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. (Incorporated in the Cayman Islands with limited liability) (Stock code: 1044) Websites: http://www.hengan.com http://www.irasia.com/listco/hk/hengan ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 “Growing with You for a Better Life” 2020 ANNUAL RESULTS FINANCIAL SUMMARY 2020 2019 Change RMB’000 RMB’000 % Revenue 22,374,001 22,492,845 (0.5%) Operating Profit 6,392,388 5,680,296 12.5% Profit attributable to shareholders 4,594,815 3,907,723 17.6% Gross Profit margin (%) 42.3% 38.6% Earnings per share — Basic RMB3.864 RMB3.285 17.6% — Diluted RMB3.864 RMB3.285 17.6% Dividends — Interim (paid) RMB1.20 RMB1.00 — Final (proposed/paid) RMB1.30 RMB1.25 Accounts receivable turnover (days) 57 53 Finished goods turnover (days) 49 43 Current ratio (times) 1.4 1.3 Rate of return (%) 23.7% 21.9% * For identification purposes only 1 RESULTS The Board of Directors of Hengan International Group Company Limited (the “Company” or “Hengan International”) is pleased to announce the consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2020, together with the comparative figures for the previous year, as follows: Consolidated statement of profit or loss Year ended 31 December Note 2020 2019 RMB’000 RMB’000 Revenue 2 22,374,001 22,492,845 Cost of goods sold (12,918,146) (13,803,888) Gross profit 9,455,855 8,688,957 Selling and distribution costs (3,468,931) (3,202,780) Administrative expenses (1,363,991) (1,284,556) Net impairment losses on financial assets (4,163) (7,614) Other income and other gains – net 1,773,618 1,486,289 Operating profit 6,392,388 5,680,296 Finance income 291,811 140,069 Finance costs (718,295) (773,478) Finance costs – net (426,484) (633,409) Share of net losses of associates (4,482) – Profit before income tax 3 5,961,422 5,046,887 Income tax expense 4 (1,352,980) (1,129,784) Profit for the year 4,608,442 3,917,103 Profit attributable to: Shareholders of the Company 4,594,815 3,907,723 Non-controlling interests 13,627 9,380 4,608,442 3,917,103 Earnings per share for profit attributable to shareholders of the Company — Basic 5 RMB3.864 RMB3.285 — Diluted 5 RMB3.864 RMB3.285 2 Consolidated statement of comprehensive income Year ended 31 December 2020 2019 RMB’000 RMB’000 Profit for the year 4,608,442 3,917,103 Other comprehensive income Items that may be reclassified to profit or loss — Currency translation differences (19,460) (39,511) Total comprehensive income for the year 4,588,982 3,877,592 Attributable to: Shareholders of the Company 4,592,157 3,858,224 Non-controlling interests (3,175) 19,368 Total comprehensive income for the year 4,588,982 3,877,592 3 Consolidated balance sheet As at 31 December Note 2020 2019 RMB’000 RMB’000 Assets Non-current assets Property, plant and equipment 7,571,430 7,822,457 Right-of-use assets 970,171 988,245 Construction-in-progress 489,052 543,534 Investment properties 213,609 226,233 Intangible assets 755,444 724,620 Prepayments for non-current assets 327,989 120,293 Deferred income tax assets 435,853 213,211 Investments in associates 97,188 101,670 Financial assets at fair value through profit or loss 156,593 – Long-term bank time deposits 3,482,147 2,430,082 14,499,476 13,170,345 Current assets Inventories 4,310,918 3,802,496 Trade and bills receivables 7 3,375,149 3,651,224 Other receivables, prepayments and deposits 1,616,952 1,956,862 Current income tax recoverable 48,995 97,511 Derivative financial instruments – 12,858 Restricted bank deposits 4,812 7,209 Financial assets at fair value through profit or loss 100,884 – Cash and bank balances 20,483,739 20,540,270 29,941,449 30,068,430 Total assets 44,440,925 43,238,775 Equity Equity attributable to shareholders of the Company Share capital 125,366 125,654 Other reserves 3,133,402 3,203,594 Retained earnings 16,152,622 14,543,693 19,411,390 17,872,941 Non-controlling interests 250,084 278,937 Total equity 19,661,474 18,151,878 4 As at 31 December Note 2020 2019 RMB’000 RMB’000 Liabilities Non-current liabilities Borrowings 9 2,492,618 1,246,992 Lease liabilities 8,665 4,365 Deferred income tax liabilities 216,222 171,467 2,717,505 1,422,824 Current liabilities Trade and bills payables 8 2,244,205 2,223,894 Other payables and accrued charges 1,310,282 907,752 Contract liabilities 134,847 145,230 Derivative financial instruments 15,643 19,788 Lease liabilities 11,110 5,960 Current income tax liabilities 2,177 – Borrowings 9 18,343,682 