Stock Code: 603899 Short Name: M&G Stationery
Shanghai M&G Stationery Inc.
Annual Report 2019
Important Notice
I. The Board of Directors, Supervisory Committee, directors, supervisors and seniormanagement of the Company warrant that the contents of this report are true,accurate and complete, without any misrepresentation, misleading statements ormaterial omissions, and severally and jointly bear the legal responsibilities thereof.
II. All directors of the Company attended the Board meeting.
III. BDO China Shu Lun Pan Certified Public Accounts LLP has issued the audit reportwith unqualified opinions to the Company.
IV. Chen Huwen, the chairman of the Company, Zhang Qing, the 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 thisannual report.
V. Profit distribution plan or plan to convert surplus reserves into share capital approvedby the Board of Directors during the Reporting PeriodThe Company will distribute cash dividend of RMB4.00 (tax inclusive) per 10 shares based onthe Company’s total share capital registered as at the registration date for the implementation ofdividend distribution, with the distributed profit totaling RMB368,000,000. The remainingdistributable profits in 2019 will be carried forward to the following year.
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. Theinvestors are advised to pay attention to investment risks.
VII. Is there any non-operating misappropriation of funds of the Company by any
controlling shareholders and their related partiesNo
VIII. Has the Company provided any external guarantees in violation of the decision-
making proceduresNo
IX. Warning on significant risksThe 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” setout in the “Discussion and Analysis of Operation” under Section IV. Investors are advised to payattention to risk of investment.
X. 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
Chapter I Definition ...... 5
Chapter II Company Profile and Key Financial Indicators ...... 6
Chapter III Business Overview ...... 14
Chapter IV Discussion and Analysis of Operation ...... 21
Chapter V Major Events ...... 50
Chapter VI Changes in Ordinary Shares and Shareholders ...... 71
Chapter VII Preference Shares ...... 78
Chapter VIII Directors, Supervisors, Senior Management and Employees ...... 79
Chapter IX Corporate Governance ...... 87
Chapter X Corporate Bonds ...... 91
Chapter XI Financial Report ...... 92
Chapter XII References ...... 308
Chapter I Definition
I. DefinitionIn this report, unless the content requires otherwise, the following terms shall have thefollowing meanings:
| Definition of common terms | ||
| The Report | Annual Report 2019 | |
| Company, the Company, M&G Stationery | Shanghai M&G Stationery Inc. | |
| M&G Group | M&G Holdings (Group) Co., Ltd. | |
| M&G Colipu | Shanghai M&G Colipu Office Supplies Co., Ltd. | |
| M&G Life (晨光生活馆) | M&G Living Studio Enterprise Management Co., Ltd.(晨光生活馆企业管理有限公司)/Large retail store of the Company | |
| M&G Technologies | Shanghai M&G Information Technology Co., Ltd.(上海晨光信息科技有限公司) | |
| Jiekui Investment | Shanghai Jiekui Investment Management Firm (L.P.) | |
| Keying Investment | Shanghai Keying Investment Management Office (L.P.) | |
| Chenguang Venture Capital Center (晨光创投) | Shanghai Chenguang Venture Capital Center (L.P.) | |
| Chenguang Sanmei (晨光三美) | Shanghai Chenguang Sanmei Property Investment Co., Ltd. | |
| Jiumu Store (九木杂物社) | 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 Supplies (晨光办公) | Shanghai M&G Office Supplies Co., Ltd. | |
| Office Depot | Office Depot Network Technology Co., Ltd. | |
| Axus Stationery | Axus Stationery (Shanghai) Company Ltd. | |
| KA | Key Account, usually referring to large cross-regional retailers with large operating space and dense customer flow, including RT-MART, Walmart, Carrefour, Hualian Supermarket. | |
| Reporting period | Year 2019, from 1 January 2019 to 31 December 2019 | |
| Yuan, ten thousand Yuan, hundred million Yuan | RMB, RMB10,000, RMB100 million | |
Chapter 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 | 晨光文具 |
| 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 | Quan Qiang | Bai Kai |
| Office address | Building C, Hanqiao Culture Science & Technology Park, No. 455 Yanzhan Road, Songjiang District, Shanghai | Building C, Hanqiao Culture Science & Technology Park, No. 455 Yanzhan Road, Songjiang District, Shanghai |
| Telephone | 021-57475621 | 021-57475621 |
| Fax | 021-57475621 | 021-57475621 |
| ir@mg-pen.com | ir@mg-pen.com |
III. Introduction to General Information
| Registered address | Building 3, No. 3469 Jinqian Road, Fengxian District, Shanghai |
| Postal code of registered address | 201406 |
| Office address | Building C, Hanqiao Culture Science & Technology Park, No. 455 Yanzhan Road, 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 Director’s 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 | 603899 | / |
VI. Other Relevant Information
| Auditor of the Company (domestic) | Name | BDO China Shu Lun Pan CPAs(Special general partnership) |
| Office address | 4F No. 61 Nanjing East Road, Shanghai | |
| Name of the signing accountant | Gu Xuefeng, Wang Aijia |
VII. Major Accounting Data and Financial Indicators for the Past Three Years
(1) Major accounting data
Unit: Yuan Currency: RMB
| Major accounting data | 2019 | 2018 | Year-on-year change (%) | 2017 |
| Revenue | 11,141,101,364.44 | 8,534,988,597.55 | 30.53 | 6,357,102,964.25 |
| Net profit attributable to shareholders of the listed companies | 1,060,083,625.03 | 806,847,308.41 | 31.39 | 634,040,991.46 |
| Net profit attributable to shareholders of the listed | 1,005,187,834.38 | 749,412,457.07 | 34.13 | 544,514,731.94 |
| companies, net of non-recurring gains and losses | ||||
| Net cash flow generated from operating activities | 1,081,941,383.68 | 827,940,565.51 | 30.68 | 717,497,928.03 |
| End of 2019 | End of 2018 | Year-on-year change (%) | End of 2017 | |
| Net assets attributable to shareholders of the listed companies | 4,201,500,384.99 | 3,410,808,445.41 | 23.18 | 2,833,961,137.00 |
| Total asset | 7,565,115,311.74 | 5,677,500,049.71 | 33.25 | 4,388,278,915.63 |
(2) Key financial indicators
| Key financial indicators | 2019 | 2018 | Year-on-year increase or decrease in the current period (%) | 2017 |
| Basic earnings per share (Yuan/share) | 1.1523 | 0.8770 | 31.39 | 0.6892 |
| Diluted earnings per share (Yuan/share) | 1.1523 | 0.8770 | 31.39 | 0.6892 |
| Basic earnings per share, net of non-recurring gains and losses (Yuan/share) | 1.0926 | 0.8146 | 34.13 | 0.5919 |
| Weighted average ROE (%) | 28.17 | 26.16 | Increase of 2.01 percentage points | 24.45 |
| Weighted average ROE, net of non-recurring gains and losses (%) | 26.71 | 24.30 | Increase of 2.41 percentage points | 20.99 |
Explanation of major accounting data and financial indicators for the past three years by theend of the Reporting Period
"√ Applicable" "□ Not applicable"Revenue increased by 30.53% or RMB2,606,112,800 over the same period of last year,primarily due to: (1) the Company’s traditional core business grew a steadily 20% in 2019, as aleading company in the stationery and office supplies industry, we benefited from ourcompetitive advantages of distribution channel, brand recognition, design and R&D, and supplychains: (2) new business continued developing at a high speed in 2019, M&G Colipu and M&GLife grew by 51% compared with last year.
VIII. Difference in the Accounting Information under the PRC Accounting Standards forBusiness Enterprise (“PRC GAAP”) and Overseas Accounting Standards
(1) Difference in net profit and net asset attributable to shareholders of the listedcompany in financial reports disclosed under International Accounting Standardsand PRC GAAP"□ Applicable" "√ Not applicable"
(2) Differences in net profit and net assets attributable to shareholders of the listedcompany in financial reports disclosed under overseas accounting standards andPRC GAAP"□ Applicable" "√ Not applicable"
(3) Explanation on the differences between PRC GAAP and Overseas AccountingStandards:
"□ Applicable" "√ Not applicable"
IX. Key Financial Data for the Year of 2019 by Quarter
Unit: Yuan Currency: RMB
| 1st Quarter (Jan-Mar) | (Apr-Jun) | 3rd Quarter (Jul-Sept) | (Oct-Dec) | |
| Revenue | 2,355,613,820.98 | 2,483,009,195.91 | 3,108,721,445.78 | 3,193,756,901.77 |
| Net profit attributable to shareholders of the listed companies | 258,715,131.28 | 212,549,376.55 | 330,611,308.24 | 258,207,808.96 |
| Net profit attributable to shareholders of the | 232,639,806.85 | 194,719,722.78 | 333,199,496.91 | 244,628,807.84 |
| listed company after non-recurring profit or loss | ||||
| Net cash flow generated from operating activities | 99,550,085.40 | 147,529,761.88 | 430,910,767.84 | 403,950,768.56 |
Explanation on difference between information by quarter and information disclosed inperiodical reports"□ 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 2019 | Notes (if applicable) | Amounts in 2018 | Amounts in 2017 |
| Gains or losses on disposal of non-current assets | 6,081,606.95 |
| -69,195.83 | -621,092.66 | |||
| Government grants included in profits and losses for the current period, excluding those closely related to the normal business and of fixed amount or fixed quantity granted on an on-going basis in accordance with certain standards and in compliance with the | 42,747,681.46 | Mainly including government grants received during the Reporting Period and government grants transferred from deferred income | 42,122,713.66 | 35,057,419.77 |
| State policies | ||||
| Gains arising from investment costs for acquisition of subsidiaries, associates and joint ventures less than the fair values of attributable identifiable net assets of the invested entity at the time of acquisition | 33,642,175.40 | |||
| Gains or losses on entrusted investment or asset management | 35,517,479.65 | 38,184,246.05 | ||
| Investment income arising from changes in fair values held-for-trading financial assets and held-for-trading financial liabilities, and investment gains on the disposal of held-for-trading financial assets, held-for-trading financial liabilities and available-for-sale financial assets, except the Company normal operations related to effective hedging business | / | -340,881.23 | ||
| Investment income arising from changes in fair values held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative financial | 29,184,868.54 | Revenue generated from purchase of wealth management products | / |
| liabilities, and investment gains on the disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investment, except the Company normal operations related to effective hedging business | ||||
| Reversal of provision for impairment of receivables which are individually tested for impairment | 1,803,027.63 | Mainly due to the provision reversal of bad debts on individual receivables of the Company | 7,460,100.24 | |
| Other net non-operating income and expenses, other than the above items | -5,743,388.02 | Mainly the expense of public donations and the losses arising from the winding up of certain subsidiaries controlled by the subsidiaries of the Company | -7,936,377.76 | -5,409,684.43 |
| Effect of minority equity | -4,764,697.27 | -2,192,444.11 | -13,897,494.77 | |
| Effect of income tax | -14,413,308.64 | -10,007,324.27 | -4,548,528.85 | |
| Total | 54,895,790.65 | 57,434,851.34 | 89,526,259.52 |
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 | 1,027,265,300.00 | 661,878,587.24 | -365,386,712.76 | 4,613,287.24 |
| Receivables | 1,894,232.00 | 29,549,924.83 | 27,655,692.83 |
| financing | ||||
| Derivative financial assets | ||||
| Other debt investments (including other current assets) | ||||
| Other non-current financial assets | ||||
| Investments in other equity instruments | 3,600,000.00 | 3,909,179.93 | 309,179.93 | |
| Held-for-trading financial liabilities | ||||
| Derivative financial liabilities | ||||
| Total | 1,032,759,532.00 | 695,337,692.00 | -337,421,840.00 | 4,613,287.24 |
XII. Others"□ Applicable" "√ Not applicable"
Chapter III Business Overview
I. Description of the Company’s principal business, operation model and industry
condition during the Reporting Period
(1) Principal business and operation model
1. Principal business
As a comprehensive stationery supplier, the Company integrates the value of creativity into itsproducts and service advantages, advocates fashionable stationery lifestyle, and providessolutions for study and work. The traditional core businesses include designing, developing,manufacturing and selling writing instruments, student stationery, office supplies and otherproducts under brands; new businesses mainly comprise of one-stop direct officesupplies service platform—M&G Colipu and retail stores—M&G Life and Jiumu Store, and onlineplatform of M&G Technologies. During the Reporting Period, there were no significant changesin the Company's principal business and operation model.
(2) Main Operation Model
The Company has an independent and complete operation from design and development ofbrands and products, procurement of raw materials and accessories, product manufacturing,supply chain management and distribution network management, and warehouse and logistics.The Company is capable of performing independent operation of business in the market. ForR&D and new products development model, the Company has an “entire design system”covering the whole process starting from customer value proposal to product design, productmold development to brand image design, incorporating trend-, theme and experience-orienteddevelopment model to develop new products with a comprehensive categories approach basedon consumer insight. For manufacturing model, the Company uses the brand manufacturingmodel that combines sales-driven production, in-house and OEM outsourcing, develops anindependent system from raw material procurement to manufacturing and selling, and hasestablished its brands in the market. We have the advantages from participating the whole valuechain from design, research and developing, manufacturing and selling stationery. For salesmodel, based on features of stationery products and current situations of domestic stationeryconsumption, the Company has developed its sales model that heavily relies on regionaldistributors, 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 pioneering companies inChina’s stationery business that engage in large-scale brand sales management and franchisemanagement.
In the direct office supplies service business，M&G Colipu is mainly responsible for providinggovernments, public institutions, Fortune Global 500 companies and other SMEs with cost-
effective one-stop service in procurement of office supplies. M&G Colipu has around 15 corecategories of office supplies, ranging from office appliances, office equipment, IT digital products,office furniture, personal protective equipment, food and beverage, and business gifts. M&GColipu ensures products are supplied by its factories directly, and provides customized value-added services.
M&G Technologies mainly comprises of onlines businesses in Tmall and JD. Tmall businessrefers to M&G Technologies’ Tmall flagship store where customers can place orders on the store.For the business on JD platform, the system issues purchase order monthly based on inventoryand shelf sales ratio, and M&G Technologies replies the purchase order in the system accordingto its actual inventory condition; after the order is confirmed, it will then be forwarded to ourwarehouse system, and warehouse will deliver goods to JD according to the confirmed purchaseorder.
M&G retail store businesses include two store formats: the M&G Life stores and Jiumu stores.M&G Life stores mainly target students aged 8-15, selling stationery products complemented bydaily necessity and entertainment products. M&G Life stores mostly locate in Xinhua Bookstoreand compound boutique bookstores, representing the Company’s exploration to move beyondthe then-dominant traditional channels nearby schools. Jiumu Stores mainly target the consumergroup of young female consumers aged 15-35 and their families, and sells a morecomprehensive products including stationery, cultural and recreative products, educational andentertainment products, and daily household and home products. Jiumu stores mostly locate inprime business districts in cities, it is an upgraded version based on experience learned fromM&G Life stores and is an ongoing exploration in new retail model in lifestyle products with adistinct cultural element. Jiumu Store started franchising in July 2018, franchisees payscontract deposit and decoration fee according to the contract, and store rent, store staff salary,utilities and other costs occurred in franchising stores are borne by franchisees.
For its traditional core businesses, the Company faces challenge with changing demands fromthe more individualized population born after 1990 and 2000. With the changing demographicsof China particularly with the decreasing birth rate, unit volume growth contribution to revenue isset to decline going forward, the sustained growth of the stationery industry will comes mostlyfrom consumption upgrade and product upgrade. Stationery consumption in China appears tobecome more brand conscious, innovative, individualized and premium. There is a clear growthin demand for better cultural and creative products, which promotes the industry moving frommerely stationery products towards stationery products with more cultural and creativity. M&GLife stores and Jiumu stores both serve as the Company’s bridgehead in upgrading its productsand channels of its traditional core businesses, and they play important role in promoting the
Company’s brands and upgrading products sales. M&G Colipu’s direct sales business to officessatisfactorily meets demands for purchasing office supplies from large corporations andinstitutions, which helps boosting the sales of writing instruments and office supplies in traditionalcore business of the Company.
3. Main driving forces in revenue growth
(1) Social transformation and consumption upgrade; (2) Greater investment from the state ineducation; (3) Favorable policy environment for development of culture industry; (4) Continuedgrowth in household income; (5) Second-child policy; (6) Fragmented industry with lowconcentration.
(2) Situations and features of industry where the Company operates, and industry statusof the Company
1. Situations of industry where the Company operates
According to Guidelines for the Industry Classification of Listed Companies (revised in 2012)issued by China Securities Regulatory Commission, and results of industry classification of listedcompanies released by China Securities Regulatory Commission, the Company is classified tomanufacturing industry in products for stationery, arts, sports and entertainment. The Companyis a member of China Stationery & Sporting Goods Association, and China Writing InstrumentAssociation.
In 2019, China’s stationery and office supplies amounted to RMB152.2 billion, representing agrowth of 6.7% from the previous year, industry profit reached RMB9.7 billion, representing agrowth of 9.8%. In 2019, there are 1,027 enterprises above designated size in China’s stationeryand office supplies industry, and the number of those who suffered loss in 2019 increasedcompared with previous year. (Source: China Stationery & Sporting Goods Association)
In 2019, member enterprises of China Writing Instrument Association recorded the revenue fromprincipal business of RMB16.4 billion, representing a decrease of 1% from the previous year,and profit is RMB0.9 billion, representing a growth of 15% compared with previous year.According to the comprehensive assessment made by China National Light Industry Council,the prosperity index of writing instrument industry was in normal range overall. In 2019, writinginstrument industry export amounted to USD2.8 billion, decreased 0.5% from previous year. Thepricing advantage of China’s low-end rollerball pens and pencils was lessened. The writinginstrument industry imports amounted to USD0.8 billion, decreased 2.2% from previous year.The import are mostly high-end pens. (Source: China Writing Instrument Association)
2. Features of the industry
(1) Periodicity
Writing instruments, student stationery and office supplies are slightly affected by economicfluctuations. With low unit price, writing instruments and student stationery are necessity goodswith relatively low income elasticity, and therefore are not much sensitive to economicfluctuations.
(2) Seasonality
There is a seasonality in demand for student stationery. Period before a new semester beginsevery year (summer and winter vacation) is what the stationery industry calls “schooling peak”season, during which sales for companies in the student stationery industry usually peak.
3. Development trend of the industry
With the changing demographics of China particularly with the decreasing birth rate, stationeryindustry revenue growth is less driven by unit volume growth, and more from consumptionupgrade and product upgrade. With the changes in the way of life and consumption habit ofconsumers, retail industry started a new round of redevelopment and innovation. Stationeryindustry faces challenges with uncertainty of external environment, diversification of retailchannels, and more individualized demands from the main customers group (post-90s and post-00s). As domestic stationery market becomes more mature, demand for mid- to high-endstationery products keeps increasing, breaking the past market structure dominated by low-endproducts, this provides opportunities for mid- to high-end stationery products with good qualityand good price. Furthermore, China’s population of 1.4 billion accounts for about 18% of globalpopulation, leading stationery companies in China have a big room for development in globalstationery market.Traditional nearby school stationery retail channels are still the major retail format in China, andthe other retail channels have higher growth rate, making channels of retail sales more diversified.New channels and forms of business are developed gradually, channel upgrade and competitionacross different channels become more pronounced. Domestic consumption for stationery inChina becomes more brand conscious, innovative, individualized and high-end. There is agrowing demand for exquisite cultural and creative products, promoting stationery productsmoving from those primarily focus on functionality towards those with more cultural and creativeelements that cater to customers. With continued development in the market, marketconcentration of stationery industry becomes greater, leaving more room for industryconsolidation. Leading companies in the stationery industry with good brand recognition are ina strong position where the strong ones may become stronger, and more market share aregained by leading companies.
The market of the direct office supplies service business has been growing very fast in China.According to industry research report from securities company, the scale of the market of broad
office supplies (including office furniture, equipment and other office supplies) in China reachedmore than RMB1 trillion. Regulation on the Implementation of the Government Procurement Lawof the People's Republic of China in 2015 explicitly requires that the state shall promote theutilization of information networks for carrying out digital government procurement. In the sameyear, General Office of the State Council issued the Notice of the General Office of the StateCouncil on Issuing the Work Plan for Integrating and Establishing a Uniform Public ResourcesTrading Platform, requiring that a public resources trading platform with unified regulations,openness and transparency, efficient service and standard supervision should be developedacross the country to achieve digital transaction of public resources in the whole process. Withsuch strong promotion and national policy supports, B2B office supplies procurement got thehistorical opportunities for rapid development.
4. Company position in the industry
The Company is a leading company of “own brand + domestic demand” in China’s stationeryindustry. The Company has a strong first-mover advantage and leading advantage with its wideand deep coverage of its distribution network in stationery industry. As at the end of the ReportingPeriod, the Company has a national distribution network covering over 85,000 retail stationeryshops across China, enabling the company to establish market leading position for its own brandproducts amidst fierce competitions of domestic market. The Company ranked first in “Top TenEnterprises in China’s Light Industry and Writing Instrument” for eight consecutive years.
II. Explanation on substantial changes in major assets of the Company during theReporting Period"√ Applicable" "□ Not applicable"Please refer to 2 (3) Analysis on Assets and Liabilities set out in Discussion and Analysis ofOperation under Section IV for more details.
III. Analysis on core competitiveness during the Reporting Period"√ Applicable" "□ Not applicable"
1. Brand advantage
As a leading company of “own brand + domestic demand” in China’s stationery industry, theCompany has established a leading position for its own brand products amidst fiercecompetitions of domestic market. The Company ranked first in “Top Ten Enterprises in China’sLight Industry and Writing Instrument” for eight consecutive years. M&G brand has sound brandrecognition among consumers, and served as the designated stationery brand for Boao Forumfor Asia for 12 consecutive years.
2. Channel advantage
The Company has a strong first-mover advantage and leading advantage with its wide and deepcoverage of its distribution network in stationery industry, and the efficient management of thedistribution system. As at the end of the Reporting Period, the Company has 35 tier-onedistributor partners across China, and tier-two and tier-three distributor partners in about 1,200cities, covering over 85,000 retail stationery shops across China.
3. Design and R&D advantage
The Company has the capability to respond timely to the market and strong R&D capacity fornew products.The Company will do market research for new product development to constantly spot and graspthe latest market trends. The Company launches about one thousand of new products each year,to meet different consumer needs. The continued development of new products helps theCompany to accumulate resources in product design. In 2019, “Enjoy Writing” gel pen developedby the Company won IF Design Award and Good Design Award (G-Mark), product design of theCompany received international recognition.
4. Technology advantage
The Company has learned core technologies of writing instrument including nib, ink and itsmatching, as well as inhouse mold development technology, and has participated in preparationof national industry standards. The Company undertook several research projects in the 13thFive-Year National R&D Program. The Company won a second-grade prize in 2019 ChinaInnovation Award for industry-university-research collaborations. During the Reporting Period,testing laboratory of the Company got CNAS accreditation certificate, which means that testresults of the Company’s laboratory are recognized by over 100 countries, testing capabilityreached world level.
5. Manufacturing advantage
The Company benefits from experience of large-scale manufacturing accumulated throughoutthe past years, independent mold development capability, stable supply chain, sound qualitycontrol system and introduction of various information management systems. The Company hasthe capability of large-scale manufacturing with high quality control standard. The good andstable product quality has won general recognition and favorable comments from consumers.China writing instrument industry base, China writing instrument center, national industry designcenter and China key laboratory of light industry and writing instrument engineering technologyall have physical presence in the Company.
6. Supply chain advantage
Using the idea of partnership to run business operation, the Company has been striving to builda high standard supply chain ecosystem. The Company keeps iterating and upgrading itsscientific management for supply chain, and has obtained new practice achievements ininformation collaboration across the value chain, inventory optimization, financial support forsupply chain, management informatization of quality and order, and optimization of supplierperformance to help business partners get stronger operation system, both loyalty and operationcapability of our business partners are improved simultaneously.
Chapter IV Discussion and Analysis of Operation
I. Discussion and Analysis of OperationIn 2019, with the background of increased uncertainties both at home and abroad, and morecomplication and changes in the market, the Company focused closely on development strategyand annual operation objective set by the Board of Directors. With the great efforts from themanagement and all employees, the Company maintained a healthy, stable and high-qualitydevelopment, achieved the annual operation target, operation performance continued to grow,and the Company’s comprehensive strength was further improved.The Board of Directors of the Company paid close attention to external industry development,actively implemented company strategies, continued to focus on “adjusting product structure andstimulating growth” as the theme for the year, continued to optimize retail channel, continued topush the four segments of its traditional core businesses, continued to grow direct office suppliesbusiness, accelerated growth of self-owned large retail stores, continued to expand online sales,and continued to improve internal management. Operation of the Company in 2019 issummarized and reported as follows:
1. Focus and Optimize Channels
During the Reporting Period, the Company focused on key retail stationery shops, built modelstores, continued to push optimization and upgrading of distribution network, and better channelmanagement: (1) improved single store quality with a focus on model stores; (2) facilitated theupgrading of franchising; (3) pushed the continued upgrading of distribution centers andoptimizing operations; (4) strengthened categories promotion and dedicated retail spaces for keyproducts; (5) actively carried out exploration for new business, and improved market shares inkey business districts. As at the end of the Reporting Period, the Company has 35 tier-onedistributor partners across China, and tier-two and tier-three distributor partners in about 1,200cities, covering over 85,000 retail stationery shops with “M&G” logo across China.
The Company made efforts to roll out M&G Alliance APP, so as to build a stronger connectionamong the Company headquarters, multi-tier distribution partners and retail stationery shops,and to improve digitization of business operations and information flow. Overall collaboration insales activities of the Company can will be improved as retail stationery shops adopt M&GAlliance APP. On the one hand, information from the Company can flow to retail stationery shopswithout geographical and time limitation, on the other hand, response time can be shortened andorder fulfillment rate improved. Headquarters can collect demand-side information as users’ pain
points and product feedback in a more timely and effective way, helping accuracy in new productdevelopment.
2. Push the Four Segments of Traditional Core Business
(1) Mass market stationery segment
Each category and product is reviewed with grid analysis tool to further identify high potentialproducts, collaborate and share resources across function departments including product,design, marketing and sales. Manage the number of SKUs to reduce quantity and increasequality, and develop a small number and high quality long-term products and hit products.
(2) Premium stationery segment
During the Reporting Period, the Company continued to expand the market for premiumstationery segment. Growth of product portfolio was driven by best-selling products, productstructure was upgraded, product mix became more balanced. Retail stationery shops suitablefor premium stationery segment was uplifted by model shops, and premium stationery productssales in single store were improved by creating dedicated zone for such products. Suitable saleschannel for premium stationery products were expanded across the country. With an integratedchain ranging from product development, business establishment, marketing, to brand promotion.Exclusive window for season-limited M&G products were well received by the market. Marketshare of the Company’s premium stationery products increased.
(3) Office stationery segment
During the Reporting Period, the Company continued development and promotion of officestationery, shifted focus from product breadth towards depth, formed overall solutions for officestationery products, put core products on shelves, developed potential customers, increasedstore count for office stationery stores. Drive sales growth and increase market shares in officesupplies market through seeking new customers continuously and improving sales in a singlestore with established customers.
(4) Arts and kids drawing segment
During the Reporting Period, the Company focused on key categories of arts and kids drawingsegment, continued to adjust product mix, emphasized on long-term products, and increasedcontribution from key products. The Company seized opportunities to build standard storeshelves in dedicated zones, improved the capability to develop best-selling categoriessignificantly with such popular products as marker pen, food-grade watercolor pen, wood-freeerasable color pencil, and water-soluble oil pastel; and prepared MG-KIDS and MG-ARTS mid-end product lines. During the Reporting Period, the Company acquired Axus Stationery, and
established strategic cooperation with CARIOCA, a stationery brand in Italy which enriched mid-to high-end arts products offering for children.
3. Continue to grow M&G Colipu
Unit: 0’000
| M&G Colipu | 2019 | 2018 | 2017 | 3-year average |
| Operating revenue | 365,806.17 | 258,604.90 | 125,515.91 | 249,975.66 |
| Net profit | 7,580.35 | 3,213.52 | 2,104.34 | 4,299.40 |
During the Reporting Period, M&G Colipu improved service quality and customer satisfaction,expanded product category, sought more customers, built national supply chain system, andenhanced service capability of regional warehouses across the country. M&G Colipu maintainedrapid growth, recorded revenue of RMB3,658,061,700, representing a year-on-year increase of
41.45%, and furthered increased its market shares and brand influence in direct sales of officesupplies. More details are presented as follows:
(1) Customer Development
As for government customers, the Company succeeded in shortlisting for e-commerce projectsof the People’s Government of Shanxi Province, the People’s Government of Liaoning Province,the People’s Government of Jilin Province, and Chongqing Municipal People’s Government; asfor central state-owned enterprises, the Company succeeded in shortlisting for procurementprojects of China Mobile, China Unicom, and China Post; as for customers of financial institutions,the Company succeeded in shortlisting for the project of SPD Bank and CGB; as for customersof companies listed on Global Fortune 500 and other enterprises, the Company won the biddingfor procurement projects of Xiaomi, Siemens, Dell, China Resources Land and GuangzhouMetro.During the Reporting Period, M&G Colipu launched convenient shopping service to expand themarket of SMEs through sound products with low price and low operation cost.
(2) Warehouse Distribution and Logistics
During the Reporting Period, M&G Colipu enhanced supervision on order, after-sale service,logistics and distribution, improved quality of basic delivery, took measures to address wrongdelivery and damaged goods, and improved product packaging. The Company enhanceddelivery capability for “end-to-end”, and implemented supervision and operation managementfor the entire order process, so delivery acceptance rate was increased. Optimizing availableareas and ranges of the four warehouses in East China, North China, South China and CentralChina, the Company kept workload of different warehouses in good balance to improve overalldelivery effectiveness, and set up delivery team in nine cities including Shanghai, Beijing,Guangzhou, Shenzhen and Tianjin, to improve customer experience.
4. Accelerate Growth of self-owned Large Retail Stores
Unit: 0’000
| M&G Life (consolidated) | 2019 | 2018 | 2017 | 3-year average |
| Revenue | 60,063.70 | 30,592.14 | 20,510.96 | 37,055.60 |
| Net profit | -804.67 | -3,030.04 | -4,114.99 | -2,649.90 |
| Of which, Jiumu Store | 2019 | 2018 | 2017 | Average in three years |
| Revenue | 46,043.51 | 15,299.61 | 3,515.35 | 21,619.49 |
| Net profit | -693.11 | -2,602.78 | -989.07 | -1,428.32 |
During the Reporting Period, M&G Life (including Jiumu Store) recorded a total operationrevenue of RMB600,637,000, increased 96.34% over the previous year. The Company activelyimproved product portfolio and service model, fully developed Jiumu Store and tried someremodeling for M&G Life stores, so as to better meet market demands from consumptionupgrading, and let people better enjoy writing and recording. As at the end of the ReportingPeriod, the Company has 380 large retail stores in China, of which 119 are M&G Life, and 261are Jiumu Stores (158 direct-sales stores and 103 franchising stores).For M&G Life stores, the Company kept optimizing operation management, focused on adjustingproduct mix and improving single store quality, continued to reduce loss and increase efficiency,losses from M&G Life was reduced significantly during the Reporting Period. For Jiumu Store,market expansion was accelerated, with new store opening in key cities, covering 55 cities inChina. The Company made continuous effort to improve and adjust product category, positionedcultural and creative products more accurately and increased brand awareness of Jiumu Store.WeChat mini program was launched, customer stickiness strengthened with membershipprograms. These efforts are meant to better satisfy consumer demand for cultural and creativeproducts from consumption upgrading, increase market shares of the Company in premiumstationery segment, and upgrade brand image of the Company. With increasing brand influenceof Jiumu Store, brands of M&G benefited better exposure to the public.
5. Continue to expand M&G Technologies
Unit: 0’000
| M&G Technologies | 2019 | 2018 | 2017 | 3-year average |
| Operating revenue | 29,668.20 | 23,434.15 | 18,530.70 | 23,877.68 |
| Net profit | -120.59 | 963.31 | 1,329.54 | 724.09 |
During the Reporting Period, M&G Technologies followed the omni-channel strategy, andrecorded revenue of RMB296,682,000, representing growth of 26.60% over the previous year.M&G products ranked the first in online retail value for student writing instruments, learningauxiliary, painting materials and paper book in Taobao system. M&G Technologies facilitatedthe development and optimization of new products to penetrate the market and strengthen itsbrand position. The number and quality of online stores of the brand were increased to ensure
sustainable online development for M&G brand, while online products were improved andpromoted to explore online incremental categories.
6. Promote Design and R&D
As a national high- and new-tech enterprise, the Company has been striving to research anddevelop core technologies and production, and keep continuous innovation to provideconsumers with good products using industry-leading technologies. During the Reporting Period,the Company kept innovating in all its product segments, optimized product mix in differentcategories, better linked products with supply chain, made some breakthroughs in certain keycategories, further improved the product portfolio. Progress in R&D and manufacturing of fullfood-grade watercolor ink improved safety for arts and kids drawing segment. The successfuldevelopment of formulas for several new oil pastels improved applicability and costcompetitiveness of products. The needle nib with the smallest diameter was successfullydeveloped, and put into lot production smoothly to fill the gap in the category of writinginstruments. The Company developed Chinese lead-free material for nib manufacturing andprocessing to address safety problems in the supply of core materials, helping environmentalprotection in China. The third and fifth research projects on the 13th Five-Year National Key R&DProgram—New Environmentally Friendly Materials for Writing Instrument proceeded smoothlywith several sub-projects completed.In October 2019, the Company again obtained High- and New-tech Enterprise Certificate jointlyissued by Shanghai Municipal Science and Technology Commission, Shanghai Finance Bureauand Shanghai Municipal Tax Service, State Taxation Administration with another term of threeyears.
7. Continue to Improve Internal Management
Production center focused its efforts on improving efficiency, eliminating bad practice, andboosting morale. By implementing measures aimed at efficiency, quality, cost, delivery time,safety, morale and environment, operation capacity was improved.Various business team strengthened cross function coordination, for example, product anddesign team worked on improving pain points in consumer survey, product planning,technological R&D, product design, manufacturing, logistics, and customer complaints, so as toimprove product quality. Supply chain resources were further integrated to support developmentof hit products and high-value products.The Company’s lean production program of MPS (M&G Production System), which waslaunched in 2015, was upgraded to a comprehensive program of MBS (M&G Business System)in 2019. The Company continued to learn from advanced global management experience andto improve management capability. For human resources, the Company improved its position
and title system, promoted performance by performance management, continued building talenttraining system and accelerated reserve of qualified managers.
8. Continue Digitization
During the Reporting Period, the Company continued to empower businesses with data, buildin-house data middle platform, integrated various existing information systems with data,mobilizing resources to solve prioritized business pain points, and met the growing demand fromexternal businesses. For sales system, focus on rolling out M&G Alliance APP to push thedigitalization of channel; for production system, better data connection between qualityinspection and MES backoffice system; for financial system, updated group financial reportingsoftware and improved work efficiency.
II. Financial Performance during the Reporting PeriodIn 2019, the Company recorded revenue of RMB11,141,101,400, representing an increase of
30.53% as compared to the corresponding period of last year. The net profit attributable toshareholders of the listed company amounted to RMB1,060,083,600, representing an increaseof 31.39% as compared to the corresponding period of last year, while net profit attributable toshareholders of the listed company after deducting non-recurring profit and loss amounted toRMB1,005,187,800, representing an increase of 34.13% as compared to the correspondingperiod of last year. As at the end of 2019, total asset of the Company amounted toRMB7,565,115,300, representing an increase of 33.25% as compared to the correspondingperiod of last year. The net asset attributable to shareholders of the listed company amountedto RMB4,201,500,400, representing an increase of 23.18% as compared to the correspondingperiod of last year. The Company has maintained healthy and rapid growth, with sound operationof its asset.
(1) 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 | 11,141,101,364.44 | 8,534,988,597.55 | 30.53 |
| Operation cost | 8,229,837,268.86 | 6,330,446,740.16 | 30.00 |
| Selling expenses | 980,166,101.18 | 789,386,543.37 | 24.17 |
| Administrative expenses | 469,262,188.13 | 379,618,754.18 | 23.61 |
| R&D expenses | 160,403,362.97 | 114,388,916.75 | 40.23 |
| Financial expenses | -8,397,277.65 | -7,959,449.65 | -5.50 |
| Net cash flow generated from operating activities | 1,081,941,383.68 | 827,940,565.51 | 30.68 |
| Net cash flow generated from investing activities | -74,352,686.18 | -295,966,108.35 | 74.88 |
| Net cash flow from financing activities | -364,300,101.66 | -225,100,000.00 | 61.84 |
2. Analysis of revenue and cost
"√ Applicable" "□ Not applicable"During the Reporting Period, the Company recorded revenue of RMB11,141,100,000,representing an increase of 30.53% as compared to the corresponding period of last year. Theincrease is mainly attributable to:
(1) In 2019, the traditional core business achieved steady growth with a year-on-yearincrease of 20%. As a leading company in the stationery and office supplies industry, webenefited from our competitive advantages of distribution channel, brand recognition, design andR&D, and supply chains. Given that the stationery and office supplies industry in China are stillquite fragmented, there is still room for the Company to increase its market share.
(2) In 2019, new businesses continued rapid growth: M&G Colipu and M&G Life grew by51% compared with last year. Among this, M&G Colipu grew 41.45% from last year, mainly dueto the much larger scale of the market of direct office supplies service. According to industryresearch report from securities company, the scale of the market of broad office supplies(including office furniture, equipment and other office supplies) in China reached more thanRMB1 trillion. Regulation on the Implementation of the Government Procurement Law of thePeople's Republic of China in 2015 explicitly requires that the state shall promote the utilizationof information networks for carrying out digital government procurement. In the same year,General Office of the State Council issued the Notice of the General Office of the State Councilon Issuing the Work Plan for Integrating and Establishing a Uniform Public Resources TradingPlatform, requiring that a public resources trading platform with unified regulations, opennessand transparency, efficient service and standard supervision should be developed across thecountry to achieve transaction of public resources by digital in the whole process. With suchstrong promotion and national policy supports, B2B office supplies procurement got the historicalopportunities for rapid development.Revenue from the principal business amounted to RMB11,139,921,600, accounting for 99.99%of the operation revenue and representing an increase of 30.54% as compared to thecorresponding period of last year. Cost of the principal business amounted toRMB8,229,332,400, representing an increase of 30.00% as compared to the correspondingperiod of last year. The increase in cost is a main result of the growth in revenue.
With the development in business, direct sales of office supplies and large retail store businessof the Company gradually expanded. In order to better reflect product and business modules ofthe Company, the Company made segment disclosure for direct sales of office supplies,accordingly, principal business reporting format by industry and product was adjusted for theReporting Period.
(1). Result of principal business by industry, product and region
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 | 7,085,012,384.59 | 4,856,789,638.83 | 31.45 | 21.62 | 19.75 | Increase by 1.07 percentage points |
| Retail industry | 4,050,346,491.25 | 3,372,542,728.19 | 16.73 | 49.69 | 48.27 | Increase by 0.80 percentage points |
| Service industry | 4,562,765.09 | / | / | / | ||
| 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 | 2,186,591,691.37 | 1,383,090,906.87 | 36.75 | 12.26 | 9.28 | Increase by 1.72 percentage points |
| Student stationery | 2,645,275,497.55 | 1,781,278,080.67 | 32.66 | 42.35 | 44.14 | Decrease by 0.83 |
| percentage points | ||||||
| Office stationery | 2,346,944,916.66 | 1,725,910,247.56 | 26.46 | 15.86 | 14.76 | Increase by 0.70 percentage points |
| Other products | 298,485,107.73 | 159,902,745.78 | 46.43 | 233.85 | 238.49 | Decrease by 0.73 percentage points |
| Direct sales of office supplies | 3,658,061,662.53 | 3,179,150,386.14 | 13.09 | 41.45 | 42.47 | Decrease by 0.62 percentage points |
| Management fee for franchising | 4,562,765.09 | 68.41 | ||||
| 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 | 10,949,351,918.16 | 8,098,106,055.92 | 26.04 | 30.15 | 29.53 | Increase by 0.35 percentage points |
| Other countries | 190,569,722.77 | 131,226,311.10 | 31.14 | 57.79 | 66.68 | Decrease by 3.67 percentage points |
Explanation on result of principal business by industry, product and geography
1. Revenue from principal business of the Company includes revenue from manufacturing andselling stationery and office supplies, revenue from retail industry and revenue from serviceindustry.
2. Revenue from retail industry refers to revenue gained by M&G Colipu and M&G Life throughselling non-M&G products. During the Reporting Period, sales of the above categories grewcontinuously.
3. Writing instruments refers to products of writing utensil sold by the Company (excluding M&GColipu).
4. Student stationery refers to products of student stationery sold by the Company (excludingM&G Colipu). During the Reporting Period, revenue from student stationery increased by 40.53%as compared to the corresponding period of last year, mainly because of sales increase and theacquisition of Axus Stationery.
5. Office stationery refers to products of office supplies sold by the Company (excluding M&GColipu).
6. Other products refers to products sold by the Company (excluding M&G Colipu) apart fromwriting instruments, student stationery and office supplies. During the Reporting Period, revenuefrom other products increased by 233.85% as compared to the corresponding period of last year,mainly because large retail store expanded business quickly and sales increased.
7. Direct sales of office supplies refer to products in all categories sold by M&G Colipu. Duringthe Reporting Period, business of M&G Colipu developed rapidly.
8. Revenue from other countries increased by 57.79%, mainly because of the increase ofoverseas sales from Axus Stationery.
Unit: 0’000
| Result of revenue by business | ||||
| Businesses | Revenue in 2019 | Revenue in 2018 | Change in amount | Change |
| Traditional core business | 665,068.98 | 551,090.85 | 113,978.13 | 21% |
| Colipu Office Supplies business | 365,806.17 | 258,604.90 | 107,201.27 | 41% |
| Retail large store business | 60,063.70 | 30,592.14 | 29,471.56 | 96% |
| E-commerce business | 29,668.20 | 23,434.15 | 6,234.05 | 27% |
| Transactions offset | -6,496.91 | -10,223.18 | 3,726.27 | |
| Total | 1,114,110.14 | 853,498.86 | 260,611.28 | 31% |
(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 | 2,301,956,388 | 2,270,730,687 | 580,672,713 | 6.84 | 8.30 | 5.68 |
| Student stationery | Piece | 5,494,359,548 | 5,305,245,796 | 644,449,966 | 36.85 | 33.01 | 41.53 |
| Office stationery | Piece | 1,423,262,635 | 1,413,678,371 | 138,580,624 | 8.63 | 7.90 | 7.43 |
| Other products | Piece | 12,576,071 | 9,178,022 | 5,410,802 | 192.28 | 197.66 | 168.83 |
| Direct sales of office supplies | Piece | 290,473,435 | 288,518,320 | 21,113,972 | 12.83 | 13.73 | 10.20 |
Explanation on production and sales volumeProduction volume increased with sales. The growth in the production and sales volume ofstudent stationery is helped by the acquisition of Axus Stationery. The growth in the productionand sales volume of other products is mainly because large retail store expanded businessquickly and sales increased.
(3). 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 | the situation |
| year (%) | |||||||
| Manufacturing and sales of stationery and office supplies | Cost of principal business | 4,856,789,638.83 | 59.02 | 4,055,859,578.58 | 64.07 | 19.75 | |
| Retail industry | Cost of principal business | 3,372,542,728.19 | 40.98 | 2,274,564,994.95 | 35.93 | 48.27 | |
| 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 (%) | the situation |
| Writing instruments | Cost of principal business | 1,383,090,906.87 | 16.81 | 1,265,617,160.50 | 19.99 | 9.28 | |
| Student stationery | Cost of principal business | 1,781,278,080.67 | 21.65 | 1,235,797,751.80 | 19.52 | 44.14 | |
| stationery | Cost of principal business | 1,725,910,247.56 | 20.97 | 1,503,891,848.04 | 23.76 | 14.76 | |
| Other products | Cost of principal business | 159,902,745.78 | 1.94 | 47,239,918.50 | 0.75 | 238.49 | |
| Direct sales of office supplies | Cost of principal business | 3,179,150,386.14 | 38.63 | 2,231,387,838.70 | 35.25 | 42.47 | |
| Management fee for franchising | Cost of principal business | / | / | / | / | / | / |
Explanation on other situations of cost analysisCost increased simultaneously with sales. The growth in the costs of student stationery is mainlybecause of sales increase and the acquisition of Axus Stationery. The growth in the costs ofother products is mainly because large retail store expanded business quickly and salesincreased.
(4). Major customers and suppliers
"√ Applicable" "□ Not applicable"Sales of the top 5 customers amounted to RMB2,389,602,700, accounting for 21.45% of thetotal annual sales. Of the sales of the top 5 customers, sales of related parties amounted toRMB387,821,100, accounting for 3.48% of the total annual sales.
Unit: RMB Yuan
| Rank | Customer name | Amount | Related relationship |
| 1 | First | 952,212,757.52 | No |
| 2 | Second | 477,565,530.73 | No |
| 3 | Third | 387,821,087.67 | Yes |
| 4 | Fourth | 288,003,073.21 | No |
| 5 | Fifth | 284,000,271.72 | No |
| Total | 2,389,602,720.85 |
Related relationship between the Company and top five customers in 2019: the third customeris Nanjing Zhaochen Stationery Sales Co., Ltd, a sales company controlled by Guo Weilong whois the younger brother of the spouse of Chen Huxiong, CEO of the Company. According to ArticleVIII and X set out in Guidelines for the Affiliated Transactions of Listed Companies, Guo Weilongis deemed as a related natural person of the Company, and the sales company controlled byhim is the related legal person of the Company.
