those goods or services that have not yet been recognized as expenses.

136

Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 23. Employee benefits

##### (1) Short term employee benefits

Employee wages or salaries, bonuses, social security contributions such as medical insurance, work injury insurance, maternity insurance and housing fund, measured at the amount incurred or accrued at the applicable benchmarks and rates, are recognized as a liability as the employee provides services, with a corresponding charge to profit or loss or included in the cost of assets where appropriate. Employee benefits which are non-monetary benefits are measured at fair value.

##### (2) Postemployment benefits defined contribution plans

Pursuant to the relevant laws and regulations of the People's Republic of China, the Group participated in a defined contribution basic pension insurance plan in the social insurance system established and managed by government organisations. The Group makes contributions to basic pension insurance plans based on the applicable benchmarks and rates stipulated by the government. When employees retire, the relevant local authorities are obliged to pay the basic pensions to them. Basic pension insurance contributions payable are recognized as a liability as the employee provides services, with a corresponding charge to profit or loss or included in the cost of assets where appropriate.

##### (3) Termination benefits

When the Group terminates the employment with employees before the employment contracts expire, or provides compensation under an offer to encourage employees to accept voluntary redundancy, a provision is recognized with a corresponding expense in profit or loss at the earlier of the following dates:

- When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee termination plan or a curtailment proposal;
- When the Group has a formal detailed restructuring plan involving the payment of termination benefits and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.

Termination benefits expected to be paid in one year are listed as current liabilities.

2022 Interim Report

137

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 24. Government grants

Government grants are nonreciprocal transfers of monetary or nonmonetary assets from the government to the Group except for capital contributions from the government in the capacity as an investor in the Group. Special funds such as investment grants allocated by the government, if clearly defined in official documents as part of “capital reserve” are dealt with as capital contributions, are not regarded as government grants.

A government grant is recognized when there is reasonable assurance that the grant will be received and that the Group will comply with the conditions attaching to the grant.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a transfer of a nonmonetary asset, it is measured at fair value.

Government grants related to assets are grants whose primary condition is that the Group qualifying for them should purchase, construct or otherwise acquire long-term assets. Government grants related to income are grants other than those related to assets. A government grant related to an asset is offset against the carrying amount of the related asset or recognized as deferred income and amortized over the useful life of the related asset on a reasonable and systematic manner as other income or non-operating income. A grant that compensates the Group for expenses or losses to be incurred in the future is recognized as deferred income, and included in other income or nonoperating income offset against related expense in the periods in which the expenses or losses are recognized. Or included in other income or non-operating income offset against the related expenses directly. The Group uses the same reporting method for similar government subsidies.

Government subsidies related to daily activities are included in operating profit, while government subsidies unrelated to daily activities are included in non-operating income and expenditure.

138

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 25. Specific reserve

According to the decision of the State Council on Further Strengthening the work of production safety (Guofa No.2 2004), Shanghai Municipal Government to implement the State Council on Further Strengthening corporate safety work notice (Hufufa No.35 2010) and Safe production costs extraction and use of management practices (Caiqi No.16 2012) issued by the Ministry of Finance and the national production safety supervision administration on February 2012, The Group extracted safety production costs in a certain percentage of sales revenue from the dangerous goods in previous year, which is used for safety costs.

The Group recognizes a safety fund in the specific reserve pursuant to relevant government regulations, with a corresponding increase in the costs of the related products or expenses.

When the safety fund is subsequently used for revenue expenditure, the specific reserve is reduced accordingly. On utilization of the safety fund for fixed assets, the specific reserve is reduced as the fixed assets are recognized, which is the time when the related assets are ready for their intended use; in such cases, an amount that corresponds to the reduction in the specific reserve is recognized in accumulated depreciation with respect to the related fixed assets. As a consequence, such fixed assets are not depreciated in subsequent periods.

### 26. Income tax

Current tax and deferred tax are recognized in profit or loss except to the extent that they relate to a business combination or items recognized directly in equity (including other comprehensive income).

Current tax is the expected tax payable calculated at the applicable tax rate on taxable income for the year, plus any adjustment to tax payable in respect of previous years.

At the balance sheet date, current tax assets and liabilities are offset only if the Group has a legally enforceable right to set them off and also intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases, which include the deductible losses and tax credits carried forward to subsequent periods. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized.

Deferred tax is not recognized for the temporary differences arising from the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting profit nor taxable profit (or deductible loss). Deferred tax is not recognized for taxable temporary differences arising from the initial recognition of goodwill.

2022 Interim Report

139

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 26. Income tax *(continued)*

At the balance sheet date, deferred tax is measured based on the tax consequences that would follow from the expected manner of recovery or settlement of the carrying amounts of the assets and liabilities, using tax rates enacted at the balance sheet date that are expected to be applied in the period when the asset is recovered, or the liability is settled.

The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable that the related tax benefits will be utilized. Such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Deferred tax liabilities are recognized for temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries, associates and joint ventures will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilized, the corresponding deferred tax assets are recognized.

At the balance sheet date, deferred tax assets and deferred tax liabilities are offset if all of the following conditions are met:

- the taxable entity has a legally enforceable right to offset current tax liabilities and current tax assets;
- they relate to income taxes levied by the same tax authority on either:
  - the same taxable entity; or
  - different taxable entities which intend either to settle the current tax liabilities and current tax assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or deferred tax assets are expected to be settled or recovered.

140

Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 27. Leases

A contract is lease if the lessor conveys the right to control the use of an identified asset to lessee for a period of time in exchange for consideration.

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

- the contract involves the use of an identified asset. An identified asset may be specified explicitly or implicitly specified in a contract and should be physically distinct, or capacity portion or other portion of an asset that is not physically distinct, but it represents substantially all of the capacity of the asset and thereby provides the customer with the right to obtain substantially all of the economic benefits from the use of the asset. If the supplier has a substantive substitution right throughout the period of use, then the asset is not identified;
- the lessee has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use;
- the lessee has the right to direct the use of the asset.

For a contract that contains more separate lease components, the lessee and the lessor separate lease components and account for each lease component as a lease separately. For a contract that contains lease and non-lease components, the lessee and the lessor separate lease components from non-lease components. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate lease components from non-lease components and account for the lease and non-lease components as a single lease component. For a contract that contains lease and non-lease components, the lessee allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The lessor allocates the consideration in the contract in accordance with the accounting policy in Note III.21.

2022 Interim Report

141

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 27. Leases *(continued)*

#### (1) As a lessee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability, any lease payments made at or before the commencement date (less any lease incentives received), any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease.

The right-of-use asset is depreciated using the straight-line method. If the lessee is reasonably certain to exercise a purchase option by the end of the lease term, the right-of-use asset is depreciated over the remaining useful lives of the underlying asset. Otherwise, the right-of-use asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. Impairment losses of right-of-use assets are accounted for in accordance with the accounting policy described in Note III.18.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. Lease payments include fixed payments and payments to be made if it is reasonably determined that the option to buy or to terminate the lease option will be exercised. The variable rent, which is determined by a certain percentage of sales, is not included in the lease payment and is recorded into the current profit and loss when it actually occurs. The Group will be paid from the balance sheet date within one year (including one year) of the lease liabilities, as a non-current liability due within one year. Discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate.

A constant periodic rate is used to calculate the interest on the lease liability in each period during the lease term with a corresponding charge to profit or loss or included in the cost of assets where appropriate. Variable lease payments not included in the measurement of the lease liability is charged to profit or loss or included in the cost of assets where appropriate as incurred.

142 Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 27. Leases *(continued)*

##### (1) As a lessee *(continued)*

Under the following circumstances after the commencement date, the Group remeasures lease liabilities based on the present value of revised lease payments:

- there is a change in the amounts expected to be payable under a residual value guarantee;
- there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments;
- there is a change in the assessment of whether the Group will exercise a purchase, extension or termination option, or there is a change in the exercise of the extension or termination option.

When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognizes the lease payments associated with these leases in profit or loss or as the cost of the assets where appropriate using the straight-line method over the lease term.

##### (2) As a lessor

All lease contracts where the Group is a lessor are operating leases.

Lease receipts from operating leases is recognized as income using the straight-line method over the lease term. The initial direct costs incurred in respect of the operating lease are initially capitalized and subsequently amortized in profit or loss over the lease term on the same basis as the lease income. Variable lease payments not included in lease receipts are recognized as income as they are earned.

