2022 Annual Report
April 2023
2022 Annual Report
Section I Important Notice, Contents and DefinitionsThe Board of Directors and the Board of Supervisors of the Company and itsdirectors, supervisors and senior management warrant that the informationcontained in this annual report is true, accurate and complete without anyfalse records, misleading statements or material omissions, and severally andjointly accept the legal liability thereof.Xie Bingzheng, the person in charge of the Company, Tang Xinqiao, the personin charge of accounting of the Company, and Chen Zhihui, the person incharge of the accounting department of the Company, declared that theywarrant the truthfulness, accuracy and completeness of the financialstatements set out in this annual report.All directors of the Company attended the Board meeting, on which this reportwas reviewed.The forward-looking statements in this annual report, including developmentstrategies and business plans, do not constitute substantive commitments of theCompany to investors. Investors and related personnel should remain vigilantand understand the differences between plans, forecasts and commitments.Investors should be aware of the investment risks.The Company shall comply with the information disclosure requirements ofthe textile and garment-related industries as stipulated in the SZSE GuidelinesNo. 3 for Self-discipline and Supervision of Listed Companies — Industry
Information Disclosure.The Company has described the potential risks it may face in the future in“Section III Discussion and Analysis of the Management” and “Section XIFuture Development Prospects of the Company”. Investors should be aware ofthe investment risks.The Board meeting has deliberated and approved the following profitdistribution proposal: Distribute a cash dividend of RMB3.00 (tax inclusive)for every 10 shares to all shareholders based on a total share capital of570,707,084 shares as at December 31, 2022; no bonus shares will be issued andno capital reserve will be converted into share capital.
Contents
Section I Important Notice, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Indicators ...... 7
Section III Discussion and Analysis of the Management ...... 12
Section IV Corporate Governance ...... 59
Section V Environmental and Social Responsibilities ...... 81
Section VI Significant Events ...... 83
Section VII Changes in Shareholding and Information of Shareholders ...... 90
Section VIII Particulars of Preference Shares ...... 98
Section IX Particulars of Bonds ...... 99
Section X Financial Report ...... 100
Documents Available for Inspection
(1) Financial statements affixed with the official stamps and signatures of the Company’s responsible person,the person in charge of accounting, and the person in charge of accounting department of the Company;
(2) Original of the audit report affixed with the stamp of the CPA firm as well as the stamps and signatures ofthe certified public accountants;
(3) All original copies of the Company’s documents and the original drafts of the Company’s announcements asdisclosed on the websites designated by the CSRC during the reporting period;
(4) Place for document inspection: Office of the Board of Directors.
Terms and Definitions
| Term | Definition | |
| Issuer, Company, the Company, joint-stock company, BIEM.L.FDLKK | BIEM.L.FDLKK Garment Co., Ltd. | |
| Controlling shareholder, actual controller | Xie Bingzheng and Feng Lingling, who are a couple | |
| Persons acting in concert | Xie Bingzheng, Feng Lingling | |
| Articles of Association | Articles of Association of BIEM.L.FDLKK Garment Co., Ltd. | |
| A shares | RMB-denominated ordinary shares with a par value of RMB1.00 per share | |
| RMB | Official currency of PRC | |
| Company Law | The Company Law of the People's Republic of China | |
| Securities Law | The Securities Law of the People's Republic of China | |
| CSRC | China Securities Regulatory Commission | |
| SZSE | Shenzhen Stock Exchange | |
| Huaxing | Huaxing Certified Public Accountants LLP | |
| Garment | A general term for articles that decorate human body, including clothes, shoes, hats, socks, gloves, scarves, ties, bags, etc. | |
| Direct sale |
A model where the Company opens direct retail terminals,is responsible for the management of the terminal storesand bears all channel costs
| Franchise | A model where the Company signs a franchise contract with enterprises or individuals up to certain certifications, granting them the right to run the Company's branded clothes by opening franchise stores within a certain period of time and region, while the Company provides corresponding guidance and support. The franchisee is responsible for the management and operation of the terminal store and bears channel expenses. | |
| Joint operation | A model where the Company signs an agreement with the joint operation party (shopping malls, airports golf clubs) who provides the business premise, collects payments from and issues invoices to consumers, and settles with the Company after deducting a certain percentage from the sales revenue. This model is also called “store-within-a-store” in the industry, and the joint operation party allows the Company to renovate and display based on its own styles for brand image presentation and promotion. | |
| Garment factory | Manufacturing enterprises that process fabrics and accessories into garments | |
| Supplier | A collective term for fabric suppliers, accessory suppliers and garment factories |
Section II Company Profile and Key Financial IndicatorsI. Company Information
| Stock abbreviation | BYLF | Stock code | 002832 |
| Stock exchange on which the shares are listed | Shenzhen Stock Exchange | ||
| Chinese name of the Company | 比音勒芬服饰股份有限公司 | ||
| Abbreviation of Chinese name of the Company | 比音勒芬 | ||
| English name of the Company (if any) | BIEM.L.FDLKK Garment Co., Ltd. | ||
| Abbreviation of English name of the Company (if any) | BIEM | ||
| Legal Representative of the Company | Xie Bingzheng | ||
| Registered address | No. 608 East Xingye Avenue, Nancun Town, Panyu District, Guangzhou City | ||
| Postal code of registered address | 511442 | ||
| Historical changes of the Company's registered address | Date of first registration: January 2, 2003; Registered address: Room 3001, Tianyu Garden, No. 138 Linhe Middle Road, Tianhe District, Guangzhou; Date of registration change: November 28, 2007; Registered address: All of No. 309 Xingye Avenue, Nancun Town, Panyu District, Guangzhou; Date of registration change: March 18, 2020; Registered address: No. 608 East Xingye Avenue, Nancun Town, Panyu District, Guangzhou. | ||
| Office address | No. 608 East Xingye Avenue, Nancun Town, Panyu District, Guangzhou | ||
| Postal code of office address | 511442 | ||
| Company website | www.biemlf.com | ||
| investor@biemlf.com | |||
II. Contact Persons and Contact Methods
| Secretary to the Board | Representative of securities affairs | |
| Name | Chen Yang | Chen Haihua |
| Address | No. 608 East Xingye Avenue, Nancun Town, Panyu District, Guangzhou | No. 608 East Xingye Avenue, Nancun Town, Panyu District, Guangzhou |
| Tel | 020-39952666 | 020-39952666 |
| Fax | 020-39958289 | 020-39958289 |
| investor@biemlf.com | investor@biemlf.com |
III. Information Disclosure and Location for Inspection of Documents
| Website of the stock exchange on which the annual report is published | Shenzhen Stock Exchange (http://www.szse.cn) |
| Name and website of the media on which the annual report is | Securities Times, Shanghai Securities News, China Securities |
| published | Journal, Securities Daily, and http://www.cninfo.com.cn |
| Location for inspection of the annual report | Shenzhen Stock Exchange, Office of the Board of Directors |
IV. Historical Changes of the Company's Registration Information
| Unified Social Credit Code | 914401017462725710 |
| Changes in the Company's main businesses since listing (if any) | None |
| Changes of controlling shareholder (if any) | None |
V. Other Relevant InformationCPA firm engaged by the Company
| Name | Huaxing Certified Public Accountants LLP |
| Office address | Floor 7-9, Block B, Zhongshan Building, No. 152 Hudong Road, Gulou District, Fuzhou City, Fujian Province |
| Name of signing accountants | Chen Danyan, He Ting |
Sponsor engaged by the Company to fulfill continuous supervision obligation during the reporting period
□ Applicable ?Not applicable
Financial advisor engaged by the Company to fulfill continuous supervision obligation during the reporting period
□ Applicable ?Not applicable
VI. Main Accounting Data and Financial IndicatorsWhether the Company needs to perform retrospective adjustment or restatement of accounting data for previous years
□ Yes ?No
| 2022 | 2021 | Changes over last year | 2020 | |
| Revenue (RMB) | 2,884,841,760.82 | 2,719,989,257.14 | 6.06% | 2,303,326,211.84 |
| Net profit attributable to shareholders of the listed company (RMB) | 727,597,822.61 | 624,541,483.00 | 16.50% | 498,822,424.55 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profit and loss (RMB) | 670,578,894.32 | 580,283,266.50 | 15.56% | 463,280,686.95 |
| Net cash flow from operating activities (RMB) | 942,236,033.82 | 897,523,638.07 | 4.98% | 636,849,599.20 |
| Basic earnings per share (RMB/share) | 1.28 | 1.15 | 11.30% | 0.95 |
| Diluted earnings per share (RMB/share) | 1.28 | 1.15 | 11.30% | 0.94 |
| Weighted average return on equity | 19.35% | 21.73% | -2.38% | 22.97% |
| End of 2022 | End of 2021 | Changes over the end | End of 2020 |
| of last year | ||||
| Total assets (RMB) | 5,578,885,921.48 | 4,862,956,852.42 | 14.72% | 3,748,598,697.97 |
| Net assets attributable to shareholders of the listed company (RMB) | 4,130,033,512.93 | 3,245,441,596.49 | 27.26% | 2,416,825,789.61 |
The lower of the net profits before and after deducting the non-recurring profit and loss in the most recent three accounting years isall negative, and the audit report of the most recent year shows that the Company’s ability to continue operations is uncertain
□ Yes ?No
The lower of the net profits before and after deducting the non-recurring profit and loss is negative
□ Yes ?No
VII. Difference in Accounting Data under Domestic and International AccountingStandards
1. Net profit and net asset differences under International Financial Reporting Standards (IFRS) andChinese Accounting Standards (CAS)
□ Applicable ?Not applicable
There is no such differences during the reporting period
2. Net profit and net asset differences under foreign accounting standards and Chinese AccountingStandards (CAS)
□ Applicable ?Not applicable
There is no such differences during the reporting period
VIII. Major Financial Indicators by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Revenue | 810,420,572.37 | 502,820,028.70 | 911,552,297.05 | 660,048,862.70 |
| Net profit attributable to shareholders of the listed company | 212,692,757.27 | 82,131,719.86 | 278,666,725.94 | 154,106,619.54 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profit and loss | 201,656,919.76 | 63,812,113.24 | 268,496,069.34 | 136,613,791.98 |
| Net cash flows from operating activities | 466,607,840.66 | 50,446,630.57 | 273,682,048.04 | 151,499,514.55 |
Whether there are significant differences between the above-mentioned financial indicators or its total number and the relevantfinancial indicators disclosed in the Company’s quarterly reports and semi-annual report
□ Yes ?No
IX. Non-recurring Items and Amounts
?Applicable □ Not applicable
Unit: RMB
| Item | Amount in 2022 | Amount in 2021 | Amount in 2020 | Description |
| Gains or losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | 1,757,902.41 | -411,065.65 | -54,727.43 | |
| Governmental grants reckoned into current profits/losses (excluding grants enjoyed in quota or ration according to national standards, which are closely relevant to the Company’s normal business) | 23,247,374.45 | 14,577,835.79 | 19,663,426.38 | |
| Gains or losses from debt restructuring | 104,009.33 | |||
| Gains or losses from changes in fair value of financial assets and financial liabilities held for trading, and investment income from the disposal of financial assets and financial liabilities held for trading and available-for-sale financial assets, excluding the effective hedging business related to the normal operation of the Company | 5,219,168.76 | 3,424,832.00 | 425,333.33 | |
| Reversal of write-down for receivables whose impairment was tested individually | 1,944,412.53 | |||
| Other non-operating revenue and expenses except for the aforementioned items | 441,307.62 | -4,924,109.89 | -980,592.68 | |
| Other profit and loss items that qualify the definition of non-recurring profit and | 39,121,856.42 | 38,711,860.90 | 24,501,459.48 |
| loss | ||||
| Less: Influence of income tax | 12,768,681.37 | 9,169,558.51 | 8,013,161.48 | |
| Total | 57,018,928.29 | 44,258,216.50 | 35,541,737.60 | -- |
Details of other profit and loss items that qualify the definition of non-recurring profit and loss:
?Applicable □ Not applicableDuring the reporting period, the Company had RMB39,121,856.42 of other profit and loss items that qualify the definition of non-recurring profit and loss, which were the income from wealth management products.Descriptions where the Company defines any non-recurring profit and loss items listed in the No. 1 Explanatory Announcement onInformation Disclosure of Companies Offering Securities to the Public—Non-recurring Profit and Loss as recurring profit and lossitems during the reporting period
□ Applicable ?Not applicable
The Company did not define any non-recurring profit and loss items listed in the No. 1 Explanatory Announcement on InformationDisclosure of Companies Offering Securities to the Public—Non-recurring Profit and Loss as recurring profit and loss itemsduring the reporting period.
Section III Discussion and Analysis of the ManagementI. Status of the Industry to Which the Company Belongs during the Reporting PeriodThe Company shall comply with the information disclosure requirements on the textile and garment-related industries as stipulatedin the SZSE Guidelines No. 3 for the Self-discipline and Supervision of Listed Companies — Industry Information Disclosure.
1. With the continued recovery of the global luxury goods market, the domestic luxury goods market is growing strongly.In 2022, the global luxury goods market showed continued recovery and reached a value of RMB2.545 trillion, an increase of 17%year-on-year. The fast growth has been especially represented in leading luxury brands, with the average market size up by morethan 30% compared with 2019. Pursuant to the 2022 China Luxury Report published by Yaok Institute, a professional research andconsulting organization in the field of China’s high-end consumption, the Chinese luxury market (i.e. at home and abroad) reachedRMB956 billion in 2022, contributing a 38% share of the global luxury market. Chinese people remain the most important force inglobal luxury consumption. Meanwhile, the domestic sales of luxury goods demonstrated a strong momentum.
2. Chinese garment companies are developing towards the high-end and brand-oriented trend, and there is broad room forhigh-end brands and brands with high quality/price ratio.China has experienced several decades of fast economic development, and the consumption level of Chinese residents hasimproved significantly, laying a solid foundation for the development of the garment industry. According to the Investigation andAnalysis Report on the Development and Consumption Trend of China’s Garment Industry 2022-23 recently released by theiiMedia Research, the retail sales of apparel goods of enterprises above designated size in China reached RMB997.46 billion in2021. Under the boost of the Outline of the 14th Five-Year Plan for Textile Industry and other policies to promote the developmentand consumption of the clothing industry, sales of the clothing market improved significantly in 2021. Pursuant to data of the
National Bureau of Statistics, the cumulative retail sales of apparel goods of enterprises above designated size were RMB189.48billion in January and February 2023, up by 6.4% year-on-year; the growth rate is 14.1 percentage points higher than that of 2022.In the future, China’s garment companies will continue to develop towards a high-end and branded trend and will be furtherrecognized by consumers. It is expected that the retail sales will reach RMB1.10718 trillion in 2025.
In addition, with enhanced comfort and design, domestic upmarket menswear brands are increasingly accepted by the market, sothey have accelerated the pace to open up more stores. With the gradual recovery, there will be huge market space for domesticupmarket menswear brands with strong product quality, high brand recognition, and continuously upgraded channel formats.
3. With the rise of outdoor sports, high-end outdoor apparel brands experience a massive surge.In recent years, under the influence and boost of various factors, short-distance tours around the local area have been booming,driving the surge of outdoor sports such as mountaineering, hiking, cycling, Frisbee, camping, and land surfing. The campingindustry registered a growth rate of 22.2% and 62.5% in 2020 and 2021, respectively. In 2022, the camping market grew 18.6% toRMB35.46 billion. According to the Report on China’s Camping Industry Status and Consumption Behavior 2021-22 published byiiMedia Research, the core market size of China's camping economy is expected to reach RMB248.32 billion in 2025, which willdrive the entire market size to RMB1.44028 trillion.In November 2022, the Ministry of Culture and Tourism of the P.R.C., in joint efforts with other departments, promulgated theGuiding Opinions on Promoting the Healthy and Orderly Development of Camping Tourism and Leisure, which proposes anobjective of RMB3 trillion for the outdoor sports industry in 2025, thereby hitting the “accelerator” for outdoor activities.Data of LeadLeo Research Institute shows that China’s new middle class has swollen from 53 million in 2010 to 400 million.According to a survey conducted by DT Finance, 86% of the new middle class participates in outdoor activities in daily life, ofwhich 66.2% are regular outdoor goers. As a result, with the rise of outdoor sports and the increase of the new middle class, theconcept of high-quality and refined consumption will drive the massive surge of upmarket outdoor apparel brands.
4. As Gen Z appears on the horizon, casual wear, sportswear and “China-chic” styles enjoy high popularity.In accordance with the Investigation and Analysis Report on the Development and Consumption Trend of China’s GarmentIndustry 2022-23 released by the iiMedia Research, the young and middle-aged and Gen Z constitute the main consumers ofChina’s garment industry, accounting for 84.8% in total. The top three apparel styles preferred by Chinese consumers are casualwear, sportswear, and what’s trending in the season, taking up 59.5%, 45.6% and 29.0%, respectively.As the per capita disposable income of Chinese residents and the proportion of urban population increase year by year, a higherproportion of Gen Z lives in cities, who are characterized by better material conditions, greater spending power, higher values andstronger brand viscosity. They have a greater acceptance of “China-chic” brands. “China-chic” products are embedded with theattributes of traditional Chinese cultural IPs, which have attracted a large number of new-generation consumers, with increasinglyhigher influence in the apparel industry.During the reporting period, there were no significant changes to national taxation, import and export policies that would exert asignificant impact on the Company against the industry to which the Company belongs.
II. Principal Businesses of the Company during the Reporting PeriodThe Company shall comply with information disclosure requirements on the textile and garment-related industries as stipulated inthe SZSE Guidelines No. 3 for the Self-discipline and Supervision of Listed Companies — Industry Information Disclosure.(I) Principal BusinessesBIEM.L.FDLKK Garment Co., Ltd. mainly engages in garment research and design, brand promotion and digital operation,marketing network construction and supply chain management. Adhering to the positioning of a high-end fashion sportswearbrand, the Company focuses on its principal businesses. The Company has established a core value of “one dedication and threehaves”, i.e. dedication to principal business and continuous innovation, and having passion, resilience and responsibility, and hasdefined being “international, upmarket, youthful and standardized” as its goals in the current stage. It is dedicated to meeting themulti-scenario dressing needs of the elites for the pursuit of a refined and beautiful life, with a brand design concept of “threehighs and one innovation”, i.e. “high quality, high taste, high technology and innovative spirit”. Upholding the mission of“continuously creating values for consumers”, the Company aims to build a century-old, world-renowned clothing group.
The Company focuses on the garment sector and implements a multi-brand strategy. Priority is given to the cultivation of corecompetitiveness, so as to build a leading brand in the sector. Currently, the Company owns three brands: BIEM.L.FDLKK, GolfFashion and CARNAVAL DE VENISE.
1. BIEM.L.FDLKK brand
The BIEM.L.FDLKK brand targets at the segment combining golf and fashionable and casual life. Continuous product innovation,brand power enhancement, and channel expansion have driven the high growth of the brand. The Company intends to build it into
an upmarket casual sportswear brand. The BIEM.L.FDLKK brand comprises Life series, Fashion series, and Palace Culture series.
(1) Life series
BIEM.L.FDLKK Life seriesThe Life series adopt internally-renowned fabrics and accessories, ultimate craftsmanship and brilliant designs to ensure highquality and high taste. The series target at consumers who are keen on casual, comfortable, low-key and luxurious clothing, andpay attention to their own image and influence.
(2) Fashion series
BIEM.L.FDLKK Fashion seriesThe Fashion series integrate elements of international trends and use high-quality fabrics and acme tailoring to ensure the fashionsense and quality of the products. The series target at young consumers with a taste for personality and accessible luxury.
(3) Palace Culture series co-branded with the Forbidden City
BIEM.L.FDLKK Palace Culture seriesThe Palace culture of the Forbidden City is a symbol of nobility and classics, which has withstood the changes of the times withendless new vitality. Golf is the representative of aristocratic culture. The Company combines the design essence and spiritual
charm of the two and gives them a new taste and charm with quality craftsmanship, to show the national confidence ofcontemporary Chinese people. Under continued, in-depth cooperation with the Palace culture of the Forbidden City and theintangible cultural heritage of Su embroidery, the Company has successively launched a series of co-branded products, including“Zhen Dou Yi Ni” (the Emperor is at your service), “Tian Guan Ci Fu” (heaven official’s blessing), “Fu Lu Shou” (three gods offortune, prosperity and longevity), “Feng Tian Cheng Yun” (Mandate from Heaven), “Rui Hu You Fu” (tiger sending blessing),and “Yu Tu Chao Yuan” (rabbit paying respect to the moon at the beginning of the New Year). These joint products bring trendyclothes with signature Chinese styles to consumers.