Purchase amount of the top 5 suppliers amounted to RMB1,087,111,000, accounting for 13.52% ofthe total annual purchase amount. Of the purchase amount of the top 5 suppliers, purchase amountof related parties amounted to RMB0, accounting for 0% of the total annual purchase amount.
Unit: RMB Yuan
| Rank | Rank of supplier | Amount | Related relationship |
| 1 | First | 380,013,748.41 | No |
| 2 | Second | 223,976,162.51 | No |
| 3 | Third | 180,407,188.66 | No |
| 4 | Fourth | 169,037,053.67 | No |
| 5 | Fifth | 133,676,870.68 | No |
| Total | 1,087,111,023.93 |
There was no related relationship between the Company and the top 5 suppliers in 2019.Other explanationNo
3. Expense
"√ Applicable" "□ Not applicable"
Unit: RMB Yuan
| Item in statement | Amount in the current period | Amount in the last period | Change (%) | Reason for change |
| Selling expenses | 980,166,101.18 | 789,386,543.37 | 24.17 | |
| Administrative expenses | 469,262,188.13 | 379,618,754.18 | 23.61 | |
| R&D expenses | 160,403,362.97 | 114,388,916.75 | 40.23 | Please see details below |
| Financial expenses | -8,397,277.65 | -7,959,449.65 | -5.50 |
Explanation on the reason for change in R&D expenses:
R&D expenses increased by RMB46,014,400, representing an increase of 40.23% as comparedto the corresponding period of last year. Reason for change: investment in R&D in traditionalbusiness, investment in development of Colipu's new IT system, and increased R&D expensesfrom the acquisition of Axus Stationery.
4. R&D investment
(1). Table of R&D investment
"√ Applicable" "□ Not applicable"
Unit: RMB Yuan
| Expensed R&D investment in the current period | 160,403,362.97 |
| Capitalized R&D investment in the current period | 0.00 |
| Total R&D investment | 160,403,362.97 |
| Percentage of total R&D investment to operation revenue (%) | 1.44 |
| Number of the Company’s R&D staff | 459 |
| Percentage of the number of R&D staff to the Company’s total number | 8.12 |
| of employees (%) | |
| Percentage of capitalized R&D investment (%) | 0.00 |
(2). Explanation on the result
"√ Applicable" "□ Not applicable"The total R&D investment accounts for 4.08% of operation revenue of the parent company
5. Cash flow
"√ Applicable" "□ Not applicable"
Unit: RMB Yuan
| Item | Amount in the current period | Amount in the same period last year | Change (%) | Reason for change |
| Net cash flow generated from operating activities | 1,081,941,383.68 | 827,940,565.51 | 30.65 | Mainly because of growth in sales and profit and benefit from effective management of cash flow from operating activity. |
| Net cash flow generated from investing activities | -74,352,686.18 | -295,966,108.35 | 74.88 | Mainly because of the net redemption of bank financial product. |
| Net cash flow from financing activities | -364,300,101.66 | -225,100,000.00 | 61.84 | During the Reporting Period, growth achieved in distributed dividends and interest payments as compared to the same period last year, and |
(2) Explanation on significant change of profit caused by non-core business"□ Applicable" "√ Not applicable"
(3) Analysis of assets and liabilities
"√ Applicable" "□ Not applicable"
1. Assets and liabilities
Unit: RMB Yuan
influence inchange ofborrowingsrepaid by AxusStationery tofinancialinstitutions.
Items
| Items | Amount as at the end of the current period | at the end of current period (%) | Amount as at the end of last period | at the end of last period (%) | Change in percentage for the current period over the last period (%) | Explanation |
| Cash and equivalents | 1,935,600,694.35 | 25.59 | 1,046,668,874.97 | 18.44 | 84.93 | Increase in cash and equivalents brought by the growth of income and net profit |
| Held-for-trading financial assets | 661,878,587.24 | 8.75 | 0.00 | According to requirements in New Standards of Financial Instruments, bank financial product is reclassified into financial assets held for trading | ||
| Bills receivable | 0.00 | 1,894,232.00 | 0.03 | -100.00 | According to requirements in New Standards of Financial Instruments, bills receivable are reclassified into receivable financing by nature |
| Receivables financing | 29,549,924.83 | 0.39 | 0.00 | According to requirements in New Standards of Financial Instruments, reclassification should be performed based on the nature of bills receivable and factoring of the accounts receivable | ||
| Prepayment | 85,371,444.73 | 1.13 | 42,336,973.71 | 0.75 | 101.65 | Payment settled in advance for goods because of the business development of the Company |
| Inventories | 1,378,108,759.85 | 18.22 | 1,042,701,610.00 | 18.37 | 32.17 |
| Other current assets | 29,280,925.29 | 0.39 | 1,046,977,400.35 | 18.44 | -97.20 | According to New Standards of Financial Instruments, bank financial product is reclassified into financial assets held for trading |
| Available-for-sale financial assets | 0.00 | 3,600,000.00 | 0.06 | -100.00 | According to New Standards of Financial Instruments, available-for-sale financial assets are reclassified to investment in other equity instruments | |
| Long-term receivables | 6,624,590.00 | 0.09 | 0.00 | Mainly from compensation for the Company made by original shareholders of Axus Stationery for audit adjustment and related losses during the period according to the agreement |
| Investments in other equity instruments | 3,909,179.93 | 0.05 | 0.00 | According to requirements in New Standards of Financial Instruments, the item is the investment for Shanghai M&G Culture and Creativity (上海晨光文化创意) held by the Company for non-transaction purpose | ||
| Fixed assets | 1,163,702,352.12 | 15.38 | 876,617,888.99 | 15.44 | 32.75 | Mainly due to the fixed assets in the acquisition of Axus Stationery during the Reporting Period |
| Construction in progress | 260,469,728.76 | 3.44 | 24,506,469.59 | 0.43 | 962.86 | Mainly due to investment in the construction project of new Qingcun production base during the Reporting Period |
| Intangible assets | 331,005,762.09 | 4.38 | 187,987,875.67 | 3.31 | 76.08 | Mainly due to intangible assets of land use rights in the acquisition of Axus Stationery during the Reporting Period |
| Goodwill | 30,175,537.19 | 0.40 | 131,001.23 | 0.00 | 22,934.54 | Consideration for the acquisition of Axus Stationery exceeded the assessed net assets during the Reporting Period |
| Deferred income tax assets | 36,623,535.59 | 0.48 | 25,525,520.98 | 0.45 | 43.48 | Mainly due to deferred income tax assets recorded through deductible temporary differences arising from increased asset impairment provisions and unrealized profits from internal transactions |
| Short-term borrowings | 182,979,528.81 | 2.42 | 0.00 | Mainly due to short-term borrowing of Axus Stationery from the bank and financial institutions |
| during the Reporting Period | ||||||
| Accounts payable | 1,861,072,467.87 | 24.60 | 1,319,407,048.21 | 23.24 | 41.05 | Mainly due to accounts payable for purchasing goods at primary schooling peak season and the acquisition of Axus Stationery as at the end of the Reporting Period |
| Accounts received in advance | 206,762,293.94 | 2.73 | 147,647,053.87 | 2.60 | 40.04 | Mainly due to amounts received in advance from customers for primary schooling peak season during the Reporting Period |
| Other payables | 331,653,211.40 | 4.38 | 240,665,881.17 | 4.24 | 37.81 | Mainly due to the collection of risk margin and provision of due unpaid marketing fees during the Reporting Period |
| Deferred income tax liabilities | 36,576,744.55 | 0.48 | 564,909.50 | 0.01 | 6,374.80 | Mainly due to the acquisition of Axus Stationery at a premium during the Reporting Period |
| Other comprehensive income | 526,359.55 | 0.01 | 0.00 | Mainly due to translation difference for Axus Stationery’s financial statement with foreign currency and changes in fair value of investment in other equity instruments during the Reporting Period | ||
| Minority equity | 259,424,856.61 | 3.43 | 85,856,179.34 | 1.51 | 202.16 | Mainly due to the new minority equity for the acquisition of Axus Stationery during the Reporting Period |
Other explanationNo
2. Major restricted assets as at the end of the Reporting Period"√ Applicable" "□ Not applicable"
(1) On 29 March 2017, Axus Stationery and Shanghai Pudong Development Bank Co., Ltd.Songjiang Branch (hereinafter referred to as “SPD Bank”) entered into the Factoring Agreementunder the contract No. 98082013280133 to provide factoring service through the pledge ofaccounts receivable (USD). As of 31 December 2019, Axus Stationery's unpaid factoringborrowing was USD427,099.11 (equivalent to RMB2,979,528.81).
(2) On 29 October 2019, Axus Stationery and China Merchants Bank Co., Ltd. Shanghai Branchentered into the Facility Agreement (No. 121XY2019028027) with facility amount ofRMB180,000,000.00 for 12 months from 30 October 2019 to 29 October 2020. Pursuant to theagreement, Axus Stationery and China Merchants Bank entered into the Maximum MortgageContract (No.121XY2019028027) with the mortgage term from the effective date of the mortgagecontract to the termination of litigation for facility credit. The collaterals for mortgage include:
| Name of collateral | Ownership No. | Original value | Accumulated depreciation | Net value |
| No. 111 Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2013) No. 015437 | 47,061,453.52 | 22,483,546.11 | 24,577,907.41 |
| No. 233 Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2013) No. 013396 | 32,156,238.78 | 11,248,094.31 | 20,908,144.47 |
| No. 333 Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2015) No. 015718 | 60,230,210.97 | 12,418,790.03 | 47,811,420.94 |
| Total | 139,447,903.27 | 46,150,430.45 | 93,297,472.82 | |
3. Other explanation
"□ Applicable" "√ Not applicable"
(4) Analysis on industry operating information
"√ Applicable" "□ Not applicable"
Please refer to “Description of the Company’s Principle Business, Operation Model and IndustryCondition During the Reporting Period” set out in “Business Overview of the Company”of SectionIII.
(5) Analysis of investment
1. Overall analysis of external equity investment
"√ Applicable" "□ Not applicable"During the Reporting Period, total external investment of the Company amounted toRMB211,038,100, representing a decrease of 41.52% as compared to the total investment ofRMB360,875,700 in corresponding period of last year.
(1) Significant equity investment
"√ Applicable" "□ Not applicable"
1. In 2018, the Company increased capital by RMB322,000,000 for M&G Colipu in cash. Theamount pledged but not yet contributed is RMB322,000,000. For more details, please refer tothe Announcement on Increasing Capital for Controlled Subsidiary (announcement No.: 2018-034) disclosed by the Company on 9 November 2018. As at the end of the Reporting Period, theactual contribution of capital made by the Company amounted to RMB98,000,000, of whichpremium is RMB28,000,000, and amount promised but not yet settled is RMB252,000,000;
2. On 22 March 2019, the Company entered into the Equity Transfer Agreement of AxusStationery (Shanghai) Company Ltd. with Axus Stationery (Shanghai) Company Ltd. and itsshareholder Yilin Investment (Shanghai) Co., Ltd.(懿琳投资(上海)有限公司), Mr. Xu Peifeng andMr. Andre FrancisViegas, the actual controllers of Beilin Investment (Shanghai) Co.,Ltd.(倍林投资(上海)有限公司) and Highton Limited respectively, to acquire 56% equity of Axus Stationery(Shanghai) Company Ltd. at the consideration of RMB177,038,100. As at the end of theReporting Period, the actual contribution of capital made by the Company amounted toRMB170,006,000, and the amount promised but not yet settled is RMB7,032,100. For moredetails, please refer to the Announcement on the Acquisition of 56% of Equity of Axus Stationery(Shanghai) Company Ltd., Announcement on Update on the Acquisition of 56% of Equity of AxusStationery (Shanghai) Company Ltd., and Announcement on Update on the Acquisition of 56%of Equity of Axus Stationery (Shanghai) Company Ltd. disclosed by the Company on 26 March2019, 9 April 2019 and 30 July 2019 respectively under the announcement No.2019-009, 2019-011 and 2019-022 respectively. Acquisition was completed at the end of April 2019, and startedto be included into the consolidated statement of the Company.
(2) Significant non-equity investment
"□ Applicable" "√ Not applicable"
(3) Financial assets measured at fair value
"□ Applicable" "√ Not applicable"
(6) Sale of significant assets and equity interests
"□ Applicable" "√ Not applicable"
(7) 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 | 3,214.99 | -925.45 | -426.55 |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | Wholesale and retail | Office supplies | 30,000.00 | 167,576.19 | 41,157.70 | 7,580.35 |
| Shanghai M&G Stationery & Gift Co., Ltd.(上海晨光文具礼品有限公司) | Wholesale and retail | Stationery and office supplies | 19,941.94 | 100,954.21 | 38,718.02 | 4,987.75 |
| M&G Living Studio 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 | 37,086.02 | -2,341.24 | -804.67 |
| 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 | 6,505.17 | 3,737.62 | 127.68 |
| Shanghai M&G Information Technology Co., | Wholesale and retail | Office supplies | 5,000.00 | 12,699.55 | 6,761.94 | -120.59 |
| Ltd.(上海晨光信息科技有限公司) | ||||||
| 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 | 1,983.22 | 1,053.25 | 3.10 |
| Shanghai M&G Office Supplies Co., Ltd. | Wholesale and retail | Office supplies | 5,000.00 | 20,682.63 | 9,635.45 | 2,636.01 |
| Axus Stationery (Shanghai) Company Ltd. | Production, sale and so forth | Stationery and office supplies | 8,100.00 | 78,201.89 | 25,273.66 | -993.49 |
Note: Acquisition of 56% equity of Axus Stationery by the Company during the ReportingPeriod was completed at the end of April 2019, and started to be included into the consolidatedstatement of the Company.
(8) Structured entities controlled by the Company
"□ Applicable" "√ Not applicable"
III. Discussion and analysis on future development of the Company
(1) Industry pattern and trend
"√ Applicable" "□ Not applicable"As the way of life and consumption habit of consumers change, retail industry started a newround of redevelopment and innovation. Stationery industry faces the challenge that uncertaintyof the external environment, decentralized diversification of consumption channel, individualdemands of the target consumption group (post-90s and post-00s) stimulate the demand for newproducts. As population structure changes in China and the birth rate declines, contributions ofgrowth in sales volume only to revenue weakens in stationery industry, so more revenue growthwill be contributed by consumption upgrading and product upgrading in the future. As domesticconsumption market becomes increasingly mature, demand for mid- to high-end pen productsin the Chinese market keeps increasing, helping enterprises to expand beyond the low-end penproducts market, and providing opportunities and challenges for mid- to high-end products withhigh quality and high price.
Traditional business circles around the schools are still the leading ones, while other businesscircles and form of sales increase rapidly, and sales terminal becomes diversified. New channelsand forms of business are developed gradually, with upgrading and competition in channelsbecoming increasingly obvious. Stationery consumption tends to be more brand-oriented,innovative, individualized and high-end in China, and there is a growing demand for exquisitecultural and creative products, promoting stationery upgrading and transforming to cultural andcreative life. With the constant development in the market, stationery industry becomes graduallycentralized in market with the M&A accelerating in upstream and downstream continuously, andintegration space in the industry further opened. Excellent brand stationery enterprises are in astrong position in the market, so the strong will get stronger, and market shares will be quicklyoccupied by leading enterprises.Market of direct sales to offices achieved prosperous development. According to industryresearch report made by the securities company, the scale of large market for office supplies(including office furniture, equipment and other office materials) in China reached more thanRMB1 trillion. Regulation on the Implementation of the Government Procurement Law of thePeople's Republic of China implemented in 2015 expressly requires that the state shall promotethe utilization of information networks for carrying out government procurement activities inelectronic manners. In the same year, General Office of the State Council issued the Notice ofthe General Office of the State Council on Issuing the Work Plan for Integrating and Establishinga Uniform Public Resources Trading Platform, requiring that a public resources trading platformwith unified regulations, openness and transparency, efficient service and standard supervisionshould be developed across the country to basically realize electronic transaction of publicresources in the whole process. Benefiting from the great promotion and support from nationalpolicies, B2B office supplies procurement got the historical opportunities for rapid development.The 1.4 billion population in China accounts for 18% of the total population in the world, andexcellent stationery enterprises in China have a vast space for greater development in globalmarket. During the Reporting Period, 98% revenue of the Company is contributed by domesticmarket, and the international market share is expected to increase.
(2) Development strategy of the Company
"√ Applicable" "□ Not applicable"To further the competitive advantage of the core traditional business by continued emphasis oninnovation of technology and products; to further develop new businesses of one-stop officesupplies service and direct retail; to actively expand international market; and to further integratehigh-quality resources in the industry chain. With continued efforts in those four areas, to reachthe goal of becoming the number one stationery brand(s) in China.
(3) Operation plan
"√ Applicable" "□ Not applicable"In 2020, the Company plans to reach revenue of RMB12,812,266,600, an increase of 15%,mainly through the following approaches:
1. Traditional core business
Businesses in domestic stationery industry are relatively decentralized. There are manymanufacturers with small average scale, so industrial concentration remains quite low.Thousands of stationery manufacturers in China are currently divided into different subdividedstationery categories. As there is no leading enterprise with relatively high market shares in mostof the subdivided stationery categories, the Company has much room for greater improvement.Making good use of the existing advantages in channel, brand, design and R&D and supplychain, the Company is expected to maintain fast and stable growth in traditional core business.
(1) Focus on and further develop channel
The Company will focus on key terminals, and build perfect stores to improve quality in a singlestore, facilitate the optimization and upgrading of franchising stores and delivery centers, andupgrade channel. Besides, the Company will also strengthen promotion for categories andspecial zones for products to increase on-sale rate of the must-have products, and activelyexplore new business models to create driving force for sale, increase proportion in businesscircles and expand market share, making breakthroughs in both the existing stock market andincrement market.
(2) Promote four product sectors comprehensively
① Consumer products
The Company will continue to improve stronger product strategy, and set up the assuranceprocess for quality of newly developed products to achieve target development with less quantitybut higher quality, and increase contribution of individual product. Focus will be placed onproduct management of key categories to develop long-term products and high-quality products.Promotion for category will be carried out collaboratively with offline distribution channel toincrease on-sale rate, while coordination will be made with online channel to increase onlinesales of consumer products.
② Exquisite cultural and creative products
The Company will optimize inventory of exquisite cultural and creative products, amelioratedevelopment and presentation plan for key categories based on terminal sale to developformations of exquisite cultural and creative products with strong function, and manage SKU toincrease the contribution of individual product. Besides, the Company will also optimizemarketing window and the timing of launching, and popularize key categories with breakthroughsthrough seizing market opportunities and collaborating research, production and sale. Brand ofexquisite cultural and creative products will be popularized and customer stickiness will beenhanced through summit of exquisite cultural and creative products.
③ Office supplies
The Company will enhance development and promotion of office supplies to put core productson sale, and expand M&G stores for office supplies and establish perfect stores for officesupplies on a continuous basis. Focus will be placed on key development and breakthrough of“mega customer”, “extensive category” and “large platform” to facilitate development of largeoffice terminal customers. Moreover, the Company will focus on the development of online officesupplies in all categories and multiple channels, and stimulate sales growth and increase marketshares in office supplies market through seeking new customers continuously and improvingsales in the single store of established customers.
④ Arts products for children
The Company will optimize product structure and promote long-term products and new products.The Company will also increase brand influence, optimize development of new products andenhance contributions from individual product, and facilitate rapid growth in e-commerce todevelop new e-commerce categories and establish new e-commerce stores. CARIOCA productswill be promoted through online and offline channel, and Marco products of Axus Stationery willbe further developed and popularized.
2. New business
(1) Keep expanding operation of M&G Colipu
Business in direct sales of office supplies continues to achieve booming development since M&GColipu follows requirement on well-informed, open and transparent government procurement,and meets requirements that enterprises desire to increase procurement efficiency and reduceprocurement cost for non-production office and administration supplies. Brand enterprisecontinues to enhance competitiveness through improving service quality, enriching productcategories, seeking more customers and developing national supply chain system, so M&GColipu is expected to maintain relatively rapid growth, and become one of the main competitorsin the market of direct sales of office supplies.M&G Colipu will redouble its efforts to develop sales teams in the south China, north China andcentral China so that it can expand local market and increase coverage of large projects.Furthermore, the Company will also further improve its capacity in supplying products to enhancecustomer stickiness, get shortlisted in more new comprehensive e-commerce projects fromstate-owned enterprises and win bidding for the Group's comprehensive promotion to expand itsexisting shares. Efforts will be made to construct central warehouse in the northeast China, andstart and facilitate construction and establishment of central warehouse in the northwest China.In addition, the Company will popularize Colipu's convenient shopping service(省心购) to expandthe market of small and micro businesses by providing sound products with low price and lowoperation cost.
(2) Combine direct sale with franchise to further explore the business model of large retail store
In terms of M&G Life, the Company will improve operation capacity of the stores and sales ofper employee, optimize human resource cost for stores, and increase orders from customersand quality of existing single store so as to improve new product launch strategy, accelerateiteration of products and increase efficiency of products. In terms of Jiumu Store, the Companywill speed up channel layout, enhance the development of operation team and exploreopportunity for new categories to strengthen development capacity for original products,integrate high-quality supply chain resources, improve supply chain management, and upgradechannel and product.
(3) Accelerate development of M&G Technologies
The Company will continue to focus on making breakthroughs in e-commerce channel, anddevelop best-selling products of new categories to accelerate development for online distributionchannel and improve key stores. Moreover, the Company will cultivate its capacity to developonline products, improve online product formations and promotion, and develop new scenes andcategories so as to continuously create incremental online categories, improve promotionefficiency for categories and enhance brand exposure. Attention will be paid to management ofmarket order to enhance control on distribution system.
(4) 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.Although the Company has developed operation management system and internal controlsystem that accord with features of its business and technology in its development, and hiredand cultivated stable core management team, operation of the Company will be adverselyaffected if the aforesaid management system and management staff fail to promptly adapt to therapid expansion of the Company. Therefore, the Company will keep improving its managementsystem and internal control system, and adopt various measures to improve qualification ofmanagement staff.
2. Market risks
With social transformation and consumption upgrading, stationery market presents opportunitiesfor structure-based development. If the Company is unable to anticipate market trends in timeand adapt to market changes from aspects of product upgrading, quality management to salestrategy, the Company will encounter certain risks in market competition. Having been aware ofthe problem, the Company enhanced product R&D under the guidance of the market, optimizedproduct structure, and developed a sounder quality management and control system. Marketstrategies are formulated based on market survey, analysis of big data and managementdiscussion.
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 besupported by the state shall be levied at the reduced tax rate of 15%. The Company was re-recognized as a national high- and new-tech enterprise on 28 October 2019, and started toimplement the policy of reduced enterprise income tax rate of 15% on 1 January 2019 for 3 years.If the state adjusts preferential income tax policy for high- and new-tech enterprises, or theCompany fails to pass the review after its qualification of high- and new-tech enterprise expires,operation performance of the Company will be adversely affected. As such, the Companyperforms strict control according to assessment standards for high- and new-tech enterprises toensure that it meets all indicators, and qualifies and passes the annual review and renewal forhigh- and new-tech enterprises.
4. Risks from COVID-19
Since the outbreak of novel coronavirus (hereinafter referred to as “COVID-19”) at the beginningof 2020, domestic economy growth and demand of foreign trade have slowed down significantly.Although demand of stationery industry is relatively rigid, it has been affected by macro-economyand delay in new semester, especially for primary and middle schools. The impact of COVID-19on the macro-economy is uncertain, adding uncertainties to the Company’s operation in 2020.The Company pays close attention to the development of COVID-19, and adopt active measuresto reduce risks and uncertainties brought by COVID-19.
(5) Others
"□ Applicable" "√ Not applicable"
IV. Explanation on the failure to disclose as per rules due to inapplicability or specialreasons such as state secrets and business secrets and the reasons thereof"□ Applicable" "√ Not applicable"
Chapter V Major Events
I. Proposal for profit distribution of ordinary shares or capitalization of capital reserve
(1) 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 atthe 16th meeting of the third Board meeting and 2016 annual general 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, underwhich shareholders are entitled to receive dividends and other kinds of distribution of interestsbased on the number of shares held by them. The Company adopts active profit distributionpolicy, which emphasizes investors’ reasonable investment returns while maintainingsustainability and stability. The Company is allowed to distribute profit in cash or shares, but itsprofit distribution shall not exceed the range of the accumulated distributable profits or affect theCompany’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 cashdividends, 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 itmakes a profit in the current year and the distributable profits are positive after making up losses,contributing to the statutory reserves and surplus reserves, but the profit distribution shall notexceed the range of the accumulated distributable profits. In general, if there are no materialinvestment plans or significant cash expenditure, the Company may distribute profit in cash fora single year not less than 20% of the distributable 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 wherethe Company operates, the stage of development, its own business model, level of profitability,and whether there is significant capital expenditure arrangement, to distinguish the followingsituations and determine differentiated cash dividend proportion in accordance with theprocedures as required by the Articles 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% whenthe profit 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% whenthe profit distribution is made;
(3) If the Company is at a growing stage of development and has no significant capitalexpenditure arrangement, the proportion of cash dividends in the profit distribution shall be atleast 30% when the profit 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% whenthe profit 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 exceeding50% of the latest audited net assets of the Company and exceeding RMB50,000,000;
(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 exceeding30% of the latest audited total assets of the Company.Significant investment plans or significant cash expenditure that meets the above conditionsshall be reviewed and approved at the general meeting after being reviewed by the Boardmeeting.
5. During the Reporting Period, the formulation and implementation of the cash dividend policyhas complied with the Articles of Association and the resolutions of the general meetings. Thedividend distribution standards and proportions are clearly stated, and relevant decision makingprocedures and systems are complete. Independent directors have diligently served theirobligations, and played their roles. As minority shareholders have opportunities to fully expresstheir opinions and appeals, their legitimate interests have been fully protected.
(2) Plan or proposal for dividend distribution of ordinary shares or transfer of capital
reserve fund to share capital of the Company for the latest three years (including thereporting period)
Unit: Yuan Currency: RMB
| distribution | Number of bonus shares per 10 shares (shares) | Amount of dividends distributed per 10 shares (Yuan) (inclusive of tax) | Number of shares transferred per 10 shares (shares) | (inclusive of tax) |
| 2019 | 0 | 4 | 0 | 368,000,000.00 | 1,060,083,625.03 | 34.71 |
| 2018 | 0 | 3 | 0 | 276,000,000.00 | 806,847,308.41 | 34.21 |
| 2017 | 0 | 2.5 | 0 | 230,000,000.00 | 634,040,991.46 | 36.28 |
(3) The inclusion of shares repurchased through cash offer in cash dividend"□ Applicable" "√ Not applicable"
(4) If the Company records profit distributable to ordinary shareholders of the Companyduring the Reporting Period is positive but there is no proposal for cash dividend,the Company shall disclose the reasons, the usage and the utilization plan of theundistributed profits in detail"□ Applicable" "√ Not applicable"II. Performance of undertakings
(1) Undertakings by the Company’s beneficial controllers, shareholders, related parties,
acquirers, the Company and other related parties during or subsisted in theReporting Period
"√ Applicable" "□ Not applicable"
| Background of undertakings | Type of undertakings Types | Undertaking party | Contents of the undertaking | Time and term of the undertaking | Whether there is deadline for performance | 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 | M&G Group, Chen Huwen, Chen Huxiong, and Chen Xueling | (1) Within 36 months from initial public offering and listing of the Company, the shares of the Company issued prior to the offering or listing shall neither be transferred or entrusted to other person for management, nor be repurchased by the Company as required. (2) If the closing price of the shares has been lower than the issue price for 20 consecutive trading days within 6 months after shares of Company are issued in the initial public offering, or the closing price is lower than the issue price as at the end of the six-month period upon the listing, the lockup period for shares of the Company held before the offering or listing shall be automatically extended by 6 months based on the 36 months of original undertaking period, in other words, the lockup period is 42 months from the date when shares of the Company are listed. 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, the above closing price refers to price after corresponding adjustment of price of shares of the Company; (3) Within 24 months after the termination of lockup period, if any attempt is made to reduce the shares of the Company that it had held prior to the offering and listing by any means, the price of the shareholding reduction shall not be lower than the offering price of the Company's initial public offering shares 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 before the reduction of the aforesaid shares, the price of the shareholding reduction 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. | 36 months | Yes | Yes |
| Restriction on sale of shares | Keying Investment and Jiekui Investment | (1) Within 36 months from initial public offering and listing of the Company, the shares of the Company issued prior to the offering or listing shall neither be transferred or entrusted to other person for management, nor be repurchased by the Company as required. (2) If the closing price of the shares has been lower than the issue price for 20 consecutive trading days within 6 months after shares of Company are issued in the initial public offering, or the closing price is lower than the issue price as at the end of the six-month period upon the listing, the lockup period for shares of the Company held before the offering or listing shall be automatically extended by 6 months based on the 36 months of original undertaking period, in other words, the lockup period is 42 months from the date when shares of the Company are listed. 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, the above closing price refers to price after corresponding adjustment of price of shares of the Company; (3) After the aforesaid undertaking period expires, the proportion of shares unlocked every year shall not exceed 25% of the total shares of the Company held; (4) Within 24 months after the termination of lockup period, if any attempt is made to reduce the shares of the Company that it had held prior to the offering and listing by any means, the price of the shareholding reduction shall not be lower than the offering price of the Company's initial public offering shares 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 before the reduction of the aforesaid shares, the price of the shareholding reduction 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; (5) 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. | 36 months | Yes | Yes | ||
| Others | 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 | Not applicable | No | Yes |
| (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. | ||
| Others | Keying Investment and Jiekui Investment |
| (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 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 Company reduces its holding of the aforesaid shares, the price of the shareholding reduction for the Company should not be lower than theadjusted 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. | Not applicable | No | Yes |
| Address competition between counterparts | 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 Company 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. | Not applicable | No | Yes |
| Address competition between counterparts | 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. (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. | Not applicable | No | Yes | ||
| Others | M&G | (1) Our 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 our company fails to perform various obligations and responsibilities set out in the undertaking issues, our 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 our Company and investors, or the method or amount determined by the securities supervision and administration department and the judicial authority; | Not applicable | No | Yes |
| ③ Our Company shall not increase the salary or allowance of our directors, supervisors and senior management in any form until our Company has fully eliminated the adverse effect due to failure on related undertaking issues. | |||||||
| Others | 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 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. | Not applicable | No | Yes | ||
| Others | 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. | Not applicable | No | Yes |
| Others | Keying Investment and Jiekui Investment | (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. | Not applicable | No | Yes |
(2) Where the Company has profit forecasts on assets or projects, and the Reporting
Period was within the term of profit forecasts, the Company has to state whethersuch profit forecasts on assets or projects are fulfilled and the reasons therefor
"□ Fulfilled" "□ Unfulfilled" "√ Not applicable"
(3) Execution of the performance undertakings and its impact on the goodwill
impairment testing"□ Applicable" "√ Not applicable"
III. Occupation of funds and repayment of debts during the Reporting Period"□ Applicable" "√ Not applicable"IV. Explanation of the Company on the “non-standard opinions audit report” fromaccounting firm"□ Applicable" "√ Not applicable"
V. Analysis and explanation from the Company on the reasons and impact of the change
of accounting policies, accounting estimates or correction on significant accountingerrors
(1) Analysis and explanation from the Company on the reasons and impact of the change of
accounting policies or accounting estimates"√ Applicable" "□ Not applicable"
1. Implement Notice of Modification and Issuance of the Financial Statement Format for GeneralBusiness Enterprises in 2019(《关于修订印发2019年度一般企业财务报表格式的通知》) andNotice of Modification and Issuance of the Format of Consolidated Financial Statements (2019)(《关于修订印发合并财务报表格式(2019版)的通知》) released by the Ministry of Finance.The Ministry of Finance issued the Notice of Modification and Issuance of the FinancialStatement Format for General Business Enterprises in 2019 (Cai Kuai (2019) No. 6) and Noticeof Modification and Issuance of the Format of Consolidated Financial Statements (2019) (CaiKuai (2019) No.16) on 30 April 2019 and 19 September 2019 respectively to revise financialstatement format for general business enterprises. The main impact of the Company'simplementation of the above regulations is shown as follows:
| Contents and reasons of changes in accounting policies | Review and approval procedure | Item and amount in statement influenced | |
| Consolidation | Parent company | ||
| (1) The “bills receivable and accounts receivable” in the balance sheet is divided into “bills receivable” and “accounts receivable”; the “bills payable and accounts payable” is divided into “bills payable” and “accounts payable”; the comparison data is adjusted accordingly. | The 18th meeting of the fourth Board meeting | The “bills payable and accounts payable” is divided into “bills payable” and “accounts payable”. Balance of “bills payable” at the end of last year is RMB0.00, and balance of “accounts payable” at the end of last year is RMB1,319,407,048.21. | The “bills payable and accounts payable” is divided into “bills payable” and “accounts payable”. Balance of “bills payable” at the end of last year is RMB0.00, and balance of |
| “accounts payable” at the end of last year is RMB240,475,062.99. | |||
| (2) The item of “Including: derecognition of income from financial assets at amortized cost” is added to the item of investment income in the income statement. The comparison data is not adjusted. | The 18th meeting of the fourth Board meeting | The amount of “derecognition of income from financial assets at amortized cost” in the current period is RMB0.00. | The amount of “derecognition of income from financial assets at amortized cost” in the current period is RMB0.00. |
2. Implement the Accounting Standard for Business Enterprises No. 22—Recognition andMeasurement of Financial Instruments, the Accounting Standard for Business Enterprises No.23—Transfer of Financial Assets, the Accounting Standard for Business Enterprises No. 24—Hedge Accounting and the Accounting Standard for Business Enterprises No. 37—Presentationof Financial Instruments (revised in 2017) issued by the Ministry of FinanceThe Ministry of Finance revised the Accounting Standard for Business Enterprises No. 22—Recognition and Measurement of Financial Instruments, the Accounting Standard for BusinessEnterprises No. 23—Transfer of Financial Assets, the Accounting Standard for BusinessEnterprises No. 24—Hedge Accounting and the Accounting Standard for Business EnterprisesNo. 37—Presentation of Financial Instruments in 2017. It is stipulated in the revised standardsthat for financial instruments that have not been derecognized on the date of first implementation,if the previous recognition and measurement are inconsistent with the revised standards, theyshall be retrospectively adjusted. If the comparative figures in financial statements for the priorperiod are inconsistent with the revised standards, no adjustment is required. The Companyadjusted the retained earnings and other comprehensive income at the beginning of the yeardue to the cumulative impact of retrospective adjustment.Based on the adjusted balance at the end of last year according to Cai Kuai (2019) No. 6 andCai Kuai (2019) No. 16, the main impacts of implementing the above new financial instrumentstandards are as follows:
| Contents and reasons of changes in accounting policies | Review and approval procedure | Item and amount in statement influenced | |
| Consolidation | Parent company | ||
| (1) Non-tradable | The 18th | Available-for-sale financial assets: | Available-for-sale financial assets: |
| available-for-sale equity instrument investments are designated as “financial assets measured at fair value through other comprehensive income”. | meeting of the fourth Board meeting | Other equity instrument investments: increased by RMB3,600,000.000 | Other equity instrument investments: increased by RMB3,600,000.00 |
| (2) Provision of expected credit loss was made for “financial assets at amortized cost” and “financial assets measured at fair value through other comprehensive income (debt instrument)”. | The 18th meeting of the fourth Board meeting | Bills receivable: decreased by RMB0.00 Accounts receivable: decreased by RMB0.00 Other receivables: decreased by RMB0.00 Debt investment: decreased by RMB0.00 Other comprehensive income: increased by RMB0.00 Deferred income tax assets: increased by RMB0.00 | Bills receivable: decreased by RMB0.00 Accounts receivable: decreased by RMB0.00 Other receivables: decreased by RMB0.00 Debt investment: decreased by RMB0.00 Other comprehensive income: increased by RMB0.00 Deferred income tax assets: increased by RMB0.00 |
| (3) Bank financial product is reclassified into financial assets held for trading and measured at fair value | The 18th meeting of the fourth Board meeting | Other current assets: decreased by RMB1,020,000,000.00 Deferred income tax liabilities: increased by RMB1,183,345.00 Financial assets held for trading: increased by RMB1,027,265,300.00 | Other current assets: decreased by RMB820,000,000.00 Deferred income tax liabilities: increased by RMB949,470.00 Financial assets held for trading: increased by RMB826,329,800.00 |
(2) Analysis and explanation from the Company on the reasons and impact of the
correction on significant accounting errors"□ Applicable" "√ Not applicable"
(3) Communication with the previous accounting firm
"□ Applicable" "√ Not applicable"
(4) Other explanation
"□ 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 Certified Public Accounts LLP |
| Remuneration of domestic accounting firm | 130 |
| Term of office of domestic accounting firm | 10 |
| Name | Remuneration | |
| Internal control audit accounting firm | BDO China Shu Lun Pan CPAs(Special general partnership) | 50 |
Explanation on appointment and dismissal of the accounting firm"√ Applicable" "□ Not applicable"During the Reporting Period, the BDO China Shu Lun Pan Certified Public Accounts LLP wasre-appointed as the audit institution.
Explanation on the change of accounting firm during the auditing period"□ Applicable" "√ Not applicable"VII. Risk of suspension of listing
(1) Causes of suspension of listing
"□ Applicable" "√ Not applicable"
(2) Measures to be taken by the Company
"□ Applicable" "√ Not applicable"
VIII. Situation and causes for termination of listing"□ Applicable" "√ Not applicable"
IX. Matters related to bankruptcy and reorganisation"□ Applicable" "√ Not applicable"
X. 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"
XI. Punishment and rectification to the listed Company, its directors, supervisors, seniormanagement, controlling shareholders, beneficial controllers and acquirers"□ Applicable" "√ Not applicable"
XII. Explanation on credibility status of the Company, its controlling shareholders andbeneficial controllers 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 effectivejudgments of a court or default of any material overdue debt.
XIII. Equity incentive plan, employee shareholding plan or other employee incentivemeasures of the Company and their impacts
(1) Incentive matters disclosed in temporary announcements and without further
progress or change in subsequent implementation"□ Applicable" "√ Not applicable"
(2) Incentive matters which have not been disclosed in temporary announcements or
with further progressEquity incentive"□ Applicable" "√ Not applicable"Other explanation"□ Applicable" "√ Not applicable"
Employee shareholding plan"□ Applicable" "√ Not applicable"
Other incentive measures"□ Applicable" "√ Not applicable"
XIV. Major related transactions
(3) Related transactions in relation to daily operation
1. Events disclosed in temporary announcements and without further progress orchange in subsequent implementation"□ Applicable" "√ Not applicable"
2. Events disclosed in temporary announcements and with further progress or changein subsequent implementation"√ Applicable" "□ Not applicable"The 15th meeting of the fourth Board meeting and 2018 annual general meeting of the Companyreviewed and passed Resolution for the Implementation of Daily Related Transactions in 2018and Expected Daily Related Transactions in 2019, and released Announcement for theImplementation of Daily Related Transactions in 2018 and Expected Daily Related Transactionsin 2019 (announcement No.: 2019-003) on 26 March 2019. In 2019, sales to the sales companycontrolled by Guo Weilong were estimated to be RMB380,000,000.00. It was estimated that feesfor the lease of self-owned houses (including office buildings, workshops, parking space,warehouses and dormitories) paid to M&G Group will amounted to RMB3,622,857.14; fees forthe lease of self-owned office buildings and parking space amounted to RMB3,848,991.90;utilities amounted to RMB6,000,000.00. M&G Colipu is expected to pay M&G GroupRMB14,834,912.14 for the lease of self-owned office building and parking space; M>echnologies is expected to pay M&G Group RMB1,675,847.14 for the lease of self-owned officebuilding and parking space; M&G Life is expected to pay M&G Group RMB11,428.57 for thelease of parking space.In 2019, the actual sales to the sales company controlled by Guo Weilong amounted toRMB387,821,087.67; actual fees for the lease of self-owned houses (including office buildings,workshops, parking space, warehouses and dormitories) paid to M&G Group amounted toRMB3,622,857.14; actual fees for the lease of self-owned office buildings and parking spacepaid to M&G Group amounted to RMB3,846,134.78; actual utilities paid to M&G Groupamounted to RMB5,283,878.50; M&G Colipu actually paid M&G Group RMB14,839,388.35 forthe lease of self-owned office building and parking space; M&G Technologies actually paid M&GGroup RMB1,677,275.74 for the lease of self-owned office building and parking space; M&G Lifeactually paid M&G Group RMB5,952.39 for the lease of self-owned parking space.
3. Events not disclosed in temporary announcements
"□ Applicable" "√ Not applicable"
(4) Related transactions as a result of acquisition and disposal of assets or equity
1. Events disclosed in temporary announcements and without further progress orchange in subsequent implementation"□ Applicable" "√ Not applicable"
2. Events disclosed in temporary announcements and with further progress or changein subsequent implementation"□ Applicable" "√ Not applicable"
3. Events not disclosed in temporary announcements
"□ Applicable" "√ Not applicable"
4. Disclosable performance achievements during the Reporting Period when involvedwith agreed-upon performance"□ Applicable" "√ Not applicable"
(5) Major related transactions in joint external investment
1. Events disclosed in temporary announcements and without further progress or
change in subsequent implementation"□ Applicable" "√ Not applicable"
2. Events disclosed in temporary announcements and with further progress or change
in subsequent implementation"□ Applicable" "√ Not applicable"
3. Events not disclosed in temporary announcements
"□ Applicable" "√ Not applicable"
(6) Creditor’s rights and debts with related parties
1. Events disclosed in temporary announcements and without further progress or
change in subsequent implementation"□ Applicable" "√ Not applicable"
2. Events disclosed in temporary announcements and with further progress or change
in subsequent implementation"□ Applicable" "√ Not applicable"
3. Events not disclosed in temporary announcements
"□ Applicable" "√ Not applicable"
(7) Others
"□ Applicable" "√ Not applicable"
XV. Material contracts and their performance
(1) Trusteeship, contracting and leasing matters
1. Trusteeship
"□ Applicable" "√ Not applicable"
2. Contracting
"□ Applicable" "√ Not applicable"
3. Leasing
"□ Applicable" "√ Not applicable"
(2) Guarantees
"□ Applicable" "√ Not applicable"
(3) 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 |
| Entrusted wealth management of banks | Raised capital | 2,000 | 0 | |
| Entrusted wealth management of banks | Self-owned capital | 104,000 | 65,000 | 0 |
Others"□ Applicable" "√ Not applicable"
(2) Individual entrusted wealth management
"√ Applicable" "□ Not applicable"
Unit: Yuan 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 | Source of Usage of fund | return | rate of return | (if any) | Actual gains or loss | Actual recovery | 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) |
| ABC Shanghai Fengxian Guangming Branch | Non-principal guaranteed with floating returns | 10,000 | 2019/7/4 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| SPD Bank Fengxian Branch | Non-principal guaranteed with floating returns | 20,000 | 2019/7/4 | 2019/10/8 | Self-owned capital | 4.16% | 218.84 | Recovered | Yes | Yes | ||||
| SPD Bank Fengxian Branch | Non-principal guaranteed with floating returns | 40,000 | 2019/7/4 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| China Merchants Bank Shanghai Wuzhong Road Branch | Principal and income guaranteed | 20,000 | 2019/7/9 | 2019/9/25 | Self-owned capital | 4.20% | 179.51 | Recovered | Yes | Yes | ||||
| Industrial and Commercial Bank of China Limited Gumei Road Branch | Fixed returns and non-principal guaranteed with floating returns | 12,000 | 2019/6/20 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Industrial and Commercial Bank of China Limited Gumei Road Branch | Fixed returns and non-principal guaranteed with floating returns | 2,000 | 2019/7/31 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Industrial and Commercial Bank of China Limited Gumei Road Branch | Fixed returns and non-principal guaranteed with floating returns | 1,000 | 2019/8/30 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Industrial and Commercial Bank of China Limited Gumei Road Branch | Fixed returns and non-principal guaranteed with floating returns | 1,000 | 2019/9/29 | Self-owned capital | Unrecovered | 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"
(4) Other material contracts
"□ Applicable" "√ Not applicable"
XVI. Explanation on other material matters"□ Applicable" "√ Not applicable"
XVII. Active fulfillment of social responsibilities
(1) Poverty alleviation of the listed companies
"□ Applicable" "√ Not applicable"
(2) Overview of social responsibility
"√ Applicable" "□ Not applicable"For more details, please refer to 2019 Annual Report on Social Responsibilities disclosed bythe Company on the website of the Shanghai Stock Exchange on 14 April 2020.
(3) Environmental information
1. Explanation on environmental protection of the company and its major subsidiariesfalling into the category of key pollutant discharging units designated by theenvironmental protection authorities"□ Applicable" "√ Not applicable"
2. Explanation on environmental protection of companies other than key pollutantdischarging units"√ Applicable" "□ Not applicable"The Company does not belong to the key pollutant discharging units published by nationalenvironmental protection authorities. As the Company pays great attention to environmentalprotection, the greening rate of its sites is high. During the production process, the plastic rawgranular edges did not produce solid waste or environmental pollution after going throughsmashing, re-granulating and recycling process; paperboard edges for package was recycledand sold by classification to local recycle stations for recycled paper. The Company has notadmixed any harmful recycling waste in its production, so no volatile gas that is harmful to thehealth of human beings was produced. Besides, domestic wastewater was disposed inaccordance with sewage treatment regulations set by the local government.