20,361,449 22,061,946 23,664,073 Total liabilities 24,779,451 25,086,897 Total equity and liabilities 44,440,925 43,238,775 5 1. Basis of preparation and principal accounting policies The consolidated financial statements of the Group have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance. The consolidated financial statements have been prepared under the historical cost convention, as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss, which are carried at fair value. (i) New and amended standards adopted by the Group A number of new or amended standards became applicable for the current reporting period. The Group assessed the adoption of these new and amended standards and concluded that they did not have a significant impact on the Group’s results and financial position. Effective for annual periods beginning Standards and amendments on or after Amendments to HKAS 1 and Definition of Material 1 January 2020 HKAS 8 Amendments to HKFRS 3 Definition of a Business 1 January 2020 Revised Conceptual Framework Revised Conceptual Framework for 1 January 2020 Financial Reporting Amendments to HKFRS 7, Interest Rate Benchmark Reform 1 January 2020 HKFRS 9 and HKAS 39 Amendments to HKFRS 16 COVID-19-related Rent Concessions 1 June 2020 6 (ii) New and amended standards not yet adopted Certain new and amended standards and interpretations are effective for annual periods beginning after 1 January 2020 and have not been early adopted in preparing these consolidated financial statements. These standards are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions. Effective for annual periods beginning Standards and amendments on or after Amendments to HKAS 1 Classification of Liabilities as 1 January 2022 Current or Non-current Amendments to HKAS 16 Property, Plant and Equipment: 1 January 2022 Proceeds before intended use Amendments to HKAS 37 Onerous Contracts – Cost of 1 January 2022 Fulfilling a Contract Amendments to HKFRS 3 Reference to the Conceptual Framework 1 January 2022 HKFRS 17 Insurance contracts 1 January 2023 Amendments to HKFRS 10 and Sale or contribution of assets between To be determined HKAS 28 an investor and its associate or joint venture Annual Improvements to 1 January 2022 HKFRS Standards 2018–2020 7 2. Revenue and segment information The segment information provided to the Executive Directors for the reportable segments is as follows: 2020 Sanitary Disposable Tissue napkins diapers paper products products products Others Group RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Segment revenue 6,804,704 1,526,780 11,097,505 4,836,954 24,265,943 Inter-segment sales (149,993) (101,213) (714,747) (925,989) (1,891,942) Revenue of the Group 6,654,711 1,425,567 10,382,758 3,910,965 22,374,001 Segment profit 3,215,281 119,363 1,040,685 266,831 4,642,160 Unallocated costs (23,390) Other income and other gains – net 1,773,618 Operating profit 6,392,388 Finance income 291,811 Finance costs (718,295) Share of net losses of associates (4,482) Profit before income tax 5,961,422 Income tax expense (1,352,980) Profit for the year 4,608,442 Non-controlling interests (13,627) Profit attributable to shareholders of the Company 4,594,815 Other items for the year ended 31 December 2020 Additions to non-current assets 132,102 74,070 294,611 85,868 586,651 Depreciation of property, plant and equipment and investment properties 167,642 37,590 505,606 54,100 764,938 Depreciation of right-of-use assets 10,667 3,162 18,568 8,014 40,411 Amortisation charge 16,020 – 382 15,551 31,953 8 2020 Sanitary Disposable Tissue napkins diapers paper products products products Others Group RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 As at 31 December 2020 Segment assets 7,431,097 4,084,636 14,055,251 3,458,077 29,029,061 Deferred income tax assets 435,853 Current income tax recoverable 48,995 Investments in associates 97,188 Financial assets at fair value through profit or loss 257,477 Unallocated assets 14,572,351 Total assets 44,440,925 Segment liabilities 2,083,677 1,435,252 5,375,313 911,512 9,805,754 Deferred income tax liabilities 216,222 Current income tax liabilities 2,177 Unallocated liabilities 14,755,298 Total liabilities 24,779,451 9 2019 Sanitary Disposable Tissue napkins diapers paper products products products Others Group RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Segment revenue 6,546,424 1,470,212 11,984,079 3,910,114 23,910,829 Inter-segment sales (59,421) (31,125)