Stock Code: 603899 Short Name: M&G Corporation
SHANGHAI M&G STATIONERY INC.
Annual Report 2023
Staying True to Original Aspiration and Forging Ahead
Letter to Shareholders
The year 2023 presented formidable challenges. Internationally, we confronted acomplex environment and a sluggish economic recovery. Domestically, we grappled withdiminishing external demand and subdued domestic consumption, exacerbated by a mix ofcyclical and structural issues. Despite these trials, M&G remained steadfast and united,successfully navigating these challenges and maintaining robust and steady operations.
The year 2023 was the third in the Company's new five-year strategy. Moreover, itmarked a point of transition. During the course of the year, we were steadfast in ourlong-term perspective. By focusing on model stores, advancing our omni-channel layoutand nurturing innovative product capabilities, we ensure stable growth for our coretraditional business. Meanwhile, our new business, including direct office supplies andlarge retail store, maintained rapid growth. We worked hard to advance policy development,doing so with a focus on the M&G Business System (MBS), digitalization and talentcultivation. This boosted our operational efficiency and laid a solid foundation for theCompany's sustainable development.
In 2023, the Company recorded revenue of RMB23.35 billion, an increase of 16.78%,and a net profit attributable to its shareholders of RMB1.52 billion, an increase of 19.05%.We also celebrated Jiumu Store's seventh anniversary in 2023, a year in which weflourished. Jiumu Store recorded revenue of RMB1.24 billion, an increase of 52.58%, and anet profit of RMB25.72 million. Furthermore, the total number of Jiumu Stores exceeded
600. Finally, after seven years of dedicated effort, we have built Jiumu Store a bridgehead.
In 2023, we emphasized quality over quantity in product development, dedicatingourselves to elevating the quality of the products we offered. We addressed consumer painpoints, and studied their satisfactory points and points of posts in pursuit of greaterconsumer satisfaction. At M&G, we value every detail throughout the consumer experience,endeavouring to "embrace" each customer with products designed with care and warmth.
In 2024, we'll remain committed to our mission of "make study and work more joyfuland effective". We'll focus on our core business as we enhance the efficiency of
collaboration. Upholding our customer-centric philosophy, we will keep improving ourcapability in technological innovation. We will strengthen the competitive edges in our coretraditional business, while continuing to expand the new business. Also, we will advancestrategies and measures such as product and technological innovation, channeltransformation, online improvement and internationalization. We'll adhere to our strategiesdespite external uncertainties. We'll also advance organizational reform to sustain theCompany's healthy, high-quality development. By doing so, we aim to strengthen ourpresence and competitiveness in the global stationery and office supplies sector.Work hard and you will be rewarded and win in the future. We'll continue to do thetough but right things in the belief that our dedication and efforts will be rewarded. Wewould like to extend our heartfelt gratitude to our employees. They have been dedicatedand hard working in 2023. We also want to thank our partners and continue our journeytogether towards a brighter future. We're thankful to our customers for their unwaveringsupport. Your trust keeps driving our growth. Last but not least, we extend heartfeltgratitude to our shareholders. M&G is ready to work with all of you to promote sound,sustainable, high-quality development. We'll strive to create greater value for each andevery shareholder.
Our mission is to take responsibility and strive to create a brighter future. And we'llkeep striving towards a world-class M&G!
Board of Directors of Shanghai M&G Stationery Inc.
28 March 2024
Important NoticeI. The Board of Directors, Supervisory Committee, directors, supervisors and senior managementof the Company warrant that the contents of this report are true, accurate and complete, withoutany misrepresentation, misleading statements or material omissions, and severally and jointly bearthe legal responsibilities thereof.
II. All directors of the Company attended the Board meeting.
III. BDO China Shu Lun Pan CPAs (LLP) has issued the audit report with unqualified opinions tothe Company.
IV. Chen Huwen, the chairman of the Company, Tang Xianbao, CFO of the Company and Zhai Yu,the head of the accounting department (person in charge of accounting), warrant the truthfulness,accuracy and completeness of the financial report in this annual report.
V. Profit distribution plan or plan to convert surplus reserves into share capital approved by theBoard of Directors during the Reporting PeriodThe Company proposes to distribute cash dividend of RMB8.00 (tax inclusive) per 10 shares basedon the Company's total share capital (exclusive of shares in the Company’s special securities account forrepurchased shares) registered as at the registration date for the implementation of dividend distribution.The profit distribution plan is subject to being submitted to the Company's 2023 annual general meetingof shareholders for deliberation.
VI. Risks statement of the forward-looking statements
√ Applicable □ Not applicable
Forward-looking statements including future plans and development strategies involved in thisannual report do not constitute the Company's substantive commitments to investors. The investors areadvised to pay attention to investment risks.
VII. Is there any non-operating misappropriation of funds of the Company by any controllingshareholders and their related partiesNo
VIII. Has the Company provided any external guarantees in violation of the decision-makingproceduresNo
IX. Are there more than half of the directors who cannot warrant the truthfulness, accuracy andcompleteness of the annual report disclosed by the CompanyNo
X. Warning on significant risks
The Company has illustrated various risks and corresponding measures that the Company mightface in the production and operation. Please refer to the "Potential Challenges and Risks" set out in"Section III Management Discussion and Analysis". Investors are advised to pay attention to risk ofinvestment.
XI. Others
□ Applicable √ Not applicable
本报告分别以中、英文编制，在对中外文文本的理解上发生歧义时，以中文文本为准。
This English version is converted from the Chinese version.In case of any discrepancy between the Chinese version and the English version, the
Chinese version shall prevail.
Contents
Section I Definition ...... 7
Section II Company Profile and Key Financial Indicators ...... 8
Section III Management Discussion and Analysis ...... 12
Section IV Corporate Governance ...... 37
Section V Environmental and Social Responsibility ...... 53
Section VI Major Events ...... 56
Section VII Changes in Shares and Shareholders ...... 68
Section VIII Preferred Shares ...... 76
Section IX Bonds ...... 77
Section X Financial Report ...... 78
| References | Financial statements signed and sealed by the legal representative, the person in charge of accounting work, and the person in charge of the accounting agency. |
| Original of the auditor's report with the seal of the accounting firm and the signature and seal of the certified public accountant. | |
| Originals of all company documents and announcements publicly disclosed on the designated information disclosure media by CSRC during the Reporting Period. |
Section I Definition
I. DefinitionIn this report, unless the content requires otherwise, the following terms shall have the followingmeanings:
| Definition of common terms | ||
| The Report | Refers to | Annual Report 2023 |
| Company, the Company, M&G Stationery, M&G Corporation | Refers to | SHANGHAI M&G STATIONERY INC. |
| M&G Group | Refers to | M&G Holdings (Group) Co., Ltd. |
| M&G Colipu | Refers to | Shanghai M&G Colipu Office Supplies Co., Ltd. |
| M&G Life（晨光生活馆） | Refers to | M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司）/Large retail store of the Company |
| Colipu Information Technology | Refers to | Shanghai Colipu Information Technology Co., Ltd.（上海科力普信息科技有限公司） |
| M&G Technologies | Refers to | Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） |
| Jiekui Investment | Refers to | Shanghai Jiekui Investment Management Firm (L.P.) |
| Keying Investment | Refers to | Shanghai Keying Investment Management Office (L.P.) |
| Jiumu Store（九木杂物社） | Refers to | Jiumu M&G Store Enterprise Management Co., Ltd.（九木杂物社企业管理有限公司）/Large retail store of the Company |
| M&G Office Stationery（晨光办公） | Refers to | Shanghai M&G Office Stationery Co., Ltd. |
| Axus Stationery | Refers to | Axus Stationery (Shanghai) Company Ltd. |
| Beckmann | Refers to | Back to School Holding AS, a Norwegian subsidiary that is principally engaged in schoolbags |
| Qizhihaowan（奇只好玩） | Refers to | Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） |
| MRO | Refers to | Maintenance, repair and operation, i.e. industrial consumables required by an industrial enterprise to ensure normal production, except raw materials |
| KA | Refers to | Key Account, usually referring to large cross-regional retailers with large operating space and dense customer flow, including RT-MART, Walmart, Carrefour, and Hualian Supermarket. |
| Core traditional business | Refers to | The designing, developing, manufacturing and selling writing instruments, student stationery, office supplies and other products under M&G brands, and also the e-commerce business M&G Technologies |
| New business | Refers to | Large retail store business and direct office supplies business |
| Reporting period | Refers to | Year 2023, from 1 January 2023 to 31 December 2023 |
| Yuan, ten thousand Yuan, hundred million Yuan | Refers to | RMB, RMB10,000, RMB100 million |
Section II Company Profile and Key Financial IndicatorsI. Company Information
| Chinese name of the Company | 上海晨光文具股份有限公司 |
| Short name of the Company in Chinese | 晨光股份 |
| English name of the Company | SHANGHAI M&G STATIONERY INC. |
| Abbreviation of English name of the Company | M&G |
| Legal representative of the Company | Chen Huwen |
II. Contact Information
| Board Secretary | Securities Affairs Representative | |
| Name | Bai Kai | |
| Office address | No.5, Lane 288, Qianfan Road, Xinqiao Town, Songjiang District, Shanghai | |
| Telephone | 021-57475621 | |
| Fax | 021-57475621 | |
| ir@mg-pen.com |
III. Introduction to General Information
| Registered address | Building 3, No. 3469 Jinqian Road, Fengxian District, Shanghai |
| Historical change of the Company's registered address | No |
| Office address | No.5, Lane 288, Qianfan Road, Xinqiao Town, Songjiang District, Shanghai |
| Postal code of office address | 201612 |
| Website of the Company | http://www.mg-pen.com |
| ir@mg-pen.com |
IV. Information Disclosure and Place for Obtaining the Report
| Media for the Company's information disclosure | Shanghai Securities News, China Securities Journal, Securities Daily, Securities Times |
| CSRC's designated website for the Company's Annual Report disclosure | www.sse.com.cn |
| The Company's Annual Report may be obtained at | Board of Directors’ Office |
V. Stock Information
| Stock Information | ||||
| Share class | Exchanges on which the stocks are listed | Stock short name | Stock code | Stock short name before change |
| A share | Shanghai Stock Exchange | M&G Corporation | 603899 | M&G Stationery |
VI. Other Relevant Information
| Auditor of the Company (domestic) | Name | BDO China Shu Lun Pan CPAs (LLP) |
| Office address | 4F, No. 61, Nanjing East Road, Shanghai | |
| Name of the signing accountant | Chen Luying, Fang Ning |
VII. Major Accounting Data and Financial Indicators for the Past Three Years(I) Major accounting data
Unit: Yuan Currency: RMB
| Major accounting data | 2023 | 2022 | Year-on-year change (%) | 2021 |
| Revenue | 23,351,304,328.03 | 19,996,315,623.32 | 16.78 | 17,607,403,250.12 |
| Net profit attributable to shareholders of the listed companies | 1,526,801,727.16 | 1,282,456,788.17 | 19.05 | 1,517,866,131.16 |
| Net profit attributable to shareholders of the listed companies, net of non-recurring gains and losses | 1,398,219,856.97 | 1,155,560,793.33 | 21.00 | 1,349,538,372.72 |
| Net cash flow generated from operating activities | 2,616,600,617.09 | 1,351,783,827.08 | 93.57 | 1,561,196,420.77 |
| End of 2023 | End of 2022 | Year-on-year change (%) | End of 2021 | |
| Net assets attributable to shareholders of the listed companies | 7,833,178,803.52 | 6,849,334,531.67 | 14.36 | 6,194,891,978.00 |
| Total assets | 15,313,962,312.00 | 13,022,593,379.49 | 17.60 | 11,424,387,930.33 |
(II) Key financial indicators
| Key financial indicators | 2023 | 2022 | Year-on-year change (%) | 2021 |
| Basic earnings per share (Yuan/share) | 1.6577 | 1.3874 | 19.48 | 1.6450 |
| Diluted earnings per share (Yuan/share) | 1.6577 | 1.3874 | 19.48 | 1.6425 |
| Basic earnings per share, net of non-recurring gains and losses (Yuan/share) | 1.5181 | 1.2499 | 21.46 | 1.4623 |
| Weighted average ROE (%) | 20.97 | 19.60 | Increase by 1.37 percentage points | 26.82 |
| Weighted average ROE, net of non-recurring gains and losses (%) | 19.20 | 17.66 | Increase by 1.54 percentage points | 23.84 |
Explanation of major accounting data and financial indicators for the past three years by the end of theReporting Period
√ Applicable □ Not applicable
Net cash flow generated from operating activities increased primarily driven by the increased sales andcash inflows.
VIII. Difference in the Accounting Information under the PRC Accounting Standards for BusinessEnterprise ("PRC GAAP") and Overseas Accounting Standards(I) Difference in net profit and net asset attributable to shareholders of the listed company infinancial reports disclosed under International Accounting Standards and PRC GAAP
□ Applicable √ Not applicable
(II) Differences in net profit and net assets attributable to shareholders of the listed company infinancial reports disclosed under International Accounting Standards and PRC GAAP
□ Applicable √ Not applicable
(III) Explanation on the differences between PRC GAAP and Overseas Accounting Standards:
□ Applicable √ Not applicable
IX. Key Financial Data for the Year of 2023 by Quarter
Unit: Yuan Currency: RMB
| 1st Quarter (January - March) | 2nd Quarter (April - June) | 3rd Quarter (July - September) | 4th Quarter (October - December) | |
| Revenue | 4,881,597,128.81 | 5,079,159,607.47 | 5,899,006,541.60 | 7,491,541,050.15 |
| Net profit attributable to shareholders of the listed companies | 333,575,984.76 | 270,916,653.58 | 489,658,451.67 | 432,650,637.15 |
| Net profit attributable to shareholders of the listed company after non-recurring profit or loss | 294,952,415.84 | 247,752,748.10 | 453,839,490.26 | 401,675,202.77 |
| Net cash flow generated from operating activities | 135,347,440.80 | 540,964,797.25 | 670,832,865.07 | 1,269,455,513.97 |
Explanation on difference between information by quarter and information disclosed in periodicalreports
□ Applicable √ Not applicable
X. Items and Amounts of Non-recurring Gains or Losses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Items of Non-recurring Gains or Losses | Amounts in 2023 | Notes (if applicable) | Amounts in 2022 | Amounts in 2021 |
| Gains or losses on disposal of non-current assets (inclusive of impairment allowance write-offs) | 4,135,364.06 | Mainly due to the gains on the disposal of fixed assets | -31,622.53 | 6,098,090.22 |
| Government subsidies included in profits and losses for the current period, excluding those that are closely related to the Company's normal business operations and given in accordance with defined criteria and in compliance with government policies, and have a continuing impact on the Company's profits or losses | 148,088,250.88 | Mainly including government subsidies received during the Reporting Period and government subsidies transferred from deferred income | 137,680,656.90 | 163,887,877.43 |
| Gains or losses on fair-value changes in financial assets and liabilities held by a non-financial enterprise, as well as on disposal of financial assets and liabilities (exclusive of the effective portion of hedges that is related to the Company's normal business operations) | 28,908,931.81 | Revenue generated from purchase of wealth management products | 33,850,421.52 | 43,557,663.15 |
| Reversal of provision for impairment of receivables which are individually tested for impairment. | 3,232,256.86 | Mainly due to the provision reversal of bad debts on individual receivables during the Reporting Period | 2,418,576.03 | 20,000,000.00 |
| Gain equal to the amount by which investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company’s enjoyable fair value of identifiable net assets of investees when making investments | 7,479.07 | |||
| Other net non-operating income and expenses, other than the above items | -2,669,713.78 | Mainly due to donation payments | 4,698,497.40 | -11,127,909.82 |
| Minus: Effect of income tax | 33,479,316.16 | 33,704,873.59 | 33,537,580.85 | |
| Effect of minority equity (after tax) | 19,633,903.48 | 18,023,139.96 | 20,550,381.69 | |
| Total | 128,581,870.19 | 126,895,994.84 | 168,327,758.44 |
Items unlisted in the Explanatory Announcement on Information Disclosure by Companies OfferingSecurities to the Public No. 1: Non-Recurring Profits and Losses are identified as non-recurring profitand loss items and the items are of a significant amount, and non-recurring profit and loss items listed inthe Explanatory Announcement on Information Disclosure by Companies Offering Securities to thePublic No. 1: Non-Recurring Profits and Losses are defined as recurring profits and losses
□ Applicable √ Not applicable
XI. Items Measured at Fair Values
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Items | Opening balance | Closing balance | Changes in the Period | Effect on profit for the Period |
| Held-for-trading financial assets | 1,627,645,879.64 | 1,402,518,595.12 | -225,127,284.52 | 31,431,746.76 |
| Receivables financing | 21,664,621.88 | 39,533,283.51 | 17,868,661.63 | |
| Derivative financial assets | ||||
| Other debt investments (including other current assets) | ||||
| Other non-current financial assets | ||||
| Investments in other equity instruments | 8,411,887.95 | 9,175,073.42 | 763,185.47 | |
| Held-for-trading financial liabilities | ||||
| Derivative financial liabilities | 881,465.28 | 1,357,106.71 | 475,641.43 | |
| Non-current liabilities due within one year | 16,715,043.39 | 35,878,223.18 | 19,163,179.79 | -4,241,121.34 |
| Estimated liabilities | 14,922,058.45 | -14,922,058.45 | ||
| Total | 1,690,240,956.59 | 1,488,462,281.94 | -201,778,674.65 | 27,190,625.42 |
XII. Others
□ Applicable √ Not applicable
Section III Management Discussion and Analysis
I. Discussion and Analysis of OperationThe year 2023 was the third in the Company's new, five-year strategy. Moreover, it marked a pointof transition. The international environment became increasingly complex and uncertain, and thedomestic market saw weak expectations and sluggish demand. In the domestic market, changingconsumer preferences, buying habits and consumption scenarios, as well as the recovering market anddemographic trends, brought new challenges and opportunities. In response, the Company adhered to itsstrategies, upheld long-term development, and promoted steady implementation of its developmentstrategies. In terms of core traditional business, it maintained a leading position industry-wide, andadvanced high-end upgrading, channel transformation and online improvement. Large retail storebusiness saw a record high of both revenue and profit, becoming a new growth point for the Company.Direct office supplies business continued to grow rapidly, with continuously improving operatingcapacity. Meanwhile, the Company actively explored the international market, empowered organisationwith digital tools, and kept promoting organisational upgrading and reform, with its corecompetitiveness further enhanced.In the Reporting Period, revenue reached RMB23.35 billion, an increase of 16.78%, and the netprofit attributable to the Company’s shareholders was RMB1.52 billion, an increase of 19.05%.Operation of the Company in 2023 is reported as follows:
1. Core traditional business focused on product capability enhancement
During the Reporting Period, the Company emphasized quality over quantity in productdevelopment to increase the on-shelf ratio and sales contribution of single products while improving thesurvival rate of new products. Moreover, the Company optimised the product structure and streamlinedthe category composition of existing products to increase the on-shelf ratio of must-have products andimprove the capability of product categories. Being customer-centric, the Company carried out in-depthstudy of consumer pain points, and thus enhanced the functional design of products and kept upgradingthe writing experience of consumers. The Company also promoted the combination of internalindependent cultivation and collaboration with external IPs to diversify the product category. This hasfurther boosted the Company's product capability.Mass market stationery segment. The Company developed and managed products centring oncustomers, so as to bring customers a full range of stationery products of reliable quality and essentialfunctions, and kept optimising the product structure and enhancing product capability. In terms ofsegmented categories, the Company effectively increased its market share through "exploitation ofpotential" and "collaboration". By tapping the potential for marketing of classic products in differentchannels, the Company increased the on-shelf ratio of products. Coordination was made with onlinechannels to tap the potential for diversifying high-quality online products and form individualbest-selling products for distribution. During the Reporting Period, the Company improved the on-shelfratio of long-selling paper products and key paper products, and the Meeboki-series products enjoyedpopularity in the market.Premium stationery segment. The Company highlighted the development and cultivation ofleading products. It optimised the product structure, increased the on-shelf ratio of best-selling productsat key offline stationery shops, exerted efforts in the arrangements, promotion, and cultivation ofproducts in all categories in the online market, and focused on developing the best-selling products anddelving into leading shops. Additionally, it developed new products for consumers in diversifiedscenarios and at diversified contact points and in line with the premium tonality, in order to provideconsumers with more high-quality products.
Arts and kids drawing segment. The Company identified different selling points of productsbased on consumer preferences and user experience, continued to develop high-end products andpromoted the product offering of "food-grade, easy-to-clean, and anti-bacterial" high-end products."Boron-free" clay, rice colour clay, acrylic markers were welcomed by the market. In the offline market,it focused on building special zones of arts and kids drawing products in key stationery shops, as well asrefined arrangements and operations of the shops. Moreover, the Company seized market opportunitiesto expand professional art and educational products.
Office stationery segment. The Company redoubled efforts at the development and promotion ofoffice supplies, focused on delving into key categories and continuously developing products with highproduct capabilities, volume, and shop profitability, continued to expand M&G office stores and modeloffice stores, advance channel transformation and empower services, and kept enhancing the servicecapabilities in order to meet the demands of professional channels. In terms of category extension, theCompany seized the consumption trends and demands of target consumers, intensified the customerside's awareness of sports products and user interaction through online channels, and enhanced thepresence and popularity of sports products.
2. Core traditional business continued omni-channel, and improved retail service capabilities
During the Reporting Period, the Company continued to promote omni-channel development of itscore traditional business. Based on changes in consumer demand and habits, the Company continued tooptimize retail operation towards a channel structure with a multi-level distribution system as core. Thisomni-channel and multiple contact point enabled more direct access to customers through new offlinechannels, online channels and direct supply channels. Further the change from a wholesaler toward abrand retail service provider.
Develop traditional channels with a focus on improving the quality of single stores andon-shelf ratio of active single products. The Company improved the operational quality and sale ofmodel stores (namely stationery stores featuring larger areas and operational quality) and single stores toenhance customer engagement, introduced more accurate and effective product configuration standards,optimised the product structure of stationery stores, further enhanced the construction of categorypositions based on the categories prioritised by the Company, and effectively increased the proportionsof must-have and high-value products in the sales of stationery stores. To maintain the structuralintegrity of products, the Company sorted out the product offering that had been verified through onlinechannels or the market, met market requirements, was sufficiently competitive and could increase thesales of stationery stores, and improved the on-shelf ratio of active single products.
Improve the operational efficiency of channels with digital tools. M&G Alliance APP's role oflinking the headquarters to stationery store owners was continuously leveraged to improve storeengagement, with the store activity of the primary market continuing to rise. Through "JUBAOPEN",the Company followed up on the business of target products and stationery shops, thus empowering thereal-time promotion decisions on business of stationery shops and enhancing their capability in "theright match between right shops and right products". Operational efficiency was constantly boosted byinformation-based channels and effective data.
Actively promote direct model. Continued efforts were made to promote headquarters directsupply, partner direct supply, office direct supply and premium stationery to create incremental sales.The office direct supply model further empowered business and developed and tapped the potential ofoffline professional channels. The premium stationery segment focused on core customers, and intendedto set a benchmark for large stores of premium products, scale up and increase premium stationerychannels through the premium direct supply model, and lead the ways of high-quality stores next toschools. The Company output the product offerings of large stores at retail summits to enhance thecooperative engagement with leading large stores in the industry.
Increase online channels. The Company vigorously developed online business and worked withdifferent segments to establish the pace, standards, and procedures for the development of onlineproducts. The efficiency was improved through "multi-store + flagship store" refined operation, andonline sales were improved through the online battle map, the exploitation of product line arrangementsand product capability of online categories and the expansion of categories for distribution and onlinechannels. Additionally, the Company continued to promote Pinduoduo and Douyin, Kuaishou and othernew channel businesses. During the Reporting Period, M&G Technologies' revenue was RMB857million, representing an increase of 30% from the previous year.
3. Continue to strengthen brand presence
During the Reporting Period, the Company adhered to the “consumer-centric” philosophy anddelved into and communicated content, consolidated the brand reputation, and built the unique brandidentity. Via products, the Company pressed ahead with brand communication and consumer interaction,and kept up with the inner world of young consumers, continuously and steadily output emotional value,thus building more profound connection and communication with users, reshaping higher-quality,younger and warmer consumer relations and ceaselessly emphasising the brand identity of M&G as
"good stationery with warmth". For three consecutive years, the Company won the titles of "ChinaAnnual No.1 Stationery Brand Award" and "China's 500 Most Valuable Brands".M&G has been well recognized among consumers, is the designated stationery supplier of the BoaoForum for Asia, and once attended China International Consumer Products Expo 2023, Gifts & HomeShenzhen, Shanghai Bookfair, China Brand Day, Shanghai Good Products Exhibition, World DesignCities Conference 2023 and a number of other grand fairs, showcasing the power of Chinese stationerybrands and continuously enhancing M&G's industry-wide leadership and worldwide presence.
4. Consolidate and improve the Company's middle-end and back-end platform capabilitiesPromote design and R&D. Adhering to the "consumer-centric" philosophy, the Company activelyperformed forward-looking research and design, focused on the pain points, satisfactory points, andpoints of posts of consumers and strengthened the functional design of products to improve the useexperience of consumers, and also highlighted the capability of technological innovation andaccelerating the speed of technological progress and results transformation. For example, M&G Youwoseries targeted beginners, and developed pens more suitable for beginners based on the core idea of"Make it a Habit to Write Properly", and the new-generation Youwo series won the golden prize inChina Stationery Innovative Design Competitive (CSID) 2023. The Company adjusted the annual plansand roll-out frequency of new products from two to four, and employed domestic and foreign designresources to improve the capability of international design and facilitate its global landscape.M&G Business System (MBS). The Company continuously promoted lean management andimplemented cost reduction and efficiency enhancement. In the production segment, the Companypromoted all-employee improvement, enhanced quality and efficiency on all fronts, further developedproduction in all directions, and continuously improved production site efficiency, quality, business flowand management capability. In the business segment, the principle of using the MBS for issueaddressing and flow improvement was combined with the Company's business model to improve allemployees' capability of solving problems and making improvements through the MBS thought, and alean talent management model was developed.Coordinate supply chain. The Company proactively promoted the application of intelligentmanufacturing technologies in the production and testing processes of the stationery industry, as well asthe application of machine vision technology in key links, thus significantly improving production andtesting efficiency and setting a model for the industry's transformation from extensive management torefined management. During the Reporting Period, the Company won the title of "Five-star GreenFactory in Shanghai". The quality assurance procedures were optimised, and the development of thesupply chain quality system was refined by enhancing the quality of core supply chains. Thecost-effectiveness of products was improved on an ongoing basis through lean production, optimisationof resource supply, local supply, and optimisation of raw materials.Logistics support. The Company is committed to building a logistics service system that cansupport multiple business models. According to requirements of different business models and diversebusiness scenarios, the Company provides differentiated, refined and efficient logistics service supportfor each business segment. The Company reasonably planned the logistics and capacity across thecountry to support business development, and achieved the nationwide layout and shipment coveringEast China, South China, and North China, significantly enhancing the operation and cost controlcapabilities of all warehouses.
Digitalization development. The Company highlighted information-based transformation anddigitalisation, and kept accelerating digital transformation and stepping up technological innovation. Inline with corporate strategy, the Company built the foundation for M&G's data governance, andimproved the data analysis capability for each business segment, so as to better drive businessimprovement by virtue of data and keep advancing digital management, data collection and integration,data analysis and decision-making support, customer experience and digital interaction in the businessprocess.
Construction of organization and talent. Organization and talents are an important basis forrealizing our strategy. The Company is committed to building an active organisation (with a refinedtalent cultivation mechanism and enabling total improvement and self-refinement). Based on the needsof employees at different positions, the Company provided matching resources to support leader echelonbuilding and leadership development of managers. Centring on the "striver-oriented" corporate cultureand the underlying logic of "benefiting others", the Company took customer-centred, open and inclusive,
sincere, focused and win-win spirits as the corporate value. Doing so helped the Company build acorporate culture with M&G's characteristics through value iteration and consolidation.
5. Large retail store business robustly developed
Jiumu Store has a clear positioning in the Company’s new five-year strategy, which is to becomethe bridgehead for the M&G brand and product upgrading, and also to become a national leadingpremium recreation and creativity retail brand. More exposure of the M&G brand can help drivedevelopment of M&G's premium stationery products, strengthen retail capabilities, and provide timelyconsumer insights.During the Reporting Period, Jiumu Store saw quick recovery of its offline outlets and continuouslyimproving operation quality, as the number of consumers at shopping malls picked up. The retailoperation capacity accumulated in the past three years came into play, empowering better product mixes,more refined operations and better consumer insights and services of Jiumu Store and continuousexpansion of offline channels.The creative stationery category is becoming the core category of Jiumu Store's products, and isgoing to undertake the role of the bridgehead for the M&G brand and product upgrading, empoweringand back-feeding the headquarters' core traditional business to some extent. The sales volume in onlinepublic domains and new channels, such as Pinduoduo, Douyin, community e-commerce and WeChatapplets, grew steadily, and the total online sales volume kept rising as Jiumu Store exerted more effortsin private domain WeChat group operations and home delivery community e-commerce. The Straight-AStudent membership operation system was continuously upgraded and it ran soundly. Through life-cyclemanagement, Jiumu Store improved customer experience and activity, and has received more than 1million Straight-A Student members.During the Reporting Period, M&G Life (including Jiumu Store) recorded revenue of RMB1.33billion, an increase of 51%, among which Jiumu Store’s revenue was RMB1.24 billion, an increase of52%, and its net profit was RMB 25.72 million, achieving profit for the first time. As of the end of theReporting Period, the Company had 659 large retail stores in China, of which 618 were Jiumu Stores(417 own stores and 201 franchised stores) and 41 were M&G Life stores.
Unit: RMB 0'000
| M&G Life (including Jiumu Store) | 2023 | 2022 | 2021 | 3-year average |
| Revenue | 133,535.55 | 88,414.44 | 105,406.13 | 109,118.71 |
| Net profit | 2,291.32 | -3,513.84 | -2,108.65 | -1,110.39 |
| Of which, Jiumu Store | 2023 | 2022 | 2021 | 3-year average |
| Revenue | 124,043.08 | 81,299.30 | 94,949.81 | 100,097.40 |
| Net profit | 2,572.81 | -3,650.09 | -2,255.78 | -1,111.02 |
6. Continued rapid growth of direct office supplies business
Boasting a professional electronic transaction system, smart warehousing logistics managementsystem, high-quality product supply chains, and personalised services, M&G Colipu has evolved into apioneer and industry leader in procurement digitalisation for enterprises, significantly enhancing M&G'smarket position and influence and further consolidating its dominant in the industry.
In terms of business scenarios, M&G Colipu focused on four business segments, including one-stopoffice supplies procurement, MRO industrial products, marketing gifts, and employee benefits, as wellas the development of core suppliers and manufacturers in core areas and the categories of MROindustrial products and marketing gifts.
In terms of customer development, M&G Colipu successfully established business relationshipswith new central state-owned enterprises in power, automobile and energy industries, such as ChinaElectrical Equipment Group, FAW and Dongfeng Motor, and continued to tap the potential of existingpartners and extended new business with State Grid, China South Power Grid, Sinopec, etc., adhering tothe professional spirit of "digging 10,000 meters deep from a 1-meter-wide opening". As for governmentcustomers, M&G Colipu successfully joined the projects initiated by institutions directly under CPCCentral Committee, and successfully renewed the projects in cooperation with the State TaxationAdministration and 81.cn; as for financial customers, M&G Colipu was shortlisted for projects ofIndustrial Bank Co., Ltd., Rui Insurance and Guotai Junan Securities, further reinforcing its dominantposition in the financial sector; as for MRO customers, M&G Colipu was shortlisted for projects of
China South Power Grid, Datang Corporation and China Aerospace Science and TechnologyCorporation.Middle-end and back-end platforms. M&G Colipu further boosted multi-business platforms andcustomer expansion, exerted more efforts in developing and operating new platforms, and keptstrengthening its platform management capability. The nationwide layout and efficiency of warehousingwere improved, and the warehouse in Northwest China was put into official operation. By developing aninnovative digital platform system to optimise business procedures, M&G Colipu stepped up digitalconstruction, empowered the centralized procurement of governments and enterprises with digitalcapability, and realised cost reduction and efficiency improvement. By piloting electronic invoices withcorporate customers and upgrading the five major self-developed engines, M&G Colipu assistedcustomers' digital transformation with its own digital capability.During the Reporting Period, challenging as the environment was, M&G Colipu still maintainedsteady growth in operating results. It recorded revenue of RMB13.30 billion, an increase of 21%; and anet profit of RMB401 million, an increase of 8%.
Unit: RMB 0'000
| M&G Colipu | 2023 | 2022 | 2021 | 3-year average |
| Revenue | 1,330,699.41 | 1,092,965.31 | 776,565.05 | 1,066,743.26 |
| Net profit | 40,120.65 | 37,156.87 | 24,198.53 | 33,825.35 |
7. Actively promote overseas markets layout
During the Reporting Period, the Company sped up the expansion of overseas markets. Based onlocal characteristics, the Company developed localized products to enhance overseas competitiveness ofits products, and sorted out the product development process and improved product managementefficiency for prompt satisfaction with consumers' needs in overseas markets. Shouldering the mission of"providing affordable stationery for local students", the Company continued to explore the Africanmarket, and carried out product promotion activities and made donations to schools, enabling morestudents to use cost-effective products of M&G. In the Southeast Asian market, the Company madepositive channel arrangements, improved operation quality, and further enhanced the influence of M&Gbrand. Amid the changing external environment, the Company saw rapid growth of overseas sales andcontinuously improving product competitiveness, brand influence and channel development capability,with the overall operation, management and team-building capabilities in overseas markets significantlyboosted.
8. M&A progress
Noteworthy Axus Stationery turnaround. During the Reporting Period, Axus Stationery continuedto optimise its operation quality, made reasonable configuration of the production capacity and resourcesof its production bases, improved the supply chain strategy to reduce procurement and manufacturingcosts, and took positive measures to increase income and reduce expenditure in all business segments.As for overseas sales, it took the initiative to increase overseas orders while boosting online and offlinedevelopment of domestic business, seeing a noteworthy turnaround.
Beckmann, a Norwegian brand, developed steadily. During the Reporting Period, Beckmann'sbusiness developed steadily, seeing revenue of approximately RMB150 million. It also recorded stableoperation in overseas markets, and sold products in China through online flagship stores on platformssuch as Tmall, JD, and Douyin, as well as offline stores of Jiumu Store and M&G Life, enjoyingpopularity among domestic consumers.
9. Protect shareholders' rights and interests
Due to confidence in its future development and corporate value, the Company launched a sharerepurchase plan to protect the interests of the Company and its shareholders, improve the Company'slong-term incentive mechanism, and fully mobilise the enthusiasm of employees. The repurchasedshares would be used as equity incentives or in employee stock ownership plans. From November 2022to February 2023, the Company repurchased, through the stock exchange, a total of 2.85 million shareswith RMB0.15 billion.
The Company safeguards shareholders' rights and interests and adopts a consistent dividend policy.It brings investors long-lasting and stable return on investment through cash dividends and other profitdistribution ways, and shares with shareholders the operating results of the Company. The Company'scash dividend per share for 2023 is expected to be RMB0.8 (to be deliberated by the general meeting of
shareholders), and cash dividends and share repurchases are expected to account for 50% of the netprofit attributable to the parent company. Since the Company went public in 2015, including the profitdistribution plan for 2023, the cumulative cash distribution has exceeded RMB3.5 billion.
10. Sustainable development
During the Reporting Period, the Company continued to advance sustainable development centringon its four major strategic pillars, and its MSCI ESG rating was upgraded to "BBB". In terms ofsustainable products, it rolled out the first Carbon Neutrality series of stationery; in response to climatechange, it verified Scope 1 and Scope 2 greenhouse gas emissions methodically; in terms of sustainablesupply chain, it revised and refined the ESG assessment standards for suppliers, as for employee andcommunity empowering, it took multiple measures to enhance employees' well-being and continuouslycarried out charitable donation and public welfare projects.
The Company made constant progress in green innovation and R&D, in a bid to disseminate thesustainability value and concept to consumers, offer more green products and services, lead thesustainable development of the industry, and forge ahead steadily on the way to the joint-creation ofsustainable business development in the future. The Company's sustainable consumption practice wasincluded in the Progress Report on the Global Sustainable Consumption Initiative, and was awarded as a"Best ESG Practice Case of Listed Company in 2023" by the China Association for Public Companies.
II. Industry Situation of the Company during the Reporting Period
1. Industry situation of the Company
According to Industrial Classification and Codes for National Economic Activities (GB/T4754-2017) issued by the National Bureau of Statistics, the Company is classified to stationery, arts,sports and entertainment products industry in the manufacturing sector. The Company is a member ofChina Stationery & Sporting Goods Association, and China Writing Instrument Association.
Between January and November 2023, 245 enterprises above designated size in the China WritingInstrument Association recorded RMB13.6 billion of revenue, showing an increase of 2.9% fromprevious year. (Source: China Writing Instrument Association). According to data from the relevante-commerce platform, stationery sales on Taobao grew 7% in 2023.
The demand for stationery and office supplies were affected due to the joint release of Opinions onFurther Reducing the Burden of Homework and Off-Campus Training in Compulsory Education by theGeneral Office of the Central Committee of the CPC and the General Office of the State Council in July2021 ("Double Reduction"). Meanwhile, China encourages aesthetic education and quality education forstudents, deepens the integration of sports and education, and promotes the healthy development ofteenagers, which brings about new development opportunities for painting and calligraphy supplies,educational books, cultural and creative student supplies, digital and intelligent stationery, andteenagers’ sports equipment suitable for physical exercise on campus.
The market of the direct office supplies has been growing very fast in China. According to theChina Public Procurement Development Report (2022) compiled and released by China Federation ofLogistics & Purchasing, the scale of public procurement transactions in China in 2022 exceeded RMB48trillion. This indicates that the rate of centralised procurement aiming to improve efficiency and savecosts has grown year by year.
2. Industry features
(1) Periodicity
Writing instruments, student stationery and office supplies are less affected by economicfluctuations. With low unit price, writing instruments and student stationery are more of necessity goodswith relatively low income elasticity, relatively less sensitive to economic fluctuations.
(2) Seasonality
There is seasonality in the demand for student stationery. Months before a new semester (summerand winter vacation) is what the stationery industry calls "schooling peak season", during which sales ofstudent stationery usually peaks. Students and their parents will buy a lot of stationery in advance andstationery manufacturers promote their products.
There is less seasonality in the demand for student stationery. However, the demand for officestationery in the second half of the year might be slightly higher than that in the first half, as somecompanies bought stationery at the end of the year.
3. Development trend of the industry
With the changes in the way of life and consumption habit of consumers, China’s retail industryentered a new stage of redevelopment and innovation. Stationery industry faces challenges withuncertainty of external environment, diversification of retail channels, and more individualized demandsfrom main customers group (now being the post-90s and post-00s). With the changing demographics ofChina in particular the decreasing birth rate, stationery industry revenue growth comes less from by unitvolume growth, and more from consumption upgrade and product upgrade. Domestic market demandfor mid- to high-end stationery products keeps increasing, reshaping market structure dominated bylow-end products. This provides opportunities for mid- to high-end stationery products with betterquality and higher price. China's population of 1.4 billion accounts for about 18% of global population,while leading stationery companies in China can continue to mostly rely on the huge domestic market,they also have room for international expansion in international markets, which could reinforce eachother under favorable conditions.
Leading enterprises focused on building omni-channel operation capabilities and implementedrefined management. With the popularity of the Internet, smart phones, and online transactions, people'sconsumption habits and consumption scenarios have changed. Consumers' access to information isbecoming more fragmented, and new-generation marketing means are becoming more diversified,including online media platforms (such as Weibo, WeChat, Xiaohongshu, and Douyin) and IP topiccreation, which further tests enterprises' ability to make quick response to industry trends. Comparedwith small- and medium-sized enterprises, leading enterprises boast stronger and richer whole networkmarketing and operation capabilities. They formulate refined marketing strategies by city to reachconsumers. In addition to online traffic, offline channels are also required to realize refined managementby empowering channels through organizational reform and information system. According to theNational Bureau of Statistics, online retail sales across the country recorded RMB15 trillion in 2023, anincrease of 11%. Outstanding companies in the consumer industry seized the development opportunitiesof online consumption and achieved continuous sales growth through online and offline integration.
Traditional retail stationery shops nearby school are still the dominant channel for China’sstationery industry, and shares of other retail formats are increasing faster. Sales terminals and channelsof the industry are becoming more diversified, upgrading and competition in channels becomes moreobvious. Domestic consumption for stationery in China becomes more brand conscious, innovative,individualized and more premium. There is a growing demand for premium cultural and creativeproducts, stationery products are moving from those primarily focus on functionality towards those withmore cultural and creative elements catering to customers. There are around thousands of stationerymanufacturers in China's domestic stationery industry and the industry is quite decentralized. There are afew leading companies for most sub-category stationery products, with continued development in thestationery industry, there could be higher industry consolidation, and leading companies could gainlarger market shares.
In recent years, in the context of the digital economy, thanks to favorable factors such as policydriving, the rapid advancement of centralized procurement by large- and medium-sized enterprises, andthe competition among various digital procurement service providers, great progress has been made inthe digitalization, e-commerce and centralization of public procurement in China, which have becomethe main form of public resource transactions from central to local governments. According to the ChinaPublic Procurement Development Report (2022) compiled and released by China Federation ofLogistics & Purchasing, the scale of public procurement transactions in China in 2022 exceeded RMB48trillion. This indicates that the rate of centralised procurement aiming to improve efficiency and savecosts has grown year by year. According to the measurement of www.chyxx.com, the market size ofoffice supplies in China exceeds RMB2 trillion. In addition, the market size of employee benefits andother categories is also quite large.
According to the 2022 Digitalized Procurement Development Report compiled and released by theChina Federation of Logistics & Purchasing, central state-owned enterprises have grown into the leaderof digitalised procurement in China, driving China's digitalised procurement into the vigorousinnovation stage. This is a novel exemplar of various medium and large enterprises in digitalisedprocurement and has encouraged the servicers and suppliers to speed up digital transformation and
upgrading. As a result, a group of new digitalised procurement platforms are growing, attracting capitalinto the real economy and thus supporting the innovation of industrial and supply chains.With the further development and application of information technology, data have become a newproduction element. Industrial digitisation is becoming a major pillar of the digital economy, andtraditional industries are actively gaining new development momentum through digital empowerment.The investment in the manufacturing industry has shifted from the investment in equipment andassembly lines to the transformation of digital processes and digital transformation of products, in a bidto apply digital technology to reduce channel costs and management costs and become a digital-drivenmodern enterprise.
With smart technology and products upgrade, promotion of national education informatization andthe development of the online education market, smart stationery products have developed rapidly in thepast few years. Technology-empowered smart pens and smart books are widely adopted in onlineeducation, providing an increasingly better user experience. Technology-empowered smart pens andsmart books are widely adopted in online education, providing a better user experience.
4. Company position in the industry
As a leader of "own brand + domestic demand" in China's stationery industry, the Company has astrong first-mover and leading advantage, with a wide and deep distribution network coverage in China'sstationery market. At the end of the Reporting Period, the Company has a national distribution networkcovering approximately 70,000 retail stationery shops using the store sign "M&G Stationery" acrossChina, enabling the Company to establish market leading position for its own brand products amidstcompetitions. The Company ranked first in "Top Ten Enterprises in China's Light Industry and WritingInstrument" for 12 consecutive years.
M&G Colipu is a leader in the field of B2B e-commerce procurement in China. After 11 yearssince its start, thanks to its electronic transaction system, intelligent warehousing logistics managementsystem, high-quality supply chain management and customized service, M&G Colipu has become one ofthe industry leaders of digital enterprise procurement service provider. For many years, M&G Colipuhas won many awards such as the Outstanding E-commerce Platform in China's Stationery and OfficeSupplies Industry, the Outstanding Supplier of Government Procurement, and the Most InfluentialE-commerce Platform in Financial Procurement.
III. The Company's Businesses during the Reporting Period
1. Principal business
M&G Stationery is a comprehensive stationery supplier and an office servicer. The Companyintegrates the value of creativity into its products and service advantages, advocates fashionablestationery lifestyle, and provides solutions for study and work. Its core traditional businesses includedesigning, developing, manufacturing and selling writing instruments, student stationery, office suppliesand other products under brands, and also the e-commerce business M&G Technologies;its new businesses mainly comprise of large retail store business - Jiumu Store and M&G Life, anddirect office supplies business - M&G Colipu. During the Reporting Period, there were no significantchanges in the Company's operation model. In recent years, the Company's new business has beengrowing rapidly, and the proportion of new business revenue to total revenue has been increasing yearby year. The Company will continue to focus on its core traditional business and expand itscompetitiveness in the global stationery industry in the new five-year strategy.
2. Principal operation model
The Company has an independent and complete operation from design and development of brandsand products, procurement of raw materials and accessories, product manufacturing, supply chainmanagement and warehouse and logistics, to distribution network management. The Company is capableof performing independent operation of business in the market. For R&D model, the Company has an"entire design system" covering the whole process starting from customer value proposition to productdesign, product mold to brand image design, incorporating trend-, theme and experience-oriented R&Dmodel to develop new products with a comprehensive categories approach based on consumer insight.For manufacturing model, the Company uses the brand manufacturing model that features sales-drivenproduction, in-house and OEM outsourcing. The Company has an independent system from raw materialprocurement to manufacturing and selling, and has established its brands in the market. We have the
advantages from participating in the whole value chain from design, research and developing,manufacturing and selling stationery. For sales model, based on features of stationery products andcurrent situations of domestic stationery consumption, the Company has developed its sales model thatrelies on regional distributors, complemented by direct sales to offices 2B customers, direct-sale store,KA sales, online sales, as well as international distribution. We are the one of leading companies inChina’s stationery business that engage in large-scale brand sales management and franchisemanagement. In addition to operations on platforms such as Tmall, JD, and Pinduoduo, M>echnologies also conducts live streaming on platforms such as Douyin and Kuaishou through its ownlive streaming room or cooperation with KOLs on the platforms. M&G Technologies is also responsiblefor online full platform marketing and management of authorized online stores.M&G large retail store businesses include two store types: Jiumu Store and M&G Life. Targetingfemale consumers aged 15-29, Jiumu Store primarily sells stationery, cultural and recreative products,educational and entertainment products, and daily household and home products. Jiumu Stores aremostly located in high-quality shopping malls in prime urban districts. Jiumu Store represents theCompany's ongoing exploration in new retail model in lifestyle products with a distinct cultural element.Jiumu Store started franchising in July 2018, where franchisees pay contract deposit and decoration feeaccording to contracts, and store rent, store staff salary, utilities and other costs incurred in franchisingstores. M&G Life mainly targets students aged 8-15, primarily selling stationery products. M&G Lifestores are mostly located in Xinhua Bookstore and compound bookstores. M&G Life represents theCompany's efforts to move beyond the dominant traditional channels of retail stationery shops nearbyschools.In the direct office supplies business, M&G Colipu provides central government-owned enterprises,governments, public institutions, Fortune Global 500 companies and other SMEs with cost-effectiveone-stop supplies procurement service. M&G Colipu has a rich product offering, covering four majorbusiness divisions—one-stop office supplies, MRO industrial products, marketing gifts, and employeebenefits, which include more than one million product categories such as office paper, office stationery,office supplies, office equipment, computers and accessories, digital and communications, officeappliances, daily necessities, labor protection industrial supplies, food and beverages, business gifts andoffice furniture. By shortening the supply chain, M&G Colipu provides customers with cost-effectiveprocurement and customized value-added services.With changing demographics of China in particular the decreasing birth rate, it becomesincreasingly difficult to achieve revenue growth from unit volume growth in the future, and stationeryindustry growth is increasingly driven by consumption upgrade and product upgrade. The Company’score traditional businesses are challenged with changing demands from more individualized populationborn after 1990 and 2000. Stationery consumption in China is becoming more brand conscious,innovative, individualized and more premium. There is a clear growth in demand for better cultural andcreative products, which accelerates industry transformation towards one with more cultural and creativeelements. M&G Technologies reflects channel diversification trend and helps the Company'somni-channel strategy by expansion of online business. Jiumu Store serves as the Company's bridgeheadto continue products and channels upgrading of its core traditional business, and it plays an importantrole in promoting the Company's brands and products upgrade. M&G Colipu's direct office suppliesbusiness meets demands for purchasing office supplies from large corporations and institutions, whichhelps boosting the sales of writing instruments and office stationery of the Company's core traditionalbusiness.
3. Major driver for revenue growth
Driven by market forceWith the changes in the way of life and consumption habit of consumers, the mix of "people,product, and place" in retail industry has been reconstructed, sales channels have become morediversified, and channel upgrades and channel competition have become increasingly fierce. As thedomestic market demand for mid- to high-end stationery products keeps increasing, this providesopportunities for mid- to high-end stationery products. China has a population of around 1.4 billion,accounting for about 18% of the global population, while leading stationery companies in China cancontinue to mostly rely on the huge domestic market, they also have room for international expansion ininternational markets, which could reinforce each other under favorable conditions.
Driven by innovation
Innovation as one of driving forces for continuous development with a focusing on consumers. TheCompany continued to promote technological innovation, product innovation, channel innovation andbusiness model innovation. Through product innovation and business model innovation, the Companyhas formed a pattern of coordinated development, high-quality development and sustainabledevelopment of multi-business model. Meanwhile, it actively promoted the high-end, intelligent andgreen transformation in its business operations, and coordinated the upgrading of traditional businesses,the growth of emerging businesses and the cultivation of future businesses.
Driven by the Company's competitive advantages
With professional teams, market insights, unique brand advantages, channel advantages, supplychain advantages, R&D and design advantages, the Company continued to promote technologicalinnovation and product innovation, and maintained a strong forward driving force through high-end,omni-channel, digital empowerment, lean production and dynamic organization.
Driven by policy
The continuous investment of the state in education, the three-child policy and a favorable policycontext for the development of the cultural industry encourage and promote the integrated developmentof the cultural industry and upstream and downstream industries, invigorate economic transformationand social development, and drive the steady development of the stationery industry. A series of nationalpolicies on the centralized procurement industry have been promulgated, rapid progress was made incentralized procurement of large- and medium-sized enterprises, various digital procurement serviceproviders competed with each other, the transparency of procurement information and the competitivemechanism of centralized procurement promoted the concentration of office supplies industry andpromoted the vigorous development of direct office supplies industry.
Driven by industry integration
With continued development in the market, market concentration of stationery industry becomesgreater, leaving more room for industry consolidation. Leading companies in the stationery industry withgood brand recognition are in a strong position, and more market share is gained by leading companies.Through mergers and acquisitions of high-quality targets at home and abroad, the Company furtherenhanced its competitiveness and brand power in segmented categories.
IV. Analysis on Core Competitiveness during the Reporting Period
√ Applicable □ Not applicable
As one of the largest stationery manufacturers in the world, the Company enjoys uniquecompetitive advantages in terms of brand, channel, supply chain, design, and R&D in its core traditionalbusiness. As for the direct office supplies business, M&G Colipu leads the way as a supplier forgovernments and enterprises in the online channel. During the Reporting Period, no significant changeoccurred to the core competitive edges of the Company, which are summarized as follows:
1. Corporate culture and team
M&G is a company with a strong sense of mission and social responsibility. With the mission of"make study and work more joyful and effective", it is committed to providing Chinese students withaffordable good domestic stationery, and continues to devote itself to various social welfareundertakings, thereby promoting its continuous development. At the same time, the Company hascultivated a team that highly recognizes the Company's values, has passion and technology, iscompetitive in the industry, is united and enterprising, and keeps unremitting struggle.
2. Brand advantage
As a leader of "own brand + domestic demand" in China's stationery industry, the Company hasestablished a leading position for its own brand products amidst competitions of domestic market. TheCompany ranked the first in "Top Ten Enterprises in China's Light Industry and Writing Instrument" for12 consecutive years. M&G brand has sound brand recognition among consumers, and served as thedesignated stationery brand for Boao Forum for Asia for many years. The Company has won the title of"China Annual No.1 Stationery Brand Award" and "China's 500 Most Valuable Brands" for threestraight years, winning international praise with excellent quality and brand reputation and showing thebrand value of Chinese stationery to the world.
3. Channel advantage
The Company has a strong first-mover and leading advantage with a wide and deep coverage ofdistribution network across China. The Company has established an efficient distribution managementsystem and a domestic terminal network with deep penetration. During the Reporting Period, theCompany continued to broaden and deepen the national network and perfected online and offlinechannels, forming an omni-channel, multi-level and multi-contact marketing network. At the end of theReporting Period, the Company has 36 tier-one distributor partners, and about 1,200 tier-two andtier-three distributor partners across China, covering approximately 70,000 retail stationery shops with"M&G Stationery" logo across China, over 600 large retail stores, and more than one thousand ofauthorized stores in Taobao system, JD.com, Pinduoduo and other e-commerce channels.
4. Supply chain advantage
The Company benefits from experience of large-scale manufacturing accumulated throughout thepast years, independent mold development capability, stable supply chain, sound quality control systemand introduction of various information management systems. The Company has the capability oflarge-scale manufacturing with high quality control standard. The good and stable product quality haswon general recognition and favorable comments from consumers. The Company promotes theapplication of intelligent manufacturing technology in the production and inspection links of thestationery industry, and applies machine vision technology in various key links to greatly improve theefficiency of production and inspection, thus serving as a benchmark and demonstration role fortransforming the extensive industrial mode into an intensive one.
With the idea of partnership in its business operation, the Company has strived to build a highstandard supply chain ecosystem. The Company keeps iterating and upgrading its scientific managementfor supply chain, and has obtained new practice achievements in information collaboration across thevalue chain, inventory optimization, financial support for supply chain, management informatization ofquality and order, and optimization of supplier performance to help business partners get strongeroperation system and simultaneously improve both loyalty and operation capability of our businesspartners.
5. Design and R&D advantage
The Company has the capability to respond timely to market and strong R&D capacity for newproducts. The Company conducts market research for new product development and identifies markettrends. The Company launches about one thousand new products each year to meet consumer needs. TheCompany has been awarded with such four major international industrial design awards as German iFAward, Red Dot Design Award, G-mark, and IDEA for its product design. The Company has a designstudio in Israel, highlighting the world-class design capabilities of M&G Stationery. M&G Self-stoppingSteel Tape Pro Measure is a winner of the 2023 Contemporary Good Design Gold Award, and M&GBlackblade Pro Hobby Knife is a winner of the 2023 Contemporary Good Design Award. As of the endof the Reporting Period, the Company owned more than 1,200 patents for invention, design and utilitymodels.
The Company has broken through the foreign technical barriers and got hold of the raw materialformula and production technology with domestic independent intellectual property rights, greatlyenhancing the percentage of home-made raw materials and finished products. The Company has beenrecognized as a national high-tech enterprise since 2010, and has built a number of national or provinciallevel technology platforms such as National Industrial Design Center, China Key Laboratory of LightIndustry and Writing Instrument Engineering Technology, Shanghai Writing Instrument EngineeringTechnology Research Center. The testing laboratory of the Company had CNAS certificationqualification and its testing capabilities have reached a world-class level. During the Reporting Period,the Company participated in the formulation of 25 national, industry and group standards, expanding itspresence from the pen industry to stationery, sporting goods, calligraphy and other industries.
6. M&G Colipu's competitive advantages
M&G Colipu is committed to providing one-stop procurement service solutions for customers infive categories including government, State-owned Key Enterprises and state-owned enterprises, finance,intermediate market (top 500 private enterprises), and MA (Fortune Global 500), with business scenarioscovering one-stop office supplies, MRO industrial products, marketing gifts, and employee benefits.Currently, M&G Colipu has evolved into a leading supplier for governments and enterprises in theonline channel, enjoying high brand influence in the industry and being widely recognised by customers
and suppliers regarding reputation.Over the years, M&G Colipu has made meticulous arrangements for the supply chain ofmanufacturers. Its product development covers well-known brands at home and abroad, with more thanmillions of product categories. It selects well-reputed manufacturers and brands at home and abroad toachieve direct supply, which omits the intermediary distribution process. Moreover, M&G Colipu boastsa well-developed qualification and licence system, of which the coverage ranges from food safety tomedical devices.
Additionally, M&G Colipu enjoys a nationwide logistic distribution network. It also has anindustry-leading intelligent main warehousing system, "Automated Storage and Retrieval System(AS/RS) System", and a new intelligent warehouse in East China, covering the whole country andallowing efficient and rapid order response. Furthermore, M&G Colipu is equipped with intelligentlogistic systems, such as automated guide vehicles (AGVs), to provide timely and accurate services forcustomers.
As a pioneer and industry leader in procurement digitalisation, M&G Colipu has won the titles ofNational E-commerce Demonstration Enterprise and Shanghai E-commerce Demonstration Enterprise. Ithas a technical R&D team of approximately one hundred members. M&G Colipu has a business cloudsystem that allows comprehensive digital management such as online organisation, communication,business, and management. M&G Colipu has independently developed a digital transaction system andrapid and professional system integration development technology, which has been certified asInformation System Security Protection Grade III, allowing it to provide a variety of personalisedvalue-added services for different customers, ensure the security and completeness of transaction data,and achieve system integration with key customers.
M&G Colipu has a professional team of nearly 2,000 people with enterprising spirit and years ofindustry experience, providing end-to-end services from pre-sales to after-sales across 31 provinces,municipalities and autonomous regions in China. Relying on a strong brand presence, strong financialstrength, and rich product strength, M&G Colipu adheres to the information-based construction of anintegrated, transparent and efficient procurement system. With the application of software and hardwareintelligent technology and strong system integration technical support, such procurement system meetsthe diversified, complex and digital procurement needs of customers, keeps increasing comprehensivecompetitiveness, and continues to create value for customers.
V. Financial Performance during the Reporting Period
In 2023, the Company’s revenue was RMB23,351 million, representing a year-on-year increase of
16.78%. The net profit attributable to shareholders of the listed company amounted to RMB1,526million, representing a year-on-year increase of 19.05%, while net profit attributable to shareholders ofthe listed company after deducting non-recurring profit and loss amounted to RMB1,398 million,representing a year-on-year increase of 21.00%. As at the end of 2023, the total asset of the Companyamounted to RMB15,313 million, representing a year-on-year increase of 17.60%. The net assetattributable to shareholders of the listed company amounted to RMB7,833 million, representing ayear-on-year increase of 14.36%. The Company has maintained healthy growth and its assets are in agood condition.
(I) Analysis of principal operation
1. Analysis of change in certain items in income statement and cash flow statement
Unit: Yuan Currency: RMB
| Item | Amount in the current period | Amount in the same period last year | Change in the proportion (%) |
| Revenue | 23,351,304,328.03 | 19,996,315,623.32 | 16.78 |
| Operation cost | 18,946,902,789.11 | 16,124,239,558.86 | 17.51 |
| Selling expenses | 1,550,242,913.35 | 1,358,215,903.43 | 14.14 |
| Administrative expenses | 817,243,965.61 | 794,196,566.05 | 2.90 |
| Financial expenses | -54,677,552.48 | -41,367,225.24 | Not applicable |
| R&D expenses | 177,525,143.59 | 183,553,643.90 | -3.28 |
| Net cash flow generated from operating activities | 2,616,600,617.09 | 1,351,783,827.08 | 93.57 |
| Net cash flow generated from investing activities | 30,115,778.76 | -151,492,348.67 | Not applicable |
| Net cash flow from financing activities | -771,123,342.97 | -922,149,601.16 | Not applicable |
| Investment income | -3,932,454.66 | 275,500.09 | -1527.39 |
| Losses on credit impairment | -21,830,178.85 | 7,200,691.02 | -403.17 |
| Losses on assets impairment | 11,744,806.55 | -18,667,188.79 | Not applicable |
| Gains from asset disposal | 3,588,809.94 | -31,622.53 | Not applicable |
Explanation on the reason for change in financial expenses: The interest income during theReporting Period increased compared with the same period last year.
Explanation on the reason for change in net cash flow generated from operating activities: The salesand cash inflow increased during the Reporting Period.
Explanation on the reason for change in net cash flow from investing activities: The net cash inflowfrom investing activities during the Reporting Period increased compared with the same period last year,mainly because the net redeemed amount of bank financial products during the Reporting Periodincreased compared with the same period last year.
Explanation on the reason for change in investment income: The losses on investments in associatesincreased compared with the same period last year.
Explanation on the reason for change in losses on credit impairment: The expected credit lossesincreased during the Reporting Period mainly due to the increased accounts receivable of M&G Colipu(reversal of expected credit losses in the same period last year), and because changes occurred toaccounting estimates relating to security deposits for property leases. For further information, see theAnnouncement of Shanghai M&G Stationery Inc. on Changes in Accounting Estimates (AnnouncementNo. 2022-030) disclosed by the Company on the website of the Shanghai Stock Exchange on 1 July2022.
Explanation on the reason for change in losses on assets impairment: The sales increased during theReporting Period, resulting in faster inventory turnover and decreased inventory valuation allowances.
Explanation on the reason for change in income from asset disposal: Asset disposal generatedincome during the Reporting Period, while it incurred loss in the same period last year.
A detailed description of the major changes in the Company's business type, profit composition or profitsource in the current period
□ Applicable √ Not applicable
2. Analysis of revenue and cost
√ Applicable □ Not applicable
During the Reporting Period, exclusive of related-party transactions, the Company's core traditionalbusiness increased by 6% as compared to the corresponding period of last year, and new businessincreased by 24% as compared to the corresponding period of last year.