2022 Interim Report

143

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 28. Hedge accounting

Hedge accounting is a method which recognizes in profit or loss (or other comprehensive income) the gain or loss on the hedging instrument and the hedged item in the same accounting period(s) to represent the effect of risk management.

Hedged items are items that expose the Group to risks of changes in cash flows and that are designated as being hedged and can be reliably measured. The Group's hedged items include a forecast transaction that is settled with an undetermined future market price and exposes the Group to risk of variability in cash flows, etc.

A hedging instrument is a designated financial instrument whose changes in cash flows are expected to offset changes in the fair value or cash flows of the hedged item.

The Group assesses at the inception of a hedging relationship, and on an ongoing basis, whether the hedging relationship meets the hedge effectiveness requirements. A hedging relationship is regarded as having met the hedge effectiveness requirements if all of the following conditions are satisfied:

- There is an economic relationship between the hedged item and the hedging instrument. The economic relationship causes the value of the hedging instrument and the hedged item to move in opposite directions due to the same exposure to the hedged risk;
- The effect of credit risk does not dominate the value changes that result from the economic relationship;
- The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of the hedged item.

When a hedging relationship no longer meets the hedge effectiveness requirements due to the hedge ratio, but the risk management objective of the designated hedging relationship remains unchanged, the Group rebalances the hedging relationship. Rebalancing refers to the adjustments made to the designated quantities of the hedged item or the hedging instrument of an already existing hedging relationship for the purpose of maintaining a hedge ratio that complies with the hedge effectiveness requirements.

144

Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 28. Hedge accounting *(continued)*

The Group discontinues applying hedge accounting in any of the following circumstances:

- The hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting;
- The hedging instrument expires or is sold, terminated or exercised;
- There is no longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to dominate the value changes that result from that economic relationship;
- The hedging relationship no longer meets other criteria for applying hedge accounting.

##### (1) Cash flow hedges

A cash flow hedge is a hedge of the exposure to variability in cash flows. The portion of the gain or loss on a hedging instrument that is determined to be an effective hedge is recognized in other comprehensive income as a cash flow hedge reserve. The amount of the cash flow hedge reserve is adjusted to the lower of the following (in absolute amounts):

- the cumulative gain or loss on the hedging instrument from inception of the hedge;
- the cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.

The change in the amount of the cash flow hedge reserve is recognized in other comprehensive income in each period.

The portion of the gain or loss on the hedging instrument that is determined to be ineffectiveness is recognized in profit or loss.

If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the Group removes that amount from the cash flow hedge reserve and includes it in the initial cost or other carrying amount of the asset or liability. This is not a reclassification adjustment and will not affect other comprehensive income.

2022 Interim Report

145

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 28. Hedge accounting *(continued)*

##### (1) Cash flow hedges *(continued)*

For cash flow hedges other than those covered above, that amount is reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit or loss.

When the Group discontinues hedge accounting for a cash flow hedge, the amount of the accumulated cash flow hedge reserve recognized in other comprehensive income is accounted for as follows:

- If the hedged future cash flows are still expected to occur, that amount will remain in the cash flow hedge reserve and be accounted for in accordance with the above policy;
- If the hedged future cash flows are no longer expected to occur, that amount is immediately reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment.

#### 29. Profit distributions

Dividends or profit distributions proposed in the profit appropriation plan, which will be approved after the balance sheet date, are not recognized as a liability at the balance sheet date but are disclosed in the notes separately.

#### 30. Related parties

If a party has the power to control, jointly control or exercise significant influence over another party, or vice versa, or where two or more parties are subject to common control or joint control from another party, they are considered to be related parties. Related parties may be individuals or enterprises. Enterprises with which the Company is under common control only from the State and that have no other related party relationships are not regarded as related parties.

In addition to the related parties stated above, the Company determines related parties based on the disclosure requirements of Administrative Procedures on the Information Disclosures of Listed Companies issued by the CSRC.

146

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 31. Segment reporting

Reportable segments are identified based on operating segments which are determined based on the structure of the Group's internal organization, management requirements and internal reporting system after taking the materiality principle into account. An operating segment is a component of the Group that satisfies all of the following conditions:

- - the component is able to earn revenues and incur expenses from its ordinary activities;
- - whose operating results are regularly reviewed by the Group's management to make decisions about resources to be allocated to the segment and to assess its performance;
- - for which the information on financial position, operating results and cash flows is available to the Group. Two or more operating segments may be aggregated into a single operating segment if the segments have the similar economic characteristics and are same or similar in respect of the nature of each segment's products and services, the nature of production processes, the types or classes of customers for the products and services, the methods used to distribute the products or provide the services, and the nature of the regulatory environment.

Inter-segment revenues are measured on the basis of the actual transaction prices for such transactions for segment reporting. Segment accounting policies are consistent with those for the consolidated financial statements.

### 32. Significant accounting estimates and judgements

The preparation of the financial statements requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

#### (1) Significant accounting estimates

##### (a) *Accounting estimate of Inventory provision*

Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Management bases the estimates on all available information, including the current market prices of the finished goods and raw materials, and historical cost of sales. If the actual selling prices were to be lower or the costs of completion were to be higher than estimated, the actual allowance for diminution in value of inventories could be higher than estimated.

2022 Interim Report

147

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 32. Significant accounting estimates and judgements *(continued)*

#### (1) Significant accounting estimates *(continued)*

##### (b) *Impairment of assets other than inventories and financial assets*

As described in Note III.18, at the end of each reporting period, the Group estimates the recoverable amount of an asset or a cash-generating unit ('CGU') (a portion of which related to certain production facilities), at the higher of its fair value less costs of disposal and its value in use, to determine the impairment losses. If circumstances indicate that the carrying amount of the asset or CGU may not be recoverable, the asset or CGU may be considered 'impaired', and an impairment loss may be recognized.

The recoverable amount of assets or CGUs is the higher of the fair value less costs of disposal and value in use. As the fair value of certain assets or CGUs may not be publicly available, the Group uses all readily available information in determining an amount that is a reasonable approximation of recoverable amount, including estimates based on reasonable and supportable assumptions for projections of product sales and operating costs and discount rate. In particular, in determining the value in use of the Group's specific CGUs, significant judgements are required on the accounting estimates which are based on the assumptions relating to product sales growth rates, related costs growth rates and discount rate applied.

##### (c) *Estimated useful life and residual value of fixed assets*

The Group assessed the reasonableness of estimated useful life of fixed assets in line with the historical experience on the basis of similar function or characteristic for the assets. If there are significant changes in estimated useful lives and residual value from previous years, the depreciation expenses for future periods are adjusted.

The Group reviews and adjusts the useful lives and estimated residual value of the assets regularly at the end of each year end.

148

Sinopec Shanghai Petrochemical Company Limited

# **NOTES TO THE FINANCIAL STATEMENTS** *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### III. Summary of significant accounting policies and accounting estimates *(continued)*

#### 32. Significant accounting estimates and judgements *(continued)*

##### (2) Significant accounting judgements

###### (a) Classification of financial assets

The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows. The Group determines the business model of managing financial assets at the level of financial asset portfolio, taking into account such factors as the way of evaluating and reporting the performance of financial assets to key managers, the risk and management methods that affect the performance of financial assets, and the ways in which relevant business managers are paid, etc..

When the Group evaluates whether the contract cash flow of financial assets is consistent with the basic lending arrangement, there are the following main judgments: whether the time distribution or amount of principal may change within the duration due to prepayment or other reasons; Does interest include only the time value of money, credit risk, other basic lending risks, and consideration of costs and profits? For example, does the prepayment amount reflect only the principal outstanding and the interest based on the principal outstanding, as well as the reasonable compensation paid for the early termination of the contract.

