Intention to Float

Intention to Float

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THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND NOT AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION, INCLUDING, WITHOUT LIMITATION, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR THE PEOPLE'S REPUBLIC OF CHINA.

Neither this announcement, nor anything contained herein shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. Investors should not subscribe for or purchase any securities referred to in this announcement except solely on the basis of the information contained in a prospectus in its final form (together with any supplementary prospectus, if relevant, the "Prospectus"), including the risk factors set out therein, expected to be published by Zhejiang Yongtai Technology Co., Ltd. (the "Company") in due course in connection with the proposed offer of global depositary receipts ("GDRs") representing the Company's A shares and the proposed admission of such GDRs to the standard listing segment of the Official List of the United Kingdom Financial Conduct Authority (the "FCA") and to trading on the Stock Connect segment of the main market for listed securities (the "Main Market") of London Stock Exchange plc (the "LSE"). A copy of any Prospectus published by the Company will, if published, be available for inspection on the Company's website at http://www.yongtaitech.com, subject to certain access restrictions.

5 July 2023

ZHEJIANG YONGTAI TECHNOLOGY CO., LTD.

(a joint stock company established under the laws of the People's Republic of China with limited liability)

Intention to List Global Depositary Receipts
on the London Stock Exchange

Zhejiang Yongtai Technology Co., Ltd. ("Yongtai" or the "Company", and together with its subsidiaries, the "Group"), a leading fluorine-containing fine chemicals manufacturer in China, today announces its intention to proceed with an offering (the "Offering") of global depositary receipts (the "GDRs") with each GDR representing 5 A shares of the Company, each with a fully paid nominal value of RMB1.00 each (the "A Shares") (the "Offer GDRs"). The Offering is expected to raise up to approximately USD 100 million.

The Offering is expected to price no lower than USD 9.41 per GDR. The final offer price in respect of the Offering (the "Offer Price") will be determined based on a book-building process. The book-building process is expected to commence immediately and end today.

The GDRs are expected to be admitted to listing on the standard segment of the Official List maintained by the FCA (the "Official List") and to trading on the Stock Connect segment of the main market for listed securities (the "Main Market") of London Stock Exchange plc (the "London Stock Exchange" or "LSE") (together the "Admission"). Admission is expected to take place on or around 11 July 2023.

Yingmei Wang, Chairwoman of the board of directors of the Company, commented:

With great pleasure, I am honoured to confirm Yongtai's intention to list GDRs on the London Stock Exchange.

Yongtai is a leading manufacturer of fluorine-containing fine chemicals, and one of the few enterprises in the industry that operates in both inorganic fluorochemical and organic fluorochemical areas. Established in 1999 and listed on the Shenzhen Stock Exchange in 2009, we have developed a horizontally diversified business structure covering performance materials, pharmaceutical products and crop science products, and have built up vertically integrated industry chains with a rich product portfolio and matrix covering the upstream, midstream and downstream sectors in the industries it operates in.

We aim to achieve further expansion of our overseas businesses by accelerating the development of our existing multinational platform. The GDR issuance of Yongtai will promote our global industry chains layout in core business areas and enhance the capabilities of product research and development, manufacturing and sales. The issuance will also further enhance our development in the new energy materials and pharmaceutical product business, and consolidate our leading position in the industry.

Shenzhen-London Stock Connect is a remarkable achievement of the economic and financial dialogue between China and the UK, and also a key measure to open up China's capital markets. Yongtai is the first Shenzhen Stock Exchange listed company to issue and list GDRs on the London Stock Exchange through the Shenzhen-London Stock Connect programme. We believe Yongtai's GDR issuance will not only be a landmark in the development of the Company, but also further enrich the Shenzhen-London Stock Connect programme portfolio and provide better investment opportunities for global investors.

Overview of the Offering

The Offering is expected to raise up to approximately USD 100 million. The Offer GDRs will represent newly issued A Shares of the Company. The Company will also apply to the Shenzhen Stock Exchange (the "SZSE") for admission to listing of the underlying A Shares representing the Offer GDRs which is expected to be effective on the date of Admission.

The GDRs are expected to be admitted to listing on the standard segment of the Official List maintained by the FCA and to trading on the Stock Connect segment of the Main Market of the LSE.

The Offering is expected to price no lower than USD 9.41 per GDR.

The Offering is expected to consist solely of newly issued GDRs representing underlying A Shares of the Company. No securities will be sold by existing shareholders of the Company as part of the Offering.

The Offer GDRs are being offered and sold outside the United States in "offshore transactions" within the meaning of Regulation S under the US Securities Act of 1933, as amended (the "Securities Act").

The Offering is subject to the receipt of all relevant registrations and regulatory approvals.

Full details of the Offering, including the final Offer Price per Offer GDR and the final number of Offer GDRs, will be included in the Prospectus, expected to be published by the Company on or around 6 July 2023. Based on the order book prepared during the book-building process, the Offer Price and the final number of GDRs to be offered are expected to be determined after the close of book-building later today. No stabilisation will be carried out in connection with the Offering.

Conditional trading in the GDRs on the LSE is expected to commence on a "when-issued" basis on or around 6 July 2023 and Admission and commencement of unconditional dealings in the GDRs on the LSE are expected to take place on or around 11 July 2023. Investors should rely only on the information contained in the Prospectus when making a decision as to whether to invest in the GDRs.