(1) Result of principal business by industry, product, region and sales model
Unit: Yuan Currency: RMB
| Result of principal business by industry | ||||||
| By industry | Revenue | Operation cost | Gross margin (%) | Change in revenue from last year (%) | Change in cost from last year (%) | Change in gross profit margin from last year (%) |
| Manufacturing and sales of stationery and office supplies | 9,051,114,445.63 | 6,077,325,987.81 | 32.86 | 7.20 | 4.96 | Increase by 1.43 percentage points |
| Retail industry | 14,249,716,005.72 | 12,834,514,791.81 | 9.93 | 23.46 | 24.25 | Decrease by 0.57 percentage point |
| Service industry | 1,825,471.64 | / | / | 158.00 | / | / |
| Result of principal business by product | ||||||
| By product | Revenue | Operation cost | Gross margin (%) | Change in revenue from last year (%) | Change in cost from last year (%) | Change in gross profit margin from last year (%) |
| Writing instruments | 2,273,272,616.04 | 1,319,857,248.91 | 41.94 | 4.83 | 0.75 | Increase by 2.35 percentage points |
| Student stationery | 3,466,456,140.76 | 2,286,895,433.46 | 34.03 | 8.58 | 6.04 | Increase by 1.58 percentage points |
| Office stationery | 3,510,698,230.28 | 2,540,457,217.01 | 27.64 | 8.91 | 6.97 | Increase by 1.31 percentage points |
| Other products | 743,409,402.45 | 409,554,808.88 | 44.91 | 57.71 | 56.75 | Increase by 0.34 percentage point |
| Direct office supplies | 13,306,994,061.82 | 12,355,076,071.36 | 7.15 | 21.75 | 23.34 | Decrease by 1.20 percentage points |
| Management fee for franchising | 1,825,471.64 | / | / | 158.00 | / | / |
| Result of principal business by region | ||||||
| By geography | Revenue | Operation cost | Gross margin (%) | Change in revenue from last year (%) | Change in cost from last year (%) | Change in gross profit margin from last year (%) |
| China | 22,448,395,918.68 | 18,296,035,315.91 | 18.50 | 16.41 | 17.39 | Decrease by 0.68 percentage point |
| Other countries and regions | 854,260,004.31 | 615,805,463.71 | 27.91 | 21.61 | 15.13 | Increase by 4.06 percentage points |
Principal business by industry, product, region, and sales model
1. Revenue from principal business of the Company includes revenue from manufacturing and sellingstationery and office supplies, revenue from retail industry and revenue from service industry.
2. Revenue from retail industry refers to revenue gained by M&G Colipu and M&G Life through sellingnon-M&G products.
3. Revenue from service industry refers to management fee for franchising. The increase in revenuefrom services during the Reporting Period was mainly due to the increased number of new franchisedstores opened by Jiumu Store as compared to the same period last year.
4. Writing instruments refer to products of writing utensil sold by the Company (excluding M&GColipu).
5. Student stationery refers to products of student stationery sold by the Company (excluding M&GColipu).
6. Office stationery refers to products of office supplies sold by the Company (excluding M&G Colipu).
7. Other products refer to products sold by the Company (excluding M&G Colipu) apart from writinginstruments, student stationery and office supplies. During the Reporting Period, the increased revenueand operation cost of other products were mainly due to the increased sales of Jiumu Store.
8. Direct office supplies refer to products in all categories sold by M&G Colipu.
Unit: RMB 0'000
| Result of revenue by business | ||||
| Business | Revenue in 2023 | Revenue in 2022 | Change in amount | Change |
| Core traditional business | 913,583.84 | 849,450.59 | 64,133.25 | 8% |
| Direct office supplies business | 1,330,699.41 | 1,092,965.31 | 237,734.10 | 22% |
| Large retail store business | 133,535.55 | 88,414.44 | 45,121.11 | 51% |
| Transactions offset | -42,688.36 | -31,198.78 | -11,489.58 | Not applicable |
| Total | 2,335,130.43 | 1,999,631.56 | 335,498.87 | 17% |
(2) Analysis of production and sales volume
√ Applicable □ Not applicable
| Major products | Unit | Production | Sales | Inventory | Change in production from last year (%) | Change in sales from last year (%) | Change in inventory from last year (%) |
| Writing instruments | Piece | 1,906,548,849 | 1,950,063,062 | 513,354,914 | -2.90 | -2.75 | -7.81 |
| Student stationery | Piece | 5,439,484,457 | 5,471,333,888 | 604,183,892 | 2.02 | 2.06 | -5.01 |
| Office stationery | Piece | 1,915,216,751 | 1,899,571,587 | 176,260,915 | 7.20 | 6.18 | 9.74 |
| Other products | Piece | 20,909,207 | 19,603,430 | 9,132,579 | 53.00 | 46.52 | 16.68 |
| Direct office supplies | Numbers | 507,567,235 | 516,806,148 | 15,127,923 | -13.67 | -11.71 | -37.92 |
Explanation on production and sales volumeThe production and sales of other products increased mainly due to the increased sales of Jiumu Store.The inventory of direct office supplies decreased mainly due to the decreased inventory of M&G Colipu.
(3) Performance of major procurement contracts and major sales contracts
□ Applicable √ Not applicable
(4) Analysis of cost
Unit: RMB Yuan
| By industry | |||||||
| By industry | Cost item | Amount in the current period | Percentage of total costs for the current period (%) | Amount in the same period last year | Percentage of total costs for the same period last year (%) | Percentage change in the amount for the current period as compared to the same period last year (%) | Explanation on the situation |
| Manufacturing and sales of stationery and office supplies | Cost of principal business | 6,077,325,987.81 | 32.14 | 5,790,028,407.81 | 35.92 | 4.96 | |
| Retail industry | Cost of principal business | 12,834,514,791.81 | 67.86 | 10,329,869,794.11 | 64.08 | 24.25 | |
| Service industry | / | / | / | / | / | / | |
| By product | |||||||
| By product | Cost item | Amount in the current period | Percentage of total costs for the current period (%) | Amount in the same period last year | Percentage of total costs for the same period last year (%) | Percentage change in the amount for the current period as compared to the same period last year (%) | Explanation on the situation |
| Writing instruments | Cost of principal business | 1,319,857,248.91 | 6.98 | 1,310,085,322.72 | 8.13 | 0.75 | |
| Student stationery | Cost of principal business | 2,286,895,433.46 | 12.09 | 2,156,659,331.50 | 13.38 | 6.04 | |
| Office stationery | Cost of principal business | 2,540,457,217.01 | 13.43 | 2,374,864,626.63 | 14.73 | 6.97 | |
| Other products | Cost of principal business | 409,554,808.88 | 2.17 | 261,286,252.03 | 1.62 | 56.75 | |
| Direct office supplies | Cost of principal business | 12,355,076,071.36 | 65.33 | 10,017,002,669.04 | 62.14 | 23.34 | |
| Management fee for franchising | / | / | / | / | / | / | |
Explanation on other situations of cost analysisCost increased simultaneously with sales. The increase in operation cost of other products is mainly dueto the increased sales of Jiumu Store.
(5) Change in the scope of consolidation due to change in the equity of major subsidiaries duringthe Reporting Period
□ Applicable √ Not applicable
(6) Major change in or adjustment to the Company's business, products or services during theReporting Period
□ Applicable √ Not applicable
(7) Major customers and suppliers
A. Major customers of the CompanySales of the top 5 customers amounted to RMB6,005.71 million, accounting for 25.72% of the totalannual sales. Of the sales of the top 5 customers, sales of related parties amounted to RMB0, accountingfor 0% of the total annual sales.
Unit: RMB Yuan
| Rank | Customer name | Sales amount | As % of the annual total sales |
| 1 | First | 1,992,246,494.88 | 8.53 |
| 2 | Second | 1,818,941,131.54 | 7.79 |
| 3 | Third | 901,373,596.40 | 3.86 |
| 4 | Fourth | 661,694,062.54 | 2.83 |
| 5 | Fifth | 631,452,680.05 | 2.71 |
| Total | 6,005,707,965.41 | 25.72 |
During the Reporting Period, the sales attributable to a single customer exceeded 50% of the total sales,there are new customers among the top 5 customers, or a small number of customers were heavilydepended on.
□ Applicable √ Not applicable
B. Major suppliers of the CompanyPurchase amount of the top 5 suppliers amounted to RMB1,634.18 million, accounting for 8.60% of thetotal annual purchase amount. Of the purchase amount of the top 5 suppliers, purchase amount of relatedparties amounted to RMB0, accounting for 0% of the total annual purchase amount.
Unit: RMB Yuan
| Rank | Supplier name | Procurement amount | As % of the annual total procurement |
| 1 | First | 432,425,516.22 | 2.28 |
| 2 | Second | 412,548,319.42 | 2.17 |
| 3 | Third | 302,696,787.56 | 1.59 |
| 4 | Fourth | 299,172,513.72 | 1.57 |
| 5 | Fifth | 187,336,738.45 | 0.99 |
| Total | 1,634,179,875.37 | 8.60 |
During the Reporting Period, the procurement from a single supplier exceeded 50% of the total amount,and there were new suppliers among the top 5 suppliers or a small number of suppliers were heavilydepended on.
□ Applicable √ Not applicable
Other descriptionsNo
3. Expenses
√ Applicable □ Not applicable
Unit: RMB Yuan
| Item in statement | Amount in the current period | Amount in the last period | Change in the proportion (%) | Reason for change |
| Selling expenses | 1,550,242,913.35 | 1,358,215,903.43 | 14.14 | |
| Administrative expenses | 817,243,965.61 | 794,196,566.05 | 2.90 | |
| R&D expenses | 177,525,143.59 | 183,553,643.90 | -3.28 | |
| Financial expenses | -54,677,552.48 | -41,367,225.24 | Not applicable | The interest income during the Reporting Period increased compared with the same period last year. |
4. R&D investment
(1) Table of R&D investment
√ Applicable □ Not applicable
Unit: RMB Yuan
| Expensed R&D investment in the current period | 177,525,143.59 |
| Capitalized R&D investment in the current period | 0.00 |
| Total R&D investment | 177,525,143.59 |
| Proportion of total R&D investment in revenue (%) | 0.76 |
| Percentage of capitalized R&D investment (%) | 0.00 |
(2) Details of R&D personnel
√ Applicable □ Not applicable
| Number of the Company's R&D staff | 503 |
| Percentage of the number of R&D staff to the Company's total number of employees (%) | 8.61 |
| Educational background structure of R&D personnel | |
| Category | Number of people |
| Doctor's degree | 0 |
| Master's degree | 37 |
| Bachelor | 292 |
| College degree | 111 |
| High school and below | 63 |
| Age structure of R&D personnel | |
| Category | Number of people |
| < 30 years old (exclusive) | 247 |
| 30 - 40 years old (including 30 years old, excluding 40 years old) | 184 |
| 40 - 50 years old (including 40 years old, excluding 50 years old) | 48 |
| 50 - 60 years old (including 50 years old, excluding 60 years old) | 24 |
| > 60 years old | 0 |
(3) Explanation
√ Applicable □ Not applicable
The total R&D investment of the parent company accounted for 3.43% of the parent company's revenue.
(4) Reasons for the major changes in the composition of R&D personnel and the impact on thefuture development of the Company
□ Applicable √ Not applicable
5. Cash flow
√ Applicable □ Not applicable
Unit: RMB Yuan
| Item | Amount in the current period | Amount in the same period last year | Change in the proportion (%) | Reason for change |
| Net cash flow generated from operating activities | 2,616,600,617.09 | 1,351,783,827.08 | 93.57 | The sales and cash inflows increased during the Reporting Period. |
| Net cash flow generated from investing activities | 30,115,778.76 | -151,492,348.67 | Not applicable | The net cash inflow from investing activities during the Reporting Period increased compared with the same period last year, and the net redeemed amount of bank financial products during the Reporting Period increased compared with the same period last year. |
| Net cash flow from financing activities | -771,123,342.97 | -922,149,601.16 | Not applicable |
(II) Explanation on significant change of profit caused by non-core business
□ Applicable √ Not applicable
(III) Analysis of assets and liabilities
√ Applicable □ Not applicable
1. Assets and liabilities
Unit: RMB Yuan
| Items | Amount as at the end of the current period | Percentage of total assets at the end of current period (%) | Amount as at the end of last period | Percentage of total assets at the end of last period (%) | Change in percentage for the current period over the last period (%) | Explanation |
| Cash and equivalents | 5,239,121,517.08 | 34.21 | 3,363,089,177.24 | 25.83 | 55.78 | During the Reporting Period, net cash flow generated from operating and investing activities increased. |
| Receivables financing | 39,533,283.51 | 0.26 | 21,664,621.88 | 0.17 | 82.48 | During the Reporting Period, the balance of M&G Colipu’s commercial bills increased compared with the beginning of the year. |
| Construction in progress | 95,391,194.19 | 0.62 | 71,901,168.18 | 0.55 | 32.67 | During the Reporting Period, equipment to be installed and unfinished engineering increased compared with the beginning of the year. |
| Other non-current assets | 12,202,603.55 | 0.08 | 7,054,811.39 | 0.05 | 72.97 | During the Reporting Period, prepayments for engineering increased compared with the beginning of the year. |
| Derivative financial liabilities | 1,357,106.71 | 0.01 | 881,465.28 | 0.01 | 53.96 | During the Reporting Period, losses on fair value changes of forward foreign exchange contracts increased. |
| Taxes payable | 312,264,527.42 | 2.04 | 198,479,439.43 | 1.52 | 57.33 | The increase in both revenue and gross profit in the fourth quarter resulted in an increase in commodity turnover tax and |
| corporate income tax payable. | ||||||
| Other current liabilities | 114,591,240.07 | 0.75 | 79,340,113.68 | 0.61 | 44.43 | The increased sales resulted in an increase in expected product returns. |
| Long-term borrowings | 30,027,500.01 | 0.20 | / | / | / | During the Reporting Period, Axus Stationery’s long-term borrowings increased. |
| Lease liabilities | 198,614,205.74 | 1.30 | 144,951,146.72 | 1.11 | 37.02 | During the Reporting Period, along with the business development of M&G Colipu and Jiumu Store, leases increased. |
| Estimated liabilities | / | / | 14,922,058.45 | 0.11 | -100.00 | The repurchase obligations on minority shareholders of Back to School Holding AS were reclassified to non-current liabilities due within one year during the Reporting Period. |
| Other comprehensive income | -945,577.17 | -0.01 | -307,971.25 | 0.00 | Not applicable | This is mainly due to the effect of differences in the translation of the financial statements of Back to School Holding AS in foreign currencies during the Reporting Period. |
Other descriptionsNo
2. Overseas assets
√ Applicable □ Not applicable
(1) Asset size
Including: overseas assets of 348,684,040.66 (unit: Yuan, currency: RMB), accounting for 2.28% of thetotal assets.
(2) Explanation for the high proportion of overseas assets
□ Applicable √ Not applicable
3. Major restricted assets as at the end of the Reporting Period
√ Applicable □ Not applicable
1. The subsidiary, Axus Stationery (Shanghai) Company Ltd., entered into the Maximum MortgageContract numbered ZD9874202200000005 with Shanghai Pudong Development Bank Co., Ltd.Fengxian Sub-branch on 15 September 2022, under which it pledges its lands and plants under PropertyHFDQ Zi (2013) No. 015437, Property HFDQ Zi (2013) No. 013396 and Property HFDQ Zi (2015) No.015718 at the maximum principal limit of RMB200 million and for the term of credit line from 15September 2022 to 14 September 2025.
2. The subsidiary Jiangsu Marco Pen Co., Ltd. (江苏马可笔业有限公司) entered into theMaximum Mortgage Contract numbered BD133202302270002428 with Jiangsu Siyang RuralCommercial Bank Co., Ltd. on 27 February 2023, under which it pledges its lands and plants under Su(2019) Siyang County Real Estate No. 0018047, Su (2019) Siyang County Real Estate No. 0018032, Su(2019) Siyang County Real Estate No. 0017990 and Su (2019) Siyang County Real Estate No. 0017993at the maximum principal limit of RMB45,122,200 and for the term of credit line from 27 February2023 to 22 November 2025.
3. As of the end of the Reporting Period, the Company had restricted monetary funds ofRMB1,531,036,380.25, mainly including letter of credit deposit, performance bond, and fixed depositover 3 months.
4. Other descriptions
□ Applicable √ Not applicable
(IV) Analysis on industry operating information
√ Applicable □ Not applicable
For details, see "II. Description of the Company's industry conditions during Reporting Period" in"Section III Management Discussion and Analysis" of this report.
(V) Analysis of investmentOverall analysis of external equity investment
√ Applicable □ Not applicable
During the Reporting Period, the Company made external investments.
In January 2023, subsidiary Shanghai M&G Stationery & Gift Co., Ltd. (上海晨光文具礼品有限公司) disposed of its 100% equity interests in Luoyang M&G Stationery Sales Co., Ltd. (洛阳晨光文具销售有限公司) for RMB20 million.
In July 2023, the Company acquired 100% equity interests in Hubei Chaoxin Real Estate Co., Ltd.(湖北潮信置业有限公司) for RMB47.54 million.
1. Significant equity investment
□ Applicable √ Not applicable
2. Significant non-equity investment
□ Applicable √ Not applicable
3. Financial assets measured at fair value
□ Applicable √ Not applicable
Securities investment
□ Applicable √ Not applicable
Description of securities investment
□ Applicable √ Not applicable
Private equity fund investment
□ Applicable √ Not applicable
Derivatives investment
□ Applicable √ Not applicable
4. Progress of major asset restructuring and integration during the Reporting Period
□ Applicable √ Not applicable
(VI) Sale of significant assets and equity interests
□ Applicable √ Not applicable
(VII) Analysis of major controlled companies and shareholding companies
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
| Company Name | Nature of the business | Major products and services | Registered capital | Total asset | Net assets | Net profit |
| Shanghai M&G Zhenmei Stationery Co., Ltd.（上海晨光珍美文具有限公司） | Wholesale and retail | Stationery and office supplies | 1,000.00 | 4,356.17 | 289.66 | -100.96 |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | Wholesale and retail | Office supplies | 66,000.00 | 590,756.76 | 158,690.16 | 40,120.65 |
| Shanghai M&G Stationery & Gift | Wholesale and | Stationery and office | 19,941.94 | 154,360.39 | 72,665.96 | 9,818.85 |
| Co., Ltd.（上海晨光文具礼品有限公司） | retail | supplies | ||||
| M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） | Wholesale and retail | Stationery and office supplies | 10,000.00 | 104,577.92 | -4,050.34 | 2,291.32 |
| Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司） | Manufacturing, wholesale and retail | Stationery and office supplies | 3,000.00 | 4,465.50 | 4,108.46 | 100.17 |
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | Wholesale and retail | Office supplies | 5,000.00 | 31,981.17 | 1,865.09 | -578.30 |
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | Design and so forth | Design, office supplies and so forth | 2,000.00 | 1,496.60 | 1,055.98 | -43.84 |
| Shanghai M&G Office Stationery Co., Ltd. | Wholesale and retail | Office supplies | 5,000.00 | 72,616.40 | 45,124.86 | 11,167.03 |
| Axus Stationery (Shanghai) Company Ltd. | Production, sale and so forth | Stationery and office supplies | 8,100.00 | 63,722.39 | 2,848.28 | -1,072.50 |
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | Service | Information Consultation | 22,000.00 | 34,055.94 | 24,495.08 | 2,252.03 |
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | Service | Creative service | 10,000.00 | 4,975.13 | 3,088.31 | -316.46 |
| Guangdong South China M&G Stationery Co., Ltd. (广东华南晨光文教用品有限公司) | Wholesale and retail | Stationery and office supplies | 5,000.00 | 10,586.64 | 4,650.81 | 391.40 |
| Hubei Chaoxin Real Estate Co., Ltd. (湖北潮信置业有限公司) | General goods warehousing services | Stationery and office supplies | 6,000.00 | 5,938.70 | 5,932.82 | -29.11 |
(VIII) Structured entities controlled by the Company
□ Applicable √ Not applicable
VI. Discussion and Analysis on Future Development of the Company(I) Industry pattern and trend
√ Applicable □ Not applicable
With the changes in the way of life and consumption habit of consumers, China’s retail industryentered a new stage of redevelopment and innovation. Stationery industry faces challenges withuncertainty of external environment, diversification of retail channels, and more individualized demandsfrom main customers group (now being the post-90s and post-00s). With the changing demographics ofChina in particular the decreasing birth rate, stationery industry revenue growth comes less from by unitvolume growth, and more from consumption upgrade and product upgrade. Domestic market demandfor mid- to high-end stationery products keeps increasing, reshaping market structure dominated bylow-end products. This provides opportunities for mid- to high-end stationery products with betterquality and higher price. China's population of 1.4 billion accounts for about 18% of global population,while leading stationery companies in China can continue to mostly rely on the huge domestic market,they also have room for international expansion in international markets, which could reinforce eachother under favorable conditions.
Leading enterprises focused on building omni-channel operation capabilities and implementedrefined management. With the popularity of the Internet, smart phones, and online transactions, people'sconsumption habits and consumption scenarios have changed. Consumers' access to information isbecoming more fragmented, and new-generation marketing means are becoming more diversified,including online media platforms (such as Weibo, WeChat, Xiaohongshu, and Douyin) and IP topiccreation, which further tests enterprises' ability to make quick response to industry trends. Comparedwith small- and medium-sized enterprises, leading enterprises boast stronger and richer whole networkmarketing and operation capabilities. They formulate refined marketing strategies by city to reachconsumers. In addition to online traffic, offline channels are also required to realize refined management
by empowering channels through organizational reform and information system. According to theNational Bureau of Statistics, online retail sales across the country recorded RMB15 trillion in 2023, ayear-on-year increase of 11%. Outstanding companies in the consumer industry seized the developmentopportunities of online consumption and achieved continuous sales growth through online and offlineintegration.
Traditional retail stationery shops nearby school are still the dominant channel for China’sstationery industry, and shares of other retail formats are increasing faster. Sales terminals and channelsof the industry are becoming more diversified, upgrading and competition in channels becomes moreobvious. Domestic consumption for stationery in China becomes more brand conscious, innovative,individualized and more premium. There is a growing demand for premium cultural and creativeproducts, stationery products are moving from those primarily focus on functionality towards those withmore cultural and creative elements catering to customers. There are around thousands of stationerymanufacturers in China's domestic stationery industry and the industry is quite decentralized. There are afew leading companies for most sub-category stationery products, with continued development in thestationery industry, there could be higher industry consolidation, and leading companies could gainlarger market shares.
In recent years, in the context of the digital economy, thanks to favorable factors such as policydriving, the rapid advancement of centralized procurement by large- and medium-sized enterprises, andthe competition among various digital procurement service providers, great progress has been made inthe digitalization, e-commerce and centralization of public procurement in China, which have becomethe main form of public resource transactions from central to local governments. According to the ChinaPublic Procurement Development Report (2022) compiled and released by China Federation ofLogistics & Purchasing, the scale of public procurement transactions in China in 2022 exceeded RMB48trillion. This indicates that the rate of centralised procurement aiming to improve efficiency and savecosts has grown year by year. According to the measurement of www.chyxx.com, the market size ofoffice supplies in China exceeds RMB2 trillion. In addition, the market size of employee benefits andother categories is also quite large.
According to the 2022 Digitalized Procurement Development Report compiled and released by theChina Federation of Logistics & Purchasing, central state-owned enterprises have grown into the leaderof digitalised procurement in China, driving China's digitalised procurement into the vigorousinnovation stage. This is a novel exemplar of various medium and large enterprises in digitalisedprocurement and has encouraged the servicers and suppliers to speed up digital transformation andupgrading. As a result, a group of new digitalised procurement platforms are growing, attracting capitalinto the real economy and thus supporting the innovation of industrial and supply chains.
With the further development and application of information technology, data have become a newproduction element. Industrial digitisation is becoming a major pillar of the digital economy, andtraditional industries are actively gaining new development momentum through digital empowerment.The investment in the manufacturing industry has shifted from the investment in equipment andassembly lines to the transformation of digital processes and digital transformation of products, in a bidto apply digital technology to reduce channel costs and management costs and become a digital-drivenmodern enterprise.
With smart technology and products upgrade, promotion of national education informatization andthe development of the online education market, smart stationery products have developed rapidly in thepast few years. Technology-empowered smart pens and smart books are widely adopted in onlineeducation, providing an increasingly better user experience. Technology-empowered smart pens andsmart books are widely adopted in online education, providing a better user experience.
(II) Development strategy of the Company
√ Applicable □ Not applicable
1. Business strategy
To consolidate competitive advantages of core businesses by adhering to the mission of "makestudy and work more joyful and effective", being consumer centric, and emphasizing on innovation oftechnology and products; to further expand new businesses of one-stop office supplies service and directretail; to actively expand international market; and to promote digitalization, organization developmentand talents, and investment and mergers and acquisitions with synergy. With continued efforts in thosefour areas, the Company will realize the vision of becoming a "world-class M&G".
2. Sustainable development strategy
In order to realize the vision of “World-class M&G”, M&G has developed a sustainabledevelopment strategy together with its business strategy. With its vision of “Writing a SustainableBusiness Future”, M&G aims to lead the sustainable development of the industry by focusing on fourpillars: sustainable products, response to climate change, sustainable supply chain and empoweringemployees and communities.
(III) Operation plan
√ Applicable □ Not applicable
In the face of changing consumer preferences, buying habits and consumption scenarios, as well asthe recovering market and demographic trends in the domestic market, M&G will improve developmentquality and efficiency with the new development concept, steadily advance its development strategy,promote the stable development of core traditional business in all directions, continue to expand newbusiness, beef up organisational upgrading and reform, and proactively exploit the global market, inorder to maintain sustainable, healthy and high-quality development of the Company and keep forgingahead toward its vision of becoming a "world-class M&G".
In 2024, the Company plans revenue of RMB27.5 billion, a year-on-year increase of 18%, mainlythrough the following:
1. Products and channels of the core traditional business
Continue to advance product optimisation
The Company will reduce the quantity and improve the quality of product development, improvethe on-shelf ratio and sales contribution of the single product, and focus on shared marketing of classicand best-selling products. Meanwhile, it will adhere to the "consumer-centric" philosophy and theprinciple of developing the best-selling products. Moreover, the product structure will be optimised bydeveloping and cultivating high-quality and high-performance products and improving the on-shelf ratioof daily necessities. The brand portfolio will be further expanded and the product offerings will beenriched. The combination of internal independent cultivation and collaboration with external IPs will bepromoted to improve international design capabilities and provide consumers with more diversifiedchoices of products.
Promote omni-channel offerings
The Company will focus on key stationery shops to improve single store quality, upgrade channels,and strengthen the royalty of key stationery shops. Besides, the Company will also strengthen promotionfor key categories, increase the on shelf ratio of must-have and classic best-selling products, increasepresence in business districts, and expand market share. In addition, continued efforts will be made topromote direct supply of office products and premium stationery products both at headquarters andpartners level to create incremental sales. The Company will also explore new online distributionmanagement models to realise the full potential of online growth. M&G Technologies will join in handswith product segments to launch online products and build a standard process for online productdevelopment, and use multi-store + flagship store for refined operations to improve efficiency. Also, itwill accelerate the development of new channel business to quickly seize market share.
2. Develop the middle-end and back-end platform capabilities
Through structural reforms and capability platform building, as well as lean operations driven byefficiency enhancement, the Company will enhance the quality of operations, reduce costs, and improveefficiency and quality, thereby averting risks and safeguarding the existing business. It will also supportthe upgrading of products, services, and business forms in the industry and shore up the extended,value-added, and innovative services using digital means, thereby unleashing the potential forincremental development. The Company will strengthen the continuous construction of the big dataplatform, comprehensively capture and deeply analyse the key data of each business, market andcustomer, provide a strong and scientific basis for business decision-making, and better drive businessimprovement by virtue of data. Also, it will promote the overall improvement of digital managementcapability, as well as create an open, inclusive and diverse talent system.
3. Continue to develop the large retail store business
Adhering to the strategies of “Straight-A Student Members, Structure Adjustment, and QualityImprovement”, the Company will continue to exert efforts on the optimization of membership operationand store operation standards, maintain the rapid growth of offline channels and the multi-channelgrowth of the online business, and increase the repurchase rate and customer unit price. As M&G'sbridgehead in upgrading its products and channels, Jiumu Store will work with the Company to increasethe sales ratio of high-end products in this channel. M&G Life will improve the quality of existing singlestores, and promote the new business model together with the premium stationery direct supply segment.
4. Continue to grow M&G Colipu
M&G Colipu follows requirements on well-informed, open and transparent governmentprocurement, and meets requirements that enterprises desire to increase procurement efficiency andreduce procurement costs for non-production office and administration supplies. It will continue tointensify core competitiveness by improving service quality, enriching product categories, furtheridentifying customers, increasing internal proportions and building a nationwide supply chain system. Itwill also enhance the development of core suppliers and manufacturers in core areas and the categoriesof MRO industrial products and marketing gifts and, based on the one-stop procurement solutions foroffice supplies, continue to expand such business scenarios as the MRO industrial products, marketinggifts and employee benefits. By developing an innovative digital platform system to optimise businessprocedures, M&G Colipu will step up digital construction, empower the centralized procurement ofgovernments and enterprises with digital capability, and realise cost reduction and efficiencyimprovement, and will also improve the nationwide layout and efficiency of warehousing and strengthenthe construction of the organisational capabilities.
(IV) Potential risks
√ Applicable □ Not applicable
1. Risks in operation management
With the great growth in the scale of assets and sale of the Company, the Company faces newchallenges in operation management system, internal control system and staff management. Althoughthe Company has developed operation management system and internal control system that accord withfeatures of its business and technology in its development, and has recruited and cultivated stable coremanagement team, operation of the Company will be adversely affected if the aforesaid managementsystem and management staff fail to promptly adapt to the rapid expansion of the Company. Therefore,the Company will keep improving its management system and internal control system, and adopt variousmeasures to improve qualification of management staff.
2. Market risks
With social transformation and consumption upgrading, stationery market presents opportunitiesfor structure-based development. The stationery industry is facing the challenges of shrinking demand,weaker expectations and increasing downward pressure. If the Company is unable to anticipate markettrends in time and adapt to market changes from aspects of product innovation and upgrading, qualitymanagement to sale strategy, the Company will encounter certain risks in market competition. Havingbeen aware of the problem, the Company enhanced product R&D under the guidance of the market,optimized product structure, and developed a sounder quality management and control system. Marketstrategies are formulated based on market survey, analysis of big data and management discussion.
3. Risks from fiscal and taxation
According to Article 28 of Enterprise Income Tax Law of the People's Republic of China, theenterprise income tax on important high- and new-tech enterprises that are necessary to be supported bythe state shall be levied at the reduced tax rate of 15%. The Company was re-recognized as a nationalhigh- and new-tech enterprise on 15 November 2022, and started to implement the policy of reducedenterprise income tax rate of 15% on 1 January 2022 for 3 years. If the state adjusts preferential incometax policy for high- and new-tech enterprises, or the Company fails to pass the review after itsqualification of high- and new-tech enterprise expires, operation performance of the Company will beadversely affected. As such, the Company performs strict control according to assessment standards forhigh- and new-tech enterprises to ensure that it meets all indicators, and qualifies and passes the annualreview and renewal for high- and new-tech enterprises.
4. Risks from macro policy
In July 2021, the release of the Opinions on Further Reducing the Burden of Homework andOff-Campus Training in Compulsory Education has a certain impact on the K12 education and trainingindustry. The Company will continue to pay attention to the impact of the "Double Reduction" policyand actively take countermeasures.
(V) Others
□ Applicable √ Not applicable
VII. Explanation on the Failure to Disclose as per Rules due to Inapplicability or Special Reasonssuch as State Secrets and Business Secrets and the Reasons Thereof
□ Applicable √ Not applicable
Section IV Corporate Governance
I. Particulars on Corporate Governance
√ Applicable □ Not applicable
During the Reporting Period, the Company, in strict compliance with the Company Law, theSecurities Law, and other applicable laws and regulations, as well as the relevant regulatory documentspromulgated by the China Securities Regulatory Commission and the Shanghai Stock Exchange,continuously optimized the corporate governance structure of the Company and improved theoperational level of the Company, strengthened the management of insider information, and enhancedthe awareness of information disclosure responsibility, to ensure continuous, stable and high-qualitydevelopment and effectively protect the legitimate rights and interests of investors and relevantstakeholders. The specific governance situation was as follows:
1. Shareholders and general shareholders' meetings: The Company holds general shareholders'meetings in strict accordance with the requirements of the Company Law, the Articles of Association,and the Rules of Procedure of the General Shareholders' Meeting. Proposals, procedures, and voting atthe general shareholders' meetings were strictly implemented in accordance with the relevant provisions.When considering proposals related to related-party transactions, related shareholders avoided voting toensure fair and reasonable related-party transactions. For the convenience of the Company's shareholders,general shareholders' meetings allow its shareholders to vote on site or online. This ensures the minorityshareholders have the right to stay informed about and vote on major issues of the Company andparticipate in the operation of the company and this also helps protect the interests of minorityshareholders. Resolutions adopted at general shareholders’ meetings met the requirements of laws andregulations, and complied with the lawful rights and interests of all shareholders, especially minorityshareholders.
2. Controlling shareholders and the listed companies: the Company and the controlling shareholdersachieved "five independences" in finance, personnel, assets, business, and organization, and theCompany's Board of Directors, Supervisory Committee and internal control institutions operatedindependently; the Company's related transaction procedures were legal and the price was fair, and theobligation of information disclosure was fulfilled; the controlling shareholders had a normative behavior,and did not directly or indirectly interfere with the Company's decision-making and business activitiesby manipulating the general shareholders' meetings.
3. Directors and the Board of Directors: All directors of the Company could, in accordance with theRules of Procedure of the Board of Directors and other systems, earnestly perform their duties asdirectors and make prudent and scientific decisions. The convening of each meeting met therequirements of relevant regulations. The Company's Board of Directors had four special committees,namely, the Strategy Committee, the Audit Committee, the Remuneration and Appraisal Committee, andthe Nomination Committee. Each special committee carried out work in accordance with the relevantprovisions of the implementation rules, gave full play to the professional role of each special committee,strengthened the democratic and scientific decision-making of the Board of Directors, and ensured thesound development of the Company.
4. Supervisors and the Supervisory Committee: The Supervisory Committee of the Company wasresponsible for the Company and its shareholders, strictly implemented the relevant provisions of theCompany Law, the Articles of Association and the Rules of Procedure of the Supervisory Committee,earnestly fulfilled its duties, convened the meetings of the Supervisory Committee by law, attended thegeneral meeting of shareholders and the meetings of the Board of Directors, and exercised supervisoryfunctions and powers in accordance with the law, supervising corporate governance, major issues,financial conditions, and the compliance with rights and regulations of the Company's directors andsenior management in performing their duties, and promoting the legal and standardized operations ofthe Company.
5. Information disclosure and transparency: The Company adhered to the principle of "truth,accuracy, completeness, timeliness, and fairness", and strictly followed the requirements of temporaryannouncement and periodic report format guidelines for information disclosure. To help investors getfamiliar with the situation of the Company, the content to be disclosed must be concise, clear, and easyto understand and must truly and duly reflect the operating status of the Company.
Whether there are significant differences between corporate governance and laws, administrativeregulations and the requirements of the relevant regulations of the China Securities RegulatoryCommission on the governance of listed company; if there are significant differences, the reasons shouldbe explained
□ Applicable √ Not applicable
II. Measures taken by the controlling shareholders and actual controllers of the Company toensure the independence of the Company's assets, personnel, finance, organization, and business,as well as the solutions taken to address the impact on the Company's independence, workprogress and follow-up work plans
√ Applicable □ Not applicable
The Company was completely separated from the controlling shareholders in assets, personnel,finance, organization and business, possessing independent and complete business and the ability tooperate independently.
1. Asset independence
The Company had business premises that are independent from the controlling shareholders andhad an independent and complete asset structure. The Company had complete control over all assets, andno asset or fund was occupied by controlling shareholders to damage the interests of the Company.
2. Personnel independence
The personnel and remuneration management of the Company were completely independent. Thedirectors, supervisors and senior management of the Company were elected and appointed in strictaccordance with the relevant provisions of the Company Law and the Articles of Association. Thepresident, vice president, chief financial officer and secretary of the Board of Directors of the Companydid not receive remuneration from the controlling shareholders and their affiliated enterprises and heldany positions other than directors and supervisors.
3. Financial independence
The Company had an independent financial and accounting department, has established anindependent accounting system and financial management system, and made financial decisionsindependently. The Company's chief financial officer and financial accounting personnel are all full-timestaff and do not hold part-time jobs in the controlling shareholder or their affiliated enterprises. TheCompany opened a basic deposit account independently and paid taxes independently.
4. Organizational independence
The Company has established a sound organizational system, which operates independently and hasno affiliation with the controlling shareholders or their functional departments.
5. Business independence
The Company's business is independent from the controlling shareholders and their affiliatedenterprises. The Company has an independent and complete design, R&D, manufacturing and salessystem, conducts business independently, and does not rely on shareholders or any other related parties.
Engagement of controlling shareholders, actual controllers and other organizations under their control inthe same or similar business as the Company, as well as the impact of horizontal competition or majorchanges in horizontal competition on the Company, measures taken, progress of the resolution and thefollow-up resolution
□ Applicable √ Not applicable
III. Brief Introduction to General Shareholders' Meetings
| Session number | Convening date | Query index of the designated website on which the resolution is published | Disclosure date when the resolution is published | Resolution of meeting |
| 2022 annual general shareholders' meeting | 20 April 2023 | www.sse.com.cn | 21 April 2023 | Considered and approved 11 proposals, including the 2022 Work Report of the Board of Directors, the 2022 Work Report of the Supervisory Committee, the 2022 Financial Settlement Report, the 2022 Profit Distribution Plan, the 2022 Annual Report and Summary, and the Proposal on the Expected Daily Related Transactions in 2023, the 2023 Annual Financial Budget |
Report, the Proposal on the Remuneration Criteria of theCompany's Directors in 2023, the Proposal on the Appointmentof the Company's 2023 Financial Report Audit Organization andInternal Control Audit Organization, the Proposal on theDividend Payout Plan for the Next Three Years (2023-2025), theProposal on Allowances for Independent Directors of the SixthBoard of Directors, the Proposal on the Election of Directors,the Proposal on the Election of Independent Directors, and theProposal on the Election of Supervisors
Holders of the preferred shares with restored voting power request for convening extraordinary generalshareholders' meetings
□ Applicable √ Not applicable
Particulars on general shareholders' meetings
□ Applicable √ Not applicable
IV. Information on Directors, Supervisors and Senior Management(I) Shareholding change and remuneration of directors, supervisors and senior management currently employed and retired during the Reporting Period
√ Applicable □ Not applicable
Unit: share
| Name | Position | Gender | Age | From | To | Number of shares held at the beginning of the year | Number of shares held at the end of the year | Change in share of the year | Reasons for change | Total pre-tax remuneration from the Company during the Reporting Period (RMB 0'000) | Whether to get remuneration from related parties of the Company |
| Chen Huwen | Chairman | Male | 54 | 2014-6-12 | 2026-4-19 | 13,609,300 | 13,609,300 | 0 | 170.39 | No | |
| Chen Huxiong | Vice Chairman and President | Male | 54 | 2014-6-12 | 2026-4-19 | 13,609,300 | 13,609,300 | 0 | 208.65 | No | |
| Chen Xueling | Director and Vice President | Female | 57 | 2014-6-12 | 2026-4-19 | 8,100,000 | 8,100,000 | 0 | 123.53 | No | |
| Fu Chang | Director and Vice President | Male | 54 | 2018-3-23 | 2026-4-19 | 108,016 | 108,016 | 0 | 57.34 | No | |
| Yu Weifeng | Independent Director | Male | 53 | 2023-4-20 | 2026-4-19 | 0 | 0 | 0 | 15.00 | No | |
| Pan Jian | Independent Director | Male | 48 | 2023-4-20 | 2026-4-19 | 0 | 0 | 0 | 15.00 | No | |
| Pan Fei | Independent director | Male | 68 | 2022-4-20 | 2026-4-19 | 0 | 0 | 0 | 18.75 | No | |
| Zhu Yiping | Chairman of the Supervisory Committee | Female | 65 | 2014-6-12 | 2026-4-19 | 0 | 0 | 0 | 0.00 | Yes | |
| Guo Limin | Supervisor | Male | 44 | 2023-4-20 | 2026-4-19 | 0 | 0 | 0 | 0.00 | Yes | |
| Zhang Chaohua | Employee Supervisor | Female | 45 | 2020-5-8 | 2026-4-19 | 0 | 0 | 0 | 29.28 | No | |
| Zhou Yonggan | Vice President | Male | 49 | 2020-5-8 | 2026-4-20 | 93,172 | 93,172 | 0 | 107.55 | No | |
| Tang Xianbao | Chief Financial Officer | Male | 42 | 2023-4-21 | 2026-4-20 | 0 | 0 | 0 | 93.36 | No | |
| Bai Kai | Board Secretary | Male | 41 | 2023-4-21 | 2026-4-20 | 12,906 | 12,906 | 0 | 30.11 | No | |
| Zhang Jingzhong | Independent director | Male | 61 | 2017-5-11 | 2023-4-19 | / | / | / | 5.00 | No | |
| Chen Jingfeng | Independent director | Male | 56 | 2017-5-11 | 2023-4-19 | / | / | / | 5.00 | No | |
| Han Lianhua | Supervisor | Female | 46 | 2014-6-12 | 2023-4-19 | / | / | / | 0.00 | Yes | |
| Quan Qiang | Board Secretary | Male | 51 | 2017-3-31 | 2023-4-20 | / | / | / | 33.71 | No | |
| Total | / | / | / | / | / | 35,532,694 | 35,532,694 | 0 | / | 912.67 | / |
Note: The term of office of Chen Huxiong, Chen Xueling and Fu Chang as directors will expire on 19 April 2026, and their term of office as senior managementwill expire on 20 April 2026.
| Name | Main working experience |
| Chen Huwen | Born in July 1970, male, Chinese nationality, no permanent residency abroad, Master’s degree granted by the School of Economics and Management, Tsinghua University, and doctorate degree granted by the Carlson School of Management, University of Minnesota. Has been involved in the stationery and office manufacturing industry since 1997, PE equity investment since 2007, and stock and bond financial investment since 2015 and is one of the founders of M&G Holdings (Group) Co., Ltd. Once worked as General Manager of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd. Now works as the chairman of Shanghai M&G Stationery Inc. and the chairman of Shanghai M&G Colipu Office Supplies Co., Ltd. Has won honors such as the Model Worker in China Light Industry and the "Top Ten Brand Leaders" in Shanghai in 2013. |
| Chen Huxiong | Born in July 1970, male, Chinese nationality, permanent residency in Singapore, Executive MBA, Cheung Kong Graduate School of Business. Has been involved in the stationery manufacturing industry since 1995. Worked as General Manager of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd. from 2001 to 2004, and Chairman of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd. from 2004 to 2009. Now works as Vice Chairman and President of Shanghai M&G Stationery Inc., and is also Vice Chairman of China Writing Instrument Association, Deputy Director of Ballpoint Pen Professional Committee of China Writing Instrument Association, and Chairman of China Writing Instrument Industry Technology Innovation Alliance. Won the "Nominated Award of Outstanding Entrepreneur of Shanghai in 2019-2020". |
| Chen Xueling | Born in October 1967, female, Chinese nationality, no permanent residency abroad, holding a junior college degree; has been involved in the stationery manufacturing industry since 1997 and is one of the founders of M&G Holdings (Group) Co., Ltd.; once worked as Deputy General Manager of Shanghai M&G Stationery Inc.'s Production Center, and now works as a director and Vice President of Shanghai M&G Stationery Inc. |
| Fu Chang | Born in January 1970, male, Chinese nationality, no permanent residency abroad, holding a master's degree in business administration (EMBA); once worked as General Manager of Wuhan Maxleaf Stationery Ltd.; joined M&G Stationery in May 2006 and successively served as Deputy Director of Marketing Centre and Director of Production Centre; now works as a director and Vice President of the Company. and now works as a director and Vice President of Shanghai M&G Stationery Inc. |
| Yu Weifeng | Born in November 1971, male, Chinese nationality, no permanent residency abroad, a first-class lawyer; has over 27 years of experience a Weifang practicing lawyer, received his LL.B. degree from Fudan University in June 1995, received his MBA degree from China Europe International Business School in October 2015, and completed the Executive Leadership Program of Harvard Business School in July 2019; has been a partner of Shanghai Links Law Offices since December 1998; now concurrently serves as Director of the Foreign Affairs Committee of the All China Lawyers Association, President of the Shanghai Arbitration Association, a member of the Administrative Reconsideration Committee of the Shanghai Municipal People's Government, a member of the Shanghai Arbitration Commission, and an arbitrator and mediator in a number of arbitration institutions and mediation institutions. |
| Pan Jian | Born in January 1976, male, Hong Kong permanent resident of China, holding a master's degree from the University of Chicago; once worked as a director and Vice President of Contemporary Amperex Technology Co., Ltd., a consultant of Kearney and Bain & Company, Vice President of MBK Partners, a director of Amperex Technology Ltd., a non-executive director of Luye Pharma, a director of Shanghai M&G Stationery Inc., and a director of Ceva Sante Animale Group; now works as a director of Contemporary Amperex Technology Co., Ltd. |
| Pan Fei | Born in August 1956, male, Chinese nationality, no permanent residency abroad, doctor, professor, and doctoral advisor in management, a member of the American Accounting Association, a member of the Accounting Society of China, a member of the Management Accounting Committee of the Accounting Society of China, Vice President of the Shanghai Cost Research Society, and Distinguished Editor at Modern Accounting. Pan Fei graduated from the School of Accountancy, Shanghai University of Finance and Economics, in 1983 and was awarded a doctoral degree in accountancy in 1998. Since 2000, he has received awards and honours, including the Shanghai Educator Award, the National Outstanding Individuals in Accounting, the Fifth Shanghai Renowned Teacher Award, and the Shanghai Excellent Teaching Team Award. In January 2018, Pan Fei was rated by the Shanghai University of Finance and Economics as a senior professor. In January 2019, he was approved as an expert eligible for special government allowances of the State Council. |
| Zhu Yiping | Born in March 1959, female, Chinese nationality, graduated from junior college. Once worked as Deputy General Manager of Jiangsu Life Group Co., Ltd. and Deputy General Manager of Shanghai Yuhui Industrial Co., Ltd. Joined M&G in May 2003 and served successively as Chief Financial Officer of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., and Deputy General Manager of the Financial Center of Shanghai M&G Stationery Inc. Now works as the person in charge of internal control of M&G Holdings (Group) Co., Ltd.. |
| Guo Limin | Born in December 1980, male, Chinese nationality, holding a bachelor's degree; once worked as a senior auditor of Deloitte, a senior manager of Zhongrong International Trust, a senior manager of Wins Investment, a trust manager of Lujiazui International Trust, and Deputy General Manager of China Universal Asset Management; joined M&G in February 2022; once worked as Director of the Risk Management Department of M&G Holdings (Group) Co., Ltd.; now works as Chief Financial Officer of M&G Holdings (Group) Co., Ltd. |
| Zhang Chaohua | Born in April 1979, female, Chinese nationality, holder of a bachelor’s degree. Once worked as Business Commissioner of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., Manager of Shanghai Apollo Machinery Co., Ltd., and Deputy Manager of M&G Holdings (Group) Co., Ltd. Now works as Deputy Manager of Shanghai M&G Stationery Inc. |
| Zhou Yonggan | Born in October 1975, male, Chinese nationality, no permanent residency abroad, holder of a master’s degree from Shangahi Maritime University and an EMBA degree from Peking University. Joined M&G Stationery in August 2005 and successively served as Assistant to the Chairman, Deputy Director, Director of the Marketing Center, and General Manager of the Office Business Department. Now works as Vice President of Shanghai M&G Stationery Inc. |
| Tang Xianbao | Born in January 1982, male, Chinese nationality, no permanent residency abroad, holding a bachelor's degree; once worked as Human Resources Director, Board Secretary, President of the Capital Operation Headquarters and President of the Financial Headquarters of Deppon Logistics Co., Ltd., and Vice President and Senior Vice President of Deppon Group; now works as Chief Financial Officer of Shanghai M&G Stationery Inc. |
| Bai Kai | Born in December 1983, male, Chinese nationality, no permanent residency abroad, holding a postgraduate degree; joined M&G Stationery in 2011, and once worked as an officer of the Board and Securities Affairs Representative; now works as Board Secretary of Shanghai M&G Stationery Inc. |
Particulars on other information
□ Applicable √ Not applicable
(II) Employment of directors, supervisors and senior management currently employed and retiredduring the Reporting Period
1. Employment in shareholders’ companies
√ Applicable □ Not applicable
| Name of person employed | Name of shareholder's company | Position held in shareholder's company | From | To |
| Chen Huwen | M&G Group | President | 10 May 2007 | |
| Chen Huwen | Keying Investment | General partner | 18 February 2011 | |
| Chen Huxiong | M&G Group | Chairman | 10 May 2007 | |
| Chen Huxiong | Jiekui Investment | General partner | 18 February 2011 | |
| Chen Xueling | M&G Group | Director | 10 May 2007 | |
| Zhu Yiping | M&G Group | Person in charge of internal control | 1 January 2020 | |
| Guo Limin | M&G Group | Chief Financial Officer | 7 February 2022 | |
| Particulars on employment in shareholders' companies | Save for the personnel disclosed above, none of other directors, supervisors and senior management of the Company were employed by the shareholders' companies. | |||
2. Employment in other companies
√ Applicable □ Not applicable
| Name of person employed | Name of other companies | Position held in other companies | From | To |
| Chen Huwen | Shanghai Chenguang Venture Capital Center (L.P.) | General partner | 12 May 2011 | |
| Chen Huwen | Shanghai Chenguang Sanmei Property Investment Co., Ltd. | General Manager | 26 May 2008 | |
| Chen Huxiong | Shanghai Chenguang Venture Capital Center (L.P.) | Limited Partner | 12 May 2011 | |
| Chen Huxiong | Shanghai Chenguang Sanmei Property Investment Co., Ltd. | Chairman | 26 May 2008 | |
| Chen Xueling | Shanghai Chenguang Venture Capital Center (L.P.) | Limited Partner | 12 May 2011 | |
| Chen Xueling | Shanghai Chenguang Sanmei Property Investment Co., Ltd. | Director | 26 May 2008 | |
| Yu Weifeng | Llinks Law Offices | Partner | December 1998 | |
| Yu Weifeng | Shenergy Company Limited | Independent Director | 30 June 2020 | |
| Yu Weifeng | Sinopharm Group Co., Ltd. | Independent Director | 18 September 2020 | |
| Pan Jian | Contemporary Amperex Technology Co., Ltd. | Director | 5 June 2017 | 29 December 2024 |
| Pan Fei | Beijing Wandong Medical Technology Co., Ltd. | Independent director | 19 June 2021 | 18 June 2024 |
| Pan Fei | Shanghai Zhonggu Logistics Co., Ltd. | Independent director | 18 December 2023 | 28 September 2024 |
| Zhang Jingzhong | Zhejiang T & C Law Firm | Director | October 1988 | |
| Zhang Jingzhong | Gansu Huangtai Wine-Marketing Industry Co., Ltd. | Independent director | October 2020 | November 2023 |
| Zhang Jingzhong | Sundy Service Group Co., Ltd. | Independent non-executive director | January 2021 | January 2024 |
| Zhang Jingzhong | Poly Developments and Holdings Group Co., Ltd. | Independent director | May 2022 | April 2023 |
| Chen Jingfeng | Zhongyun Capital | Chairman | October 2017 | |
| Particulars on employment in other companies | Save for the personnel disclosed above, none of other directors, supervisors and senior management of the Company were employed by other related companies. | |||
(III) Remuneration of directors, supervisors and senior management
√ Applicable □ Not applicable
| Decision-making procedures for the remuneration of directors, supervisors and senior management | According to the Articles of Association, the remuneration of directors and supervisors is determined by the general shareholders' meeting; and the remuneration of senior management is determined by the Board of Directors. |
| Whether a director steps aside in the Board's discussion of his/her remuneration matters | No |
| Recommendations by the Remuneration and Appraisal Committee or the special meeting of independent directors on matters relating to the remuneration of directors, supervisors and senior management | The remuneration of directors, supervisors and senior management should be determined with reference to the industry as well as regional levels, taking into account the actual situation of the Company. |
| Determination basis for the remuneration of directors, supervisors and senior management | The allowances of independent directors of the Company are considered and approved by the general shareholders' meeting. Other directors, supervisors and senior management who receive remuneration from the Company are subject to the operation performance appraisal on an annual basis and the pre-paid base salary on a monthly basis, and the annual remuneration is settled after the Company's annual operation target is completed. |
| Actual payment of the remuneration of directors, supervisors and senior management | RMB9.1267 million |
| Total remuneration actually received by all directors, supervisors and senior management at the end of the Reporting Period | RMB9.1267 million |
(IV) Changes in directors, supervisors and senior management of the Company
√ Applicable □ Not applicable
| Name | Office title | Change | Reason for change |
| Chen Huwen | Chairman | Elected | Re-elected upon expiry of the office term |
| Chen Huxiong | Vice Chairman | Elected | Re-elected upon expiry of the office term |
| Chen Xueling | Director | Elected | Re-elected upon expiry of the office term |
| Fu Chang | Director | Elected | Re-elected upon expiry of the office term |
| Yu Weifeng | Independent Director | Elected | Re-elected upon expiry of the office term |
| Pan Jian | Independent Director | Elected | Re-elected upon expiry of the office term |
| Pan Fei | Independent director | Elected | Re-elected upon expiry of the office term |
| Zhu Yiping | Chairman of the Supervisory Committee | Elected | Re-elected upon expiry of the office term |
| Guo Limin | Supervisor | Elected | Re-elected upon expiry of the office term |
| Zhang Chaohua | Employee Supervisor | Elected | Re-elected upon expiry of the office term |
| Chen Huxiong | President | Appointed | Re-appointed upon expiry of the office term |
| Chen Xueling | Vice President | Appointed | Re-appointed upon expiry of the office term |
| Fu Chang | Vice President | Appointed | Re-appointed upon expiry of the office term |
| Zhou Yonggan | Vice President | Appointed | Re-appointed upon expiry of the office term |
| Tang Xianbao | Chief Financial Officer | Appointed | Re-appointed upon expiry of the office term |
| Bai Kai | Board Secretary | Appointed | Re-appointed upon expiry of the office term |
| Zhang Jingzhong | Independent Director | Resigned | Expiry of the office term |
| Chen Jingfeng | Independent director | Resigned | Expiry of the office term |
| Han Lianhua | Supervisor | Resigned | Expiry of the office term |
| Quan Qiang | Board Secretary | Resigned | Expiry of the office term |
(V) Particulars on punishments by securities regulatory authorities in the past three years
□ Applicable √ Not applicable
(VI) Others
□ Applicable √ Not applicable
V. Meetings of the Board of Directors held during the Reporting Period
| Session number | Convening date | Resolution of meeting |
| The 19th meeting of the 5th session of Board of Directors | 29 March 2023 | 1. Considered and approved the 2022 Work Report of the Board of Directors 2. Considered and approved the 2022 Work Report of the President 3. Considered and approved the 2022 Financial Settlement Report 4. Considered and approved the 2022 Profit Distribution Plan 5. Considered and approved the 2022 Auditor’s Report 6. Considered and approved the 2022 Annual Report and Summary 7. Considered and approved the 2022 Work Report of Independent Directors 8. Considered and approved the 2022 Performance Report of the Audit Committee under the Board of Directors 9. Considered and approved the 2022 Internal Control Evaluation Report 10. Considered and approved the 2022 Environmental, Social and Governance Report 11. Considered and approved the Proposal on Determining the Annual Audit Remuneration in 2022 12. Considered and approved the Proposal on the Expected Daily Related Transactions in 2023 13. Considered and approved the 2023 Annual Financial Budget Report 14. Considered and approved the Proposal on the Remuneration Criteria of the Company's Directors in 2023 15. Considered and approved the Proposal on the Remuneration Criteria of the Company's Senior Management in 2023 16. Considered and approved the Proposal on the Appointment of the Company' 2023 Financial Report Audit Organization and Internal Control Audit Organization 17. Considered and approved the Proposal on Using Some Owned Funds for Investment and Financial Management 18. Considered and approved the Proposal on the Dividend Payout Plan for the Next Three Years (2023-2025) 19. Considered and approved the Proposal on Repurchase and Cancellation of Some Restricted Shares 20. Considered and approved the Proposal on Amendments to the Rules of Work for the Strategy Committee of the Board of Directors 21. Considered and approved the Proposal on Appointment of a New Senior Executive 22. Considered and approved the Proposal on Re-election of the Board of Directors 23. Considered and approved the Proposal on Allowances for Independent Directors for the 6th Session of Board of Directors 24. Considered and approved the Proposal to Hold the Company's 2022 Annual General Shareholders' Meeting |
| The 1st meeting of the 6th session of Board of Directors | 21 April 2023 | 1. Considered and approved the Proposal on Election of Chairman and Vice Chairman for the 6th Session of Board of Directors 2. Considered and approved the Proposal on Setting up the Professional Committee of the 6th Session of Board of Directors 3. Considered and approved the Proposal on Appointment of Senior Management |
| The 2nd meeting of the 6th session of Board of Directors | 27 April 2023 | 1. Considered and approved the Report for the First Quarter of 2023 2. Considered and approved the Proposal on Adjusting the Repurchase Price of Restricted Shares |
| The 3rd meeting of the 6th session of Board of Directors | 25 August 2023 | Considered and approved the 2023 Semi-annual Report and Summary |
| The 4th meeting of the 6th session of Board of Directors | 27 October 2023 | Considered and approved the Report for the Third Quarter of 2023 |
VI. Performance of Functions and Duties by Directors(I) Attendance of directors at board meetings and general shareholders' meetings
| Director Name | Independent director | Attendance at board meetings | Attendance at general shareholders' meetings | |||||
| Number of attendance required | Number of attendance in person | Number of attendance by communication | Number of attendance by proxy | Number of absence | Two consecutive absences in person | Number of attendance at general shareholders' meetings | ||
| Chen Huwen | No | 5 | 5 | 3 | 0 | 0 | No | 1 |
| Chen Huxiong | No | 5 | 5 | 3 | 0 | 0 | No | 0 |
| Chen Xueling | No | 5 | 5 | 3 | 0 | 0 | No | 0 |
| Fu Chang | No | 5 | 5 | 3 | 0 | 0 | No | 0 |
| Yu Weifeng | Yes | 4 | 4 | 3 | 0 | 0 | No | 0 |
| Pan Jian | Yes | 4 | 4 | 4 | 0 | 0 | No | 0 |
| Pan Fei | Yes | 5 | 5 | 3 | 0 | 0 | No | 1 |
| Zhang Jingzhong (having resigned) | Yes | 1 | 1 | 0 | 0 | 0 | No | 0 |
| Chen Jingfeng (having resigned) | Yes | 1 | 1 | 0 | 0 | 0 | No | 0 |
Particulars on two consecutive absences in person from board meetings
□ Applicable √ Not applicable
| Number of board meetings held during the year | 5 |
| Including: on site | 2 |
| by communication | 4 |
| on site and by communication | 1 |
(II) Directors' objections to the Company's related matters
□ Applicable √ Not applicable
(III) Others
□ Applicable √ Not applicable
VII. Special Committees under the Board of Directors
√ Applicable □ Not applicable
(I) Members of special committees under the Board of Directors
| Type | Name of member |
| Audit Committee | Pan Fei, Chen Huwen, Yu Weifeng |
| Nomination Committee | Yu Weifeng, Chen Huwen, Pan Jian |
| Remuneration and Appraisal Committee | Pan Fei, Chen Huxiong, Yu Weifeng |
| Strategy Committee | Chen Huxiong, Yu Weifeng, Pan Jian |
(II) During the Reporting Period, the Audit Committee held 5 meetings
| Convening date | Contents of meetings | Important comments and recommendations | Other performance of duties |
| 21 March 2023 | First meeting of the Audit Committee in 2023 | 1. Considered and approved the Work Summary of the Audit Department in 2022 2. Considered and approved the Work Plan of the Audit Department in 2023 | Debriefed and reviewed the work summary for this year and the next year's work plan of the Company's Internal Audit Department, and guided the operation of the Internal Audit Department. |
| 29 March 2023 | Second meeting of the Audit Committee in 2023 | 1. Considered and approved the 2022 Performance Report of the Audit Committee under the Board of Directors 2. Considered and approved the 2022 Auditor's Report 3. Considered and approved the 2022 Internal Control Evaluation Report 4. Considered and approved the Proposal on Determining the Annual Audit Remuneration in 2022 5. Considered and approved the Proposal on the Expected Daily Related Transactions in 2023 6. Considered and approved the Proposal on the Appointment of the Company’ 2023 Financial Report Audit Organization and Internal Control Audit Organization | During the preparation of the annual report, the Audit Committee under the Board of Directors communicated with BDO China Shu Lun Pan CPAs (LLP), which was responsible for the Company's annual audit, on the composition of the annual audit working group, audit plan, risk judgment and audit priorities, and continued to pay attention to the preparation of the Company's annual financial report. Debriefed and reviewed the work summary for this year and the next year's work plan of the Company's Audit Department, and guided the operation of the Audit Department. |
| 26 April 2023 | Third meeting of the Audit Committee in 2023 | Considered and approved the Report for the First Quarter of 2023 | No |
| 25 August 2023 | Fourth meeting of the Audit Committee in 2023 | Considered and approved the 2023 Semi-annual Report and Summary | No |
| 26 October 2023 | Fifth meeting of the Audit Committee in 2023 | Considered and approved the Report for the Third Quarter of 2023 | No |
(III) During the Reporting Period, the Nomination Committee held 3 meetings
| Convening date | Contents of meetings | Important comments and recommendations | Other performance of duties |
| 22 March 2023 | First meeting of the Nomination Committee in 2023 | Considered and approved the Proposal on the Review Opinion for the Qualifications of Candidate for Director | No |
| 29 March 2023 | Second meeting of the Nomination Committee in 2023 | Considered and approved the Proposal on the Review Opinion for the Qualifications of Tang Xianbao, Candidate for Chief Financial Officer | No |
| 12 April 2023 | Third meeting of the Nomination Committee in 2023 | Considered and approved the Proposal on the Review Opinion for the Qualifications of Candidates for President and Other Senior Management | No |
(IV) During the Reporting Period, the Remuneration and Appraisal Committee held 1 meeting
| Convening date | Contents of meetings | Important comments and recommendations | Other performance of duties |
| 29 March 2023 | First meeting of the Remuneration and Appraisal Committee in 2023 | 1. Considered and approved the Proposal on the Remuneration Criteria of the Company's Directors in 2023 2. Considered and approved the Proposal on the Remuneration Criteria of the Company's Senior Management in 2023 3. Considered and approved the Proposal on Allowances for Independent Directors for the 6th Session of Board of Directors 4. Considered and approved the Proposal on Repurchase and Cancellation of Some Restricted Shares | No |
(V) During the Reporting Period, the Strategy Committee held 1 meeting
| Convening date | Contents of meetings | Important comments and recommendations | Other performance of duties |
| 29 March 2023 | First meeting of the Strategy Committee in 2023 | 1. Considered and approved the Proposal on the Company's 2023 Business Plan 2. Considered and approved the 2022 Environmental, Social and Governance Report | No |
(VI) Details of the matter in question
□ Applicable √ Not applicable
VIII. Particulars on Risks in the Company Identified by the Supervisory Committee
□ Applicable √ Not applicable
The Supervisory Committee has no objection to the supervision matters during the Reporting Period.
