Stock Code: 603899 Short Name: M&G Stationery
SHANGHAI M&G STATIONERY INC.
Annual Report 2020
Going Forward with our Mission
Dear shareholders, partners and friends,
The year 2020 was an extraordinary year. Since the beginning of the year, the suddenoutbreak of the COVID-19 pandemic has brought tremendous impacts to various industries.Due to such macroeconomic climate and the delay in school return date, many stationeryshops faced grave challenges to resume operation. Among such uncertainties, what M&Gcan do is do "things with certainty". The Company acted quickly to fight against thepandemic. On the one hand, we adopted pandemic prevention and control measures to protectour employees, provided PPE for front-line workers and donated money and materials. Onthe other hand, the Company took resolute steps to restart factories to resume production. Inthe first half of the year, the Company recorded a decrease in results. With our strenuousefforts, we achieved satisfactory performance in the second half. One of the most importantthings we learned in 2020 is that if you truly aspire something , you can always work out away and if you persist enough, you can make the seemingly impossible come true.In 2020, the Company recorded revenue of RMB13 billion, an increase of 17.9%, and netprofit of RMB1.2 billion, an increase of 18.4%. For the past years since going public, M&Ghas maintained health growth and sound asset condition. The year 2020 was of greatsignificance to M&G. Exploring with the spirit of a startup company, M&G has been foundedfor three decades, and it launched a new round of a five-year strategy plan.The year 2021 is the beginning of China's 14th Five-Year Plan, and also the start of M&G'snew five-year strategy. M&G will adhere to the new development thinking of growth withemphasis on quality and efficiency. Our new five-year strategy is formulated in line with thedirection of the previous strategy, and reflects China’s population trend and consumptionupgrade in the new era. The new strategy calls for product mix upgrade and on-line businessexpansion, supported by digitalization, MBS, and merger and acquisition. The Company’smission is to "make study and work more joyful and effective", and the Company’s vision isto become a "world-class M&G".We believe that good stationery has vitality, as a good book and stationery is temperate andcan make a positive difference. In China, we see great potential in the stationery and creativeculture products industry. Every year, M&G launches thousands of new products based on
consumer insights. To deliver a better experience for consumers, we hope to include newfeatures in our products, incorporating functionality and a sense of beauty and humor.According to the vision to become "world-class M&G" as set out in our new five-yearstrategy, M&G devotes to providing better products for China and the world, aiming tobecome a pioneer in global stationery industry when it comes to products and technology.From stationery to creative culture products, M&G must have a more open mindset. M&GColipu is committed to making work more joyful and effective, and becoming a leader inChina’s office supplies 2B industry with about one trillion RMB market. While promotinginternational business and carrying out Dual Circulation, we will break various bottlenecksand strive for higher goals.Dear shareholders and partners, we will go forward with our mission in mind! M&G isinspired by grand national rejuvenation, yet we also take clue from ordinary people. Webelieve the best way to help us successfully is by helping related others successful, we believethat the success of individuals and companies depends on their “energy, will and spirit”. Webelieve in long-termism, choosing to do harder but right things, and doing daily work withexcellence. "The new era belongs to those who strive. Striving leads to happiness and strivingin itself is a happiness."We would like to express our heartfelt thanks to our customers and partners, for your careand support for the development of the Company. M&G is willing to work together with allof you, remain true to our original aspiration, and forge ahead to promote a sustainable, soundand high-quality development, and create better value for all shareholders. Strive towards a"world-class M&G". We look forward to working with you towards a bright future!
Chairman: Chen Huwen
26 March 2021
Important NoticeI. The Board of Directors, Supervisory Committee, directors, supervisors and senior management
of the Company warrant that the contents of this report are true, accurate and complete,without any misrepresentation, misleading statements or material omissions, and severally andjointly 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 report withunqualified opinions to the Company.
IV. Chen Huwen, the chairman of the Company, Quan Qiang, CFO of the Company and Zhai Yu,the head of the accounting department (person in charge of accounting), warrant thetruthfulness, accuracy and completeness of the financial report in this annual report.
V. Profit distribution plan or plan to convert surplus reserves into share capital approved by theBoard of Directors during the Reporting PeriodThe Company proposes to distribute cash dividend of RMB5.00 (tax inclusive) per 10 shares basedon the Company’s total share capital registered as at the registration date for the implementation ofdividend distribution. The profit distribution plan is subject to being submitted the Company's 2020 annualgeneral meeting of shareholders for deliberation.
VI. Risks statement of the forward-looking statements"√ Applicable" "□ Not applicable"
Forward-looking statements including future plans and development strategies involved in thisannual report do not constitute the Company’s substantive commitments to investors. The investors areadvised to pay attention to investment risks.
VII. Is there any non-operating misappropriation of funds of the Company by any controllingshareholders and their related partiesNo
VIII. Has the Company provided any external guarantees in violation of the decision-making
proceduresNo
IX. Are there more than half of the directors who cannot warrant the truthfulness, accuracy andcompleteness of the annual report disclosed by the CompanyNo
X. Warning on significant risksThe Company has illustrated various risks and corresponding measures that the Company might facein the production and operation. Please refer to the “Potential Challenges and Risks” set out in the“Discussion and Analysis of Operation” under Chapter IV. Investors are advised to pay attention to riskof investment.
XI. Others"□ Applicable" "√ Not applicable"
本报告分别以中、英文编制，在对中外文文本的理解上发生歧义时，以中文文本为
准。This English version is converted from the Chinese version.In case of any discrepancy between the Chinese version and the English version, the
Chinese version shall prevail.
Contents
Pressing Forward with Mission in Mind ...... 2
Chapter I Definition ...... 7
Chapter II Company Profile and Key Financial Indicators ...... 8
Chapter III Business Overview ...... 13
Chapter IV Discussion and Analysis of Operation ...... 18
Chapter V Major Events ...... 39
Chapter VI Changes in Ordinary Shares and Shareholders ...... 66
Chapter VII Preference Shares ...... 76
Chapter VIII Directors, Supervisors, Senior Management and Employees ...... 77
Chapter IX Corporate Governance ...... 84
Chapter X Corporate Bonds ...... 88
Chapter XI Financial Report ...... 89
Chapter XII References ...... 244
Chapter I Definition
I. DefinitionIn this report, unless the content requires otherwise, the following terms shall have the followingmeanings:
| Definition of common terms | ||
| The Report | Annual Report 2020 | |
| 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 Life 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 2020, from 1 January 2020 to 31 December 2020 | |
| 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 Stationery |
| Legal representative of the Company | Chen Huwen |
| 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 |
| 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 |
| 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 |
| 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 | / |
| Auditor of the Company (domestic) | Name | BDO China Shu Lun Pan Certified Public Accounts LLP |
| 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 | 2020 | 2019 | Year-on-year change (%) | 2018 |
| Revenue | 13,137,745,727.18 | 11,141,101,364.44 | 17.92 | 8,534,988,597.55 |
| Net profit attributable to shareholders of the listed company | 1,255,426,655.27 | 1,060,083,625.03 | 18.43 | 806,847,308.41 |
| Net profit attributable to shareholders of the listed company, net of non-recurring gains and losses | 1,102,712,281.50 | 1,005,187,834.38 | 9.70 | 749,412,457.07 |
| Net cash flow generated from operating activities | 1,271,697,892.28 | 1,081,941,383.68 | 17.54 | 827,940,565.51 |
| End of 2020 | End of 2019 | Year-on-year change (%) | End of 2018 | |
| Net assets attributable to shareholders of the listed company | 5,193,568,712.05 | 4,201,500,384.99 | 23.61 | 3,410,808,445.41 |
| Total asset | 9,709,908,436.32 | 7,565,115,311.74 | 28.35 | 5,677,500,049.71 |
| Key financial indicators | 2020 | 2019 | Year-on-year change (%) | 2018 |
| Basic earnings per share (Yuan/share) | 1.3558 | 1.1523 | 17.66 | 0.8770 |
| Diluted earnings per share (Yuan/share) | 1.3558 | 1.1523 | 17.66 | 0.8770 |
| Basic earnings per share， net of non-recurring gains and losses (Yuan/share) | 1.1908 | 1.0926 | 8.99 | 0.8146 |
| Weighted average ROE (%) | 26.91 | 28.17 | Decrease by 1.26 percentage points | 26.16 |
| Weighted average ROE, net of non-recurring gains and losses (%) | 23.63 | 26.71 | Decrease by 3.08 percentage points | 24.30 |
2) Differences in net profit and net assets attributable to shareholders of the listed company infinancial reports disclosed under overseas accounting standards and PRC GAAP"□ Applicable" "√ Not applicable"
3) Explanation on the differences between PRC GAAP and Overseas Accounting Standards:
"□ Applicable" "√ Not applicable"
IX. Key Financial Data for the Year of 2020 by Quarter
Unit: Yuan Currency: RMB
| 1st Quarter (January - March) | 2nd Quarter (April - June) | 3rd Quarter (July - September) | 4th Quarter (October - December) | |
| Revenue | 2,083,587,295.14 | 2,677,836,377.15 | 3,776,378,538.71 | 4,599,943,516.18 |
| Net profit attributable to shareholders of the listed company | 230,373,494.44 | 234,127,325.67 | 448,408,007.50 | 342,517,827.66 |
| Net profit attributable to shareholders of the listed company after non-recurring profit or loss | 173,986,745.54 | 213,134,322.82 | 405,711,591.63 | 309,879,621.51 |
| Net cash flow generated from operating activities | -258,692,211.83 | 385,237,644.11 | 767,509,677.24 | 377,642,782.76 |
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 2020 | Notes (if applicable) | Amounts in 2019 | Amounts in 2018 |
| Gains or losses on disposal of non-current assets | 169,704.92 | Mainly due to the Company's renewal of some old equipment | 6,081,606.95 | -69,195.83 |
| Government subsidies 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 State policies | 135,222,930.01 | Mainly including government subsidies received during the Reporting Period and government subsidies transferred from deferred income | 42,747,681.46 | 42,122,713.66 |
| Gains or losses on entrusted investment or asset management | 35,517,479.65 | |||
| 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 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 | 37,743,018.95 | Revenue generated from purchase of wealth management products | 29,184,868.54 | |
| Reversal of provision for impairment of receivables and contractual assets which are individually tested for impairment | 8,958,818.94 | Mainly due to the provision reversal of bad debts on individual receivables of the Company | 1,803,027.63 | |
| Other net non-operating income and expenses, other than the above items | 18,746,671.42 | Mainly including the non-operating income transferred from the proceeds from the merger and acquisition of Office Depot, and the expenditure of charity donations. | -5,743,388.02 | -7,936,377.76 |
| Effect of minority equity | -18,957,557.36 | -4,764,697.27 | -2,192,444.11 | |
| Effect of income tax | -29,169,213.11 | -14,413,308.64 | -10,007,324.27 | |
| Total | 152,714,373.77 | 54,895,790.65 | 57,434,851.34 |
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 | 661,878,587.24 | 1,428,277,848.33 | 766,399,261.09 | 32,281,250.23 |
| Receivables financing | 29,549,924.83 | 61,412,976.46 | 31,863,051.63 | |
| Derivative financial assets | ||||
| Other debt investments (including other current assets) | ||||
| Other non-current financial assets | ||||
| Investments in other equity instruments | 3,909,179.93 | 5,476,577.42 | 1,567,397.49 | |
| Held-for-trading financial liabilities | ||||
| Derivative financial liabilities | ||||
| Total | 695,337,692.00 | 1,495,167,402.21 | 799,829,710.21 | 32,281,250.23 |
Chapter III Business OverviewI. Description of the Company’s principal business, operation model and industry conditionduring the Reporting Period
1) Principal business and operation model
1. Principal business
M&G Stationery is a comprehensive stationery supplier and an office servicer. The Companyintegrates the value of creativity into its products and service advantages, advocates fashionable stationerylifestyle, and provides solutions for study and work. Its traditional core businesses include designing,developing, manufacturing and selling writing instruments, student stationery, office supplies and otherproducts under brands, and also the e-commerce business M&G Technologies; its Newbusinesses mainly comprise of own-operated retail stores - Jiumu Store and M&G Life, and direct officesupplies service - M&G Colipu. During the Reporting Period, there were no significant changes in theCompany's principal business and operation model.
2. Principal operation model
The Company has an independent and complete operation from design and development of brandsand products, procurement of raw materials and accessories, product manufacturing, supply chainmanagement and warehouse and logistics, to distribution network management. The Company is capableof performing independent operation of business in the market. For R&D and new products developmentmodel, the Company has an “entire design system” covering the whole process starting from customervalue proposition to product design, product mold to brand image design, incorporating trend-, theme andexperience-oriented development model to develop new products with a comprehensive categoriesapproach based on consumer insight. For manufacturing model, the Company uses the brandmanufacturing model that features sales-driven production, in-house and OEM outsourcing. The Companyhas an independent system from raw material procurement to manufacturing and selling, and hasestablished its brands in the market. We have the advantages from participating in the whole value chainfrom design, research and developing, manufacturing and selling stationery. For sales model, based onfeatures of stationery products and current situations of domestic stationery consumption, the Companyhas developed its sales model that relies on regional distributors, complemented by direct sales to offices2B customers, direct-sale store, KA sales, online sales, as well as international distribution. We are theone of leading companies in China’s stationery business that engage in large-scale brand salesmanagement and franchise management.
M&G Technologies mainly comprises of online businesses in Tmall and JD. Tmall business is M>echnologies’ Tmall flagship store where customers can place orders. For the business on JD platform, ittakes purchase order monthly based on inventory and shelf sales ratio, and responds to purchase orderaccording to M&G Technologies’ actual inventory condition; after the order is confirmed, it will then beforwarded to the warehouse system where it then delivers goods to JD according to the confirmed purchaseorder. M&G Technologies is also responsible for online full platform marketing and management ofauthorized online stores.
M&G retail store businesses include two store types: Jiumu stores and M&G Life stores. Targetingfemale consumers aged 15-29, Jiumu Stores primarily sell stationery, cultural and recreative products,educational and entertainment products, and daily household and home products. Jiumu stores are mostlylocated in high-quality shopping malls in prime urban districts. Jiumu stores represent the Company’songoing exploration in new retail model in lifestyle products with a distinct cultural element. Jiumu Storestarted franchising in July 2018, where franchisees pay contract deposit and decoration fee according tocontracts, and store rent, store staff salary, utilities and other costs incurred in franchising stores. M&G
Life stores mainly target students aged 8-15, primarily selling stationery products. M&G Life stores mostlylocate in Xinhua Bookstore and compound bookstores, M&G Life stores represent the Company’s effortsto move beyond the dominant traditional channels of retail stationery shops nearby schools.
In the direct office supplies service business，M&G Colipu provides governments, public institutions,Fortune Global 500 companies and other SMEs with cost-effective one-stop office supplies procurementservice. M&G Colipu has a rich product offering, covering office supplies, MRO industrial products,marketing gifts, employee benefits and corporate services, more than one million products including officepaper, office stationery, office supplies, office equipment, computers and accessories, digital andcommunications, office appliances, daily necessities, labor protection industrial supplies, food andbeverages, business gifts and office furniture. By shortening the supply chain, M&G Colipu providescustomers with cost-effective procurement and customized value-added services.With changing demographics of China in particular the decreasing birth rate, it becomes increasinglydifficult to achieve revenue growth from unit volume growth in the future, and stationery industry growthis increasingly driven by consumption upgrade and product upgrade. The Company’s traditional corebusinesses are challenged with changing demands from more individualized population born after 1990and 2000. Stationery consumption in China is becoming more brand conscious, innovative, individualizedand more premium. There is a clear growth in demand for better cultural and creative products, whichaccelerates industry transformation towards one with more cultural and creative elements. M>echnologies reflects channel diversification trend and helps the Company's omni-channel strategy byexpansion of online business. Jiumu stores and M&G Life stores both serve as the Company’s bridgeheadto continue products and channels upgrading of its traditional core businesses, and they play an importantrole in promoting the Company’s brands and products upgrade. M&G Colipu’s direct office suppliesservice business meets demands for purchasing office supplies from large corporations and institutions,which helps boosting the sales of writing instruments and office stationery of the Company’s traditionalcore business.
3. Major driver for revenue growth
(1) Social transformation and consumption upgrade; (2) State investment in education; (3) Favorablepolicy environment for culture industry development; (4) Continued growth in household income; (5)Second-child policy; (6) Fragmented industry with low concentration.
2) Situations and features of industry where the Company operates, and industry status of theCompany
1. Situations of industry where the Company operates
According to Guidelines for the Industry Classification of Listed Companies (revised in 2012) issuedby China Securities Regulatory Commission, and results of industry classification of listed companiesreleased by China Securities Regulatory Commission, the Company is classified to stationery, arts, sportsand entertainment products industry. The Company is a member of China Stationery & Sporting GoodsAssociation, and China Writing Instrument Association.
During January-November 2020, revenue of China’s stationery and office supplies industryamounted to RMB136.7 billion, representing a decline of 1% from the previous year, and total profitsamounted to RMB7.9 billion, representing a fall of 11% from the previous year. There were 1,033enterprises above designated size in China’s stationery and office supplies industry (Source: ChinaStationery & Sporting Goods Association).
In 2020, 212 member enterprises of China Writing Instrument Association recorded revenue fromprincipal business of RMB14.5 billion, representing a decrease of 11% from the previous year, andrealized profits of RMB0.7 billion, representing a decline of 20% from the previous year. In 2020, writinginstrument industry exports amounted to USD2.4 billion, down 16% from previous year. Affected by thepandemic, the demand for writing instruments decreased across the world, and export was severely hit in
2020, reaching the lowest point in the past ten years. The writing instrument industry imports amountedto USD800 million, up 1% from the previous year. (Source: China Writing Instrument Association)
2. Features of the industry
(1) Periodicity
Writing instruments, student stationery and office supplies are less affected by economic fluctuations.With low unit price, writing instruments and student stationery are more of necessity goods with relativelylow income elasticity, relatively less sensitive to economic fluctuations.
(2) Seasonality
There is seasonality in the demand for student stationery. Months before a new semester (summerand winter vacation) is what the stationery industry calls “schooling peak season”, during which sales ofstudent stationery usually peaks.
3. Development trend of the industry
With the changes in the way of life and consumption habit of consumers, China’s retail industryentered a new stage of redevelopment and innovation. Stationery industry faces challenges withuncertainty of external environment, diversification of retail channels, and more individualized demandsfrom main customers group (now being the post-90s and post-00s). With the changing demographics ofChina in particular the decreasing birth rate, stationery industry revenue growth comes less from by unitvolume growth, and more from consumption upgrade and product upgrade. Domestic market demand formid- to high-end stationery products keeps increasing, reshaping market structure dominated by low-endproducts. This provides opportunities for mid- to high-end stationery products with better quality andhigher price. China’s population of 1.4 billion accounts for about 18% of global population, while leadingstationery companies in China can continue to mostly rely on the huge domestic market, they also haveroom for international expansion in international markets, which could reinforce each other underfavorable conditions.
Traditional retail stationery shops nearby school are still the dominant channel for China’s stationeryindustry, and shares of other retail formats are increasing faster. Sales terminals and channels of theindustry are becoming more diversified, upgrading and competition in channels becomes more obvious.Domestic consumption for stationery in China becomes more brand conscious, innovative, individualizedand more premium. There is a growing demand for premium cultural and creative products, stationeryproducts are moving from those primarily focus on functionality towards those with more cultural andcreative elements catering to customers. There are around thousands of stationery manufacturers inChina’s domestic stationery industry and the industry is quite decentralized. There are a few leadingcompanies for most sub-category stationery products, with continued development in the stationeryindustry, there could be higher industry consolidation, and leading companies could gain larger marketshares.
The market of the direct office supplies service has been growing fast in China. According to industryresearch report, the scale of the market of broad office supplies (including office furniture, equipment andother office supplies) in China reached more than RMB1 trillion. Regulation on the Implementation of theGovernment Procurement Law of the People's Republic of China in 2015 explicitly requires that the stateshall promote the utilization of information networks for carrying out digital government procurement. In2019, the Notice on Promoting Fair Competition and Optimizing the Business Environment inGovernment Procurement clearly proposed to accelerate the promotion of electronic governmentprocurement. With strong national policy supports, B2B office supplies procurement in China got a uniqueopportunity for rapid development. At present days, driven by favorable policies and leading large andmedium-sized enterprises, various digital procurement service providers are entering the market,accelerating development of e-procurement with public purchasing. The continuous integration anddevelopment of public procurement and high technology has also promoted the development of publicprocurement towards more professional, intelligent market-oriented and international.
During the pandemic, offline consumption was hindered, and consumption towards onlineaccelerated. According to the National Bureau of Statistics, online retail sales across the country recordedRMB12 trillion in 2020, a year-on-year increase of 11%. Leading consumer products companies seizedopportunities of online consumption and achieved sustained growth through online and offline integration.China's digital economy accounts for 36% of the total economy (source: China Academy ofInformation and Communications Technology). Data has become a new factor of production. Industrialdigitization is becoming the main pillar of the digital economy. Traditional industries have gained growthmomentum in the digital age.With smart technology and products upgrade, promotion of national education informatization andthe development of the online education market, smart stationery products have developed rapidly in thepast few years. Technology-empowered smart pens and smart books are widely adopted in onlineeducation, providing an increasingly better user experience.
4. Company position in the industry
As a leader of “own brand + domestic demand” in China’s stationery industry, the Company has astrong first-mover and leading advantage, with a wide and deep distribution network coverage in China’sstationery market. At the end of the Reporting Period, the Company has a national distribution networkcovering over 80,000 retail stationery shops using the store sign “M&G Stationery” across China, enablingthe Company to establish market leading position for its own brand products amidst competitions. TheCompany ranked first in “Top Ten Enterprises in China’s Light Industry and Writing Instrument” for nineconsecutive years.
II. Explanation on substantial changes in major assets of the Company during the Reporting
Period"√ Applicable" "□ Not applicable"Please refer to 2 (3) Analysis on Assets and Liabilities set out in Discussion and Analysis of Operationunder Chapter IV for more details.
III. Analysis on core competitiveness during the Reporting Period"√ Applicable" "□ Not applicable"
1. Brand advantage
As a leader of “own brand + domestic demand” in China’s stationery industry, the Company hasestablished a leading position for its own brand products amidst competitions of domestic market. TheCompany ranked the first in “Top Ten Enterprises in China’s Light Industry and Writing Instrument” fornine consecutive years. M&G brand has sound brand recognition among consumers, and served as thedesignated stationery brand for Boao Forum for Asia for many years. During the Reporting Period, theCompany won the "Shanghai Brand" certification.
2. Channel advantage
The Company has a strong first-mover and leading advantage with a wide and deep coverage ofdistribution network across China. The Company has established an efficient distribution managementsystem and a domestic terminal network with deep penetration. At the end of the Reporting Period, theCompany has 36 tier-one distributor partners, and about 1,200 tier-two and tier-three distributor partnersacross China, covering over 80,000 retail stationery shops with “M&G Stationery” logo across China.
3. Design and R&D advantage
The Company has the capability to respond timely to market and strong R&D capacity for newproducts. The Company conducts market research for new product development and identifies markettrends. The Company launches about one thousand new products each year to meet consumer needs,covering writing instruments, writing pads, art materials, office supplies and other categories. Throughinnovation, the Company has developed a variety of products such as quick-drying series, heat erasableseries, and professional painting materials. The Company was awarded high profile industrial design
awards including German iF Award, Red Dot Design Award, G-mark, and IDEA, also product designawards such as Gold Ideas Medal and Red Star Medal, reflecting the Company’s design capabilities. TheCompany pioneered application of antibacterial, high-density, spray-free, and biodegradable materials,broadened stationery materials, helped the environmental protection and green development of theindustry.
4. Technology advantage
The Company has raw material formula and production process with intellectual property rights. TheCompany was recognized as a national high-tech enterprise since 2010. The Company hosts the “nationalindustry design center”, “China key laboratory of light industry and writing instrument engineeringtechnology”, “Shanghai research center of writing instrument engineering technology” and other national,provincial and ministerial level technology centers. The testing laboratory of the Company obtainedCNAS certification qualification and testing results are recognized by over 100 countries. The Companyhas undertaken a number of national, provincial and ministerial-level and independent research anddevelopment projects. The Company won two First Prizes for State Science and Technology ProgressAward issued by China National Light Industry Council.
5. Manufacturing advantage
The Company benefits from experience of large-scale manufacturing accumulated from past years,in-house mold capability, reliable supply chain, sound quality control system and adoption of informationmanagement systems. The Company has the capability of large-scale manufacturing with high qualitycontrol standard. Its product quality has won general recognition and favorable comments from consumers.The Company promotes the application of intelligent manufacturing technology in the production andinspection, and applies machine vision technology in various key links to improve the efficiency. TheCompany sets itself as a model for transforming the stationery industry towards a leaner manufacturingmodel.
6. Supply chain advantage
With the idea of partnership in its business operation, the Company has strived to build a highstandard supply chain ecosystem. The Company keeps upgrading the management for supply chain, andhas information collaboration, inventory optimization, financial support, quality and order management,performance optimization to help supply chain partners to be stronger, improve consistency and operationcapability of our supply chain partners.
Chapter IV Discussion and Analysis of Operation
I. Discussion and Analysis of OperationIn the first half of 2020, due to the impact of the COVID-19 pandemic, both domestic economicgrowth momentum and foreign trade demand significantly slowed down. The office stationery industrywas severely affected by the macro economy and delayed school openings, especially primary andsecondary schools. On the one hand, the Company actively complied with pandemic prevention andcontrol measures; on the other hand, the Company steadily promoted resumption of factory and production,raced against time to resume normal operations. In the second half of the year, thanks to the efforts of thestate and local government, pandemic was largely brought under control, national GDP resumed positivegrowth. Company management paid close attention to market dynamics and actively tookcountermeasures. Guided by company strategy, and driven by innovations, the Company continued toexecute its growth strategy and business plans. Adhering to normalized pandemic control measures, theCompany managed to maintain its growth momentum and further enhance its competitiveness throughsuch measures as focused channel cultivation, rapid growth of online business, comprehensive advance oftraditional core business and continuous expansion of new businesses. At the same time, the Company'sinternal management was continuously improved and the restricted stock incentive plan for 2020 wasintroduced, demonstrating confidence in long-term development and determination to grow stronger.Operation of the Company in 2020 is summarized as follows:
1. Push the Four Segments of Traditional Core Business
(1) Mass market stationery segment
With "exploitation of potential, collaboration, product capability" as the key words, continued thestrong product strategy, develop less and better products. This segment continued to optimize productstructure and increase contribution of individual products. It established a mechanism to unleash thepotential of long life cycle products and has achieved initial results in the development of long life cycleand best-selling products. Promotion for category was carried out collaboratively with offline distributionchannel to increase on shelf ratio, coordination was made with online channel to identify potential productsand form individual best-selling products for distribution. Online product management and orderingprocedures were formulated to meet customer ordering needs and increase online sales of consumerproducts.
(2) Premium stationery segment
Improved the development and presentation for key categories based on terminal sale to developformations of premium stationery segment with strong function; focused on top star products and corepopular products to enhance the contribution of individual products, combined with mature serializedproducts and trendy stationery (such as blind boxes, products featuring IP and season-theme, etc.) to openup a situation where medium and high priced items coexist. With quality improved on the Company’ssingle stores in key areas, the proportion of high-quality premium stationery products in traditionalchannels was enhanced. At the same time, the Company shortened the channels, continued to promotedirect-to-customer business both at headquarters and at partner level, focused on quality domesticstationery retail terminals (bookstores, grocery retail and stationery retail terminals).
(3) Arts and kids drawing segment
Optimized product structure, promoted long life cycle products and new products, increasedcontribution from key products; made further efforts to build dedicated areas for products of this segmentin various channels, developed national art stores, explored big store business, and increased terminal onshelf rate of art products; accelerated the expansion of online product lines and opportunity categories,created online best-selling products. The online sales of best-selling marker pens, clays, and pigmentsincreased significantly, and professional art and puzzle categories were expanded. Through the promotion
of key product categories, the expansion of dedicated areas, and seminars, arts products for children werepromoted. Online and offline channels were integrated to promote CARIOCA brand products. TheCARIOCA brand added new products to existing portfolios.
(4) Office stationery segment
Under the pandemic, product development cycle was shortened. Anti-pandemic office supplies werelaunched. The office stationery segment was further developed and integrated solutions were proposed sothat core products could be put on shelves. The online sales of office supplies significantly increased.Focus was placed on development and breakthrough of “key customer”, “key category” and “keyplatform”. Developed large office stationery customers across the country. The segment made furtherefforts to develop the professional channel model of direct office supplies.
2. Focus and Optimize Channels
Due to the COVID-19 pandemic, the traditional core business was greatly restricted in the first halfof the year. School opening was delayed, which impacted the operation of terminals near schools. TheCompany's sales team and partners worked together to actively maintain retail terminals and helped themto boost sales and confidence. With favorable policy support and as the pandemic was largely broughtunder control, market picked up during the schooling peak season, many business indicators steadilyimproved. During the Reporting Period, the Company adhered to its strategy, focused on key terminals,cultivated model stores, pushed optimization and upgrading of domestic channels: (1) improved singlestore quality, facilitated the upgrading of distribution centers; (2) strengthened categories promotion anddedicated retail spaces for key products, promoted the optimization of the product mix of terminals acrossthe country, opened up channels, and established a normal promotion mechanism for staple products; (3)built dedicated areas for key categories in the sales terminal, increased the on shelf ratio of staple productson the counter, and improved the quality of single stores; and (4) focused on improving single storesquality in key areas to improve shares in key business districts. At the end of the Reporting Period, theCompany has 36 tier-one distributor partners, and about 1,200 tier-two and tier-three distributor partnersacross China, covering over 80,000 retail stationery shops with “M&G Stationery” logo across China. TheCompany actively promoted M&G Alliance APP, to build a stronger connection among headquarters,multi-tier distribution partners and retail stationery shops with the help of digital tools, improveddigitization of business and flow of information.
3. Increase Online Sales
During the Reporting Period, facing declined demand from offline terminals, M&G Technologiesaccelerated the development of online distribution channels, developed best-selling products based ondemand and traffic flow. Growth rate of online business was significantly higher than the industry average:
(1) collaborated with the four segments of traditional core business to launch many products for onlinesales; (2) enhanced online product development capabilities and made breakthroughs in new productswhile continuing efforts for existing product portfolios; (3) carried out external and internal live streamingevents to improve category promotion efficiency and brand exposure; (4) emphasized market managementto strengthen collaboration of the online distribution system; and (5) actively promoted key stores toincrease market share and strengthened member operations. During the Reporting Period, M>echnologies recorded revenue of RMB473 million, representing an increase of 59% from the previousyear. During the Reporting Period, M&G Technologies increased expenditure on brand promotion andonline distribution channels.
Unit: 0’000
| M&G Technologies | 2020 | 2019 | 2018 | 3-year average |
| Revenue | 47,368.78 | 29,668.20 | 23,434.15 | 33,490.38 |
| Net profit | -1,195.77 | -120.59 | 963.31 | -117.68 |
4. Continue to Improve Brand Image
During the Reporting Period, the Company made progress in corporate brand infrastructure, brandcommunication, and public relations. Launced a number of season-themed events such as cherry blossomseason, children season and exam season. Brand and product information reached core audience. TheCompany's brand influence and reputation were enhanced. During such events, the Company gained tensof millions of exposures on social media platforms such as Weibo, Bilibili, and Xiaohongshu; theCompany put product placement on websites, print media, WeChat, and Weibo, etc., gaining tens ofmillions of exposures which increased brand value.
5. Promote Design and R&D
During the Reporting Period, the Company’s product segments continued innovations based onconsumer insights, optimized online and offline products offerings, and improved its product portfoliobased on market feedback. The successful development and production of new color series writinginstruments expanded products application. The research projects under the 13th Five-Year National KeyR&D Program - New Environmentally Friendly Materials for Writing Instrument, several sub-projectswere completed and entered final review stage. The Company promoted cooperation with external designresources, and launched "M&G Global Design Center - Israel Studio", attracting more overseasoutstanding designers to contribute the Company’s products and brands.
6. Steadily Develop Own-operated Retail Stores
The Company actively improved product portfolio and service model of its own-operated retail stores,developed Jiumu Store and tried some remodeling for M&G Life stores. During the Reporting Period, thebusiness of retail stores was greatly affected by the pandemic. In the first half of the year, retail storeswere mostly closed or operated abnormally. Since the second half of the year, stores have graduallyrecovered operations, customer traffic has gradually picked up. M&G Life (including Jiumu Store)recorded revenue of RMB654 million, representing an increase of 9%. Jiumu Store recorded revenue ofRMB558 million, representing an increase of 21%. At the end of the Reporting Period, the Company had441 large own-operated retail stores in China, of which 80 are M&G Life, and 361 are Jiumu Stores (237own stores and 124 franchise stores).
Jiumu Stores continued to optimize its product mix and explored new category opportunities. JiumuStores maintained steady development of offline channels, promoted online businesses such as the openingof Tmall’s official flagship store, live broadcast, and social media marketing, boosted customer repurchasethrough several season themed and holiday marketing. M&G Life continued to optimize store operationand management, improved efficiency and reduced store labor costs, with single store qualityimprovement as its main target. During the Reporting Period, due to lower customer traffic and new storesopening, loss of the own-operated retail store business increased.
Unit: 0’000
| M&G Life (consolidated) | 2020 | 2019 | 2018 | 3-year average |
| Revenue | 65,484.36 | 60,063.70 | 30,592.14 | 52,046.73 |
| Net profit | -5,022.93 | -804.67 | -3,030.04 | -2,952.55 |
| Of which, Jiumu Store | 2020 | 2019 | 2018 | 3-year average |
| Revenue | 55,849.09 | 46,043.51 | 15,299.61 | 39,064.07 |
| Net profit | -4,207.86 | -693.11 | -2,602.78 | -2,501.25 |
revenue of RMB5,000 million, representing an increase of 37% from the previous year. Its influence inthe direct office supplies service market was further enhanced.
(1) Customer Development
For government customers, M&G Colipu was shortlisted for e-commerce projects of the People’sGovernment of Shandong Province, Hu’nan Province, and Chongqing Municipal People’s Government;for central state-owned enterprises, M&G Colipu was shortlisted for procurement projects of ChinaResources Group, China Railway, Aluminum Corporation of China and Commercial Aircraft Corporationof China (COMAC); for financial institutions, M&G Colipu was shortlisted for the branch project of CCB,CEB and SPD Bank; for other enterprises, M&G Colipu won the bidding for procurement projects ofShimao Group, SF Express and Lingang Group. M&G Colipu launched MRO online stores.
(2) Warehouse and Logistics
As of the end of the Reporting Period, M&G Colipu operates 6 central warehouses across the country,covering North China, South China, East China, West China, Central China, and Northeast China. Thecentral warehouse in Northeast China was added to improve order responsiveness. At the same time, anew central warehouse in East China was put into use, which adopted several intelligent processingsystems such as the dense storage system, indicating M&G Colipu becomes one of leading companieswith intelligent warehousing and logistics.
Unit: 0’000
| M&G Colipu | 2020 | 2019 | 2018 | 3-year average |
| Revenue | 500,027.59 | 365,806.17 | 258,604.90 | 374,812.89 |
| Net profit | 14,382.86 | 7,580.35 | 3,213.52 | 8,392.24 |
stock incentive plan is conducive to further improving the Company's governance structure, improving itsincentive mechanism, enhancing management team and business backbones' sense of responsibility andmission to achieve the Company's sustainable and healthy development, and is also conducive to theCompany's sustainable development. During the Reporting Period, the Company’s share-based paymentrecognized as current year expenses was RMB8 million.
11. Axus Stationery
Export business accounts for more than 70% of the revenue of Axus Stationery. During the ReportingPeriod, export was severely affected by the pandemic and the overseas market suffered greatly.Particularly in South America, a key market of Axus Stationery, factories and schools were closed andexport revenue declined. In China, the school opening was delayed in the first half of 2020, sales of theself-owned brand MARCO, which targets students and focuses on basic writing instruments, recorded ayear-on-year decline. Through adjustments in the second half of the year, domestic sales were largelyrestored on par with the same period last year. Factories efficiency was at a multi-year low due tofluctuaration in capacity utiliazation. During the Reporting Period, Axus Stationery incurred significantlosses, primarily due to high manufacturing cost resulting from under utilization of its factories.
12. Actively Explore Overseas Markets
The Company's products are exported to more than 50 countries and regions, with distribution andprocurement networks in Thailand, Vietnam, Malaysia and other countries. During the Reporting Period,the Company actively explored overseas markets, and dispatched experienced project teams to Africa,promoted M&G products and business models based on local conditions. With the mission of “providingaffordable and quality stationery to local students”, the Company started to form a channel model andproduct development tailored to local conditions.
II. Financial Performance during the Reporting Period
In 2020, the Company recorded revenue of RMB13,137,745,700, representing an increase of 17.92%from the previous year. The net profit attributable to shareholders of the listed company amounted toRMB1,255,426,700, representing an increase of 18.43% from the previous year, while net profitattributable to shareholders of the listed company after deducting non-recurring profit and loss amountedto RMB1,102,712,300, representing an increase of 9.70% as compared to the corresponding period of lastyear. As at the end of 2020, total asset of the Company amounted to RMB9,709,908,400, representing anincrease of 28.35% from the previous year. The net asset attributable to shareholders of the listed companyamounted to RMB5,193,568,700, representing an increase of 23.61% from the previous year. TheCompany has maintained health growth and sound asset condition.