Huatai Financial Holdings (Hong Kong) Limited is acting as sole global co-ordinator (the "Sole Global Co-ordinator" and joint bookrunner, and China Securities (International) Corporate Finance Company Limited and CLSA Limited are acting as joint bookrunners (together with the Sole Global Co-ordinator, the "Joint Bookrunners").

Use of Proceeds

The Company intends to use the net proceeds received from the Offering as follows:

·      approximately 70% of the net proceeds will be used to promote the Group's global industry chains layout in core business areas, which include new energy materials, pharmaceutical products and crop science products, and to enhance the capabilities of product research and development, manufacturing and sales; and

·      approximately 30% of the net proceeds will be used to repay the Group's indebtedness and supplement the Group's working capital.

Overview of the Group

The Group is a leading manufacturer of fluorine-containing fine chemicals, and is one of the few enterprises in the industry that operates in both inorganic fluorochemical and organic fluorochemical industries. The Group has built up vertically integrated industry chains with a rich product portfolio and matrix covering the upstream, midstream and downstream sectors in the industries it operates in.

The Group has a horizontally diversified business structure covering performance materials (new energy lithium battery materials and liquid crystal materials), pharmaceutical products, crop science products and trading business.

·      Performance Materials (New Energy Lithium Battery Materials and Liquid Crystal Materials) Business: By expanding to upstream lithium fluoride raw materials and downstream electrolyte products, the Group has formed a vertically integrated industrial chain covering products from upstream raw materials for lithium salts, to lithium salts, additives and electrolyte solutions. The Group's performance materials (new energy lithium battery materials and liquid crystal materials) mainly include new energy lithium battery material products (LiPF6 (lithium hexafluorophosphate), LiFSI (lithium bis(fluorosulfonyl)imide), VC (vinylene carbonate), FEC (fluoroethylene carbonate), electrolyte solutions) and fluoro liquid-crystal intermediates.

·      Pharmaceutical Product Business: By expanding to high value-added downstream sectors, such as active pharmaceutical ingredients ("APIs") and finished dosages, the Group has developed a vertically integrated industrial chain covering key pharmaceutical fluorine-containing intermediates, pharmaceutical APIs and pharmaceutical finished dosages in the fields of cardiovascular, diabetes, central nervous system, anti-infection, and anti-virus.

·      Crop Science Product Business: By expanding to high value-added downstream sectors, such as active crop science ingredients ("AIs") and crop science formulations, the Group has developed a vertically integrated industrial chain covering crop science intermediates, crop science AIs and formulations including fluorinated herbicides, fungicides and insecticides.

·      Trading Business: The Group also conducts trading business, the business models for which include a contract manufacturing organisation model. The Group's subsidiary Shanghai E-tong Chemical Co., Ltd. ("Shanghai E-tong") provides technical or financial support to domestic manufacturers to produce designated AIs and formulations, and then sells the products to domestic and overseas customers. The Group also adopts an original equipment manufacturing model, whereby Shanghai E-tong delegates domestic manufacturers to produce formulations with Shanghai E-tong's brand and mainly sells products to overseas markets such as Indonesia and Nigeria. Meanwhile, Shanghai E-tong also purchases crop science products and other fine chemicals in China and resells them to domestic and overseas trading companies and end-customers.

Over the years, the Group has experienced significant growth in operating income and net profit. For the years ended 31 December 2020, 2021, 2022 and three months ended 31 March 2022 and 2023, the Group's total operating income was RMB3,450.3 million, RMB4,468.7 million, RMB6,336.2 million, RMB1,737.3 million and RMB1,005.9 million, respectively. During the same period, the Group's total net profit was RMB77.7 million, RMB332.2 million, RMB659.6 million, RMB433.5 million and RMB17.0 million, and its return on equity was 3.7%, 8.1%, 16.0%, 11.0% and 0.4%, respectively, providing a good return to the Group's shareholders.

Investment Highlights

A world-leading fluorine-containing fine chemicals manufacturer with a horizontally diversified and vertically integrated industry layout.

The Group is one of the few companies with business operations in both inorganic fluorine and organic fluorine in the fluorochemical industries in China. With a focus on fluorination technology, the Group's business operation covers the performance materials (new energy lithium battery materials and liquid crystal materials), pharmaceutical products and crop science products, and has built up a rich product portfolio and matrix covering the upstream, midstream and downstream sectors in the industries it operates in and developed its unique enterprise development strategy.

For the new energy lithium battery material business, the Group's product portfolio covers both the upstream raw materials for lithium salts (lithium fluoride ("LiF")), lithium salts (LiPF6, LiFSI), additives (VC, FEC) and the downstream electrolyte solution, and has established a vertically integrated industry chain. For the pharmaceutical product business, the Group's product portfolio covers not only fluorine-containing pharmaceutical intermediates (2,4,5-Trifluorophenylacetic acid, pyrazine hydrochloride, pentafluorophenol, etc.), APIs (Gabapentin, Methyldopa, Carbidopa, Etodolac acid, Pregabalin, etc.), but also the downstream finished dosages (Gabapentin capsules, Doxycycline hydrochloride capsules, etc.), establishing a vertically integrated industry chain. With a vertically integrated industrial chain, a flexible and comprehensive production platform and strong research and development ("R&D") capabilities, the Group's business layout effectively increases operational efficiency, enhances business synergy, ensures raw material supply, achieves cost-effectiveness and secures long-term competitiveness of the Group.