IX. Employee of Parent Company and the Principal Subsidiaries of the Company at the End of theReporting Period(I) Employees
| Number of employees in the parent company | 2,583 |
| Number of employees in major subsidiaries | 3,256 |
| Number of employees | 5,839 |
| Number of retirees of whom the parent company and major subsidiaries are responsible for the expenses | |
| Professional structure | |
| Category | Number |
| Production personnel | 1,427 |
| Sales personnel | 1,464 |
| Technical personnel | 503 |
| Finance personnel | 208 |
| Administration personnel | 332 |
| Management personnel | 1,333 |
| Others | 572 |
| Total | 5,839 |
| Education background | |
| Category | Number (person) |
| University (including college) and above | 3,621 |
| High school, technical secondary school | 964 |
| Others | 1,254 |
| Total | 5,839 |
(II) Remuneration policy
√ Applicable □ Not applicable
To conform to the Company's organizational strategy, the Company implements a competitiveremuneration policy where the employees' remuneration is determined considering the job value,person-job fit and performance. By establishing and improving competitive remunerations and benefits,performance appraisal systems and incentive systems, the Company attracted all kinds of professionaltalents and formed healthy competitive work environment to stimulate the vitality and potential ofemployees, build a stable, professional team, and ensure the growth of the Company's performance.
(III) Training program
√ Applicable □ Not applicable
The Company attached great importance to the development of talents in the organization,especially the establishment of leadership talent echelon and the cultivation of managers at all levels andpersonnel for strategic key positions. The Company will establish a management curriculum system andinternal trainer team, develop hybrid learning projects, such as the new manager transformation projectand the training project for management trainees, and leverage the online learning platforms to improve
the management capabilities of the Management and accumulate forces. Additionally, employees' coreexpertise will be improved through centralised training and guidance from superiors. The training underthe production and manufacturing system will focus on the training and accumulation of core skilledworkers. Moreover, hierarchical and classified management will be implemented to refine the jobqualification and certification training system, and "learn by working and vice versa" will be promoted.Also, the training system for skilled workers will be built.
(IV) Labor outsourcing
√ Applicable □ Not applicable
| Total working hours of labor outsourcing | 19,080,037 hours |
| Total remuneration paid for labor outsourcing | RMB733,776,950 |
X. Profit Distribution or Capital Accumulation Plan(I) Formulation, implementation or adjustment of the cash dividend policy
√ Applicable □ Not applicable
1. The existing profit distribution policy of the Company is implemented after it was passed at the19th meeting of the 5th session of the Board of Directors and 2022 annual shareholders' meeting.
2. Principle in profit distribution of the Company: The Company implements the dividenddistribution policy which entitles the shareholders to the same rights and same dividends, under whichshareholders are entitled to receive dividends and other kinds of distribution of interests based on thenumber of shares held by them. The Company adopts active profit distribution policy, which emphasizesinvestors' reasonable investment returns while maintaining sustainability and stability. The Company isallowed to distribute profit in cash or shares, but its profit distribution shall not exceed the range of theaccumulated distributable profits or affect the Company's ability to continue as a going concern.
3. Overall approaches to distribute profit of the Company: The Company distributes dividends incash or shares, or cash-and-shares, and if the Company satisfies the conditions for cash dividends,priority should be given to profit distribution by means of cash dividends.
4. Specific conditions and proportion for cash dividends: The Company primarily adopts cashdividend as its profit distribution policy. The Company may distribute cash dividend when it makes aprofit in the current year and the distributable profits are positive after making up losses, contributing tothe statutory reserves and surplus reserves, but the profit distribution shall not exceed the range of theaccumulated distributable profits. In general, if there are no material investment plans or significant cashexpenditure, the Company may distribute profit in cash for a single year not less than 20% of thedistributable profit realized in the current year.
In addition, as for the proportion of cash dividends to the total profit distribution, the Board ofDirectors shall take into full account of various factors such as features of the industries where theCompany operates, the stage of development, its own business model, level of profitability, and whetherthere is significant capital expenditure arrangement, to distinguish the following situations anddetermine differentiated cash dividend proportion in accordance with the procedures as required by theArticles of Association:
(1) If the Company is at a mature stage of development and has no significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 80% when theprofit distribution is made;
(2) If the Company is at a mature stage of development and has significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 40% when theprofit distribution is made;
(3) If the Company is at a growing stage of development and has no significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 30% when theprofit distribution is made;
(4) If the Company is at a growing stage of development and has significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 20% when theprofit distribution is made.
The aforesaid "significant investment plans" or "significant cash expenditure" refers to one of thefollowing:
(1) The proposed external investment, acquisition of assets or purchase of equipment by theCompany in the coming twelve months with accumulated expenses amounting to or exceeding 50% ofthe latest audited net assets of the Company and exceeding RMB50 million;
(2) The proposed external investment, acquisition of assets or purchase of equipment by theCompany in the coming twelve months with accumulated expenses amounting to or exceeding 30% ofthe latest audited total assets of the Company.
Significant investment plans or significant cash expenditure that meets the above conditions shallbe reviewed and approved at the general meeting after being reviewed by the Board meeting.
5. During the Reporting Period, the formulation and implementation of the cash dividend policy hascomplied with the Articles of Association and the resolutions of the general meetings. The dividenddistribution standards and proportions are clearly stated, and relevant decision-making procedures andsystems are complete. Independent directors have diligently served their obligations, and played theirroles. As minority shareholders have opportunities to fully express their opinions and appeals, theirlegitimate interests have been fully protected.
(II) Special description of the cash dividend policy
√ Applicable □ Not applicable
| Does it meet the requirements of the Company's Articles of Association or the resolutions adopted at the Annual General Meeting of Shareholders: | √Yes □No |
| Are the dividend criteria and ratio definite and clear: | √Yes □No |
| Are the relevant decision-making procedures and mechanisms complete | √Yes □No |
| Do the independent directors perform their duties and play their due role | √Yes □No |
| Do the minority shareholders have the opportunity to fully express their opinions and requests, and whether their legitimate rights and interests get fully protection | √Yes □No |
(III) If the Company records profit distributable to shareholders of the Company during theReporting Period is positive but there is no proposal for cash dividend, the Company shall disclosethe reasons, the usage and the utilization plan of the undistributed profits in detail
□ Applicable √ Not applicable
(IV) Profit distribution and bonus issue from capital reserves for the Reporting Period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Bonus issue from profit (share/10 shares) | 0 |
| Cash dividend/10 shares (RMB Yuan) (tax inclusive) | 8 |
| Bonus issue from capital reserves (share/10 shares) | 0 |
| Cash dividends (tax inclusive) | 738,990,821.60 |
| Net profit attributable to ordinary shareholders of the listed company in the consolidated financial statements of the dividend year | 1,526,801,727.16 |
| Cash dividends as % of net profit attributable to ordinary shareholders of the listed company in the consolidated financial statements | 48.40 |
| Dividends in form of share repurchases in cash | 35,719,468.96 |
| Total dividends (tax inclusive) | 774,710,290.56 |
| Total dividends as % of net profit attributable to ordinary shareholders of the listed company in the consolidated financial statements | 50.74 |
XI. Equity Incentive Plan, Employee Shareholding Plan or Other Employee Incentive Measures ofthe Company and Their Impacts(I) Incentive matters disclosed in temporary announcements and without further progress orchange in subsequent implementation
√ Applicable □ Not applicable
| Item | Query index |
| On 29 March 2023, the Company held the 19th meeting of the 5th session of Board of Directors and the 17th meeting of the 5th session of Supervisory Committee, and considered and approved the Proposal on Repurchase and Cancellation of Some Restricted Shares. | Announcement on Resolutions of the 19th Meeting of the 5th Session of Board of Directors numbered 2023-004 Announcement on Resolutions of the 17th Meeting of the 5th Session of Supervisory Committee numbered 2023-005 Announcement on Repurchase and Cancellation of Some Restricted Shares numbered 2023-010 Announcement on Notifying Creditors of Repurchase and Cancellation of Some Restricted Shares numbered 2023-011 |
| On 27 April 2023, the Company held the 2nd meeting of the 6th session of Board of Directors and the 2nd meeting of the 6th session of Supervisory Committee, and considered and approved the Proposal on Adjusting the Repurchase Price of Restricted Shares. | Announcement on Resolutions of the 2nd Meeting of the 6th Session of Board of Directors numbered 2023-019 Announcement on Resolutions of the 2nd Meeting of the 6th Session of Supervisory Committee numbered 2023-020 Announcement on Adjusting the Repurchase Price of Restricted Shares numbered 2023-021 |
| On 9 June 2023, the Company completed the cancellation of some restricted stocks with China Securities Depository and Clearing Corporation Limited Shanghai Branch. | Announcement on the Implementation of Repurchase and Cancellation of Restricted Share for Equity Incentive numbered 2023-024 |
(II) Incentive matters which have not been disclosed in temporary announcements or with furtherprogressEquity incentive
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
Employee shareholding plan
□ Applicable √ Not applicable
Other incentive measures
□ Applicable √ Not applicable
(III) Equity incentives granted to directors and senior management during the Reporting Period
□ Applicable √ Not applicable
(IV) Establishment and implementation of appraisal mechanism and the incentive mechanism forsenior management during the Reporting Period
√ Applicable □ Not applicable
The Company has established a relatively perfect performance evaluation and incentive system.Based on the principle that the income of senior management is linked to the business performance ofthe enterprise, the Company followed an open, fair and impartial process to appoint senior management,and continuously and timely improved the assessment mechanism. The Company has established acompensation system in line with the development needs of the Company and the actual situation of theindustry to ensure the enthusiasm of senior management.The Company implemented the 2020 Restricted Share Incentive Plan to provide long-termincentives for senior management and core technicians, and formulated corresponding assessmentmethods to carry out scientific, standardized and institutionalized assessment management for seniormanagement and core technicians included in restricted share incentive plan. The Company hasguaranteed the stability of the core team and key employees and mobilizing their enthusiasm by virtue of
a reasonable, sound, flexible and effective remuneration and welfare system, and a long-term benefitmechanism based on the supporting equity incentive plan.
XII. Construction and implementation of internal control system during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, the Company has established a strict internal control managementsystem in strict accordance with the requirements of the Company Law, the Securities Law, the StockListing Rules of the Shanghai Stock Exchange, and other applicable laws, regulations and regulatorydocuments, as well as the Articles of Association. The Company has set up an Audit Committee underthe Board of Directors to review the internal control of the Company, supervise the effectiveimplementation of internal control and self-evaluation of internal control, and guide and coordinateinternal audit and other related matters. The Company has set up an Audit Department to independentlycarry out audit under the guidance of the Audit Committee under the Board of Directors. The AuditDepartment is accountable to the Audit Committee. The Audit Department evaluates the efficiency,results and effectiveness of the design and implementation of internal control through internal controlaudits, business management audits, special audits and economic responsibility audits, and promotes theCompany's continuous improvement and enhancement of the quality of internal control. The AuditDepartment reports the internal control defects found in the audit to the Supervisory Committee, theAudit Committee or the management according to the seriousness of the problems, and urges therelevant departments to take active measures to rectify them. According to the identification of majordefects in the Company's internal control, in 2023, the Company had no significant defects andimportant defects in the internal control of financial reporting and non-financial reporting. The Companyhas continuously improved the internal control system. Therefore, the internal control operationmechanism is effective, which has achieved the expected internal control objectives and protected theinterests of the Company and all shareholders.
Particulars on major defects in the internal control during the Reporting Period
□ Applicable √ Not applicable
XIII. Management and Control over the Subsidiaries during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, the Company has implemented the Management System for HoldingSubsidiaries, stipulating the control measures and the responsibilities and authority of the parentcompany and the subsidiaries in the subsidiary's articles of association, personnel appointment andremoval, financial management, operation decision, information management, inspection andassessment, so as to ensure that the various businesses of the subsidiaries meet the requirements of theCompany's overall development strategy, ensure that the financial position of the subsidiaries iseffectively monitored by the Company, prevent significant operating risks of the subsidiaries, andprotect the security and integrity of assets.
| Company Name | Integration plan | Integration progress | Problems encountered in integration | Measures taken | Resolution progress | Follow-up resolution plan |
| Hubei Chaoxin Real Estate Co., Ltd. (湖北潮信置业有限公司) | Integration of organization, management system, operation mode and business | The integration of organizational structure, management system, operation mode and business has been completed. | No | No | No | No |
XIV. Particulars on the Auditor's Report on Internal Control
√ Applicable □ Not applicable
The Company engaged BDO China Shu Lun Pan CPAs (LLP) to audit the implementation ofinternal control in its 2023 financial statements and the Audit Report on Internal Control was issued. Forthe full text of the report, see 2023 Audit Report on Internal Control disclosed on the website of theShanghai Stock Exchange (www.sse.com.cn) on 30 March 2024.
Whether to disclose the audit report on internal control: yesOpinion type of the audit report on internal control: With unqualified opinion
XV. Self-inspection and Rectification of Problems in the Special Action on Governance of ListedCompaniesNot applicable
XVI. Others
□ Applicable √ Not applicable
Section V Environmental and Social Responsibility
I. Environmental Information
| Whether an environmental protection mechanism has been put in place | Yes |
| Expenditure on environmental protection during the Reporting Period (Unit: RMB 0’000) | 239 |
(I) Explanation on environmental protection of the companies and their major subsidiaries fallinginto the category of key pollutant discharging organizations designated by the environmentalprotection authorities
□ Applicable √ Not applicable
(II) Explanation on environmental protection of companies other than key pollutant dischargingunits
√ Applicable □ Not applicable
The Company does not belong to the key pollutant discharging units published by nationalenvironmental protection authorities. The Company pays great attention to environmental protection,strictly abides by the Environmental Protection Law of the People's Republic of China and otherrelevant laws and regulations, and keeps refining its environmental management system. The Company'sproduction base in Shanghai has passed the ISO14001 environmental management system certification.In routine management, the Company strengthens the monitoring and handling of "three wastes" andensures that they are discharged as per the requirements.
All solid waste from the manufacturing process of the Company has been properly disposed of inaccordance with relevant laws, regulations and discharge standards to ensure compliant discharge andtreatment of waste. The Company keeps monitoring water consumption data to ensure compliantwastewater discharge and that domestic wastewater is treated in accordance with local regulations onsewage treatment. It also manages waste gas in strict accordance with relevant laws, regulations andstandards, and keeps upgrading and optimising the facilities for waste gas pollution control to eliminateor relieve the adverse impacts of waste gas on the atmospheric environment to the greatest extent.
1. Administrative penalties for environmental issues
√ Applicable □ Not applicable
Axus Stationery was fined RMB100,000 for failure to maintain the proper operation of air pollutanttreatment facilities according to the Written Decision of Administrative Penalty issued by ShanghaiMunicipal Bureau of Ecology and Environment on 23 October 2023. It has paid the fine in full amount,and has completed the remediation as required.
2. Disclosing other environmental information with reference to key pollutant discharging units
□ Applicable √ Not applicable
3. Reason for not disclosing other environmental information
□ Applicable √ Not applicable
(III) Information that is conducive to ecological protection, pollution prevention and control, andfulfillment of environmental responsibility
√ Applicable □ Not applicable
The Company attaches great importance to the impact of its operation on the environment, andtakes the initiative to shoulder the responsibility for environmental protection. It actively promoted the
implementation of strategies to cope with climate change, continuously intensified the management ofenvironmental operation footprints and, in 2023, won the title of "Five-star Green Factory" co-grantedby Shanghai Municipal Commission of Economy and Informatization and Shanghai MunicipalDevelopment & Reform Commission.
Starting from consumer insights, the Company kept developing innovative and sustainable products,adopted sustainable raw material procurement, and actively promoted green and innovative productpackaging. Through marketing channels, product publicity and consumer interaction, it popularised theimportance of plastic reduction, low carbon and biodiversity protection among young consumers andenhanced the public's awareness and engagement in sustainable development.For more details, see the 2023 Environmental, Social and Governance Report disclosed by theCompany on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 30 March 2024.
(IV) Measures taken to reduce carbon emissions during the Reporting Period and their effects
| Whether to adopt carbon reduction measures | Yes |
| Reduction of carbon dioxide-equivalent (Unit: ton) | 6,059 |
| Types of carbon reduction measures (for example, using clean energy to generate electricity, using carbon reduction technology in the production process, and developing and producing new products to assist carbon reduction.) | Using PV to generate electricity, improving the energy conservation of equipment in the manufacturing process, and developing and producing low-carbon products |
Detailed description
√ Applicable □ Not applicable
The Company continued to tap the potential for energy conservation and carbon emission reductionby initiating a number of projects themed on photovoltaic power generation, gas conservation via aircompressors, heat recovery, energy conservation via injection moulding equipment, and optimisation ofwater pump motors, gaining significant benefits from carbon emission reduction.
In terms of photovoltaic power generation, the Company has been carrying out a photovoltaicpower generation project in its production and logistics base in Shanghai since 2020, and the subsidiaryAxus Stationery has been building distributed photovoltaic power generators on the roofs of its factoriesin Shanghai and Siyang. As of the end of 2023, the installed capacity of photovoltaic power generationhas totalled 15,700 kW, and the annual consumption of photovoltaic power has totalled 13.22 millionkWh.
For more details, see the 2023 Environmental, Social and Governance Report disclosed by theCompany on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 30 March 2024.
II. Overview of Social Responsibility(I) Whether a social responsibility report, sustainability report or ESG report is disclosedseparately
√ Applicable □ Not applicable
The Company has disclosed the 2023 Environmental, Social and Governance Report on the websiteof the Shanghai Stock Exchange (www.sse.com.cn) on 30 March 2024.
(II) Particulars on the fulfillment of social responsibility
√ Applicable □ Not applicable
| Donations and public welfare activities | Number/content | Description |
| Total expenditure (RMB 0’000) | 608 | |
| Of which: Funds (RMB 0’000) | 303 | |
| Worth of supplies and materials (RMB 0’000) | 305 | |
| Number of people benefited | 430,000 |
Detailed description
√ Applicable □ Not applicable
The Company always undertakes social responsibilities of its own accord. During the ReportingPeriod, Shanghai M&G Charity Foundation continued to give play to the superior resources of theCompany, highlighted and deeply engaged in rural aesthetic education, special population developmentand other public welfare activities, and continued to further foster the "Golden Seed" student aidprogram, "Beautiful Time, Aesthetic Class" rural aesthetic education program, "M&G Star Kids"program for autistic people and other public welfare programs, gathering forces from all walks of life tofollow up on social topics to care for children's childhood and power the development of a harmonioussociety.
For more details, see the 2023 Environmental, Social and Governance Report disclosed by theCompany on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 30 March 2024.
III. Consolidation and Expansion of the Achievements of Poverty Alleviation and RuralRevitalization
√ Applicable □ Not applicable
| Poverty alleviation and rural revitalization activities | Number/content | Description |
| Total expenditure (RMB 0’000) | 383 | |
| Of which: Funds (RMB 0’000) | 100 | |
| Worth of supplies and materials (RMB 0’000) | 283 | |
| Number of people benefited | 430,000 | |
| Way of support (by industrial development, job creation, educational development, etc.) | By educational development |
Detailed description
√ Applicable □ Not applicable
Shanghai M&G Charity Foundation actively responded to the state's call for rural aestheticeducation, integrated social resources and initiated the "Beautiful Time, Aesthetic Class" rural aestheticeducation program based on the status quo of scattered resources for aesthetic education, promoting thecreation of industrial ecology for rural aesthetic education for children and beefing up rural revitalisationand local aesthetic quality through aesthetic education. Joining hands with a number of partners,Shanghai M&G Charity Foundation has been delivering M&G public art classes in 153 rural primaryschools and the children service stations in 20 communities, and organised rural painting competitionsattended by nearly 120,000 rural children by intensively integrating its business strengths and publicwelfare courses.
For more details, see the 2023 Environmental, Social and Governance Report disclosed by theCompany on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 30 March 2024.
Section VI Major EventsI. Performance of Undertakings(I) Undertakings by the Company's beneficial controllers, shareholders, related parties, acquirers, the Company and other related parties during orsubsisted in the Reporting Period
√ Applicable □ Not applicable
| Background of undertakings | Type of undertakings | Undertaking party | Contents of the undertaking | Time of the undertaking | Whether there is deadline for performance | Term of the undertaking | Whether strictly performed in a timely manner | If not performed in time, describe the specific reasons | If not performed in time, describe plans in next steps |
| Undertakings related to initial public offering | Restriction on sale of shares | Keying Investment Jiekui Investment | Undertaking for restriction on sale of shares and voluntary lockup undertaking by Keying Investment and Jiekui Investment, shareholders holding more than 5% of the equity (1) The proportion of shares unlocked every year shall not exceed 25% of the total shares held by the Company; (2) Notwithstanding any change in the position of some of the partners in the joint venture or their departure from the joint venture, the joint venture will strictly perform the above undertakings. | 22 April 2014 | No | Permanent | Yes | ||
| Others | M&G Group | Shareholding and intention to reduce shareholding of the controlling shareholder—M&G Group (1) M&G Group advocates that shares of the Company should be held in the long term to ensure that M&G Group shares operation achievements of the Company on a continuous basis. Therefore, M&G Group has the intention to hold shares of the Company for a long term. (2) After the lockup period of the Company's shares held by M&G Group expires, it is possible that M&G Group might reduce shareholding of the Company appropriately for the development requirement of M&G Group. In this situation, M&G Group is expected to reduce its shareholdings by no more than 5% of the total shares of the Company held by M&G Group within the first year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering. The shareholding reduction shall not exceed 10% of the total shares of the Company held by M&G Group within the second year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering at the time of the offering and the listing. If there are any ex-rights or ex-dividends events, such as the declaration of dividends, bonus issue, and capitalization from capital reserve to share capital in the Company before the reduction of the aforesaid shares, the price of the shareholding reduction for M&G Group should not be lower than the adjusted offering price of the Company's initial public offering shares at the time of the offering and the listing. (3) If M&G Group intends to reduce shareholding of the Company, it will announce its reduction plan 3 transaction days before reducing the shareholding. Furthermore, the reduction will be performed legally according to rules of Shanghai Stock Exchange in the form of block trade, auction transaction as well as other methods recognized by China Securities Regulatory Commission. | 22 April 2014 | No | Permanent | Yes | |||
| Others | Keying Investment Jiekui Investment | Shareholding and intention to reduce shareholding of Keying Investment and Jiekui Investment, shareholders holding more than 5% of the equity (1) The joint venture, which is an employee-owned enterprise established by officials and important business professionals of the Company, advocates that shares of the Company should be held in the long | 22 April 2014 | No | Permanent | Yes |
| term to ensure that operation achievements of the Company are shared on a continuous basis. Therefore, the joint venture has the intention to hold shares of the Company for a long term. (2) After the lockup period of the Company's shares held by joint venture expires, it is possible that the joint venture might reduce shareholding of the Company appropriately for the development requirement of the joint venture. In this situation, the joint venture is expected to reduce its shareholdings by no more than 25% of the total shares of the Company held by the joint venture within the first year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering. The shareholding reduction shall not exceed 25% of the total shares of the Company held by joint venture within the second year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering. If there are any ex-rights or ex-dividends events, such as the declaration of dividends, bonus issue, and capitalization from capital reserve to share capital before the joint venture reduces its holding of the aforesaid shares, the price of the shareholding reduction for the joint venture should not be lower than the adjusted offering price of the Company's initial public offering shares at the time of the offering and the listing; (3) If the joint venture intends to reduce shareholding of the Company, it will announce its reduction plan 3 transaction days before reducing the shareholding. Furthermore, the reduction will be performed legally according to rules of Shanghai Stock Exchange in the form of block trade, auction transaction as well as other methods recognized by China Securities Regulatory Commission. | ||||||||
| Address competition between counterparts | M&G Group, Keying Investment and Jiekui Investment | Undertaking in relation to non-competition by M&G Group, Keying Investment and Jiekui Investment (1) The enterprise and other enterprises (except the Company and enterprises controlled by it) controlled and (or) invested by it currently have not engaged in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with principal businesses of the Company and enterprises controlled by it. (2) After the initial public offering and listing of the Company, the enterprise and other enterprises (except the Company and enterprises controlled by it) controlled and (or) invested by it will not: ① engage in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ② support other enterprises other than the Company and enterprises controlled by it in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ③ interfere in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in. Apart from the aforesaid undertaking, the enterprise further guarantees that it will ① ensure its independence in assets, businesses, employees, finance and institution according to relevant rules of laws and regulations; ② adopt legal and effective measures to stop companies, enterprises and other economic organizations that the enterprise has control right from engaging directly or indirectly in the same or similar businesses with the Company; ③ not take advantage of its position as the controlling shareholder of the Company to carry out any other activities that may harm the rights of the Company and other shareholders. | 15 February 2012 | No | Permanent | Yes | ||
| Address competition between counterparts | Chen Huwen, Chen Huxiong, | Undertaking in relation to non-competition by beneficial controllers—Chen Huwen, Chen Huxiong, and Chen Xueling (1) I currently hold no position in other companies or economic organizations that have the same or similar business with the Company or enterprises controlled by it. | 15 February 2012 | No | Permanent | Yes |
| and Chen Xueling | (2) Other enterprises (except the Company and enterprises controlled by it) which are controlled by me independently and/ or in which I am one of the beneficial shareholders currently have not engaged in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with principal businesses of the Company and enterprises controlled by it. (3) After the initial public offering and listing of the Company, other enterprises (except the Company and enterprises controlled by it) which are controlled by me independently and/ or in which I am one of the beneficial shareholders will not: ① engage in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ② support other enterprises other than the Company and enterprises controlled by it in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ③ interfere in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in. Apart from the aforesaid undertaking, I further guarantee that I will: ① ensure its independence in assets, businesses, employees, finance and institution according to relevant rules of laws and regulations; ② adopt legal and effective measures to stop companies, enterprises and other economic organizations that I have control right from engaging directly or indirectly in the same or similar businesses with the Company; ③ not take advantage of the position as the beneficial controller of the Company to carry out any other activities that may harm the rights of the Company and other shareholders. | |||||||
| Others | M&G Stationery | Undertaking on the binding measures in case of the failure to fulfill the undertaking by M&G Stationery (1) The Company will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as "Undertaking Issues") in the initial public offering and listing. (2) If the Company fails to perform various obligations and responsibilities set out in the undertaking issues, the Company undertakes to take the following measures for restrictions: ① Compensate public investors for direct losses suffered by relying on relevant undertakings to implement transactions through self-owned capital with the amount of compensation being determined according to negotiation between the Company and investors, or the method or amount determined by the securities supervision and administration department and the judicial authority; ② Within 12 months after the date when the Company fully eliminates the adverse effect due to failure on related undertaking issues, the Company shall not issue securities, including but not limited to shares, corporate bonds, convertible corporate bonds and other types of securities approved by securities regulatory authorities; ③ The Company shall not increase the salary or allowance of our directors, supervisors and senior management in any form until the Company has fully eliminated the adverse effect due to failure on related undertaking issues. | 22 April 2014 | No | Permanent | Yes | ||
| Others | M&G Group | Undertaking on the binding measures in case of the failure to fulfill the undertaking by the controlling shareholder—M&G Group (1) M&G Group will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as "Undertaking Issues") in the initial public offering and listing | 22 April 2014 | No | Permanent | Yes |
| of M&G Stationery. (2) If M&G Group fails to perform various obligations and responsibilities set out in the aforesaid undertaking issues, M&G Group undertakes to take the following measures for restrictions: ① Compensate public investors for direct losses suffered by relying on relevant undertakings to implement transactions through self-owned capital with the amount of compensation being determined according to negotiation between M&G Group and investors, or the method or amount determined by the securities regulatory authorities and the judicial authority; ② The lockup period of M&G Stationery's shares held by M&G Group will be automatically extended to the date when M&G Group fully eliminates the adverse effect due to failure on related undertaking issues. | ||||||||
| Others | Chen Huwen, Chen Huxiong, and Chen Xueling | Undertaking on the binding measures in case of the failure to fulfill the undertaking by beneficial controllers—Chen Huwen, Chen Huxiong, and Chen Xueling (1) I will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as "Undertaking Issues") in the initial public offering and listing of M&G Stationery. (2) If I fail to perform various obligations and responsibilities set out in the aforesaid undertaking issues, I undertake to take the following measures for restrictions: ① Compensate public investors for direct losses suffered by relying on relevant undertakings to implement transactions through self-owned capital with the amount of compensation being determined according to negotiation between investors and me, or the method or amount determined by the securities regulatory authorities and the judicial authority; ② The lockup period of M&G Stationery's shares held by me directly or indirectly will be automatically extended to the date when I fully eliminate the adverse effect due to failure on related undertaking issues. ③ I shall not require M&G Stationery to increase my salary or allowance in any form, nor shall I accept the increase of salary or allowance by M&G Stationery in any form until I have fully eliminated the adverse effect due to failure on related undertaking issues. | 22 April 2014 | No | Permanent | Yes | ||
| Others | Keying Investment Jiekui Investment | Undertaking on the binding measures in case of the failure to fulfill the undertaking by Keying Investment and Jiekui Investment, shareholders holding more than 5% of the equity (1) The joint venture will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as "Undertaking Issues") in the initial public offering and listing of M&G Stationery. (2) If the joint venture fails to perform various obligations and responsibilities set out in the aforesaid undertaking issues, the joint venture undertakes to take the following measures for restrictions: ① Compensate public investors for direct losses suffered by relying on relevant undertakings to implement transactions through self-owned capital with the amount of compensation being determined according to negotiation between the joint venture and investors, or the method or amount determined by the securities regulatory authorities and the judicial authority; ② The lockup period of M&G Stationery's shares held by the joint venture will be automatically extended to the date when the joint venture fully eliminates the adverse effect due to failure on related undertaking issues. | 22 April 2014 | No | Permanent | Yes |
(II) Where the Company has profit forecasts on assets or projects, and the Reporting Period waswithin the term of profit forecasts, the Company has to state whether such profit forecasts onassets or projects are fulfilled and the reasons thereof
□Fulfilled □Unfulfilled √ Not applicable
(III) Execution of the performance undertakings and its impact on the goodwill impairmenttesting
□ Applicable √ Not applicable
II. Non-operating Misappropriation of Funds of the Company by any Controlling Shareholdersand Their Related Parties during the Reporting Period
□ Applicable √ Not applicable
III. Illegal Guarantee
□ Applicable √ Not applicable
IV. Explanation of the Company's Board of Directors on the "Auditor's Report with ModifiedAudit Opinions" Issued by the CPA
□ Applicable √ Not applicable
V. Analysis and Explanation from the Company on the Reasons and Impact of the Change ofAccounting Policies, Accounting Estimates or Correction on Significant Accounting Errors(I) Analysis and explanation from the Company on the reasons and impact of the change ofaccounting policies or accounting estimates
□ Applicable √ Not applicable
(II) Analysis and explanation from the Company on the reasons and impact of the correction onsignificant accounting errors
□ Applicable √ Not applicable
(III) Communication with the previous accounting firm
□ Applicable √ Not applicable
(IV) Approval process and other descriptions
□ Applicable √ Not applicable
VI. Appointment and Dismissal of the Accounting Firm
Unit: 0'000 Currency: RMB
| Current accounting firm | |
| Name of domestic accounting firm | BDO China Shu Lun Pan CPAs (LLP) |
| Remuneration of domestic accounting firm | 170 |
| Term of office of domestic accounting firm | 14 |
| Names of certified public accountants of domestic accounting firm | Chen Luying, and Fang Ning |
| How many consecutive years the certified public accountants of the domestic accounting firm have provided audit service for the Company | Chen Luying: 3 years Fang Ning: 1 year |
| Name | Remuneration | |
| Internal control audit accounting firm | BDO China Shu Lun Pan CPAs (LLP) | 90 |
Explanation on appointment and dismissal of the accounting firm
√ Applicable □ Not applicable
During the Reporting Period, the BDO China Shu Lun Pan CPAs (LLP) was re-appointed as the auditinstitution.
Explanation on the change of accounting firm during the auditing period
□ Applicable √ Not applicable
Explanation on any over 20% (inclusive) reduction in audit fee compared to last year
□ Applicable √ Not applicable
VII. Risk of Suspension of Listing(I) Causes of suspension of listing
□ Applicable √ Not applicable
(II) Measures to be taken by the Company
□ Applicable √ Not applicable
(III) Situation and causes for termination of listing
□ Applicable √ Not applicable
VIII. Matters Related to Bankruptcy and Reorganization
□ Applicable √ Not applicable
IX. Material Litigation and Arbitration
□ The Company had material litigation and arbitration during the year
√ The Company did not have material litigation and arbitration during the year
X. Suspected Violation of Laws and Regulations, Punishment and Rectification to the ListedCompany, Its Directors, Supervisors, Senior Management, Controlling Shareholders, and ActualControllers
□ Applicable √ Not applicable
XI. Explanation on Credibility Status of the Company, Its Controlling Shareholders and BeneficialControllers during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, since the Company, its controlling shareholders and beneficialcontrollers maintained sound credibility, there had been no refusal to implement effective judgments of acourt or default of any material overdue debt.
XII. Major Related Transactions(I) Related transactions in relation to daily operation
1. Events disclosed in temporary announcements and without further progress or change insubsequent implementation
□ Applicable √ Not applicable
2. Events disclosed in temporary announcements and with further progress or change insubsequent implementation
√ Applicable □ Not applicable
The 19th meeting of the 5th session of Board of Directors and 2022 annual general meeting of theCompany considered and approved the Proposal on the Expected Daily Related Transactions in 2023,
and issued the Announcement on the Implementation of Expected Daily Related Transactions in 2023(number: 2023-007) on 31 March 2023.
In 2023, the estimated income from selling goods to the sales entities controlled by Guo Weilongamounted to RMB500,000,000.00. It was estimated that fees for leasing the houses of M&G Group(including office buildings, workshops, parking space, warehouses and dormitories) amounted toRMB4,621,000.00; fees for leasing the office buildings and parking space of M&G Group amounted toRMB700,000.00; utilities amounted to RMB5,600,000.00. It was estimated that the expenses incurredby M&G Colipu in leasing M&G Group's office building and parking space amounted toRMB10,652,000.00, the expenses incurred by Colipu Information Technology in leasing M&G Group'soffice building amounted to RMB2,820,000.00, and the expenses incurred by Qizhihaowan in leasingM&G Group's office building amounted to RMB1,063,000.00.In 2023, the actual income from selling goods to the sales entities controlled by Guo Weilongamounted to RMB280,620,675.09. The actual fees for leasing the houses of M&G Group (includingoffice buildings, workshops, parking space, warehouses and dormitories) amounted toRMB4,620,952.39; fees for leasing the office buildings and parking space of M&G Group amounted toRMB528,033.71; utilities amounted to RMB5,667,002.15. The actual expenses incurred by M&GColipu in leasing M&G Group's office building and parking space amounted to RMB10,691,879.11, theactual expenses incurred by Colipu Information Technology in leasing M&G Group's office buildingamounted to RMB2,813,180.16, and the actual expenses incurred by Qizhihaowan in leasing M&GGroup's office building amounted to RMB1,234,174.86.
3. Events not disclosed in temporary announcements
□ Applicable √ Not applicable
(II) Related transactions as a result of acquisition and disposal of assets or equity
1. Events disclosed in temporary announcements and without further progress or change insubsequent implementation
□ Applicable √ Not applicable
2. Events disclosed in temporary announcements and with further progress or change insubsequent implementation
□ Applicable √ Not applicable
3. Events not disclosed in temporary announcements
□ Applicable √ Not applicable
4. Disclosable performance achievements during the Reporting Period when involved withagreed-upon performance
□ Applicable √ Not applicable
(III) Major related transactions in joint external investment
1. Events disclosed in temporary announcements and without further progress or change insubsequent implementation
□ Applicable √ Not applicable
2. Events disclosed in temporary announcements and with further progress or change insubsequent implementation
□ Applicable √ Not applicable
3. Events not disclosed in temporary announcements
□ Applicable √ Not applicable
(IV) Creditor’s rights and debts with related parties
1. Events disclosed in temporary announcements and without further progress or change insubsequent implementation
□ Applicable √ Not applicable
2. Events disclosed in temporary announcements and with further progress or change insubsequent implementation
□ Applicable √ Not applicable
3. Events not disclosed in temporary announcements
□ Applicable √ Not applicable
(V) Financial business between the Company and the affiliated financial companies, theCompany's holding financial company and the related party
□ Applicable √ Not applicable
(VI) Others
□ Applicable √ Not applicable
XIII. Material Contracts and Their Performance(I) Trusteeship, contracting and leasing matters
1. Trusteeship
□ Applicable √ Not applicable
2. Contracting
□ Applicable √ Not applicable
3. Leasing
□ Applicable √ Not applicable
(II) Guarantees
□ Applicable √ Not applicable
(III) Entrusting others to manage cash assets
1. Entrusted wealth management
(1) Overall condition of entrusted wealth management
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
| Types | Source of fund | Amount incurred | Undue balance | Overdue uncollected amount |
| Bank financial product | Raised capital | |||
| Bank financial product | Self-owned capital | 220,000 | 136,800 |
Others
□ Applicable √ Not applicable
(2) Individual entrusted wealth management
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
| Trustee | Type of entrusted wealth management | Amount of entrusted wealth management | Beginning date of entrusted wealth management | Termination date of entrusted wealth management | Source of fund | Usage of fund | Restricted or not | Method to determine return way | Annual rate of return | Expected return (if any) | Actual gains or loss | Undue amount | Overdue uncollected amount | Whether it has gone through a legal procedure or not | Whether there is a future entrusted wealth management plan or not | Amount of provision for the impairment (if any) |
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Bank financial product | 25,000 | 2021/9/30 | 2023/5/29 | Self-owned capital | No | 2.77% | 1,147.71 | 0 | 0 | Yes | Yes | ||||
| Agricultural Bank of China Limited | Bank financial | 10,000 | 2021/10/8 | 2023/5/29 | Self-owned capital | No | 2.79% | 457.83 | 0 | 0 | Yes | Yes |
| Shanghai Guangming Sub-branch | product | |||||||||||||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Bank financial product | 45,000 | 2021/10/13 | Self-owned capital | No | 45,000 | 0 | Yes | Yes | |||||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 10,000 | 2022/10/8 | 2023/1/6 | Self-owned capital | No | 3.50% | 86.30 | 0 | 0 | Yes | Yes | ||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 20,000 | 2022/12/30 | 2023/1/29 | Self-owned capital | No | 3.20% | 52.60 | 0 | 0 | Yes | Yes | ||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 20,000 | 2022/12/30 | 2023/1/29 | Self-owned capital | No | 3.20% | 52.60 | 0 | 0 | Yes | Yes | ||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 45,000 | 2023/3/29 | 2023/4/28 | Self-owned capital | No | 3.35% | 123.90 | 0 | 0 | Yes | Yes | ||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 45,000 | 2023/5/12 | 2023/6/12 | Self-owned capital | No | 3.00% | 114.66 | 0 | 0 | Yes | Yes | ||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 45,000 | 2023/6/14 | 2023/7/14 | Self-owned capital | No | 3.00% | 110.96 | 0 | 0 | Yes | Yes | ||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 45,000 | 2023/7/14 | 2023/8/14 | Self-owned capital | No | 3.00% | 114.66 | 0 | 0 | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Bank financial product | 30,000 | 2023/8/8 | 2023/12/28 | Self-owned capital | No | 1.67% | 194.70 | 0 | 0 | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming | Bank financial product | 5,000 | 2023/8/8 | 2023/12/28 | Self-owned capital | No | 2.06% | 39.98 | 0 | 0 | Yes | Yes |
| Sub-branch | ||||||||||||||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Bank financial product | 20,000 | 2023/8/8 | 2023/11/16 | Self-owned capital | No | 1.40% | 76.94 | 0 | 0 | Yes | Yes | ||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 10,000 | 2023/8/8 | 2023/9/7 | Self-owned capital | No | 2.90% | 23.84 | 0 | 0 | Yes | Yes | ||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 25,000 | 2023/8/8 | Self-owned capital | No | 25,000 | 0 | Yes | Yes | |||||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 10,000 | 2023/8/8 | Self-owned capital | No | 10,000 | 0 | Yes | Yes | |||||||
| Shanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch | Bank financial product | 26,800 | 2023/12/29 | Self-owned capital | No | 26,800 | 0 | Yes | Yes | |||||||
| China Merchants Bank Co., Ltd. Shanghai Branch Wujiaochang Sub-branch | Bank financial product | 10,000 | 2022/3/29 | Self-owned capital | No | 10,000 | 0 | Yes | Yes | |||||||
| China Merchants Bank Co., Ltd. Shanghai Branch Wujiaochang Sub-branch | Bank financial product | 5,000 | 2022/4/8 | Self-owned capital | No | 5,000 | 0 | Yes | Yes | |||||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Bank financial product | 10,000 | 2022/7/12 | Self-owned capital | No | 10,000 | 0 | Yes | Yes | |||||||
| China Merchants Bank Co., Ltd. Shanghai Branch Wujiaochang Sub-branch | Bank financial product | 5,000 | 2022/9/22 | Self-owned capital | No | 5,000 | 0 | Yes | Yes |
Others
□ Applicable √ Not applicable
(3) Provision for the impairment of entrusted wealth management
□ Applicable √ Not applicable
2. Entrusted loans
(1) Overall condition of entrusted loans
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
(2) Individual entrusted loans
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
(3) Provision for the impairment of entrusted loans
□ Applicable √ Not applicable
3. Others
□ Applicable √ Not applicable
(IV) Other material contracts
□ Applicable √ Not applicable
XIV. Progress on the use of raised capital
□ Applicable √ Not applicable
XV. Explanation of Other Major Events that Have a Material Impact on Investors' Value Judgments and Investment Decisions
□ Applicable √ Not applicable
Section VII Changes in Shares and Shareholders
I. Changes in Share Capital(I) Statement of changes in shares
1. Statement of changes in shares
Unit: share
| Before the change | Increase/decrease of the change (+, -) | After the change | |||||||
| Quantity | Percentage (%) | Issue of new shares | Bonus shares | Capital reserve-converted shares | Others | Subtotal | Quantity | Percentage (%) | |
| I. Restricted shares | 3,104,630 | 0.33 | -336,480 | -336,480 | 2,768,150 | 0.30 | |||
| 1. State-owned shares | |||||||||
| 2. Shares held by state-owned legal person | |||||||||
| 3. Other domestic shares | 3,104,630 | 0.33 | -336,480 | -336,480 | 2,768,150 | 0.30 | |||
| Including: Shares held by domestic non-state-owned legal person | |||||||||
| Shares held by domestic natural person | 3,104,630 | 0.33 | -336,480 | -336,480 | 2,768,150 | 0.30 | |||
| 4. Overseas shares | |||||||||
| Including: Shares held by foreign legal person | |||||||||
| Shares held by overseas natural person | |||||||||
| II. Non-restricted circulating shares | 923,828,420 | 99.67 | 923,828,420 | 99.70 | |||||
| 1. Ordinary RMB shares | 923,828,420 | 99.67 | 923,828,420 | 99.70 | |||||
| 2. Domestically listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total number of shares | 926,933,050 | 100.00 | -336,480 | -336,480 | 926,596,570 | 100.00 | |||
2. Explanation of changes in shares
√ Applicable □ Not applicable
According to the Company's 2020 Restricted Share Incentive Plan and the authorization of the2019 Annual General Meeting of Shareholders：
Upon consideration and approval at the 19th meeting of the 5th session of Board of Directors andthe 17th meeting of the 5th session of Supervisory Committee, the Company completed the cancellationof part of the restricted shares under such Incentive Plan with China Securities Depository and ClearingCorporation Limited Shanghai Branch on 9 June 2023, repurchasing and canceling 336,480 restrictedshares of 44 incentive objects. After the completion of the repurchase and cancellation, the total sharesof the Company decreased from 926,933,050 shares to 926,596,570 shares.
3. Impact of changes in shares on the earnings per share, net asset value per share and otherfinancial indicators in the last year and period (if any)
√ Applicable □ Not applicable
(1) Basic earnings per share
Basic earnings per share are based on the combined net profit attributable to the ordinaryshareholders of the parent company divided by the weighted mean of the Company's outstandingordinary shares:
Unit: RMB
| Item | Amount in the current period | Amount in the last period |
| Combined net profit attributable to ordinary shareholders of the parent company | 1,526,801,727.16 | 1,280,594,010.17 |
| Weighted mean of the Company's outstanding ordinary shares | 921,056,004.08 | 923,037,570.00 |
| Basic earnings per share | 1.6577 | 1.3874 |
| Including: Basic earnings per share from continuing as a going concern | 1.6577 | 1.3874 |
| Basic earnings per share from not continuing as a going concern |
(2) Diluted earnings per share
Diluted earnings per share are based on the combined net profit (diluted) attributable to the ordinaryshareholders of the parent company divided by the weighted mean (diluted) of the Company'soutstanding ordinary shares:
Unit: RMB
| Item | Amount in the current period | Amount in the last period |
| Combined net profit (diluted) attributable to ordinary shareholders of the parent company | 1,526,801,727.16 | 1,282,456,788.17 |
| Weighted mean of the Company's outstanding ordinary shares(diluted) | 921,056,004.08 | 923,819,770.41 |
| Diluted earnings per share | 1.6577 | 1.3874 |
| Including: Diluted earnings per share from continuing as a going concern | 1.6577 | 1.3874 |
| Diluted earnings per share from not continuing as a going concern |
4. Other contents that the Company deems necessary and the securities regulatory authoritiesrequire disclosing
□ Applicable √ Not applicable
(II) Changes in restricted shares
√ Applicable □ Not applicable
Unit: share
| Name of shareholder | Number of restricted shares at the beginning of the year | Number of restricted shares removed during the year | Increase in number of restricted shares during the year | Number of restricted shares at the end of the year | Reason for selling restrictions | Date of lifting of selling restrictions |
| Incentive objects of restricted shares in 2020 | 3,104,630 | 336,480 | 2,768,150 | Equity incentive selling restrictions | ||
| Total | 3,104,630 | 336,480 | 2,768,150 | / | / |
Note: " Number of restricted shares removed during the year " in the above table includes 336,480shares repurchased and cancelled. The cancellation date is 9 June 2023.
II. Issuance and Listing of Securities(I) Issuance of securities as at the Reporting Period
□ Applicable √ Not applicable
Explanation on issuance of securities as at the Reporting Period (please provide separate explanation onthe bonds with different interest rates during their duration):
□ Applicable √ Not applicable
(II) Changes in the total number of ordinary shares and shareholder structure of the Companyand changes in the structure of assets and liabilities of the Company
□ Applicable √ Not applicable
(III) Existing internal employee shares
□ Applicable √ Not applicable
III. Shareholder and Beneficial Controller(I) Total number of shareholders
| Total number of shareholders of ordinary shares as at the end of the Reporting Period | 30,104 |
| Total number of shareholders of ordinary shares at the end of last month prior to the disclosure date of this annual report | 30,622 |
| Total number of shareholders of preferred shares whose voting rights have been restored as at the end of the Reporting Period | 0 |
| Total number of shareholders of preferred shares whose voting rights have been restored at the end of last month prior to the disclosure date of this annual report | 0 |
(II) Table of shareholdings of the top ten shareholders and the top ten shareholders of shares incirculation (or shareholders not subject to selling restrictions) as at the end of the ReportingPeriod
Unit: share
| Shareholdings of the top ten shareholders (exclusive of shares lent in refinancing) | ||||||||
| Name of shareholder (full name) | Change during the Reporting Period | Number of shares held as at the end of the period | Percentage (%) | Number of shares held subject to selling restrictions | Pledged, marked, or frozen | Nature of shareholder | ||
| Status of share | Quantity | |||||||
| M&G Holdings (Group) Co., Ltd. | 0 | 536,000,000 | 57.85 | 0 | No | 0 | Domestic nonstate-owned legal person | |
| Hong Kong Securities Clearing Company Limited | -26,046,207 | 41,055,987 | 4.43 | 0 | No | 0 | Others | |
| Industrial and Commercial Bank of China Limited-Invesco Great Wall Emerging Mature and Hybrid Equity Investment Funds（中国工商银行股份有限公司－景顺长城新兴成长混合型证券投资基金） | 458,000 | 29,957,915 | 3.23 | 0 | No | 0 | Others | |
| Bank of China Limited-Invesco Great Wall Ding Yi Hybrid Security Investment Fund (LOF)（中国银行股份有限公司－景顺长城鼎益混合型证券投资基金） | 0 | 14,671,302 | 1.58 | 0 | No | 0 | Others | |
| Shanghai Keying Investment Management Office (L.P.) | 0 | 14,662,558 | 1.58 | 0 | No | 0 | Others | |
| Shanghai Jiekui Investment Management Firm (L.P.) | 0 | 14,493,900 | 1.56 | 0 | No | 0 | Others | |
| Chen Huxiong | 0 | 13,609,300 | 1.47 | 0 | No | 0 | Domestic natural person | |
| Chen Huwen | 0 | 13,609,300 | 1.47 | 0 | No | 0 | Domestic natural person | |
| China Construction Bank Corporation －Lombarda China Senior Care Industry Mixed Securities Investment Fund (中国建设银行股份有限公司－中欧养老产业混合型证券投资基金) | 13,408,237 | 13,408,237 | 1.45 | 0 | No | 0 | Others | |
| Kuwait Investment Authority－Own Capital | 1,529,266 | 9,534,553 | 1.03 | 0 | No | 0 | Others | |
| Shareholdings of the top ten shareholders of non-restricted circulating shares | ||||||||
| Name of shareholder | Number of non-restricted circulating shares held | Type and number of shares | ||||||
| Type | Quantity | |||||||
| M&G Holdings (Group) Co., Ltd. | 536,000,000 | Ordinary RMB Shares | 536,000,000 | |||||
| Hong Kong Securities Clearing Company Limited | 41,055,987 | Ordinary RMB Shares | 41,055,987 | |||||
| Industrial and Commercial Bank of China Limited-Invesco Great Wall Emerging Mature and Hybrid Equity Investment Funds（中国工商银行股份有限公司－景顺长城新兴成长混合型证券投资基金） | 29,957,915 | Ordinary RMB Shares | 29,957,915 |
| Bank of China Limited-Invesco Great Wall Ding Yi Hybrid Security Investment Fund (LOF)（中国银行股份有限公司－景顺长城鼎益混合型证券投资基金） | 14,671,302 | Ordinary RMB Shares | 14,671,302 |
| Shanghai Keying Investment Management Office (L.P.) | 14,662,558 | Ordinary RMB Shares | 14,662,558 |
| Shanghai Jiekui Investment Management Firm (L.P.) | 14,493,900 | Ordinary RMB Shares | 14,493,900 |
| Chen Huxiong | 13,609,300 | Ordinary RMB Shares | 13,609,300 |
| Chen Huwen | 13,609,300 | Ordinary RMB Shares | 13,609,300 |
| China Construction Bank Corporation －Lombarda China Senior Care Industry Mixed Securities Investment Fund (中国建设银行股份有限公司－中欧养老产业混合型证券投资基金) | 13,408,237 | Ordinary RMB Shares | 13,408,237 |
| Kuwait Investment Authority－Own Capital | 9,534,553 | Ordinary RMB Shares | 9,534,553 |
| Special repurchase account of the top ten shareholders | Not applicable | ||
Explanation on the above-mentioned shareholders'entrusting voting rights, accepting voting rightsentrusted and waiver of voting rights
| Not applicable | |
| Explanation on the related relationship or parties acting in concert among the above shareholders | There is related relationship among the shareholders—M&G Group, Keying Investment, Jiekui Investment, Chen Huwen, and Chen Huxiong. Chen Huwen and Chen Huxiong are parties acting in concert. Save as the above, the Company is not aware of any related relationship or parties acting in concert as set out in Measures for the Administration of the Takeover of Listed Companies among the aforesaid shareholders. |
| Explanation on the preference shareholders with voting rights restored and their shareholdings | Not applicable |
Top ten shareholders involved in refinancing shares lending
□ Applicable √ Not applicable
Changes in the top ten shareholders compared with the prior period
√ Applicable □ Not applicable
Unit: share
| Changes in the top ten shareholders compared with the end of the prior period | |||||
| Full name of shareholder | Newly added to/exiting from the top ten shareholders in the Reporting Period | Shares lent in refinancing and not yet returned at the period-end | Shares in the common account and credit account plus shares lent in refinancing and not yet returned at the period-end | ||
| Total shares | As % of total share capital | Total shares | As % of total share capital | ||
| China Construction Bank Corporation －Lombarda China Senior Care Industry Mixed Securities Investment Fund (中国建设银行股份有限公司－中欧养老产业混合型证券投资基金) | Newly added | 0 | 0 | 13,408,237 | 1.45 |
| Kuwait Investment Authority－Own Capital | Newly added | 0 | 0 | 9,534,553 | 1.03 |
| Aberdeen Standard Investments (Asia) Limited - Aberdeen Standard - China A Share Fund | Exiting | 0 | 0 | 8,685,369 | 0.94 |
| Chen Xueling | Exiting | 0 | 0 | 8,100,000 | 0.87 |
Shareholdings of the top ten shareholders subject to trading moratorium and the condition of tradingmoratorium
√ Applicable □ Not applicable
Unit: share
| No. | Name of shareholder subject to selling restrictions | Number of shares held subject to selling restrictions | Available-for-listing-and-trading conditions of shares held subject to selling restriction | Selling restrictions | |
| Available-for-listing-and-trading time | Number of new available-for-listing-and-trading shares | ||||
| 1 | Incentive objects of restricted shares in 2020 | 2,768,150 | Equity incentive selling restrictions | ||
| Explanation on the related relationship or parties acting in concert among the above shareholders | Not applicable | ||||
Note: The restricted stocks granted by the equity incentive plan implemented in 2020 must beunlocked in batches in accordance with the Company's 2020 Restricted Share Incentive Plan.
(III) Strategic investors or general legal persons becoming the top ten shareholders because ofplacing of new shares
□ Applicable √ Not applicable
IV. Controlling Shareholder and Beneficial Controllers(I) Controlling shareholder1 Legal person
√ Applicable □ Not applicable
| Name | M&G Holdings (Group) Co., Ltd. |
| Person in charge of the Company or legal representative | Chen Huxiong |
| Establishment date | 2007-5-10 |
| Main operation businesses | Industrial investment, infrastructure investment, consultation for investment information (except broker), consultation for enterprise management and relevant businesses, domestic trade (excluding projects with national special approval) (For the above items subject to licensing or permit, relevant approval must be obtained prior to operation) |
| Equity interests of other domestic and overseas listed companies controlled or invested during the Reporting Period | No |
| Other explanations | No |
2 Natural person
□ Applicable √ Not applicable
3 Special explanation on the Company not having controlling shareholders
□ Applicable √ Not applicable
4 Explanation of the change in controlling shareholders during the Reporting Period
□ Applicable √ Not applicable
5 Diagram of the ownership and controlling relationship between the Company and its
controlling shareholders
√ Applicable □ Not applicable
M&G Group
M&G Stationery
(II) Beneficial controllers1 Legal person
□ Applicable √ Not applicable
2 Natural person
√ Applicable □ Not applicable
| Name | Chen Huwen |
| Nationality | China |
| Acquire right of residence in other countries or regions or not | No |
| Main job and title | Chairman of the Board of Shanghai M&G Stationery Inc. |
| Shareholdings in other domestic or overseas listed companies over the past 10 years | No |
| Name | Chen Huxiong |
| Nationality | China |
| Acquire right of residence in other countries or regions or not | Yes |
| Main job and title | Vice-chairman of the Board and CEO of Shanghai M&G Stationery Inc. |
| Shareholdings in other domestic or overseas listed companies over the past 10 years | No |
| Name | Chen Xueling |
| Nationality | China |
| Acquire right of residence in other countries or regions or not | No |
| Main job and title | Chairman of the Board and vice president of Shanghai M&G Stationery Inc. |
| Shareholdings in other domestic or overseas listed companies over the past 10 years | No |
3 Special explanation on the Company not having beneficial controllers
□ Applicable √ Not applicable
4 Explanation of the change of the Company's control during the Reporting Period
□ Applicable √ Not applicable
5 Diagram of the ownership and controlling relationship between the Company and its
beneficial controllers
√ Applicable □ Not applicable
ChenXueling
ChenHuwen
ChenHuxiong
M&GGroup
KeyingInvestment
JiekuiInvestment
M&G
Stationery
6 Control of the Company by beneficial controllers by way of trust or other means of assetmanagement
□ Applicable √ Not applicable
(III) Other explanation regarding the controlling shareholders and the beneficial controllers
□ Applicable √ Not applicable
V. The Total Shares Pledged by the Controlling Shareholder or the First Majority Shareholder andthe Person Acting in Concert Account for More Than 80% of the Company’s Shares Held byThem
□ Applicable √ Not applicable
VI. Other Legal Person Shareholders with More Than 10% Shareholdings
□ Applicable √ Not applicable
VII. Explanation on Limitation on Reduction of Shareholding
□ Applicable √ Not applicable
VIII. Implementation of Share Repurchase during the Reporting Period
√ Applicable □ Not applicable
Unit: 00’000’000 Currency: RMB
| Name of the share repurchase plan | Plan for Share Repurchase through the Stock Exchange |
| Date of the disclosure of the share repurchase plan | 29 October 2022 |
| Number of shares to be repurchased and that as % of the total share capital | 0.25-0.50 |
| Amount to be used for the share repurchase | 1.5-3.0 |
57.85%
| 57.85% | 1.58% | 1.56% | ||
Planned repurchase periodWithin 6 months starting from the date of theshare repurchase plan’s approval at the 18
th
meeting of the 5
thsession of Board of Directors
| Purpose of the repurchased shares | To be used as equity incentives or in employee stock ownership plans |
| Number of shares that have been repurchased | 657,975 |
| Number of shares that have been repurchased as % of the total underlying shares of the equity incentive plan (if any) | |
| Progress on reduction of repurchased shares through the stock exchange | Not applicable |
Section VIII Preferred Shares
□ Applicable √ Not applicable
Section IX Bonds
I. Enterprise Bonds, Corporate Bonds and Non-financial Enterprise Debt Financing Instruments
□ Applicable √ Not applicable
II. Convertible Corporate Bonds
□ Applicable √ Not applicable
Section X Financial ReportI. Auditor’s Report
√ Applicable □ Not applicable
Xin Kuai Shi Bao Zi [2024] No. ZA10382
To the shareholders of Shanghai M&G Stationery Inc.:
I. Audits' OpinionWe have audited the accompanying financial statements of Shanghai M&G Stationery Inc.(hereinafter referred to as "M&G"), which comprise the consolidated and parent company's balancesheets as at 31 December 2023, the consolidated and parent company's income statements, theconsolidated and parent company's cash flow statements, and the consolidated and parent company'sstatements of changes in shareholders' equity for the year of 2023, as well as notes to financialstatements.In our opinion, the accompanying financial statements were prepared in accordance with theAccounting Standards for Business Enterprises in all material aspects and give a true and fair view of theconsolidated and parent company's financial position of M&G as at 31 December 2023 and of itsconsolidated and parent company's operating results and cash flows for the year of 2023.
II. Basis of Auditors' OpinionWe have conducted our audit in accordance with the Chinese Auditing Standards for CertifiedPublic Accountants. The "Responsibilities of Certified Public Accountants for Auditing of FinancialStatements" in the auditor's report further illustrate our responsibilities under those standards. Inaccordance with the Code of Professional Ethics of Chinese Certified Public Accountants, we areindependent of M&G and have performed other responsibilities in respect of professional ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance inour audit of the financial statements for the current period. These matters were addressed in the contextof our audit of the financial statements as a whole and, in forming our opinion thereon, we do notprovide a separate opinion on these matters.The key audit matters identified in our audit are summarized as follows:
| Key audit matters | How our audit addressed the key audit matter |
| (I) Recognition of the revenue | |
| Please refer to notes to financial statements for accounting policies set out in "III Significant Accounting Policies and Accounting Estimates" (XXV) and "V Notes to Consolidated Financial Statements" (XXXXI). M&G mainly specializes in selling stationery and office supplies. In 2023, M&G's revenue from principal business in sales recognition amounted to RMB23,302.6559 million. M&G recognized revenue based on the expected amount of consideration that it is entitled to | 1. We understood and evaluated design of the key internal control designed by management and we tested the effectiveness of implementing key controls; 2. We inspected customer contracts, on a sample basis, to identify terms and conditions related to the transfer of control over the goods, and assessed the timing of revenue recognition with reference to the requirements of prevailing accounting standards; 3. We selected samples for revenue transactions recorded during the current year, with invoices, sales contracts, goods delivery notes or transport documents to assess whether the related revenue was recognized in accordance with M&G's |
| receive when the customer obtains control of the relevant products or services. Since revenue is one of the key performance indicators of M&G, there is possibly inherent risk of inappropriately recognizing revenue to reach specific purpose in revenue recognition made based on the sales group of distributor; there is possibly potential risk of material misstatement in revenue recognition made based on the sales group of end customer because it involves many transactions with small amount for each transaction, so we recognized revenue recognition as a key audit matter. | revenue recognition accounting policies; 4. We performed analytical procedures on revenue and cost, including analysis of revenue, cost, gross profit margin fluctuations in each month of the current period, and performed analysis on sales model to observe whether there is any abnormal transaction; 5. We took samples from revenue transactions that took place shortly before and after the balance sheet date, by checking delivery orders and other supportive documents to assess whether revenue was recognized in the correct accounting period. 6. We evaluated the accuracy and authenticity of the revenue amount by implementing the letter verification procedure based on the balances of accounts receivable from major customers and checking goods return after the period. |
| (II) Anticipated credit loss of accounts receivable | |
| Please refer to notes to financial statements for accounting policies set out in "III Significant Accounting Policies and Accounting Estimates" (X) and "V Notes to Consolidated Financial Statements" (IV). As at 31 December 2023, balance of accounts receivable amounted to RMB3,656.5116 million, and provision made for credit impairment loss of accounts receivable amounted to RMB69.0418 million. M&G measured provision for loss of accounts receivable in accordance with amount of anticipated credit loss in the entire lifetime. The anticipated credit loss requires the management to take into consideration of forward-looking information apart from combining historical experience and current situations, involving lots of estimation and judgment, so we recognized anticipated credit loss of accounts receivable as a key audit matter. | 1. We understood and evaluated design of the key internal control regarding impairment of financial assets (including accounts receivable) designed by management and we tested the effectiveness of implementing key controls; 2. We evaluated rationality of the estimation on anticipated credit loss of accounts receivable, including judgment of forward-looking information; basis of estimation on anticipated credit loss made on a single item, and basis of estimation on anticipated credit loss made on portfolio, including rationality of the division for portfolio; 3. We reviewed credit risk assessment performed by the management on internal and external environment of M&G's operation, integrity of different customers, repayment history, repayment capacity, and historical experience in credit loss; 4. We recalculated to check whether measurement of provision for loss made by the management on single and portfolio accounts receivable is consistent with the amount of anticipated credit loss in the entire existing period. |
IV. Other InformationThe management of M&G (hereinafter referred to as the "management") is responsible for the otherinformation which comprises all the information covered in M&G 2023 Annual Report other than thefinancial statements and this auditor's report.