3. Explanation on reasons for not disclosing the environmental information of
companies other than key pollutant discharging units"□ Applicable" "√ Not applicable"
4. Explanation on further progress or changes of environmental information disclosed
during the Reporting Period"□ Applicable" "√ Not applicable"
(4) Other explanation
"□ Applicable" "√ Not applicable"
XVIII. Convertible corporate bonds"□ Applicable" "√ Not applicable"
Chapter VI Changes in Ordinary Shares and Shareholders
I. Changes in share capital of ordinary shares
(1) Changes in ordinary shares
1. Changes in ordinary shares
During the Reporting Period, there is no change in the total number and structure of share capitalof ordinary shares of the Company.
2. Explanation on changes in ordinary shares
"□ Applicable" "√ Not applicable"
3. Impact of changes in ordinary shares on the earnings per share, net asset value pershare and other financial indicators in the last year and period (if any)"□ Applicable" "√ Not applicable"
4. Other contents that the Company deems necessary and the securities regulatoryauthorities require disclosing"□ Applicable" "√ Not applicable"
(2) Changes in restricted shares
"□ Applicable" "√ Not applicable"II. Issuance and listing of securities
(1) Issuance of securities as at the Reporting Period
"□ Applicable" "√ Not applicable"Explanation on issuance of securities as at the Reporting Period (please provide separateexplanation on the bonds with different interest rates during their duration):
"□ Applicable" "√ Not applicable"
(2) Changes in the total number of ordinary shares and shareholder structure of theCompany and changes in the structure of assets and liabilities of the Company"□ Applicable" "√ Not applicable"
(3) Existing internal employee shares
"□ Applicable" "√ Not applicable"III. Shareholder and beneficial controller
(1) Total number of shareholders
| Total number of shareholders of ordinary shares as at the end of the Reporting Period | 15,196 |
| Total number of shareholders of ordinary shares at the end of last month prior to the disclosure date of this annual report | 14,271 |
| 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 |
(2) Table of shareholdings of the top ten shareholders and the top ten shareholders ofshares in circulation (or shareholders not subject to selling restrictions) as at the endof the Reporting Period
Unit: share
| Shareholdings of the top ten shareholders | |||||||
| (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 or frozen | shareholder | |
| status | Number | ||||||
| M&G Holdings (Group) Co., Ltd. | 0 | 536,000,000 | 58.26 | 0 | No | 0 | Domestic nonstate-owned legal person |
| Hong Kong Securities Clearing Company Limited | 30,760,849 | 33,489,521 | 3.64 | 0 | No | 0 | Unknown |
| Shanghai Keying Investment Management Office (L.P.) | -7,800,000 | 23,400,000 | 2.54 | 0 | No | 0 | Others |
| Shanghai Jiekui Investment Management Firm (L.P.) | -7,700,000 | 23,100,000 | 2.51 | 0 | No | 0 | Others |
| Chen Huxiong | -7,600,000 | 22,800,000 | 2.48 | 0 | No | 0 | Domestic natural person | ||
| Chen Huwen | -7,600,000 | 22,800,000 | 2.48 | 0 | No | 0 | Domestic natural person | ||
| Chen Xueling | -4,800,000 | 14,400,000 | 1.57 | 0 | No | 0 | Domestic natural person | ||
| 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) | 1,691,966 | 11,999,854 | 1.30 | 0 | No | 0 | Unknown | ||
| NSSF 406 portfolio | 6,608,798 | 9,561,401 | 1.04 | 0 | No | 0 | Unknown | ||
| 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) | 375,396 | 9,260,000 | 1.01 | 0 | No | 0 | Unknown | ||
| 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 | Number | ||||||||
| M&G Holdings (Group) Co., Ltd. | 536,000,000 | Ordinary RMB Shares | 536,000,000 | ||||||
| Hong Kong Securities Clearing Company Limited | 33,489,521 | Ordinary RMB Shares | 33,489,521 | ||||||
| Shanghai Keying Investment Management Office (L.P.) | 23,400,000 | Ordinary RMB Shares | 23,400,000 | ||||||
| Shanghai Jiekui Investment Management Firm (L.P.) | 23,100,000 | Ordinary RMB Shares | 23,100,000 | ||||||
| Chen Huxiong | 22,800,000 | Ordinary RMB Shares | 22,800,000 | ||||||
| Chen Huwen | 22,800,000 | Ordinary RMB Shares | 22,800,000 | ||||||
| Chen Xueling | 14,400,000 | Ordinary RMB Shares | 14,400,000 | ||||||
| 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) | 11,999,854 | Ordinary RMB Shares | 11,999,854 |
| NSSF 406 portfolio | 9,561,401 | Ordinary RMB Shares | 9,561,401 |
| 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) | 9,260,000 | Ordinary RMB Shares | 9,260,000 |
| 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, Chen Huxiong, and Chen Xueling. Chen Huwen, Chen Huxiong, and Chen Xueling 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 | No | ||
Shareholdings of the top ten shareholders subject to trading moratorium and the condition oftrading moratorium"□ Applicable" "√ Not applicable"
(3) Strategic investors or general legal persons becoming the top ten shareholders
because of placing of new shares"□ Applicable" "√ Not applicable"IV. Controlling shareholder and beneficial controllers
(1) Controlling shareholder
1 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 | 2007-05-10 |
| Main operation businesses | Industrial investment, infrastructure investment, |
| 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 Index and date of changes 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"
(2) Beneficial controllers
1 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 Index and date of changes in beneficial controllers during the Reporting Period"□ Applicable" "√ Not applicable"
5 Diagram of the ownership and controlling relationship between the Company and itsbeneficial controllers"√ Applicable" "□ Not applicable"
6 Control of the Company by beneficial controllers by way of trust or other means ofasset management"□ Applicable" "√ Not applicable"
(3) Other explanation regarding the controlling shareholders and the beneficialcontrollers"□ Applicable" "√ Not applicable"
V. Other legal person shareholders with more than 10% shareholdings"□ Applicable" "√ Not applicable"VI. Explanation on limitation on reduction of shareholding"□ Applicable" "√ Not applicable"
Chapter VII Preference Shares
"□ Applicable" "√ Not applicable"
Chapter VIII Directors, Supervisors, Senior Management and EmployeesI. Shareholding change and remuneration
(1) Shareholding change and remuneration of directors, supervisors and senior management currently employed and retired during theReporting Period"√ Applicable" "□ Not applicable"
Unit: 0’000 shares
| Name | Position (note) | 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 | 50 | 2014-6-12 | 2020-5-10 | 3,040 | 2,280 | -760 | Personal capital needs | 164.04 | No |
| Chen Huxiong | Vice Chairman and President | Male | 50 | 2014-6-12 | 2020-5-10 | 3,040 | 2,280 | -760 | Personal capital needs | 164.04 | No |
| Chen Xueling | Director and Vice President | Female | 53 | 2014-6-12 | 2020-5-10 | 1,920 | 1,440 | -480 | Personal capital needs | 92.61 | No |
| Fu Chang | Director and Vice President | Male | 50 | 2018-3-23 | 2020-5-10 | 0 | 0 | 0 | 111.52 | No | |
| Zhang Jingzhong | Independent Director | Male | 57 | 2017-5-11 | 2020-5-10 | 0 | 0 | 0 | 12.00 | No | |
| Chen Jingfeng | Independent Director | Male | 52 | 2017-5-11 | 2020-5-10 | 0 | 0 | 0 | 12.00 | No |
| Cheng Bo | Independent Director | Male | 45 | 2016-4-19 | 2020-5-10 | 0 | 0 | 0 | 12.00 | No | |
| Zhu Yiping | Chairman of the Board of Supervisors | Female | 61 | 2014-6-12 | 2020-5-10 | 0 | 0 | 0 | 0 | Yes | |
| Xu Jingjin | Employee Supervisor | Male | 41 | 2014-6-12 | 2020-5-10 | 0 | 0 | 0 | 51.31 | No | |
| Han Lianhua | Supervisor | Female | 42 | 2014-6-12 | 2020-5-10 | 0 | 0 | 0 | 0 | Yes | |
| Yao Hezhong | Chief Engineer | Male | 64 | 2014-6-12 | 2020-5-10 | 0 | 0 | 0 | 68.16 | No | |
| Zhang Qing | Chief Financial Officer | Male | 45 | 2018-4-4 | 2020-5-10 | 0 | 0 | 0 | 146.70 | No | |
| Quan Qiang | Board Secretary | Male | 47 | 2017-3-31 | 2020-5-10 | 0 | 0 | 0 | 96.18 | No | |
| Total | / | / | / | / | / | 8,000 | 6,000 | -2,000 | / | 930.56 | / |
| Name | Main working experience |
| Chen Huwen | Has been involved in the stationery manufacturing industry since 1997 and is one of the founders of M&G Group. Once worked as General Manager of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd. Now works as Chairman of the Company. |
| Chen Huxiong | 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 the Company, 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. |
| Chen Xueling | Has been involved in the stationery manufacturing industry since 1997 and is one of the founders of M&G Group. Once worked as Deputy General Manager of the Company's Production Center, and now works as a director and Vice President of the Company. |
| Fu Chang | Joined M&G Stationery in May 2006 and successively served as Deputy Director of Marketing Center and Director of Production Center. Now works as a director |
| and Vice President of the Company. | |
| Zhang Jingzhong | Worked in the Research Office of the Politics and Law Committee under the Zhejiang Provincial Party Committee from August 1984 to September 1988; and has been the Director at Zhejiang T & C Law Firm from October 1988 to present. Has been Vice President of the All China Lawyers Association from April 2016 to present. |
| Chen Jingfeng | Once worked as Deputy General Manager and General Manager of Shanghai Dazhong Public Utilities (Group) Co., Ltd. and President of CMC Holdings, and is currently the Chairman of Zhongyun Capital. |
| Cheng Bo | Professor of accounting, doctor of accounting, senior accountant, senior member of the Accounting Society of China, the third-level talent of the New Century 151 Talent Project in Zhejiang Province. Started to work in a college or university in 2008 and is currently a teacher of economics and accounting specialty at Zhejiang Agriculture and Forestry University. Has long been engaged in scientific research and teaching in auditing and internal control, corporate governance and financial management. Has chaired more than 20 projects such as the National Social Science Fund of China and the Humanities and Social Science Fund under the Ministry of Education, and published more than 100 academic papers in various authoritative accounting journals and 4 academic monographs. |
| Zhu Yiping | 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 Stationery in May 2003 and served successively as Chief Financial Officer of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., Deputy Director of the Company's Financial Center, and Chief Financial Officer of M&G Group. Now works as the person in charge of internal control of M&G Group. |
| Xu Jingjin | Once worked as Sales Manager of Beijing International Hotel, Marketing Director and Sales Manager of Jianguo Garden Hotel Beijing, Sales Manager of Noble Club, and Restaurant Manager of Thai Chili Catering Service Company. Joined M&G Stationery in 2007. Now works as Director of the Company's Public Affairs Department. |
| Han Lianhua | Once worked as Cashier of Shanghai Fengxian Qianqiao Grain Management Office, Chief Accountant of Shanghai Rongjian Chemical Plant, and Financial Director of Shanghai Office of Fengxian Modern Agricultural Park. Joined M&G Stationery in June 2006. Successively served as Financial Supervisor of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., Shanghai M&G Zhenmei Stationery Co., Ltd., and Shanghai M&G Stationery & Gift Chain Management Co., Ltd., and Financial Manager of M&G Group. Now works as Chief Financial Officer of M&G Group. |
| Yao Hezhong | Joined M&G Stationery in 1999 and successively served as Deputy General Manager and Deputy President of the Company’s R & D Center. Now works as Chief Engineer of the Company. |
| Zhang Qing | Once worked as Chief Financial & Operating Officer at Danone Premium Brands (Shanghai) Trading Co., Ltd. and Asia-Pacific Chief Financial Officer at Moen Shanghai Kitchen & Bath Products Co., Ltd. Now works as Chief Financial Officer of the Company. |
| Quan Qiang | Once worked as Chief Financial Officer of Fenglin Wood Industry Group Co., Ltd. and Executive Director for Chinese Business of the Royal Bank of Scotland. Now works as Secretary of the Board of Directors of the Company. |
Particulars on other information"□ Applicable" "√ Not applicable"
(2) Equity incentives granted to directors and senior management during the Reporting Period"□ Applicable" "√ Not applicable"II. Employment of directors, supervisors and senior management currently employed and retired during 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 | 2007-05-10 | |
| Keying Investment | General Partner | 2011-02-18 | ||
| Chen Huxiong | M&G Group | Chairman | 2007-05-10 | |
| Jiekui Investment | General Partner | 2011-02-18 | ||
| Chen Xueling | M&G Group | Director | 2007-05-10 | |
| Zhu Yiping | M&G Group | Chief Financial Officer | 2011-03-01 | |
| Han Lianhua | M&G Group | Financial Manager | 2011-03-01 | |
| 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 | Chenguang Venture Capital Center(晨光创投) | General Partner | 12 May 2011 | |
| Chenguang Sanmei(晨光三美) | General Manager | 26 May 2008 | ||
| Chen Huxiong | Chenguang Venture Capital Center(晨光创投) | Limited Partner | 12 May 2011 | |
| Chenguang Sanmei(晨光三美) | Chairman | 26 May 2008 | ||
| Chen Xueling | Chenguang Venture Capital Center (晨光创投) | Limited Partner | 12 May 2011 | |
| Chenguang Sanmei(晨光三美) | Director | 26 May 2008 | ||
| Zhang Jingzhong | Zhejiang T & C Law Firm | Director | October 1988 | |
| Zhejiang Jinggong Science & Technology Co., Ltd. | Independent Director | January 2018 | ||
| Kweichow Moutai Co., Ltd. | Independent Director | August 2016 | ||
| Lily Group Co., Ltd. | Independent Director | September 2018 | ||
| Chen Jingfeng | Zhongyun Capital | Chairman | October 2017 | |
| Cheng Bo | Zhejiang Agriculture and Forestry University | Full-time Teacher | June 2014 | |
| Shanghai Serum Bio-technology Co., Ltd. | Independent Director | January 2018 | ||
| Hangzhou Silan Microelectronics Co., Ltd. | Independent Director | June 2019 | ||
| 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. |
| Determination basis for the remuneration of directors, supervisors and senior management | 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 | RMB9,305,600 |
| Total remuneration actually received by all directors, supervisors and senior management at the end of the Reporting Period | RMB9,305,600 |
IV. Changes in directors, supervisors and senior management of the Company"□ Applicable" "√ Not applicable"V. Particulars on punishments by securities regulatory authorities in the past three years"□ Applicable" "√ Not applicable"
VI. Employees of the parent company and major subsidiaries
(1) Employees
| Number of employees in the parent company | 2,109 |
| Number of employees in major subsidiaries | 3,543 |
| Number of employees | 5,652 |
| Number of retirees of whom the parent company and major subsidiaries are responsible for the expenses | |
| Professional structure | |
| Category | Number |
| Production personnel | 1,978 |
| Sales personnel | 1,241 |
| Technical personnel | 459 |
| Finance personnel | 191 |
| Administration personnel | 269 |
| Management personnel | 1,040 |
| Others | 474 |
| Total | 5,652 |
| Education background | |
| Category | Number (person) |
| University (including college) and above | 2,827 |
| High school, technical secondary school | 1,312 |
| Others | 1,513 |
| Total | 5,652 |
(2) Remuneration policy
"√ Applicable" "□ Not applicable"A competitive compensation strategy was implemented: The Company adopted differentappraisal methods for personnel in different positions and at different levels, and by establishingand improving competitive remunerations and benefits, performance appraisal systems andincentive systems, actively promoted equity incentives and employee shareholding plans,attracted all kinds of professional talents and formed a benign internal competition to stimulatethe potential of employees, enhance the enthusiasm and initiative of employees, build aprofessional team with stable development, and ensure the continuous improvement of theCompany’s performance.
(3) Training program
"√ Applicable" "□ Not applicable"The Company highlighted the construction of talent echelon and promoted the development oftalents in the organization. It carried out the cultivation of talent quality through the leadershiptraining program, potential talent development plan, rotation learning, personal developmentpath design, etc. The training of the manufacturing system focused on the ability enhancementof grassroots management personnel and the cultivation of reserve talents in core technicalpositions, and actively promoted the establishment and application of the apprentice base tocreate a first-class stationery manufacturing technician team in the industry.
(4) Labor outsourcing
"√ Applicable" "□ Not applicable"
| Total working hours of labor outsourcing | 20,686,562 hours |
| Total remuneration paid for labor outsourcing | RMB566,831,518 |
VII. Others"□ Applicable" "√ Not applicable"
Chapter IX Corporate GovernanceI. Particulars on corporate governance"√ Applicable" "□ Not applicable"
1. Shareholders and general shareholders’ meetings: The Company could hold generalshareholders’ meetings in accordance with the requirements of the Company Law, the Articlesof Association, and the Rules of Procedure of the General Shareholders’ Meeting. Proposals,procedures, and voting at the general shareholders’ meetings were strictly implemented inaccordance with the relevant provisions. When considering proposals related to related-partytransactions, related shareholders avoided voting to ensure fair and reasonable related-partytransactions. Resolutions adopted at general shareholders’ meetings met the requirements oflaws and regulations, and complied with the lawful rights and interests of all shareholders,especially small and medium-sized shareholders.
2. Directors and board of directors: All the Directors of the Company could, based on the Rulesof Procedure of the Meetings of the Board of Directors and other rules, attend the board meetingsearnestly and all independent directors strictly complied with the above rules and performed theirrespective functions and duties in good faith and with diligence. The board of directors set upfour special committees, namely the Audit Committee, the Strategic Committee, the NominationCommittee, and the Remuneration and Appraisal Committee, which could give full play to theirprofessional roles in the Company's operation management.
3. Supervisors and the board of supervisors: The Company’s board of supervisors strictlycomplied with the relevant provisions of the Company Law and the Articles of Association, metthe requirements of laws and rules in terms of number and composition of members, and could,according to the Rules of Procedure of the Board of Supervisors, etc., seriously perform theirown functions and duties, and supervise the compliance with laws and regulations of theCompany's finance personnel, directors and senior management in performing their functionsand duties.
4. Controlling shareholder and listed company: The Company and its controlling shareholderswere independent of each other in personnel, assets, finance, organization and operatingbusiness. The Company's board of directors, board of supervisors and internal institutions couldoperate independently. The Company's major decisions were made by the general shareholders'meeting in accordance with the law. The controlling shareholders exercised the rights ofshareholders in accordance with the law, and had no behaviors that directly or indirectlyinterfered with the Company's decisions and business activities by circumventing the Company'sgeneral shareholders' meeting.
Whether there are significant differences between corporate governance and the requirementsof the relevant regulations of the China Securities Regulatory Commission; if there aresignificant differences, the reasons should be explained"□ Applicable" "√ Not applicable"
II. 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 |
| 2018 annual general shareholders’ meeting | 18 April 2019 | www.sse.com.cn | 19 April 2019 |
| 2019 1st extraordinary general shareholders’ meeting | 20 June 2019 | www.sse.com.cn | 21 June 2019 |
Particulars on general shareholders’ meetings"√ Applicable" "□ Not applicable"The proposals considered at 2018 annual general shareholders’ meeting and 2019 1stextraordinary general shareholders’ meeting were adopted.
III. Performance of functions and duties by directors
(1) Attendance of directors at board meetings and general shareholders’ meetings
| 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 | 2 |
| Chen Huxiong | No | 5 | 5 | 5 | 0 | 0 | No | 1 |
| Chen Xueling | No | 5 | 5 | 3 | 0 | 0 | No | 1 |
| Fu Chang | No | 5 | 5 | 4 | 0 | 0 | No | 1 |
| Zhang Jingzhong | Yes | 5 | 5 | 4 | 0 | 0 | No | 0 |
| Chen Jingfeng | Yes | 5 | 5 | 4 | 0 | 0 | No | 0 |
| Cheng Bo | Yes | 5 | 5 | 3 | 0 | 0 | No | 1 |
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 | 3 |
| on site and by communication | 2 |
(2) Independent directors' objections to the Company's related matters"□ Applicable" "√ Not applicable"
(3) Others
"□ Applicable" "√ Not applicable"
IV. If there is any objection to important opinions and suggestions put forward by the
special committees under the board of directors in performing its functions andduties during the Reporting Period, the specific situation should be disclosed"□ Applicable" "√ Not applicable"
V. Particulars on risks in the Company identified by the board of supervisors"□ Applicable" "√ Not applicable"
VI. Particulars on the situations that the Company and its controlling shareholderscannot guarantee independence and cannot maintain self-operation ability in theaspects of business, personnel, assets, organization and finance"□ Applicable" "√ Not applicable"
The corresponding solutions, work progress and follow-up work plan of the Company in caseof horizontal competition"□ Applicable" "√ Not applicable"
VII. Establishment and implementation of appraisal mechanism and the incentivemechanism for senior management during the Reporting Period"√ Applicable" "□ Not applicable"During the Reporting Period, the Company established a comprehensive appraisal mechanismfor senior management. Quarterly and annual appraisals were conducted based on thecompletion of KPI and daily routine work by the departments for which senior management wereresponsible. Through the appraisal, not only the Company's overall operation and maineconomic indicators were achieved, but also the development of the senior managementpersonnel was realized, so as to fully mobilize the work enthusiasm and operation potential ofthe senior management.
VIII. Whether to disclose the self-appraisal report on internal control"√ Applicable" "□ Not applicable"2019 Appraisal Report on Internal Control was considered and approved at the 20th meeting ofthe 4th board of directors of the Company. For the full text of the report, pleasesee 2019 Appraisal Report on Internal Control disclosed on the website of the Shanghai StockExchange (www.sse.com.cn) on 14 April 2020.
Particulars on major defects in the internal control during the Reporting Period"□ Applicable" "√ Not applicable"
IX. Particulars on the audit report on internal control"√ Applicable" "□ Not applicable"The Company engaged BDO China Shu Lun Pan Certified Public Accounts LLP to audit theimplementation of internal control in its 2019 financial statements and the Audit Report onInternal Control was issued. For the full text of the report, please see 2019 Audit Report onInternal Control disclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn)on 14 April 2020.Whether to disclose the audit report on internal control: yes
X. Others"□ Applicable" "√ Not applicable"
Chapter X Corporate Bonds
"□ Applicable" "√ Not applicable"
Chapter XI Financial ReportI. Auditor’s report"√ Applicable" "□ Not applicable"
Xin Kuai Shi Bao Zi [2020] No. ZA10693
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 Stationery”), which comprise the consolidated and parentcompany’s balance sheets as at 31 December 2019, the consolidated and parent company’sincome statements, the consolidated and parent company’s cash flow statements, and theconsolidated and parent company’s statements of changes in shareholders’ equity for the yearof 2019, as well as notes to financial statements.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 fairview of the consolidated and parent company’s financial position of M&G Stationery as at 31December 2019 and of its consolidated and parent company’s operating results and cash flowsfor the year of 2019.
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 ofFinancial Statements” in the auditor’s report further illustrate our responsibilities under thosestandards. In accordance with the Code of Professional Ethics of Chinese Certified PublicAccountants, we are independent of M&G Stationery and have performed other responsibilitiesin respect of professional ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
III. Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significancein our audit of the financial statements for the current period. These matters were addressed inthe context of our audit of the financial statements as a whole and, in forming our opinion thereon,we do not provide a separate opinion on these matters. The followings are the key audit mattersthat we have determined to communicate in the auditor’s report.
| Key audit matters | How our audit addressed the key audit matter |
| (I) Recognition of the revenue | |
| M&G Stationery mainly specializes in selling stationery and office supplies. (1) Timing of revenue recognition for regional sales and overseas sale (export agent): Shanghai: sales revenue is recognized after goods are delivered; regions other than Shanghai: sales revenue is recognized after goods are delivered and delivery documents are confirmed with signature from the logistic companies; (2) Timing of revenue recognition for KA sales: sales revenue is recognized after goods are delivered and delivery documents are confirmed with signature from the logistic companies; (3) Timing of revenue recognition for self-managing and export business: revenue is recognized when the goods pass the ship’s rail in the port of shipment under the term of FOB; (4) Timing of revenue recognition for direct sales of office supplies: sales revenue is recognized after goods are delivered and confirmed by customers; (5) Timing of revenue recognition for direct sales large flagship store: sales revenue is recognized after goods are delivered and confirmed by customers. In 2019, M&G Stationery’s revenue from principal business in sales recognition | 2. We inspected customer contracts, on a sample basis, to identify terms and conditions of transfer of risks and rewards related to the ownership of 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 Stationery’s 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 |
| Since revenue is one of the key performance indicators of M&G Stationery, 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. | 6. We evaluated the accuracy and authenticity of the revenue amount by implementing the income letter verification procedure and checking goods return after the period. |
| (II) Anticipated credit loss of accounts receivable | |
| As at 31 December 2019, balance of accounts receivable amounted to RMB1,059,038,000, and provision made for credit impairment loss of accounts receivable amounted to RMB32,943,200. M&G Stationery 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. | 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 Stationery’s operation, integrity of different customers, repayment history, repayment capacity, and historical experience in credit loss; |
IV. Other informationThe management of M&G Stationery (hereinafter referred to as the “management”) isresponsible for the other information which comprises all the information covered in M&GStationery 2019 Annual Report other than the financial 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 thereis likely material misstatement between the other information and the financial statements or theinformation we obtained 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 otherinformation. We have nothing needed to be reported on this case.
V. Responsibilities of the management and governing bodies for the financialstatementsThe management shall be responsible for the preparation of financial statements in accordancewith the 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 materialmisstatement due to fraud or error in the financial statements.In the preparation of the financial statements, the management is responsible for assessing M&GStationery’s continuous operating capacity, disclosing matters relating to continuous operations(if applicable), and applying the continuing operating assumptions unless the management plansto perform liquidation, cease operation or otherwise has no realistic choice.The governing bodies are responsible for overseeing the financial reporting process of M&GStationery.
VI. Responsibilities of CPA for the audit of the financial statementsOur objective is to obtain reasonable assurance of the financial statements as a whole whetherthere is a material misstatement due to fraud or error and to issue an auditor’s report containingaudit opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with China Standards on Auditing will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with the auditing standards, we exercised professionaljudgment and maintained professional skepticism throughout the audit. We also performed thefollowing works:
(1) to identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud or error; design and perform audit procedures responsive to those risks; and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.
(2) to understand the internal control related to the audit to design the appropriate auditprocedures.
(3) to evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
(4) to draw a conclusion on the appropriateness of the management’s use of the going concernbasis of accounting. and, based on the audit evidence obtained, whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the ability of M&GStationery to continue as a going concern. If we conclude that a material uncertainty exists, weare required to draw attention in our auditor’s report to the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify our opinion. Our conclusions arebased on the audit evidence obtained up to the date of our auditor’s report. However, futureevents or conditions may cause M&G Stationery to cease to continue as a going concern.
(5) to evaluate the overall presentation, structure and content (including disclosure) of thefinancial statements, and to assess whether the financial statements reflect the relatedtransactions and events fairly.
(6) to obtain sufficient and appropriate audit evidence of the financial information of the entity orbusiness activity of the M&G Stationery in order to express an opinion on the financial statements.We are responsible for directing, supervising and performing group audits. We take fullresponsibility for the audit opinion.We communicated with the governing bodies regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficienciesin internal control that we identify during the audit.We also provided a statement to management on compliance with ethical requirements relatedto independence, and communicated with governing bodies about all relationships and othermatters that may be reasonably considered to affect our independence, as well as relatedprecautions (if applicable).
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 constitutedthe key audit matters. We set out these matters in the auditor’s report. Unless the disclosure ofthese matters are forbidden by the laws and regulations, or, in rare cases, if it is reasonablyexpected that the negative impacts caused by discussing certain matters in the auditor’s reportwould be larger than the benefits for public interest, we shall not disclose the matters in theauditor’s report under such circumstances.
BDO China Shu Lun Pan CPAs Certified Public Accountant: Gu Xuefeng (Project Partner)(Special general partnership)
Certified Public Accountant: Wang Aijia
Shanghai, China 10 April 2020
II. Financial Statements
Combined Balance Sheet
31 December 2019Prepared by: SHANGHAI M&G STATIONERY INC.
Unit: Yuan Currency: RMB
| Item | Notes | 31 December 2019 | 31 December 2018 |
| Current assets: | |||
| Cash and equivalents | VII. 1 | 1,935,600,694.35 | 1,046,668,874.97 |
| Transaction settlement funds | |||
| Lending funds | |||
| Held-for-trading financial assets | VII. 2 | 661,878,587.24 | |
| Financial assets at fair value through current profit or loss | |||
| Derivative financial assets | |||
| Bills receivable | VII. 4 | 1,894,232.00 | |
| Accounts receivable | VII. 5 | 1,026,094,724.15 | 808,772,112.91 |
| Receivables financing | VII. 6 | 29,549,924.83 | |
| Prepayment | VII. 7 | 85,371,444.73 | 42,336,973.71 |
| Premium receivable | |||
| Reinsurance premium receivable | |||
| Reserves for reinsurance contract receivable | |||
| Other receivables | VII. 8 | 117,647,039.93 | 110,280,059.38 |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Financial assets purchased under agreements to resell | |||
| Inventories | VII. 9 | 1,378,108,759.85 | 1,042,701,610.00 |
| Held for sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | VII. 12 | 29,280,925.29 | 1,046,977,400.35 |
| Total current assets | 5,263,532,100.37 | 4,099,631,263.32 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Debt investment | |||
| Available-for-sale financial assets | 3,600,000.00 | ||
| Other debt investment | |||
| Held-to-maturity investment | |||
| Long-term receivables | VII. 15 | 6,624,590.00 | |
| Long-term equity investments | VII. 16 | 35,582,783.47 | 30,175,665.26 |
| Investments in other equity instruments | VII. 17 | 3,909,179.93 | |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | VII. 20 | 1,163,702,352.12 | 876,617,888.99 |
| Construction in progress | VII. 21 | 260,469,728.76 | 24,506,469.59 |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | VII. 25 | 331,005,762.09 | 187,987,875.67 |
| Development expenses | |||
| Goodwill | VII. 27 | 30,175,537.19 | 131,001.23 |
| Long-term prepaid expenses | VII. 28 | 118,336,333.95 | 118,024,364.67 |
| Deferred income tax assets | VII. 29 | 36,623,535.59 | 25,525,520.98 |
| Other non-current assets | VII. 30 | 315,153,408.27 | 311,300,000.00 |
| Total non-current assets | 2,301,583,211.37 | 1,577,868,786.39 | |
| Total assets | 7,565,115,311.74 | 5,677,500,049.71 | |
| Current liabilities: | |||
| Short-term borrowings | VII. 31 | 183,193,763.86 | |
| Borrowings from central bank | |||
| Placements from banks and other financial institutions |
| Held-for-trading financial liabilities | |||
| Financial liabilities at fair value through current profit or loss | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | VII. 35 | 1,861,072,467.87 | 1,319,407,048.21 |
| Accounts received in advance | VII. 36 | 206,762,293.94 | 147,647,053.87 |
| Financial assets sold under repurchase agreements | |||
| Deposits from customers and other banks | |||
| Brokerage for trading securities | |||
| Brokerage for underwriting securities | |||
| Employee benefits payable | VII. 37 | 154,119,492.32 | 120,786,076.52 |
| Taxes payable | VII. 38 | 258,583,118.14 | 279,377,546.18 |
| Other payables | VII. 39 | 331,438,976.35 | 240,665,881.17 |
| Including: Interest payable | |||
| Dividend payable | |||
| Fees and commissions payable | |||
| Reinsured accounts payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | |||
| Total current liabilities | 2,995,170,112.48 | 2,107,883,605.95 | |
| Non-current liabilities: | |||
| Reserves for insurance contracts | |||
| Long-term borrowings | |||
| Bonds payable |
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payable | VII. 46 | 6,620,000.00 | 5,109,800.00 |
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | VII. 49 | 65,823,213.11 | 67,277,109.51 |
| Deferred income tax liabilities | VII. 29 | 36,576,744.55 | 564,909.50 |
| Other non-current liabilities | |||
| Total non-current liabilities | 109,019,957.66 | 72,951,819.01 | |
| Total liabilities | 3,104,190,070.14 | 2,180,835,424.96 | |
| Owner’s equity (or shareholders’ equity): | |||
| Share capital | VII. 51 | 920,000,000.00 | 920,000,000.00 |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | VII. 53 | 272,347,764.53 | 272,347,764.53 |
| Less: Treasury shares | |||
| Other comprehensive income | 526,359.55 | ||
| Special reserve | |||
| Surplus reserve | VII. 57 | 440,260,399.59 | 343,733,386.35 |
| General risk provision | |||
| Undistributed profit | VII. 58 | 2,568,365,861.32 | 1,874,727,294.53 |
| Total equity attributable to the owners of the parent company | 4,201,500,384.99 | 3,410,808,445.41 | |
| Minority equity | 259,424,856.61 | 85,856,179.34 | |
| Total owners’ equity (or shareholders’ equity) | 4,460,925,241.60 | 3,496,664,624.75 |
| Total liabilities and owner's equity (or shareholders’ equity) | 7,565,115,311.74 | 5,677,500,049.71 |
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge ofAccounting Department: Zhai Yu