In recent years, the Group has focused on developing the new energy lithium battery material business and the pharmaceutical products business. Regarding the new energy lithium battery material business, the General Office of the State Council of the People's Republic of China (the "PRC") issued the New Energy Vehicle Industry Development Plan (2021-2035) (《新能源汽车产业发展规划(2021-2035年)》 ) in November 2020, which clearly indicated that the sales volume of NEVs (new energy vehicles) in China will reach approximately 20% of the total sales volume of new vehicles by 2025. This development plan was reiterated in the Comprehensive Work Plan for Energy Conservation and Emission Reduction during the 14th Five-Year Plan (《"十四五"节能减排综合工作方案》 ) issued in January 2022. The rapid development of NEV industry has greatly increased the demand for lithium batteries by NEV manufacturers, but the production capacity of lithium batteries is currently restricted by the supply of upstream raw materials. As a result of the short supply of upstream new energy lithium battery material products in the context of the rapid growth in market demand from new energy lithium battery manufacturers, both the sales volume and price of the Group's new energy lithium battery material products has surged. The Group's operating income generated from the performance materials (new energy lithium battery materials and liquid crystal materials) business increased from RMB290.2 million in 2020 to RMB1,981.9 million in 2022, representing a compound annual growth rate ("CAGR") of 161.4% from 2020 to 2022. The percentage of the operating income of this business in the total operating income of the Group increased from 8.4% in 2020 to 31.3% in 2022. The gross profit of this business accounted for 8.1% of the total gross profit of the Group in 2020, and accounted for 41.6% in 2022 .

The Group has also focused on developing its pharmaceutical product business. The pharmaceutical product industry is a strategic industry that is crucial to people's livelihood, national economic development and national security. With China's increasingly ageing population, awareness of healthcare and household income increase, the inelastic demand for pharmaceuticals will drive the sustainable and stable development of the industry. The Group mainly focuses on high added-value fluorine-containing pharmaceutical products. In 2021 and 2022, the pharmaceutical product business of the Group recorded an operating income of RMB1,168.5 million and RMB1,464.3 million, accounting for approximately 26.1% and 23.1% of total operating income of the Group in the same periods, respectively. The gross profit of the pharmaceutical product business accounted for 30.3% and 29.5% of the total gross profit of the Group in 2021 and 2022.

As a fluorine technology-focused manufacturer of performance materials (new energy lithium battery materials and liquid crystal materials), pharmaceutical products and crop science products, empowered by advanced technology and innovation and driven by smart manufacturing facilities, the Group ranked top in the industry in terms of production volume, production value and export value of various products during the period from 2019 to 2021.

For its new energy lithium battery material business, the Group was the largest LiPF6 producer in China in terms of CAGR of both cumulative production value and cumulative production volume for the period from 2019 to 2021 (among the LiPF6 producers with production capacity over 2,000 tons per annum); the Group was also the third largest LiPF6 producer in China in terms of both production volume and production value in 2021.

For its pharmaceutical product business, the Group was the largest pharmaceutical fluorinated intermediates producer in China in terms of both production volume in 2021 and cumulative production volume for the period from 2019 to 2021; the Group was also the largest pharmaceutical fluorinated fine chemicals producer in China in terms of production value in 2021 and cumulative production value for the period from 2019 to 2021.

For its crop science business, the Group was the largest crop science fluorinated intermediates exporter in China in terms of export value in 2021 and cumulative export value for the period from 2019 to 2021.

Geographically distributed production sites across China and industry-leading production capacity that can flexibly meet market demands.

In recent years, the Group has been optimising its industrial layout and production capacity presence, and actively built up its comprehensive production platform. The Group currently has a number of key production sites, which are located in Wuhai, Inner Mongolia, Shaowu, Fujian and Taizhou, Zhejiang. The production sites in Wuhai, Inner Mongolia focus on the production of fine chemical products, with various processing technologies such as fluorination, chlorination, hydrogenation, nitration and Grignard, which further enhances the Group's leadership in the traditional industry sectors. The production of diversified fine organic chemical products ensures a supply for the Group's businesses of performance materials (new energy lithium battery materials and liquid crystal materials), pharmaceutical products and crop science products. The production sites in Shaowu, Fujian are for the production of lithium salts. The production sites in Taizhou, Zhejiang are for the production of APIs and finished dosage meeting good manufacturing practice production standards, covering key pharmaceutical products in relation to the endocrine, digestive, central nervous and cardiovascular systems. Zhejiang Yongtai Chiral Medicine Technology Co., Ltd. ("Yongtai Chiral") and Zhejiang Yongtai Pharmaceutical Co., Ltd. ("Yongtai Pharma") are the two key platforms in Zhejiang Yongtai Technology Co., Ltd., and their various APIs and finished dosages related R&D projects, construction projects and production projects are well underway. The Group has also built important production sites in Shandong, Jiangsu, Guangdong and Chongqing, and, as of 31 March 2023, the Group has established 13 production sites across China. Its existing production capacity and planned or under-construction production capacity are sufficient to support the growth of its core business in the future. With a well-established industry chain, products portfolio and production capacities, the Group is able to flexibly meet various market demand.