#### 33. Changes in significant accounting policies and accounting estimates

##### (1) Description and reasons of changes in accounting policies

The following accounting standards take effect for annual periods beginning on or after 1 January 2022 and are relevant to the Group:

- CAS Bulletin No.15 (Caikuai [2021] No.35) ('Bulletin No.15') 'About the accounting treatment of external sales of products or by-products produced by enterprises before the fixed assets are ready for their intended use or during the research and development process ('Accounting treatment of trial operation sales');
- Judgment regarding onerous contracts' in Bulletin No.15; and
- Notice on the Adoption of the Accounting Treatment of COVID-19-Related Rent Concessions (Caikuai [2022] No.13)

2022 Interim Report

149

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## III. Summary of significant accounting policies and accounting estimates *(continued)*

### 33. Changes in significant accounting policies and accounting estimates *(continued)*

#### (1) Description and reasons of changes in accounting policies *(continued)*

##### (a) *Accounting treatment of trial operation sales in Bulletin No.15*

According to this regulation, the income and cost of the Group’s external sales of products or by-products produced before the fixed assets are ready for their intended use or during the research and development process (hereinafter collectively referred to as “trial operation sales”) are accounted for separately and recognized in profit or loss in accordance with CAS No.14 - Revenue and CAS No.1 - Inventory. The net trial operation sales after offsetting the relevant cost will no longer be offset against the cost of fixed assets or R&D expenses.

The above standards take effect on 1 January 2022. The Group has made retrospective adjustments to the trial operation sales that occurred between January 1, 2021 and the date of initial implementation in accordance with the above standards.

The adoption of above standards does not have any significant effect on the financial position or financial performance of the Group.

##### (b) *‘Judgment regarding onerous contracts’ in Bulletin No.15*

According to this regulation, when the Group judges an onerous contract, the estimated cost of performing the contract shall include the incremental cost of performing the contract and the apportioned amount of other costs directly related to the performance of the contract.

The adoption of this standard does not have any significant effect on the financial position or financial performance of the Group.

##### (c) *Caikuai [2022] No.13*

The Accounting Treatment of COVID-19-Related Rent Concessions (Caikuai [2020] No.10) provides a simplified approach to rent concessions under certain conditions directly triggered by the COVID-19 pandemic. According to Caikuai [2022] No.13, for the reduction of lease payments payable after 30 June 2022, the simplified approach of Cai Kuai [2020] No.10 still applies.

The adoption of the above standard does not have any significant effect on the financial position or financial performance of the Group.

150

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## IV. Taxation

Main types of taxes and corresponding tax rates:

| Tax type | Tax basis | Tax rate |
| --- | --- | --- |
| Corporate income tax (a) | Based on taxable profits | 25% |
| Value-added tax (VAT) | Output VAT is calculated on product sales and taxable services revenue. The basis for VAT payable is to deduct input VAT from the output VAT for the period | 5%.6%.9% and 13% |
| Consumption tax | Based on taxable revenue | Gasoline: RMB2,109.76 per ton; Diesel oil: RMB1,411.20 per ton; Naphtha: RMB2,105.20 per ton; Fuel oil: RMB1,218.00 per ton |
| Urban maintenance and construction tax | Based on VAT and consumption tax paid | 5% and 7% |

(a) Pursuant to the 'Circular on Enterprise Income Tax Policy concerning Deductions for Equipment and Appliances' (Cai Shui [2018] 54) issued by the State Administration of Taxation, during the period from 1 January 2018 to 31 December 2020, the cost of newly purchased equipment with the original cost less than RMB5 million can be fully deducted against taxable profit in the next month after the asset is put into use, instead of being depreciated annually for tax filing. Pursuant to the 'Announcement on the extension of the implementation period of some tax incentives' (Cai Shui [2021] 6) issued by the State Administration of Taxation, the implementation period of Cai Shui [2018] 54 is extended to December 31, 2023.

2022 Interim Report

151

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements

### 1. Cash at bank and on hand

| Item | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Deposits with banks | 6,668,212 | 12,498,614 |
| Other monetary funds | 3 | 3 |
| Total | 6,668,215 | 12,498,617 |

Cash and cash equivalents shown in the cash flow statement:

| Item | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Deposits with banks | 6,668,212 | 12,498,614 |
| Less: Time deposits (a) | (4,229,562) | (7,386,604) |
| Ending balance of cash and cash equivalents | 2,438,650 | 5,112,010 |

(a) As at 30 June 2022, time deposits are 3-year time deposits due within one year, with annual interest rate of 3.85%-4.18%.

As at 31 December 2021, time deposits are time deposits of six months to three years, with annual interest rate of 3.2%-4.2%.

### 2. Derivative financial assets and derivative financial liabilities

| Category | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Derivative financial assets |  |  |
| - Commodity swap contracts | 240,953 | 81,405 |
| Derivative financial Liabilities |  |  |
| - Commodity swap contracts | - | 23,804 |

As at 30 June 2022 and 31 December 2021, the Group's derivative financial assets are mainly commodity swap contracts.

152

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 3. Financial assets at fair value through profit or loss

|  | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Structured deposits | 1,009,300 | - |

As at 30 June 2022, financial assets at fair value through profit or loss are structured deposits with banks, with maturity of 195 days. The contract stipulates that the principal is guaranteed, and the income is linked to the exchange rate of the US dollar against the Japanese yen (as at 31 December 2021: Nil).

### 4. Accounts receivable

#### (1) Accounts receivable by customer type are as follows:

| Category | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Amounts due from related parties (Note VIII.6) | 669,527 | 1,091,980 |
| Amounts due from third parties | 69,721 | 79,413 |
| Sub-total | 739,248 | 1,171,393 |
| Less: Provision for bad and doubtful debts | (2,150) | (1,988) |
| Total | 737,098 | 1,169,405 |

#### (2) The ageing analysis of accounts receivable is as follows:

| Aging | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Within 1 year (inclusive) | 737,134 | 1,169,279 |
| Over 1 year but within 2 years (inclusive) | - | - |
| Over 2 years but within 3 years (inclusive) | 2,114 | 2,114 |
| Total | 739,248 | 1,171,393 |

The ageing is counted starting from the date when accounts receivables are recognized.

2022 Interim Report

153

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 4. Accounts receivable *(continued)*

#### (3) Accounts receivable by provisioning method

| Category | 30 June 2022(unaudited) |  |  |  |  | 31 December 2021 |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Book value |  | Provision for bad and doubtful debts |  |  | Book value |  | Provision for bad and doubtful debts |  |  |
|  | Percentage |  | Percentage |  | Carrying amount | Percentage |  | Percentage |  | Carrying amount |
|  | Amount | (%) | Amount | (%) |  | Amount | (%) | Amount | (%) |  |
| Individual assessment | - | - | - | - | - | - | - | - | - | - |
| Collective assessment | 739,248 | 100 | 2,150 | 0.29 | 737,096 | 1,171,393 | 100 | 1,988 | 0.17 | 1,169,405 |
| Total | 739,248 | 100 | 2,150 | 0.29 | 737,096 | 1,171,393 | 100 | 1,988 | 0.17 | 1,169,405 |

(i) As at 30 June 2022, the Group has no balance of individually impaired accounts receivable (as at 31 December 2021: Nil).

(ii) Criteria for collective assessment for the six months ended 30 June 2022 and details:

According to the historical experience of the Group, there are no significant differences in the losses of different customer groups. Therefore, different customer groups are not further distinguished when calculating impairment loss.

(iii) Assessment of ECLs on accounts receivable:

At all times the Group measures the impairment loss for accounts receivable at an amount equal to lifetime ECLs, and the ECLs are based on the number of overdue days and the expected loss rate.

The loss given default is measured based on the actual credit loss experience in the past years, and is adjusted taking into consideration the differences among the economic conditions during the historical data collection period, the current economic conditions and the economic conditions during the expected lifetime.