Parent Company’s Balance Sheet
31 December 2019Prepared by: SHANGHAI M&G STATIONERY INC.
Unit: Yuan Currency: RMB
| Item | Notes | 31 December 2019 | 31 December 2018 |
| Current assets: | |||
| Cash and equivalents | 1,358,805,872.56 | 552,507,774.24 | |
| Held-for-trading financial assets | 509,467,061.37 | ||
| Financial assets at fair value through current profit or loss | |||
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | XVII. 1 | 82,949,224.65 | 93,324,765.86 |
| Receivables financing | |||
| Prepayment | 9,630,209.45 | 9,002,289.37 | |
| Other receivables | XVII. 2 | 285,036,794.54 | 227,644,350.97 |
| Including: Interest receivable | 192,500.00 | ||
| Dividend receivable | |||
| Inventories | 448,245,658.48 | 433,945,665.76 | |
| Held for sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | 150,047,540.99 | 820,679,150.20 | |
| Total current assets | 2,844,182,362.04 | 2,137,103,996.40 | |
| Non-current assets: | |||
| Debt investment | |||
| Available-for-sale financial assets | 3,600,000.00 |
| Other debt investment | |||
| Held-to-maturity investment | |||
| Long-term receivables | 6,624,590.00 | ||
| Long-term equity investments | XVII. 3 | 1,089,168,192.56 | 878,722,964.35 |
| Investments in other equity instruments | 3,909,179.93 | ||
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | 749,415,024.84 | 792,636,398.34 | |
| Construction in progress | 258,864,834.00 | 23,686,726.44 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 182,268,368.82 | 184,634,388.95 | |
| Development expenses | |||
| Goodwill | |||
| Long-term prepaid expenses | 10,106,589.01 | 15,345,487.19 | |
| Deferred income tax assets | 5,469,359.66 | 5,277,303.99 | |
| Other non-current assets | 311,929,028.24 | 311,300,000.00 | |
| Total non-current assets | 2,617,755,167.06 | 2,215,203,269.26 | |
| Total assets | 5,461,937,529.10 | 4,352,307,265.66 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Financial liabilities at fair value through current profit or loss | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 225,831,712.59 | 240,475,062.99 | |
| Accounts received in advance | 116,720,284.19 | 80,736,039.60 | |
| Employee benefits payable | 87,609,891.62 | 76,794,379.93 |
| Taxes payable | 160,129,252.33 | 187,418,365.45 | |
| Other payables | 513,035,659.92 | 29,240,729.97 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | 140,000,000.00 | ||
| Other current liabilities | |||
| Total current liabilities | 1,103,326,800.65 | 754,664,577.94 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payable | 258,620,000.00 | 187,109,800.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | 28,453,779.37 | 29,979,024.38 | |
| Deferred income tax liabilities | 1,420,059.21 | ||
| Other non-current liabilities | |||
| Total non-current liabilities | 288,493,838.58 | 217,088,824.38 | |
| Total liabilities | 1,391,820,639.23 | 971,753,402.32 | |
| Owner’s equity (or shareholders’ equity): | |||
| Share capital | 920,000,000.00 | 920,000,000.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 274,008,599.09 | 274,008,599.09 | |
| Less: Treasury shares | |||
| Other comprehensive income | 292,894.11 |
| Special reserve | |||
| Surplus reserve | 439,931,539.68 | 343,404,526.44 | |
| Undistributed profit | 2,435,883,856.99 | 1,843,140,737.81 | |
| Total owners’ equity (or shareholders’ equity) | 4,070,116,889.87 | 3,380,553,863.34 | |
| Total liabilities and owner's equity (or shareholders’ equity) | 5,461,937,529.10 | 4,352,307,265.66 |
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge ofAccounting Department: Zhai Yu
Consolidated Income Statement
January - December 2019
Unit: Yuan Currency: RMB
| Item | Notes | 2019 | 2018 |
| I. Total operating income | 11,141,101,364.44 | 8,534,988,597.55 | |
| Including: Operating income | VII. 59 | 11,141,101,364.44 | 8,534,988,597.55 |
| Interest income | |||
| Premium received | |||
| Handling fee and commission income | |||
| II. Total operating costs | 9,873,266,701.55 | 7,640,602,184.07 | |
| Including: Operating cost | VII. 59 | 8,229,837,268.86 | 6,330,446,740.16 |
| 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. 60 | 41,995,058.06 | 34,720,679.26 |
| Selling expenses | VII. 61 | 980,166,101.18 | 789,386,543.37 |
| Administrative expenses | VII. 62 | 469,262,188.13 | 379,618,754.18 |
| R&D expenses | VII. 63 | 160,403,362.97 | 114,388,916.75 |
| Financial expenses | VII. 64 | -8,397,277.65 | -7,959,449.65 |
| Including: Interest expenses | 8,386,182.80 | |||||
| Interest income | 20,872,167.57 | 5,997,422.97 | ||||
| Add: Other gains | VII. 65 | 26,504,881.46 | 8,716,713.66 | |||
| Income from investment (“-” refers to loss) | VII. 66 | 23,994,985.32 | 35,123,869.91 | |||
| Including: Investment income from associates and joint ventures | -576,595.97 | -393,609.74 | ||||
| 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. 68 | 4,613,287.24 | ||||
| Losses on credit impairment (“-” refers to loss) | VII. 69 | -28,006,009.88 | ||||
| Losses on assets impairment (“-” refers to loss) | VII. 70 | -17,843,081.89 | -3,412,585.70 | |||
| Gains from asset disposal (“-” refers to loss) | VII. 71 | 6,081,606.95 | -69,195.83 | |||
| III. Operating profits (“-” refers to loss) | 1,283,180,332.09 | 934,745,215.52 | ||||
| Add: Non-operating profits | VII. 72 | 29,358,655.04 | 46,009,012.19 | |||
| Less: Non-operating expenses | VII. 73 | 18,859,243.06 | 20,539,389.95 | |||
| IV. Total profits (“-” refers to total loss) | 1,293,679,744.07 | 960,214,837.76 | ||||
| Less: Income tax expenses | VII. 74 | 217,602,900.41 | 152,378,423.75 | |||
| V. Net profits (“-” refers to net loss) | 1,076,076,843.66 | 807,836,414.01 | ||||
| (I) Classified by operation continuity | ||||||
| 1. Net profits from continuing activities (“-” refers to net loss) | 1,076,076,843.66 | 807,836,414.01 | ||||
| 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) | 1,060,083,625.03 | 806,847,308.41 | ||||
| 2. Profit or loss attributable to minority shareholders (“-” refers to net loss) | 15,993,218.63 | 989,105.60 | |
| VI. Net amount of other comprehensive income after tax | 709,796.69 | ||
| (I) Net amount of other comprehensive income after tax attributable to owners of the parent company | 526,359.55 | ||
| 1. Other comprehensive income not to be reclassified into profit or loss | 309,179.93 | ||
| (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 | 309,179.93 | ||
| (4) Change in fair value of enterprise's own credit risk | |||
| 2. Other comprehensive income to be reclassified into profit or loss | 217,179.62 | ||
| (1) Other comprehensive income that may be reclassified to profit or loss under equity method | -16,285.82 | ||
| (2) Change in fair value of other debt investments | |||
| (3) Profit or loss from the change of fair value of available-for-sale financial assets | |||
| (4) Amount included in other comprehensive income on reclassification of financial assets | |||
| (5) Profit or loss from held-to-maturity investment reclassified as available-for-sale financial assets |
| (6) Credit impairment provisions of other debt investments | |||
| (7) Cash flow hedging reserve (Effective portion of cash flow hedging profit or loss) | |||
| (8) Exchange differences from translation of financial statements | 233,465.44 | ||
| (9) Others | |||
| (II) Net amount of other comprehensive income after tax attributable to minority shareholders | 183,437.14 | ||
| VII. Total comprehensive income | 1,076,786,640.35 | 807,836,414.01 | |
| (I) Total comprehensive income attributable to owners of the parent company | 1,060,609,984.58 | 806,847,308.41 | |
| (II) Total comprehensive income attributable to minority shareholders | 16,176,655.77 | 989,105.60 | |
| VIII. Earnings per share: | |||
| (I) Basic earnings per share (Yuan/share) | 1.1523 | 0.8770 | |
| (II) Diluted earnings per share (Yuan/share) | 1.1523 | 0.8770 |
In case of business combination under common control, net profit realized by the combinedbefore the combination in the period was nil; net profit realized by the combined in the previousperiod was nil. RMB0.Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge ofAccounting Department: Zhai Yu
Income Statement of the Parent Company
January - December 2019
Unit: Yuan Currency: RMB
| Item | Notes | 2019 | 2018 |
| I. Operating income | XVII. 4 | 3,933,991,943.14 | 3,402,622,358.54 |
| Less: Operating cost | XVII. 4 | 2,183,782,074.37 | 2,034,456,319.11 |
| Taxes and surcharges | 17,610,206.96 | 15,169,890.00 | |
| Selling expenses | 186,518,505.25 | 164,230,651.64 | |
| Administrative expenses | 338,338,989.17 | 260,215,672.87 |
| R&D expenses | 129,731,243.16 | 114,388,916.75 | |
| Financial expenses | -12,660,392.50 | -5,324,409.58 | |
| Including: Interest expenses | 948,654.26 | ||
| Interest income | 12,582,570.87 | 2,721,099.71 | |
| Add: Other gains | 5,782,081.23 | 4,618,424.45 | |
| Income from investment (“-” refers to loss) | XVII. 5 | 21,470,373.55 | 32,190,116.49 |
| Including: Investment income from associates and joint ventures | -576,595.97 | -393,609.74 | |
| 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) | 3,137,261.37 | ||
| Losses on credit impairment (“-” refers to loss) | -651,502.57 | ||
| Losses on assets impairment (“-” refers to loss) | -2,154,113.62 | -1,191,669.73 | |
| Gains from asset disposal (“-” refers to loss) | 190,467.53 | -332,568.10 | |
| II. Operating profits (“-” refers to loss) | 1,118,445,884.22 | 854,769,620.86 | |
| Add: Non-operating profits | 17,311,132.84 | 35,648,932.27 | |
| Less: Non-operating expenses | 2,001,519.26 | 13,794,616.24 | |
| III. Total profits (“-” refers to total loss) | 1,133,755,497.80 | 876,623,936.89 | |
| Less: Income tax expenses | 173,865,695.38 | 131,832,461.42 | |
| IV. Net profits (“-” refers to net loss) | 959,889,802.42 | 744,791,475.47 | |
| (I) Net profits from continuing activities (“-” refers to net loss) | 959,889,802.42 | 744,791,475.47 | |
| (II) Net profits from discontinuing activities (“-” refers to net loss) | |||
| V. Net amount of other comprehensive income after tax | 292,894.11 |
| (I) Other comprehensive income not to be reclassified into profit or loss | 309,179.93 | ||
| 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 | 309,179.93 | ||
| 4. Change in fair value of enterprise's own credit risk | |||
| (II) Other comprehensive income to be reclassified into profit or loss | -16,285.82 | ||
| 1. Other comprehensive income that may be reclassified to profit or loss under equity method | -16,285.82 | ||
| 2. Change in fair value of other debt investments | |||
| 3. Profit or loss from the change of fair value of available-for-sale financial assets | |||
| 4. Amount included in other comprehensive income on reclassification of financial assets | |||
| 5. Profit or loss from held-to-maturity investment reclassified as available-for-sale financial assets | |||
| 6. Credit impairment provisions of other debt investments | |||
| 7. Cash flow hedging reserve (Effective portion of cash flow hedging profit or loss) | |||
| 8. Exchange differences from translation of financial statements | |||
| 9. Others |
| VI. Total comprehensive income | 960,182,696.53 | 744,791,475.47 | |
| VII. Earnings per share: | |||
| (I) Basic earnings per share (Yuan/share) | |||
| (II) Diluted earnings per share (Yuan/share) |
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge ofAccounting Department: Zhai Yu
Consolidated Cash Flow StatementJanuary - December 2019
Unit: Yuan Currency: RMB
| Item | Notes | 2019 | 2018 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods or rendering of services | 12,659,206,706.73 | 9,713,854,726.05 | |
| 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 | 10,615,726.68 | ||
| Other cash received from operating activities | VII. 76 | 278,708,570.57 | 107,722,867.77 |
| Sub-total of cash inflows from operating activities | 12,948,531,003.98 | 9,821,577,593.82 | |
| Cash paid for goods and services | 9,111,402,404.98 | 7,005,237,744.44 | |
| 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 | 727,849,843.52 | 578,387,066.44 | |
| Taxes and fees paid | 676,394,326.12 | 467,902,661.41 | |
| Cash paid for other operating activities | VII. 76 | 1,350,943,045.68 | 942,109,556.02 |
| Sub-total of cash outflows from operating activities | 11,866,589,620.30 | 8,993,637,028.31 | |
| Net cash flow generated from operating activities | 1,081,941,383.68 | 827,940,565.51 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investments | 1,250,355,226.95 | 3,065,000,000.00 |
| Cash received from returns on investments | 24,216,354.35 | 35,517,479.65 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 5,463,204.22 | 912,028.22 | |
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received relating to investing activities | |||
| Sub-total of cash inflows from investing activities | 1,280,034,785.52 | 3,101,429,507.87 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 377,738,579.26 | 318,226,341.22 | |
| Cash paid for investment | 866,000,000.00 | 3,079,169,275.00 | |
| Net increase in pledged loans | |||
| Net cash paid for acquiring subsidiaries and other operating entities | 110,648,892.44 | ||
| Other cash paid relating to investing activities | |||
| Sub-total of cash outflows from investing activities | 1,354,387,471.70 | 3,397,395,616.22 | |
| Net cash flow generated from investing activities | -74,352,686.18 | -295,966,108.35 | |
| III. Cash flow generated from financing activities: | |||
| Proceeds received from financing activities | 42,000,000.00 | 4,900,000.00 | |
| Including: Proceeds received by subsidiaries from minority shareholders’ investment | 42,000,000.00 | 4,900,000.00 | |
| Cash received from borrowings | 346,892,780.31 |
| Other cash received from financing-related activities | |||
| Sub-total of cash inflows from financing activities | 388,892,780.31 | 4,900,000.00 | |
| Cash repayments of borrowings | 458,363,649.10 | ||
| Dividends paid, profit distributed or interest paid | 286,141,698.09 | 230,000,000.00 | |
| Including: Dividend and profit paid by subsidiaries to minority shareholders | |||
| Other cash paid for financing-related activities | VII. 76 | 8,687,534.78 | |
| Sub-total of cash outflows from financing activities | 753,192,881.97 | 230,000,000.00 | |
| Net cash flow from financing activities | -364,300,101.66 | -225,100,000.00 | |
| IV. Effects of exchange rate fluctuations on cash and cash equivalents | -7,343,606.05 | 2,580,870.25 | |
| V. Net increase in cash and cash equivalents | 635,944,989.79 | 309,455,327.41 | |
| Add: Cash and cash equivalents at the beginning of the period | 741,501,446.10 | 432,046,118.69 | |
| VI. Cash and cash equivalents at the end of the period | 1,377,446,435.89 | 741,501,446.10 |
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge ofAccounting Department: Zhai Yu
Cash Flow Statement of the Company
January - December 2019
Unit: Yuan Currency: RMB
| Item | Notes | 2019 | 2018 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods or rendering of services | 4,481,220,462.21 | 3,889,934,554.26 | |
| Tax rebates | |||
| Other cash received from operating activities | 869,793,478.23 | 65,606,561.94 | |
| Sub-total of cash inflows from operating activities | 5,351,013,940.44 | 3,955,541,116.20 | |
| Cash paid for goods and services | 2,424,224,396.02 | 2,227,188,178.82 | |
| Cash paid to and on behalf of employees | 366,624,770.76 | 328,475,870.29 | |
| Taxes and fees paid | 445,473,384.86 | 289,957,488.72 | |
| Cash paid for other operating activities | 894,987,272.24 | 557,320,507.69 | |
| Sub-total of cash outflows from operating activities | 4,131,309,823.88 | 3,402,942,045.52 | |
| Net cash flow generated from operating activities | 1,219,704,116.56 | 552,599,070.68 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investments | 1,020,000,000.00 | 2,610,000,000.00 | |
| Cash received from returns on investments | 22,046,969.52 | 32,583,726.23 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 1,564,005.35 | 611,830.73 | |
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received relating to investing activities | |||
| Sub-total of cash inflows from investing activities | 1,043,610,974.87 | 2,643,195,556.96 |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 301,156,480.55 | 246,840,159.56 | |
| Cash paid for investment | 954,000,000.00 | 2,589,269,275.00 | |
| Net cash paid for acquiring subsidiaries and other operating entities | 170,005,997.67 | ||
| Other cash paid relating to investing activities | |||
| Sub-total of cash outflows from investing activities | 1,425,162,478.22 | 2,836,109,434.56 | |
| Net cash flow generated from investing activities | -381,551,503.35 | -192,913,877.60 | |
| 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 | 276,948,654.26 | 230,000,000.00 | |
| Other cash paid for financing-related activities | |||
| Sub-total of cash outflows from financing activities | 276,948,654.26 | 230,000,000.00 | |
| Net cash flow from financing activities | -276,948,654.26 | -230,000,000.00 | |
| IV. Effects of exchange rate fluctuations on cash and cash equivalents | -2,444,756.42 | 2,580,870.25 |
| V. Net increase in cash and cash equivalents | 558,759,202.53 | 132,266,063.33 | |
| Add: Cash and cash equivalents at the beginning of the period | 247,580,827.87 | 115,314,764.54 | |
| VI. Cash and cash equivalents at the end of the period | 806,340,030.40 | 247,580,827.87 |
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge ofAccounting Department: Zhai Yu
Consolidated Statements of Changes in Owners’ Equity
January - December 2019
Unit: Yuan Currency: RMB
| Item | 2019 | ||||||||||||||
| 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 | Sub-total | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of last year | 920,000,000.00 | 272,347,764.53 | 343,733,386.35 | 1,874,727,294.53 | 3,410,808,445.41 | 85,856,179.34 | 3,496,664,624.75 | ||||||||
| Add: Changes in accounting policies | 538,033.00 | 5,543,922.00 | 6,081,955.00 | 6,081,955.00 | |||||||||||
| Correction for previous errors | |||||||||||||||
| Enterprise merger under the same control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the year | 920,000,000.00 | 272,347,764.53 | 344,271,419.35 | 1,880,271,216.53 | 3,416,890,400.41 | 85,856,179.34 | 3,502,746,579.75 | ||||||||
| III. Increase and decrease for the period (“-” for decrease) | 526,359.55 | 95,988,980.24 | 688,094,644.79 | 784,609,984.58 | 173,568,677.27 | 958,178,661.85 | |||||||||
| (I) Total comprehensive income | 526,359.55 | 1,060,083,625.03 | 1,060,609,984.58 | 16,176,655.77 | 1,076,786,640.35 | ||||||||||
| (II) Owner’s contribution and capital reduction | 157,392,021.50 | 157,392,021.50 | |||||||||||||
| 1. Ordinary shares contributed by the owners | 42,000,000.00 | 42,000,000.00 | |||||||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payments credited to owners’ equity | |||||||||||||||
| 4. Others | 115,392,021.50 | 115,392,021.50 | |||||||||||||
| (III) Profit distribution | 95,988,980.24 | -371,988,980.24 | -276,000,000.00 | -276,000,000.00 | |||||||||||
| 1. Withdrawal of surplus reserve | 95,988,980.24 | -95,988,980.24 | |||||||||||||
| 2. Withdrawal of general risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -276,000,000.00 | -276,000,000.00 | -276,000,000.00 |
| 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 | 920,000,000.00 | 272,347,764.53 | 526,359.55 | 440,260,399.59 | 2,568,365,861.32 | 4,201,500,384.99 | 259,424,856.61 | 4,460,925,241.60 |
| Item | 2018 | ||||||||||||||
| 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 | Sub-total | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of last year | 920,000,000.00 | 272,347,764.53 | 269,254,238.80 | 1,372,359,133.67 | 2,833,961,137.00 | 79,967,073.74 | 2,913,928,210.74 | ||||||||
| Add: Changes in accounting policies | |||||||||||||||
| Correction for previous errors | |||||||||||||||
| Enterprise merger under the same control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the year | 920,000,000.00 | 272,347,764.53 | 269,254,238.80 | 1,372,359,133.67 | 2,833,961,137.00 | 79,967,073.74 | 2,913,928,210.74 | ||||||||
| III. Increase and decrease for the period (“-” for decrease) | 74,479,147.55 | 502,368,160.86 | 576,847,308.41 | 5,889,105.60 | 582,736,414.01 | ||||||||||
| (I) Total comprehensive income | 806,847,308.41 | 806,847,308.41 | 989,105.60 | 807,836,414.01 | |||||||||||
| (II) Owner’s contribution and capital reduction | 4,900,000.00 | 4,900,000.00 | |||||||||||||
| 1. Ordinary shares contributed by the owners | 4,900,000.00 | 4,900,000.00 | |||||||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payments credited to owners’ equity | |||||||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | 74,479,147.55 | -304,479,147.55 | -230,000,000.00 | -230,000,000.00 | |||||||||||
| 1. Withdrawal of surplus reserve | 74,479,147.55 | -74,479,147.55 | |||||||||||||
| 2. Withdrawal of general risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -230,000,000.00 | -230,000,000.00 | -230,000,000.00 | ||||||||||||
| 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 | 920,000,000.00 | 272,347,764.53 | 343,733,386.35 | 1,874,727,294.53 | 3,410,808,445.41 | 85,856,179.34 | 3,496,664,624.75 |
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of Accounting Department: Zhai Yu
Statements of Changes in Equity of Owners of Parent Company
January - December 2019
Unit: Yuan Currency: RMB
| Item | 2019 | ||||||||||
| 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 | 920,000,000.00 | 274,008,599.09 | 343,404,526.44 | 1,843,140,737.81 | 3,380,553,863.34 | ||||||
| Add: Changes in accounting policies | 538,033.00 | 4,842,297.00 | 5,380,330.00 | ||||||||
| Correction for previous errors | |||||||||||
| Others | |||||||||||
| II. Balance at the beginning of the year | 920,000,000.00 | 274,008,599.09 | 343,942,559.44 | 1,847,983,034.81 | 3,385,934,193.34 | ||||||
| III. Increase and decrease for the period (“-” for decrease) | 292,894.11 | 95,988,980.24 | 587,900,822.18 | 684,182,696.53 | |||||||
| (I) Total comprehensive income | 292,894.11 | 959,889,802.42 | 960,182,696.53 | ||||||||
| (II) Owner’s contribution and capital reduction | |||||||||||
| 1. Ordinary shares contributed by the owners | |||||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||
| 3. Amount of share-based payments credited to owners’ equity | |||||||||||
| 4. Others | |||||||||||
| (III) Profit distribution | 95,988,980.24 | -371,988,980.24 | -276,000,000.00 | ||||||||
| 1. Withdrawal of surplus reserve | 95,988,980.24 | -95,988,980.24 | |||||||||
| 2. Distribution to owners (or shareholders) | -276,000,000.00 | -276,000,000.00 | |||||||||
| 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 | 920,000,000.00 | 274,008,599.09 | 292,894.11 | 439,931,539.68 | 2,435,883,856.99 | 4,070,116,889.87 |
| Item | 2018 | ||||||||||
| 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 | 920,000,000.00 | 274,008,599.09 | 268,925,378.89 | 1,402,828,409.89 | 2,865,762,387.87 | ||||||
| Add: Changes in accounting policies | |||||||||||
| Correction for previous errors | |||||||||||
| Others | |||||||||||
| II. Balance at the beginning of the year | 920,000,000.00 | 274,008,599.09 | 268,925,378.89 | 1,402,828,409.89 | 2,865,762,387.87 | ||||||
| III. Increase and decrease for the period (“-” for decrease) | 74,479,147.55 | 440,312,327.92 | 514,791,475.47 | ||||||||
| (I) Total comprehensive income | 744,791,475.47 | 744,791,475.47 | |||||||||
| (II) Owner’s contribution and capital reduction | |||||||||||
| 1. Ordinary shares contributed by the owners | |||||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||
| 3. Amount of share-based payments credited to owners’ equity | |||||||||||
| 4. Others | |||||||||||
| (III) Profit distribution | 74,479,147.55 | -304,479,147.55 | -230,000,000.00 | ||||||||
| 1. Withdrawal of surplus reserve | 74,479,147.55 | -74,479,147.55 | |||||||||
| 2. Distribution to owners (or shareholders) | -230,000,000.00 | -230,000,000.00 | |||||||||
| 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 | 920,000,000.00 | 274,008,599.09 | 343,404,526.44 | 1,843,140,737.81 | 3,380,553,863.34 |
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of Accounting Department: Zhai Yu
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 ShanghaiM&G Stationery Inc. in [2015] No. 15 securities regulatory license of China Securities RegulatoryCommission in January 2015. The Company’s business license No.: 91310000677833266F. InJanuary 2015, the Company was listed on Shanghai Stock Exchange. The industry where theCompany operates is manufacturing industry in products for stationery, arts, sports andentertainment.As of 31 December 2019, the Company issued a total of 920,000,000 shares accumulatively,and its registered capital amounted to RMB920,000,000. The registered address of theCompany is Building 3, No. 3469 Jinqian Road, Fengxian District,Shanghai. The principaloperations of the Company include: stationery manufacturing and sales, digital products, securityequipment, instruments and apparatus, protective equipment in work, furniture, decorations,cosmetics, accessories, office supplies, craft gifts (except ivory and its products), rubber andplastic products, electronic products, household appliances, toys, molds, hardware and electricmaterial, communication equipment, computer software and auxiliary equipment, wholesale andretail of daily necessities, engagement in the import and export business of goods andtechnology, food sales, e-commerce, publication operation, printing for other prints, packagingand printing services, and consultation for business management. [For those businesses thatrequire permission, business activities are conducted after getting the approval from relevantdepartments].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 10 April2020.
2. Scope of consolidated financial statements
"√ Applicable" "□ Not applicable"As of 31 December 2019, subsidiaries in the scope of the Company’s consolidated financialstatements are presented as follows:
| Name of subsidiaries |
| Shanghai M&G Zhenmei Stationery Co., Ltd.(上海晨光珍美文具有限公司) |
| Shanghai M&G Colipu Office Supplies Co., Ltd. |
| 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) |
| Shanghai M&G Stationery & Gift Co., Ltd.(上海晨光文具礼品有限公司) |
| Shanghai M&G Stationery Sales Co., Ltd.(上海晨光文具销售有限公司) |
| Guangzhou M&G Stationery&Gifts Sales Co., Ltd.(广州晨光文具礼品销售有限公司) |
| Yiwu Chenxing Stationery Co., Ltd.(义乌市晨兴文具用品有限公司) |
| Harbin M&G Sanmei Stationery Co., Ltd.(哈尔滨晨光三美文具有限公司) |
| Zhengzhou M&G Stationery&Gifts Co., Ltd.(郑州晨光文具礼品有限责任公司) |
| M&G Living Studio Enterprise Management Co., Ltd.(晨光生活馆企业管理有限公司) |
| M&G Living Studio Enterprise Management (Shanghai) Co., Ltd.(晨光生活馆企业管理(上海)有限公司) |
| Shanghai M&G Jiamei Stationery Co., Ltd.(上海晨光佳美文具有限公司) |
| Jiangsu M&G Living Studio Enterprise Management Co., Ltd.(江苏晨光生活馆企业管理有限公司) |
| Zhejiang New M&G Living Studio Enterprise Management Co., Ltd.(浙江新晨光生活馆企业管理有限公司) |
| Jiumu M&G Store Enterprise Management Co., Ltd.(九木杂物社企业管理有限公司) |
| Shanghai M&G Information Technology Co., Ltd.(上海晨光信息科技有限公司) |
| Shenzhen Erya Creative and Cultural Development Co., Ltd.(深圳尔雅文化创意发展有限公司) |
| Shanghai M&G Office Supplies Co., Ltd. |
| Office Depot Network Technology Co., Ltd. |
| Luoyang M&G Stationery Sales Co., Ltd.(洛阳晨光文具销售有限公司) |
| Hangzhou Sanmei M&G Stationery Co., Ltd.(杭州三美晨光文具有限公司) |
| Axus Stationery (Shanghai) Company Ltd. |
| Jiangsu Marco Pen Co., Ltd.(江苏马可笔业有限公司) |
| Changchun Macro Stationery Co., Ltd.(长春马可文教用品有限公司) |
| Yili Senlai Wood Co., Ltd.(伊犁森徕木业有限公司) |
| Axus Stationery (Hong Kong) Company Ltd. |
| International stationery company |
Details of the scope of the consolidated financial statements for the current period and itschanges are set out in “VI Changes in the Consolidation Scope” and “VII Equity in Other Entities”of the notes.
IV. Preparation basis of financial statements
1. Preparation basis
Based on a going concern and actual transactions and events, the Company prepared financialstatements in accordance with the Accounting Standards for Business Enterprises-BasicStandards, as well as various specific account standards, application guidance for accounting
standards for business enterprises, interpretations of the accounting standards for businessenterprises and other relevant regulations (hereinafter collectively referred to as “CAS”) issuedby the Ministry of Finance, and the disclosure requirements in the Preparation Convention ofInformation Disclosure by Companies Offering Securities to the Public No.15—GeneralProvisions on Financial Report issued by China Securities Regulatory Commission.
2. Going concern
"√ Applicable" "□ Not applicable"The Company has the ability to continue as a going concern within the 12 months after the endof the Reporting Period and there are no material events that may affect its ability to continue asa going concern.
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. Formore details, please refer to “III (IX) Financial instrument”, “III (XIII) Fixed assets”, “III (XVI)Intangible assets”, “III (XVIII) Long-term prepaid expenses”, “III (XXII) Revenue” and “III (XXIII)Government grant”.
1. Statement of compliance of accounting standards for business enterprisesThe financial statements have been prepared by the Company in conformity with the ChinaAccounting Standards for Business Enterprises, and present truly and completely theCompany’s financial position, operating results, changes in shareholders' equity and cash flowand other related information.
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"The Company’s operating cycle is 12 months.
4. Reporting currency
The reporting currency of the Company is RMB.
5. Accounting treatments for enterprise merger under or not under joint control"√ Applicable" "□ Not applicable"Enterprise merger under joint control: the assets and liabilities acquired by the Company inenterprise merger shall be measured at the carrying amount of the assets and liabilities of theacquiree (including goodwill incurred in the acquisition of the acquiree by ultimate controllingparty) in the consolidated financial statements of the ultimate controlling party at the date ofmerger. The difference between the carrying amount of the net assets obtained and the carryingamount of the consideration paid for the merger (or total nominal value of the issued shares) isadjusted to capital premium in capital reserve. If the capital premium in capital reserve is notsufficient to offset the difference, the remaining balance is adjusted against retained earnings.Enterprise merger not under joint control: the assets paid and liabilities incurred or committed asa consideration of enterprise merger by the Company are measured at fair value on the date ofacquisition and the difference between the fair value and its carrying amount shall be includedin the current profit or loss. Where the cost of merger is higher than the fair value of theidentifiable net assets acquired from the acquiree in enterprise merger, the Company shallrecognize such difference as goodwill; where the cost of merger is less than the fair value of theidentifiable net assets acquired from the acquiree in enterprise merger, such difference shall beincluded in the current profit or loss.The direct expenses incurred in enterprise merger shall be included the current profit or loss;transaction costs associated with the issue of equity or debt securities for the enterprise mergershall be included in the initially recognized amounts of the equity or debt securities.
6. Preparation of consolidated financial statements
"√ Applicable" "□ Not applicable"
(1) Scope of consolidation
The consolidation scope of consolidated financial statements is determined on the basis ofcontrol, including the Company and all of its subsidiaries.
(2) Consolidation procedure
The consolidated financial statements are prepared by the Company based on the financialstatements of the Company and its subsidiaries and in accordance with the other relevantinformation. In preparation of the Company’s consolidated financial statements, the Companywill regard the enterprise group as a single accounting entity. The Group’s overall financialcondition, operating results and cash flow are reflected based on the relevant accountingstandards, measurement and presentation requirements and in accordance with the unifiedaccounting policy.
The subsidiaries that are within the scope of the consolidation shall have the same accountingpolicies and the accounting periods with those of the Company. In preparing the consolidatedfinancial statements, where the accounting policies and the accounting periods are inconsistentbetween the Company and its subsidiaries, the financial statements of subsidiaries are adjustedin accordance with the accounting policies and accounting period of the Company. Forsubsidiaries acquired from an enterprise merger not under joint control, the financial statementsof the subsidiaries are adjusted based on the fair value of the identifiable net assets on the dateof acquisition. For subsidiaries acquired from an enterprise merger under joint control, thefinancial statements of the subsidiaries are adjusted based on the carrying amount of their assets,liabilities (including goodwill incurred in the acquisition by ultimate controlling party) in thefinancial statements of the ultimate controlling party.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 the consolidated balance sheet, the net profit and the total comprehensive income inthe consolidated income statement respectively. Where losses attributable to the minorityshareholders of a subsidiary exceed the minority shareholders’ interest entitled in theshareholders’ equity of the subsidiary at the beginning of the period, the excess is allocatedagainst 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 amount at the beginning of the period in the consolidatedbalance sheet will be adjusted; the income, expenses and profit of the subsidiary or businesscombination from the beginning of the period to the end of the reporting period will be includedin the consolidated income statement; the cash flows of the subsidiary or business combinationfrom the beginning of the period to the end of the reporting period will be included in theconsolidated statement of cash flows, and relevant items in the comparative statements will alsobe adjusted as if the reporting entity after combination had been existing since the control of theultimate controlling party started.Where control over the investee under common control is obtained due to reasons such asincrease in investments, adjustment is made as if the parties involved in the combination hadbeen existing in the current condition since the control of the ultimate controlling party started.For equity investment held before the control over the acquiree is obtained, profit or loss, othercomprehensive income and other changes in net assets recognized from the later of theacquisition of the original equity interest and the date when the acquirer and the acquiree wereplaced under common control until the date of combination are offset against retained profit atthe beginning of the period of the comparative statements or profit or loss of the periodrespectively.
During the Reporting Period, if there is an addition of subsidiary or business due to businesscombination not under common control, the amount at the beginning of the period in theconsolidated balance sheet will not be adjusted; the income, expenses and profit of thesubsidiary or business from the date of purchase to the end of the reporting period will beincluded in the consolidated income statement; the cash flows of the subsidiary or business fromthe date of purchase to the end of the reporting period will be included in the consolidatedstatement of cash flows.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,the Company remeasures the equity interest at its fair value as at the date of purchase, and anydifference between the fair value and its book value will be accounted for as investment gains ofthe period. Where equity interest of the acquiree held before the date of purchase is related toother comprehensive income under equity accounting and other changes in owners’ equity otherthan net profit or loss, other comprehensive income and profit distribution, other comprehensiveincome and other changes in owners’ equity related thereto are transferred to investment gainsof the period to which the date of purchase belongs, except for other comprehensive incomearising from the changes in net liabilities or net assets due to the re-measurement of definedbeneficiary plans by the acquiree.
② Disposal of subsidiaries or business
A. General treatment for disposalDuring the reporting period, for the disposal of a subsidiary or business, the income, expensesand profit of the subsidiary or business from the beginning of the period to the date of disposalare included in the consolidated income statement; the cash flows of the subsidiary or businessfrom the beginning of the period to the date of disposal are included in the consolidatedstatement of cash flows.When control over the investee is lost due to the disposal of part of the equity investment orother reasons, the Company remeasures the remaining equity investment at fair value as at thedate on which control is lost. The difference between the sum of the consideration received fromequity disposal and the fair value of the remaining equity interest and the sum of the net assetsof the subsidiary proportionate to the original shareholding accumulated from the date ofpurchase or combination and goodwill is included in investment gains of the period during whichthe control is lost. Other comprehensive income related to the equity investment in the originalsubsidiary or other changes in owners’ equity other than net profit or loss, other comprehensiveincome and profit distribution are transferred to investment gains of the period during which thecontrol is lost, except for other comprehensive income arising from the changes in net liabilitiesor net assets due to the re-measurement of defined beneficiary plans by the investee.
Where loss of control is due to the decrease in the Company’s shareholding as a result of theincrease in capital contribution to the subsidiary by other investing parties, the accountingprinciple described above will be applied.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 equityinvestment in the subsidiary satisfy one or more of the following conditions, the transactions arenormally accounted for as a basket of transactions:
i. these transactions were entered into simultaneously or after considering the effects of eachother;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 of disposal of equity investment in a subsidiary until control is lostconstitute a basket of transactions, the Company accounts for the transactions as a transactionof disposal of a subsidiary until control is lost; however, the difference between the amountreceived 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 whichcontrol is lost upon loss of control.Where the transactions of disposal of equity investment in a subsidiary until control is lost do notconstitute a basket of transactions, before the loss of control, the transactions are accounted forusing the policies related to partial disposal of equity investment in a subsidiary where no controlis lost; when control is lost, they are accounted for using the general method for disposal ofsubsidiaries.
③ Purchase of minority interests in subsidiary
For the difference between the long-term equity investment newly acquired due to the purchaseof minority interests by the Company and the share of net assets of the subsidiary calculatedaccording to the new shareholding accumulated from the date of purchase (or date ofcombination), 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, retainedprofit will be adjusted.
④ Partial disposal of equity investment in subsidiaries without losing controlFor the difference between the consideration received from partial disposal of long-term equityinvestment in a subsidiary without loss of control and the net assets of the subsidiarycorresponding to the disposal of long-term equity investment accumulated from the date ofpurchase or date of combination, share premium of the capital reserve in the consolidated
balance sheet will be adjusted; where share premium of the capital reserve is insufficient for thewrite-down, retained profit will be adjusted.
7. Classification of joint arrangements and accounting of associate"□ Applicable" "√ Not applicable"
8. Determination of cash and cash equivalents
In preparing the cash flow statement, the cash on hand and deposits that are available forpayment at any time of the Company are recognized as cash. The short-term (due within 3months of the date of purchase) and highly liquid investments that are readily convertible toknown amounts of cash and subject to an insignificant risk of change in value are recognized ascash equivalents.
9. Foreign currency transactions and translation of foreign currency financialstatements"√ 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 thespot rates prevailing at the balance sheet date, and any translation difference arising therefromis included in profit or loss of the period except for the translation difference arising fromdedicated borrowings in foreign currency related to the construction of assets qualified forcapitalisation which is accounted for under 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 thebalance sheet date. Owners’ equity items other than “undistributed profit” are translated at thespot rates on the dates when they are incurred. Income and expense items in the incomestatement are translated at the spot 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 ofthe period during which the disposal occurs.
10. Financial instruments
"√ Applicable" "□ Not applicable"Financial instruments include financial assets, financial liabilities and equity instruments.
(1) Classification of the financial instruments
Applicable accounting policies from 1 January 2019According 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 theinitial recognition as: financial assets at amortized cost, financial assets (debt instruments) at fairvalue through profit or loss, and other financial assets at fair value through current profit or loss.If the business model aims at collecting contractual cash flows that are only the payment madebased on the principal and the interest of the outstanding principal amount, financial assets shallbe classified as financial assets at amortized cost; if the business model aims at both collectingcontractual cash flows and selling the financial assets, and contractual cash flows are only thepayment made based on the principal and the interest of the outstanding principal amount,financial assets shall be classified as financial assets at fair value through other comprehensiveincome. Save for the above, other financial assets shall be classified as financial assets at fairvalue through current profit or loss.For non-trading equity instrument investments, the Company determines at the initial recognitionwhether it is designated as financial asset (equity instruments) at fair value through othercomprehensive income.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 officialwritten document, management and evaluation of the financial liabilities portfolio or financialassets and financial liabilities portfolio are based on fair value which will be used as the basis forreporting to the key management personnel.
③ The financial liabilities include embedded derivatives that need to be split separately.
Applicable accounting policies before 1 January 2019The financial assets and financial liabilities are classified at the initial recognition as: financialassets or financial liabilities at fair value through current profit or loss, including financial assetsor liabilities for trading and financial assets or financial liabilities that are directly designated formeasurement at fair value through current profit or loss; held-to-maturity investments; accountsreceivable; available-for-sale financial assets and other financial liabilities.
(2) Recognition and measurement of financial instruments
Applicable accounting policies from 1 January 2019
① Financial assets at amortized cost
Financial assets at amortized cost include notes receivable and accounts receivable, otherreceivables, long-term receivables and debt investment, which are initially measured at fair value,and related transaction costs are included in the initial recognition amount. The accountsreceivable of major financing components and the accounts receivable of the Company’sdecision not to consider the financing component with the term less than one year are initiallymeasured at the contract transaction price.Interest calculated by the effective interest method during the period of holding is included in thecurrent profit or loss.Upon recovery or disposal, the difference between the acquisition price and the carrying amountof the 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 aresubsequently measured at fair value. Changes in fair value are included in other comprehensiveincome, except for interest, impairment losses or gains and exchange gain or loss calculatedusing the effective interest method.When the recognition is terminated, the accumulated gain or loss previously included in othercomprehensive income is transferred from other comprehensive income and included in thecurrent profit or loss.
③ Financial assets (equity instruments) at fair value through other comprehensive incomeFinancial assets (equity instruments) at fair value through other comprehensive income,including other equity instruments, are initially measured at fair value, and related transactioncosts are included in the initial recognition amount. The financial assets are subsequentlymeasured at fair value, and changes in fair value are included in other comprehensive income.The dividends obtained are included in the current 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 measuredat fair value, and related transaction costs are included in the current profit or loss. The financialassets are subsequently measured at fair value, and changes in fair value are included in thecurrent 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
transaction costs are included in the current profit or loss. The financial liabilities aresubsequently measured at fair value, and changes in fair value are included in the current profitor loss.When the recognition is terminated, the difference between the carrying amount andconsideration paid 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.
Applicable accounting policies before 1 January 2019
① Financial assets (financial liabilities) at fair value through current profit or lossWhen acquired, the financial assets (financial liabilities) shall be initially recognized at their fairvalue (except for cash dividends which are declared but not distributed or interests on bonds ofwhich the maturity interest is not collected), and related transaction costs are included in thecurrent profit or loss.The interest or cash dividend which was gained in the holding period is recognized as investmentincome. At the end of the period, the change in the fair value of the financial asset (financialliabilities) shall be included in the current profit or loss.When disposed, the difference between the fair value and the amount of initial recognition shallbe recognized as investment income; meanwhile, the gain or loss on changes in fair value isadjusted.
② Held-to-maturity investment
When acquired, the held-to-maturity investment is initially recognized at the sum of the fair value(except for interests on bonds of which the maturity interest is not collected) and relevanttransaction costs.Interest income is calculated according to the amortized cost and effective interest rate, andincluded in investment income during the holding period. The effective interest rate is determinedwhen acquired, and shall remain unchanged within the predicted term of existence or within ashorter applicable term.When disposed, the difference between the consideration obtained and the carrying amount ofthe investment shall be included in investment income.
③ Accounts receivable
The receivables that are formed in selling goods or rendering labor services to external parties,and the debts (excluding debt instruments that are quoted in an active market) of otherenterprises held by the Company, including accounts receivable and other receivables, areinitially recognized at the consideration of the contract or agreement to be received from thebuyers. Accounts receivable that are of a financing nature are initially recognized at their presentvalue.Upon recovery or disposal of accounts receivable, the difference between the considerationobtained and the carrying amount of accounts receivable is included in the current profit or loss.
④ Available-for-sale financial assets
When acquired, available-for-sale financial assets are initially recognized at the sum of the fairvalue (except for cash dividends which are declared but not distributed or interests on bonds ofwhich the maturity interest is not collected) and relevant transaction costs.The interests or cash dividends to be obtained during the holding period are recognized ininvestment income. At the end of the period, financial assets are measured at fair value, and itschange in fair value is included in other comprehensive income. However, the equity instrumentinvestment that is not quoted in an active market and whose fair value cannot be reliablymeasured, and derivative financial assets that are linked to the equity instrument and that mustbe settled through the delivery of the equity instrument, are measured at cost.When disposed, the difference between the consideration obtained and the carrying amount ofthe financial assets shall be included into the current profit or loss; meanwhile, the correspondingdisposal portion of accumulated change in fair value previously included into othercomprehensive income shall be transferred to the current profit or loss.
⑤ Other financial liabilities
Other financial liabilities are initially recognized based on the sum of its fair value and relevanttransaction costs, and subsequently measured at amortized cost.
(3) Recognition and measurement of transfer of financial assets
A financial asset shall be derecognized when the Company has transferred nearly all the risksand rewards related to the ownership of the financial asset to the transferee, and it shall not bederecognized if the Company has retained nearly all the risks and rewards related to theownerships 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 differencebetween the two 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 transferredfinancial assets are financial assets (debt instruments) at fair value through other comprehensiveincome, and available-for-sale financial assets).
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 theirrespective relative fair value between the portion of derecognized part and the remaining part,and the difference between the two amounts below shall be included in the current profit or loss:
① The carrying amount of the derecognized portion;
② The sum of consideration of the derecognized portion, plus the corresponding derecognizedportion of accumulated change in fair value previously included in owners’ equity (in cases wherethe transferred financial assets are financial assets (debt instruments) at fair value through othercomprehensive income, and available-for-sale financial assets).If the transfer of financial assets does not meet the conditions for derecognition, the financialassets continue to be recognized and the consideration received is recognized as a financialliability.
(4) Conditions for 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 betweenthe Company and a creditor to replace the original financial liabilities with new financial liabilitieswith substantially different terms, the original financial liabilities will be derecognized and the newfinancial liabilities 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 liabilitieswhose terms 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 thecarrying amount of the derecognized portion of financial liabilities and the consideration paid(including transferred non-cash assets or new financial liability) will be included in the currentprofit 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 techniquesto determine their fair value. During the valuation process, the Company uses valuationtechniques appropriate to the prevailing circumstances with the support of sufficient data andother information available, selects inputs consistent with the characteristics of the assets orliabilities considered in the transactions of relevant assets or liabilities by market participants,and gives priority to relevant observable inputs. Unobservable inputs are used only when therelevant observable inputs are not accessible or the access to which is impracticable.
(6) Impairment test method and accounting treatment for impairment of financial assetsApplicable accounting policies from 1 January 2019The Company takes into consideration all reasonable and evidence-based information, includingforward-looking information, and estimates the anticipated credit loss on a single or combinationof financial assets measured at amortized cost and financial assets (debt instruments) at fairvalue through other comprehensive income. The measurement of anticipated credit lossdepends on whether the credit risk of the financial assets has increased significantly since theinitial 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 forthe lifetime of the financial instruments; if the credit risk of the financial instruments has notsignificantly increased since the initial recognition, the Company will measure its loss provisionbased on the amount of anticipated credit loss for the financial instruments in the next 12 months.The increase or reversal of the loss provision resulting therefrom is included in the current profitand loss as an impairment loss or gain.Usually, after an overdue for more than 30 days, the Company believes that the credit risk of thefinancial instrument has increased significantly unless there is conclusive evidence that the creditrisk of the financial instrument has not increased 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 initialrecognition.If there is any objective evidence indicating that some financial assets have incurred creditimpairment, the Company will make provision for impairment for the financial asset in a singlefinancial asset manner.For accounts receivable, whether it contains significant financing components or not, theCompany always measures its loss reserves in accordance with the amount of anticipated creditlosses for the entire lifetime.
For lease receivable and long-term receivables obtained by the Company through selling goodsand rendering services, the Company always measures its loss reserves in accordance with theamount of anticipated credit loss for the entire lifetime.
Applicable accounting policies before 1 January 2019The Company shall assess the carrying amount of financial assets other than those measuredat fair value with change included in the current profit or loss at the balance sheet date. If thereis objective evidence indicating that the financial asset is impaired, impairment provision shallbe made.
① Impairment provision for available-for-sale financial assets:
If the fair value of available-for-sale financial assets falls significantly, or judged by the Companythat descending trend is not temporary after taking into account various relevant factorscomprehensively at the end of the period, impairment will be recognized, and the cumulativeloss arising from decline in fair value that had been recognized directly in the shareholders’ equityshall be transferred from the shareholders’ equity and recognized as impairment loss.As for the available-for-sale debt instruments whose impairment losses have been recognized,if, within the accounting period thereafter, an increase in fair value is objectively related to asubsequent event that occurs after the original impairment losses were recognized, the originallyrecognized impairment losses shall be reversed and be recorded into the profits and losses ofthe current period.Impairment loss incurred during an investment period on an available-for-sale equity instrumentshall not be reversed through profit or loss.
② Impairment provision for held-to-maturity investment:
The measurement of the impairment loss for held-to-maturity investments shall be treated withreference to that for the accounts receivable.
11. Bills receivable
Determination and accounting treatment of the anticipated credit loss of notes receivable"√ Applicable" "□ Not applicable"Please refer to Note V (X) Financial instruments
12. Accounts receivable
Determination and accounting treatment of the anticipated credit loss of accountsreceivable"√ Applicable" "□ Not applicable"Please refer to Note V (X) Financial instruments
13. Receivables financing
"√ Applicable" "□ Not applicable"Please refer to Note V (X) Financial instruments
14. Other receivables
Determination and accounting treatment of the anticipated credit loss of other receivables"√ Applicable" "□ Not applicable"Please refer to Note V (X) Financial instruments
15. Inventories
"√ Applicable" "□ Not applicable"
(1) Classification of inventories
Inventories include raw materials, materials in transit, turnover materials, goods-in-stock,expendable biological assets, goods in production, goods in transit, commissioned processingmaterials and so forth.
(2) Determination of cost
Cost of inventories is determined using the weighted average method.
(3) Basis for the determination of net realizable value for different types of inventoriesNet realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock,and held-for-sale raw materials, during the normal course of production and operation, shall bedetermined by their estimated selling price less the related selling expenses and taxes; the netrealizable value of material inventories, which need to be processed, during the normal courseof production and operation, shall be determined by the amount after deducting the estimatedcost of completion, estimated selling expenses and relevant taxes from the estimated sellingprice of finished goods; the net realizable value of inventories held for execution of salescontracts or labor contracts shall be calculated on the ground of the contracted price. If anenterprise holds more inventories than the quantity stipulated in the sales contract, the netrealizable value of the exceeding part shall be calculated on the ground of general selling price.Provision for decline in value of inventories is made on an item-by-item basis at the end of theperiod. For large quantity and low value items of inventories, provision for decline in value maybe made based on categories of inventories; for items of inventories relating to a product linethat is produced and marketed in the same geographical area with the same or similar end usesor purposes, which are impossible to be evaluated separately from other items in that productline, provision for decline in value of inventories may be determined on an aggregate basis.
Unless there is clear evidence indicating that abnormality in market price exists as of the balancesheet date, the net realizable value of inventories is determined based on the market price as ofthe balance sheet date.The net realizable value of inventories at the end of current period is determined based on themarket price of the balance sheet date.
(4) Inventory system
The perpetual inventory system is adopted.
(5) 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.
16. Held for sale assets
"√ Applicable" "□ Not applicable"The Company classifies the non-current assets or disposal groups which meet the followingconditions as held-for-sale categories:
(1) According to the general practice for selling such kind of asset or disposal group in the similartransaction, it can be immediately sold in the prevailing circumstance;
(2) The sale of the asset or group is very likely to happen, which means that the Company hasmade a resolution for one selling plan and had acquired decided purchase commitment, and itis estimated that the sale will be completed within one year. Where the sale can be done onlyupon the approval of relevant authorities or regulatory authorities of the Company as requiredby relevant provisions, the approval has been obtained.
17. Debt investment
(1). Determination and accounting treatment of the anticipated credit loss of debtinvestments"□ Applicable" "√ Not applicable"
18. Other debt investment
(1). Determination and accounting treatment of the anticipated credit loss of other debtinvestments"□ Applicable" "√ Not applicable"
19. Long-term receivables
(1) Determination and accounting treatment of the anticipated credit loss of long-termreceivables"√ Applicable" "□ Not applicable"Please refer to Note V (X) Financial instruments
20. 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 onlywhen decisions about the relevant activities of the arrangement require the unanimous consentof the parties sharing control. The Company together with the other joint venture parties canjointly control over the investee, and are entitled to the right of the net assets of the investee whois joint venture of the Company.Significant influence refers to the power to participate in making decisions on the financial andoperating policies of an enterprise, but not power to control or jointly control the formulation ofsuch policies with other parties. Where the investor can exercise significant influence over theinvestee, the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business combination of entitiesFor business combinations involving entities under common control: where the Company payscash, transfers non-cash assets, bears debts or issues equity securities as consideration ofcombinations, the initial investment cost of long-term equity investments are the share withreference to the book value of the shareholders’ equity of the acquiree in the consolidatedfinancial statements of the ultimate controlling party on the date of combinations. In connectionwith imposing control over the investee under joint control as a result of additional investmentand other reasons, the initial investment cost of long-term equity investments shall bedetermined based on share of carrying amount in the consolidated financial statements of theultimate controlling party by net assets of acquiree after the merger on the date of merger. Thedifference between initial investment cost and the carrying amount of long term equity investmentbefore merger and the sum of carrying amount of newly paid consideration for additional sharesacquired on the date of merger is to adjust share premium. If the balance of share premium isinsufficient, any excess is adjusted to retained earnings.For business combinations involving entities not under common control: the cost of thecombinations ascertained on the date of acquisition shall be taken as the initial investment costof the long-term equity investments. In connection with imposing control over the investee not
under joint control as a result of additional investment and other reasons, the initial investmentcost when changing to the cost method shall be the sum of the carrying amount of the equityinvestment originally held and the newly increased initial investment cost.
② Long-term equity investments acquired by other means
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 meansof issuance of equity securities shall be the fair value of the equity securities issued.If the non-monetary assets transaction is commercial in nature and the fair value of the assetsreceived or surrendered can be reliably measured, fair value shall be taken as the measurementbasis. If the assets received or surrendered can be reliably measured, for long-term equityinvestments received, the fair value of the assets surrendered and related taxes payable arerecognized as the initial investment cost of long-term equity investments received, unless thereis clear evidence indicating that the fair value of the assets received is more reliable. If neitherthe non-monetary assets transaction is commercial in nature, nor can the fair value of the assetsreceived and surrendered be reliably measured, for long-term equity investments received, thecarrying amount of the assets surrendered and related taxes payable are recognized as theinitial investment cost of long-term equity investments received.For the long-term equity investments acquired through debt restructuring, its carrying amount isdetermined based on the fair value of the creditor’s rights waived, the taxes that can be directlyattributable to the assets and other costs, and the balance between the fair value and carryingamount of the creditor’s rights waived is included in the current profit or loss.
(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,except for the actual consideration paid for the acquisition of investment or the declared but notyet distributed cash dividends or profits which are included in the consideration, investment gainsare recognized as the Company’s shares of cash dividends 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 equitymethod. Where the initial investment cost of a long-term equity investment exceeds theinvestor’s interest in the fair value of the investee’s identifiable net assets at the date ofacquisition, no adjustment shall be made to the initial investment cost of long-term equityinvestments; where the initial investment cost is less than the investor’s interest in the fair valueof the investee’s identifiable net assets at the date of acquisition, the difference shall be includedin the current profit or loss.
The Company recognizes the investment income and other comprehensive income accordingto the shares of net profit or loss and other comprehensive income realized by the investee whichit shall be entitled or shared respectively, and simultaneously makes adjustment to the carryingamount of long-term equity investments; the carrying amount of long-term equity investmentsshall be reduced by attributable share of the profit or cash dividends for distribution declared bythe investee. In relation to other changes of owners’ equity except for net profit and loss, othercomprehensive income and profit distributions of the investee, the carrying amount of long-termequity investments shall be adjusted and included in the owners’ equity.When determining the amount of proportion of net profit or loss in the investee which it entitles,fair value of each identifiable assets of the investee at the time when the investment is obtainedshall be used as the basis, and adjustment shall be made to the net profit of the investeeaccording to the accounting policies and accounting period of the Company. During the periodof holding investments, when the investee prepares consolidated financial statements, theaccounting shall be based on the amounts attributable to the investee in the net profit, othercomprehensive income and other changes of the owners’ equity in the consolidated financialstatements.The unrealized profit or loss resulting from transactions between the Company and its associatesor joint ventures shall be offset in proportion to the investor’s equity interest of investee, basedon which investment income or loss shall be recognized. Any losses resulting from internaltransactions, which are attributable to impairment of assets, shall be fully recognized.Transactions of the assets casted and sold that are able to constitute an agreement between theCompany and associates and joint ventures shall be dealt with in accordance with Note “III (V)Accounting treatments for enterprise merger under and not under joint control” and Note III (VI)”Preparation of consolidated financial statements”.In recognition of share of losses in the investee, the Company treats it in the following order:
firstly, the Company will write off the carrying amount of long-term equity investments. Secondly,in the event the aforesaid carrying amount is insufficient for write-off, it shall continue torecognize investment loss and write off carrying amount of long-term receivables to the extentof the carrying amount of the long-term equity which substantively constitutes the net investmentin the investee. Finally, after the above treatment, for the additional obligations which shall bestill assumed by entities according to investment contract or agreement, the estimated liabilitiesshall be recognized based on the obligations which are expected to assume, and included in thecurrent investment loss.
