Related Party Transactions and Relationships and Transactions With Certain Other Parties (Tables)

6 Months Ended

Jun. 30, 2013

Name of parties		Relationship
Mr. Chunfeng Tao		Majority stockholder

Mr. Jicun Wang		Principal stockholder

Mr. Peijun Chen		Principal stockholder

Ms. Sumei Chen		Member of the Company’s Board of Supervisors and spouse of Mr. Wang

Ms. Yushui Huang		Vice President of Administration, Ningbo Keyuan

Ningbo Pacific Ocean Shipping Co., Ltd (Ningbo Pacific)		100% ownership by Mr. Wang

Ningbo Xinhe Logistic Co., Ltd (Ningbo Xinhe)		10% ownership by Ms. Huang

Ningbo Kunde Petrochemical Co, Ltd. (Ningbo Kunde)		Mr. Tao’s mother was a 65% nominee shareholder for Mr. Hu, a third party through September 2011

	Three months ended June 30				Six months ended June 30
	2013		2012		2013		2012
	($’000)		($’000)		($’000)		($’000)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Purchase of transportation services (a)	$	413	$	1,105	$	1,041	$	1,666
Loan guarantee fee (b)	$	19	$	113	$	42	$	204

	June 30, 2013		December 31, 2012
	($’000)		($’000)
	(Unaudited)		(Unaudited)

Amounts due from related parties (c)	$	295	$	40
Amounts due to related parties(d)	$	-	$	479

(a)

The Group purchased transportation services of approximately $0.4 million and $1.1 million from Ningbo Xinhe during each of the three months ended June 30, 2013 and 2012, respectively. The Group purchased transportation services of $1.04 million and $1.7 million from Ningbo Xinhe during the six months ended June 30, 2013 and 2012, respectively.

(b)

Guarantees for Bank Loans

	Guarantee provided during three months ended June 30,				Bank loans Guaranteed as of
	2013		2012		June 30, 2013		December 31, 2012
	($’000)		($’000)		($’000)			($’000)
	(Unaudited)		(Unaudited)		(Unaudited)
Mr. Tao	$	-	$	-	$	-	$	15,840
Jicun Wang and Sumei Chen		-		-		-		1,899
Ningbo Pacific		-		-		43,579		23,976
Total	$	-	$	-	$	43,579	$	41,715

Beginning in 2011, loan guarantee fees of 0.3% of the loan principal guaranteed are to be paid quarterly. During the three months ended June 30, 2013 and 2012, loan guarantee fees were approximately $0.02 million and $0.1 million for Ningbo Pacific, respectively. During the six months ended June 30, 2013 and 2012, loan guarantee fees were $0.04 million and $0.2 million for Ningbo Pacific, respectively.

(c)

Amounts due from related parties consist of the following.

	June 30, 2013		December 31, 2012
	($’000)		($’000)
	(Unaudited)		(Unaudited)
Ningbo Xinhe (Prepaid transportation expenses)	$	246	$	-
Mr. Chunfeng Tao		49		40
Total	$	295	$	40

(d)

Amounts due to related parties consist of the following.

	June 30, 2013		December 31, 2012
	($’000)		($’000)
	(Unaudited)		(Unaudited)
Ningbo Xinhe	$	-	$	479

Guarantees for bank loans

	Guarantee provided during three months ended June 30,				Bank loans Guaranteed as of
	2013		2012		June 30, 2013		December 31, 2012
	($’000)		($’000)		($’000)			($’000)
	(Unaudited)		(Unaudited)		(Unaudited)
Mr. Tao	$	-	$	-	$	-	$	15,840
Jicun Wang and Sumei Chen		-		-		-		1,899
Ningbo Pacific		-		-		43,579		23,976
Total	$	-	$	-	$	43,579	$	41,715

Amounts due from related parties

	June 30, 2013		December 31, 2012
	($’000)		($’000)
	(Unaudited)		(Unaudited)
Ningbo Xinhe (Prepaid transportation expenses)	$	246	$	-
Mr. Chunfeng Tao		49		40
Total	$	295	$	40

Amount due to related parties

	June 30, 2013		December 31, 2012
	($’000)		($’000)
	(Unaudited)		(Unaudited)
Ningbo Xinhe	$	-	$	479

Relationships and transactions with certain other parties

Name of parties		Relationship
Ningbo Litong Petrochemical Co., Ltd (Ningbo Litong)		Former 12.75% nominee shareholder of Ningbo Keyuan
Ningbo Anqi Petrochemical Co., Ltd (Ningbo Anqi)		A related party through September 2011 when control transferred
Ningbo Kewei Investment Co., Ltd. (Ningbo Kewei)		A related party through September 2011 when control transferred
Ningbo Kunde Petrochemical Co, Ltd. (Ningbo Kunde)		A related party through September 2011 when control transferred