Our audit opinion on the financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.In conjunction with our audit to the financial statements, our responsibility is to read the otherinformation. During the process, we considered whether there is material inconsistency or there is likelymaterial misstatement between the other information and the financial statements or the information weobtained during the audit.
As we have performed the work on the other information obtained before the date of our auditor'sreport, we shall report if we confirmed there was a material misstatement among the other information.We have nothing needed to be reported on this case.
V. Responsibilities of the Management and Governing Bodies for the Financial StatementsThe management shall be responsible for the preparation of financial statements in accordance withthe Accounting Standards for Business Enterprises to enable them to be fairly reflected, and to design,implement and maintain the necessary internal controls so that there is no material misstatement due tofraud or error in the financial statements.
In the preparation of the financial statements, the management is responsible for assessing M&G'scontinuous operating capacity, disclosing matters relating to continuous operations (if applicable), andapplying the continuing operating assumptions unless the management plans to perform liquidation,cease operation or otherwise has no realistic choice.The governing bodies are responsible for overseeing the financial reporting process of M&G.
VI. Responsibilities of CPA for the Audit of the Financial Statements
Our objective is to obtain reasonable assurance of the financial statements as a whole whether thereis a material misstatement due to fraud or error and to issue an auditor's report containing audit opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with China Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with the auditing standards, we exercised professional judgmentand maintained professional skepticism throughout the audit. We also performed the following works:
(1) to identify and assess the risks of material misstatement of the financial statements, whether dueto fraud or error; design and perform audit procedures responsive to those risks; and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error, as fraud mayinvolve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) to understand the internal control related to the audit to design the appropriate audit procedures.
(3)to evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the management.
(4) to draw a conclusion on the appropriateness of the management's use of the going concern basisof accounting and, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the ability of M&G to continue as a goingconcern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate,to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause M&G to cease to continue as a goingconcern.
(5) to evaluate the overall presentation, structure and content (including disclosure) of the financialstatements, and to assess whether the financial statements reflect the related transactions and eventsfairly.
(6) to obtain sufficient and appropriate audit evidence of the financial information of the entity orbusiness activity of the M&G in order to express an opinion on the consolidated financial statements.We are responsible for directing, supervising and performing group audits. We take full responsibilityfor the audit opinion.
We communicated with the governing bodies regarding, among other matters, the planned scopeand timing of the audit and significant audit findings, including any significant deficiencies in internalcontrol that we identify during the audit.
We also provided a statement to management on compliance with ethical requirements related toindependence, and communicated with governing bodies about all relationships and other matters thatmay be reasonably considered to affect our independence, as well as related precautions.From the matters we had discussed with the governing bodies, we confirmed which matters weremost important to the audit of the financial statements for the current period and thus constituted the keyaudit matters. We set out these matters in the auditor's report. Unless the disclosure of these matters areforbidden by the laws and regulations, or, in rare cases, if it is reasonably expected that the negativeimpacts caused by discussing certain matters in the auditor's report would be larger than the benefits forpublic interest, we shall not disclose the matters in the auditor's report under such circumstances.
| BDO China Shu Lun Pan CPAs (LLP) | Chinese Certified Public Accountant: Chen Luying (Engagement Partner) |
| Chinese Certified Public Accountant: Fang Ning | |
| Shanghai? China | 28 March 2024 |
II. Financial Statements
Consolidated Balance Sheet31 December 2023
Prepared by: Shanghai M&G Stationery Inc.
Unit: Yuan Currency: RMB
| Item | Notes | 31 December 2023 | 31 December 2022 |
| Current assets: | |||
| Cash and equivalents | VII. 1 | 5,239,121,517.08 | 3,363,089,177.24 |
| Transaction settlement funds | |||
| Lending funds | |||
| Held-for-trading financial assets | VII. 2 | 1,402,518,595.12 | 1,627,645,879.64 |
| Derivative financial assets | |||
| Bills receivable | VII. 4 | 38,196,088.94 | 37,460,749.20 |
| Accounts receivable | VII. 5 | 3,587,469,805.30 | 2,956,650,584.96 |
| Receivables financing | VII. 7 | 39,533,283.51 | 21,664,621.88 |
| Prepayment | VII. 8 | 72,862,234.83 | 83,452,245.56 |
| Premium receivable | |||
| Reinsurance premium receivable | |||
| Reserves for reinsurance contract receivable | |||
| Other receivables | VII. 9 | 226,419,933.52 | 208,957,374.58 |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Financial assets purchased under agreements to resell | |||
| Inventories | VII. 10 | 1,578,089,411.98 | 1,625,162,456.68 |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | VII. 12 | 1,360,640.55 | 1,360,640.55 |
| Other current assets | VII. 13 | 90,964,160.29 | 72,438,325.58 |
| Total current assets | 12,276,535,671.12 | 9,997,882,055.87 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investments | VII. 17 | 37,232,112.47 | 39,726,537.12 |
| Investments in other equity instruments | VII. 18 | 9,175,073.42 | 8,411,887.95 |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | VII. 21 | 1,634,646,959.11 | 1,744,358,557.28 |
| Construction in progress | VII. 22 | 95,391,194.19 | 71,901,168.18 |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | VII. 25 | 400,835,370.95 | 335,796,074.68 |
| Intangible assets | VII. 26 | 447,302,419.37 | 417,768,644.64 |
| Development expenses | |||
| Goodwill | VII. 27 | 63,529,740.20 | 63,529,740.20 |
| Long-term prepaid expenses | VII. 28 | 114,101,678.30 | 120,284,544.92 |
| Deferred income tax assets | VII. 29 | 223,009,489.32 | 215,879,357.26 |
| Other non-current assets | VII. 30 | 12,202,603.55 | 7,054,811.39 |
| Total non-current assets | 3,037,426,640.88 | 3,024,711,323.62 | |
| Total assets | 15,313,962,312.00 | 13,022,593,379.49 | |
| Current liabilities: | |||
| Short-term borrowings | VII. 32 | 190,174,166.67 | 189,350,225.65 |
| Borrowings from central bank | |||
| Placements from banks and other | |||
| financial institutions | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | VII. 34 | 1,357,106.71 | 881,465.28 |
| Bills payable | |||
| Accounts payable | VII. 36 | 4,854,339,509.13 | 3,998,633,387.71 |
| Accounts received in advance | |||
| Contract liabilities | VII. 38 | 106,038,218.29 | 81,745,797.60 |
| Financial assets sold under repurchase agreements | |||
| Deposits from customers and other banks | |||
| Brokerage for trading securities | |||
| Brokerage for underwriting securities | |||
| Employee benefits payable | VII. 39 | 196,177,758.05 | 181,863,963.94 |
| Taxes payable | VII. 40 | 312,264,527.42 | 198,479,439.43 |
| Other payables | VII. 41 | 537,102,511.17 | 492,874,360.46 |
| Including: Interest payable | |||
| Dividend payable | |||
| Fees and commissions payable | |||
| Reinsured accounts payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | VII. 43 | 222,168,448.30 | 190,502,470.68 |
| Other current liabilities | VII. 44 | 114,591,240.07 | 79,340,113.68 |
| Total current liabilities | 6,534,213,485.81 | 5,413,671,224.43 | |
| Non-current liabilities: | |||
| Reserves for insurance contracts | |||
| Long-term borrowings | VII. 45 | 30,027,500.01 | |
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | VII. 47 | 198,614,205.74 | 144,951,146.72 |
| Long-term payable | |||
| Long-term employee benefits payable | |||
| Estimated liabilities | VII. 50 | 14,922,058.45 | |
| Deferred income | VII. 51 | 34,349,803.59 | 46,210,203.99 |
| Deferred income tax liabilities | VII. 29 | 165,592,520.47 | 150,660,684.23 |
| Other non-current liabilities | |||
| Total non-current liabilities | 428,584,029.81 | 356,744,093.39 | |
| Total liabilities | 6,962,797,515.62 | 5,770,415,317.82 | |
| Owner's equity (or shareholders' equity): | |||
| Share capital | VII. 53 | 926,596,570.00 | 926,933,050.00 |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | VII. 55 | 373,093,781.49 | 427,940,233.12 |
| Less: Treasury shares | VII. 56 | 216,941,657.70 | 191,842,243.44 |
| Other comprehensive income | VII. 57 | -945,577.17 | -307,971.25 |
| Special reserve | |||
| Surplus reserve | VII. 59 | 464,201,654.91 | 464,201,654.91 |
| General risk provision | |||
| Undistributed profit | VII. 60 | 6,287,174,031.99 | 5,222,409,808.33 |
| Total equity attributable to the owners of the parent company | 7,833,178,803.52 | 6,849,334,531.67 | |
| Minority equity | 517,985,992.86 | 402,843,530.00 | |
| Total owners' equity (or shareholders' equity) | 8,351,164,796.38 | 7,252,178,061.67 | |
| Total liabilities and owner's equity (or shareholders' equity) | 15,313,962,312.00 | 13,022,593,379.49 | |
The chairman of the Company: Chen Huwen CFO of the Company: Tang XianbaoPerson in charge of Accounting Department: Zhai Yu
Parent Company's Balance Sheet
31 December 2023
Prepared by: Shanghai M&G Stationery Inc.
Unit: Yuan Currency: RMB
| Item | Notes | 31 December 2023 | 31 December 2022 |
| Current assets: | |||
| Cash and equivalents | 2,810,505,828.98 | 1,855,707,174.82 | |
| Held-for-trading financial assets | 1,098,679,879.15 | 1,326,556,840.76 | |
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | XIX. 1 | 218,745,403.54 | 167,299,219.56 |
| Receivables financing | |||
| Prepayment | 14,820,327.83 | 11,224,884.39 | |
| Other receivables | XIX. 2 | 921,226,487.12 | 781,222,709.03 |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Inventories | 407,860,444.17 | 438,133,785.64 | |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | 1,360,640.55 | 1,360,640.55 | |
| Other current assets | 160,219,377.77 | 156,495,400.96 | |
| Total current assets | 5,633,418,389.11 | 4,738,000,655.71 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investments | XIX. 3 | 1,643,810,516.06 | 1,579,882,367.34 |
| Investments in other equity instruments | 9,175,073.42 | 8,411,887.95 | |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | 1,312,651,259.59 | 1,406,922,226.18 | |
| Construction in progress | 80,558,035.05 | 60,741,537.96 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 45,649,712.84 | 13,284,607.91 | |
| Intangible assets | 167,005,889.18 | 168,644,888.50 | |
| Development expenses | |||
| Goodwill | |||
| Long-term prepaid expenses | 35,648,356.38 | 49,798,955.29 | |
| Deferred income tax assets | 11,745,589.36 | 15,690,882.38 | |
| Other non-current assets | 3,281,493.90 | 3,908,784.84 | |
| Total non-current assets | 3,309,525,925.78 | 3,307,286,138.35 | |
| Total assets | 8,942,944,314.89 | 8,045,286,794.06 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 256,315,615.85 | 216,401,089.09 | |
| Accounts received in advance | |||
| Contract liabilities | 38,565,610.35 | 28,395,398.24 | |
| Employee benefits payable | 112,383,035.60 | 95,792,215.59 | |
| Taxes payable | 140,462,466.72 | 80,191,373.52 | |
| Other payables | 1,444,091,922.61 | 1,157,206,059.07 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | 19,133,612.70 | 5,894,935.53 | |
| Other current liabilities | 4,534,103.70 | 3,347,508.96 | |
| Total current liabilities | 2,015,486,367.53 | 1,587,228,580.00 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | 22,215,282.52 | 5,655,050.39 | |
| Long-term payable | 252,000,000.00 | 252,000,000.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | 24,881,079.81 | 25,253,594.01 | |
| Deferred income tax liabilities | 12,285,699.82 | 6,698,000.50 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 311,382,062.15 | 289,606,644.90 | |
| Total liabilities | 2,326,868,429.68 | 1,876,835,224.90 | |
| Owner's equity (or shareholders' equity): | |||
| Share capital | 926,596,570.00 | 926,933,050.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 558,113,091.00 | 616,012,396.67 | |
| Less: Treasury shares | 216,941,657.70 | 191,842,243.44 | |
| Other comprehensive income | 5,790,535.88 | 5,187,211.48 | |
| Special reserve | |||
| Surplus reserve | 463,872,795.00 | 463,872,795.00 | |
| Undistributed profit | 4,878,644,551.03 | 4,348,288,359.45 | |
| Total owners' equity (or shareholders' equity) | 6,616,075,885.21 | 6,168,451,569.16 | |
| Total liabilities and owner's equity (or shareholders' equity) | 8,942,944,314.89 | 8,045,286,794.06 | |
The chairman of the Company: Chen Huwen CFO of the Company: Tang XianbaoPerson in charge of Accounting Department: Zhai Yu
Consolidated Income StatementJanuary - December 2023
Unit: Yuan Currency: RMB
| Item | Notes | 2023 | 2022 |
| I. Total revenue | 23,351,304,328.03 | 19,996,315,623.32 | |
| Including: Revenue | VII. 61 | 23,351,304,328.03 | 19,996,315,623.32 |
| Interest income | |||
| Premium received | |||
| Handling fee and commission income | |||
| II. Total operating costs | 21,534,011,700.75 | 18,494,426,971.33 | |
| Including: Operating cost | VII. 61 | 18,946,902,789.11 | 16,124,239,558.86 |
| Interest expenses | |||
| Handling fee and commission expenses | |||
| Payment on surrenders | |||
| Net compensation expenses | |||
| Net provision drawn for insurance |
| contract | |||
| Policy dividend expenses | |||
| Reinsurance expenses | |||
| Taxes and surcharges | VII. 62 | 96,774,441.57 | 75,588,524.33 |
| Selling expenses | VII. 63 | 1,550,242,913.35 | 1,358,215,903.43 |
| Administrative expenses | VII. 64 | 817,243,965.61 | 794,196,566.05 |
| R&D expenses | VII. 65 | 177,525,143.59 | 183,553,643.90 |
| Financial expenses | VII. 66 | -54,677,552.48 | -41,367,225.24 |
| Including: Interest expenses | 24,995,988.63 | 14,760,179.42 | |
| Interest income | 76,346,842.50 | 38,938,757.91 | |
| Add: Other gains | VII. 67 | 96,557,027.08 | 85,981,142.12 |
| Income from investment ("-" refers to loss) | VII. 68 | -3,932,454.66 | 275,500.09 |
| Including: Investment income from associates and joint ventures | -6,197,315.17 | -1,731,132.47 | |
| Derecognition of income from financial assets at amortized cost | |||
| Exchange gains ("-" refers to loss) | |||
| Net gain on exposure hedging ("-" refers to loss) | |||
| Gain on change in fair value ("-" refers to loss) | VII. 70 | 27,190,625.42 | 31,843,788.96 |
| Losses on credit impairment ("-" refers to loss) | VII. 71 | -21,830,178.85 | 7,200,691.02 |
| Losses on assets impairment ("-" refers to loss) | VII. 72 | 11,744,806.55 | -18,667,188.79 |
| Gains from asset disposal ("-" refers to loss) | VII. 73 | 3,588,809.94 | -31,622.53 |
| III. Operating profits ("-" refers to loss) | 1,930,611,262.76 | 1,608,490,962.86 | |
| Add: Non-operating profits | VII. 74 | 59,663,963.46 | 68,537,627.40 |
| Less: Non-operating expenses | VII. 75 | 10,802,453.44 | 12,132,136.15 |
| IV. Total profits ("-" refers to total loss) | 1,979,472,772.78 | 1,664,896,454.11 | |
| Less: Income tax expenses | VII. 76 | 335,533,770.88 | 309,517,621.73 |
| V. Net profits ("-" refers to net loss) | 1,643,939,001.90 | 1,355,378,832.38 | |
| (I) Classified by operation continuity | |||
| 1. Net profits from continuing activities ("-" refers to net loss) | 1,643,939,001.90 | 1,355,378,832.38 | |
| 2. Net profits from discontinuing activities ("-" refers to net loss) | |||
| (II) Classified by ownership | |||
| 1. Net profits attributable to shareholders of the parent company ("-" refers to net loss) | 1,526,801,727.16 | 1,282,456,788.17 | |
| 2. Profit or loss attributable to minority shareholders ("-" refers to net loss) | 117,137,274.74 | 72,922,044.21 | |
| VI. Net amount of other comprehensive income after tax | -812,726.67 | -461,439.48 | |
| (I) Net amount of other comprehensive income after tax attributable to owners of the parent company | -637,605.92 | -572,013.39 | |
| 1. Other comprehensive income not to be reclassified into profit or loss | 648,707.65 | 1,416,512.94 | |
| (1) Change in re-measurement of defined benefit plans | |||
| (2) Other comprehensive income that may not be reclassified to profit or loss under equity method | |||
| (3) Change in fair value of investments in other equity instruments | 648,707.65 | 1,416,512.94 | |
| (4) Change in fair value of enterprise's own credit risk | |||
| 2. Other comprehensive income to be reclassified into profit or loss | -1,286,313.57 | -1,988,526.33 | |
| (1) Other comprehensive income that may | -45,383.25 | -55,032.21 | |
| be reclassified to profit or loss under equity method | |||
| (2) Change in fair value of other debt investments | |||
| (3) Amount included in other comprehensive income on reclassification of financial assets | |||
| (4) Credit impairment provisions of other debt investments | |||
| (5) Cash flow hedging reserve | 155,407.12 | -1,231,612.34 | |
| (6) Exchange differences from translation of financial statements | -1,396,337.44 | -701,881.78 | |
| (7) Others | |||
| (II) Net amount of other comprehensive income after tax attributable to minority shareholders | -175,120.75 | 110,573.91 | |
| VII. Total comprehensive income | 1,643,126,275.23 | 1,354,917,392.90 | |
| (I) Total comprehensive income attributable to owners of the parent company | 1,526,164,121.24 | 1,281,884,774.78 | |
| (II) Total comprehensive income attributable to minority shareholders | 116,962,153.99 | 73,032,618.12 | |
| VIII. Earnings per share: | |||
| (I) Basic earnings per share (Yuan/share) | 1.6577 | 1.3874 | |
| (II) Diluted earnings per share (Yuan/share) | 1.6577 | 1.3874 | |
In case of business combination under common control, net profit realized by the combined before thecombination in the period was nil; net profit realized by the combined in the previous period was nil.The chairman of the Company: Chen Huwen CFO of the Company: Tang XianbaoPerson in charge of Accounting Department: Zhai Yu
Income Statement of the Parent Company
January - December 2023
Unit: Yuan Currency: RMB
| Item | Notes | 2023 | 2022 |
| I. Revenue | XIX. 4 | 4,172,771,481.68 | 3,933,024,934.46 |
| Less: Operating cost | XIX. 4 | 2,310,747,422.30 | 2,098,941,558.83 |
| Taxes and surcharges | 38,660,604.35 | 33,602,007.79 | |
| Selling expenses | 271,931,282.04 | 232,058,903.83 | |
| Administrative expenses | 423,189,963.28 | 487,836,035.59 | |
| R&D expenses | 143,152,332.78 | 150,455,614.86 | |
| Financial expenses | -69,111,348.72 | -58,452,112.33 | |
| Including: Interest expenses | 2,186,262.69 | 3,736,490.90 | |
| Interest income | 62,635,566.35 | 48,906,629.71 | |
| Add: Other gains | 7,653,397.73 | 12,791,665.26 | |
| Income from investment ("-" refers to loss) | XIX. 5 | 4,391,935.55 | 610,779.67 |
| Including: Investment income from associates and joint ventures | -1,275,439.03 | -1,283,553.86 | |
| Derecognition of income from financial assets at amortized cost | |||
| Net gain on exposure hedging ("-" refers to loss) | |||
| Gain on change in fair value ("-" refers to loss) | 24,422,433.76 | 24,238,011.48 | |
| Losses on credit impairment ("-" refers to loss) | 1,152,223.14 | -1,553,929.01 | |
| Losses on assets impairment ("-" refers to loss) | 1,810,119.96 | -4,096,298.20 | |
| Gains from asset disposal ("-" refers to loss) | 1,515,065.96 | 569,278.29 | |
| II. Operating profits ("-" refers to loss) | 1,095,146,401.75 | 1,021,142,433.38 |
| Add: Non-operating profits | 56,350,575.24 | 53,039,286.31 | |
| Less: Non-operating expenses | 2,390,650.65 | 4,712,088.11 | |
| III. Total profits ("-" refers to total loss) | 1,149,106,326.34 | 1,069,469,631.58 | |
| Less: Income tax expenses | 156,712,631.26 | 141,658,287.94 | |
| IV. Net profits ("-" refers to net loss) | 992,393,695.08 | 927,811,343.64 | |
| (I) Net profits from continuing activities ("-" refers to net loss) | 992,393,695.08 | 927,811,343.64 | |
| (II) Net profits from discontinuing activities ("-" refers to net loss) | |||
| V. Net amount of other comprehensive income after tax | 603,324.40 | 1,361,480.73 | |
| (I) Other comprehensive income not to be reclassified into profit or loss | 648,707.65 | 1,416,512.94 | |
| 1. Change in re-measurement of defined benefit plans | |||
| 2. Other comprehensive income that may not be reclassified to profit or loss under equity method | |||
| 3. Change in fair value of investments in other equity instruments | 648,707.65 | 1,416,512.94 | |
| 4. Change in fair value of enterprise's own credit risk | |||
| (II) Other comprehensive income to be reclassified into profit or loss | -45,383.25 | -55,032.21 | |
| 1. Other comprehensive income that may be reclassified to profit or loss under equity method | -45,383.25 | -55,032.21 | |
| 2. Change in fair value of other debt investments | |||
| 3. Amount included in other comprehensive income on reclassification of financial assets | |||
| 4. Credit impairment provisions of other debt investments | |||
| 5. Cash flow hedging reserve | |||
| 6. Exchange differences from translation of financial statements | |||
| 7. Others | |||
| VI. Total comprehensive income | 992,997,019.48 | 929,172,824.37 | |
| VII. Earnings per share: | |||
| (I) Basic earnings per share (Yuan/share) | |||
| (II) Diluted earnings per share (Yuan/share) | |||
The chairman of the Company: Chen Huwen CFO of the Company: Tang XianbaoPerson in charge of Accounting Department: Zhai Yu
Consolidated Cash Flow Statement
January - December 2023
Unit: Yuan Currency: RMB
| Item | Notes | 2023 | 2022 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods or rendering of services | 25,681,461,458.93 | 21,340,101,499.49 | |
| Net increase in customer and interbank deposits | |||
| Net increase in borrowings from central bank | |||
| Net increase in placements from banks and other financial institutions | |||
| Cash received from premiums under original insurance contract | |||
| Net cash received from reinsurance business | |||
| Net increase in deposits of policy holders and investments | |||
| Cash received from interest, fees and commissions | |||
| Net increase in borrowings | |||
| Net increase in repurchase business capital | |||
| Net cash received from securities trading agency services | |||
| Tax rebates | 22,563,944.69 | 20,549,280.25 | |
| Other cash received from operating activities | VII. 78 | 2,087,543,362.67 | 1,923,748,053.94 |
| Sub-total of cash inflows from operating activities | 27,791,568,766.29 | 23,284,398,833.68 | |
| Cash paid for goods and services | 20,222,036,076.91 | 16,993,054,882.62 | |
| Net increase in customer loans and advances | |||
| Net increase in deposits with PBOC and interbank deposits | |||
| Cash paid for compensation payments under original insurance contract | |||
| Net increase in funds for lending | |||
| Cash paid for interests, handling charges and commissions | |||
| Cash paid for policy dividends | |||
| Cash paid to and on behalf of employees | 1,125,985,637.99 | 1,059,233,938.69 | |
| Taxes and fees paid | 888,950,487.89 | 1,018,359,606.33 | |
| Cash paid for other operating activities | VII. 78 | 2,937,995,946.41 | 2,861,966,578.96 |
| Sub-total of cash outflows from operating activities | 25,174,968,149.20 | 21,932,615,006.60 | |
| Net cash flow generated from operating activities | 2,616,600,617.09 | 1,351,783,827.08 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investments | 3,301,251,726.23 | 2,000,000,000.00 | |
| Cash received from returns on investments | 30,231,597.67 | 11,907,562.97 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 4,235,188.00 | 937,920.34 | |
| Net cash received from disposal of subsidiaries and other operating entities | 19,980,758.01 | ||
| Other cash received relating to investing activities | VII. 78 | 3,214,522.06 | |
| Sub-total of cash inflows from investing activities | 3,355,699,269.91 | 2,016,060,005.37 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 208,425,441.63 | 162,552,354.04 | |
| Cash paid for investment | 3,073,000,000.00 | 2,005,000,000.00 | |
| Net increase in pledged loans | |||
| Net cash paid for acquiring subsidiaries and other operating entities | 44,158,049.52 | ||
| Other cash paid relating to investing activities | |||
| Sub-total of cash outflows from investing activities | 3,325,583,491.15 | 2,167,552,354.04 | |
| Net cash flow generated from investing activities | 30,115,778.76 | -151,492,348.67 | |
| III. Cash flow generated from financing activities: | |||
| Proceeds received from financing activities | 1,500,000.00 | ||
| Including: Proceeds received by subsidiaries from minority shareholders' investment | 1,500,000.00 | ||
| Cash received from borrowings | 281,955,762.18 | 355,693,735.65 | |
| Other cash received from financing-related activities | |||
| Sub-total of cash inflows from financing activities | 281,955,762.18 | 357,193,735.65 | |
| Cash repayments of borrowings | 251,129,987.83 | 343,130,117.46 | |
| Dividends paid, profit distributed or interest paid | 469,820,485.84 | 563,214,251.05 | |
| Including: Dividend and profit paid by subsidiaries to minority shareholders | |||
| Other cash paid for financing-related activities | VII. 78 | 332,128,631.48 | 372,998,968.30 |
| Sub-total of cash outflows from financing activities | 1,053,079,105.15 | 1,279,343,336.81 | |
| Net cash flow from financing activities | -771,123,342.97 | -922,149,601.16 | |
| IV. Effects of exchange rate fluctuations on cash and cash equivalents | 4,472,840.91 | 10,392,751.10 | |
| V. Net increase in cash and cash equivalents | 1,880,065,893.79 | 288,534,628.35 | |
| Add: Cash and cash equivalents at the beginning of the period | 1,828,019,243.04 | 1,539,484,614.69 | |
| VI. Cash and cash equivalents at the end of the period | 3,708,085,136.83 | 1,828,019,243.04 |
The chairman of the Company: Chen Huwen CFO of the Company: Tang XianbaoPerson in charge of Accounting Department: Zhai Yu
Cash Flow Statement of the Parent Company
January - December 2023
Unit: Yuan Currency: RMB
| Item | Notes | 2023 | 2022 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods or rendering of services | 4,441,324,613.84 | 4,268,406,963.86 | |
| Tax rebates | 1,321,673.23 | ||
| Other cash received from operating activities | 1,489,601,241.95 | 1,151,255,589.19 | |
| Sub-total of cash inflows from operating activities | 5,930,925,855.79 | 5,420,984,226.28 | |
| Cash paid for goods and services | 2,362,608,779.17 | 2,211,589,298.25 | |
| Cash paid to and on behalf of employees | 543,052,695.19 | 530,587,450.71 | |
| Taxes and fees paid | 319,990,692.12 | 419,366,244.01 | |
| Cash paid for other operating activities | 1,275,677,186.75 | 1,486,214,809.44 | |
| Sub-total of cash outflows from operating activities | 4,501,329,353.23 | 4,647,757,802.41 | |
| Net cash flow generated from operating activities | 1,429,596,502.56 | 773,226,423.87 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investments | 3,300,000,000.00 | 1,800,000,000.00 | |
| Cash received from returns on investments | 25,966,769.95 | 8,036,532.48 | |
| Net cash received from disposal of fixed assets, intangible assets and other | 2,657,117.43 | 6,696,003.94 | |
| long-term assets | |||
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received relating to investing activities | 1,951,654.45 | ||
| Sub-total of cash inflows from investing activities | 3,328,623,887.38 | 1,816,684,190.87 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 120,641,964.87 | 88,125,567.05 | |
| Cash paid for investment | 3,093,000,000.00 | 1,740,000,000.00 | |
| Net cash paid for acquiring subsidiaries and other operating entities | 47,547,771.00 | ||
| Other cash paid relating to investing activities | |||
| Sub-total of cash outflows from investing activities | 3,261,189,735.87 | 1,828,125,567.05 | |
| Net cash flow generated from investing activities | 67,434,151.51 | -11,441,376.18 | |
| III. Cash flow generated from financing activities: | |||
| Proceeds received from financing activities | |||
| Cash received from borrowings | |||
| Other cash received from financing-related activities | |||
| Sub-total of cash inflows from financing activities | |||
| Cash repayments of borrowings | |||
| Dividends paid, profit distributed or interest paid | 464,614,476.85 | 556,647,354.00 | |
| Other cash paid for financing-related activities | 72,922,497.88 | 145,913,502.15 | |
| Sub-total of cash outflows from financing activities | 537,536,974.73 | 702,560,856.15 | |
| Net cash flow from financing activities | -537,536,974.73 | -702,560,856.15 | |
| IV. Effects of exchange rate fluctuations on cash and cash equivalents | 4,693,544.62 | 9,361,830.08 | |
| V. Net increase in cash and cash equivalents | 964,187,223.96 | 68,586,021.62 | |
| Add: Cash and cash equivalents at the beginning of the period | 852,461,455.25 | 783,875,433.63 | |
| VI. Cash and cash equivalents at the end of the period | 1,816,648,679.21 | 852,461,455.25 | |
The chairman of the Company: Chen Huwen CFO of the Company: Tang XianbaoPerson in charge of Accounting Department: Zhai Yu
Consolidated Statements of Changes in Owners' Equity
January - December 2023
Unit: Yuan Currency: RMB
| Item | 2023 | ||||||||||||||
| Equity attributable to owners of the parent company | Minority equity | Total equity attributable to owners | |||||||||||||
| Paid-up capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profit | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of last year | 926,933,050.00 | 427,940,233.12 | 191,842,243.44 | -307,971.25 | 464,201,654.91 | 5,222,409,808.33 | 6,849,334,531.67 | 402,843,530.00 | 7,252,178,061.67 | ||||||
| Add: Changes in accounting policies | |||||||||||||||
| Correction for previous errors | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the year | 926,933,050.00 | 427,940,233.12 | 191,842,243.44 | -307,971.25 | 464,201,654.91 | 5,222,409,808.33 | 6,849,334,531.67 | 402,843,530.00 | 7,252,178,061.67 | ||||||
| III. Increase and decrease for the period ("-" for decrease) | -336,480.00 | -54,846,451.63 | 25,099,414.26 | -637,605.92 | 1,064,764,223.66 | 983,844,271.85 | 115,142,462.86 | 1,098,986,734.71 | |||||||
| (I) Total comprehensive income | -637,605.92 | 1,526,801,727.16 | 1,526,164,121.24 | 116,962,153.99 | 1,643,126,275.23 | ||||||||||
| (II) Owner's contribution and capital reduction | -336,480.00 | -54,846,451.63 | 25,099,414.26 | -80,282,345.89 | -1,819,691.13 | -82,102,037.02 | |||||||||
| 1. Ordinary shares contributed by the owners | -336,480.00 | -9,237,846.00 | 25,099,414.26 | -34,673,740.26 | -34,673,740.26 | ||||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payments credited to owners' equity | -42,193,526.85 | -42,193,526.85 | -42,193,526.85 | ||||||||||||
| 4. Others | -3,415,078.78 | -3,415,078.78 | -1,819,691.13 | -5,234,769.91 | |||||||||||
| (III) Profit distribution | -462,037,503.50 | -462,037,503.50 | -462,037,503.50 | ||||||||||||
| 1. Withdrawal of surplus reserve | |||||||||||||||
| 2. Withdrawal of general risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -462,037,503.50 | -462,037,503.50 | -462,037,503.50 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-forward of owners' equity | |||||||||||||||
| 1. Transfer of capital reserve to capital (or share capital) | |||||||||||||||
| 2. Transfer of surplus reserve to capital (or share capital) | |||||||||||||||
| 3. Surplus reserve to cover loss | |||||||||||||||
| 4. Changes in defined benefit scheme carried forward to retained earnings | |||||||||||||||
| 5. Carry-forward of other comprehensive income to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Withdrawal for the period | |||||||||||||||
| 2. Utilization for the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of the period | 926,596,570.00 | 373,093,781.49 | 216,941,657.70 | -945,577.17 | 464,201,654.91 | 6,287,174,031.99 | 7,833,178,803.52 | 517,985,992.86 | 8,351,164,796.38 |
| Item | 2022 | ||||||||||||||
| Equity attributable to owners of the parent company | Minority equity | Total equity attributable to owners | |||||||||||||
| Paid-up capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profit | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of last year | 927,745,590.00 | 454,186,790.79 | 148,106,474.00 | 264,042.14 | 464,201,654.91 | 4,496,600,374.16 | 6,194,891,978.00 | 328,399,213.56 | 6,523,291,191.56 | ||||||
| Add: Changes in accounting policies | |||||||||||||||
| Correction for previous errors | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the year | 927,745,590.00 | 454,186,790.79 | 148,106,474.00 | 264,042.14 | 464,201,654.91 | 4,496,600,374.16 | 6,194,891,978.00 | 328,399,213.56 | 6,523,291,191.56 | ||||||
| III. Increase and decrease for the period ("-" for decrease) | -812,540.00 | -26,246,557.67 | 43,735,769.44 | -572,013.39 | 725,809,434.17 | 654,442,553.67 | 74,444,316.44 | 728,886,870.11 | |||||||
| (I) Total comprehensive income | -572,013.39 | 1,282,456,788.17 | 1,281,884,774.78 | 73,032,618.12 | 1,354,917,392.90 | ||||||||||
| (II) Owner's contribution and capital reduction | -812,540.00 | -26,246,557.67 | 43,735,769.44 | -70,794,867.11 | 1,411,698.32 | -69,383,168.79 | |||||||||
| 1. Ordinary shares contributed by the owners | -812,540.00 | -20,649,630.21 | 43,735,769.44 | -65,197,939.65 | 1,500,000.00 | -63,697,939.65 | |||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payments credited to owners' equity | 2,002,637.09 | 2,002,637.09 | 2,002,637.09 | ||||||||||||
| 4. Others | -7,599,564.55 | -7,599,564.55 | -88,301.68 | -7,687,866.23 | |||||||||||
| (III) Profit distribution | -556,647,354.00 | -556,647,354.00 | -556,647,354.00 | ||||||||||||
| 1. Withdrawal of surplus reserve | |||||||||||||||
| 2. Withdrawal of general risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -556,647,354.00 | -556,647,354.00 | -556,647,354.00 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-forward of owners' equity | |||||||||||||||
| 1. Transfer of capital reserve to capital (or share capital) | |||||||||||||||
| 2. Transfer of surplus reserve to capital (or share capital) | |||||||||||||||
| 3. Surplus reserve to cover loss | |||||||||||||||
| 4. Changes in defined benefit scheme carried forward to retained earnings | |||||||||||||||
| 5. Carry-forward of other comprehensive income to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Withdrawal for the period | |||||||||||||||
| 2. Utilization for the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of the period | 926,933,050.00 | 427,940,233.12 | 191,842,243.44 | -307,971.25 | 464,201,654.91 | 5,222,409,808.33 | 6,849,334,531.67 | 402,843,530.00 | 7,252,178,061.67 |
The chairman of the Company: Chen Huwen CFO of the Company: Tang Xianbao Person in charge of Accounting Department: Zhai Yu
Parent Company's Statement of Changes in Owners' Equity
January - December 2023
Unit: Yuan Currency: RMB
| Item | 2023 | ||||||||||
| Paid-up capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Total equity attributable to owners | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| I. Balance at the end of last year | 926,933,050.00 | 616,012,396.67 | 191,842,243.44 | 5,187,211.48 | 463,872,795.00 | 4,348,288,359.45 | 6,168,451,569.16 | ||||
| Add: Changes in accounting policies | |||||||||||
| Correction for previous errors | |||||||||||
| Others | |||||||||||
| II. Balance at the beginning of the year | 926,933,050.00 | 616,012,396.67 | 191,842,243.44 | 5,187,211.48 | 463,872,795.00 | 4,348,288,359.45 | 6,168,451,569.16 | ||||
| III. Increase and decrease for the period ("-" for decrease) | -336,480.00 | -57,899,305.67 | 25,099,414.26 | 603,324.40 | 530,356,191.58 | 447,624,316.05 | |||||
| (I) Total comprehensive income | 603,324.40 | 992,393,695.08 | 992,997,019.48 | ||||||||
| (II) Owner's contribution and capital reduction | -336,480.00 | -57,899,305.67 | 25,099,414.26 | -83,335,199.93 | |||||||
| 1. Ordinary shares contributed by the owners | -336,480.00 | -9,237,846.00 | 25,099,414.26 | -34,673,740.26 | |||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||
| 3. Amount of share-based payments credited to owners' equity | -42,193,526.85 | -42,193,526.85 | |||||||||
| 4. Others | -6,467,932.82 | -6,467,932.82 | |||||||||
| (III) Profit distribution | -462,037,503.50 | -462,037,503.50 | |||||||||
| 1. Withdrawal of surplus reserve | |||||||||||
| 2. Distribution to owners (or shareholders) | -462,037,503.50 | -462,037,503.50 | |||||||||
| 3. Others | |||||||||||
| (IV) Internal carry-forward of owners' equity | |||||||||||
| 1. Transfer of capital reserve to capital (or share capital) | |||||||||||
| 2. Transfer of surplus reserve to capital (or share capital) | |||||||||||
| 3. Surplus reserve to cover loss | |||||||||||
| 4. Changes in defined benefit scheme carried forward to retained earnings | |||||||||||
| 5. Carry-forward of other comprehensive income to retained earnings | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1. Withdrawal for the period | |||||||||||
| 2. Utilization for the period | |||||||||||
| (VI) Others | |||||||||||
| IV. Balance at the end of the period | 926,596,570.00 | 558,113,091.00 | 216,941,657.70 | 5,790,535.88 | 463,872,795.00 | 4,878,644,551.03 | 6,616,075,885.21 |
| Item | 2022 | ||||||||||
| Paid-up capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Total equity attributable to owners | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| I. Balance at the end of last year | 927,745,590.00 | 638,242,426.13 | 148,106,474.00 | 3,825,730.75 | 463,872,795.00 | 3,977,124,369.81 | 5,862,704,437.69 | ||||
| Add: Changes in accounting policies | |||||||||||
| Correction for previous errors | |||||||||||
| Others | |||||||||||
| II. Balance at the beginning of the year | 927,745,590.00 | 638,242,426.13 | 148,106,474.00 | 3,825,730.75 | 463,872,795.00 | 3,977,124,369.81 | 5,862,704,437.69 | ||||
| III. Increase and decrease for the period ("-" for decrease) | -812,540.00 | -22,230,029.46 | 43,735,769.44 | 1,361,480.73 | 371,163,989.64 | 305,747,131.47 | |||||
| (I) Total comprehensive income | 1,361,480.73 | 927,811,343.64 | 929,172,824.37 | ||||||||
| (II) Owner's contribution and capital reduction | -812,540.00 | -22,230,029.46 | 43,735,769.44 | -66,778,338.90 | |||||||
| 1. Ordinary shares contributed by the owners | -812,540.00 | -20,649,630.21 | 43,735,769.44 | -65,197,939.65 | |||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||
| 3. Amount of share-based payments credited to owners' equity | 2,002,637.09 | 2,002,637.09 | |||||||||
| 4. Others | -3,583,036.34 | -3,583,036.34 | |||||||||
| (III) Profit distribution | -556,647,354.00 | -556,647,354.00 | |||||||||
| 1. Withdrawal of surplus reserve | |||||||||||
| 2. Distribution to owners (or shareholders) | -556,647,354.00 | -556,647,354.00 | |||||||||
| 3. Others | |||||||||||
| (IV) Internal carry-forward of owners' equity | |||||||||||
| 1. Transfer of capital reserve to capital (or share capital) | |||||||||||
| 2. Transfer of surplus reserve to capital (or share capital) | |||||||||||
| 3. Surplus reserve to cover loss | |||||||||||
| 4. Changes in defined benefit scheme carried forward to retained earnings | |||||||||||
| 5. Carry-forward of other comprehensive income to retained earnings | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1. Withdrawal for the period | |||||||||||
| 2. Utilization for the period | |||||||||||
| (VI) Others | |||||||||||
| IV. Balance at the end of the period | 926,933,050.00 | 616,012,396.67 | 191,842,243.44 | 5,187,211.48 | 463,872,795.00 | 4,348,288,359.45 | 6,168,451,569.16 | ||||
The chairman of the Company: Chen Huwen CFO of the Company: Tang Xianbao Person in charge of Accounting Department: Zhai Yu
Notes to financial statements Page 96
III. General Information about the Company
1. Company profile
√ Applicable □ Not applicable
Shanghai M&G Stationery Inc. (hereinafter referred to as "Company" or the "Company") is alimited company that was approved by the Approval for the Initial Public Offering of Shanghai M&GStationery Inc. in [2015] No. 15 securities regulatory license of China Securities RegulatoryCommission in January 2015. The Company's business license No.: 91310000677833266F. In January2015, the Company was listed on Shanghai Stock Exchange. The industry where the Company operatesis manufacturing industry in products for stationery, arts, sports and entertainment.As of 31 December 2023, the Company issued a total of 926,596,570 shares accumulatively,including 2,768,150 restricted shares, and its registered capital amounted to RMB926,596,570. Theregistered address of the Company is Building 3, No. 3469 Jinqian Road, Fengxian District, Shanghai.The principal operations of the Company include the design, development, manufacturing and marketingof writing instruments, student stationery, office supplies and other products, the direct office suppliesbusiness and the new retail business.The parent company of the Company is M&G Holdings (Group) Co., Ltd., and the beneficialcontrollers are Chen Huwen, Chen Huxiong, and Chen Xueling.The financial statements were approved for submission by the Board of Directors on 28 March2024.
IV. Preparation Basis of Financial Statements
1. Preparation basis
The Company prepared financial statements in accordance with the Accounting Standards forBusiness Enterprises - Basic Standards, and various specific account standards, application guidance foraccounting standards for business enterprises, interpretations of the accounting standards for businessenterprises and other relevant regulations (hereinafter collectively referred to as "Accounting Standardsfor Business Enterprises") promulgated by the Ministry of Finance, and the disclosure requirements inthe Preparation Convention of Information Disclosure by Companies Offering Securities to the PublicNo.15 - General Provisions on Financial Report issued by China Securities Regulatory Commission.
2. Going concern
√ Applicable □ Not applicable
These financial statements have been prepared on a going concern basis.
V. Significant Accounting Policies and Accounting EstimatesNotes to specific accounting policies and accounting estimates:
√ Applicable □ Not applicable
The following disclosures cover the specific accounting policies and accounting estimatesformulated by the Company according to the characteristics of its production and operation. For details,please refer to Notes "V (11) Financial Instruments", "V (21) Fixed Assets", "V (26) Intangible Assets","V (28) Long-term Deferred Expenses", "V (34) Income", and "V (36) Government Subsidies".
1. Statement of compliance of accounting standards for business enterprises
The financial statements are in compliance with the Accounting Standards for Business Enterprisespromulgated by the Ministry of Finance, and truly and completely present the consolidated and parentcompany's financial position of the Company as at 31 December 2023, as well as the consolidated andparent company's operating results and cash flows for the year then ended.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
√ Applicable □ Not applicable
Notes to financial statements Page 97
The Company's operating cycle is 12 months.
4. Reporting currency
RMB is adopted by the Company as the bookkeeping currency. Each subsidiary of the Companydetermines its own reporting currency based on the primary economic environment where it runsbusiness. The reporting currency of Back to School Holding AS and Beckmann AS is NOK; thereporting currency of Beckmann Norway GmbH (Germany) is EUR; the reporting currency ofBeckmann Norway Inc. is USD; the recording currency of Beckmann Norway GmbH (Austria) is EUR;the recording currency of Axus Stationery (Hong Kong) Company Ltd. is HKD; and the recordingcurrency of International stationery company is VND. The financial statement herein is presented inRMB.
5. Methods for determining materiality standards and selection basis
√ Applicable □ Not applicable
| Item | Materiality standard |
| Material accounts receivable where bad debt provisions are accrued separately | The amount of a provision separately accrued accounts for over 0.5% of total assets |
| Write-off of material accounts receivable | The amount of a single write-off accounts for over 0.5% of total assets |
| Material bad debt provision amounts recovered or reversed in the accounts receivable in the current period | The amount of a single recovery or reversal accounts for over 0.5% of total assets |
| Other material accounts receivable where bad debt provisions are accrued separately | The amount of a provision separately accrued accounts for over 0.5% of total assets |
| Write-off of other material accounts receivable | The amount of a single write-off accounts for over 0.5% of total assets |
| Material bad debt provision amounts recovered or reversed in other accounts receivable in the current period | The amount of a single recovery or reversal accounts for over 0.5% of total assets |
| Material prepayments by amount that have aged over one year | The amount of a single prepayment that has aged over one year accounts for over 0.5% of total assets |
| Changes in material construction in progress in the current period | The budget of a single project exceeds 3% of total assets |
| Material accounts payable that have aged over one year or are overdue | The amount of a single account payable that has aged over one year accounts for over 0.5% of total assets |
| Material contract liabilities that have aged over one year | The amount of a single contract liability that has aged over one year accounts for over 0.5% of total assets |
| Other material accounts payable that have aged over one year or are overdue | The amount of a single other account payable that has aged over one year accounts for over 0.5% of total assets |
| Cash received in connection with material investing activities | The Company recognises the payments related to equity disposal that occur in amounts greater than 5% of net assets as cash received in connection with material investing activities |
| Cash paid in connection with material investing activities | The Company recognises the payments related to equity acquisition that occur in amounts greater than 5% of net assets as cash paid in connection with material investing activities |
| Material overseas operating entities | The Company recognises overseas operating entities whose total assets/gross profits/revenues exceed 15%/10%/15% of total consolidated assets/total consolidated profits/consolidated revenues as material overseas operating entities. |
| Material non-wholly-owned subsidiary | The Company recognises non-wholly-owned subsidiaries whose total assets/gross profits/revenues exceed 15%/10%/15% of total consolidated assets/total consolidated profits/consolidated revenues as material non-wholly-owned subsidiaries. |
| Material joint ventures or associated | The Company recognises joint ventures or associated |
Notes to financial statements Page 98
| enterprises | enterprises whose total assets/gross profits/revenues exceed 15%/10%/15% of total consolidated assets/total consolidated profits/consolidated revenues as material joint ventures or associated enterprises. |
6. Accounting treatments for business combination under or not under common control
√ Applicable □ Not applicable
Business combination under common control: the assets and liabilities acquired by the Company inbusiness combination (including goodwill incurred in the acquisition of the acquiree by ultimatecontrolling party) shall be measured at the carrying amount of the assets and liabilities of the acquiree inthe consolidated financial statements of the ultimate controlling party at the date of combination. Thedifference between the carrying amount of the net assets obtained and the carrying amount of theconsideration paid for the merger (or total nominal value of the issued shares) is adjusted to capitalpremium in capital reserve. If the capital premium in capital reserve is not sufficient to offset thedifference, the remaining balance is adjusted against retained earnings.
Business combination not under common control: the cost of business combination is the fair valueof the assets paid by the acquirer to obtain the control right of the acquiree, the liabilities incurred orassumed, and the equity securities issued at the date of purchase. Where the cost of businesscombination is higher than the fair value of the identifiable net assets acquired from the acquiree inbusiness combination, the Company shall recognize such difference as goodwill; where the cost ofbusiness combination is less than the fair value of the identifiable net assets acquired from the acquireein business combination, such difference shall be included in the current profit or loss. The identifiableassets, liabilities and contingent liabilities of the acquiree obtained in the business combination that meetthe recognition conditions are measured at their fair values at the date of purchase.
The direct expenses incurred in business combination shall be included the current profit or loss;transaction costs associated with the issue of equity or debt securities for the business combination shallbe included in the initially recognized amounts of the equity or debt securities.
7. Control judgment criteria and preparation of consolidated financial statements
√ Applicable □ Not applicable
(1) Control judgment criteria
The consolidation scope of consolidated financial statements is determined on the basis of control,including the Company and all of its subsidiaries. The term "control" refers to the power held by theCompany over the invested enterprise, through which the Company is capable of enjoying variablereturn by participating in relevant activities of the invested enterprise, and having the ability to influencethe amount of return via such control.
(2) Consolidation procedure
The Company regards the entire enterprise group as an accounting entity and prepares theconsolidated financial statements in accordance with unified accounting policies to reflect the overallfinancial status, operating results and cash flow of the enterprise group. The influence of internaltransactions between the Company and its subsidiaries and among the subsidiaries shall be offset. Ifinternal transactions indicate that the relevant assets have suffered impairment losses, the losses shall befully recognized. In preparing the consolidated financial statements, where the accounting policies andthe accounting periods are inconsistent between the Company and its subsidiaries, the financialstatements of the subsidiaries are adjusted in accordance with the accounting policies and accountingperiod of the Company.
The owners' equity, the net profit or loss and the comprehensive income attributable to minorityshareholders of a subsidiary of the current period are presented separately under the owners' equity in theconsolidated balance sheet, the net profit and the total comprehensive income in the consolidated incomestatement respectively. Where losses attributable to the minority shareholders of a subsidiary exceed theminority shareholders' interest entitled in the shareholders' equity of the subsidiary at the beginning ofthe period, the excess is allocated against the minority equity.
① Addition of subsidiary or business
During the Reporting Period, if there is an addition of subsidiary or business due to businesscombination under common control, the operating results and cash flows of the subsidiary or business
Notes to financial statements Page 99
combination from the beginning of the current period to the end of the Reporting Period are includedinto the consolidated financial statements, and at the same time, the amount at the end of the period ofthe consolidated financial statements and the relevant items in the comparative statements are adjustedas if the reporting entity after combination had been existing since the control of the ultimate controllingparty started.Where control over the investee under common control is obtained due to reasons such as increasein investments, for equity investment held before the control over the acquiree is obtained, profit or loss,other comprehensive income and other changes in net assets recognized from the later of the acquisitionof the original equity interest and the date when the acquirer and the acquiree were placed undercommon control until the date of combination are offset against the retained profit at the beginning ofthe period of the comparative statements or the profit or loss of the current period respectively.During the Reporting Period, if there is an addition of subsidiary or business due to businesscombination not under common control, it shall be included in the consolidated financial statements onthe basis of the fair value of the identifiable assets, liabilities and contingent liabilities determined at thedate of purchase.Where control over the investee not under common control is obtained due to reasons such asincrease in investments, for the equity interest of the acquiree held before the date of purchase, theCompany remeasures the equity interest at its fair value as at the date of purchase, and any differencebetween the fair value and its book value will be accounted for as investment gains of the current period.Where equity interest of the acquiree held before the date of purchase is related to other comprehensiveincome that can be reclassified into profit and loss in the future and other changes in owners’ equityunder the equity method, such equity interest is transferred to investment gains of the period to whichthe date of purchase belongs.
② Disposal of subsidiaries
A. General treatment for disposalWhen control over the investee is lost due to the disposal of part of the equity investment or otherreasons, the Company remeasures the remaining equity investment at fair value as at the date on whichcontrol is lost. The difference between the sum of the consideration received from equity disposal andthe fair value of the remaining equity interest and the sum of the net assets of the subsidiaryproportionate to the original shareholding accumulated from the date of purchase or combination andgoodwill is included in investment gains of the period during which the control is lost. Othercomprehensive income that is related to the equity investment in the original subsidiary and can bereclassified into profit and loss in the future and other changes in owners’ equity under the equitymethod, are transferred to investment gains of the period during which the control is lost.B. Stepwise disposal of subsidiaryIn respect of stepwise disposal of equity investment in a subsidiary through multiple transactionsuntil control is lost, if the terms, conditions and economic effects of the transactions of equity investmentin the subsidiary satisfy one or more of the following conditions, the transactions are normally accountedfor as a basket of transactions:
i. these transactions were entered into simultaneously or after considering the effects of each other;ii. these transactions constituted a complete commercial result as a whole;iii. one transaction was conditional upon at least one of the other transaction;iv. one transaction was not economical on its own but was economical when considering togetherwith other transactions.Where the transactions constitute a basket of transactions, the Company accounts for thetransactions as a transaction of disposal of a subsidiary until control is lost; the difference between theamount received each time for disposal before control is lost and the net assets of such subsidiarycorresponding to the disposal of investment is recognized as other comprehensive income in theconsolidated financial statements, and is transferred to profit or loss of the period during which control islost upon loss of control.
Where the transactions do not constitute a basket of transactions, before the loss of control, thetransactions are accounted for using the policies related to partial disposal of equity investment in asubsidiary where no control is lost; when control is lost, they are accounted for using the general methodfor disposal of subsidiaries.
③ Purchase of minority interests in subsidiary
For the difference between the long-term equity investment newly acquired due to the purchase ofminority interests by the Company and the share of net assets of the subsidiary calculated according to
Notes to financial statements Page 100
the new shareholding accumulated from the date of purchase (or date of combination), share premium ofthe capital reserve in the consolidated balance sheet will be adjusted; where share premium of the capitalreserve is insufficient for the write-down, retained profit will be adjusted.
④ Partial disposal of equity investment in subsidiaries without losing control
For the difference between the disposal consideration and the net assets of the subsidiarycorresponding to the disposal of long-term equity investment accumulated from the date of purchase ordate of combination, share premium of the capital reserve in the consolidated balance sheet will beadjusted; where share premium of the capital reserve is insufficient for the write-down, retained profitwill be adjusted.
8. Classification of joint arrangements and accounting treatment of joint operations
√ Applicable □ Not applicable
Joint arrangements are divided into joint operations and joint ventures.
A joint operation is a joint arrangement whereby the party to joint arrangement has rights to theassets, and obligations for the liabilities related to the arrangement.
The Company recognises the following items in connection with the interest share in jointoperation:
(1) Assets solely held by the Company, and assets jointly held under the Company's shares;
(2) Liabilities solely assumed by the Company, and liabilities jointly assumed under the Company'sshares;
(3) Revenues from the sale of the Company's share in the output of joint operation;
(4) Revenues from the sale of the output from the joint operation recognised under the Company'sshare;
(5) Expenses solely incurred, and expenses incurred from the joint operation recognised under theCompany's share.
The Company's investments in joint ventures are accounted for by equity method. For details,please refer to Note "V (19) Long-term Equity Investment".
9. Determination of cash and cash equivalents
Cash refers to the cash on hand and deposits that are available for payment of the Company. Cashequivalents refer to investments held by the Company that are short-term, highly liquid, readilyconvertible to known amounts of cash and subject to an insignificant risk of changes in value.
10. Foreign currency transactions and translation of foreign currency financial statements
√ Applicable □ Not applicable
(1) Foreign currency transactions
Foreign currency transactions shall be translated into RMB at the spot exchange rate on the daywhen the transactions occur.
Balance of monetary items in foreign currency as at the balance sheet date is translated at the spotrates prevailing at the balance sheet date, and any translation difference arising therefrom is included inprofit or loss of the period except for the translation difference arising from dedicated borrowings inforeign currency related to the construction of assets qualified for capitalisation which is accounted forunder the principle of capitalisation of borrowing expenses.
(2) Translation of foreign currency financial statements
Asset and liability items in the balance sheet are translated at the spot rates prevailing at the balancesheet date. Owners' equity items other than "undistributed profit" adopt the spot rates on the dates whentransactions are incurred. Income and expense items in the income statement are translated at theapproximate rates prevailing at the transaction dates.
On disposal of a foreign operation, the exchange differences in the financial statements in foreigncurrency relating to that foreign operation are transferred from owners' equity to profit or loss of theperiod during which the disposal occurs.
11. Financial instruments
√ Applicable □ Not applicable
Notes to financial statements Page 101
The Company recognises a financial asset, financial liability or equity instrument when it becomesa party to a financial instrument contract.
(1) Classification of the financial instruments
According to the business model of the Company’s management of financial assets and thecontractual cash flow characteristics of financial assets, financial assets are classified at the initialrecognition as: financial assets at amortized cost, financial assets at fair value through profit or loss, andother financial assets at fair value through current profit or loss.
The Company classifies financial assets that simultaneously meet the following conditions and arenot designated as financial assets at fair value through current profit or loss as financial assets measuredat amortized cost:
- the business model aims at collecting contractual cash flows; and
- contractual cash flows are only the payment made based on the principal and the interest of theoutstanding principal amount.
The Company classifies financial assets that simultaneously meet the following conditions and arenot designated as financial assets at fair value through current profit or loss as financial assets (debtinstruments) at fair value through other comprehensive income:
- the business model aims at both collecting contractual cash flows and selling the financial assets;and
- contractual cash flows are only the payment made based on the principal and the interest of theoutstanding principal amount.
For non-trading equity instrument investments, the Company irrevocably designates them asfinancial assets (equity instruments) at fair value through other comprehensive income at the time ofinitial recognition. The designation is made on the basis of a single investment, and the relatedinvestment meets the definition of an equity instrument from the issuer's perspective.
Except for the above-mentioned financial assets measured at amortized cost and at fair valuethrough other comprehensive income, the Company classifies all other financial assets as financial assetsat fair value through current profit or loss. At the time of initial recognition, if accounting mismatchescan be eliminated or significantly reduced, the Company can irrevocably designate financial assets thatshould be classified as financial assets measured at amortized cost or at fair value through othercomprehensive income as financial assets at fair value through current profit or loss.
Financial liabilities at the initial recognition are classified into financial liabilities at fair valuethrough current profit or loss, and financial liabilities at amortized cost.
Financial liabilities at the initial recognition can be designated as financial liabilities at fair valuethrough current profit or loss if one of the following conditions can be met:
① Such designation can eliminate or significantly reduce accounting mismatches.
② According to the enterprise risk management or investment strategy stated in the official writtendocument, management and evaluation of the financial liabilities portfolio or financial assets andfinancial liabilities portfolio are based on fair value which will be used as the basis for reporting to thekey management personnel.
③ The financial liabilities include embedded derivatives that need to be split separately.
(2) Recognition and measurement of financial instruments
① Financial assets at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables,long-term receivables and debt investment, which are initially measured at fair value, and relatedtransaction costs are included in the initial recognition amount. The accounts receivable of majorfinancing components and the accounts receivable of the Company's decision not to consider thefinancing component with the term less than one year are initially measured at the contract transactionprice.
Interest calculated by the effective interest method during the period of holding is included in thecurrent profit or loss.
Notes to financial statements Page 102
Upon recovery or disposal, the difference between the acquisition price and the carrying amount ofthe financial asset shall be included in the current profit or loss.
② Financial assets at fair value through other comprehensive income (debt instruments)
Financial assets (debt instruments) at fair value through other comprehensive income, includingreceivables financing and other debt investments, are initially measured at fair value, and relatedtransaction costs are included in the initial recognition amount. The financial assets are subsequentlymeasured at fair value. Changes in fair value are included in other comprehensive income, except forinterest, impairment losses or gains and exchange gain or loss calculated using the effective interestmethod.
When the recognition is terminated, the accumulated gain or loss previously included in othercomprehensive income is transferred from other comprehensive income and included in the currentprofit or loss.
③ Financial assets (equity instruments) at fair value through other comprehensive income
Financial assets (equity instruments) at fair value through other comprehensive income, includingother equity instruments, are initially measured at fair value, and related transaction costs are included inthe initial recognition amount. The financial assets are subsequently measured at fair value, and changesin fair value are included in other comprehensive income. The dividends obtained are included in thecurrent profit and loss.
When the recognition is terminated, the accumulated gain or loss previously included in othercomprehensive income is transferred from other comprehensive income and included in retainedearnings.
④ Financial assets at fair value through the current profit or loss
Financial assets at fair value through the current profit or loss, including held-for-trading financialassets, derivative financial assets and other non-current financial assets, are initially measured at fairvalue, and related transaction costs are included in the current profit or loss. The financial assets aresubsequently measured at fair value, and changes in fair value are included in the current profit or loss.
⑤ Financial liabilities at fair value through current profit or loss
Financial liabilities at fair value through current profit or loss, including held-for-trading financialliabilities, and derivative financial liabilities, are initially measured at fair value, and related transactioncosts are included in the current profit or loss. The financial liabilities are subsequently measured at fairvalue, and changes in fair value are included in the current profit or loss.