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 the long-term equity investment under the equity method, when such investment is disposed,part of amounts that shall be originally included in other comprehensive income shall be
accounted for in proportion by using the same basis as the investee used for direct disposal ofrelevant assets or liabilities. The owners’ equity which is recognized due to other changes ofowners’ equity except for net profit and loss, other comprehensive income and profit distributionsshall be transferred in proportion into the current profit or loss, excluding the othercomprehensive income derived from changes of net liabilities or net assets due to re-measurement on defined benefit plan by the investee.When the control or material influence over the investee is lost due to partial disposal of equityinvestment and other reasons, the remaining equities shall be accounted for in accordance withthe standards on recognition and measurement of financial instruments, and the differencebetween the fair value and the carrying amount at the date when control or material influence islost shall be included in the current profit or loss. For other comprehensive income recognizedin the original equity investment due to the equity method is adopted, it shall be treated with thesame accounting basis as the investee used for direct disposal of relevant assets or liabilitieswhen ceasing to use the equity method. All owners’ equities which are recognized due to otherchanges of owners’ equity except for net profit and loss, other comprehensive income and profitdistributions shall be transferred into the current profit or loss when ceasing to use the equitymethod.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 inpreparing individual financial statements provided that joint control or material influence over theinvestee can be imposed, and shall be adjusted as if such remaining equities has beenaccounted for by the equity method since they are obtained. Where the remaining equities afterdisposal cannot impose joint control or material influence over the investee, it shall be accountedfor according to relevant provisions of the standards on recognition and measurement of financialinstruments, and the difference between fair value and the carrying amount on the date whencontrol is lost shall be included in the current profit or loss.If the disposed equity interest is acquired in an enterprise merger as a result of making additionalinvestment or other reasons, the remaining equity interest after disposal will be accounted for bycost method or equity method when preparing the separate financial statements. Othercomprehensive income and other owners’ equity recognized when the equity interests held onthe date of acquisition is accounted for by equity method and shall be transferred on pro ratabasis; for the remaining equity interest after disposal accounted for by the recognition andmeasurement standard of financial instruments, other comprehensive income and other owners’equity shall be fully transferred.
21. Investment real estate
Not applicable
22. Fixed assets
(1) Conditions for recognition
"√ Applicable" "□ Not applicable"Fixed assets are tangible assets that are held for use in the production or supply of goods orservices, for rental to others, or for administrative purposes; and have a useful life of more thanone accounting year. Fixed assets are recognized when they meet the following conditions:
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.
(2) Method for depreciation
"√ Applicable" "□ Not applicable"
| Category | Method for depreciation | Useful lives of depreciation (year) | Residual value | 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 |
Fixed assets are depreciated by categories using the straight-line method, and the depreciationrates are determined by categories based upon their estimated useful lives and their estimatedresidual value. Where the parts of a fixed asset have different useful lives or cause economicbenefits for the enterprise in different ways, different depreciation rates or depreciation methodsshall be applied, and each part shall be depreciated separately.For fixed assets leased under finance lease, if it can be reasonably determined that theownership of the leased asset can be acquired upon the expiry of the lease term, depreciationwill be prepared during the remaining useful life of the leased asset. If it cannot be reasonablydetermined that the ownership of the leased asset can be acquired upon the expiry of the leaseterm, depreciation will be prepared during the lease term or the remaining useful life of the leasedasset, whichever is shorter.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 usefullife.
(3) Recognition basis and measurement method of fixed assets under finance lease"√ Applicable" "□ Not applicable"Where any one of the following conditions is provided in the lease agreement between theCompany and the lesser, assets under finance lease will be recognized:
① the ownership of the leased asset is transferred to the Company upon the expiry of lease;
② the Company has the option to purchase the leased asset, and the purchase considerationentered into is expected to be far less than the fair value of the leased asset upon the exerciseof the option;
③ the lease term accounts for the majority of the useful life of the leased asset;
④ the present value of the minimum lease payment upon the commencement of the lease issubstantially the same as the fair value of the leased asset.On the commencement of the lease, the leased asset shall be stated at an amount equal to thefair value of the leased asset or the present value of the minimum lease payments (whichever islower), and the minimum lease payments shall be stated as the carrying amount of long-termpayables. The difference between the stated amount of the leased asset and the minimum leasepayments shall be accounted for as unrecognized finance charge.
23. Construction in progress
"√ Applicable" "□ Not applicable"Construction in progress is measured and recognized as fixed assets at all the expensesincurred to bring the fixed assets ready for their intended use. If the construction in progress offixed assets constructed are ready for their intended use but the final account of completedproject has not been issued, it should be transferred to fixed assets at an estimated costaccording to the construction budget, construction price or actual cost, and depreciation shouldbe provided according to the Company’s deprecation policy for fixed assets from the date whenthe assets are ready for their intended use. When the final account of completed project is issued,the estimated cost will be adjusted according to the actual cost, but the original depreciationcharge will not be adjusted.
24. Borrowing costs
"√ Applicable" "□ Not applicable"
(1) Criteria for recognition of capitalized borrowing costs
Borrowing costs refer to the borrowing interests, amortization of discounts or premiums, ancillarycosts and exchange differences arising from foreign currency borrowings.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 and
included in the costs of the related assets. Other borrowing costs shall be recognized as expensein the period 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 getready for their intended use or sale.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 orexpenditure for holding debt liability for the acquisition, construction or production of assetsqualified for capitalization) have been incurred;
② borrowing costs have been incurred;
③ acquisition, construction or production that are necessary to enable the asset reach itsintended usable or saleable condition have commenced.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessationof capitalization of borrowing costs, excluding the period in which capitalization of borrowingcosts is temporarily suspended.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.If part of an asset being acquired, constructed or produced has been completed respectively andput into use individually, capitalization of its relevant borrowing costs should be suspended.If different parts of the assets acquired, constructed or produced are completed separately, butsuch asset will not be ready for the intended use or sale until all parts have been completed,then the borrowing costs will be capitalized until the completion of all parts of the said asset.
(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 interruptionis for a continuous period of more than 3 months; if the interruption is a necessary step for makingthe qualifying asset under acquisition and construction or production ready for the intended useor sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurredduring such suspension period shall be recognized as the current profit or loss. When theacquisition and construction or production of the asset resumes, the capitalization of borrowingcosts 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 of the specific borrowings actually incurred in the current period minus the interest incomeearned on the unused borrowing loans as a deposit in the bank or as investment income earnedfrom temporary investment.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 becalculated and determined by multiplying the weighted average asset disbursement of the partof the accumulative asset disbursements minus the specifically borrowed loans by thecapitalization rate of the general borrowings used. The capitalization rate shall be calculated anddetermined according to the weighted average interest rate of the general borrowings.
25. Biological assets
"□ Applicable" "√ Not applicable"
26. Oil and gas assets
"□ Applicable" "√ Not applicable"
27. Right-of-use assets
"□ Applicable" "√ Not applicable"
28. Intangible assets
(1) Valuation method, useful life and impairment test
"√ 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 taxesand expenses paid, and other expenditures directly attributable to putting the asset into conditionfor its intended use. If the payment for the intangible assets is delayed beyond the normal creditconditions and it is of financing nature in effect, the cost of the intangible assets shall beascertained based on the present value of the purchase price.For the intangible assets obtained through debt restructuring for offsetting the debt of the debtor,its stated value is determined by the fair value of the creditor’s rights waived, the taxes that canbe directly attributable to putting the asset into condition for its intended use and other costs,and the balance between the fair value and carrying amount of the creditor’s rights waived isincluded in the current profit or loss.If the non-monetary assets transaction is commercial in nature and the fair value of the assetsreceived or surrendered can be reliably measured, fair value shall be taken as the measurementbasis. If the assets received or surrendered can be reliably measured, for intangible assets
received, the fair value of the assets surrendered and related taxes payable are recognized asthe initial investment cost of intangible assets received, unless there is clear evidence indicatingthat the fair value of the assets received is more reliable. If neither the non-monetary assetstransaction is commercial in nature, nor can the fair value of the assets received and surrenderedbe reliably measured, for intangible assets received, the carrying amount of the assetssurrendered and related taxes payable are recognized as the initial investment cost of intangibleassets received.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 using the straight-line methodover the term in which economic benefits are brought to the enterprise; if the term in whicheconomic benefits are brought to the enterprise by intangible assets cannot be estimated, theintangible assets shall be regarded as intangible assets with indefinite useful life, and shall notbe amortized.
② Estimated useful lives for the intangible assets with finite useful life
| Item | Estimated useful lives | Basis |
| Land use rights | 50 | Certificate of land use rights |
| Image identification rights | 12 months to 64 months | License contract |
| Software | 3 to 10 years | Expected years of benefit |
| Patent right | 10 | Patent right certificate |
| Others | 19 months to 120 months | 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 remaininguseful life.
(2) Accounting policy regarding the expenditure on the internal research and
development"√ Applicable" "□ Not applicable"
① Specific criteria for the division of research phase and development phaseThe 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 priorto a commercial production or use in order to produce new or essentially-improved materials,devices, products, etc.
② Specific criteria for capitalization at development phase
Expenses in the development phase are recognized as an intangible asset when all of thefollowing conditions are satisfied:
A. it is technically feasible to complete the intangible asset so that it will be available for use orsale;B. there is an intention to complete the intangible asset for use or sale;C. the intangible asset can produce economic benefits, including there is evidence that theproducts produced using the intangible asset has a market or the intangible asset itself has amarket; if the intangible asset is for internal use, there is evidence that there exists usage for theintangible asset;D. 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 sellthe intangible asset;E. the expenses attributable to the development stage of the intangible asset can be measuredreliably.Expenses incurred during the development stage which do not meet the above conditions, areincluded in the current profit or loss. Expenses incurred during the research phase are includedin the current profit or loss.
29. Impairment of long-term assets
"√ Applicable" "□ Not applicable"Long-term assets, such as long-term equity investment, fixed assets, construction in progress,intangible assets with finite useful life, are tested for impairment if there is any indication that anasset may be impaired at the balance sheet date. If the result of the impairment test indicatesthat the recoverable amount of the asset is less than its carrying amount, the difference shall beused to make impairment provision and an impairment loss are recognized. The recoverableamount 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 assetimpairment is determined and recognized on the individual asset basis. If it is not possible toestimate the recoverable amount of an individual asset, the recoverable amount of a group ofassets to which the asset belongs to is determined. An assets group is the smallest group ofassets that is able to generate cash inflow independently.Impairment test to goodwill, intangible assets with indefinite useful life and intangible assets notready to use shall be carried out at least at the end of each year.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 byenterprise merger to the relevant asset groups, or if there is a difficulty in allocation, the Companyshall allocate it to the portfolio of asset groups. When apportioning the carrying amount ofgoodwill, the Company shall carry out impairment test to goodwill after conducting apportionment
in accordance with relative benefit that the assets group or portfolio of asset groups can obtainfrom the synergistic effect of enterprise merger.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 ofasset groups related to goodwill exists, an impairment test will be made firstly on the assetgroups or portfolio of asset groups not containing goodwill, thus calculating the recoverableamount and comparing it with the relevant carrying amount so as to recognize the correspondingimpairment loss. Then the Company will make an impairment test to the asset groups or portfolioof asset groups containing goodwill, and compare the carrying amount of these asset groups orportfolio of asset groups (including the carrying amount of the goodwill apportioned thereto) withthe recoverable amount. Where the recoverable amount of the relevant assets or portfolio of theasset groups is lower than the carrying amount thereof, the impairment loss of the goodwill shallbe recognized.Once the above asset impairment loss is recognized, it will not be reversed in the subsequentaccounting periods.
30. Long-term prepaid expenses
"√ Applicable" "□ Not applicable"Long-term prepaid expenses are expenses which have occurred with amortization period over1 year and shall be borne by the current period and subsequent periods. Long-term prepaidexpenses of the Company include decoration fee and so forth.
(1) Amortization method
Long-term prepaid expenses are amortized averagely in the expected benefit period.
(2) Amortization period
| Item | Estimated useful lives | Basis |
| Decoration fee | 3 to 5 years | Expected years of benefit |
| Others | 2 | Expected years of benefit |
31. Employee remuneration
(1) Method of accounting treatment for short-term remuneration"√ Applicable" "□ Not applicable"During the accounting period when employees provide service, the Company will recognize theshort-term remuneration actually incurred as liabilities, and the liabilities will be included in thecurrent profit or 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 therequirements. During the accounting period when employees provide service, the Company will
determine relevant amount of employee remuneration in accordance with the required provisionbasis and provision ratios.Non-currency employee benefits will be measured in accordance with their fair value if they canbe measured reliably.
(2) Method of accounting treatment for post-employment benefits"√ Applicable" "□ Not applicable"
① Defined contribution scheme
The Company will pay basic pension insurance and unemployment insurance in accordancewith the relevant provisions of the local government for the employees. During the accountingperiod when employees provide service, the Company will calculate the amount payable whichwill be recognized as liabilities in accordance with the local stipulated basis and proportions, andthe liabilities will be included in the current profit or loss or costs of related assets.In addition to basic pension insurance, the Company also established the enterprise annuitypayment system (supplementary pension insurance)/enterprise annuity scheme according torelevant policy of national enterprise annuity system. The Company makes payment to localsocial insurance agencies/annuity scheme based on a certain proportion of total employeeremuneration. Corresponding expense is included in the current profit or loss or costs of relatedassets.
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 benefitscheme minus the fair value of the assets of defined benefit scheme is recognized as netliabilities or net assets. When the defined benefit scheme has surplus, the Company will measurethe net assets of the defined benefit scheme at the lower of the surplus of defined benefit schemeand the upper limit of the assets.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, shallbe discounted based on the bond market yield of sovereign bond matching the term ofobligations of the defined benefit plan and currency or corporate bonds of high quality in theactive market on the balance sheet date.The service cost incurred by defined benefit scheme and the net interest of the net liabilities andnet assets of the defined benefit scheme will be included in the current profit or loss or costs ofrelevant assets. The changes as a result of re-measurement of the net defined benefit liabilitiesor assets shall be recognized in other comprehensive income and shall not be reversed to profitor loss at subsequent accounting period. When the original defined benefit plan is terminated,
amount originally included in other comprehensive income shall be transferred to undistributedprofit 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 schemeas at the balance sheet date.
(3) Accounting method for termination benefits
"√ Applicable" "□ Not applicable"The Company will pay termination benefits when the Company can no longer withdraw the offerof termination plan or layoff proposal or when the Company recognizes costs for restructuringwhich involving the payment of termination benefits (whichever is earlier). The remunerationincurred by the termination benefits will be recognized as liabilities that will be included in thecurrent profit or loss.
(4) Accounting treatment of other long-term employees’ benefits"□ Applicable" "√ Not applicable"
32. Lease liabilities
"□ Applicable" "√ Not applicable"
33. Estimated liabilities
"√ Applicable" "□ Not applicable"
(1) Recognition criteria for estimated liabilities
The Company shall recognize the obligations related to contingencies involving litigation,guarantee provided to debt, loss-making contract, restructuring as estimated liabilities, when allof the following conditions are satisfied:
① the obligation is a present obligation of the group;
② it is probable that an outflow of economic benefits will be required to settle the obligation;
③ the amount of the obligation can be measured reliably.
(2) Method of measuring the various estimated liabilities
Estimated liabilities shall be initially measured at the best estimate of the expenses required tosettle the 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 ofmoney is material, the best estimate shall be determined by discounting the related future cashoutflow.The best estimate will be dealt with separately in the following circumstances:
The expenses required have a successive range (or band), in which the possibilities ofoccurrence of each result are the same, and the best estimate should be determined as themiddle value for the range, i.e. the average of the upper and lower limit.The expenses required does not have a successive range (or band), or although there is asuccessive range (or band), the possibilities of occurrence of each result are not the same, andif the contingency is related to individual item, the best estimate should be determined as themost likely amount; if the contingency is related to several items, the best estimate should becalculated and determined according to the possible results and the relevant 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 isvirtually certain that the reimbursement will be received. The amount recognized for thereimbursement is limited to the carrying amount of the liability recognized.
34. Share-based payments
"√ Applicable" "□ Not applicable"Share-based payments are transactions that grant equity instruments or assume equity-instrument based liabilities for receiving services rendered by employees or other parties. TheCompany’s share-based payments included equity-settled share-based payments and cash-settled share-based payments.Equity-settled share-based paymentsEquity-settled share-based payments made in exchange for services rendered by employeesare measured at the fair value of equity instruments granted to employees. If the Companymakes the share-based payments by restricted shares, employees will subscribe shares, but theshares shall not be listed on the market or transferred before it fulfills the unlocking condition tobe unlocked. If the unlocking conditions stipulated in the equity incentive scheme cannot befulfilled eventually, the Company will repurchase those shares based on the predetermined price.Upon obtaining the payment for subscribing restricted shares made by the employees, theCompany will recognize the share capital and capital reserve (share capital premium) accordingto the payment it receives, while fully recognizing a liability for its repurchasing obligation as wellas its treasury shares. On each balance sheet date within the vesting period, the Company willmake the best estimation of the number of vested equity instruments based on the subsequentinformation such as [the updated changes in the number of executives] and [the achievement ofperformance standard]. Based on the above results, the services received in the current periodwill be included in the relevant cost or expense based on the fair value on the date of grant, andthe capital reserve will be increased accordingly. The recognized cost or expense and owners’interest will not be adjusted after the vesting date. However, equity instruments vestedimmediately after the date of grant will be included in the relevant cost or expense based on itsfair value on the date of grant, and the capital reserve will be increased accordingly.
For the share-based payments that are not vested eventually, no cost or expense will berecognized, unless the vesting condition is market condition or non-exercisable condition. Undersuch circumstances, no matter whether the market condition or non-exercisable condition canbe fulfilled, the share-based payments will be deemed as vested as long as all the non-marketconditions in the vesting condition are fulfilled.If the terms of the equity-settled share-based payments are amended, the Company shallrecognize the services received at least based on the situation before the amendment is made.In addition, any amendment resulting in the increase of the fair value of the equity instrumentgranted or changes that are beneficial to employees on the amendment date, will be recognizedas an increase in the service received.If the equity-settled share-based payments are canceled, they will be accounted for asaccelerated exercise on the date of cancellation, and the unrecognized amount will berecognized immediately. If employees and other parties are able to satisfy the non-vestingconditions, but the conditions are not fulfilled during the vesting period, the equity settled share-based payments will be deemed as canceled. However, if new equity instruments are vestedand they are verified at the vesting date of new equity instrument as alternatives vested tocanceled equity instruments, the treatment on the new equity instrument is in conformity with themodified treatment on disposal of equity instrument.
35. Preference shares, perpetual bonds and other financial instruments"□ Applicable" "√ Not applicable"
36. Revenue
"√ Applicable" "□ Not applicable"
(1) General principle of recognition of revenue from sales of goods
① All the significant risks and rewards of ownership of the goods have been transferred to thebuyer;
② The Company does not retain either continuing managerial involvement to the degree usuallyassociated with ownership or effective control over the goods sold;
③ The amount of revenue can be reliably measured;
④ It is probable that relevant economic benefits will flow to the Company;
⑤ The relevant amount of costs incurred or to be incurred can be measured reliably.
(2) Specific principles
① Timing of revenue recognition for regional sales and overseas sale (export agent): Shanghai:
sales revenue is recognized after goods are delivered; regions other than Shanghai: salesrevenue is recognized after goods are delivered and delivery documents are confirmed withsignature from the logistic companies;
② Timing of revenue recognition for KA sales: sales revenue is recognized after goods aredelivered and delivery documents are confirmed with signature from the logistic companies;
③ Timing of revenue recognition for self-managing and export business: revenue is recognizedwhen the goods pass the ship’s rail in the port of shipment under the term of FOB;
④ Timing of revenue recognition for direct sales of office supplies: sales revenue is recognizedafter goods are delivered and confirmed by customers;
⑤ Timing of revenue recognition for direct sales large flagship store: sales revenue isrecognized after goods are delivered and confirmed by customers.
37. Government grant
"√ Applicable" "□ Not applicable"
(1) Types
Government grants are transfer of monetary assets or non-monetary assets from thegovernment to the Company at no consideration, and are classified into government grantsrelated to assets and government grants related to income.Government grant related to assets refers to government grant obtained by the Company thatare used to purchase or construct or otherwise form long-term assets. Government grantsrelated to income refer to the government grants other than government grants related to assets.The standard for the Company to classify the government grant as assets related: If obtainedgrant is used to purchase, construct or otherwise form fixed assets, intangible assets and otherlong-term assets as expressly stipulated in government documents, then such grant is deemedas assets related.The standard for the Company to classify the government grant as income related: If thegovernment grant (excluding grant related to assets) is used to compensate relevant costs orlosses of the Company that are already incurred or to be incurred in subsequent periods, thensuch grant is deemed as income related.Where there is no express regulation on the grant object in government documents, then theCompany will classify a government grant as assets related or as income related depending onthe specific purpose that the grant is used for.
(2) Timing of recognition
Government grants are recognized when the grants are received actually or when the rights toget government grants are obtained and it is basically certain that the grants can be received.
(3) Accounting treatment
Government grants 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 thecurrent profit and loss in a reasonable and systematic way within the useful life of the relevant
assets (if it is related to the daily activities of the Company, it shall be included in other income;otherwise, it shall be included in the non-operating income);Government grants 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 areincluded in the current profit or loss in the period in which the relevant costs, expenses or lossesare recognized (if it is related to the daily activities of the Company, it shall be included in otherincome; otherwise, it shall be included in the non-operating income) or offset the relevant costsor losses; government grants related to income that are used for compensation for the relevantcosts or losses that the Company has already incurred shall be directly included in the currentprofit or loss (if it is related to the daily activities of the Company, it shall be included in otherincome; otherwise, it shall be included in the non-operating income) or offset the relevant costsor 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 actualborrowing amount received is recognized as the entry value of the borrowing and the relevantborrowing expenses are measured in accordance with the principal amount of the borrowing andpolicy-based preferential interest rate.
② When the government directly distributes the interest-grant funds to the Company, thecorresponding discount will offset the relevant borrowing costs.
38. Deferred income tax assets and liabilities
"√ Applicable" "□ Not applicable"Deferred tax assets are recognized to the extent that it is probable that future taxable profits willbe available against which deductible temporary differences can be offset. For deductible lossesand tax credits that can be reversed in the future period, deferred tax assets shall be recognizedto the extent that it is probable that taxable profit will be available in the future to offset thedeductible losses and tax credits.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 initialrecognition of the goodwill; other transactions or matters other than enterprise merger in whichneither profit nor taxable income (or deductible loss) will be affected when transactions occur.When the Group has a legal right to settle on a net basis and intends either to settle on a netbasis or to realize the assets and settle the liabilities simultaneously, current tax assets andcurrent tax liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, anddeferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxationauthority on either the same taxable entity or different taxable entities which intend either to settlecurrent tax assets and liabilities on a net basis or to realize the assets and liabilitiessimultaneously, in each future period in which significant amounts of deferred tax assets orliabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offsetand presented on a net basis.
39. Lease
(1) Accounting treatment method of operating lease
"√ Applicable" "□ Not applicable"
① The Company's rental expenses paid for leased assets shall be amortized at straight-linemethod over the whole lease period (including rent-free period) and will be included in the currentexpenses. Initial direct expenses related to lease transactions paid by the Company shall beincluded in current expenses.When the lessor of assets bears expenses related to the lease which shall be borne by theCompany, the Company shall deduct the part of expenses from the total rents and amortize therents after deduction over the lease term and include them in current expenses.
② The Company's rental expenses collected for leased assets shall be amortized at straight-line method over the whole lease period (including rent-free period) and recognized as therelevant rental income. Initial direct costs related to lease transactions and paid by the Companyare included in current expenses; in case of a large amount, such costs shall be capitalized andthen included in the current revenue by stages at the same base as the recognition of rentalincome over the whole lease term.When the Company bears expenses related to the lease which shall be borne by the lessee, theCompany shall deduct the part of expenses from the total rental income and amortize the rentsafter deduction over the lease term.
(2) Accounting treatment method of financing lease
"√ Applicable" "□ Not applicable"
① Assets acquired under financing leases: At the commencement of the lease term, assetsacquired under financing leases shall be recorded at the lower of their fair values and the presentvalues of the minimum lease payments, and the Company shall recognize the long-termpayables at amounts equal to the minimum lease payments，and shall record the differencesbetween book value of the leased assets and the long-term payables as unrecognized financingexpenses. The Company adopts the effective interest rate method for unrecognized financing
expenses, which shall be amortized over the lease terms and included in financial expenses.Initial direct expenses incurred to the Company shall be included in the value of the leased assets.
② Assets leased out under financing leases: On the lease beginning date, the Companyrecognizes the difference between the sum of financing lease receivable and the unguaranteedresidual value, and the present value thereof as unrealized financing income, and recognizesthem as rental income over the periods when the rents are received in the future. Initial directexpenses related to the rental transactions incurred to the Company shall be included in theinitial measurement of the financing lease receivables and the amount of income recognized inthe lease term will be reduced.
(3) Determination method and accounting treatment method of lease under new lease
standards"□ Applicable" "√ Not applicable"
40. Other significant accounting policies and accounting estimates"√ 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 theCompany as held 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.
41. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
"√ Applicable" "□ Not applicable"
| Contents and reasons of changes in accounting policies | Review and approval procedure | Remarks (name and amount of report items affected materially) |
| The Notice of the Ministry of Finance on Revising and Issuing the Format of Financial Statements of General Enterprises for 2019 and the Notice on Revising and Issuing the | The 18th meeting of the fourth Board meeting | See other descriptions l |
| Format of Consolidated Financial Statements (2019 Version) were implemented | ||
| The Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, the Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets, the Accounting Standards for Business Enterprises No. 24 - Hedging Accounting and the Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments (revised in 2017) were implemented | The 18th meeting of the fourth Board meeting | See other descriptions 2 |
Other explanation
1. The Ministry of Finance released the Notice of the Ministry of Finance on Revising and Issuingthe Format of Financial Statements of General Enterprises for 2019 (Cai Kuai (2019) No.6) andthe Notice on Revising and Issuing the Format of Consolidated Financial Statements (2019Version) ((Cai Kuai (2019) No.16)) on 30 April 2019 and 19 September 2019 respectively,revising the format of financial statements of general enterprises. The main impact of theCompany's implementation of the above regulations is shown as follows:
| Contents and reasons of changes in accounting policies | Review and approval procedure | Item and amount in statement influenced | |
| Consolidation | Parent company | ||
| (1) The “bills receivable and accounts receivable” in the balance sheet is divided into “bills receivable” and “accounts receivable”; | The “bills receivable and accounts receivable” is divided into “bills receivable” and “accounts receivable”. Balance of “bills receivable” at the end of | The “bills receivable and accounts receivable” is divided into “bills receivable” and “accounts receivable”. Balance of “bills receivable” at the | |
| the “bills payable and accounts payable” is divided into “bills payable” and “accounts payable”; the comparison data is adjusted accordingly. | The “bills payable and accounts payable” is divided into “bills payable” and “accounts payable”. Balance of “bills payable” at the end of last year is RMB0.00, and balance of “accounts payable” at the end of last year is RMB1,319,407,048.21. | The “bills payable and accounts payable” is divided into “bills payable” and “accounts payable”. Balance of “bills payable” at the end of last year is RMB0.00, and balance of “accounts payable” at the end of last year is RMB240,475,062.99. | |
| (2) The item of “Including: derecognition of income from financial assets at amortized cost” is added to the item of investment income in the income statement. The comparison data is not adjusted. | The 18th meeting of the fourth Board meeting | The amount of “derecognition of income from financial assets at amortized cost” in the current period is RMB0.00. | The amount of “derecognition of income from financial assets at amortized cost” in the current period is RMB0.00. |
2. In 2017 the Ministry of Finance revised the Accounting Standards for Business EnterprisesNo. 22 - Recognition and Measurement of Financial Instruments, the Accounting Standards forBusiness Enterprises No. 23 - Transfer of Financial Assets, the Accounting Standards forBusiness Enterprises No. 24 - Hedging Accounting and the Accounting Standards for BusinessEnterprises No. 37 - Presentation of Financial Instruments. It is stipulated in the revisedstandards that for financial instruments that have not been derecognized on the date of firstimplementation, if the previous recognition and measurement are inconsistent with the revisedstandards, they shall be retrospectively adjusted. If the comparative figures in financial
statements for the prior period are inconsistent with the revised standards, no adjustment isrequired. The Company adjusted the retained earnings and other comprehensive income at thebeginning of the year due to the cumulative impact of retrospective adjustment. Based on theadjusted balance at the end of last year according to Cai Kuai (2019) No. 6 and Cai Kuai (2019)No. 16, the main impacts of implementing the above new financial instrument standards are asfollows:
| Contents and reasons of changes in accounting policies | Review and approval procedure | Item and amount in statement influenced | |
| Consolidation | Parent company | ||
| (1) Non-tradable available-for-sale equity instrument investments are designated as “financial assets measured at fair value through other comprehensive income”. | The 18th meeting of the fourth Board meeting | Other equity instrument investments: increased by RMB3,600,000.000 | Other equity instrument investments: increased by RMB3,600,000.00 |
| (2) Provision of expected credit loss was made for “financial assets at amortized cost” and “financial assets measured at fair value through other comprehensive income (debt instrument)”. | The 18th meeting of the fourth Board meeting | Bills receivable: decreased by RMB0.00 Accounts receivable: decreased by RMB0.00 Other receivables: decreased by RMB0.00 Debt investment: decreased by RMB0.00 Other comprehensive income: increased by RMB0.00 Deferred income tax assets: increased by RMB0.00 | Bills receivable: decreased by RMB0.00 Accounts receivable: decreased by RMB0.00 Other receivables: decreased by RMB0.00 Debt investment: decreased by RMB0.00 Other comprehensive income: increased by RMB0.00 |
| Deferred income tax assets: increased by RMB0.00 | |||
| (3) Bank financial product is reclassified into financial assets held for trading and measured at fair value | The 18th meeting of the fourth Board meeting | Other current assets: decreased by RMB1,020,000,000.00 Deferred income tax liabilities: increased by RMB1,183,345.00 Financial assets held for trading: increased by RMB1,027,265,300.00 | Retained earnings: increased by RMB5,380,330.00 Other current assets: decreased by RMB820,000,000.00 Deferred income tax liabilities: increased by RMB949,470.00 Financial assets held for trading: increased by RMB826,329,800.00 |
(2) Changes in significant accounting estimates
"□ Applicable" "√ Not applicable"
(3) Particulars on adjustment to relevant items of the financial statements for the yeardue to implementation of new standards for financial instruments, new standards forrevenues or new standards for lease from 2019"√ Applicable" "□ Not applicable"
Combined Balance Sheet
Unit: Yuan Currency: RMB
| Item | 31 December 2018 | 1 January 2019 | Adjustment amount |
| Current assets: | |||
| Cash and equivalents | 1,046,668,874.97 | 1,046,668,874.97 | |
| Transaction settlement funds | |||
| Lending funds | |||
| Held-for-trading financial assets | Not applicable | 1,027,265,300.00 | 1,027,265,300.00 |
| Financial assets at fair value through current profit or loss | Not applicable | ||
| Derivative financial assets | |||
| Bills receivable | 1,894,232.00 | -1,894,232.00 | |
| Accounts receivable | 808,772,112.91 | 808,772,112.91 | |
| Receivables financing | Not applicable | 1,894,232.00 | 1,894,232.00 |
| Prepayment | 42,336,973.71 | 42,336,973.71 | |
| Premium receivable | |||
| Reinsurance premium receivable | |||
| Reserves for reinsurance contract receivable | |||
| Other receivables | 110,280,059.38 | 110,280,059.38 | |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Financial assets purchased under agreements to resell | |||
| Inventories | 1,042,701,610.00 | 1,042,701,610.00 | |
| Held for sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | 1,046,977,400.35 | 26,977,400.35 | -1,020,000,000.00 |
| Total current assets | 4,099,631,263.32 | 4,106,896,563.32 | 7,265,300.00 |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Debt investment | Not applicable | ||
| Available-for-sale financial assets | 3,600,000.00 | Not applicable | -3,600,000.00 |
| Other debt investment | Not applicable | ||
| Held-to-maturity investment | Not applicable | ||
| Long-term receivables | |||
| Long-term equity investments | 30,175,665.26 | 30,175,665.26 | |
| Investments in other equity instruments | Not applicable | 3,600,000.00 | 3,600,000.00 |
| Other non-current financial assets | Not applicable | ||
| Investment real estate | |||
| Fixed assets | 876,617,888.99 | 876,617,888.99 | |
| Construction in progress | 24,506,469.59 | 24,506,469.59 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 187,987,875.67 | 187,987,875.67 | |
| Development expenses | |||
| Goodwill | 131,001.23 | 131,001.23 | |
| Long-term prepaid expenses | 118,024,364.67 | 118,024,364.67 | |
| Deferred income tax assets | 25,525,520.98 | 25,525,520.98 | |
| Other non-current assets | 311,300,000.00 | 311,300,000.00 | |
| Total non-current assets | 1,577,868,786.39 | 1,577,868,786.39 | |
| Total assets | 5,677,500,049.71 | 5,684,765,349.71 | 7,265,300.00 |
| Current liabilities: | |||
| Short-term borrowings | |||
| Borrowings from central bank | |||
| Placements from banks and other financial institutions | |||
| Held-for-trading financial liabilities | Not applicable | ||
| Financial liabilities at fair value through current profit or loss | Not applicable | ||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 1,319,407,048.21 | 1,319,407,048.21 | |
| Accounts received in advance | 147,647,053.87 | 147,647,053.87 | |
| Financial assets sold under repurchase agreements | |||
| Deposits from customers and other banks | |||
| Brokerage for trading securities | |||
| Brokerage for underwriting securities | |||
| Employee benefits payable | 120,786,076.52 | 120,786,076.52 | |
| Taxes payable | 279,377,546.18 | 279,377,546.18 | |
| Other payables | 240,665,881.17 | 240,665,881.17 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Fees and commissions payable | |||
| Reinsured accounts payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | |||
| Total current liabilities | 2,107,883,605.95 | 2,107,883,605.95 | |
| Non-current liabilities: | |||
| Reserves for insurance contracts | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payable | 5,109,800.00 | 5,109,800.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | 67,277,109.51 | 67,277,109.51 | |
| Deferred income tax liabilities | 564,909.50 | 1,748,254.50 | 1,183,345.00 | ||
| Other non-current liabilities | |||||
| Total non-current liabilities | 72,951,819.01 | 74,135,164.01 | 1,183,345.00 | ||
| Total liabilities | 2,180,835,424.96 | 2,182,018,769.96 | 1,183,345.00 | ||
| Owner’s equity (or shareholders’ equity): | |||||
| Share capital | 920,000,000.00 | 920,000,000.00 | |||
| Other equity instruments | |||||
| Including: Preference shares | |||||
| Perpetual bonds | |||||
| Capital reserve | 272,347,764.53 | 272,347,764.53 | |||
| Less: Treasury shares | |||||
| Other comprehensive income | |||||
| Special reserve | |||||
| Surplus reserve | 343,733,386.35 | 344,271,419.35 | 538,033.00 | ||
| General risk provision | |||||
| Undistributed profit | 1,874,727,294.53 | 1,880,271,216.53 | 5,543,922.00 | ||
| Total equity attributable to the owners of the parent company | 3,410,808,445.41 | 3,416,890,400.41 | 6,081,955.00 | ||
| Minority equity | 85,856,179.34 | 85,856,179.34 | |||
| Total owners’ equity (or shareholders’ equity) | 3,496,664,624.75 | 3,502,746,579.75 | 6,081,955.00 | ||
| Total liabilities and owner's equity (or shareholders’ equity) | 5,677,500,049.71 | 5,684,765,349.71 | 7,265,300.00 | ||
Description on adjustment to relevant items:
"√ Applicable" "□ Not applicable"See Note V (41). (4) Description on retrospective adjustment to previous comparative data dueto implementation of new standards for financial instruments and new standards for leases fordetails.
Parent Company’s Balance Sheet
Unit: Yuan Currency: RMB
| Item | 31 December 2018 | 1 January 2019 | Adjustment amount | |||
| Current assets: | ||||||
| Cash and equivalents | 552,507,774.24 | 552,507,774.24 | ||||
| Held-for-trading financial assets | Not applicable | 826,329,800.00 | 826,329,800.00 | |||
| Financial assets at fair value through current profit or loss | Not applicable | |||||
| Derivative financial assets | ||||||
| Bills receivable | ||||||
| Accounts receivable | 93,324,765.86 | 93,324,765.86 | ||||
| Receivables financing | Not applicable | |||||
| Prepayment | 9,002,289.37 | 9,002,289.37 | ||||
| Other receivables | 227,644,350.97 | 227,644,350.97 | ||||
| Including: Interest receivable | ||||||
| Dividend receivable | ||||||
| Inventories | 433,945,665.76 | 433,945,665.76 | ||||
| Held for sale assets | ||||||
| Non-current assets due within one year | ||||||
| Other current assets | 820,679,150.20 | 679,150.20 | -820,000,000.00 | |||
| Total current assets | 2,137,103,996.40 | 2,143,433,796.40 | 6,329,800.00 | |||
| Non-current assets: | ||||||
| Debt investment | Not applicable | |||||
| Available-for-sale financial assets | 3,600,000.00 | Not applicable | -3,600,000.00 | |||
| Other debt investment | Not applicable | |||||
| Held-to-maturity investment | Not applicable | |||||
| Long-term receivables | ||||||
| Long-term equity investments | 878,722,964.35 | 878,722,964.35 | ||||
| Investments in other equity instruments | Not applicable | 3,600,000.00 | 3,600,000.00 | |||
| Other non-current financial assets | Not applicable | |||||
| Investment real estate | ||||||
| Fixed assets | 792,636,398.34 | 792,636,398.34 | ||||
| Construction in progress | 23,686,726.44 | 23,686,726.44 | |||
| Productive biological assets | |||||
| Oil and gas assets | |||||
| Right-of-use assets | |||||
| Intangible assets | 184,634,388.95 | 184,634,388.95 | |||
| Development expenses | |||||
| Goodwill | |||||
| Long-term prepaid expenses | 15,345,487.19 | 15,345,487.19 | |||
| Deferred income tax assets | 5,277,303.99 | 5,277,303.99 | |||
| Other non-current assets | 311,300,000.00 | 311,300,000.00 | |||
| Total non-current assets | 2,215,203,269.26 | 2,215,203,269.26 | |||
| Total assets | 4,352,307,265.66 | 4,358,637,065.66 | 6,329,800.00 | ||
| Current liabilities: | |||||
| Short-term borrowings | |||||
| Held-for-trading financial liabilities | Not applicable | ||||
| Financial liabilities at fair value through current profit or loss | Not applicable | ||||
| Derivative financial liabilities | |||||
| Bills payable | |||||
| Accounts payable | 240,475,062.99 | 240,475,062.99 | |||
| Accounts received in advance | 80,736,039.60 | 80,736,039.60 | |||
| Employee benefits payable | 76,794,379.93 | 76,794,379.93 | |||
| Taxes payable | 187,418,365.45 | 187,418,365.45 | |||
| Other payables | 29,240,729.97 | 29,240,729.97 | |||
| Including: Interest payable | |||||
| Dividend payable | |||||
| Held-for-sale liabilities | |||||
| Non-current liabilities due within one year | 140,000,000.00 | 140,000,000.00 | |||
| Other current liabilities | |||||
| Total current liabilities | 754,664,577.94 | 754,664,577.94 | |||
| 非流动负债： | |||||
| Long-term borrowings | |||||
| Bonds payable | |||||
| Including: Preference shares | |||||
| Perpetual bonds | |||||
| Lease liabilities | |||||
| Long-term payable | 187,109,800.00 | 187,109,800.00 | |||
| Long-term employee benefits payable | |||||
| Estimated liabilities | |||||
| Deferred income | 29,979,024.38 | 29,979,024.38 | |||
| Deferred income tax liabilities | 949,470.00 | 949,470.00 | |||
| Other non-current liabilities | |||||
| Total non-current liabilities | 217,088,824.38 | 218,038,294.38 | 949,470.00 | ||
| Total liabilities | 971,753,402.32 | 972,702,872.32 | 949,470.00 | ||
| Owner’s equity (or shareholders’ equity): | |||||
| Share capital | 920,000,000.00 | 920,000,000.00 | |||
| Other equity instruments | |||||
| Including: Preference shares | |||||
| Perpetual bonds | |||||
| Capital reserve | 274,008,599.09 | 274,008,599.09 | |||
| Less: Treasury shares | |||||
| Other comprehensive income | |||||
| Special reserve | |||||
| Surplus reserve | 343,404,526.44 | 343,942,559.44 | 538,033.00 | ||
| Undistributed profit | 1,843,140,737.81 | 1,847,983,034.81 | 4,842,297.00 | ||
| Total owners’ equity (or shareholders’ equity) | 3,380,553,863.34 | 3,385,934,193.34 | 5,380,330.00 | ||
| Total liabilities and owner's equity (or shareholders’ equity) | 4,352,307,265.66 | 4,358,637,065.66 | 6,329,800.00 | ||
Description on adjustment to relevant items:
"√ Applicable" "□ Not applicable"See Note V (41). (4) Description on retrospective adjustment to previous comparative data dueto implementation of new standards for financial instruments and new standards for leases fordetails.
(4) Description on retrospective adjustment to previous comparative data due to
implementation of new standards for financial instruments and new standards forleases from 2019"√ Applicable" "□ Not applicable"Based on the balance at the end of the previous year adjusted according to Cai Kuai (2019) No.6and Cai Kuai (2019) No.16, various financial assets and financial liabilities were classified inaccordance with the provisions of the standards for recognition and measurement of financialinstruments before and after the revision and the measurement results were compared asfollows:
Consolidation
| Old standards for financial instruments | New standards for financial instruments | ||||
| Presentation item | Measurement category | Carrying value | Presentation item | Measurement category | Carrying value |
| Cash and equivalents | Amortized cost | 1,046,668,874.97 | Cash and equivalents | Amortized cost | 1,046,668,874.97 |
| Financial assets at fair value through current profit or loss | at fair value through profit or loss | Held-for-trading financial assets | at fair value through profit or loss | ||
| Derivative financial assets | at fair value through profit or loss | Derivative financial assets | at fair value through profit or loss | ||
| Bills receivable | Amortized cost | 1,894,232.00 | Bills receivable | Amortized cost | |
| Receivables financing | at fair value through other comprehensive income | 1,894,232.00 | |||
| Accounts receivable | Amortized cost | 808,772,112.91 | Accounts receivable | Amortized cost | 808,772,112.91 |
| Receivables financing | at fair value through other comprehensive income | ||||
| Other receivables | Amortized cost | 110,280,059.38 | Other receivables | Amortized cost | 110,280,059.38 |
| (Including other current assets) | Amortized cost | (Including other current assets) | Amortized cost | ||
| (Including other current assets) | at fair value through other comprehensive income (debt instruments) | (Including other current assets) | Amortized cost | ||
| (Including other current assets) | at fair value through other comprehensive income | ||||
| at fair value through other comprehensive income (equity instruments) | Held-for-trading financial assets | at fair value through profit or loss | |||
| Other non-current financial assets | |||||
| Investments in other equity instruments | at fair value through other comprehensive income | ||||
| at cost (equity instruments) | 3,600,000.00 | Held-for-trading financial assets | at fair value through profit or loss | ||
| Other non-current financial assets | |||||
| Investments in other equity instruments | at fair value through other comprehensive income | 3,600,000.00 | |||
| Other current assets | Amortized cost | 1,020,000,000.00 | Held-for-trading financial assets | at fair value through profit or loss | 1,027,265,300.00 |
| Long-term receivables | Amortized cost | Long-term receivables | Amortized cost | ||
| Financial liabilities at fair value through current profit or loss | at fair value through profit or loss | Held-for-trading financial liabilities | at fair value through profit or loss | ||
| Derivative financial liabilities | at fair value through profit or loss | Derivative financial liabilities | at fair value through profit or loss |
Parent company
| Old standards for financial instruments | New standards for financial instruments | ||||
| Presentation item | Measurement | Carrying value | Presentation | Measurement | Carrying value |
| category | item | category | |||
| Cash and equivalents | Amortized cost | 552,507,774.24 | Cash and equivalents | Amortized cost | 552,507,774.24 |
| Financial assets at fair value through current profit or loss | at fair value through profit or loss | Held-for-trading financial assets | at fair value through profit or loss | ||
| Derivative financial assets | at fair value through profit or loss | Derivative financial assets | at fair value through profit or loss | ||
| Bills receivable | Amortized cost | Bills receivable | Amortized cost | ||
| Receivables financing | at fair value through other comprehensive income | ||||
| Accounts receivable | Amortized cost | 93,324,765.86 | Accounts receivable | Amortized cost | 93,324,765.86 |
| Receivables financing | at fair value through other comprehensive income | ||||
| Other receivables | Amortized cost | 227,644,350.97 | Other receivables | Amortized cost | 227,644,350.97 |
| (Including other current assets) | Amortized cost | (Including other current assets) | Amortized cost | ||
| (Including other current assets) | at fair value through other comprehensive income (debt instruments) | (Including other current assets) | Amortized cost | ||
| (Including other current assets) | at fair value through other comprehensive income | ||||
| at fair value through other | Held-for-trading financial assets | at fair value through profit or |
| comprehensive income (equity instruments) | Other non-current financial assets | loss | |||
| Investments in other equity instruments | at fair value through other comprehensive income | ||||
| at cost (equity instruments) | 3,600,000.00 | Held-for-trading financial assets | at fair value through profit or loss | ||
| Other non-current financial assets | |||||
| Investments in other equity instruments | at fair value through other comprehensive income | 3,600,000.00 | |||
| Other current assets | Amortized cost | 820,000,000.00 | Held-for-trading financial assets | at fair value through profit or loss | 826,329,800.00 |
| Long-term receivables | Amortized cost | Long-term receivables | Amortized cost | ||
| Financial liabilities at fair value through current profit or loss | at fair value through profit or loss | Held-for-trading financial liabilities | at fair value through profit or loss | ||
| Derivative financial liabilities | at fair value through profit or loss | Derivative financial liabilities | at fair value through profit or loss |
42. 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 assetor liability or an unrecognized firm commitment (except for foreign exchange risk).