2. Golf Fashion brand
The Golf Fashion brand is positioned as a high-end fashion sportswear. Using the world’s leading functional fabrics andintegrating characteristics of golf and other outdoor sports into design, the products boast both functionality and comfort. Targetconsumers are enthusiasts of golf and other outdoor sports who value sports, fashion and functionality.
Golf Fashion brandThe Golf Fashion brand is derived from the Company’s high-end fashion series and adheres to the style of being “young,fashionable and innovative”. Under the leadership of the new Korean designer, the fashion sense of the brand has been improvedand SKUs have been enriched. The Company has opened separate stores for the Golf Fashion brand, which will further enhancethe consumption experience of high-end consumers for fashionable sportswear.
3. CARNAVAL DE VENISE brand
The CARNAVAL DE VENISE brand () is positioned to tap the blue ocean market of vacation and travelapparel, focusing on matching clothes for families and couples. Focusing on a segmented market, the products can satisfy themulti-scenario dressing needs of middle-class consumers in high-quality travels. It is hoped that when people think of vacationtravel apparel, CARNAVAL DE VENISE would be the first to pop up in their minds.During the reporting period, the CARNAVAL DE VENISE brand () furthered cooperation with Snoopy andadded the Doraemon series, a well-known Japanese IP. In the future, the Company will launch more designer joint series and
cross-brand joint series, to meet the demands of middle-class consumers for themed and cultural products.
CARNAVAL DE VENISE () 2023 Spring/Summer Collection(II) Business models of the Company
1. Operation model: committed to high value-added links on the business chain such as product design and developmentand brand operationAs the operator of a domestic high-end fashion sportswear brand, the Company adopts the “dumbbell” business model; that is, itfocuses on the core upstream links with high value addition such as product design and development, brand operation,development and control of sales channels, and outsources links of low value addition such as production, transportation anddistribution. Such a business model takes on the “U-shaped smile curve” with division of labor in the industry chain as thehorizontal axis and value addition as the vertical axis.
U-shaped smile curve
2. Design and development model: building high-end, differentiated products with ingenuity and craftsmanshipAdhering to the product design and development concept of “three highs and one innovation”, i.e. high quality, high taste, hightechnology, and innovative spirit, the Company improves the taste and cultural connotations of products through fabric innovation,process innovation, plate innovation, and crossover design innovation. It strives to offer consumers with high-value products andmeet their differentiated demands in consumption upgrading.The product design and development process of the Company mainly comprises four stages: market data analysis and forecast,conception and initial design, plate making and review, verification on ordering meetings and design finalization
3. Sales model: online + offline omni-channel layout
The Company mainly adopts a sales model of direct sales plus franchise, and it boasts obvious advantages in offline channels. Thestores of the Company are divided into company-operated stores and franchise stores. Currently, the Company mainly sets upcompany-operated stores in the first- and second-tier cities and franchise stores in other cities.Meanwhile, the Company makes active deployments in digital new retail channels, and has opened flagship stores on Tmall, JDand Vipshop. Livestream shopping and recommendations on Xiaohongshu (Little Red Book), TikTok and WeChat mini-programsare also utilized to tap customers with high stickiness and products with high repurchase rates. An omni-channel layout has beenbuilt with the integration of offline and online channels.
Channel layout of the Company(III) Status of the Company in the industry
1. Taking up the largest market share for five consecutive years, T-shirts have become a super category of the Company.According to a statistical survey on T-shirt sales of national large-scale retail enterprises conducted by the China General Chamberof Commerce and the China National Commercial Information Center, the comprehensive market share (weighted average ofmarket share by volume and market coverage) of BIEM T-shirts dwarfed other brands of the same category for five consecutiveyears (2018-2022). Judging from the sales volume for five consecutive years, T-shirts have become a super category of theCompany.
From 2022 onwards, the Company started to tap the advantages of the category and implemented strategic upgrading under thedriving of a single category, with a view to building itself into the “T-shirt Expert”. This could facilitate the further open-up ofmarket space. In accordance with data of the Report on Market Panoramic Survey of China's T-shirt Industry and InvestmentEvaluation 2020-2025 published by ACADEMIA SINICA, billions of T-shirts are sold each year worldwide. As a majorconsumption market of T-shirts, China consumes more than 3 billion T-shirts annually. When China’s per capita GDP exceededUS$3,000, people would raise higher demands for apparels' quality and taste. Therefore, high-end T-shirts will occupy greater
market space.
2. Golf Fashion series rank first in overall market share for six consecutive years (2017-2022).According to a statistical survey on national large-scale retail enterprises conducted by the China General Chamber of Commerceand the China National Commercial Information, the Company’s Golf Fashion series ranked the first in comprehensive marketshare (weighted average of market share by volume and market coverage) among the same category in 2022, which has beenmaintained for five consecutive years (2017-2022).
In 2022, the Company opened independent stores and initiated independent operations for high-end sports series. Positioned ashigh-end fashion sportswear, the Golf Fashion series aim to provide high-value experience to enthusiasts of golf and other outdoorsports who value fashion and functionality. Opening independent stores for the series could further enhance the experience of high-end consumers toward fashion sportswear.
3. Continue to sponsor the China National Golf Team and firmly occupy the leading position in the domestic professionalgolf apparel market.The Company and the China National Golf Team embarked on a journey of partnership in 2013. Now, eight years later, the two
parties have renewed the sponsorship for another eight years. The Company continuously provides professional training andcompetition uniforms for the national team with constant innovations and the craftsmanship spirit. The uniforms have witnessedChinese national confidence and Chinese brand confidence in international competitions such as the Olympic Games and theWorld Cup. This is our way of contributing to China’s golf industry. In 2022, BIEM.L.FDLKK researched and designed uniformsfor the national team to help them prepare for the Hangzhou Asian Games. Next, the Company will design new five-star uniformsfor the national team to help them compete in the Paris 2024 Olympics and win glory for the country.
Themed photos featuring the China National Golf Team and BIEM.L.FDLKK products shot at the 73th anniversary of the
founding of the People’s Republic of ChinaCelebrating the motherland’s birthday in the name of youth and passion, and demonstrating the national responsibility of a high-
end sportswear brandIII. Analysis of Core Competitiveness(I) Competitiveness in respect of brand: differentiated brand positioning + golf gene + multi-brand strategyIn terms of brand positioning, the Company has accurately grasped the form and spirit of the golf sport and golf apparel. Theproducts give a distinct golf visual cognition to consumers. The Company, with the spirit of craftsmanship, has showcased the“sunshine, healthy, and self-confidence” culture of the golf sport in its products. By advocating the healthy and slow life conceptof golf, it has formed a unique brand tonality in terms of brands, products, styles and culture with differentiated positioning. Golfculture has become the cultural gene of the Company’s brands. After years of accumulation, the Company has forged an image of adifferentiated “big brand” in the minds of consumers.Through the multi-brand development and differentiated market positioning strategy, the Company continues to focus on qualitysegmented markets. The BIEM.L.FDLKK brand has formed a comprehensive and quality product system that comprises the Lifeseries, Fashion series and Palace Culture series. The brand provides fashionable and trendy products with signature Chinese
elements to meet the differentiated needs of consumers in different scenarios.The Golf Fashion brand targets at the professional golf apparel segment and digs deep into potentials of the high-end casualsportswear market with professional, youthful and fashionable products.The CARNAVAL DE VENISE brand () focuses on the vacation travel market. The Company intends to build anew brand worth tens of billions that would pop up in the minds of consumers whenever they think of vacation travel apparel.
BIEM.L.FDLKK Brand Ambassador——Wu Zun(II) Competitiveness in respect of products: innovation driven + three “highs” + proficient design and development teamProducts are the core of brands while quality is the lifeline of brands. Adhering to the product design and development philosophyof “three highs and one innovation”, i.e. high quality, high taste, high technology, and innovative spirit, the Company strives tooffer “three highs” products to consumers through innovation and pursuit of high-quality fabrics, bright colors, novel styles andfine workmanship. In order to ensure product quality, the Company insists on strictly selecting high-grade and high-performancefabrics and maintains stable cooperative relations with renowned fabric suppliers in Italy, South Korea and Japan that are alsopartners of international top brands. Technical and R&D staff of the Company regularly communicated with fabric suppliers.Sometimes, joint efforts are made to conduct targeted development based on style characteristics of the Company's products.The Company is equipped with a high-quality design and development team, who have years of experience in the design of luxurybrands and golf apparel series of international well-known brands. They are highly proficient in aspects like design concepts, colorapplication, process design and performance, fabric processing and grasping, etc. When it comes to design, priority is given to theuse of new technologies, new techniques and high-tech fabrics. Under the guidance of cross-border design concepts, sportselements, leisure elements and fashion elements are fused to achieve the unity of functionality and aesthetics. Each year, theCompany’s design department will come up with over a thousand designs, which is a testimony to its strong R&D and designcapabilities. Up to now, the Company has 143 invention patents and utility model patents. In the future, the Company will continueto increase investment in research and development and continuously improve the competitive edges of its products through fabricinnovation, plate optimization, design breakthroughs and cultural empowerment.(III) Competitiveness in respect of channels: quality offline channels + digital new retailThe Company has built a marketing network with coverage of all models featuring “quality offline channels + digital new retail”.Wherein, the quality offline channels have covered high-end department stores, shopping centers, airports, high-speed rail hubsand golf courses throughout the country. As of December 31, 2022, the Company’s marketing network has made presence in 31
provinces, autonomous regions and municipalities, including core business districts, high-end department stores, airports, well-known golf clubs, etc. The number of stores at the end of 2022 reached 1191, up by 91 compared with the end of 2021, of which579 were company-operated stores and 612 were franchise stores.Moreover, in terms of digital new retail, the Company actively deploys online channels and carries out in-depth cooperation withe-commerce platforms. Through livestreaming platforms, it steers quality VIP customers from offline to online. An “offline +online” channel layout could provide consumers with more choices and more convenient services.(IV) Competitiveness in respect of marketing: integrated marketing + precision marketingThe Company, closely focusing on main target consumer groups, implements integrated marketing from commodity planning,product design, terminal visual image, and window advertising to product display, brand endorsement and planning of marketingactivities. As products of the Company are positioned at high end, the Company has analyzed the habits of target consumer groupsand adopted a series of new media marketing measures thereupon. A matrix of measures including celebrity endorsement, sportscompetition sponsorship, entertainment marketing, event marketing, and contribution to public welfare activities wereimplemented, to continuously enhance brand awareness and reputation.
(V) Competitiveness in respect of management: long-term stable team + experienced managementThe Company boasts a management team with rich experiences, consistent philosophy, aggressiveness, dedication andperseverance. They have a deep and thorough understanding of China’s golf apparel culture and market. Core executives havebeen granted shares of the Company, thereby guaranteeing the stability and sustained development of the management.Meanwhile, with years of experience in the industry, the management has a rather clear idea about the Company’s positioning,development strategies and management improvement. The Company has established a business process catering to brand andcorporate operations, a terminal management system with strong control, a supply chain system with fast responses, and astandardized decision-making and execution mechanism over years of development. All these could ensure its healthy and fastdevelopment.
IV. Analysis of Principal Businesses
1. Overview
(I) Financial performancesDuring the reporting period, the Company recorded a total revenue of RMB2.885 billion, an increase of 6.06% over the previousyear. The operating profit and total profit were RMB855 million and RMB856 million, respectively, up by 15.93% and 16.78%,respectively, over the previous year. In addition, the Company posted a net profit attributable to shareholders of the listed companyof RMB728 million and basic earnings per share of RMB1.28, a YoY increase of 16.5% and 11.30%, respectively. Overall, theCompany maintained steady growth during the reporting period.
(II) Operations
1. Strengthen the construction of corporate culture and gradually internalize “responsibility and perfection” into behaviorguidelines and standards.Adhering to the vision of “building a century-old, world-renowned clothing group” and the mission of “continuously creatingvalues for consumers”, the Company has established a corporate value of “one dedication and three haves”, i.e. dedication toprincipal business and continuous innovation, and having passion, resilience and responsibility. In addition, it has defined its coreculture as “responsibility and perfection”. During the reporting period, the Company continued to strengthen the construction ofcorporate culture and gradually internalized “responsibility and perfection” into behavior guidelines and standards, thereby layingthe foundation for its long-term development.
2. Focus on T-shirts and build the “first T-shirt brand” that would pop up in the minds of consumers whenever they thinkof T-shirts.During the reporting period, based on its own advantages, the Company has launched a strategic upgrade plan of drivingdevelopment with a single category. By introducing the new slogan “BIEM.L.FDLKK, T-shirt Expert”, the Company focuses onthe T-shirt category and hopes to build itself into the “first T-shirt brand” that would pop up in the minds of consumers wheneverthey think of that category. This could help the Company to further open up market space. In 2022, the Company launched anintegrated marketing campaign for collared T-shirts and the T-shirt Festival activity. Through such activities as the creation ofbestsellers, brand festivals, and online-offline integrated marketing, collared T-shirts have become a top-selling item of theCompany. According to the statistical data of China General Chamber of Commerce and the China National CommercialInformation Center, T-shirts of the Company have taken up the first place in comprehensive market share (weighted average ofmarket share by volume and market coverage) for five consecutive years (2018-2022). T-shirt has become a super category of theCompany.
3. Establish the Golf BU to seize the high-end fashion sportswear market.
With the rise of outdoor sports and the support of a series of state policies, the domestic upmarket sportswear market has become anew opportunity. During the reporting period, the Company spun off the original high-end sports series into the Golf Fashionbrand and established the Golf BU accordingly with independent operations. Positioning at a style of being “young, fashionableand innovative”, the Golf Fashion brand aims to offer high-value experience for golf enthusiasts who value sports, fashion andfunctionality.
4. Continue to team up with the Forbidden City and explore the Palace Culture IP to shape the core of brand culture.During the reporting period, the Company continued to co-brand with the Forbidden City to further explore the Palace Culture IP.On August 23, 2022, BIEM.L.FDLKK and Mr. Zhang Xue, the inheritor of intangible cultural heritage Su embroidery craft,concluded a 12-year agreement to jointly create trending high-end products with Chinese cultural characteristics. In the autumn of2022, the two parties added another series to the Palace Culture IP — “Rui Hu You Fu” (tiger sending blessing).
The Company, through continued cooperation with the Palace Culture IP of the Forbidden City and Mr. Zhang Xue, intends tolaunch trendy clothes with oriental charm under the inspiration of the traditional culture and Palace elements. The clothes becomea language to tell the story of “China-chic” such that consumers can feel the charm of traditional Chinese culture. In addition, thiscould help shape the cultural core of the Company’s brands.
5. Build products of “three highs” quality and differentiation with craftsmanship spirit.The Company continued to invest highly into product research and development during the reporting period. Efforts have beenmade to integrate international high-quality fabric resources, introduce outstanding R&D and design talents both at home andabroad, and foster a designer team with an international horizon. With craftsmanship, every product is endowed with “high quality,high taste and high-tech content”. The Company strives to create scarce, differentiated and high-end products through constantinnovations and pursues excellence in every piece of clothes by pooling resources throughout the world.In the winter of 2022, the Company again teamed up with French design master SAFA SAHIN and jointly launched the Dad Shoes
2.0 series. As a continuation of the classics but with innovations, the new series adopt contrasting colors and splicing designs ofdifferent materials and bring a new wearing experience to consumers.In 2022, the Company continued to upgrade the monogram patters and incorporated golf and green flag elements into its signature“BG” letters. There are infinite possibilities for the combinations of golf elements and the “BG” letters. By fusing brand featuresand classic imprinting techniques, combined with exquisite weaving details and matching sports style tailoring, the products caninherit the classics while setting trend with subtle changes. The Company intends to build the series into a super symbol of high-end brands that can continuously inject new cultural genes into brands.
BIEM.L.FDLKK x SAFA SAHIN Dad Shoes
6. Continue to consolidate brand power, enhance brand awareness and reputation, and demonstrate the glamor of anational brand.In 2022, in order to deepen the core of brand culture and enhance brand influence, the Company conducted strategic upgrade. Avariety of initiatives were taken, such as focusing on the core category of T-shirts, defining the new slogan of “BIEM.L.FDLKK,T-shirt Expert”, and implementing a multi-pronged approach including event promotion, advertising, entertainment marketing,event marketing, etc.
(1) Event promotion: promoting brand influence through multiple channels and dimensions
1) Mr. Xie Bingzheng, Chairman of the Board, was invited to a program of CCTV Finance and told the story behind thegrowth of both revenue and net profit in eleven consecutive years.On May 20, 2022, Chairman of the Company Mr. Xie Bingzheng appeared on “Finance Interview · Reading Financial Reports”, aprogram of CCTV Finance. Being aired on the national authoritative media has further elevated the credibility and authority of theCompany.
2) Strengthen the construction of culture-based brand spirit.
During the reporting period, the Company joined forces with the Forbidden City and Mr. Zhang Xue, the inheritor of intangiblecultural heritage Su embroidery, and created the Palace Culture series under the inspiration of the traditional culture and Palace
elements. The clothes become a language to tell the story of “China-chic”. Meanwhile, the Company cemented a 12-yearagreement with Mr. Zhang Xue, to convey the beauty of traditional Chinese culture with works and craftsmanship of masters.
3) Hold fast to tradition while being innovative, win over time and achieve high growth across cycles with long-terminsistence.On December 30, 2022, Wu Xiaobo, a well-known financial expert, made an in-depth analysis of BIEM.L.FDLKK in his year-endshow, believing that the reason for BIEM.L.FDLKK’s high growth across cycles in 20 years was long-term insistence on traditionand innovation.
4) Strengthen bonds with VIPs using emotion as the link.
The Company launched the country’s first salon themed on the intangible cultural heritage Su embroidery in 2022. Mr. Zhang Xue,
the inheritor of Su embroidery, was invited to the site to demonstrate the skills and techniques of Su embroidery. Such activitiescould create exclusive royal cultural experience and thereby deepen the core of its cultural spirit.
5) Enhance consumer experience and brand stickiness with creative activities.
In the first half of 2022, the Company held the “Making Leather by Hand” activity in stores across the country. A variety of VIPactivities at terminal stores have enhanced consumer loyalty.
(2) Entertainment marketing: comprehensively consolidating brand awareness and reputation via the matrix of celebritiesand KOLsDuring the reporting period, the Company carried out in-depth cooperation with a number of celebrities including Wang Yaoqing,Wu Xuanyi, Wu Zun, Li Xiaoran, and Liu Mintao, and worked with well-known fashion media such as Shang Cheng Shi and
Voyage to improve brand awareness and disseminate the elite dressing culture. The linkages of multiple dimensions includingcelebrity matrix communication, celebrity endorsement, and celebrity street style photos have enhanced brand reputation andpopularity.
1) Promote brand influence through the matrix communication of celebrities.
2) Promote brand recognition through recommendations of KOLs from various dimensions and channels especiallyknowledge KOLs and dressing KOLs.During the reporting period, the Company further improved the KOL matrix on social media platforms such as Xiaohongshu and
TikTok. Diversified topics on social media and a large number of UGC contents could attract the attention of more users,especially the young people.
3) Enhance brand influence and popularity through cooperating with popular films and TV drams such as The Lion'sSecret.
(3) Enhance brand exposure by increasing advertising efforts.
In 2022, the Company increased advertising efforts on high-speed rail. Through screens at railway stations and on trains, theCompany is able to convey its brand concepts and cultural values to hundreds of millions of users, thereby increasing brandexposure.
(4) Event marketing: digging deep in the golf category and further consolidating brand positioningThe Company has continuously consolidated its brand status by helping the national team prepare for international events such asHangzhou Asian Games and cooperating with a number of well-known domestic amateur events.