In terms of the new energy lithium battery material business, the Group's major production sites are Shaowu Yongtai Hi-tech Material Co., Ltd. ("Yongtai Hi-tech"), Inner Mongolia Yongtai Chemical Co., Ltd. ("Inner Mongolia Yongtai") and Zhejiang Yongtai New Energy Material Co., Ltd.. The Group believes that its production capacities for new energy lithium battery materials are sufficient to support its rapid growth in the near future. As of 31 March 2023, the Group's production capacities for new energy lithium battery materials are as follows:

·      the Group's current production capacity of LiPF6 is approximately 8,000 tons per annum, and the production capacity under construction of liquid LiPF6 is equivalent to 30,000 tons per annum of solid LiPF6;

·      the Group's current production capacity of LiFSI is approximately 900 tons per annum, and the production capacity under construction of liquid LiFSI is equivalent to 20,000 tons per annum of solid LiFSI;

·      the Group's current production capacity of VC is approximately 5,000 tons per annum, and the capacity under construction and planned production is 25,000 tons per annum;

·      the Group's current production capacity of FEC is approximately 3,000 tons per annum, and the capacity under construction and planned production capacity is 5,000 tons per annum; and

·      the Group's production capacity of electrolyte solutions is approximately 150,000 tons per annum, and a further planned production capacity is 200,000 tons per annum.

In terms of the pharmaceutical product business, the Group's industry chain is synergistically supported by the Group's subsidiaries and production sites distributed across China. The production sites for pharmaceutical intermediates are the Company and Shandong Zhanhua Yongtai Pharmaceutical Co., Ltd. The production sites for pharmaceutical APIs are Zhejiang Chiral Medicine Chemicals Co., Ltd. and Yongtai Chiral. The production sites for pharmaceutical finished dosages are Foshan Soin Chiralpharma Co., Ltd. and Yongtai Pharma. Inner Mongolia Yongtai and Binhai Meikang Pharmaceutical Co., Ltd. ("Binhai Meikang") are under construction, which will further improve the Group's production sites' layout after they are put into production. The fine chemicals and advanced pharmaceutical intermediates projects at Inner Mongolia Yongtai are implemented as scheduled, and some production facilities have been put into production. After the rest of the production facilities at Inner Mongolia Yongtai are put into operation, Inner Mongolia Yongtai is expected to expand the Group's production capacity, accelerate the achievement of economies of scale at Group level, increase the Group's market share and enhance its competitiveness. Moreover, Binhai Meikang has obtained the Drug Production License issued by the Jiangsu Provincial Drug Administration for the production of tablets (anti-tumour drugs), hard capsules (anti-tumour drugs), and creams.

Twenty-three years of chemical synthesis experience, with strict adherence to "safety, environmental protection and quality"

The Group highly emphasises the development and implementation of the highest standards of safety, environmental protection and quality management in the industry. Adherence to safety, environmental protection, and quality are considered to be the essential factors in the sustainable growth and continued success of a fluorinated fine chemicals producer. The Group has developed its management policy based on "three bottom-lines", namely safety, environmental protection, and quality, which are more important to the Group than profitability. The Group also implements strict control over product production standards, and robustly implements the aforementioned concepts of safety, environmental protection and quality. Since its establishment, the Group has strictly complied with environmental laws and regulations, and continued to increase investment in environmental protection. The Group's total investment in environmental protection from 2020 to 2022 was approximately RMB291.8 million.

Safety and environmental protection have always been the top priority for the Group's production, operation and management. The Group has always adhered to the safety production policy of "safety first, prevention as the key, and comprehensive management". In terms of production safety, the Group actively responds to the regulatory authorities' requirements on automation, technical transformation and equipment upgrading of pharmaceutical and chemical enterprises. As of 31 March 2023, all the production sites of the Group have met the requirements and standards under the applicable laws and regulations. In accordance with the Group's safety policy, in addition to the automation standards under the relevant laws and regulations, which are considered by the Group as a minimum requirement, the newly constructed production facilities of the Group, such as the production sites in Inner Mongolia, have highly automated processes, such as full-process automation and unmanned workshops.

In terms of environmental protection, the Group strictly implements and complies with environmental laws and regulations on the matters concerning wastewater, waste gas emission, solid waste discharge, noise, hazardous substances and other environmental matters promulgated by the relevant government authorities where the Group operates. The Group has also made great efforts in improving its environmental protection performance. From 2020 to 2022, the Group has made various investments in improving environmental protection performance, including upgrading an environmental protection processing facility, controlling wastewater, waste gas emissions and uncontrolled waste gas emissions in the workshop, and concentrated on upgrading and improving the safety of devices and equipment.