When the recognition is terminated, the difference between the carrying amount and considerationpaid is included in the current profit and loss.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost, including short-term borrowings, bills payable and accountspayable, other payables, long-term borrowings, bonds payable, long-term payables, are initiallymeasured at fair value, and related transaction costs are included in the initial recognition amount.
Interest calculated by the effective interest method during the period of holding is included in thecurrent profit or loss.
When the recognition is terminated, the difference between consideration paid and the carryingamount of the financial liabilities is included in the current profit and loss.
(3) Recognition basis and measurement methods for derecognition of financial assets and transferof financial assets
The Company derecognizes financial assets when one of the following conditions is met:
- the contractual rights to collect the cash flows from the financial assets expire;
- the financial assets have been transferred and nearly all the risks and rewards related to theownership of the financial assets have been transferred to the transferee; or
- the financial assets have been transferred, and the Company have neither transferred nor retainedalmost all risks and rewards related to the ownership of the financial assets, but did not retain controlover the financial assets.
Notes to financial statements Page 103
When the Company modifies or renegotiates a contract with a counterparty in a manner thatconstitutes a material modification, the original financial asset is derecognised and a new financial assetis recognised in accordance with the modified terms.Where a financial asset is transferred, it shall not be derecognized if the Company has retainednearly all the risks and rewards related to the ownerships of the financial asset.The substance-over-form principle shall be adopted while making a judgment on whether thetransfer of financial assets satisfies the above conditions for derecognition.
The transfer of financial assets could be classified into entire transfer and partial transfer. If thetransfer of an entire financial asset satisfies the conditions for derecognition, the difference between thetwo amounts below shall be included in the current profit or loss:
① The carrying amount of the financial assets transferred;
② The consideration received as a result of the transfer, plus the accumulative amount of thechange in fair value previously included into the owners’ equity (in cases where the transferred financialassets are financial assets (debt instruments) at fair value through other comprehensive income).
If the partial transfer of financial assets satisfies the conditions for derecognition, the overallcarrying amount of the transferred financial assets shall be apportioned according to their respectiverelative fair value between the portion of derecognized part and the remaining part, and the differencebetween the two amounts below shall be included in the current profit or loss:
① The carrying amount of the derecognized portion;
② The consideration of the derecognized portion, plus the corresponding derecognized portion ofaccumulated change in fair value previously included in owners’ equity (in cases where the transferredfinancial assets are financial assets (debt instruments) at fair value through other comprehensiveincome).
If the transfer of financial assets does not meet the conditions for derecognition, the financial assetscontinue to be recognized and the consideration received is recognized as a financial liability.
(4) Derecognition of financial liabilities
When the current obligation under a financial liability is completely or partially discharged, thewhole or relevant portion of the liability is derecognized; if an agreement is entered into between theCompany and a creditor to replace the original financial liabilities with new financial liabilities withsubstantially different terms, the original financial liabilities will be derecognized and the new financialliabilities will be recognized.
If the contract terms of the original financial liabilities are substantially amended in part or in full,the original financial liabilities will be derecognized in full or in part, and the financial liabilities whoseterms have been amended will be recognized as a new financial liability.
When financial liabilities are derecognized in full or in part, the difference between the carryingamount of the financial liabilities derecognized and the consideration paid (including transferrednon-cash assets or new financial liability) will be included in the current profit or loss.
Where the Company repurchases part of its financial liabilities, the carrying amount of suchfinancial liabilities will be allocated according to the relative fair value between the continuouslyrecognized part and derecognized part on the repurchase date. The difference between the carryingamount of the derecognized portion of financial liabilities and the consideration paid (includingtransferred non-cash assets or new financial liability) will be included in the current profit or loss.
(5) Method of determining the fair values of financial assets and liabilities
A financial instrument with an active market determines its fair value by quoted prices in an activemarket. Financial instruments that do not exist in an active market shall use valuation techniques todetermine their fair value. During the valuation process, the Company uses valuation techniquesappropriate to the prevailing circumstances with the support of sufficient data and other informationavailable, selects inputs consistent with the characteristics of the assets or liabilities considered in thetransactions of relevant assets or liabilities by market participants, and gives priority to relevantobservable inputs. Unobservable inputs are used only when the relevant observable inputs are notaccessible or the access to which is impracticable.
(6) Impairment test method and accounting treatment for impairment of financial instruments
Notes to financial statements Page 104
Based on anticipated credit losses, the Company carries out accounting treatments of impairment onfinancial assets measured at amortized cost, financial assets (debt instruments) at fair value throughother comprehensive income and financial guarantee contracts.The Company considers reasonable and evidence-based information about past events, currentconditions, and forecasts of future economic conditions, and uses the risk of default as the weight tocalculate the probability-weighted amount of the present value of the difference between the contractualcash flow receivable and the expected cash flow, and recognizes the expected credit loss.
Regarding one-year the receivables and contract assets formed from transactions regulated by theAccounting Standards for Business Enterprises No. 14 - Revenue, regardless of whether they containsignificant financing components or not, the Company always measures their loss reserves in accordancewith the amount of anticipated credit losses for the entire lifetime.
Regarding receivables from leasing formed from transactions regulated by the AccountingStandards for Business Enterprises No. 21 - Leases, the Company always measures their loss reserves inaccordance with the amount of anticipated credit losses for the entire lifetime.
Regarding other financial instruments, the Company assesses at each balance sheet date their creditrisk changes since initial recognition.
The Company compares the risk of default on the balance sheet date of a financial instrument withthe risk of default on the date of initial recognition to determine the relative change in the risk of defaultduring the expected life of the financial instrument so as to assess whether the credit risk of the financialinstrument has increased significantly since the initial recognition. Usually, after an overdue for morethan 30 days, the Company believes that the credit risk of the financial instrument has increasedsignificantly unless there is conclusive evidence that the credit risk of the financial instrument has notincreased significantly since the initial recognition.
If the credit risk of financial instrument at the balance sheet date is low, the Company will believethat the credit risk of the financial instrument has not increased significantly since the initial recognition.
If the credit risk of the financial instruments has increased significantly since the initial recognition,the Company will measure its loss provision based on the amount of anticipated credit loss for thelifetime of the financial instruments; if the credit risk of the financial instruments has not significantlyincreased since the initial recognition, the Company will measure its loss provision based on the amountof anticipated credit loss for the financial instruments in the next 12 months. The increase or reversal ofthe loss provision resulting therefrom is included in the current profit and loss as an impairment loss orgain. Regarding financial assets at fair value through other comprehensive income (debt instruments),the Company recognises their loss reserves through other comprehensive income and includesimpairment losses or gains in the profit or loss for the current period, without reducing the book value ofsuch financial assets presented in the balance sheet.
If there is any objective evidence indicating that an account receivable has incurred creditimpairment, the Company will make provision for impairment for that account receivable separately.
Apart from the above-mentioned accounts receivable where bad debt provisions are accruedseparately, the Company divides other financial instruments into several portfolios according to theircredit risk characteristics, and determines the expected credit loss of each portfolio. Portfolios of notesreceivable, accounts receivable and other receivables for provision of expected credit losses and thebasis for the Company's determination are as follows:
① Portfolios for provision of expected credit losses and the determination basis:
| Item | Portfolio | Determination basis |
| Notes receivable | Commercial acceptance bills | The expected credit loss is measured with the default risk exposure and the expected credit loss rate for the entire lifetime based on status quo and the forecast of future economic conditions, by reference to historical credit loss experience. |
| Finance company acceptance bills | ||
| Receivables financing | Bank acceptance bills | |
| Accounts receivable | Related parties in the scope of the consolidated financial statements | |
| Account age analysis | ||
| Other receivables | Consolidated balance of | The expected credit loss is measured with |
Notes to financial statements Page 105
| related-parties current accounts - provisional estimate of input tax | the default risk exposure and the expected credit loss rate for the following 12 months or the entire lifetime based on status quo and the forecast of future economic conditions, by reference to historical credit loss experience. |
| Related parties in the scope of the consolidated financial statements | |
| Account age analysis | |
| House lease deposit |
② Parallel table of account age portfolios and expected credit loss rates
| Account age | Expected credit loss rate of accounts receivable (core traditional business) | Expected credit loss rate of accounts receivable (direct office supplies business) | Expected credit loss rate of other accounts receivable |
| Within one year (0-6 months (inclusive)) | 5.00% | 0.50% | 5.00% |
| Within one year (6-12 months (inclusive)) | 5.00% | ||
| 1-2 years | 30.00% | 10.00% | 30.00% |
| 2-3 years | 60.00% | 50.00% | 60.00% |
| More than 3 years | 100.00% | 100.00% | 100.00% |
If the Company no longer reasonably expects that the contractual cash flow of a financial asset canbe recovered in whole or in part, it will directly write down the book balance of the financial asset.
12. Bills receivable
√ Applicable □ Not applicable
Determination and accounting treatment of the anticipated credit loss of notes receivable
√ Applicable □ Not applicable
For details, please refer to Note V (11) Financial Instruments.
Categories of groups for which bad debt provisions are made on a grouping basis of credit riskcharacteristics and the basis for determining them
√ Applicable □ Not applicable
For details, please refer to “(6) Impairment test method and accounting treatment for impairment offinancial instruments” under Note V (11) Financial Instruments.
Aging methods for age-based recognition of a group of credit risk characteristics
□ Applicable √ Not applicable
Judgment criteria for bad debt provisions made on an individual basis
□ Applicable √ Not applicable
13. Accounts receivable
√ Applicable □ Not applicable
Determination and accounting treatment of the anticipated credit loss of accounts receivable
√ Applicable □ Not applicable
For details, please refer to Note V (11) Financial Instruments.
Categories of groups for which bad debt provisions are made on a grouping basis of credit riskcharacteristics and the basis for determining them
Notes to financial statements Page 106
√ Applicable □ Not applicable
For details, please refer to “(6) Impairment test method and accounting treatment for impairment offinancial instruments” under Note V (11) Financial Instruments.
Aging methods for age-based recognition of a group of credit risk characteristics
√ Applicable □ Not applicable
For details, please refer to “(6) Impairment test method and accounting treatment for impairment offinancial instruments” under Note V (11) Financial Instruments.
Judgment criteria for bad debt provisions made on an individual basis
√ Applicable □ Not applicable
The Company makes provision for impairment of accounts receivable separately based ondistinctive credit risk characteristics such as significantly deteriorated credit standing, low possibility offurther repayment and ongoing credit impairment of counterparties.
14. Receivables financing
√ Applicable □ Not applicable
Determination and accounting treatment of the anticipated credit loss of receivables financing
√ Applicable □ Not applicable
For details, please refer to Note V (11) Financial Instruments.
Categories of groups for which bad debt provisions are made on a grouping basis of credit riskcharacteristics and the basis for determining them
√ Applicable □ Not applicable
For details, please refer to “(6) Impairment test method and accounting treatment for impairment offinancial instruments” under Note V (11) Financial Instruments.
Aging methods for age-based recognition of a group of credit risk characteristics
□ Applicable √ Not applicable
Judgment criteria for bad debt provisions made on an individual basis
□ Applicable √ Not applicable
15. Other receivables
√ Applicable □ Not applicable
Determination and accounting treatment of the anticipated credit loss of other receivables
√ Applicable □ Not applicable
For details, please refer to Note V (11) Financial Instruments.
Categories of groups for which bad debt provisions are made on a grouping basis of credit riskcharacteristics and the basis for determining them
√ Applicable □ Not applicable
For details, please refer to “(6) Impairment test method and accounting treatment for impairment offinancial instruments” under Note V (11) Financial Instruments.
Aging methods for age-based recognition of a group of credit risk characteristics
√ Applicable □ Not applicable
For details, please refer to “(6) Impairment test method and accounting treatment for impairment offinancial instruments” under Note V (11) Financial Instruments.
Judgment criteria for bad debt provisions made on an individual basis
√ Applicable □ Not applicable
The Company makes provision for impairment of other receivables separately based on distinctivecredit risk characteristics such as significantly deteriorated credit standing, low possibility of furtherrepayment and ongoing credit impairment of counterparties.
Notes to financial statements Page 107
16. Inventories
√ Applicable □ Not applicable
Inventory categories, issue valuation method, inventory system, amortisation method for low valueconsumables and packages
√ Applicable □ Not applicable
(1) Classification and cost of inventories
Inventories are classified into materials in transit, raw materials, turnover materials, goods-in-stock,goods in production, goods in transit, commissioned processing materials and so forth.
Inventories are initially measured at cost. The cost of inventories includes purchase cost, processingcost and other expenditures incurred to bring inventory to its current location and state.
(2) Valuation of inventory COGS
Inventory COGS is valued using the weighted average method.
(3) Inventory system
The perpetual inventory system is adopted.
(4) Amortization of low-value consumables and packaging materials
① Low-value consumables are amortized using the immediate write-off method
② Packaging materials are amortized using the immediate write-off method
Criteria for recognising and providing for provision for decline in value of inventories
√ Applicable □ Not applicable
At the balance sheet date, the inventories are measured according to the cost or the net realizablevalue, whichever is lower. If the cost of inventories is higher than the net realizable value, the provisionfor decline in value of inventories is made. The net realizable value refers, in the ordinary course ofbusiness, to the amount after deducting the estimated cost of completion, estimated sale expense andrelevant taxes from the estimated sale price of inventories.
Net realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock, andheld-for-sale raw materials, during the normal course of production and operation, shall be determinedby their estimated selling price less the related selling expenses and taxes; the net realizable value ofmaterial inventories, which need to be processed, during the normal course of production and operation,shall be determined by the amount after deducting the estimated cost of completion, estimated sellingexpenses and relevant taxes from the estimated selling price of finished goods; the net realizable value ofinventories held for execution of sales contracts or labor contracts shall be calculated on the ground ofthe contracted price. If an enterprise holds more inventories than the quantity stipulated in the salescontract, the net realizable value of the exceeding part shall be calculated on the ground of generalselling price.
If the factors, which cause any value write-down of the inventories, have disappeared, thus causingthe inventories’ net realizable value to be higher than their carrying amount, the amount of write-down isreversed from the provision for the loss on decline in value of inventories which has been made. Thereversed amount is included in the profits and losses of the current period.
Categories of groups and the basis for determining the allowance for decline in value ofinventories on a grouping basis, and the basis for determining the net realisable value of differentcategories of inventories
□ Applicable √ Not applicable
Calculation method and basis for determining the net realisable value of each age group for thepurpose of recognising the net realisable value of inventories based on the age of the inventories
□ Applicable √ Not applicable
17. Contract assets
□ Applicable √ Not applicable
Notes to financial statements Page 108
18. Non-current assets or disposal groups held for sale
√ Applicable □ Not applicable
Recognition standards and accounting treatment for non-current assets or disposal groups heldfor sale
√ Applicable □ Not applicable
The Company classifies a non-current asset or disposal group as held for sale when the carryingamount of the non-current asset or disposal group will be recovered through a sale transaction (includingnon-monetary asset exchange with commercial substance) rather than through continuing use.
The Company classifies non-current assets or disposal groups meeting all of the followingconditions as held for sale:
(1) Assets or disposal groups can be sold immediately under current conditions based on thepractice of selling such assets or disposal groups in similar transactions;
(2) Sales are highly likely to occur, that is, the Company has already made a resolution on a saleplan and obtained a certain purchase commitment, and the sale is expected to be completed within oneyear. The sale shall have been approved if the relevant regulations require the approval of the relevant orregulatory authority governing the Company.
If the carrying amount of non-current assets (excluding financial assets, deferred income tax assetsor assets formed by employee remuneration) or disposal groups meeting all of the following conditionsas held for sale is higher than the fair value minus the net amount of the sale costs, the carrying amountwill be written down to the net amount of fair value minus the sale costs, the amount written down willbe recognised as asset impairment losses and included in the profit or loss for the current period, andprovision for impairment of assets held for sale will be made.
Criteria for identification and presentation of discontinued operation
√ Applicable □ Not applicable
Discontinued operation is a component that satisfies one of the following conditions and isseparately identifiable, and has been disposed of by the Company or is classified by the Company asheld for sale:
(1) It represents a separate major line of business or geographical area of operations;
(2) It is part of a single coordinated plan to dispose of a separate major line of business orgeographical area of operations; or
(3) It is a subsidiary acquired exclusively with a view to resale.
The profit and loss from continuing operations and the profit and loss from discontinued operationsare separately presented in the income statement. Operational gains and losses such as impairment lossesand reversal amounts and disposal gains and losses from discontinued operations are reported as gainsand losses from discontinued operations. For the discontinued operations reported in the current period,the Company re-reports the information previously reported as profits and losses from continuingoperations as the profits and losses from discontinued operations for the comparable accounting periodin the current financial statements.
19. Long-term equity investments
√ Applicable □ Not applicable
(1) Joint control or significant influence criterion
Joint control is the contractually agreed sharing of control of an arrangement, and exists only whendecisions about the relevant activities of the arrangement require the unanimous consent of the partiessharing control. The Company together with the other joint venture parties can jointly control over theinvestee, and are entitled to the right of the net assets of the investee who is joint venture of theCompany.
The term "significant influences" refers to the power to participate in making decisions on thefinancial and operating policies of the invested enterprise, but not to control or do joint control togetherwith other parties over the formulation of these policies. Where the investor can exercise significantinfluence over the investee, the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business combination of entities
Notes to financial statements Page 109
For long-term equity investments in subsidiaries formed by business combination under commoncontrol, the initial investment cost of long-term equity investments shall be determined based on share ofthe book value of the owners’ equity of the acquiree in the consolidated financial statements of theultimate controlling party at the date of combination. The difference between the initial investment costof the long-term equity investment and the carrying value of the consideration paid is adjusted to theequity premium in the capital reserve. If the capital premium in capital reserve is not sufficient to offsetthe difference, the remaining balance is adjusted against retained earnings. In connection with imposingcontrol over the investee under joint control as a result of additional investment and other reasons, thedifference between the initial investment cost of the long-term equity investment recognized inaccordance with the above principles and the carrying amount of the long term equity investment beforethe combination and the sum of carrying amount of newly paid consideration for additional sharesacquired on the date of combination is adjusted to equity premium. If the capital premium in capitalreserve is not sufficient to offset the difference, the remaining balance is adjusted against retainedearnings.For long-term equity investment in subsidiaries formed by business combination not under commoncontrol, the cost of the combination ascertained on the date of acquisition shall be taken as the initialinvestment cost of the long-term equity investments. In connection with imposing control over theinvestee not under joint control as a result of additional investment and other reasons, the initialinvestment cost is the sum of the carrying amount of the equity investment originally held and the newlyincreased initial investment cost.
② Long-term equity investments acquired by means other than business combination
The initial investment cost of a long-term equity investment obtained by the Company by cashpayment shall be the purchase cost paid actually.
The initial investment cost of a long-term equity investment obtained by the Company by means ofissuance of equity securities shall be the fair value of the equity securities issued.
(3) Subsequent measurement and recognition of profit or loss
① Long-term equity investment accounted for by cost method
Long-term equity investment in subsidiaries of the Company is accounted for by cost method,unless the investment meets the conditions for holding for sale. except for the actual consideration paidfor the acquisition of investment or the declared but not yet distributed cash dividends or profits whichare included in the consideration, investment gains are recognized as the Company’s shares of cashdividends or profits declared by the investee.
② Long-term equity investment accounted for by equity method
Long-term equity investments of associates and joint ventures are accounted for by equity method.Where the initial investment cost of a long-term equity investment exceeds the investor’s interest in thefair value of the investee’s identifiable net assets at the date of acquisition, no adjustment is made to theinitial investment cost of long-term equity investments; where the initial investment cost is less than theinvestor’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition, thedifference is included in the profits or losses of the current period, and the cost of the long-term equityinvestment is adjusted simultaneously.
The Company recognizes the investment income and other comprehensive income according to theshares of net profit or loss and other comprehensive income realized by the investee which it shall beentitled or shared respectively, and simultaneously makes adjustment to the carrying amount oflong-term equity investments; the carrying amount of long-term equity investments shall be reduced byattributable share of the profit or cash dividends for distribution declared by the investee. In relation toother changes of owners’ equity except for net profit and loss, other comprehensive income and profitdistributions of the investee (hereinafter referred to as "other changes in owners’ equity"), the carryingamount of long-term equity investments shall be adjusted and included in the owners’ equity.
When determining the amount of proportion of net profit or loss, other comprehensive income andother changes in owners’ equity in the investee which it entitles, fair value of each identifiable assets ofthe investee at the time when the investment is obtained shall be used as the basis, and adjustment shallbe made to the net profit and other comprehensive income of the investee according to the accountingpolicies and accounting period of the Company.
The unrealized profit or loss resulting from transactions between the Company and its associates orjoint ventures shall be offset in proportion to the investor’s equity interest of investee, based on whichinvestment income or loss shall be recognized. However, the situation that the assets invested or sold
Notes to financial statements Page 110
constitute business is excluded. Any losses resulting from internal transactions, which are attributable toimpairment of assets, shall be fully recognized.The Company shall recognize the net losses of the joint ventures or associates until the book valueof the long-term equity investment and other long-term rights and interests which substantially form thenet investment made to the invested entity are reduced to zero, unless the joint ventures or associateshave the obligation to undertake extra losses. If the joint ventures or associates realize net profits in thefuture, the Company resumes recognizing its share of profits after the share of profits makes up for theshare of unrecognized losses.
③ Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the carrying amount and theconsideration actually received shall be included in the current profit or loss.For partial disposal of long-term equity investments accounted for by the equity method, if theremaining equity is still accounted for by the equity method, the other comprehensive income calculatedand recognized by the original equity method shall be carried forward in corresponding proportion byusing the same basis as the investee used for direct disposal of relevant assets or liabilities. Otherchanges in owners’ equity shall be carried forward to the profits or losses of the current period on a prorata basis.
When the joint control or material influence over the investee is lost due to disposal of equityinvestment and other reasons, other comprehensive income recognized in the original equity investmentdue to the use of the equity method shall, when it is no longer calculated by the equity method, besubject to the accounting treatment on the same basis as the investee used for direct disposal of relevantassets or liabilities. Other changes in owners’ equity shall be all transferred into the profits or losses ofthe current period when they are no longer calculated by the equity method.
When the control over the investee is lost due to partial disposal of equity investment and otherreasons, the remaining equities after disposal shall be accounted for by equity method in preparingindividual financial statements provided that joint control or material influence over the investee can beimposed, and shall be adjusted as if such remaining equities has been accounted for by the equitymethod since they are obtained. The other comprehensive income recognized before the control over theinvestee is obtained shall be carried forward in proportion by using the same basis as the investee usedfor direct disposal of relevant assets or liabilities, and the other changes in owners’ equity calculated andrecognized using the equity method shall be carried forward to the profits or losses of the current periodon a pro rata basis. Where the remaining equities after disposal cannot impose joint control or materialinfluence over the investee, they shall be recognized as financial assets, and the difference between fairvalue and the carrying amount on the date when control is lost shall be included in the profits or lossesof the current period. All other comprehensive income and other changes in owners’ equity recognizedbefore the control over the investee is obtained shall be carried forward.
In respect of stepwise disposal of equity investment in a subsidiary through multiple transactionsuntil control is lost, where the transactions constitute a basket of transactions, the Company accounts forthe transactions as a transaction of disposal of a subsidiary until control is lost; however, the differencebetween the amount received each time for disposal before control is lost and the carrying amount oflong-term equity investments corresponding to the disposal of equity is recognized as othercomprehensive income in the individual financial statements, and is transferred to the profits or losses ofthe current period during which control is lost upon loss of control. Where the transactions do notconstitute a basket of transactions, each transaction shall be accounted for separately.
20. Investment real estate
Not applicable
21. Fixed assets
(1). Recognition conditions
√ Applicable □ Not applicable
Fixed assets are tangible assets that are held for use in the production or supply of goods or services,for rental to others, or for administrative purposes; and have a useful life of more than one accountingyear. Fixed assets are recognized when they meet the following conditions:
Notes to financial statements Page 111
① It is probable that the economic benefits associated with the fixed assets will flow to theenterprise;
② The cost of fixed assets can be reliably measured.
A fixed asset is initially measured at its cost (and considering the impact of expected abandonmentcost factors).
Subsequent expenditures related to fixed assets are included in the cost of fixed assets when theirrelated economic benefits are likely to flow in to the Company and their costs can be reliably measured;the book value of the replaced part is derecognized; all other subsequent expenditures are included in theprofits or losses of the current period at the time of occurrence.
(2). Method for depreciation
√ Applicable □ Not applicable
Fixed assets are depreciated by categories using the straight-line method, and the depreciation ratesare determined by categories based upon their estimated useful lives and their estimated residual value.For fixed assets with provision for impairment accrued, the depreciation amount shall be determinedaccording to the book value after deduction of the impairment provision and the remaining useful life inthe future period. Where the parts of a fixed asset have different useful lives or cause economic benefitsfor the enterprise in different ways, different depreciation rates or depreciation methods shall be applied,and each part shall be depreciated separately.
The methods for depreciation, useful lives of depreciation, residual value and annual depreciationrates of various categories of fixed assets are as follows:
| Category | Method for depreciation | Useful lives of depreciation (year) | Residual value ratio | Annual depreciation rate |
| Property and buildings | Straight-line method | 20 | 5% | 4.75% |
| Machinery and equipment | Straight-line method | 10 | 5-10% | 9.5-9% |
| Transportation vehicles | Straight-line method | 4-10 | 0-10% | 25-9% |
| Other equipment | Straight-line method | 2-10 | 0-10% | 47.5-9.5% |
Note: physical assets newly acquired through the increase of capital by M&G Holdings (Group)Co., Ltd. to the Company in 2010 are stated at valuation, and depreciated at the remaining useful life.
22. Construction in progress
√ Applicable □ Not applicable
Construction in progress is measured at the actual cost incurred. Actual cost includes constructioncost, installation cost, borrowing expense qualified for capitalization, and other necessary expendituresincurred before the construction in progress reaches its intended use status. When the construction inprogress reaches the intended use status, it shall be transferred to fixed assets and its depreciation shallbe accrued from the next month. The standards and time point for carrying forward the Company'sconstruction in progress to fixed assets are as follows:
| Category | Standards and time point for carrying forward them to fixed assets |
| Houses, buildings and decoration of fixed assets | (1) The construction project and ancillary projects are substantially completed; (2) the construction project meets the predetermined design requirements and is accepted by units responsible for surveying, design, construction, supervision, etc.; (3) the construction project is accepted by fire department, land department, planning department or other external authorities if such acceptance is required; (4) if the construction project has reached the predetermined state for use but the final account for completion has not been made, the project shall be carried forward to fixed assets at the value estimated according to the actual cost of the project from the date when it reaches the predetermined state for use. |
| Machines and other equipment that need to be installed and commissioned and other long-term assets | (1) The equipment and supporting facilities are installed; (2) the equipment can maintain normal and stable operation for a period of time after commissioning; (3) the production equipment can stably output qualified products in a period of time; (4) the equipment is accepted by asset management personnel and users. |
23. Borrowing costs
√ Applicable □ Not applicable
(1) Criteria for recognition of capitalized borrowing costs
Notes to financial statements Page 112
For borrowing costs incurred by the Company that are directly attributable to the acquisition,construction or production of assets qualified for capitalization, the costs will be capitalized andincluded in the costs of the related assets. Other borrowing costs shall be recognized as expense in theperiod in which they incur and are included in the current profit or loss.Assets qualified for capitalization are assets (fixed assets, investment property, inventories, etc.)that necessarily take a substantial period of time for acquisition, construction or production to get readyfor their intended use or sale.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessation ofcapitalization of borrowing costs, excluding the period in which capitalization of borrowing costs istemporarily suspended.
Capitalization of borrowing costs begins when the following three conditions are fully satisfied:
① expenditures for the assets (including cash paid, transferred non-currency assets or expenditurefor holding debt liability for the acquisition, construction or production of assets qualified forcapitalization) have been incurred;
② borrowing costs have been incurred;
③ acquisition, construction or production that are necessary to enable the asset reach its intendedusable or saleable condition have commenced.
Capitalization of borrowing costs shall be suspended during periods in which the qualifying assetunder acquisition and construction or production ready for the intended use or sale.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended during periods in which the acquisition,construction or production of a qualifying asset is interrupted abnormally, when the interruption is for acontinuous period of more than 3 months; if the interruption is a necessary step for making thequalifying asset under acquisition and construction or production ready for the intended use or sale, thecapitalization of the borrowing costs shall continue. The borrowing costs incurred during suchsuspension period shall be recognized as the current profit or loss. When the acquisition and constructionor production of the asset resumes, the capitalization of borrowing costs commences.
(4) Calculation of capitalization rate and amount of borrowing costs
For specific borrowings for the acquisition, construction or production of assets qualified forcapitalization, the amount of borrowing costs for capitalization is determined through borrowing costs ofthe specific borrowings actually incurred in the current period minus the interest income earned on theunused borrowing loans as a deposit in the bank or as investment income earned from temporaryinvestment.
For general borrowings for the acquisition, construction or production of assets qualified forcapitalization, the to-be-capitalized amount of interests on the general borrowings shall be calculated anddetermined by multiplying the weighted average asset disbursement of the part of the accumulative assetdisbursements minus the specifically borrowed loans by the capitalization rate of the general borrowingsused. The capitalization rate shall be calculated and determined according to the weighted average actualinterest rate of the general borrowings.
During the capitalization period, the exchange difference between the principal and interest ofdedicated borrowings in foreign currency is capitalized and included in the cost of the assets qualifiedfor capitalization. Exchange differences arising from the principal and interest of borrowings in foreigncurrency other than dedicated borrowings in foreign currency are included in the profits or losses of thecurrent period.
24. Biological assets
□ Applicable √ Not applicable
25. Oil and gas assets
□ Applicable √ Not applicable
Notes to financial statements Page 113
26. Intangible assets
(1). Useful life and the basis for its determination, estimation, amortisation method or review
procedure
√ Applicable □ Not applicable
① Valuation method of intangible assets
A. Intangible assets are initially measured at cost upon acquisition by the Company;The costs of externally purchased intangible assets include the purchase price, relevant taxes andexpenses paid, and other expenditures directly attributable to putting the asset into condition for itsintended use.B. Subsequent measurementThe useful life of intangible assets shall be analyze and judged upon acquisition.As for intangible assets with finite useful life, they are amortized over the term in which economicbenefits are brought to the enterprise; if the term in which economic benefits are brought to theenterprise by intangible assets cannot be estimated, the intangible assets shall be regarded as intangibleassets with indefinite useful life, and shall not be amortized.
② Estimated useful lives for the intangible assets with finite useful life
| Item | Estimated useful lives | Amortization method | Residual value ratio | Basis for determining expected useful life |
| Land use rights | 50 years | Straight-line method | 0 | Certificate of land use rights |
| Image identification rights | 12 months to 64 months | Straight-line method | 0 | License contract |
| Software | 3 to 10 years | Straight-line method | 0 | Expected years of benefit |
| Patent right | 10 years | Straight-line method | 0 | Patent right certificate |
| Others | 19 months to 120 months | Straight-line method | 0 | Expected years of benefit |
Note: land use rights newly acquired through the increase of capital by M&G Holdings (Group) Co.,Ltd. to the Company in 2010 are stated at valuation, and amortized at the remaining useful life.
(2). Scope of R&D expenditures and corresponding accounting treatment methods
√ Applicable □ Not applicable
① Scope of R&D expenditures
The Company classifies all expenses in direct connection with R&D activities as R&Dexpenditures, including the remuneration and benefits for R&D staff, inventory consumption, design andsample costs, and depreciation and amortisation expenses.
A. Remuneration and benefits
Remuneration and benefits refer to the wages and salaries, basic endowment insurance premiums,basic medical insurance premiums, unemployment insurance premiums, work-related injury insurancepremiums, maternity insurance premiums and housing provident funds for the Company's R&D staff,and the labour costs of external R&D personnel.
B. Inventory consumption
Inventory consumption refers to the expenditures actually incurred by the Company in carrying outR&D activities, including the costs of directly consumed materials, fuel and power.
C. Depreciation and amortisation expenses
Depreciation and amortisation charges refer to the expenses incurred from the depreciation ofinstruments and equipment used in R&D activities, and the expenses amortisatised for software,intellectual property, and non-patented technologies (proprietary technologies, licenses, design andcalculation methods, etc.).
D. Design and sample costs
Design and sample costs refer to the costs incurred in the conception, development andmanufacturing of new products and new processes, and the design of processes, technical specifications,procedures and operational characteristics, including the costs incurred in creative design activities forthe acquisition of innovative, creative and breakthrough products.
Notes to financial statements Page 114
② Specific criteria for the division of research phase and development phase
The expenses for internal research and development projects of the Company are divided intoexpenses in the research phase and expenses in the development phase.Research phase: scheduled, innovative investigations and research activities to obtain andunderstand scientific or technological knowledge.Development phase: apply the research outcomes or other knowledge to a plan or design prior to acommercial production or use in order to produce new or essentially-improved materials, devices,products, etc.
③ Specific criteria for capitalization at development phase
Expenditure in the research phase is included in the profit or loss for the current period at the timeof occurrence. Expenses in the development phase are recognized as an intangible asset when all of thefollowing conditions are satisfied, otherwise are included in the current profit or loss:
i. it is technically feasible to complete the intangible asset so that it will be available for use or sale;
ii. there is an intention to complete the intangible asset for use or sale;
iii. the intangible asset can produce economic benefits, including there is evidence that the productsproduced using the intangible asset has a market or the intangible asset itself has a market; if theintangible asset is for internal use, there is evidence that there exists usage for the intangible asset;
iv. there is sufficient support in terms of technology, financial resources and other resources inorder to complete the development of the intangible asset, and there is capability to use or sell theintangible asset;
v. the expenses attributable to the development stage of the intangible asset can be measuredreliably.
If it is impossible to distinguish the expenses in the research phase from the expenses in thedevelopment phase, all the incurred research and development expenses shall be included in the currentprofit or loss.
27. Impairment of long-term assets
√ Applicable □ Not applicable
Long-term assets, such as long-term equity investment, fixed assets, construction in progress,right-of-use assets, intangible assets with finite useful life, and oil and gas assets are tested forimpairment if there is any indication that an asset may be impaired at the balance sheet date. If the resultof the impairment test indicates that the recoverable amount of the asset is less than its carrying amount,the difference shall be used to make impairment provision and an impairment loss are recognized. Therecoverable amount is the higher of the net amount of asset’s fair value less costs to sell and the presentvalue of the future cash flows expected to be derived from the asset. Provision for asset impairment isdetermined and recognized on the individual asset basis. If it is not possible to estimate the recoverableamount of an individual asset, the recoverable amount of a group of assets to which the asset belongs tois determined. An assets group is the smallest group of assets that is able to generate cash inflowindependently.
Impairment test to goodwill formed by business combination, intangible assets with indefiniteuseful life and intangible assets not ready to use shall be carried out at least at the end of each year,regardless of whether there are any indications of impairment.
When the Company carries out impairment test to goodwill, the Company shall, as of thepurchasing day, allocate on a reasonable basis the carrying amount of the goodwill formed by enterprisemerger to the relevant asset groups, or if there is a difficulty in allocation, the Company shall allocate itto the portfolio of asset groups. Relevant asset groups or portfolio of asset groups refer to the assetgroups or portfolio of asset groups that can benefit from the synergistic effect of business combination.
For the purpose of impairment test to the relevant asset groups or portfolio of asset groupscontaining goodwill, if any evidence shows that the impairment of asset groups or portfolio of assetgroups related to goodwill exists, an impairment test will be made firstly on the asset groups or portfolioof asset groups not containing goodwill, thus calculating the recoverable amount and comparing it withthe relevant carrying amount so as to recognize the corresponding impairment loss. Then the Companywill make an impairment test to the asset groups or portfolio of asset groups containing goodwill, andcompare their carrying value with their recoverable amount. Where the recoverable amount is lower than
Notes to financial statements Page 115
the carrying value thereof, the amount of impairment loss is first deducted and allocated to the carryingvalue of goodwill in the asset groups or portfolio of asset groups, and then the carrying value of otherassets other than goodwill in the asset groups or portfolio of asset groups is deducted according to thepercentages of the carrying value of such other assets.Once the above asset impairment loss is recognized, it will not be reversed in the subsequentaccounting periods.
28. Long-term prepaid expenses
√ Applicable □ Not applicable
Long-term prepaid expenses are expenses which have occurred with amortization period over 1year and shall be borne by the current period and subsequent periods.
Amortization periods and amortization methods of various expenses are as follows:
| Item | Amortization period | Amortization method |
| Decoration fee | 3 to 5 years | Expected years of benefit |
| Others | 2 years | Expected years of benefit |
29. Contract liabilities
√ Applicable □ Not applicable
The Company presents contract assets or contract liabilities in the balance sheet based on therelationship between performance obligations and customer payments. The Company's obligation totransfer goods or provide services to customers for consideration received or receivable from customersis presented as contract liabilities. Contract assets and contract liabilities under the same contract arepresented in net amounts.
30. Employee benefits
(1). Accounting treatment of short-term benefits
√ Applicable □ Not applicable
During the accounting period when employees provide service, the Company will recognize theshort-term benefits actually incurred as liabilities, and the liabilities will be included in the current profitor loss or relevant costs of assets.
The Company will pay social insurance and housing funds for the employees, and will makeprovision of trade union funds and employee education costs in accordance with the requirements.During the accounting period when employees provide service, the Company will determine relevantamount of employee benefits in accordance with the required provision basis and provision ratios.
The employee welfare expenses incurred by the Company are included in the current profit or lossor related asset costs based on the actual amounts when they actually occur. Among them, non-monetarybenefits are measured at fair value.
(2). Accounting treatment of post-employment benefits
√ Applicable □ Not applicable
① Defined contribution scheme
The Company will pay basic pension insurance and unemployment insurance in accordance withthe relevant provisions of the local government for the employees. During the accounting period whenemployees provide service, the Company will calculate the amount payable which will be recognized asliabilities in accordance with the local stipulated basis and proportions, and the liabilities will beincluded in the current profit or loss or costs of related assets.
② Defined benefit scheme
The welfare responsibilities generated from defined benefit scheme based on the formuladetermined by projected unit credit method will be vested to the service period of employees andincluded into the current profit or costs of related assets.
The deficit or surplus generated from the present value of obligations of the defined benefit schememinus the fair value of the assets of defined benefit scheme is recognized as net liabilities or net assets.When the defined benefit scheme has surplus, the Company will measure the net assets of the definedbenefit scheme at the lower of the surplus of defined benefit scheme and the upper limit of the assets.
Notes to financial statements Page 116
All obligations of the defined benefit plan, including the expected duty of payment within 12months after the end of annual reporting period during which employees provide service, shall bediscounted based on the bond market yield of sovereign bond matching the term of obligations of thedefined benefit plan and currency or corporate bonds of high quality in the active market on the balancesheet date.
The service cost incurred by defined benefit scheme and the net interest of the net liabilities and netassets of the defined benefit scheme will be included in the current profit or loss or costs of relevantassets. The changes as a result of re-measurement of the net defined benefit liabilities or assets shall berecognized in other comprehensive income and shall not be reversed to profit or loss at subsequentaccounting period. When the original defined benefit plan is terminated, amount originally included inother comprehensive income shall be transferred to undistributed profit in the scope of equity.
When the defined benefit scheme is settled, the gain or loss is confirmed based on the differencebetween the present value of obligations and the settlement price of the defined benefit scheme as at thebalance sheet date.
(3). Accounting treatment of termination benefits
√ Applicable □ Not applicable
Where the Company provides termination benefits to its employees, the employee benefitsliabilities resulting from termination benefits are recognized on the following date (whichever is earlier)and are included in the current profit or loss: when the Company cannot unilaterally withdraw thetermination benefits provided due to the cancellation of the labor relationship with the employees or thelayoff proposal; or when the Company recognizes the costs or expenses of reorganization relating topayment of termination benefits.
(4). Accounting treatment of other long-term employees' benefits
□ Applicable √ Not applicable
31. Estimated liabilities
√ Applicable □ Not applicable
The Company shall recognize the obligations related to contingencies when all of the followingconditions are satisfied:
(1) obligation is a present obligation of the Company;
(2) it is probable that an outflow of economic benefits of the Company will be required to settle theobligation; and
(3) the amount of the obligation can be measured reliably.
Estimated liabilities shall be initially measured at the best estimate of the expenses required to settlethe related present obligation.
Factors pertaining to a contingency such as risk, uncertainties, and time value of money shall betaken into account as a whole in getting the best estimate. Where the effect of the time value of money ismaterial, the best estimate shall be determined by discounting the related future cash outflow.
Where the expenses required have a successive range and the possibilities of occurrence of eachresult are the same in the range, the best estimate shall be determined according to the median valuewithin the range; in other cases, the best estimate shall be determined as below:
? If contingencies involve a single item, the best estimate shall be determined according to the mostpossible occurrence amount.
? If contingencies involve multiple items, the best estimate shall be calculated and determined inaccordance with various possible outcomes and related possibilities.
Where some or all of the expenses required to settle an estimated liability are expected to bereimbursed by a third party, the reimbursement is separately recognized as an asset when it is virtuallycertain that the reimbursement will be received. The amount recognized for the reimbursement is limitedto the carrying amount of the liability recognized.
The Company reviews the carrying value of the estimated liabilities at the balance sheet date. Ifthere is any exact evidence indicating that the carrying value cannot really reflect the current bestestimate, the carrying value shall be adjusted in accordance with the current best estimate.
Notes to financial statements Page 117
32. Share-based payments
√ Applicable □ Not applicable
Share-based payments are transactions that grant equity instruments or assume equity-instrumentbased liabilities for receiving services rendered by employees or other parties. The Company’sshare-based payments included equity-settled share-based payments and cash-settled share-basedpayments.
(1) Equity-settled share-based payments and equity instruments
Equity-settled share-based payments made in exchange for services rendered by employees aremeasured at the fair value of equity instruments granted to employees. Share-based payment transactionsvested immediately after the date of grant shall be included in the relevant cost or expense based on thefair value of equity instruments at the date of grant, and the capital reserve shall be increasedaccordingly. For share-based payment transactions vested only when the services during the waitingperiod are completed or the specified performance conditions are satisfied after the grant, the Companyshall, at each balance sheet date during the waiting period, include the services obtained during theperiod in relevant cost or expense at the fair value of the date of grant, according to the best estimate ofthe number of vested equity instruments, and the capital reserve shall be increased accordingly.
If the terms of the equity-settled share-based payments are amended, the Company shall recognizethe services received at least based on the situation before the amendment is made. In addition, anyamendment resulting in the increase of the fair value of the equity instrument granted or changes that arebeneficial to employees on the amendment date, will be recognized as an increase in the servicereceived.
During the waiting period, if the granted equity instrument is cancelled, the Company will acceleratethe vesting thereof, immediately include the remaining amount that should be recognized in the waitingperiod in the current profit or loss, and recognize the capital reserve. However, if new equity instrumentsare vested and they are verified at the vesting date of new equity instrument as alternatives vested to cancelequity instruments, the treatment on the new equity instrument is in conformity with the modifiedtreatment on disposal of equity instrument.
(2) Cash-settled share-based payments and equity instruments
Cash-settled share-based payments are measured at the fair value of the liabilities calculated anddetermined on the basis of shares or other equity instruments undertaken by the Company. Share-basedpayment transactions vested immediately after the date of grant shall be included in the relevant cost orexpense based on the fair value of liabilities undertook at the date of grant, and the liabilities shall beincreased accordingly. For share-based payment transactions vested only when the services during thewaiting period are completed or the specified performance conditions are satisfied after the grant, theCompany shall include the services obtained during the period in relevant cost or expense at the fairvalue of the liabilities undertook by the Company based on the best estimate of the vesting situation, andthe liabilities shall be included accordingly. At each balance sheet date before the settlement and thesettlement date of relevant liabilities, the fair value of the liabilities is remeasured, and its changes areincluded in the current profit or loss.
If the Company modifies the terms and conditions of a cash-settled share-based payment agreementso that it becomes an equity-settled share-based payment, on the date of modification (regardless ofwhether it occurs within or after the vesting period), the Company measures the equity-settledshare-based payment at the fair value on the grant date of the equity instrument, and recognises theservices acquired in capital reserve, and derecognises the liability recognised for the cash-settledshare-based payment on the date of modification, with the difference between the two being recognisedin profit or loss for the period. If the vesting period is lengthened or shortened as a result of themodification, the Company accounts for the modification in accordance with the modified vestingperiod.
33. Preference shares, perpetual bonds and other financial instruments
□ Applicable √ Not applicable
Notes to financial statements Page 118
34. Revenue
(1). Accounting policies used in recognition and measurement of revenue by type of business
√ Applicable □ Not applicable
① Accounting policies used in recognition and measurement of revenue
The Company recognizes revenue when its performance obligations in the contract are fulfilled,that is, the control over the relevant goods or services is obtained by the customer. Obtaining controlover related goods or services means being able to lead the use of the goods or services and obtainalmost all of the economic benefits from the goods or services.
If the contract contains two or more performance obligations, the Company will, at the date of thecontract, allocate the transaction price to each individual performance obligation in accordance with therelative proportion of the stand-alone selling price of the goods or services promised by each individualperformance obligation. The Company measures revenue based on the transaction price allocated to eachindividual performance obligation.
Transaction price refers to the amount of consideration that the Company expects to be entitled toreceive due to the transfer of goods or services to customers, excluding amounts collected on behalf ofthird parties and amounts expected to be returned to customers. The Company determines the transactionprice in accordance with the terms of the contract and combined with its past customary practices. Whendetermining the transaction price, the Company considers the impact of variable consideration, majorfinancing components in the contract, non-cash consideration, consideration payable to customers andother factors. The Company determines the transaction price that includes variable consideration at anamount that does not exceed the amount of accumulated recognized revenue that is unlikely to besignificantly reversed when the relevant uncertainty is eliminated. If there is a major financingcomponent in the contract, the Company determines the transaction price based on the amount payablein cash when the customer obtains control over the goods or services, and amortizes the differencebetween the transaction price and the contract consideration with the actual interest rate method duringthe contract period.
The performance obligation is fulfilled during a certain period of time if one of the followingconditions is satisfied, otherwise, the performance obligation is fulfilled at a certain point in time:
? the customer obtains and consumes the economic benefits brought by the Company's performanceat the same time as the Company's performance.
? the customer can control the products under construction during the Company's performance.
? the goods produced during the Company's performance have irreplaceable uses, and the Companyhas the right to collect payment for the cumulative performance part that has been completed so farduring the entire contract period.
For performance obligations performed within a certain period of time, the Company recognizesrevenue in accordance with the performance progress during that period, except where the performanceprogress cannot be reasonably determined. The Company considers the nature of the goods or servicesand adopts the output method or the input method to determine the performance progress. When theperformance progress cannot be reasonably determined, and the cost incurred is expected to becompensated, the Company recognizes the revenue according to the amount of the cost incurred until theperformance progress can be reasonably determined.
For performance obligations performed at a certain point in time, the Company recognizes revenueat the point when the customer obtains control over the relevant goods or services. When judgingwhether the customer has obtained control over goods or services, the Company considers the followingsigns:
? the Company has the current right to receive payment for the goods or services, that is, thecustomer has the current payment obligation for the goods or services;
? the Company has transferred the legal ownership of the goods to the customer, that is, thecustomer has the legal ownership of the goods;
? the company has transferred the goods to the customer in kind, that is, the customer has takenpossession of the goods in kind;
? the company has transferred the main risks and rewards of the ownership of the goods to thecustomer, that is, the customer has obtained the main risks and rewards of the ownership of the goods;
? the customer has accepted the goods or services.
The Company determines whether the Company's status is that of a principal or agent whenengaging in a transaction based on whether it has control over the goods or services prior to transferring
Notes to financial statements Page 119
them to the customer. If the Company is able to control the goods or services before transferring them tothe customer, the Company is the principal responsible party and recognizes revenue based on the totalconsideration received or receivable. Otherwise, the Company shall recognize revenue as an agent basedon the amount of commissions or fees to which it is expected to be entitled.
② Disclosure of specific revenue recognition methods and measurement methods by the type ofbusiness
A. Sale contract: The sale contract between the Company and its customers usually contains onlythe performance obligation for the transfer of goods. The Company usually takes into account thefollowing factors in order to obtain the current right of collection of goods, the transfer of primary risksand rewards on the ownership of the goods, the transfer of legal ownership of the goods, the transfer ofphysical assets of the goods and the customer's acceptance of the goods as the time point of revenuerecognition.
B. Supply chain service: The provision of integrated logistics and supply chain services is aperformance obligation performed at a certain time point, and revenue is recognised when thecorresponding services have been provided, the payment has been collected or the right to collectpayment has been obtained, and the corresponding economic benefits are likely to flow in.
C. Others (including franchise management fee, hardware and software and material income):
Revenue is recognised at the time point when the customer obtains control over the corresponding goodsor services.
(2). Different revenue recognition and measurement methods for the same type of business
adopting different business models
□ Applicable √ Not applicable
35. Contract cost
√ Applicable □ Not applicable
Contract cost includes contract performance cost and contract acquisition cost.
If the cost incurred by the Company for the performance of the contract does not fall within thescope of relevant standards and regulations for inventories, fixed assets or intangible assets, it shall berecognized as an asset as the contract performance cost when the following conditions are met:
? the cost is directly related to a current or expected contract;
? the cost increases the Company's future resources for fulfilling its performance obligations;
? the cost is expected to be recovered.
If the incremental cost incurred by the Company to obtain the contract is expected to be recovered,it will be recognized as an asset as the cost of obtaining the contract.
Assets related to contract costs are amortized on the same basis as the revenue recognition of goodsor services related to the assets; however, if the amortization period of cost of obtaining the contractdoes not exceed one year, the Company will include it in the current profit or loss when it occurs.
If the carrying value of the assets related to the contract cost is higher than the difference betweenthe following two items, the Company will make provision for impairment of the excess part andrecognize it as an asset impairment loss:
(1) the remaining consideration expected to be obtained due to the transfer of goods or servicesrelated to the assets; and
(2) the costs expected to be incurred due to the transfer of the related goods or services.
If the depreciation factors in the previous period change later, causing the aforementioneddifference to be higher than the carrying value of the assets, the Company will reverse thepreviously-made provision for impairment and include it in the current profit or loss, but the carryingvalue of the assets after the reversal cannot exceed the carrying value of the assets at the date of reversalunder the assumption that no provision is made for the impairment.
36. Government subsidies
√ Applicable □ Not applicable
(1) Types
Notes to financial statements Page 120
Government subsidies are monetary or non-monetary assets obtained by the Company from thegovernment free of charge. They are divided into government subsidies related to assets and governmentsubsidies related to income.Government subsidies related to assets refer to government subsidies obtained by the Company thatare used to purchase or construct or otherwise form long-term assets. Government subsidies related toincome refer to the government subsidies other than government subsidies related to assets.
The specific standards for the Company to classify government subsidies into government subsidiesrelated to assets are as follows:
If obtained subsidies are used to purchase, construct or otherwise form fixed assets, intangibleassets and other long-term assets as expressly stipulated in government documents, then such subsidiesare deemed as asset-related government subsidies.
The specific standards for the Company to classify government subsidies into income-relatedgovernment subsidies are as follows:
If the government subsidies (excluding asset-related subsidies) are used to compensate relevantcosts or losses of the Company that have been already incurred or to be incurred in subsequent periods,then such subsidies are deemed as income-related government subsidies.
Where there is no express regulation on the object of subsidies in government documents, then theCompany will classify the government subsidies as assets-related or income-related depending on thespecific purpose that the subsidies are used for.
(2) Timing of recognition
Government subsidies are recognized when the Company can meet the conditions attached and canreceive them.
(3) Accounting treatment
Government subsidies related to assets shall offset the carrying amount of relevant assets or berecognized as deferred income. If it is recognized as deferred income, it shall be included in the currentprofit and loss in a reasonable and systematic way within the useful life of the relevant assets (if it isrelated to the daily activities of the Company, it shall be included in other income; otherwise, it shall beincluded in the non-operating income);
Government subsidies related to income that are used for compensation for the relevant costs orlosses of the Company in subsequent periods are recognized as deferred income and are included in thecurrent profit or loss in the period in which the relevant costs, expenses or losses are recognized (if theyare related to the daily activities of the Company, they shall be included in other income; otherwise, theyshall be included in the non-operating income) or offset the relevant costs or losses; Governmentsubsidies related to income that are used for compensation for the relevant costs or losses that theCompany has already incurred shall be directly included in the current profit or loss (if they are relatedto the daily activities of the Company, they shall be included in other income; otherwise, they shall beincluded in the non-operating income) or offset the relevant costs or losses.
The Company's policy-based concessional loans are classified into the following two conditionsand are accounted for respectively:
① If the lending bank provides loans to the Company at a policy-based preferential interest rateafter the Ministry of Finance allocates the interest-grant funds to the lending bank, the actual borrowingamount received is recognized as the entry value of the borrowing and the relevant borrowing expensesare measured in accordance with the principal amount of the borrowing and policy-based preferentialinterest rate.
② When the government directly distributes the interest-grant funds to the Company, thecorresponding discount will offset the relevant borrowing costs.
37. Deferred income tax assets and liabilities
√ Applicable □ Not applicable
Income taxes include current income tax and deferred income tax. Except for income tax arisingfrom business combination and transactions or events that are directly included in owners' equity(including other comprehensive income), the Company includes current income tax and deferred incometax in the current profit or loss.
Notes to financial statements Page 121
Deferred income tax assets and deferred income tax liabilities are calculated and recognized basedon the difference (temporary difference) between the tax base of assets and liabilities and their carryingvalue.Deferred tax assets are recognized to the extent that it is probable that future taxable profits will beavailable against which deductible temporary differences can be offset. For deductible losses and taxcredits that can be reversed in the future period, deferred tax assets shall be recognized to the extent thatit is probable that taxable profit will be available in the future to offset the deductible losses and taxcredits.Save as the exceptions, deferred tax liabilities shall be recognized for the taxable temporarydifference.The exceptions for not recognizing deferred tax assets and liabilities include:
? the initial recognition of the goodwill;
? other transactions or matters other than enterprise merger in which neither profit nor taxableincome (or deductible loss) will be affected when transactions occur, and the initial recognition of assetsand liabilities does not result in taxable temporary differences and deductible temporary differences ofequal amount
Deferred income tax liabilities are recognized for all taxable temporary differences arising from theinvestments in subsidiaries, joint ventures and associates, except to the extent that both of the followingconditions are satisfied: the Company is able to control the timing of the reversal of the temporarydifferences; and it is likely that the temporary difference will not reverse in the foreseeable future.Deferred income tax assets are recognized for all deductible temporary differences associated withinvestments in subsidiaries, joint ventures and associates if all of the following conditions are satisfied:
It is likely that the deductible temporary difference will reverse in the foreseeable future and it is likelythat taxable profit in the future will be available against which the deductible temporary difference canbe offset.
At the balance sheet date, deferred income tax assets and liabilities are measured at tax ratesexpected to be applied to the period when the assets are recovered or the liabilities are settled accordingto the tax law.
At the balance sheet date, the Company reviews the carrying value of deferred income tax assets.The carrying value of the deferred income tax assets are reduced if it is unlikely to obtain sufficienttaxable income to offset the benefit of the deferred income tax assets in the future. When it is likely thatsufficient taxable income will be available, the amount of write-down is reversed.
38. Lease
√ Applicable □ Not applicable
A lease is a contract whereby the lessor conveys to the lessee the right to use an asset in exchangefor consideration. On the commencement date of the contract, the Company assesses whether thecontract is or contains a lease. A contract is, or contains, a lease if one party to the contract gives theright to control the use of an identified asset or identified assets for a period of time in exchange forconsideration.
If the contract contains multiple separate leases simultaneously, the Company will split the contractand conduct separate accounting treatment for each separate lease. If the contract contains leasecomponents and non-lease components simultaneously, the lessee and the lessor will split the leasecomponents and the non-lease components.
Judgemental basis and accounting treatment of short-term leases and leases of low-value assets forwhich a simplified treatment is adopted as the lessee
√ Applicable □ Not applicable
The Company as the lessee
(1) Right-of-use assets
At the commencement date of the lease term, the Company recognizes right-of-use assets for leasesother than short-term leases and low-value asset leases. Right-of-use assets are initially measured at cost.The cost comprises:
? the amount of the initial measurement of the lease liability;
? any lease payments made at or before the commencement date of the lease term, less any leaseincentives received;
Notes to financial statements Page 122
? any initial direct costs incurred by the Company; and? an estimate of costs to be incurred by the Company in dismantling and removing the leased asset,restoring the site on which it is located or restoring the leased asset to the condition required by theterms and conditions of the lease, unless those costs are incurred to produce inventories.The Company subsequently adopts the straight-line method to depreciate the right-of-use assets. Ifit can be reasonably determined that the ownership of the leased asset can be acquired upon the expiry ofthe lease term, depreciation will be prepared during the remaining useful life of the leased asset;otherwise, depreciation will be prepared during the lease term or the remaining useful life of the leasedasset whichever is shorter.The Company determines whether the right-of-use asset has been impaired in accordance with theprinciples described in Note "V (27) Impairment of long-term assets", and performs accountingtreatment for the identified impairment losses.
(2) Lease liabilities
At the commencement date of the lease term, the Company recognizes lease liabilities for leasesother than short-term leases and low-value asset leases. Lease liabilities are initially measured at thepresent value of the lease payments that are not paid. Lease payments comprise:
? fixed payments (including substantial fixed payments), less any lease incentives received;
? variable lease payments that depend on an index or a rate;
? amounts expected to be payable by the lessee under residual value guarantees provided by theCompany;
? the exercise price of a purchase option if the Company is reasonably certain to exercise that option;and
? Payments for exercising an option to terminate the lease if the lease term reflects the lesseeexercising an option to terminate the lease.
The Company uses the interest rate implicit in lease as the discount rate, but if the interest rateimplicit in lease cannot be reasonably determined, the Company's incremental borrowing rate is used asthe discount rate.
The Company calculates the interest expense of the lease liability in each period of the lease termaccording to the fixed periodic interest rate, and includes it in the current profit and loss or the relatedasset costs.
Variable lease payments excluded in the measurement of lease liabilities are included in the currentprofit and loss or the related asset costs when they are actually incurred.
After the commencement date of the lease term, the Company re-measures the lease liabilities andadjusts the corresponding right-of-use assets under the following circumstances. If the carrying amountof the right-of-use assets is reduced to zero, but the lease liabilities still need to be further reduced, thedifference is included in the current profit and loss:
? when there is a change in the assessment result of an option to purchase, renew or terminate thelease, or the actual exercise of the aforementioned options is inconsistent with the original assessmentresult, the Company remeasures the lease liabilities at the present value calculated according to thechanged lease payments and the revised discount rate; and
? When there is a change in the substantial fixed payments, a change in the amounts expected to bepayable under a residual value guarantee, or a change in an index or a rate used to determine the leasepayments, the Company remeasures the lease liabilities at the present value calculated according to thechanged lease payments and the unchanged discount rate. However, the present value is calculatedaccording to the revised discount rate if the change in lease payments is caused by a change in floatinginterest rates.
(3) Short-term leases and low-value asset leases
The Company chooses not to recognize right-of-use assets and lease liabilities for short-term leasesand low-value asset leases, and includes relevant lease payments in the current profit and loss or relatedasset costs over the lease term on straight-line basis. A short-term lease is a lease that, at thecommencement date, has a lease term of 12 months or less and does not contain a purchase option. Alow-value asset lease is a lease with a lower value when a single leased asset is a brand-new asset. If theCompany subleases or expects to sublease a leased asset, the original lease is not a low-value asset lease.
(4) Lease modifications
Notes to financial statements Page 123
The Company accounts for a lease modification as a separate lease if the following conditions aresatisfied simultaneously:
? the lease modification increases the lease scope by adding the right to use one or more lease assets;and
? the consideration for the lease increases by an amount commensurate with the stand-alone pricefor the increase in scope and any appropriate adjustments to that stand-alone price to reflect thecircumstances of the particular contract.
When a lease modification is not treated as a separate lease, at the effective date of the leasemodification, the Company re-allocates the consideration of the contract after the change, re-determinesthe lease term, and remeasures the lease liability at the present value calculated according to the changedlease payments and the revised discount rate.
When a lease modification decreases the lease scope or shortens the lease term, the Companyreduces the carrying value of the right-of-use asset and includes the relevant gain or loss resulting frompartial of full termination of the lease in the current profit and loss. When other lease modificationsresult in re-measurement of the lease liability, the Company adjusts the carrying value of the right-of-useasset accordingly.
(5) Sale and leaseback
The Company assesses and determines whether the transfer of the asset in the sale and leasebacktransactions is a sale according to Note "V (34) Income".
When the transfer of the asset in the sale and leaseback transactions is a sale, the Company as thelessor measures the right-of-use asset arising from the sale and leaseback at the proportion of theprevious carrying amount of the asset that relates to the right of use retained through leaseback, andrecognises the relevant gain or loss at the amount that relates to the rights transferred to the lessor.
When the transfer of the asset in the sale and leaseback transactions is not a sale, the Company asthe lessor continues to recognize the transferred assets and also recognizes a financial liability equal tothe transfer income. Details of accounting treatment of financial liabilities are set out in Note "V (11)Financial Instruments".
Criteria for classification and accounting treatment of leases as the lessor
√ Applicable □ Not applicable
The Company as the lessor
At the commencement date of the lease term, the Company classifies lease into finance lease andoperating lease. Finance lease refers to a lease that has transferred in substance all the risks and rewardsrelated to the ownership of an asset, regardless of whether the ownership is ultimately transferred.Operating lease refers to a lease other than a finance lease. When the Company acts as a sublease lessor,it classifies the sublease based on the right-of-use asset arising from the original lease.
(1) Accounting treatment of operating leases
Lease receipts from operating leases are recognized as rental income over the lease term onstraight-line basis. The Company capitalizes the initial direct expenses incurred in relation to operatingleases, and amortizes and includes them in the current profit and loss on the same basis as the rentalincome is recognized during the lease term. Variable lease payments excluded in lease receipts areincluded in the current profit and loss when they are actually incurred. In case of any operating leasemodification, the Company will account for it as a new lease from the effective date of the modification,and regard the lease advance or lease receivable related to the lease before the modification as the receiptfrom the new lease.