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 | 13,137,745,727.18 | 11,141,101,364.44 | 17.92 |
| Operation cost | 9,806,609,999.48 | 8,229,837,268.86 | 19.16 |
| Selling expenses | 1,103,184,023.51 | 980,166,101.18 | 12.55 |
| Administrative expenses | 602,627,135.41 | 469,262,188.13 | 28.42 |
| R&D expenses | 160,178,941.89 | 160,403,362.97 | -0.14 |
| Financial expenses | 9,060,176.35 | -8,397,277.65 | 207.89 |
| Net cash flow generated from operating activities | 1,271,697,892.28 | 1,081,941,383.68 | 17.54 |
| Net cash flow generated from investing activities | -1,065,448,932.04 | -74,352,686.18 | -1,332.97 |
| Net cash flow from financing activities | -200,057,726.09 | -364,300,101.66 | -45.08 |
| 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 | 7,745,854,967.03 | 5,165,288,162.73 | 33.32 | 9.33 | 6.35 | Increase by 1.87 percentage points |
| Retail industry | 5,385,322,954.25 | 4,641,066,357.09 | 13.82 | 32.96 | 37.61 | Decrease by 2.91 percentage points |
| Service industry | 2,368,196.45 | / | / | -48.10 | / | / |
| 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 | 2,280,319,347.53 | 1,349,337,371.37 | 40.83 | 4.29 | -2.44 | Increase by 4.08 percentage points |
| Student stationery | 2,705,879,062.04 | 1,801,327,917.08 | 33.43 | 2.29 | 1.13 | Increase by 0.77 percentage points |
| Office stationery | 2,821,455,762.73 | 2,024,465,110.41 | 28.25 | 20.22 | 17.30 | Increase by 1.79 percentage points |
| Other products | 323,247,832.92 | 180,119,757.57 | 44.28 | 8.30 | 12.64 | Decrease by 2.15 percentage points |
| Direct sales of office supplies | 5,000,275,916.06 | 4,451,104,363.39 | 10.98 | 36.69 | 40.01 | Decrease by 2.11 percentage points |
| Management fee for franchising | 2,368,196.45 | / | / | -48.10 | / | / |
| 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 | 12,770,598,738.37 | 9,508,541,355.21 | 25.54 | 18.75 | 19.81 | Decrease by 0.66 percentage points |
| Other countries | 362,947,379.36 | 297,813,164.61 | 17.95 | -5.91 | 1.57 | Decrease by 6.04 percentage points |
5. Student stationery refers to products of student stationery sold by the Company (excluding M&G Colipu).
6. Office stationery refers to products of office supplies sold by the Company (excluding M&G Colipu).
7. Other products refer to products sold by the Company (excluding M&G Colipu) apart from writing instruments, student stationery and office supplies.
8. Direct sales of office supplies refer to products in all categories sold by M&G Colipu. During the Reporting Period, business of M&G Colipu developed rapidly.
Unit: 0’000
| Result of revenue by business | ||||
| Business | Revenue in 2020 | Revenue in 2019 | Change in amount | Change |
| Traditional core business | 757,611.01 | 694,737.18 | 62,873.83 | 9.05% |
| Colipu Office Supplies business | 500,027.59 | 365,806.17 | 134,221.42 | 36.69% |
| Retail large store business | 65,484.36 | 60,063.70 | 5,420.66 | 9.02% |
| Transactions offset | -9,348.39 | -6,496.91 | -2,851.48 | |
| Total | 1,313,774.57 | 1,114,110.14 | 199,664.43 | 17.92% |
| 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 | 2,327,748,721 | 2,313,385,523 | 595,035,911 | 1.12 | 1.88 | 2.47 |
| Student stationery | Piece | 5,356,021,889 | 5,336,153,012 | 664,318,843 | -2.52 | 0.58 | 3.08 |
| Office stationery | Piece | 1,621,574,646 | 1,605,115,091 | 155,040,179 | 13.93 | 13.54 | 11.88 |
| Other products | Piece | 10,234,954 | 9,552,791 | 6,092,965 | -18.62 | 4.08 | 12.61 |
| Direct sales of office supplies | Piece | 375,325,301 | 374,156,127 | 22,283,146 | 29.21 | 29.68 | 5.54 |
| By industry | |||||||
| By industry | Cost item | Amount in the current period | Percentage of total costs for the current period (%) | Amount in the same period last year | Percentage of total costs for the same period last year (%) | Percentage change in the amount for the current period as compared to the same period last year (%) | Explanation on the situation |
| Manufacturing and sales of stationery and office supplies | Cost of principal business | 5,165,288,162.73 | 52.67 | 4,856,789,638.83 | 59.02 | 6.35 | |
| Retail industry | Cost of principal business | 4,641,066,357.09 | 47.33 | 3,372,542,728.19 | 40.98 | 37.61 | |
| Service industry | / | / | / | / | / | / | |
| By product | |||||||
| By product | Cost item | Amount in the current period | Percentage of total costs for the current period (%) | Amount in the same period last year | Percentage of total costs for the same period last year (%) | Percentage change in the amount for the current period as compared to the same period last year (%) | Explanation on the situation |
| Writing instruments | Cost of principal business | 1,349,337,371.37 | 13.76 | 1,383,090,906.87 | 16.81 | -2.44 | |
| Student stationery | Cost of principal business | 1,801,327,917.08 | 18.37 | 1,781,278,080.67 | 21.65 | 1.13 | |
| Office stationery | Cost of principal business | 2,024,465,110.41 | 20.64 | 1,725,910,247.56 | 20.97 | 17.30 | |
| Other products | Cost of principal business | 180,119,757.57 | 1.84 | 159,902,745.78 | 1.94 | 12.64 | |
| Direct sales of office supplies | Cost of principal business | 4,451,104,363.39 | 45.39 | 3,179,150,386.14 | 38.63 | 40.01 | |
| Management fee for franchising | / | / | / | / | / | / | |
(4). Major customers and suppliers
"√ Applicable" "□ Not applicable"Sales of the top 5 customers amounted to RMB2,276,310,000, accounting for 17.33% of the total annualsales. Of the sales of the top 5 customers, sales of related parties amounted to RMB439,540,000,accounting for 3.35% of the total annual sales.
Unit: RMB Yuan
| Rank | Customer name | Amount | Related relationship |
| 1 | First | 711,492,936.94 | No |
| 2 | Second | 439,535,408.86 | Yes |
| 3 | Third | 382,832,718.47 | No |
| 4 | Fourth | 377,120,118.00 | No |
| 5 | Fifth | 365,330,048.64 | No |
| Total | 2,276,311,230.91 |
| Rank | Rank of suppliers | Amount | Related relationship |
| 1 | First | 381,920,265.59 | No |
| 2 | Second | 313,739,685.53 | No |
| 3 | Third | 304,078,713.52 | No |
| 4 | Fourth | 213,912,775.27 | No |
| 5 | Fifth | 187,985,398.96 | No |
| Total | 1,401,636,838.87 |
| Item in statement | Amount in the current period | Amount in the last period | Change in the proportion (%) | Reason for change |
| Selling expenses | 1,103,184,023.51 | 980,166,101.18 | 12.55 | |
| Administrative expenses | 602,627,135.41 | 469,262,188.13 | 28.42 | |
| R&D expenses | 160,178,941.89 | 160,403,362.97 | -0.14 | |
| Financial expenses | 9,060,176.35 | -8,397,277.65 | 207.89 | Please see details below |
4. R&D investment
(1). Table of R&D investment
"√ Applicable" "□ Not applicable"
Unit: RMB Yuan
| Expensed R&D investment in the current period | 160,178,941.89 |
| Capitalized R&D investment in the current period | 0.00 |
| Total R&D investment | 160,178,941.89 |
| Proportion of total R&D investment in operating income (%) | 1.22 |
| Number of the Company’s R&D staff | 462 |
| Percentage of the number of R&D staff to the Company’s total number of employees (%) | 8.12 |
| Percentage of capitalized R&D investment (%) | 0.00 |
| Item | Amount in the current period | Amount in the same period last year | Change in the proportion (%) | Reason for change |
| Net cash flow generated from operating activities | 1,271,697,892.28 | 1,081,941,383.68 | 17.54 | |
| Net cash flow generated from investing activities | -1,065,448,932.04 | -74,352,686.18 | -1,332.97 | Mainly because the bank wealth management products were purchased at a higher price than they are redeemed during the Reporting Period, while the bank wealth management products were purchased at a lower price than they are redeemed in the corresponding period of last year. |
| Net cash flow from financing activities | -200,057,726.09 | -364,300,101.66 | -45.08 | 1. The employee equity incentive was implemented during the Reporting Period, and the net equity investment absorbed increased by RMB132 million compared with the corresponding period of last year (the capital increase of M&G Colipu), which increased the inflow of the current period; 2. During the Reporting Period, the dividends paid, the net amount of borrowed and repaid principals, and the interest paid on Axus Stationery loans decreased by RMB23 million as compared with the corresponding period of last year, which decreased the outflow in the current period. |
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
| Items | Amount as at the end of the current period | Percentage of total assets at the end of current period (%) | Amount as at the end of last period | Percentage of total assets at the end of last period (%) | Change in percentage for the current period over the last period (%) | Explanation |
| Cash and equivalents | 2,562,158,926.11 | 26.39 | 1,935,600,694.35 | 25.59 | 32.37 | Increase in cash and equivalents brought by the growth of income and net profit. |
| Held-for-trading financial assets | 1,428,277,848.33 | 14.71 | 661,878,587.24 | 8.75 | 115.79 | Mainly because the unredeemed bank wealth management products increased as compared with the corresponding period of last year. |
| Accounts receivable | 1,561,211,468.90 | 16.08 | 1,026,094,724.15 | 13.56 | 52.15 | The growth in sales in the second half of the year caused the accounts receivable to increase, of which M&G Colipu had a longer account period and the accounts receivable increased significantly. |
| Receivables financing | 61,412,976.46 | 0.63 | 29,549,924.83 | 0.39 | 107.83 | Mainly because M&G Colipu received more bank acceptance bills as compared with the corresponding period of last year. |
| Prepayment | 131,596,384.76 | 1.36 | 85,371,444.73 | 1.13 | 54.15 | Mainly because the Company developed and was required to make more advance payments for goods. |
| Non-current assets due within one year | 4,637,213.00 | 0.05 | 0.00 | Compensation payable to the Company by the original shareholders of Axus Stationery according to the agreement will expire within one year. | ||
| Long-term receivables | 0.00 | 6,624,590.00 | 0.09 | -100.00 | Compensation payable to the Company by the original shareholders of Axus Stationery according to the agreement was partially recovered during the Reporting Period, and the remaining receivables will be due within one year. | |
| Investments in | 5,476,577.42 | 0.06 | 3,909,179.93 | 0.05 | 40.10 | Increase in return on the investment for Shanghai M&G |
| other equity instruments | Culture and Creativity (上海晨光文化创意) held by the Company for non-transaction purpose | |||||
| Fixed assets | 1,847,635,724.45 | 19.03 | 1,163,702,352.12 | 15.38 | 58.77 | Mainly because Songjiang office house and Qingcun Production Base Construction Project were converted into fixed assets. |
| Construction in progress | 54,946,300.66 | 0.57 | 260,469,728.76 | 3.44 | -78.90 | Mainly because Qingcun Production Base Construction Project was converted into fixed assets. |
| Goodwill | 0.00 | 30,175,537.19 | 0.40 | -100.00 | After the goodwill impairment test, the Company made provision for impairment of all the goodwill formed by the acquisition of Axus Stationery. | |
| Deferred income tax assets | 99,939,414.58 | 1.03 | 36,623,535.59 | 0.48 | 172.88 | Deferred income tax assets were mostly generated from the share-based payment expenses related to equity incentives, the asset depreciation and amortization difference between M&G Colipu's parent company and subsidiary companies, deferred income, and deductible losses. |
| Other non-current assets | 6,258,468.47 | 0.06 | 315,153,408.27 | 4.17 | -98.01 | Mainly because Songjiang office house was converted into fixed assets. |
| Accounts payable | 2,602,020,507.99 | 26.80 | 1,861,072,467.87 | 24.60 | 39.81 |
| Accounts received in advance | 0.00 | 206,762,293.94 | 2.73 | -100.00 | According to the requirements of the new revenue standards, the advance receipts that meet the requirements of the standards were transferred to contract liabilities. | |
| Taxes payable | 477,240,219.10 | 4.91 | 258,583,118.14 | 3.42 | 84.56 | 1. The growth of revenue and total profit in the fourth quarter caused the turnover tax payable and corporate income tax payable to increase; 2. Timing difference of tax payment for some companies. |
| Other payables | 625,468,675.97 | 6.44 | 331,438,976.35 | 4.38 | 88.71 | Mainly because the obligation to repurchase restricted stocks, unpaid provisional estimate of the construction project of the Qingcun Production Base Construction Project, and the margins collected by M&G Colipu from suppliers increased. |
| Contract liabilities | 114,100,035.35 | 1.18 | 0.00 | According to the requirements of the new revenue standards, the advance receipts that meet the requirements of the standards were transferred to contract liabilities. | ||
| Other current liabilities | 13,746,089.97 | 0.14 | 0.00 | Taxes and charges relating to contract liabilities. |
| Estimated liabilities | 12,211,357.80 | 0.13 | 0.00 | Possible liabilities incurred by returned goods according to the requirements of the new revenue standards. |
| 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 | 24,976,111.47 | 22,085,342.05 |
| No. 233 Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2013) No. 013396 | 32,156,238.78 | 12,856,455.39 | 19,299,783.39 |
| No. 333 Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2015) No. 015718 | 60,230,210.97 | 15,309,106.79 | 44,921,104.18 |
| Total | 139,447,903.27 | 53,141,673.65 | 86,306,229.62 | |
5) Analysis of investment
1、 Overall analysis of external equity investment
"√ Applicable" "□ Not applicable"During the Reporting Period, the Company made foreign investments.
(1) Significant equity investment
"√ Applicable" "□ Not applicable"
1. The Company has established a wholly-owned subsidiary, Shanghai Chenxun EnterpriseManagement Co., Ltd., with a registered capital of RMB70 million; the Company has completed therelevant industrial and commercial registration procedures, and has not yet paid the capital;
2. the Company has established a subsidiary Shanghai Qizhihaowan Cultural and Creative Co., Ltd.,with an investment of RMB57 million; the Company has promised but has not contributed RMB57.0million, with the shareholding ratio of 57%.
(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 | 3,426.47 | -603.38 | 322.06 |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | Wholesale and retail | Office supplies | 66,000.00 | 243,746.53 | 56,879.45 | 14,382.86 |
| 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 | 121,266.40 | 46,755.47 | 8,037.45 |
| M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） | Wholesale and retail | Stationery and office supplies | 10,000.00 | 43,751.23 | -7,469.18 | -5,022.93 |
| Shanghai M&G Jiamei | Manufacturing, | Stationery and | 3,000.00 | 4,800.12 | 3,842.31 | 104.69 |
| Stationery Co., Ltd.（上海晨光佳美文具有限公司） | wholesale and retail | office supplies | ||||
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | Wholesale and retail | Office supplies | 5,000.00 | 22,748.86 | 5,598.78 | -1,195.77 |
| 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 | 2,795.57 | 1,216.19 | 30.47 |
| Shanghai M&G Office Supplies Co., Ltd. | Wholesale and retail | Office supplies | 5,000.00 | 41,251.68 | 13,052.09 | 3,416.63 |
| Axus Stationery (Shanghai) Company Ltd. | Production, sale and so forth | Stationery and office supplies | 8,100.00 | 68,842.62 | 17,313.85 | -7,884.61 |
companies for most sub-category stationery products, with continued development in the stationeryindustry, there could be higher industry consolidation, and leading companies could gain larger marketshares.
The market of the direct office supplies service has been growing fast in China. According to industryresearch report, the scale of the market of broad office supplies (including office furniture, equipment andother office supplies) in China reached more than RMB1 trillion. Regulation on the Implementation of theGovernment Procurement Law of the People's Republic of China in 2015 explicitly requires that the stateshall promote the utilization of information networks for carrying out digital government procurement. In2019, the Notice on Promoting Fair Competition and Optimizing the Business Environment inGovernment Procurement clearly proposed to accelerate the promotion of electronic governmentprocurement. With strong national policy supports, B2B office supplies procurement in China got a uniqueopportunity for rapid development. At present days, driven by favorable policies and leading large andmedium-sized enterprises, various digital procurement service providers are entering the market,accelerating development of e-procurement with public purchasing. The continuous integration anddevelopment of public procurement and high technology have also promoted the development of publicprocurement towards more professional, intelligent market-oriented and international.During the pandemic, offline consumption was hindered, and consumption towards onlineaccelerated. According to the National Bureau of Statistics, online retail sales across the country recordedRMB12 trillion in 2020, a year-on-year increase of 11%. Leading consumer products companies seizedopportunities of online consumption and achieved sustained growth through online and offline integration.
China's digital economy accounts for 36% of the total economy (source: China Academy ofInformation and Communications Technology). Data has become a new factor of production. Industrialdigitization is becoming the main pillar of the digital economy. Traditional industries have gained growthmomentum in the digital age.
With smart technology and products upgrade, promotion of national education informatization andthe development of the online education market, smart stationery products have developed rapidly in thepast few years. Technology-empowered smart pens and smart books are widely adopted in onlineeducation, providing an increasingly better user experience.
2) Development strategy of the Company
"√ Applicable" "□ Not applicable"
To consolidate competitive advantages of traditional core businesses by adhering to the mission of"make study and work more joyful and effective", being consumer centric, and emphasizing on innovationof technology and products; to further develop new business including direct office supplies service andown-operated retail stores; to actively expand international market; and to promote digitalization,organization development and talents, mergers and acquisitions with synergy. With continued efforts inthose four areas, to realize the vision of becoming a "world-class M&G".
The Company’s mission is to "make study and work more joyful and effective", and theCompany’s vision is to become a "world-class M&G".
3) Operation plan
"√ Applicable" "□ Not applicable"
In 2021, the Company plans to reach revenue of RMB16,200,000,000, an increase of 23%, mainlythrough the following:
1. Traditional core business
To make good use of the advantages in channel, brand, design and R&D and supply chain, to maintainfast and stable growth in traditional core business, improve the quality of development, continue productmix upgrade, and improve quality of online business.
(1) Promote four segments comprehensively
① Mass market stationery segment
The Company will focus on development of long life cycle products and best-selling products,increase share of long life cycle products, increase new products with longer life cycle with new functions,new technologies and at higher prices. Continue to improve design capabilities and quality. Using MBSmethod to continuously optimize new product development process and reduce lead time of productdevelopment. The Company will take advantage of online channels to enhance the sales of mass marketproducts.
② Premium stationery segment
The Company will continue to optimize the existing product offering of premium stationery segment,improve product mix, increase contribution of single products, create a series of best-selling products, andincrease the proportion of premium stationery segment in traditional channels; and develop tailoredpremium stationery products for Jiumu Stores, direct channels, E-commerce and APPs to better meetdemand of higher income consumers. The Company will also focus more on best-selling products by bettercoordinating marketing, design, supply chain and channel actions, improve the launch pace anddistribution of IP products.
③ Office stationery segment
The Company will strengthen the development and promotion of office products, focus on thedevelopment of high-end innovative products in terms of solving pain points of end users, optimize qualitycontrol process; promote channel transformation with direct supply from the headquarters focusing on thedevelopment of key customers; expand M&G stores for office supplies and develop model stores for officesupplies on a continuous basis; focus on development of online office supplies in all categories andmultiple channels to drive the overall growth of the office supplies.
④ Arts and kids drawing segment
The Company will focus on product design and quality upgrade and development of high-value best-selling products; create best-selling products and drive channels through categories; develop e-commerceproduct lines with integrated thinking, carry out cultivation of categories to form M&G's integratedonline product matrix + channel promotion matrix + supply support plan of arts products for children, andbuild loyalty of children's arts category at new channels; exert more efforts in the exploration of newcategories; expand category width and improve the store product structure.
（2) Focus on and further develop traditional channels, and promote channel transformation
The Company will focus on key terminals, and build model stores to improve single store quality,facilitate the optimization and upgrading of franchise stores and delivery centers, and upgrade channel.Besides, the Company will also strengthen promotion for categories and dedicated zones for products toincrease on shelf ratio of the must-have products, increase presence in major business districts and expandmarket share, promote direct supply both at headquarters and partners level to create incremental sales.The Company will better utilize data to upgrade traditional distribution network, including using M&GAlliance APP to shorten the feedback between retail terminal and the Company, to form a closed-looporder and increase the number of APP monthly active users.
(3) Improve online business quality
M&G Technologies will join in hands with product segments to launch online products and build astandard process for online product development, explore opportunities in key categories, improve productefficiency, improve online product offering; use platform data to guide the development of premiumproducts; coordinate brand and the segments to build the content output capacity of product promotion.To build promotion matrix of celebrity, live broadcast and video, to promote new channel businessincluding Douyin live broadcast and Xiaohongshu; enhance online operations capabilities by combiningTmall digital category captain project and promote a more refined membership operations.
(4) Continue digitalization
In line with corporate strategy, the Company plans to build foundation for M&G's data governance,initiate quick-win projects for members and channels, and improve products and core business processesof the supply chain. The Company will establish a unified data standard to improve M&G's data analysis;upgrade the existing dealer information system to improve the ability to "select the right stores and deliverthe right goods"; use member operations as a key handle to grow online business.
(5) Axus Stationery to reduce loss
Stabilize overseas markets and continue to develop MARCO’s own brand and online business, buildbrand image of MARCO’s professional art pencils, increase sources of revenue and cut costs, increaseefficiency, improve quality improvement and new product launch, aiming for an turnaround.
2. New business development
(1) Continue to develop retail large store business
For Jiumu Stores, continue to exert efforts in member operations, closed-loop online business,continuous optimization of products, and optimization of store operating standards to achieve high-qualitygrowth of offline channels and higher growth of online business. As M&G’s bridgehead in upgrading itsproducts and channels, Jiumu stores will work closely with the Company to increase the sales ratio ofpremium products. M&G Life will improve operation capacity of the stores and sales of per employee,and optimize human resource cost for stores.
(2) Continue to grow 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 meetsrequirements that enterprises desire to increase procurement efficiency and reduce procurement cost fornon-production office and administration supplies. Renowned companies in the industry continue toenhance competitiveness through improving service quality, enriching product categories, seeking morecustomers and developing nationwide supply chain system. M&G Colipu is expected to maintainrelatively rapid growth, and become one of the main competitors in its market. M&G Colipu will continueto win new large national customers, while maintaining good services for contracted projects, to increase
prefecture-level city coverage, strengthen sales and service capabilities, and improve supply chain systems,to enhance service efficiency, better meet market needs, and improve organizational capabilities.
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 theCompany has developed operation management system and internal control system that accord withfeatures of its business and technology in its development, and has recruited and cultivated stable coremanagement team, operation of the Company will be adversely affected if the aforesaid managementsystem and management staff fail to promptly adapt to the rapid expansion of the Company. Therefore,the Company will keep improving its management system and internal control system, and adopt variousmeasures to improve qualification of management staff.
2. Market risks
With social transformation and consumption upgrading, stationery market presents opportunities forstructure-based development. If the Company is unable to anticipate market trends in time and adapt tomarket changes from aspects of product upgrading, quality management to sale strategy, the Companywill encounter certain risks in market competition. Having been aware of the problem, the Companyenhanced product R&D under the guidance of the market, optimized product structure, and developed asounder quality management and control system. Market strategies are formulated based on market survey,analysis of big data and management discussion.
3. Risks from fiscal and taxation
According to Article 28 of Enterprise Income Tax Law of the People's Republic of China, theenterprise income tax on important high- and new-tech enterprises that are necessary to be supported bythe state shall be levied at the reduced tax rate of 15%. The Company was re-recognized as a nationalhigh- and new-tech enterprise on 28 October 2019, and started to implement the policy of reducedenterprise income tax rate of 15% on 1 January 2019 for 3 years. If the state adjusts preferential incometax policy for high- and new-tech enterprises, or the Company fails to pass the review after its qualificationof high- and new-tech enterprise expires, operation performance of the Company will be adverselyaffected. As such, the Company performs strict control according to assessment standards for high- andnew-tech enterprises to ensure that it meets all indicators, and qualifies and passes the annual review andrenewal for high- and new-tech enterprises.
4. Risks from COVID-19
Since the outbreak of COVID-19 at the beginning of 2020, domestic economy growth and demandof foreign trade have slowed down significantly. Although demand of stationery industry is relatively rigid,it has been affected by macro-economy and delay in new semester, especially for primary and middleschools. The impact of COVID-19 on the macro-economy is uncertain, adding uncertainties to the
Company’s operation in 2021. The Company pays close attention to the development of COVID-19, andadopts active measures to 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 special reasons 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 at the20th meeting of the fourth Board meeting and 2019 annual general meeting.
2. Principle in profit distribution of the Company: the Company implements the dividend distributionpolicy which entitles the shareholders to the same rights and same dividends, under which shareholdersare entitled to receive dividends and other kinds of distribution of interests based on the number of sharesheld by them. The Company adopts active profit distribution policy, which emphasizes investors’reasonable investment returns while maintaining sustainability and stability. The Company is allowed todistribute profit in cash or shares, but its profit distribution shall not exceed the range of the accumulateddistributable profits or affect the Company’s ability to continue as a going concern.
3. Overall approaches to distribute profit of the Company: the Company distributes dividends in cashor shares, or cash-and-shares, and if the Company satisfies the conditions for cash dividends, priorityshould be given to profit distribution by means of cash dividends.
4. Specific conditions and proportion for cash dividends: the Company primarily adopts cashdividend as its profit distribution policy. The Company may distribute cash dividend when it makes aprofit in the current year and the distributable profits are positive after making up losses, contributing tothe statutory reserves and surplus reserves, but the profit distribution shall not exceed the range of theaccumulated distributable profits. In general, if there are no material investment plans or significant cashexpenditure, the Company may distribute profit in cash for a single year not less than 20% of thedistributable profit realized in the current year.
In addition, as for the proportion of cash dividends to the total profit distribution, the Board ofDirectors shall take into full account of various factors such as features of the industries where theCompany operates, the stage of development, its own business model, level of profitability, and whetherthere is significant capital expenditure arrangement, to distinguish the following situations and determinedifferentiated cash dividend proportion in accordance with the procedures as required by the Articles ofAssociation:
(1) If the Company is at a mature stage of development and has no significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 80% when theprofit distribution is made;
(2) If the Company is at a mature stage of development and has significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 40% when theprofit distribution is made;
(3) If the Company is at a growing stage of development and has no significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 30% when theprofit distribution is made;
(4) If the Company is at a growing stage of development and has significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 20% when theprofit distribution is made.
The aforesaid “significant investment plans” or “significant cash expenditure” refers to one of thefollowing:
(1) The proposed external investment, acquisition of assets or purchase of equipment by the Companyin the coming twelve months with accumulated expenses amounting to or exceeding 50% of the latestaudited net assets of the Company and exceeding RMB50,000,000;
(2) The proposed external investment, acquisition of assets or purchase of equipment by the Companyin the coming twelve months with accumulated expenses amounting to or exceeding 30% of the latestaudited total assets of the Company.
Significant investment plans or significant cash expenditure that meets the above conditions shall bereviewed and approved at the general meeting after being reviewed by the Board meeting.
5. During the Reporting Period, the formulation and implementation of the cash dividend policy hascomplied with the Articles of Association and the resolutions of the general meetings. The dividenddistribution standards and proportions are clearly stated, and relevant decision making procedures andsystems are complete. Independent directors have diligently served their obligations, and played their roles.As minority shareholders have opportunities to fully express their opinions and appeals, their legitimateinterests 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 threeyears (including the Reporting Period)
Unit: Yuan Currency: RMB
| Year of 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) | Amount of cash dividends (inclusive of tax) |
| Percentage of the net profit attributable to the ordinary shareholders of the listed company in the consolidated financial statements (%) | ||||||
| 2020 | 0 | 5 | 0 | 463,713,800.00 | 1,255,426,655.27 | 36.94 |
| 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 |
| Background of undertakings | Type of undertakings Types | Undertaking party | Type of undertakings 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 , Chen Xueling | Undertaking for restriction on sale of shares and voluntary lockup undertaking by the controlling shareholder—M&G Group, and beneficial controllers—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 | Undertaking for restriction on sale of shares and voluntary lockup undertaking by Keying Investment and Jiekui Investment, shareholders holding more than 5% of the equity | 36 months | Yes | Yes |
| , 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. | ||||||
| Others | M&G Group | Shareholding and intention to reduce shareholding of the controlling shareholder—M&G Group (1) M&G Group advocates that shares of the Company should be held in the long term to ensure that M&G Group shares operation achievements of the Company on a continuous basis. Therefore, M&G Group has the intention to hold shares of the Company for a long term. (2) After the lockup period of the Company’s shares held by M&G Group expires, it is possible that M&G Group might reduce shareholding of the Company appropriately for the development requirement of M&G Group. In this | Not applicable | No | Yes |
| situation, M&G Group is expected to reduce its shareholdings by no more than 5% of the total shares of the Company held by M&G Group within the first year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering. The shareholding reduction shall not exceed 10% of the total shares of the Company held by M&G Group within the second year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering. If there are any ex-rights or ex-dividends events, such as the declaration of dividends, bonus issue, and capitalization from capital reserve to share capital in the Company before M&G Group reduces its holding of the aforesaid shares, the price of the shareholding reduction for M&G Group should not be lower than the adjusted offering price of the Company's initial public offering shares at the time of the offering and the listing. (3) If M&G Group intends to reduce shareholding of the Company, it will announce its reduction plan 3 transaction days before reducing the shareholding. Furthermore, the reduction will be performed legally according to rules of Shanghai Stock Exchange in the form of block trade, auction transaction as well as other methods recognized by China Securities Regulatory Commission. | |||||||
| Others | Keying Investment , Jiekui Investment | Shareholding and intention to reduce shareholding of Keying Investment and Jiekui Investment, shareholders holding more than 5% of the equity (1) The joint venture, which is an employee-owned enterprise established by officials and important business professionals of the Company, advocates that shares of the Company should be held in the long 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 | Not applicable | No | Yes |
| 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 the adjusted offering price of the Company's initial public offering shares at the time of the offering and the listing. (3) If the joint venture intends to reduce shareholding of the Company, it will announce its reduction plan 3 transaction days before reducing the shareholding. Furthermore, the reduction will be performed legally according to rules of Shanghai Stock Exchange in the form of block trade, auction transaction as well as other methods recognized by China Securities Regulatory Commission. | |||||||
| Address competition between counterparts | M&G Group , Keying Investment , Jiekui Investment | Undertaking in relation to non-competition by M&G Group, Keying Investment and Jiekui Investment (1) The enterprise and other enterprises (except the Company and enterprises controlled by it) controlled and (or) invested by it currently have not engaged in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with principal businesses of the Company and enterprises controlled by it. (2) After the initial public offering and listing of the Company, the enterprise and other enterprises (except the Company and enterprises controlled by it) controlled and (or) invested by it will not: ① engage in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ② support other enterprises other than the Company and enterprises controlled by it in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ③ interfere in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in. Apart from the aforesaid undertaking, the enterprise further guarantees that it will ① ensure its independence in assets, businesses, employees, finance and institution according to relevant rules of laws and regulations; ② adopt legal and effective measures to stop companies, enterprises and other economic organizations that the 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 , Chen Xueling | Undertaking in relation to non-competition by beneficial controllers—Chen Huwen, Chen Huxiong, and Chen Xueling (1) I currently hold no position in other companies or economic organizations that have the same or similar business with the Company or enterprises controlled by it. (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 | Undertaking on the binding measures in case of the failure to fulfill the undertaking by M&G Stationery | Not applicable | No | Yes |
| (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; ② Within 12 months after the date when our Company fully eliminates the adverse effect due to failure on related undertaking issues, our Company shall not issue securities, including but not limited to shares, corporate bonds, convertible corporate bonds and other types of securities approved by securities regulatory authorities; ③ 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 | Undertaking on the binding measures in case of the failure to fulfill the undertaking by the controlling shareholder—M&G Group (1) M&G Group will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as “Undertaking Issues”) in the initial public offering and listing 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 , | Undertaking on the binding measures in case of the failure to fulfill the undertaking by beneficial controllers—Chen Huwen, Chen Huxiong, and Chen Xueling | Not applicable | No | Yes |
| Chen Huxiong , 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. | ||||||
| Others | Keying Investment , Jiekui Investment | Undertaking on the binding measures in case of the failure to fulfill the undertaking by Keying Investment and Jiekui Investment, shareholders holding more than 5% of the equity (1) The joint venture will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as “Undertaking Issues”) in the initial public offering and listing of M&G Stationery. (2) If the joint venture fails to perform various obligations and responsibilities set out in the aforesaid undertaking issues, the joint venture undertakes to take the following measures for restrictions: ① Compensate public investors for direct losses suffered by relying on relevant undertakings to implement transactions through self-owned capital with the amount of compensation being determined according to negotiation between the joint venture and investors, or the method or amount determined by the securities regulatory authorities and the judicial authority; ② The lockup period of M&G Stationery’s shares held by the joint venture will be automatically extended to the date when the joint venture fully eliminates the adverse effect due to failure on related undertaking issues. | 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 whether such profit forecasts onassets or projects are fulfilled and the reasons thereofWhether the original profit forecast is reached and the description of reasons"□ 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” from accountingfirm"□ 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 accounting errors
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. Implementation of the Accounting Standards for Business Enterprises No. 14 - Revenue (revisedin 2017)
The Ministry of Finance revised the Accounting Standards for Business Enterprises No. 14 - Revenue(hereinafter referred to as the "New Revenue Standards") in 2017. The revised standards stipulate that forthe first implementation of the standards, the amounts of retained earnings and other related items in thefinancial statements at the beginning of the year should be adjusted according to the cumulative impact,and the information for the comparable period should not be adjusted.
The Company implements the new revenue standards from 1 January 2020. According to theprovisions of the new revenue standards, the Company only adjusted the amounts of retained earnings andother related items in the financial statements at the beginning of 2020 for the cumulative impact ofcontracts that have not been completed on the date of first implementation, and did not make adjustmentsto the comparative financial statements. The main impacts of the implementation of the standards are asfollows:
| Contents and reasons of changes in accounting policies | Review and approval procedure | Affected item in statement | Effect on balance at 1 January 2020 | |
| Consolidation | Parent company | |||
| (1) The original revenue from the e- | The 20th meeting | Accounts | 47,244,304.93 | |
| commerce platform business is recognized at the time of the receipt of the platform statement. Due to the implementation of the new revenue standards, the revenue is recognized at the time of the transfer of control, namely it is recognized when the e-commerce platform actually accepts and warehouses the products. | of the fourth Board of Directors | receivable | ||
| Inventories | -35,291,780.35 | |||
| Deferred income tax assets | -1,208,991.72 | |||
| Undistributed profit | 10,596,781.73 | |||
| Minority equity | 146,751.13 | |||
| (2) Reclassification of accounts received in advance arising from sales contracts to contract liabilities | The 20th meeting of the fourth Board of Directors | Contract liabilities | 182,975,481.36 | 103,292,286.89 |
| Other current liabilities | 23,786,812.58 | 13,427,997.30 | ||
| Accounts received in advance | -206,762,293.94 | -116,720,284.19 |
| Affected item in balance sheet | Effect on balance at 31 December 2020 | |
| Consolidation | Parent company | |
| Accounts receivable | 71,949,017.96 | |
| Inventories | -52,850,926.86 | |
| Deferred income tax assets | -619,504.51 | |
| Accounts received in advance | -127,846,125.32 | -86,209,335.15 |
| Contract liabilities | 114,100,035.35 | 76,291,447.04 |
| Taxes payable | 9,092,049.66 | |
| Other current liabilities | 13,746,089.97 | 9,917,888.11 |
| Undistributed profit | 9,156,410.72 | |
| Minority equity | 230,126.21 | |
| Affected item in income statement | Effect on amount incurred in 2020 | |
| Consolidation | Parent company | |
| Revenue | 22,717,752.44 | |
| Operation cost | 126,244,555.60 | 23,728,733.05 |
| Selling expenses | -77,637,937.98 | 7,318,738.06 |
| Administrative expenses | -31,047,471.11 | -31,047,471.11 |
| Credit impairment losses | -1,269,284.91 | |
| Income tax expenses | -210,406.66 | |
| Net profit | -1,356,995.93 |
On 19 June 2020, the Ministry of Finance issued the Provisions on the Accounting Treatment of theCOVID-19 Pandemic-related Rental Concessions (Caikuai (2020) No. 10) with immediate effect,allowing companies to adjust relevant rental concessions incurred between 1 January 2020 and theimplementation date of the Provisions. According to the Provisions, companies can resort to a simplifiedmethod for accounting treatment for rental reductions, deferred rent payment and other rental concessionsrelating to COVID-19 pandemic that meet the stipulations of the Provisions.
The Company used the simplified method for accounting treatment for all rental concessions that fallwithin the scope of the Provisions, and adjusted the relevant rent concessions incurred between 1 January2020 and the effective date of the Provisions accordingly.
As the lessee, the Company adopted a simplified method to deal with related rental concessions tooffset the current operating costs, management expenses and sales expenses totaling RMB12,799,186.64.
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 descriptions
"□ Applicable" "√ Not applicable"
VI. Appointment and dismissal of the accounting firm
Unit: 0’000 Currency: RMB
| Current accounting firm | |
| Name of domestic accounting firm | BDO China Shu Lun Pan Certified Public Accounts LLP |
| Remuneration of domestic accounting firm | 136.5 |
| Term of office of domestic accounting firm | 11 |
| Name | Remuneration | |
| Internal control audit accounting firm | BDO China Shu Lun Pan Certified Public Accounts LLP | 52.5 |
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 and beneficial
controllers during the Reporting Period"√ Applicable" "□ Not applicable"During the Reporting Period, since the Company, its controlling shareholders and beneficial controllersmaintained sound credibility, there had been no refusal to implement effective judgments of a court ordefault of any material overdue debt.