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
expected transaction that is likely to occur, or the foreign exchange risk included in anunrecognized firm commitment.
② Hedge of net investment in an overseas operation is a hedge of the foreign exchangeexposure arising from net investment in an overseas operation. Net investment in an overseasoperation refers to an enterprise's equity proportion in the net assets in an overseas operation.
(2) Designation of hedging relationship and confirmation of hedging effectivenessApplicable accounting policies from 1 January 2019At 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 thecontents and number of the hedging instruments, the nature and number of the hedged items,the nature of the hedged risk, the type of hedge and the evaluation of the Company on theeffectiveness of the hedging instruments. Hedging effectiveness refers to the extent that thechanges in the fair value or cash flow of a hedging instrument may offset the changes resultedfrom the hedging risks in the fair value or cash flow of 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 theaccounting period when the hedging relationship is specified. If the hedging fails to meet therequirements, the use of 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 therelative weight of the hedged item and the hedging instrument, thereby generating accountingresults that are inconsistent with the hedge accounting objectives. If the hedging ratio is no longerappropriate, but the hedging risk management objectives have not changed, the number ofhedged items or hedging instruments shall be adjusted so that the hedging ratio meets therequirements on effectiveness again.
Applicable accounting policies before 1 January 2019At 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 state the nature ofthe hedging instruments, the hedged items or transactions, and the hedged risk, and the methodof the Company for the evaluation on the effectiveness of the hedging instruments.
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 orcash flow of a hedged item. The Company shall continuously evaluate the hedging effectivenessto judge whether the hedging is highly effective within the accounting period when the hedgingrelationship is specified. If a hedging satisfies the following conditions simultaneously, theCompany shall recognize it as being highly efficient:
① At the commencement and in subsequent periods of a hedging, the hedging is expected tobe highly effective in offsetting the changes in the fair value or cash flows caused by the hedgedrisk during the period in which the hedging is specified; and
② The actual offset result of the hedging is within a range of 80% to 125%.
(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.Changes in the fair value of a hedged item due to hedging risk are included in the current profitand loss, while adjusting the book value of the hedged item.For fair value hedges related to financial instruments measured at amortized cost, adjustmentsto the carrying value of the hedged item are amortized in the remaining period between theadjustment date and the maturity date and are included in the current profit and loss.Amortization carried out in accordance with the effective interest rate method can beginimmediately after the adjustment of the carrying value, and shall not be later than the adjustmentmade due to the changes in the fair values caused by the hedging risk after the hedged item isterminated.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 valueof the firm commitment caused due to the hedged risk is recognized as an asset or liability, andthe related gains or losses are included in the current profit and loss. Changes in the fair valueof hedging instruments 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 tothe ineffective 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 inother comprehensive income will be transferred to the current profit and loss. If the hedged itemis the cost of a non-financial asset or liability, the amount originally recognized in othercomprehensive income is transferred out and included in the initial recognition amount of the
non-financial asset or liability (or the amount originally recognized in other comprehensiveincome is transferred out in the same period in which the non-financial asset or liability affectsthe profit and loss, and included in the current profit and loss).If the expected transaction or firm commitment is not expected to occur, the cumulative gains orlosses of hedging instruments previously included in shareholders’ equity are transferred out andincluded in the current profit and loss. If the hedging instrument expires, is sold, terminated orexercised (but has not been replaced or extended), or the designation of the hedging relationshipis revoked, the amount previously included in other comprehensive income will not be transferredout until the 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 ofnet investment, is handled similarly to cash flow hedge. The portion of the gains or losses fromhedging instruments, which is recognized as effective hedge, shall be recorded in othercomprehensive income, and the portion which is recognized as ineffective hedge shall beincluded in the current profit and loss. When disposing of overseas operations, any accumulatedgains or losses included in shareholders’ equity are transferred out and included in the currentprofit and loss.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. | 16%, 13% (Note), 10%, 9%, 6%, 5% |
| Urban maintenance and construction tax | Calculated and paid according to the actually-paid VAT and consumption tax | 7%、1% |
| Enterprise income tax | Calculated and paid according to the taxable income | 15%、20%、25% |
Note: According to the Notice on Adjusting the VAT Rate of the Ministry of Finance and the StateAdministration of Taxation (Cai Shui [2019] No. 39), the original 16% and 10% VAT rates arerespectively adjusted to 13% and 9% for taxable sale behaviors and imported goods of thetaxpayers from 1 April 2019. The income from sales of products of the Company and itssubsidiaries is subject to VAT at the rate of 16% from January to March 2019 and at the rate of13% from 1 April 2019.
If there are taxpayers with different enterprise income tax rates, the disclosure will be made fordescription"√ Applicable" "□ Not applicable"
| Name of taxpayer | Income tax rate (%) |
| 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) | 25 |
| 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 |
| M&G Life Enterprise Management (Shanghai) Co., Ltd.(晨光生活馆企业管理(上海)有限公司) | 25 |
| Shanghai M&G Jiamei Stationery Co., Ltd.(上海晨光佳美文具有限公司) | 25 |
| Jiangsu M&G Life Enterprise Management Co., Ltd.(江苏晨光生活馆企业管理有限公司) | 25 |
| 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) | 25 |
| 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 Supplies Co., Ltd. | 25 |
| Office Depot Network Technology Co., Ltd. | 25 |
| Luoyang M&G Stationery Sales Co., Ltd.(洛阳晨光文具销售有限公司) | 20 |
| Hangzhou Sanmei M&G Stationery Co., Ltd.(杭州三美晨光文具有限公司) | 25 |
| 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 |
| International stationery company | 20 |
2. Tax preference
"√ Applicable" "□ Not applicable"On 28 October 2019, the Company obtained High- and New-tech Enterprise Certificate(certificate number GR201931001046, valid for 3 years) issued jointly by Shanghai MunicipalScience and Technology Commission, Shanghai Finance Bureau and Shanghai Municipal TaxService, State Taxation Administration.
On 2 November 2018, the subsidiary Axus Stationery (Shanghai) Company Ltd. (“AxusStationery”) obtained High- and New-tech Enterprise Certificate (certificate numberGR201831003575, valid for 3 years) issued jointly by Shanghai Municipal Science andTechnology Commission, Shanghai Finance Bureau and Shanghai Municipal Tax Service, StateTaxation Administration.
The Company and the subsidiary Axus Stationery paid the enterprise income tax at the rate of15% this year.
The subsidiaries Luoyang M&G Stationery Sales Co., Ltd. and Lianyungang Colipu OfficeSupplies Co., Ltd. paid the enterprise income tax according to the Enterprise Income Tax Lawof the People's Republic of China and the Notice of the Ministry of Finance and the StateAdministration of Taxation on the Implementation of Inclusive Tax Relief Policy for Small andMicro Enterprises (Cai Shui [2019] No. 13), namely, starting from 1 January 2019 to 31December 2021, for SMEs with annual taxable income not exceeding RMB 1 million, theenterprise income tax at 20% shall apply based on 25% of the taxable income; for SMEs withannual taxable income between RMB 1 million and RMB 3 million, the enterprise income tax at20% shall apply based on 50% of the taxable income.
3. Others
"□ Applicable" "√ Not applicable"
VII. Notes to the Items in Consolidated Financial Statements
1. Cash and equivalents
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 503,222.44 | 816,463.47 |
| Cash at bank | 1,922,791,232.44 | 736,640,850.12 |
| Other cash and equivalents | 12,306,239.47 | 309,211,561.38 |
| Total | 1,935,600,694.35 | 1,046,668,874.97 |
| Including: Total cash deposited outside China | 3,541,107.84 |
Other explanationDetails of the Cash and equivalents that are restricted for use due to mortgage, pledge orfreeze and which are deposited overseas and of which the remittance is restricted were asfollows:
| Item | Closing balance | Balance at the end of the year |
| Letter of credit (“L/C”) deposit | 5,079,343.94 | 4,926,946.37 |
| Performance bond | 230,000.00 | 240,482.50 |
| Structured deposit | 300,000,000.00 | |
| Fund of restricted use | 2,844,914.52 | |
| Time deposits over three months | 550,000,000.00 | |
| Total | 558,154,258.46 | 305,167,428.87 |
2. Held-for-trading financial assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Financial assets at fair value through current profit or loss | 661,878,587.24 | 1,027,265,300.00 |
| Including: | ||
| Debt instrument investment | ||
| Equity instrument investment | ||
| Derivative financial assets | ||
| Others | 661,878,587.24 | 1,027,265,300.00 |
| Financial asset designated as at fair value through profit or loss | ||
| Including: | ||
| Total | 661,878,587.24 | 1,027,265,300.00 |
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). Notes receivable presented by category
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance bills | 0 | |
| Commercial acceptance bills | 0 | |
| Total | 0 |
(2). Notes receivable pledged by the Company at the end of the period"□ Applicable" "√ Not applicable"
(3). Notes receivable endorsed or discounted by the Company at the end of the period but
not due yet at the balance sheet date"□ Applicable" "√ Not applicable"
(4). Notes transferred by the Company into accounts receivable at the end of the period
due to the note issuer’s failure of performance"□ Applicable" "√ Not applicable"
(5). Disclosure by accruing method for bad debt provisions
"□ Applicable" "√ Not applicable"Bad debt provisions accrued separately:
"□ Applicable" "√ Not applicable"
Bad debt provisions accrued according to the combination:
"□ Applicable" "√ Not applicable"
If bad debt provisions are accrued according to the general model of expected credit losses,please refer to the disclosure on other receivables:
"□ Applicable" "√ Not applicable"
(6). Particulars on bad debt provisions
"□ Applicable" "√ Not applicable"
(7). Particulars on notes receivable actually written-off in the current period"□ Applicable" "√ Not applicable"
Other explanation"□ 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 |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 1,022,427,308.95 |
| 1 to 2 years | 30,982,477.00 |
| 2 to 3 years | 3,510,597.38 |
| Above 3 years | 2,117,572.04 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -32,943,231.22 |
| Total | 1,026,094,724.15 |
(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 | value | Carrying balance | Bad debt provisions | value | |||||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | Amount | Percentage (%) | Amount | Accruing percentage (%) | |||
| Bad debt provisions accrued separately | 23,438,444.19 | 2.21 | 13,612,009.12 | 58.08 | 9,826,435.07 | 2,713,628.91 | 0.33 | 2,713,628.91 | 100.00 | |
| Including: | ||||||||||
| Bad debt provisions accrued according to the combination | 1,035,599,511.18 | 97.79 | 19,331,222.10 | 1.87 | 1,016,268,289.08 | 821,997,824.94 | 99.67 | 13,225,712.03 | 1.61 | 808,772,112.91 |
| Including: | ||||||||||
| Combination 1: Account age | 1,035,599,511.18 | 97.79 | 19,331,222.10 | 1.87 | 1,016,268,289.08 | 821,997,824.94 | 99.67 | 13,225,712.03 | 1.61 | 808,772,112.91 |
| Total | 1,059,037,955.37 | / | 32,943,231.22 | / | 1,026,094,724.15 | 824,711,453.85 | / | 15,939,340.94 | / | 808,772,112.91 |
Bad debt provisions accrued separately:
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Name | Closing balance | |||
| Carrying balance | Bad debt provisions | Accruing percentage (%) | Accruing reason | |
| Xiangshan Haowenke Stationery & Sports Goods Co., Ltd. | 68,304.73 | 68,304.73 | 100.00 | Not expected to be recovered |
| Changxing Shengxing Stationery Co., Ltd. | 264,790.33 | 264,790.33 | 100.00 | Not expected to be recovered |
| Hangzhou Yunman Department Store Co., Ltd. | 227,671.00 | 227,671.00 | 100.00 | Not expected to be recovered |
| Zhejiang C&U Supermarket Co., Ltd. | 11,756.54 | 11,756.54 | 100.00 | Not expected to be recovered |
| Zebra Higo (Beijing) Commercial Chain Management Co., Ltd. | 1,539,651.03 | 1,539,651.03 | 100.00 | Not expected to be recovered |
| Kiddy Children’s Products (Shanghai) Co., Ltd. | 8,636.16 | 8,636.16 | 100.00 | Not expected to be recovered |
| Shanghai Kingwing General Aviation Co., Ltd. | 183,045.93 | 183,045.93 | 100.00 | Not expected to be recovered |
| Shanghai Eastone Automotive Technology Co., Ltd. | 17,033.08 | 17,033.08 | 100.00 | Not expected to be recovered |
| Shanghai Zhouji Restaurant Management Co., Ltd. | 22,978.71 | 22,978.71 | 100.00 | Not expected to be recovered |
| Shenzhen TFS Investment Development Co., Ltd. | 11,859.64 | 11,859.64 | 100.00 | Not expected to be recovered |
| Danone (China) Food & Beverage Co., Ltd. | 79,476.80 | 79,476.80 | 100.00 | Not expected to be recovered |
| Shanghai Chuangzhi Computer Technology Co., Ltd. | 4,082.47 | 4,082.47 | 100.00 | Not expected to be recovered |
| Shanghai Yiguo E-commerce Co., Ltd. | 210,937.67 | 210,937.67 | 100.00 | Not expected to be recovered |
| Shanghai Lantern Network Technology Co., Ltd. | 585,865.00 | 585,865.00 | 100.00 | Not expected to be recovered |
| Ping An Bank Co., Ltd. Shanghai Branch | 51,623.74 | 51,623.74 | 100.00 | Not expected to be recovered |
| Huzhou Yuanhui Real Estate Development Co., Ltd. | 83,636.84 | 83,636.84 | 100.00 | Not expected to be recovered |
| Shanghai Renjian Investment Co., Ltd. | 64,389.16 | 64,389.16 | 100.00 | Not expected to be recovered |
| HNA Import and Export Co., Ltd. | 19,652,870.14 | 9,826,435.07 | 50.00 | As the liquidity risk of the group company is high, whether it can be recovered is uncertain |
| Shanghai Donghao Oil Products Co., Ltd. | 126,732.39 | 126,732.39 | 100.00 | Not expected to be recovered |
| Ningbo Jiangdong Benyuan Stationery Co., Ltd. | 62,788.05 | 62,788.05 | 100.00 | Not expected to be recovered |
| Guangdong ONE PLUS ONE Commercial Chain Stores Co., Ltd. | 43,451.16 | 43,451.16 | 100.00 | Not expected to be recovered |
| Shenyang Yong Modern Trading Company | 36,202.46 | 36,202.46 | 100.00 | Not expected to be recovered |
| Changsha Kaifu Huida Stationery Supermarket | 21,799.03 | 21,799.03 | 100.00 | Not expected to be recovered |
| Dongguan Tangxia Yikang Stationery and Sports Goods Mall | 16,399.07 | 16,399.07 | 100.00 | Not expected to be recovered |
| Wuhan Bowen Stationery Business Department | 11,089.41 | 11,089.41 | 100.00 | Not expected to be recovered |
| Shaoxing Datong Commercial Trading Co., Ltd. | 10,838.99 | 10,838.99 | 100.00 | Not expected to be recovered |
| Beijing Guoyu Rongfeng Co., Ltd. | 9,036.16 | 9,036.16 | 100.00 | Not expected to be recovered |
| Huai'an Famous Brand Culture and Education Office Supplies Co., Ltd. | 3,261.97 | 3,261.97 | 100.00 | Not expected to be recovered |
| Shenzhen Luohu Jinhonghui Stationery Store | 3,093.39 | 3,093.39 | 100.00 | Not expected to be recovered |
| Shanghai Golden Times Commercial Trading Co., Ltd. | 2,038.64 | 2,038.64 | 100.00 | Not expected to be recovered |
| Hefei Yizheng Stationery Co., Ltd. | 1,795.12 | 1,795.12 | 100.00 | Not expected to be recovered |
| Yunnan Timely Rain Commercial Trading Co., Ltd. | 1,038.51 | 1,038.51 | 100.00 | Not expected to be recovered |
| Nanning Feida Zhishang Stationery Company | 270.87 | 270.87 | 100.00 | Not expected to be recovered |
| Total | 23,438,444.19 | 13,612,009.12 | 58.08 | / |
Description on bad debt provisions accrued separately:
"□ Applicable" "√ Not applicable"No
Bad debt provisions accrued according to the combination:
"□ Applicable" "√ Not applicable"
If bad debt provisions are accrued according to the general model of expected credit losses,please refer to the disclosure on other receivables:
"□ Applicable" "√ Not applicable"
(3). Particulars on bad debt provisions
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Category | Opening | Change of the current period | Closing balance |
| balance | Accrued | Recovered or reversed | Resold or written-off | Other changes | ||
| Accrued separately | 2,713,628.91 | 12,701,407.84 | 1,803,027.63 | 13,612,009.12 | ||
| Combination 1: Account age | 13,225,712.03 | 7,138,040.23 | 1,032,530.16 | 19,331,222.10 | ||
| Total | 15,939,340.94 | 19,839,448.07 | 1,803,027.63 | 1,032,530.16 | 32,943,231.22 |
Other descriptions:
Combination 1: The accruing of the account age change of the current period included anincrease of RMB4,861,462.60 for business combination. The actual amounts accrued separatelyand according to the combination were: RMB14,977,985.47.Significant bad debt provision amounts recovered or reversed in the current period:
"□ Applicable" "√ Not applicable"
(4). Particulars on accounts receivable actually written-off in the current period"□ Applicable" "√ Not applicable"
(5). Particulars on top 5 accounts receivable in terms of the balance at the end of the
period based on debtors"√ Applicable" "□ Not applicable"
| Company name | Closing balance | ||
| Accounts receivable | Percentage (%) of the total accounts receivable | Bad debt provisions | |
| State Grid Materials Co., Ltd. | 231,601,047.00 | 21.87 | 1,725,419.13 |
| China Southern Power Grid Materials Co., Ltd. | 77,503,551.38 | 7.32 | 393,433.13 |
| China Post Group Company | 75,578,464.82 | 7.14 | 600,085.53 |
| China Petroleum & Chemical Corporation Material Assembly Department | 43,627,058.44 | 4.12 | 326,105.44 |
| China National Water Resources & Electric Power Materials & Equipment (Beijing) | 32,672,838.56 | 3.09 | 164,099.08 |
| Total | 460,982,960.20 | 43.54 | 3,209,142.31 |
(6). Accounts receivable derecognizd due to the transfer of financial assets"□ Applicable" "√ Not applicable"
(7). Assets and liabilities formed due to the transfer and continuous involvement ofaccounts receivable"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
6. Receivables financing
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Bills receivable | 24,262,204.08 | 1,894,232.00 |
| Factoring of accounts receivable | 5,287,720.75 | |
| Total | 29,549,924.83 | 1,894,232.00 |
Changes in receivables financing during the current period and changes in fair value:
"√ Applicable" "□ Not applicable"See the table below for details
| Item | Balance at the beginning of the year | Increase of the current period | Derecognition of the current period | Other changes | Closing balance | Accumulated loss provisions recognized in other comprehensive income |
| Bills receivable | 1,894,232.00 | 52,633,199.44 | 30,265,227.36 | 24,262,204.08 |
| Factoring of accounts receivable | 105,362,252.36 | 106,817,205.35 | 6,742,673.74 | 5,287,720.75 | ||
| Total | 1,894,232.00 | 157,995,451.80 | 137,082,432.71 | 6,742,673.74 | 29,549,924.83 |
Other descriptions: Other changes were caused by the increase in business combinations thisyear.
If bad debt provisions are accrued according to the general model of expected credit losses,please refer to the disclosure on other receivables:
"□ Applicable" "√ Not applicable"
Other descriptions:
"√ Applicable" "□ Not applicable"Notes receivable endorsed or discounted by the Company at the end of the period but not dueyet at the balance sheet date
Unit: Yuan Currency: RMB
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Bank acceptance bills | 12,030,000.00 |
7. 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 1 year | 84,880,944.13 | 99.43 | 41,922,742.37 | 99.02 |
| 1 to 2 years | 490,500.60 | 0.57 | 392,024.18 | 0.93 |
| 2 to 3 years | 1,876.10 | |||
| Above 3 years | 20,331.06 | 0.05 | ||
| Total | 85,371,444.73 | 100.00 | 42,336,973.71 | 100.00 |
Description on the reasons for failure to settle the advance payment with an account age overone year and a significant amount:
No
(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"
| Parties to which the advance payments are made | Closing balance | Percentage (%) in the total balance at the end of the period of advance payment |
| CNBM Technology Corporation Limited | 33,075,300.00 | 38.74 |
| M&G Holdings (Group) Co., Ltd. | 3,419,063.44 | 4.00 |
| Suzhou Double Elephant Optical Materials Co., Ltd. | 2,215,051.32 | 2.59 |
| A. O. Smith (China) Environmental Products Co., Ltd. | 1,994,936.63 | 2.34 |
| Shijiazhuang Guoda Logistics Co., Ltd. Yuanshi Branch | 1,766,136.44 | 2.07 |
| Total | 42,470,487.83 | 49.74 |
Other explanation"□ Applicable" "√ Not applicable"
8. Other receivables
Presented by item"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Interest receivable | ||
| Dividend receivable | ||
| Other receivables | 117,647,039.93 | 110,280,059.38 |
| Total | 117,647,039.93 | 110,280,059.38 |
Other descriptions:
"□ Applicable" "√ Not applicable"
Interest receivable
(1) Classification of interest receivable
"□ Applicable" "√ Not applicable"
(2) Important overdue interest
"□ Applicable" "√ Not applicable"
(3) Particulars on accruing of bad debt provisions
"□ 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) Particulars on accruing of bad debt provisions
"□ 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 |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 99,752,417.89 |
| 1 to 2 years | 25,715,031.11 |
| 2 to 3 years | 13,588,611.30 |
| Above 3 years | 4,645,114.88 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -26,054,135.25 |
| Total | 117,647,039.93 |
(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 | 8,848,583.44 | 8,467,628.64 |
| Amount paid for materials | 34,532,789.63 | 13,688,452.79 |
| Consolidated balance of related-parties current accounts - provisional input tax | 17,406,678.21 | 20,205,179.36 |
| Margin and deposit | 66,283,403.63 | 50,835,514.15 |
| Royalties collected on behalf | 39,000.00 | |
| Bank wealth management products with guaranteed principal and guaranteed income | 20,000,000.00 | |
| E-commerce platform amount | 781.00 | |
| Others | 16,629,720.27 | 11,404,419.62 |
| Total | 143,701,175.18 | 124,640,975.56 |
(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 2019 | 14,360,916.18 | 14,360,916.18 | ||
| Balance as at 1 January 2019 in the current period | -651,031.11 | 651,031.11 | ||
| -- Transferred into Phase 2 | ||||
| -- Transferred into Phase 3 | -651,031.11 | 651,031.11 | ||
| -- Reversed into Phase 2 | ||||
| -- Reversed into Phase 1 | ||||
| Accrued in the current period | 9,819,847.25 | 3,208,177.16 | 13,028,024.41 | |
| Reserved in the current period | ||||
| Resold in the current period | ||||
| Written-off in the current period | 705,861.68 | 2,359,820.28 | 3,065,681.96 | |
| Other changes | 1,730,876.62 | 1,730,876.62 | ||
| Balance as at 31 December 2019 | 24,554,747.26 | 1,499,387.99 | 26,054,135.25 |
Other descriptions:
Other changes included the increase of RMB1,719,516.14 for the Company’s businesscombination and the translation difference of RMB11,360.48 of foreign currency statements ofoverseas subsidiaries at the end of the year.
Particulars on the significant changes in the carrying balance of other receivables in whichchanges in loss provisions occurred in the current period:
"√ Applicable" "□ Not applicable"
| 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 2019 | 124,640,975.55 | 124,640,975.55 | ||
| Balance as at 1 January 2019 in the current period | -797,789.51 | 797,789.51 | ||
| -- Transferred into Phase 2 | ||||
| -- Transferred into Phase 3 | -797,789.51 | 797,789.51 | ||
| -- Reversed into Phase 2 | ||||
| -- Reversed into Phase 1 | ||||
| Increase of the current period | 1,096,121,348.25 | 1,499,387.99 | 1,097,620,736.24 | |
| Direct reduction of the current period | ||||
| Derecognition of the current period | 1,086,784,428.54 | 797,789.51 | 1,087,582,218.05 | |
| Other changes | 9,021,681.43 | 9,021,681.43 |
| Balance as at 31 December 2019 | 142,201,787.19 | 1,499,387.99 | 143,701,175.18 |
Other descriptions:
Other changes were caused by the increase for the Company’s business combinations.
The basis for adopting the amount of bad debt provisions accrued for the current period and theassessment on whether the credit risk of financial instruments 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 | 3,208,177.16 | 1,708,789.17 | 1,499,387.99 | |||
| Combination 1: Account age | 14,360,916.18 | 11,550,723.87 | 1,356,892.79 | 24,554,747.26 | ||
| Total | 14,360,916.18 | 14,758,901.03 | 3,065,681.96 | 26,054,135.25 | ||
Other descriptions:
Combination 1: The accruing of the account age change of the current period included anincrease of RMB1,719,516.14 for business combination. The actual amounts accrued separatelyand according to the combination were RMB13,028,024.41. The amount affected by foreignexchange rate changes was RMB11,360.48.
Significant bad debt provision amounts reversed or recovered in the current period:
"□ Applicable" "√ Not applicable"
(5) Particulars on other receivables actually written-off in the current period"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Written-off amount |
| Other receivables actually written-off | 3,065,681.96 |
Significant writing-off of other receivables:
"□ Applicable" "√ Not applicable"Description on writing-off of other receivables:
"□ Applicable" "√ Not applicable"
(6) Particulars on top 5 other receivables in terms of the balance at the end of the periodbased on debtors"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Company name | Amount nature | Closing balance | Account age | Percentage (%) in the total balance at the end of the period of other receivables | Closing balance |
| Provisional input tax | Consolidated balance of related-parties current accounts - provisional input tax | 17,406,678.21 | Within 1 year | 12.11 | |
| Shanghai Xiqia Stationery Factory | Amount paid for materials | 12,713,462.64 | Within 1 year | 8.85 | 635,673.13 |
| Shanghai Linsong Real Estate Co., Ltd. | Margin and deposit | 3,279,861.00 | 2-3 years | 2.28 | 1,967,916.60 |
| State Grid Materials Co., Ltd. | Margin and deposit | 2,400,000.00 | Within 1 year | 1.67 | 120,000.00 |
| Shenzhen Shuncheng Supply Chain Service Co., Ltd. | Margin and deposit | 1,627,000.00 | Within 1 year | 1.13 | 81,350.00 |
| Total | / | 37,427,001.85 | 26.04 | 2,804,939.73 |
(7) Receivables involving government subsidies
"□ Applicable" "√ Not applicable"
(8) Other receivables derecognized due to the transfer of financial assets"□ Applicable" "√ Not applicable"
(9) Assets and liabilities formed due to the transfer and continuous involvement of otherreceivables"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
9. Inventories
(1) Classification of inventories
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Devaluation provisions | Carrying value | Carrying balance | Devaluation provisions | Carrying value | |
| Raw materials | 230,583,859.11 | 1,418,134.61 | 229,165,724.50 | 179,668,368.02 | 179,668,368.02 | |
| Work-in-process | 55,336,578.58 | 91,431.46 | 55,245,147.12 | 25,245,351.77 | 25,245,351.77 | |
| Finished products | 1,070,802,359.90 | 35,434,374.53 | 1,035,367,985.37 | 835,427,474.28 | 16,909,196.39 | 818,518,277.89 |
| Revolving materials | 17,933,897.04 | 1,035,002.57 | 16,898,894.47 | 402,083.23 | 402,083.23 | |
| Expendable biological assets | 14,937,710.39 | 14,937,710.39 | ||||
| Completed unsettled assets formed by construction contracts | ||||||
| Materials in transit | 4,258,709.42 | 4,258,709.42 | ||||
| Consigned processing materials | 14,249,868.76 | 14,249,868.76 | 16,215,146.47 | 16,215,146.47 | ||
| Shipped goods | 7,984,719.82 | 7,984,719.82 | 2,652,382.62 | 2,652,382.62 | ||
| Total | 1,416,087,703.02 | 37,978,943.17 | 1,378,108,759.85 | 1,059,610,806.39 | 16,909,196.39 | 1,042,701,610.00 |
(2) Devaluation provisions of inventories
"√ 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 | 739,072.04 | 670,188.37 | -8,874.20 | 1,418,134.61 | ||
| Work-in-process | -580,268.16 | 671,699.62 | 91,431.46 | |||
| Finished products | 16,909,196.39 | 16,660,777.49 | 1,862,261.83 | -2,138.82 | 35,434,374.53 | |
| Revolving materials | 892,499.29 | 141,489.51 | -1,013.77 | 1,035,002.57 | ||
| Expendable biological assets | ||||||
| Completed unsettled assets formed by construction contracts | ||||||
| Materials in transit | ||||||
| Consigned processing materials | ||||||
| Shipped goods | ||||||
| Total | 16,909,196.39 | 17,712,080.66 | 3,345,639.33 | -12,026.79 | 37,978,943.17 | |
Other descriptions:
Increase amount of the current period - others were caused by the business combination, whiledecrease amount of the current period - others were caused by the translation difference offoreign currency statements of overseas subsidiaries at the end of the year.
(3) Description on the capitalization amount of the borrowing expenses included in thebalance of inventories at the end of the period"□ Applicable" "√ Not applicable"
(4) Particulars on completed but unsettled assets formed by construction contract at theend of the period"□ Applicable" "√ Not applicable"Other explanation"□ Applicable" "√ Not applicable"
10. Held for sale assets
"□ Applicable" "√ Not applicable"
11. Non-current assets due within one year
"□ Applicable" "√ Not applicable"Important debt investment and other debt investment at the end of the period:
"□ Applicable" "√ Not applicable"Other explanationNo
12. Other current assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Bank wealth management products | 0 | |
| VAT input tax to be certified | 20,104,638.98 | 12,930,815.35 |
| Pre-paid enterprise income tax | 1,104,950.25 | 154,827.95 |
| Carbon quota | 35,824.00 | |
| VAT retention amount | 8,035,512.06 | 13,891,757.05 |
| Total | 29,280,925.29 | 26,977,400.35 |
Other explanationNo
13. Debt investment
(1) Particulars on debt investment
"□ 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"
The basis for adopting the amount of impairment provisions accrued for the current period andthe assessment on whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
Other explanation"□ Applicable" "√ Not applicable"
14. Other debt investment
(1) Particulars on other debt investments
"□ 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"
The basis for adopting the amount of impairment provisions accrued for the current period andthe assessment on whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
15. Long-term receivables
(1) Long-term receivables
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | Discount rate range | ||||
| Carrying balance | Bad debt provisions | Carrying value | Carrying balance | Bad debt provisions | Carrying value | ||
| Financing lease receivables | |||||||
| Including: Unrealized financing income | |||||||
| Installment sales of goods | |||||||
| Installment rendering of services | |||||||
| Others | 6,624,590.00 | 6,624,590.00 | |||||
| Total | 6,624,590.00 | 6,624,590.00 | / | ||||
Other descriptions:
On 29 July 2019, the Company and Axus Stationery’s original actual controllers (Mr. Xu Peifengand Mr. Andre Francis Viegas) and original shareholders (Yilin Investment (Shanghai) Co., Ltd.(“Yilin Investment”), Higton Limited and Beilin Investment (Shanghai) Co., Ltd. (“BeilinInvestment”) signed the Supplementary Agreement to the Equity Transfer Agreement (2).According to the Agreement, Yilin Investment, Higton Limited and Beilin Investment agreed toprovide company compensation for audit adjustments and losses during the period, and thecompensation would be implemented in two years from 1 July 2019, namely RMB3,312,295would be returned before 30 June 2020 and RMB3,312,295 before 30 June 2021; Mr. Xu Peifengagreed to assume personal guarantee of joint and several liability for the company for all theabove compensation obligations, and the guarantee period started from the effective date of theAgreement to the date when the creditor's right was fully performed; the scope of guaranteeincluded but was not limited to the creditor's right, damage compensation (if any), and thecompany's cost for realizing the creditor's right; Mr. Xu Peifeng's assets involved in theassumption of guarantee responsibility were including but not limited to his indirectly-held sharesof Axus Stationery.
(2) Particulars on accruing of bad debt provisions
"□ Applicable" "√ Not applicable"
The basis for adopting the amount of bad debt provisions accrued for the current period and theassessment on whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
(3) Long receivables derecognizd due to the transfer of financial assets"□ Applicable" "√ Not applicable"
(4) Assets and liabilities formed due to the transfer and continuous involvement of long
receivables"□ Applicable" "√ Not applicable"
Other explanation"□ Applicable" "√ Not applicable"
16. Long-term equity investments
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Invested company | Balance | Additional investment | Withdrawn investment | Investment gains and losses recognized 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 | Balance | Balance of impairment provisions at the end of the period |
| I. Joint venture | |||||||||||
| Sub-total | |||||||||||
| II. Associate | |||||||||||
| Ningbo Zhongchen Equity Investment Partnership (Limited Partnership) | 30,175,665.26 | -313,145.25 | -16,285.82 | 29,846,234.19 | |||||||
| Shanghai Pen-making Technology Services Co., Ltd. | 6,000,000.00 | -263,450.72 | 5,736,549.28 | ||||||||
| Sub-total | 30,175,665.26 | 6,000,000.00 | -576,595.97 | -16,285.82 | 35,582,783.47 | ||||||
| Total | 30,175,665.26 | 6,000,000.00 | -576,595.97 | -16,285.82 | 35,582,783.47 | ||||||
Other explanationNo
17. Investments in other equity instruments
(1) Particulars on other equity instrument investments
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Shanghai M&G Culture and Creativity Co., Ltd. | 3,909,179.93 | 3,600,000.00 |
| Total | 3,909,179.93 | 3,600,000.00 |
(2) Particulars on non-trading equity instrument investment
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Dividend income recognized in the current period | Accumulated gains | Accumulated losses | Amount transferred from other comprehensive income into retained earnings | Reason for designation as at fair value through other comprehensive income | Reason for transfer from other comprehensive income into retained earnings |
| Shanghai M&G Culture and Creativity Co., Ltd. | 309,179.93 | The Company held the investment for non-trading purposes |
Other descriptions:
"□ Applicable" "√ Not applicable"
18. Other non-current financial assets
"□ Applicable" "√ Not applicable"Other descriptions:
"□ Applicable" "√ Not applicable"
19. Investment real estate
Measurement model of investment real estateNot applicable
20. Fixed assets
Presented by item"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 1,163,702,352.12 | 876,617,888.99 |
| Disposal of fixed assets | ||
| Total | 1,163,702,352.12 | 876,617,888.99 |
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 | 634,058,338.98 | 508,257,905.74 | 51,896,534.68 | 247,138,600.17 | 1,441,351,379.57 |
| 2. Increase amount of the current period | 307,887,708.81 | 228,594,626.61 | 7,103,818.01 | 65,925,711.32 | 609,511,864.75 |
| (1) Acquisition | 1,124,312.14 | 2,243,162.75 | 2,718,213.62 | 8,683,132.13 | 14,768,820.64 |
| (2) Transfer-in from construction in progress | 344,573.67 | 44,870,318.20 | 43,644,778.63 | 88,859,670.50 | |
| (3) Increase for business combination | 306,418,823.00 | 181,481,145.66 | 4,385,604.39 | 13,597,800.56 | 505,883,373.61 |
| 3. Decrease amount of the current period | -34,853.14 | 10,671,810.89 | 1,609,309.01 | 8,464,792.35 | 20,711,059.11 |
| (1) Disposal or scraping | 344,908.44 | 11,288,741.19 | 1,619,341.63 | 8,648,782.88 | 21,901,774.14 |
| (2) Translation difference of foreign-currency statements | -379,761.58 | -616,930.30 | -10,032.62 | -183,990.53 | -1,190,715.03 |
| 4. Balance at the end of the period | 941,980,900.93 | 726,180,721.46 | 57,391,043.68 | 304,599,519.14 | 2,030,152,185.21 |
| II. Accumulative depreciation | |||||
| 1. Balance at the beginning of the period | 154,272,296.01 | 195,023,643.78 | 39,846,494.48 | 175,591,056.31 | 564,733,490.58 |
| 2. Increase amount of the current period | 100,482,179.17 | 150,350,773.86 | 6,746,608.71 | 59,581,720.59 | 317,161,282.33 |
| (1) Accruing | 44,858,253.67 | 60,679,850.29 | 3,421,246.71 | 51,540,231.67 | 160,499,582.34 |
| (2) Increase for business combination | 55,623,925.50 | 89,670,923.57 | 3,325,362.00 | 8,041,488.92 | 156,661,699.99 |
| 3. Decrease amount of the current period | 647,425.55 | 5,883,989.75 | 877,379.09 | 8,270,294.13 | 15,679,088.52 |
| (1) Disposal or scraping | 660,455.03 | 6,242,258.00 | 889,987.33 | 8,342,204.06 | 16,134,904.42 |
| (2) Translation difference of foreign-currency statements | -13,029.48 | -358,268.25 | -12,608.24 | -71,909.93 | -455,815.90 |
| 4. Balance at the end of the period | 254,107,049.63 | 339,490,427.89 | 45,715,724.10 | 226,902,482.77 | 866,215,684.39 |
| III. Impairment provisions | (0.00) | ||||
| 1. Balance at the |
| beginning of the period | |||||
| 2. Increase amount of the current period | 234,148.70 | 234,148.70 | |||
| (1) Accruing | |||||
| (2) Increase for business combination | 234,148.70 | 234,148.70 | |||
| 3. Decrease amount of the current period | |||||
| (1) Disposal or scraping | |||||
| 4. Balance at the end of the period | 234,148.70 | 234,148.70 | |||
| IV. Carrying value | |||||
| 1. Carrying value at the end of the period | 687,873,851.30 | 386,456,144.87 | 11,675,319.58 | 77,697,036.37 | 1,163,702,352.12 |
| 2. Carrying value at the beginning of the period | 479,786,042.97 | 313,234,261.96 | 12,050,040.20 | 71,547,543.86 | 876,617,888.99 |
Other descriptions:
For the restricted situation of fixed assets, please refer to Note XIV. Commitments andContingencies.
(2) Particulars on temporary idle fixed assets
"□ Applicable" "√ Not applicable"
(3) Particulars on fixed assets leased in under financing leases
"□ Applicable" "√ Not applicable"
(4) Fixed assets leased out under operating leases
"□ Applicable" "√ Not applicable"
(5) Particulars on fixed assets of which the property ownership certificates have notbeen obtained"□ Applicable" "√ Not applicable"Other descriptions:
"□ Applicable" "√ Not applicable"
Disposal of fixed assets"□ Applicable" "√ Not applicable"
21. Construction in progress
Presented by item"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 260,469,728.76 | 24,506,469.59 |
| Engineering materials | ||
| Total | 260,469,728.76 | 24,506,469.59 |
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 | |
| Qingcun Production Base Construction Project | 158,942,138.30 | 158,942,138.30 | 2,300,484.22 | 2,300,484.22 | ||
| Internet E-Commerce Industrial Park Project | 82,259,438.98 | 82,259,438.98 | ||||
| Fixed assets not yet installed and put into use | 8,824,754.04 | 8,824,754.04 | 20,922,274.63 | 20,922,274.63 | ||
| Others | 10,443,397.44 | 10,443,397.44 | 1,283,710.74 | 1,283,710.74 | ||
| Total | 260,469,728.76 | 260,469,728.76 | 24,506,469.59 | 24,506,469.59 | ||
Changes in important construction in progress projects in the current period"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Items | Budget | Balance | Increase amount of the current period | Amount of fixed assets transferred in the current period | Other decrease amounts in the current period | Balance | Proportion of cumulative investment in the project to the budget (%) | Progress of works | Accumulated amount of interest capitalization | Including: Amount of interest capitalization in the current period | Interest capitalization rate (%) in the current period | Source of fund |
| Qingcun Production Base Construction Project | 733,910,100.00 | 2,300,484.22 | 156,792,972.06 | 151,317.98 | 158,942,138.30 | 91.22 | 91.22 | Self-raised funds, borrowings from financial institutions | ||||
| Internet E-Commerce Industrial Park Project | 82,259,438.98 | 82,259,438.98 | ||||||||||
| Fixed assets not yet installed and put into use | 20,922,274.63 | 73,095,059.90 | 85,192,580.49 | 8,824,754.04 | ||||||||
| Others | 1,283,710.74 | 15,396,762.86 | 3,515,772.03 | 2,721,304.13 | 10,443,397.44 | |||||||
| Total | 733,910,100.00 | 24,506,469.59 | 327,544,233.80 | 88,859,670.50 | 2,721,304.13 | 260,469,728.76 | / | / | / | / |
The amount of other increases transferred into intangible assets was RMB2,461,673.93, and theamount transferred into long-term deferred expenses was RMB259,630.20.
(2) Particulars on impairment provisions accrued for construction in progress in thecurrent period"□ Applicable" "√ Not applicable"Other explanation"□ Applicable" "√ Not applicable"
Engineering materials
(1) Particulars on engineering materials
"□ Applicable" "√ Not applicable"
22. Productive biological assets
(1) Productive biological assets using cost measurement model"□ Applicable" "√ Not applicable"
(2) Productive biological assets using fair value measurement model"□ Applicable" "√ Not applicable"
Other explanation"□ Applicable" "√ Not applicable"
23. Oil and gas assets
"□ Applicable" "√ Not applicable"
24. Right-of-use assets
"□ Applicable" "√ Not applicable"
25. Intangible assets
(1) Particulars on intangible assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Land use rights | Patent right | Unpatented technology | Image identification rights | Software | Others | Total |
| I. Original carrying value | |||||||
| 1. Balance at the beginning of the period | 187,858,988.00 | 6,175,637.85 | 14,754,928.91 | 24,618,010.88 | 1,650,000.00 | 235,057,565.64 | |
| 2. Increase amount of the current period | 151,557,936.87 | 6,470,027.94 | 93,989.00 | 8,633,605.89 | 32,622.64 | 166,788,182.34 | |
| (1) Acquisition | 741,339.43 | 3,590,815.98 | 4,332,155.41 | ||||
| (2) R&D | |||||||
| (3) Increase for business combination | 151,557,936.87 | 5,728,688.51 | 93,989.00 | 2,581,115.98 | 32,622.64 | 159,994,353.00 | |
| (4) Transfer-in from construction in progress | 2,461,673.93 | 2,461,673.93 | |||||
| 3. Decrease amount of the current period | -600,414.23 | 14,754,928.91 | 14,154,514.68 | ||||
| (1) Disposal | |||||||
| (2) Translation difference of foreign- | -600,414.23 | -600,414.23 |
| currency statements | |||||||
| (3) Invalid and derecognized use rights | 14,754,928.91 | 14,754,928.91 | |||||
| 4. Balance at the end of the period | 340,017,339.10 | 12,645,665.79 | 93,989.00 | 33,251,616.77 | 1,682,622.64 | 387,691,233.30 | |
| 2. Cumulative amortization | |||||||
| 1. Balance at the beginning of the period | 19,524,715.50 | 2,023,538.20 | 14,335,071.58 | 10,286,364.69 | 900,000.00 | 47,069,689.97 | |
| 2. Increase amount of the current period | 15,562,298.97 | 1,278,556.24 | 513,846.33 | 6,806,933.57 | 182,622.48 | 24,344,257.59 | |
| (1) Accruing | 6,253,494.22 | 1,047,818.95 | 419,857.33 | 4,373,675.91 | 150,000.00 | 12,244,846.41 | |
| (2) Increase for business combination | 9,308,804.75 | 230,737.29 | 93,989.00 | 2,433,257.66 | 32,622.48 | 12,099,411.18 | |
| 3. Decrease amount of the current period | -26,452.56 | 14,754,928.91 | 14,728,476.35 | ||||
| (1) Disposal | |||||||
| (2) Invalid and derecognized use rights | 14,754,928.91 | 14,754,928.91 | |||||
| (3) Translation difference of foreign-currency statements | -26,452.56 | -26,452.56 | |||||
| 4. Balance at the end of the period | 35,113,467.03 | 3,302,094.44 | 93,989.00 | 17,093,298.26 | 1,082,622.48 | 56,685,471.21 | |
| III. Impairment provisions | |||||||
| 1. Balance at the beginning of the period | |||||||
| 2. Increase amount of the current period | |||||||
| (1) Accruing | |||||||
| (2) Increase for business combination |
| 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 | 304,903,872.07 | 9,343,571.35 | 16,158,318.51 | 600,000.16 | 331,005,762.09 | ||
| 2. Carrying value at the beginning of the period | 168,334,272.50 | 4,152,099.65 | 419,857.33 | 14,331,646.19 | 750,000.00 | 187,987,875.67 |
The proportion of intangible assets formed by the Company's internal R&D at the end of thecurrent period in the balance of intangible assets was 0
(2) Particulars on use rights of land of which the property ownership certificates havenot been obtained"□ Applicable" "√ Not applicable"Other descriptions:
"□ Applicable" "√ Not applicable"
26. Development expenses
"□ Applicable" "√ Not applicable"
27. Goodwill
(1) Original carrying value 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 | ||
| 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 | ||||
| Total | 131,001.23 | 30,175,537.19 | 30,306,538.42 |
(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 | ||||
| Total | 131,001.23 | 131,001.23 | ||||
(3) Information regarding the asset group or the combination of asset groups to which
goodwill belongs"√ Applicable" "□ Not applicable"
| Name of asset group | Carrying value of goodwill attributable to shareholders of the parent | Carrying value of goodwill attributable to minority shareholders | Total carrying value of goodwill | Carrying value of other assets in the asset group or the combination of | Carrying value of the asset group or the combination of asset groups | Whether the asset group has |
| company | asset groups | including goodwill | changed | ||||
| 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 | 125,863.93 | 256,865.16 | 1,347,489.93 | 1,604,355.09 | No | |
| Axus Stationery (Shanghai) Company Ltd. | 30,175,537.19 | 23,709,350.65 | 53,884,887.84 | 438,838,223.62 | 492,723,111.46 | No | |
(4) Describe the goodwill impairment test process, key parameters (such as growth ratein the forecast period, growth rate in the stable period, profit margin, discount rate,forecast period, etc. when estimating the present value of the estimated future cashflow, if applicable) and the recognition method for impairment losses of goodwill"√ Applicable" "□ Not applicable"
| Name of asset group | Key parameter | Present value of estimated future cash flow | Amount of goodwill impairment provisions | ||||
| Forecast period | Expected growth rate | Growth rate in the steady period | Profit margin | Discount rate (weighted average cost of capital WACC) | |||
| Axus Stationery (Shanghai) Company Ltd. | 2020-2024 | [Note] | Flat | Calculated according to predicted income, costs, expenses, etc. | 15.43% | 519,000,000.00 | |
Note: According to the comprehensive analysis of the contracts and agreements signed byAxus Stationery, and development plans, operating trends over the years, market competitionand other factors, the main business income and related costs, expenses and profits in thenext five years starting from the evaluation base date were estimated.