#### (4) Movements of provisions for bad and doubtful debts:

| Provisions for bad and doubtful debts | For the six months ended 30 June |  |
| --- | --- | --- |
|  | 2022 (unaudited) | 2021 (unaudited) |
| Balance at the beginning | 1,988 | 634 |
| Additions during the period | 162 | - |
| Recoveries or reversals during the period | - | - |
| Balance at the end | 2,150 | 634 |

154

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 4. Accounts receivable *(continued)*

(5) As at 30 June 2022, Five largest accounts receivable by debtor at the end of the period:

|  | Amount | Provision | Percent of total amount |
| --- | --- | --- | --- |
| Total amount of five largest accounts receivable by debtor of the Group | 680,939 | 9 | 92.11% |

(6) Derecognition of accounts receivable due to transfer of financial assets

- (i) For the six months ended 30 June 2022, the Group has no accounts receivable derecognized due to transfer of financial assets.
- (ii) For the six months ended 30 June 2022, the Group has no accounts receivable that have fully accrued or accrued a large proportion of bad and doubtful debts in previous years, but fully recovered or reversed, or have a large proportion of recovered or reversed in the current year. (For the six months ended 30 June 2021: Nil).
- (iii) For the six months ended 30 June 2022, the Group has not written off significant accounts receivable. (For the six months ended 30 June 2021: Nil)
- (iv) At 30 June 2022, the Group has no pledged accounts receivable. (31 December 2021: Nil)

### 5. Receivables under financing

| Item | Note | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- | --- |
| Bills receivable | (1) | 173,720 | 673,295 |
| Accounts receivable | (2) | 506,549 | 399,395 |
| Total |  | 680,269 | 1,072,690 |

2022 Interim Report

155

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 5. Receivables under financing *(continued)*

#### (1) Bills receivable

- (i) Due to the requirement of cash management, the Group discounted and endorsed part of the bank acceptance notes. The business model of bank acceptance notes management is for the purpose of collecting cash flow of contracts and sales. Therefore, as at 30 June 2022, the Group classified RMB173,720 thousand bills receivable to financial assets measured at fair value and whose changes are included in other comprehensive income and disclosed in bills receivable and accounts receivable (31 December 2021: RMB673,295 thousand).
- (ii) The Group has no individually impaired bank acceptance notes, with all provision was accrued by their expected credit loss. As at 30 June 2022 and 31 December 2021, the Group considers no significant credit risk of the bank acceptance notes and the Group has limited exposure to losses arising from banks' breach of contract.
- (iii) As at 30 June 2022, the Group had no pledged bank acceptance notes (31 December 2021: Nil).
- (iv) As at 30 June 2022, unmatured bills receivable that have been endorsed or discounted by the Group is as follows:

| Item | Derecognized | Not derecognized |
| --- | --- | --- |
| Bank acceptance notes | 639,370 | - |

As at 30 June 2022, the Group endorsed and discounted the undue bills receivable of RMB639,370 thousand (31 December 2021: RMB464,012 thousand). The Group derecognized such bills receivable, accounts payable to suppliers and short-term loans as a whole by considering that the risks and rewards of ownership of such unmatured bills had been substantially transferred. The Group's continued involvement in the unexpired bills receivable whose overall derecognition is limited to the extent that the issuing bank is unable to settle the amount to the bill holder. The maximum exposure to loss caused by the Group's continued involvement is the amount of outstanding bills receivable endorsed to the supplier of RMB639,370 thousand (31 December 2021: RMB464,012 thousand). The term of the outstanding bills receivable is within one year.

#### (2) Accounts receivable

- (i) The Group's subsidiaries Shanghai Jinshan Trading Corporation Limited("JMGJ") and Shanghai Jinmao International Trading Corporation Limited ("Jinmao International") derecognized part of the accounts receivable for the non-recourse forfeiting business based on the requirement of daily cash management. The business model of accounts receivable management is for the purpose of collecting cash flow of contracts and sales. Therefore, as at 30 June 2022, the Group classified RMB506,549 thousand third party accounts receivable of subsidiaries to financial assets measured at fair value and whose changes are included in other comprehensive income and disclosed in bills receivable and accounts receivable (31 December 2021, RMB399,395 thousand).
- (ii) The analysis of accounts receivable derecognized due to the transfer of financial assets is as follows:

For the six months ended 30 June 2022, the Group's subsidiaries JMGJ and Jinmao International derecognized RMB166,343 thousand-yuan accounts receivable due to the non-recourse forfeiting. (31 December 2021: RMB254,915 thousand).

156

Sinopec Shanghai Petrochemical Company Limited

## NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### V. Notes to the consolidated financial statements *(continued)*

#### 6. Prepayments

##### (1) Prepayments by category:

| Item | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Amounts advance to related parties (Note VIII.6) | 7,258 | 34,220 |
| Amounts advance to third parties | 35,859 | 26,357 |
| Total | 43,117 | 60,577 |

##### (2) The ageing analysis of prepayments is as follows:

| Aging | 30 June 2022(unaudited) |  | 31 December 2021 |  |
| --- | --- | --- | --- | --- |
|  | Amount | Percentage | Amount | Percentage |
| Within 1 year (inclusive) | 43,117 | 100% | 60,577 | 100% |

The ageing is counted starting from the date when prepayments are recognized.

##### (3) As at 30 June 2022, the total amount of the top five prepayments to suppliers are summarised as follows:

|  | Amount | Percentage of total advances to suppliers |
| --- | --- | --- |
| Total amount of the top five prepayments to suppliers | 39,156 | 90.81% |

2022 Interim Report

157

## NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### V. Notes to the consolidated financial statements *(continued)*

#### 7. Other receivables

|  | Note | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- | --- |
| Amounts due from related parties | Note VIII.6 | 110,326 | 61,131 |
| Amounts due from third parties |  | 86,725 | 47,737 |
| Sub-total |  | 197,051 | 108,868 |
| Less: Provision for bad and doubtful debts |  | (4,865) | (140) |
| Total |  | 192,186 | 108,728 |

#### (a) The ageing analysis is as follows:

| Aging | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Within 1 year (inclusive) | 196,578 | 108,701 |
| Over 1 year but within 2 years (inclusive) | 334 | 28 |
| Over 2 years but within 3 years (inclusive) | - | - |
| Over 3 years | 139 | 139 |
| Total | 197,051 | 108,868 |

The ageing is counted starting from the date when other receivables are recognized.

158

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 7. Other receivables *(continued)*

#### (b) Others by provisioning method:

| Category | 30 June 2022 |  |  |  |  | 31 December 2021 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Book value |  | Provision for bad and doubtful debts |  |  | Book value |  | Provision for bad and doubtful debts |  |  |  |
|  | Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount | Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount |  |
|  | Individual assessment | 4,725 | 2 | (4,725) | 100.00 | - | - | - | - | - | - |
| Collective assessment | 192,336 | 98 | (140) | 0.07 | 192,186 | 108,868 | 100 | (140) | 0.13 | 108,728 |  |
| Total | 197,051 | 100 | (4,865) | 2.47 | 192,186 | 108,868 | 100 | (140) | 0.13 | 108,728 |  |

#### (c) Movements of provisions for bad and doubtful debts

|  | Stage 1 |  |  |  |  | Stage 3 |  |  | Total Provision for bad and doubtful debts |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 12-month ECL (collective) |  | 12-month ECL (individual) |  | Sub-total | Lifetime ECL - Credit impaired |  |  |  |
|  | Book value | Provision for bad and doubtful debts | Book value | Provision for bad and doubtful debts | Provision for bad and doubtful debts | Book value | Provision for bad and doubtful debts |  |  |
| Balance at 31 December 2021 | 108,729 | (1) | - | - | (1) | 139 | (139) |  | (140) |
| Additions during the period | - | - | - | - | - | 4,725 | (4,725) |  | (4,725) |
| Recoveries or reversals during the period | - | - | - | - | - | - | - |  | - |
| Balance at 30 June 2022 | 192,187 | (1) | - | - | (1) | 4,864 | (4,864) |  | (4,865) |

As at 30 June 2022 and 31 December 2021, the Group has no other receivables under Stage 2.

(i) For the six months ended 30 June 2022, the Group has no other receivables that have fully accrued or accrued a large proportion of bad and doubtful debts in previous years, but fully recovered or reversed, or have a large proportion of recovered or reversed in the current year. (For the six months ended 30 June 2021: Nil)

(ii) For the six months ended 30 June 2022, the Group has not written off significant other receivables. (For the six months ended 30 June 2021: Nil).