XIII. Equity incentive plan, employee shareholding plan or other employee incentive measures
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"
| Overview of matters | Query index |
| On 10 April 2020, the Company held the 20th meeting of the fourth Board of Directors and the 13th meeting of the fourth Board of Supervisors, which reviewed and passed the Proposal on the Company's 2020 Restricted Stock Incentive Plan (Draft) and Its | Announcement on Resolutions of the 20th Meeting of the Fourth Board of Directors numbered 2020-006 |
| Summary, the Proposal on the Management Measures for the Implementation of the Company's 2020 Restricted Stock Incentive Plan, and the Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Deal with Matters Related to Restricted Stock Incentives. | Announcement on Resolutions of the 13th Meeting of the Fourth Board of Directors numbered 2020-007 Announcement on the Summary of the Equity Incentive Plan Draft numbered 2020-015 |
| On 8 May 2020, the Company held the 2019 Annual General Meeting of Shareholders, which reviewed and passed the Proposal on the Company's 2020 Restricted Stock Incentive Plan (Draft) and Its Summary, the Proposal on the Management Measures for the Implementation of the Company's 2020 Restricted Stock Incentive Plan, and the Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Deal with Matters Related to Restricted Stock Incentives. | Announcement on Resolutions of the 2019 Annual General Meeting of Shareholders numbered 2020-022 |
| On 8 May 2020, the Company held the 1st meeting of the fifth Board of Directors and the 1st meeting of the fifth Board of Supervisors, which reviewed and passed the Proposal on Adjusting the 2020 Restricted Stock Incentive Plan and the Proposal on Granting Restricted Stocks to Incentive Objects in 2020. | Announcement on Resolutions of the 1st Meeting of the Fifth Board of Directors numbered 2020-024 Announcement on Resolutions of the 1st Meeting of the Fifth Board of Supervisors numbered 2020-025 Announcement on Adjusting Matters Related to the 2020 Restricted Stock Incentive Plan numbered 2020-026 Proposal on Granting Restricted Stocks to Incentive Objects in 2020 numbered 2020-027 |
| On 29 May 2020, the Company completed the registration of restricted stocks with China Securities Depository and Clearing Corporation Limited Shanghai Branch. | Announcement on the Results of the First Grant of the 2020 Restricted Stock Incentive Plan numbered 2020-029 |
"□ Applicable" "√ Not applicable"
XIV. Major related transactions
1) Related transactions in relation to daily operation
1. Events disclosed in temporary announcements and without further progress or change insubsequent implementation"□ Applicable" "√ Not applicable"
2. Events disclosed in temporary announcements and with further progress or change insubsequent implementation"√ Applicable" "□ Not applicable"The 20th meeting of the fourth Board meeting and 2019 annual general meeting of the Companyreviewed and passed the Proposal on the Implementation of Daily Related Transactions in 2019 andExpected Daily Related Transactions in 2020, and issued the Announcement on the Implementation ofDaily Related Transactions in 2019 and Expected Daily Related Transactions in 2020 (numbered 2020-011) on 14 April 2020.In 2020, sales to the sales company controlled by Guo Weilong were estimated to beRMB460,000,000.00. It was estimated that fees for the lease of self-owned houses (including officebuildings, workshops, parking space, warehouses and dormitories) paid to M&G Group will amounted toRMB4,620,952.38; fees for the lease of self-owned office buildings and parking space amounted toRMB3,831,849.04; utilities amounted to RMB6,000,000.00. M&G Colipu is expected to pay M&G GroupRMB11,714,870.72 for the lease of self-owned office building and parking space; M&G Colipu isexpected to pay M&G Group RMB3,125,755.71 for the lease of self-owned office building; 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 RMB5,714.29 for the lease ofparking space.In 2020, actual sales to the sales company controlled by Guo Weilong were RMB439,535,408.86.Fees for the lease of self-owned houses (including office buildings, workshops, parking space, warehousesand dormitories) actually paid to M&G Group amounted to RMB4,620,952.38; fees for the lease of self-owned office buildings and parking space amounted to RMB3,519,671.17; and utilities amounted toRMB5,164,795.80. M&G Colipu actually paid M&G Group RMB10,761,012.43 for the lease of self-owned office building and parking space; M&G Colipu actually paid M&G Group RMB2,865,276.09 forthe lease of self-owned office building; M&G Technologies actually paid M&G Group RMB1,541,431.33for the lease of self-owned office building and parking space; M&G Life actually paid M&G GroupRMB5,714.29 for the lease of self-owned parking space.
3. Events not disclosed in temporary announcements
"□ Applicable" "√ Not applicable"
2) Related transactions as a result of acquisition and disposal of assets or equity
1. Events disclosed in temporary announcements and without further progress or change 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"
4. Disclosable performance achievements during the Reporting Period when involved with
agreed-upon performance"□ Applicable" "√ Not applicable"
3) 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"
4) 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"
5) 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 | 0 | 0 | 0 |
| Entrusted wealth management of banks | Self-owned capital | 151,000 | 140,000 | 0 |
(2) Individual entrusted wealth management
"√ Applicable" "□ Not applicable"
Unit: 0’000 Currency: RMB
| Trustee | Type of entrusted wealth management | Amount of entrusted wealth management | Beginning date of entrusted wealth management | Termination date of entrusted wealth management | Source of fund | Source of Usage of fund | Method to determine return way | Annual rate of return | Expected 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) |
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 10,000 | 2019/7/4 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 40,000 | 2019/7/4 | Self-owned capital | 3.59% | 352.64 | Partial recovery | Yes | Yes | |||||
| Bank of Communications Co., Ltd. Shanghai | Non-principal guaranteed with | 20,000 | 2020/1/2 | 2020/8/4 | Self-owned capital | 3.45% | 335.18 | Recovered | Yes | Yes |
| Fengxian Sub-branch | floating returns | |||||||||||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 40,000 | 2020/1/3 | 2020/1/19 | Self-owned capital | 2.95% | 51.73 | Recovered | Yes | Yes | ||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 20,000 | 2020/4/2 | 2020/7/1 | Self-owned capital | 3.90% | 192.33 | Recovered | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 15,000 | 2020/4/8 | 2020/5/22 | Self-owned capital | 3.02% | 55.91 | Recovered | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 15,000 | 2020/4/9 | 2020/7/13 | Self-owned capital | 3.29% | 128.53 | Recovered | Yes | Yes |
| Bank of Communications Co., Ltd. Shanghai Fengxian Sub-branch | Non-principal guaranteed with floating returns | 50,000 | 2020/7/15 | 2020/12/29 | Self-owned capital | 3.10% | 455.23 | Recovered | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 40,000 | 2020/7/17 | 2020/12/30 | Self-owned capital | 2.71% | 493.04 | Recovered | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 30,000 | 2020/8/5 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 40,000 | 2020/12/31 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed | 20,000 | 2020/12/31 | Self-owned capital | Unrecovered | Yes | Yes |
| with floating returns | ||||||||||||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Fixed returns and non-principal guaranteed with floating returns | 12,000 | 2019/6/20 | Self-owned capital | Partial recovery | Yes | Yes | |||||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-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 Shanghai Gumei Road Sub-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 Shanghai Gumei Road Sub-branch | Fixed returns and non-principal guaranteed with floating returns | 1,000 | 2019/9/29 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Fixed returns and non-principal guaranteed with floating returns | 3,550 | 2020/6/3 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Bank of Shanghai Co., Ltd. Puxi Sub-branch | Fixed returns and non-principal guaranteed with floating returns | 2,000 | 2020/6/22 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Industrial and Commercial Bank of China | Fixed returns and non- | 3,000 | 2020/7/8 | Self-owned capital | Unrecovered | Yes | Yes |
| Limited Shanghai Gumei Road Sub-branch | principal guaranteed with floating returns | |||||||||||||
| China Merchants Bank Co., Ltd. Beijing Branch Dongsanhuan Sub-branch | Fixed returns and non-principal guaranteed with floating returns | 3,550 | 2020/3/31 | 2020/6/3 | Self-owned capital | 3.36% | 20.57 | Recovered | Yes | Yes |
(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 2020 Annual Report on Social Responsibilities disclosed by theCompany on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 30 March 2021.
3) Environmental information
1. Explanation on environmental protection of the Company and its major subsidiaries falling
into the category of key pollutant discharging units designated by the environmental protectionauthorities"□ Applicable" "√ Not applicable"
2. Explanation on environmental protection of companies other than key pollutant dischargingunits"√ Applicable" "□ Not applicable"
The Company does not belong to the key pollutant discharging units published by nationalenvironmental protection authorities. As the Company pays great attention to environmental protection,the greening rate of its sites is high. During the production process, the plastic raw granular edges did notproduce solid waste or environmental pollution after going through smashing, re-granulating and recyclingprocess; paperboard edges for package was recycled and sold by classification to local recycle stations forrecycled paper. The Company has not admixed any harmful recycling waste in its production, so novolatile gas that is harmful to the health of human beings was produced. Besides, domestic wastewaterwas disposed in accordance 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 descriptions
"□ 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
Unit: share
| Before this change | Increase or decrease (+ or -) due to this change | After this change | |||||||
| Number | Percentage (%) | Issuance of new shares | Bonus shares | Shares transferred from provident funds | Others | Sub-total | Number | Percentage (%) | |
| I. Shares held subject to selling restrictions | 0 | 0 | 7,427,600 | 7,427,600 | 7,427,600 | 0.80 | |||
| 1. Shares held by the state | |||||||||
| 2. Shares held by the state-owned legal person | |||||||||
| 3. Shares held by other domestic funds | 0 | 0 | 7,427,600 | 7,427,600 | 7,427,600 | 0.80 | |||
| Including: Shares held by domestic non-state-owned legal person | |||||||||
| Shares held by domestic natural person | 0 | 0 | 7,427,600 | 7,427,600 | 7,427,600 | 0.80 | |||
| 4. Shares held by foreign funds | |||||||||
| Including: Shares held by foreign legal person | |||||||||
| Shares held by foreign natural person | |||||||||
| II. Circulating shares not subject to selling restrictions | 920,000,000 | 100 | 920,000,000 | 99.20 | |||||
| 1. Ordinary RMB Shares | 920,000,000 | 100 | 920,000,000 | 99.20 | |||||
| 2. Foreign-funded shares listed domestically | |||||||||
| 3. Foreign-funded shares listed overseas | |||||||||
| 4. Others | |||||||||
| III. Total number of ordinary shares | 920,000,000 | 100 | 7,427,600 | 7,427,600 | 927,427,600 | 100 |
4. Other contents that the Company deems necessary and the securities regulatory authorities require disclosing"□ Applicable" "√ Not applicable"
2) Changes in restricted shares
"√ Applicable" "□ Not applicable"
Unit: Share
| Name of shareholder | Number of restricted shares at the beginning of the year | Number of restricted shares unlocked during the current year | Number of restricted shares increased during the current year | Number of restricted shares at the end of the year | Reason for restricted sale | Date of unlocking restricted sale |
| Incentive objects of restricted stocks in 2020 | 0 | 0 | 7,427,600 | 7,427,600 | Equity incentive selling restrictions | Note |
| Total | 0 | 0 | 7,427,600 | 7,427,600 | / | / |
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 separate explanation onthe bonds with different interest rates during their duration):
"□ Applicable" "√ Not applicable"
2) Changes in the total number of ordinary shares and shareholder structure of the Company andchanges 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 | 18,160 |
| Total number of shareholders of ordinary shares at the end of last month prior to the disclosure date of this annual report | 33,203 |
| 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 of shares in circulation (or shareholders not subject to selling restrictions)
as at the end of the Reporting Period
Unit: share
| Shareholdings of the top ten shareholders | |||||||
| Name of shareholder (full name) | Change during the Reporting Period | Number of shares held as at the end of the period | Percentage (%) | Number of shares held subject to selling restrictions | Pledged or frozen | Nature of shareholder | |
| Share status | Number | ||||||
| M&G Holdings (Group) Co., Ltd. | 0 | 536,000,000 | 57.79 | 0 | No | 0 | Domestic nonstate-owned legal person |
| Hong Kong Securities Clearing Company Limited | -528,095 | 32,961,426 | 3.55 | 0 | No | 0 | Unknown |
| 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） | 9,500,094 | 21,499,948 | 2.32 | 0 | No | 0 | Unknown |
| Shanghai Keying Investment Management Office (L.P.) | -5,850,000 | 17,550,000 | 1.89 | 0 | No | 0 | Others |
| Shanghai Jiekui Investment Management Firm (L.P.) | -5,775,000 | 17,325,000 | 1.87 | 0 | No | 0 | Others |
| Chen Huxiong | -5,700,000 | 17,100,000 | 1.84 | 0 | No | 0 | Domestic natural person |
| Chen Huwen | -5,700,000 | 17,100,000 | 1.84 | 0 | No | 0 | Domestic natural person |
| Chen Xueling | -3,600,000 | 10,800,000 | 1.16 | 0 | No | 0 | Domestic natural person |
| 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） | -560,000 | 8,700,000 | 0.94 | 0 | No | 0 | Unknown |
| Central Huijin Asset Management Co., Ltd. | 0 | 8,539,200 | 0.92 | 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 | 32,961,426 | Ordinary RMB Shares | 32,961,426 | ||||
| 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） | 21,499,948 | Ordinary RMB Shares | 21,499,948 | ||||
| Shanghai Keying Investment Management Office (L.P.) | 17,550,000 | Ordinary RMB Shares | 17,550,000 | ||||
| Shanghai Jiekui Investment Management Firm (L.P.) | 17,325,000 | Ordinary RMB Shares | 17,325,000 | ||||
| Chen Huxiong | 17,100,000 | Ordinary RMB Shares | 17,100,000 | ||||
| Chen Huwen | 17,100,000 | Ordinary RMB Shares | 17,100,000 | ||||
| Chen Xueling | 10,800,000 | Ordinary RMB Shares | 10,800,000 | ||||
| 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） | 8,700,000 | Ordinary RMB Shares | 8,700,000 | ||||
| Central Huijin Asset Management Co., Ltd. | 8,539,200 | Ordinary RMB Shares | 8,539,200 | ||||
| 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 |
| Number | Name of shareholder subject to selling restrictions | Number of shares held subject to selling restrictions | Available-for-listing-and-trading conditions of shares held subject to selling restrictions | Selling restrictions | |
| Available-for-listing-and-trading time | Number of new available-for-listing-and-trading shares | ||||
| 1 | Incentive objects of restricted stocks in 2020 | 7,427,600 | Equity incentive selling restrictions | ||
| Explanation on the related relationship or parties acting in concert among the above shareholders | 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, consultation for investment information (excluding broker), consultation for enterprise management and relevant businesses, domestic trade (excluding projects with national special approval) (For the above items subject to licensing or permit, relevant approval must be obtained prior to operation) | |
| Equity interests of other domestic and overseas listed companies controlled or invested during the Reporting Period | No | |
| Other explanations | No | |
2) 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 |
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 its beneficial
controllers"√ Applicable" "□ Not applicable"
6 Control of the Company by beneficial controllers by way of trust or other means of asset
management"□ Applicable" "√ Not applicable"
3) Other explanation regarding the controlling shareholders and the beneficial controllers"□ 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 the Reporting Period"√ Applicable" "□ Not applicable"
Unit: share
| 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 | 51 | 2014-6-12 | 2023-5-7 | 22,800,000 | 17,100,000 | -5,700,000 | Personal capital needs | 180.67 | No |
| Chen Huxiong | Vice Chairman and President | Male | 51 | 2014-6-12 | 2023-5-7 | 22,800,000 | 17,100,000 | -5,700,000 | Personal capital needs | 180.67 | No |
| Chen Xueling | Director and Vice President | Female | 54 | 2014-6-12 | 2023-5-7 | 14,400,000 | 10,800,000 | -3,600,000 | Personal capital needs | 100.37 | No |
| Fu Chang | Director and Vice President | Male | 51 | 2018-3-23 | 2023-5-7 | 0 | 109,200 | 109,200 | Equity incentive | 177.63 | No |
| Zhang Jingzhong | Independent Director | Male | 58 | 2017-5-11 | 2023-5-7 | 0 | 0 | 0 | 14.00 | No | |
| Chen Jingfeng | Independent Director | Male | 53 | 2017-5-11 | 2023-5-7 | 0 | 0 | 0 | 14.00 | No | |
| Cheng Bo | Independent Director | Male | 46 | 2016-4-19 | 2023-5-7 | 0 | 0 | 0 | 14.00 | No | |
| Zhu Yiping | Chairman of the Board of Supervisors | Female | 62 | 2014-6-12 | 2023-5-7 | 0 | 0 | 0 | 0 | Yes | |
| Han Lianhua | Supervisor | Female | 43 | 2014-6-12 | 2023-5-7 | 0 | 0 | 0 | 0 | Yes | |
| Zhang | Employee | Female | 42 | 2020-5-8 | 2023-5-7 | 0 | 0 | 0 | 11.85 | No |
| Chaohua | Supervisor | ||||||||||
| Zhou Yonggan | Vice President | Male | 46 | 2020-5-8 | 2023-5-7 | 0 | 102,400 | 102,400 | Equity incentive | 28.93 | No |
| Quan Qiang | Board Secretary | Male | 48 | 2017-3-31 | 2023-5-7 | 0 | 71,700 | 71,700 | Equity incentive | 97.11 | No |
| Xu Jingjin | Employee Supervisor | Male | 42 | 2014-6-12 | 2020-5-7 | 0 | 0 | 0 | 27.26 | No | |
| Yao Hezhong | Chief Engineer | Male | 65 | 2014-6-12 | 2020-5-7 | 0 | 0 | 0 | 25.50 | No | |
| Zhang Qing | Chief Financial Officer | Male | 46 | 2018-4-4 | 2020-10-30 | 0 | 71,700 | 71,700 | Equity incentive | 154.68 | No |
| Total | / | / | / | / | / | 60,000,000 | 45,355,000 | -14,645,000 | / | 1,026.67 | / |
| 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. | |
| 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. |
| Zhang Chaohua | Once worked as Business Commissioner of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., Manager of Shanghai Apollo Machinery Co., Ltd., and Deputy Manager of M&G Group. Now works as Deputy Manager of the Company. |
| Zhou Yonggan | Joined M&G Stationery in August 2005 and successively served as Assistant to the Chairman, Deputy Director, Director of the Marketing Center, and General Manager of the Office Business Department. Now works as Vice President of 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. |
| 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. |
| Yao Hezhong | Joined M&G Stationery in 1999 and successively served as Deputy General Manager, Deputy President and Chief Engineer of the Company’s R&D Center. |
| 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., and Chief Financial Officer of the Company. |
| Name | Position | Number of restricted stocks held at the beginning of the year | Number of restricted stocks granted during the Reporting Period | Grant price of restricted stocks (RMB) | Unlocked shares | Locked shares | Number of restricted stocks held at the end of the period | Market price at the end of the Reporting Period (RMB) |
| Fu Chang | Director | 0 | 109,200 | 23.70 | 0 | 109,200 | 109,200 | 88.56 |
| Quan Qiang | Senior management | 0 | 71,700 | 23.70 | 0 | 71,700 | 71,700 | 88.56 |
| Zhou Yonggan | Senior management | 0 | 102,400 | 23.70 | 0 | 102,400 | 102,400 | 88.56 |
| Zhang Qing | Senior management | 0 | 71,700 | 23.70 | 0 | 71,700 | 71,700 | 88.56 |
| Total | / | 0 | 355,000 | / | 0 | 355,000 | 355,000 | / |
| 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 | |
| Chen Huwen | Keying Investment | General Partner | 2011-02-18 | |
| Chen Huxiong | M&G Group | Chairman | 2007-05-10 | |
| Chen Huxiong | Jiekui Investment | General Partner | 2011-02-18 | |
| Chen Xueling | M&G Group | Director | 2007-05-10 | |
| Zhu Yiping | M&G Group | Person in charge of internal control | 2020-01-01 | |
| Han Lianhua | M&G Group | Chief Financial Officer | 2020-01-01 | |
| 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. | |||
| 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 | |
| Chen Huwen | 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 | |
| Chen Huxiong | 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 | |
| Chen Xueling | Chenguang Sanmei（晨光三美） | Director | 26 May 2008 | |
| Zhang Jingzhong | Zhejiang T & C Law Firm | Director | October 1988 | |
| Zhang Jingzhong | Kweichow Moutai Co., Ltd. | Independent Director | August 2016 |
| Zhang Jingzhong | Zhejiang Jinggong Science & Technology Co., Ltd. | Independent Director | January 2018 | |
| Zhang Jingzhong | Lily Group Co., Ltd. | Independent Director | September 2018 | |
| Zhang Jingzhong | Gansu Huangtai Wine-Marketing Industry Co., Ltd. | Independent Director | October 2020 | |
| Chen Jingfeng | Zhongyun Capital | Chairman | October 2017 | |
| Cheng Bo | Zhejiang Agriculture and Forestry University | Full-time Teacher | June 2014 | |
| Cheng Bo | Shanghai Serum Bio-technology Co., Ltd. | Independent Director | January 2018 | September 2020 |
| Cheng Bo | Hangzhou Silan Microelectronics Co., Ltd. | Independent Director | June 2019 | |
| Cheng Bo | Shanghai Construction Building Materials Technology Group Co., Ltd. | Independent Director | June 2020 | |
| 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. | |||
| 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 | The annual remuneration of independent directors of the Company is considered and approved by the general shareholders' meeting. Other directors, supervisors and senior managers who receive remuneration from the Company are subject to the operation performance appraisal on an annual basis and the pre-paid base salary on a monthly basis, and the annual remuneration is settled after the Company’s annual operation target is completed. |
| Actual payment of the remuneration of directors, supervisors and senior management | RMB10,266,700 |
| Total remuneration actually received by all directors, supervisors and senior management at the end of the Reporting Period | RMB10,266,700 |
| Name | Position held | Changes | Reason for change |
| Chen Huwen | Chairman | Election | Change of session due to expiration |
| Chen Huxiong | Vice Chairman | Election | Change of session due to expiration |
| Chen Xueling | Director | Election | Change of session due to expiration |
| Fu Chang | Director | Election | Change of session due to expiration |
| Zhang Jingzhong | Independent Director | Election | Change of session due to expiration |
| Chen Jingfeng | Independent Director | Election | Change of session due to expiration |
| Cheng Bo | Independent Director | Election | Change of session due to expiration |
| Zhu Yiping | Chairman of the Board of Supervisors | Election | Change of session due to expiration |
| Han Lianhua | Supervisor | Election | Change of session due to expiration |
| Zhang Chaohua | Employee Supervisor | Election | Change of session due to expiration |
| Chen Huxiong | President | Employment | Change of session due to expiration |
| Chen Xueling | Vice President | Employment | Change of session due to expiration |
| Fu Chang | Vice President | Employment | Change of session due to expiration |
| Zhou Yonggan | Vice President | Employment | Change of session due to expiration |
| Quan Qiang | Board Secretary | Employment | Change of session due to expiration |
| Xu Jingjin | Employee Supervisor | Retired | Expiration of term of office |
| Yao Hezhong | Chief Engineer | Retired | Expiration of term of office |
| Zhang Qing | Chief Financial Officer | Retired | Resigned for personal reasons |
VI. Employees of the parent company and major subsidiaries
1) Employees
| Number of employees in the parent company | 2,221 | |
| Number of employees in major subsidiaries | 3,468 | |
| Number of employees | 5,689 | |
| Number of retirees of whom the parent company and major subsidiaries are responsible for the expenses | ||
| Professional structure | ||
| Category | Number | |
| Production personnel | 1,952 | |
| Sales personnel | 1,313 | |
| Technical personnel | 462 | |
| Finance personnel | 198 | |
| Administration personnel | 280 | |
| Management personnel | 1,068 | |
| Others | 416 | |
| Total | 5,689 | |
| Education background | ||
| Category | Number (person) | |
| University (including college) and above | 3,013 | |
| High school, technical secondary school | 1,197 | |
| Others | 1,479 | |
| Total | 5,689 | |
| Total working hours of labor outsourcing | 19,330,394 hours |
| Total remuneration paid for labor outsourcing | RMB549,352,245 |
Chapter IX Corporate GovernanceI. Particulars on corporate governance"√ Applicable" "□ Not applicable"During the Reporting Period, the Company, in strict compliance with the Company Law, theSecurities Law, the Code of Corporate Governance for Listed Companies, and other relevant laws andregulations promulgated by the China Securities Regulatory Commission and the Shanghai StockExchange, continuously optimized the corporate governance structure of the Company and improved theoperational level of the Company, strengthened the management of insider information, and enhanced theawareness of information disclosure responsibility, to ensure continuous and stable development andeffectively protect the legitimate rights and interests of investors and relevant stakeholders. The specificgovernance situation was as follows:
1. Shareholders and general shareholders’ meetings: the Company could hold general shareholders’meetings in accordance with the requirements of the Company Law, the Articles of Association, and theRules of Procedure of the General Shareholders’ Meeting. Proposals, procedures, and voting at the generalshareholders’ meetings were strictly implemented in accordance with the relevant provisions. Whenconsidering proposals related to related-party transactions, related shareholders avoided voting to ensurefair and reasonable related-party transactions. For the convenience of the Company's shareholders, generalshareholders’ meetings allow its shareholders to vote on site or online. This ensures the minorityshareholders have the right to stay informed about and vote on major issues of the Company and participatein the operation of the Company and this also helps protect the interests of minority shareholders.Resolutions adopted at general shareholders’ meetings met the requirements of laws and regulations, andcomplied with the lawful rights and interests of all shareholders, especially minority shareholders.
2. Directors and the Board of Directors: All directors of the Company could, in accordance with theRules of Procedure of the Board of Directors and other systems, earnestly perform their duties as directorsand make prudent and scientific decisions. The convening of each meeting met the requirements ofrelevant regulations. During the Reporting Period, the Company completed the election of the new sessionof Board of Directors. The Company's Board of Directors had four special committees, namely, the AuditCommittee, the Strategy Committee, the Nomination Committee, and the Remuneration and AppraisalCommittee. The special committees performed their duties with due diligence and conscientiousness inaccordance with their respective working rules to promote the scientific decision-making and standardizedoperation of the Board of Directors.
3. Supervisors and the Board of Supervisors: The Board of Supervisors of the Company wasresponsible for the Company and its shareholders, strictly implemented the relevant provisions of theCompany Law, the Articles of Association and the Rules of Procedure of the Board of Supervisors,earnestly fulfilled its duties, attended the general meeting of shareholders and the meetings of the Boardof Directors, convened the meetings of the Board of Supervisors, and exercised supervisory functions andpowers in accordance with the law, supervising corporate governance, major issues, financial conditions,and the compliance with rights and regulations of the Company's directors, managers and other seniormanagement in performing their duties, and promoting the legal and standardized operations of theCompany. During the Reporting Period, the Company completed the election of the new session of Boardof Supervisors.
4. Controlling shareholder and listed company: the Company and its controlling shareholders wereindependent of each other in personnel, assets, finance, organization and operating business. TheCompany's Board of Directors, Board of Supervisors and internal institutions could operate independently.The Company's major decisions were made by the general shareholders' meeting in accordance with thelaw. The controlling shareholders exercised the rights of shareholders in accordance with the law, and hadno behaviors that directly or indirectly interfered with the Company's decisions and business activities bycircumventing the Company's general shareholders' meeting.
5. Information disclosure and transparency: the Company adhered to the principle of "truth, accuracy,completeness, timeliness, and fairness", and strictly followed the requirements of temporaryannouncement and periodic report format guidelines for information disclosure. To help investors getfamiliar with the situation of the Company, the content to be disclosed must be concise, clear, and easy tounderstand and must truly and duly reflect the operating status of the Company.
Whether there are significant differences between corporate governance and the requirements of therelevant regulations of the China Securities Regulatory Commission; if there are significant 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 |
| 2019 annual general shareholders’ meeting | 8 May 2020 | www.sse.com.cn | 9 May 2020 |
| 2020 1st extraordinary general shareholders’ meeting | 29 June 2020 | www.sse.com.cn | 30 June 2020 |
| Director Name | Independent director | Attendance at board meetings | Attendance at general shareholders’ meetings | |||||
| Number of attendance required | Number of attendance in person | Number of attendance by communication | Number of attendance by proxy | Number of absence | Two consecutive absences in person | Number of attendance at general shareholders’ meetings | ||
| Chen Huwen | No | 6 | 6 | 3 | 0 | 0 | No | 2 |
| Chen Huxiong | No | 6 | 6 | 4 | 0 | 0 | No | 0 |
| Chen Xueling | No | 6 | 6 | 4 | 0 | 0 | No | 0 |
| Fu Chang | No | 6 | 6 | 5 | 0 | 0 | No | 0 |
| Zhang Jingzhong | Yes | 6 | 6 | 5 | 0 | 0 | No | 0 |
| Chen Jingfeng | Yes | 6 | 6 | 4 | 0 | 0 | No | 0 |
| Cheng Bo | Yes | 6 | 6 | 3 | 0 | 0 | No | 1 |
| Number of board meetings held during the year | 6 |
| Including: on site | 3 |
| by communication | 3 |
| on site and by communication | 3 |
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 specialcommittees under the board of directors in performing its functions and duties during theReporting 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 shareholders cannot
guarantee independence and cannot maintain self-operation ability in the aspects of business,personnel, assets, organization and finance"□ Applicable" "√ Not applicable"
The corresponding solutions, work progress and follow-up work plan of the Company in case ofhorizontal competition"□ Applicable" "√ Not applicable"
VII. Establishment and implementation of appraisal mechanism and the incentive mechanism forsenior management during the Reporting Period"√ Applicable" "□ Not applicable"
During the Reporting Period, the Company established a comprehensive appraisal mechanism forsenior management. Quarterly and annual appraisals were conducted based on the completion of KPI anddaily routine work by the departments for which senior management were responsible. Through theappraisal, not only the Company's overall operation and main economic indicators were achieved, but alsothe development of the senior management personnel was realized, so as to fully mobilize the workenthusiasm and operation potential of the senior management.
VIII. Whether to disclose the self-appraisal report on internal control"√ Applicable" "□ Not applicable"
2020 Appraisal Report on Internal Control was considered and approved at the 5th meeting of thefifth Board of Directors of the Company. For the full text of the report, please see 2020 Appraisal Reporton Internal Control disclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 30March 2021.
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 2020 financial statements and the Audit Report on InternalControl was issued. For the full text of the report, please see 2020 Audit Report on Internal Controldisclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 30 March 2021.
Whether to disclose the audit report on internal control: yesOpinion type of the audit report on internal control: With unqualified opinion
X. Others"□ Applicable" "√ Not applicable"
Chapter X Corporate Bonds
"□ Applicable" "√ Not applicable"
Chapter XI Financial Report
I. Auditor’s report"√ Applicable" "□ Not applicable"
Xin Kuai Shi Bao Zi [2021] No. ZA10558
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 parent company’sbalance sheets as at 31 December 2020, the consolidated and parent company’s income statements, theconsolidated and parent company’s cash flow statements, and the consolidated and parent company’sstatements of changes in shareholders’ equity for the year of 2020, 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 fair view of theconsolidated and parent company’s financial position of M&G Stationery as at 31 December 2020 and ofits consolidated and parent company’s operating results and cash flows for the year of 2020.
ii． Basis of auditors’ opinion
We have conducted our audit in accordance with the Chinese Auditing Standards for CertifiedPublic Accountants. The “Responsibilities of Certified Public Accountants for Auditing of FinancialStatements” in the auditor’s report further illustrate our responsibilities under those standards. Inaccordance with the Code of Professional Ethics of Chinese Certified Public Accountants, we areindependent of M&G Stationery and have performed other responsibilities in respect of professional ethics.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.
iii．Key audit matters
Key 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 in the contextof our audit of the financial statements as a whole and, in forming our opinion thereon, we do not providea separate opinion on these matters.
The key audit matters identified in our audit are summarized as follows:
| Key audit matters | How our audit addressed the key audit matter |
| 1) Recognition of the revenue | |
| Please refer to notes to financial statements for accounting policies set out in “III Significant Accounting Policies and Accounting Estimates” (XXIII) and “V Notes to Consolidated Financial Statements” (XXXVII). M&G Stationery mainly specializes in selling stationery and office supplies. In 2020, M&G Stationery’s revenue from principal business in sales recognition amounted to RMB13,133,546,100. M&G Stationery recognized revenue based on the expected amount of consideration that it is | 1. We understood and evaluated design of the key internal control designed by management and we tested the effectiveness of implementing key controls; 2. We inspected customer contracts, on a sample basis, to identify terms and conditions related to the transfer of control over the goods, and assessed the timing of revenue recognition with reference to the requirements of prevailing accounting standards; 3. We selected samples for revenue transactions recorded during the current year, with invoices, sales contracts, goods delivery notes or transport documents to assess whether the related revenue was |
| entitled to receive when the customer obtains control of the relevant products. 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. | 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 revenue was recognized in the correct accounting period. 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. |
| 2) Anticipated credit loss of accounts receivable | |
| Please refer to notes to financial statements for accounting policies set out in “III Significant Accounting Policies and Accounting Estimates” (IX) and “V Notes to Consolidated Financial Statements” (III). As at 31 December 2020, balance of accounts receivable amounted to RMB1,598,035,700, and provision made for credit impairment loss of accounts receivable amounted to RMB36,824,200. 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. | 1. We understood and evaluated design of the key internal control regarding impairment of financial assets (including accounts receivable) designed by management and we tested the effectiveness of implementing key controls; 2. We evaluated rationality of the estimation on anticipated credit loss of accounts receivable, including judgment of forward-looking information; basis of estimation on anticipated credit loss made on a single item, and basis of estimation on anticipated credit loss made on portfolio, including rationality of the division for portfolio; 3. We reviewed credit risk assessment performed by the management on internal and external environment of M&G Stationery’s operation, integrity of different customers, repayment history, repayment capacity, and historical experience in credit loss; 4. We recalculated to check whether measurement of provision for loss made by the management on single and portfolio accounts receivable is consistent with the amount of anticipated credit loss in the entire existing period. |
material misstatement between the other information and the financial statements or the information weobtained during the audit.
As we have performed the work on the other information obtained before the date of our auditor’sreport, we shall report if we confirmed there was a material misstatement among the other information.We have nothing needed to be reported on this case.
v．Responsibilities of the management and governing bodies for the financial statements
The management shall be responsible for the preparation of financial statements in accordance withthe Accounting Standards for Business Enterprises to enable them to be fairly reflected, and to design,implement and maintain the necessary internal controls so that there is no material misstatement due tofraud or error in the financial statements.
In the preparation of the financial statements, the management is responsible for assessing M&GStationery’s continuous operating capacity, disclosing matters relating to continuous operations (ifapplicable), and applying the continuing operating assumptions unless the management plans to performliquidation, 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 statements
Our objective is to obtain reasonable assurance of the financial statements as a whole whether thereis a material misstatement due to fraud or error and to issue an auditor’s report containing audit opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with China Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.
As part of an audit in accordance with the auditing standards, we exercised professional judgmentand maintained professional skepticism throughout the audit. We also performed the following works:
(1) to identify and assess the risks of material misstatement of the financial statements, whether dueto fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) to understand the internal control related to the audit to design the appropriate audit procedures.
(3) to evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the management.
(4) to draw a conclusion on the appropriateness of the management’s use of the going concern basisof accounting and, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the ability of M&G Stationery to continue as agoing concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate,to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause M&G Stationery to cease to continue asa going concern.
(5) to evaluate the overall presentation, structure and content (including disclosure) of the financialstatements, and to assess whether the financial statements reflect the related transactions and 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 consolidated 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 planned scopeand timing of the audit and significant audit findings, including any significant deficiencies in internalcontrol that we identify during the audit.
We also provided a statement to management on compliance with ethical requirements related toindependence, and communicated with governing bodies about all relationships and other matters thatmay be reasonably considered to affect our independence, as well as related precautions (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 constituted the keyaudit matters. We set out these matters in the auditor’s report. Unless the disclosure of these matters areforbidden by the laws and regulations, or, in rare cases, if it is reasonably expected that the negativeimpacts caused by discussing certain matters in the auditor’s report would be larger than the benefits forpublic interest, we shall not disclose the matters in the auditor’s report under such circumstances.
BDO China Shu Lun Pan CPAs Certified Public Accountant: Gu Xuefeng (Project Partner)LLP
Certified Public Accountant: Wang Aijia
Shanghai? China 26 March 2021
II. Financial Statements
Consolidated Balance Sheet31 December 2020
Prepared by: SHANGHAI M&G STATIONERY INC.
Unit: Yuan Currency: RMB
| Item | Notes | 31 December 2020 | 31 December 2019 |
| Current assets: | |||
| Cash and equivalents | VII. 1 | 2,562,158,926.11 | 1,935,600,694.35 |
| Transaction settlement funds | |||
| Lending funds | |||
| Held-for-trading financial assets | VII. 2 | 1,428,277,848.33 | 661,878,587.24 |
| Derivative financial assets | |||
| Bills receivable | VII. 4 | ||
| Accounts receivable | VII. 5 | 1,561,211,468.90 | 1,026,094,724.15 |
| Receivables financing | VII. 6 | 61,412,976.46 | 29,549,924.83 |
| Prepayment | VII. 7 | 131,596,384.76 | 85,371,444.73 |
| Premium receivable | |||
| Reinsurance premium receivable | |||
| Reserves for reinsurance contract receivable | |||
| Other receivables | VII. 8 | 141,753,102.00 | 117,647,039.93 |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Financial assets purchased under agreements to resell | |||
| Inventories | VII. 9 | 1,322,812,846.83 | 1,378,108,759.85 |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | VII. 12 | 4,637,213.00 | |
| Other current assets | VII. 13 | 27,286,607.30 | 29,280,925.29 |
| Total current assets | 7,241,147,373.69 | 5,263,532,100.37 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | VII. 16 | 6,624,590.00 | |
| Long-term equity investments | VII. 17 | 34,722,395.67 | 35,582,783.47 |
| Investments in other equity instruments | VII. 18 | 5,476,577.42 | 3,909,179.93 |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | VII. 21 | 1,847,635,724.45 | 1,163,702,352.12 |
| Construction in progress | VII. 22 | 54,946,300.66 | 260,469,728.76 |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | VII. 26 | 320,746,328.60 | 331,005,762.09 |
| Development expenses | |||
| Goodwill | VII. 28 | 30,175,537.19 | |
| Long-term prepaid expenses | VII. 29 | 99,035,852.78 | 118,336,333.95 |
| Deferred income tax assets | VII. 30 | 99,939,414.58 | 36,623,535.59 |
| Other non-current assets | VII. 31 | 6,258,468.47 | 315,153,408.27 |
| Total non-current assets | 2,468,761,062.63 | 2,301,583,211.37 | |
| Total assets | 9,709,908,436.32 | 7,565,115,311.74 | |
| Current liabilities: | |||
| Short-term borrowings | VII. 32 | 180,176,000.00 | 183,193,763.86 |
| Borrowings from central bank | |||
| Placements from banks and other financial institutions |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | VII. 36 | 2,602,020,507.99 | 1,861,072,467.87 |
| Accounts received in advance | VII. 37 | 206,762,293.94 | |
| Contract liabilities | VII. 38 | 114,100,035.35 | |
| Financial assets sold under repurchase agreements | |||
| Deposits from customers and other banks | |||
| Brokerage for trading securities | |||
| Brokerage for underwriting securities | |||
| Employee benefits payable | VII. 39 | 152,625,106.89 | 154,119,492.32 |
| Taxes payable | VII. 40 | 477,240,219.10 | 258,583,118.14 |
| Other payables | VII. 41 | 625,468,675.97 | 331,438,976.35 |
| 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 | VII. 44 | 13,746,089.97 | |
| Total current liabilities | 4,165,376,635.27 | 2,995,170,112.48 | |
| Non-current liabilities: | |||
| Reserves for insurance contracts | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | VII. 48 | 8,420,000.00 | 6,620,000.00 |
| Long-term employee benefits payable | |||
| Estimated liabilities | VII. 50 | 12,211,357.80 | |
| Deferred income | VII. 51 | 46,132,513.40 | 65,823,213.11 |
| Deferred income tax liabilities | VII. 30 | 36,781,069.25 | 36,576,744.55 |
| Other non-current liabilities | |||
| Total non-current liabilities | 103,544,940.45 | 109,019,957.66 | |
| Total liabilities | 4,268,921,575.72 | 3,104,190,070.14 | |
| Owner’s equity (or shareholders’ equity): | |||
| Share capital | VII. 53 | 927,427,600.00 | 920,000,000.00 |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | VII. 55 | 533,384,131.66 | 272,347,764.53 |
| Less: Treasury shares | VII. 56 | 176,034,120.00 | |
| Other comprehensive income | VII. 57 | 2,141,402.48 | 526,359.55 |
| Special reserve | |||
| Surplus reserve | VII. 59 | 464,042,659.91 | 440,260,399.59 |
| General risk provision | |||
| Undistributed profit | VII. 60 | 3,442,607,038.00 | 2,568,365,861.32 |
| Total equity attributable to the owners of the parent company | 5,193,568,712.05 | 4,201,500,384.99 | |
| Minority equity | 247,418,148.55 | 259,424,856.61 | |
| Total owners’ equity (or shareholders’ equity) | 5,440,986,860.60 | 4,460,925,241.60 | |
| Total liabilities and owner's equity (or shareholders’ equity) | 9,709,908,436.32 | 7,565,115,311.74 |
Parent Company’s Balance Sheet
31 December 2020
Prepared by: SHANGHAI M&G STATIONERY INC.