In terms of quality management, the Group has established a strict quality management system. The Group, in addition to being granted the ISO9000 certification in terms of its quality management system, has also passed IATF16949 certification of the automotive quality management system standard, which ensures that the Group maintains complete quality control over every step of the process, from raw materials delivery, production process, testing and release, to delivery to customers. For the Group's pharmaceutical APIs and finished dosages, the Group has implemented quality management control in accordance with pharmaceutical administration regulations and regulatory requirements, and the Group has obtained good manufacturing practice ("GMP") (China), certificate of suitability ("CEP") (EU) and Food and Drug Administration ("FDA") (US) certification, and is highly regarded by customers.

Furthermore, the Group provides comprehensive onboard safety training and guidance for its employees, as well as on-the-job training regarding safety, environmental protection, health and accident prevention. The Group also requires all middle-level and senior management personnel to outline their personal annual safety action working plans to ensure awareness of the "three bottom-lines" and quality management concept of each employee of the Group. The implementation of the safety and environmental protection responsibility system, strengthening safety training, improvement of safety awareness and preventive measures for all employees, all-around and all-weather monitoring of the production process, and the updating and upgrading of existing equipment, as well as promotion of automation, intelligence and standardisation of the production process, all lay a solid foundation for the Group's long-term, safe and stable operation and development.

Industry-leading comprehensive innovative technology and production platform, highly professional R&D team and a leading technology patents portfolio.

The Group has strong research and development capabilities and possesses leading technological advantages in related fields. As of 31 March 2023, the Group had applied for over 189 invention patents and been granted 151 patents. The Group's key state-of-the-art technologies include directional introduction of fluorine atom technology, chiral hydrogenation technology, biological enzymatic catalytic technology, multi-step co-production technology and green reaction technology.

·      Directional introduction of fluorine atom technology: by virtue of this technology, the fluorine atoms or fluorinated functional group can be introduced into organic molecules to distort the electron cloud, dipole moment, acidity and alkalinity of the molecule, and eventually change the physical, chemical and biological properties of the molecule and create unique functions for fluorine-containing organic compounds. Through continuous R&D and innovation, the Group has developed proprietary technology of the directional introduction of fluorine atoms, to achieve directional introduction of fluorine atoms at any position of the aromatic ring to manufacture fluorinated fine chemicals. The Group currently has the product portfolios of monofluoride, difluoride, trifluoride, tetrafluoride, pentafluoride, hexafluoride products series, and has leading technologies in China.

·      Chiral hydrogenation technology and biological enzymatic catalytic technology: according to Professor Ryoji Noyori, 2001 Nobel Laureate in Chemistry, "the advanced chemical synthesis process of the future needs to be economical, safe, environmentally benign, and resource- and energy-saving. Chemists need new catalytic systems effecting 'perfect chemical reactions' that give only the desired products, with 100% selectivity and 100% yield without unwanted wastes". The asymmetric synthesis is one of the important pathways to achieve "perfect synthetic chemistry". Furthermore, the high efficiency and high selectivity of catalysts are the key to the industrial application of asymmetric synthesis. The Group cooperated with colleges and universities and developed chiral hydrogenation technology and biological enzymatic catalytic technology, and the application of these technologies shortens the process route, substantially increases the reaction efficiency and atom economy, remarkably reduces the production costs and waste emissions, and eventually promotes the green and high-quality development of chiral drugs.

·      Multi-step co-production technology: through continuous R&D and innovation, the Group developed multi-step co-production technology for fluorine-containing fine chemicals, which maximises the production process utilisation efficiency from raw materials to products, effectively lowers production costs, and reduces wastes emission and environmental pollution.

·      Green reaction technology: the Group has developed green reaction technology such as carbonylation reaction, continuous distillation and other technologies. Carbonylation reaction technology plays an important role in the production of fluorinated fine chemicals. The Group has developed a proprietary carbonylation technology with p-Fluorobenzyl chloride and CO as the starting material and tetracarbonyl cobalt salt as catalyst, which has been successfully used in the synthesis of 2,4,5-trifluorophenylacetic acid, 2,3-difluorophenylacetic acid and other products. For the synthesis of fluorophenylacetic acid and its analogues, this technology bypasses the traditional cyanidation and hydrolysis reaction, and avoids using highly toxic sodium cyanide and wastewater generation, which is not only a cleaner and safer production process, but symbolises a clean production in the industry, avoiding the potential environmental hazard caused by industrial production, and achieving the green chemical industrialisation paradigm and sustainable development.

As a high-tech enterprise, many other technologies of the Group have won various awards, including:

·      China Patent Gold Award (中国专利金奖) in 2017;

·      China Patent Excellence Award (专利优秀奖) in 2022;

·      Second Prize Award and Third Prize Awards (for three times) of Zhejiang Science and Technology Award (浙江省科学技术奖二等奖1次、三等奖3次) since 2004; and

·      First Prize Award, Second Prize Award and Third Prize Award of the Science and Technology Progress Award from China Petroleum and Chemical Industry Federation (中国石油和化学工业联合会科技进步奖) since 2011.

For the sustainable development of the Group's business, the Group has professional R&D personnel for each of its business segments and has set up R&D centres in cooperation with many universities, scientific research institutions and industry experts, establishing an advanced and efficient research and development system. As of 31 March 2023, the Group has over 500 R&D personnel. The scientific R&D centres established by the Group are also highly recognised by the relevant authorities, including awards and certification such as the "National Level Enterprise R&D Centre" (国家级企业技术中心), "Postdoctoral Research Workstation" ("博士后科研工作站"), "Provincial Engineering Research Center" ("省级工程研究中心") and "China National Accreditation Service ("CNAS") Certified Safety Laboratory" ("CNAS认证的安全实验 室").