2. Revenue and cost
(1) Composition of revenue
Unit: RMB
| 2022 | 2021 | YoY changes | |||
| Amount | Proportion in revenue | Amount | Proportion in revenue | ||
| Total revenue | 2,884,841,760.82 | 100% | 2,719,989,257.14 | 100% | 6.06% |
| By industry | |||||
| Garment and apparel | 2,884,841,760.82 | 100.00% | 2,719,989,257.14 | 100.00% | 6.06% |
| By product | |||||
| Tops | 1,262,647,306.22 | 43.77% | 1,155,253,965.36 | 42.47% | 9.30% |
| Bottoms | 613,119,968.34 | 21.25% | 577,413,010.84 | 21.23% | 6.18% |
| Jackets | 761,869,806.27 | 26.41% | 760,953,959.00 | 27.98% | 0.12% |
| Others | 247,144,658.56 | 8.57% | 226,323,052.12 | 8.32% | 9.20% |
| Revenue from other businesses | 60,021.43 | 0.00% | 45,269.82 | 0.00% | 32.59% |
| By region | |||||
| Northeast China | 285,802,804.81 | 9.91% | 257,702,259.73 | 9.47% | 10.90% |
| North China | 455,529,568.34 | 15.79% | 438,055,235.73 | 16.11% | 3.99% |
| East China | 558,880,108.12 | 19.37% | 509,188,940.50 | 18.72% | 9.76% |
| South China | 571,773,995.27 | 19.82% | 599,071,826.19 | 22.02% | -4.56% |
| Central China | 234,916,443.89 | 8.14% | 199,039,149.25 | 7.32% | 18.03% |
| Northwest China | 132,822,171.31 | 4.60% | 140,100,579.39 | 5.15% | -5.20% |
| Southwest China | 477,160,024.28 | 16.54% | 454,255,647.71 | 16.70% | 5.04% |
| E-commerce | 167,956,644.80 | 5.82% | 122,575,618.64 | 4.51% | 37.02% |
| By sales model | |||||
| Online sale | 167,956,644.80 | 5.82% | 122,575,618.64 | 4.51% | 37.02% |
| Direct sale | 1,779,943,248.67 | 61.70% | 1,914,079,312.33 | 70.37% | -7.01% |
| Franchise sale | 936,941,867.35 | 32.48% | 683,334,326.17 | 25.12% | 37.11% |
(2) Industries, products, regions or sales models that accounted for over 10% of the Company’s revenue or operating profit?Applicable □ Not applicableThe Company shall comply with information disclosure requirements on the textile and garment-related industries as stipulated inthe SZSE Guidelines No. 3 for the Self-discipline and Supervision of Listed Companies — Industry Information Disclosure.
Unit: RMB
| Revenue | Cost of revenue | Gross profit margin | YoY changes of revenue | YoY changes of cost of revenue | YoY changes of gross profit margin | |
| By industry | ||||||
| Garment and apparel | 2,884,841,760.82 | 652,016,624.24 | 77.40% | 6.06% | 2.82% | 0.71% |
| By product | ||||||
| Tops | 1,262,647,306.22 | 253,822,996.18 | 79.90% | 9.30% | 5.60% | 0.71% |
| Bottoms | 613,119,968.34 | 124,278,398.85 | 79.73% | 6.18% | 6.74% | -0.11% |
| Jackets | 761,869,806.27 | 183,833,850.51 | 75.87% | 0.12% | -3.40% | 0.88% |
| Others | 247,144,658.56 | 90,081,378.70 | 63.55% | 9.20% | 3.48% | 2.01% |
| Revenue from | 60,021.43 | 100.00% | 32.59% | |||
| other businesses | ||||||
| By region | ||||||
| Northeast China | 285,802,804.81 | 68,013,238.57 | 76.20% | 10.90% | 3.24% | 1.76% |
| North China | 455,529,568.34 | 90,796,796.40 | 80.07% | 3.99% | 3.56% | 0.08% |
| East China | 558,880,108.12 | 108,188,132.90 | 80.64% | 9.76% | 1.80% | 1.51% |
| South China | 571,773,995.27 | 140,865,110.31 | 75.36% | -4.56% | 1.02% | -1.36% |
| Central China | 234,916,443.89 | 52,149,408.42 | 77.80% | 18.03% | 9.32% | 1.77% |
| Northwest China | 132,822,171.31 | 25,617,061.98 | 80.71% | -5.20% | -10.50% | 1.14% |
| Southwest China | 477,160,024.28 | 104,956,701.00 | 78.00% | 5.04% | 6.65% | -0.34% |
| E-commerce | 167,956,644.80 | 61,430,174.66 | 63.42% | 37.02% | 2.13% | 12.49% |
| By sales model | ||||||
| Online sale | 167,956,644.80 | 61,430,174.66 | 63.42% | 37.02% | 2.13% | 12.49% |
| Direct sale | 1,779,943,248.67 | 318,595,594.74 | 82.10% | -7.01% | -11.87% | 0.99% |
| Franchise sale | 936,941,867.35 | 271,990,854.84 | 70.97% | 37.11% | 27.98% | 2.07% |
Where the statistical standards for the Company’s principal business data were adjusted in the reporting period, and, if yes,principal business data of the Company in the recent year after being adjusted as per the new statistical standards
□ Applicable ?Not applicable
Whether the Company has physical stores and sales terminals?Yes □ NoDistribution of physical stores
| Type of store | Number of stores | Area of stores | Number of new stores opened in the period | Number of stores closed in the period | Reason for close | Brands involved |
| Company-operated stores | 579 | 86,458 | 84 | 37 | Mainly due to expiration of contract, adjustment of stores, etc. | BIEM.L.FDLKK, CARNAVAL DE VENISE |
| Franchise stores | 612 | 100,313 | 80 | 36 | Mainly due to expiration of contract, adjustment of stores, etc. | BIEM.L.FDLKK, CARNAVAL DE VENISE |
Total area and efficiency of company-operated storesTop 5 stores by revenue
| No. | Name of store | Date of opening | Revenue (RMB) | Sales per square meter (RMB) |
| 1 | Store 1 | November 14, 2007 | 40,309,759.25 | 44,100 |
| 2 | Store 2 | July 01, 2012 | 31,413,278.76 | 99,700 |
| 3 | Store 3 | April 27, 2007 | 19,995,361.06 | 121,200 |
| 4 | Store 4 | April 01, 2015 | 19,320,246.90 | 149,800 |
| 5 | Store 5 | March 01, 2003 | 18,646,838.05 | 79,000 |
| Total | 129,685,484.02 | 73,700 |
Where there were new stores of the listed company?Yes □ No
The Company had 1191 terminal sales stores by the end of the reporting period, an increase of 91 compared with the end of 2021.It is expected that the new stores will not have a significant impact on the Company's business operations.Whether the Company disclosed top 5 franchise stores
□ Yes ?No
(3) Whether the Company’s goods sales income is greater than the labor service income?Yes □ No
| Industry | Item | Unit | 2022 | 2021 | YoY changes |
| Garment and apparel | Sales volume | Pieces | 4,328,824 | 3,681,850 | 17.57% |
| Production volume | |||||
| Inventory | |||||
| Garment | Garment (RMB) | 2,884,841,760.82 | 2,719,989,257.14 | 6.06% |
Reasons for YoY changes of relevant data over 30%
□ Applicable ?Not applicable
(4) Performance of major sales contracts and major procurement contracts already signed by the Company as of the end ofthe reporting period
□ Applicable ?Not applicable
(5) Composition of cost of revenue
By industry and product
Unit: RMB
| Industry | Item | 2022 | 2021 | YoY changes | ||
| Amount | Proportion in cost of revenue | Amount | Proportion in cost of revenue | |||
| Garment and apparel | Garment and apparel | 652,016,624.24 | 100.00% | 634,160,601.71 | 100.00% | 2.82% |
Unit: RMB
| Product | Item | 2022 | 2021 | YoY changes | ||
| Amount | Proportion in cost of revenue | Amount | Proportion in cost of revenue | |||
| Garment and apparel | Tops | 253,822,996.18 | 38.93% | 240,366,386.18 | 37.90% | 5.60% |
| Garment and apparel | Bottoms | 124,278,398.85 | 19.06% | 116,434,061.13 | 18.36% | 6.74% |
| Garment and apparel | Jackets | 183,833,850.51 | 28.19% | 190,307,785.69 | 30.01% | -3.40% |
| Garment and apparel | Others | 90,081,378.70 | 13.82% | 87,052,368.71 | 13.73% | 3.48% |
(6) Whether there are changes to the consolidated scope during the reporting period
?Yes □ NoNewly established holding subsidiary/second-tier subsidiary
| Name of company | Reason of change | Date of establishment | Period of consolidation | Nature of company |
| Guangzhou Houde Zaiwu Industrial Investment Fund Partnership (Limited Partnership) | Newly established in the period | December 07, 2022 | 2022 | Holding subsidiary |
| Hong Kong Carritt Limited | Newly established in the period | December 30, 2022 | 2022 | Holding second-tier subsidiary |
| Hong Kong Plentiful Shiny Limited | Newly established in the period | December 30, 2022 | 2022 | Holding second-tier subsidiary |
(7) Whether there are significant changes or adjustments to the Company’s businesses, products or services during thereporting period
□ Applicable ?Not applicable
(8) Major customers and suppliers
Major customers of the Company
| Total sales to the top five customers (RMB) | 348,841,370.03 |
| Proportion of sales to top five customers in total annual sales | 12.09% |
| Proportion of sales to related parties among the top five customers in total annual sales | 0.00% |
Information of the top five customers of the Company
| No. | Name of customer | Sales amount (RMB) | Proportion in total annual sales |
| 1 | Customer 1 | 92,110,487.08 | 3.19% |
| 2 | Customer 2 | 79,433,798.08 | 2.75% |
| 3 | Customer 3 | 61,192,252.59 | 2.12% |
| 4 | Customer 4 | 59,344,906.93 | 2.06% |
| 5 | Customer 5 | 56,759,925.35 | 1.97% |
| Total | -- | 348,841,370.03 | 12.09% |
Other description of major customers
□ Applicable ?Not applicable
Major suppliers of the Company
| Total purchase amount from the top five suppliers (RMB) | 280,226,619.42 |
| Proportion of the total purchase amount from the top five suppliers in total annual purchase amount | 33.53% |
| Proportion of purchase amount from related parties among the top five suppliers in total annual purchase amount | 0.00% |
Information of the top five suppliers of the Company
| No. | Name of supplier | Purchase amount (RMB) | Proportion in total annual purchase amount |
| 1 | Supplier 1 | 64,828,936.32 | 7.76% |
| 2 | Supplier 2 | 58,473,428.24 | 7.00% |
| 3 | Supplier 3 | 56,419,104.70 | 6.75% |
| 4 | Supplier 4 | 53,425,803.61 | 6.39% |
| 5 | Supplier 5 | 47,079,346.55 | 5.63% |
| Total | -- | 280,226,619.42 | 33.53% |
Other description of major suppliers
□ Applicable ?Not applicable
3. Expenses
Unit: RMB
| 2022 | 2021 | YoY changes | Description of significant changes | |
| Selling expenses | 1,036,372,556.97 | 1,041,052,486.14 | -0.45% | |
| Administrative expenses | 195,632,058.12 | 156,267,574.26 | 25.19% | |
| Finance expenses | -7,782,554.63 | 21,805,535.69 | -135.69% | Mainly owing to the decrease in interest expense due to the conversion of convertible bonds into shares in the current period |
| R&D expenses | 100,182,947.69 | 83,388,128.67 | 20.14% |
The Company shall comply with the information disclosure requirements on the textile and garment-related industries as stipulatedin the SZSE Guidelines No. 3 for the Self-discipline and Supervision of Listed Companies — Industry Information Disclosure.
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | YoY changes of selling expenses | Reason of change |
| Employee benefits | 296,637,808.88 | 292,614,931.34 | 1.37% | |
| Store operating expenses | 287,914,059.48 | 359,724,699.13 | -19.96% | |
| Depreciation of right-of-use assets | 208,991,072.66 | 175,539,936.53 | 19.06% | |
| Decoration and renovation expenses | 107,756,159.43 | 84,303,737.40 | 27.82% | |
| Advertising fee | 73,427,178.68 | 78,889,887.30 | -6.92% | |
| Office and business travel expenses | 20,388,057.96 | 20,281,804.02 | 0.52% | |
| Transportation expenses | 12,078,098.60 | 10,068,692.80 | 19.96% | |
| E-commerce service fees | 13,620,502.48 | 8,659,135.65 | 57.30% | Mainly owing to the growth of online business |
| Others | 15,559,618.80 | 10,969,661.97 | 41.84% | Mainly owing to the increase in sales scale |
| Total | 1,036,372,556.97 | 1,041,052,486.14 | -0.45% |
4. Other information required by guidelines for information disclosure of textile and garment relatedindustries
The Company shall comply with the information disclosure requirements on the textile and garment-related industries as stipulatedin the SZSE Guidelines No. 3 for the Self-discipline and Supervision of Listed Companies — Industry Information Disclosure.
(1) Production capacity
The Company’s own production capacityCapacity utilization rate had a YoY change of more than 10%
□ Yes ?No
Whether there is overseas production capacity
□ Yes ?No
(2) Sales models and channels
Product sales channels and actual operation methodsThe Company adopts an omni-channel sales model of “direct sale + franchise” and “online + offline” that cover high-enddepartment stores, shopping centers, airports, high-speed rail hubs and golf courses across the country and Tmall flagship stores.Offline channels are classified into company-operated stores and franchise stores.Direct sale refers to the model where the Company sets up counters or stores in high-end shopping malls, airports with largepassenger flow, well-known golf clubs, hotels, etc. in first- and second-tier cities to sell products. Direct sale can be divided intojoint operation and non-joint operation models. Under the joint operation model, the Company signs a joint operation agreementwith the shopping mall, airport or golf club, under which the other party provides the venue and collection services while theCompany provides products and sales management. The two parties share the sales revenue according to the agreed proportion.Under the non-joint operation model, the Company signs a lease agreement with the provider of the business premise and obtainsthe use of premise via payment of rent. The Company is responsible for product and sales management.As for the franchise model, the franchisee signs a franchise contract with the Company to acquire the franchise qualification ofBIEM brands. The franchisee is responsible for acquiring business premises as well as daily operation and management of stores,while enforcing product pricing, price adjustment and other policies formulated by the Company. Under the franchise model,products of the Company are sold to the franchisee in the form of buyouts, which are then sold externally through franchise stores.The franchisee bears benefits and risks associated with their operations.For online sales, the main channels include Tmall, JD, Vipshop, and other third-party platforms. The Company opens officialflagship shops on these platforms and pays a certain amount of platform fee or certain share of the sales according to the salesvolume on the platform.
Unit: RMB
| Sales channel | Revenue | Cost of revenue | Gross profit margin | YoY changes of revenue (%) | YoY changes of cost of revenue (%) | YoY changes of gross profit margin (%) |
| Online sale | 167,956,644.80 | 61,430,174.66 | 63.42% | 37.02% | 2.13% | 12.49% |
| Direct sale | 1,779,943,248.67 | 318,595,594.74 | 82.10% | -7.01% | -11.87% | 0.99% |
| Franchise sale | 936,941,867.35 | 271,990,854.84 | 70.97% | 37.11% | 27.98% | 2.07% |
(3) Franchise and distribution
Whether sales revenue of franchisees and distributors accounted for more than 30%?Yes □ NoFranchise is a business model with franchise rights as the core. Under the franchise model, the Company signs a franchise contractwith enterprises or individuals up to certain certifications, granting them the right to run the Company’s branded clothes byopening franchise stores within a certain period of time and region, while the Company provides corresponding guidance andsupport. The franchisee is responsible for the management and operation of the terminal store, bears channel expenses, anddirectly purchases goods from the Company and sells them to consumers at retail prices. As at the end of the reporting period, theCompany had 612 franchise stores.Currently, the Company’s sales to franchisees are mainly achieved through two modes: order and replenishment, with order as theprimary mode and replenishment as a supplement. The order mode refers to the mode where the franchisee attends the ordermeeting and place orders; the replenishment mode refers to the mode where the franchisee places a supplementary order accordingto the sales situation after the product is launched.Under the franchise model, the Company recognizes sales revenue when the goods are delivered to the franchisee and receives theconfirmation receipt from the franchisee. In the event that the franchisee picks up goods by itself, the handover of the goods by theCompany to the carrier is regarded as having been confirmed by the franchisee. The Company has formulated replacement policiesfor franchisees. It makes reasonable estimates of the replacement rate of goods based on the replacement ratio agreed in thereplacement policy and the actual historical replacement conditions. The estimated replacement revenue offsets the sales revenueof the period and is included in other current liabilities; the estimated replacement cost offsets the sales cost of the period and isincluded in other current assets.Top 5 franchisees
| No. | Name of franchisee | Cooperation start time | Whether a related party | Total sales (RMB) | Level of franchisee |
| 1 | Franchisee 1 | September 01, 2006 | No | 38,056,865.62 | Level 1 |
| 2 | Franchisee 2 | December 01, 2007 | No | 30,350,937.02 | Level 1 |
| 3 | Franchisee 3 | August 01, 2019 | No | 23,318,115.10 | Level 1 |
| 4 | Franchisee 4 | October 01, 2011 | No | 22,922,104.01 | Level 1 |
| 5 | Franchisee 5 | December 01, 2013 | No | 14,649,261.06 | Level 1 |
| Total | -- | -- | -- | 129,297,282.81 | -- |
(4) Online sales
Whether sales revenue of online sales accounted for more than 30%
□ Yes ?No
Whether the Company had self-built sales platform
□ Yes ?No
Whether the Company cooperated with third-party sales platforms?Yes □ NoWhether the Company opened or closed online sales channels?Applicable □ Not applicable
| Name of channel | Main brands | Main product categories | Channel status | Reason for close | Opening time | Operation conditions during opening |
| Taobao | BIEM.L.FDLKK | Garment and apparel | Open | May 20, 2022 | Normal operation | |
| TikTok | BIEM.L.FDLKK Female Garment Flagship Shop | Garment and apparel | Open | August 01, 2022 | Normal operation | |
| Taobao | CARNAVAC DE VENISE | Garment and apparel | Open | December 01, 2022 | Normal operation |
Explanation of the impact on the current and future development of the CompanyBy adding online channels and carrying out in-depth cooperation with e-commerce platforms, the Company could offer morechoices to the shopping experience of consumers and further optimize channels and diversify traffic.
(5) Agent operation
Whether agent operation was involved?Yes □ No
| Name of partner | Main content of cooperation | Fee payment |
| Partner 1 | Provide operation services for the Company on TikTok | Agency fee is paid based on a certain percentage of the actual sales amount |
(6) Inventory
Particulars of inventory
| Main product | Days of inventory turnover | Quantity | Aging | YoY changes of inventory balance | Reason |
| Garment | 388 | 4,424,372 | Within 1 year: RMB460.4254 million 1-2 years: RMB208.0606 million 2-3 years: RMB110.1252 million Over 3 year: RMB66.4065 million | Balance at the end of the year increased by RMB85.3910 million or 12.93% over the end of previous year. | Mainly owing to the increase in sales scale during the period |
Provision for inventory write-downMethods for recognition of the net realizable value of inventories and inventory write-downInventories at the end of the reporting period are measured at the lower of cost and net realizable value. If the net realizable valueof inventories at the end of the reporting period is lower than the book cost, the difference is set aside as inventory write-down.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, theestimated costs necessary to make the sale, and related taxes and fees.
1. Basis for determining the net realizable value of inventories: For materials held for production, if the net realizable value offinished product using the material is higher than its cost, the material is still measured at cost. However, when a decline in theprice of materials indicates that the cost of the finished product exceeds net realizable value, the material is written down to netrealizable value. For inventories held to satisfy sales contracts or service contracts, their net realizable value is based on thecontract price. If the sales contracts are less than the inventory quantities held, the net realizable value of the excess part is basedon general selling prices.