2022 Interim Report

159

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 7. Other receivables *(continued)*

#### (d) Others categorised by nature

| Nature of other receivables | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Export tax rebate | 68,087 | 35,665 |
| Amounts due from related parties | 110,326 | 61,131 |
| Rent receivable | 8,800 | 17 |
| Water, electricity and gas charges receivable | 392 | 86 |
| Others | 9,446 | 11,969 |
| Sub-total | 197,051 | 108,868 |
| Less: Provision for bad and doubtful debts | (4,865) | (140) |
| Total | 192,186 | 108,728 |

#### (e) Five largest others-by debtors as at 30 June 2022

| Name | Nature of the receivable | Balance at the end of the year | Ageing | Percentage of ending balance of others (%) | Ending balance of provision for bad and doubtful debts |
| --- | --- | --- | --- | --- | --- |
| China International United Petroleum and Chemicals Co., Ltd. | Current account | 93,659 | Within 1 year (inclusive) | 48% | - |
| State Administration of Taxation, Shanghai Jinshan | Export tax rebate | 68,087 | Within 1 year (inclusive) | 35% | - |
| Linde-SPC Gases Company Limited | Current account | 8,298 | Within 1 year (inclusive) | 4% | - |
| Shanghai Jinshan Petrochemical Logistics Co., Ltd. | Current account | 4,164 | Within 1 year (inclusive) | 2% | - |
| Sinopec Catalyst Co., Ltd. Precious Metals Branch | Current account | 3,686 | Within 1 year (inclusive) | 1% | - |
| Total |  | 177,894 |  | 90% | - |

160

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 8. Inventories

#### (1) Inventories by categories are as follows:

| Inventories by categories | 30 June 2022 (unaudited) |  |  | 31 December 2021 |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Book value | Provision for impairment of inventories | Carrying amount | Book value | Provision for impairment of inventories | Carrying amount |
| Raw materials | 4,143,637 | (20,080) | 4,123,557 | 4,391,555 | (13,406) | 4,378,149 |
| Work in progress | 817,116 | (72,693) | 744,423 | 795,791 | (105,450) | 690,341 |
| Finished goods | 1,594,699 | (121,996) | 1,472,703 | 709,990 | (45,950) | 664,040 |
| Spare parts and consumables | 265,477 | (58,461) | 207,016 | 249,456 | (58,461) | 190,995 |
| Total | 6,820,929 | (273,230) | 6,547,699 | 6,146,792 | (223,267) | 5,923,525 |

The balance of inventories of the Group does not include the capitalized interest at 30 June 2022 (31 December 2021: Nil).

The Group has no inventory for guarantee as at 30 June 2022 (31 December 2021: Nil).

#### (2) Provision for impairment of inventories is analysed as follows:

| Inventories by categories | 1 January 2022 | Increases during the year | Decreases during the year | 30 June 2022 (unaudited) |
| --- | --- | --- | --- | --- |
| Raw materials | 13,406 | 6,674 | - | 20,080 |
| Work in progress | 105,450 | 77,873 | (110,630) | 72,693 |
| Finished goods | 45,950 | 93,230 | (17,184) | 121,996 |
| Spare parts and consumables | 58,461 | - | - | 58,461 |
| Total | 223,267 | 177,777 | (127,814) | 273,230 |

2022 Interim Report

161

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 8. Inventories *(continued)*

#### (3) Provision for impairment of inventories are analysed as follows:

| Inventories by categories | Basis for determining net realizable value | Main reasons for reversal/write-off |
| --- | --- | --- |
| Raw materials | The estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs to make the sale and related taxes. | Not applicable |
| Work in progress | The estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs to make the sale and related taxes. | Sold in current year |
| Finished goods | The estimated selling price in the ordinary course of business, less the estimated costs to make the sale and related taxes. | Sold in current year |
| Spare parts and consumables | The estimated selling price in the ordinary course of business, less the estimated costs to make the sale and related taxes. | Used for repair and sold in current year |

### 9. Other current assets

| Item | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Entrusted loan (a) | 150,000 | - |
| VAT deductible | 373,956 | 13,322 |
| Corporate income tax prepaid | 54,173 | - |
| Others | 4,007 | 4,007 |
| Total | 582,136 | 17,329 |

(a) In January 2022, the Group provided an entrusted loan to Shanghai Jinshan Baling New Materials Co., Ltd. ('Baling Materials') through Sinopec Finance with a total loan amount of RMB300,000 thousand for styrene thermoplastics elastomeric project funds with a loan term of 6 months and an annual interest rate of 3.80%. For the six months ended 30 June 2022, the Group has granted entrusted loans of RMB150,000 thousand.

162

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 10. Long-term equity investments

|  | Note | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- | --- |
| Joint ventures | (1) | 333,569 | 276,043 |
| Associates | (2) | 3,386,338 | 3,941,237 |
| Sub-total |  | 3,719,907 | 4,217,280 |
| Less: Provision for impairment |  |  |  |
| - Joint ventures |  | - | - |
| - Associates |  | (28,392) | (28,392) |
| Total |  | 3,691,515 | 4,188,888 |

(1) Joint ventures

| Investee | 31 December 2021 | Beginning balance of impairment provision | Current period movement |  |  |  | 30 June 2022 (unaudited) | Ending balance of impairment provision |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  | Additional/ (negative) investment | Investment income recognized under equity method | Cash dividends declared in current year | Impairment provision |  |  |
| Joint venture of the Company |  |  |  |  |  |  |  |  |
| Shanghai Jinshan Baling New Material Co., Ltd. ('Baling Materials') | 50,000 | - | 50,000 | - | - | - | 100,000 | - |
| Joint ventures of subsidiaries |  |  |  |  |  |  |  |  |
| Shanghai Petrochemical Equipment Inspection and Testing Co., Ltd. ('Inspection and Testing company') | 10,100 | - | - | 592 | - | - | 10,882 | - |
| Shanghai Petrochemical Yangu Gas Development Company Limited ('Yangu Gas') | 49,919 | - | - | 199 | - | - | 50,118 | - |
| Linde-SPC Gases Company Limited ('Linde'), formerly known as 'SDC-SPC Gases Company Limited' | 166,024 | - | - | 17,805 | (11,200) | - | 172,759 | - |
| Total | 276,043 | - | 50,000 | 18,726 | (11,200) | - | 333,569 | - |

Interests in joint ventures, refer to Note VI.2.

2022 Interim Report

163

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 10. Long-term equity investments *(continued)*

#### (2) Associates

| Investes | Current period movement |  |  |  |  |  |  |  |  | Ending balance of impairment provision |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 31 December 2021 | Beginning balance of impairment provision | Additional (negative) investment | Investment income/(loss) recognized under equity method | Cash dividends declared in current year | Impairment provision | Change in other equity | Others | 31 June 2022 (unaudited) |  |
| Associates of the Company |  |  |  |  |  |  |  |  |  |  |
| Shanghai Secco | 1,270,351 | - | - | (132,608) | (554,438) | - | 3,860 | - | 507,165 | - |
| Shanghai Chemical Industry |  |  |  |  |  |  |  |  |  |  |
| Park Development |  |  |  |  |  |  |  |  |  |  |
| Company Limited |  |  |  |  |  |  |  |  |  |  |
| ("Chemical Industry") | 2,123,566 | - | - | 79,262 | - | - | (22,558) | - | 2,190,290 | - |
| Associates of subsidiaries |  |  |  |  |  |  |  |  |  |  |
| Shanghai Jinsen Hydrocarbon |  |  |  |  |  |  |  |  |  |  |
| Resins Company Limited |  |  |  |  |  |  |  |  |  |  |
| ("Jinsen")(Note 1) | 44,581 | (28,392) | - | (6,561) | - | - | - | - | 38,520 | (28,392) |
| Shanghai Aobil Automation |  |  |  |  |  |  |  |  |  |  |
| Company Limited ("Aobil") | 68,567 | - | - | 2,060 | - | - | - | - | 70,627 | - |
| Shanghai Shidian Energy |  |  |  |  |  |  |  |  |  |  |
| Company Limited ("Shidian Energy") | 334,073 | - | 60,000 | 5,754 | - | - | - | - | 418,627 | - |
| CRRC Forming Technology |  |  |  |  |  |  |  |  |  |  |
| (Qingdao) Co., Ltd. ("CRRC forming") | 26,000 | - | - | 109 | - | - | - | - | 26,109 | - |
| Others | 74,079 | - | - | 721 | (10,500) | - | - | - | 64,300 | - |
| Total | 3,941,237 | (28,392) | 60,000 | (51,263) | (564,938) | - | (19,698) | - | 3,386,338 | (28,392) |

Interests in associates, refer to Note VI.2.

Note 1: During the year ended 31 December 2021, the Group reviewed the carrying value of the Group's associate and joint ventures. The entire carrying amount of the interests in an associate is tested for impairment in accordance with CAS 8 Impairment of Assets as a single asset by comparing its recoverable amount with its carrying amount. Since the recoverable amount of investment in an associate Jinsen is lower when compared with its carrying amount, impairment loss amounting to RMB28,392 thousand is recognized during the year ended 31 December 2021.

The recoverable amount of the investment in an associate was based on its fair value less costs to sell. The fair value was determined by reference to the actual price at which another shareholder of Jinsen sold its equity interest in fiscal 2021.