Unit: Yuan Currency: RMB
| Item | Notes | 31 December 2020 | 31 December 2019 |
| Current assets: | |||
| Cash and equivalents | 1,887,003,379.89 | 1,358,805,872.56 | |
| Held-for-trading financial assets | 1,272,219,811.46 | 509,467,061.37 | |
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | XVII. 1 | 177,648,799.65 | 82,949,224.65 |
| Receivables financing | |||
| Prepayment | 36,987,935.22 | 9,630,209.45 | |
| Other receivables | XVII. 2 | 399,678,347.22 | 285,036,794.54 |
| Including: Interest receivable | 35,000.00 | 192,500.00 | |
| Dividend receivable | |||
| Inventories | 332,755,309.92 | 448,245,658.48 | |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | 4,637,213.00 | ||
| Other current assets | 150,000,000.00 | 150,047,540.99 | |
| Total current assets | 4,260,930,796.36 | 2,844,182,362.04 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | 6,624,590.00 | ||
| Long-term equity investments | XVII. 3 | 1,098,535,037.00 | 1,089,168,192.56 |
| Investments in other equity instruments | 5,476,577.42 | 3,909,179.93 | |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | 1,471,196,714.32 | 749,415,024.84 | |
| Construction in progress | 50,603,926.95 | 258,864,834.00 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 177,722,510.27 | 182,268,368.82 | |
| Development expenses | |||
| Goodwill | |||
| Long-term prepaid expenses | 5,417,965.45 | 10,106,589.01 | |
| Deferred income tax assets | 29,239,636.35 | 5,469,359.66 | |
| Other non-current assets | 5,829,768.47 | 311,929,028.24 | |
| Total non-current assets | 2,844,022,136.23 | 2,617,755,167.06 | |
| Total assets | 7,104,952,932.59 | 5,461,937,529.10 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 320,744,916.72 | 225,831,712.59 | |
| Accounts received in advance | 116,720,284.19 | ||
| Contract liabilities | 76,291,447.04 |
| Employee benefits payable | 84,898,291.78 | 87,609,891.62 | |
| Taxes payable | 263,690,993.11 | 160,129,252.33 | |
| Other payables | 1,089,678,737.94 | 513,035,659.92 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | 9,917,888.11 | ||
| Total current liabilities | 1,845,222,274.70 | 1,103,326,800.65 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | 260,420,000.00 | 258,620,000.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | 23,417,137.82 | 28,453,779.37 | |
| Deferred income tax liabilities | 3,614,458.33 | 1,420,059.21 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 287,451,596.15 | 288,493,838.58 | |
| Total liabilities | 2,132,673,870.85 | 1,391,820,639.23 | |
| Owner’s equity (or shareholders’ equity): | |||
| Share capital | 927,427,600.00 | 920,000,000.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 538,163,670.62 | 274,008,599.09 | |
| Less: Treasury shares | 176,034,120.00 | ||
| Other comprehensive income | 2,329,031.21 | 292,894.11 | |
| Special reserve | |||
| Surplus reserve | 463,713,800.00 | 439,931,539.68 | |
| Undistributed profit | 3,216,679,079.91 | 2,435,883,856.99 | |
| Total owners’ equity (or shareholders’ equity) | 4,972,279,061.74 | 4,070,116,889.87 | |
| Total liabilities and owner's equity (or shareholders’ equity) | 7,104,952,932.59 | 5,461,937,529.10 |
Consolidated Income StatementJanuary - December 2020
Unit: Yuan Currency: RMB
| Item | Notes | 2020 | 2019 |
| I. Total operating income | 13,137,745,727.18 | 11,141,101,364.44 | |
| Including: Revenue | VII. 61 | 13,137,745,727.18 | 11,141,101,364.44 |
| Interest income | |||
| Premium received | |||
| Handling fee and commission income | |||
| II. Total operating costs | 11,732,355,241.35 | 9,873,266,701.55 | |
| Including: Operating cost | VII. 61 | 9,806,609,999.48 | 8,229,837,268.86 |
| Interest expenses | |||
| Handling fee and commission expenses | |||
| Payment on surrenders | |||
| Net compensation expenses | |||
| Net provision drawn for insurance contract | |||
| Policy dividend expenses | |||
| Reinsurance expenses | |||
| Taxes and surcharges | VII. 62 | 50,694,964.71 | 41,995,058.06 |
| Selling expenses | VII. 63 | 1,103,184,023.51 | 980,166,101.18 |
| Administrative expenses | VII. 64 | 602,627,135.41 | 469,262,188.13 |
| R&D expenses | VII. 65 | 160,178,941.89 | 160,403,362.97 |
| Financial expenses | VII. 66 | 9,060,176.35 | -8,397,277.65 |
| Including: Interest expenses | 6,948,206.51 | 8,386,182.80 | |
| Interest income | 13,415,173.15 | 20,872,167.57 | |
| Add: Other gains | VII. 67 | 45,665,409.77 | 26,504,881.46 |
| Income from investment (“-” refers to loss) | VII. 68 | 3,851,154.70 | 23,994,985.32 |
| Including: Investment income from associates and joint ventures | -1,610,614.02 | -576,595.97 | |
| Derecognition of income from financial assets at amortized cost | |||
| Exchange gains (“-” refers to loss) | |||
| Net gain on exposure hedging (“-” refers to loss) | |||
| Gain on change in fair value (“-” refers to loss) | VII. 70 | 32,281,250.23 | 4,613,287.24 |
| Losses on credit impairment (“-” refers to loss) | VII. 71 | -38,225,902.12 | -28,006,009.88 |
| Losses on assets impairment (“-” refers to loss) | VII. 72 | -40,287,483.83 | -17,843,081.89 |
| Gains from asset disposal (“-” refers to loss) | VII. 73 | 169,704.92 | 6,081,606.95 |
| III. Operating profits (“-” refers to loss) | 1,408,844,619.50 | 1,283,180,332.09 | |
| Add: Non-operating profits | VII. 74 | 128,775,498.09 | 29,358,655.04 |
| Less: Non-operating expenses | VII. 75 | 20,471,306.43 | 18,859,243.06 |
| IV. Total profits (“-” refers to total loss) | 1,517,148,811.16 | 1,293,679,744.07 | |
| Less: Income tax expenses | VII. 76 | 278,775,085.16 | 217,602,900.41 |
| V. Net profits (“-” refers to net loss) | 1,238,373,726.00 | 1,076,076,843.66 | |
| (I) Classified by operation continuity | |||
| 1. Net profits from continuing activities (“-” refers to net loss) | 1,238,373,726.00 | 1,076,076,843.66 | |
| 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) | 1,255,426,655.27 | 1,060,083,625.03 | |
| 2. Profit or loss attributable to minority shareholders (“-” refers to net loss) | -17,052,929.27 | 15,993,218.63 | |
| VI. Net amount of other comprehensive income after tax | 1,284,183.22 | 709,796.69 | |
| (I) Net amount of other comprehensive income after tax attributable to owners of the parent company | 1,615,042.93 | 526,359.55 | |
| 1. Other comprehensive income not to be reclassified into profit or loss | 2,024,062.42 | 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 | 738,151.54 | ||
| (3) Change in fair value of investments in other equity instruments | 1,285,910.88 | 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 | -409,019.49 | 217,179.62 | |
| (1) Other comprehensive income that may be reclassified to profit or loss under equity method | 12,074.68 | -16,285.82 | |
| (2) Change in fair value of other debt investments | |||
| (3) Amount included in other comprehensive income on reclassification of financial assets | |||
| (4) Credit impairment provisions of other debt investments | |||
| (5) Cash flow hedging reserve | |||
| (6) Exchange differences from translation of financial statements | -421,094.17 | 233,465.44 | |
| (7) Others | |||
| (II) Net amount of other comprehensive income after tax attributable to minority shareholders | -330,859.71 | 183,437.14 | |
| VII. Total comprehensive income | 1,239,657,909.22 | 1,076,786,640.35 | |
| (I) Total comprehensive income attributable to owners of the parent company | 1,257,041,698.20 | 1,060,609,984.58 | |
| (II) Total comprehensive income attributable to minority shareholders | -17,383,788.98 | 16,176,655.77 | |
| VIII. Earnings per share: | |||
| (I) Basic earnings per share (Yuan/share) | 1.3558 | 1.1523 | |
| (II) Diluted earnings per share (Yuan/share) | 1.3558 | 1.1523 | |
Income Statement of the Parent Company
January - December 2020
Unit: Yuan Currency: RMB
| Item | Notes | 2020 | 2019 |
| I. Revenue | XVII. 4 | 4,195,911,462.19 | 3,933,991,943.14 |
| Less: Operating cost | XVII. 4 | 2,164,311,904.18 | 2,183,782,074.37 |
| Taxes and surcharges | 18,164,236.07 | 17,610,206.96 | |
| Selling expenses | 205,919,659.54 | 186,518,505.25 | |
| Administrative expenses | 425,917,972.99 | 338,338,989.17 | |
| R&D expenses | 135,381,593.07 | 129,731,243.16 | |
| Financial expenses | -7,024,536.16 | -12,660,392.50 | |
| Including: Interest expenses | 1,517,396.53 | 948,654.26 | |
| Interest income | 18,306,911.40 | 12,582,570.87 | |
| Add: Other gains | 10,610,663.43 | 5,782,081.23 | |
| Income from investment (“-” refers to loss) | XVII. 5 | 3,153,311.04 | 21,470,373.55 |
| Including: Investment income from associates and joint ventures | -1,610,614.02 | -576,595.97 | |
| 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) | 28,634,739.23 | 3,137,261.37 | |
| Losses on credit impairment (“-” refers to loss) | -3,408,970.51 | -651,502.57 | |
| Losses on assets impairment (“-” refers to loss) | 872,454.58 | -2,154,113.62 | |
| Gains from asset disposal (“-” refers to loss) | 25,621.30 | 190,467.53 | |
| II. Operating profits (“-” refers to loss) | 1,293,128,451.57 | 1,118,445,884.22 | |
| Add: Non-operating profits | 90,245,541.69 | 17,311,132.84 | |
| Less: Non-operating expenses | 5,632,154.87 | 2,001,519.26 | |
| III. Total profits (“-” refers to total loss) | 1,377,741,838.39 | 1,133,755,497.80 | |
| Less: Income tax expenses | 205,164,355.15 | 173,865,695.38 | |
| IV. Net profits (“-” refers to net loss) | 1,172,577,483.24 | 959,889,802.42 | |
| (I) Net profits from continuing activities (“-” refers to net loss) | 1,172,577,483.24 | 959,889,802.42 | |
| (II) Net profits from discontinuing activities (“-” refers to net loss) | |||
| V. Net amount of other comprehensive income after tax | 2,036,137.10 | 292,894.11 | |
| (I) Other comprehensive income not to be reclassified into profit or loss | 2,024,062.42 | 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 | 738,151.54 | ||
| 3. Change in fair value of investments in other equity instruments | 1,285,910.88 | 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 | 12,074.68 | -16,285.82 | |
| 1. Other comprehensive income that may be reclassified to profit or loss under equity method | 12,074.68 | -16,285.82 | |
| 2. Change in fair value of other debt investments | |||
| 3. Amount included in other comprehensive income on reclassification of financial assets | |||
| 4. Credit impairment provisions of other debt investments | |||
| 5. Cash flow hedging reserve | |||
| 6. Exchange differences from translation of financial statements | |||
| 7. Others | |||
| VI. Total comprehensive income | 1,174,613,620.34 | 960,182,696.53 | |
| VII. Earnings per share: | |||
| (I) Basic earnings per share (Yuan/share) | |||
| (II) Diluted earnings per share (Yuan/share) |
Consolidated Cash Flow StatementJanuary - December 2020
Unit: Yuan Currency: RMB
| Item | Notes | 2020 | 2019 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods or rendering of services | 14,375,933,624.40 | 12,659,206,706.73 | |
| 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 | 11,398,390.80 | 10,615,726.68 | |
| Other cash received from operating activities | VII. 78 | 744,295,214.21 | 278,708,570.57 |
| Sub-total of cash inflows from operating activities | 15,131,627,229.41 | 12,948,531,003.98 | |
| Cash paid for goods and services | 10,196,223,261.78 | 9,111,402,404.98 | |
| 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 | 820,264,591.39 | 727,849,843.52 | |
| Taxes and fees paid | 663,182,452.66 | 676,394,326.12 | |
| Cash paid for other operating activities | VII. 78 | 2,180,259,031.30 | 1,350,943,045.68 |
| Sub-total of cash outflows from operating activities | 13,859,929,337.13 | 11,866,589,620.30 | |
| Net cash flow generated from operating activities | 1,271,697,892.28 | 1,081,941,383.68 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investments | 2,291,000,000.00 | 1,250,355,226.95 | |
| Cash received from returns on investments | 21,189,324.39 | 24,216,354.35 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 16,631.67 | 5,463,204.22 | |
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received relating to investing activities | VII. 78 | 1,987,377.00 |
| Sub-total of cash inflows from investing activities | 2,314,193,333.06 | 1,280,034,785.52 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 323,935,562.77 | 377,738,579.26 | |
| Cash paid for investment | 3,042,050,000.00 | 866,000,000.00 | |
| Net increase in pledged loans | |||
| Net cash paid for acquiring subsidiaries and other operating entities | 13,656,702.33 | 110,648,892.44 | |
| Other cash paid relating to investing activities | |||
| Sub-total of cash outflows from investing activities | 3,379,642,265.10 | 1,354,387,471.70 | |
| Net cash flow generated from investing activities | -1,065,448,932.04 | -74,352,686.18 | |
| III. Cash flow generated from financing activities: | |||
| Proceeds received from financing activities | 176,034,120.00 | 42,000,000.00 | |
| Including: Proceeds received by subsidiaries from minority shareholders’ investment | 42,000,000.00 | ||
| Cash received from borrowings | 180,000,000.00 | 346,892,780.31 | |
| Other cash received from financing-related activities | |||
| Sub-total of cash inflows from financing activities | 356,034,120.00 | 388,892,780.31 | |
| Cash repayments of borrowings | 180,000,000.00 | 458,363,649.10 | |
| Dividends paid, profit distributed or interest paid | 374,506,316.09 | 286,141,698.09 | |
| Including: Dividend and profit paid by subsidiaries to minority shareholders | |||
| Other cash paid for financing-related activities | VII. 78 | 1,585,530.00 | 8,687,534.78 |
| Sub-total of cash outflows from financing activities | 556,091,846.09 | 753,192,881.97 | |
| Net cash flow from financing activities | -200,057,726.09 | -364,300,101.66 | |
| IV. Effects of exchange rate fluctuations on cash and cash equivalents | -6,291,534.79 | -7,343,606.05 | |
| V. Net increase in cash and cash equivalents | -100,300.64 | 635,944,989.79 | |
| Add: Cash and cash equivalents at the beginning of the period | 1,377,446,435.89 | 741,501,446.10 | |
| VI. Cash and cash equivalents at the end of the period | 1,377,346,135.25 | 1,377,446,435.89 |
Cash Flow Statement of the Company
January - December 2020
Unit: Yuan Currency: RMB
| Item | Notes | 2020 | 2019 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods or rendering of services | 4,597,258,430.48 | 4,481,220,462.21 | |
| Tax rebates | |||
| Other cash received from operating activities | 1,051,218,859.99 | 869,793,478.23 | |
| Sub-total of cash inflows from operating activities | 5,648,477,290.47 | 5,351,013,940.44 | |
| Cash paid for goods and services | 2,109,943,577.01 | 2,424,224,396.02 | |
| Cash paid to and on behalf of employees | 403,578,239.43 | 366,624,770.76 | |
| Taxes and fees paid | 398,632,878.68 | 445,473,384.86 | |
| Cash paid for other operating activities | 1,641,002,312.95 | 894,987,272.24 | |
| Sub-total of cash outflows from operating activities | 4,553,157,008.07 | 4,131,309,823.88 | |
| Net cash flow generated from operating activities | 1,095,320,282.40 | 1,219,704,116.56 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investments | 2,150,000,000.00 | 1,020,000,000.00 | |
| Cash received from returns on investments | 20,645,914.20 | 22,046,969.52 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 604,365.44 | 1,564,005.35 | |
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received relating to investing activities | 1,987,377.00 | ||
| Sub-total of cash inflows from investing activities | 2,173,237,656.64 | 1,043,610,974.87 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 254,982,539.91 | 301,156,480.55 | |
| Cash paid for investment | 2,900,000,000.00 | 954,000,000.00 | |
| Net cash paid for acquiring subsidiaries and other operating entities | 13,656,702.33 | 170,005,997.67 | |
| Other cash paid relating to investing activities | |||
| Sub-total of cash outflows from investing activities | 3,168,639,242.24 | 1,425,162,478.22 | |
| Net cash flow generated from investing activities | -995,401,585.60 | -381,551,503.35 | |
| III. Cash flow generated from financing activities: |
| Proceeds received from financing activities | 176,034,120.00 | ||
| Cash received from borrowings | |||
| Other cash received from financing-related activities | |||
| Sub-total of cash inflows from financing activities | 176,034,120.00 | ||
| Cash repayments of borrowings | |||
| Dividends paid, profit distributed or interest paid | 369,517,396.53 | 276,948,654.26 | |
| Other cash paid for financing-related activities | 1,585,530.00 | ||
| Sub-total of cash outflows from financing activities | 371,102,926.53 | 276,948,654.26 | |
| Net cash flow from financing activities | -195,068,806.53 | -276,948,654.26 | |
| IV. Effects of exchange rate fluctuations on cash and cash equivalents | -5,972,061.74 | -2,444,756.42 | |
| V. Net increase in cash and cash equivalents | -101,122,171.47 | 558,759,202.53 | |
| Add: Cash and cash equivalents at the beginning of the period | 806,340,030.40 | 247,580,827.87 | |
| VI. Cash and cash equivalents at the end of the period | 705,217,858.93 | 806,340,030.40 |
Consolidated Statements of Changes in Owners’ Equity
January - December 2020
Unit: Yuan Currency: RMB
| Item | 2020 | ||||||||||||||
| 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 | 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 | |||||||
| Add: Changes in accounting policies | 10,596,781.73 | 10,596,781.73 | 146,751.13 | 10,743,532.86 | |||||||||||
| Correction for previous errors | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the year | 920,000,000.00 | 272,347,764.53 | 526,359.55 | 440,260,399.59 | 2,578,962,643.05 | 4,212,097,166.72 | 259,571,607.74 | 4,471,668,774.46 | |||||||
| III. Increase and decrease for the period (“-” for decrease) | 7,427,600.00 | 261,036,367.13 | 176,034,120.00 | 1,615,042.93 | 23,782,260.32 | 863,644,394.95 | 981,471,545.33 | -12,153,459.19 | 969,318,086.14 | ||||||
| (I) Total comprehensive income | 1,615,042.93 | 1,255,426,655.27 | 1,257,041,698.20 | -17,383,788.98 | 1,239,657,909.22 | ||||||||||
| (II) Owner’s contribution and capital reduction | 7,427,600.00 | 261,036,367.13 | 176,034,120.00 | 92,429,847.13 | 5,230,329.79 | 97,660,176.92 | |||||||||
| 1. Ordinary shares contributed by the owners | 7,427,600.00 | 168,606,520.00 | 176,034,120.00 | -1,050,000.00 | -1,050,000.00 | ||||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based | 71,971,792.64 | 71,971,792.64 | 71,971,792.64 | ||||||||||||
| payments credited to owners’ equity | |||||||||||||||
| 4. Others | 20,458,054.49 | 20,458,054.49 | 6,280,329.79 | 26,738,384.28 | |||||||||||
| (III) Profit distribution | 23,782,260.32 | -391,782,260.32 | -368,000,000.00 | -368,000,000.00 | |||||||||||
| 1. Withdrawal of surplus reserve | 23,782,260.32 | -23,782,260.32 | |||||||||||||
| 2. Withdrawal of general risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -368,000,000.00 | -368,000,000.00 | -368,000,000.00 | ||||||||||||
| 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 | 927,427,600.00 | 533,384,131.66 | 176,034,120.00 | 2,141,402.48 | 464,042,659.91 | 3,442,607,038.00 | 5,193,568,712.05 | 247,418,148.55 | 5,440,986,860.60 |
| 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 | |||||||||||||||
| Business combination under common 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 | 2020 | ||||||||||
| 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 | 292,894.11 | 439,931,539.68 | 2,435,883,856.99 | 4,070,116,889.87 | |||||
| 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 | 292,894.11 | 439,931,539.68 | 2,435,883,856.99 | 4,070,116,889.87 | |||||
| III. Increase and decrease for the period (“-” for decrease) | 7,427,600.00 | 264,155,071.53 | 176,034,120.00 | 2,036,137.10 | 23,782,260.32 | 780,795,222.92 | 902,162,171.87 | ||||
| (I) Total comprehensive income | 2,036,137.10 | 1,172,577,483.24 | 1,174,613,620.34 | ||||||||
| (II) Owner’s contribution and capital reduction | 7,427,600.00 | 264,155,071.53 | 176,034,120.00 | 95,548,551.53 | |||||||
| 1. Ordinary shares contributed by the owners | 7,427,600.00 | 168,606,520.00 | 176,034,120.00 | ||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||
| 3. Amount of share-based payments credited to owners’ equity | 82,199,024.88 | 82,199,024.88 | |||||||||
| 4. Others | 13,349,526.65 | 13,349,526.65 | |||||||||
| (III) Profit distribution | 23,782,260.32 | -391,782,260.32 | -368,000,000.00 | ||||||||
| 1. Withdrawal of surplus reserve | 23,782,260.32 | -23,782,260.32 | |||||||||
| 2. Distribution to owners (or shareholders) | -368,000,000.00 | -368,000,000.00 | |||||||||
| 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 | 927,427,600.00 | 538,163,670.62 | 176,034,120.00 | 2,329,031.21 | 463,713,800.00 | 3,216,679,079.91 | 4,972,279,061.74 |
| 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 |
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 a companylimited by shares that was approved by the Approval for the Initial Public Offering of Shanghai M&G StationeryInc. in [2015] No. 15 securities regulatory license of China Securities Regulatory Commission in January 2015.The Company’s business license No.: 91310000677833266F. In January 2015, the Company was listed onShanghai Stock Exchange. The industry where the Company operates is manufacturing industry in products forstationery, arts, sports and entertainment.
As of 31 December 2020, the Company issued a total of 927,427,600 shares accumulatively, including7,427,600 restricted shares, and its registered capital amounted to RMB927,427,600. The registered address ofthe Company is Building 3, No. 3469 Jinqian Road, Fengxian District, Shanghai. The principal operations ofthe Company include:
Permitted items: Food operation; printing of packaging and decoration printing products; printing ofdocuments, materials and other printing products; publication operation. (For items subject to approval,operation activities are conducted after getting the approval from relevant departments. For specific operationitems, the approval documents or permits of relevant departments shall prevail)
General items: Manufacturing and sales of stationery products; wholesale and retail of digital products,security equipment, instruments and apparatus, protective equipment in work, furniture, decorations, cosmetics,accessories, office supplies, craft gifts (except ivory and its products), rubber and plastic products, electronicproducts, household appliances, toys, molds, hardware and electric material, communication equipment,computer software and auxiliary equipment, daily necessities, textiles, clothing and footwear, household goods,sporting goods and equipment, disinfectants (excluding hazardous chemicals), kitchen utensils, sanitary wareand daily sundries, daily chemical products, first-class medical equipment, second-class medical equipment,machinery equipment, office equipment and consumables, photographic equipment, audio equipment,decorative materials, fire-fighting equipment, hotel supplies, glass products, power and electronic components,lubricants, plumbing pipes and accessories, ceramic pipes and accessories, automotive supplies, sanitaryproducts, and mother and baby supplies; import and export of goods and technology; e-commerce and enterprisemanagement consulting. (Except for items subject to approval according to law, operation activities are carriedout independently with business license according to law)
The parent company of the Company is M&G Holdings (Group) Co., Ltd., and the beneficial controllersare Chen Huwen, Chen Huxiong, and Chen Xueling.
The financial statements were approved for submission by the Board of Directors on 26 March 2021.
2. Scope of consolidated financial statements
"√ Applicable" "□ Not applicable"
As of 31 December 2020, subsidiaries in the scope of the Company’s consolidated financial statementsare 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 Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） |
| M&G Life 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 Life Enterprise Management Co., Ltd.（江苏晨光生活馆企业管理有限公司） |
| Zhejiang New M&G Life Enterprise Management Co., Ltd.（浙江新晨光生活馆企业管理有限公司） |
| 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. |
| 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） |
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） |
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） |
| Shanghai Colipu Information Technology Co., Ltd.（上海科力普信息科技有限公司） |
| 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.（安硕文教用品（香港）有限公司） |
| International stationery company |
Information Disclosure by Companies Offering Securities to the Public No.15 - General Provisions onFinancial 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 end of theReporting Period and there are no material events that may affect its ability to continue as a 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 estimates formulated bythe Company according to the characteristics of its production and operation. For details, please refer to Notes"V (10) Financial Instruments", "V (23) Fixed Assets", "V (29) Intangible Assets", "V (31) Long-term DeferredExpenses", "V (38) Income", and "V (40) Government Subsidies".
1. Statement of compliance of accounting standards for business enterprises
The financial statements are in compliance with the Accounting Standards for Business Enterprisespromulgated by the Ministry of Finance, and truly and completely present the consolidated and parentcompany’s financial position of the Company as at 31 December 2020, as well as the consolidated and parentcompany’s operating results and cash flows for the year then ended.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
"√ Applicable" "□ Not applicable"
The Company’s operating cycle is 12 months.
4. Reporting currency
RMB is adopted by the Company as the bookkeeping currency.
5. Accounting treatments for business combination under or not under common control"√ Applicable" "□ Not applicable"
Business combination under common control: the assets and liabilities acquired by the Company inbusiness combination (including goodwill incurred in the acquisition of the acquiree by ultimate controllingparty) shall be measured at the carrying amount of the assets and liabilities of the acquiree in the consolidatedfinancial statements of the ultimate controlling party at the date of combination. The difference between thecarrying amount of the net assets obtained and the carrying amount of the consideration paid for the merger (ortotal nominal value of the issued shares) is adjusted to capital premium in capital reserve. If the capital premium
in capital reserve is not sufficient to offset the difference, the remaining balance is adjusted against retainedearnings.Business combination not under common control: the cost of merger is the fair value of the assets paid bythe acquirer to obtain the control right of the acquiree, the liabilities incurred or assumed, and the equitysecurities issued at the date of purchase. Where the cost of merger is higher than the fair value of the identifiablenet assets acquired from the acquiree in enterprise merger, the Company shall recognize such difference asgoodwill; where the cost of merger is less than the fair value of the identifiable net assets acquired from theacquiree in enterprise merger, such difference shall be included in the current profit or loss. The identifiableassets, liabilities and contingent liabilities of the acquiree obtained in the combination that meet the recognitionconditions are measured at their fair values at the date of purchase.The direct expenses incurred in enterprise merger shall be included the current profit or loss; transactioncosts associated with the issue of equity or debt securities for the enterprise merger shall be included in theinitially 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 of control,including the Company and all of its subsidiaries. The term "control" refers to the power held by the Companyover the invested enterprise, through which the Company is capable of enjoying variable return by participatingin relevant activities of the invested enterprise, and having the ability to influence the amount of return via suchcontrol.
(2) Consolidation procedure
The Company regards the entire enterprise group as an accounting entity and prepares the consolidatedfinancial statements in accordance with unified accounting policies to reflect the overall financial status,operating results and cash flow of the enterprise group. The influence of internal transactions between theCompany and its subsidiaries and among the subsidiaries shall be offset. If internal transactions indicate thatthe relevant assets have suffered impairment losses, the losses shall be fully recognized. In preparing theconsolidated financial statements, where the accounting policies and the accounting periods are inconsistentbetween the Company and its subsidiaries, the financial statements of the subsidiaries are adjusted in accordancewith the accounting policies and accounting period of the Company.
The owners’ equity, the net profit or loss and the comprehensive income attributable to minorityshareholders of a subsidiary of the current period are presented separately under the owners’ equity in theconsolidated balance sheet, the net profit and the total comprehensive income in the consolidated incomestatement respectively. Where losses attributable to the minority shareholders of a subsidiary exceed theminority shareholders’ interest entitled in the shareholders’ equity of the subsidiary at the beginning of theperiod, the excess is allocated against the minority equity.
① Addition of subsidiary or business
During the Reporting Period, if there is an addition of subsidiary or business due to business combinationunder common control, the operating results and cash flows of the subsidiary or business combination from thebeginning of the current period to the end of the Reporting Period are included into the consolidated financialstatements, and at the same time, the amount at the end of the period of the consolidated financial statementsand the relevant items in the comparative statements are adjusted as if the reporting entity after combinationhad been existing since the control of the ultimate controlling party started.
Where control over the investee under common control is obtained due to reasons such as increase ininvestments, 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 the acquisition of the originalequity interest and the date when the acquirer and the acquiree were placed under common control until the dateof combination are offset against the retained profit at the beginning of the period of the comparative statementsor the profit or loss of the current period respectively.During the Reporting Period, if there is an addition of subsidiary or business due to business combinationnot under common control, it shall be included in the consolidated financial statements on the basis of the fairvalue of the identifiable assets, liabilities and contingent liabilities determined at the date of purchase.Where control over the investee not under common control is obtained due to reasons such as increase ininvestments, for the equity interest of the acquiree held before the date of purchase, the Company remeasuresthe equity interest at its fair value as at the date of purchase, and any difference between the fair value and itsbook value will be accounted for as investment gains of the current period. Where equity interest of the acquireeheld before the date of purchase is related to other comprehensive income that can be reclassified into profitand loss in the future and other changes in owners’ equity under the equity method, such equity interest istransferred to investment gains of the period to which the date of purchase belongs.
② Disposal of subsidiaries
A. General treatment for disposal
When control over the investee is lost due to the disposal of part of the equity investment or other reasons,the Company remeasures the remaining equity investment at fair value as at the date on which control is lost.The difference between the sum of the consideration received from equity disposal and the fair value of theremaining equity interest and the sum of the net assets of the subsidiary proportionate to the originalshareholding accumulated from the date of purchase or combination and goodwill is included in investmentgains of the period during which the control is lost. Other comprehensive income that is related to the equityinvestment in the original subsidiary and can be reclassified into profit and loss in the future and other changesin owners’ equity under the equity method, are transferred to investment gains of the period during which thecontrol is lost.
B. Stepwise disposal of subsidiary
In respect of stepwise disposal of equity investment in a subsidiary through multiple transactions untilcontrol is lost, if the terms, conditions and economic effects of the transactions of equity investment in thesubsidiary satisfy one or more of the following conditions, the transactions are normally accounted for as abasket of transactions:
i. these transactions were entered into simultaneously or after considering the effects of each other;
ii. these transactions constituted a complete commercial result as a whole;
iii. one transaction was conditional upon at least one of the other transaction;
iv. one transaction was not economical on its own but was economical when considering together withother transactions.
Where the transactions constitute a basket of transactions, the Company accounts for the transactions as atransaction of disposal of a subsidiary until control is lost; the difference between the amount received eachtime for disposal before control is lost and the net assets of such subsidiary corresponding to the disposal ofinvestment is recognized as other comprehensive income in the consolidated financial statements, and istransferred to profit or loss of the period during which control is lost upon loss of control.
Where the transactions do not constitute a basket of transactions, before the loss of control, the transactionsare accounted for using the policies related to partial disposal of equity investment in a subsidiary where nocontrol is lost; when control is lost, they are accounted for using the general method for disposal of subsidiaries.
③ Purchase of minority interests in subsidiary
For the difference between the long-term equity investment newly acquired due to the purchase of minorityinterests by the Company and the share of net assets of the subsidiary calculated according to the newshareholding accumulated from the date of purchase (or date of combination), share premium of the capitalreserve in the consolidated balance sheet will be adjusted; where share premium of the capital reserve isinsufficient for the write-down, retained profit will be adjusted.
④ Partial disposal of equity investment in subsidiaries without losing control
For the difference between the disposal consideration and the net assets of the subsidiary corresponding tothe disposal of long-term equity investment accumulated from the date of purchase or date of combination,share premium of the capital reserve in the consolidated balance sheet will be adjusted; where share premiumof the capital reserve is insufficient for the write-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
Cash refers to the cash on hand and deposits that are available for payment of the Company. Cashequivalents refer to investments held by the Company that are short-term, highly liquid, readily convertible toknown amounts of cash and subject to an insignificant risk of changes in value.
9. Foreign currency transactions and translation of foreign currency financial statements"√ Applicable" "□ Not applicable"
(1) Foreign currency transactions
Foreign currency transactions shall be translated into RMB at the spot exchange rate on the day when thetransactions occur.
Balance of monetary items in foreign currency as at the balance sheet date is translated at the spot ratesprevailing at the balance sheet date, and any translation difference arising therefrom is included in profit or lossof the period except for the translation difference arising from dedicated borrowings in foreign currency relatedto the construction of assets qualified for capitalisation which is accounted for under the principle ofcapitalisation of borrowing expenses.
(2) Translation of foreign currency financial statements
Asset and liability items in the balance sheet are translated at the spot rates prevailing at the balance sheetdate. Owners’ equity items other than “undistributed profit” are translated at the spot rates on the dates whenthey are incurred. Income and expense items in the income statement are translated at the spot rates prevailingat the transaction dates.
On disposal of a foreign operation, the exchange differences in the financial statements in foreign currencyrelating to that foreign operation are transferred from owners’ equity to profit or loss of the period during whichthe disposal occurs.
10. Financial instruments
"√ Applicable" "□ Not applicable"
The Company recognizes a financial asset, a financial liability or an equity instrument when it becomes aparty to a financial instrument contract.
(1) Classification of the financial instruments
According to the business model of the Company’s management of financial assets and the contractualcash flow characteristics of financial assets, financial assets are classified at the initial recognition as: financialassets at amortized cost, financial assets at fair value through profit or loss, and other financial assets at fairvalue through current profit or loss.
The Company classifies financial assets that simultaneously meet the following conditions and are notdesignated as financial assets at fair value through current profit or loss as financial assets measured at amortizedcost:
- the business model aims at collecting contractual cash flows; and
- contractual cash flows are only the payment made based on the principal and the interest of theoutstanding principal amount.The Company classifies financial assets that simultaneously meet the following conditions and are notdesignated as financial assets at fair value through current profit or loss as financial assets (debt instruments) atfair value through other comprehensive income:
- the business model aims at both collecting contractual cash flows and selling the financial assets; and
- contractual cash flows are only the payment made based on the principal and the interest of theoutstanding principal amount.
For non-trading equity instrument investments, the Company irrevocably designates them as financialassets (equity instruments) at fair value through other comprehensive income at the time of initial recognition.The designation is made on the basis of a single investment, and the related investment meets the definition ofan equity instrument from the issuer's perspective.
Except for the above-mentioned financial assets measured at amortized cost and at fair value through othercomprehensive income, the Company classifies all other financial assets as financial assets at fair value throughcurrent profit or loss. At the time of initial recognition, if accounting mismatches can be eliminated orsignificantly reduced, the Company can irrevocably designate financial assets that should be classified asfinancial assets measured at amortized cost or at fair value through other comprehensive income as financialassets at fair value through current profit or loss.
Financial liabilities at the initial recognition are classified into financial liabilities at fair value throughcurrent profit or loss, and financial liabilities at amortized cost.
Financial liabilities at the initial recognition can be designated as financial liabilities at fair value throughcurrent profit or loss if one of the following conditions can be met:
① Such designation can eliminate or significantly reduce accounting mismatches.
② According to the enterprise risk management or investment strategy stated in the official writtendocument, management and evaluation of the financial liabilities portfolio or financial assets and financialliabilities portfolio are based on fair value which will be used as the basis for reporting to the key managementpersonnel.
③ The financial liabilities include embedded derivatives that need to be split separately.
(2) Recognition and measurement of financial instruments
① Financial assets at amortized cost
Financial assets at amortized cost include notes receivable and accounts receivable, other receivables, long-term receivables and debt investment, which are initially measured at fair value, and related transaction costsare included in the initial recognition amount. The accounts receivable of major financing components and theaccounts receivable of the Company’s decision not to consider the financing component with the term less thanone year are initially measured at the contract transaction price.
Interest calculated by the effective interest method during the period of holding is included in the currentprofit or loss.
Upon recovery or disposal, the difference between the acquisition price and the carrying amount of thefinancial 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 related transactioncosts are included in the initial recognition amount. The financial assets are subsequently measured at fair value.Changes in fair value are included in other comprehensive income, except for interest, impairment losses orgains and exchange gain or loss calculated using 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 the current profit orloss.
③ Financial assets (equity instruments) at fair value through other comprehensive income
Financial assets (equity instruments) at fair value through other comprehensive income, including otherequity instruments, are initially measured at fair value, and related transaction costs are included in the initialrecognition amount. The financial assets are subsequently measured at fair value, and changes in fair value areincluded 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 retained earnings.
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 financial assets,derivative financial assets and other non-current financial assets, are initially measured at fair value, and relatedtransaction costs are included in the current profit or loss. The financial assets are subsequently measured at fairvalue, and changes in fair value are included in the current profit or loss.
⑤ Financial liabilities at fair value through current profit or loss
Financial liabilities at fair value through current profit or loss, including held-for-trading financialliabilities, and derivative financial liabilities, are initially measured at fair value, and related transaction costsare included in the current profit or loss. The financial liabilities are subsequently measured at fair value, andchanges in fair value are included in the current profit or loss.
When the recognition is terminated, the difference between the carrying amount and consideration paid isincluded in the current profit and loss.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost, including short-term borrowings, bills payable and accounts payable,other payables, long-term borrowings, bonds payable, long-term payables, are initially measured 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 the currentprofit or loss.
When the recognition is terminated, the difference between consideration paid and the carrying amount ofthe financial liabilities is included in the current profit and loss.
(3) Derecognition of financial assets and transfer of financial assets
The Company derecognizes financial assets when one of the following conditions is met:
- the contractual rights to collect the cash flows from the financial assets expire;
- the financial assets have been transferred and nearly all the risks and rewards related to the ownership ofthe financial assets have been transferred to the transferee; or
- the financial assets have been transferred, and the Company have neither transferred nor retained almostall risks and rewards related to the ownership of the financial assets, but did not retain control over the financialassets.