2. Methods for determining inventory write-down: At the end of the reporting period, the Company determines the net realizablevalue of out-of-season clothes as the estimated selling price less selling cost and related taxes and fees. If the net realizable value islower than the book cost, the difference is set aside as inventory write-down. The reversed inventory write-down during thereporting period is for inventories sold in the current period but with write-down already recognized in the previous period.For specific inventory write-downs, please refer to “Section X Financial Report” --> “VII. Notes to Items of the ConsolidatedFinancial Statements” --> “6. Inventory”.Inventories of terminal channels such as franchisees or distributors
(7) Brand building
Whether the Company was involved in the production and sales of branded clothing, apparel and household textile products?Yes □ NoOwn brands
| Name of brand | Name of trademark | Main product types | Characteristics | Target consumers | Price range | Main sales area | City level |
| BIEM.L.FDLKK | BIEM.L.FDLKK | Casual sportswear | High-end, combination of leisure and sports | Middle class and above-income groups who advocate a healthy, sunny and comfortable lifestyle | 1500-8000 | China | 1st-4th tier cities |
| CARNAVAL DE VENISE | CARNAVAL DE VENISE | Outdoor travel apparel | Matching outfits for families, parents-children, and couples, catering to different outdoor travel scenarios | Middle-class consumers who pursue high-quality travels | 300-2000 | China | 1st-4th tier cities |
Marketing and operation of each brand during the reporting period
The Company focuses on the garment sector and implements a multi-brand strategy. Priority is given to the cultivation of corecompetitiveness, so as to build a leading brand in the sector. Currently, the Company owns three brands: BIEM.L.FDLKK, GolfFashion and CARNAVAL DE VENISE.The BIEM.L.FDLKK brand targets at the segment combining golf and fashionable and casual life. Continuous product innovation,brand power enhancement, and channel expansion have driven the high growth of the brand. The Company intends to build it intoan upmarket casual sportswear brand. The BIEM.L.FDLKK brand comprises Life series, Fashion series, and Palace Culture series.The Golf Fashion brand is positioned as a high-end fashion sportswear. Using the world’s leading functional fabrics andintegrating characteristics of golf and other outdoor sports into design, the products boast both functionality and comfort. Targetconsumers are enthusiasts of golf and other outdoor sports who value sports, fashion and functionality.The CARNAVAL DE VENISE brand is positioned to tap the blue ocean market of vacation and travel apparel, focusing onmatching clothes for families and couples. Focusing on a segmented market, the products can satisfy the multi-scenario dressingneeds of middle-class consumers in high-quality travels. It is hoped that when people think of vacation travel apparel,CARNAVAL DE VENISE would be the first to pop up in their minds.During the reporting period, based on its own advantages, the Company has launched a strategic upgrade plan of drivingdevelopment with a single category. By introducing the new slogan “BIEM.L.FDLKK, T-shirt Expert”, the Company focuses onthe T-shirt category and hopes to build itself into the “first T-shirt brand” that would pop up in the minds of consumers wheneverthey think of that category. This could help the Company to further open up market space. In 2022, the Company launched theintegrated marketing campaign for collared T-shirts and the T-shirt Festival activity. Through activities such as the creation ofbestsellers, brand festivals, and online-offline integrated marketing, collared T-shirts have become a top-selling item of theCompany.The Company continued to co-brand with the Forbidden City to further explore the Palace Culture IP. On August 23, 2022,BIEM.L.FDLKK and Mr. Zhang Xue, the inheritor of intangible cultural heritage Su embroidery craft, concluded a 12-yearagreement to jointly create trending high-end products with Chinese culture characteristics. In the autumn of 2022, the two partiesadded another series to the Palace Culture IP — “Rui Hu You Fu” (tiger sending blessing).During the reporting period, the CARNAVAL DE VENISE brand furthered cooperation with Snoopy and added the Doraemonseries, a well-known Japanese IP. In the future, the Company will launch more designer joint series and cross-brand joint series, tomeet the demands of middle-class consumers for theme and culture.In 2022, in order to deepen the core of brand culture and enhance brand influence, the Company conducted strategic upgrade. Avariety of efforts were taken, such as focusing on the core category of T-shirts, defining the new slogan of “BIEM.L.FDLKK, T-shirt Expert”, and implementing a multi-pronged approach including event promotion, advertising, entertainment marketing, eventmarketing, etc.Trademark ownership disputes, etc. in which the Company was involved
□ Applicable ?Not applicable
(8) Others
Whether the Company was engaged in clothing design related businesses?Yes □ No
| Number of self-owned designers | 79 | Number of contracted designers | 7 |
| Operation of the built designer platform | Not applicable | ||
Whether the Company organized order meetings?Yes □ No
5. R&D investment
?Applicable □ Not applicable
| Name of main R&D project | Project purpose | Project progress | Intended goals | Expected impact on the future development of the Company |
| Design, development and research on clothes with multi-functional composite blended materials | Promote the Company’s innovative product design, innovative fabric research and development, innovative process research and development, and research and development of standards for innovative function testing; under the research and development concept of “three high and one innovation” — high quality, high taste, high technology and innovative spirit, comprehensively elevate features, performances and images of products and strengthen brand awareness, so that the Company's products could continue to lead the market. | Ongoing | Master the key technologies of functional clothes with multi-functional composite blended materials | Maintain a leading position in the high-end fashion sportswear sector, continuously expand market boundaries, consolidate market competitiveness and brand influence of the Company's products, and lay the foundation for building a century-old brand. |
Information on R&D personnel of the Company
| 2022 | 2021 | Change ratio | |
| Number of R&D personnel | 207 | 205 | 0.98% |
| Proportion of R&D personnel | 6.26% | 6.47% | -0.21% |
| Educational structure of R&D personnel | |||
| University graduates | 80 | 76 | 5.26% |
| Master | 6 | 7 | -14.29% |
| College graduates | 71 | 70 | 1.43% |
| Others | 50 | 52 | -3.85% |
| Age structure of R&D personnel | |||
| Under 30 | 41 | 42 | -2.38% |
| 30~40 | 119 | 117 | 1.71% |
| 40~50 | 43 | 42 | 2.38% |
| Above 50 | 4 | 4 | 0.00% |
R&D investment of the Company
| 2022 | 2021 | Change ratio | |
| Amount of R&D investment (RMB) | 100,182,947.69 | 83,388,128.67 | 20.14% |
| Proportion of R&D investment in total revenue | 3.47% | 3.07% | 0.40% |
| Amount of capitalized R&D investment (RMB) | 0.00 | 0.00 | 0.00% |
| Proportion of capitalized R&D investment in total R&D investment | 0.00% | 0.00% | 0.00% |
Reason for and impact of marked changes in the composition of the Company’s R&D personnel
□ Applicable ?Not applicable
Reason for marked changes in the proportion of R&D investment in total revenue over the last year
□ Applicable ?Not applicable
Reason for marked changes in the proportion of capitalized R&D investment and its reasonable explanation
□ Applicable ?Not applicable
6. Cash flow
Unit: RMB
| Item | 2022 | 2021 | YoY changes |
| Subtotal of cash inflow from operating activities | 2,988,994,363.45 | 2,794,084,680.61 | 6.98% |
| Subtotal of cash outflow from operating activities | 2,046,758,329.63 | 1,896,561,042.54 | 7.92% |
| Net cash flow from operating activities | 942,236,033.82 | 897,523,638.07 | 4.98% |
| Subtotal of cash inflow from investing activities | 5,233,116,445.27 | 3,170,817,478.89 | 65.04% |
| Subtotal of cash outflow from investing activities | 5,916,079,305.06 | 3,354,579,606.23 | 76.36% |
| Net cash flow from investing activities | -682,962,859.79 | -183,762,127.34 | -271.66% |
| Subtotal of cash outflow from financing activities | 218,200,364.75 | 225,027,351.47 | -3.03% |
| Net cash flow from financing activities | -218,200,364.75 | -225,027,351.47 | 3.03% |
| Net increase in cash and cash | 41,072,809.28 | 488,734,159.26 | -91.60% |
equivalents
Major influencing factors for significant YoY changes in relevant data?Applicable □ Not applicable
(1) During the reporting period, the cash inflow from investing activities recorded an increase of 65.04% compared with the sameperiod of the previous year, mainly owing to the increase in the redemption of mature wealth management products in the currentperiod;
(2) During the reporting period, the cash outflow from investing activities recorded an increase of 76.36% compared with the sameperiod of the previous year, mainly owing to the increase in the purchase of wealth management products and the payment of theland purchase price in the current period;
(3) During the reporting period, the net cash flow from investing activities recorded a decrease of 271.66% compared with thesame period of the previous year, mainly owing to the increase in the purchase of wealth management products and the payment ofthe land purchase price in the current period;
(4) During the reporting period, the net increase in cash and cash equivalents recorded a decrease of 91.6% compared with thesame period of the previous year, mainly owing to the increase in the purchase of wealth management products and the payment ofthe land purchase price in the current period.Reason for significant differences between the net cash flow from operating activities and the net profit of the year during thereporting period
□ Applicable ?Not applicable
V. Analysis of Non-principal Businesses?Applicable □ Not applicable
Unit: RMB
| Amount | Proportion in total profit | Explanation of reason | Whether it is sustainable | |
| Investment income | 39,390,949.38 | 4.60% | Yes | |
| Profit and loss from changes in fair value | 4,950,075.80 | 0.58% | Yes | |
| Asset impairment | -99,445,469.97 | -11.62% | Yes | |
| Non-operating revenue | 3,017,693.32 | 0.35% | No | |
| Non-operating expense | 2,681,429.95 | 0.31% | No | |
| Credit impairment loss | 2,269,925.82 | 0.27% | Yes |
VI. Analysis of Assets and Liabilities
1. Significant changes in the composition of assets
Unit: RMB
| End of 2022 | Beginning of 2022 | Proportion changes | Description of significant changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary funds | 1,144,693,949.57 | 20.52% | 1,082,712,218.58 | 22.26% | -1.74% | |
| Accounts receivable | 252,544,886.96 | 4.53% | 279,717,057.14 | 5.75% | -1.22% | |
| Inventory | 745,605,174.25 | 13.36% | 660,214,219.41 | 13.58% | -0.22% | |
| Property, plant and equipment | 461,506,954.62 | 8.27% | 244,337,754.20 | 5.02% | 3.25% | Mainly owing to the transfer of the intelligent storage center from construction in progress to property, plant and equipment |
| Construction in process | 70,114,185.76 | 1.26% | 148,165,548.36 | 3.05% | -1.79% | |
| Right-of-use assets | 332,568,088.84 | 5.96% | 407,448,654.74 | 8.38% | -2.42% | |
| Contract liabilities | 168,876,645.17 | 3.03% | 140,669,127.30 | 2.89% | 0.14% | |
| Lease liabilities | 141,295,857.16 | 2.53% | 217,323,756.45 | 4.47% | -1.94% | |
| Other current assets | 364,286,702.97 | 6.53% | 830,640,713.41 | 17.08% | -10.55% | Mainly owing to the decrease in purchased structured deposits |
| Investment in other equity instruments | 10,499,383.76 | 0.19% | 98,099,300.47 | 2.02% | -1.83% | |
| Intangible assets | 129,012,724.85 | 2.31% | 119,548,729.29 | 2.46% | -0.15% | |
| Long-term deferred expenses | 111,489,073.31 | 2.00% | 105,243,120.55 | 2.16% | -0.16% | |
| Other payables | 90,368,389.42 | 1.62% | 55,878,486.28 | 1.15% | 0.47% | |
| Bonds payable | 284,554,163.11 | 5.85% | -5.85% | Mainly owing to the conversion of convertible bonds into shares | ||
| Assets held for sale | 137,859,613.49 | 2.47% | 2.47% | Mainly owning to the reclassification of the other equity instrument investments in Fast Fashion (Guangzhou) Co., Ltd. |
High proportion of overseas assets
□ Applicable ?Not applicable
2. Assets and liabilities measured at fair value
?Applicable □ Not applicable
Unit: RMB
| Item | Opening balance | Profit or loss from changes in fair value of the period | Accumulated changes in fair value included in equity | Write-down in the period | Amount purchased in the period | Amount sold in the period | Other changes | Closing balance |
| Financial assets | ||||||||
| 1. Financial assets held for trading (excluding derivative financial assets) | 634,763,818.96 | 3,992,979.91 | 2,360,000,000.00 | 1,620,000,000.00 | 1,378,756,798.87 | |||
| 4. Investment in other equity instruments | 98,099,300.47 | 1,500,083.29 | -89,100,000.00 | 10,499,383.76 | ||||
| 5. Assets held for sale | 48,570,000.00 | 89,100,000.00 | 137,670,000.00 | |||||
| Total | 732,863,119.43 | 3,992,979.91 | 50,070,083.29 | 2,360,000,000.00 | 1,620,000,000.00 | 1,526,926,182.63 | ||
| Financial liabilities | 0.00 | 0.00 | ||||||
Other changesOther changes herein refer to the reclassification of the investment in Fast Fashion (Guangzhou) Co., Ltd. From other equityinstruments to assets held for sale.Whether there were significant changes to measurements of the Company’s main assets during the reporting period
□ Yes ?No
3. Restriction of asset rights at the end of the reporting period
| Item | Book value at the end of the period (RMB) | Reason for restriction |
| Monetary funds | 28,568,760.06 | Security deposits for bank acceptance bills and project performance guarantees |
| Total | 28,568,760.06 |
VII. Analysis of Investment
1. Overview
□ Applicable ?Not applicable
2. Major equity investment during the reporting period
□ Applicable ?Not applicable
3. Major non-equity investment during the reporting period
□ Applicable ?Not applicable
4. Financial asset investment
(1) Security investment
?Applicable □ Not applicable
Unit: RMB
| Security type | Security code | Security abbreviation | Initial investment cost | Measurement model | Book value at the beginning of the period | Profit or loss from changes in fair value of the period | Accumulated changes in fair value included in equity | Amount purchased in the period | Amount sold in the period | Profit or loss during the period | Book value at the end of the period | Accounting subject | Source of fund |
| Domestic and foreign stocks | 000564 | ST Daji | 1,338,986.96 | Measured at fair value | 1,338,986.96 | 425,811.00 | 812,000.00 | 425,811.00 | 952,797.96 | Financial assets held for trading | Debt repayment by the mall | ||
| Total | 1,338,986.96 | -- | 1,338,986.96 | 425,811.00 | 0.00 | 0.00 | 812,000.00 | 425,811.00 | 952,797.96 | -- | -- | ||
(2) Derivative investment
□ Applicable ?Not applicable
The Company did not invest in derivatives during the reporting period.
5. Use of proceeds
?Applicable □Not applicable
(1) Overall use of proceeds
?Applicable □Not applicable
Unit: RMB10,000
| Year of raising | Method of raising | Total amount of proceeds raised | Amount of proceeds used in the period | Cumulative amount of proceeds used | Amount of proceeds whose use was changed in the period | Cumulative amount of proceeds whose use was changed | Proportion of cumulative proceeds whose use was changed in total proceeds raised | Amount of unused proceeds | Purpose and whereabouts of unused proceeds | Amount of proceeds that have been idle for over two years |
| 2016 | IPO | 62,407.7 | 10,340.88 | 62,443.03 | 0 | 22,412 | 35.91% | 3,787.22 | Deposited in regulatory banks | 0 |
| 2020 | Convertible bonds | 67,872.93 | 15,348.79 | 41,874.97 | 13,900 | 13,900 | 20.48% | 28,405.41 | Wealth management products, deposited in regulatory banks | 0 |
| Total | -- | 130,280.63 | 25,689.67 | 104,318 | 13,900 | 36,312 | 27.87% | 32,192.63 | -- | 0 |
| Description on overall use of proceeds | ||||||||||
| (1) Proceeds raised in IPO: Under “CSRC Approval [2016] No. 2860” issued by China Securities Regulatory Commission, BIEM.L.FDLKK Garment Co., Ltd. issued 26,670,000 RMB-denominated ordinary shares (A shares) to the public, each having a par value of RMB1.00 and an issue price of RMB26.17. The total capital raised was RMB697,953,900.00, and the net amount was RMB624,077,000.00 after deducting the issuance fees of RMB73,876,900.00 (tax exclusive). The raised proceeds were received in full amount on December 20, 2016, for which GP Certified Public Accountants (Limited Liability Partnership) had verified and presented the Capital Verification Report (GP Verification Doc. [2016] No. G14002150538) As of December 31, 2022, RMB624,430,321.13 of the proceeds had been used and RMB37,872,239.17 had not been used (including interest income less service charge). (2) Proceeds raised through convertible bonds: Under “CSRC Approval [2020] No. 638” issued by China Securities Regulatory Commission, BIEM.L.FDLKK Garment Co., Ltd. issued a total of RMB689 million convertible bonds to the general public, each having a par value of RMB100. The total capital raised was RMB689,000,000.00, and the net amount was RMB678,729,339.62 after deducting the underwriting fee, sponsor fee and other issuance fees of RMB10,270,660.38 (tax exclusive). The raised proceeds were received in full amount on June 19, 2020, for which Zhongxinghua Certified Public Accountants (Limited Liability Partnership) had verified and presented the Capital Verification Report (ZXH Verification Doc. [2020] No. 410005). As of December 31, 2022, RMB418,749,741.54 of the proceeds had been used and RMB284,054,111.84 had not been used (including interest income less service charge). | ||||||||||
(2) Projects committed with proceeds raised
?Applicable □Not applicable
Unit: RMB10,000
| Committed investment projects and use of over-raised funds | Whether committed projects have been changed (including partial change) | Total committed investment at raising | Total investment after adjustment (1) | Amount invested in the period | Cumulative amount invested as of the end of the period (2) | Investment progress as of the end of the period (3) = (2)/(1) | Date for the project is ready for intended use | Benefits realized in the period | Whether expected benefits are achieved | Whether project feasibility changed significantly |
| Committed investment project | ||||||||||
| Marketing network construction project | Yes | 52,053.82 | 29,641.82 | 0 | 29,641.82 | 100.00% | December 31, 2019 | 21,318.14 | Yes | No |
| Information system improvement project | No | 5,383.88 | 5,383.88 | 0 | 5,384.03 | 100.00% | December 31, 2019 | Not applicable | No | |
| Supplementing working capital | No | 5,000 | 5,000 | 0 | 5,000 | 100.00% | Not applicable | No | ||
| BIEM.L.FDLKK intelligent storage center | Yes | 0 | 22,412 | 10,340.88 | 22,417.18 | 100.00% | December 31, 2022 | Not applicable | No | |
| Marketing network construction and upgrading project | Yes | 30,972.93 | 17,072.93 | 9,706.81 | 13,167.83 | 77.13% | June 30, 2023 | 751.34 | Yes | No |
| Supply chain park project | Yes | 14,000 | 27,900 | 5,192.66 | 6,933.2 | 24.85% | June 30, 2024 | Not applicable | No | |
| R&D design center project | No | 4,000 | 4,000 | 449.32 | 2,873.94 | 71.85% | June 30, 2023 | Not applicable | No | |
| Supplementing working capital | No | 18,900 | 18,900 | 0 | 18,900 | 100.00% | Not applicable | No | ||
| Subtotal of committed investment projects | -- | 130,310.63 | 130,310.63 | 25,689.67 | 104,318 | -- | -- | 22,069.48 | -- | -- |
| Investment direction of over-raised funds | ||||||||||
| None | ||||||||||
| Repaying bank loans (if any) | -- | 0 | 0 | 0 | 0 | 0.00% | -- | -- | -- | -- |
| Supplementing working capital (if any) | -- | 0 | 0 | 0 | 0 | 0.00% | -- | -- | -- | -- |
| Subtotal of investment direction of over-raised funds | -- | 0 | 0 | 0 | 0 | -- | -- | 0 | -- | -- |
| Total | -- | 130,310.63 | 130,310.63 | 25,689.67 | 104,318 | -- | -- | 22,069.48 | -- | -- |
| Explain the situation and reasons for failure to achieve the planned progress and expected benefits by project (including “whether expected benefits are achieved” and the reason for choosing “not applicable”) | The “supply chain park project” is behind the expected schedule mainly because relevant departments have made adjustments to the planning of the plot, resulting in slow construction progress. Meanwhile, considering long-term development and planning, the Company added an investment of RMB139 million from the proceeds in July 2022, so the time of reaching the intended use is adjusted accordingly. The “R&D design center project” is behind the expected schedule mainly because the decoration part progresses slowly, and the installation and commissioning of some equipment have been postponed since the equipment arrived late, resulting in slowdown of the project. | |||||||||
| Description of significant changes in project feasibility | None | |||||||||
| Amount, purpose and progress of use of over-raised funds | Not applicable | |||||||||
| Changes in implementation locations of projects invested with raised proceeds | Applicable | |||||||||
| Occurred in previous years | ||||||||||
| In July 2017, the 17th meeting of the Second Board of Directors deliberated and approved the Proposal on Changing the Specific Locations of Certain Projects Invested with Raised Proceeds, which agreed to change the locations of some stores under the “marketing network construction project”. Specific locations of stores were adjusted by the management according to actual business needs. The change of locations would not change the use of raised proceeds, nor would it cause any substantial impact on the implementation of the project. | ||||||||||
| Adjustments to implementation methods of projects invested with raised proceeds | Applicable | |||||||||
| Occurred in previous years | ||||||||||
| The “marketing network construction project” originally planned to establish 224 company-operated stores across the country, including 206 joint-operation stores in shopping malls and airports and 18 stores in golf clubs. On October 25, 2018, the 6th meeting of the Third Board of Directors and the 5th meeting of the Third Board of Supervisors deliberated and approved the Proposal on Adjusting the Number of Stores under the Marketing Network Construction Project, which stated to increase the number of stores under the marketing network construction project from 224 to no more than 400 under the premise of not changing the total investment amount, investment purpose and implementation entity. Specific implementation decisions will be made by the management according to actual business needs. The matter has been approved by the 2018 Second Extraordinary General Meeting. | ||||||||||
| Advance | Applicable | |||||||||
| investments for projects planned with raised funds and their exchange | (1) Proceeds raised in IPO: In April 2017, upon deliberation and approval at the 16th meeting of the Second Board of Directors, in accordance with the Authentication Report of Having Used Self-raised Funds to Invest in Projects Planned with Raised Proceeds in Advance issued by GP Certified Public Accountants LLP (GP Special Doc. [2017] No. G17003810041), independent directors, the Board of Supervisors and the sponsor expressed their consent to exchange the Company's self-raised funds that had invested in the projects planned under raised proceeds in advance at an amount of RMB99,223,778.79 on February 28, 2017 with the raised proceeds. (2) Proceeds raised through convertible bonds: On September 25, 2020, upon deliberation and approval at the 28th meeting of the Third Board of Directors, in accordance with the Authentication Report of Exchanging the Self-raised Funds That Have Been Used for Projects Planned with the Raised Proceeds and Issuance Fees with Raised Proceeds issued by Huaxing Certified Public Accountants LLP (HX Audit Doc. [2020] No. GD-280), independent directors, the Board of Supervisors and the sponsor expressed their consent to exchange the Company's self-raised funds that had invested in the projects planned under raised proceeds in advance at an amount of RMB11,826,344.79 and self-owned funds that had been used to pay for issuance fees at an amount of RMB2,470,660.38 with the raised proceeds at an amount of RMB14,297,005.17. |
| Temporary replenishment of working capital with idle proceeds | Not applicable |
| Amount of proceed balance after project implementation and reasons | Not applicable |
| Unused proceeds and their whereabouts | The Company convened the 13th meeting of the Fourth Board of Directors and the 10th meeting of the Fourth Board of Supervisors on August 29, 2022 and the 2022 Second Extraordinary General Meeting on October 10, 2022. The meetings deliberated and approved the Proposal on Using Idle Proceeds and Idle Self-owned Funds for Cash Management, which agreed to use no more than RMB400 million of temporarily idle proceeds for cash management under the premise of not affecting the progress of the investment projects and daily operations of the Company. The above cash management quota is valid for 12 months from the date of approval by the general shareholder meeting, and, within the validity period, the funds may be used on a rolling basis. Independent directors and the sponsor all expressed their consent. As of December 31, 2022, the Company had used RMB270 million idle proceeds to purchase the capital-guaranteed wealth management products of banks and securities companies. Other unused proceeds are still stored in the special account for the raised proceeds. |
| Problems or other situations in the use and disclosure of proceeds | None |
(3) Changing the use of proceeds
?Applicable □Not applicable
Unit: RMB10,000
| Project after change | Original committed project | Total amount of proceeds to be invested in project | Amount actually invested in the period | Cumulative amount invested as of the end of the period (2) | Investment progress as of the end of the period (3) = (2)/(1) | Date for the project is ready for intended | Benefits realized in the period | Whether expected benefits are achieved | Whether feasibility of the project after change had any |
| after change (1) | use | significant changes | |||||||
| Supply chain park project | Marketing network construction and upgrading project | 27,900 | 5,192.66 | 6,933.2 | 24.85% | June 30, 2024 | Not applicable | No | |
| Total | -- | 27,900 | 5,192.66 | 6,933.2 | -- | -- | 0 | -- | -- |
| Reasons for the change, decision-making procedures and information disclosure (by project) | The Company issued the Announcement of BIEM.L.FDLKK Garment Co., Ltd. on Changing the Use of Some Raised Proceeds and the Postponement of the Projects Invested with the Proceeds (Announcement No.: 2022-056) on July 16, 2022. The Company convened the 12th Meeting of the Fourth Board of Directors and the 9th Meeting of the Fourth Board of Supervisors on July 15, 2022, which deliberated and approved the Proposal on Changing the Use of Some Raised Proceeds and Postponing the Project Invested with the Proceeds. Under the impact of economic downturn as well as strategic development needs, the Company planned to adjust the use of a portion of the proceeds at RMB139 million raised through the issuance of convertible bonds from the “marketing network construction and upgrading project” to the “R&D design center project”, another intended investment project under the issuance of convertible bonds. Meanwhile, the Company plans to extend the time for reaching the intended use of both of the above projects. | ||||||||
| Description of failure to achieve the planned progress or expected benefits and reasons (by project) | The “supply chain park project” is behind the expected schedule mainly because relevant departments have made adjustments to the planning of the plot, resulting in slow construction progress. Meanwhile, considering long-term development and planning, the Company added an investment of RMB139 million from the proceeds in July 2022, so the time of reaching the intended use is adjusted accordingly. | ||||||||
| Description of significant changes in the feasibility of the project after change | None | ||||||||
VIII. Major Assets and Equity Sales
1. Sales of major assets
□ Applicable ?Not applicable
The Company did not sell major assets during the reporting period.