(5) Effect of goodwill impairment test
"√ Applicable" "□ Not applicable"
The Company's acquisition of Axus Stationery was based on the performance promise that theagreed gross profit margin needs to be achieved in 2019 and the income from sales outsideChina needs to reach the corresponding amount, but because the Company failed to achievesuch goals, according to the relevant provisions of the Accounting Standards for BusinessEnterprises, should any new or further evidence arises within 12 months after the acquisitiondate and makes it necessary to adjust the contingent consideration on the acquisition date, itshall be recognized and the amount originally included into consolidated goodwill shall beadjusted; the Company determined the carrying value of goodwill according to the adjustedcorresponding consideration.For the current year, the Company hired Shanghai Lixin Appraisal Co., Ltd. to issue the AssetAppraisal Report on the Recoverable Amount of Relevant Asset Groups of Axus Stationery(Shanghai) Company Ltd. involved in the Goodwill Impairment Test Carried out by ShanghaiM&G Stationery Inc. for the Purpose of Financial Reporting with the report number of Xin Zi PingBao Zi [2020] No.40043 on 10 April 2020. According to the appraisal results, as of 31 December2019, the carrying value of the asst group or the combination of asset groups including goodwillof Axus Stationery acquired by the Company was RMB492,723,100, and the recoverableamount was RMB519,000,000; after the test, there was no impairment of the goodwill formed bythe Company's acquisition of Axus Stationery.
Other explanation"□ Applicable" "√ Not applicable"
28. Long-term prepaid expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase amount of the current period | Amortization amount of the current period | Other decrease amounts | Closing balance |
| Decoration fee | 117,412,655.81 | 58,969,490.95 | 56,178,649.63 | 3,936,583.49 | 116,266,913.64 |
| Others | 611,708.86 | 12,770,468.84 | 2,144,251.34 | 9,168,506.05 | 2,069,420.31 |
| Total | 118,024,364.67 | 71,739,959.79 | 58,322,900.97 | 13,105,089.54 | 118,336,333.95 |
Other descriptions:
The increase amount of the current period included the original value of RMB12,538,099.65 oflong-term deferred expenses increased for business combinations.Other decrease amounts included the accumulated amortization amount of RMB12,279,319.47of long-term deferred expenses increased for business combinations.
29. Deferred income tax assets/Deferred income tax liabilities
(1) Unoffset deferred income tax assets
"√ Applicable" "□ Not applicable"
Unit: RMB Currency: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Assets | Deductible temporary differences | Assets | |
| Impairment provisions of assets | 59,901,405.29 | 14,183,474.28 | 28,661,424.71 | 6,791,290.35 |
| Unrealized profits from internal transactions | 105,422,678.59 | 17,734,494.35 | 82,691,090.00 | 14,122,763.53 |
| Deductible losses | 1,394,984.07 | 348,746.02 | ||
| Deferred income | 28,808,795.45 | 4,356,820.94 | 30,437,478.08 | 4,611,467.10 |
| Total | 195,527,863.40 | 36,623,535.59 | 141,789,992.79 | 25,525,520.98 |
(2) Unoffset deferred income tax liabilities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Liabilities | Taxable temporary differences | Liabilities | |
| Assets appreciation for business combination not under the common control | 190,554,505.02 | 34,553,803.87 | 2,259,638.02 | 564,909.50 |
| Changes in fair value of other debt investments | ||||
| Changes in fair value of other equity instrument investments | ||||
| Changes in fair value of trading financial assets | 11,878,587.24 | 2,022,940.68 | ||
| Total | 202,433,092.26 | 36,576,744.55 | 2,259,638.02 | 564,909.50 |
(3) Deferred income tax assets or liabilities presented on a net basis after offsetting"□ Applicable" "√ Not applicable"
(4) Details of unrecognized deferred income tax assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 80,145,537.46 | 55,387,660.23 |
| Deductible losses | 319,004,132.22 | 222,133,153.97 |
| Total | 399,149,669.68 | 277,520,814.20 |
(5) The deductible losses of unrecognized deferred income tax assets will expire in thefollowing years"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Year | Amount at the end of the period | Amount at the beginning of the period | Note |
| 2024 | 51,157,003.13 | ||
| 2023 | 128,291,769.66 | 58,495,645.77 | |
| 2022 | 35,217,084.45 | 52,048,124.68 | |
| 2021 | 81,175,636.36 | 86,639,439.53 | |
| 2020 | 20,866,933.92 | 15,739,983.66 | |
| 2019 | 2,295,704.70 | 9,209,960.33 | |
| Total | 319,004,132.22 | 222,133,153.97 | / |
Other descriptions:
"□ Applicable" "√ Not applicable"
30. Other non-current assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Prepayments for real estate, engineering, equipment, etc. | 311,300,000.00 | |
| Total | 315,153,408.27 | 311,300,000.00 |
Other descriptions:
No
31. 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 | 182,979,528.81 | |
| Guaranteed borrowings | ||
| Credit borrowings | ||
| Interest payable | 214,235.05 | |
| Total | 183,193,763.86 |
Other descriptions:
For the relevant mortgage information, please refer to Note XIV. Commitments andContingencies.
(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 explanation"□ Applicable" "√ Not applicable"
32. Held-for-trading financial liabilities
"□ Applicable" "√ Not applicable"
33. Derivative financial liabilities
"□ Applicable" "√ Not applicable"
34. Bills payable
(1) Presentation of notes payable
"□ Applicable" "√ Not applicable"
35. Accounts payable
(1) Presentation of accounts payable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Within 1 year | 1,857,292,820.26 | 1,316,235,807.23 |
| 1 to 2 years | 2,179,464.37 | 1,992,272.43 |
| 2 to 3 years | 1,103,433.79 | 731,795.95 |
| Above 3 years | 496,749.45 | 447,172.60 |
| Total | 1,861,072,467.87 | 1,319,407,048.21 |
(2) Accounts payable with the account age over one year
"□ Applicable" "√ Not applicable"Other explanation"□ Applicable" "√ Not applicable"
36. Accounts received in advance
(1) Presentation of advance received from customers
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Within 1 year | 205,407,801.97 | 144,643,662.55 |
| 1 to 2 years | 824,974.39 | 2,713,712.64 |
| 2 to 3 years | 316,841.78 | 179,943.98 |
| Above 3 years | 212,675.80 | 109,734.70 |
| Total | 206,762,293.94 | 147,647,053.87 |
(2) Significant advance received from customers with the account age over one year"□ Applicable" "√ Not applicable"
(3) Particulars of settled but uncompleted projects formed by construction contract at
the end of the period"□ Applicable" "√ Not applicable"Other explanation"□ Applicable" "√ Not applicable"
37. 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 | 114,073,241.17 | 684,508,436.90 | 651,801,356.38 | 146,780,321.69 |
| II. Post-employment benefits - Defined contribution plans | 6,712,835.35 | 77,590,743.51 | 76,964,408.23 | 7,339,170.63 |
| III. Dismissal benefits | 417,251.98 | 417,251.98 | ||
| IV. Other benefits due within one year | ||||
| Total | 120,786,076.52 | 762,516,432.39 | 729,183,016.59 | 154,119,492.32 |
(2) Presentation of short-term benefits
"√ Applicable" "□ Not applicable"
Unit: RMB Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| I. Salary, bonus, allowance and subsidy | 109,048,913.79 | 599,982,363.54 | 572,282,508.82 | 136,748,768.51 |
| II. Employee benefits | 1,248,410.48 | 1,248,017.15 | 393.33 | |
| III. Social insurance | 2,599,960.27 | 48,360,502.97 | 47,133,344.02 | 3,827,119.22 |
| Including: Medical insurance | 2,298,876.31 | 40,569,713.86 | 39,530,719.41 | 3,337,870.76 |
| Work-related injury insurance | 66,036.09 | 3,242,652.28 | 3,163,283.70 | 145,404.67 |
| Maternity insurance | 235,047.87 | 4,548,136.83 | 4,439,340.91 | 343,843.79 |
| IV. Housing provident fund | 2,196,410.89 | 19,535,462.44 | 19,132,641.66 | 2,599,231.67 |
| V. Labor union and employee education funds | 38,055.30 | 6,169,123.07 | 2,884,748.42 | 3,322,429.95 |
| VI. Short-term compensated absences | 189,900.92 | 8,439,402.26 | 8,349,327.80 | 279,975.38 |
| VII. Short-term profit sharing plan | ||||
| VIII. Other short-term benefits | 773,172.14 | 770,768.51 | 2,403.63 | |
| Total | 114,073,241.17 | 684,508,436.90 | 651,801,356.38 | 146,780,321.69 |
(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 | 6,589,734.69 | 75,307,562.28 | 74,741,520.09 | 7,155,776.88 |
| 2. Unemployment insurance | 123,100.66 | 2,283,181.23 | 2,222,888.14 | 183,393.75 |
| 3. Enterprise annuity payment | ||||
| Total | 6,712,835.35 | 77,590,743.51 | 76,964,408.23 | 7,339,170.63 |
Other descriptions:
"□ Applicable" "√ Not applicable"
38. Taxes payable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Value added tax (“VAT”) | 104,412,244.02 | 141,466,661.91 |
| Consumption tax | ||
| Business tax | ||
| Enterprise income tax | 130,486,171.57 | 120,221,282.24 |
| Personnel income tax | 8,228,966.18 | 6,628,590.90 |
| Urban maintenance and construction tax | 3,975,132.04 | 5,216,961.88 |
| Property tax | 476,707.70 | |
| Education surcharge | 5,857,154.52 | 5,740,453.51 |
| Land use tax | 1,492,046.98 | |
| Stamp duty | 3,439,030.61 | 103,401.74 |
| Others | 215,664.52 | 194.00 |
| Total | 258,583,118.14 | 279,377,546.18 |
Other descriptions:
No
39. Other payables
Presented by item"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Interest payable | ||
| Dividend payable | ||
| Other payables | 331,438,976.35 | 240,665,881.17 |
| Total | 331,438,976.35 | 240,665,881.17 |
Other descriptions:
"□ Applicable" "√ Not applicable"
Interest payable
(1) Presentation by category
"□ Applicable" "√ Not applicable"
Dividend payable
(1) Presentation by category
"□ Applicable" "√ Not applicable"
Other payables
(1) Other payables presented by amount nature
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Margin and deposit | 153,783,801.10 | 120,859,921.25 |
| Product license fee | 1,051,890.00 | 1,539,546.31 |
| Estimated fees | 126,261,415.65 | 78,855,783.50 |
| Engineering and decoration fund | 28,482,632.65 | 26,019,961.51 |
| Others | 21,859,236.95 | 13,390,668.60 |
| Total | 331,438,976.35 | 240,665,881.17 |
(2) Other payables with the account age over one year
"□ Applicable" "√ Not applicable"Other particulars:
"□ Applicable" "√ Not applicable"
40. Held-for-sale liabilities
"□ Applicable" "√ Not applicable"
41. Non-current liabilities due within one year
"□ Applicable" "√ Not applicable"
42. Other current liabilities
Particulars on other current liabilities"□ Applicable" "√ Not applicable"Changes in short-term bonds payable:
"□ Applicable" "√ Not applicable"Other descriptions:
"□ Applicable" "√ Not applicable"
43. Long-term borrowings
(1) Classification of long-term borrowings
"□ Applicable" "√ Not applicable"
Other particulars, including interest rate ranges:
"□ Applicable" "√ Not applicable"
44. Bonds payable
(1) Bonds payable
"□ Applicable" "√ Not applicable"
(2) Changes in bonds payable: (excluding other financial instruments such as preferredshares classified as financial liabilities and perpetual bonds)"□ Applicable" "√ Not applicable"
(3) Description on the conversion conditions and conversion time of convertiblecorporate bonds"□ Applicable" "√ Not applicable"
(4) Description on other financial instruments classified as financial liabilitiesBasic information on other financial instruments such as outstanding preferred shares andperpetual bonds at the end of the period"□ Applicable" "√ Not applicable"
Form of changes in financial instruments such as outstanding preferred shares and perpetualbonds at the end of the period"□ Applicable" "√ Not applicable"Description of the basis for other financial instruments classified as financial liabilities:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
45. Lease liabilities
"□ Applicable" "√ Not applicable"
46. Long-term payables
Presented by item"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Long-term payable | ||
| Special payables | 6,620,000.00 | 5,109,800.00 |
| Total | 6,620,000.00 | 5,109,800.00 |
Other descriptions:
"□ Applicable" "√ Not applicable"
Long-term payable
(1) Long-term payables presented by amount nature
"□ Applicable" "√ Not applicable"
Special payables
(1) Special payables presented by amount nature
"√ 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 |
| New environment-friendly pen-making material project belonging to key special projects for improvement and industrialization of key basic materials under the national key R&D plan | 5,109,800.00 | 8,710,200.00 | 7,200,000.00 | 6,620,000.00 | |
| Total | 5,109,800.00 | 8,710,200.00 | 7,200,000.00 | 6,620,000.00 | / |
Other descriptions:
No
47. Long-term employee benefits payable
"□ Applicable" "√ Not applicable"
48. Estimated liabilities
"□ Applicable" "√ Not applicable"
49. 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 grant | 30,215,315.26 | 5,543,095.62 | 4,291,731.80 | 31,466,679.08 | |
| Reward on customer points | 2,904,973.75 | 148,497.62 | 2,853,757.84 | 199,713.53 | |
| Brand maintenance | 34,156,820.50 | 34,156,820.50 | |||
| Total | 67,277,109.51 | 5,691,593.24 | 7,145,489.64 | 65,823,213.11 | / |
Items involving government subsidies:
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Liability items | Opening balance | Subsidy amount increased in the current period | Amount included in non-operating income of the current period | Amount included in other income of the current period | Other changes | Closing balance | Pertinent to assets/income |
| Special Fund for Shanghai Modern Service Industry - Three-dimensional Warehouse | 10,080,267.27 | 672,017.88 | 9,408,249.39 | Pertinent to assets | |||
| Shanghai's second batch special fund for encouraging enterprises to purchase international R&D equipment in 2014 | 783,000.00 | 174,000.00 | 609,000.00 | Pertinent to assets | |||
| R&D and industrialization of key materials and preparation technologies in the pen-making industry | 966,610.33 | 244,646.88 | 721,963.45 | Pertinent to assets | |||
| Subsidies for the second batch of key technological | 2,783,993.79 | 586,104.12 | 2,197,889.67 | Pertinent to assets |
| transformation projects in 2013 | |||||||
| Subsidies for absorption and innovation projects in 2014 | 620,217.51 | 90,443.52 | 529,773.99 | Pertinent to assets | |||
| Service industry guidance funds in 2014 | 2,123,531.21 | 328,891.68 | 1,794,639.53 | Pertinent to assets | |||
| Key technological transformation projects of Shanghai in 2015 | 4,260,910.89 | 561,878.28 | 3,699,032.61 | Pertinent to assets | |||
| Inbound Marketing - Internet + product development project | 687,029.12 | 107,310.24 | 579,718.88 | Pertinent to assets | |||
| Special fund for Shanghai informatization development | 1,340,000.00 | 580,000.00 | 325,087.60 | 1,594,912.40 | Pertinent to assets | ||
| Special funds for technology R&D projects | 266,167.65 | 134,548.27 | 131,619.38 | Pertinent to assets | |||
| Special funds for industrial transformation and upgrade development of Shanghai in 2016 | 1,100,000.00 | 120,879.10 | 979,120.90 | Pertinent to assets | |||
| High-value-added product creative development project | 197,296.61 | 29,437.44 | 167,859.17 | Pertinent to assets | |||
| Industrial foundation consolidation project in 2016 | 3,770,000.00 | 3,770,000.00 | Pertinent to assets | ||||
| Special funds for development of SMEs in Shanghai in 2016 | 236,290.88 | 80,988.33 | 155,302.55 | Pertinent to assets | |||
| Funds for improvement of capacities of Shanghai Engineering Research Center in 2017 | 1,000,000.00 | 1,000,000.00 | Pertinent to assets | ||||
| Cultural and creative project in 2019 | 700,000.00 | 700,000.00 | Pertinent to assets |
| Subsidies for injection molding machine intelligent equipment | 570,000.00 | 570,000.00 | Pertinent to assets | ||||
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of “Green Design - Innovative R&D” by Marco Colorful Painting Pen C1085 | 1,542,320.00 | 709,085.34 | 529,461.95 | 1,362,696.61 | Pertinent to assets | ||
| Special fund plan for key technological renovation projects in Qingpu District in 2012 | 77,333.36 | 473,666.66 | 396,333.30 | Pertinent to assets | |||
| Construction Project of "Marco-Color- Source" Creative Experience Center | 362,370.95 | 362,370.95 | Pertinent to assets | ||||
| Special funds for central foreign economic and trade development | 49,079.76 | 785,276.06 | 736,196.30 | Pertinent to assets | |||
| Total | 30,215,315.26 | 3,754,690.95 | 4,291,731.80 | 1,788,404.67 | 31,466,679.08 |
Other descriptions:
"√ Applicable" "□ Not applicable"Other changes were caused by the increase for business combinations.
50. Other non-current liabilities
"□ Applicable" "√ Not applicable"
51. Share capital
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Opening balance | Increase or decrease (+ or -) due to this change | Closing balance | |||||
| New shares | Bonus shares | Transferred shares | Others | Sub-total | |||
| Total shares | 920,000,000.00 | 920,000,000.00 |
Other descriptions:
No
52. 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 forrelevant accounting treatment:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
53. 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) | 272,347,764.53 | 272,347,764.53 | ||
| Other capital reserve | ||||
| Total | 272,347,764.53 | 272,347,764.53 |
Other descriptions, including descriptions on changes of the current period and reasons forchanges:
No
54. Treasury shares
"□ Applicable" "√ Not applicable"
55. Other comprehensive income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Balance | Amount accounted for in the current period | 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 | 309,179.93 | 309,179.93 | 309,179.93 | |||||
| Including: Change in re-measurement of defined benefit plans | ||||||||
| Other comprehensive income that may not be reclassified to profit or loss under equity method | ||||||||
| Changes in fair value of other equity instrument investments | 309,179.93 | 309,179.93 | 309,179.93 | |||||
| Change in fair value of enterprise's own credit risk | ||||||||
| II. Other comprehensive income to be reclassified into profit or loss | 400,616.76 | 217,179.62 | 183,437.14 | 217,179.62 | ||||
| Including: Other comprehensive income that may be reclassified to profit or loss under equity method | -16,285.82 | -16,285.82 | -16,285.82 | |||||
| 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 | ||||||||
| Effective portion of cash flow hedging profit or loss | ||||||||
| Exchange differences from translation of financial statements | 416,902.58 | 233,465.44 | 183,437.14 | 233,465.44 | ||||
| Total other comprehensive income | 709,796.69 | 526,359.55 | 183,437.14 | 526,359.55 |
Other descriptions, including the adjustment of the effective portion of cash flow hedging profitor loss transferred to the initial recognition amount of the hedged item:
No
56. Special reserve
"□ Applicable" "√ Not applicable"
57. 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 | 344,271,419.35 | 95,988,980.24 | 440,260,399.59 | |
| Arbitrary surplus reserve | ||||
| Reserve fund | ||||
| Enterprise development fund | ||||
| Others | ||||
| Total | 344,271,419.35 | 95,988,980.24 | 440,260,399.59 |
Descriptions on surplus reserve, including descriptions on changes of the current period andreasons for changes:
The statutory surplus reserve is accrued at 10% of the parent company’s net profits.
58. Undistributed profit
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Current period | Previous period |
| Pre-adjustment undistributed profits at the end of the previous period | 1,874,727,294.53 | 1,372,359,133.67 |
| Total adjustment amount of undistributed profits at the beginning of the period (“+” refers to increase by adjustment and “-” refers to decrease by adjustment) | 5,543,922.00 | |
| Post-adjustment amount of undistributed profits at the beginning of the period | 1,880,271,216.53 | 1,372,359,133.67 |
| Add: Net profit attributable to shareholders of the parent company in the current period | 1,060,083,625.03 | 806,847,308.41 |
| Less: Statutory surplus reserve accrued | 95,988,980.24 | 74,479,147.55 |
| Arbitrary surplus reserve accrued | ||
| Withdrawal of general risk provision | ||
| Dividends on common shares payable | 276,000,000.00 | 230,000,000.00 |
| Dividends on common shares converted to stock capital | ||
| Undistributed profit at the end of the period | 2,568,365,861.32 | 1,874,727,294.53 |
Details on adjustment of undistributed profits at the beginning of the period:
1. Due to the retrospective adjustment based on the Accounting Standards for BusinessEnterprises and their related new regulations, the affected undistributed profit at the beginningof the period was RMB5,543,922.00.
2. Due to changes in accounting policies, the affected undistributed profit at the beginning of theperiod was RMB0.
3. Due to correction of major accounting errors, the affected undistributed profit at the beginningof the 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 theperiod was RMB0.
5. Due to other adjustments, the affected undistributed profit at the beginning of the period wasRMB0.
59. Operating income and operating costs
(1) Operating income 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 | 11,139,921,640.93 | 8,229,332,367.02 | 8,533,924,778.69 | 6,330,424,573.53 |
| Other operations | 1,179,723.51 | 504,901.84 | 1,063,818.86 | 22,166.63 |
| Total | 11,141,101,364.44 | 8,229,837,268.86 | 8,534,988,597.55 | 6,330,446,740.16 |
Other descriptions:
Details on operating income:
| Item | Amount in the current period | Amount in the last period |
| Income from main operations | 11,139,921,640.93 | 8,533,924,778.69 |
| Including: Sales of goods | 11,128,504,198.10 | 8,530,618,597.18 |
| Management fee for franchising | 4,562,765.09 | 2,709,394.05 |
| Hardware and software | 6,854,677.74 | 596,787.47 |
| Income from other operations | 1,179,723.51 | 1,063,818.86 |
| Including: Material income | 996,698.40 | |
| Rental income | 63,875.37 | 955,179.69 |
| Others | 119,149.74 | 108,639.17 |
| Total | 11,141,101,364.44 | 8,534,988,597.55 |
60. 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 | 11,196,254.01 | 12,512,019.05 |
| Education surcharge | 17,562,369.49 | 18,171,704.35 |
| Resource tax | ||
| Property tax | 1,348,318.75 | |
| Land use tax | 683,113.09 | 754,343.70 |
| Vehicle usage tax | ||
| Stamp duty | 11,052,982.62 | 3,211,910.43 |
| Others | 152,020.10 | 70,701.73 |
| Total | 41,995,058.06 | 34,720,679.26 |
Other descriptions:
No
61. Selling expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Total | 980,166,101.18 | 789,386,543.37 |
| Items with relatively large amount: | ||
| Salaries and benefits | 282,098,540.51 | 264,361,912.83 |
| Channel construction fee | 52,031,005.95 | 46,590,825.26 |
| Brand promotion fee | 49,109,586.72 | 26,183,591.17 |
| Transportation and handling charge | 86,718,004.33 | 81,667,789.42 |
| Business promotion fee | 77,878,656.77 | 67,602,773.25 |
| Rental fee | 149,176,463.15 | 108,921,114.59 |
| Others | 283,153,843.75 | 194,058,536.85 |
Other descriptions:
No
62. Administrative expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Total | 469,262,188.13 | 379,618,754.18 |
| Items with relatively large amount: | ||
| Salaries and benefits | 226,532,654.57 | 187,276,647.20 |
| Depreciation and amortization | 57,040,455.35 | 46,069,652.50 |
| Rental fee | 34,022,959.81 | 30,456,723.78 |
| Office expense | 23,030,837.14 | 11,263,997.46 |
| Others | 128,635,281.26 | 104,551,733.24 |
Other descriptions:
No
63. 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 |
| Total | 160,403,362.97 | 114,388,916.75 |
| Items with relatively large amount: | ||
| Salaries and benefits | 74,850,775.54 | 31,648,292.56 |
| Inventory consumption | 56,560,157.03 | 66,844,278.08 |
| Others | 28,992,430.40 | 15,896,346.11 |
Other descriptions:
No
64. Financial 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 | 8,386,182.80 | |
| Less: Interest income | -20,872,167.57 | -5,997,422.97 |
| Exchange gains and losses | 566,099.52 | -2,768,222.32 |
| Others | 3,522,607.60 | 806,195.64 |
| Total | -8,397,277.65 | -7,959,449.65 |
Other descriptions:
No
65. Other income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Government grant | 26,355,003.29 | 8,716,713.66 |
| Accrual and deduction of input tax | ||
| Handling charge on withholding personnel income tax | 149,878.17 | |
| Total | 26,504,881.46 | 8,716,713.66 |
Other descriptions:
Government subsidies included in other income
| Subsidy projects | Amount in the current period | Amount in the last period | Pertinent to assets/income |
| Special Fund for Shanghai Modern Service Industry - Three-dimensional Warehouse | 672,017.88 | 672,017.88 | Pertinent to assets |
| Shanghai's second batch special fund for encouraging enterprises to purchase international R&D equipment in 2014 | 174,000.00 | 174,000.00 | Pertinent to assets |
| R&D and industrialization of key materials and preparation technologies in the pen-making industry | 244,646.88 | 244,646.88 | Pertinent to assets |
| Subsidies for the second batch of key technological | 586,104.12 | 586,104.12 | Pertinent to assets |
| transformation projects in 2013 | |||
| Subsidies for absorption and innovation projects in 2014 | 90,443.52 | 90,443.52 | Pertinent to assets |
| Service industry guidance funds in 2014 | 328,891.68 | 328,891.68 | Pertinent to assets |
| Key technological transformation projects of Shanghai in 2015 | 561,878.28 | 619,089.11 | Pertinent to assets |
| Inbound Marketing - Internet + product development project | 107,310.24 | 107,310.24 | Pertinent to assets |
| Special fund for Shanghai informatization development | 325,087.60 | Pertinent to assets | |
| Special funds for technology R&D projects | 134,548.27 | 134,548.32 | Pertinent to assets |
| Special funds for industrial transformation and upgrade development of Shanghai in 2016 | 120,879.10 | Pertinent to assets | |
| High-value-added product creative development project | 29,437.44 | 272,402.74 | Pertinent to assets |
| Special funds for development of SMEs in Shanghai in 2016 | 80,988.33 | 228,817.89 | Pertinent to assets |
| Zhangjiang Special Development Fund | 709,085.34 | Pertinent to assets |
| in 2017 - Achievement Transformation of “Green Design - Innovative R&D” by Marco Colorful Painting Pen C1085 | |||
| Special fund plan for key technological renovation projects in Qingpu District in 2012: | 77,333.36 | Pertinent to assets | |
| Special funds for central foreign economic and trade development | 49,079.76 | Pertinent to assets | |
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of “Green Design - Innovative R&D” by Marco Colorful Painting Pen C1085 | 1,217,680.00 | Pertinent to income | |
| Zero Balance Special Account of Shanghai Qingpu District Finance Bureau - Enterprise Support Fund of Shanghai Municipal Administration for Market Regulation Qingpu District Branch | 10,100.00 | Pertinent to income | |
| Construction Project of "Marco-Color- | 12,629.05 | Pertinent to income |
| Source" Creative Experience Center | |||
| Subsidies for coal-fired boilers | 36,864.00 | Pertinent to income | |
| Government subsidies | 742,900.00 | Pertinent to income | |
| Industry development guidance funds | 153,400.00 | Pertinent to income | |
| Post stability subsidies | 428,526.10 | 218,788.32 | Pertinent to income |
| Support funds for export credit insurance premium | 4,451.92 | 202,358.65 | Pertinent to income |
| Disability benefit awards | 68,181.83 | Pertinent to income | |
| IP related rewards | 489,463.00 | 203,334.50 | Pertinent to income |
| Cultural festival bonuses | 4,000.00 | Pertinent to income | |
| Special development funds for SMEs | 3,440,000.00 | Pertinent to income | |
| Training fee subsidies | 1,795,663.80 | 914,733.81 | Pertinent to income |
| Funds for investment promotion in Fengxian District | 69,226.00 | Pertinent to income | |
| Rewards from Hangzhou Qiantang Smart City Industrial Construction Center | 210,000.00 | Pertinent to income | |
| Support funds for physical industries | 1,780,000.00 | Pertinent to income | |
| Appropriation of bonuses for recognition of enterprises | 5,000.00 | Pertinent to income | |
| Unemployment insurance from Yiwu | 418,811.79 | Pertinent to income |
| Employment Management & Service Bureau | |||
| Government subsidies for automobile scrapping | 15,600.00 | Pertinent to income | |
| Special funds for development of enterprises | 14,600,000.00 | Pertinent to income | |
| Amount returned by financial department in 2018 | 280,000.00 | Pertinent to income | |
| Total | 26,355,003.29 | 8,716,713.66 |
66. 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 | -576,595.97 | -393,609.74 |
| Investment income from disposal of long-term equity investment | ||
| Investment income from financial asset designated as at fair value through profit or loss during the holding period | ||
| Investment income from disposal of financial asset designated as at fair value through profit or loss | ||
| Investment income from held-to-maturity investments during the holding period | ||
| Investment income from disposal of held-to-maturity investments |
| Investment income from available-for-sale financial assets during the holding period | ||
| Investment income from disposal of available-for-sale financial assets | ||
| 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 | 24,571,581.29 | |
| Investment income from disposal of other equity instrument investments | ||
| Investment income from disposal of debt investment | ||
| Investment income from disposal of other debt investments | ||
| Income from bank wealth management products | 35,517,479.65 | |
| Total | 23,994,985.32 | 35,123,869.91 |
Other descriptions:
No
67. Net gain on exposure hedging
"□ Applicable" "√ Not applicable"
68. 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 | 4,613,287.24 | |
| Including: Income from changes in fair value of derivative financial instruments | ||
| Held-for-trading financial liabilities | ||
| Investment real estate measured at fair value | ||
| Total | 4,613,287.24 |
Other descriptions:
No
69. 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 accounts receivable | 14,977,985.47 | |
| Bad debt losses of other receivables | 13,028,024.41 | |
| Impairment losses of debt investment | ||
| Impairment losses of other debt investments | ||
| Bad debt losses of long-term receivables | ||
| Total | 28,006,009.88 |
Other descriptions:
No
70. 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 |
| 1. Bad debt losses | -4,070,164.66 | |
| 2. Inventory devaluation losses | 17,712,080.66 | 7,482,750.36 |
| 3. Impairment losses of available-for-sale financial assets | ||
| 4. Impairment losses of held-to-maturity investment | ||
| 5. Impairment losses of long-term equity investment | ||
| 6. Impairment losses on investment real estate | ||
| 7. Impairment losses of fixed assets | ||
| 8. Impairment losses of engineering materials | ||
| 9. Impairment losses of construction in progress | ||
| 10. Impairment losses of productive biological assets | ||
| 11. Impairment losses of oil and gas assets | ||
| 12. Impairment losses of intangible assets | ||
| 13. Impairment losses of goodwill | 131,001.23 | |
| 14. Others | ||
| Total | 17,843,081.89 | 3,412,585.70 |
Other descriptions:
No
71. 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 | 6,081,606.95 | -69,195.83 |
| Total | 6,081,606.95 | -69,195.83 |
Other descriptions:
No
72. Non-operating profits
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 gains and losses |
| Total gains from disposal of non-current assets | |||
| Including: Gains from disposal of fixed assets | |||
| Gains from disposal of intangible assets | |||
| Gains from restructuring of debts | |||
| Gains from exchange of non-currency assets | |||
| Acceptance of donations | |||
| Government grant | 16,242,800.00 | 33,406,000.00 | 16,242,800.00 |
| Brand maintenance | 7,843,179.50 | ||
| Liquidated damages and fine income | 922,677.94 | 2,814,531.50 | 922,677.94 |
| Others | 12,193,177.10 | 1,945,301.19 | 12,193,177.10 |
| Total | 29,358,655.04 | 46,009,012.19 | 29,358,655.04 |
Government subsidies included in current profit and loss"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Subsidy projects | Amount accounted for in the current period | Amount accounted for in the previous period | Pertinent to assets/income |
| Financial support | 16,242,800.00 | 33,406,000.00 | Pertinent to income |
| Total | 16,242,800.00 | 33,406,000.00 |
Other descriptions:
"□ Applicable" "√ Not applicable"
73. 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 | 3,153,550.20 | 7,769,418.99 | 3,153,550.20 |
| Including: Losses from disposal of fixed assets | |||
| Losses from disposal of intangible assets | |||
| Losses from restructuring of debts | |||
| Losses from exchange of non-currency assets | |||
| Offering of donations | 4,456,387.80 | 5,211,500.00 | 4,456,387.80 |
| Abnormal loss | 11,579.27 | 11,579.27 | |
| Fine late payment | 19,532.73 | 113,965.06 | 19,532.73 |
| Compensation expenses | 657,935.89 | 831,477.90 | 657,935.89 |
| Inventory losses | 25,692.24 | 13,243.48 | 25,692.24 |
| Others | 10,534,564.93 | 6,599,784.52 | 10,534,564.93 |
| Total | 18,859,243.06 | 20,539,389.95 | 18,859,243.06 |
Other descriptions:
No
74. 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 | 229,869,239.88 | 159,360,651.89 |
| Deferred income tax expenses | -12,266,339.47 | -6,982,228.14 |
| Total | 217,602,900.41 | 152,378,423.75 |
(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 | 1,293,679,744.07 |
| Income tax expenses calculated at statutory/applicable tax rate | 194,051,961.61 |
| Effect of applying different tax rates to subsidiaries | 18,551,460.39 |
| Effect of adjusting income taxes of the previous periods | -1,593,706.87 |
| Effect of non-taxable income | -28,090,838.02 |
| Effect of non-deductible costs, expenses and losses | 26,010,897.30 |
| Effect of deductible losses of deferred income tax assets not recognized in the previous period | -18,128,238.44 |
| Effect of deductible temporary differences or deductible losses of deferred income tax assets not recognized in the current period | 26,801,364.44 |
| Income tax expenses | 217,602,900.41 |
Other descriptions:
"□ Applicable" "√ Not applicable"
75. Other comprehensive income
"□ Applicable" "√ Not applicable"
76. Items of the cash flow statement
(1) 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 | 212,985,779.50 | 58,188,219.81 |
| Special allowances and subsidies | 43,659,627.09 | 41,020,341.28 |
| Rental income | ||
| Interest income | 20,872,167.57 | 5,997,422.97 |
| Non-operating profits | 1,190,996.41 | 2,516,883.71 |
| Total | 278,708,570.57 | 107,722,867.77 |
Descriptions on other cash received from operating activities:
No
(2) 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 | 453,378,164.39 | 340,401,634.22 |
| Sales expenses | 670,248,889.99 | 452,856,547.19 |
| Administration expenses | 191,012,799.95 | 126,951,476.82 |
| Financial expenses | 3,522,607.60 | 1,351,716.08 |
| Non-operating expenses | 5,881,790.24 | 6,364,330.49 |
| R&D expenses | 26,898,793.51 | 14,183,851.22 |
| Total | 1,350,943,045.68 | 942,109,556.02 |
Descriptions on cash paid for other operating activities:
No
(3) Other cash received relating to investing activities
"□ Applicable" "√ Not applicable"
(4) Other cash paid relating to investing activities
"□ Applicable" "√ Not applicable"
(5) Other cash received from financing-related activities
"□ Applicable" "√ Not applicable"
(6) 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 |
| Cash paid for financing lease | 8,687,534.78 | |
| Total | 8,687,534.78 |
Descriptions on other cash paid for financing-related activities:
No
77. 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 | 1,076,076,843.66 | 807,836,414.01 |
| Add: Impairment provisions of assets | 28,006,009.88 | 3,412,585.70 |
| Depreciation of fixed assets, oil and gas assets, and productive biological assets | 17,843,081.89 | |
| Amortization of right-of-use assets | 160,499,582.34 | 137,811,934.54 |
| Amortization of intangible assets | 12,244,846.41 | 9,858,077.23 |
| Amortization of long-term prepaid expenses | 58,322,900.97 | 50,404,368.15 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets (“-” refers to gains) | -6,081,606.95 | 69,195.83 |
| Losses from retirement of fixed assets (“-” refers to gains) | 3,153,550.20 | 7,769,418.99 |
| Losses from changes in fair value (“-” refers to gains) | -4,613,287.24 | |
| Financial expenses (“-” refers to income) | 15,729,788.85 | -2,580,870.25 |
| Investment losses (“-” refers to gains) | -23,994,985.32 | -35,123,869.91 |
| Decrease in deferred income tax assets (“-” refers to increase) | -11,098,014.61 | -6,866,481.94 |
| Increase in deferred income tax liabilities (“-” refers to decrease) | -1,168,324.86 | -115,746.20 |
| Decrease in inventories (“-” refers to increase) | -168,780,666.90 | -178,327,653.13 |
| Decrease in operating receivables (“-” refers to increase) | -393,772,873.21 | -667,687,434.76 |
| Increase in operating payables (“-” refers to decrease) | 319,574,538.57 | 701,480,627.25 |
| Others | ||
| Net cash flow generated from operating activities | 1,081,941,383.68 | 827,940,565.51 |
| 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. Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 1,377,446,435.89 | 741,501,446.10 |
| Less: Opening balance of cash | 741,501,446.10 | 432,046,118.69 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 635,944,989.79 | 309,455,327.41 |
(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 for the business combination of the current period in the current period | 170,005,997.67 |
| Including: Axus Stationery (Shanghai) Company Ltd. | 170,005,997.67 |
| Less: Cash and cash equivalents held by subsidiaries on the acquisition date | 59,357,105.23 |
| Including: Axus Stationery (Shanghai) Company Ltd. | 59,357,105.23 |
| Add: Cash or cash equivalents paid for the business combination of the prior periods in the current period | |
| Net cash paid for acquiring subsidiaries | 110,648,892.44 |
Other descriptions:
No
(3) Net cash amount received from the disposal of subsidiaries in the current period"□ Applicable" "√ Not applicable"
(4) Composition of cash and cash equivalents
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 1,377,446,435.89 | 741,501,446.10 |
| Including: Cash on hand | 503,222.44 | 816,463.47 |
| Bank deposits readily available for payment | 1,372,791,232.44 | 736,400,367.62 |
| Other Cash and equivalents readily available for payment at any time | 4,151,981.01 | 4,284,615.01 |
| 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 | 1,377,446,435.89 | 741,501,446.10 |
| Including: Cash and cash equivalents of which the use is restricted for the parent company or subsidiaries within the group |
Other descriptions:
"□ Applicable" "√ Not applicable"
78. 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 ofthe previous year:
"□ Applicable" "√ Not applicable"
79. Assets with restricted ownership or use rights
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Carrying value at the end of the period | Reason for restriction |
| Cash and equivalents | 558,154,258.46 | Letter of credit deposit and performance bond and fixed deposit over three months, etc. |
| Bills receivable | ||
| Inventories | ||
| Fixed assets | 93,297,472.82 | Mortgaged borrowings |
| Intangible assets | ||
| Receivables financing | 5,287,720.75 | Factoring of accounts receivable |
| Total | 656,739,452.03 | / |
Other descriptions:
For details of accounts receivable factoring and fixed asset mortgage borrowing, please refer toNote XIV. Commitments and Contingencies.