164

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 11. Investment properties

|  | Buildings |
| --- | --- |
| Cost |  |
| 31 December 2021 | 626,414 |
| Decrease during the period |  |
| - Transfer out to fixed assets (Note V.12) | (47) |
| 30 June 2022 (unaudited) | 626,367 |
| Accumulated depreciation |  |
| 31 December 2021 | 274,226 |
| Additions during the period |  |
| - Charge for current period | 7,661 |
| Decrease during the period |  |
| - Transfer out to fixed assets (Note V.12) | (45) |
| 30 June 2022 (unaudited) | 281,842 |
| Carrying amount |  |
| 30 June 2022 (unaudited) | 344,525 |
| 31 December 2021 | 352,188 |

For the six months ended 30 June 2022, the depreciation amount of investment properties is RMB7,661 thousand without provision for impairment (for the six months ended 30 June 2021, depreciation amount is RMB7,663 thousand without provision for impairment).

As at 30 June 2022 and 31 December 2021 the Group had no investment properties pending certificates of ownership.

2022 Interim Report

165

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 12. Fixed assets

#### (1) Fixed assets

|  | Buildings | Plant and machinery | Vehicles and other equipment | Total |
| --- | --- | --- | --- | --- |
| Cost |  |  |  |  |
| 31 December 2021 | 3,876,070 | 43,772,938 | 1,996,930 | 49,645,938 |
| Reclassification in current period | 9,088 | (47,399) | 38,311 | - |
| Increase in current period |  |  |  |  |
| - Purchase | - | 41,480 | 18,463 | 59,943 |
| - Transfer from CIP (Note V.13) | 10,585 | 117,279 | 31,812 | 159,676 |
| - Transfer from investment properties | 47 | - | - | 47 |
| Decrease in current period |  |  |  |  |
| - Disposal | (15) | (140,900) | (39,626) | (180,541) |
| 30 June 2022 (unaudited) | 3,895,775 | 43,743,398 | 2,045,890 | 49,685,063 |
| Accumulated depreciation |  |  |  |  |
| 31 December 2021 | 2,696,773 | 32,669,993 | 1,512,782 | 36,879,548 |
| Reclassification in current period | 2,201 | (11,326) | 9,125 | - |
| Increase in current period |  |  |  |  |
| - Charge for current period | 44,300 | 611,668 | 61,250 | 717,218 |
| - Transfer from investment properties | 45 | - | - | 45 |
| Decrease in current period |  |  |  |  |
| - Disposal | (15) | (124,498) | (38,368) | (162,881) |
| 30 June 2022 (unaudited) | 2,743,304 | 33,145,837 | 1,544,789 | 37,433,930 |
| Provision for impairment |  |  |  |  |
| 31 December 2021 | 80,718 | 1,348,640 | 8,967 | 1,438,325 |
| Reclassification in current period | 2,146 | (2,202) | 56 | - |
| Increase in current period |  |  |  |  |
| - Charge for current period | - | - | - | - |
| Decrease in current period |  |  |  |  |
| - Disposals during current period | - | (1,985) | - | (1,985) |
| 30 June 2022 (unaudited) | 82,864 | 1,344,453 | 9,023 | 1,436,340 |
| Carrying amount |  |  |  |  |
| 30 June 2022 (unaudited) | 1,069,607 | 9,253,108 | 492,078 | 10,814,793 |
| 31 December 2021 | 1,098,579 | 9,754,305 | 475,181 | 11,328,065 |

166

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 12. Fixed assets *(continued)*

(2) For the six months ended 30 June 2022, the group didn't recognize impairment loss on fixed assets. As at 30 June 2022, the impairment loss on fixed assets was RMB1,436,340 thousand.

(3) As at 30 June 2022, the cost of temporarily idle fixed assets was RMB3,903,073 thousand, the accumulated depreciation was RMB3,175,305 thousand, related impairment provision was RMB550,699 thousand and the carrying amount of these assets was RMB177,069 thousand (31 December 2021: the cost of temporarily idle fixed assets was RMB3,553,001 thousand, accumulated depreciation was RMB2,867,318 thousand, related impairment provision was RMB552,580 thousand, and the carrying amount of these assets was RMB133,103 thousand, respectively).

For the six months ended 30 June 2022, amount of RMB159,676 thousand was transferred from construction in progress to fixed assets. (for the six months ended 30 June 2021: RMB687,557 thousand).

(4) As at 30 June 2022, the carrying amount of fixed assets leased out under operating leases was RMB57,310 thousand (31 December 2021: RMB54,366 thousand).

(5) As at 30 June 2022 and 31 December 2021, the Group had no fixed assets pending certificates of ownership.

### 13. Construction in progress

#### (1) Construction in progress

|  | 30 June 2022 (unaudited) |  |  | 31 December 2021 |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Original cost | Provision for impairment | Carrying amount | Original cost | Provision for impairment | Carrying amount |
| Construction in progress | 4,064,892 | (24,486) | 4,040,406 | 3,317,663 | (24,486) | 3,293,177 |

2022 Interim Report

167

# NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements (continued)

### 13. Construction in progress (continued)

#### (2) The movement of the Group's major construction in progress is listed as follows:

| Project | Budget | 31 December 2021 | Increase during the period | Transfer to fixed assets (Note V.12) | Disposal during the period | 30 June 2022 (unaudited) | Percentage of actual cost to budget | Project progress | Accumulative capitalized interest in current period | Capitalized interest in current period | Interest rate for capitalization in current period | Sources of funding |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 24000 TIA precursor fiber and 12000 TIA 48K large box carbon fiber project | 3,489,608 | 1,279,699 | 604,470 | - | - | 1,884,469 | 54.00% | 54.00% | 18,971 | 7,188 | 2.13% | own funds and borrowings |
| 100,000 tons/year EVA production equipment | 1,131,520 | 257,853 | - | - | - | 257,853 | 22.79% | 22.79% | 1,081 | - | - | own funds and borrowings |
| Shanghai Petrochemical third circuit 220KV power supply line project | 507,120 | 374,487 | 2,028 | - | - | 376,515 | 75.40% | 75.40% | 2,028 | 2,028 | 2.13% | own funds and borrowings |
| 24-34 aromatics joint unit energy saving renovation | 954,240 | 29,940 | - | - | (2,795) | 27,145 | 2.84% | 2.84% | - | - | - | own funds |
| Management project of hidden danger of seawall safety | 256,118 | 172,057 | - | - | - | 172,057 | 67.18% | 67.18% | 1,104 | - | - | own funds and borrowings |
| Centralized control relocation and reconstruction project of No.5 and No.6 units of thermal power department | 37,900 | 1,837 | 661 | (2,488) | - | - | 88.67% | 88.67% | - | - | - | own funds |
| Optimization project of turbine control system of olefin Department | 76,320 | 48,000 | - | - | - | 48,000 | 60.27% | 60.27% | - | - | - | own funds |
| Oil cleaning project | 781,657 | 1,423 | - | - | - | 1,423 | 99.53% | 99.53% | - | - | - | own funds |
| T-121-1 of Shanghai petrochemical storage and transportation department, Jinshan Area environmental comprehensive improvement | 158,259 | 70,000 | 303 | - | - | 70,303 | 44.99% | 44.99% | - | - | - | own funds |
| Energy saving and reliability of No.5 and No.6 boilers of coal power unit energy consumption compliance of cogeneration department | 80,150 | 53,000 | 3,898 | - | - | 58,898 | 70.99% | 70.99% | - | - | - | own funds |
| Energy-saving optimization and improvement project of cracked gasoline hydrogenation unit | 63,681 | 1,356 | 603 | (1,359) | - | - | 74.55% | 74.55% | - | - | - | own funds |
| Shanghai petrochemical ethylene glycol product structure optimization and hazardous waste reduction project | 70,303 | 41,465 | 123 | - | - | 41,568 | 59.13% | 59.13% | - | - | - | own funds |
| 100-ton high performance carbon fiber plant | 566,183 | 186,668 | 54,028 | - | - | 220,694 | 38.98% | 38.98% | 1,561 | 1,561 | 2.13% | own funds and borrowings |
| 2-CC100 Turbine (No.5, No.6) for Coal Power Unit Energy Consumption Compliance | 93,260 | 31,000 | 3,557 | - | - | 34,557 | 37.05% | 37.05% | - | - | - | own funds |
| Recirculation project of hidden danger of oil and gas connection in the storage tank of the olefin department | 24,497 | 11,412 | 617 | (12,009) | - | - | 49.10% | 49.10% | - | - | - | own funds |
| Controlling room project of 1st, 2nd, 3rd, 4th refining combined unit of oil refining department | 97,669 | - | 37,862 | - | - | 37,862 | 38.76% | 38.76% | - | - | - | own funds |
| Shanghai petrochemical test line project of aviation carbon fiber reinforced thermoplastic composite material | 87,682 | - | 15,458 | - | - | 15,458 | 17.63% | 17.63% | - | - | - | own funds |
| Aromatics unit low temperature heat comprehensive utilization phase II project | 76,237 | 34,740 | 3,731 | - | - | 38,471 | 50.46% | 50.46% | - | - | - | own funds |