2. Sales of major equities
□ Applicable ?Not applicable
IX. Major Holding and Joint-stock Companies
□ Applicable ?Not applicable
The Company had no major holding and joint-stock companies that should be disclosed during the reporting period.X. Structured Entities Controlled by the Company
□ Applicable ?Not applicable
XI. Outlook of the Company’s Future Development(I) Future outlookAs many internationally-renowned clothing brands have started to make layout in the Chinese market, BIEM.L.FDLKK willofficially compete with international peers on the same stage in the future. Along with changes in market competition, theCompany will fight for the right of say in the international arena on behalf of Chinese upmarket apparel brands. The Company willgo all out and strive to transform from a pioneer to a leader in China's high-end apparel segment.
1. Upgrading ways of thinking and actions
The Company will upgrade its ways of thinking and actions from domestic competition to international competition and fromproduct sales to brand marketing, with a focus on being international, high-end, youthful, and standardized.
2. Upgrading product R&D
The Company will continue to step up R&D efforts and strengthen technological innovation and patent R&D with a R&D conceptof “three highs and one innovation”, i.e. “high quality, high taste, high technology and innovative spirit”, so as to create productswith competitive edges in the international market.
3. Upgrading marketing management
The Company will carefully study the marketing management experience of international brands, optimize operation managementand expand marketing ideas in combination with its corporate strategies. It will strive to improve performance of single stores,strengthen the idea of creating hot-selling items, and build BIEM.L.FDLKK into the first brand that would pop up in the minds ofconsumers when they think of T-shirts.
4. Upgrading brand building
The Company will continue to increase advertising efforts, integrate global marketing channels, and further improve brandawareness and reputation through a series of new channels and models for brand promotion. It will strengthen the culturalconnotations for its brands, build signature brand culture, and tell a good brand story, to comprehensively enhance brand equity.
5. Upgrading brand image
In terms of brand image upgrading, the Company will build the new look of terminal stores via design and display upgrades. It willoptimize the online web design and comprehensively shape a brand vision of being international, high-end and youthful.
6. Upgrading services
As for brand service upgrading, the Company will comprehensively improve the soft power of competition by elevating theimages and qualities of all employees and comprehensively improving store services.
7. Upgrading organizational management
The Company will build an excellent corporate culture with “responsibility and perfection” at the core. In order to attract moreoutstanding talents and create a team with international vision and competitiveness, it will improve career development channelsand training mechanisms and introduce a talent competition mechanism with both promotion and demotion incentives.
8. Upgrading digital technologies
The Company will step up efforts in digital construction and achieve process streamline, cost reduction and high synergy throughbig data and AI innovation, which could greatly improve its operating efficiency as well as profitability and lay the foundation forinternational development.(II) Potential risks faced by the Company and countermeasures
1. Risks of production outsourcing
The Company adopts the brand operation model; i.e. it focuses on links with higher added value such as design in the upstream aswell as brand operation and sales channel construction in the downstream of the business chain, and outsources production. Theoutsourcing of production allows the Company to effectively reduce operating costs while enhancing core competitiveness. Atpresent, the garment industry chain in China boasts obvious advantages and there are many garment factories with highmanufacturing level to choose from. Meanwhile, for products with special requirements, the Company will choose some factoriesoverseas (such as South Korea) for production to ensure product quality. The Company has taken a variety of measures tostrengthen and improve product quality. Despite so, there is still the risk that production processes of the factories are not up to thequality requirements of the Company or production arrangement could not meet delivery schedule which result in delayed supply,thereby affecting the promotion and sales of the Company’s products. Countermeasures: The Company may take measures such asestablishing a factory selection, inspection and evaluation system, dispatching quality specialists to factories, inspecting theirwarehouses, entrusting third-parties to conduct special tests, etc.
2. Management risks brought by marketing network expansion
Products of the Company are sold through company-operated stores and franchise stores. The expansion of marketing network isan important way for the Company to increase market share and improve business performance. In recent years, with steadybusiness development, store expansion has maintained a rapid growth rate. Although the Company has accumulated strongexperience in channel expansion and management, possesses certain high-quality channel resources, has established a sound talentcultivation mechanism, and is equipped with strong store replication capabilities, along with the availability of proceeds raisedthrough this offering and the unfolding of investment projects, the scale of the Company will grow rapidly and the marketingnetwork will be further expanded. The rapid growth of the number of stores will raise more demanding requirements on theCompany's management and operation. If the Company's talent reserve, HR management, selection of suitable locations for newstores and performance management cannot adapt to its development, the profitability of the Company in the future will beimpacted to a certain extent. Countermeasures: The Company may take measures such as analyzing the effectiveness of opening acertain store through big data researches, establishing a talent reserve and iteration system, and improving the performanceappraisal system.
3. Risks of large inventory balance
For high-end clothing brands, inventory usually takes up a high proportion in total assets while the turnover rate is low, which isconsistent with their business models. This is also the case for the Company. Despite the fact that inventories of the Company haveremained at a reasonable level required for normal production and operation, and the aging is mostly within 2 years, if there arechanges in the market environment or the competition is intensified in future years, it may lead to inventory backlog or impairment.
This will cause adverse effects to operations of the Company. Countermeasures: The Company may take measures such asdiversifying channel layout, strengthening digital management through the data middle platform, etc.XII. Reception of Researches, Communications, Interviews and Other Activities?Applicable □ Not applicable
| Reception time | Reception location | Reception method | Type of reception object | Reception object | Main content discussed and information provided | Index of the basic situation of the survey |
| April 27, 2022 | Online platform (http://rs.p5w.net) | Others | Others | Online investors | For details, please refer to the IR Activity Record Form (No. 2022-001) | CNINFO (http://www.cninfo.com.cn). |
| September 22, 2022 | Online platform (http://rs.p5w.net) | Others | Others | Online investors | For details, please refer to the IR Activity Record Form (No. 2022-002) | CNINFO (http://www.cninfo.com.cn). |
Section IV Corporate GovernanceI. Basic Information of Corporate GovernanceDuring the reporting period, the Company has constantly improved its corporate governance structure and optimized its internalmanagement systems in strict compliance with requirements of the Company Law, the Securities Law, the Code of CorporateGovernance for Listed Companies, the Rules Governing the Listing of Shares on Shenzhen Stock Exchange, and other relevantlaws, administrative regulations and normative rules promulgated by China Securities Regulatory Commission (CSRC) andShenzhen Stock Exchange (SZSE).(I) Shareholders and general meeting of shareholdersThe Company has formulated the Rules of Procedure for the General Meetings of Shareholders and implemented them strictly.During the reporting period, the Company convened three general meetings of shareholders. The calling and convening procedures,notifications, authorizations and delegations, resolutions, deliberations and announcements of the general meeting of shareholdersare all compliant with relevant laws and regulations. In addition, all the meetings conducted voting both on site and via Internet, sothat all shareholders, especially minority shareholders, can fully exercise their rights.(II) Directors and the Board of DirectorsThe Board of Directors of the Company currently comprises seven directors, among which three are independent directors. Thenumber and composition of the Board of Directors meet requirements of laws, regulations, and the Articles of Association. TheCompany organized the directors to attend relevant training activities of regulatory authorities. Further study and familiarity withrelevant laws and regulations has effectively improved the capabilities of directors to perform their duties. Independent directors ofthe Company have fulfilled their duties in a serious and responsible manner. They are responsible for safeguarding the overallinterests of the Company, with a special focus on the protection of the legitimate interests of minority shareholders, and expressingindependent opinions on material and important matters.(III) Supervisors and the Board of SupervisorsThe Board of Supervisors of the Company comprises three supervisors, among which one is an employee representative supervisor.The number and composition of the Board of Supervisors meet requirements of laws, regulations, and the Articles of Association.All supervisors earnestly perform their duties as per requirements of the Rules of Procedure of the Board of Supervisors and otherrelevant regulations, to supervise the decision-making procedures and resolutions of the Board of Directors and the Company’slegal operations and to effectively oversee the legality and compliance of directors, managers and other senior executives of theCompany in their duty performance.(IV) Relationship between controlling shareholders and the CompanyThe controlling shareholder of the Company is a natural person, Mr. Xie Bingzheng, who is also the actual controller and theChairman of the Company. Mr. Xie strictly regulates his behaviors in accordance with relevant requirements on listed companies.All major business decisions of the Company have been made in line with standardized operating procedures, and there are no
circumstances of damaging the interests of the Company and other shareholders. The Company is independent from thecontrolling shareholder in terms of business, personnel, assets, institution, finance, etc. and has independent and complete businesssystems and independent operation capabilities.(V) Other stakeholdersThe Company fully respects and safeguards the legitimate rights and interests of all stakeholders including shareholders,employees, suppliers and customers. While creating the optimal profits, the Company strives to achieve a balance of interestsamong the society, shareholders, employees and other relevant parties, to jointly promote its continual, sustainable development.(VI) Information disclosure and transparencyThe Board of Directors has designated the Secretary to the Board in accordance with provisions of the Measures of the Companyon Information Disclosure Management, who is responsible for investor relations management and daily information disclosureand for receiving visits and consultations from shareholders. The Company strives to disclose information in a fair, timely,accurate and complete manner such that all shareholders may learn about information of the Company timely and fairly.Whether there were significant differences between the Company’s actual status of corporate governance and requirements oflaws, administrative regulations and CSRC normative documents on the governance of listed companies
□ Yes ?No
There were no significant differences between the Company’s actual conditions and requirements of laws, administrativeregulations and CSRC normative documents on listed company governance.
II. The Company’s Independence from Its Controlling Shareholders in terms of Business,Personnel, Finance, Organization, Business, etc.During the reporting period, the Company operates in strict compliance with the Company Law and the Articles of Association. Itis entirely independent from the controlling shareholder in terms of business, personnel, assets, institution, finance, etc. and hasindependent and complete business systems and independent operation capabilities.(I) In respect of businessThe Company is equipped with independent R&D design, procurement, marketing and supply systems. It faces the market andoperates independently, without any reliance on the controlling shareholder and other related parties for production and operation.Its businesses are also independent from the controlling shareholder and other related parties.(II) In respect of personnelThe Company has set up an independent HR Dept. with independent personnel files, recruitment, appointment and dismissalsystems, and appraisal, reward and punishment rules in accordance with relevant state laws and regulations. All employees arerecruited through standard recruitment procedures and have signed a labor contract with the Company. Directors, supervisors andsenior management of the Company have been elected and appointed in strict accordance with provisions of the Company Lawand the Articles of Association. Senior management of the Company including the Chairman, General Manager, Deputy GeneralManager, Chief Financial Officer and Board Secretary serve full-time in the Company. They do not hold any positions other thandirectors and supervisors in the controlling shareholder or actual controller or other companies controlled by them, nor do theyreceive remuneration from the controlling shareholder or actual controller or other companies controlled by them. Finance
personnel of the Company do not moonlight in the controlling shareholder or actual controller or other companies controlled bythem.(III) In respect of assetsThe Company legally owns the ownership or use rights of lands, properties, and trademark patents, and other assets relating to itscurrent businesses. The property rights of assets between the Company and its shareholders are clearly defined. There is nosituation where assets, equities or reputation of the Company are used as guarantees for debts of shareholders, or where controllingshareholder and related parties embezzle funds, assets and other resources of the listed company.(IV) In respect of institutionThe Company has established and improved an independent and complete organizational structure in line with the needs of its ownbusiness development, with clear division of labor as well as coordination and cooperation among units and departments.Functional departments are completely independent from the controlling shareholder and actual controller in respects of personnel,office sites and management systems. The Company has put in place a relatively complete corporate governance structure inaccordance with relevant laws. General meetings of shareholders, the Board of Directors and the Board of Supervisors operatestandardly in strict accordance with the Company Law and the Articles of Association. Moreover, the Company is also equippedwith an independent director system. Office premises of the Company are independent of those of the shareholder units, withoutany co-working or mixed operation.(V) In respect of financeThe Company has set up an independent finance department equipped with full-time financial personnel, and also established anindependent accounting system and a standardized financial management system in accordance with the Accounting Law of thePeople's Republic of China and the Accounting Standards for Business Enterprises and is able to make decisions relating tofinancial matters independently. The Company opens independent bank accounts and files for tax returns and performs taxationobligations independently. There is no shared bank account with the controlling shareholder or actual controller or othercompanies controlled by them.III. Horizontal Competition
□ Applicable ?Not applicable
IV. Annual General Meeting and Extraordinary General Meetings Held during theReporting Period
1. Shareholder meetings during the reporting period
| Session of meeting | Type | Ratio of investor participation | Date of convening | Date of disclosure | Resolutions of the meeting |
| 2021 Annual General Meeting of Shareholders | Annual general meeting | 47.20% | May 13, 2022 | May 14, 2022 | Deliberated and approved all proposals. Details can be found in the Announcement on |
| Resolutions of 2021 Annual General Meeting of Shareholders (Announcement No.: 2022-047) on CNINFO (http://www.cninfo.com.cn). | |||||
| 2022 First Extraordinary General Meeting | Extraordinary general meeting of shareholders | 47.40% | August 02, 2022 | August 03, 2022 | Deliberated and approved all proposals. Details can be found in the Announcement on Resolutions of 2022 First Extraordinary General Meeting (Announcement No.: 2022-060) on CNINFO (http://www.cninfo.com.cn). |
| 2022 Second Extraordinary General Meeting | Extraordinary general meeting of shareholders | 45.64% | October 12, 2022 | October 13, 2022 | Deliberated and approved all proposals. Details can be found in the Announcement on Resolutions of 2022 Second Extraordinary General Meeting (Announcement No.: 2022-074) on CNINFO (http://www.cninfo.com.cn). |
2. Extraordinary general meetings of shareholders proposed to be convened by preferred shareholderswhose voting rights were resumed
□ Applicable ?Not applicable
V. Particulars of Directors, Supervisors and Senior Management
1. Basic information
| Name | Position | Position status | Gender | Age | Start date of term of office | End date of term of office | Number of shares held at the beginning of the | Increase of shares during the period | Decrease of shares during the period | Other changes (shares) | Number of shares held at the end of the period | Reason for change |
| period | ||||||||||||
| Xie Bingzheng | Chairman | Incumbent | Male | 54 | February 15, 2015 | January 28, 2024 | 216,170,800 | 216,170,800 | ||||
| Shen Jindong | Director and General Manager | Incumbent | Male | 48 | February 15, 2015 | January 28, 2024 | 19,652,000 | 19,652,000 | ||||
| Tang Xinqiao | Director, Deputy General Manager, and Chief Financial Officer | Incumbent | Female | 50 | February 15, 2015 | January 28, 2024 | 5,895,600 | 5,895,600 | ||||
| Chen Yang | Director, Deputy General Manager, and Board Secretary | Incumbent | Male | 43 | February 15, 2015 | January 28, 2024 | ||||||
| Xu Xiaoxia | Independent Director | Incumbent | Female | 60 | January 26, 2018 | January 28, 2024 | ||||||
| Xie Qing | Independent Director | Incumbent | Male | 58 | January 29, 2021 | January 28, 2024 | ||||||
| Zeng Yamin | Independent Director | Resigned | Female | 44 | January 29, 2021 | August 02, 2022 | ||||||
| He Chunhai | Independent Director | Incumbent | Male | 52 | August 02, 2022 | January 28, 2024 | ||||||
| Shi Minqiang | Chairman of the Board of Supervisors | Incumbent | Male | 41 | February 15, 2015 | January 28, 2024 | ||||||
| Cao Yong | Supervisor | Incumbent | Male | 49 | February 15, 2015 | January 28, 2024 | ||||||
| Zhou Cancan | Employee Representative Supervisor | Incumbent | Female | 51 | January 26, 2018 | January 28, 2024 | ||||||
| Deputy | Incumbe | Femal | 44 | Januar | Januar |
| Jin Fenlin | General Manager | nt | e | y 22, 2017 | y 28, 2024 | |||||||
| Lu Haibo | Deputy General Manager | Incumbent | Male | 48 | October 17, 2022 | January 28, 2024 | ||||||
| Total | -- | -- | -- | -- | -- | -- | 241,718,400 | 0 | 0 | 0 | 241,718,400 | -- |
Whether there was any resignation of directors and supervisors or dismissal of senior management within their term of officeduring the reporting period?Yes □ NoDuring the reporting period, Ms. Zeng Yamin resigned from the independent director of the Company due to personal reasons.After resignation, she no longer holds any position in the Company.Changes in directors, supervisors and senior management of the Company?Applicable □ Not applicable
| Name | Position | Type | Date | Reason |
| Zeng Yamin | Independent Director | Resigned | August 02, 2022 | Resignation due to personal reasons |
| He Chunhai | Independent Director | Elected | August 02, 2022 | Elected by the general meeting of shareholders |
| Lu Haibo | Deputy General Manager | Appointed | October 17, 2022 | Appointed by the board of directors |
2. Main working experience
Professional background, main working experience and main current responsibilities of the Company’s in-service directors,supervisors and senior management(I) DirectorsMr. Xie Bingzheng, born in 1969, is of Chinese nationality and has no permanent residency abroad. Mr. Xie holds an EMBAdegree from Jinan University. He is a National Textile Industry Model Worker, the Vice Chairman of China Golf Association,Vice President of China National Garment Association, Vice President of China Fashion Color Association, Vice President ofChina Textile Planning Research Association, and Vice President of Guangzhou Federation of Industry & Commerce. He startedto serve as the Executive Director (Legal Representative) of the Company in October 2007 and has been the Chairman of theCompany ever since February 2012.Mr. Shen Jindong, born in 1975, is of Chinese nationality and has no permanent residency abroad. Mr. Shen holds an EMBAdegree from Jinan University. He is Vice President of Guangdong Association of Garment and Garment Article Industry. Hebecame the Executive Deputy General Manager of the Company in March 2003 and has been the director and General Manager ofthe Company since February 2012. Ms. Tang Xinqiao, born in 1973, is of Chinese nationality and has no permanent residencyabroad. She has a college degree and is an assistant accountant. Ms. Tang acted as the Deputy General Manager and ChiefFinancial Officer of the Company from December 2006 and currently serves as the director, Deputy General Manager, and ChiefFinancial Officer of the Company.