Where a financial asset is transferred, it shall not be derecognized if the Company has retained nearly allthe risks and rewards related to the ownerships of the financial asset.
The substance-over-form principle shall be adopted while making a judgment on whether the transfer offinancial assets satisfies the above conditions for derecognition.
The transfer of financial assets could be classified into entire transfer and partial transfer. If the transfer ofan entire financial asset satisfies the conditions for derecognition, the difference between the two amounts belowshall 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 the change infair value previously included into the owners’ equity (in cases where the transferred financial assets arefinancial assets (debt instruments) at fair value through other comprehensive income).
If the partial transfer of financial assets satisfies the conditions for derecognition, the overall carryingamount of the transferred financial assets shall be apportioned according to their respective relative fair valuebetween the portion of derecognized part and the remaining part, and the difference between the two amountsbelow shall be included in the current profit or loss:
① The carrying amount of the derecognized portion;
② The consideration of the derecognized portion, plus the corresponding derecognized portion ofaccumulated change in fair value previously included in owners’ equity (in cases where the transferred financialassets are financial assets (debt instruments) at fair value through other comprehensive income).
If the transfer of financial assets does not meet the conditions for derecognition, the financial assetscontinue to be recognized and the consideration received is recognized as a financial liability.
(4) Derecognition of financial liabilities
When the current obligation under a financial liability is completely or partially discharged, the whole orrelevant portion of the liability is derecognized; if an agreement is entered into between the Company and acreditor to replace the original financial liabilities with new financial liabilities with substantially different terms,the original financial liabilities will be derecognized and the new financial liabilities will be recognized.
If the contract terms of the original financial liabilities are substantially amended in part or in full, theoriginal financial liabilities will be derecognized in full or in part, and the financial liabilities whose terms havebeen amended will be recognized as a new financial liability.
When financial liabilities are derecognized in full or in part, the difference between the carrying amountof the financial liabilities derecognized and the consideration paid (including transferred non-cash assets or newfinancial liability) will be included in the current profit or loss.
Where the Company repurchases part of its financial liabilities, the carrying amount of such financialliabilities will be allocated according to the relative fair value between the continuously recognized part andderecognized part on the repurchase date. The difference between the carrying amount of the derecognizedportion of financial liabilities and the consideration paid (including transferred non-cash assets or new financialliability) will be included in the current profit or loss.
(5) Method of determining the fair values of financial assets and liabilities
A financial instrument with an active market determines its fair value by quoted prices in an active market.Financial instruments that do not exist in an active market shall use valuation techniques to determine their fairvalue. During the valuation process, the Company uses valuation techniques appropriate to the prevailingcircumstances with the support of sufficient data and other information available, selects inputs consistent withthe characteristics of the assets or liabilities considered in the transactions of relevant assets or liabilities bymarket participants, and gives priority to relevant observable inputs. Unobservable inputs are used only whenthe relevant observable inputs are not accessible or the access to which is impracticable.
(6) Impairment test method and accounting treatment for impairment of financial assets
The Company estimates the anticipated credit loss on a single or combination of financial assets measuredat amortized cost, financial assets (debt instruments) at fair value through other comprehensive income andfinancial guarantee contracts.
The Company considers reasonable and evidence-based information about past events, current conditions,and forecasts of future economic conditions, and uses the risk of default as the weight to calculate theprobability-weighted amount of the present value of the difference between the contractual cash flow receivableand the expected cash flow, and recognizes the expected credit loss.
If the credit risk of the financial instruments has increased significantly since the initial recognition, theCompany will measure its loss provision based on the amount of anticipated credit loss for the lifetime of thefinancial instruments; if the credit risk of the financial instruments has not significantly increased since theinitial recognition, the Company will measure its loss provision based on the amount of anticipated credit lossfor the financial instruments in the next 12 months. The increase or reversal of the loss provision resultingtherefrom is included in the current profit and loss as an impairment loss or gain.
the Company compares the risk of default on the balance sheet date of a financial instrument with the riskof default on the date of initial recognition to determine the relative change in the risk of default during the
expected life of the financial instrument so as to assess whether the credit risk of the financial instrument hasincreased significantly since the initial recognition. Usually, after an overdue for more than 30 days, theCompany believes that the credit risk of the financial instrument has increased significantly unless there isconclusive evidence that the credit risk of the financial instrument has not increased significantly since the initialrecognition.
If the credit risk of financial instrument at the balance sheet date is low, the Company will believe that thecredit risk of the financial instrument has not increased significantly since the initial recognition.If there is any objective evidence indicating that some financial assets have incurred credit impairment, theCompany will make provision for impairment for the financial asset in a single financial asset manner.Regarding the receivables and contract assets formed from transactions regulated by the AccountingStandards for Business Enterprises No. 14 - Revenue (2017), regardless of whether they contain significantfinancing components or not, the Company always measures their loss reserves in accordance with the amountof anticipated credit losses for the entire lifetime.
For lease receivables, the Company always measures their loss reserves in accordance with the amount ofanticipated credit losses for the entire lifetime.
If the Company no longer reasonably expects that the contractual cash flow of a financial asset can berecovered in whole or in part, it will directly write down the book balance of the financial asset.
11. Bills receivable
Determination and accounting treatment of the anticipated credit loss of notes receivable"√ Applicable" "□ Not applicable"For details, please refer to Note V (10) Financial Instruments.
12. Accounts receivable
Determination and accounting treatment of the anticipated credit loss of accounts receivable"√ Applicable" "□ Not applicable"For details, please refer to Note V (10) Financial Instruments.
13. Receivables financing
"√ Applicable" "□ Not applicable"For details, please refer to Note V (10) Financial Instruments.
14. Other receivables
Determination and accounting treatment of the anticipated credit loss of other receivables"√ Applicable" "□ Not applicable"For details, please refer to Note V (10) Financial Instruments.
15. Inventories
"√ Applicable" "□ Not applicable"
(1) Classification and cost of inventories
Inventories are classified into materials in transit, raw materials, turnover materials, goods-in-stock, goodsin production, goods in transit, commissioned processing materials and so forth.
Inventories are initially measured at cost. The cost of inventories includes purchase cost, processing costand other expenditures incurred to bring inventory to its current location and state.
(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 inventories
At the balance sheet date, the inventories are measured according to the cost or the net realizable value,whichever is lower. If the cost of inventories is higher than the net realizable value, the provision for decline invalue of inventories is made. The net realizable value refers, in the ordinary course of business, to the amountafter deducting the estimated cost of completion, estimated sale expense and relevant taxes from the estimatedsale price of inventories.
Net 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 be determined by theirestimated selling price less the related selling expenses and taxes; the net realizable value of material inventories,which need to be processed, during the normal course of production and operation, shall be determined by theamount after deducting the estimated cost of completion, estimated selling expenses and relevant taxes from theestimated selling price 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 an enterprise holds moreinventories than the quantity stipulated in the sales contract, the net realizable value of the exceeding part shallbe calculated on the ground of general selling price.
If the factors, which cause any value write-down of the inventories, have disappeared, thus causing theinventories’ net realizable value to be higher than their carrying amount, the amount of write-down is reversedfrom the provision for the loss on decline in value of inventories which has been made. The reversed amount isincluded in the profits and losses of the current period.
(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. Contract assets
(1). Recognition methods and standards of contract assets
"√ Applicable" "□ Not applicable"
Accounting policies from 1 January 2020
The Company presents contract assets or contract liabilities in the balance sheet based on the relationshipbetween performance obligations and customer payments. The Company presents the right to receiveconsideration for the transfer of goods or services rendered to customers (and the right depends on other factorsother than the passage of time) as contract assets. Contract assets and contract liabilities under the same contractare presented in net amounts. The Company's unconditional (only depending on the passage of time) right tocollect consideration from customers is separately presented as receivables.
(2). Determination and accounting treatment of the anticipated credit loss of contract assets"□ Applicable" "√ Not applicable"
17. Held for sale assets
"□ Applicable" "√ Not applicable"
18. Debt investment
(1). Determination and accounting treatment of the anticipated credit loss of debt investments"□ Applicable" "√ Not applicable"
19. Other debt investment
(1). Determination and accounting treatment of the anticipated credit loss of other debt investments"□ Applicable" "√ Not applicable"
20. Long-term receivables
(1). Determination and accounting treatment of the anticipated credit loss of long-term receivables"√ Applicable" "□ Not applicable"For details, please refer to Note V (10) Financial Instruments.
21. Long-term equity investments
"√ Applicable" "□ Not applicable"
(1) Joint control or significant influence criterion
Joint control is the contractually agreed sharing of control of an arrangement, and exists only whendecisions about the relevant activities of the arrangement require the unanimous consent of the parties sharingcontrol. The Company together with the other joint venture parties can jointly control over the investee, and areentitled to the right of the net assets of the investee who is joint venture of the Company.The term "significant influences" refers to the power to participate in making decisions on the financialand operating policies of the invested enterprise, but not to control or do joint control together with other partiesover the formulation of these policies. Where the investor can exercise significant influence over the investee,the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business combination of entities
For long-term equity investments in subsidiaries formed by business combination under common control,the initial investment cost of long-term equity investments shall be determined based on share of the book valueof the owners’ equity of the acquiree in the consolidated financial statements of the ultimate controlling partyat the date of combination. The difference between the initial investment cost of the long-term equity investmentand the carrying value of the consideration paid is adjusted to the equity premium in the capital reserve. If thecapital premium in capital reserve is not sufficient to offset the difference, the remaining balance is adjustedagainst retained earnings. In connection with imposing control over the investee under joint control as a resultof additional investment and other reasons, the difference between the initial investment cost of the long-term
equity investment recognized in accordance with the above principles and the carrying amount of the long termequity investment before the combination and the sum of carrying amount of newly paid consideration foradditional shares acquired on the date of combination is adjusted to equity premium. If the capital premium incapital reserve is not sufficient to offset the difference, the remaining balance is adjusted against retainedearnings.For long-term equity investment in subsidiaries formed by business combination not under commoncontrol, the cost of the combination ascertained on the date of acquisition shall be taken as the initial investmentcost of the long-term equity investments. In connection with imposing control over the investee not under jointcontrol as a result of additional investment and other reasons, the initial investment cost is the sum of thecarrying amount of the equity investment originally held and the newly increased initial investment cost.
② Long-term equity investments acquired by means other than business combinationThe initial investment cost of a long-term equity investment obtained by the Company by cash paymentshall be the purchase cost paid actually.
The initial investment cost of a long-term equity investment obtained by the Company by means ofissuance of equity securities shall be the fair value of the equity securities issued.
(3) Subsequent measurement and recognition of profit or loss
① Long-term equity investment accounted for by cost method
Long-term equity investment in subsidiaries of the Company is accounted for by cost method, unless theinvestment meets the conditions for holding for sale. Except for the actual consideration paid for the acquisitionof investment or the declared but not yet distributed cash dividends or profits which are included in theconsideration, investment gains are recognized as the Company’s shares of cash dividends or profits declaredby the investee.
② Long-term equity investment accounted for by equity method
Long-term equity investments of associates and joint ventures are accounted for by equity method. Wherethe initial investment cost of a long-term equity investment exceeds the investor’s interest in the fair value ofthe investee’s identifiable net assets at the date of acquisition, no adjustment is made to the initial investmentcost of long-term equity investments; where the initial investment cost is less than the investor’s interest in thefair value of the investee’s identifiable net assets at the date of acquisition, the difference is included in theprofits or losses of the current period, and the cost of the long-term equity investment is adjusted simultaneously.
the Company recognizes the investment income and other comprehensive income according to the sharesof net profit or loss and other comprehensive income realized by the investee which it shall be entitled or sharedrespectively, and simultaneously makes adjustment to the carrying amount of long-term equity investments; thecarrying amount of long-term equity investments shall be reduced by attributable share of the profit or cashdividends for distribution declared by the investee. In relation to other changes of owners’ equity except for netprofit and loss, other comprehensive income and profit distributions of the investee (hereinafter referred to as“other changes in owners’ equity”), the carrying amount of long-term equity investments shall be adjusted andincluded in the owners’ equity.
When determining the amount of proportion of net profit or loss, other comprehensive income and otherchanges in owners’ equity in the investee which it entitles, fair value of each identifiable assets of the investeeat the time when the investment is obtained shall be used as the basis, and adjustment shall be made to the netprofit and other comprehensive income of the investee according to the accounting policies and accountingperiod of the Company.
The unrealized profit or loss resulting from transactions between the Company and its associates or jointventures shall be offset in proportion to the investor’s equity interest of investee, based on which investmentincome or loss shall be recognized. However, the situation that the assets invested or sold constitute business isexcluded. Any losses resulting from internal transactions, which are attributable to impairment of assets, shallbe fully recognized.The Company shall recognize the net losses of the joint ventures or associates until the book value of thelong-term equity investment and other long-term rights and interests which substantially form the net investmentmade to the invested entity are reduced to zero, unless the joint ventures or associates have the obligation toundertake extra losses. If the joint ventures or associates realize net profits in the future, the Company resumesrecognizing its share of profits after the share of profits makes up for the share of unrecognized losses.
③ Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the carrying amount and theconsideration actually received shall be included in the current profit or loss.
For partial disposal of long-term equity investments accounted for by the equity method, if the remainingequity is still accounted for by the equity method, the other comprehensive income calculated and recognizedby the original equity method shall be carried forward in corresponding proportion by using the same basis asthe investee used for direct disposal of relevant assets or liabilities. Other changes in owners’ equity shall becarried forward to the profits or losses of the current period on a pro rata basis.
When the joint control or material influence over the investee is lost due to disposal of equity investmentand other reasons, other comprehensive income recognized in the original equity investment due to the use ofthe equity method shall, when it is no longer calculated by the equity method, be subject to the accountingtreatment on the same basis as the investee used for direct disposal of relevant assets or liabilities. Other changesin owners’ equity shall be all transferred into the profits or losses of the current period when they are no longercalculated by the equity method.
When the control over the investee is lost due to partial disposal of equity investment and other reasons,the remaining equities after disposal shall be accounted for by equity method in preparing individual financialstatements provided that joint control or material influence over the investee can be imposed, and shall beadjusted as if such remaining equities has been accounted for by the equity method since they are obtained. Theother comprehensive income recognized before the control over the investee is obtained shall be carried forwardin proportion by using the same basis as the investee used for direct disposal of relevant assets or liabilities, andthe other changes in owners’ equity calculated and recognized using the equity method shall be carried forwardto the profits or losses of the current period on a pro rata basis. Where the remaining equities after disposalcannot impose joint control or material influence over the investee, they shall be recognized as financial assets,and the difference between fair value and the carrying amount on the date when control is lost shall be includedin the profits or losses of the current period. All other comprehensive income and other changes in owners’equity recognized before the control over the investee is obtained shall be carried forward.
In respect of stepwise disposal of equity investment in a subsidiary through multiple transactions untilcontrol is lost, where the transactions constitute a basket of transactions, the Company accounts for thetransactions as a transaction of disposal of a subsidiary until control is lost; however, the difference between theamount received each time for disposal before control is lost and the carrying amount of long-term equityinvestments corresponding to the disposal of equity is recognized as other comprehensive income in theindividual financial statements, and is transferred to the profits or losses of the current period during whichcontrol is lost upon loss of control. Where the transactions do not constitute a basket of transactions, eachtransaction shall be accounted for separately.
22. Investment real estate
Not applicable
23. 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 or services, forrental to others, or for administrative purposes; and have a useful life of more than one accounting year. Fixedassets are recognized when they meet the following conditions:
① It is probable that the economic benefits associated with the fixed assets will flow to the enterprise;
② The cost of fixed assets can be reliably measured.
A fixed asset is initially measured at its cost (and considering the impact of expected abandonment costfactors).Subsequent expenditures related to fixed assets are included in the cost of fixed assets when their relatedeconomic benefits are likely to flow in to the Company and their costs can be reliably measured; the book valueof the replaced part is derecognized; all other subsequent expenditures are included in the profits or losses ofthe current period at the time of occurrence.
(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% |
Note: physical assets newly acquired through the increase of capital by M&G Holdings (Group) Co., Ltd.to the Company in 2010 are stated at valuation, and depreciated at the remaining useful life.
(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 the Company andthe 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 consideration entered intois expected to be far less than the fair value of the leased asset upon the exercise of 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 is substantiallythe same as the fair value of the leased asset.
⑤ Leased assets of special nature can only be used by the lessee unless major renovations are made.
On the commencement of the lease, the leased asset shall be stated at an amount equal to the fair value ofthe leased asset or the present value of the minimum lease payments (whichever is lower), and the minimumlease payments shall be stated as the carrying amount of long-term payables. The difference between the statedamount of the leased asset and the minimum lease payments shall be accounted for as unrecognized financecharge.
24. Construction in progress
"√ Applicable" "□ Not applicable"
Construction in progress is measured at the actual cost incurred. Actual cost includes construction cost,installation cost, borrowing expense qualified for capitalization, and other necessary expenditures incurredbefore the construction in progress reaches its intended use status. When the construction in progress reachesthe intended use status, it shall be transferred to fixed assets and its depreciation shall be accrued from the nextmonth.
25. Borrowing costs
"√ Applicable" "□ Not applicable"
(1) Criteria for recognition of capitalized borrowing costs
For borrowing costs incurred by the Company that are directly attributable to the acquisition, constructionor production of assets qualified for capitalization, the costs will be capitalized and included in the costs of therelated assets. Other borrowing costs shall be recognized as expense in the period in which they incur and areincluded in the current profit or loss.
Assets qualified for capitalization are assets (fixed assets, investment property, inventories, etc.) thatnecessarily take a substantial period of time for acquisition, construction or production to get ready for theirintended use or sale.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessation ofcapitalization of borrowing costs, excluding the period in which capitalization of borrowing costs is temporarilysuspended.
Capitalization of borrowing costs begins when the following three conditions are fully satisfied:
① expenditures for the assets (including cash paid, transferred non-currency assets or expenditure forholding debt liability for the acquisition, construction or production of assets qualified for capitalization) havebeen incurred;
② borrowing costs have been incurred;
③ acquisition, construction or production that are necessary to enable the asset reach its intended usableor saleable condition have commenced.
Capitalization of borrowing costs shall be suspended during periods in which the qualifying asset underacquisition and construction or production ready for the intended use or sale.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended during periods in which the acquisition, constructionor production of a qualifying asset is interrupted abnormally, when the interruption is for a continuous periodof more than 3 months; if the interruption is a necessary step for making the qualifying asset under acquisitionand construction or production ready for the intended use or sale, the capitalization of the borrowing costs shallcontinue. The borrowing costs incurred during such suspension period shall be recognized as the current profitor loss. When the acquisition and construction or production of the asset resumes, the capitalization ofborrowing costs commences.
(4) Calculation of capitalization rate and amount of borrowing costs
For specific borrowings for the acquisition, construction or production of assets qualified for capitalization,the amount of borrowing costs for capitalization is determined through borrowing costs of the specificborrowings actually incurred in the current period minus the interest income earned on the unused borrowingloans as a deposit in the bank or as investment income earned from temporary investment.
For general borrowings for the acquisition, construction or production of assets qualified for capitalization,the to-be-capitalized amount of interests on the general borrowings shall be calculated and determined bymultiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minusthe specifically borrowed loans by the capitalization rate of the general borrowings used. The capitalization rateshall be calculated and determined according to the weighted average actual interest rate of the generalborrowings.
During the capitalization period, the exchange difference between the principal and interest of dedicatedborrowings in foreign currency is capitalized and included in the cost of the assets qualified for capitalization.Exchange differences arising from the principal and interest of borrowings in foreign currency other thandedicated borrowings in foreign currency are included in the profits or losses of the current period.
26. Biological assets
"□ Applicable" "√ Not applicable"
27. Oil and gas assets
"□ Applicable" "√ Not applicable"
28. Right-of-use assets
"□ Applicable" "√ Not applicable"
29. 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 taxes and expensespaid, and other expenditures directly attributable to putting the asset into condition for its intended use.B. Subsequent measurementThe useful life of intangible assets shall be analyze and judged upon acquisition.As for intangible assets with finite useful life, they are amortized over the term in which economic benefitsare brought to the enterprise; if the term in which economic benefits are brought to the enterprise by intangibleassets cannot be estimated, the intangible assets shall be regarded as intangible assets with indefinite useful life,and shall not be amortized.
② Estimated useful lives for the intangible assets with finite useful life
| Item | Estimated useful lives | Basis |
| Land use rights | 50 years | 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 years | Patent right certificate |
| Others | 19 months to 120 months | Expected years of benefit |
D. there is sufficient support in terms of technology, financial resources and other resources in order tocomplete the development of the intangible asset, and there is capability to use or sell the intangible asset;
E. the expenses attributable to the development stage of the intangible asset can be measured reliably.
If it is impossible to distinguish the expenses in the research phase from the expenses in the developmentphase, all the incurred research and development expenses shall be included in the current profit or loss.
30. Impairment of long-term assets
"√ Applicable" "□ Not applicable"
Long-term assets, such as long-term equity investment, fixed assets, construction in progress, intangibleassets with finite useful life, and oil and gas assets 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 indicates that the recoverableamount of the asset is less than its carrying amount, the difference shall be used to make impairment provisionand an impairment loss are recognized. The recoverable amount is the higher of the net amount of asset’s fairvalue less costs to sell and the present value of the future cash flows expected to be derived from the asset.Provision for asset impairment is determined and recognized on the individual asset basis. If it is not possibleto estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to whichthe asset belongs to is determined. An assets group is the smallest group of assets that is able to generate cashinflow independently.
Impairment test to goodwill formed by business combination, intangible assets with indefinite useful lifeand intangible assets not ready to use shall be carried out at least at the end of each year, regardless of whetherthere are any indications of impairment.
When the Company carries out impairment test to goodwill, the Company shall, as of the purchasing day,allocate on a reasonable basis the carrying amount of the goodwill formed by enterprise merger to the relevantasset groups, or if there is a difficulty in allocation, the Company shall allocate it to the portfolio of asset groups.Relevant asset groups or portfolio of asset groups refer to the asset groups or portfolio of asset groups that canbenefit from the synergistic effect of business combination.
For the purpose of impairment test to the relevant asset groups or portfolio of asset groups containinggoodwill, if any evidence shows that the impairment of asset groups or portfolio of asset groups related togoodwill exists, an impairment test will be made firstly on the asset groups or portfolio of asset groups notcontaining goodwill, thus calculating the recoverable amount and comparing it with the relevant carryingamount so as to recognize the corresponding impairment loss. Then the Company will make an impairment testto the asset groups or portfolio of asset groups containing goodwill, and compare their carrying value with theirrecoverable amount. Where the recoverable amount is lower than the carrying value thereof, the amount ofimpairment loss is first deducted and allocated to the carrying value of goodwill in the asset groups or portfolioof asset groups, and then the carrying value of other assets other than goodwill in the asset groups or portfolioof asset groups is deducted according to the percentages of the carrying value of such other assets.
Once the above asset impairment loss is recognized, it will not be reversed in the subsequent accountingperiods.
31. Long-term prepaid expenses
"√ Applicable" "□ Not applicable"
Long-term prepaid expenses are expenses which have occurred with amortization period over 1 year andshall be borne by the current period and subsequent periods.
Amortization periods and amortization methods of various expenses are as follows:
| Item | Estimated useful lives | Basis |
| Decoration fee | 3 to 5 years | Expected years of benefit |
| Others | 2 years | Expected years of benefit |
The welfare responsibilities generated from defined benefit scheme based on the formula determined byprojected unit credit method will be vested to the service period of employees and included into the currentprofit or costs of related assets.The deficit or surplus generated from the present value of obligations of the defined benefit scheme minusthe fair value of the assets of defined benefit scheme is recognized as net liabilities or net assets. When thedefined benefit scheme has surplus, the Company will measure the net assets of the defined benefit scheme atthe lower of the surplus of defined benefit scheme and the upper limit of the assets.
All obligations of the defined benefit plan, including the expected duty of payment within 12 months afterthe end of annual reporting period during which employees provide service, shall be discounted based on thebond market yield of sovereign bond matching the term of obligations of the defined benefit plan and currencyor corporate bonds of high quality in the active market on the balance sheet date.
The service cost incurred by defined benefit scheme and the net interest of the net liabilities and net assetsof the defined benefit scheme will be included in the current profit or loss or costs of relevant assets. The changesas a result of re-measurement of the net defined benefit liabilities or assets shall be recognized in othercomprehensive income and shall not be reversed to profit or loss at subsequent accounting period. When theoriginal defined benefit plan is terminated, amount originally included in other comprehensive income shall betransferred to undistributed profit in the scope of equity.
When the defined benefit scheme is settled, the gain or loss is confirmed based on the difference betweenthe present value of obligations and the settlement price of the defined benefit scheme as at the balance sheetdate.
(3). Accounting method for termination benefits
"√ Applicable" "□ Not applicable"
Where the Company provides termination benefits to its employees, the employee benefits liabilitiesresulting from termination benefits are recognized on the following date (whichever is earlier) and are includedin the current profit or loss: when the Company cannot unilaterally withdraw the termination benefits provideddue to the cancellation of the labor relationship with the employees or the layoff proposal; or when the Companyrecognizes the costs or expenses of reorganization relating to payment of termination benefits.
(4). Accounting treatment of other long-term employees’ benefits
"□ Applicable" "√ Not applicable"
34. Lease liabilities
"□ Applicable" "√ Not applicable"
35. Estimated liabilities
"√ Applicable" "□ Not applicable"
The Company shall recognize the obligations related to contingencies when all of the following conditionsare satisfied:
(1) obligation is a present obligation of the Company;
(2) it is probable that an outflow of economic benefits of the Company will be required to settle theobligation; and
(3) the amount of the obligation can be measured reliably.
Estimated liabilities shall be initially measured at the best estimate of the expenses required to settle therelated present obligation.
Factors pertaining to a contingency such as risk, uncertainties, and time value of money shall be taken intoaccount as a whole in getting the best estimate. Where the effect of the time value of money is material, the bestestimate shall be determined by discounting the related future cash outflow.
Where the expenses required have a successive range and the possibilities of occurrence of each result arethe same in the range, the best estimate shall be determined according to the median value within the range; inother cases, the best estimate shall be determined as below:
? If contingencies involve a single item, the best estimate shall be determined according to the most possibleoccurrence amount.
? If contingencies involve multiple items, the best estimate shall be calculated and determined inaccordance with various possible outcomes and related possibilities.
Where some or all of the expenses required to settle an estimated liability are expected to be reimbursedby a third party, the reimbursement is separately recognized as an asset when it is virtually certain that thereimbursement will be received. The amount recognized for the reimbursement is limited to the carrying amountof the liability recognized.
The Company reviews the carrying value of the estimated liabilities at the balance sheet date. If there isany exact evidence indicating that the carrying value cannot really reflect the current best estimate, the carryingvalue shall be adjusted in accordance with the current best estimate.
36. Share-based payments
"√ Applicable" "□ Not applicable"
Share-based payments are transactions that grant equity instruments or assume equity-instrument basedliabilities for receiving services rendered by employees or other parties. The Company’s share-based paymentsincluded equity-settled share-based payments and cash-settled share-based payments.
(1) Equity-settled share-based payments and equity instruments
Equity-settled share-based payments made in exchange for services rendered by employees are measuredat the fair value of equity instruments granted to employees. Share-based payment transactions vestedimmediately after the date of grant shall be included in the relevant cost or expense based on the fair value ofequity instruments at the date of grant, and the capital reserve shall be increased accordingly. For share-basedpayment transactions vested only when the services during the waiting period are completed or the specifiedperformance conditions are satisfied after the grant, the Company shall, at each balance sheet date during thewaiting period, include the services obtained during the period in relevant cost or expense at the fair value ofthe date of grant, according to the best estimate of the number of vested equity instruments, and the capitalreserve shall be increased accordingly.
If the terms of the equity-settled share-based payments are amended, the Company shall recognize theservices received at least based on the situation before the amendment is made. In addition, any amendmentresulting in the increase of the fair value of the equity instrument granted or changes that are beneficial toemployees on the amendment date, will be recognized as an increase in the service received.
During the waiting period, if the granted equity instrument is cancelled, the Company will accelerate thevesting thereof, immediately include the remaining amount that should be recognized in the waiting period inthe current profit or loss, and recognize the capital reserve. However, if new equity instruments are vested and
they are verified at the vesting date of new equity instrument as alternatives vested to cancel equity instruments,the treatment on the new equity instrument is in conformity with the modified treatment on disposal of equityinstrument.
(2) Cash-settled share-based payments and equity instruments
Cash-settled share-based payments are measured at the fair value of the liabilities calculated anddetermined on the basis of shares or other equity instruments undertaken by the Company. Share-based paymenttransactions vested immediately after the date of grant shall be included in the relevant cost or expense basedon the fair value of liabilities undertook at the date of grant, and the liabilities shall be increased accordingly.For share-based payment transactions vested only when the services during the waiting period are completed orthe specified performance conditions are satisfied after the grant, the Company shall include the servicesobtained during the period in relevant cost or expense at the fair value of the liabilities undertook by theCompany based on the best estimate of the vesting situation, and the liabilities shall be included accordingly.At each balance sheet date before the settlement and the settlement date of relevant liabilities, the fair value ofthe liabilities is remeasured, and its changes are included in the current profit or loss.
37. Preference shares, perpetual bonds and other financial instruments
"□ Applicable" "√ Not applicable"
38. Revenue
(1). Accounting policies used in recognition and measurement of revenue
"√ Applicable" "□ Not applicable"
Accounting policies from 1 January 2020The Company recognizes revenue when its performance obligations in the contract are fulfilled, that is,the control over the relevant goods or services is obtained by the customer. Obtaining control over related goodsor services means being able to lead the use of the goods or services and obtain almost all of the economicbenefits from the goods or services.
If the contract contains two or more performance obligations, the Company will, at the date of the contract,allocate the transaction price to each individual performance obligation in accordance with the relativeproportion of the stand-alone selling price of the goods or services promised by each individual performanceobligation. The Company measures revenue based on the transaction price allocated to each individualperformance obligation.
Transaction price refers to the amount of consideration that the Company expects to be entitled to receivedue to the transfer of goods or services to customers, excluding amounts collected on behalf of third parties andamounts expected to be returned to customers. The Company determines the transaction price in accordancewith the terms of the contract and combined with its past customary practices. When determining the transactionprice, the Company considers the impact of variable consideration, major financing components in the contract,non-cash consideration, consideration payable to customers and other factors. The Company determines thetransaction price that includes variable consideration at an amount that does not exceed the amount ofaccumulated recognized revenue that is unlikely to be significantly reversed when the relevant uncertainty iseliminated. If there is a major financing component in the contract, the Company determines the transactionprice based on the amount payable in cash when the customer obtains control over the goods or services, and
amortizes the difference between the transaction price and the contract consideration with the actual interestrate method during the contract period.The performance obligation is fulfilled during a certain period of time if one of the following conditions issatisfied, otherwise, the performance obligation is fulfilled at a certain point in time:
? the customer obtains and consumes the economic benefits brought by the Company's performance at thesame time as the Company's performance.? the customer can control the products under construction during the Company's performance.? the goods produced during the Company's performance have irreplaceable uses, and the Company hasthe right to collect payment for the cumulative performance part that has been completed so far during the entirecontract period.For performance obligations performed within a certain period of time, the Company recognizes revenuein accordance with the performance progress during that period, except where the performance progress cannotbe reasonably determined. The Company considers the nature of the goods or services and adopts the outputmethod or the input method to determine the performance progress. When the performance progress cannot bereasonably determined, and the cost incurred is expected to be compensated, the Company recognizes therevenue according to the amount of the cost incurred until the performance progress can be reasonablydetermined.For performance obligations performed at a certain point in time, the Company recognizes revenue at thepoint when the customer obtains control over the relevant goods or services. When judging whether thecustomer has obtained control over goods or services, the Company considers the following signs:
? the Company has the current right to receive payment for the goods or services, that is, the customer hasthe current payment obligation for the goods or services;
? the Company has transferred the legal ownership of the goods to the customer, that is, the customer hasthe legal ownership of the goods;
? the Company has transferred the goods to the customer in kind, that is, the customer has taken possessionof the goods in kind;
? the Company has transferred the main risks and rewards of the ownership of the goods to the customer,that is, the customer has obtained the main risks and rewards of the ownership of the goods;
? the customer has accepted the goods or services.
Accounting policies before 1 January 2020
① General principle of recognition of revenue from sales of goods
A. All the significant risks and rewards of ownership of the goods have been transferred to the buyer;
B. the Company does not retain either continuing managerial involvement to the degree usually associatedwith ownership or effective control over the goods sold;
C. The amount of revenue can be reliably measured;
D. It is probable that relevant economic benefits will flow to the Company;
E. The relevant amount of costs incurred or to be incurred can be measured reliably.
② Specific principles
A. Timing of revenue recognition for regional sales and overseas sale (export agent): Shanghai: salesrevenue is recognized after goods are delivered; regions other than Shanghai: sales revenue is recognized aftergoods are delivered and delivery documents are confirmed with signature from the logistic companies;
B. Timing of revenue recognition for KA sales: sales revenue is recognized after goods are delivered anddelivery documents are confirmed with signature from the logistic companies;
C. Timing of revenue recognition for self-managing and export business: revenue is recognized when thegoods pass the ship’s rail in the port of shipment under the term of FOB;
D. Timing of revenue recognition for direct sales of office supplies: sales revenue is recognized after goodsare delivered and confirmed by customers;
E. Timing of revenue recognition for direct sales large flagship store: sales revenue is recognized aftergoods are delivered and confirmed by customers.
(2). Differences in accounting policies for revenue recognition caused by the adoption of different
operation models for similar businesses"□ Applicable" "√ Not applicable"
39. Contract cost
"√ Applicable" "□ Not applicable"
Accounting policies from 1 January 2020
Contract cost includes contract performance cost and contract acquisition cost.
If the cost incurred by the Company for the performance of the contract does not fall within the scope ofrelevant standards and regulations for inventories, fixed assets or intangible assets, it shall be recognized as anasset as the contract performance cost when the following conditions are met:
? the cost is directly related to a current or expected contract;
? the cost increases the Company's future resources for fulfilling its performance obligations;
? the cost is expected to be recovered.
If the incremental cost incurred by the Company to obtain the contract is expected to be recovered, it willbe recognized as an asset as the cost of obtaining the contract.Assets related to contract costs are amortized on the same basis as the revenue recognition of goods or services
related to the assets; however, if the amortization period of cost of obtaining the contract does not exceed
one year, the Company will include it in the current profit or loss when it occurs.
If the carrying value of the assets related to the contract cost is higher than the difference between thefollowing two items, the Company will make provision for impairment of the excess part and recognize it as anasset impairment loss:
(1) the remaining consideration expected to be obtained due to the transfer of goods or services related tothe assets; and
(2) the costs expected to be incurred due to the transfer of the related goods or services.
If the depreciation factors in the previous period change later, causing the aforementioned difference to behigher than the carrying value of the assets, the Company will reverse the previously-made provision forimpairment and include it in the current profit or loss, but the carrying value of the assets after the reversalcannot exceed the carrying value of the assets at the date of reversal under the assumption that no provision ismade for the impairment.
40. Government subsidies
"√ Applicable" "□ Not applicable"
(1) Types
Government subsidies are monetary or non-monetary assets obtained by the Company from thegovernment free of charge. They are divided into government subsidies related to assets and governmentsubsidies related to income.
Government subsidies related to assets refers to government subsidies obtained by the Company that areused to purchase or construct or otherwise form long-term assets. Government subsidies related to income referto the government subsidies other than government subsidies related to assets.
The specific standards for the Company to classify government subsidies into asset-related governmentsubsidies are as follows:
If obtained subsidies are used to purchase, construct or otherwise form fixed assets, intangible assets andother long-term assets as expressly stipulated in government documents, then such subsidies are deemed asasset-related government subsidies.
The specific standards for the Company to classify government subsidies into income-related governmentsubsidies are as follows:
If the government subsidies (excluding asset-related subsidies) are used to compensate relevant costs orlosses of the Company that have been already incurred or to be incurred in subsequent periods, then suchsubsidies are deemed as income-related government subsidies.
Where there is no express regulation on the grant object in government documents, then the Company willclassify government subsidies as assets related or as income related depending on the specific purpose that thesubsidies are used for.
(2) Timing of recognition
Government subsidies are recognized when the subsidies are received actually or when the rights to getgovernment subsidies are obtained and it is basically certain that the subsidies can be received.
(3) Accounting treatment
Government subsidies related to assets shall offset the carrying amount of relevant assets or be recognizedas deferred income. If it is recognized as deferred income, it shall be included in the current profit and loss in areasonable and systematic way within the useful life of the relevant assets (if it is related to the daily activitiesof the Company, it shall be included in other income; otherwise, it shall be included in the non-operatingincome);
Government subsidies related to income that are used for compensation for the relevant costs or losses ofthe Company in subsequent periods are recognized as deferred income and are included in the current profit orloss in the period in which the relevant costs, expenses or losses are recognized (if it is related to the dailyactivities of the Company, it shall be included in other income; otherwise, it shall be included in the non-operating income) or offset the relevant costs or losses; government subsidies related to income that are usedfor compensation for the relevant costs or losses that the Company has already incurred shall be directlyincluded in the current profit or loss (if it is related to the daily activities of the Company, it shall be includedin other income; otherwise, it shall be included in the non-operating income) or offset the relevant costs orlosses.
The Company's policy-based concessional loans are classified into the following two conditions and areaccounted for respectively:
① If the lending bank provides loans to the Company at a policy-based preferential interest rate after theMinistry of Finance allocates the interest-grant funds to the lending bank, the actual borrowing amount received
is recognized as the entry value of the borrowing and the relevant borrowing expenses are measured inaccordance with the principal amount of the borrowing and policy-based preferential interest rate.
② When the government directly distributes the interest-grant funds to the Company, the correspondingdiscount will offset the relevant borrowing costs.
41. Deferred income tax assets and liabilities
"√ Applicable" "□ Not applicable"
Income taxes include current income tax and deferred income tax. Except for income tax arising frombusiness combination and transactions or events that are directly included in owners' equity (including othercomprehensive income), the Company includes current income tax and deferred income tax in the current profitor loss.
Deferred income tax assets and deferred income tax liabilities are calculated and recognized based on thedifference (temporary difference) between the tax base of assets and liabilities and their carrying value.
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be availableagainst which deductible temporary differences can be offset. For deductible losses and tax credits that can bereversed in the future period, deferred tax assets shall be recognized to the extent that it is probable that taxableprofit will be available in the future to offset the deductible losses and tax credits.
Save as the exceptions, deferred tax liabilities shall be recognized for the taxable temporary difference.