168

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements (continued)

### 13. Construction in progress (continued)

#### (2) The movement of the Group's major construction in progress is listed as follows: (continued)

| Project | Budget | 31 December 2021 | Increase during the period | Transfer to fixed Assets (Note V.12) | Disposal during the period | 30 June 2022 (unaudited) | Percentage of actual cost to budget | Project progress | Accumulative capitalized interest in current period | Capitalized interest in current period | Interest rate for capitalization in current period | Sources of funding |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Rectification project of hidden danger in central control room of Jaffa Department | 44,288 | 2,488 | 16,152 | - | - | 18,640 | 42.68% | 42.68% | - | - | - | own funds |
| Oil refining department upgrading project of high-pressure air-cooling materials for medium pressure hydrocracking unit | 32,829 | - | 15,941 | - | - | 15,941 | 48.56% | 48.56% | - | - | - | own funds |
| Carbon fibre testing energy efficiency project for improving quality management center | 27,304 | - | 10,580 | - | - | 10,580 | 38.75% | 38.75% | - | - | - | own funds |
| Heat and power department equipment renewal | - | 43,761 | - | (10,245) | - | 33,516 | - | - | - | - | - | own funds |
| Oil refining department equipment renewal | - | 52,295 | 9,664 | - | - | 62,159 | - | - | - | - | - | own funds |
| Utility department equipment renewal (Oil refining segment) | - | 34,471 | 207 | - | - | 34,678 | - | - | - | - | - | own funds |
| Other projects | - | 611,421 | 131,559 | (132,955) | (1,940) | 608,085 | - | - | - | - | - | own funds |
| Sub-total | - | 3,317,663 | 911,640 | (159,678) | (4,735) | 4,064,892 | - | - | 24,745 | 10,777 | 2.13% |  |
| Less: Provision for impairment | - | (24,486) | - | - | - | (24,486) | - | - | - | - | - | - |
| Total | - | 3,293,177 | 911,640 | (159,678) | (4,735) | 4,040,406 | - | - | 24,745 | 10,777 | 2.13% |  |

For the six months ended 30 June 2022, the capitalized interest of the Group is RMB10,777 thousand (for the six months ended 30 June 2021: RMB3,588 thousand).

As at 30 June 2022 and 31 December 2021, the balance of the impairment provision for the Group's construction in progress was for the long-term suspended energy saving transformation of No. 2 and No. 3 aromatics combined plant with the amount of RMB24,486 thousand.

2022 Interim Report

169

## NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### V. Notes to the consolidated financial statements *(continued)*

#### 14. Right-of-use assets

| Item | Buildings | Plant and machinery | Vehicles and other equipment | Total |
| --- | --- | --- | --- | --- |
| Cost |  |  |  |  |
| 31 December 2021 | 37,058 | 1,307 | 2,736 | 41,101 |
| Increase in current period | 22,662 | 264 | 643 | 23,569 |
| Decrease in current period | (23,163) | - | - | (23,163) |
| 30 June 2022 (unaudited) | 36,557 | 1,571 | 3,379 | 41,507 |
| Accumulated depreciation |  |  |  |  |
| 31 December 2021 | 33,770 | 682 | 1,770 | 36,222 |
| Increase in current period | 6,741 | 277 | 590 | 7,608 |
| Decrease in current period | (23,020) | - | - | (23,020) |
| 30 June 2022 (unaudited) | 17,491 | 959 | 2,360 | 20,810 |
| Carrying amount |  |  |  |  |
| 30 June 2022 (unaudited) | 19,066 | 612 | 1,019 | 20,697 |
| 31 December 2021 | 3,288 | 625 | 966 | 4,879 |

170

Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 15. Intangible assets

#### Intangible assets situation

|  | Land-use rights | Other intangible assets | Total |
| --- | --- | --- | --- |
| Cost |  |  |  |
| 31 December 2021 | 785,567 | 100,193 | 885,760 |
| Increase in current period |  |  |  |
| - Purchase | - | - | - |
| Disposal in current period | - | - | - |
| 30 June 2022 (unaudited) | 785,567 | 100,193 | 885,760 |
| Accumulated amortization |  |  |  |
| 31 December 2021 | 404,803 | 88,349 | 493,152 |
| Charge for current period | 8,522 | 1,462 | 9,984 |
| Disposal in current period | - | - | - |
| 30 June 2022 (unaudited) | 413,325 | 89,811 | 503,136 |
| Carrying amount |  |  |  |
| 30 June 2022 (unaudited) | 372,242 | 10,382 | 382,624 |
| 31 December 2021 | 380,764 | 11,844 | 392,608 |

As at 30 June 2022 and at 31 December 2021, the Group had no land-use right without property right certificate.

As at 30 June 2022 and at 31 December 2021, the Group has no intangible assets formed through internal research and development.

2022 Interim Report

171

## NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### V. Notes to the consolidated financial statements *(continued)*

#### 16. Long-term deferred expenses

| Item | 31 December 2021 | Increase during the period | Amortization during the period | 30 June 2022 (unaudited) |
| --- | --- | --- | --- | --- |
| Catalysts | 769,491 | 144,381 | (133,955) | 779,917 |
| Lease holding improvements | 5,660 | - | (555) | 5,105 |
| Others | 812 | - | (153) | 659 |
| Less: Provision for impairment | - | - | - | - |
| Total | 775,963 | 144,381 | (134,663) | 785,681 |

#### 17. Deferred tax assets and deferred tax liabilities

##### (1) Deferred tax assets before offsetting

| Item | 30 June 2022 (unaudited) |  | 31 December 2021 |  |  |
| --- | --- | --- | --- | --- | --- |
|  | Deductible temporary differences and deductible losses | Deferred tax assets | Deductible temporary differences and deductible losses | Deferred tax assets |  |
|  | Provision for bad debts | 7,014 | 1,754 | 2,127 | 532 |
| Provision for inventory | 273,230 | 68,307 | 223,267 | 55,817 |  |
| Provision for impairment of fixed assets | 1,406,372 | 351,593 | 1,408,357 | 352,089 |  |
| Provision for impairment of construction in progress | 24,486 | 6,122 | 24,486 | 6,122 |  |
| Accrued expenses | 386,826 | 96,706 | 300,013 | 75,003 |  |
| Deductible loss | 377,199 | 94,300 | - | - |  |
| Other deferred tax assets | 27,018 | 6,754 | 28,700 | 7,175 |  |
| Total | 2,502,145 | 625,536 | 1,986,950 | 496,738 |  |

172

Sinopec Shanghai Petrochemical Company Limited

## NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### V. Notes to the consolidated financial statements *(continued)*

#### 17. Deferred tax assets and deferred tax liabilities *(continued)*

##### (2) Deferred tax liabilities before offsetting

| Item | 30 June 2022 (unaudited) |  | 31 December 2021 |  |
| --- | --- | --- | --- | --- |
|  | Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities |
| Capitalized interest | (5,442) | (1,361) | (5,873) | (1,468) |
| Difference in fixed assets depreciation and intangible assets amortization | (1,537,457) | (384,364) | (1,320,280) | (330,071) |
| Derivative financial instruments | (250,253) | (62,563) | (57,600) | (14,400) |
| Total | (1,793,152) | (448,288) | (1,383,753) | (345,939) |

##### (3) Deductible temporary differences and deductible losses that are not recognized as deferred tax assets are analysed as follows:

| Item | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Deductible temporary differences | 29,969 | 29,969 |
| Deductible losses | 396,998 | 350,574 |
| Total | 426,967 | 380,543 |

In accordance with the accounting policy set out in Note III.26, it is unlikely that some of the Group's subsidiaries will obtain sufficient future taxable profits to be used to offset the deductible temporary differences and deductible losses. Therefore, the Group has not recognized deferred income tax assets for the deductible temporary differences and deductible losses of the following subsidiaries. Under current tax law, these deductible losses expire between 2023 and 2028.