The Group has also won many awards for its outstanding R&D capabilities and achievements, including:

·      "National Intellectual Property Advantage Enterprise" ("国家知识产权优势企业");

·      "National Key High-tech Enterprise" ("国家重点高新技术企业");

·      "Innovation Model and Pilot Enterprise in Zhejiang Province" ("浙江省创新型示范、试点企业"); and

·      "Credit Model Enterprise in Zhejiang Province" ("浙江省信用示范企业").

Various internationally renowned and industry-leading long-term business partners accumulated with strong technology, production and customised service capabilities.

Relying on the Group's vertically integrated industrial chain, flexible comprehensive production platform and professional R&D team, the Group, as one of the few companies in the industry that spans the inorganic fluorochemical and organic fluorochemical industries, is able to provide customised R&D, production and technical services for domestic and foreign customers. With its strong technology, production and customised service capabilities, the Group has secured a number of internationally renowned and industry-leading business partners.

In terms of the new energy lithium battery material business: the Group's key partners are leading enterprises in China in lithium batteries, such as Contemporary Amperex Technology Co. Ltd. ("CATL") and BYD Co. Ltd. In July 2021, the Group entered into a strategic procurement agreement with CATL to establish long-term cooperation. In November 2021, the Group and CATL further agreed on equity investment in Yongtai Hi-tech, a subsidiary of the Group. In terms of the pharmaceutical product business: the customers of the Group are mostly Fortune 500 companies, including Merck & Co., Inc. ("Merck"), Evonik Industries AG, Pfizer, Inc. and Gilead Sciences, Inc., among which Merck highly values the fluorine fine chemical customised technology of the Group and has maintained a close business relationship with the Group for 18 years. The Group continuously improves and optimises product technology and costs, and there is an enduring cooperation between the Group and Merck on research and development into diabetes drugs.

In terms of the crop science product business: key customers of the Group include Syngenta Group Co., Ltd., BASF SE, Bayer AG, Corteva, Inc. and Sumitomo Chemical and other leaders in the industry. In general, the Group has earned the trust of its business partners by virtue of outstanding product quality, a good delivery track record and strong technical strength; relying on strict environmental protection, a good safety assurance and quality assurance system, the Group has successfully passed the audit verification of its business partners, ensuring the stability of its cooperative relationship and enhancing the trust of customers.

Business Strategies

To continue the Group's development in the new energy materials and pharmaceutical product business, to further increase the Group's scale of business and consolidate its leading position in the industry

In the future, the Group plans to continue to focus on developing its new energy material and pharmaceutical product businesses. In terms of the new energy material business, the Group will, based on the needs of customers along the industry chain, further increase its R&D investments in upstream raw materials for lithium salts, lithium salts, additives and electrolyte solutions, and establish a sound one-stop electrolyte solutions procurement platform.

In terms of its pharmaceutical product business, the Group plans to, with the support of core technologies, including directional introduction of fluorine atoms technology, chiral hydrogenation, enzymatic catalysis technology and micro-flow reaction, ensure further development in the fields of cardiovascular, diabetes, anti-virus and digestive systems.

In terms of production capacity, the Group has an abundant production capacity reserve for various products. As of 31 March 2023, the Group had a production capacity under construction for different products of 197,000 tons per annum (including liquid lithium salts of 167,000 tons per annum, VC of 25,000 tons per annum and FEC of 5,000 tons per annum) and considerable planned production capacity (including electrolyte solutions of 200,000 tons per annum), which will effectively support its future growth and enhance its leadership in the industry.

To continue to improve the streamlining, automation, closed-end operation and circular development of the Group's key production platforms and enhance the Group's economies of scale

In the future, the Group plans to continue to comply strictly with its policy of "safety, environmental protection and quality", carry out construction or upgrading works, featuring streamlining, automation and closed-end operation at its production sites to support the long-term, healthy, stable and high-quality development of the Group.

The Group plans to continue to promote recycling in production and the construction of supporting facilities, to recycle unreacted reactants and by-products and the sealing of the production process, promote energy-saving and low-carbon processes, reduce the cost of energy consumption and integrated production, and enhance the overall competitiveness of the Group.

To develop a high-quality R&D platform, establish a team of high-calibre technical personnel and enhance the Group's sustainable technological innovation capabilities

As a high-tech enterprise, the Group plans to continue the construction of its high-quality R&D platform and to equip its R&D platform and production facilities with additional expertise. The Group has also established a new integrated R&D centre in Hangzhou, specialising in pharmaceutical products, focusing on innovative technology research.

Furthermore, the Group plans to also maintain a good industry-university-research cooperative relationship with Tsinghua University, Zhejiang University of Technology and other scientific research institutes to explore the possibility of industrialisation of technologies developed by these universities.

To take advantage of the synergistic effect of the industry chain to identify strategic customers and explore the needs of the market.