Mr. Chen Yang, born in 1980, is of Chinese nationality and has no permanent residency abroad. Mr. Chen holds a master’s degree.He once worked as the Director of the Alumni Services Office, School of Business Administration, South China University ofTechnology and the General Manager of Jiangshan Dijing Golf Club. He became the Deputy General Manager and BoardSecretary of the Company in September 2011 and currently serves as the director, Deputy General Manager and Board Secretaryof the Company.Mr. Xie Qing, born in 1965, is of Chinese nationality and has no permanent residency abroad. He is a senior economist with amaster's degree. He once acted as the Vice President of China National Garment Association, the Deputy Director of the Economyand Information Technology Bureau of Xinjiang Uygur Autonomous Region (Aid Xinjiang Program), the Deputy Director-General of the Industry and Information Technology Department of Xinjiang Uygur Autonomous Region (Aid Xinjiang Program),and the Vice President of China Textile Enterprise Association. He has been serving as the Deputy Director of the PlanningDepartment (Industry Development Department), China National Textile and Apparel Council since October 2015 and as theExecutive Vice President of China Textile Enterprise Association since December 2020. Currently, he is an independent directorof the Company.Ms. Xu Xiaoxia, born in 1963, is of Chinese nationality and has no permanent residency abroad. She holds a master's degree. Ms.Xu once worked as an engineer in Shantou AD Photographic Material Research Institute, the Deputy General Manager of theElectromechanical Equipment Company of Guangdong Shantou International Industrial Group, the Assistant to the Dean andDirector of the Training Center of the School of Business Administration, South China University of Technology. Currently, sheserves as the Executive Director of the Research and Consultancy Center for Guangdong Small and Medium-Sized Firms, Schoolof Business Administration, South China University of Technology, and the Managing Director of Baibu Youth (Guangzhou)Management Consulting Co., Ltd. She has part-timed as a director of Guangdong Industrial Finance Holding Company sinceSeptember 2018 and the manager of the Huada Capital Management (Guangdong) Co., Ltd. since March 2022. Currently she is anindependent director of the Company.Mr. He Chunhai, born in 1971, is of Chinese nationality and has no permanent residency abroad. He has a bachelor degree and is acertified public accountant, with expertise in accounting and auditing. He used to be the PM of Guangdong Kangyuan CertifiedPublic Accountants Co., Ltd., the Senior Manager of Zhonghe Zhengxin Certified Public Accountants Co., Ltd., and the SeniorManager and Partner of Tianjian Zhengxin Certified Public Accountants Co., Ltd. Currently, he is the Partner of ShineWingCertified Public Accountants (LLP) and part-times as the independent director of Hainan Strait Shipping Co., Ltd., theindependent director of GMG International Tendering Co., Ltd., and the independent director of Higold Group Co., Ltd. Currently,he is an independent director of the Company.(II) SupervisorsMr. Shi Minqiang, born in 1982, is of Chinese nationality and has no permanent residency abroad. Mr. Shi has a master’s degree.He joined the Company in October 2011 and currently serves as the Chairman of the Board of Supervisors.Mr. Cao Yong, born in 1974, is of Chinese nationality and has no permanent residency abroad. Mr. Cao has a master’s degree. Heonce worked in Bank of China Guangdong Branch. He served as the Investment Director of the Investment Department,
Guangzhou Jinan Investment Co., Ltd. between September 2010 and August 2022 and part-timed as a director of GuangdongZhongyao Kiln Stock Co., Ltd. between August 2017 and August 2022. Currently he is a supervisor of the Company.Ms. Zhou Cancan, born in 1972, is of Chinese nationality and has no permanent residency abroad. She holds a college degree andhas been working in the Company since 2008. Currently she is a supervisor of the Company.(III) Senior managementMr. Shen Jindong is the General Manager of the Company. For details on his resume, please refer to the above “(I) Directors”.Ms. Tang Xinqiao is the Deputy General Manager and Chief Financial Officer of the Company. For details on her resume, pleaserefer to the above “(I) Directors”.Mr. Chen Yang is the Deputy General Manager and Board Secretary of the Company. For details on his resume, please refer to theabove “(I) Directors”.Ms. Jin Fenlin, born in 1979, is of Chinese nationality and has no permanent residency abroad. Ms. Jin holds a master's degree andis currently the Executive Director of China Fashion Color Association. She joined the Company in 2008 and currently serves asthe Deputy General Manager of the Company.Mr. Lu Haibo, born in 1975, is of Chinese nationality and has no permanent residency abroad. He holds a doctorate inmanagement. Mr. Lu once served as the Partner of Jiangsu U-Choice Consulting Co., Ltd., the Senior Partner of Shanghai BaiyanEnterprise Management Consulting Co., Ltd., the Deputy Director of Human Resources of Suzhou Broadcasting System, and theVice President of Human Resources of Sanpower Group. He joined the Company in 2022 and currently serves as the DeputyGeneral Manager of the Company.Positions in shareholder entities
□ Applicable ?Not applicable
Positions in other entities?Applicable □Not applicable
| Name | Name of other entity | Position held in other entity | Start date of term of office | End date of term of office | Whether receiving remuneration and allowance from other entity |
| Xie Qing | Planning Department (Industry Development Department), China National Textile and Apparel Council | Deputy Director | October 01, 2015 | No | |
| Xie Qing | China Textile Enterprise Association | Executive Vice President | December 01, 2020 | Yes | |
| Xu Xiaoxia | Research and Consultancy Center for Guangdong Small and Medium-Sized Firms, South | Executive Director | January 01, 2022 | Yes |
| China University of Technology | |||||
| Xu Xiaoxia | Baibu Youth (Guangzhou) Management Consulting Co., Ltd. | Managing Director | September 01, 2021 | No | |
| Xu Xiaoxia | Guangdong Industrial Finance Holding Company | Director | September 01, 2018 | No | |
| Xu Xiaoxia | Huada Capital Management (Guangdong) Co., Ltd. | Manager | March 01, 2022 | No | |
| He Chunhai | ShineWing Certified Public Accountants (LLP) | Partner | August 01, 2011 | Yes | |
| He Chunhai | Hainan Strait Shipping Co., Ltd. | Independent Director | January 17, 2017 | Yes | |
| He Chunhai | GMG International Tendering Co., Ltd. | Independent Director | June 23, 2020 | Yes | |
| He Chunhai | Higold Group Co., Ltd. | Independent Director | September 01, 2020 | Yes | |
| Xie Bingzheng | Guangzhou Nanyue Mingchuang Private Equity Securities Investment Fund Management Co., Ltd. | Director | February 25, 2021 | No | |
| Tang Xinqiao | Guangdong Quality Energy Beverage Co., Ltd. | Director | July 25, 2018 | No | |
| Tang Xinqiao | Guangzhou Chuanqi Intelligent Technology Co., Ltd. | Executive Director and General Manager | April 26, 2019 | No | |
| Tang Xinqiao | Guangzhou Wanqi Business Management Co., Ltd. | Supervisor | September 07, 2021 | No | |
| Tang Xinqiao | Guangzhou Wanye Business Management Co., Ltd. | Supervisor | February 28, 2022 | No | |
| Cao Yong | Guangdong Zhongyao Kiln Stock Co., Ltd. | Director | August 01, 2017 | August 01, 2022 | No |
Penalties by regulatory authorities on the Company’s directors, supervisors and senior management both incumbent and resignedduring the reporting period over the past three years
□ Applicable ?Not applicable
3. Remuneration of directors, supervisors and senior management
Procedures and basis for determining the remuneration of directors, supervisors and senior management and actual paymentFor the remuneration and appraisal of directors, the Remuneration and Review Committee proposes the program, which is thensubmitted to the general meeting of shareholders for approval. For the remuneration and appraisal of supervisors, the Board ofSupervisors proposes the program, which is then submitted to the general meeting of shareholders for approval. For theremuneration and appraisal of senior management, the Remuneration and Review Committee proposes the program, which is thensubmitted to the Board of Directors for approval.The annual allowance for independent directors is determined after being reviewed and approved by the general meeting ofshareholders. The standard is RMB60,000/year for each independent director, which is paid monthly.During the reporting period, remunerations of directors, supervisors and senior management of the Company are reasonable andpaid in time, which are consistent with requirements of regulatory authorities and relevant regulations of the Company.Remuneration of directors, supervisors and senior management of the Company during the reporting period
Unit: RMB10,000
| Name | Position | Gender | Age | Position status | Total remuneration before tax received from the Company | Whether receiving remuneration from related parties of the Company |
| Xie Bingzheng | Chairman | Male | 54 | Incumbent | 107.93 | No |
| Shen Jindong | Director and General Manager | Male | 48 | Incumbent | 115.33 | No |
| Tang Xinqiao | Director, Deputy General Manager, and Chief Financial Officer | Female | 50 | Incumbent | 108.41 | No |
| Chen Yang | Director, Deputy General Manager, and Board Secretary | Male | 43 | Incumbent | 74.96 | No |
| Xu Xiaoxia | Independent Director | Female | 60 | Incumbent | 6 | No |
| Xie Qing | Independent Director | Male | 58 | Incumbent | No | |
| Zeng Yamin | Independent Director | Female | 44 | Resigned | 3.54 | No |
| He Chunhai | Independent Director | Male | 52 | Incumbent | 2.46 | No |
| Shi Minqiang | Chairman of the Board of Supervisors | Male | 41 | Incumbent | 32.45 | No |
| Cao Yong | Supervisor | Male | 49 | Incumbent | 2.4 | No |
| Zhou Cancan | Employee Representative Supervisor | Female | 51 | Incumbent | 43.11 | No |
| Jin Fenlin | Deputy General Manager | Female | 44 | Incumbent | 50.62 | No |
| Lu Haibo | Deputy General Manager | Male | 48 | Incumbent | 119.67 | No |
| Total | -- | -- | -- | -- | 666.88 | -- |
VI. Performance of Duties by Directors during the Reporting Period
1. Board meetings during the reporting period
| Session of meeting | Date of convening | Date of disclosure | Resolutions of the meeting |
| 8th Meeting of the Fourth Board of Directors | January 13, 2022 | January 15, 2022 | No proposal was rejected at the meeting. For details, please refer to the announcement on CNINFO (http://www.cninfo.com.cn). |
| 9th Meeting of the Fourth Board of Directors | January 24, 2022 | January 25, 2022 | No proposal was rejected at the meeting. For details, please refer to the announcement on CNINFO (http://www.cninfo.com.cn). |
| 10th Meeting of the Fourth Board of Directors | March 09, 2022 | March 10, 2022 | No proposal was rejected at the meeting. For details, please refer to the announcement on CNINFO (http://www.cninfo.com.cn). |
| 11th Meeting of the Fourth Board of Directors | April 15, 2022 | April 16, 2022 | No proposal was rejected at the meeting. For details, please refer to the announcement on CNINFO (http://www.cninfo.com.cn). |
| 12th Meeting of the Fourth Board of Directors | July 15, 2022 | July 16, 2022 | No proposal was rejected at the meeting. For details, please refer to the announcement on CNINFO (http://www.cninfo.com.cn). |
| 13th Meeting of the Fourth Board of Directors | August 29, 2022 | August 30, 2022 | No proposal was rejected at the meeting. For details, please refer to the announcement on CNINFO (http://www.cninfo.com.cn). |
| 14th Meeting of the Fourth Board of Directors | October 17, 2022 | October 18, 2022 | No proposal was rejected at the meeting. For details, please refer to the announcement on CNINFO (http://www.cninfo.com.cn). |
| 15th Meeting of the Fourth Board of Directors | December 30, 2022 | December 31, 2022 | No proposal was rejected at the meeting. For details, please refer to the announcement on CNINFO (http://www.cninfo.com.cn). |
2. Directors’ attendance to Board meetings and general meetings of shareholders
| Directors’ attendance to Board meetings and general meetings of shareholders | |||||||
| Name of director | Number of Board meetings required to attend during the reporting period | Number of Board meetings attended in person | Number of Board meetings attended via communication methods | Number of Board meetings attended by proxy | Number of absence | Any failure in attending in person for two consecutive meetings | Number of general shareholder meetings attended |
| Xie Bingzheng | 8 | 6 | 2 | 0 | 0 | No | 3 |
| Shen Jindong | 8 | 7 | 1 | 0 | 0 | No | 3 |
| Tang Xinqiao | 8 | 7 | 1 | 0 | 0 | No | 3 |
| Chen Yang | 8 | 6 | 2 | 0 | 0 | No | 3 |
| Xu Xiaoxia | 8 | 6 | 2 | 0 | 0 | No | 3 |
| Xie Qing | 8 | 1 | 7 | 0 | 0 | No | 3 |
| Zeng Yamin | 5 | 2 | 3 | 0 | 0 | No | 2 |
| He Chunhai | 3 | 2 | 1 | 0 | 0 | No | 1 |
Explanation of failure in attending in person for two consecutive meetingsNot applicable
3. Objections by directors to the Company’s relevant matters
Whether directors raised objections to relevant matters of the Company
□ Yes ?No
Directors did not raise objections to relevant matters of the Company during the reporting period.
4. Other descriptions on directors’ performance of duty
Whether opinions from directors were adopted?Yes □ NoDescription on whether opinions from directors were adoptedDuring the reporting period, all the directors of the Company performed their duties faithfully and diligently in strict accordancewith the Company Law, the Securities Law, the Rules Governing the Listing of Shares on Shenzhen Stock Exchange and otherrelevant laws and regulations. They paid attention to the Company’s standardized operations and reviewed various matters of theCompany scientifically and prudently, and put forward valuable, professional suggestions regarding operations and developmentof the Company according to actual situations of the Company. Efforts were also made to actively protect the legitimate rights andinterests of the Company and all shareholders.VII. Particulars of the Special Committees under the Board of Directors during theReporting Period
| Name of committee | Members | Number of meetings convened | Date of convening | Contents | Important opinions and suggestions | Other situations of duty | Specifics of objections |
| raised | performance | (if any) | |||||
| Strategy Committee | Xie Bingzheng, Shen Jindong, Tang Xinqiao, Chen Yang, Xu Xiaoxia, Xie Qing, Zeng Yamin | 1 | April 15, 2022 | Discussed and reviewed the Proposal on the Strategic Planning of Branches in 2022 and the Proposal on the 2021 Work Report of the General Manager | The meeting reviewed operations in 2021 and put forward prospects for 2022. | None | None |
| Remuneration and Review Committee | Xu Xiaoxia, Shen Jindong, Zeng Yamin | 1 | April 15, 2022 | Reviewed the remuneration program for directors in 2022; reviewed the remuneration program for senior management in 2022 | Participants raised no objection to the proposals, and all proposals were approved at the meeting. | None | None |
| Nomination Committee | Xie Qing, Xie Bingzheng, Xu Xiaoxia | 2 | July 15, 2022 | Proposal on By-election of Independent Directors | After fully reviewing and considering the qualifications of the proposed candidates based on the principle of professional experience diversification and competence complementation of board members, the meeting agreed to submit the proposal to the Board of Directors for review and approval. | ||
| Nomination Committee | Xie Qing, Xie Bingzheng, Xu Xiaoxia | 2 | October 17, 2022 | Proposal on Appointing the Deputy General Manager of the Company | After considering that qualifications of the candidates were up to requirements on senior management of listed companies and requirements of |
| the post, the meeting agreed to submit the proposal to the Board of Directors for review and approval. | |||||||
| Audit Committee | Zeng Yamin, Chen Yang, Xu Xiaoxia | 2 | March 09, 2022 | Proposal on Corrections to Accounting Errors in Previous Periods; discussed and reviewed the 2021 Internal Audit Work Report of the Company | The meeting agreed to submit the proposal to the Board of Directors for review and approval. | ||
| April 11, 2022 | Reviewed the 2021 Audit Report presented by the CPA firm; reviewed the 2021 Internal Control Self-evaluation Report; reviewed the 2022 First Quarter Report; reviewed the Internal Audit Work Report of 2022 Q1. | Participants raised no objection to the proposals, and all proposals were approved at the meeting. | |||||
| Audit Committee | He Chunhai, Chen Yang, Xu Xiaoxia | 3 | August 29, 2022 | Reviewed the Company's 2022 Semi-Annual Report; reviewed the Proposal on the Continued Engagement of the CPA Firm in 2022; reviewed the Special Report on the Deposit and Use of Proceeds in H1 2022; listened to the Company's | Participants raised no objection to the proposals, and all proposals were approved at the meeting. |
| internal audit work report in Q2 2022 | ||||
| October 17, 2022 | Reviewed the 2022 Third Quarter Report; listed to the Company's internal audit work report in Q3 2022 | Participants raised no objection to the proposals, and all proposals were approved at the meeting. | ||
| December 30, 2022 | Reviewed and deliberated the Company's internal audit work plan in 2023 | All the proposals were agreed. |
VIII. Work of the Board of SupervisorsWhether the Board of Supervisors discovered risks in supervisory activities during the reporting period
□ Yes ?No
The Board of Supervisors had no objections to supervised events during the reporting period.
IX. Employees of the Company
1. Number, profession composition and education level of employees
| Number of in-service employees of the Parent Company at the end of the reporting period | 533 |
| Number of in-service employees of the major subsidiaries at the end of the reporting period | 2,769 |
| Total number of in-service employees at the end of the reporting period | 3,302 |
| Total number of employees receiving remuneration in the reporting period | 3,302 |
| Number of retired employees whose expenses are borne by the Parent Company and its major subsidiaries | 7 |
| Composition of professions | |
| Type of profession | Number of persons |
| Sales staff | 2,756 |
| Administrative staff | 164 |
| Operation staff | 303 |
| R&D and design staff | 79 |
| Total | 3,302 |
| Education level | |
| Type of education level | Number of persons |
| Postgraduates and above | 15 |
| University graduates | 226 |
| College graduates | 760 |
| Technical school graduates and lower | 2,301 |
| Total | 3,302 |
2. Remuneration policy
Remunerations of the Company should be performance-oriented and encourage and give full play to the initiatives and innovationsof employees internally, and remain competitive externally. The Company pays attention to both performance and position values,and adopts a flexible remuneration structure for different sequences of positions. The remuneration base and total amount aredynamically managed in line with the business performance of the Company. Adhering to the value proposition of people-oriented,remuneration policy of the Company should be able to enhance the cohesion and competitiveness of the Company, to promote itssustainable, smooth and fast development.
3. Training program
The Company values the growth of every employee and has set up different training programs for employees and managers basedon their different professional sequence and management level. Moreover, targeted courses have been developed in combinationwith the results of survey on annual training needs, to ensure the scientific nature and effectiveness of the curriculum. Catering todifferent trainees, the Company has forged a series of classic training programs like the “National New Product Tour Training”,“National Store Management Training” and “Orientation Training”. The E-learning platform developed by the Company featurespocket courses and short teaching videos, which could satisfy the learning needs of all employees throughout the country anytime,anywhere.The Company has established the BIEM.L.FDLKK Business Academy targeting at mid-level managers and backbone employees.Combining offline and CEIBS online platform, the program aims to tap the potentials of employees by strengthening theirstrategic management, project management and process management capabilities and solidifying their work abilities. It could helpthem identify key capabilities and practical design with a focus on business pain points, stimulate their awareness of learning andinnovation, and solidify their work abilities.