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# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 17. Deferred tax assets and deferred tax liabilities *(continued)*

(3) Deductible temporary differences and deductible losses that are not recognized as deferred tax assets are analysed as follows: *(continued)*

The breakdown of deductible losses by subsidiaries is as follows:

| Name of subsidiaries | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Shanghai Petrochemical Investment Development Company Limited ('Toufa') | 89,355 | 71,113 |
| Shanghai Jinchang Engineering Plastics Company Limited ('Jinchang') | 80,279 | 67,585 |
| Shanghai Jinshan Hotel Company Limited ('Jinshan Hotel') | 18,845 | 21,717 |
| Zhejiang Jinlian Petrochemical Storage and Transportation Co. LTD. ('Jinlian') | 208,519 | 190,159 |
| Total | 396,998 | 350,574 |

(4) Deductible losses that are not recognized as deferred tax assets will expire in the following years:

| Year | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| 2022 | 62,459 | 65,331 |
| 2023 | 66,965 | 66,965 |
| 2024 | 91,901 | 91,901 |
| 2025 | 41,475 | 41,475 |
| 2026 | 95,144 | 84,902 |
| 2027 | 39,054 | - |
| Total | 396,998 | 350,574 |

174

Sinopec Shanghai Petrochemical Company Limited

## NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### V. Notes to the consolidated financial statements *(continued)*

#### 17. Deferred tax assets and deferred tax liabilities *(continued)*

(5) The net balance of deferred tax assets and liabilities after offsetting is as follows:

| Item | 30 June 2022 (unaudited) |  | 31 December 2021 |  |  |
| --- | --- | --- | --- | --- | --- |
|  | Offsetting amount of deferred tax assets and deferred tax liabilities | Deferred tax assets - net | Offsetting amount of deferred tax assets and deferred tax liabilities | Deferred tax assets - net |  |
|  | Deferred tax assets | (416,341) | 209,195 | (312,595) | 184,143 |
| Deferred tax liabilities | 416,341 | (31,947) | 312,595 | (33,344) |  |

#### 18. Other non-current assets

| Item | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Time deposit | 5,432,203 | 5,581,435 |
| Investment security deposits | 53,500 | - |
| Total | 5,485,703 | 5,581,435 |

As at 30 June 2022, other non-current assets of the Group is three-year or five-year time deposit with interest rate range from 3.55% to 4.20% per annum (31 December 2021: from 3.45% to 4.20% per annum).

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## NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### V. Notes to the consolidated financial statements *(continued)*

#### 19. Provision for assets impairment

|  | 31 December 2021 | Increase | Decrease |  |  | 30 June 2022 (unaudited) |
| --- | --- | --- | --- | --- | --- | --- |
|  |  |  | Reverse | Sold | Written-off |  |
| Provision for accounts receivable (Note V.4) | 1,988 | 162 | - | - | - | 2,150 |
| Provision for other receivable (Note V.7) | 140 | 4,725 | - | - | - | 4,865 |
| Sub-total | 2,128 | 4,887 | - | - | - | 7,015 |
| Provision for inventory (Note V.8) | 223,267 | 177,777 | - | (127,814) | - | 273,230 |
| Provision for fixed assets (Note V.12) | 1,438,325 | - | - | - | (1,985) | 1,436,340 |
| Provision for CIP (Note V.13) | 24,486 | - | - | - | - | 24,486 |
| Impairment loss of investments accounted for using equity method (note V.10) | 28,392 | - | - | - | - | 28,392 |
| Sub-total | 1,714,470 | 177,777 | - | (127,814) | (1,985) | 1,762,448 |
| Total | 1,716,598 | 182,664 | - | (127,814) | (1,985) | 1,769,463 |

#### 20. Short-term loans

| Item | Currency | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- | --- |
| Credit loans |  |  |  |
| - bank loans | RMB | 2,040,000 | 1,540,000 |

As at 30 June 2022, the interest rate of short-term loans ranged from 2.6% to 3.5% per annum (31 December 2021: from 2.70% to 3.70% per annum).

As at 30 June 2022 and 31 December 2021, there was no short-term loans which are due but have not been repaid.

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Sinopec Shanghai Petrochemical Company Limited

# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 21. Bills payable

| Item | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Bank acceptance notes | 152,564 | 830,006 |

The bills above are all due within one year.

### 22. Accounts payable

| Item | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Amount due to related parties (Note VIII.6) | 1,839,123 | 4,361,173 |
| Amount due to third parties | 2,166,862 | 1,527,706 |
| Total | 4,005,985 | 5,888,879 |

As at 30 June 2022 and 31 December 2021, there was no individually significant accounts payable aged over one year.

### 23. Contract liabilities

| Item | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- |
| Advance from related parties (Note VIII.6) | 3,869 | 6,275 |
| Advance from third parties | 371,143 | 424,607 |
| Total | 375,012 | 430,882 |

As at 30 June 2022 and 31 December 2021, there was no individually significant contract liabilities aged over one year.

Contract liabilities primarily relate to the Group's advances from product sales contracts. The Group receives 100% of the contract consideration as advances when entering into the contract with customers. The revenue related to the contracts will be recognized until the Group satisfies its performance obligation.

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# NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

## V. Notes to the consolidated financial statements *(continued)*

### 23. Contract liabilities *(continued)*

Changes in the contract liabilities of the Group are as follows:

|  | 30 June 2022 (unaudited) | 30 June 2021 (unaudited) |
| --- | --- | --- |
| Balance at the beginning of the period | 430,882 | 496,521 |
| Revenue recognized that was included in the contract liability balance at the beginning of the period | (409,218) | (496,521) |
| Net increase due to cash received during the period | 353,348 | 279,900 |
| Balance at the end of the period | 375,012 | 279,900 |

### 24. Employee benefits payable

#### (1) Employee benefits payable:

|  | Note | 30 June 2022 (unaudited) | 31 December 2021 |
| --- | --- | --- | --- |
| Short-term employee benefits | (2) | 528,247 | 235,593 |
| Post-employment benefits |  |  |  |
| - defined contribution plans | (3) | 23,815 | 24,503 |
| Total |  | 552,062 | 260,096 |

178

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## NOTES TO THE FINANCIAL STATEMENTS *(continued)*

FOR THE SIX MONTHS ENDED 30 JUNE 2022

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

### V. Notes to the consolidated financial statements *(continued)*

#### 24. Employee benefits payable *(continued)*

##### (2) Short-term employee benefits

|  | 31 December 2021 | Increase in current period | Decrease in current period | 30 June 2022 (unaudited) |
| --- | --- | --- | --- | --- |
| Salaries, bonuses, allowances | 214,250 | 1,112,037 | (818,896) | 507,391 |
| Staff welfare | 3,569 | 121,521 | (121,521) | 3,569 |
| Social insurances | 17,060 | 113,770 | (114,234) | 16,596 |
| Including: Medical insurance | 14,091 | 84,650 | (85,036) | 13,705 |
| Work injury insurance | 1,488 | 8,881 | (8,923) | 1,446 |
| Maternity insurance | 1,481 | 8,907 | (8,943) | 1,445 |
| Supplementary medical insurance | - | 11,332 | (11,332) | - |
| Housing funds | 8 | 106,416 | (106,418) | 6 |
| Termination benefits | - | 8,251 | (8,251) | - |
| Labour union fee, staff and workers' education fee | 706 | 22,159 | (22,180) | 685 |
| Non-monetary benefits | - | 48,725 | (48,725) | - |
| Others | - | 21,239 | (21,239) | - |
| Total | 235,593 | 1,554,118 | (1,261,464) | 528,247 |

##### (3) Post-employment benefits- defined contribution plans

|  | 31 December 2021 | Increase in current period | Decrease in current period | 30 June 2022 (unaudited) |
| --- | --- | --- | --- | --- |
| Basic pensions | 23,760 | 142,543 | (143,211) | 23,092 |
| Unemployment insurance | 743 | 4,455 | (4,475) | 723 |
| Supplemental basic pensions | - | 77,810 | (77,810) | - |
| Total | 24,503 | 224,808 | (225,496) | 23,815 |

As stipulated by the regulations of the PRC, the Group participates in a defined contribution retirement plan organised by the Shanghai Municipal Government for its staff.

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