The exceptions for not recognizing deferred tax assets and liabilities include:
the initial recognition of the goodwill;
other transactions or matters other than enterprise merger in which neither profit nor taxable income (ordeductible loss) will be affected when transactions occur.
Deferred income tax liabilities are recognized for all taxable temporary differences arising from theinvestments in subsidiaries, joint ventures and associates, except to the extent that both of the followingconditions are satisfied: the Company is able to control the timing of the reversal of the temporary differences;and it is likely that the temporary difference will not reverse in the foreseeable future. Deferred income taxassets are recognized for all deductible temporary differences associated with investments in subsidiaries, jointventures and associates if all of the following conditions are satisfied: It is likely that the deductible temporarydifference will reverse in the foreseeable future and it is likely that taxable profit in the future will be availableagainst which the deductible temporary difference can be offset.
At the balance sheet date, deferred income tax assets and liabilities are measured at tax rates expected tobe applied to the period when the assets are recovered or the liabilities are settled according to the tax law.
At the balance sheet date, the Company reviews the carrying value of deferred income tax assets. Thecarrying value of the deferred income tax assets are reduced if it is unlikely to obtain sufficient taxable incometo offset the benefit of the deferred income tax assets in the future. When it is likely that sufficient taxableincome will be available, the amount of write-down is reversed.
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or torealize the assets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offsetand presented on a net basis.
At the balance sheet date, the deferred income tax assets and the deferred income tax liabilities are offsetand presented on a net basis when all of the following conditions are satisfied:
? the taxable entity has a legal right to settle current income tax assets and liabilities on a net basis; and
? deferred income tax assets and deferred income tax liabilities relate to income taxes levied by the sametaxation authority on either the same taxable entity or different taxable entities which intend either to settle
current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously, in eachfuture period in which significant amounts of deferred tax assets or liabilities are expected to be reversed.
42. 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-line method overthe whole lease period (including rent-free period) and will be included in the current expenses. Initial directexpenses related to lease transactions paid by the Company shall be included in current expenses.When the lessor of assets bears expenses related to the lease which shall be borne by the Company, the Companyshall deduct the part of expenses from the total rents and amortize the rents after deduction over the lease termand include them in current expenses.
② the Company's rental expenses collected for leased assets shall be amortized at straight-line methodover the whole lease period (including rent-free period) and recognized as the relevant rental income. Initialdirect costs related to lease transactions and paid by the Company are included in current expenses; in case of alarge amount, such costs shall be capitalized and then included in the current revenue by stages at the same baseas the recognition of rental income over the whole lease term.
When the Company bears expenses related to the lease which shall be borne by the lessee, the Companyshall deduct the part of expenses from the total rental income and amortize the rents after deduction over thelease term.
(2). Accounting treatment method of financing lease
"√ Applicable" "□ Not applicable"
① Assets acquired under financing leases: At the commencement of the lease term, assets acquired underfinancing leases shall be recorded at the lower of their fair values and the present values of the minimum leasepayments, and the Company shall recognize the long-term payables at amounts equal to the minimum leasepayments，and shall record the differences between book value of the leased assets and the long-term payablesas unrecognized financing expenses. The Company adopts the effective interest rate method for unrecognizedfinancing expenses, which shall be amortized over the lease terms and included in financial expenses. Initialdirect 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 Company recognizes thedifference between the sum of financing lease receivable and the unguaranteed residual value, and the presentvalue thereof as unrealized financing income, and recognizes them as rental income over the periods when therents are received in the future. Initial direct expenses related to the rental transactions incurred to the Companyshall be included in the initial measurement of the financing lease receivables and the amount of incomerecognized in the lease term will be reduced.
(3). Determination method and accounting treatment method of lease under new lease standards"□ Applicable" "√ Not applicable"
43. Other significant accounting policies and accounting estimates
"√ Applicable" "□ Not applicable"
Discontinued operation is a component that satisfies one of the following conditions and is separatelyidentifiable, and has been disposed of by the Company or is classified by the Company 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 or geographicalarea of operations; or
(3) It is a subsidiary acquired exclusively with a view to resale.
The profit and loss from continuing operations and the profit and loss from discontinued operations areseparately presented in the income statement. Operational gains and losses such as impairment losses andreversal amounts and disposal gains and losses from discontinued operations are reported as gains and lossesfrom discontinued operations. For the discontinued operations reported in the current period, the Company re-reports the information previously reported as profits and losses from continuing operations as the profits andlosses from discontinued operations for the comparable accounting period in the current financial statements.
44. 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) |
| Implementation of the Notice of the Ministry of Finance on Revising and Issuing the Accounting Standards for Business Enterprises No. 14 - Revenue (Cai Kuai [2017] No. 22) | The 20th meeting of the fourth Board of Directors | See Other description l |
| Contents and reasons of changes in accounting policies | Review and approval procedure | Affected item in statement | Effect on balance at 1 January 2020 | |
| Consolidation | Parent company | |||
| (1) The original revenue from the e-commerce platform business is | The 20th meeting of | Accounts receivable | 47,244,304.93 | |
| Inventories | -35,291,780.35 | |||
| recognized at the time of the receipt of the platform statement. Due to the implementation of the new revenue standards, the revenue is recognized at the time of the transfer of control, namely it is recognized when the e-commerce platform actually accepts and warehouses the products. | the fourth Board of Directors | Deferred income tax assets | -1,208,991.72 | |
| Undistributed profit | 10,596,781.73 | |||
| Minority equity | 146,751.13 | |||
| (2) Reclassification of accounts received in advance arising from sales contracts to contract liabilities | The 20th meeting of the fourth Board of Directors | Contract liabilities | 182,975,481.36 | 103,292,286.89 |
| Other current liabilities | 23,786,812.58 | 13,427,997.30 | ||
| Accounts received in advance | -206,762,293.94 | -116,720,284.19 |
| Affected item in balance sheet | Effect on balance at 31 December 2020 | |
| Consolidation | Parent company | |
| Accounts receivable | 71,949,017.96 | |
| Inventories | -52,850,926.86 | |
| Deferred income tax assets | -619,504.51 | |
| Accounts received in advance | -127,846,125.32 | -86,209,335.15 |
| Contract liabilities | 114,100,035.35 | 76,291,447.04 |
| Taxes payable | 9,092,049.66 | |
| Other current liabilities | 13,746,089.97 | 9,917,888.11 |
| Undistributed profit | 9,156,410.72 | |
| Minority equity | 230,126.21 | |
| Affected item in income statement | Effect on amount incurred in 2020 | |
| Consolidation | Parent company | |
| Revenue | 22,717,752.44 | |
| Operation cost | 126,244,555.60 | 23,728,733.05 |
| Selling expenses | -77,637,937.98 | 7,318,738.06 |
| Administrative expenses | -31,047,471.11 | -31,047,471.11 |
| Credit impairment losses | -1,269,284.91 | |
| Income tax expenses | -210,406.66 | |
| Net profit | -1,356,995.93 |
The Company used the simplified method for accounting treatment for all rental concessions that fallwithin the scope of the Provisions, and adjusted the relevant rent concessions incurred between 1 January 2020and the effective date of the Provisions accordingly.As the lessee, the Company adopted a simplified method to deal with related rental concessions to offsetthe current operating costs, management expenses and sales expenses totaling RMB 12,799,186.64.
(2). Changes in significant accounting estimates
"□ Applicable" "√ Not applicable"
(3). Particulars on adjustment to the financial statements for the year due to the first implementation of
new standards for revenues or new standards for lease from 2020"√ Applicable" "□ Not applicable"
Consolidated Balance Sheet
Unit: Yuan Currency: RMB
| Item | 31 December 2019 | 1 January 2020 | Adjustment amount |
| Current assets: | |||
| Cash and equivalents | 1,935,600,694.35 | 1,935,600,694.35 | |
| Transaction settlement funds | |||
| Lending funds | |||
| Held-for-trading financial assets | 661,878,587.24 | 661,878,587.24 | |
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | 1,026,094,724.15 | 1,073,339,029.08 | 47,244,304.93 |
| Receivables financing | 29,549,924.83 | 29,549,924.83 | |
| Prepayment | 85,371,444.73 | 85,371,444.73 | |
| Premium receivable | |||
| Reinsurance premium receivable | |||
| Reserves for reinsurance contract receivable | |||
| Other receivables | 117,647,039.93 | 117,647,039.93 | |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Financial assets purchased under agreements to resell | |||
| Inventories | 1,378,108,759.85 | 1,342,816,979.50 | -35,291,780.35 |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | 29,280,925.29 | 29,280,925.29 | |
| Total current assets | 5,263,532,100.37 | 5,275,484,624.95 | 11,952,524.58 |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | 6,624,590.00 | 6,624,590.00 | |
| Long-term equity investments | 35,582,783.47 | 35,582,783.47 | |
| Investments in other equity instruments | 3,909,179.93 | 3,909,179.93 | |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | 1,163,702,352.12 | 1,163,702,352.12 | |
| Construction in progress | 260,469,728.76 | 260,469,728.76 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 331,005,762.09 | 331,005,762.09 | |
| Development expenses | |||
| Goodwill | 30,175,537.19 | 30,175,537.19 | |
| Long-term prepaid expenses | 118,336,333.95 | 118,336,333.95 | |
| Deferred income tax assets | 36,623,535.59 | 35,414,543.87 | -1,208,991.72 |
| Other non-current assets | 315,153,408.27 | 315,153,408.27 | |
| Total non-current assets | 2,301,583,211.37 | 2,300,374,219.65 | -1,208,991.72 |
| Total assets | 7,565,115,311.74 | 7,575,858,844.60 | 10,743,532.86 |
| Current liabilities: | |||
| Short-term borrowings | 183,193,763.86 | 183,193,763.86 | |
| Borrowings from central bank | |||
| Placements from banks and other financial institutions | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 1,861,072,467.87 | 1,861,072,467.87 | |
| Accounts received in advance | 206,762,293.94 | -206,762,293.94 | |
| Contract liabilities | 182,975,481.36 | 182,975,481.36 | |
| Financial assets sold under repurchase agreements | |||
| Deposits from customers and other banks | |||
| Brokerage for trading securities | |||
| Brokerage for underwriting securities | |||
| Employee benefits payable | 154,119,492.32 | 154,119,492.32 | |
| Taxes payable | 258,583,118.14 | 258,583,118.14 | |
| Other payables | 331,438,976.35 | 331,438,976.35 | |
| 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 | 23,786,812.58 | 23,786,812.58 | |
| Total current liabilities | 2,995,170,112.48 | 2,995,170,112.48 | |
| Non-current liabilities: | |||
| Reserves for insurance contracts | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | 6,620,000.00 | 6,620,000.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | 65,823,213.11 | 65,823,213.11 | |
| Deferred income tax liabilities | 36,576,744.55 | 36,576,744.55 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 109,019,957.66 | 109,019,957.66 | |
| Total liabilities | 3,104,190,070.14 | 3,104,190,070.14 | |
| 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 | 526,359.55 | 526,359.55 | |
| Special reserve | |||
| Surplus reserve | 440,260,399.59 | 440,260,399.59 | |
| General risk provision | |||
| Undistributed profit | 2,568,365,861.32 | 2,578,962,643.05 | 10,596,781.73 |
| Total equity attributable to the owners of the parent company | 4,201,500,384.99 | 4,212,097,166.72 | 10,596,781.73 |
| Minority equity | 259,424,856.61 | 259,571,607.74 | 146,751.13 |
| Total owners’ equity (or shareholders’ equity) | 4,460,925,241.60 | 4,471,668,774.46 | 10,743,532.86 |
| Total liabilities and owner's equity (or shareholders’ equity) | 7,565,115,311.74 | 7,575,858,844.60 | 10,743,532.86 |
| Item | 31 December 2019 | 1 January 2020 | Adjustment amount |
| Current assets: | |||
| Cash and equivalents | 1,358,805,872.56 | 1,358,805,872.56 | |
| Held-for-trading financial assets | 509,467,061.37 | 509,467,061.37 | |
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | 82,949,224.65 | 82,949,224.65 | |
| Receivables financing | |||
| Prepayment | 9,630,209.45 | 9,630,209.45 | |
| Other receivables | 285,036,794.54 | 285,036,794.54 | |
| Including: Interest receivable | 192,500.00 | 192,500.00 | |
| Dividend receivable | |||
| Inventories | 448,245,658.48 | 448,245,658.48 | |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | 150,047,540.99 | 150,047,540.99 | |
| Total current assets | 2,844,182,362.04 | 2,844,182,362.04 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | 6,624,590.00 | 6,624,590.00 | |
| Long-term equity investments | 1,089,168,192.56 | 1,089,168,192.56 | |
| Investments in other equity instruments | 3,909,179.93 | 3,909,179.93 | |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | 749,415,024.84 | 749,415,024.84 | |
| Construction in progress | 258,864,834.00 | 258,864,834.00 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 182,268,368.82 | 182,268,368.82 | |
| Development expenses | |||
| Goodwill | |||
| Long-term prepaid expenses | 10,106,589.01 | 10,106,589.01 | |
| Deferred income tax assets | 5,469,359.66 | 5,469,359.66 | |
| Other non-current assets | 311,929,028.24 | 311,929,028.24 | |
| Total non-current assets | 2,617,755,167.06 | 2,617,755,167.06 | |
| Total assets | 5,461,937,529.10 | 5,461,937,529.10 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 225,831,712.59 | 225,831,712.59 | |
| Accounts received in advance | 116,720,284.19 | -116,720,284.19 | |
| Contract liabilities | 103,292,286.89 | 103,292,286.89 | |
| Employee benefits payable | 87,609,891.62 | 87,609,891.62 | |
| Taxes payable | 160,129,252.33 | 160,129,252.33 | |
| Other payables | 513,035,659.92 | 513,035,659.92 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | 13,427,997.30 | 13,427,997.30 | |
| Total current liabilities | 1,103,326,800.65 | 1,103,326,800.65 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | 258,620,000.00 | 258,620,000.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | 28,453,779.37 | 28,453,779.37 | |
| Deferred income tax liabilities | 1,420,059.21 | 1,420,059.21 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 288,493,838.58 | 288,493,838.58 | |
| Total liabilities | 1,391,820,639.23 | 1,391,820,639.23 | |
| 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 | 292,894.11 | |
| Special reserve | |||
| Surplus reserve | 439,931,539.68 | 439,931,539.68 | |
| Undistributed profit | 2,435,883,856.99 | 2,435,883,856.99 | |
| Total owners’ equity (or shareholders’ equity) | 4,070,116,889.87 | 4,070,116,889.87 | |
| Total liabilities and owner's equity (or shareholders’ equity) | 5,461,937,529.10 | 5,461,937,529.10 |
hedging relationship is specified. If the hedging fails to meet the requirements, the use of hedging relationshipshall 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 the hedginginstrument, the influence of credit risk is not dominant.
③ An appropriate hedging ratio is adopted, and this ratio will not form an imbalance in the relative weightof the hedged item and the hedging instrument, thereby generating accounting results that are inconsistent withthe hedge accounting objectives. If the hedging ratio is no longer appropriate, but the hedging risk managementobjectives have not changed, the number of hedged items or hedging instruments shall be adjusted so that thehedging ratio meets the requirements on effectiveness again.
(3) Accounting treatment method of hedge
① Fair value hedge
Changes in the fair value of hedging derivatives are included in the current profit and loss. Changes in thefair value of a hedged item due to hedging risk are included in the current profit and loss, while adjusting thebook value of the hedged item.
For fair value hedges related to financial instruments measured at amortized cost, adjustments to thecarrying value of the hedged item are amortized in the remaining period between the adjustment date and thematurity date and are included in the current profit and loss. Amortization carried out in accordance with theeffective interest rate method can begin immediately after the adjustment of the carrying value, and shall not belater than the adjustment made due to the changes in the fair values caused by the hedging risk after the hedgeditem is terminated.
If the hedged item is derecognized, the un-amortized fair value is recognized as current profit or loss.
If the hedged item is a unrecognized firm commitment, the accumulated changes in the fair value of thefirm commitment caused due to the hedged risk is recognized as an asset or liability, and the related gains orlosses are included in the current profit and loss. Changes in the fair value of hedging instruments are alsoincluded 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 bedirectly recognized as other comprehensive income, and the portion which belongs to the ineffective hedge shallbe included in the current profit and loss.
If the hedged transaction affects the current profit or loss, for example, when the hedged financial incomeor financial expense is confirmed or the expected sale occurs, the amount recognized in other comprehensiveincome will be transferred to the current profit and loss. If the hedged item is the cost of a non-financial assetor liability, the amount originally recognized in other comprehensive income is transferred out and included inthe initial recognition amount of the non-financial asset or liability (or the amount originally recognized in othercomprehensive income 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 or losses ofhedging instruments previously included in other comprehensive income are transferred out and included in thecurrent profit or loss. If the hedging instrument expires, is sold, terminated or exercised (but has not beenreplaced or extended), or the designation of the hedging relationship is revoked, the amount previously included
in other comprehensive income will not be transferred out until the expected transaction or firm commitmentaffects the current profit and loss.
③ Hedge of net investment in an overseas operation
Hedge of net investment in an overseas operation, including hedge of monetary items as part of netinvestment, is handled similarly to cash flow hedge. The portion of the gains or losses from hedging instruments,which is recognized as effective hedge, shall be recorded in other comprehensive income, and the portion whichis recognized as ineffective hedge shall be included in the current profit and loss. When disposing of overseasoperations, any accumulated gains or losses included in other comprehensive income are transferred out andincluded in the current profit or loss.
Segment Report
The Company determines the operating segment based on the internal organizational structure,management requirements, and internal reporting system, and determines the reporting segment based on theoperating segment and discloses segment information.
Operating segment refers to the component of the Company that meets the following conditionssimultaneously: (1) the component can generate income and incur expenses in daily activities; (2) themanagement of the Company can regularly evaluate the operating results of the component to decide to allocateresources to it and evaluate its performance; and (3) the Company can obtain relevant accounting informationsuch as the financial status, operating results and cash flow of the component. If two or more operating segmentshave similar economic characteristics and meet certain conditions, they can be combined into one operatingsegment.
VI. Taxes
1. Major tax types and tax rates
Particulars on major tax types and tax rates"√ Applicable" "□ Not applicable"
| Tax type | Taxing basis | Tax rate |
| Value added tax (“VAT”) | The output tax is calculated on the basis of the income from sales of products and taxable income from rendering of services calculated according to the provisions of the tax law. The difference between the output tax and the input tax which is allowed to be deductible in the current period is the payable VAT. | 13%、10%、9%、6%、5% |
| Consumption tax | ||
| Business tax | ||
| Urban maintenance and construction tax | Calculated and paid according to the actually-paid VAT and consumption tax | 7%、1% |
| Enterprise income tax | Calculated and paid according to the taxable income | 15%、20%、25% |
| 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 |
| 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 |
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | 25 |
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | 25 |
| Shanghai Colipu Information Technology Co., Ltd.（上海科力普信息科技有限公司） | 25 |
| 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.（安硕文教用品（香港）有限公司） | 16.5 |
| International stationery company | 20 |
On 2 November 2018, the subsidiary Axus Stationery (Shanghai) Company Ltd. (“Axus Stationery”)obtained High- and New-tech Enterprise Certificate (certificate number GR201831003575, valid for 3 years)issued jointly by Shanghai Municipal Science and Technology Commission, Shanghai Finance Bureau andShanghai Municipal Tax Service, State Taxation Administration.
The Company and the subsidiary Axus Stationery paid the enterprise income tax at the rate of 15% thisyear.
The subsidiaries Luoyang M&G Stationery Sales Co., Ltd. and Lianyungang Colipu Office Supplies Co.,Ltd. paid the enterprise income tax according to the Enterprise Income Tax Law of the People's Republic ofChina and the Notice of the Ministry of Finance and the State Administration of Taxation on the Implementationof Inclusive Tax Relief Policy for Small and Micro Enterprises (Cai Shui [2019] No. 13), namely, starting from1 January 2019 to 31 December 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 with annual taxableincome between RMB 1 million and RMB 3 million, the enterprise income tax at 20% shall apply based on 50%of the taxable income.
In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation onValue-Added Tax Policies for Software Products (Cai Shui [2011] No. 100), the subsidiary Shanghai ColipuInformation Technology Co., Ltd. was granted the tax incentive regarding the refund upon payment of VAT byShanghai Xuhui District Tax Service, State Taxation Administration on software products on 9 June 2020, witha valid period from 1 April 2020 to 31 March 2070.
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 | 1,134,204.63 | 503,222.44 |
| Cash at bank | 2,551,360,452.36 | 1,922,791,232.44 |
| Other cash and equivalents | 9,664,269.12 | 12,306,239.47 |
| Total | 2,562,158,926.11 | 1,935,600,694.35 |
| Including: Total cash deposited outside China | 3,490,810.78 | 3,541,107.84 |
| Item | Closing balance | Balance at the end of the year |
| Letter of credit (“L/C”) deposit | 2,137,865.56 | 5,079,343.94 |
| Performance bond | 2,674,925.30 | 230,000.00 |
| Time deposits over three months | 1,180,000,000.00 | 550,000,000.00 |
| Fund of restricted use | 2,844,914.52 | |
| Total | 1,184,812,790.86 | 558,154,258.46 |
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 | 1,428,277,848.33 | 661,878,587.24 |
| Including: | ||
| Debt instrument investment | ||
| Equity instrument investment | ||
| Derivative financial assets | ||
| Others | 1,428,277,848.33 | 661,878,587.24 |
| Financial asset designated as at fair value through profit or loss | ||
| Including: | ||
| Debt instrument investment | ||
| Others | ||
| Total | 1,428,277,848.33 | 661,878,587.24 |
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 thedisclosure 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 descriptions"□ Applicable" "√ Not applicable"
5. Accounts receivable
(1). Disclosure by account age
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Account age | Carrying balance at the end of the period |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 1,586,045,928.63 |
| 1 to 2 years | 8,184,203.32 |
| 2 to 3 years | 1,883,220.15 |
| Above 3 years | 1,922,348.14 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -36,824,231.34 |
| Total | 1,561,211,468.90 |
Unit: Yuan Currency: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provisions | Carrying value | Carrying balance | Bad debt provisions | Carrying value | |||||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | Amount | Percentage (%) | Amount | Accruing percentage (%) | |||
| Bad debt provisions accrued separately | 8,442,002.81 | 0.53 | 8,442,002.81 | 100.00 | 23,438,444.19 | 2.21 | 13,612,009.12 | 58.08 | 9,826,435.07 | |
| Including: | ||||||||||
| Bad debt provisions accrued according to the combination | 1,589,593,697.43 | 99.47 | 28,382,228.53 | 1.79 | 1,561,211,468.90 | 1,085,361,321.62 | 97.89 | 21,848,727.61 | 2.01 | 1,063,512,594.01 |
| Including: | ||||||||||
| Combination 1: Account age | 1,589,593,697.43 | 99.47 | 28,382,228.53 | 1.79 | 1,561,211,468.90 | 1,085,361,321.62 | 97.89 | 21,848,727.61 | 2.01 | 1,063,512,594.01 |
| Total | 1,598,035,700.24 | / | 36,824,231.34 | / | 1,561,211,468.90 | 1,108,799,765.81 | / | 35,460,736.73 | / | 1,073,339,029.08 |
| Name | Closing balance | |||
| Carrying balance | Bad debt provisions | Accruing percentage (%) | Accruing reason | |
| Changxing Shengxing Stationery Co., Ltd. | 264,790.33 | 264,790.33 | 100.00 | Not expected to be recovered |
| Hangzhou Yunman Department Store Co., Ltd. | 113,835.50 | 113,835.50 | 100.00 | Not expected to be recovered |
| China Post Group Company Jiangxi Branch | 2,503,300.41 | 2,503,300.41 | 100.00 | Not expected to be recovered |
| HNA Import and Export Co., Ltd. | 1,451,567.75 | 1,451,567.75 | 100.00 | Not expected to be recovered |
| Guangzhou Greenland Real Estate Development Co., Ltd. | 1,069,182.67 | 1,069,182.67 | 100.00 | Not expected to be recovered |
| Shanghai Huazhen Logistics Co., Ltd. | 584,648.60 | 584,648.60 | 100.00 | Not expected to be recovered |
| Shanxi Road & Bridge Construction Group Co., Ltd. | 397,417.68 | 397,417.68 | 100.00 | Not expected to be recovered |
| Shaoguan Heping Road Primary School | 285,600.00 | 285,600.00 | 100.00 | Not expected to be recovered |
| 61001 Troop | 238,947.00 | 238,947.00 | 100.00 | Not expected to be recovered |
| The Second JunYi University | 235,552.69 | 235,552.69 | 100.00 | Not expected to be recovered |
| Shaoguan Wulihe Central Primary School | 235,200.00 | 235,200.00 | 100.00 | Not expected to be recovered |
| Shaoguan Zhenjiang District Lishi Town Central Primary School | 184,800.00 | 184,800.00 | 100.00 | Not expected to be recovered |
| Nokia Shanghai Bell Co., Ltd. | 128,798.36 | 128,798.36 | 100.00 | Not expected to be recovered |
| Shaoguan Zhenjiang District Nanfeng Primary School | 100,800.00 | 100,800.00 | 100.00 | Not expected to be recovered |
| Shaoguan Zhenjiang District Shaliyuan Primary School | 100,800.00 | 100,800.00 | 100.00 | Not expected to be recovered |
| China Vanke Co., Ltd. | 84,048.73 | 84,048.73 | 100.00 | Not expected to be recovered |
| Shaoguan Zhenjiang District Laixin Primary School | 84,000.00 | 84,000.00 | 100.00 | Not expected to be recovered |
| Postal Savings Bank of China Co., Ltd. Shaoxing Branch | 80,566.85 | 80,566.85 | 100.00 | Not expected to be recovered |
| Information Engineering University | 62,980.00 | 62,980.00 | 100.00 | Not expected to be recovered |
| Air Liquide (China) Holding Co., Ltd. | 62,764.55 | 62,764.55 | 100.00 | Not expected to be recovered |
| Nanjing Guodian Nanzi Software Engineering Co., Ltd. | 41,972.00 | 41,972.00 | 100.00 | Not expected to be recovered |
| The First Hospital of Changsha | 33,783.00 | 33,783.00 | 100.00 | Not expected to be recovered |
| 91528 Troop of the Chinese People's Liberation Army | 29,353.70 | 29,353.70 | 100.00 | Not expected to be recovered |
| Yicheng Group Shanghai Investment Co., Ltd. | 19,280.72 | 19,280.72 | 100.00 | Not expected to be recovered |
| Beijing Taihe Jinxiu Real Estate Co., Ltd. | 17,538.09 | 17,538.09 | 100.00 | Not expected to be recovered |
| The 58th Research Institute of China Electronics Technology Group Corporation | 15,774.57 | 15,774.57 | 100.00 | Not expected to be recovered |
| Beijing Qiaoxi Investment Co., Ltd. | 14,699.61 | 14,699.61 | 100.00 | Not expected to be recovered |
| Total | 8,442,002.81 | 8,442,002.81 | 100.00 | / |
Description on 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 thedisclosure 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 | |||
| Accrued separately | 13,612,009.12 | 7,785,464.46 | 8,958,818.94 | 3,996,651.83 | 8,442,002.81 | |
| Combination 1: Account age | 21,848,727.61 | 6,829,380.72 | 295,879.80 | 28,382,228.53 | ||
| Total | 35,460,736.73 | 14,614,845.18 | 8,958,818.94 | 4,292,531.63 | 36,824,231.34 | |
| Company name | Recovered or reversed amount | Recovery way |
| HNA Import and Export Co., Ltd. | 8,374,867.32 | Bank repayment |
| Total | 8,374,867.32 | / |
| Item | Written-off amount |
| Accounts receivable actually written-off | 4,246,273.71 |
"□ Applicable" "√ Not applicable"Description on writing-off of accounts receivable:
"□ Applicable" "√ Not applicable"
(5). Particulars on top 5 accounts receivable in terms of the balance at the end of the period based ondebtors"√ Applicable" "□ Not applicable"
| Company name | Closing balance | ||
| Accounts receivable | Percentage (%) of the total accounts receivable | Bad debt provisions | |
| First | 267,682,145.37 | 16.75 | 1,818,616.11 |
| Second | 172,150,746.16 | 10.77 | 3,353,683.96 |
| Third | 97,355,830.97 | 6.09 | 486,779.15 |
| Fourth | 64,459,459.89 | 4.03 | 576,915.52 |
| Fifth | 61,451,947.79 | 3.85 | 3,072,597.39 |
| Total | 663,100,130.18 | 41.49 | 9,308,592.13 |
| Item | Closing balance | Opening balance |
| Bills receivable | 61,412,976.46 | 24,262,204.08 |
| Factoring of accounts receivable | 5,287,720.75 | |
| Total | 61,412,976.46 | 29,549,924.83 |
| 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 | 24,262,204.08 | 100,038,314.02 | 62,887,541.64 | 61,412,976.46 | ||
| Factoring of | 5,287,720.75 | 5,287,720.75 |
| accounts receivable | ||||||
| Total | 29,549,924.83 | 100,038,314.02 | 68,175,262.39 | 61,412,976.46 |
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Bank acceptance bills | 8,082,485.71 |
| Account age | Closing balance | Opening balance | ||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year | 150,881,413.40 | 99.53 | 84,880,944.13 | 99.43 |
| 1 to 2 years | 443,712.70 | 0.29 | 490,500.60 | 0.57 |
| 2 to 3 years | 271,258.66 | 0.18 | ||
| Above 3 years | ||||
| Less: Bad debt provisions | -20,000,000.00 | |||
| Total | 131,596,384.76 | 100.00 | 85,371,444.73 | 100.00 |
| Parties to which the advance payments are made | Closing balance | Percentage (%) in the total balance at the end of the period of advance payment |
| First | 40,000,000.00 | 26.39 |
| Second | 11,218,218.00 | 7.40 |
| Third | 10,308,250.72 | 6.80 |
| Fourth | 7,166,689.42 | 4.73 |
| Fifth | 6,592,122.82 | 4.35 |
| Total | 75,285,280.96 | 49.67 |
| Item | Closing balance | Opening balance |
| Interest receivable | ||
| Dividend receivable | ||
| Other receivables | 141,753,102.00 | 117,647,039.93 |
| Total | 141,753,102.00 | 117,647,039.93 |
(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 | 114,136,931.70 |
| 1 to 2 years | 37,461,137.32 |
| 2 to 3 years | 13,197,142.97 |
| Above 3 years | 14,050,615.76 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -37,092,725.75 |
| Total | 141,753,102.00 |
| Amount nature | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Personal loans and petty cash | 7,619,165.29 | 8,848,583.44 |
| Amount paid for materials | 33,583,639.24 | 34,532,789.63 |
| Consolidated balance of related-parties current accounts - provisional input tax | 36,427,271.95 | 17,406,678.21 |
| Margin and deposit | 82,608,805.20 | 66,283,403.63 |
| Others | 18,606,946.07 | 16,629,720.27 |
| Total | 178,845,827.75 | 143,701,175.18 |
| Bad debt provisions | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit | Expected credit loss | Expected credit loss |
| losses in the next 12 months | for the entire duration (no credit impairment occurred) | for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January 2020 | 24,554,747.26 | 1,499,387.99 | 26,054,135.25 | |
| Balance as at 1 January 2020 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 | 12,569,875.88 | 12,569,875.88 | ||
| Reserved in the current period | ||||
| Resold in the current period | ||||
| Written-off in the current period | 6,500.00 | 1,499,387.99 | 1,505,887.99 | |
| Other changes | 25,397.39 | 25,397.39 | ||
| Balance as at 31 December 2020 | 37,092,725.75 | 37,092,725.75 |
| 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 2020 | 142,201,787.19 | 1,499,387.99 | 143,701,175.18 | |
| Balance as at 1 January 2020 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 | 709,959,479.04 | 709,959,479.04 | ||
| Derecognition of the current period | 673,315,438.48 | 1,499,387.99 | 674,814,826.47 | |
| Other changes | ||||
| Balance as at 31 December 2020 | 178,845,827.75 | 178,845,827.75 |
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Bad debt provisions accrued separately | 1,499,387.99 | 1,499,387.99 | ||||
| Combination 1: Account age | 24,554,747.26 | 12,569,875.88 | 31,897.38 | 37,092,725.75 | ||
| Total | 26,054,135.25 | 12,569,875.88 | 1,531,285.37 | 37,092,725.75 | ||
| Item | Written-off amount |
| Other receivables actually written-off | 1,505,887.99 |
(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 | Bad debt provisions Closing balance |
| First | Consolidated balance of related-parties current accounts - provisional input tax | 36,427,271.95 | Within 1 year | 20.37 | |
| Second | Amount paid for materials | 7,705,462.64 | 1-2 years | 4.31 | 2,311,638.79 |
| Third | Others | 5,576,436.30 | Within 1 year | 3.12 | 278,821.82 |
| Fourth | Margin and deposit | 4,000,000.00 | Within 1 year | 2.24 | 200,000.00 |
| Fifth | Margin and deposit | 3,821,857.88 | Above 3 years | 2.14 | 3,821,857.88 |
| Total | / | 57,531,028.77 | / | 32.18 | 6,612,318.49 |
| Company name | Government subsidies | Closing balance | Account age at the end of the period | Estimated time, amount and basis of receipt |
| Shanghai Xuhui District Tax Service, State Taxation Administration | Refund upon payment of VAT on software enterprises | 5,576,436.30 | Within 1 year | Refund upon payment of VAT on software enterprises |
| Total | 5,576,436.30 |
(9). Assets and liabilities formed due to the transfer and continuous involvement of other receivables"□ 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 | Provision for the loss on decline in value of inventories/provision for the impairment of contract performance cost | Carrying value | Carrying balance | Provision for the loss on decline in value of inventories/provision for the impairment of contract performance cost | Carrying value | |
| Raw materials | 171,682,717.53 | 503,028.26 | 171,179,689.27 | 230,583,859.11 | 1,418,134.61 | 229,165,724.50 |
| Work-in-process | 67,576,697.07 | 90,168.22 | 67,486,528.85 | 55,336,578.58 | 91,431.46 | 55,245,147.12 |
| Finished products | 1,065,016,694.84 | 45,926,598.58 | 1,019,090,096.26 | 1,035,510,579.55 | 35,434,374.53 | 1,000,076,205.02 |
| Revolving materials | 16,274,211.14 | 1,514,799.76 | 14,759,411.38 | 17,933,897.04 | 1,035,002.57 | 16,898,894.47 |
| Expendable biological assets | 14,814,590.65 | 14,814,590.65 | 14,937,710.39 | 14,937,710.39 | ||
| Contract performance cost | ||||||
| Materials in transit | 4,146,657.42 | 39,054.79 | 4,107,602.63 | 4,258,709.42 | 4,258,709.42 | |
| Consigned processing materials | 13,713,637.94 | 13,713,637.94 | 14,249,868.76 | 14,249,868.76 | ||
| Shipped goods | 17,661,289.85 | 17,661,289.85 | 7,984,719.82 | 7,984,719.82 | ||
| Total | 1,370,886,496.44 | 48,073,649.61 | 1,322,812,846.83 | 1,380,795,922.67 | 37,978,943.17 | 1,342,816,979.50 |
(2). Provision for the loss on decline in value of inventories and provision for the impairment of contract
performance cost"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase amount of the current period | Decrease amount of the current period | Closing balance | ||
| Accrued | Others | Reversed or resold | Others | |||
| Raw materials | 1,418,134.61 | -908,328.15 | 6,778.20 | 503,028.26 | ||
| Work-in-process | 91,431.46 | -1,263.24 | 90,168.22 | |||
| Finished products | 35,434,374.53 | 10,502,686.05 | 10,462.00 | 45,926,598.58 | ||
| Revolving materials | 1,035,002.57 | 479,797.19 | 1,514,799.76 | |||
| Expendable biological assets | ||||||
| Contract performance cost | ||||||
| Materials in transit | 39,054.79 | 39,054.79 | ||||
| Consigned processing materials | ||||||
| Shipped goods | ||||||
| Total | 37,978,943.17 | 10,111,946.64 | 17,240.20 | 48,073,649.61 | ||
If bad debt provisions are accrued according to the general model of expected credit losses, please refer tothe disclosure on other receivables:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
11. Held for sale assets
"□ Applicable" "√ Not applicable"
12. Non-current assets due within one year
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Debt investment due within one year | ||
| Other debt investments due within one year | ||
| Long-term receivables due within one year | 4,637,213.00 | |
| Total | 4,637,213.00 |
| Item | Closing balance | Opening balance |
| Contract acquisition cost | ||
| Receivable return cost | 10,541,165.83 | |
| VAT input tax to be certified | 8,685,801.62 | 20,104,638.98 |
| Pre-paid enterprise income tax | 549,155.49 | 1,104,950.25 |
| Carbon quota | 35,824.00 | |
| VAT retention amount | 7,510,484.36 | 8,035,512.06 |
| Total | 27,286,607.30 | 29,280,925.29 |
(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 and the assessmenton whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
Other descriptions"□ Applicable" "√ Not applicable"
15. 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 and the assessmenton whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
16. 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 | / |
Unit: Yuan Currency: RMB
| Invested company | At the beginning of the period Balance | Change of the current period | At the end of the 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) | 29,846,234.19 | -903,362.87 | 750,226.22 | 29,693,097.54 | |||||||
| Shanghai Pen-making Technology Services Co., Ltd. | 5,736,549.28 | -707,251.15 | 5,029,298.13 | ||||||||
| Sub-total | 35,582,783.47 | -1,610,614.02 | 750,226.22 | 34,722,395.67 | |||||||
| Total | 35,582,783.47 | -1,610,614.02 | 750,226.22 | 34,722,395.67 | |||||||
18. 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. | 5,476,577.42 | 3,909,179.93 |
| Total | 5,476,577.42 | 3,909,179.93 |
| 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. | 1,876,577.42 | the Company held the investment for non-trading purposes |
| Item | Closing balance | Opening balance |
| Fixed assets | 1,847,635,724.45 | 1,163,702,352.12 |
| Disposal of fixed assets | ||
| Total | 1,847,635,724.45 | 1,163,702,352.12 |
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 | 941,980,900.93 | 726,180,721.46 | 57,391,043.68 | 304,599,519.14 | 2,030,152,185.21 |
| 2. Increase amount of the current period | 773,201,860.29 | 54,512,057.80 | 3,260,151.82 | 40,532,487.22 | 871,506,557.13 |
| (1) Acquisition | 413,350,966.04 | 1,598,780.42 | 2,402,056.10 | 7,741,673.34 | 425,093,475.90 |
| (2) Transfer-in from construction in progress | 359,850,894.25 | 52,913,277.38 | 858,095.72 | 32,790,813.88 | 446,413,081.23 |
| (3) Increase for business combination | |||||
| 3. Decrease amount of the current period | 698,967.97 | 7,391,483.22 | 3,096,448.52 | 22,038,233.42 | 33,225,133.13 |
| (1) Disposal or scraping | 10,950.18 | 6,202,686.37 | 3,079,876.82 | 21,730,278.32 | 31,023,791.69 |
| (2) Translation difference of foreign-currency statements | 688,017.79 | 1,188,796.85 | 16,571.70 | 307,955.10 | 2,201,341.44 |
| 4. Balance at the end of the period | 1,714,483,793.25 | 773,301,296.04 | 57,554,746.98 | 323,093,772.94 | 2,868,433,609.21 |
| II. Accumulative depreciation | |||||
| 1. Balance at the beginning of the period | 254,107,049.63 | 339,490,427.89 | 45,715,724.10 | 226,902,482.77 | 866,215,684.39 |
| 2. Increase amount of the current period | 55,887,900.79 | 70,603,850.06 | 3,300,571.59 | 49,455,842.59 | 179,248,165.03 |
| (1) Accruing | 55,887,900.79 | 70,603,850.06 | 3,300,571.59 | 49,455,842.59 | 179,248,165.03 |
| 3. Decrease amount of the current period | 76,324.60 | 5,426,153.45 | 2,345,248.30 | 17,052,387.01 | 24,900,113.36 |
| (1) Disposal or scraping | 4,203.65 | 4,578,385.00 | 2,337,313.66 | 16,874,764.92 | 23,794,667.23 |
| (2) Translation difference of foreign-currency statements | 72,120.95 | 847,768.45 | 7,934.64 | 177,622.09 | 1,105,446.13 |
| 4. Balance at the end of the period | 309,918,625.82 | 404,668,124.50 | 46,671,047.39 | 259,305,938.35 | 1,020,563,736.06 |
| III. Impairment provisions |
| 1. Balance at the beginning of the period | 234,148.70 | 234,148.70 | |||
| 2. Increase amount of the current period | |||||
| (1) Accruing | |||||
| 3. Decrease amount of the current period | |||||
| (1) Disposal or scraping | |||||
| 4. Balance at the end of the period | 234,148.70 | 234,148.70 | |||
| IV. Carrying value | |||||
| 1. Carrying value at the end of the period | 1,404,565,167.43 | 368,399,022.84 | 10,883,699.59 | 63,787,834.59 | 1,847,635,724.45 |
| 2. Carrying value at the beginning 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). 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 not been obtained"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Carrying value | Reason why the property ownership certificates have not been obtained |
| Rafael Cloud Porch | 413,220,000.00 | The property ownership certificate is being obtained |
| Qingcun Production Base Construction Project | 227,388,278.15 | The property ownership certificate is being obtained |
| Internet E-Commerce Industrial Park Project | 132,462,616.10 | The property ownership certificate is being obtained |
| Item | Closing balance | Opening balance |
| Construction in progress | 54,946,300.66 | 260,469,728.76 |
| Engineering materials | ||
| Total | 54,946,300.66 | 260,469,728.76 |
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 | ||||
| Internet E-Commerce Industrial Park Project | 82,259,438.98 | 82,259,438.98 | ||||
| Fixed assets not yet installed and put into use | 23,771,536.87 | 23,771,536.87 | 8,824,754.04 | 8,824,754.04 | ||
| Others | 31,174,763.79 | 31,174,763.79 | 10,443,397.44 | 10,443,397.44 | ||
| Total | 54,946,300.66 | 54,946,300.66 | 260,469,728.76 | 260,469,728.76 | ||
| Items | Budget | At the beginning of the period Balance | Increase amount of the current period | Amount of fixed assets transferred in the current period | Other decrease amounts in the current period | At the end of the 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 | 158,942,138.30 | 68,446,139.85 | 227,388,278.15 | 100.55 | 100.00% | Self-raised funds, borrowings from financial institutions | |||||
| Internet E-Commerce Industrial Park Project | 82,259,438.98 | 50,203,177.12 | 132,462,616.10 | 100.00 | 100.00% | Self-raising | ||||||
| Fixed assets not yet installed and put into use | 8,824,754.04 | 101,968,814.90 | 86,378,205.32 | 643,826.75 | 23,771,536.87 | |||||||
| Total | 733,910,100.00 | 250,026,331.32 | 220,618,131.87 | 446,229,099.57 | 643,826.75 | 23,771,536.87 | / | / | / | / |
(3). Particulars on impairment provisions accrued for construction in progress in the current
period"□ Applicable" "√ Not applicable"Other descriptions"□ Applicable" "√ Not applicable"
Engineering materials
(1). Particulars on engineering materials
"□ Applicable" "√ Not applicable"
23. Productive biological assets
(1). Productive biological assets using cost measurement model
"□ Applicable" "√ Not applicable"
(2). Productive biological assets using fair value measurement model
"□ Applicable" "√ Not applicable"Other descriptions"□ Applicable" "√ Not applicable"
24. Oil and gas assets
"□ Applicable" "√ Not applicable"
25. Right-of-use assets
"□ Applicable" "√ Not applicable"
26. 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 | 340,017,339.10 | 12,645,665.79 | 93,989.00 | 33,251,616.77 | 1,682,622.64 | 387,691,233.30 | |
| 2. Increase amount of the current period | 529,481.27 | 2,937,777.45 | 853,144.87 | 4,320,403.59 | |||
| (1) Acquisition | 529,481.27 | 2,937,777.45 | 853,144.87 | 4,320,403.59 | |||
| (2) R&D | |||||||
| (3) Increase for business combination | |||||||
| 3. Decrease amount of the current period | 1,097,401.49 | 445,051.37 | 1,542,452.86 | ||||
| (1) Disposal | 445,051.37 | 445,051.37 | |||||
| (2) Difference of exchange gains and losses | 1,097,401.49 | 1,097,401.49 | |||||
| 4. Balance at the end of the period | 338,919,937.61 | 13,175,147.06 | 93,989.00 | 36,189,394.22 | 2,090,716.14 | 390,469,184.03 | |
| 2. Cumulative amortization | |||||||
| 1. Balance at the beginning 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 | |
| 2. Increase amount of the current period | 8,034,173.16 | 830,531.47 | 3,813,640.96 | 437,995.23 | 13,116,340.82 | ||
| (1) Accruing | 8,034,173.16 | 830,531.47 | 3,813,640.96 | 437,995.23 | 13,116,340.82 | ||
| (2) Difference of exchange gains and losses | |||||||
| 3. Decrease amount of the current period | 78,956.60 | 78,956.60 |
| (1) Disposal | |||||||
| (2) Invalid and derecognized portion | |||||||
| 4. Balance at the end of the period | 43,068,683.59 | 4,132,625.91 | 93,989.00 | 20,906,939.22 | 1,520,617.71 | 69,722,855.43 | |
| III. Impairment provisions | |||||||
| 1. Balance at the beginning of the period | |||||||
| 2. Increase amount of the current period | |||||||
| (1) Accruing | |||||||
| 3. Decrease amount of the current period | |||||||
| (1) Disposal | |||||||
| 4. Balance at the end of the period | |||||||
| IV. Carrying value | |||||||
| 1. Carrying value at the end of the period | 295,851,254.02 | 9,042,521.15 | 15,282,455.00 | 570,098.43 | 320,746,328.60 | ||
| 2. Carrying value at the beginning of the period | 304,903,872.07 | 9,343,571.35 | 16,158,318.51 | 600,000.16 | 331,005,762.09 |
(2). Particulars on use rights of land of which the property ownership certificates have not been
obtained"□ Applicable" "√ Not applicable"Other descriptions:
"□ Applicable" "√ Not applicable"
27. Development expenses
"□ Applicable" "√ Not applicable"
28. 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 | 30,306,538.42 | 30,306,538.42 | ||||
| Name of invested company or event forming goodwill | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | ||
| Accrued | Others | Disposal | Others | |||
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 131,001.23 | 131,001.23 | ||||
| Axus Stationery (Shanghai) Company Ltd. | 30,175,537.19 | 30,175,537.19 | ||||
| Total | 131,001.23 | 30,175,537.19 | 30,306,538.42 | |||
(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 company | 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 asset groups | Carrying value of the asset group or the combination of asset groups including goodwill | Whether the asset group has 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 | 1,000,251.34 | 1,257,116.50 | No |
| Axus Stationery (Shanghai) Company Ltd. | 30,175,537.19 | 23,709,350.65 | 53,884,887.84 | 397,174,874.58 | 451,059,762.42 | No |
| Name of asset group | Key parameter | Present value of estimated future cash flow | Amount of goodwill impairment provisions | |||
| Forecast period | Growth rate in the steady period | Profit margin | Discount rate (weighted average cost of capital WACC) | |||
| Axus Stationery (Shanghai) Company Ltd. | 2021-2026 | Flat | Calculated according to predicted income, costs, expenses, etc. | 12.30% | 399,000,000.00 | 30,175,537.19 |
(5). Effect of goodwill impairment test
"√ Applicable" "□ Not applicable"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 Shanghai M&G Stationery Inc.for the Purpose of Financial Reporting with the report number of Xin Zi Ping Bao Zi [2021] No.090009on 26 March 2021. According to the appraisal results, as of 31 December 2020, the carrying value of theasst group or the combination of asset groups including goodwill of Axus Stationery acquired by theCompany was RMB451,059,800, and the recoverable amount was RMB399,000,000; after the test, thefull provision for impairment was accrued for the goodwill formed by the Company's acquisition of AxusStationery.