4. Labor outsourcing
□ Applicable ?Not applicable
X. Profit Distribution of the Ordinary Shares and Conversion of Capital Reserve to ShareCapital of the Company
Formulation, implementation or adjustment of profit distribution policies of ordinary shares especially the cash dividend plan inthe reporting period?Applicable □ Not applicable
The Company implemented profit distribution in strict accordance with relevant requirements of the Articles of Association in thereporting period.During the reporting period, the Board of Directors and the general shareholder meeting deliberated and approved the 2021 profitdistribution plan on April 15 and May 13, 2022, respectively, which is: Distribute a cash dividend of RMB3.0 (tax inclusive) forevery 10 shares to all shareholders based on the total share capital of 570,707,084 shares as at the end of March 31, 2022, with atotal amount of RMB171,212,125.20. The plan was completed in July 2022.
| Special explanation on cash dividend policy | |
| Whether the policy complies with provisions of the Articles of Association or requirements of the resolutions made on the shareholders’ general meeting: | Yes |
| Whether dividend standards and ratio are definite and clear: | Yes |
| Whether relevant decision-making procedure and mechanism are well-established: | Yes |
| Whether independent directors have performed duties and played their roles properly: | Yes |
| Whether minority shareholders have sufficient opportunities to express opinions and requests, and whether their legitimate rights and interests were sufficiently protected: | Yes |
| Where the cash dividend policy undergoes any adjustment or change, whether the conditions and procedures are compliant and transparent: | Not applicable |
The Company gained profits in the reporting period and the retained profit of the Parent Company for holders of ordinary shareswas positive, but no plan of cash dividend was proposed
□ Applicable ?Not applicable
Profit distribution and conversion of capital reserve to share capital during the reporting period?Applicable □ Not applicable
| Number of bonus shares for every 10 shares | 0 |
| Amount of dividend for every 10 shares (RMB) (tax included) | 3.00 |
| Basis of the shares for distribution proposal | 570,707,084 |
| Amount of cash dividends (RMB) (tax included) | 171,212,125.20 |
| Cash dividend amount in other ways (such as share repurchase) (RMB) | 0.00 |
| Total amount of cash dividends (including other ways) (RMB) | 171,212,125.20 |
| Distributable profit (RMB) | 2,338,994,313.31 |
| Proportion of total cash dividends (including other ways) in distributable profit | 100% |
| Cash dividend of the reporting period | |
| If the Company is in the growth period and there are major capital expenditure arrangements, when the profit is distributed, the proportion of cash dividends in this profit distribution should be at least 20%. | |
| Details of the profit distribution proposal or share conversion proposal from capital reserve | |
| The Company plans to distribute a cash dividend of RMB3.0 (tax inclusive) for every 10 shares to all shareholders based on a total share capital of 570,707,084 shares as at December 31, 2022, with a total amount of RMB171,212,125.20; no bonus shares will be issued and no capital reserve will be converted into share capital; the remaining undistributed profits will be carried forward to the next year. Where there are any changes to the Company's total share capital after the announcement of the profit distribution proposal and before the equity registration date for actual implementation, the Company will maintain the same distribution ratio | |
per share and adjusts the total distribution amount accordingly.
XI. Implementation of the Stock Incentive Plan, Employee Stock Ownership Plan, andOther Employee Incentives of the Company
?Applicable □ Not applicable
1. Equity incentive
NoneEquity incentives granted to directors and senior management during the reporting period
□ Applicable ?Not applicable
Performance appraisal and incentives of senior managementNone
2. Implementation of the employee stock ownership plan
?Applicable □ Not applicableAll valid employee stock ownership plans during the reporting period
| Scope of employees | Number of entitled employees | Total number of shares held | Changes | Proportion to the total share capital of the listed company | Source of funds for implementing the plan |
| 1. Directors (excluding independent directors), supervisors and senior management of the Company; 2. Other core and backbone employees | 851 | 6,494,626 | None | 1.14% | Self-raised funds by employees and borrowed funds from the controlling shareholder |
Shareholdings of directors, supervisors and senior management in the Employee Stock Ownership Plan during the reporting period
| Name | Position | Number of shares held at the beginning of the reporting period | Number of shares held at the end of the reporting period | Proportion to the total share capital of the listed company |
| Shen Jindong | Director and General Manager | 413,590 | 0 | 0.00% |
| Tang Xinqiao | Director, Deputy General Manager, and Chief Financial Officer | 241,187 | 0 | 0.00% |
| Chen Yang | Director, Deputy General Manager, and Board Secretary | 55,500 | 0 | 0.00% |
| Jin Fenlin | Deputy General Manager | 47,234 | 0 | 0.00% |
| Shi Minqiang | Chairman of the Board of Supervisors | 44,872 | 0 | 0.00% |
| Zhou Cancan | Employee | 35,425 | 0 | 0.00% |
RepresentativeSupervisor
Changes in asset management institution during the reporting period
□ Applicable ?Not applicable
Changes in equity due to disposal of shares by holders during the reporting period
□ Applicable ?Not applicable
Exercise of shareholder rights during the reporting periodNoneOther situations of the employee stock ownership plan during the reporting period and explanation
□ Applicable ?Not applicable
Changes in the members of the management committee of the employee stock ownership plan
□ Applicable ?Not applicable
Financial impact of the employee stock ownership plan on the listed company during the reporting period and related accountingtreatment
□ Applicable ?Not applicable
Termination of employee stock ownership plan during the reporting period?Applicable □ Not applicableOn May 13, 2022, the Company issued the Announcement on the Completion of the Sale of the Phase III Employee StockOwnership Plan and Termination of the Plan. All the 6,494,626 shares under the Plan were sold through centralized bidding.Accordingly, the Phase III Employee Stock Ownership Plan was terminated. For details, please refer to the announcement onCNINFO (http://www.cninfo.com.cn).
3. Other employee incentives
□ Applicable ?Not applicable
XII. Construction and Implementation of Internal Control Systems during the ReportingPeriod
1. Internal control construction and implementation
The Company has put in place a relatively complete corporate governance structure and a relatively sound internal control system,which are consistent with the Company’s management requirements and development needs and compliant with relevant laws,regulations and securities regulatory requirements. Various internal systems of the Company were well implemented and furtherrevised and optimized in 2022, and have basically achieved the overall goal of internal control. They have played a positive role incontrolling and preventing operation and management risks, protecting the legitimate rights and interests of investors, andpromoting the standardized operation and healthy development of the Company. As of December 31, 2022, the design andoperations of the Company’s internal control system are effective, without any major defects.
The internal control system should be continuously improved with the expansion of the Company's businesses and scale. TheCompany will continue to optimize the building of the internal control system, and strengthen the awareness of standardizedoperation and internal supervision mechanism, so as to promote its sustainable, stable and healthy development.
2. Particulars of material internal control defects detected during the reporting period
□ Yes ?No
XIII. Management and Control of the Company for Subsidiaries during the ReportingPeriod
| Name of company | Integration plan | Integration progress | Problems in integration | Solutions taken | Solution progress | Subsequent solution plan |
| Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable |
XIV. Self-assessment Report on Internal Control or Internal Control Audit Report
1. Self-assessment report on internal control
| Disclosure date of the self-assessment report on internal control | April 28, 2023 |
| Disclosure index of the self-assessment report on internal control | CNINFO (http://www.cninfo.com.cn) |
Percentage of total assets of unitsincluded in the assessment scope to theCompany’s total assets in itsconsolidated financial statements
| 100.00% | ||
| Percentage of total revenue of units included in the assessment scope to the Company’s revenue in its consolidated financial statements | 100.00% | |
| Defect identification criteria | ||
| Category | Financial report | Non-financial report |
| Qualitative criteria | Material defect: (1) The internal control is invalid; (2) Directors, supervisors and senior management have committed fraud and caused serious losses and severe adverse impacts to the company; (3) Significant errors in the current financial reports were identified by the certified public accountants but not by internal control; (4) The internal control and supervision conducted by the company’s audit committee and internal auditing units are invalid; (5) There exist one or a combination of control defects that may cause the company to materially deviate from the objectives of internal control. Major defect: (1) The company fails to select and apply | Material defect: Its probability of occurrence is high or the defect severely reduces work efficiency or effectiveness, or severely increases the uncertainty of effects or causes severe deviations from expected objectives. Major defect: Its probability of occurrence is relatively high or the defect significantly reduces work efficiency or effectiveness, or significantly increases the uncertainty of effects or causes obvious deviations from expected objectives. General defect: Its probability of occurrence is low or the defect reduces work efficiency or effectiveness, or increases the uncertainty of effects or |
| accounting policies based on generally accepted accounting standards; (2) There are no anti-fraud procedures and control measures; (3) There is no control mechanism for significant non-routine or special transactions or the mechanism is not implemented, while there is no compensatory control; (4) There are one or multiple defects in the control of the financial reporting process at the end of the period such that the authenticity and completeness of the prepared financial reports could not be reasonably guaranteed. General defect: Other internal control defects than material defects and major defects. | causes deviations from expected objectives. | |
| Quantitative criteria | Quantitative criteria take revenue and total assets as measurement indicators. (1) In respect of revenue: General defect: The misstated amount in the financial report arising from the defect alone or in combination with other defects is less than 1% of revenue;Major defect: The misstated amount is between 1% (inclusive) and 2% of the revenue;Material defect: The misstated amount is more than 2% (inclusive) of revenue. (2) In respect of total assets: General defect: The misstated amount in the financial report arising from the defect alone or in combination with other defects is less than 0.5% of total assets;Major defect: The misstated amount is between 0.5% (inclusive) and 1% of total assets;Material defect: The misstated amount is more than 1% (inclusive) of total assets. | The quantitative criteria for non-financial report defects are subject to those of financial report defects. |
| Number of material defects in financial reports | 0 | |
| Number of material defects in non-financial reports | 0 | |
| Number of major defects in financial reports | 0 | |
| Number of major defects in non-financial reports | 0 | |
2. Internal Control Audit Report
?Applicable □Not applicable
| Audit Opinions in the Internal Control Audit Report | |
| We believe that the Company has maintained effective internal control over financial reporting in all material aspects in accordance with requirements of the Basic Norms for the Internal Control of Enterprises and other relevant control standards as at December 31, 2022. | |
| Disclosure of the Internal Control Audit Report | Disclosed |
| Disclosure date of the Internal Control Audit Report | April 28, 2023 |
| Disclosure index of the Internal Control Audit Report | 2022 Internal Control Audit Report on CNINFO |
| Type of opinion of the Internal Control Audit Report | Standard unqualified |
| Whether there were material defects in non-financial reports | No |
Whether the CPA firm issued an Internal Control Audit Report with qualified opinions
□ Yes ?No
Whether opinions of the Internal Control Audit Report issued by the CPA firm were consistent with the self-assessment report ofthe Board?Yes □ No
XV. Rectification of Detected Problems in the Corporate Governance Special Action ofListed Companies
Not applicable
Section V Environmental and Social ResponsibilitiesI. Main Environmental Protection IssuesWhether the listed company and its subsidiaries are the key pollution discharge units published by the environmental protectiondepartment
□ Yes ?No
Administrative penalties due to environmental issues during the reporting period
| Name of company or subsidiary | Reason of penalty | Violation | Penalty result | Impact on production and operation of the listed company | Rectification measures of the Company |
| Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable |
Other environmental information to be disclosed with a reference to key pollutant discharge unitsNot applicableMeasures taken to reduce carbon emissions during the reporting period and their effects
□ Applicable ?Not applicable
Reason for not disclosing other environmental informationNot applicableThe Company shall comply with information disclosure requirements on the textile and garment-related industries as stipulated inthe SZSE Guidelines No. 3 for the Self-discipline and Supervision of Listed Companies — Industry Information Disclosure.Occurrence of environmental accidents of the listed companyNot applicable
II. Corporate Social Responsibilities
(1) Corporate governance and investor protection
Pursuant to the Company Law, the Securities Law and relevant regulatory requirements of China Securities RegulatoryCommission and Shenzhen Stock Exchange, the Company has defined a governance structure with general shareholder meetingsas the organ of authority, the Board of Directors as the decision-making body and the Board of Supervisors as the supervisorybody, and has formulated their rule of procedure and decision-making procedure. Moreover, the Articles of Association of theCompany is at the center of the Company’s governance system, which is continuously revised and improved according to newrequirements.The Company attaches great importance to the protection of rights and interests of investors and has formulated the Rules ofProcedures of the General Meeting of Shareholders and the Investor Relations Management System, to regulate the elections ofdirectors and supervisors, ensure full exercise of power by shareholders, and safeguard the interests of minority shareholders.
(2) Protection of employee rights and interests
Adhering to the principle of people-oriented, the Company actively provides employees with a development platform andenvironment to realize their self-worth. In addition, the Company has established a sound and harmonious corporate culture that
facilities the common development of the Company and employees, such that employees can share the Company’s operatingresults. Pursuant to the Labor Law and other relevant laws and regulations, the Company has put in place a sound HR system andoffers a safe and comfortable workplace environment to employees. It listens to voices of the employees, pays close attention totheir health, safety and satisfaction, and actively carries out trainings to improve the overall quality of the workforce.
(3) Relationship with other stakeholders
The Company actively builds and develops the strategic partnership with suppliers and customers and provides quality productsand services to customers under the principles of “voluntariness, equality and mutual benefit”. It strengthens communication andcooperation with suppliers to achieve win-win and strictly controls product quality to protect the interests of consumers. The soundcommunication and coordination with relevant stakeholders to build a platform of trust and cooperation can properly guarantee therights and interests of all parties. In terms of social welfare undertakings, the Company actively fulfills its corporate socialresponsibilities and creates values for stakeholders and the society as a whole.III. Efforts Regarding Poverty Alleviation and Rural RevitalizationThe Company did not engage in any poverty alleviation and rural revitalization work during the reporting period.
Section VI Significant EventsI. Implementation of Commitments
1. Commitments fulfilled by actual controllers, shareholders, related parties, purchasers, or the Companywithin the reporting period and commitments not fulfilled by the end of the reporting period?Applicable □Not applicable
| Cause of commitment | Undertaking party | Type of commitment | Content of commitment | Time of commitment | Term of commitment | Fulfillment of commitment |
| Commitments made during IPO or refinancing | Xie Bingzheng, Feng Lingling, Shen Jindong, Tang Xinqiao | Commitment to share reduction | They promise that during their term as a director, supervisor and senior management of the Company, they will not transfer more than 25% of the total shares they hold in the Company each year; if they leave office, they will not transfer any shares within six months after leaving office; within 12 months upon the expiration of the aforesaid 6 months after reporting for leaving office, the number of shares sold through stock exchange listing will not exceed 50% of the total number of shares they hold in the Company. | December 23, 2016 | During the term when they serve as the director, supervisor and senior management and within a specific period after reporting for leaving office | Ongoing normally |
| Xie Bingzheng, Feng Lingling | Not-to-compete commitment | They have presented the Letter of Commitment to Avoid Horizontal Competition, promising not to compete with the Company in the same business sector. | January 15, 2013 | During the period when they act as the controlling shareholder and actual controller of the Company and within three years after they no longer act as the controlling shareholder and actual controller | Ongoing normally | |
| Whether commitments | Yes | |||||
| are fulfilled on time | |
| If there are commitments not fulfilled within the specified period of time, specify reasons for failure to do so and follow-up work plans | Not applicable |
2. If there are assets or projects of the Company which have profit forecast while the reporting period isstill in the forecast period, the Company should state whether the assets or projects could still achieve theprofit forecast and explain reasons
□ Applicable ?Not applicable
II. Appropriation of Funds for Non-operating Purposes by Controlling Shareholder and ItsRelated Parties
□ Applicable ?Not applicable
During the reporting period, the Company did not have any funds appropriated for non-operating purposes by the controllingshareholder and its related parties.III. External Guarantee in Violation of Prescribed Procedures
□ Applicable ?Not applicable
During the reporting period, there was no external guarantee in violation of prescribed procedures.
IV. Explanation by the Board of Directors of the “Non-standard Audit Report” of the LatestPeriod
□ Applicable ?Not applicable
V. Explanation by the Board of Directors, the Board of Supervisors, and IndependentDirectors (if any) of the "Non-standard Audit Report" for the Reporting Period Issued bythe CPA Firm
□ Applicable ?Not applicable
VI. Changes in Accounting Policies and Estimates Compared with the Financial Report ofLast Fiscal Year or Correction of Significant Accounting Errors
?Applicable □Not applicable
(1) Implementation of the Interpretation No. 15 to Accounting Standards for Business Enterprises
In December 2021, the Ministry of Finance issued the Interpretation No. 15 to Accounting Standards for Business Enterprises (CaiKuai [2021] No. 35) (hereinafter referred to as the “Interpretation No.”), which stipulated that contents regarding “accountingtreatment for the external sales of products or by-products before they reach intended use or produced during the research anddevelopment process” and “judgment of loss contracts” shall be implemented from January 1, 2022.The Company started to implement the provisions regarding “accounting treatment for the external sales of products or by-products before they reach intended use or produced during the research and development process” and “judgment of losscontracts” from January 1, 2022. The above changes in accounting policies have no impact on the Company’s financial statements.
(2) Implementation of the Interpretation No. 16 to Accounting Standards for Business EnterprisesIn November 2022, the Ministry of Finance issued the Interpretation No. 16 to Accounting Standards for Business Enterprises(Cai Kuai [2022] No. 31) (hereinafter referred to as the “Interpretation No. 16”), which stipulated that contents regarding“accounting treatment for the dividends of financial instruments classified as equity instruments by the issuer” and “accountingtreatment for the change of cash-settled share-based payment transaction to equity-settled shared-based payment transaction” shallcome into force as of the date of issuance.The Company started to implement the provisions regarding “accounting treatment for the dividends of financial instrumentsclassified as equity instruments by the issuer” and “accounting treatment for the change of cash-settled share-based paymenttransaction to equity-settled shared-based payment transaction” as of the date of issuance. The above changes in accountingpolicies have no impact on the Company’s financial statements.VII. Changes in the Scope of Consolidated Statements Compared with the Financial Reportof Last Year?Applicable □ Not applicableIn December 2022, three new companies were incorporated into the consolidated scope due to business needs, including oneholing subsidiary Guangzhou Houde Zaiwu Industrial Investment Fund Partnership (Limited Partnership) and two second-tiersubsidiaries of Hong Kong Carritt Limited and Hong Kong Plentiful Shiny Limited.
VIII. Engagement and Dismissal of CPA Firm
CPA firm engaged
| Name of the domestic CPA firm | Huaxing Certified Public Accountants LLP |
| Remuneration for the domestic CPA firm (RMB 10,000) | 150 |
| Consecutive years of auditing service provided by the domestic CPA firm | 3 years |
| Name of domestic certified public accountants | Chen Danyan, He Ting |
| Consecutive years of auditing service provided by domestic certified public accountants | 1 year, 2 years |
Whether the CPA firm was changed in the reporting period
□ Yes ?No
Appointment of CPA firm, financial advisor or sponsor for internal control audit?Applicable □Not applicableDuring the reporting period, the Company hired Huaxing Certified Public Accountants LLP to provide internal control auditservices for the Company, with a service fee of RMB400,000.IX. The Company Facing Delisting after the Disclosure of the Annual Report
□ Applicable ?Not applicable
X. Matters relating to Bankruptcy and Restructuring
□ Applicable ?Not applicable
No bankruptcy and restructuring-related matters of the Company happened during the reporting period.XI. Material Litigations and Arbitrations
□ Applicable ?Not applicable
There were no material litigations or arbitrations during the reporting period.XII. Penalties and Rectifications
□ Applicable ?Not applicable
No penalties and rectifications of the Company occurred during the reporting period.XIII. Integrity Records of the Company and its Controlling Shareholder and ActualController
□ Applicable ?Not applicable
XIV. Material Related Party Transactions
1. Related party transactions relating to daily operations
□ Applicable ?Not applicable
The Company had no related party transactions relating to daily operations during the reporting period.
2. Related party transactions relating to acquisition and sale of assets or equities
□ Applicable ?Not applicable
During the reporting period, there was no related party transaction relating to acquisition and sale of assets or equities.
3. Related party transactions relating to joint outbound investment
□ Applicable ?Not applicable
During the reporting period, there was no related party transaction relating to joint outbound investment.
4. Related party transactions relating to credits and debts
□ Applicable ?Not applicable
During the reporting period, there was no related party transaction relating to credits and debts.
5. Transactions with related party financial companies
□ Applicable ?Not applicable
The Company did not have deposit, loan, credit or other financial business transactions with financial companies that have relatedrelationship and the associated related parties.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable ?Not applicable
Financial companies controlled by the Company did not have deposit, loan, credit or other financial business transactions withrelated parties.
7. Other significant related party transactions
□ Applicable ?Not applicable
During the reporting period, there were no other significant related party transactions.
XV. Significant Contracts and Their Performance
1. Custody, contracting and leasing matters
(1) Custody
□ Applicable ?Not applicable
During the reporting period, there was no custody.
(2) Contracting
□ Applicable ?Not applicable
During the reporting period, there was no contracting.