80. Foreign currency monetary items
(1) Foreign currency monetary items
"√ Applicable" "□ Not applicable"
Unit: RMB Yuan
| Item | Foreign currency balance at the end of the period | Translation foreign exchange rate | Balance |
| Cash and equivalents | - | - | 122,488,302.78 |
| Including: USD | 17,048,608.25 | 6.9762 | 118,934,500.87 |
| EURO | 90.76 | 7.8155 | 709.33 |
| JPY | 1,121.00 | 0.0641 | 71.84 |
| HKD | 22,127.12 | 0.8958 | 19,821.03 |
| GBP | 1,175.00 | 9.1501 | 10,751.37 |
| VND | 11,736,445,624.57 | 0.0003 | 3,522,448.34 |
| Accounts receivable | - | - | 24,143,538.52 |
| Including: USD | 453,301.38 | 6.9762 | 3,162,321.09 |
| VND | 69,900,471,814.68 | 0.0003 | 20,979,162.58 |
| HKD | 2,293.92 | 0.8958 | 2,054.85 |
| Prepayments | - | - | 462,263.86 |
| Including: VND | 1,540,216,961.20 | 0.0003 | 462,263.86 |
| Accounts payable | - | - | 76,022,447.65 |
| Including: USD | 375,614.18 | 6.9762 | 2,620,359.64 |
| VND | 244,279,581,853.16 | 0.0003 | 73,315,400.18 |
| HKD | 96,773.57 | 0.8958 | 86,687.83 |
| Accounts received in advance | - | - | 5,344,175.70 |
| Including: USD | 746,196.83 | 6.9762 | 5,205,618.33 |
| VND | 461,659,311.36 | 0.0003 | 138,557.37 |
| Other receivables | - | - | 497,820.40 |
| Including: VND | 1,620,977,408.45 | 0.0003 | 486,502.42 |
| HKD | 12,634.78 | 0.8958 | 11,317.98 |
| Other payables | - | - | 1,091,367.20 |
| Including: VND | 3,502,005,373.20 | 0.0003 | 1,051,053.56 |
| HKD | 45,003.95 | 0.8958 | 40,313.64 |
| Long-term borrowings | - | - | |
| Including: USD | |||
| Short-term borrowings | - | - | 2,979,528.81 |
| Including: USD | 427,099.11 | 6.9762 | 2,979,528.81 |
Other descriptions:
No
(2) Descriptions on overseas operating entities, including: for important overseas
business entities, their main overseas business locations, bookkeeping currency andselection basis shall be disclosed; in case of any change in the bookkeeping currency,the reasons for such change shall be also disclosed"□ Applicable" "√ Not applicable"
81. Hedging
"□ Applicable" "√ Not applicable"
82. Government grant
(1) Basic information on government grant
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Type | Amount | Presentation item | Amount included in current profit and loss |
| Special Fund for Shanghai Modern Service Industry - Three-dimensional Warehouse | 13,131,632.13 | Deferred income | 672,017.88 |
| Shanghai's second batch special fund for encouraging enterprises to purchase international R&D equipment in 2014 | 1,740,000.00 | Deferred income | 174,000.00 |
| R&D and industrialization of key materials and preparation technologies in the pen-making industry | 2,446,471.05 | Deferred income | 244,646.88 |
| Subsidies for the second batch of key technological transformation projects in 2013 | 5,328,614.61 | Deferred income | 586,104.12 |
| Subsidies for absorption and innovation projects in 2014 | 951,743.46 | Deferred income | 90,443.52 |
| Service industry guidance | 3,450,000.00 | Deferred income | 328,891.68 |
| funds in 2014 | |||
| Key technological transformation projects of Shanghai in 2015 | 4,880,000.00 | Deferred income | 561,878.28 |
| Inbound Marketing - Internet + product development project | 1,000,000.00 | Deferred income | 107,310.24 |
| Special fund for Shanghai informatization development | 1,340,000.00 | Deferred income | 325,087.60 |
| Special funds for technology R&D projects | 786,219.51 | Deferred income | 134,548.27 |
| Special funds for industrial transformation and upgrade development of Shanghai in 2016 | 1,100,000.00 | Deferred income | 120,879.10 |
| High-value-added product creative development project | 1,300,000.00 | Deferred income | 29,437.44 |
| Industrial foundation consolidation project in 2016 | 3,770,000.00 | Deferred income | |
| Special funds for development of SMEs in Shanghai in 2016 | 465,108.77 | Deferred income | 80,988.33 |
| Funds for improvement of capacities of Shanghai Engineering Research Center in 2017 | 1,000,000.00 | Deferred income | |
| Cultural and creative project in 2019 | 700,000.00 | Deferred income | |
| Subsidies for injection molding machine intelligent equipment | 570,000.00 | Deferred income | |
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of “Green | 4,600,000.00 | Deferred income | 709,085.34 |
| Design - Innovative R&D” by Marco Colorful Painting Pen C1085 | |||
| Special fund plan for key technological renovation projects in Qingpu District in 2012: | 1,160,000.00 | Deferred income | 77,333.36 |
| Special funds for central foreign economic and trade development | 1,000,000.00 | Deferred income | 49,079.76 |
| Construction Project of "Marco-Color-Source" Creative Experience Center | 2,500,000.00 | Deferred income | |
| Financial support | 16,242,800.00 | Non-operating profits | 16,242,800.00 |
| Special development funds for SMEs | Other income | ||
| Support funds for export credit insurance premium | 4,451.92 | Other income | 4,451.92 |
| Training fee subsidies | 1,795,663.80 | Other income | 1,795,663.80 |
| Post stability subsidies | 428,526.10 | Other income | 428,526.10 |
| Knowledge products and patent subsidies | 489,463.00 | Other income | 489,463.00 |
| Funds for investment promotion in Fengxian District | Other income | ||
| Rewards from Hangzhou Qiantang Smart City Industrial Construction Center | Other income | ||
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of “Green Design - Innovative R&D” by Marco Colorful Painting Pen C1085 | 1,217,680.00 | Other income | 1,217,680.00 |
| Zero Balance Special | 10,100.00 | Other income | 10,100.00 |
| Account of Shanghai Qingpu District Finance Bureau - Enterprise Support Fund of Shanghai Municipal Administration for Market Regulation Qingpu District Branch | |||
| Construction Project of "Marco-Color-Source" Creative Experience Center | 12,629.05 | Other income | 12,629.05 |
| Subsidies for coal-fired boilers | 36,864.00 | Other income | 36,864.00 |
| Government subsidies | 742,900.00 | Other income | 742,900.00 |
| Industry development guidance funds | 153,400.00 | Other income | 153,400.00 |
| Disability benefit awards | 68,181.83 | Other income | 68,181.83 |
| Cultural festival bonuses | 4,000.00 | Other income | 4,000.00 |
| Support funds for physical industries | 1,780,000.00 | Other income | 1,780,000.00 |
| Appropriation of bonuses for recognition of enterprises | 5,000.00 | Other income | 5,000.00 |
| Unemployment insurance from Yiwu Employment Management & Service Bureau | 418,811.79 | Other income | 418,811.79 |
| Government subsidies for automobile scrapping | 15,600.00 | Other income | 15,600.00 |
| Special funds for development of enterprises | 14,600,000.00 | Other income | 14,600,000.00 |
| Amount returned by financial department in 2018 | 280,000.00 | Other income | 280,000.00 |
(2) Return of government grant
"□ Applicable" "√ Not applicable"Other descriptions:
No
83. Others
"□ Applicable" "√ Not applicable"
VIII. Change in consolidation scope
1. Business combinations not under common control
"√ Applicable" "□ Not applicable"
(1) Business combinations not under common control occurring during the current
period"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Name of acquiree | Equity acquisition time | Equity acquisition cost | (%) | Equity acquisition type | Date of acquisition | Basis for determining the acquisition date | Income of acquiree from the acquisition date to the end of the period | Net profit of acquiree from the acquisition date to the end of the period |
| Axus Stationery (Shanghai) Company Ltd. | 30 April 2019 | 177,038,110.00 | 56.00 | Acquisition | 2019-4-30 | Acquisition agreement | 364,743,402.42 | -9,934,923.15 |
Other descriptions:
No
(2) Business combination cost and goodwill
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Combination cost | XX Company |
| --Cash | 170,005,997.67 |
| --Fair value of non-cash assets | |
| --Fair value of the debts issued or assumed | 13,656,702.33 |
| --Fair value of the equity securities issued | |
| --Fair value of contingent consideration |
| --Acquisition-date fair value of the equity held before the acquisition date | |
| --Others | -6,624,590.00 |
| Total combination cost | 177,038,110.00 |
| Less: Fair value share of the identifiable net assets acquired | 146,862,572.81 |
| Goodwill/Amount of the combination cost below fair value share of the identifiable net assets acquired | 30,175,537.19 |
Description on determination method for fair value of combination cost, contingent considerationand its change:
No
Main reason for the formation of large-amount goodwill:
No
Other descriptions:
According to the equity transfer agreement signed between the Company and the originalshareholder and ultimate controller of Axus Stationery, the consideration for 56% equity of AxusStationery was RMB177,038,110.00, of which RMB13,656,702.33 was not paid; the amount inarrear of Axus Stationery’s original shareholder was RMB6,624,590.00, of whichRMB170,005,997.67 has been paid in cash.
(3) Identifiable assets and liabilities of acquiree on the acquisition date"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Axus Stationery (Shanghai) Company Ltd. | ||
| Fair value on the acquisition date | Carrying value on the acquisition date | |
| Assets: | 815,983,742.56 | 617,929,441.79 |
| Cash and equivalents | 63,033,979.82 | 63,033,979.82 |
| Receivables | 60,954,759.68 | 60,954,759.68 |
| Inventories | 186,767,547.77 | 174,919,855.43 |
| Fixed assets | 348,987,524.92 | 271,750,108.32 |
| Intangible assets | 147,781,660.13 | 38,812,468.30 |
| Construction in progress | 2,025,571.50 | 2,025,571.50 |
| Long-term prepaid expenses | 258,780.18 | 258,780.18 |
| Other current assets | 6,078,498.05 | 6,078,498.05 |
| Other non-current assets | 95,420.51 | 95,420.51 |
| Liabilities: | 553,729,148.25 | 517,829,203.29 |
| Borrowings | 293,443,925.46 | 293,443,925.46 |
| Payables | 216,213,376.08 | 216,213,376.08 |
| Deferred income tax liabilities | 35,899,944.96 | |
| Long-term payable | 6,383,497.08 | 6,383,497.08 |
| Deferred income | 1,788,404.67 | 1,788,404.67 |
| Net assets | 262,254,594.31 | 100,100,238.50 |
| Less: Minority equity | 115,392,021.50 | 44,044,104.94 |
| Net assets acquired | 146,862,572.81 | 56,056,133.56 |
Determination method for fair value of identifiable assets and liabilities:
NoContingent liabilities of acquiree assumed in the business combination:
NoOther descriptions:
No
(4) Gains or losses arising from the re-measurement of the equity held before theacquisition date at fair valueWhether there is a transaction where a business combination is achieved stepwise throughmultiple transactions and the control is obtained within the Reporting Period"□ Applicable" "√ Not applicable"
(5) Descriptions on the situation that it is unable to reasonably determine thecombination consideration or the fair value of identifiable assets and liabilities of theacquiree at the combination date or the end of the combination period"□ Applicable" "√ Not applicable"
(6) Other explanation
"□ Applicable" "√ Not applicable"
2. Enterprise merger under the same control
"□ Applicable" "√ Not applicable"
3. Reverse acquisition
"□ Applicable" "√ Not applicable"
4. Disposal of subsidiaries
Whether there is a loss of control upon a single disposal of investment to subsidiaries"□ Applicable" "√ Not applicable"Other descriptions:
"□ Applicable" "√ Not applicable"
Whether there is a loss of control in the current period upon a stepwise disposal of investment to subsidiaries through multiple transactions"□ 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 their related circumstances:
"√ Applicable" "□ Not applicable"
(1) This year the Company deregisters two subsidiaries M&G Life Jiangxi Enterprise Management Co., Ltd. and Beijing Asia Business OnlineInformation Technology Co., Ltd.
(2) This year the subsidiary Shenyang M&G Colipu Office Supplies Co., Ltd. was incorporated into the scope of consolidated financial statementsthrough establishment. The registered capital is RMB500,000, and the investment ratio is 100%.
6. Others
"□ Applicable" "√ Not applicable"
IX. Equity in Other Entities
1. Equity in subsidiaries
(1) Composition of the corporate group
"√ Applicable" "□ Not applicable"
| Name | Main place of business | Registered address | Nature of the business | Shareholding ratio (%) | way | |
| Direct | Indirect | |||||
| Shanghai M&G Colipu Office Supplies Co., Ltd. | Shanghai | Shanghai | Retail, wholesale, etc. | 70.00 | Establishment | |
| Shanghai M&G Stationery & Gift Co., Ltd.(上海晨光文具礼品有限公司) | Shanghai | Shanghai | Production, sale and so forth | 100.00 | Establishment | |
| Shanghai M&G Stationery Sales Co., Ltd.(上海晨光文具销售有限公司) | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Establishment | |
| Guangzhou M&G Stationery&Gifts Sales Co., Ltd.(广州晨光文具礼品销售有限公司) | Guangzhou | Guangzhou | Retail, wholesale, etc. | 100.00 | Establishment | |
| Yiwu Chenxing Stationery Co., Ltd.(义乌市晨兴文具用品有限公司) | Yiwu | Yiwu | Retail, wholesale, etc. | 100.00 | Establishment | |
| M&G Life Enterprise Management Co., Ltd.(晨光生活馆企业管理有限公司) | Shanghai | Shanghai | Retail, wholesale, etc. | 60.00 | Establishment | |
| M&G Life Enterprise Management (Shanghai) Co., Ltd. (晨光生活馆企业管理(上海)有限公司) | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Establishment | |
| Shanghai M&G Jiamei Stationery Co., Ltd.(上海晨光佳美文具有限公司) | Shanghai | Shanghai | Production, sale and so forth | 100.00 | Establishment | |
| Shanghai M&G Information Technology Co., Ltd.(上海晨光信息科技有限公司) | Shanghai | Shanghai | E-commerce business, etc. | 55.00 | 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 | Nanjing | Retail, wholesale, etc. | 70.00 | 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 | Hangzhou | Retail, wholesale, etc. | 100.00 | Establishment | |
| Jiumu M&G Store Enterprise Management Co., Ltd.(九木杂物社企业管理有限公司) | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Establishment | |
| Shanghai M&G Zhenmei Stationery Co., Ltd.(上海晨光珍美文具有限公司) | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Acquired by business combination under common control | |
| Harbin M&G Sanmei Stationery Co., Ltd.(哈尔滨晨光三美文具有限公司) | Harbin | Harbin | Retail, wholesale, etc. | 100.00 | 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 | Zhengzhou | Retail, wholesale, etc. | 100.00 | 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 | Shenzhen | Design and so forth | 51.00 | Acquired by business combination under common control | |
| Shanghai M&G Office Supplies Co., Ltd. | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Establishment | |
| Office Depot Network Technology Co., Ltd. | Beijing | Beijing | Retail, wholesale, etc. | 100.00 | Acquired by business combination under common control | |
| Lianyungang Colipu Office Supplies Co., Ltd.(连云港市科力普办公用品有限公司) | Lianyungang | Lianyungang | Retail, wholesale, etc. | 100.00 | 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 | Shenyang | Retail, wholesale, etc. | 100.00 | Establishment | |
| Hangzhou Sanmei M&G Stationery Co., Ltd.(杭州三美晨光文具有限公司) | Hangzhou | Hangzhou | Retail, wholesale, etc. | 100.00 | Establishment | |
| Luoyang M&G Stationery Sales Co., Ltd.(洛阳晨光文具销售有限公司) | Luoyang | Luoyang | Retail, wholesale, etc. | 100.00 | Establishment |
| Axus Stationery (Shanghai) Company Ltd. | Shanghai | Shanghai | Production, sale and so forth | 56.00 | Acquired by business combination not under common control | |
| Jiangsu Marco Pen Co., Ltd.(江苏马可笔业有限公司) | Jiangsu | Jiangsu | Production, sale and so forth | 100.00 | 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) | Jilin | Jilin | Production, sale and so forth | 100.00 | Acquired by business combination not under common control | |
| Yili Senlai Wood Co., Ltd.(伊犁森徕木业有限公司) | Xinjiang | Xinjiang | Production, sale and so forth | 100.00 | Acquired by business combination not under common control | |
| Axus Stationery (Hong Kong) Company Ltd. | Hong Kong | Hong Kong | Retail, wholesale, etc. | 100.00 | Acquired by business combination not under common control | |
| International stationery company | Vietnam | Vietnam | Production, sale and so forth | 100.00 | Acquired by business combination not under common control |
Descriptions on the situation that the shareholding ratio in the subsidiary is different from theshare of the voting rights:
No
Basis for holding half or less of the voting rights of the investee but still controlling the investeeand holding 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: Yuan Currency: RMB
| Name of subsidiaries | 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. | 30.00% | 22,741,063.01 | 123,473,104.09 | |
Descriptions on the situation that the shareholding ratio of minority shareholders in the subsidiaryis different from that of the voting rights:
"□ Applicable" "√ Not applicable"
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. | 163,996.71 | 3,579.48 | 167,576.19 | 122,907.02 | 3,511.47 | 126,418.49 | 112,789.59 | 3,253.11 | 116,042.70 | 93,003.83 | 3,461.53 | 96,465.36 |
| Name of subsidiaries | Amount accounted for in the current period | Amount accounted for in the previous period | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flow from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 365,806.17 | 7,580.35 | 14,880.10 | 258,604.90 | 3,213.52 | 14,280.02 | ||
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 subsidiarybut the Company still controls the subsidiary"□ Applicable" "√ Not applicable"
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
| Balance at the end of the period/Amount accounted for in the current period | Balance at the beginning of the period/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 | 35,582,783.47 | 30,175,665.26 |
| Total of the following items calculated according to the shareholding ratio | ||
| --Net profits | -576,595.97 | -393,609.74 |
| --Other comprehensive income | -16,285.82 | |
| --Total comprehensive income | -592,881.79 | -393,609.74 |
Other explanationNo
(5) Descriptions on significant limitation of the ability of a joint venture or associate totransfer funds to the Company"□ Applicable" "√ Not applicable"
(6) Excess losses incurred by a joint venture or associate
"□ Applicable" "√ Not applicable"
(7) Unrecognized 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"
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"
X. Risks associated with financial instruments"√ Applicable" "□ Not applicable"The Company faces various financial risks in its business operations: credit risk, market risk andliquidity risk. The Company's Board of Directors is fully responsible for the determination of riskmanagement objectives and policies and bears the ultimate responsibility for risk managementobjectives and policies. The Company's overall objective of risk management is to develop a riskmanagement policy that minimizes risks without unduly affecting the Company'scompetitiveness and resilience.(I) Credit riskCredit risk is the risk that a party to a financial instrument fails to perform its obligations, causingfinancial losses to the other party. The Company mainly faces customer credit risk caused bycredit sales. Before signing a new contract, the Company assesses the credit risk of newcustomers. The Company has set a credit limit for each customer, which is the maximum amountthat does not require additional approval. The Company ensures that the overall credit risk ofthe Company is within a controllable range through the annual monitoring of existing customercredit ratings and the monthly review of aging analysis of accounts receivable.(II) 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 and otherprice risks.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 matches foreign currencyincome with foreign currency expenditure as far as possible to reduce exchange rate risk. Inaddition, the Company may also sign forward foreign exchange contracts or currency swapcontracts to avoid exchange rate risk. During the current period and the previous period, theCompany did not sign any forward foreign exchange contracts or currency swap contracts.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 liabilitiesconverted into RMB are shown below:
| Item | Closing balance | Opening balance | ||||
| USD | Other foreign currencies | Total | USD | Other foreign currencies | Total | |
| Cash and equivalents | 118,934,500.87 | 3,553,801.91 | 122,488,302.78 | 51,086,558.15 | 79,156.03 | 51,165,714.18 |
| Accounts receivable | 3,162,321.09 | 20,981,217.43 | 24,143,538.52 | 4,107,704.54 | 4,107,704.54 | |
| Prepayment | 462,263.86 | 462,263.86 | 4,002,319.29 | 4,002,319.29 | ||
| Other | 497,820.40 | 497,820.40 | ||||
| receivables | ||||||
| Total foreign currency financial assets | 122,096,821.96 | 25,495,103.60 | 147,591,925.56 | 55,194,262.69 | 4,081,475.32 | 59,275,738.01 |
| Short-term borrowings | 427,099.11 | 427,099.11 | ||||
| Accounts payable | 2,620,359.64 | 73,402,088.01 | 76,022,447.65 | 4,242,195.19 | 4,242,195.19 | |
| Accounts received in advance | 5,205,618.33 | 138,557.37 | 5,344,175.70 | 7,912,504.08 | 7,912,504.08 | |
| Other payables | 1,091,367.20 | 1,091,367.20 | ||||
| Total foreign currency financial liabilities | 8,253,077.08 | 74,632,012.58 | 82,885,089.66 | 12,154,699.27 | 12,154,699.27 |
(III) 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'spolicy is to ensure that there is sufficient cash to pay off the debts due. Liquidity risk is centrallycontrolled by the Company's Finance Department. Finance Department ensures that theCompany has sufficient funds to repay debts under all reasonable forecasts by monitoring cashbalances, marketable securities at any time, and rolling forecasts of the cash flows in the coming12 months.Financial liabilities of the Company are presented as unrealized contractual cash flows on thematurity date as follows:
| Item | Closing balance | |||||
| Within 1 month | 1-3 months | 3 months - 1 year | 1-5 years | Above 5 years | Total | |
| Short-term borrowings | 214,235.05 | 2,979,528.81 | 180,000,000.00 | 183,193,763.86 | ||
XI. 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) Held-for-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 | 661,878,587.24 | 661,878,587.24 | ||
| 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 | 3,909,179.93 | 3,909,179.93 | ||
| (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 biological assets | ||||
| Receivables financing | 29,549,924.83 | 29,549,924.83 | ||
| Total assets continuously measured at fair value | 661,878,587.24 | 33,459,104.76 | 695,337,692.00 | |
| (VI) Held-for-trading financial liabilities | ||||
| 1. Financial liabilities at fair value through profit or loss | ||||
| Including: Trading bonds issued | ||||
| Derivative financial liabilities | ||||
| Others | ||||
| 2. Financial liabilities designated as at fair value through profit or loss | ||||
| Total liabilities continuously measured at fair value | ||||
| 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 |
Other descriptions:
The level to which the fair value measurement result belongs is determined by the lowest levelto which the input value that is important to the fair value measurement as a whole belongs.
2. Basis for determining market prices of items continuously and not continuouslymeasured at the 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 canbe obtained 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 thesecond-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 thethird-level fair value"√ Applicable" "□ Not applicable"The input value of the third level is the unobservable input value of the related asset or liability.
5. Information on adjustment between the beginning carrying value and the closing
carrying value of items continuously measured at the third-level fair value andsensitivity analysis on unobservable parameters"□ Applicable" "√ Not applicable"
6. For items continuously measured at fair value, in case of any conversion between
various levels during the period, reasons for the conversion and policies to determinethe conversion time 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 atfair value"□ Applicable" "√ Not applicable"
9. Others
"□ Applicable" "√ Not applicable"
XII. 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 | 58.26 | 58.26 |
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 VII. “Equity in Other Entities” for details.
3. Particulars on joint ventures and associates of the CompanyFor 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 the Note VII. “Equity in OtherEntities” 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 theprevious period and form balances are as follows"√ Applicable" "□ Not applicable"
| 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. | Associates |
Other explanation"□ 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 |
| Shanghai Jiekui Investment Management Firm (L.P.) | Share-participation shareholders |
| Shanghai Keying Investment Management Office (L.P.) | Share-participation shareholders |
| Guo Weilong | Others |
| Wuxi Creative M&G Trading Co., Ltd. | Others |
| Nanjing Zhaochen Stationery Sales Co., Ltd. | Others |
| Nanjing Youchen Stationery Sales Co., Ltd. | Others |
| Nanjing Chenri Stationery Sales Co., Ltd. | Others |
Other explanationNo
5. Particulars on related-party transactions
(1) Related-party transactions for the purchase and sales of goods and the renderingand receipt of servicesTable of information on the purchase of goods/the receipt of services"□ Applicable" "√ Not applicable"
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 | 387,821,087.67 | 332,427,736.80 |
| M&G Holdings (Group) Co., Ltd. | Sale of goods | 26,730.34 | |
| M&G Holdings (Group) Co., Ltd. | Fixed assets | 5,882.90 |
Particulars on related-party transactions for the purchase and sales of goods and the renderingand receipt of services"□ Applicable" "√ Not applicable"
(2) Particulars on related-party entrusted management/contracting and entrustingmanagement/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"□ Applicable" "√ Not applicable"
(3) Particulars on related-party leases
The Company as the lessor:
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Name of lessee | Types of leased assets | Rental income recognized in the current period | Rental income recognized in the previous period |
| Shanghai Jiekui Investment Management Firm (L.P.) | Self-owned office building | ||
| Shanghai Keying Investment Management Office (L.P.) | Self-owned office building |
The Company as the lessee:
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Name of lessor | Types of leased assets | Rental fee recognized in the current period | Rental fee recognized in the previous period |
| M&G Holdings (Group) Co., Ltd. | Self-owned houses (including office buildings, workshops, parking spaces, warehouses, dormitory buildings, etc.) | 3,622,857.14 | 2,818,095.24 |
| M&G Holdings (Group) Co., Ltd. | Self-owned office buildings and parking spaces | 19,032,828.26 | |
| M&G Holdings (Group) Co., Ltd. | Utilities | 5,283,878.50 | 5,602,223.96 |
Descriptions on related-party leases"□ Applicable" "√ Not applicable"
(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 | M&G Holdings (Group) Co., Ltd. | 25,003.50 | 156.21 | ||
| Prepayments | M&G Holdings (Group) Co., Ltd. | 3,419,063.44 | 3,906,164.44 | ||
| Other receivables | Sales entities controlled by Guo Weilong | 12.93 | 0.65 | ||
(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 | 9,576.58 | |
| Other payables | Sales entities controlled by Guo Weilong |
| M&G Holdings (Group) Co., Ltd. | 6,234,878.32 | 521,547.01 | |
| Advance receipts | Sales entities controlled by Guo Weilong | 38,198,477.81 | 12,367,997.96 |
7. Related-party commitments
"□ Applicable" "√ Not applicable"
8. Others
"□ Applicable" "√ Not applicable"
XIII. Share-based payments
1. Overall situation of share-based payment
"□ Applicable" "√ Not applicable"
2. Particulars on equity-settled share-based payment
"□ Applicable" "√ Not applicable"
3. Particulars on cash-settled share-based payment
"□ Applicable" "√ Not applicable"
4. Particulars on modification and termination of share-based payment"□ Applicable" "√ Not applicable"
5. Others
"□ Applicable" "√ Not applicable"
XIV. Commitments and Contingencies
1. Important commitments
"√ Applicable" "□ Not applicable"Important external commitments, nature, and amount existing on the balance sheet date
(1) Mortgage, pledge and guarantee matters in which Shanghai Pudong Development Bank Co.,Ltd. Songjiang Sub-branch (“SPD Songjiang Sub-branch”) is involved
① On 24 March 2016, the subsidiary Jiangsu Marco Pen Co., Ltd. and SPD Songjiang Sub-branch signed the Cap Guarantee Contract numbered ZB9808201600000004, pursuant to which,SPD Songjiang Sub-branch provides a guarantee with a maximum amount not exceeding theequivalent of USD12,000,000.00 to the debts incurred by Jiangsu Marco Pen Co., Ltd. inhandling various financing businesses during the period from 24 March 2016 to 23 March 2022;
② On 24 March 2016, Xu Peifeng and Yang Min, as the ultimate controllers of Axus Stationery,and SPD Songjiang Sub-branch signed the Cap Guarantee Contract numberedZB9808201600000005, pursuant to which, SPD Songjiang Sub-branch provides a guaranteewith a maximum amount not exceeding the equivalent of USD12,000,000.00 to the debtsincurred by Axus Stationery in handling various financing businesses during the period from 24March 2016 to 23 March 2022;
③ On 29 March 2017,Axus Stationery and SPD Songjiang Sub-branch signed the FactoringAgreement numbered 98082013280133, which stipulated that Axus Stationery transfers thereceivables to SPD Songjiang Sub-branch through the way as agreed in the Agreement, andSPD Songjiang Sub-branch agrees to assign related accounts receivable and provide relatedfactoring services in accordance with the conditions and methods stipulated in the Agreement.As of 31 December 2019, the outstanding factoring borrowing from Axus Stationery wasUSD427,099.11, equivalent to RMB2,979,528.81.
(2) Mortgage matters in which China Merchants Bank Co., Ltd. Shanghai Branch is involvedOn 29 October 2019, the subsidiary Axus Stationery and China Merchants Bank Co., Ltd.Shanghai Branch (“CMB Shanghai Branch”) signed the Credit Agreement numbered121XY2019028027; the credit line is RMB180,000,000.00, and the credit period is 12 months,from 30 October 2019 to 29 October 2020; the types of credit business under the credit lineinclude but are not limited to loans\order loans, trade financing, bill discounting, commercial billacceptance, commercial acceptance bill confirmation\discount, international\domestic letter ofguarantee, customs duty payment guarantee, corporate account overdraft, derivative transactionand gold leasing. CMB Shanghai Branch has the right to adjust the floating ratio and/or basicpoint of current asset loans regularly or irregularly in accordance with changes in relevantnational policies, changes in domestic credit market prices or changes in Axus Stationery’s owncredit policies. As of 31 December 2019, the outstanding loan of Axus Stationery wasRMB180,000,000.00.At the same time, Axus Stationery and the bank signed the Maximum Mortgage Contractnumbered 121XY2019028027 based on the above credit agreement, the mortgage period isfrom the effective date of the mortgage contract to the expiration of the period of the creditor'srights claims under the Credit Agreement; the collaterals used for mortgage include:
| Name of collateral | Ownership No. | Original value | Accumulated depreciation | Net value |
| No. 111 Xuezi | HFDQ Zi (2013) | 47,061,453.52 | 22,483,546.11 | 24,577,907.41 |
| South Road, Xianghuaqiao Street, Qingpu District | No. 015437 | |||
| No. 233 Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2013) No. 013396 | 32,156,238.78 | 11,248,094.31 | 20,908,144.47 |
| No. 333 Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2015) No. 015718 | 60,230,210.97 | 12,418,790.03 | 47,811,420.94 |
| Total | 139,447,903.27 | 46,150,430.45 | 93,297,472.82 | |
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"There were no important contingent issues that need to be disclosed during the ReportingPeriod
3. Others
"□ Applicable" "√ Not applicable"
XV. 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 | 368,000,000 |
| Profits or dividends reviewed and approved to be declared for distribution |
According to the Profit Distribution Plan for 2019 reviewed and approved by the 20th meeting ofthe 4th session of Board of Directors of the Company on 10 April 2020, based on the total sockcapital registered on the registration date for the implementation of the equity distribution, theCompany intends to distribute the dividend in cash at RMB4 every 10 shares (tax inclusive) andthe total profit distributed this time is RMB368,000,000.00. The remaining distributable profits in2019 will be carried forward to the following year.
3. Sales return
"□ Applicable" "√ Not applicable"
4. Explanations on other post-balance-sheet-date events
"√ Applicable" "□ Not applicable"According to the 2020 Restricted Stock Incentive Plan of Shanghai M&G Stationery Inc. (Draft)considered and approved at the 20th meeting of the fourth Board of Directors of the Companyon 10 April 2020, the form of incentives to be adopted is restricted stock. The source of the stockis RMB A-share common stock issued by the Company to the incentive target. Incentive targetincludes directors, senior management personnel and key management, technical, and businesspersonnel who serve in the company (including holding subsidiaries, the same below) when theCompany announces this incentive plan. It does not include independent directors, supervisors,shareholders or actual controllers who hold more than 5% of shares individually or in total, andtheir spouses, parents and children. The validity period of this incentive plan is from the datewhen the registration of the first grant of restricted stocks is completed to the date when all therestricted stocks granted to the incentive objects are exempt from restricted sales or therepurchase is canceled, and the maximum period is 48 months.
XVI. 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. 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"
6. Segment information
(1) Basis for determining reporting segments and accounting policies"√ Applicable" "□ Not applicable"According to the Company's internal organizational structure, management requirements andinternal reporting system, two reporting segments are identified, namely: office direct-sellingbusiness and traditional core business. The Company's reporting segments provide differentservices. Since each segment requires different technical or marketing strategies, themanagement of the Company separately manages the operating activities of each reportingsegment and regularly evaluates the operating results of these reporting segments to determinethe 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,and the expenses indirectly attributable to each segment are grouped according to the actualshare of each segment. Assets are allocated according to the operation of the segment and thelocation of the asset. Segment liabilities include liabilities that can be attributed to the segmentformed by the segment's operating activities. If the expenses associated with liabilities sharedby multiple operating segments are allocated to these operating segments, the jointly assumedliabilities are also allocated to these operating segments.
(2) Financial information of reporting segments
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Office direct-selling business | Traditional core business | Inter-segment elimination | Total |
| I. Revenue from foreign transactions | 3,635,092,992.22 | 7,570,977,486.20 | 64,969,113.98 | 11,141,101,364.44 |
| II. Revenue from inter-segment transactions | 22,968,670.31 | 42,000,443.67 | 64,969,113.98 | |
| III. Income from investments in associates and joint ventures | -576,595.97 | -576,595.97 | ||
| IV. Credit impairment losses | -18,750,413.26 | -9,255,596.62 | -28,006,009.88 | |
| V. Asset impairment losses | -66,174.84 | -17,776,907.05 | -17,843,081.89 | |
| VI. Depreciation and amortization charges | 9,128,652.71 | 221,938,677.01 | 231,067,329.72 | |
| VII. Total profits (total losses) | 100,778,132.68 | 1,192,792,039.85 | -109,571.54 | 1,293,679,744.07 |
| VIII. Income tax expenses | 24,974,589.33 | 192,600,918.20 | -27,392.88 | 217,602,900.41 |
| IX. Net profits (net losses) | 75,803,543.35 | 1,000,191,121.65 | -82,178.66 | 1,076,076,843.66 |
| X. Total assets | 1,675,761,928.19 | 5,904,802,289.55 | 15,448,906.00 | 7,565,115,311.74 |
| XI. Total Liabilities | 1,264,184,914.55 | 1,855,536,240.25 | 15,531,084.66 | 3,104,190,070.14 |
(3) If the Company does not have a reporting segment, or if it cannot disclose the totalassets and total liabilities of each reporting segment, the reason should be explained"□ Applicable" "√ Not applicable"
(4) Other explanation
"□ Applicable" "√ Not applicable"
7. Other important transactions and matters that have an impact on investors’ decisions"□ Applicable" "√ Not applicable"
8. Others
"□ Applicable" "√ Not applicable"
XVII. 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 |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 83,650,659.61 |
| 1 to 2 years | 61,547.48 |
| 2 to 3 years | 16,481.17 |
| Above 3 years | 34,618.97 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -814,082.58 |
| Total | 82,949,224.65 |
(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 | value | Carrying balance | Bad debt provisions | 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 | 83,763,307.23 | 100.00 | 814,082.58 | 0.97 | 82,949,224.65 | 94,543,811.55 | 100.00 | 1,219,045.69 | 1.29 | 93,324,765.86 | ||
| Including: | ||||||||||||
| Combination 1: Account age | 16,281,651.67 | 19.44 | 814,082.58 | 5.00 | 15,467,569.09 | 21,821,635.34 | 23.08 | 1,219,045.69 | 5.59 | 20,602,589.65 | ||
| Combination II: Consolidated balance of related-parties current accounts - provisional input tax | ||||||||||||
| Combination III: Related parties in the scope of the consolidated financial statements | 67,481,655.56 | 80.56 | 67,481,655.56 | 72,722,176.21 | 76.92 | 72,722,176.21 | ||||||
| Total | 83,763,307.23 | / | 814,082.58 | / | 82,949,224.65 | 94,543,811.55 | / | 1,219,045.69 | / | 93,324,765.86 | ||
Bad debt provisions accrued separately:
"□ Applicable" "√ Not applicable"
Bad debt provisions accrued according to the combination:
"□ Applicable" "√ Not applicable"
If bad debt provisions are accrued according to the general model of expected credit losses,please refer to the disclosure on other receivables:
"□ 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 | |||
| Combination 1: Account age | 1,219,045.69 | -404,963.11 | 814,082.58 | |||
| Total | 1,219,045.69 | -404,963.11 | 814,082.58 | |||
Significant bad debt provision amounts recovered or reversed in the current period:
"□ Applicable" "√ Not applicable"
(4) Particulars on accounts receivable actually written-off in the current period"□ Applicable" "√ Not applicable"Writing-off of significant accounts receivable"□ Applicable" "√ Not applicable"
(5) Particulars on top 5 accounts receivable in terms of the balance at the end of theperiod based on debtors"√ Applicable" "□ Not applicable"
| Company name | Closing balance | ||
| Accounts receivable | Percentage (%) of the total accounts receivable | Bad debt provisions | |
| Shanghai M&G Stationery & Gift Co., | 47,760,091.18 | 57.02 | |
| Ltd.(上海晨光文具礼品有限公司) | |||
| Shanghai M&G Zhenmei Stationery Co., Ltd.(上海晨光珍美文具有限公司) | 6,004,105.02 | 7.17 | |
| Shanghai M&G Office Supplies Co., Ltd. | 3,371,128.25 | 4.02 | |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 2,529,948.28 | 3.02 | |
| Hangzhou Sanmei M&G Stationery Co., Ltd.(杭州三美晨光文具有限公司) | 2,368,106.90 | 2.83 | |
| Total | 62,033,379.63 | 74.06 |
(6) Accounts receivable derecognizd due to the transfer of financial assets"□ Applicable" "√ Not applicable"
(7) Assets and liabilities formed due to the transfer and continuous involvement ofaccounts receivable"□ Applicable" "√ Not applicable"
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 | 192,500.00 | |
| Dividend receivable | ||
| Other receivables | 284,844,294.54 | 227,644,350.97 |
| Total | 285,036,794.54 | 227,644,350.97 |
Other descriptions:
"□ Applicable" "√ Not applicable"
Interest receivable
(1) Classification of interest receivable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Time deposits | ||
| Entrusted loans | 192,500.00 | |
| Bond investment | ||
| Total | 192,500.00 |
(2) Important overdue interest
"□ Applicable" "√ Not applicable"
(3) Particulars on accruing of bad debt provisions
"□ 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) Particulars on accruing of bad debt provisions
"□ 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 |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 106,166,103.04 |
| 1 to 2 years | 55,612,983.59 |
| 2 to 3 years | 48,436,923.11 |
| Above 3 years | 78,488,187.99 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -3,859,903.19 |
| Total | 284,844,294.54 |
(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 | 2,564,837.10 | 3,433,742.17 |
| Consolidated balance of related-parties current accounts | 277,015,264.79 | 213,679,783.79 |
| Amount paid for materials | 100,145.85 | 2,133,099.15 |
| Consolidated balance of related-parties current accounts - provisional input tax | 1,500,098.94 | 2,191,731.16 |
| Margin and deposit | 4,865,737.79 | 6,372,345.19 |
| Others | 2,658,113.26 | 2,637,087.02 |
| Total | 288,704,197.73 | 230,447,788.48 |
(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 2019 | 2,803,437.51 | 2,803,437.51 | ||
| Balance as at 1 January 2019 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 | 1,056,465.68 | 1,056,465.68 | ||
| Reserved in the current period | ||||
| Resold in the current period | ||||
| Written-off in the current period | ||||
| Other changes | ||||
| Balance as at 31 December 2019 | 3,859,903.19 | 3,859,903.19 |
Particulars on the significant changes in the carrying balance of other receivables in whichchanges in loss provisions occurred in the current period:
"√ Applicable" "□ Not applicable"
| 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 2019 | 230,447,788.48 | 230,447,788.48 | ||
| Balance as at 1 January 2019 in the current period | ||||
| -- Transferred into Phase 2 | ||||
| -- Transferred into Phase 3 | ||||
| -- Reversed into Phase 2 | ||||
| -- Reversed into Phase 1 | ||||
| Increase of the current period | 270,055,776.41 | 270,055,776.41 | ||
| Direct reduction of the current period | ||||
| Derecognition of the current period | 211,799,367.16 | 211,799,367.16 | ||
| Other changes | ||||
| Balance as at 31 December 2019 | 288,704,197.73 | 288,704,197.73 |
The basis for adopting the amount of bad debt provisions accrued for the current period andthe assessment on whether the credit risk of financial instruments 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 | |||
| Combination 1: Account age | 2,803,437.51 | 1,056,465.68 | 3,859,903.19 | |||
| Total | 2,803,437.51 | 1,056,465.68 | 3,859,903.19 | |||
Significant bad debt provision amounts reversed or recovered in the current period:
"□ Applicable" "√ Not applicable"
(5) Particulars on other receivables actually written-off in the current period"□ Applicable" "√ Not applicable"
(6) Particulars on top 5 other receivables in terms of the balance at the end of the period
based on debtors"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Company name | Amount nature | Closing balance | Account age | Percentage (%) in the total balance at the end of the period of other receivables | Closing balance |
| Jiumu M&G Store Enterprise Management Co., Ltd.(九木杂物社企业管理有限公司) | Consolidated balance of related-parties current accounts | 110,420,206.25 | 1-2 years: RMB40,145,500 | 38.25 |
| Shanghai M&G Information Technology Co., Ltd.(上海晨光信息科技有限公司) | Consolidated balance of related-parties current accounts | 23,521,310.33 | Within 1 year | 8.15 | |
| Shanghai M&G Zhenmei Stationery Co., Ltd.(上海晨光珍美文具有限公司) | Consolidated balance of related-parties current accounts | 21,750,000.00 | Above 3 years: RMB8,000,000 | 7.53 | |
| Shanghai Linsong Real Estate Co., Ltd. | Margin and deposit | 3,279,861.00 | 2-3 years | 1.14 | 1,967,916.60 |
| Shanghai M&G Stationery & Gift Co., Ltd.(上海晨光文具礼品有限公司) | Consolidated balance of related-parties current accounts | 2,548,081.03 | Within 1 year | 0.88 | |
| Total | / | 161,519,458.61 | / | 55.95 | 1,967,916.60 |
(7) Receivables involving government subsidies
"□ Applicable" "√ Not applicable"
(8) Other receivables derecognized due to the transfer of financial assets"□ Applicable" "√ Not applicable"
(9) Assets and liabilities formed due to the transfer and continuous involvement of otherreceivables"□ 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 | 1,053,585,409.09 | 1,053,585,409.09 | 848,547,299.09 | 848,547,299.09 | ||
| Investments to associates and joint ventures | 35,582,783.47 | 35,582,783.47 | 30,175,665.26 | 30,175,665.26 | ||
| Total | 1,089,168,192.56 | 1,089,168,192.56 | 878,722,964.35 | 878,722,964.35 | ||
(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 | Closing balance | Impairment provisions accrued in the current period | Balance of impairment provisions at the end of the period |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 462,000,000.00 | 28,000,000.00 | 490,000,000.00 | |||
| 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) | 60,000,000.00 | 60,000,000.00 | ||||
| Shanghai M&G Jiamei Stationery Co., | 30,000,000.00 | 30,000,000.00 |
| Ltd.(上海晨光佳美文具有限公司) | ||||||
| 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 Information Technology Co., Ltd.(上海晨光信息科技有限公司) | 50,000,000.00 | 50,000,000.00 | ||||
| Axus Stationery (Shanghai) Company Ltd. | 177,038,110.00 | 177,038,110.00 | ||||
| Total | 848,547,299.09 | 205,038,110.00 | 1,053,585,409.09 |
(2) Investments to associates and joint ventures
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Unit | At the beginning of the period Balance | Change of the current period | Balance | Balance of impairment provisions at the end of the period | |||||||
| Additional investment | Withdrawn investment | Investment gains and losses recognized 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 | |||||||||||
| Sub-total | |||||||||||
| II. Associate | |||||||||||
| Ningbo Zhongchen Equity Investment Partnership (Limited Partnership) | 30,175,665.26 | -313,145.25 | -16,285.82 | 29,846,234.19 | |||||||
| Shanghai Pen-making Technology Services Co., Ltd. | 6,000,000.00 | -263,450.72 | 5,736,549.28 | ||||||||
| Sub-total | 30,175,665.26 | 6,000,000.00 | -576,595.97 | -16,285.82 | 35,582,783.47 | ||||||
| Total | 30,175,665.26 | 6,000,000.00 | -576,595.97 | -16,285.82 | 35,582,783.47 | ||||||
Other descriptions:
No
4. Operating income and operating costs
(1) Operating income 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 | 3,888,768,953.18 | 2,183,782,074.37 | 3,397,296,920.86 | 2,034,456,319.11 |
| Other operations | 45,222,989.96 | 5,325,437.68 | ||
| Total | 3,933,991,943.14 | 2,183,782,074.37 | 3,402,622,358.54 | 2,034,456,319.11 |
Other descriptions:
Details on operating income:
| Item | Amount in the current period | Amount in the last period |
| Income from main operations | 3,888,768,953.18 | 3,397,296,920.86 |
| Including: Sales of goods | 3,888,768,953.18 | 3,397,296,920.86 |
| Income from other operations | 45,222,989.96 | 5,325,437.68 |
| Including: Rental income | 4,628,381.90 | 5,325,437.68 |
| Interest income from entrusted loans | 1,983,333.33 | |
| Jiku TP freight income | 38,611,274.73 | |
| Total | 3,933,991,943.14 | 3,402,622,358.54 |
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 | -576,595.97 | -393,609.74 |
| Investment income from disposal of long-term equity investment | ||
| Investment income from financial asset designated as at fair value through profit or loss during the holding period | ||
| Investment income from disposal of financial asset designated as at fair value through profit or loss | ||
| Investment income from held-to-maturity investments during the holding period | ||
| Investment income from disposal of held-to-maturity investments | ||
| Investment income from available-for-sale financial assets during the holding period | ||
| Investment income from disposal of available-for-sale financial assets | ||
| 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 | 22,046,969.52 | |
| Investment income from disposal of other equity instrument investments | ||
| Investment income from disposal of debt investment | ||
| Investment income from disposal of other debt investments | ||
| Bank wealth management products | 32,583,726.23 |
| Total | 21,470,373.55 | 32,190,116.49 |
Other descriptions:
No
6. Others
"□ Applicable" "√ Not applicable"
XVIII. 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 | the situation |
| Gains or losses on disposal of non-current assets | 6,081,606.95 | Mainly due to the disposal of certain old equipment by the subsidiaries held by the Company and the winding up of certain subsidiaries under the subsidiaries held by the Company, which is in view of the business demands |
| Government subsidies included in the profits and losses of the current period (except those closely related to the Company's business and of fixed amount or fixed quantity granted in accordance with national uniform standards) | 42,747,681.46 | Mainly including government grants received during the Reporting Period and government grants transferred from deferred income |
| Investment income arising from changes in fair values held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative financial liabilities, and investment gains on the disposal of held-for-trading financial | 29,184,868.54 | Revenue generated from purchase of wealth management products |
| assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investment, except the Company normal operations related to effective hedging business | ||
| Reversal of provision for impairment of receivables which are individually tested for impairment | 1,803,027.63 | Mainly due to the provision reversal of bad debts on individual receivables of the Company |
| Other net non-operating income and expenses, other than the above items | -5,743,388.02 | Mainly the expense of public donations and the losses arising from the winding up of certain subsidiaries controlled by the subsidiaries of the Company |
| Effect of income tax | -14,413,308.64 | |
| Effect of minority equity | -4,764,697.27 | |
| Total | 54,895,790.65 |
For non-recurring profit and loss items defined by the Company according to the ExplanatoryAnnouncement of Information Disclosure by Companies Offering Securities to the Public No. 1- Non-recurring Gains and Losses, and non-recurring profit and loss items listed in theExplanatory Announcement of Information Disclosure by Companies Offering Securities to thePublic No. 1 - Non-recurring Gains and Losses defined as recurring profit and loss items，thereasons shall be explained."□ Applicable" "√ Not applicable"
2. Return on net assets and earnings per share
"√ Applicable" "□ Not applicable"
| Profits during the Reporting Period | Weighted average return on net assets (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to ordinary shareholders of the company | 28.17 | 1.1523 | 1.1523 |
| Net profit attributable to ordinary shareholders of the company after deducting non-recurring gains and losses | 26.71 | 1.0926 | 1.0926 |
3. Difference in the Accounting Information under the PRC Accounting Standards forBusiness Enterprise (“PRC GAAP”) and Overseas Accounting Standards"□ Applicable" "√ Not applicable"
4. Others
"□ Applicable" "√ Not applicable"
Chapter XII References
| 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. |
| References | Original of the auditor’s report with the seal of the accounting firm and the signature and seal of the certified public accountant. |
| References | Originals of all company documents and announcements publicly disclosed on the designated information disclosure media by CSRC during the Reporting Period. |
Chairman: Chen HuwenDate of report and submission approved by the Board of Directors: 10 April 2020
Revision information"□ Applicable" "√ Not applicable"