By leveraging upon its advantages in cooperative activities within the industry and by way of merger and acquisition, the Group plans to further enhance the synergistic effect of the industry chain and broaden the coverage of its products, improve the cooperative relationships with its existing customers, develop long-term strategic customers and further explore the needs of these strategic customers.

For example, the development of new energy vehicles ("NEV") industry worldwide will spur a rapid development of the downstream NEV battery industry. Both the widely used new energy lithium battery and maturing sodium-ion battery rely on the supply of fluorine-containing raw materials, and the market demand exceeds the market supply. Therefore, the fluorine-containing chemical industry is expected to be an important strategic industry in supporting the development of renewable energy industry. As such, the Group plans to, in the light of the development of the new energy battery industry, further explore its production capacity and technical reserve for sodium-ion batteries to diversify its product portfolio.

To develop overseas business and increase global presence

The Group intends to achieve further expansion of its overseas businesses by accelerating the development of its existing multinational platform of pharmaceutical finished dosages to expand its pharmaceutical product business, and leveraging the over 1,200 fluorine containing pesticide registration certificates obtained in more than 60 countries to strengthen its trading business. In terms of its new energy material business, the Group plans to explore overseas markets with preferential policies in the new energy industry, such as Japan, Korea, Europe, and the United States.

Dividend Policy

After completion of the Offering, the Company may distribute dividends in the form of cash or stocks. Any proposed distribution of dividends shall be formulated by the Company's senior management and will be subject to the Board's and shareholders' approval. A decision to declare or to pay any dividends in the future, and the amount of any dividends, will depend on a number of factors, including the Group's results of operations, cash flows, financial condition, payments by its subsidiaries of cash dividends to the Company, the stage of the Company's development, its business prospects, statutory, regulatory and contractual restrictions on its declaration and payment of dividends and other factors that the Board may consider important.

According to the applicable PRC laws and the Company's articles of association (the "Articles of Association"), the Company will pay dividends out of its profit after tax only after it has made the following allocations:

·      recovery of accumulated losses, if any;

·      allocations to the statutory reserve equivalent to 10% of its profit after tax, and, when the statutory reserve reaches and is maintained at or above 50% of its registered capital, no further allocations to this statutory reserve will be required; and

·      allocation, if any, to a discretionary common reserve fund an amount approved by the shareholders of the Company in a shareholders' meeting.

Furthermore, as set forth in its Articles of Association, the Company distributes dividends primarily in the form of cash, but may also distribute dividends in the form of stocks. The Company shall in principle distribute cash dividends every fiscal year, and may declare interim dividends as it considers appropriate, provided that the Company records a positive profit for the year and has positive retained earnings. In principle, the profits for distribution in each fiscal year shall be no less than 10% of the distributable profits realised in the same period. According to its Articles of Association, the Company implements a tiered cash distribution policy: if the Company has reached a mature stage and there is no major capital expenditure expected, cash dividends shall account for no less than 80% of the overall dividend distribution; if the Company has reached a mature stage but there is a major capital expenditure expected, cash dividends shall account for no less than 40% of the overall dividend distribution; and if the Company is at a growth stage and there is a major capital expenditure expected, cash dividends shall account for no less than 20% of the overall profit distribution. For the years ended 31 December 2020, 2021 and 2022, the Company distributed cash dividend of nil, RMB1.0 and RMB 1.0 per ten shares, respectively. However, the Company is allowed to amend its Articles of Association with the approval of more than two thirds of the voting rights held by the shareholders attending the shareholders' meetings and there is no assurance that the Company will distribute the dividends in an amount as specified in the Articles of Association.

Management and Corporate Governance

The Board of Directors is responsible for the general management of the Company and is accountable to the general meeting. Board meetings include routine board meetings and extraordinary board meetings. A routine board meeting is required to be called at least twice a year. An extraordinary board meeting may be called upon demand.

The Company's Board of Directors currently consists of nine Directors, including three independent Directors. A Director serves a term of three years and may seek re-election upon expiry of the said term.

The senior management team consists of:

·      General Manager: Kuang He

·      Deputy General Manager and Chief Financial Officer: Lijie Chen

·      Deputy General Manager and Secretary of the Board of Directors: Jiangshan Zhang

·      Deputy General Managers: Yizhong Jin, Jinfeng Huang, Hegeng Wei, Chunhua Wang, Zichen Wang

Corporate Information

Zhejiang Yongtai Technology Co., Ltd. is a joint stock company with limited liability established pursuant to the Company Law of the PRC.

The Company's registered office is located at No. 1 Donghai Fifth Avenue, Linhai Park, Zhejiang Chemical API Base, Zhejiang Province, China.

For further information, please visit the website of the Company at http://www.yongtaitech.com, or contact +86 0576-85588006.

Disclaimer / Forward Looking Statements

The contents of this announcement have been prepared by and are the sole responsibility of the Company.