Other descriptions"□ Applicable" "√ Not applicable"
29. 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 | 116,266,913.64 | 42,992,088.15 | 61,611,508.84 | 478,493.84 | 97,168,999.11 |
| Others | 2,069,420.31 | 2,384,191.57 | 2,579,056.33 | 7,701.88 | 1,866,853.67 |
| Total | 118,336,333.95 | 45,376,279.72 | 64,190,565.17 | 486,195.72 | 99,035,852.78 |
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred income tax Assets | Deductible temporary differences | Deferred income tax Assets | |
| Impairment provisions of assets | 62,830,410.42 | 15,736,764.19 | 57,383,899.78 | 12,974,482.56 |
| Unrealized profits from internal transactions | 128,331,275.32 | 19,493,583.59 | 105,422,678.59 | 17,734,494.35 |
| Deductible losses | 15,475,765.74 | 3,868,941.44 | 1,394,984.07 | 348,746.02 |
| Deferred income | 43,408,616.60 | 8,510,440.37 | 28,808,795.45 | 4,356,820.94 |
| Depreciation or amortization difference | 88,272,113.20 | 22,068,028.30 | ||
| Time difference in revenue recognition | 1,591,710.76 | 397,927.68 | ||
| Difference between the expected pre-tax deductible amount of equity incentive expenses during the waiting period and the fair value of the stock at the date of grant | 101,643,345.93 | 16,511,152.05 | ||
| Equity incentive | 82,199,024.88 | 13,352,576.96 | ||
| Total | 523,752,262.85 | 99,939,414.58 | 193,010,357.89 | 35,414,543.87 |
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax Liabilities | Taxable temporary differences | Deferred income tax Liabilities | |
| Assets appreciation for business combination not under the common control | 175,784,995.89 | 31,652,101.70 | 190,554,505.02 | 34,553,803.87 |
| Changes in fair value of other debt investments | ||||
| Changes in fair value of other equity instrument investments | 1,876,577.42 | 281,486.61 | ||
| Changes in fair value of trading financial assets | 28,277,848.33 | 4,847,480.94 | 11,878,587.24 | 2,022,940.68 |
| Total | 205,939,421.64 | 36,781,069.25 | 202,433,092.26 | 36,576,744.55 |
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 62,196,722.99 | 80,145,537.46 |
| Deductible losses | 351,596,864.50 | 316,708,427.52 |
| Total | 413,793,587.49 | 396,853,964.98 |
| Year | Amount at the end of the period | Amount at the beginning of the period | Note |
| 2025 | 118,026,277.48 | ||
| 2024 | 61,116,333.17 | 51,157,003.13 | |
| 2023 | 110,708,628.54 | 128,291,769.66 | |
| 2022 | 35,828,658.63 | 35,217,084.45 | |
| 2021 | 25,916,966.68 | 81,175,636.36 | |
| 2020 | 20,866,933.92 | ||
| Total | 351,596,864.50 | 316,708,427.52 | / |
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment provisions | Carrying value | Carrying balance | Impairment provisions | Carrying value | |
| Contract acquisition cost | ||||||
| Contract performance cost | ||||||
| Receivable return cost | ||||||
| Contract assets | ||||||
| Prepayments for real estate, engineering, equipment, etc. | 6,258,468.47 | 6,258,468.47 | 315,153,408.27 | 315,153,408.27 | ||
| Total | 6,258,468.47 | 6,258,468.47 | 315,153,408.27 | 315,153,408.27 | ||
32. Short-term borrowings
(1). Classification of short-term borrowings
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Pledged borrowings | ||
| Mortgaged borrowings | 180,000,000.00 | 182,979,528.81 |
| Guaranteed borrowings | ||
| Credit borrowings | ||
| Interest payable | 176,000.00 | 214,235.05 |
| Total | 180,176,000.00 | 183,193,763.86 |
| Item | Closing balance | Opening balance |
| Within 1 year | 2,552,911,388.83 | 1,857,292,820.26 |
| 1 to 2 years | 46,850,996.73 | 2,179,464.37 |
| 2 to 3 years | 1,389,918.08 | 1,103,433.79 |
| Above 3 years | 868,204.35 | 496,749.45 |
| Total | 2,602,020,507.99 | 1,861,072,467.87 |
| Item | Closing balance | Opening balance |
| Loans | 114,100,035.35 | 182,975,481.36 |
| Total | 114,100,035.35 | 182,975,481.36 |
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| I. Short-term benefits | 146,780,321.69 | 772,665,372.92 | 773,666,541.39 | 145,779,153.22 |
| II. Post-employment benefits - Defined contribution plans | 7,339,170.63 | 46,337,718.71 | 47,428,423.67 | 6,248,465.67 |
| III. Dismissal benefits | 4,110,868.79 | 3,513,380.79 | 597,488.00 |
| IV. Other benefits due within one year | ||||
| Total | 154,119,492.32 | 823,113,960.42 | 824,608,345.85 | 152,625,106.89 |
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| I. Salary, bonus, allowance and subsidy | 136,748,768.51 | 681,595,603.59 | 680,957,347.72 | 137,387,024.38 |
| II. Employee benefits | 393.33 | 19,919,866.58 | 19,887,526.58 | 32,733.33 |
| III. Social insurance | 3,827,119.22 | 41,736,224.16 | 41,822,820.28 | 3,740,523.10 |
| Including: Medical insurance | 3,337,870.76 | 37,403,336.63 | 37,122,847.35 | 3,618,360.04 |
| Work-related injury insurance | 145,404.67 | 3,080,065.03 | 3,113,015.83 | 112,453.87 |
| Maternity insurance | 343,843.79 | 1,252,822.50 | 1,586,957.10 | 9,709.19 |
| IV. Housing provident fund | 2,599,231.67 | 24,852,031.82 | 24,688,470.60 | 2,762,792.89 |
| V. Labor union and employee education funds | 3,322,429.95 | 459,468.67 | 1,927,978.56 | 1,853,920.06 |
| VI. Short-term compensated absences | 279,975.38 | 4,101,706.10 | 4,381,681.48 | |
| VII. Short-term profit sharing plan | ||||
| VIII. Other short-term benefits | 2,403.63 | 472.00 | 716.17 | 2,159.46 |
| Total | 146,780,321.69 | 772,665,372.92 | 773,666,541.39 | 145,779,153.22 |
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| 1. Basic pension | 7,155,776.88 | 44,812,116.60 | 45,853,551.82 | 6,114,341.66 |
| 2. Unemployment insurance | 183,393.75 | 1,525,602.11 | 1,574,871.85 | 134,124.01 |
| 3. Enterprise annuity payment |
| Total | 7,339,170.63 | 46,337,718.71 | 47,428,423.67 | 6,248,465.67 |
| Item | Closing balance | Opening balance |
| Value added tax (“VAT”) | 223,026,940.44 | 104,412,244.02 |
| Consumption tax | ||
| Business tax | ||
| Enterprise income tax | 217,311,562.20 | 130,486,171.57 |
| Personnel income tax | 9,161,957.00 | 8,228,966.18 |
| Urban maintenance and construction tax | 7,416,779.26 | 3,975,132.04 |
| Property tax | 290,044.29 | 476,707.70 |
| Education surcharge | 10,972,177.74 | 5,857,154.52 |
| Land use tax | 1,539,806.37 | 1,492,046.98 |
| Stamp duty | 7,505,424.40 | 3,439,030.61 |
| Others | 15,527.40 | 215,664.52 |
| Total | 477,240,219.10 | 258,583,118.14 |
| Item | Closing balance | Opening balance |
| Interest payable | ||
| Dividend payable | ||
| Other payables | 625,468,675.97 | 331,438,976.35 |
| Total | 625,468,675.97 | 331,438,976.35 |
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 | 161,138,624.45 | 153,783,801.10 |
| Repurchase obligations of restricted stocks | 176,034,120.00 | |
| Product license fee | 1,860,000.00 | 1,051,890.00 |
| Estimated fees | 189,127,390.60 | 126,261,415.65 |
| Engineering and decoration fund | 75,577,971.07 | 28,482,632.65 |
| Others | 21,730,569.85 | 21,859,236.95 |
| Total | 625,468,675.97 | 331,438,976.35 |
| Item | Closing balance | Opening balance |
| Short-term bonds payable | ||
| Return amount payable | ||
| Output tax to be written off | 13,746,089.97 | 23,786,812.58 |
| Total | 13,746,089.97 | 23,786,812.58 |
Other descriptions:
"□ Applicable" "√ Not applicable"
45. Long-term borrowings
(1). Classification of long-term borrowings
"□ Applicable" "√ Not applicable"
Other descriptions, including interest rate ranges:
"□ Applicable" "√ Not applicable"
46. Bonds payable
(1). Bonds payable
"□ Applicable" "√ Not applicable"
(2). Changes in bonds payable: (excluding other financial instruments such as preferred sharesclassified as financial liabilities and perpetual bonds)"□ Applicable" "√ Not applicable"
(3). Description on the conversion conditions and conversion time of convertible corporate bonds"□ Applicable" "√ Not applicable"
(4). Description on other financial instruments classified as financial liabilitiesBasic information on other financial instruments such as outstanding preferred shares and perpetualbonds at the end of the period"□ Applicable" "√ Not applicable"
Form of changes in financial instruments such as outstanding preferred shares and perpetual bonds at theend of the period"□ Applicable" "√ Not applicable"Description of the basis for other financial instruments classified as financial liabilities:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
47. Lease liabilities
"□ Applicable" "√ Not applicable"
48. Long-term payables
Presented by item"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Long-term payables | ||
| Special payables | 8,420,000.00 | 6,620,000.00 |
| Total | 8,420,000.00 | 6,620,000.00 |
| 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 | 6,620,000.00 | 1,800,000.00 | 8,420,000.00 | ||
| Total | 6,620,000.00 | 1,800,000.00 | 8,420,000.00 | / |
| Item | Opening balance | Closing balance | Cause of formation |
| External guarantee | |||
| Pending litigation | |||
| Product quality assurance |
| Restructuring obligations | |||
| Onerous contract to be implemented | |||
| Return amount payable | 12,211,357.80 | Estimated returns | |
| Others | |||
| Total | 12,211,357.80 | / |
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | Cause of formation |
| Government subsidies | 31,466,679.08 | 24,050,000.00 | 9,384,165.68 | 46,132,513.40 | |
| Reward on customer points | 199,713.53 | 311,962.20 | 511,675.73 | ||
| Brand maintenance | 34,156,820.50 | 34,156,820.50 | |||
| Total | 65,823,213.11 | 24,361,962.20 | 44,052,661.91 | 46,132,513.40 | / |
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 | 9,408,249.39 | 672,017.88 | 8,736,231.51 | Pertinent to assets | |||
| Shanghai's second batch special fund for encouraging enterprises to purchase international R&D equipment in 2014 | 609,000.00 | 174,000.00 | 435,000.00 | Pertinent to assets | |||
| R&D and industrialization of key materials and preparation technologies in the pen-making industry | 721,963.45 | 244,646.88 | 477,316.57 | Pertinent to assets | |||
| Subsidies for the second batch of key technological transformation projects in 2013 | 2,197,889.67 | 586,104.12 | 1,611,785.55 | Pertinent to assets | |||
| Subsidies for absorption and innovation projects in 2014 | 529,773.99 | 90,443.52 | 439,330.47 | Pertinent to assets | |||
| Service industry guidance funds in 2014 | 1,794,639.53 | 328,891.68 | 1,465,747.85 | Pertinent to assets | |||
| Key technological transformation projects of Shanghai in 2015 | 3,699,032.61 | 561,878.28 | 3,137,154.33 | Pertinent to assets | |||
| Inbound Marketing - Internet + product development project | 579,718.88 | 107,310.24 | 472,408.64 | Pertinent to assets |
| Special fund for Shanghai informatization development | 1,594,912.40 | 194,331.20 | 1,400,581.20 | Pertinent to assets | |||
| Special funds for technology R&D projects | 131,619.38 | 105,943.09 | 25,676.29 | Pertinent to assets | |||
| Special funds for industrial transformation and upgrade development of Shanghai in 2016 | 979,120.90 | 1,000,000.00 | 271,637.22 | 1,707,483.68 | Pertinent to assets | ||
| High-value-added product creative development project | 167,859.17 | 29,437.44 | 138,421.73 | Pertinent to assets | |||
| Industrial foundation consolidation project in 2016 | 3,770,000.00 | -3,770,000.00 | 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 | ||||
| Special funds for Shanghai research center of writing instrument engineering technology | 1,000,000.00 | 1,000,000.00 | Pertinent to assets | ||||
| Academician Expert Workstation | 100,000.00 | 100,000.00 | 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 | 1,362,696.61 | 174,080.64 | 1,188,615.97 | Pertinent to assets |
| 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 | 396,333.30 | 116,000.04 | 280,333.26 | Pertinent to assets | |||
| Construction Project of "Marco-Color-Source" Creative Experience Center | 362,370.95 | 50,000.04 | 312,370.91 | Pertinent to assets | |||
| Special funds for central foreign economic and trade development | 736,196.30 | 73,619.64 | 662,576.66 | Pertinent to assets | |||
| Subsidies for boiler retrofit | 350,000.00 | 70,000.00 | 280,000.00 | Pertinent to assets | |||
| Special funds for development of SMEs in Shanghai in 2016 | 155,302.55 | 78,831.89 | 76,470.66 | Pertinent to assets | |||
| Special development funds for enterprises | 18,260,000.00 | 18,260,000.00 | Pertinent to assets | ||||
| Subsidies for Internet projects | 2,590,000.00 | 1,684,991.88 | 905,008.12 | Pertinent to assets | |||
| Special funds for development of modern service industry | 750,000.00 | 750,000.00 | Pertinent to assets | ||||
| Total | 31,466,679.08 | 24,050,000.00 | 5,614,165.68 | -3,770,000.00 | 46,132,513.40 |
52. Other non-current liabilities
"□ Applicable" "√ Not applicable"
53. Share capital
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Opening balance | Increase or decrease (+ or -) due to this change | Closing balance | |||||
| Issue New shares | Bonus shares | Provident funds Transferred shares | Others | Sub-total | |||
| Total shares | 920,000,000.00 | 7,427,600.00 | 7,427,600.00 | 927,427,600.00 | |||
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| Capital premium (Share premium) | 272,347,764.53 | 168,606,520.00 | 440,954,284.53 | |
| Other capital reserve | 92,429,847.13 | 92,429,847.13 | ||
| Total | 272,347,764.53 | 261,036,367.13 | 533,384,131.66 |
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| Equity incentive repurchase | 176,034,120.00 | 176,034,120.00 | ||
| Total | 176,034,120.00 | 176,034,120.00 |
Unit: Yuan Currency: RMB
| Item | At the beginning of the period Balance | Amount accounted for in the current period | At the end of the 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 | 2,305,549.03 | 281,486.61 | 2,024,062.42 | 2,333,242.35 | |||
| Including: Change in re-measurement of defined benefit plans | ||||||||
| Other comprehensive income that may not be reclassified to profit or loss under equity method | 738,151.54 | 738,151.54 | 738,151.54 | |||||
| Changes in fair value of other equity instrument investments | 309,179.93 | 1,567,397.49 | 281,486.61 | 1,285,910.88 | 1,595,090.81 | |||
| Change in fair value of enterprise's own credit risk | ||||||||
| II. Other comprehensive income to be reclassified into profit or loss | 217,179.62 | -739,879.20 | -409,019.49 | -330,859.71 | -191,839.87 | |||
| Including: Other comprehensive income that may be reclassified to profit or loss under equity method | -16,285.82 | 12,074.68 | 12,074.68 | -4,211.14 | ||||
| Changes in fair value of other debt investments | ||||||||
| Amount included in other comprehensive income on reclassification of financial assets | ||||||||
| Credit impairment provisions of other debt investments | ||||||||
| Cash flow hedging reserve | ||||||||
| Exchange differences from translation of financial statements | 233,465.44 | -751,953.88 | -421,094.17 | -330,859.71 | -187,628.73 | |||
| Total other comprehensive income | 526,359.55 | 1,565,669.83 | 281,486.61 | 1,615,042.93 | -330,859.71 | 2,141,402.48 |
58. Special reserve
"□ Applicable" "√ Not applicable"
59. Surplus reserve
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| Statutory surplus reserve | 440,260,399.59 | 23,782,260.32 | 464,042,659.91 | |
| Arbitrary surplus reserve | ||||
| Reserve fund | ||||
| Enterprise development fund | ||||
| Others | ||||
| Total | 440,260,399.59 | 23,782,260.32 | 464,042,659.91 |
| Item | Current period | Previous period |
| Pre-adjustment undistributed profits at the end of the previous period | 2,568,365,861.32 | 1,874,727,294.53 |
| Total adjustment amount of undistributed profits at the beginning of the period (“+” refers to increase by adjustment and “-” refers to decrease by adjustment) | 10,596,781.73 | 5,543,922.00 |
| Post-adjustment amount of undistributed profits at the beginning of the period | 2,578,962,643.05 | 1,880,271,216.53 |
| Add: Net profit attributable to shareholders of the parent company in the current period | 1,255,426,655.27 | 1,060,083,625.03 |
| Less: Statutory surplus reserve accrued | 23,782,260.32 | 95,988,980.24 |
| Arbitrary surplus reserve accrued | ||
| Withdrawal of general risk provision | ||
| Dividends on common shares payable | 368,000,000.00 | 276,000,000.00 |
| Dividends on common shares converted to stock capital | ||
| Undistributed profit at the end of the period | 3,442,607,038.00 | 2,568,365,861.32 |
4. Due to changes in the scope of the consolidated financial statements caused by the businesscombination under common control, the affected undistributed profit at the beginning of the period wasRMB0.
5. Due to other adjustments, the affected undistributed profit at the beginning of the period was RMB0.
61. Revenue and operating costs
(1). Revenue and operating costs
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | ||
| Revenue | Costs | Revenue | Costs | |
| Main operations | 13,133,546,117.73 | 9,806,354,519.82 | 11,139,921,640.93 | 8,229,332,367.02 |
| Other operations | 4,199,609.45 | 255,479.66 | 1,179,723.51 | 504,901.84 |
| Total | 13,137,745,727.18 | 9,806,609,999.48 | 11,141,101,364.44 | 8,229,837,268.86 |
| Classification of contracts | Total |
| Types of goods | |
| 1. Sales of goods | 13,126,820,058.35 |
| 2. Management fee for franchising | 2,368,196.45 |
| 3. Hardware and software | 4,357,862.93 |
| 4. Material income | 1,099,644.09 |
| 5. Others | 2,483,821.51 |
| Classification by operation territory | |
| 1. China | 12,774,182,203.97 |
| 2. Other countries | 362,947,379.36 |
| Total | 13,137,129,583.33 |
| Item | Amount in the current period | Amount in the last period |
| Description on revenue from customer contracts | 13,137,129,583.33 | 11,141,037,489.07 |
| Rental income | 616,143.85 | 63,875.37 |
| Total | 13,137,745,727.18 | 11,141,101,364.44 |
62. Taxes and surcharges
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Consumption tax | ||
| Business tax | ||
| Urban maintenance and construction tax | 15,541,751.43 | 11,196,254.01 |
| Education surcharge | 25,015,709.73 | 17,562,369.49 |
| Resource tax | ||
| Property tax | 1,535,728.76 | 1,348,318.75 |
| Land use tax | 1,045,803.55 | 683,113.09 |
| Vehicle usage tax | ||
| Stamp duty | 7,261,952.70 | 11,052,982.62 |
| Others | 294,018.54 | 152,020.10 |
| Total | 50,694,964.71 | 41,995,058.06 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Salaries and benefits | 308,941,016.61 | 282,098,540.51 |
| Channel related expenditure | 84,054,269.88 | 52,031,005.95 |
| Brand promotion | 68,021,855.27 | 49,109,586.72 |
| Transportation and handling | 18,558,875.62 | 86,718,004.33 |
| Marketing | 87,880,339.63 | 77,878,656.77 |
| Rental fee | 212,362,438.26 | 149,176,463.15 |
| Others | 323,365,228.24 | 283,153,843.75 |
| Total | 1,103,184,023.51 | 980,166,101.18 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Salaries and benefits | 254,969,061.73 | 226,532,654.57 |
| Depreciation and amortization | 64,967,664.15 | 57,040,455.35 |
| Rental fee | 46,636,231.60 | 34,022,959.81 |
| Office expense | 21,420,634.26 | 23,030,837.14 |
| Share-based payments | 82,199,024.88 | |
| Others | 132,434,518.79 | 128,635,281.26 |
| Total | 602,627,135.41 | 469,262,188.13 |
65. R&D expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Salaries and benefits | 66,828,400.15 | 74,850,775.54 |
| Inventory consumption | 54,757,593.65 | 56,560,157.03 |
| Others | 38,592,948.09 | 28,992,430.40 |
| Total | 160,178,941.89 | 160,403,362.97 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Interest expense | 6,948,206.51 | 8,386,182.80 |
| Less: Interest income | -13,415,173.15 | -20,872,167.57 |
| Exchange gains and losses | 12,089,237.27 | 566,099.52 |
| Others | 3,437,905.72 | 3,522,607.60 |
| Total | 9,060,176.35 | -8,397,277.65 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Government subsidies | 44,472,282.85 | 26,355,003.29 |
| Handling charge on withholding personnel income tax | 1,193,126.92 | 149,878.17 |
| Total | 45,665,409.77 | 26,504,881.46 |
| 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 transformation projects in 2013 | 586,104.12 | 586,104.12 | Pertinent to assets |
| 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 | 561,878.28 | Pertinent to assets |
| Inbound Marketing - Internet + product development project | 107,310.24 | 107,310.24 | Pertinent to assets |
| Special fund for Shanghai informatization | 194,331.20 | 325,087.60 | Pertinent to assets |
| development | |||
| Special funds for technology R&D projects | 105,943.09 | 134,548.27 | Pertinent to assets |
| Special funds for industrial transformation and upgrade development of Shanghai in 2016 | 271,637.22 | 120,879.10 | Pertinent to assets |
| High-value-added product creative development project | 29,437.44 | 29,437.44 | Pertinent to assets |
| Special funds for development of SMEs in Shanghai in 2016 | 78,831.89 | 80,988.33 | Pertinent to assets |
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of “Green Design - Innovative R&D” by Marco Colorful Painting Pen C1085 | 174,080.64 | 709,085.34 | Pertinent to assets |
| Special fund plan for key technological renovation projects in Qingpu District in 2012 | 116,000.04 | 77,333.36 | Pertinent to assets |
| Special funds for central foreign economic and trade development | 73,619.64 | 49,079.76 | Pertinent to assets |
| Construction Project of "Marco-Color-Source" Creative Experience Center | 50,000.04 | 12,629.05 | Pertinent to assets |
| Subsidies for boiler retrofit | 70,000.00 | Pertinent to assets | |
| Subsidies for Internet projects | 1,684,991.88 | Pertinent to assets | |
| Special certificate security skills training subsidy | 3,180.00 | Pertinent to income | |
| “Four-help and four-offering” sales rewards | 20,000.00 | Pertinent to income | |
| Rewards for the inclusion of technology-based SMEs | 40,800.00 | Pertinent to income | |
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of “Green Design - Innovative R&D” by Marco Colorful Painting Pen C1085 | 370,000.00 | 1,217,680.00 | Pertinent to income |
| Rewards for the pass during the evaluation by the municipal enterprise technology center | 100,000.00 | Pertinent to income | |
| Subsidies provided by the economic and information technology commission | 25,440.00 | Pertinent to income | |
| Subsidies given by Shanghai Municipal Commission of Commerce for our legal fees for Brazilian anti-dumping case | 53,008.00 | Pertinent to income | |
| Enterprise support funds in Qingpu District, Shanghai | 255,800.00 | 10,100.00 | Pertinent to income |
| Comprehensive support fund for Hangzhou Qiantang Smart City Industrial Construction Center in 2019 | 450,000.00 | Pertinent to income | |
| Special rental subsidies and special salary support for epidemic prevention and control | 83,651.00 | Pertinent to income | |
| Subsidies for patents | 417,000.00 | Pertinent to income | |
| 2019 central import interest subsidies (directly paid by the municipal finance bureau) | 210,146.00 | Pertinent to income | |
| Subsidies for R&D and innovation of the first batch of "Three Hundreds" enterprises (paid by Shanghai Fengxian District Finance Bureau) | 439,500.00 | Pertinent to income | |
| Refund upon payment of VAT | 7,039,516.55 | Pertinent to income | |
| Special funds for technological innovation and development | 90,000.00 | Pertinent to income | |
| Subsidies for buildings due to the epidemic | 100,000.00 | Pertinent to income | |
| Talent development funds | 315,200.00 | Pertinent to income | |
| Talent subsidies provided by the Human | 252,400.00 | Pertinent to income |
| Resources and Social Security Bureau | |||
| Subsidies for coal-fired boilers | 170,000.00 | 36,864.00 | Pertinent to income |
| Government subsidies | 3,452,666.13 | 742,900.00 | Pertinent to income |
| Industry development guidance funds | 153,400.00 | Pertinent to income | |
| Post stability subsidies | 2,971,018.41 | 428,526.10 | Pertinent to income |
| Support funds for export credit insurance premium | 4,451.92 | Pertinent to income | |
| Disability benefit awards | 70,229.10 | 68,181.83 | Pertinent to income |
| IP related rewards | 489,463.00 | Pertinent to income | |
| Cultural festival bonuses | 4,000.00 | Pertinent to income | |
| Training fee subsidies | 3,305,599.20 | 1,795,663.80 | 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 Employment Management & Service Bureau | 163,362.78 | 418,811.79 | Pertinent to income |
| Government subsidies for automobile scrapping | 15,600.00 | Pertinent to income | |
| Special funds for development of enterprises | 18,400,000.00 | 14,600,000.00 | Pertinent to income |
| Amount returned by financial department in 2018 | 280,000.00 | Pertinent to income | |
| The second batch of rewards and support for epidemic prevention provided by the Bureau of Industry and Information Technology of Longgang District, Shenzhen in 2020 | 20,000.00 | Pertinent to income | |
| Work-for-training subsidies | 39,600.00 | Pertinent to income | |
| Total | 44,472,282.85 | 26,355,003.29 |
| 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 | -1,610,614.02 | -576,595.97 |
| Investment income from disposal of long-term equity investment | ||
| Investment income from held-for-trading financial assets during the holding period | ||
| Dividend income from other equity instrument investments during the holding period | ||
| Interest income from debt investment during the holding period | ||
| Interest income from other debt investments during the holding period | ||
| Investment income from disposal of held-for-trading financial assets | 5,461,768.72 | 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 | ||
| Total | 3,851,154.70 | 23,994,985.32 |
69. Net gain on exposure hedging
"□ Applicable" "√ Not applicable"
70. Gain on change in fair value
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Sources of income from changes in fair value | Amount accounted for in the current period | Amount accounted for in the previous period |
| Held-for-trading financial assets | 32,281,250.23 | 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 | 32,281,250.23 | 4,613,287.24 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Bad debt losses of notes receivable | ||
| Bad debt losses of accounts receivable | 5,656,026.24 | 14,977,985.47 |
| Bad debt losses of other receivables | 12,569,875.88 | 13,028,024.41 |
| Impairment losses of debt investment | ||
| Impairment losses of other debt investments | ||
| Bad debt losses of long-term receivables | ||
| Impairment losses of contract assets | ||
| Bad debt losses of prepayments | 20,000,000.00 | |
| Total | 38,225,902.12 | 28,006,009.88 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| 1. Bad debt losses | ||
| II. Loss for decline in value of inventories and loss for impairment of contract performance cost | 10,111,946.64 | 17,712,080.66 |
| III. Impairment losses of long-term equity investment | ||
| IV. Impairment losses of investment real estate | ||
| V. Impairment losses of fixed assets | ||
| VI. Impairment losses of engineering materials | ||
| VII. Impairment losses of construction in progress | ||
| VIII. Impairment losses of productive biological assets | ||
| IX. Impairment losses of oil and gas assets | ||
| X. Impairment losses of intangible assets |
| XI. Impairment losses of goodwill | 30,175,537.19 | 131,001.23 |
| XII. Others | ||
| Total | 40,287,483.83 | 17,843,081.89 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Gaines or losses from disposal of fixed assets | 169,704.92 | 6,081,606.95 |
| Total | 169,704.92 | 6,081,606.95 |
| 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 subsidies | 89,557,520.24 | 16,242,800.00 | 89,557,520.24 |
| Inventory profit | 36,601.59 | 36,601.59 | |
| Brand maintenance | 34,156,820.50 | 34,156,820.50 | |
| Liquidated damages and fine income | 1,790,210.19 | 922,677.94 | 1,790,210.19 |
| Others | 3,234,345.57 | 12,193,177.10 | 3,234,345.57 |
| Total | 128,775,498.09 | 29,358,655.04 | 128,775,498.09 |
| Subsidy projects | Amount accounted for in the current period | Amount accounted for in the previous period | Pertinent to assets/income |
| Financial support | 89,557,520.24 | 16,242,800.00 | Pertinent to income |
| Total | 89,557,520.24 | 16,242,800.00 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | Amount included in the current non-recurring gains and losses |
| Total losses from disposal of non-current assets | |||
| Including: Losses from disposal of fixed assets | |||
| Losses from disposal of intangible assets | |||
| Losses from restructuring of debts | |||
| Losses from exchange of non-currency assets | |||
| Offering of donations | 8,044,041.60 | 4,456,387.80 | 8,044,041.60 |
| Abnormal loss | 11,579.27 | ||
| Inventory losses | 180,639.72 | 25,692.24 | 180,639.72 |
| Loss from damage and retirement of non-current assets | 2,596,461.69 | 3,153,550.20 | 2,596,461.69 |
| Fine late payment | 1,042,177.33 | 19,532.73 | 1,042,177.33 |
| Compensation expenses | 3,191,899.75 | 657,935.89 | 3,191,899.75 |
| Others | 5,416,086.34 | 10,534,564.93 | 5,416,086.34 |
| Total | 20,471,306.43 | 18,859,243.06 | 20,471,306.43 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Current income tax expenses | 326,704,216.12 | 229,869,239.88 |
| Deferred income tax expenses | -47,929,130.96 | -12,266,339.47 |
| Total | 278,775,085.16 | 217,602,900.41 |
| Item | Amount accounted for in the current period |
| Total profits | 1,517,148,811.16 |
| Income tax expenses calculated at statutory/applicable tax rate | 227,572,321.67 |
| Effect of applying different tax rates to subsidiaries | 24,972,662.61 |
| Effect of adjusting income taxes of the previous periods | -6,945,475.40 |
| Effect of non-taxable income | -9,025,850.71 |
| Effect of non-deductible costs, expenses and losses | 9,180,955.24 |
| Effect of deductible losses of deferred income tax assets not recognized in the previous period | -1,134,459.56 |
| Effect of deductible temporary differences or deductible losses of deferred income tax assets not recognized in the current period | 34,154,931.31 |
| Income tax expenses | 278,775,085.16 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Recovery of current amount and advances | 581,182,581.81 | 212,985,779.50 |
| Special allowances and subsidies | 148,419,247.78 | 43,659,627.09 |
| Interest income | 13,415,173.15 | 20,872,167.57 |
| Non-operating profits | 1,278,211.47 | 1,190,996.41 |
| Total | 744,295,214.21 | 278,708,570.57 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Inter-company business | 1,207,529,783.72 | 453,378,164.39 |
| Sales expenses | 641,492,275.98 | 670,248,889.99 |
| Administration expenses | 226,914,119.41 | 191,012,799.95 |
| Financial expenses | 3,754,024.37 | 3,522,607.60 |
| Non-operating expenses | 14,108,869.53 | 5,881,790.24 |
| R&D expenses | 86,459,958.29 | 26,898,793.51 |
| Total | 2,180,259,031.30 | 1,350,943,045.68 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Equity funds of original shareholders of Axus Stationery | 1,987,377.00 | |
| Total | 1,987,377.00 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Repurchase payment of treasury shares | 1,585,530.00 | |
| Cash paid for financing lease | 8,687,534.78 | |
| Total | 1,585,530.00 | 8,687,534.78 |
| 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 | 1,238,373,726.00 | 1,076,076,843.66 |
| Add: Impairment provisions of assets | 40,287,483.83 | 17,843,081.89 |
| Credit impairment losses | 38,225,902.12 | 28,006,009.88 |
| Depreciation of fixed assets, oil and gas assets, and productive biological assets | 179,248,165.03 | 160,499,582.34 |
| Amortization of right-of-use assets | ||
| Amortization of intangible assets | 13,116,340.82 | 12,244,846.41 |
| Amortization of long-term prepaid expenses | 64,190,565.17 | 58,322,900.97 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets (“-” refers to gains) | -169,704.92 | -6,081,606.95 |
| Losses from retirement of fixed assets (“-” refers to gains) | 2,596,461.69 | 3,153,550.20 |
| Losses from changes in fair value (“-” refers to gains) | -32,281,250.23 | -4,613,287.24 |
| Financial expenses (“-” refers to income) | 13,239,741.30 | 15,729,788.85 |
| Investment losses (“-” refers to gains) | -3,851,154.70 | -23,994,985.32 |
| Decrease in deferred income tax assets (“-” refers to increase) | -48,643,095.04 | -11,098,014.61 |
| Increase in deferred income tax liabilities (“-” refers to decrease) | 204,324.70 | -1,168,324.86 |
| Decrease in inventories (“-” refers to increase) | 55,821,469.29 | -168,780,666.90 |
| Decrease in operating receivables (“-” refers to increase) | -638,589,375.17 | -393,772,873.21 |
| Increase in operating payables (“-” refers to decrease) | 349,928,292.39 | 319,574,538.57 |
| Others | ||
| Net cash flow generated from operating activities | 1,271,697,892.28 | 1,081,941,383.68 |
| 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 | 1,377,346,135.25 | 1,377,446,435.89 |
| Less: Opening balance of cash | 1,377,446,435.89 | 741,501,446.10 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | -100,300.64 | 635,944,989.79 |
| Item | Closing balance | Opening balance |
| I. Cash | 1,377,346,135.25 | 1,377,446,435.89 |
| Including: Cash on hand | 1,134,204.63 | 503,222.44 |
| Bank deposits readily available for payment | 1,371,360,452.36 | 1,372,791,232.44 |
| Other cash and equivalents readily available for payment at any time | 4,851,478.26 | 4,151,981.01 |
| 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 | 1,377,346,135.25 | 1,377,446,435.89 |
| Including: Cash and cash equivalents of which the use is restricted for the parent company or subsidiaries within the group |
| Item | Carrying value at the end of the period | Reason for restriction |
| Cash and equivalents | 1,184,812,790.86 | Letter of credit deposit and fixed deposit with restricted use and over three months, etc. |
| Bills receivable | ||
| Inventories | ||
| Fixed assets | 86,306,229.62 | Loan mortgage |
| Intangible assets | ||
| Total | 1,271,119,020.48 | / |
| Item | Foreign currency balance at the end of the period | Translation foreign exchange rate | RMB translated at the end of the period Balance |
| Cash and equivalents | - | - | 85,165,095.66 |
| Including: USD | 12,652,630.01 | 6.5249 | 82,557,145.55 |
| EURO | 229,387.82 | 8.0250 | 1,840,837.26 |
| JPY | 1,121.00 | 0.0632 | 70.85 |
| HKD | 79,523.02 | 0.8416 | 66,926.57 |
| VND | 2,333,718,087.78 | 0.0003 | 700,115.43 |
| Accounts receivable | - | - | 31,687,341.28 |
| Including: USD | 4,827,758.50 | 6.5249 | 31,500,641.44 |
| EURO | 22,896.07 | 8.0250 | 183,740.96 |
| HKD | 3,515.78 | 0.8416 | 2,958.88 |
| Accounts payable | - | - | 5,746,409.23 |
| Including: USD | 608,161.27 | 6.5249 | 3,968,191.47 |
| JPY | 4,525,212.00 | 0.0632 | 285,993.40 |
| CHF | 3,128.00 | 7.4006 | 23,149.08 |
| VND | 4,896,917,616.40 | 0.0003 | 1,469,075.28 |
| Other receivables | - | - | 427,463.91 |
| Including: VND | 1,424,879,696.12 | 0.0003 | 427,463.91 |
| Other payables | - | - | 282,014.95 |
| Including: VND | 940,049,816.99 | 0.0003 | 282,014.95 |
| Long-term borrowings | - | - | |
| Including: USD |
84. Government subsidies
(1). Basic information on government subsidies
"√ 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 funds in 2014 | 3,450,000.00 | Deferred income | 328,891.68 |
| 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 | 194,331.20 |