(2) Accounting treatment of finance leases
At the commencement of the lease, the Company recognizes a finance lease receivable for a financelease, and derecognizes finance lease assets. At the initial measurement of the finance lease receivable,the Company regards the net investment in the lease as the entry value of the finance lease receivable.Net investment in the lease is the sum of the following items discounted at the interest rate implicit inlease: any unguaranteed residual value; and any lease receipt which is received at the commencement ofthe lease.
Notes to financial statements Page 124
The Company calculates and recognizes the interest income over the lease term at the fixedperiodic interest rate. Derecognition and impairment of finance lease receivables are subject to theaccounting treatment in accordance with Note "V (11) Financial Instruments".Variable lease payments excluded in net investment in the lease are included in measurement thecurrent profit and loss when they are actually incurred.
The Company accounts for a finance lease modification as a separate lease if the followingconditions are satisfied simultaneously:
? the modification increases the lease scope by adding the right to use one or more lease assets; and
? the consideration for the lease increases by an amount commensurate with the stand-alone pricefor the increase in scope and any appropriate adjustments to that stand-alone price to reflect thecircumstances of the particular contract.
When a finance lease modification is not treated as a separate lease, the Company accounts for themodified lease as follows:
? if the lease would have been classified as an operating lease had the modification been in effect atthe commencement date, the Company accounts for the lease modification as a new lease from theeffective date of the modification, and measures the carrying value of the lease asset as the netinvestment in the lease immediately before the effective date of the lease modification.
? if the lease would have been classified as an finance lease had the modification been in effect atthe commencement date, the Company accounts for the lease modification according to the policies formodification or renegotiation of contracts in Note "V (11) Financial Instruments".
(3) Sale and leaseback transactions
The Company assesses and determines whether the transfer of the asset in the sale and leasebacktransactions is a sale according to Note "V (34) Income".
When the transfer of the asset in the sale and leaseback transactions is a sale, the Company as thelessor accounts for the purchase of the asset, and accounts for the lease of the asset in accordance withthe aforementioned policy; When the transfer of the asset in the sale and leaseback transactions is not asale, the Company as the lessor does not recognize the transferred asset, but recognizes a financial assetequal to the transfer income. Details of accounting treatment of financial assets are set out in Note "V
(11) Financial Instruments".
39. Other significant accounting policies and accounting estimates
□ Applicable √ Not applicable
40. Changes in significant accounting policies and accounting estimates
(1). Changes in significant accounting policies
□ Applicable √ Not applicable
(2). Changes in significant accounting estimates
□ Applicable √ Not applicable
(3). Adjustments to the opening items and amounts of the financial statements for the year of the
first implementation due to the first implementation of new accounting standards, standard
interpretations, etc. from 2023
□ Applicable √ Not applicable
41. Others
√ Applicable □ Not applicable
Hedge accounting
(1) Classification of hedging
① Fair value hedge is a hedge of the exposure to changes in fair value of a recognized asset orliability or an unrecognized firm commitment (except for foreign exchange risk).
Notes to financial statements Page 125
② Cash flow hedge is a hedge of the exposure to changes in cash flows. Such changes in cashflows mainly come from a specific type of risk related to a recognized asset or liability or an expectedtransaction that is likely to occur, or the foreign exchange risk included in an unrecognized firmcommitment.
③ Hedge of net investment in an overseas operation is a hedge of the foreign exchange exposurearising from net investment in an overseas operation. Net investment in an overseas operation refers toan enterprise's equity proportion in the net assets in an overseas operation.
(2) Designation of hedging relationship and confirmation of hedging effectiveness
At the commencement of the hedging relationship, the Company shall specify the hedgingrelationship formally and prepare a formal written document on the hedging relationship, riskmanagement objectives and the strategies of hedging. This document shall at least specify the contentsand number of the hedging instruments, the nature and number of the hedged items, the nature of thehedged risk, the type of hedge and the evaluation of the Company on the effectiveness of the hedginginstruments. Hedging effectiveness refers to the extent that the changes in the fair value or cash flow of ahedging instrument may offset the changes resulted from the hedging risks in the fair value or cash flowof a hedged item.
The Company shall continuously evaluate the hedging effectiveness to determine whether thehedging meets the requirements on effectiveness for using hedging accounting within the accountingperiod when the hedging relationship is specified. If the hedging fails to meet the requirements, the useof hedging relationship shall be terminated.
The use of hedge accounting shall meet the following requirements for the hedging effectiveness:
① There is an economic relationship between the hedged item and the hedging instrument.
② In the value change caused by the economic relationship between the hedged item and thehedging instrument, the influence of credit risk is not dominant.
③ An appropriate hedging ratio is adopted, and this ratio will not form an imbalance in the relativeweight of the hedged item and the hedging instrument, thereby generating accounting results that areinconsistent with the hedge accounting objectives. If the hedging ratio is no longer appropriate, but thehedging risk management objectives have not changed, the number of hedged items or hedginginstruments shall be adjusted so that the hedging ratio meets the requirements on effectiveness again.
(3) Accounting treatment method of hedge
① Fair value hedge
Changes in the fair value of hedging derivatives are included in the current profit and loss. Changesin the fair value of a hedged item due to hedging risk are included in the current profit and loss, whileadjusting the book value of the hedged item.
For fair value hedges related to financial instruments measured at amortized cost, adjustments tothe carrying value of the hedged item are amortized in the remaining period between the adjustment dateand the maturity date and are included in the current profit and loss. Amortization carried out inaccordance with the effective interest rate method can begin immediately after the adjustment of thecarrying value, and shall not be later than the adjustment made due to the changes in the fair valuescaused by the hedging risk after the hedged item is terminated.
If the hedged item is derecognized, the un-amortized fair value is recognized as current profit orloss.
If the hedged item is a unrecognized firm commitment, the accumulated changes in the fair value ofthe firm commitment caused due to the hedged risk is recognized as an asset or liability, and the relatedgains or losses are included in the current profit and loss. Changes in the fair value of hedginginstruments are also included in the current profit and loss.
② Cash flow hedge
The portion of the gains or losses from hedging instruments, which belongs to the effective hedge,shall be directly recognized as other comprehensive income, and the portion which belongs to theineffective hedge shall be included in the current profit and loss.
If the hedged transaction affects the current profit or loss, for example, when the hedged financialincome or financial expense is confirmed or the expected sale occurs, the amount recognized in othercomprehensive income will be transferred to the current profit and loss. If the hedged item is the cost ofa non-financial asset or liability, the amount originally recognized in other comprehensive income is
Notes to financial statements Page 126
transferred out and included in the initial recognition amount of the non-financial asset or liability (or theamount originally recognized in other comprehensive income is transferred out in the same period inwhich the non-financial asset or liability affects the profit and loss, and included in the current profit andloss).If the expected transaction or firm commitment is not expected to occur, the cumulative gains orlosses of hedging instruments previously included in other comprehensive income are transferred outand included in the current profit or loss. If the hedging instrument expires, is sold, terminated orexercised (but has not been replaced or extended), or the designation of the hedging relationship isrevoked, the amount previously included in other comprehensive income will not be transferred out untilthe expected transaction or firm commitment affects the current profit and loss.
③ Hedge of net investment in an overseas operation
Hedge of net investment in an overseas operation, including hedge of monetary items as part of netinvestment, is handled similarly to cash flow hedge. The portion of the gains or losses from hedginginstruments, which is recognized as effective hedge, shall be recorded in other comprehensive income,and the portion which is recognized as ineffective hedge shall be included in the current profit and loss.When disposing of overseas operations, any accumulated gains or losses included in othercomprehensive income are transferred out and included in the current profit or loss.
Repurchase of the Company's shares
The Company manages the repurchased shares as treasury shares before cancellation or transfer,and transfers all the expenses for the repurchase to the costs of treasury shares. The consideration andtransaction costs paid for the repurchase reduce the owner's equity, and no gain or loss is recognizedwhen the Company's shares are repurchased, transferred or cancelled.
(1) Where the Company's shares are acquired for reasons such as reduction of registered capital orreward to employees, they will be treated as treasury shares based on the amount actually paid for therepurchase and also be registered for future reference. If the repurchased shares are cancelled, thedifference between the total nominal value of the shares calculated based on the nominal value andnumber of the cancelled shares and the amount actually paid for the repurchase will be offset against thecapital reserve, and if the capital reserve is insufficient to offset, the remaining difference will be offsetagainst the retained earnings. If the repurchased shares are awarded to employees of the Company asequity-settled share-based payment, when receiving the price from the exercise by the employees of theoption to purchase the Company's shares, the Company resells and delivers the cost of employees'treasury shares and the accumulated amount of capital reserves (other capital reserves) during thewaiting period, and adjusts the capital reserve (share premium) based on the difference between them.
(2) For the shares repurchased in accordance with the equity incentive plan, the Company willrepurchase and cancel the restricted stocks that fail to meet the unlocking conditions. For the stocksrequired to be repurchased due to failure to unlocking conditions for restricted stocks, the Companydebits them to "Other payables - Repurchase obligations of restricted stocks" and other subjects andcredits them to "Bank deposits" and other subjects. At the same time, the Company debits the amount ofshare capital corresponding to the number of cancelled restricted stocks in the subject of "Share capital",credits the carrying value of the treasury stocks corresponding to the number of cancelled restrictedstocks in the subject of "Treasury shares", and debits the difference of them to the subject of "CapitalReserve - Share premium".
Debt reorganisation
(1) The Company as the creditor
The Company terminates the recognition of claims when the contractual right to receive the cashflow from claims terminates. In the event of debt reorganisation by means of extinguishing debts withassets or converting debts into equity instruments, the Company recognises the corresponding assetswhen they meet the definition and the conditions for recognition.
In the event of debt reorganisation by means of extinguishing debts with assets, the Companymeasures the transferred non-financial assets at cost upon initial recognition. The cost of inventoryincludes the fair value of waived claims and other costs directly attributable to the asset such as taxes,transportation and handling fees, insurance premiums and other costs incurred in bringing the asset to itscurrent position and condition. The cost of an investment in an associated enterprise or joint ventureincludes other costs such as the fair value of waived claims and taxes directly attributable to the asset.The cost of an investment property includes the fair value of waived claims and other costs, such as
Notes to financial statements Page 127
taxes, directly attributable to the asset. The cost of a fixed asset includes the fair value of waived claimsand other costs directly attributable to the asset such as taxes, transportation, handling and installationfees, service fees to professionals and other costs incurred in bringing the asset to the predeterminedstate for use. The cost of a biological asset includes the fair value of waived claims and other costs, suchas taxes, directly attributable to the asset. The cost of an intangible asset includes the fair value ofwaived claims and other costs, such as taxes, incurred in bringing the asset to its intended use. Wheredebt reorganisation by converting debts into equity instruments causes creditors to convert their claimsinto equity investments in an associated enterprise or joint venture, the Company measures the initialinvestment cost at the fair value of waived claims and other costs, such as taxes, directly attributable tothe asset. The difference between the fair value of waived claims and the carrying amount is included inthe profit or loss for the current period.
For debt reorganisation by means of modifying other terms, the Company recognises and measuresreorganised claims according to Note "V (11) Financial Instruments".
For debt reorganisation by means of extinguishing debts with multiple assets or by multiple means,the Company first recognises and measures transferred financial assets and reorganised claims accordingto Note "V (11) Financial Instruments", and then distributes the net fair value of waived claims afterdeducting the recognised amounts of transferred financial assets and reorganised claims according to theproportion of the fair value of the assets other than the transferred financial assets and, on that basis,separately determines the cost of each asset according to the aforementioned method. The differencebetween the fair value of waived claims and the carrying amount is included in the profit or loss for thecurrent period.
(2) The Company as the debtor
The Company terminates the recognition of debts when its current obligation for debts isdischarged.
In the event of debt reorganisation by means of extinguishing debts with assets, the Companyterminates recognition when the corresponding assets and the debts to be extinguished meet theconditions for termination of recognition, and the difference between the carrying amount of the debts tobe extinguished and that of transferred assets is included in the profit or loss for the current period.
In the event of debt reorganisation by means of converting debts into equity instruments, theCompany terminates recognition when the debts to be extinguished meet the conditions for terminationof recognition. Upon initial recognition of equity instruments, the Company measures at the fair value ofthe equity instruments. If the fair value of equity instruments cannot be reliably measured, the Companymeasures at the fair value of the debts to be extinguished. The difference between the carrying amount ofthe debts to be extinguished and the recognised amounts of equity instruments shall be included in theprofit or loss for the current period.
For debt reorganisation by means of modifying other terms, the Company recognises and measuresreorganised debts according to Note "V (11) Financial Instruments".
For debt reorganisation by means of extinguishing debts with multiple assets or by multiple means,the Company recognises and measures equity instruments and reorganised debts according to theaforementioned methods, and includes the difference between the carrying amount of the debts to beextinguished and the sum of the carrying amount of transferred assets and the recognised amounts ofequity instruments and debts to be extinguished in the profit or loss for the current period.
Segment reporting
The Company determines the operating segment based on the internal organizational structure,management requirements, and internal reporting system, and determines the reporting segment basedon the operating segment and discloses segment information.
Operating segment refers to the component of the Company that meets the following conditionssimultaneously: (1) the component can generate income and incur expenses in daily activities; (2) themanagement of the Company can regularly evaluate the operating results of the component to decide toallocate resources to it and evaluate its performance; and (3) the Company can obtain relevantaccounting information such as the financial status, operating results and cash flow of the component. Iftwo or more operating segments have similar economic characteristics and meet certain conditions, theycan be combined into one operating segment.
Notes to financial statements Page 128
VI. Taxes
1. Major tax types and tax rates
Particulars on major tax types and tax rates
√ Applicable □ Not applicable
| Tax type | Taxing basis | Tax rate |
| Value added tax ("VAT") | The output tax is calculated on the basis of the income from sales of products and taxable income from rendering of services calculated according to the provisions of the tax law. The difference between the output tax and the input tax which is allowed to be deductible in the current period is the payable VAT | 13%, 9%, 6%, 5% |
| Consumption tax | ||
| Business tax | ||
| Urban maintenance and construction tax | Calculated and paid according to the actually-paid VAT and consumption tax | 7%, 5%, 1% |
| Enterprise income tax | Calculated and paid according to the taxable income | 15%, 20%, 25%, 22%, 31%, 17%, 16.5%, 24%, 21% |
Particulars on disclosure of taxpayers with different enterprise income tax rates
√ Applicable □ Not applicable
| Name of taxpayer | Income tax rate (%) |
| Shanghai M&G Stationery Inc. | 15 |
| Shanghai M&G Zhenmei Stationery Co., Ltd.（上海晨光珍美文具有限公司） | 25 |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 25 |
| Lianyungang Colipu Office Supplies Co., Ltd.（连云港市科力普办公用品有限公司） | 20 |
| Shenyang M&G Colipu Office Supplies Co., Ltd.（沈阳晨光科力普办公用品有限公司） | 20 |
| Shanghai M&G Stationery & Gift Co., Ltd.（上海晨光文具礼品有限公司） | 25 |
| Shanghai M&G Stationery Sales Co., Ltd.（上海晨光文具销售有限公司） | 25 |
| Guangzhou M&G Stationery&Gifts Sales Co., Ltd.（广州晨光文具礼品销售有限公司） | 25 |
| Yiwu Chenxing Stationery Co., Ltd.（义乌市晨兴文具用品有限公司） | 25 |
| Harbin M&G Sanmei Stationery Co., Ltd.（哈尔滨晨光三美文具有限公司） | 25 |
| Zhengzhou M&G Stationery&Gifts Co., Ltd.（郑州晨光文具礼品有限责任公司） | 25 |
| M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） | 25 |
| Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司） | 20 |
| Jiangsu M&G Life Enterprise Management Co., Ltd.（江苏晨光生活馆企业管理有限公司） | 20 |
| Zhejiang New M&G Life Enterprise Management Co., Ltd.（浙江新晨光生活馆企业管理有限公司） | 20 |
| Jiumu M&G Store Enterprise Management Co., Ltd.（九木杂物社企业管理有限公司） | 25 |
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | 25 |
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 25 |
| Shanghai M&G Office Stationery Co., Ltd. | 25 |
| Hangzhou Sanmei M&G Stationery Co., Ltd.（杭州三美晨光文具有限公司） | 25 |
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | 20 |
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | 25 |
| Shanghai Colipu Information Technology Co., Ltd.（上海科力普信息科技有限公司） | 25 |
| Axus Stationery (Shanghai) Company Ltd. | 15 |
| Jiangsu Marco Pen Co., Ltd.（江苏马可笔业有限公司） | 25 |
| Changchun Macro Stationery Co., Ltd.（长春马可文教用品有限公司） | 25 |
| Yili Senlai Wood Co., Ltd.（伊犁森徕木业有限公司） | 25 |
| Axus Stationery (Hong Kong) Company Ltd. | 16.5 |
Notes to financial statements Page 129
| International stationery company | 20 |
| Shanghai Meixin Stationery Co., Ltd. (上海美新文具有限公司) | 25 |
| SHANGHAI M&G STATIONERY (SINGAPORE) PTE.LTD. | 17 |
| M&G Jiumu Enterprise Management (Beijing) Co., Ltd. (晨光九木企业管理（北京）有限公司) | 20 |
| Back to School Holding AS | 22 |
| Beckmann AS | 22 |
| Beckmann Norway GmbH (Germany) | 31 |
| Beckmann Norway Inc | 21 |
| Beckmann Norway GmbH (Austria) | 24 |
| Zhejiang Benwei Technology Co., Ltd. (浙江本味科技有限公司) | 20 |
| Guangdong South China M&G Stationery Co., Ltd. (广东华南晨光文教用品有限公司) | 25 |
| Hubei Chaoxin Real Estate Co., Ltd. (湖北潮信置业有限公司) | 25 |
| Shanghai M&G Colipu Technology Development Co., Ltd. (上海晨光科力普科技发展有限公司) | 20 |
| Shanghai Yichengxiang E-commerce Co., Ltd. (上海益诚祥电子商务有限公司) | 20 |
2. Tax preference
√ Applicable □ Not applicable
On 15 November 2022, the Company obtained the High- and New-tech Enterprise Certificate(certificate number GR202231001425, valid for 3 years) issued jointly by Shanghai Municipal Scienceand Technology Commission, Shanghai Finance Bureau and Shanghai Municipal Tax Service, StateTaxation Administration.On 24 September, 2021, the subsidiary Axus Stationery (Shanghai) Company Ltd. ("AxusStationery") obtained the High- and New-tech Enterprise Certificate (certificate numberGR201831003575, valid for 3 years) issued jointly by Shanghai Municipal Science and TechnologyCommission, Shanghai Finance Bureau and Shanghai Municipal Tax Service, State TaxationAdministration.The Company and the subsidiary Axus Stationery paid the enterprise income tax at the rate of 15%this year.
According to the Notice of the Ministry of Finance and the State Taxation Administration on thePreferential Income Tax Policies for Micro and Small Enterprises and Individual Industrial andCommercial Households (Notice No. 6 of the Ministry of Finance and the State Taxation Administrationin 2023), for the part of small low-profit enterprises' annual taxable income not exceedingRMB1,000,000, the enterprise income tax at 20% shall apply based on 25% of the taxable income, withan effective period from 1 January 2023 to 31 December 2024. According to the Notice on ImplementingFurther Income Tax Preference Policies for Micro and Small Enterprises (Notice No. 13 of the Ministryof Finance and the State Taxation Administration in 2022), for the part of small low-profit enterprises'annual taxable income between RMB1,000,000 and RMB3,000,000, the enterprise income tax at 20%shall apply based on 25% of the taxable income, with an effective period from 1 January 2022 to 31December 2024. Pursuant to the Announcement on Further Supporting Small and Micro Enterprises andIndividual Industrial and Commercial Businesses through Relevant Tax and Fee Policies(Announcement No. 12 of 2023 of the Ministry of Finance and the State Taxation Administration). Taxon natural resources (excluding tax on water resources), urban maintenance and construction tax, realestate tax, urban land use tax, stamp tax (excluding stamp tax on securities transactions), agriculture landtax, educational surcharge and local education surcharge on small-scale VAT taxpayers, small-sizedlow-profit enterprises and individual industrial and commercial households are deducted by half from 1January 2023 to 31 December 2027. The enterprise income tax at 20% shall apply based on 25% of thetaxable income for small-sized low-profit enterprises, with the effective period extended till 31December 2027. Subsidiaries M&G Jiumu Enterprise Management (Beijing) Co., Ltd. (晨光九木企业管理（北京）有限公司), Zhejiang New M&G Life Enterprise Management Co., Ltd.（浙江新晨光生活馆企业管理有限公司）, Jiangsu M&G Life Enterprise Management Co., Ltd.（江苏晨光生活馆企业管理有限公司）, Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司）, Lianyungang Colipu Office Supplies Co., Ltd.（连云港市科力普办公用品有限公司）,Shenyang M&G Colipu Office Supplies Co., Ltd.（沈阳晨光科力普办公用品有限公司）, ShanghaiM&G Colipu Technology Development Co., Ltd. (上海晨光科力普科技发展有限公司), Zhejiang
Notes to financial statements Page 130
Benwei Technology Co., Ltd. (浙江本味科技有限公司), Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司）, and Shanghai Yichengxiang E-commerce Co., Ltd. (上海益诚祥电子商务有限公司) meet the tax declaration requirements for micro and small enterprises, and declare theenterprise income tax at the tax rate of 20%.
In accordance with the Notice of the Ministry of Finance and the State Administration of Taxationon Value-Added Tax Policies for Software Products (Cai Shui [2011] No. 100), the subsidiary ShanghaiColipu Information Technology Co., Ltd. (Hereinafter referred to as "Colipu Information Technology")was granted the tax incentive regarding the refund upon payment of VAT by Shanghai Xuhui DistrictTax Service, State Taxation Administration on software products on 9 June 2020, with a valid periodfrom 1 April 2020 to 31 March 2070.
According to the Notice of the Ministry of Finance and the State Administration of Taxation onEnterprise Income Tax Policies for Further Encouraging the Development of Software Industry andIntegrated Circuit Industry (Cai Shui [2012] No.27), an eligible software company shall be exemptedfrom enterprise income tax for the first 2 years as of the first profit-making year and shall pay enterpriseincome tax at half of the statutory tax rate of 25% for the third to the fifth years until the expiry of thepreferential period. As such, Colipu Information Technology was entitled to a preferential corporateincome tax rate of 12.5% for the current year.
3. Others
□ Applicable √ Not applicable
VII. Notes to the Items of Consolidated Financial Statements
1. Cash and equivalents
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 612,487.27 | 764,880.86 |
| Cash at bank | 5,144,131,897.40 | 3,249,065,541.16 |
| Other cash and equivalents | 94,377,132.41 | 113,258,755.22 |
| Deposits in finance company | ||
| Total | 5,239,121,517.08 | 3,363,089,177.24 |
| Including: Total cash deposited outside China | 67,735,912.35 | 10,480,461.66 |
Other descriptionsNo
2. Held-for-trading financial assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | Reasons and basis for designation |
| Financial assets at fair value through profit or loss | 1,402,518,595.12 | 1,627,645,879.64 | / |
| Including: | |||
| Debt instrument investment | / | ||
| Equity instrument investment | / | ||
| Derivative financial assets | / | ||
| Others | 1,402,518,595.12 | 1,627,645,879.64 | / |
| Financial assets designated at fair value through profit or loss | |||
Notes to financial statements Page 131
| Including: | |||
| Debt instrument investment | |||
| Others | |||
| Total | 1,402,518,595.12 | 1,627,645,879.64 | / |
Other descriptions:
√ Applicable □ Not applicable
Other bank wealth management products purchased for the Company.
3. Derivative financial assets
□ Applicable √ Not applicable
4. Bills receivable
(1). Bills receivable presented by category
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Finance company acceptance bills | 31,549,469.04 | 34,345,789.16 |
| Commercial acceptance bills | 8,768,551.36 | 4,736,930.40 |
| Less: Bad debt provisions of bills receivable | -2,121,931.46 | -1,621,970.36 |
| Total | 38,196,088.94 | 37,460,749.20 |
(2). Bills receivable pledged by the Company at the end of the period
□ Applicable √ Not applicable
(3). Bills receivable endorsed or discounted by the Company at the end of the period but not dueyet at the balance sheet date
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount derecognised at the end of the Period | Amount not derecognised at the end of the period |
| Finance company acceptance bills | 15,945,243.71 | |
| Commercial acceptance bills | 2,706,627.49 | |
| Total | 18,651,871.20 |
(4). Disclosure by accruing method for bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provisions | Carrying value | Carrying balance | Bad debt provisions | Carrying value | |||||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | Amount | Percentage (%) | Amount | Accruing percentage (%) | |||
| Bad debt provisions accrued separately | ||||||||||
| Including: | ||||||||||
| Bad debt provisions accrued according to the combination | 40,318,020.40 | 100.00 | 2,121,931.46 | 5.26 | 38,196,088.94 | 39,082,719.56 | 100.00 | 1,621,970.36 | 4.15 | 37,460,749.20 |
| Including: | ||||||||||
Notes to financial statements Page 132
| Account age analysis | 40,318,020.40 | 100.00 | 2,121,931.46 | 5.26 | 38,196,088.94 | 39,082,719.56 | 100.00 | 1,621,970.36 | 4.15 | 37,460,749.20 |
| Total | 40,318,020.40 | / | 2,121,931.46 | / | 38,196,088.94 | 39,082,719.56 | / | 1,621,970.36 | / | 37,460,749.20 |
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
√ Applicable □ Not applicable
Combination item: Account age analysis
Unit: Yuan Currency: RMB
| Item | Closing balance | ||
| Bills receivable | Bad debt provisions | Accruing percentage (%) | |
| Finance company acceptance bills | 31,549,469.04 | 1,721,268.96 | 5.46 |
| Commercial acceptance draft | 8,768,551.36 | 400,662.50 | 4.57 |
| Total | 40,318,020.40 | 2,121,931.46 | |
Notes to bad debt provisions accrued according to the combination
□ Applicable √ Not applicable
Bad debt provisions accrued according to the general model of expected credit losses
□ Applicable √ Not applicable
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of bills receivable arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
(5). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Finance company acceptance bills | 1,431,485.48 | 289,783.48 | 1,721,268.96 | |||
| Commercial acceptance draft | 190,484.88 | 210,177.62 | 400,662.50 | |||
| Total | 1,621,970.36 | 499,961.10 | 2,121,931.46 | |||
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptions:
No
(6). Particulars on notes receivable actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant notes receivable:
□ Applicable √ Not applicable
Notes to financial statements Page 133
Notes to the write-off of notes receivable:
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
5. Accounts receivable
(1). Disclosure by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Within one year | ||
| Including: Sub-item within one year | ||
| Within one year | 3,596,158,530.17 | 2,982,697,246.23 |
| Sub-total within one year | 3,596,158,530.17 | 2,982,697,246.23 |
| One to two years | 47,189,044.02 | 24,648,697.52 |
| Two to three years | 9,916,131.28 | 4,137,539.06 |
| Above three years | 3,247,920.65 | 738,641.97 |
| Three to four years | ||
| Four to five years | ||
| Above five years | ||
| Total | 3,656,511,626.12 | 3,012,222,124.78 |
(2). Disclosure by accruing method for bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provisions | Carrying value | Carrying balance | Bad debt provisions | Carrying value | |||||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | Amount | Percentage (%) | Amount | Accruing percentage (%) | |||
| Bad debt provisions accrued separately | 8,947,233.20 | 0.24 | 8,947,233.20 | 100.00 | 10,212,919.44 | 0.34 | 10,212,919.44 | 100.00 | ||
| Including: | ||||||||||
| Bad debt provisions accrued according to the combination | 3,647,564,392.92 | 99.76 | 60,094,587.62 | 1.65 | 3,587,469,805.30 | 3,002,009,205.34 | 99.66 | 45,358,620.38 | 1.51 | 2,956,650,584.96 |
| Including: | ||||||||||
| Account age analysis | 3,647,564,392.92 | 99.76 | 60,094,587.62 | 1.65 | 3,587,469,805.30 | 3,002,009,205.34 | 99.66 | 45,358,620.38 | 1.51 | 2,956,650,584.96 |
| Total | 3,656,511,626.12 | / | 69,041,820.82 | / | 3,587,469,805.30 | 3,012,222,124.78 | / | 55,571,539.82 | / | 2,956,650,584.96 |
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
√ Applicable □ Not applicable
Combination item: Account age analysis
Unit: Yuan Currency: RMB
| Item | Closing balance | ||
| Accounts receivable | Bad debt provisions | Accruing percentage (%) | |
| Account age analysis | 3,647,564,392.92 | 60,094,587.62 | 1.65 |
Notes to financial statements Page 134
| Total | 3,647,564,392.92 | 60,094,587.62 |
Description on bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the general model of expected credit losses
□ Applicable √ Not applicable
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of accounts receivable arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
(3). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Bad debt provisions accrued separately | 10,212,919.44 | 4,422,654.97 | 3,232,256.86 | 2,456,084.35 | 8,947,233.20 | |
| Account age analysis | 45,358,620.38 | 15,066,297.87 | 223,147.79 | -107,182.84 | 60,094,587.62 | |
| Total | 55,571,539.82 | 19,488,952.84 | 3,232,256.86 | 2,679,232.14 | -107,182.84 | 69,041,820.82 |
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptions:
In the bad debt provision for the current year, there is an impact of RMB-37,211.83 due to theexchange rate difference in the conversion of foreign currency financial statements, as well as areduction in the bad debt provision for the disposal of Luoyang M&G Stationery Sales Co., Ltd. (洛阳晨光文具销售有限公司) during this period, amounting to RMB-69,971.01. The bad debt provisionrecognized for the current year includes an amount of RMB3,232,256.86 recovered or reversed from theprovision for bad debts previously recognized, with the actual provision for bad debts beingRMB16,256,695.98.
(4). Particulars on accounts receivable actually written-off in the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Written-off amount |
| Accounts receivable actually written-off | 2,679,232.14 |
Writing-off of significant accounts receivable
□ Applicable √ Not applicable
Description on writing-off of accounts receivable:
□ Applicable √ Not applicable
(5). Particulars on top five accounts receivable and contract assets in terms of the balance at the
end of the period based on debtors
√ Applicable □ Not applicable
Notes to financial statements Page 135
Unit: Yuan Currency: RMB
| Company name | Closing balance | Closing balance of contract assets | Closing balance of accounts receivable and contract assets | Percentage (%) in the total balance at the end of the period of accounts receivable | Balance of bad debt provisions at the end of the period |
| First | 576,741,401.26 | 576,741,401.26 | 15.77 | 2,883,707.01 | |
| Second | 509,888,643.62 | 509,888,643.62 | 13.94 | 2,932,584.75 | |
| Third | 273,568,209.01 | 273,568,209.01 | 7.48 | 4,319,389.68 | |
| Fourth | 122,110,762.99 | 122,110,762.99 | 3.34 | 985,158.44 | |
| Fifth | 109,017,286.68 | 109,017,286.68 | 2.98 | 587,700.13 | |
| Total | 1,591,326,303.56 | 1,591,326,303.56 | 43.51 | 11,708,540.01 |
Other descriptionsNo
Other descriptions:
□ Applicable √ Not applicable
6. Contract assets
(1). Particulars on contract assets
□ Applicable √ Not applicable
(2). Amount of and reason for significant changes in carrying value during the Reporting Period
□ Applicable √ Not applicable
(3). Disclosure by accruing method for bad debt provisions
□ Applicable √ Not applicable
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Description on bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the general model of expected credit losses
□ Applicable √ Not applicable
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of contract assets arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
(4). Provision set aside for bad debts on contract assets in the current period
□ Applicable √ Not applicable
Notes to financial statements Page 136
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptions:
No
(5). Contract assets written off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant contract assets
□ Applicable √ Not applicable
Notes to write-off of contract assets:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
7. Accounts receivable financing
(1). Classified presentation of accounts receivables financing
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Bills receivable | 39,533,283.51 | 21,664,621.88 |
| Factoring of accounts receivable | ||
| Accounts receivable | ||
| Total | 39,533,283.51 | 21,664,621.88 |
(2). Accounts receivables financing pledged by the Company at the end of the period
□ Applicable √ Not applicable
(3). Accounts receivables financing endorsed or discounted by the Company at the end of theperiod but not due yet at the balance sheet date
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount derecognised at the end of the period | Amount not derecognised at the end of the period |
| Bank acceptance bills | 14,783,368.02 | |
| Total | 14,783,368.02 |
(4). Disclosure by accruing method for bad debt provisions
□ Applicable √ Not applicable
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Description on bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the general model of expected credit losses
Notes to financial statements Page 137
□ Applicable √ Not applicable
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of accounts receivables financing arising fromchanges in the provision for losses in the current period:
□ Applicable √ Not applicable
(5). Particulars on bad debt provisions
□ Applicable √ Not applicable
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptions:
No
(6). Particulars on accounts receivable financing actually written-off in the current period
□ Applicable √ Not applicable
Including: Significant write-off of accounts receivables financing
□ Applicable √ Not applicable
Notes on write-off:
□ Applicable √ Not applicable
(7). Changes in receivables financing during the current period and changes in fair value:
√ Applicable □ Not applicable
| Item | Balance at the end of the year | Increased in the current period | Derecognition of the current period | Other changes | Closing balance | Accumulated losses recognized in other comprehensive income |
| Bills receivable | 21,664,621.88 | 112,506,318.82 | 94,637,657.19 | 39,533,283.51 |
(8). Other descriptions:
□ Applicable √ Not applicable
8. Prepayment
(1). Advance payment presented by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Closing balance | Opening balance | ||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within one year | 70,580,071.90 | 96.86 | 82,051,410.79 | 98.32 |
| One to two years | 1,811,662.07 | 2.49 | 1,336,396.27 | 1.60 |
| Two to three years | 470,500.86 | 0.65 | 64,438.50 | 0.08 |
| Above three years | ||||
| Total | 72,862,234.83 | 100.00 | 83,452,245.56 | 100.00 |
Description on the reasons for failure to settle the advance payment with an account age over one yearand a significant amount:
No
Notes to financial statements Page 138
(2). Particulars on top 5 advance payments in terms of the balance at the end of the periodaccording to the concentration of parties to which the advance payments are made
√ Applicable □ Not applicable
| Company name | Closing balance | Percentage (%) in the total balance at the end of the period of advance payment |
| First | 10,700,656.74 | 14.69 |
| Second | 5,413,218.48 | 7.43 |
| Third | 5,235,812.87 | 7.19 |
| Fourth | 3,467,663.89 | 4.76 |
| Fifth | 2,448,119.22 | 3.36 |
| Total | 27,265,471.20 | 37.43 |
Other descriptionsNo
Other descriptions
□ Applicable √ Not applicable
9. Other receivables
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Interest receivable | ||
| Dividend receivable | ||
| Other receivables | 226,419,933.52 | 208,957,374.58 |
| Total | 226,419,933.52 | 208,957,374.58 |
Other descriptions:
□ Applicable √ Not applicable
Interest receivable
(1). Classification of interest receivable
□ Applicable √ Not applicable
(2). Important overdue interest
□ Applicable √ Not applicable
(3). Disclosure by accruing method for bad debt provisions
□ Applicable √ Not applicable
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Description on bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Notes to financial statements Page 139
(4). Bad debt provisions accrued according to the general model of expected credit losses
□ Applicable √ Not applicable
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of interest receivable arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
(5). Particulars on bad debt provisions
□ Applicable √ Not applicable
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptions:
No
(6). Particulars on interest receivable actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant interest receivable
□ Applicable √ Not applicable
Notes on write-off:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Dividend receivable
(1). Dividend receivable
□ Applicable √ Not applicable
(2). Important dividend receivable with the account age over one year
□ Applicable √ Not applicable
(3). Disclosure by accruing method for bad debt provisions
□ Applicable √ Not applicable
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Description on bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
(4). Bad debt provisions accrued according to the general model of expected credit losses
□ Applicable √ Not applicable
Notes to financial statements Page 140
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of dividends receivable arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
(5). Particulars on bad debt provisions
□ Applicable √ Not applicable
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptions:
No
(6). Particulars on dividend receivable actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant dividend receivable
□ Applicable √ Not applicable
Notes on write-off:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Other receivables
(1). Disclosure by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Within one year | ||
| Including: Sub-item within one year | ||
| Within one year | 165,563,284.02 | 168,410,800.27 |
| Sub-total within one year | 165,563,284.02 | 168,410,800.27 |
| One to two years | 39,844,384.24 | 24,291,850.81 |
| Two to three years | 17,409,340.53 | 30,215,722.06 |
| Above three years | 42,422,223.31 | 19,794,386.51 |
| Three to four years | ||
| Four to five years | ||
| Above five years | ||
| Less: Bad debt provisions | -38,819,298.58 | -33,755,385.07 |
| Total | 226,419,933.52 | 208,957,374.58 |
(2). Particulars on classification by amount nature
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Amount nature | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Personal loans and petty cash | 10,318,174.21 | 10,057,590.14 |
| Amount paid for materials | 45,159,020.33 | 45,511,365.72 |
Notes to financial statements Page 141
| Consolidated balance of related-parties current accounts - provisional input tax | 43,432,125.94 | 48,721,963.13 |
| Non-housing deposit and margin | 59,149,069.50 | 46,899,705.91 |
| Housing deposit and margin | 73,213,647.38 | 61,576,770.10 |
| Others | 33,967,194.74 | 29,945,364.65 |
| Total | 265,239,232.10 | 242,712,759.65 |
(3). Particulars on accruing of bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Bad debt provisions | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment occurred) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January 2023 | 20,755,385.07 | 13,000,000.00 | 33,755,385.07 | |
| Balance as of 1 January 2023 in the current period | ||||
| - Transferred into Phase 2 | ||||
| - Transferred into Phase 3 | ||||
| - Reversed into Phase 2 | ||||
| - Reversed into Phase 1 | ||||
| Accrued in the current period | 5,073,521.77 | 5,073,521.77 | ||
| Reserved in the current period | ||||
| Resold in the current period | ||||
| Written-off in the current period | ||||
| Other Changes | -9,608.26 | -9,608.26 | ||
| Balance as at 31 December 2023 | 25,819,298.58 | 13,000,000.00 | 38,819,298.58 |
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of other receivables arising from changes in theprovision for losses in the current period:
√ Applicable □ Not applicable
| Carrying balance | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment occurred) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January | 229,712,759.65 | 13,000,000.00 | 242,712,759.65 |
Notes to financial statements Page 142
| 2023 | ||||
| Balance as of 1 January 2023 in the current period | ||||
| - Transferred into Phase 2 | ||||
| - Transferred into Phase 3 | ||||
| - Reversed into Phase 2 | ||||
| - Reversed into Phase 1 | ||||
| Increased in the Current Period | 1,283,531,485.17 | 1,283,531,485.17 | ||
| Derecognition of the current period | 1,259,924,588.91 | 1,259,924,588.91 | ||
| Other Changes | 1,080,423.81 | 1,080,423.81 | ||
| Balance as at 31 December 2023 | 252,239,232.10 | 13,000,000.00 | 265,239,232.10 |
Amount of bad debt provisions accrued for the current period and the basis for assessing whether thecredit risk of financial instruments has increased significantly:
□ Applicable √ Not applicable
(4). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Bad debt provisions accrued separately | 13,000,000.00 | 13,000,000.00 | ||||
| Account age analysis | 17,676,546.56 | 4,491,677.80 | -9,608.26 | 22,158,616.10 | ||
| Deposit for housing lease | 3,078,838.51 | 581,843.97 | 3,660,682.48 | |||
| Total | 33,755,385.07 | 5,073,521.77 | -9,608.26 | 38,819,298.58 | ||
Significant bad debt provision amounts reversed or recovered in the current period:
□ Applicable √ Not applicable
Other descriptions
The other changes in the bad debt provision for the current year consist of a foreign exchangetranslation difference of RMB-2,007.50 in the financial statements and a reduction in the bad debtprovision due to the disposal of Luoyang M&G Stationery Sales Co., Ltd. during this period, amountingto RMB-7,600.76.
(5). Particulars on other receivables actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant other receivables:
□ Applicable √ Not applicable
Notes to the write-off of other receivables:
□ Applicable √ Not applicable
Notes to financial statements Page 143
(6). Particulars on top 5 other receivables in terms of the balance at the end of the period basedon debtors
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Company name | Closing balance | Percentage (%) in the total balance at the end of the period of other receivables | Account nature | Account age | Bad debt provisions closing balance |
| First | 43,432,125.94 | 16.37 | Consolidated balance of related-parties current accounts - provisional input tax | Within one year | |
| Second | 13,000,000.00 | 4.90 | Others | Above three years | 13,000,000.00 |
| Third | 7,975,770.00 | 3.01 | Housing deposit and margin | Within one year 3,962,600 One to two years 4,013,200 | 398,788.50 |
| Fourth | 6,627,634.54 | 2.50 | Others | Within one year | 331,381.73 |
| Fifth | 6,136,781.42 | 2.31 | Others | Within one year | 306,839.07 |
| Total | 77,172,311.90 | 29.09 | / | / | 14,037,009.30 |
(7). Other receivables reported due to centralised management of funds
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
10. Inventories
(1). Classification of inventories
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Provision for the loss on decline in value of inventories/ provision for the impairment of contract performance cost | Carrying value | Carrying balance | Provision for the loss on decline in value of inventories/ provision for the impairment of contract performance cost | Carrying value | |
| Raw materials | 211,999,112.35 | 295,700.00 | 211,703,412.35 | 218,765,255.88 | 260,231.80 | 218,505,024.08 |
| Work-in-process | 38,723,366.52 | 38,723,366.52 | 38,759,893.74 | 426,844.96 | 38,333,048.78 | |
| Finished products | 1,343,825,313.39 | 67,142,882.21 | 1,276,682,431.18 | 1,385,031,556.91 | 81,988,636.69 | 1,303,042,920.22 |
| Revolving materials | 10,425,912.90 | 246,715.31 | 10,179,197.59 | 12,423,975.70 | 262,851.54 | 12,161,124.16 |
| Expendable biological assets | 9,605,089.97 | 9,605,089.97 | 12,394,562.86 | 12,394,562.86 | ||
| Contract | ||||||
Notes to financial statements Page 144
| performance cost | ||||||
| Materials in transit | 4,894,908.48 | 7,997.87 | 4,886,910.61 | |||
| Consigned processing materials | 6,916,598.85 | 6,916,598.85 | 7,598,696.70 | 7,598,696.70 | ||
| Shipped goods | 24,279,315.52 | 24,279,315.52 | 28,240,169.26 | 28,240,169.26 | ||
| Total | 1,645,774,709.50 | 67,685,297.52 | 1,578,089,411.98 | 1,708,109,019.54 | 82,946,562.86 | 1,625,162,456.68 |
(2). Devaluation provisions of inventories and impairment provisions of contract performance
cost
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase amount of the current period | Decrease amount of the current period | Closing balance | ||
| Accrued | Others | Reversed or resold | Others | |||
| Raw materials | 260,231.80 | 35,494.03 | 25.83 | 295,700.00 | ||
| Work-in-process | 426,844.96 | -426,844.96 | ||||
| Finished products | 81,988,636.69 | -11,337,319.39 | 3,508,435.09 | 67,142,882.21 | ||
| Revolving materials | 262,851.54 | -16,136.23 | 246,715.31 | |||
| Expendable biological assets | ||||||
| Contract performance cost | ||||||
| Materials in transit | 7,997.87 | 7,997.87 | ||||
| Total | 82,946,562.86 | -11,744,806.55 | 3,516,458.79 | 67,685,297.52 | ||
Additional notes: The other changes in the provision for inventory impairment for the current yearinclude a foreign exchange translation difference of RMB10,396.28 in the financial statements, as wellas a reduction in the provision for inventory impairment due to the disposal of Luoyang M&G StationerySales Co., Ltd. (洛阳晨光文具销售有限公司) during this period, amounting to RMB3,506,062.51.
Reasons for reversal or write-off of provision for inventories impairment in the current period
□ Applicable √ Not applicable
Inventories impairment provisions accrued according to the combination
□ Applicable √ Not applicable
Criteria for inventories impairment provisions accrued according to the combination
□ Applicable √ Not applicable
(3). Capitalisation amount of the borrowing expenses included in the balance of inventories at the
end of the period and the criteria and basis for its calculation
□ Applicable √ Not applicable
(4). Description on amortization amount of the current period of contract performance cost
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
Notes to financial statements Page 145
11. Held for sale assets
□ Applicable √ Not applicable
12. Non-current assets due within one year
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Debt investment due within one year | ||
| Other debt investments due within one year | ||
| Long-term receivables due within one year | 1,360,640.55 | 1,360,640.55 |
| Total | 1,360,640.55 | 1,360,640.55 |
Debt investment due within one year
□ Applicable √ Not applicable
Other debt investments due within one year
□ Applicable √ Not applicable
Additional notes to non-current assets due within one yearNo
13. Other current assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Contract acquisition cost | ||
| Receivable return cost | 70,145,155.05 | 49,434,039.49 |
| VAT input tax to be verified | 885,763.39 | 759,099.33 |
| VAT input tax to be deducted | 17,957,651.08 | 17,395,435.31 |
| Pre-paid enterprise income tax | 245,142.45 | 4,344,134.90 |
| Pre-paid value added tax | 183.13 | |
| Others | 1,730,448.32 | 505,433.42 |
| Total | 90,964,160.29 | 72,438,325.58 |
Other descriptionsNo
14. Debt investment
(1). Particulars on debt investment
□ Applicable √ Not applicable
Changes in provision for impairment on debt investments in the current period
□ Applicable √ Not applicable
(2). Important debt investment at the end of the period
□ Applicable √ Not applicable
(3). Particulars on accruing of impairment provisions
□ Applicable √ Not applicable
Basis of classification of stages and percentage of impairment provisionNo
Notes to financial statements Page 146
Notes to the significant changes in the book balance of debt investments arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
Bases for determining the amount of provision set aside for impairment and assessing whether the creditrisk of financial instruments has increased substantially in the current period
□ Applicable √ Not applicable
(4). Particulars on debt investment actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant debt investments
□ Applicable √ Not applicable
Notes to write-off of debt investments:
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
15. Other debt investment
(1). Other debt investment
□ Applicable √ Not applicable
Changes in provision for impairment on other debt investments in the current period
□ Applicable √ Not applicable
(2). Important other debt investments at the end of the period
□ Applicable √ Not applicable
(3). Particulars on accruing of impairment provisions
□ Applicable √ Not applicable
Basis of classification of stages and percentage of impairment provisionNo
Notes to the significant changes in the book balance of other debt investments arising from changes inthe provision for losses in the current period:
□ Applicable √ Not applicable
Bases for determining the amount of provision set aside for impairment and assessing whether the creditrisk of financial instruments has increased substantially in the current period
□ Applicable √ Not applicable
(4). Particulars on other debt investments actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of other significant debt investments
□ Applicable √ Not applicable
Notes to write-off of other debt investments:
□ Applicable √ Not applicable
Other descriptions:
Notes to financial statements Page 147
□ Applicable √ Not applicable
16. Long-term receivables
(1). Long-term receivables
□ Applicable √ Not applicable
(2). Disclosure by accruing method for bad debt provisions
□ Applicable √ Not applicable
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Description on bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
(3). Bad debt provisions accrued according to the general model of expected credit losses
□ Applicable √ Not applicable
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of long-term receivables arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
Bases for determining the amount of provision set aside for bad debts and assessing whether the creditrisk of financial instruments has increased substantially in the current period
□ Applicable √ Not applicable
(4). Particulars on bad debt provisions
□ Applicable √ Not applicable
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptions:
No
(5). Particulars on long-term receivables actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant long-term receivables
□ Applicable √ Not applicable
Notes to the write-off of long-term receivables:
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
Notes to financial statements Page 148
17. Long-term equity investments
(1). Long-term equity investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Invested company | At the beginning of the period balance | Change of the current period | Closing balance | Balance of impairment provisions at the end of the period | |||||||
| Additional investment | Withdrawn investment | Investment gains and losses recognised under the equity method | Adjustment to other comprehensive income | Other equity changes | Declaration on distribution of cash dividends or profits | Accruing of impairment provisions | Others | ||||
| I. Joint venture | |||||||||||
| Subtotal | |||||||||||
| II. Associate | |||||||||||
| Ningbo Zhongchen Equity Investment Partnership (Limited Partnership) | 31,423,824.34 | -673,689.41 | -45,383.25 | 30,704,751.68 | |||||||
| Shanghai Pen-making Technology Services Co., Ltd.（上海制笔技术服务有限公司） | 3,750,291.39 | -601,749.62 | 3,148,541.77 | ||||||||
| Shanghai Momobanzhang Enterprise Management Co., Ltd. | 2,359,494.02 | 5,000,000.00 | -3,980,675.00 | 3,378,819.02 | |||||||
| Anhui Pinhetongchen Enterprise Management Co., Ltd.（安徽品合同晨企业管理有限公司） | 2,192,927.37 | 1,251,726.23 | -941,201.14 | ||||||||
| Subtotal | 39,726,537.12 | 5,000,000.00 | 1,251,726.23 | -6,197,315.17 | -45,383.25 | 37,232,112.47 | |||||
| Total | 39,726,537.12 | 5,000,000.00 | 1,251,726.23 | -6,197,315.17 | -45,383.25 | 37,232,112.47 | |||||
(2). Impairment test of long-term equity investments
□ Applicable √ Not applicable
Other descriptionsNo
Notes to financial statements Page 149
18. Investments in other equity instruments
(1). Particulars on other equity instrument investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Change of the current period | Closing balance | Dividend income recognised in the current period | Accumulated gains included in other comprehensive income | Accumulated losses included in other comprehensive income | Reason for designation as at fair value through other comprehensive income | ||||
| Additional investment | Withdrawn investment | Gains included in other comprehensive income in the current period | Accumulated losses included in other comprehensive income in the current period | Others | |||||||
| Shanghai M&G Culture and Creativity Co., Ltd. | 8,411,887.95 | 763,185.47 | 9,175,073.42 | 5,575,073.42 | The Company held the investment for non-trading purposes | ||||||
| Total | 8,411,887.95 | 763,185.47 | 9,175,073.42 | 5,575,073.42 | / | ||||||
(2). Amount derecognised in the current period
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Notes to financial statements Page 150
19. Other non-current financial assets
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
20. Investment real estate
Measurement model of investment real estateNot applicable
(1). Impairment test of investment real estate measured at cost
□ Applicable √ Not applicable
21. Fixed assets
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 1,634,646,959.11 | 1,744,358,557.28 |
| Disposal of fixed assets | ||
| Total | 1,634,646,959.11 | 1,744,358,557.28 |
Other descriptions:
□ Applicable √ Not applicable
Fixed assets
(1). Particulars on fixed assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Property and buildings | Machinery and equipment | Means of transportation | Other equipment | Total |
| I. Original carrying value: | |||||
| 1. Balance at the beginning of the period | 1,720,394,149.04 | 924,195,667.99 | 63,548,975.56 | 401,795,849.93 | 3,109,934,642.52 |
| 2. Increase amount of the current period | 520,673.07 | 70,703,011.14 | 8,289,567.17 | 41,933,868.29 | 121,447,119.67 |
| (1) Acquisition | 182,526.68 | 5,675,978.68 | 73,418.98 | 6,727,380.75 | 12,659,305.09 |
| (2) Transfer-in from construction in progress | 338,146.39 | 65,027,032.46 | 8,216,148.19 | 35,206,487.54 | 108,787,814.58 |
| (3) Increase for business combination | |||||
| 3. Decrease amount of the current period | 2,194,031.18 | 32,525,371.70 | 10,612,261.64 | 25,433,436.26 | 70,765,100.78 |
| (1) Disposal or scraping | 2,973,438.07 | 30,986,390.57 | 10,133,127.81 | 25,639,238.21 | 69,732,194.66 |
| (2) Disposal of subsidiaries | 563,629.24 | 179,546.16 | 743,175.40 | ||
| (3) Translation difference of foreign-currency statements | -779,406.89 | 1,538,981.13 | -84,495.41 | -385,348.11 | 289,730.72 |
Notes to financial statements Page 151
| 4. Balance at the end of the period | 1,718,720,790.93 | 962,373,307.43 | 61,226,281.09 | 418,296,281.96 | 3,160,616,661.41 |
| II. Accumulated depreciation | |||||
| 1. Balance at the beginning of the period | 486,428,888.87 | 526,245,553.46 | 47,934,942.73 | 303,020,540.97 | 1,363,629,926.03 |
| 2. Increase amount of the current period | 90,445,205.56 | 77,595,402.52 | 4,574,110.64 | 49,810,654.17 | 222,425,372.89 |
| (1) Accruing | 90,445,205.56 | 77,595,402.52 | 4,574,110.64 | 49,810,654.17 | 222,425,372.89 |
| 3. Decrease amount of the current period | 2,143,789.40 | 25,877,756.76 | 9,548,559.84 | 24,461,649.83 | 62,031,755.83 |
| (1) Disposal or scraping | 2,109,288.88 | 25,078,191.60 | 9,375,291.62 | 24,401,464.03 | 60,964,236.13 |
| (2) Disposal of subsidiaries | 387,256.63 | 170,849.63 | 558,106.26 | ||
| (3) Translation difference of foreign-currency statements | 34,500.52 | 799,565.16 | -213,988.41 | -110,663.83 | 509,413.44 |
| 4. Balance at the end of the period | 574,730,305.03 | 577,963,199.22 | 42,960,493.53 | 328,369,545.31 | 1,524,023,543.09 |
| III. Impairment provisions | |||||
| 1. Balance at the beginning of the period | 1,946,159.21 | 1,946,159.21 | |||
| 2. Increase amount of the current period | |||||
| (1) Accruing | |||||
| 3. Decrease amount of the current period | |||||
| (1) Disposal or scraping | |||||
| 4. Balance at the end of the period | 1,946,159.21 | 1,946,159.21 | |||
| IV. Carrying value | |||||
| 1. Carrying value at the end of the period | 1,143,990,485.90 | 382,463,949.00 | 18,265,787.56 | 89,926,736.65 | 1,634,646,959.11 |
| 2. Carrying value at the beginning of the period | 1,233,965,260.17 | 396,003,955.32 | 15,614,032.83 | 98,775,308.96 | 1,744,358,557.28 |
Other descriptions: For fixed assets used as collaterals, see “1. Important Commitments” underNote “XVI. Commitments and Contingencies”.
(2). Particulars on temporary idle fixed assets
□ Applicable √ Not applicable
(3). Particulars on fixed assets leased in under finance leases
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing carrying value |
| Property and Buildings | 46,429,899.85 |
Notes to financial statements Page 152
(4). Fixed assets without proper certificates of title
□ Applicable √ Not applicable
(5). Impairment test of fixed assets
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Disposal of fixed assets
□ Applicable √ Not applicable
22. Construction in progress
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 95,391,194.19 | 71,901,168.18 |
| Engineering materials | ||
| Total | 95,391,194.19 | 71,901,168.18 |
Other descriptions:
□ Applicable √ Not applicable
Construction in progress
(1). Particulars on construction in progress
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment provisions | Carrying value | Carrying Balance | Impairment provisions | Carrying value | |
| Fixed assets not yet installed and put into use | 71,960,914.66 | 71,960,914.66 | 36,984,476.82 | 36,984,476.82 | ||
| Others | 23,430,279.53 | 23,430,279.53 | 34,916,691.36 | 34,916,691.36 | ||
| Total | 95,391,194.19 | 95,391,194.19 | 71,901,168.18 | 71,901,168.18 | ||
(2). Changes in important construction in progress projects in the current period
□ Applicable √ Not applicable
(3). Particulars on impairment provisions accrued for construction in progress in the currentperiod
□ Applicable √ Not applicable
(4). Impairment test of construction in progress
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
Notes to financial statements Page 153
Engineering materials
(1). Particulars on engineering materials
□ Applicable √ Not applicable
23. Productive biological assets
(1). Productive biological assets using cost measurement model
□ Applicable √ Not applicable
(2). Impairment test of productive biological assets using cost measurement model
□ Applicable √ Not applicable
(3). Productive biological assets using fair value measurement model
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
24. Oil and gas assets
(1) Particulars on oil and gas assets
□ Applicable √ Not applicable
(2) Impairment test of oil and gas assets
□ Applicable √ Not applicable
Other descriptions:
No
25. Right-of-use assets
(1) Particulars on right-of-use assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Property and buildings | Transportation vehicles | Machinery and equipment | Total |
| I. Original carrying value | ||||
| 1. Balance at the beginning of the period | 713,879,408.22 | 2,679,653.36 | 716,559,061.58 | |
| 2. Increase amount of the current period | 334,487,302.89 | -1,885.49 | 170,119.08 | 334,655,536.48 |
| (1) New leases | 338,541,245.40 | 170,119.08 | 338,711,364.48 | |
| (2) Revaluation adjustment | -4,053,942.51 | -1,885.49 | -4,055,828.00 | |
| 3. Decrease amount of the current period | 316,855,235.59 | 316,855,235.59 | ||
| (1) Disposal | 313,994,913.45 | 313,994,913.45 | ||
| (2) Disposal of subsidiaries | 2,860,322.14 | 2,860,322.14 | ||
| 4. Balance at the end of the period | 731,511,475.52 | 2,677,767.87 | 170,119.08 | 734,359,362.47 |
| II. Accumulated depreciation | ||||
| 1. Balance at the beginning of the period | 379,370,678.03 | 1,392,308.87 | 380,762,986.90 | |
Notes to financial statements Page 154
| 2. Increase amount of the current period | 241,622,911.58 | 531,817.82 | 14,176.60 | 242,168,906.00 |
| (1) Accrual | 241,622,911.58 | 531,817.82 | 14,176.60 | 242,168,906.00 |
| 3. Decrease amount of the current period | 289,419,359.82 | -11,458.44 | 289,407,901.38 | |
| (1) Disposal | 288,242,636.87 | 288,242,636.87 | ||
| (2) Disposal of subsidiaries | 1,235,882.75 | 1,235,882.75 | ||
| (3) Translation difference of foreign-currency statements | -59,159.80 | -11,458.44 | -70,618.24 | |
| 4. Balance at the end of the period | 331,574,229.79 | 1,935,585.13 | 14,176.60 | 333,523,991.52 |
| III. Impairment provisions | ||||
| 1. Balance at the beginning of the period | ||||
| 2. Increase amount of the current period | ||||
| (1) Accrual | ||||
| 3. Decrease amount of the current period | ||||
| (1) Disposal | ||||
| 4. Balance at the end of the period | ||||
| IV. Carrying value | ||||
| 1. Carrying value at the end of the period | 399,937,245.73 | 742,182.74 | 155,942.48 | 400,835,370.95 |
| 2. Carrying value at the beginning of the period | 334,508,730.19 | 1,287,344.49 | 335,796,074.68 | |
(2) Impairment test of right-of-use assets
□ Applicable √ Not applicable
Other descriptions:
No
26. Intangible assets
(1). Particulars on intangible assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Land use right | Patent right | Unpatented technology | Image identification rights | Trademark use rights | Software | Others | Total |
| I. Original carrying value | ||||||||
| 1. Balance at the beginning of the period | 337,260,255.54 | 16,585,109.59 | 93,989.00 | 97,905,332.20 | 39,129,063.08 | 37,296,978.79 | 528,270,728.20 | |
| 2. Increase amount of the current period | 43,066,999.47 | 2,274,487.73 | 5,161,555.33 | 165,943.15 | 50,668,985.68 | |||
| (1) Acquisition | 2,274,487.73 | 1,935,911.38 | 165,943.15 | 4,376,342.26 | ||||
| (2) Internal R&D | ||||||||
| (3) Increase for business combination | 43,066,999.47 | 43,066,999.47 | ||||||
| (4) Transfer-in from construction in progress | 3,225,643.95 | 3,225,643.95 | ||||||
Notes to financial statements Page 155
| 3. Decrease amount of the current period | 113,385.79 | 93,989.00 | 923,178.16 | 23,345.10 | 1,153,898.05 | |||
| (1) Disposal | 93,989.00 | 93,989.00 | ||||||
| (2) Translation difference of foreign-currency statements | 113,385.79 | 923,178.16 | 23,345.10 | 1,059,909.05 | ||||
| 4. Balance at the end of the period | 380,213,869.22 | 18,859,597.32 | 96,982,154.04 | 44,290,618.41 | 37,439,576.84 | 577,785,815.83 | ||
| II. Accumulated amortisation | ||||||||
| 1. Balance at the beginning of the period | 57,152,400.55 | 6,072,813.99 | 93,989.00 | 10,296,136.98 | 25,596,122.56 | 11,290,620.49 | 110,502,083.57 | |
| 2. Increase amount of the current period | 8,009,899.17 | 1,178,835.03 | 1,710,825.44 | 4,174,304.15 | 5,143,501.87 | 20,217,365.66 | ||
| (1) Accruing | 8,009,899.17 | 1,178,835.03 | 1,710,825.44 | 4,174,304.15 | 5,143,501.87 | 20,217,365.66 | ||
| 3. Decrease amount of the current period | 16,303.10 | 93,989.00 | -629,712.29 | 755,472.95 | 236,052.76 | |||
| (1) Disposal | 93,989.00 | 93,989.00 | ||||||
| (2) Translation difference of foreign-currency statements | 16,303.10 | -629,712.29 | 755,472.95 | 142,063.76 | ||||
| 4. Balance at the end of the period | 65,145,996.62 | 7,251,649.02 | 12,636,674.71 | 29,770,426.71 | 15,678,649.41 | 130,483,396.47 | ||
| III. Impairment provisions | ||||||||
| 1. Balance at the beginning of the period | ||||||||
| 2. Increase amount of the current period | ||||||||
| (1) Accruing | ||||||||
| 3. Decrease amount of the current period | ||||||||
| (1) Disposal | ||||||||
| 4. Balance at the end of the period | ||||||||
| IV. Carrying value | ||||||||
| 1. Carrying value at the end of the period | 315,067,872.61 | 11,607,948.30 | 84,345,479.33 | 14,520,191.70 | 21,760,927.43 | 447,302,419.37 | ||
| 2. Carrying value at the beginning of the period | 280,107,855.00 | 10,512,295.60 | 87,609,195.22 | 13,532,940.52 | 26,006,358.30 | 417,768,644.64 | ||
Other descriptions: For intangible assets used as collaterals, see “1. Important Commitments” underNote “XVI. Commitments and Contingencies”.