The information contained in this announcement is for background purposes only and does not purport to be full or complete nor does it constitute or form part of any invitation or inducement to engage in investment activity, nor does it constitute an offer or invitation to buy any securities in any jurisdiction including the United States, or a recommendation in respect of buying, holding or selling any securities. No reliance may be placed by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia), Australia, Canada, Japan, South Africa, the People's Republic of China or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The distribution of this announcement may be restricted by laws in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement is an advertisement and not a prospectus and, further, is not an offer to sell, or solicitation of an offer to buy, acquire or subscribe for, or otherwise invest in, any securities to any person in any jurisdiction, including without limitation those in the United States (including its territories and possessions, any state of the United States and the District of Columbia), Australia, Canada, Japan, South Africa, the People's Republic of China, or in any other jurisdiction in which such offer or solicitation would be unlawful. The Offer GDRs have not been, and will not be, registered under the Securities Act, or the securities laws of any state of the United States and may not be offered or sold in the United States unless registered under the Securities Act or pursuant to or an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any applicable state or local securities law. The Company has not made and does not intend to make any public offer of securities in any jurisdiction, including. without limitation, the United States.

For persons in any member state of the European Economic Area (the "EEA"), this announcement is only addressed to and directed at persons who are "qualified investors" ("Qualified Investors") within the meaning of Article 2(e) of the Regulation (EU) 2017/1129.

For persons in the United Kingdom, this announcement and any offer if made subsequently is only addressed to and directed at persons who are "qualified investors" within the meaning of Article 2(e) of Regulation (EU) 2017/1129 as it forms part of retained EU law as defined in the European Union (Withdrawal) Act 2018 and who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), (ii) are high net worth entities who fall within Article 49(2)(a) to (d) of the Order, or (iii) are otherwise persons to whom it may otherwise lawfully be communicated (all such persons being referred to as "relevant persons").

This announcement must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the EEA, by persons who are not Qualified Investors. Any investment or investment activity to which this announcement relates is available only to and will only be engaged with (i) in the United Kingdom, relevant persons, and (ii) in any member state of the EEA, Qualified Investors.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believe", "expect", "anticipate", "intend", "estimate", "forecast", "project", "will", "may", "target", "should" and similar expressions, or, in each case, their negative or other variations or comparable terminology, or by discussions of strategies, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group's business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward looking statements speak only as of the date they are made.

To the fullest extent permitted under applicable laws, the Company and each of the Joint Bookrunners and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

Any subscription or purchase of Offer GDRs in the proposed Offering should be made solely on the basis of information contained in the Prospectus which may be issued by the Company in connection with the Offering. The information in this announcement is subject to change. Before subscribing for or purchasing any Offer GDRs, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the Prospectus if published. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. This announcement shall not form the basis of or constitute any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any Offer GDRs or any other securities nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor.

The timing of any Offering and Admission may be influenced by a variety of factors which include market conditions. The Company may decide not to go ahead with the proposed Offering and/or Admission and therefore there is no guarantee that the Prospectus will be published, the proposed Offering will proceed or Admission will occur. Potential investors should not base their financial decision on the Company's intentions in relation to Admission or this announcement. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested.

Persons considering making investments should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the proposed Offering. The value of GDRs can decrease as well as increase. Past performance is not a guide to future performance. Information in this announcement cannot be relied upon as a guide to future performance. Before purchasing any securities in the Company, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the Prospectus, if published. Potential investors should consult a professional advisor as to the suitability of the proposed Offering for the person concerned.

None of the Company, the Joint Bookrunners or any of their respective affiliates, or any of their or their affiliates' directors, officers, employees, advisors or agents, accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or that any transaction has been or may be effected on the terms or in the manner stated herein or as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any, or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, the Joint Bookrunners and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

The Joint Bookrunners and their affiliates are acting exclusively for the Company and no one else in connection with the Offering. They will not regard any other person as their respective clients in relation to the Offering and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, or for providing advice in relation to the Offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

Huatai Financial Holdings (Hong Kong) Limited, China Securities (International) Corporate Finance Company Limited and CLSA Limited are licensed by the Securities and Futures Commission of Hong Kong.

In connection with the Offering, the Joint Bookrunners and/or any of their respective affiliates and/or funds managed by affiliates of the Company acting as an investor for its or their own account(s) may subscribe for the Offer GDRs and, in that capacity, may retain, purchase, sell, offer to sell or otherwise deal for its or their own account(s) in such Offer GDRs, any other securities of the Company or other related investments in connection with the Offering or otherwise. Accordingly, any references in the Prospectus, if published, to the Offer GDRs being issued, offered, subscribed, acquired or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition or dealing by, the Joint Bookrunners and/or any of their respective affiliates and/or funds managed by affiliates of the Company acting in such capacity. In addition, certain of the Joint Bookrunners or their affiliates may enter into financing or hedging arrangements (including swaps) with investors in connection with which such Joint Bookrunners (or their affiliates) may from time to time acquire, hold or dispose of GDRs. Neither the Joint Bookrunners nor any of their respective affiliates intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

No stabilisation will be carried out in connection with the Offering.

Unless otherwise indicated, market, industry and competitive position data are estimates (and accordingly, approximate) and should be treated with caution. Such information has not been audited or independently verified, nor has the Company ascertained the underlying economic assumptions relied upon therein.

Certain data in this announcement, including financial, statistical, and operating information has been rounded. As a result of the rounding, the totals of data presented in this announcement may vary slightly from the actual arithmetic totals of such data. Percentages in tables may have been rounded and accordingly may not add up to 100%.

For the avoidance of doubt, the contents of the Company's website are not incorporated by reference into, and do not form part of, this announcement.