| Special funds for technology R&D projects | 786,219.51 | Deferred income | 105,943.09 |
| Special funds for industrial transformation and upgrade development of Shanghai in 2016 | 1,100,000.00 | Deferred income | 271,637.22 |
| High-value-added product creative development project | 1,300,000.00 | Deferred income | 29,437.44 |
| Special funds for development of SMEs in Shanghai in 2016 | 465,108.77 | Deferred income | 78,831.89 |
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of “Green Design - Innovative R&D” by Marco Colorful Painting Pen C1085 | 4,600,000.00 | Deferred income | 174,080.64 |
| Special fund plan for key technological renovation projects in Qingpu District in 2012 | 1,160,000.00 | Deferred income | 116,000.04 |
| Special funds for central foreign economic and trade development | 1,000,000.00 | Deferred income | 73,619.64 |
| Construction Project of "Marco-Color-Source" Creative Experience Center | 2,500,000.00 | Deferred income | 50,000.04 |
| Subsidies for boiler retrofit | 350,000.00 | Deferred income | 70,000.00 |
| Subsidies for Internet projects | 2,590,000.00 | Deferred income | 1,684,991.88 |
| Financial support | 89,557,520.24 | Non-operating expenses | 89,557,520.24 |
| Special certificate security skills training subsidy | 3,180.00 | Other income | 3,180.00 |
| “Four-help and four-offering” sales rewards | 20,000.00 | Other income | 20,000.00 |
| Rewards for the inclusion of technology-based SMEs | 40,800.00 | Other income | 40,800.00 |
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of “Green Design - Innovative R&D” by Marco Colorful Painting Pen C1085 | 370,000.00 | Other income | 370,000.00 |
| Rewards for the pass during the evaluation by the municipal enterprise technology center | 100,000.00 | Other income | 100,000.00 |
| Subsidies provided by the economic and information technology commission | 25,440.00 | Other income | 25,440.00 |
| Subsidies given by Shanghai Municipal Commission of Commerce for our legal fees for Brazilian anti-dumping case | 53,008.00 | Other income | 53,008.00 |
| Enterprise support funds in Qingpu District, Shanghai | 255,800.00 | Other income | 255,800.00 |
| Comprehensive support fund for Hangzhou Qiantang Smart City Industrial Construction Center in 2019 | 450,000.00 | Other income | 450,000.00 |
| Special rental subsidies and special salary support for epidemic prevention and control | 83,651.00 | Other income | 83,651.00 |
| Subsidies for patents | 417,000.00 | Other income | 417,000.00 |
| 2019 central import interest subsidies (directly paid by the municipal finance bureau) | 210,146.00 | Other income | 210,146.00 |
| Subsidies for R&D and innovation of the first batch of "Three Hundreds" enterprises (paid by Shanghai Fengxian District Finance Bureau) | 439,500.00 | Other income | 439,500.00 |
| Refund upon payment of VAT | 7,039,516.55 | Other income | 7,039,516.55 |
| Special funds for technological innovation and development | 90,000.00 | Other income | 90,000.00 |
| Subsidies for buildings due to the epidemic | 100,000.00 | Other income | 100,000.00 |
| Talent development funds | 315,200.00 | Other income | 315,200.00 |
| Talent subsidies provided by the Human Resources and Social Security Bureau | 252,400.00 | Other income | 252,400.00 |
| The second batch of rewards and support for epidemic prevention provided by the Bureau of Industry and Information Technology of Longgang District, Shenzhen in 2020 | 20,000.00 | Other income | 20,000.00 |
| Work-for-training subsidies | 39,600.00 | Other income | 39,600.00 |
| Training fee subsidies | 3,305,599.20 | Other income | 3,305,599.20 |
| Post stability subsidies | 2,971,018.41 | Other income | 2,971,018.41 |
| Subsidies for coal-fired boilers | 170,000.00 | Other income | 170,000.00 |
| Government subsidies | 3,452,666.13 | Other income | 3,452,666.13 |
| Disability benefit awards | 70,229.10 | Other income | 70,229.10 |
| Unemployment insurance from Yiwu Employment Management & Service Bureau | 163,362.78 | Other income | 163,362.78 |
| Special funds for development of | 18,400,000.00 | Other income | 18,400,000.00 |
enterprises
(2). Return of government subsidies
"□ Applicable" "√ Not applicable"Other descriptions:
No
85. Others
"□ Applicable" "√ Not applicable"
VIII. Change in consolidation scope
1、 Business combinations not under common control
"□ Applicable" "√ Not applicable"
2、 Business combination under common control
"□ Applicable" "√ Not applicable"
3、 Reverse acquisition
"□ Applicable" "√ Not applicable" Disposal of subsidiariesWhether there is a loss of control upon a single disposal of investment to subsidiaries"□ Applicable" "√ Not applicable"Other descriptions:
"□ Applicable" "√ Not applicable"
4、 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) Three subsidiaries were incorporated into the scope of consolidation through newestablishments for the current year, among which, Shanghai Chenxun Enterprise Management Co., Ltd.has a registered capital of RMB70 million, with an investment ratio of 100%; Shanghai QizhihaowanCulture and Creativity Co., Ltd. has a registered capital of RMB100 million, with an investment ratio of57%; Shanghai Colipu Information Technology Co., Ltd. has a registered capital of RMB5 million, withan investment ratio of 100%.
(2) The subsidiary Office Depot Network Technology Co., Ltd. was deregistered for the currentyear.
5、 Others
"□ Applicable" "√ Not applicable"
IX. Equity in Other Entities
1、 Equity in subsidiaries
(1). Composition of the corporate group
"√ Applicable" "□ Not applicable"
| Subsidiary name Name | Main place of business | Registered address | Nature of the business | Shareholding ratio (%) | Acquisition 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. | 100.00 | 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 not under common control | |
| Shanghai M&G Office Supplies Co., Ltd. | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Establishment | |
| 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 |
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | Shanghai | Shanghai | Creative service | 57.00 | Establishment | |
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | Shanghai | Shanghai | Enterprise management | 100.00 | Establishment | |
| Shanghai Colipu Information Technology Co., Ltd.（上海科力普信息科技有限公司） | Shanghai | Shanghai | Software development | 100.00 | Establishment |
| Name of subsidiaries | Minority shareholding ratio | Profits and losses attributable to minority shareholders in the current period | Dividends declared and distributed to minority shareholders in the current period | Minority equity balance at the end of the period |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 30.00% | 43,148,587.48 | 170,638,348.86 |
(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. | 237,271.61 | 6,474.92 | 243,746.53 | 184,145.14 | 2,721.93 | 186,867.07 | 163,996.71 | 3,579.48 | 167,576.19 | 122,907.02 | 3,511.47 | 126,418.49 |
| Name of subsidiaries | Amount accounted for in the current period | Amount accounted for in the previous period | ||||||
| Revenue | Net profit | Total comprehensive income | Cash flow from operating activities | Revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 500,027.59 | 14,382.86 | 14,382.86 | 22,586.95 | 365,806.17 | 7,580.35 | 7,580.35 | 14,880.10 |
(4). Significant restrictions on the use of corporate group assets and the liquidation of corporate
group debts"□ Applicable" "√ Not applicable"
(5). Financial support or other support provided to structured entities included in the scope of
consolidated financial statements"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
2、 Transactions which result in a change in the share of owners’ equity in the subsidiary but theCompany still controls the subsidiary"□ Applicable" "√ Not applicable"
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 | 34,722,395.67 | 35,582,783.47 |
| Total of the following items calculated according to the shareholding ratio | ||
| --Net profits | -1,610,614.02 | -576,595.97 |
| --Other comprehensive income | 750,226.22 | -16,285.82 |
| --Total comprehensive income | -860,387.80 | -592,881.79 |
(5). Descriptions on significant limitation of the ability of a joint venture or associate to transfer
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, liquidity risk andmarket risk (including exchange rate risk, interest rate risk and other price risk). The above financial risksand the risk management policies adopted by the Company to reduce these risks are as follows:
The Board of Directors is responsible for planning and establishing the Company's risk managementstructure, formulating the Company's risk management policies and related guidelines, and supervisingthe implementation of risk management measures. The Company has formulated risk management policiesto identify and analyze the risks faced by the Company. These risk management policies clearly stipulatespecific risks, covering many aspects in the management of market risk, credit risk and liquidity risk. TheCompany regularly evaluates the market environment and changes in the Company's business activities todetermine whether to update the risk management policies and systems. The Company's risk managementis carried out by the Risk Management Committee in accordance with the policies approved by the Boardof Directors. The Risk Management Committee works closely with other business departments of theCompany to identify, evaluate and avoid related risks. The Internal Audit Department of the Companyconducts regular audits on risk management control and procedures, and reports the audit results to theAudit Committee of the Company.
The Company diversifies the risk of financial instruments through appropriate diversified investmentand business portfolios, and reduces the risks relating to concentration in a single industry, specific regionor specific counterparty through formulation of corresponding risk management policies.
(I) Credit risk
Credit risk refers to the risk of the Company's financial losses due to the failure of the counterpartyto perform its contractual obligations.
the Company’s credit risk mainly arises from monetary funds, notes receivable, accounts receivable,accounts receivable financing, other receivables, debt investments, other debt investments and financialguarantee contracts, etc., and debt instruments and derivative financial assets at fair value through current
profit or loss that are not included in the scope of impairment assessment. At the balance sheet date, thecarrying value of the Company's financial assets represented its maximum credit risk exposure.The Company’s monetary funds are mainly bank deposits deposited in reputable state-owned banksand other large and medium-sized listed banks with high credit ratings, thus the Company believes thatthere are no significant credit risks and almost no major losses caused by bank defaults.
In addition, for notes receivable, accounts receivable, financing receivables and other receivables,the Company sets relevant policies to control credit risk exposure. The Company evaluates the customer'scredit qualifications and sets the corresponding credit period based on the customer's financial status,possibility of obtaining guarantees from a third party, credit history and other factors such as currentmarket conditions. The Company regularly monitors customer credit records. For customers with poorcredit records, the Company uses written dunning and shortens or cancels the credit period, etc., to ensurethat the Company's overall credit risk is within the controllable range.
(II) Liquidity risk
Liquidity risk is the risk of a shortage of funds of the Company when the Company is performing itsobligation to settle in the form of delivery of cash or other financial assets.
The Company's policy is to ensure that there is sufficient cash to pay off the debts due. Liquidity riskis centrally controlled by the Company's Finance Department. Finance Department ensures that theCompany has sufficient funds to repay debts under all reasonable forecasts by monitoring cash balances,marketable securities at any time, and rolling forecasts of the cash flows in the coming 12 months. FinanceDepartment also continuously monitors whether the Company complies with the provisions of the loanagreement and obtains commitments from major financial institutions to provide sufficient reserve fundsso as to meet short- and long-term funding needs.Financial liabilities of the Company are presented as unrealized contractual cash flows on the maturitydate as follows:
| Item | Closing balance | |||||
| Immediate repayment | Within 1 year | 1-2 years | 2-5 years | Above 5 years | Total | |
| Short-term borrowings | 176,000.00 | 180,000,000.00 | 180,176,000.00 | |||
| Total | 176,000.00 | 180,000,000.00 | 180,176,000.00 | |||
| Item | Balance at the end of the year | |||||
| Immediate repayment | Within 1 year | 1-2 years | 2-5 years | Above 5 years | Total | |
| Short-term borrowings | 214,235.05 | 182,979,528.81 | 183,193,763.86 | |||
| Total | 214,235.05 | 182,979,528.81 | 183,193,763.86 | |||
Foreign exchange risk faced by the Company mainly comes from financial assets and liabilities denominated in USD, and the amounts of foreign currencyfinancial assets and liabilities converted into RMB are shown below:
| Item | Closing balance | Balance at the end of the year | ||||
| USD | Other foreign currencies | Total | USD | Other foreign currencies | Total | |
| Cash and equivalents | 82,557,145.55 | 2,607,950.11 | 85,165,095.66 | 118,934,500.87 | 3,553,801.91 | 122,488,302.78 |
| Accounts receivable | 31,500,641.44 | 186,699.84 | 31,687,341.28 | 3,162,321.09 | 20,981,217.43 | 24,143,538.52 |
| Other receivables | 427,463.91 | 427,463.91 | 497,820.40 | 497,820.40 | ||
| Total foreign currency financial assets | 114,057,786.99 | 3,222,113.86 | 117,279,900.85 | 122,096,821.96 | 25,032,839.74 | 147,129,661.70 |
| Short-term borrowings | 427,099.11 | 427,099.11 | ||||
| Accounts payable | 3,968,191.47 | 1,778,217.76 | 5,746,409.23 | 2,620,359.64 | 73,402,088.01 | 76,022,447.65 |
| Other payables | 282,014.95 | 282,014.95 | 1,091,367.20 | 1,091,367.20 | ||
| Total foreign currency financial liabilities | 3,968,191.47 | 2,060,232.71 | 6,028,424.18 | 3,047,458.75 | 74,493,455.21 | 77,540,913.96 |
| 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 | 1,428,277,848.33 | 1,428,277,848.33 | ||
| 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 | 5,476,577.42 | 5,476,577.42 | ||
| (IV) Investment real estate | ||||
| 1. Land use rights used for rent | ||||
| 2. Rental buildings | ||||
| 3. Land use rights held and ready to be transferred after appreciation | ||||
| (V) Biological assets | ||||
| 1. Consumable biological assets | ||||
| 2. Productive biological assets | ||||
| (VI) Receivables financing | 61,412,976.46 | 61,412,976.46 | ||
| Total assets continuously measured at fair value | 1,428,277,848.33 | 66,889,553.88 | 1,495,167,402.21 | |
| (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 |
2. Basis for determining market prices of items continuously and not continuously measured atthe first-level fair value"√ Applicable" "□ Not applicable"The input value of the first level is the unadjusted quotation of the same asset or liability that can beobtained on the measurement date in the active market.
3. Qualitative and quantitative information on valuation techniques and important parameters
adopted by items continuously and not continuously measured at the second-level fair value"√ Applicable" "□ Not applicable"The input value of the second level is the directly or indirectly observable input value of related assets orliabilities except the input value of the first level.
4. Qualitative and quantitative information on valuation techniques and important parameters
adopted by items continuously and not continuously measured at the third-level fair value"√ Applicable" "□ Not applicable"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 and sensitivity 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 determine the 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 at fair 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 | RMB300 million | 57.79 | 57.79 |
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 IX. Equity in Other Entities for details.
3. Particulars on joint ventures and associates of the Company
For important joint ventures and associates of the Company, see the Notes for details"√ Applicable" "□ Not applicable"For particulars on subsidiaries of the Company, see Note IX. Equity in Other Entities for details.
Particulars on other joint ventures and associates which have related-party transactions with theCompany in the current period or had related-party transactions with the Company in the previousperiod and form balances are as follows"√ Applicable" "□ Not applicable"
| 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 |
| 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 |
| PELEG DESIGN Ltd | Others |
| 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 |
| Related party | Related-party transaction content | Amount accounted for in the current period | Amount accounted for in the previous period |
| PELEG DESIGN Ltd | Purchase of goods | 702,355.15 |
| 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 | 439,535,408.86 | 387,821,087.67 |
| 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 |
| 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.) | 4,620,952.38 | 3,622,857.14 |
| M&G Holdings (Group) Co., Ltd. | Self-owned office buildings and parking spaces | 18,693,105.31 | 20,368,751.26 |
| M&G Holdings (Group) Co., Ltd. | Utilities | 5,164,795.80 | 5,283,878.50 |
"□ 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 | ||
| Prepayment | M&G Holdings (Group) Co., Ltd. | 5,301,834.70 | 3,419,063.44 | ||
| Other receivables | Sales entities controlled by Guo Weilong | 12.93 | 0.65 | ||
| 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 | 87,891.05 | 9,576.58 |
| Accounts payable | PELEG DESIGN Ltd | 660,345.39 | |
| Other payables | Sales entities controlled by Guo Weilong | 1,485,000.00 | 1,310,000.00 |
| Other payables | M&G Holdings (Group) Co., Ltd. | 1,144,105.84 | 6,234,878.32 |
| Accounts received in advance | Sales entities controlled by Guo Weilong | 38,198,477.81 | |
| Contract liabilities | Sales entities controlled by Guo Weilong | 21,037,129.41 |
XIII. Share-based payments
1. Overall situation of share-based payment
"√ Applicable" "□ Not applicable"
Unit: Share Currency: RMB
| Total amount of equity instruments granted by the Company in the current period | 7,427,600 |
| Total amount of equity instruments vested by the Company in the current period | 0 |
| Total amount of equity instruments of the Company expired in the current period | 138,600 |
| Scope of the vesting price of the outstanding stock options of the Company at the end of the period and the remaining period of the contract | Restricted stocks are granted at a price of RMB23.7/share and are valid for 3 years from the date of grant; the remaining validity period is 2.67 years |
| Scope of the vesting price of other outstanding equity instruments of the Company at the end of the period and the remaining period of the contract |
| Determination method of the fair value of equity instruments at the date of grant | The closing price of the stocks on the date of grant was RMB58.70/share |
| Determination basis for the number of vesting equity instruments | At each balance sheet date during the waiting period, the Company will make the best estimate based on the latest obtained follow-up information such as changes in the number of vesting employees, and revise the expected number of vesting equity instruments |
| Reasons for the significant difference between the current estimate and the previous estimate | No |
| Cumulative amount of equity-settled share-based payments included in the capital reserve | 79,130,855.20 |
| Total amount of expenses recognized by equity-settled share-based payments in the current period | 82,199,024.88 |
Supervisors held by the Company on 8 May 2020, the first grant price of restricted stocks was adjustedfrom RMB24.1/share to RMB23.7/share, the first grant number of incentive objects from 343 to 335, andthe first grant number of restricted stocks from 7,583,000 to 7,441,200, while the total number of restrictedstocks to be granted according to this equity incentive plan was adjusted from 9,180,600 to 9,038,700.After the date of grant of the restricted stock incentive plan was determined, 6 incentive objectsresigned and abandoned the equity incentive plan. As of 31 December 2020, the number of incentiveobjects actually granted by the stock incentive plan was 329, and the number of restricted stocks actuallygranted was 7,289,000 shares.The incentive plan evaluates the Company's operating performance annually, and takes theachievement of the performance evaluation target as one of the conditions for releasing the salesrestrictions for the incentive objects in the current year. The performance evaluation objectives of theincentive plan are shown in the following table:
| Date of releasing the sales restrictions | Performance evaluation objective |
| The first period of releasing the sales restrictions | Based on 2019, the growth rate of operating income in 2020 will not be less than 15%, and the growth rate of net profit in 2020 will not be less than 10%; |
| The second period of releasing the sales restrictions | Based on 2019, the growth rate of operating income in 2021 will not be less than 45%, and the growth rate of net profit in 2021 will not be less than 34%; |
| The third period of releasing the sales restrictions | Based on 2019, the growth rate of operating income in 2022 will not be less than 75%, and the growth rate of net profit in 2022 will not be less than 66%. |
On 24 September 2020, Axus Stationery and Industrial Bank Co., Ltd. Shanghai Zhangyang Branchentered into the Maximum Mortgage Contract numbered Zhang Yang DYAS2020. This contract is asub-contract of the Line Credit Contract. The maximum principal limit of the mortgage under thiscontract is RMB200,000,000.00, and the mortgage limit is valid from 24 September 2020 to 23September 2021.
The mortgage term runs from the effective date of the mortgage contract to the termination oflitigation 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 | 24,976,111.47 | 22,085,342.05 |
| No. 233 Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2013) No. 013396 | 32,156,238.78 | 12,856,455.39 | 19,299,783.39 |
| No. 333 Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2015) No. 015718 | 60,230,210.97 | 15,309,106.79 | 44,921,104.18 |
| Total | 139,447,903.27 | 53,141,673.65 | 86,306,229.62 | |
| Profits or dividends proposed to be distributed | 463,713,800 |
| Profits or dividends reviewed and approved to be declared for distribution |
3. Sales return
"□ Applicable" "√ Not applicable"
4. Explanations on other post-balance-sheet-date events
"□ Applicable" "√ Not applicable"
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 and internalreporting system, two reporting segments are identified, namely: office direct-selling business andtraditional core business. The Company's reporting segments provide different services. Since eachsegment requires different technical or marketing strategies, the management of the Company separatelymanages the operating activities of each reporting segment and regularly evaluates the operating resultsof these reporting segments to determine the allocation of resources to them and the evaluation of theirperformance.The transfer price between segments is determined on the basis of the actual transaction price, andthe expenses indirectly attributable to each segment are grouped according to the actual share of eachsegment. Assets are allocated according to the operation of the segment and the location of the asset.Segment liabilities include liabilities that can be attributed to the segment formed by the segment'soperating activities. If the expenses associated with liabilities shared by multiple operating segments areallocated to these operating segments, the jointly assumed liabilities are also allocated to these operatingsegments.
(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 |
| Revenue from foreign transactions | 4,989,638,214.67 | 8,241,591,422.03 | 93,483,909.52 | 13,137,745,727.18 |
| Revenue from inter-segment transactions | 10,637,701.39 | 82,846,208.13 | 93,483,909.52 | |
| Income from investments in associates and joint ventures | -1,610,614.02 | -1,610,614.02 | ||
| Credit impairment losses | -22,065,328.47 | -16,160,573.65 | -38,225,902.12 | |
| Asset impairment losses | -137,304.43 | -40,150,179.40 | -40,287,483.83 | |
| Depreciation and amortization charges | 9,763,350.25 | 246,791,720.77 | 256,555,071.02 | |
| Total profits (total losses) | 184,529,940.14 | 1,332,315,470.25 | -303,400.77 | 1,517,148,811.16 |
| Income tax expenses | 40,701,315.22 | 237,997,919.75 | -75,850.19 | 278,775,085.16 |
| Net profits (net losses) | 143,828,624.92 | 1,094,317,550.50 | -227,550.58 | 1,238,373,726.00 |
| Total assets | 2,437,465,217.49 | 7,343,718,965.00 | 71,275,746.17 | 9,709,908,436.32 |
| Total liabilities | 1,868,670,721.29 | 2,471,299,050.02 | 71,048,195.59 | 4,268,921,575.72 |
| Account age | Carrying balance at the end of the period |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 181,133,866.23 |
| 1 to 2 years | |
| 2 to 3 years | |
| Above 3 years | |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -3,485,066.58 |
| Total | 177,648,799.65 |
| Category | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provisions | Carrying value | Carrying balance | Bad debt provisions | Carrying value | |||||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | Amount | Percentage (%) | Amount | Accruing percentage (%) | |||
| Bad debt provisions accrued separately | ||||||||||
| Including: | ||||||||||
| Bad debt provisions accrued according to the combination | 181,133,866.23 | 100.00 | 3,485,066.58 | 1.92 | 177,648,799.65 | 83,763,307.23 | 100.00 | 814,082.58 | 0.97 | 82,949,224.65 |
| Including: | ||||||||||
| Combination 1: Account age | 69,701,331.66 | 38.48 | 3,485,066.58 | 5.00 | 66,216,265.08 | 16,281,651.67 | 19.44 | 814,082.58 | 5.00 | 15,467,569.09 |
| Combination III: Related parties in the scope of the consolidated financial statements | 111,432,534.57 | 61.52 | 111,432,534.57 | 67,481,655.56 | 80.56 | 67,481,655.56 | ||||
| Total | 181,133,866.23 | / | 3,485,066.58 | / | 177,648,799.65 | 83,763,307.23 | / | 814,082.58 | / | 82,949,224.65 |
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Combination 1: Account age | 814,082.58 | 2,670,984.00 | 3,485,066.58 | |||
| Total | 814,082.58 | 2,670,984.00 | 3,485,066.58 | |||
(5). Particulars on top 5 accounts receivable in terms of the balance at the end of the period basedon debtors"√ Applicable" "□ Not applicable"
| Company name | Closing balance | ||
| Accounts receivable | Percentage (%) of the total accounts receivable | Bad debt provisions | |
| First | 80,989,689.63 | 44.71 | |
| Second | 10,313,022.70 | 5.69 | |
| Third | 10,203,557.98 | 5.63 | 510,177.90 |
| Fourth | 8,663,866.66 | 4.78 | |
| Fifth | 5,050,958.23 | 2.79 | 252,547.91 |
| Total | 115,221,095.20 | 63.61 | 762,725.81 |
| Item | Closing balance | Opening balance |
| Interest receivable | 35,000.00 | 192,500.00 |
| Dividend receivable | ||
| Other receivables | 399,643,347.22 | 284,844,294.54 |
| Total | 399,678,347.22 | 285,036,794.54 |
| Item | Closing balance | Opening balance |
| Time deposits | ||
| Entrusted loans | 35,000.00 | 192,500.00 |
| Bond investment | ||
| Total | 35,000.00 | 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 | 133,916,433.34 |
| 1 to 2 years | 97,052,395.97 |
| 2 to 3 years | 51,706,365.65 |
| Above 3 years | 121,566,041.96 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -4,597,889.70 |
| Total | 399,643,347.22 |
| Amount nature | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Personal loans and petty cash | 1,680,200.77 | 2,564,837.10 |
| Consolidated balance of related-parties current accounts | 391,720,050.07 | 277,015,264.79 |
| Amount paid for materials | 174,142.29 | 100,145.85 |
| Consolidated balance of related-parties current accounts - provisional input tax | 1,937,167.34 | 1,500,098.94 |
| Margin and deposit | 5,383,734.67 | 4,865,737.79 |
| Others | 3,345,941.78 | 2,658,113.26 |
| Total | 404,241,236.92 | 288,704,197.73 |
| 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 2020 | 3,859,903.19 | 3,859,903.19 | ||
| Balance as at 1 January 2020 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 | 737,986.51 | 737,986.51 | ||
| Reserved in the current period | ||||
| Resold in the current period | ||||
| Written-off in the current period | ||||
| Other changes | ||||
| Balance as at 31 December 2020 | 4,597,889.70 | 4,597,889.70 |
| 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 2020 | 288,704,197.73 | 288,704,197.73 | ||
| Balance as at 1 January 2020 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 | 278,377,461.18 | 278,377,461.18 | ||
| Derecognition of the current period | 162,840,421.99 | 162,840,421.99 | ||
| Other changes | ||||
| Balance as at 31 December 2020 | 404,241,236.92 | 404,241,236.92 |
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Combination 1: Account age | 3,859,903.19 | 737,986.51 | 4,597,889.70 | |||
| Total | 3,859,903.19 | 737,986.51 | 4,597,889.70 | |||
| Company name | Amount nature | Closing balance | Account age | Percentage (%) in the total balance at the end of the period of other receivables | Bad debt provisions Closing balance |
| First | Consolidated balance of related-parties current accounts | 187,488,553.15 | Within 1 year: RMB77,068,400 1-2 years: RMB70,274,700 2-3 years: RMB40,145,500 | 46.38 | |
| Second | Consolidated balance of related-parties current accounts | 117,173,454.80 | Within 1 year: RMB1,843,400 1-2 years: RMB3,264,100 Above 3 years: RMB112,066,000 | 28.99 |
| Third | Consolidated balance of related-parties current accounts | 56,998,819.58 | Within 1 year: RMB33,477,500 1-2 years: RMB23,521,300 | 14.10 | |
| Fourth | Consolidated balance of related-parties current accounts | 21,750,000.00 | 2-3 years: RMB13,750,000 Above 3 years: RMB8,000,000 | 5.38 | |
| Fifth | Margin and deposit | 3,821,857.88 | Above 3 years | 0.95 | 3,821,857.88 |
| Total | / | 387,232,685.41 | / | 95.80 | 3,821,857.88 |
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment provisions | Carrying value | Carrying balance | Impairment provisions | Carrying value | |
| Investment to subsidiaries | 1,063,812,641.33 | 1,063,812,641.33 | 1,053,585,409.09 | 1,053,585,409.09 | ||
| Investments to associates and joint ventures | 34,722,395.67 | 34,722,395.67 | 35,582,783.47 | 35,582,783.47 | ||
| Total | 1,098,535,037.00 | 1,098,535,037.00 | 1,089,168,192.56 | 1,089,168,192.56 | ||
| 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. | 490,000,000.00 | 10,227,232.24 | 500,227,232.24 | |||
| Shanghai M&G Zhenmei Stationery Co., Ltd.（上海晨 | 13,288,599.09 | 13,288,599.09 |
| 光珍美文具有限公司） | ||||||
| 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., Ltd.（上海晨光佳美文具有限公司） | 30,000,000.00 | 30,000,000.00 | ||||
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | 27,500,000.00 | 27,500,000.00 | ||||
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 6,339,300.00 | 6,339,300.00 | ||||
| Shanghai M&G 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 | 1,053,585,409.09 | 10,227,232.24 | 1,063,812,641.33 |
| Investment Unit | At the beginning of the period Balance | Change of the current period | At the end of the 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) | 29,846,234.19 | -903,362.87 | 750,226.22 | 29,693,097.54 | |||||||
| Shanghai Pen-making Technology Services Co., Ltd. | 5,736,549.28 | -707,251.15 | 5,029,298.13 | ||||||||
| Sub-total | 35,582,783.47 | -1,610,614.02 | 750,226.22 | 34,722,395.67 | |||||||
| Total | 35,582,783.47 | -1,610,614.02 | 750,226.22 | 34,722,395.67 | |||||||
4. Revenue and operating costs
(1). Revenue and operating costs
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | ||
| Revenue | Costs | Revenue | Costs | |
| Main operations | 4,130,671,233.32 | 2,164,311,904.18 | 3,888,768,953.18 | 2,183,782,074.37 |
| Other operations | 65,240,228.87 | 45,222,989.96 | ||
| Total | 4,195,911,462.19 | 2,164,311,904.18 | 3,933,991,943.14 | 2,183,782,074.37 |
| Classification of contracts | Total |
| Types of goods | |
| 1. Sales of goods | 4,130,671,233.32 |
| 2. Others | 59,678,695.90 |
| Classification by operation territory | |
| 1. China | 4,066,533,445.41 |
| 2. Other countries | 123,816,483.81 |
| Total | 4,195,911,462.19 |
| Item | Amount in the current period | Amount in the last period |
| Description on revenue from customer contracts | 4,190,349,929.22 | 3,929,363,561.24 |
| Rental income | 5,561,532.97 | 4,628,381.90 |
| Total | 4,195,911,462.19 | 3,933,991,943.14 |
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Long-term equity investment income calculated by cost method | ||
| Long-term equity investment income accounted for under the equity method | -1,610,614.02 | -576,595.97 |
| Investment income from disposal of long-term equity investment | ||
| Investment income from held-for-trading financial assets during the holding period | ||
| Dividend income from other equity instrument investments during the holding period | ||
| Interest income from debt investment during the holding period | ||
| Interest income from other debt investments during the holding period | ||
| Investment income from disposal of held-for-trading financial assets | 4,763,925.06 | 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 | ||
| Total | 3,153,311.04 | 21,470,373.55 |
| Item | Amount | the situation |
| Gains or losses on disposal of non-current assets | 169,704.92 | Mainly due to the Company's renewal of some old equipment |
| 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) | 135,222,930.01 | Mainly including government subsidies received during the Reporting Period and government subsidies 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 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 | 37,743,018.95 | Revenue generated from purchase of wealth management products |
| Reversal of provision for impairment of receivables and contractual assets which are individually tested for impairment | 8,958,818.94 | 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 | 18,746,671.42 | Mainly including the non-operating income transferred from the proceeds from the merger |
| and acquisition of Office Depot, and the expenditure of charity donations. | ||
| Effect of income tax | -29,169,213.11 | |
| Effect of minority equity | -18,957,557.36 | |
| Total | 152,714,373.77 |
| Profits during the Reporting Period | Weighted average ROE (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to ordinary shareholders of the Company | 26.91 | 1.3558 | 1.3558 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring gains and losses | 23.63 | 1.1908 | 1.1908 |
| 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. |