The proportion of intangible assets formed by the Company's internal R&D at the end of the currentperiod in the balance of intangible assets was 0.
(2). Particulars on use rights of land of which the property ownership certificates have not been
obtained
□ Applicable √ Not applicable
(3) Impairment test of intangible assets
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
27. Goodwill
(1). Original carrying value of goodwill
√ Applicable □ Not applicable
Notes to financial statements Page 156
Unit: Yuan Currency: RMB
| Name of invested company or event forming goodwill | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | ||
| Formed due to business combination | Others | Disposal | Others | |||
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 131,001.23 | 131,001.23 | ||||
| Axus Stationery (Shanghai) Company Ltd. | 30,175,537.19 | 30,175,537.19 | ||||
| Beckmann Holding AS | 63,529,740.20 | 63,529,740.20 | ||||
| Total | 93,836,278.62 | 93,836,278.62 | ||||
(2). Impairment provisions of goodwill
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name of invested company or event forming goodwill | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | ||
| Accrued | Others | Disposal | Others | |||
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 131,001.23 | 131,001.23 | ||||
| Axus Stationery (Shanghai) Company Ltd. | 30,175,537.19 | 30,175,537.19 | ||||
| Total | 30,306,538.42 | 30,306,538.42 | ||||
(3). Information regarding the asset group or the combination of asset groups to which goodwill
belongs
√ Applicable □ Not applicable
| Item | Composition and basis of the asset group or combination of asset groups | Operating segments and basis | Whether it is consistent with the previous year |
| Back to School Holding AS has assessed the asset group containing goodwill as of the valuation reference date. | The asset group comprises fixed assets, leasehold assets, trademarks, and other intangible assets. The cash flows generated by this asset group or combination are independent of other assets or asset groups. | These assets represent the core traditional business activities, where the Company offers various products or services or engages in operational activities in different regions. | Yes |
Changes in asset groups or combinations of asset groups
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
(4). Specific determination method for recoverable amount
The recoverable amount is determined as the net fair value less disposal costs
□ Applicable √ Not applicable
Notes to financial statements Page 157
The recoverable amount is determined as the present value of the expected future cash flows
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Carrying value | Recoverable amount | Impairment amount | Years of the forecast period | Key parameters for the forecast period (growth rate, profit margin, etc.) | Basis for determining the parameters for the forecast period | Key parameters of the stable period (growth rate, profit margin, discount rate, etc.) | Basis for determining key parameters for the stable period |
| Back to School Holding AS has assessed the asset group containing goodwill as of the valuation reference date. | 169,992,470.13 | 201,921,737.92 | 0.00 | Five years | Projected operating revenue growth rate: 4.9% to 13.7% | Based on the profit forecast provided by the Company, verified and validated by professional institutions. | Steady-state operating revenue growth rate: 2% Post-tax discount rate: 13% | The operating revenue growth rate is determined based on the long-term CPI growth rate in the region where the asset group is located, while the post-tax discount rate is determined according to the weighted average cost of capital model. |
| Total | 169,992,470.13 | 201,921,737.92 | 0.00 | / | / | / | / | / |
Other descriptions: For the current year, the Company hired KPMG Asset Appraisal (Shanghai) Co.,Ltd. to issue the Asset Appraisal Report on the Recoverable Amount of Goodwill Asset Groups of Backto School Holding AS (Beckmann) Involved in the Goodwill Impairment Test Carried out by ShanghaiM&G Stationery Inc. for the Purpose of Financial Reporting with the report number of KPMG Ping BaoZi [2024] No.002 on 20 March 2024. According to the appraisal results, as of 31 December 2023, thecarrying value of the asst group or the combination of asset groups including goodwill of Beckmannacquired by the Company was RMB169.9925 million, and the recoverable amount was not lower thanRMB201.9217 million; after the test, there was no impairment risk in the goodwill formed by theCompany's acquisition of Beckmann.
The differences between the foregoing information and the data used in impairment testing in previousyears, or external information, are due to apparent reasons
□ Applicable √ Not applicable
The reasons for the disparity between the information used in impairment testing in previous years andthe actual situation of the current year are evident for the Company
□ Applicable √ Not applicable
(5). Performance commitments and corresponding goodwill impairment
Performance commitments existed at the time goodwill was formed and are within the performancecommitment period in the current period or the previous period
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
28. Long-term prepaid expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening | Increase | Amortisation | Other decrease | Closing balance |
Notes to financial statements Page 158
| balance | amount of the current period | amount of the current period | amounts | ||
| Decoration fee | 106,109,878.14 | 53,762,458.09 | 59,122,844.25 | 100,749,491.98 | |
| Others | 14,174,666.78 | 2,523,670.28 | 3,346,150.74 | 13,352,186.32 | |
| Total | 120,284,544.92 | 56,286,128.37 | 62,468,994.99 | 114,101,678.30 |
Other descriptions:
No
29. Deferred income tax assets/Deferred income tax liabilities
(1). Unoffset deferred income tax assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred income tax Assets | Deductible temporary differences | Deferred income tax Assets | |
| Impairment provisions of assets | 122,270,919.41 | 29,727,339.67 | 119,883,535.58 | 28,510,998.74 |
| Unrealised profits from internal transactions | 135,294,710.04 | 22,819,900.77 | 151,128,402.65 | 25,504,796.74 |
| Deductible losses | 3,688,040.49 | 922,010.12 | 9,935,404.10 | 2,483,851.03 |
| Changes in fair value of repurchase obligations | 566,964.60 | 85,044.69 | ||
| Cash flow hedging | 1,357,106.71 | 298,563.48 | 881,465.28 | 193,922.36 |
| Deferred income | 33,521,058.76 | 5,892,156.71 | 45,109,045.29 | 8,751,901.92 |
| Depreciation or amortisation difference | 215,241,142.48 | 53,798,582.23 | 200,572,316.33 | 50,139,937.56 |
| Time difference in revenue recognition | 75,325,949.34 | 18,831,487.34 | 50,581,578.95 | 12,645,394.74 |
| Changes in lease liabilities | 384,780,513.35 | 90,632,454.95 | 318,738,574.01 | 78,036,800.34 |
| Time difference in equity incentive costs | 59,553,417.51 | 9,611,753.83 | ||
| Others | 8,860.72 | 1,949.36 | ||
| Total | 972,055,265.90 | 223,009,489.32 | 956,383,739.70 | 215,879,357.26 |
(2). Unoffset deferred income tax liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Assets appreciation for business combination not under the common control | 173,266,473.26 | 32,000,755.35 | 190,655,832.81 | 35,543,815.35 |
| Changes in fair value of other debt investments | ||||
| Changes in fair value | 5,575,073.42 | 836,261.01 | 4,811,887.95 | 721,783.19 |
Notes to financial statements Page 159
| of other equity instrument investments | ||||
| Depreciation or amortisation difference | 70,672,762.05 | 15,548,007.65 | 72,971,387.02 | 16,053,705.14 |
| Time difference in cost recognition | 70,145,155.05 | 17,536,288.78 | 45,934,871.19 | 11,483,717.81 |
| Changes in right-of-use assets | 400,835,370.95 | 94,109,546.81 | 335,796,074.68 | 82,050,753.39 |
| Changes in fair value of repurchase obligations | 3,674,156.71 | 551,123.51 | ||
| Changes in fair value of trading financial assets | 34,518,595.12 | 5,561,660.87 | 27,645,879.64 | 4,255,785.84 |
| Total | 755,013,429.85 | 165,592,520.47 | 681,490,090.00 | 150,660,684.23 |
(3). Deferred income tax assets or liabilities presented on a net basis after offsetting
□ Applicable √ Not applicable
(4). Details of unrecognised deferred income tax assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 61,892,123.81 | 62,480,850.37 |
| Deductible losses | 503,640,888.34 | 567,596,672.82 |
| Total | 565,533,012.15 | 630,077,523.19 |
(5). The deductible losses of unrecognised deferred income tax assets will expire in the followingyears
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Year | Closing balance | Opening balance | Note |
| 2028 | 56,598,961.20 | ||
| 2027 | 165,391,111.89 | 156,617,072.09 | |
| 2026 | 107,983,988.11 | 126,146,965.53 | |
| 2025 | 121,699,095.49 | 136,313,858.06 | |
| 2024 | 51,967,731.65 | 53,774,720.35 | |
| 2023 | 94,744,056.79 | ||
| Total | 503,640,888.34 | 567,596,672.82 | / |
Other descriptions:
□ Applicable √ Not applicable
30. Other non-current assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment provisions | Carrying value | Carrying balance | Impairment provisions | Carrying value | |
| Contract acquisition cost | ||||||
| Contract | ||||||
Notes to financial statements Page 160
| performance cost | ||||||
| Receivable return cost | ||||||
| Contract assets | ||||||
| Prepayments for real estate, engineering, equipment, etc. | 12,202,603.55 | 12,202,603.55 | 7,054,811.39 | 7,054,811.39 | ||
| Total | 12,202,603.55 | 12,202,603.55 | 7,054,811.39 | 7,054,811.39 |
Other descriptions:
No
31. Assets with restricted ownership or use rights
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | At the end of the period | At the beginning of the period | ||||||
| Carrying balance | Carrying value | Type of restriction | Restriction details | Carrying balance | Carrying value | Type of restriction | Restriction details | |
| Cash and equivalents | ||||||||
| Bills receivable | ||||||||
| Inventories | ||||||||
| Fixed assets | 232,833,662.80 | 125,596,115.11 | Mortgage | Mortgaged borrowings | 232,833,662.80 | 130,469,933.51 | Mortgage | Mortgaged borrowings |
| Intangible assets | 113,742,703.94 | 94,136,860.53 | Mortgage | Mortgaged borrowings | 113,742,703.94 | 97,214,969.13 | Mortgage | Mortgaged borrowings |
| Cash and equivalents - Other cash and equivalents | 20,025,637.33 | 20,025,637.33 | Pledge | Performance bonds, letter of credit deposits, etc. | 25,069,934.20 | 25,069,934.20 | Pledge | Performance bonds, letter of credit deposits, etc. |
| Cash and equivalents - Cash at bank | 1,500,000,000.00 | 1,500,000,000.00 | Frozen | Fixed-term deposits exceeding three months | 1,510,000,000.00 | 1,510,000,000.00 | Frozen | Fixed-term deposits exceeding three months |
| Cash and equivalents - Cash at bank | 10,000,000.00 | 10,000,000.00 | Pledge | Deposits for bank acceptance bills | ||||
| Cash and equivalents - Cash at bank | 1,010,742.92 | 1,010,742.92 | Frozen | Litigation | ||||
| Accounts receivable | 2,500,000.00 | 2,369,305.44 | Pledge | Factoring pledge | ||||
| Total | 1,880,112,746.99 | 1,753,138,661.33 | / | / | 1,881,646,300.94 | 1,762,754,836.84 | / | / |
Other descriptions:
No
32. Short-term borrowings
(1). Classification of short-term borrowings
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Pledged borrowings | ||
| Mortgaged borrowings | 190,000,000.00 | 184,000,000.00 |
| Guaranteed borrowings |
Notes to financial statements Page 161
| Credit borrowings | 5,174,225.65 | |
| Borrowing interest expenses | 174,166.67 | 176,000.00 |
| Total | 190,174,166.67 | 189,350,225.65 |
Description on classification of short-term borrowings:
See 1. "Important Commitments" under "Note XVI. Commitments and Contingencies".
(2). Particulars on overdue but yet unrepaid short-term borrowings
□ Applicable √ Not applicable
Particulars of important overdue but yet unrepaid short-term borrowings:
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
33. Held-for-trading financial liabilities
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
34. Derivative financial liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Foreign exchange derivatives - Cash flow hedging | 1,357,106.71 | 881,465.28 |
| Total | 1,357,106.71 | 881,465.28 |
Other descriptions:
No
35. Bills payable
(1). Presentation of notes payable
□ Applicable √ Not applicable
36. Accounts payable
(1). Presentation of accounts payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Within one year | 4,754,209,098.31 | 3,970,197,454.64 |
| One to two years | 91,390,676.82 | 27,008,487.77 |
| Two to three years | 7,499,025.52 | 1,427,445.30 |
| Above three years | 1,240,708.48 | |
| Total | 4,854,339,509.13 | 3,998,633,387.71 |
(2). Accounts payable with the account age over one year or overdue
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
Notes to financial statements Page 162
37. Accounts received in advance
(1). Presentation of accounts received in advance
□ Applicable √ Not applicable
(2). Significant accounts received in advance with an age of more than one year
□ Applicable √ Not applicable
(3). Amount of and reason for significant changes in carrying value during the Reporting Period
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
38. Contract liabilities
(1). Contract liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Loans | 62,138,668.61 | 51,902,037.54 |
| Membership points | 19,824,160.30 | 12,981,932.51 |
| Vouchers | 24,075,389.38 | 16,861,827.55 |
| Total | 106,038,218.29 | 81,745,797.60 |
(2). Significant contract liabilities with an age of more than one year
□ Applicable √ Not applicable
(3). Amount of and reason for significant changes in carrying value during the Reporting Period
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
39. Employee benefits payable
(1). Presentation of employee benefits payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| I. Short-term benefits | 169,314,530.92 | 1,027,574,796.78 | 1,009,603,589.29 | 187,285,738.41 |
| II. Post-employment benefits - Defined contribution plans | 12,549,433.02 | 118,916,040.28 | 122,573,453.66 | 8,892,019.64 |
| III. Termination benefits | 91,452.89 | 91,452.89 | ||
| IV. Other benefits due within one year | ||||
| Total | 181,863,963.94 | 1,146,582,289.95 | 1,132,268,495.84 | 196,177,758.05 |
(2). Presentation of short-term benefits
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
Notes to financial statements Page 163
| I. Salary, bonus, allowance and subsidy | 156,143,008.41 | 897,241,951.25 | 876,093,614.89 | 177,291,344.77 |
| II. Employee benefits | 240.00 | 10,827,048.96 | 10,826,848.96 | 440.00 |
| III. Social insurance | 8,971,965.66 | 73,574,128.11 | 77,203,255.72 | 5,342,838.05 |
| Including: Medical insurance | 8,689,848.94 | 70,402,357.48 | 73,943,318.53 | 5,148,887.89 |
| Work-related injury insurance | 282,116.72 | 2,826,343.54 | 2,914,510.10 | 193,950.16 |
| Maternity insurance | 345,427.09 | 345,427.09 | ||
| IV. Housing provident fund | 2,432,220.46 | 40,933,890.16 | 40,551,017.11 | 2,815,093.51 |
| V. Labor union and employee education funds | 500,596.79 | 622,469.07 | 661,629.95 | 461,435.91 |
| VI. Short-term compensated absences | 1,264,340.14 | 3,818,240.02 | 3,710,153.45 | 1,372,426.71 |
| VII. Short-term profit sharing plan | ||||
| VIII. Other short-term benefits | 2,159.46 | 557,069.21 | 557,069.21 | 2,159.46 |
| Total | 169,314,530.92 | 1,027,574,796.78 | 1,009,603,589.29 | 187,285,738.41 |
(3). Presentation of defined contribution plans
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| 1. Basic pension | 12,180,712.09 | 115,138,047.54 | 118,684,660.20 | 8,634,099.43 |
| 2. Unemployment insurance | 368,720.93 | 3,777,992.74 | 3,888,793.46 | 257,920.21 |
| 3. Enterprise annuity payment | ||||
| Total | 12,549,433.02 | 118,916,040.28 | 122,573,453.66 | 8,892,019.64 |
Other descriptions:
□ Applicable √ Not applicable
40. Taxes payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Value added tax ("VAT") | 84,502,695.39 | 49,153,002.78 |
| Consumption tax | ||
| Business tax | ||
| Enterprise income tax | 196,506,377.39 | 121,751,106.11 |
| Personal income tax | 12,725,068.12 | 12,798,981.46 |
| Urban maintenance and construction tax | 5,754,431.07 | 3,342,654.01 |
| Property tax | 3,832,665.46 | 3,867,521.54 |
| Education surcharge | 4,756,101.43 | 2,848,067.51 |
| Land use tax | 287,892.43 | 1,603,711.07 |
| Stamp duty | 3,870,218.42 | 3,103,842.61 |
| Others | 29,077.71 | 10,552.34 |
| Total | 312,264,527.42 | 198,479,439.43 |
Other descriptions:
No
Notes to financial statements Page 164
41. Other payables
(1). Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Interest payable | ||
| Dividend payable | ||
| Other payables | 537,102,511.17 | 492,874,360.46 |
| Total | 537,102,511.17 | 492,874,360.46 |
Other descriptions:
□ Applicable √ Not applicable
(2). Interest payable
Presentation by category
□ Applicable √ Not applicable
Significant interest payable overdue:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
(3). Dividend payable
Presentation by category
□ Applicable √ Not applicable
(4). Other payables
Other payables presented by amount nature
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Margin and deposit | 171,635,945.59 | 165,796,599.90 |
| Repurchase obligations of restricted stocks | 65,381,732.00 | 76,756,505.00 |
| Product license fee | 16,907,000.00 | 16,209,000.00 |
| Estimated fees | 248,212,246.67 | 205,942,866.54 |
| Engineering and decoration fund | 15,743,710.03 | 7,185,194.49 |
| Others | 19,221,876.88 | 20,984,194.53 |
| Total | 537,102,511.17 | 492,874,360.46 |
Significant other payables with the account age over one year or overdue
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
42. Held-for-sale liabilities
□ Applicable √ Not applicable
43. Non-current liabilities due within one year
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Notes to financial statements Page 165
| Item | Closing balance | Opening balance |
| Long-term borrowings due within one year | ||
| Bonds payable due within one year | ||
| Long-term payables due within one year | ||
| Lease liabilities due within one year | 186,290,225.12 | 173,787,427.29 |
| Repurchase obligations | 35,878,223.18 | 16,715,043.39 |
| Total | 222,168,448.30 | 190,502,470.68 |
Other descriptions:
No
44. Other current liabilities
Particulars on other current liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Short-term bonds payable | ||
| Return amount payable | 77,357,807.61 | 54,763,234.90 |
| Output tax to be written off | 6,853,079.95 | 5,107,775.65 |
| Receivables that cannot be derecognized | 30,380,352.51 | 19,469,103.13 |
| Total | 114,591,240.07 | 79,340,113.68 |
Changes in short-term bonds payable:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
45. Long-term borrowings
(1). Classification of long-term borrowings
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing Balance | Opening Balance |
| Pledged borrowings | ||
| Mortgaged borrowings | 26,023,833.34 | |
| Guaranteed borrowings | ||
| Credit borrowings | 4,003,666.67 | |
| Total | 30,027,500.01 |
Notes to the classification of long-term borrowings:
No
Other descriptions:
□ Applicable √ Not applicable
46. Bonds payable
(1). Bonds payable
□ Applicable √ Not applicable
(2). Changes in bonds payable: (excluding other financial instruments such as preferred shares
classified as financial liabilities and perpetual bonds)
□ Applicable √ Not applicable
Notes to financial statements Page 166
(3). Description on convertible corporate bonds
□ Applicable √ Not applicable
Accounting for transfers of equity and basis of judgment
□ Applicable √ Not applicable
(4). Description on other financial instruments classified as financial liabilitiesBasic information on other financial instruments such as outstanding preferred shares and perpetualbonds at the end of the period
□ Applicable √ Not applicable
Form of changes in financial instruments such as outstanding preferred shares and perpetual bonds at theend of the period
□ Applicable √ Not applicable
Description on the basis for classification of other financial instruments as financial liabilities:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
47. Lease liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Long-term lease liabilities | 384,904,430.86 | 318,738,574.01 |
| Less: Lease liabilities due within one year | -186,290,225.12 | -173,787,427.29 |
| Total | 198,614,205.74 | 144,951,146.72 |
Other descriptions:
No
48. Long-term payables
Presented by item
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Long-term payables
(1). Long-term payables presented by amount nature
□ Applicable √ Not applicable
Special payables
(1). Special payables presented by amount nature
□ Applicable √ Not applicable
Notes to financial statements Page 167
49. Long-term employee benefits payable
□ Applicable √ Not applicable
50. Estimated liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Closing balance | Cause of formation |
| External guarantee | |||
| Pending litigation | |||
| Product quality assurance | |||
| Restructuring obligations | |||
| Onerous contract to be implemented | |||
| Return amount payable | |||
| Others | |||
| Repurchase obligations | 14,922,058.45 | 0.00 | |
| Total | 14,922,058.45 | 0.00 | / |
Other descriptions, including descriptions on important assumptions and estimates related to importantestimated liabilities:
No
51. Deferred income
Particulars on deferred income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | Cause of formation |
| Government subsidies | 46,210,203.99 | 3,750,000.00 | 15,610,400.40 | 34,349,803.59 | Government subsidies received |
| Total | 46,210,203.99 | 3,750,000.00 | 15,610,400.40 | 34,349,803.59 | / |
Other descriptions:
□ Applicable √ Not applicable
52. Other non-current liabilities
□ Applicable √ Not applicable
53. Share capital
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Opening balance | Increase or decrease (+ or -) due to this change | Closing balance | |||||
| Issue new shares | Bonus shares | Provident funds transferred shares | Others | Subtotal | |||
| Total shares | 926,933,050.00 | -336,480.00 | -336,480.00 | 926,596,570.00 | |||
Notes to financial statements Page 168
Other descriptions:
According to the Proposal on Repurchase and Cancellation of Some Restricted Shares consideredand approved at the 19th meeting of the 5th session of the Board of Directors and the 17th meeting ofthe 5th session of Supervisory Committee held on 29 March 2023, it was agreed to repurchase andcancel restricted shares that have been granted but not yet released from restriction for certain incentiverecipients. The quantity of shares repurchased and canceled in this instance amounts to 336,480 shares.
54. Other equity instruments
(1). Basic information on other financial instruments such as outstanding preferred shares and
perpetual bonds at the end of the period
□ Applicable √ Not applicable
(2). Form of changes in financial instruments such as outstanding preferred shares and perpetual
bonds at the end of the period
□ Applicable √ Not applicable
Changes in other equity instruments of the current period, reasons for changes, and basis for relevantaccounting treatment:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
55. Capital reserve
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| Capital premium (Share premium) | 371,583,768.25 | 9,237,846.00 | 362,345,922.25 | |
| Other capital reserve | 56,356,464.87 | 920,360.07 | 46,528,965.70 | 10,747,859.24 |
| Total | 427,940,233.12 | 920,360.07 | 55,766,811.70 | 373,093,781.49 |
Other descriptions, including descriptions on changes of the current period and reasons for changes:
1. Increase or decrease in capital premium for the current year:
As stated in Note VII (53), the capital reserve was decreased by RMB9,237,846.00 due to therepurchase of shares.
2. Increase or decrease in other capital reserves for the current year:
(1) Due to the failure to achieve the planned performance assessment targets this year, the capitalreserve decreased by RMB419,492.07 due to the recognition of the difference between the estimatedpre-tax deductible amount of equity incentive expenses during the vesting period and the fair value ofthe stock on the date of grant as deferred income tax assets for the implementation of the restricted stockincentive plan in accordance with the relevant resolutions of the Company.
(2) Due to the failure to achieve the planned performance assessment targets this year, the capitalreserve decreased by RMB46,528,965.70 due to the recognition of the estimated pre-tax deductibleamount of equity incentive expenses during the vesting period for the implementation of the restrictedstock incentive plan in accordance with the relevant resolutions of the Company;
(3) The capital reserve increased by RMB500,868.00 due to other changes.
56. Treasury shares
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Notes to financial statements Page 169
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| Repurchase of restricted stocks | 77,555,184.50 | 10,625,773.00 | 66,929,411.50 | |
| Repurchase through the stock exchange | 114,287,058.94 | 35,725,187.26 | 150,012,246.20 | |
| Total | 191,842,243.44 | 35,725,187.26 | 10,625,773.00 | 216,941,657.70 |
Other descriptions, including descriptions on changes of the current period and reasons for changes:
(1) According to the Proposal on the Plan for Share Repurchase through the Stock Exchange,which was approved at the 18th meeting of the 5th session of the Board of Directors, the Companyrepurchased, through the stock exchange, treasury shares with a total amount of RMB35,725,187.26 inthe current year.
(2) The total amount of treasury shares decreased by RMB10,625,773.00 due to the release of therestrictions on and the repurchase of some restricted stocks issued by the Company.
57. Other comprehensive income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Amount accounted for in the current period | Closing balance | |||||
| Amount incurred before income tax for the current period | Less: Included in other comprehensive income in the previous period and transferred to profit or loss in the current period | Less: Included in other comprehensive income in the previous period and transferred to retained earnings in the current period | Less: Income tax expenses | Attributable to the parent company after the tax | Attributable to minority shareholders after the tax | |||
| I. Other comprehensive income not to be reclassified into profit or loss | 5,246,076.58 | 763,185.47 | 114,477.82 | 648,707.65 | 5,894,784.23 | |||
| Including: Change in re-measurement of defined benefit plans | ||||||||
| Other comprehensive income that may not be reclassified to profit or loss under equity method | 1,155,971.82 | 1,155,971.82 | ||||||
| Changes in fair value of other equity instrument investments | 4,090,104.76 | 763,185.47 | 114,477.82 | 648,707.65 | 4,738,812.41 | |||
| Change in fair value of enterprise's own credit risk | ||||||||
| II. Other comprehensive income to be reclassified into profit or loss | -5,554,047.83 | -1,566,075.44 | -104,641.12 | -1,286,313.57 | -175,120.75 | -6,840,361.40 | ||
| Including: Other comprehensive income that may be reclassified to profit | -58,865.10 | -45,383.25 | -45,383.25 | -104,248.35 | ||||
Notes to financial statements Page 170
| or loss under equity method | ||||||||
| Changes in fair value of other debt investments | ||||||||
| Amount included in other comprehensive income on reclassification of financial assets | ||||||||
| Credit impairment provisions of other debt investments | ||||||||
| Cash flow hedging reserve | -1,122,915.64 | 65,388.55 | -104,641.12 | 155,407.12 | 14,622.55 | -967,508.52 | ||
| Exchange differences from translation of financial statements | -4,372,267.09 | -1,586,080.74 | -1,396,337.44 | -189,743.30 | -5,768,604.53 | |||
| Total other comprehensive income | -307,971.25 | -802,889.97 | 9,836.70 | -637,605.92 | -175,120.75 | -945,577.17 |
Other descriptions, including the adjustment of the effective portion of cash flow hedging profit or losstransferred to the initial recognition amount of the hedged item:
No
58. Special reserve
□ Applicable √ Not applicable
59. Surplus reserve
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| Statutory surplus reserve | 464,201,654.91 | 464,201,654.91 | ||
| Arbitrary surplus reserve | ||||
| Reserve fund | ||||
| Enterprise development fund | ||||
| Others | ||||
| Total | 464,201,654.91 | 464,201,654.91 |
Descriptions on surplus reserve, including descriptions on changes of the current period and reasons forchanges:
The statutory surplus reserve is accrued at 10% of the parent company's net profits and is capped at 50%of the share capital.
60. Undistributed profit
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Current period | Previous period |
| Pre-adjustment undistributed profits at the | 5,222,409,808.33 | 4,496,600,374.16 |
Notes to financial statements Page 171
| end of the previous period | ||
| Total adjustment amount of undistributed profits at the beginning of the period ("+" refers to increase by adjustment and "-" refers to decrease by adjustment) | ||
| Post-adjustment amount of undistributed profits at the beginning of the period | 5,222,409,808.33 | 4,496,600,374.16 |
| Add: Net profit attributable to shareholders of the parent company in the current period | 1,526,801,727.16 | 1,282,456,788.17 |
| Less: Statutory surplus reserve accrued | ||
| Arbitrary surplus reserve accrued | ||
| Withdrawal of general risk provision | ||
| Dividends on common shares payable | 462,037,503.50 | 556,647,354.00 |
| Dividends on common shares converted to stock capital | ||
| Undistributed profit at the end of the period | 6,287,174,031.99 | 5,222,409,808.33 |
Details on adjustment of undistributed profits at the beginning of the period:
1. Due to the retrospective adjustment based on the Accounting Standards for Business Enterprises andtheir related new regulations, the affected undistributed profit at the beginning of the period was RMB0.
2. Due to changes in accounting policies, the affected undistributed profit at the beginning of the periodwas RMB0.
3. Due to the correction of major accounting errors, the affected undistributed profit at the beginning ofthe period was RMB0.
4. Due to changes in the scope of the consolidated financial statements caused by the businesscombination under common control, the affected undistributed profit at the beginning of the period wasRMB0.
5. Due to other adjustments, the affected undistributed profit at the beginning of the period was RMB0.
61. Revenue and operating costs
(1). Particulars on revenue and operating costs
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | ||
| Revenue | Costs | Revenue | Costs | |
| Main operations | 23,302,655,922.99 | 18,911,840,779.62 | 19,986,262,640.35 | 16,119,898,201.92 |
| Other operations | 48,648,405.04 | 35,062,009.49 | 10,052,982.97 | 4,341,356.94 |
| Total | 23,351,304,328.03 | 18,946,902,789.11 | 19,996,315,623.32 | 16,124,239,558.86 |
Notes to financial statements Page 172
(2). Information on the breakdown of revenue and operating costs
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Classification of contracts | Core traditional business | Direct office supplies business | Inter-branch offset | Total | ||||
| Revenue | Operating costs | Revenue | Operating costs | Revenue | Operating costs | Revenue | Operating costs | |
| Types of goods | ||||||||
| 1. Sales of goods | 10,241,741,904.05 | 6,808,150,440.29 | 13,306,401,500.45 | 12,355,076,071.36 | -248,988,447.76 | -251,385,732.03 | 23,299,154,956.74 | 18,911,840,779.62 |
| 2. Management fee for franchising | 1,825,471.64 | 1,825,471.64 | ||||||
| 3. Hardware and software | 1,082,933.24 | 592,561.37 | 1,675,494.61 | |||||
| 4. Material income | 2,159,269.06 | 10,922.02 | 2,159,269.06 | 10,922.02 | ||||
| 5. Supply chain service | 29,943,206.17 | 28,901,052.05 | 29,943,206.17 | 28,901,052.05 | ||||
| 6. Others | 9,361,653.00 | 1,973,820.38 | 9,361,653.00 | 1,973,820.38 | ||||
| Classification by operation territory | ||||||||
| 1. China | 9,431,854,432.85 | 6,223,230,771.03 | 13,306,994,061.82 | 12,355,076,071.36 | -248,988,447.76 | -251,385,732.03 | 22,489,860,046.91 | 18,326,921,110.36 |
| 2. Other countries | 854,260,004.31 | 615,805,463.71 | 854,260,004.31 | 615,805,463.71 | ||||
| Classification by the time of goods transfer | ||||||||
| 1. Recognised at a specific point in time | 10,286,114,437.16 | 6,839,036,234.74 | 13,306,994,061.82 | 12,355,076,071.36 | -248,988,447.76 | -251,385,732.03 | 23,344,120,051.22 | 18,942,726,574.07 |
| 2. Recognised within a specific time period | ||||||||
| Total | 10,286,114,437.16 | 6,839,036,234.74 | 13,306,994,061.82 | 12,355,076,071.36 | -248,988,447.76 | -251,385,732.03 | 23,344,120,051.22 | 18,942,726,574.07 |
Other descriptions
□ Applicable √ Not applicable
(3). Description on performance obligations
□ Applicable √ Not applicable
(4). Description on allocation to remaining performance obligations
□ Applicable √ Not applicable
(5). Significant contract changes or significant transaction price adjustments
□ Applicable √ Not applicable
Other descriptions:
Details on revenue:
| Item | Amount in the current period | Amount in the last period |
| Description on revenue from customer contracts | 23,344,120,051.22 | 19,991,494,971.94 |
| Rental income | 7,184,276.81 | 4,820,651.38 |
| Total | 23,351,304,328.03 | 19,996,315,623.32 |
Notes to financial statements Page 173
62. Taxes and surcharges
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Consumption tax | ||
| Business tax | ||
| Urban maintenance and construction tax | 36,874,093.32 | 28,457,233.70 |
| Education surcharge | 31,593,658.98 | 24,525,189.75 |
| Resource tax | ||
| Property tax | 15,552,280.02 | 9,658,389.33 |
| Land use tax | -294,609.04 | 1,182,692.61 |
| Taxes and surcharges | ||
| Stamp duty | 12,909,014.50 | 11,596,424.00 |
| Others | 140,003.79 | 168,594.94 |
| Total | 96,774,441.57 | 75,588,524.33 |
Other descriptions:
No
63. Selling expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Salaries and benefits | 461,747,483.61 | 419,102,211.06 |
| Channel construction fee | 128,748,286.97 | 108,797,588.41 |
| Depreciation and amortization | 189,443,014.45 | 186,670,564.42 |
| Brand promotion fee | 90,126,956.28 | 72,015,069.68 |
| Business promotion fee | 141,564,588.74 | 111,911,339.25 |
| Others | 538,612,583.30 | 459,719,130.61 |
| Total | 1,550,242,913.35 | 1,358,215,903.43 |
Other descriptions:
No
64. Administrative expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Salaries and benefits | 399,779,442.22 | 376,088,841.61 |
| Depreciation and amortization | 149,565,885.36 | 128,259,319.67 |
| Office expense | 16,989,750.23 | 19,523,321.71 |
| Share-based Payments | -48,387,010.93 | 3,956,675.57 |
| Others | 299,295,898.73 | 266,368,407.49 |
| Total | 817,243,965.61 | 794,196,566.05 |
Other descriptions:
No
Notes to financial statements Page 174
65. R&D expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Salaries and benefits | 97,614,345.88 | 94,628,651.15 |
| Inventory consumption | 41,157,179.77 | 49,479,451.16 |
| Others | 38,753,617.94 | 39,445,541.59 |
| Total | 177,525,143.59 | 183,553,643.90 |
Other descriptions:
No
66. Finance expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Interest expense | 24,995,988.63 | 14,760,179.42 |
| Including: Interest expense of lease liabilities | 17,242,339.72 | 7,851,181.44 |
| Less: Interest income | -76,346,842.50 | -38,938,757.91 |
| Exchange gains and losses | -10,704,793.25 | -22,209,538.34 |
| Others | 7,378,094.64 | 5,020,891.59 |
| Total | -54,677,552.48 | -41,367,225.24 |
Other descriptions:
No
67. Other income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Classification based on nature | Amount accounted for in the current period | Amount accounted for in the previous period |
| Government subsidies | 95,659,262.80 | 84,991,259.53 |
| Handling charge on withholding personnel income tax | 897,764.28 | 989,882.59 |
| Total | 96,557,027.08 | 85,981,142.12 |
Other descriptions:
No
68. Investment income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Long-term equity investment income accounted for under the equity method | -6,197,315.17 | -1,731,132.47 |
| Investment income from disposal of long-term equity investment | 546,554.12 | |
| Investment income from held-for-trading financial assets during the holding period | ||
| Dividend income from other equity instrument investments during the holding period |
Notes to financial statements Page 175
| Interest income from debt investment during the holding period | ||
| Interest income from other debt investments during the holding period | ||
| Investment income from disposal of held-for-trading financial assets | 1,608,966.39 | 2,006,632.56 |
| Investment income from disposal of other equity instrument investments | ||
| Investment income from disposal of debt investment | ||
| Investment income from disposal of other debt investments | ||
| Gains from debt restructuring | ||
| Others | 109,340.00 | |
| Total | -3,932,454.66 | 275,500.09 |
Other descriptions:
No
69. Net gain on exposure hedging
□ Applicable √ Not applicable
70. Gain on change in fair value
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Sources of income from changes in fair value | Amount accounted for in the current period | Amount accounted for in the previous period |
| Held-for-trading financial assets | 31,431,746.76 | 28,169,632.25 |
| Including: Income from changes in fair value of derivative financial instruments | ||
| Held-for-trading financial liabilities | ||
| Investment real estate measured at fair value | ||
| Changes in fair value of repurchase obligations | -4,241,121.34 | 3,674,156.71 |
| Total | 27,190,625.42 | 31,843,788.96 |
Other descriptions:
No
71. Credit impairment losses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Bad debt losses of notes receivable | 499,961.10 | 903,576.33 |
| Bad debt losses of accounts receivable | 16,256,695.98 | 17,010,117.09 |
| Bad debt losses of other receivables | 5,073,521.77 | -25,114,384.44 |
| Impairment losses of debt investment | ||
| Impairment losses of other debt investments | ||
| Bad debt losses of long-term receivables | ||
| Impairment losses related to financial guarantee | ||
| Total | 21,830,178.85 | -7,200,691.02 |
Notes to financial statements Page 176
Other descriptions:
No
72. Asset impairment losses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| I. Impairment losses of contract assets | ||
| II. Loss for decline in value of inventories and loss for impairment of contract performance cost | -11,744,806.55 | 16,955,178.28 |
| III. Impairment losses of long-term equity investment | ||
| IV. Impairment losses of investment real estate | ||
| V. Impairment losses of fixed assets | 1,712,010.51 | |
| VI. Impairment losses of engineering materials | ||
| VII. Impairment losses of construction in progress | ||
| VIII. Impairment losses of productive biological assets | ||
| IX. Impairment losses of oil and gas assets | ||
| X. Impairment losses of intangible assets | ||
| XI. Impairment losses of goodwill | ||
| XII. Others | ||
| Total | -11,744,806.55 | 18,667,188.79 |
Other descriptions:
No
73. Gains from asset disposal
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Gaines or losses from disposal of fixed assets | 2,058,216.68 | -26,233.78 |
| Gaines or losses from disposal of right-of-use assets | 1,530,593.26 | -5,388.75 |
| Total | 3,588,809.94 | -31,622.53 |
Other descriptions:
No
74. Non-operating profits
Particulars on non-operating profits
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | Amount included in the current non-recurring |
Notes to financial statements Page 177
| gains and losses | |||
| Total gains from disposal of non-current assets | 12,529.29 | 12,529.29 | |
| Including: Gains from disposal of fixed assets | |||
| Gains from disposal of intangible assets | |||
| Gains from exchange of non-currency assets | |||
| Donations received | |||
| Government subsidies | 51,531,223.80 | 51,699,514.78 | 51,531,223.80 |
| Inventory profit | 192,237.19 | 8,000.00 | 192,237.19 |
| Liquidated damages and fine income | 5,323,268.86 | 1,518,188.88 | 5,323,268.86 |
| Others | 2,604,704.32 | 15,311,923.74 | 2,604,704.32 |
| Total | 59,663,963.46 | 68,537,627.40 | 59,663,963.46 |
Other descriptions:
□ Applicable √ Not applicable
75. Non-operating expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | Amount included in the current non-recurring gains and losses |
| Total losses from disposal of non-current assets | |||
| Including: Losses from disposal of fixed assets | |||
| Losses from disposal of intangible assets | |||
| Losses from exchange of non-currency assets | |||
| Offering of donations | 4,658,536.77 | 5,026,224.99 | 4,658,536.77 |
| Loss from damage and retirement of non-current assets | 1,855,245.99 | 4,305,319.22 | 1,855,245.99 |
| Fine late payment | 3,877,795.12 | 1,688,283.64 | 3,877,795.12 |
| Compensation expenses | 104,297.75 | 499,075.91 | 104,297.75 |
| Others | 306,577.81 | 613,232.39 | 306,577.81 |
| Total | 10,802,453.44 | 12,132,136.15 | 10,802,453.44 |
Other descriptions:
No
Notes to financial statements Page 178
76. Income tax expenses
(1). Table of income tax expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Current income tax expenses | 327,076,490.56 | 320,204,998.68 |
| Deferred income tax expenses | 8,457,280.32 | -10,687,376.95 |
| Total | 335,533,770.88 | 309,517,621.73 |
(2). Adjustment process of accounting profits and income tax expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period |
| Total profits | 1,979,472,772.78 |
| Income tax expenses calculated at statutory/applicable rates | 296,920,915.92 |
| Effect of applying different tax rates to subsidiaries | 67,812,977.58 |
| Effect of adjusting income taxes of the previous periods | -41,695,533.97 |
| Effect of non-taxable income | -570,911.06 |
| Effect of non-deductible costs, expenses and losses | 6,580,636.68 |
| Effect of deductible losses of deferred income tax assets not recognised in the previous period | |
| Tax effect of offsetting losses in previous years; | -9,797,622.02 |
| Effect of deductible temporary differences or deductible losses of deferred income tax assets not recognised in the current period | 16,283,307.75 |
| Income tax expenses | 335,533,770.88 |
Other descriptions:
□ Applicable √ Not applicable
77. Other comprehensive income
√ Applicable □ Not applicable
For details, refer to Note VII (57) Other Comprehensive Income.
78. Items of the cash flow statement
(1). Cash related to operating activities
Other cash received from operating activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Recovery of current amount and advances | 1,880,785,622.09 | 1,755,456,064.21 |
| Special allowances and subsidies | 123,163,692.08 | 127,381,296.13 |
| Interest income | 76,346,842.50 | 38,938,757.91 |
| Non-operating profits | 7,247,206.00 | 1,971,935.69 |
| Total | 2,087,543,362.67 | 1,923,748,053.94 |
Descriptions on other cash received from operating activities:
Notes to financial statements Page 179
No
Cash paid for other operating activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Inter-company business | 1,733,167,639.08 | 1,840,989,538.73 |
| Sales expenses | 850,115,497.82 | 720,503,239.35 |
| Administration expenses | 301,001,862.18 | 249,680,084.71 |
| Financial expenses | 7,289,624.92 | 4,962,743.50 |
| Non-operating expenses | 8,947,207.45 | 7,404,649.42 |
| R&D expenses | 37,474,114.96 | 38,426,323.24 |
| Total | 2,937,995,946.41 | 2,861,966,578.96 |
Descriptions on cash paid for other operating activities:
No
(2). Cash related to investing activities
Significant cash received related to investing activities
□ Applicable √ Not applicable
Significant cash paid related to investing activities
□ Applicable √ Not applicable
Other cash received relating to investing activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Compensation for the acquisition of the original controlling shareholders of Axus Stationery | 1,951,654.45 | |
| Net cash received in the acquisition of subsidiaries | 1,262,867.61 | |
| Total | 3,214,522.06 |
Description on other cash received relating to investing activities:
No
Other cash paid relating to investing activities
□ Applicable √ Not applicable
(3). Other cash received related to financing activities
Description on other cash received relating to financing activities:
□ Applicable √ Not applicable
Other cash paid for financing-related activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Repurchase payment of treasury shares | 46,048,513.26 | 134,291,202.15 |
| Lease payments related to the new lease standards | 286,080,118.22 | 238,707,766.15 |
| Total | 332,128,631.48 | 372,998,968.30 |
Notes to financial statements Page 180
Descriptions on other cash paid for financing-related activities:
No
Changes in liabilities arising from financing activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | ||
| Cash changes | Non-cash changes | Cash changes | Non-cash changes | |||
| Short-term borrowings | 189,350,225.65 | 251,955,762.18 | 7,781,149.01 | 258,912,970.17 | 190,174,166.67 | |
| Long-term borrowings | 30,000,000.00 | 27,500.01 | 30,027,500.01 | |||
| Lease liabilities (including non-current liabilities due within one year) | 318,738,574.01 | 379,528,844.91 | 286,080,118.22 | 27,282,869.84 | 384,904,430.86 | |
| Other payables - Repurchase obligations of restricted stocks | 76,756,505.00 | 10,323,326.00 | 1,051,447.00 | 65,381,732.00 | ||
| Treasury shares - Stock exchange | 114,287,058.94 | 35,725,187.26 | 150,012,246.20 | |||
| Dividend payable | 462,037,503.50 | 462,037,503.50 | ||||
| Total | 699,132,363.60 | 317,680,949.44 | 849,374,997.43 | 1,017,353,917.89 | 28,334,316.84 | 820,500,075.74 |
(4). Notes to the presentation of cash flows on a net basis
□ Applicable √ Not applicable
(5). Significant activities and financial effects that do not involve current cash receipts andpayments but affect the financial position of the enterprise or may affect the enterprise's cashflows in the future
□ Applicable √ Not applicable
79. Supplementary information for the cash flow statement
(1). Supplementary information for the cash flow statement
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Supplementary information | Amount in the current period | Amount in the last period |
| 1. Reconciliation of net profit to cash flow from operating activities: | ||
| Net profit | 1,643,939,001.90 | 1,355,378,832.38 |
| Add: Impairment provisions of assets | -11,744,806.55 | 18,667,188.79 |
| Credit impairment losses | 21,830,178.85 | -7,200,691.02 |
| Depreciation of fixed assets, oil and gas assets, and productive biological assets | 221,278,518.68 | 223,396,398.72 |
| Amortisation of right-of-use assets | 242,168,906.00 | 220,354,767.27 |
| Amortisation of intangible assets | 20,217,366.34 | 21,503,151.71 |
| Amortisation of long-term prepaid expenses | 62,468,994.99 | 70,393,392.44 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets ("-" refers to gains) | -3,588,809.94 | 31,622.53 |
| Losses from retirement of fixed assets | 1,842,716.70 | 4,305,319.22 |
Notes to financial statements Page 181
| ("-" refers to gains) | ||
| Losses from changes in fair value ("-" refers to gains) | -27,190,625.42 | -31,843,788.96 |
| Financial expenses ("-" refers to income) | 20,133,278.55 | 4,367,428.32 |
| Investment losses ("-" refers to gains) | 3,932,454.66 | -275,500.09 |
| Decrease in deferred income tax assets ("-" refers to increase) | -6,766,187.97 | -68,428,233.46 |
| Increase in deferred income tax liabilities ("-" refers to decrease) | 15,223,468.27 | 57,744,773.98 |
| Decrease in inventories ("-" refers to increase) | 44,990,472.03 | -95,461,097.71 |
| Decrease in operating receivables ("-" refers to increase) | 181,273,120.89 | 244,707,130.81 |
| Increase in operating payables ("-" refers to decrease) | 186,592,569.11 | -665,856,867.85 |
| Others | ||
| Net cash flow generated from operating activities | 2,616,600,617.09 | 1,351,783,827.08 |
| 2. Major investing and financing activities not involving cash payment and receipts: | ||
| Debts converted to capital | ||
| Convertible company bonds due within one year | ||
| Fixed assets acquired under financing leases | ||
| 3. Particulars on net changes in cash and cash equivalents: | ||
| Closing balance of cash | 3,708,085,136.83 | 1,828,019,243.04 |
| Less: Opening balance of cash | 1,828,019,243.04 | 1,539,484,614.69 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 1,880,065,893.79 | 288,534,628.35 |
(2). Net cash amount paid for the acquisition of subsidiaries in the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Amount | |
| Cash or cash equivalents paid in the current period for business combinations that occurred in the current period | 47,547,771.00 |
| Including: Hubei Chaoxin Property Co., Ltd.（湖北潮信置业有限公司） | 47,547,771.00 |
| Less: Cash and cash equivalents held by subsidiaries on the purchase date | 3,389,721.48 |
| Including: Hubei Chaoxin Property Co., Ltd.（湖北潮信置业有限公司） | 3,389,721.48 |
| Plus: Cash or cash equivalents paid in the current period for business combinations that occurred in previous periods | |
| Net cash paid by subsidiaries | 44,158,049.52 |
Other descriptions:
No
(3). Net cash amount received from the disposal of subsidiaries in the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Notes to financial statements Page 182
| Amount | |
| Cash or cash equivalents received in the current period from the disposal of subsidiaries in the current period | 20,003,204.01 |
| Including: Luoyang M&G Stationery Sales Co., Ltd. | 20,003,204.01 |
| Less: Cash and cash equivalents held by subsidiaries on the day when control is lost | 22,446.00 |
| Including: Luoyang M&G Stationery Sales Co., Ltd. | 22,446.00 |
| Add: Cash or cash equivalents received in the current period from the disposal of subsidiaries in previous periods | |
| Net cash amount received from the disposal of subsidiaries | 19,980,758.01 |
Other descriptions:
No
(4). Composition of cash and cash equivalents
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 3,708,085,136.83 | 1,828,019,243.04 |
| Including: Cash on hand | 612,487.27 | 764,880.86 |
| Bank deposits readily available for payment | 3,633,121,154.48 | 1,739,065,541.16 |
| Other cash and equivalents readily available for payment at any time | 74,351,495.08 | 88,188,821.02 |
| Due from central bank available for payment | ||
| Due from placements with banks and other financial institutions | ||
| Call loan to banks and other financial institutions | ||
| II. Cash equivalents | ||
| Including: Bond investments due within three months | ||
| III. Closing balance of cash and cash equivalents | 3,708,085,136.83 | 1,828,019,243.04 |
| Including: Cash and cash equivalents of which the use is restricted for the parent company or subsidiaries within the group |
(5). Presentation of cash and cash equivalents with restricted use
□ Applicable √ Not applicable
(6). Monetary funds not classified as cash and cash equivalents
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount in the current period | Amount in the last period | Reason |
| Deposits for bank acceptance bills | 10,000,000.00 | Pledge | |
| Deposits for letter of credit | 3,857,149.77 | 3,245,719.57 | Pledge |
| Performance bond | 15,715,590.36 | 21,427,837.65 | Pledge |
| Fixed-term deposits exceeding three months | 1,500,000,000.00 | 1,510,000,000.00 | Period exceeding three months at maturity |
Notes to financial statements Page 183
| Frozen funds | 1,010,742.92 | Frozen | |
| Others | 452,897.20 | 396,376.98 | Pledge |
| Total | 1,531,036,380.25 | 1,535,069,934.20 | / |
Other descriptions:
□ Applicable √ Not applicable
80. Notes to items of the statement of changes in owners' equity
Description on "other" item name and adjustment amount adjusted for balance at the end of the previousyear:
□ Applicable √ Not applicable
81. Foreign currency monetary items
(1). Foreign currency monetary items
√ Applicable □ Not applicable
Unit: Yuan
| Item | Foreign currency balance at the end of the period | Translation foreign exchange rate | RMB translated at the end of the period balance |
| Cash and equivalents | - | - | 152,541,981.82 |
| Including: USD | 14,046,208.40 | 7.0827 | 99,485,080.26 |
| EURO | 1,295,501.64 | 7.8592 | 10,181,606.45 |
| JPY | 1,121.00 | 0.0502 | 56.29 |
| HKD | 12,198.74 | 0.9062 | 11,054.74 |
| GBP | 375.00 | 9.0411 | 3,390.41 |
| VND | 7,063,349,439.00 | 0.0003 | 2,069,560.95 |
| NOK | 42,286,701.57 | 0.6963 | 29,443,463.01 |
| DKK | 122,038.87 | 1.0536 | 128,583.78 |
| SGD | 2,079,942.35 | 5.3772 | 11,184,266.00 |
| SEK | 49,114.88 | 0.7110 | 34,919.93 |
| Accounts receivable | - | - | 177,051,838.29 |
| Including: USD | 22,174,642.10 | 7.0827 | 157,056,337.60 |
| EURO | 76,332.44 | 7.8592 | 599,911.91 |
| VND | 212,734,080.00 | 0.0003 | 62,331.07 |
| NOK | 27,766,424.72 | 0.6963 | 19,333,257.71 |
| Long-term borrowings | - | - | |
| Including: USD | |||
| EURO | |||
| HKD | |||
| Accounts payable | - | - | 72,225,058.69 |
| Including: USD | 7,463,713.00 | 7.0827 | 52,863,240.07 |
| VND | 14,612,556,821.86 | 0.0003 | 4,281,478.25 |
| NOK | 21,658,384.84 | 0.6963 | 15,080,340.37 |
| Other receivables | - | - | 398,425.94 |
| Including: VND | 864,430,841.00 | 0.0003 | 253,278.18 |
| USD | 8,700.00 | 7.0827 | 61,619.49 |
| HKD | 87,800.00 | 0.9062 | 79,566.12 |
| NOK | 5,690.44 | 0.6963 | 3,962.15 |
| Other payables | - | - | 14,741,177.15 |
| Including: USD | 2,001,786.20 | 7.0827 | 14,178,051.12 |
| VND | 948,396,154.00 | 0.0003 | 277,880.01 |
| HKD | 105,800.00 | 0.9062 | 95,878.08 |
| NOK | 271,970.23 | 0.6963 | 189,367.94 |
Notes to financial statements Page 184
| Repurchase obligations | - | - | 35,878,223.18 |
| Including: NOK | 51,528,304.13 | 0.6963 | 35,878,223.18 |
Other descriptions:
No
(2). Descriptions on overseas operating entities, including: for important overseas business
entities, their main overseas business locations, bookkeeping currency and selection basisshall be disclosed; in case of any change in the bookkeeping currency, the reasons for suchchange shall be also disclosed
□ Applicable √ Not applicable
82. Lease
(1) As a lessee
√ Applicable □ Not applicable
Variable lease payments not included in the measurement of lease liabilities
□ Applicable √ Not applicable
Rental of simplified short-term leases and leases of low-value assets
√ Applicable □ Not applicable
The simplified treatment of short-term lease expenses included in relevant asset costs or current periodexpenses amounted to RMB6,952,046.63. Additionally, the simplified treatment of low-value asset leaseexpenses included in relevant asset costs or current period expenses (excluding short-term leaseexpenses of low-value assets) amounted to RMB514,705.94.Sale and leaseback transactions and basis of judgment
□ Applicable √ Not applicable
Total cash outflows related to leases was 305,681,177.89 (Unit: Yuan Currency: RMB)
(2) As a lessor
Operating leases as a lessor
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Rental income | Including: income relating to variable lease payments not recognised as lease receipts |
| Operating lease income | 7,184,276.81 | |
| Total | 7,184,276.81 |
Financial leases as a lessor
□ Applicable √ Not applicable
Reconciliation statement of undiscounted lease receipts and net investment in leases
□ Applicable √ Not applicable
Undiscounted lease receipts for the next five years
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Annual undiscounted lease receipts | |
| Closing balance | Opening balance | |
| First year | 7,264,402.90 | 5,998,811.18 |
| Second year | 7,369,588.60 | 6,263,921.58 |
| Third year | 7,330,474.93 | 6,394,495.61 |
Notes to financial statements Page 185
| Fourth year | 7,484,698.33 | 6,627,859.14 |
| Fifth year | 1,192,738.38 | 6,765,541.09 |
| Total undiscounted lease receipts after five years | 0.00 | 1,720,828.69 |
(3) Profit or losses on sales recognised under finance leases as a producer or distributor
□ Applicable √ Not applicable
Other descriptionsNo
83. Others
□ Applicable √ Not applicable
VIII. R&D expenses
(1). Presented based on nature of expense
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Employee benefits | 97,614,345.88 | 94,628,651.15 |
| Consumption materials | 41,157,179.77 | 49,479,451.16 |
| Others | 38,753,617.94 | 39,445,541.59 |
| Total | 177,525,143.59 | 183,553,643.90 |
| Including: Expensed R&D expenditure | 177,525,143.59 | 183,553,643.90 |
| Capitalised R&D expenditure |
Other descriptions:
No
(2). Development expenses on R&D projects eligible for capitalisation
□ Applicable √ Not applicable
Significant capitalised R&D projects
□ Applicable √ Not applicable
Provision for impairment of development expenses
□ Applicable √ Not applicable
Other descriptionsNo
(3). Significant outsourced ongoing research projects
□ Applicable √ Not applicable
IX. Change in Consolidation Scope
1. Business combination not under common control
□ Applicable √ Not applicable
2. Business combination not under common control
□ Applicable √ Not applicable
Notes to financial statements Page 186
3. Reverse acquisition
□ Applicable √ Not applicable
Notes to financial statements Page 187
4. Disposal of subsidiaries
Whether there were any transactions or events during the current period in which control of subsidiaries was lost
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name of subsidiaries | Control right losing time point | Disposal price at control right losing time point | Proportion of disposals at control right losing time point (%) | Disposal method at control right losing time point | Basis for determining control right losing time point | Difference between the disposal price and the attributable share of net assets of the subsidiary at the level of consolidated financial statements corresponding to the investment disposal | Residual equity proportion on the date of losing control power (%) | Carrying value of remaining equity at the level of the consolidated financial statements on the day when the control right is lost | Fair value of remaining equity at the level of the consolidated financial statements on the day when the control right is lost | Gains or losses from re-measurement of remaining equity at fair value | Recognition method and major assumptions of fair value of remaining equity at the level of the consolidated financial statements on the day when the control right is lost | Amount of other comprehensive income related to the equity investments of former subsidiaries transferred into investment profit or loss |
| Luoyang M&G Stationery Sales Co., Ltd. (洛阳晨光文具销售有限公司) | 1 January 2023 | 20,003,204.01 | 100.00 | External equity transfer | Transfer of control | 546,554.12 | 0.00 |
Other descriptions:
□ Applicable √ Not applicable
Whether there was a step-by-step disposal of investments in subsidiaries through multiple transactions and loss of control during the current period
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
5. Changes in scope of consolidated financial statements for other reasonsDescriptions on changes in the scope of consolidated financial statements for other reasons (e.g., establishing subsidiaries, clearing subsidiaries, etc.) and theirrelated circumstances:
Notes to financial statements Page 188
√ Applicable □ Not applicable
Two new subsidiary companies were established during the current period: Shanghai Yichengxiang E-commerce Co., Ltd.（上海益诚祥电子商务有限公司） andShanghai M&G Colipu Technology Development Co., Ltd.（海晨光科力普科技发展有限公司）Additionally, one subsidiary company was acquired during the current period, which does not constitute a business: Hubei Chaoxin Real Estate Co., Ltd.（湖北潮信置业有限公司）
6. Others
□ Applicable √ Not applicable
Notes to financial statements Page 189
X. Equity in Other Entities
1. Equity in subsidiaries
(1). Composition of the corporate group
√ Applicable □ Not applicable
Unit: 0’000 Currency: RMB
| Subsidiary name | Main place of business | Registered capital | Registered address | Nature of the business | Shareholding ratio (%) | Acquisition way | |
| Direct | Indirect | ||||||
| Shanghai M&G Colipu Office Supplies Co., Ltd.（上海晨光科力普办公用品有限公司） | Shanghai | 66,000.00 | Shanghai | Retail, wholesale, etc. | 70 | Establishment | |
| Shanghai M&G Stationery & Gift Co., Ltd.（上海晨光文具礼品有限公司） | Shanghai | 19,941.94 | Shanghai | Production, sale and so forth | 100 | Establishment | |
| Shanghai M&G Stationery Sales Co., Ltd.（上海晨光文具销售有限公司） | Shanghai | 1,300.00 | Shanghai | Retail, wholesale, etc. | 100 | Establishment | |
| Guangzhou M&G Stationery&Gifts Sales Co., Ltd.（广州晨光文具礼品销售有限公司） | Guangzhou | 3,950.00 | Guangzhou | Retail, wholesale, etc. | 100 | Establishment | |
| Yiwu Chenxing Stationery Co., Ltd.（义乌市晨兴文具用品有限公司） | Yiwu | 1,800.00 | Yiwu | Retail, wholesale, etc. | 100 | Establishment | |
| Zhejiang Benwei Technology Co., Ltd. (浙江本味科技有限公司) | Yiwu | 1,000.00 | Yiwu | Information technology services | 100 | Acquired by business combination not under common control | |
| M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） | Shanghai | 10,000.00 | Shanghai | Retail, wholesale, etc. | 100 | Establishment | |
| Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司） | Shanghai | 3,000.00 | Shanghai | Production, sale and so forth | 100 | Establishment | |
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | Shanghai | 5,000.00 | Shanghai | E-commerce business, etc. | 55 | Establishment | |
| Jiangsu M&G Life Enterprise Management Co., Ltd.（江苏晨光生活馆企业管理有限公司） | Nanjing | 2,000.00 | Nanjing | Retail, wholesale, etc. | 100 | Establishment | |
| Zhejiang New M&G Life Enterprise Management Co., Ltd.（浙江新晨光生活馆企业管理有限公司） | Hangzhou | 3,000.00 | Hangzhou | Retail, wholesale, etc. | 100 | Establishment | |
| Jiumu M&G Store Enterprise Management Co., Ltd.（九木杂物社企业管理有限公司） | Shanghai | 5,000.00 | Shanghai | Retail, wholesale, etc. | 85 | Establishment | |
| Shanghai M&G Zhenmei Stationery Co., Ltd.（上海晨光珍美文具有限公司） | Shanghai | 1,000.00 | Shanghai | Retail, wholesale, etc. | 100 | Acquired by business combination | |
Notes to financial statements Page 190
| under common control | |||||||
| Harbin M&G Sanmei Stationery Co., Ltd.（哈尔滨晨光三美文具有限公司） | Harbin | 1,900.00 | Harbin | Retail, wholesale, etc. | 100 | Acquired by business combination under common control | |
| Zhengzhou M&G Stationery&Gifts Co., Ltd.（郑州晨光文具礼品有限责任公司） | Zhengzhou | 2,600.00 | Zhengzhou | Retail, wholesale, etc. | 100 | Acquired by business combination under common control | |
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | Shenzhen | 2,000.00 | Shenzhen | Design and so forth | 51 | Acquired by business combination not under common control | |
| Shanghai M&G Office Stationery Co., Ltd. | Shanghai | 5,000.00 | Shanghai | Retail, wholesale, etc. | 100 | Establishment | |
| Lianyungang Colipu Office Supplies Co., Ltd.（连云港市科力普办公用品有限公司） | Lianyungang | 100.00 | Lianyungang | Retail, wholesale, etc. | 100 | Establishment | |
| Shenyang M&G Colipu Office Supplies Co., Ltd.（沈阳晨光科力普办公用品有限公司） | Shenyang | 50.00 | Shenyang | Retail, wholesale, etc. | 100 | Establishment | |
| Hangzhou Sanmei M&G Stationery Co., Ltd.（杭州三美晨光文具有限公司） | Hangzhou | 1,800.00 | Hangzhou | Retail, wholesale, etc. | 100 | Establishment | |
| Axus Stationery (Shanghai) Company Ltd. | Shanghai | 8,100.00 | Shanghai | Production, sale and so forth | 56 | Acquired by business combination not under common control | |
| Jiangsu Marco Pen Co., Ltd.（江苏马可笔业有限公司） | Siyang | 5,000.00 | Siyang | Production, sale and so forth | 100 | Acquired by business combination not under common control | |
| Changchun Macro Stationery Co., Ltd.（长春马可文教用品有限公司） | Changchun | 4,000.00 | Changchun | Production, sale and so forth | 100 | Acquired by business combination not under common control | |
| Yili Senlai Wood Co., Ltd.（伊犁森徕木业有限公司） | Yili | 2,000.00 | Yili | Production, sale and so forth | 100 | Acquired by business combination not under common |
Notes to financial statements Page 191
| control | |||||||
| Axus Stationery (Hong Kong) Company Ltd. | Hong Kong | 550.00 | Hong Kong | Retail, wholesale, etc. | 100 | Acquired by business combination not under common control | |
| International stationery company | Vietnam | 100.00 | Vietnam | Production, sale and so forth | 100 | Acquired by business combination not under common control | |
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | Shanghai | 10,000.00 | Shanghai | Creative service | 57 | Establishment | |
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | Shanghai | 22,000.00 | Shanghai | Enterprise management | 100 | Establishment | |
| Shanghai Colipu Information Technology Co., Ltd.（上海科力普信息科技有限公司） | Shanghai | 500.00 | Shanghai | Software development | 100 | Establishment | |
| Shanghai Meixin Stationery Co., Ltd. (上海美新文具有限公司) | Shanghai | 5,000.00 | Shanghai | Wholesale and retail | 100 | Establishment | |
| SHANGHAI M&G STATIONERY (SINGAPORE) PTE. LTD. | Singapore | 3,966.73 | Singapore | Enterprise management | 100 | Establishment | |
| M&G Jiumu Enterprise Management (Beijing) Co., Ltd.（晨光九木企业管理（北京）有限公司） | Beijing | 100.00 | Beijing | Wholesale and retail | 100 | Establishment | |
| Back to School Holding AS | Norway | 99.55 | Norway | Holding company | 91.4 | Acquired by business combination not under common control | |
| Beckmann AS | Norway | 66.00 | Norway | Production, sale and so forth | 100 | Acquired by business combination not under common control | |
| Beckmann Norway GmbH（Germany） | Germany | 2.50 | Germany | Retail, wholesale, etc. | 100 | Acquired by business combination not under common control | |
| Beckmann Norway Inc | United States | 0.0001 | United States | Retail, wholesale, etc. | 100 | Establishment | |
| Beckmann Norway GmbH（Austria） | Austria | 3.50 | Austria | Retail, wholesale, etc. | 100 | Establishment |
Notes to financial statements Page 192
| Guangdong South China Stationery Co., Ltd. (广东华南文教用品有限公司) | Huizhou | 5,000.00 | Huizhou | Retail, wholesale, etc. | 100 | Establishment | |
| Shanghai M&G Colipu Technology Development Co., Ltd.（上海晨光科力普科技发展有限公司） | Shanghai | 10,000.00 | Shanghai | Technology services | 100 | Establishment | |
| Shanghai Yichengxiang E-commerce Co., Ltd.（上海益诚祥电子商务有限公司） | Shanghai | 50.00 | Shanghai | Retail, wholesale, etc. | 100 | Establishment | |
| Hubei Chaoxin Real Estate Co., Ltd.（湖北潮信置业有限公司） | Wuhan | 6,000.00 | Wuhan | General goods storage and warehousing services | 100 | Acquisition that does not constitute a business |
Additional Note: The registered capital currency for Axus Stationery (Hong Kong) Company Ltd.is HKD, International Stationery Company and Beckmann Norway Inc. is USD, SHANGHAI M&GSTATIONERY (SINGAPORE) PTE. LTD. is SGD, Back to School Holding AS and Beckmann AS isNOK, Beckmann Norway GmbH (Germany) and Beckmann Norway GmbH (Austria) is EURO.