Transactions and amounts outstanding with certain other parties

	Three months ended June 30					Six months ended June 30
		2013		2012			2013		2012
		($’000)		($’000)			($’000)		($’000)
		(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
Sales of products (e)		$	8,809	$	47,734		$	50,129	$	70,021
Purchase of raw materials (f)		$	7,987	$	21,942		$	34,703	$	22,358
Guarantee for bank borrowings (g)		$	94,405	$	141,062		$	94,405	$	161,688
Loan guarantee fees (g)		$	575	$	382		$	1,092	$	742

	June 30, 2013		December 31, 2012
	($’000)		($’000)
	(Unaudited)		(Unaudited)
Amounts due to these parties (h)	$	953	$	-
Amounts due from these parties(i)	$	23,614	$	28,028

(e)

The Group sold finished products of approximately $1.8 million and $7 million to Ningbo Litong during the three months ended June 30, 2013 and 2012, respectively and sold finished products of approximately $7.0 million and $41 million to Ningbo Kunde during the three months ended June 30, 2013 and 2012, respectively. The Group sold finished products of approximately $12.1 million and $17 million to Ningbo Litong, during the six months ended June 30, 2013 and 2012, respectively. The Group sold finished products of approximately $38.0 million and $53 million to Kunde during the six months ended June 30, 2013 and 2012, respectively.

(f)

During the three months ended June 30, 2013, the Group purchased raw materials of nil and approximately $8.0 million from Kunde and Kewei, respectively. During the three months ended June 30, 2012, the Group purchased raw material of $8.8 million and $13.1 million from Ningbo Litong and Ningbo Kunde, respectively. During the six months ended June 30, 2013, the Group purchased raw materials of approximately $2.7 million and $32.0 million from Kunde and Kewei, respectively. During the six months ended June 30, 2012, the Group purchased raw materials of approximately $9.2 million and $13.1 million from Ningbo Litong and Ningbo Kunde, respectively.

(g)

Guarantees for Bank Loans

	Guarantee provided during the three months ended June 30,				Guarantee provided during the six months ended June 30,
	2013		2012		2013		2012
	($’000)		($’000)		($’000)		($’000)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Ningbo Litong	$	62,056	$	30,000	$	62,056	$	50,626
Ningbo Kewei		32,056		111,062		32,056		111,062
Total	$	94,112	$	141,062	$	94,112	$	161,688

	Bank loans Guaranteed as of
	June 30, 2013		December 31, 2012
	($’000)		($’000)
	(Unaudited)

Ningbo Litong	$	145,422	$	30,710
Ningbo Kewei		166,549		122,651
Total	$	311,971	$	153,361

Beginning in January 2011, loan guarantee fees of approximately 0.3% of the loan principal guaranteed after January 2011 are to be paid quarterly. Guarantee fees paid to Litong and Kewei were approximately $0.24 million and $0.34 million for the three months ended June 30, 2013, respectively. In the three months ended June 30, 2012, loan guarantee fees were $0.18 million and $0.2 million to Ningbo Litong and Ningbo Kewei, respectively. Guarantee fees paid to Ningbo Litong and Ningbo Kewei were approximately $0.47 million and $0.62 million for the six months ended June 30, 2013. In the six months ended June 30, 2012, loan guarantee fees were $0.37 million and $0.37 million for Ningbo Litong and Ningbo Kunde, respectively.

(h)

At June 30, 2013, amounts due to certain other parties consist of amounts due to Kewei of approximately $1.0 million.

(i)

At June 30, 3013, amounts due from certain other parties consist of amounts due from Litong, Kunde and Kewei of $2.6 million, $4.3 million and $16.7 million, respectively. These amounts are included in accounts receivable and prepayments to suppliers on the consolidated balance sheet.

Guarantees for bank loans with certain other parties

	Guarantee provided during the three months ended June 30,				Guarantee provided during the six months ended June 30,
	2013		2012		2013		2012
	($’000)		($’000)		($’000)		($’000)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Ningbo Litong	$	62,056	$	30,000	$	62,056	$	50,626
Ningbo Kewei		32,056		111,062		32,056		111,062
Total	$	94,112	$	141,062	$	94,112	$	161,688

	Bank loans Guaranteed as of
	June 30, 2013		December 31, 2012
	($’000)		($’000)
	(Unaudited)

Ningbo Litong	$	145,422	$	30,710
Ningbo Kewei		166,549		122,651
Total	$	311,971	$	153,361