Descriptions on the situation that the shareholding ratio in the subsidiary is different from the share ofthe voting rights:
No
Basis for holding half or less of the voting rights of the investee but still controlling the investee andholding more than half of the voting rights but not controlling the investee:
No
Basis for controlling important structured entities included in the scope of consolidated financialstatements:
No
Basis for determining whether the Company is an agent or a principal:
No
Other descriptions:
No
(2). Important non-wholly owned subsidiaries
√ Applicable □ Not applicable
Unit: 0’000 Currency: RMB
| Name of subsidiaries | Minority shareholding ratio | Profits and losses attributable to minority shareholders in the current period | Dividends declared and distributed to minority shareholders in the current period | Minority equity balance at the end of the period |
| Shanghai M&G Colipu Office Supplies Co., Ltd.（上海晨光科力普办公用品有限公司） | 30.00% | 12,036.20 | 47,607.05 |
Descriptions on the situation that the shareholding ratio of minority shareholders in the subsidiary isdifferent from that of the voting rights:
□ Applicable √ Not applicable
Notes to financial statements Page 193
Other descriptions:
□ Applicable √ Not applicable
(3). Major financial information of important non-wholly owned subsidiaries
√ Applicable □ Not applicable
Unit: 0’000 Currency: RMB
| Name of subsidiaries | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Shanghai M&G Colipu Office Supplies Co., Ltd.（上海晨光科力普办公用品有限公司） | 573,460.50 | 17,296.27 | 590,756.77 | 425,711.43 | 6,355.17 | 432,066.60 | 451,852.77 | 13,961.42 | 465,814.19 | 342,184.67 | 4,453.45 | 346,638.12 |
| Name of subsidiaries | Amount accounted for in the current period | Amount accounted for in the previous period | ||||||
| Revenue | Net profit | Total comprehensive income | Cash flow from operating activities | Revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Shanghai M&G Colipu Office Supplies Co., Ltd.（上海晨光科力普办公用品有限公司） | 1,330,699.41 | 40,120.65 | 40,120.65 | 63,835.84 | 1,092,965.31 | 37,156.87 | 37,156.87 | 42,994.26 |
Other descriptions:
No
(4). Significant restrictions on the use of corporate group assets and the liquidation of corporate
group debts
□ Applicable √ Not applicable
(5). Financial support or other support provided to structured entities included in the scope of
consolidated financial statements
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
2. Transactions which result in a change in the share of owners' equity in the subsidiary but theCompany still controls the subsidiary
□ Applicable √ Not applicable
Notes to financial statements Page 194
3. Equity in joint ventures or associates
√ Applicable □ Not applicable
(1). Important joint ventures or associates
□ Applicable √ Not applicable
(2). Major financial information of important joint ventures
□ Applicable √ Not applicable
(3). Major financial information of important associates
□ Applicable √ Not applicable
(4). Summary financial information of unimportant joint ventures and associates
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Closing balance/Amount accounted for in the current period | Opening balance/Amount accounted for in the previous period | |
| Joint ventures: | ||
| Total carrying value of investments | ||
| Total of the following items calculated according to the shareholding ratio | ||
| - Net profits | ||
| - Other comprehensive income | ||
| - Total comprehensive income | ||
| Associates: | ||
| Total carrying value of investments | 37,232,112.47 | 39,726,537.12 |
| Total of the following items calculated according to the shareholding ratio | ||
| - Net profits | -6,197,315.17 | -1,731,132.47 |
| - Other comprehensive income | -45,383.25 | -55,032.21 |
| - Total comprehensive income | -6,242,698.42 | -1,786,164.68 |
Other descriptionsNo
(5). Descriptions on significant limitation of the ability of a joint venture or associate to transferfunds to the Company
□ Applicable √ Not applicable
(6). Excess losses incurred by a joint venture or associate
□ Applicable √ Not applicable
(7). Unrecognised commitments related to joint venture investment
□ Applicable √ Not applicable
(8). Contingent liabilities related to joint venture or associate investment
□ Applicable √ Not applicable
4. Important joint operations
□ Applicable √ Not applicable
Notes to financial statements Page 195
5. Equity in structured entities not included in the consolidated financial statementsDescriptions on structured entities not included in the consolidated financial statements:
□ Applicable √ Not applicable
6. Others
□ Applicable √ Not applicable
XI. Government subsidies
1. Government subsidies recognised at the end of the current period based on amountsreceivable
□ Applicable √ Not applicable
Reasons for not receiving the projected amount of government subsidies at the projected point in time
□ Applicable √ Not applicable
2. Liability items involving government subsidies
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Financial statement item | Opening balance | Subsidies increased in the current period | Amount recognised as non-operating income in the current period | Other income entered in the current period | Other changes in the current period | Closing balance | Related to assets/income |
| Deferred income | 46,210,203.99 | 3,750,000.00 | 15,610,400.40 | 34,349,803.59 | Asset-related | ||
| Total | 46,210,203.99 | 3,750,000.00 | 15,610,400.40 | 34,349,803.59 | / |
3. Government subsidies recognised as profit and loss of the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Type | Amount accounted for in the current period | Amount accounted for in the previous period |
| Asset-related | 15,610,400.40 | 5,582,134.73 |
| Income-related | 131,580,086.20 | 131,108,639.58 |
| Total | 147,190,486.60 | 136,690,774.31 |
Other descriptions:
No
XII. Risks Associated with Financial Instruments
1. Financial instrument risk
√ Applicable □ Not applicable
The Company faces various financial risks in its business operations: credit risk, liquidity risk andmarket risk (including exchange rate risk, interest rate risk and other price risk). The above financialrisks and the risk management policies adopted by the Company to reduce these risks are as follows:
The Board of Directors is responsible for planning and establishing the Company's riskmanagement structure, formulating the Company's risk management policies and related guidelines, andsupervising the implementation of risk management measures. The Company has formulated riskmanagement policies to identify and analyse the risks faced by the Company. These risk managementpolicies clearly stipulate specific risks, covering many aspects in the management of market risk, creditrisk and liquidity risk. The Company regularly evaluates the market environment and changes in theCompany's business activities to determine whether to update the risk management policies and systems.The Company's risk management is carried out by the Risk Management Committee in accordance with
Notes to financial statements Page 196
the policies approved by the Board of Directors. The Risk Management Committee works closely withother business departments of the Company to identify, evaluate and avoid related risks. The InternalAudit Department of the Company conducts regular audits on risk management control and procedures,and reports the audit results to the Audit Committee of the Company.The Company diversifies the risk of financial instruments through appropriate diversifiedinvestment and business portfolios, and reduces the risks relating to concentration in a single industry,specific region or specific counterparty through formulation of corresponding risk management policies.
(I) Credit riskCredit risk refers to the risk of the Company's financial losses due to the failure of the counterpartyto perform its contractual obligations.The main sources of credit risk for the Company primarily arise from cash and equivalents, billsreceivable, accounts receivable, financing of accounts receivable, and other receivables.The Company's monetary funds are mainly bank deposits deposited in reputable state-owned banksand other large and medium-sized listed banks with high credit ratings, thus the Company believes thatthere are no significant credit risks and almost no major losses caused by bank defaults.In addition, for notes receivable, accounts receivable, financing receivables and other receivables,the Company sets relevant policies to control credit risk exposure. The Company evaluates thecustomer's credit qualifications and sets the corresponding credit period based on the customer'sfinancial status, possibility of obtaining guarantees from a third party, credit history and other factorssuch as current market conditions. The Company regularly monitors customer credit records. Forcustomers with poor credit records, the Company uses written dunning and shortens or cancels the creditperiod, etc., to ensure that the Company's overall credit risk is within the controllable range.
(II) Liquidity riskLiquidity risk is the risk of a shortage of funds of the Company when the Company is performingits obligation to settle in the form of delivery of cash or other financial assets.The Company's policy is to ensure that there is sufficient cash to pay off the debts due. Liquidityrisk is centrally controlled by the Company's Finance Department. Finance Department ensures that theCompany has sufficient funds to repay debts under all reasonable forecasts by monitoring cash balances,marketable securities at any time, and rolling forecasts of the cash flows in the coming 12 months.Finance Department also continuously monitors whether the Company complies with the provisions ofthe loan agreement and obtains commitments from major financial institutions to provide sufficientreserve funds so as to meet short- and long-term funding needs.
Financial liabilities of the Company are presented as unrealized contractual cash flows on thematurity date as follows:
| Item | Closing balance | ||||||
| Immediate repayment | Within one year | One to two years | Two to five years | Above five years | Total undiscounted contract amount | Carrying value | |
| Short-term borrowings | 174,166.67 | 190,000,000.00 | 190,174,166.67 | 190,174,166.67 | |||
| Derivative financial liabilities | 1,357,106.71 | 1,357,106.71 | 1,357,106.71 | ||||
| Accounts payable | 4,854,339,509.13 | 4,854,339,509.13 | 4,854,339,509.13 | ||||
| Other payables | 537,102,511.17 | 537,102,511.17 | 537,102,511.17 | ||||
| Non-current liabilities due within one year | 235,994,248.56 | 235,994,248.56 | 222,168,448.30 | ||||
| Long-term borrowings | 27,500.01 | 30,000,000.00 | 30,027,500.01 | 30,027,500.01 | |||
| Lease liabilities | 115,943,987.99 | 88,789,953.19 | 4,726,026.03 | 209,459,967.21 | 198,614,205.74 | ||
| Total | 201,666.68 | 5,818,793,375.57 | 145,943,987.99 | 88,789,953.19 | 4,726,026.03 | 6,058,455,009.46 | 6,033,783,447.73 |
| Item | Balance at the end of the year | ||||||
| Immediate repayment | Within one year | One to two years | Two to five years | Above five years | Total undiscounted contract amount | Carrying value | |
| Short-term borrowings | 176,000.00 | 189,174,225.65 | 189,350,225.65 | 189,350,225.65 | |||
| Derivative financial liabilities | 881,465.28 | 881,465.28 | 881,465.28 | ||||
| Accounts payable | 3,998,633,387.71 | 3,998,633,387.71 | 3,998,633,387.71 | ||||
| Other payables | 492,874,360.46 | 492,874,360.46 | 492,874,360.46 | ||||
| Total | 176,000.00 | 4,681,563,439.10 | 4,681,739,439.10 | 4,681,739,439.10 | |||
Notes to financial statements Page 197
(III) Market riskMarket risk of financial instruments is the risk that the fair value or future cash flows of financialinstruments will fluctuate due to changes in market prices including exchange rate risk, interest rate riskand other price risks.
1. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate due to changes in market rates.
Interest-bearing financial instruments with fixed and floating rates expose the Company to fairvalue interest rate risk and cash flow interest rate risk, respectively. The Company determines thepercentages of fixed interest rate instruments and floating interest rate instruments according to themarket environment, and maintains an appropriate combination of fixed interest rate instruments andfloating interest rate instruments through regular review and monitoring. When necessary, the Companyadopts interest rate swap instruments to hedge the interest rate risk.
As of 31 December 2023, assuming all other variables remain constant, a 100 basis points increaseor decrease in the borrowing interest rate calculated at a floating rate will result in a decrease or increaseof RMB2.2 million in the net profit of the Company (as of 31 December 2022: RMB1.8917 million).Management believes that a 100 basis points change reasonably reflects the reasonable range of interestrate fluctuations for the next year.
2. Exchange rate risk
Exchange rate risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate due to changes in foreign exchange rates.
The Company continuously monitors the scale of foreign-currency transactions andforeign-currency assets and liabilities to minimise foreign exchange risks. In addition, the Company mayalso sign forward foreign exchange contracts or currency swap contracts to avoid exchange rate risk.
Foreign exchange risk faced by the Company mainly comes from financial assets and liabilitiesdenominated in USD, and the amounts of foreign currency financial assets and liabilities converted intoRMB are shown below:
| Item | Closing balance | Balance at the end of the year | ||||
| USD | Other foreign currencies | Total | USD | Other foreign currencies | Total | |
| Cash and equivalents | 99,485,080.26 | 53,056,901.56 | 152,541,981.82 | 91,606,085.48 | 41,146,285.88 | 132,752,371.36 |
| Accounts receivable | 157,056,337.60 | 19,995,500.69 | 177,051,838.29 | 141,742,280.35 | 22,444,761.73 | 164,187,042.08 |
| Other receivables | 61,619.49 | 336,806.45 | 398,425.94 | 475,144.01 | 475,144.01 | |
| Total foreign currency financial assets | 256,603,037.35 | 73,389,208.70 | 329,992,246.05 | 233,348,365.83 | 64,066,191.62 | 297,414,557.45 |
| Short-term borrowings | 5,174,225.65 | 5,174,225.65 | ||||
| Non-current liabilities due within one year | 35,878,223.18 | 35,878,223.18 | 16,715,043.39 | 16,715,043.39 | ||
| Accounts payable | 52,863,240.07 | 19,361,818.62 | 72,225,058.69 | 3,409,725.11 | 17,922,355.81 | 21,332,080.92 |
| Other payables | 14,178,051.12 | 563,126.03 | 14,741,177.15 | 83,473.52 | 867,177.79 | 950,651.31 |
| Estimated liabilities | 14,922,058.45 | 14,922,058.45 | ||||
| Total foreign currency financial liabilities | 67,041,291.19 | 55,803,167.83 | 122,844,459.02 | 3,493,198.63 | 55,600,861.09 | 59,094,059.72 |
As of 31 December 2023, assuming all other variables remain constant, a 5% appreciation ordepreciation of the RMB against foreign currencies will result in an increase or decrease ofRMB10.3574 million in the net profit of the Company (as of 31 December 2022: RMB11.916 million).Management believes that a 5% change reasonably reflects the reasonable range of RMB fluctuationsagainst foreign currencies for the next year.
2. Hedging
(1) The Company conducts hedging operations for risk management
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
(2) The Company conducts qualifying hedging operations and applies hedge accounting
□ Applicable √ Not applicable
Notes to financial statements Page 198
Other descriptions
□ Applicable √ Not applicable
(3) The Company conducts hedging operations for risk management, expects to achieve its riskmanagement objectives, but does not apply hedge accounting
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
3. Transfer of financial asset
(1) Classification of transfer modalities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Transfer modality | Nature of financial assets transferred | Amount of financial assets transferred | Derecognition | Basis for determining derecognition |
| Bill endorsement | Bank acceptance bills | 14,783,368.02 | Terminated | Almost all risks and remuneration of the ownership have been transferred |
| Bill endorsement | Commercial acceptance draft | 2,706,627.49 | Non-terminated | Not applicable |
| Bill endorsement | Finance company acceptance bills | 15,945,243.71 | Non-terminated | Not applicable |
| Assignment or subdivision transfer | Digital accounts receivable claims certificates | 9,228,481.31 | Non-terminated | Not applicable |
| Factoring of accounts receivable | Digital accounts receivable claims certificates | 2,500,000.00 | Non-terminated | Not applicable |
| Total | / | 45,163,720.53 | / | / |
(2) Financial assets derecognised as a result of a transfer
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Modality for the transfer of financial assets | Amount of financial assets derecognised | Gains or losses related to derecognition |
| Bank acceptance bills | Bill endorsement | 14,783,368.02 | |
| Total | / | 14,783,368.02 |
(3) Transferred financial assets that continue to be involved
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Asset transfer modality | Amount of assets generated through continuing involvement | Amount of liabilities generated through continuing involvement |
| Commercial acceptance draft | Bill endorsement | 2,706,627.49 | 2,706,627.49 |
| Finance company acceptance bills | Bill endorsement | 15,945,243.71 | 15,945,243.71 |
| Digital accounts receivable | Factoring of | 2,500,000.00 | 2,500,000.00 |
Notes to financial statements Page 199
| claims certificates | accounts receivable | ||
| Digital accounts receivable claims certificates | Assignment or subdivision transfer | 9,228,481.31 | 9,228,481.31 |
| Total | / | 30,380,352.51 | 30,380,352.51 |
Other descriptions
□ Applicable √ Not applicable
XIII. Disclosure of Fair Value
1. Closing fair value of assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing fair value | |||
| Level-1 fair value measurement | Level-2 fair value measurement | Level-3 fair value measurement | Total | |
| I. Continuous fair value measurement | ||||
| (I) Trading financial assets | ||||
| 1. Financial assets at fair value through profit or loss | ||||
| (1) Debt instrument investment | ||||
| (2) Equity instrument investment | ||||
| (3) Derivative financial assets | ||||
| (4) Others | 1,402,518,595.12 | 1,402,518,595.12 | ||
| 2. Financial assets designated as at fair value through profit or loss | ||||
| (1) Debt instrument investment | ||||
| (2) Equity instrument investment | ||||
| (II) Other debt investments | ||||
| (III) Other equity instrument investments | 9,175,073.42 | 9,175,073.42 | ||
| (IV) Investment real estate | ||||
| 1. Land use rights used for rent | ||||
| 2. Rental buildings | ||||
| 3. Land use rights held and ready to be transferred after appreciation | ||||
| (V) Biological assets | ||||
| 1. Consumable biological assets | ||||
| 2. Productive | ||||
Notes to financial statements Page 200
| biological assets | ||||
| (VI) Receivables financing | 39,533,283.51 | 39,533,283.51 | ||
| Total assets continuously measured at fair value | 1,402,518,595.12 | 48,708,356.93 | 1,451,226,952.05 | |
| (VI) Trading financial liabilities | 1,357,106.71 | 1,357,106.71 | ||
| 1. Financial liabilities at fair value through profit or loss | ||||
| Including: Trading bonds issued | ||||
| Derivative financial liabilities | 1,357,106.71 | 1,357,106.71 | ||
| Others | ||||
| 2. Financial liabilities designated as at fair value through profit or loss | ||||
| (VII) Repurchase obligation liabilities | 35,878,223.18 | 35,878,223.18 | ||
| Total liabilities continuously measured at fair value | 37,235,329.89 | 37,235,329.89 | ||
| II. Non-continuous fair value measurement | ||||
| (I) Assets held for sale | ||||
| Total assets not continuously measured at fair value | ||||
| Total liabilities not continuously measured at fair value |
2. Basis for determining market prices of items continuously and not continuously measured atthe first-level fair value
√ Applicable □ Not applicable
The input value of the first level is the unadjusted quotation of the same asset or liability that can beobtained on the measurement date in the active market.
3. Qualitative and quantitative information on valuation techniques and important parameters
adopted by items continuously and not continuously measured at the second-level fair value
√ Applicable □ Not applicable
The input value of the second level is the directly or indirectly observable input value of relatedassets or liabilities except the input value of the first level.
4. Qualitative and quantitative information on valuation techniques and important parameters
adopted by items continuously and not continuously measured at the third-level fair value
□ Applicable √ Not applicable
Notes to financial statements Page 201
5. Information on adjustment between the beginning carrying value and the closing carryingvalue of items continuously measured at the third-level fair value and sensitivity analysis onunobservable parameters
□ Applicable √ Not applicable
6. For items continuously measured at fair value, in case of any conversion between variouslevels during the period, reasons for the conversion and policies to determine the conversiontime should be provided
□ Applicable √ Not applicable
7. Changes in valuation techniques and reasons for changes during the period
□ Applicable √ Not applicable
8. Particulars on fair value of financial assets and liabilities which are not measured at fair value
□ Applicable √ Not applicable
9. Others
□ Applicable √ Not applicable
XIV. Related Parties and Related-Party Transactions
1. Particulars on the parent company of the Company
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
| Name of the parent company | Registered address | Nature of the business | Registered capital | The parent company's shareholding ratio in the Company (%) | The parent company's voting right ratio in the Company (%) |
| M&G Holdings (Group) Co., Ltd. | Shanghai | Industrial Investment | 30,000 | 57.85 | 57.85 |
Descriptions on the parent company of the CompanyNoThe ultimate controlling party of the Company is Chen Huwen, Chen Huxiong and Chen XuelingOther descriptions:
No
2. Particulars on subsidiaries of the Company
Particulars on subsidiaries of the Company are shown in the relevant notes
√ Applicable □ Not applicable
For particulars on subsidiaries of the Company, see Note X. Equity in Other Entities for details.
3. Particulars on joint ventures and associates of the Company
For important joint ventures and associates of the Company, see the Notes for details
√ Applicable □ Not applicable
For important joint ventures and associates of the Company, see Note X. "Equity in Other Entities"for details.Particulars on other joint ventures and associates which have related-party transactions with theCompany in the current period or had related-party transactions with the Company in the previousperiod and form balances are as follows
√ Applicable □ Not applicable
Notes to financial statements Page 202
| Name of joint venture and associate | Relationship with the Company |
| Ningbo Zhongchen Equity Investment Partnership (Limited Partnership) | Associates |
| Shanghai Pen-making Technology Services Co., Ltd.（上海制笔技术服务有限公司） | Associates |
| Shanghai Momobanzhang Enterprise Management Co., Ltd. | Associates |
Other descriptions
□ Applicable √ Not applicable
4. Particulars on other related parties
√ Applicable □ Not applicable
| Name of other related parties | Relationship between other related parties and the Company |
| PELEG DESIGN Ltd | Others |
| Shanghai M&G Charity Foundation | Others |
| Shanghai KACO Industrial Co., Ltd. | Others |
| Guo Weilong | Others |
| Nanjing Zhaochen Stationery Sales Co., Ltd. | Others |
| Nanjing Chenri Stationery Sales Co., Ltd. | Others |
| Nanjing Youchen Stationery Sales Co., Ltd. | Others |
| Huaian Youpin Chenguang Trading Co., Ltd. (淮安优品晨光贸易有限公司) | Others |
| Nanjing Liuhe District Weifeng Qichen Cultural Products Co., Ltd. | Others |
| Contemporary Amperex Technology Co., Limited | Others |
Other descriptionsNo
5. Particulars on related-party transactions
(1). Related-party transactions for the purchase and sales of goods and the rendering and receiptof servicesTable of information on the purchase of goods/the receipt of services
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Related party | Related-party transaction content | Amount accounted for in the current period | Approved transaction line (if applicable) | Over the transaction line or not (if applicable) | Amount accounted for in the previous period |
| PELEG DESIGN Ltd | Receipt of services | 1,190,000.00 | 2,801,435.30 | ||
| Shanghai KACO Industrial Co., Ltd. | Purchase of goods | 7,214.00 | 1,975.89 | ||
| Shanghai Momobanzhang Enterprise Management Co., Ltd. | Purchase of goods | 430,357.09 | 238,792.93 | ||
| M&G Holdings (Group) Co., Ltd. | Purchase of goods | 148.00 | |||
| M&G Holdings (Group) Co., Ltd. | Receipt of services | 75,507.80 |
Notes to financial statements Page 203
| Shanghai Pen-making Technology Services Co., Ltd.（上海制笔技术服务有限公司） | Purchase of goods | 64,672.57 | |||
| Shanghai Pen-making Technology Services Co., Ltd.（上海制笔技术服务有限公司） | Receipt of services | 1,633.66 |
Table of information on the sale of goods/the rendering of services
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Related party | Related-party transaction content | Amount accounted for in the current period | Amount accounted for in the previous period |
| Sales entities controlled by Guo Weilong | Sale of goods | 280,620,675.09 | 355,283,148.55 |
| PELEG DESIGN Ltd | Sale of goods | 702,855.49 | |
| Shanghai Momobanzhang Enterprise Management Co., Ltd. | Sale of goods | 3,957,126.00 | 370,489.16 |
| Shanghai Momobanzhang Enterprise Management Co., Ltd. | Provision of labour service | 1,038,633.42 | |
| Shanghai KACO Industrial Co., Ltd. | Provision of labour service | 1,226.42 | |
| Shanghai Pen-making Technology Services Co., Ltd.（上海制笔技术服务有限公司） | Provision of labour service | 1,226.42 | |
| Shanghai M&G Charity Foundation | Sale of goods | 35,383.28 | 342,373.82 |
| Shanghai Pen-making Technology Services Co., Ltd.（上海制笔技术服务有限公司） | Sale of goods | 288,188.24 | |
| M&G Holdings (Group) Co., Ltd. | Sale of goods | 48,542.48 | |
| Contemporary Amperex Technology Co., Limited | Sale of goods | 236,216.07 |
Particulars on related-party transactions for the purchase and sales of goods and the rendering andreceipt of services
□ Applicable √ Not applicable
(2). Particulars on related-party entrusted management/contracting and entrusting
management/outsourcingTable of information on the Company's entrusted management/contracting:
□ Applicable √ Not applicable
Particulars on related-party entrusting/contracting
□ Applicable √ Not applicable
Table of information on the Company's entrusting management/outsourcing
□ Applicable √ Not applicable
Particulars on related-party management/outsourcing
Notes to financial statements Page 204
□ Applicable √ Not applicable
(3). Particulars on related-party leases
The Company as the lessor:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name of lessee | Type of leased assets | Rental income recognised in the current period | Rental income recognised in the previous period |
| Shanghai Momobanzhang Enterprise Management Co., Ltd. | Self-owned office building | 200,917.43 |
Notes to financial statements Page 205
The Company as the lessee:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name of lessor | Type of leased assets | Rental costs for short-term leases and leases of low-value assets with simplified treatment (if applicable) | Variable lease payments not included in lease liabilities (if applicable) | Rental payments | Interest expense on lease liabilities | Increase in right-of-use assets | |||||
| Amount accounted for in the current period | Amount accounted for in the previous period | Amount accounted for in the current period | Amount accounted for in the previous period | Amount accounted for in the current period | Amount accounted for in the previous period | Amount accounted for in the current period | Amount accounted for in the previous period | Amount accounted for in the current period | Amount accounted for in the previous period | ||
| M&G Holdings (Group) Co., Ltd. | Self-owned houses (including office buildings, workshops, parking spaces, warehouses, dormitory buildings, etc.) | 4,852,000.00 | 4,852,000.00 | 319,493.40 | 79,337.90 | 8,850,788.03 | |||||
| M&G Holdings (Group) Co., Ltd. | Self-owned office buildings and parking spaces | 78,857.15 | 68,571.43 | 16,488,306.13 | 13,304,378.59 | 334,185.69 | 366,948.53 | 34,737,251.46 | 12,958,631.76 | ||
| M&G Holdings (Group) Co., Ltd. | Utilities | 6,457,939.02 | 4,983,461.41 | ||||||||
Descriptions on related-party leases
□ Applicable √ Not applicable
Notes to financial statements Page 206
(4). Particulars on related-party guarantees
The Company as a guarantor
□ Applicable √ Not applicable
The Company as a guaranteed party
□ Applicable √ Not applicable
Descriptions on related-party guarantees
□ Applicable √ Not applicable
(5). Related-party fund lending
□ Applicable √ Not applicable
(6). Related-party asset transfer and debt restructuring
□ Applicable √ Not applicable
(7). Compensation of key management personnel
□ Applicable √ Not applicable
(8). Other related-party transactions
□ Applicable √ Not applicable
6. Receivables from and payables to related parties
(1). Receivables
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Items | Related party | Closing balance | Opening balance | ||
| Carrying balance | Bad debt provisions | Carrying balance | Bad debt provisions | ||
| Accounts receivable | Shanghai M&G Charity Foundation | 14,684.00 | 734.20 | 81,428.89 | 4,071.44 |
| Accounts receivable | Shanghai Momobanzhang Enterprise Management Co., Ltd. | 344,295.74 | 13,653.49 | 106,040.10 | 5,302.01 |
| Accounts receivable | Sales entities controlled by Guo Weilong | 25,163.72 | 1,258.19 | ||
| Accounts receivable | Contemporary Amperex Technology Co., Limited | 72,688.21 | 363.44 | ||
| Other receivables | Shanghai KACO Industrial Co., Ltd. | 15.79 | 0.79 | ||
| Other receivables | Shanghai Momobanzhang Enterprise Management Co., Ltd. | 3,543.33 | 177.17 | ||
| Prepaid accounts | Shanghai Pen-making | 1,600.00 | |||
Notes to financial statements Page 207
TechnologyServices Co., Ltd.（上海制笔技术服务有限公司）
(2). Payables
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Items | Related party | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Accounts payable | Sales entities controlled by Guo Weilong | 9,649.79 | 12,670.41 |
| Accounts payable | Shanghai KACO Industrial Co., Ltd. | 836.90 | |
| Accounts payable | Shanghai Momobanzhang Enterprise Management Co., Ltd. | 238,792.82 | |
| Other payables | Sales entities controlled by Guo Weilong | 524,000.00 | 700,000.00 |
| Other payables | M&G Holdings (Group) Co., Ltd. | 1,155,958.11 | 1,018,493.70 |
| Contract liabilities | Sales entities controlled by Guo Weilong | 3,936,727.68 | 2,905,275.49 |
| Lease liabilities | M&G Holdings (Group) Co., Ltd. | 26,349,112.06 | 1,452,194.72 |
| Non-current liabilities due within one year | M&G Holdings (Group) Co., Ltd. | 18,362,042.94 | 1,409,785.18 |
(3). Others
□ Applicable √ Not applicable
7. Related-party commitments
□ Applicable √ Not applicable
8. Others
□ Applicable √ Not applicable
XV. Share-based Payments
1. Various equity instruments
√ Applicable □ Not applicable
Quantity unit: Share Amount unit: Yuan Currency: RMB
| Tye of grant recipients | Granted in the current period | Vested in the current period | Unlocked in the current period | Expired in the current period | ||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | Quantity | Amount | |
| Initial grant target of 2020 Restricted Share Incentive Plan: | 261,480.00 | 6,197,076.00 | ||||||
| Reserved grant target of 2020 | 75,000.00 | 3,377,250.00 | ||||||
Notes to financial statements Page 208
| Restricted Share Incentive Plan: | ||||||||
| Total | 336,480.00 | 9,574,326.00 |
Outstanding stock options or other equity instruments at the end of the period
□ Applicable √ Not applicable
2. Particulars on equity-settled share-based payment
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Determination of the Fair Value of Equity Instruments at the Date of Grant | The Closing Price of the Shares on the Date of Grant |
| Important parameters of the fair value of equity instruments at the date of grant | / |
| Determination basis for the number of vesting equity instruments | At each balance sheet date during the waiting period, the Company will make the best estimate based on the latest obtained follow-up information such as changes in the number of vesting employees, and revise the expected number of vesting equity instruments. |
| Reasons for the significant difference between the current estimate and the previous estimate | No |
| Cumulative amount of equity-settled share-based payments included in the capital reserve | 118,392,651.26 |
Other descriptions
(1) In accordance with the Proposal on the Company's 2020 Restricted Share Incentive Plan (Draft)and Its Summary, the Proposal on the Management Measures for the Implementation of the Company's2020 Restricted Share Incentive Plan, and the Proposal on Requesting the General Meeting ofShareholders to Authorize the Board of Directors to Deal with Matters Related to Restricted StockIncentives considered and approved at the 2019 Annual General Meeting of Shareholders held on 8 May2020, the Company initially granted 7.4412 million restricted shares at a price of RMB23.70 per share.As of 2023, there are still 2.5046 million shares that have not been unlocked. The incentive plan assessesthe Company's operating performance annually, with achieving the performance targets as one of theconditions for lifting the restrictions in the incentive plan for the current year. On 15November 2022, theresolution on the Proposal on Adjusting the 2020 Restricted Share Incentive Plan was approved at thefirst Extraordinary General Meeting of Shareholders in 2022, adjusting the incentive plan. Based on2019, the growth rate of operating revenue for 2022, which was originally set at not less than 75%, wasadjusted to 2023, and the growth rate of net profit for 2022, originally set at not less than 66%, was alsoadjusted to 2023. The Company anticipates that the performance targets for the third tranche of restrictedshares to be released cannot be achieved, necessitating a reversal of the corresponding equity incentiveexpenses.
(2) Regarding the 2020 Restricted Share Incentive Plan, the reserved shares were approved on 29April 2021, at the seventh meeting of the 5th session of Board of Directors and the sixth meeting of the5th session of Supervisory Committee. A total of 705,500 restricted shares were granted at a price ofRMB45.03 per share. As of 31 December 2023, there are still 263,550 shares that have not been releasedfrom restriction. The incentive plan assesses the Company's operating performance annually, withachieving the performance targets as one of the conditions for lifting the restrictions in the incentive planfor the current year. As mentioned in (1), the Company adjusted the performance targets after relevantdeliberation on 15 November 2022. The original targets, based on 2019, were revised from a minimumoperating revenue growth rate of 75% for 2022 to 2023 and a minimum net profit growth rate of 66% for2022 to 2023. The Company anticipates that the performance targets for the second tranche of restrictedshares to be released cannot be achieved, necessitating a reversal of the corresponding equity incentiveexpenses.
Notes to financial statements Page 209
3. Particulars on cash-settled share-based payment
□ Applicable √ Not applicable
4. share-based payment expense in the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Tye of grant recipients | Equity-settled share-based payment expenses | Cash-settled share-based payment expenses |
| Employee | -48,387,010.93 | |
| Total | -48,387,010.93 |
Other descriptionsNo
5. Particulars on modification and termination of share-based payment
□ Applicable √ Not applicable
6. Others
□ Applicable √ Not applicable
XVI. Commitments and Contingencies
1. Important commitments
√ Applicable □ Not applicable
Important external commitments, nature, and amount existing on the balance sheet date
1. Particulars on mortgaged assets
(1) The subsidiary, Axus Stationery (Shanghai) Company Ltd. (hereinafter referred to as “AxusStationery”), entered into the Maximum Mortgage Contract numbered ZD9874202200000005 withShanghai Pudong Development Bank Co., Ltd. Fengxian Sub-branch on 15 September 2022, underwhich it pledges its lands and plants under Property HFDQ Zi (2013) No. 015437, Property HFDQ Zi(2013) No. 013396 and Property HFDQ Zi (2015) No. 015718 at the maximum principal limit ofRMB200 million and for the term of credit line from 15 September 2022 to 14 September 2025.
(2) The subsidiary Jiangsu Marco Pen Co., Ltd. (江苏马可笔业有限公司) (hereinafter referred toas “Jiangsu Marco”) entered into the Maximum Mortgage Contract numbered BD133202302270002428with Jiangsu Siyang Rural Commercial Bank Co., Ltd. on 27 February 2023, under which it pledges itslands and plants under Su (2019) Siyang County Real Estate No. 0018047, Su (2019) Siyang CountyReal Estate No. 0018032, Su (2019) Siyang County Real Estate No. 0017990 and Su (2019) SiyangCounty Real Estate No. 0017993 at the maximum principal limit of RMB45,122,200 and for the term ofcredit line from 27 February 2023 to 22 November 2025.
2. Contingencies
(1). Important contingencies on the balance sheet date
□ Applicable √ Not applicable
(2). If the Company has no important contingent issues that need to be disclosed, it should also be
explained:
□ Applicable √ Not applicable
3. Others
□ Applicable √ Not applicable
Notes to financial statements Page 210
XVII. Post-balance Sheet Date Events
1. Important non-adjustment matters
□ Applicable √ Not applicable
2. Profit distribution
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Profits or dividends proposed to be distributed | 738,990,821.60 |
| Profits or dividends reviewed and approved to be declared for distribution |
According to the Profit Distribution Plan for 2023 reviewed and approved at the 5th meeting of the6th session of Board of Directors held by the Company on 28 March 2024, the Company proposes todistribute cash dividend of RMB8.00 (tax inclusive) per 10 shares based on the Company's total sharecapital (exclusive of shares in the Company’s special securities account for repurchased shares)registered as at the registration date for the implementation of dividend distribution. The remainingdistributable profits in 2023 will be carried forward to the following year.
3. Sales return
□ Applicable √ Not applicable
4. Particulars on other post-balance-sheet-date events
□ Applicable √ Not applicable
XVIII. Other Important Issues
1. Correction of previous-period accounting errors
(1). Retrospective restatement method
□ Applicable √ Not applicable
(2). Future application method
□ Applicable √ Not applicable
2. Significant debt restructuring
□ Applicable √ Not applicable
3. Asset replacement
(1). Non-monetary asset exchange
□ Applicable √ Not applicable
(2). Other asset replacement
□ Applicable √ Not applicable
4. Annuity plan
□ Applicable √ Not applicable
5. Discontinued operations
□ Applicable √ Not applicable
Notes to financial statements Page 211
6. Segment information
(1). Basis for determining reporting segments and accounting policies
√ Applicable □ Not applicable
According to the Company's internal organisational structure, management requirements andinternal reporting system, two reporting segments are identified, namely: direct office supplies businessand core traditional business. The Company's reporting segments provide different products or services,or engages in operational activities in different regions. Since each segment requires different technicalor marketing strategies, the management of the Company separately manages the operating activities ofeach reporting segment and regularly evaluates the operating results of these reporting segments todetermine the allocation of resources to them and the evaluation of their performance.
The transfer price between segments is determined on the basis of the actual transaction price, andthe expenses indirectly attributable to each segment are grouped according to the actual share of eachsegment. Allocation among segments is conducted accordingly. Assets are allocated according to theoperation of the segment and the location of the asset. Segment liabilities include liabilities that can beattributed to the segment formed by the segment's operating activities. If the expenses associated withliabilities shared by multiple operating segments are allocated to these operating segments, the jointlyassumed liabilities are also allocated to these operating segments.
(2). Financial information of reporting segments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Direct office supplies business | Traditional business | Inter-segment elimination | Total |
| Revenue from foreign transactions | 13,295,012,999.95 | 10,056,291,328.08 | 23,351,304,328.03 | |
| Revenue from inter-segment transactions | 11,981,061.87 | 248,336,336.64 | 260,317,398.51 | |
| Income from investments in associates and joint ventures | -1,275,439.03 | -1,275,439.03 | ||
| Credit impairment losses | -22,120,977.75 | 290,798.90 | -21,830,178.85 | |
| Asset impairment losses | 502,351.70 | 11,242,454.85 | 11,744,806.55 | |
| Depreciation and amortisation charges | 33,443,821.10 | 512,689,964.91 | 546,133,786.01 | |
| Total profits (total losses) | 493,267,809.30 | 1,483,807,679.21 | -2,397,284.27 | 1,979,472,772.78 |
| Income tax expenses | 92,061,294.87 | 242,873,154.94 | -599,321.07 | 335,533,770.88 |
| Net profits (net losses) | 401,206,514.43 | 1,240,934,524.27 | -1,797,963.20 | 1,643,939,001.90 |
| Total assets | 5,907,567,612.89 | 9,669,789,751.92 | 263,395,052.81 | 15,313,962,312.00 |
| Total liabilities | 4,320,666,043.09 | 2,903,636,594.77 | 261,505,122.24 | 6,962,797,515.62 |
(3). If the Company does not have a reporting segment, or if it cannot disclose the total assets and
total liabilities of each reporting segment, the reason should be explained
□ Applicable √ Not applicable
(4). Other descriptions
□ Applicable √ Not applicable
7. Other important transactions and matters that have an impact on investors' decisions
□ Applicable √ Not applicable
8. Others
√ Applicable □ Not applicable
Notes to financial statements Page 212
Key Impacts of Implementing the General Provisions of Financial Reports (Revised in 2023), Rule15 on the Disclosure of Financial Information by Companies Issuing Securities Publicly
In preparing these financial statements, the Company has disclosed relevant financial informationin accordance with the requirements of the General Provisions of Financial Reports (Revised in 2023),Rule 15 on the Disclosure of Financial Information by Companies Issuing Securities Publicly, aspromulgated by the China Securities Regulatory Commission on 22 December 2023. With respect toitems such as financial instruments, inventories, impairment of long-term assets, revenue, cash flows,share-based payments, R&D expenses, government, among others, the implementation of this regulationhas not significantly impacted the disclosure format of the main financial data for other comparableaccounting periods.
XIX. Notes on the Main Items of the Parent Company's Financial Statements
1. Accounts receivable
(1). Disclosure by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Within one year | ||
| Including: Sub-item within one year | ||
| Within one year | 223,470,487.70 | 172,369,683.69 |
| Sub-total within one year | 223,470,487.70 | 172,369,683.69 |
| One to two years | ||
| Two to three years | 1,054,026.72 | |
| Above three years | ||
| Three to four years | ||
| Four to five years | ||
| Above five years | ||
| Total | 223,470,487.70 | 173,423,710.41 |
(2). Disclosure by accruing method for bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provisions | Carrying value | Carrying balance | Bad debt provisions | Carrying value | |||||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | Amount | Percentage (%) | Amount | Accruing percentage (%) | |||
| Bad debt provisions accrued separately | 1,054,026.72 | 0.61 | 1,054,026.72 | 100.00 | ||||||
| Including: | ||||||||||
| Bad debt provisions accrued according to the combination | 223,470,487.70 | 100.00 | 4,725,084.16 | 2.11 | 218,745,403.54 | 172,369,683.69 | 99.39 | 5,070,464.13 | 2.94 | 167,299,219.56 |
| Including: | ||||||||||
| Account age analysis | 94,501,683.09 | 42.29 | 4,725,084.16 | 5.00 | 89,776,598.93 | 101,409,282.65 | 58.47 | 5,070,464.13 | 5.00 | 96,338,818.52 |
| Related parties in the scope of the consolidated financial statements | 128,968,804.61 | 57.71 | 128,968,804.61 | 70,960,401.04 | 40.92 | 70,960,401.04 | ||||
| Total | 223,470,487.70 | / | 4,725,084.16 | / | 218,745,403.54 | 173,423,710.41 | / | 6,124,490.85 | / | 167,299,219.56 |
Notes to financial statements Page 213
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
√ Applicable □ Not applicable
Combination item: Account age analysis
Unit: Yuan Currency: RMB
| Item | Closing balance | ||
| Accounts receivable | Bad debt provisions | Accruing percentage (%) | |
| Account age analysis | 94,501,683.09 | 4,725,084.16 | 5.00 |
| Total | 94,501,683.09 | 4,725,084.16 | |
Description on bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the general model of expected credit losses
□ Applicable √ Not applicable
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of accounts receivable arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
(3). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Bad debt provisions accrued separately | 1,054,026.72 | 1,054,026.72 | ||||
| Account age analysis | 5,070,464.13 | -345,379.97 | 4,725,084.16 | |||
| Total | 6,124,490.85 | -345,379.97 | 1,054,026.72 | 4,725,084.16 | ||
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptionsNo
(4). Particulars on accounts receivable actually written-off in the current period
□ Applicable √ Not applicable
Writing-off of significant accounts receivable
□ Applicable √ Not applicable
Description on writing-off of accounts receivable:
□ Applicable √ Not applicable
Notes to financial statements Page 214
(5). Particulars on top five accounts receivable and contract assets in terms of the balance at theend of the period based on debtors
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Company name | Closing balance | Closing balance of contract assets | Closing balance of accounts receivable and contract assets | Percentage (%) in the total balance at the end of the period of accounts receivable | Balance of bad debt provisions at the end of the period |
| First | 38,069,697.28 | 38,069,697.28 | 17.04 | ||
| Second | 34,646,498.50 | 34,646,498.50 | 15.50 | ||
| Third | 17,125,542.07 | 17,125,542.07 | 7.66 | 856,277.10 | |
| Fourth | 16,859,097.41 | 16,859,097.41 | 7.54 | 842,954.87 | |
| Fifth | 12,883,707.74 | 12,883,707.74 | 5.77 | 644,185.39 | |
| Total | 119,584,543.00 | 119,584,543.00 | 53.51 | 2,343,417.36 |
Other descriptionsNo
Other descriptions:
□ Applicable √ Not applicable
2. Other receivables
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Interest receivable | ||
| Dividend receivable | ||
| Other receivables | 921,226,487.12 | 781,222,709.03 |
| Total | 921,226,487.12 | 781,222,709.03 |
Other descriptions:
□ Applicable √ Not applicable
Interest receivable
(1). Classification of interest receivable
□ Applicable √ Not applicable
(2). Important overdue interest
□ Applicable √ Not applicable
(3). Disclosure by accruing method for bad debt provisions
□ Applicable √ Not applicable
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Description on bad debt provisions accrued separately:
□ Applicable √ Not applicable
Notes to financial statements Page 215
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
(4). Bad debt provisions accrued according to the general model of expected credit losses
□ Applicable √ Not applicable
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of interest receivable arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
(5). Particulars on bad debt provisions
□ Applicable √ Not applicable
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptions:
No
(6). Particulars on interest receivable actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant interest receivable
□ Applicable √ Not applicable
Notes on write-off:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Dividend receivable
(1). Dividend receivable
□ Applicable √ Not applicable
(2). Important dividend receivable with the account age over one year
□ Applicable √ Not applicable
(3). Disclosure by accruing method for bad debt provisions
□ Applicable √ Not applicable
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Description on bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Notes to financial statements Page 216
(4). Bad debt provisions accrued according to the general model of expected credit losses
□ Applicable √ Not applicable
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of dividends receivable arising from changes in theprovision for losses in the current period:
□ Applicable √ Not applicable
(5). Particulars on bad debt provisions
□ Applicable √ Not applicable
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
Other descriptions:
No
(6). Particulars on dividend receivable actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant dividend receivable
□ Applicable √ Not applicable
Notes on write-off:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Other receivables
(1). Disclosure by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Within one year | ||
| Including: Sub-item within one year | ||
| Within one year | 228,088,190.64 | 239,564,462.23 |
| Sub-total within one year | 228,088,190.64 | 239,564,462.23 |
| One to two years | 206,092,006.96 | 164,879,144.36 |
| Two to three years | 148,050,647.45 | 120,602,465.05 |
| Above three years | 340,627,308.31 | 257,561,120.08 |
| Three to four years | ||
| Four to five years | ||
| Above five years | ||
| Less: Bad debt provisions | -1,631,666.24 | -1,384,482.69 |
| Total | 921,226,487.12 | 781,222,709.03 |
(2). Particulars on classification by amount nature
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Notes to financial statements Page 217
| Amount nature | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Personal loans and petty cash | 5,080,611.01 | 5,184,623.94 |
| Consolidated balance of related-parties current accounts | 898,888,847.17 | 768,968,145.05 |
| Amount paid for materials | 11,585,777.21 | 3,721,731.92 |
| Consolidated balance of related-parties current accounts - provisional input tax | 3,011,351.30 | 2,990,262.20 |
| Margin and deposit | 181,200.00 | 881,922.40 |
| Housing deposit and margin | 3,744,079.00 | 444,272.00 |
| Others | 366,287.67 | 416,234.21 |
| Total | 922,858,153.36 | 782,607,191.72 |
(3). Particulars on accruing of bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Bad debt provisions | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment occurred) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January 2023 | 1,384,482.69 | 1,384,482.69 | ||
| Balance as of 1 January 2023 in the current period | ||||
| - Transferred into Phase 2 | ||||
| - Transferred into Phase 3 | ||||
| - Reversed into Phase 2 | ||||
| - Reversed into Phase 1 | ||||
| Accrued in the current period | 247,183.55 | 247,183.55 | ||
| Reserved in the current period | ||||
| Resold in the current period | ||||
| Written-off in the current period | ||||
| Other Changes | ||||
| Balance as at 31 December 2023 | 1,631,666.24 | 1,631,666.24 |
Basis of classification of stages and percentage of provision for bad debtsNo
Notes to the significant changes in the book balance of other receivables arising from changes in theprovision for losses in the current period:
√ Applicable □ Not applicable
| Carrying balance | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses | Expected credit | Expected credit |
Notes to financial statements Page 218
| in the next 12 months | loss for the entire duration (no credit impairment occurred) | loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January 2023 | 782,607,191.72 | 782,607,191.72 | ||
| Balance as of 1 January 2023 in the current period | ||||
| - Transferred into Phase 2 | ||||
| - Transferred into Phase 3 | ||||
| - Reversed into Phase 2 | ||||
| - Reversed into Phase 1 | ||||
| Increased in the Current Period | 380,216,047.23 | 380,216,047.23 | ||
| Derecognition of the current period | 239,965,085.59 | 239,965,085.59 | ||
| Other Changes | ||||
| Balance as at 31 December 2023 | 922,858,153.36 | 922,858,153.36 |
Amount of bad debt provisions accrued for the current period and the basis for assessing whether thecredit risk of financial instruments has increased significantly:
□ Applicable √ Not applicable
(4). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Account age analysis | 1,362,269.09 | 82,193.20 | 1,444,462.29 | |||
| Deposit for housing lease | 22,213.60 | 164,990.35 | 187,203.95 | |||
| Total | 1,384,482.69 | 247,183.55 | 1,631,666.24 | |||
Significant bad debt provision amounts reversed or recovered in the current period:
□ Applicable √ Not applicable
Other descriptionsNo
(5). Particulars on other receivables actually written-off in the current period
□ Applicable √ Not applicable
Including: Write-off of significant other receivables:
□ Applicable √ Not applicable
Notes to the write-off of other receivables:
□ Applicable √ Not applicable
(6). Particulars on top 5 other receivables in terms of the balance at the end of the period basedon debtors
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Company name | Closing balance | Percentage (%) in the total balance at the | Account nature | Account age | Bad debt provisions closing |
Notes to financial statements Page 219
| end of the period of other receivables | balance | ||||
| First | 321,877,192.63 | 34.88 | Consolidated balance of related-parties current accounts | Within one year RMB59.0092 million Above one year RMB262.868 million | |
| Second | 251,520,748.98 | 27.25 | Consolidated balance of related-parties current accounts | Within one year RMB95.3646 million Above one year RMB156.1562 million | |
| Third | 115,418,234.31 | 12.51 | Consolidated balance of related-parties current accounts | Within one year RMB1.1464 million Above one year RMB114.2718 million | |
| Fourth | 80,005,699.28 | 8.67 | Consolidated balance of related-parties current accounts | Within one year RMB1.7433 million Above one year RMB78.2624 million | |
| Fifth | 39,000,000.00 | 4.23 | Consolidated balance of related-parties current accounts | Within one year RMB21.8436 million Above one year RMB17.1564 million | |
| Total | 807,821,875.20 | 87.54 | / | / |
(7). Other receivables reported due to centralised management of funds
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
3. Long-term equity investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment provisions | Carrying value | Carrying balance | Impairment provisions | Carrying value | |
| Investment to subsidiaries | 1,609,957,222.61 | 1,609,957,222.61 | 1,544,708,251.61 | 1,544,708,251.61 | ||
| Investments to associates and joint ventures | 33,853,293.45 | 33,853,293.45 | 35,174,115.73 | 35,174,115.73 | ||
| Total | 1,643,810,516.06 | 1,643,810,516.06 | 1,579,882,367.34 | 1,579,882,367.34 | ||
(1). Investment to subsidiaries
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Invested company | Opening balance | Increase of the current period | Decrease of the current period | Others | Closing balance | Impairment provisions accrued in the current | Balance of impairment provisions at the end of the |
Notes to financial statements Page 220
| period | period | ||||||
| Shanghai M&G Colipu Office Supplies Co., Ltd.（上海晨光科力普办公用品有限公司） | 512,622,842.52 | -7,298,800.00 | 505,324,042.52 | ||||
| Shanghai M&G Zhenmei Stationery Co., Ltd.（上海晨光珍美文具有限公司） | 13,288,599.09 | 13,288,599.09 | |||||
| Shanghai M&G Stationery & Gift Co., Ltd.（上海晨光文具礼品有限公司） | 199,419,400.00 | 199,419,400.00 | |||||
| M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） | 240,000,000.00 | 240,000,000.00 | |||||
| Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司） | 30,000,000.00 | 30,000,000.00 | |||||
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | 27,500,000.00 | 27,500,000.00 | |||||
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 6,339,300.00 | 6,339,300.00 | |||||
| Shanghai M&G Office Stationery Co., Ltd.（上海晨光办公用品有限公司） | 50,000,000.00 | 50,000,000.00 | |||||
| Axus Stationery (Shanghai) Company Ltd. | 177,038,110.00 | 177,038,110.00 | |||||
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | 28,500,000.00 | 28,500,000.00 | |||||
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | 220,000,000.00 | 220,000,000.00 | |||||
| Guangdong South China Stationery Co., Ltd. (广东华南文教用品有限公司) | 40,000,000.00 | 40,000,000.00 | |||||
| Hubei Chaoxin Real Estate Co., Ltd.（湖北潮信置业有限公司） | 72,547,771.00 | 72,547,771.00 | |||||
| Total | 1,544,708,251.61 | 72,547,771.00 | -7,298,800.00 | 1,609,957,222.61 |
(2). Investments to associates and joint ventures
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Investment unit | At the beginning of the period balance | Change of the current period | Closing balance | Balance of impairment provisions at the end of the period | |||||||
| Additional investment | Withdrawn investment | Investment gains and losses recognised under the equity method | Adjustment to other comprehensive income | Other equity changes | Declaration on distribution of cash dividends or profits | Accruing of impairment provisions | Others | ||||
| I. Joint venture | |||||||||||
Notes to financial statements Page 221
| Subtotal | |||||||||||
| II. Associate | |||||||||||
| Ningbo Zhongchen Equity Investment Partnership (Limited Partnership) | 31,423,824.34 | -673,689.41 | -45,383.25 | 30,704,751.68 | |||||||
| Shanghai Pen-making Technology Services Co., Ltd.（上海制笔技术服务有限公司） | 3,750,291.39 | -601,749.62 | 3,148,541.77 | ||||||||
| Subtotal | 35,174,115.73 | -1,275,439.03 | -45,383.25 | 33,853,293.45 | |||||||
| Total | 35,174,115.73 | -1,275,439.03 | -45,383.25 | 33,853,293.45 | |||||||
(3). Impairment test of long-term equity investments
□ Applicable √ Not applicable
Other descriptions:
No
4. Revenue and operating costs
(1). Particulars on revenue and operating costs
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | ||
| Revenue | Costs | Revenue | Costs | |
| Main operations | 3,991,833,680.10 | 2,154,460,755.11 | 3,842,440,076.52 | 2,098,459,464.66 |
| Other operations | 180,937,801.58 | 156,286,667.19 | 90,584,857.94 | 482,094.17 |
| Total | 4,172,771,481.68 | 2,310,747,422.30 | 3,933,024,934.46 | 2,098,941,558.83 |
(2). Information on the breakdown of revenue and operating costs
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Classification of contracts | Total | |
| Revenue | Operating costs | |
| Types of goods | ||
| 1. Sales of goods | 3,991,833,680.10 | 2,154,460,755.11 |
| 2. Supply chain service | 158,072,067.21 | 153,143,255.16 |
| 3. Others | 3,751,113.18 | 283,414.59 |
| Classification by operation territory | ||
| 1. China | 3,842,475,369.96 | 2,111,523,946.37 |
| 2. Other countries | 311,181,490.53 | 196,363,478.49 |
| Classification by the time of goods transfer | ||
| 1. Recognised at a specific point in time | 4,153,656,860.49 | 2,307,887,424.86 |
| 2. Recognised within a specific time period | ||
| Total | 4,153,656,860.49 | 2,307,887,424.86 |
Other descriptions
□ Applicable √ Not applicable
Notes to financial statements Page 222
(3). Description on performance obligations
□ Applicable √ Not applicable
(4). Description on allocation to remaining performance obligations
□ Applicable √ Not applicable
(5). Significant contract changes or significant transaction price adjustments
□ Applicable √ Not applicable
Other descriptions:
Details on revenue:
| Item | Amount in the current period | Amount in the last period |
| Description on revenue from customer contracts | 4,153,656,860.49 | 3,920,289,816.34 |
| Rental income | 19,114,621.19 | 12,735,118.12 |
| Total | 4,172,771,481.68 | 3,933,024,934.46 |
5. Investment income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Long-term equity investment income calculated by cost method | ||
| Long-term equity investment income accounted for under the equity method | -1,275,439.03 | -1,283,553.86 |
| Investment income from disposal of long-term equity investment | ||
| Investment income from held-for-trading financial assets during the holding period | ||
| Dividend income from other equity instrument investments during the holding period | ||
| Interest income from debt investment during the holding period | ||
| Interest income from other debt investments during the holding period | ||
| Investment income from disposal of held-for-trading financial assets | 5,667,374.58 | 1,894,333.53 |
| Investment income from disposal of other equity instrument investments | ||
| Investment income from disposal of debt investment | ||
| Investment income from disposal of other debt investments | ||
| Gains from debt restructuring | ||
| Total | 4,391,935.55 | 610,779.67 |
Other descriptions:
No
6. Others
□ Applicable √ Not applicable
Notes to financial statements Page 223
XX. Supplementary Information
1. Table on details of non-recurring gains and losses of the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount | Description |
| Gains or losses on disposal of non-current assets (inclusive of impairment allowance write-offs) | 4,135,364.06 | |
| Government subsidies included in profits and losses for the current period, excluding those that are closely related to the Company's normal business operations and given in accordance with defined criteria and in compliance with government policies, and have a continuing impact on the Company's profits or losses | 148,088,250.88 | |
| Gains or losses on fair-value changes in financial assets and liabilities held by a non-financial enterprise, as well as on disposal of financial assets and liabilities (exclusive of the effective portion of hedges that is related to the Company's normal business operations) | 28,908,931.81 | |
| Reversal of provision for impairment of receivables which are individually tested for impairment. | 3,232,256.86 | |
| Other net non-operating income and expenses, other than the above items | -2,669,713.78 | |
| Minus: Effect of income tax | 33,479,316.16 | |
| Effect of minority equity (after tax) | 19,633,903.48 | |
| Total | 128,581,870.19 |
Items unlisted in the Explanatory Announcement on Information Disclosure by Companies OfferingSecurities to the Public No. 1: Non-Recurring Profits and Losses are identified as non-recurring profitand loss items and the items are of a significant amount, and non-recurring profit and loss items listed inthe Explanatory Announcement on Information Disclosure by Companies Offering Securities to thePublic No. 1: Non-Recurring Profits and Losses are defined as recurring profits and losses
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
√ Applicable □ Not applicable
| Profits during the Reporting Period | Weighted average ROE (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to ordinary shareholders of the Company | 20.97 | 1.6577 | 1.6577 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring gains and losses | 19.20 | 1.5181 | 1.5181 |
3. Difference in the Accounting Information under the PRC Accounting Standards for BusinessEnterprise ("PRC GAAP") and Overseas Accounting Standards
□ Applicable √ Not applicable
Notes to financial statements Page 224
4. Others
□ Applicable √ Not applicable
Chairman: Chen HuwenDate of report and submission approved by the Board of Directors: 28 March 2024
Revision information
□ Applicable √ Not applicable