(3) Leasing
?Applicable □Not applicableDescription of leasing mattersFor details on leasing matters, please refer to “Section X Financial Report --> XVI. Other Significant Matters --> 2. Leases”.Projects whose profits or losses brought to the Company reached more than 10% of the total profits of the Company during thereporting period
□ Applicable ?Not applicable
During the reporting period, there were no leasing projects whose profits or losses brought to the Company reached more than10% of the total profits of the Company during the reporting period.
2. Material guarantees
□ Applicable ?Not applicable
During the reporting period, the Company did not have material guarantees.
3. Entrusting others to manage cash assets
(1) Entrusted wealth management
?Applicable □Not applicableOverview of entrusted wealth management during the reporting period
Unit: RMB10,000
| Specific type | Source of entrusted wealth management funds | Incurred amount of entrusted wealth management | Undue balance | Amount overdue but not recovered | Amount overdue but not recovered with impairment having been accrued |
| Wealth management product of bank | Proceeds raised | 38,000 | 17,000 | 0 | 0 |
| Wealth management product of securities company | Proceeds raised | 10,000 | 10,000 | 0 | 0 |
| Wealth management product of bank | Self-owned fund | 120,000 | 120,000 | 0 | 0 |
| Wealth management product of securities company | Self-owned fund | 10,000 | 10,000 | 0 | 0 |
| Total | 178,000 | 157,000 | 0 | 0 | |
Explanation of high-risk entrusted wealth management with large individual amount or low safety and poor liquidity
□ Applicable ?Not applicable
Entrusted wealth management is expected to fail to recover the principal or there are other circumstances that may lead toimpairment
□ Applicable ?Not applicable
(2) Entrusted loans
□ Applicable ?Not applicable
There were no entrusted loans during the reporting period.
4. Other significant contracts
□ Applicable ?Not applicable
There were no other significant contracts during the reporting period.
XVI. Other Significant Events
□ Applicable ?Not applicable
There were no other significant matters that need to be explained during the reporting period.XVII. Significant Events of Subsidiaries of the Company?Applicable □Not applicableOn December 1, 2022, the Company issued the Announcement on Transferring Shares of Guangzhou BIEM.L.FDLKK EjamEquity Investment Partnership (Limited Partnership) and Exiting the Partnership. According to the Company’s developmentstrategy and the future planning of Fast Fashion (Guangzhou) Co., Ltd., the Company, upon negotiations, signed the PartnershipShare Transfer Agreement with 19 transferees, including Beijing Qianchenhui Trading Co., Ltd., Liang Xiaofen, Yue Minglei, etc.In accordance with the agreement, the Company transferred 99.01% of the equities it held in the partnership to the abovetransferees at a price of RMB137.67 million. After the transfer, the Company no longer holds any equities in the partnership. Fordetails, please refer to the announcement issued on CNINFO (www.cninfo.com.cn).
Section VII Changes in Shareholding and Information of
ShareholdersI. Changes in Share Capital
1. Changes in shares
Unit: share
| Before change | Increase/decrease (+, -) of this change | After change | |||||||
| Quantity | Percentage | New shares issued | Bonus shares | Shares transferred from surplus reserve | Others | Subtotal | Quantity | Percentage | |
| I. Restricted shares | 181,289,700 | 32.94% | -900 | -900 | 181,288,800 | 31.77% | |||
| 1. Shares held by the state | |||||||||
| 2. Shares held by state-owned legal person | |||||||||
| 3. Shares held by other domestic shareholders | 181,289,700 | 32.94% | -900 | -900 | 181,288,800 | 31.77% | |||
| Including: Shares held by domestic legal persons | |||||||||
| Shares held by domestic natural persons | 181,289,700 | 32.94% | -900 | -900 | 181,288,800 | 31.77% | |||
| 4. Shares held by | |||||||||
| foreign shareholders | |||||||||
| Including: Shares held by foreign legal persons | |||||||||
| Shares held by foreign natural persons | |||||||||
| II. Unrestricted shares | 369,037,012 | 67.06% | 20,381,272 | 20,381,272 | 389,418,284.00 | 68.23% | |||
| 1. RMB-denominated ordinary shares | 369,037,012 | 67.06% | 20,381,272 | 20,381,272 | 389,418,284.00 | 68.23% | |||
| 2. Domestic listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total number of shares | 550,326,712 | 100.00% | 20,380,372 | 20,380,372 | 570,707,084 | 100.00% |
Explanation on changes in shares?Applicable □Not applicable
1. Lock-up shares of senior management held by directors of the Company are lifted at a ratio of 25% of the shares held by them atthe end of the previous year for each year during their term as a director.
2. During the reporting period, 20,380,372 shares were converted from “BYZZ” convertible bonds, leading to the increase of theCompany's total share capital.Approval of changes in shares?Applicable □Not applicable
The Company convened the 16th meeting of the Third Board of Directors on September 10, 2019 and the 2019 ThirdExtraordinary General Meeting of Shareholders on September 27, 2019. The meetings deliberated and approved the Proposal onthe Public Offering of Convertible Bonds and other relevant proposals.Under the approval of “CSRC Approval [2020] No. 638”, the Company issued 6.89 million convertible bonds to the general public,with a par value of RMB100.00 each and a total amount of RMB689 million. Under the approval of “SZSE Listing [2020] No.604”, the Company listed the convertible bonds worth RMB689 million on Shenzhen Stock Exchange from July 15, 2020, with anabbreviation of “BYZZ” and a bond code of “128113”. In accordance with relevant provisions of the laws, regulations and theProspectus for the Public Offering of Convertible Bonds by BIEM.L.FDLKK Garment Co., Ltd., the convertible bonds can beconverted into shares of the Company starting from December 21, 2020.Transfer of title of changed shares?Applicable □Not applicableConvertible bonds can be converted into shares of the Company and are therefore directly credited to the securities accounts ofshareholders.Impact of share changes on basic earnings per share and diluted earnings per share, net assets per share attributable to ordinaryshareholders of the Company, and other financial indicators in last year and the latest period?Applicable □Not applicableThe conversion of convertible bonds into shares of the Company would reduce basic earnings per share, diluted earnings per share,and net assets per share attributable to ordinary shareholders of the Company.Other contents considered necessary by the Company or required to be disclosed by the securities regulatory authority
□ Applicable ?Not applicable
2. Changes in restricted shares
?Applicable □Not applicable
Unit: share
| Shareholder’s name | Number of restricted shares at the beginning of the period | Increase in restricted shares during the period | Number of shares released from selling restrictions during the period | Number of restricted shares at the end of the year | Reason for selling restrictions | Date of lifting selling restrictions |
| Xie Bingzheng | 162,129,000 | 0 | 900 | 162,128,100 | Lock-up shares of senior management | Subject to relevant provisions on lock-up shares of senior management |
| Shen Jindong | 14,739,000 | 0 | 0 | 14,739,000 | Lock-up shares of senior management | Subject to relevant provisions on lock-up shares of senior management |
| Tang Xinqiao | 4,421,700 | 0 | 0 | 4,421,700 | Lock-up shares of senior | Subject to relevant |
| management | provisions on lock-up shares of senior management | |||||
| Total | 181,289,700 | 0 | 900 | 181,288,800 | -- | -- |
II. Issuance and Listing of Securities
1. Issuance of securities (excluding preference shares) during the reporting period
□ Applicable ?Not applicable
2. Changes in total shares and shareholder structure as well as changes in asset and liability structure ofthe Company?Applicable □Not applicableThe convertible bonds issued by the Company (bond abbreviation: BYZZ; bond code: 128113) can be converted into companyshares starting from December 21, 2020. As of December 31, 2022, the convertible bonds had converted into a total of 46,637,374shares, and the Company’s total share capital increased to 570,707,084 shares after the conversion.
3. Internal employee shares
□ Applicable ?Not applicable
III. Information of Shareholders and Actual Controllers
1. Total number of shareholders
Unit: share
| Total number of ordinary shareholders at the end of the reporting period | 8,373 | Total number of ordinary shareholders at the end of the month preceding the disclosure date of the annual report | 8,769 | Total number of preferred shareholders whose voting rights were resumed at the end of the reporting period (if any) (see Note 8) | 0 | Total number of preferred shareholders whose voting rights were resumed at the end of the month preceding the disclosure date of the annual report (if any) (see Note 8) | 0 | |
| Shareholdings of shareholders with more than 5% or the top 10 shareholders | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage (%) | Shares held at the end of the reporting period | Increase/decrease during the reporting period | Number of restricted shares | Number of unrestricted shares | Pledged, marked or frozen | |
| Share status | Quantity | |||||||
| Xie Bingzheng | Domestic natural | 37.88% | 216,170,800 | 0 | 162,128,100 | 54,042,700 | ||
| person | ||||||||
| Feng Lingling | Domestic natural person | 3.44% | 19,652,000 | 0 | 0 | 19,652,000 | ||
| Shen Jindong | Domestic natural person | 3.44% | 19,652,000 | 0 | 14,739,000 | 4,913,000 | ||
| CCB - Guotai Health Equity Investment Fund | Others | 2.61% | 14,920,781 | 9,752,783 | 0 | 14,920,781 | ||
| National Social Security Fund Portfolio 103 | Others | 2.31% | 13,200,289 | 1,199,910 | 0 | 13,200,289 | ||
| ICBC - GF Steady Growth Securities Investment Fund | Others | 2.07% | 11,800,000 | 800,000 | 0 | 11,800,000 | ||
| Taiping Life Insurance Company Limited - Traditional - General Insurance Product - 022L-CT001 SZ | Others | 1.77% | 10,073,280 | 8,123,280 | 0 | 10,073,280 | ||
| Hong Kong Securities Clearing Co., Ltd. | Foreign legal person | 1.73% | 9,848,367 | -8,402,254 | 0 | 9,848,367 | ||
| National Social Security Fund Portfolio 115 | Others | 1.63% | 9,300,000 | 7,300,000 | 0 | 9,300,000 | ||
| ICBC - ZO Value Hybrid Securities Investment Fund | Others | 1.60% | 9,114,911 | 1,221,900 | 0 | 9,114,911 | ||
| Strategic investors or general legal persons becoming top ten shareholders due to private placement of new shares (if any) (see Note 3) | None | |||||||
| Description on the related relationship or persons acting-in-concert | Xie Bingzheng and Feng Lingling, as husband and wife, are persons acting in concert. | |||||||
| arrangements among the above shareholders | |||
| Description on entrusting/being entrusted with voting rights and waver of voting rights by the aforementioned shareholders | None | ||
| Description on special repurchase account among top 10 shareholders (if any) (see Note 10) | None | ||
| Top 10 shareholders not subject to selling restrictions | |||
| Name of shareholder | Number of unrestricted shares held at the end of reporting period | Type of shares | |
| Type of shares | Quantity | ||
| Xie Bingzheng | 54,042,700.00 | RMB-denominated ordinary shares | 54,042,700.00 |
| Feng Lingling | 19,652,000.00 | RMB-denominated ordinary shares | 19,652,000.00 |
| CCB - Guotai Health Equity Investment Fund | 14,920,781.00 | RMB-denominated ordinary shares | 14,920,781.00 |
| National Social Security Fund Portfolio 103 | 13,200,289.00 | RMB-denominated ordinary shares | 13,200,289.00 |
| ICBC - GF Steady Growth Securities Investment Fund | 11,800,000.00 | RMB-denominated ordinary shares | 11,800,000.00 |
| Taiping Life Insurance Company Limited - Traditional - General Insurance Product - 022L-CT001 SZ | 10,073,280.00 | RMB-denominated ordinary shares | 10,073,280.00 |
| Hong Kong Securities Clearing Co., Ltd. | 9,848,367.00 | RMB-denominated ordinary shares | 9,848,367.00 |
| National Social Security Fund Portfolio 115 | 9,300,000.00 | RMB-denominated ordinary shares | 9,300,000.00 |
| ICBC - ZO Value Hybrid Securities Investment Fund | 9,114,911.00 | RMB-denominated ordinary shares | 9,114,911.00 |
| National Social Security Fund Portfolio 118 | 8,812,199.00 | RMB-denominated | 8,812,199.00 |
| ordinary shares | |||
| Description on the related relationship or persons acting-in-concert among the top ten ordinary shareholders without selling restrictions and between the top ten ordinary shareholders without selling restrictions and the top ten ordinary shareholders | Xie Bingzheng and Feng Lingling, as husband and wife, are persons acting in concert. It is unknown to the Company whether other shareholders are related parties or persons acting in concert as stipulated in the Administrative Measures on Acquisition of Listed Companies. | ||
| Description on the top 10 ordinary shareholders’ participation in margin trading and securities lending business (if any) (see Note 4) | None | ||
Whether the top ten ordinary shareholders and the top ten shareholders without selling restrictions conducted any transactions withagreements to repurchase during the reporting period
□ Yes ?No
The Company's top ten ordinary shareholders and top ten ordinary shareholders without selling restrictions did not conduct anytransactions with agreements to repurchase during the reporting period.
2. Controlling shareholder of the Company
Nature of controlling shareholder: natural person holdingType of controlling shareholder: natural person
| Name of controlling shareholder | Nationality | Whether having obtained the right of abode in other countries or regions |
| Xie Bingzheng | Chinese | No |
| Feng Lingling | Chinese | No |
| Main occupation and position | Xie Bingzheng is the Chairman of the Company; Feng Lingling is the Head of the R&D Center of the Company. | |
| Equity interests in other controlled and invested companies whose shares were listed in the PRC or overseas during the reporting period | None | |
Changes of controlling shareholders during the reporting period
□ Applicable ?Not applicable
There was no change of the Company’s controlling shareholders during the reporting period.
3. Actual controller and persons acting in concert
Nature of actual controller: domestic natural personType of actual controller: natural person
| Name | Relationship with actual controller | Nationality | Whether having obtained the right of abode in other countries or regions |
| Xie Bingzheng | Self | Chinese | No |
| Feng Lingling | Self | Chinese | No |
| Main occupation and position | Xie Bingzheng is the Chairman of the Company; Feng Lingling is the Head of the R&D Center of the Company. | ||
| Holding of domestic and overseas listed companies over the past ten years | None | ||
Changes of actual controllers during the reporting period
□ Applicable ?Not applicable
There was no change of the Company’s actual controllers during the reporting period.Diagram on equity and control relationship between the Company and actual controllers
Actual controller controls the Company by entrust or other asset management methods
□ Applicable ?Not applicable
4. Share pledge by controlling shareholder or largest shareholder and persons acting in concert reaching80% of shareholding
□ Applicable ?Not applicable
5. Other legal person shareholders holding 10% or more of shares
□ Applicable ?Not applicable
6. Restrictions on share reductions of controlling shareholders, actual controllers, restructuring partiesand other commitment subjects
□ Applicable ?Not applicable
IV. Implementation of Share Repurchase during the Reporting PeriodImplementation progress of share repurchase
□ Applicable ?Not applicable
Implementation of share repurchase through centralized bidding
□ Applicable ?Not applicable
Section VIII Particulars of Preference Shares
□ Applicable ?Not applicable
The Company had no preference shares during the reporting period.
Section IX Particulars of Bonds
□ Applicable ?Not applicable
Section X Financial Report
I. Audit Report
| Type of auditor’s opinion | Standard unqualified |
| Signing date of the Audit Report | April 26, 2023 |
| Name of auditing organization | Huaxing Certified Public Accountants LLP |
| Reference number of the Audit Report | Hua-Xing-Shen-Zi [2023] No. 22012980012 |
| Name of certified public accountants | Chen Danyan, He Ting |
Text of the Audit ReportI. OpinionWe have audited the accompanying financial statements of BIEM.L.FDLKK Garment Co., Ltd. (hereinafter “the Company”),which comprise the consolidated and the Parent Company’s balance sheet as at December 31, 2022, the consolidated and theParent Company’s income statement, the consolidated and the Parent Company’s cash flow statement, and the consolidated andthe Parent Company’s statement of the changes in equity for 2022, and notes to the financial statements.In our opinion, the accompanying financial statements have been prepared in accordance with the Accounting Standards forBusiness Enterprises in all material aspects, and they fairly present the consolidated and the Parent Company’s financial positionas of December 31, 2022, and the consolidated and the Parent Company’s operating results and cash flows for 2022.II. Basis of OpinionWe conducted our audit in accordance with the Auditing Standards for PRC Certified Public Accountants. Our responsibilitiesunder those standards are further described in the “Certified Public Accountants’ Responsibilities for the Audit of the FinancialStatements” section of this Report. We are independent of the Company in accordance with the Code of Ethics for ChineseCertified Public Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,and in forming our opinion thereon, and we do not provide a separate opinion on these matters.(I) Inventory write-down
1. Description of the matter
With regard to recognition of inventory impairment, please refer to “Note V (14)” for accounting policies and “Note VII (6)Inventories” for specific amount.BIEM.L.FDLKK adopts a sales model primarily based on direct chain operation and supplemented by franchise operation. As aresult, the Company needs and maintains a relatively high level of inventories. Inventories are measured at the lower of cost andnet realizable value. When determining whether the inventories have impaired, the management needs to make judgments and
estimates based on conclusive evidence while taking into account purpose of holding inventories and impacts of events after thebalance sheet date. Given that the amount involved is large and the management needs to make significant judgments, we haveidentified inventory write-down as a key audit matter.
2. How the matter was addressed in our audit
Our audit procedures included:
(1) We evaluated the design and implementation of internal controls relating to the Company's inventory write-down;
(2) We counted inventories in the Company’s main warehouse and self-owned stores and inspected the quantity, condition andaging of the inventories;
(3) We obtained the purchase-sell-stock data of the Company’s inventories and analyzed changes in unit prices of inventories andtheir reasonableness.
(4) We obtained the aging list of the Company’s inventories at fiscal year-end, and compared and analyzed changes in inventoryaging with comparable periods and their reasonableness.
(5) We interviewed major responsible people of the Company to understand the pricing policies and clearance rate of out-of-season products in the year and judged the risks of inventory impairment at the end of the period.
(6) We obtained the gross profit table of all channels of the Company, and judged the probability of the impairment of inventoriesof different seasons based on product discount information, shopping mall deduction rates and other information we had learned.
(7) We obtained the Company’s calculation sheet for inventory write-down and its impairment tests for inventories, checkedwhether the Company has implemented according to relevant accounting policies and whether write-down recognized in previousperiods had any changes in the current period, and analyzed whether the write-down was sufficient.(II) Recognition of revenue
1. Description of the matter
With regard to revenue recognition, please refer to “Note V (32)” for accounting policies and “Note VII (35) Revenue and cost ofrevenue” for specific amount.Since the amount of revenue is significant and a key performance indicator of the Company, there is an inherent risk that themanagement may manipulate the timing of recognition in order to achieve specific goals or expectations. So, we identified therecognition of revenue as a key audit matter.
2. How the matter was addressed in our audit
Our audit procedures included:
(1) We obtained an understanding of and evaluated the internal control design over the recognition of sales income and tested theeffectiveness of key controls;
(2) We checked the revenue recognition policies of the Company and judged whether they are consistent with the requirements ofthe Accounting Standards for Business Enterprises;
(3) We obtained the store list of the Company and analyzed the distribution and changes of stores to determine whether they matchchanges in income;
(4) We acquired the agreement signed between the Company and main franchisees and associates, and checked key terms andconditions;
(5) We checked the industrial and commercial information of the Company’s main franchisees and associates, to confirm whetherthere is related party relationship between the Company and the franchisees/associates;
(6) We acquired the goods return and exchange records in the Company's supply chain system, to confirm whether there are anysignificant, abnormal returns and exchanges that affect income recognition and to review whether the Company has fully accruedlosses for returns and exchanges of franchise stores at the end of the reporting period;
(7) We sample-checked the purchase orders, delivery documents, accounting vouchers, payment receipts and other information ofthe Company and franchise stores;
(8) We sample-checked the monthly statements and payment receipts of the Company and joint operation stores;
(9) We sampled and conducted external confirmation for current sales and current balances, and checked any subsequent paymentcollections of joint operation stores;
(10) We conducted the sales cutoff test, sample-checked several original sales documents and accounting vouchers before andafter the balance sheet date, and compared the dates of the accounting vouchers and the attached shipping records, to assesswhether the revenue is included in the appropriate accounting period.IV. Other InformationThe Company’s management is responsible for other information. Other information includes the information included in theCompany’s 2022 Annual Report, but excludes the financial statements and our audit report.Our audit opinion on the financial statements does not cover the other information and we do not express any form of assuranceconclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in theaudit process or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that if there is a material misstatement of this other information, we arerequired to report that fact. We have nothing to report in this regard.V. Responsibilities of Management and Governance Layer for Financial StatementsThe management of ZD Automotive (Beijing) Co., Ltd. (hereinafter the “Management”) is responsible for preparing financialstatements in accordance with the Accounting Standards for Business Enterprises, and fairly presenting them; the Managementalso needs to design, implement and maintain necessary internal control such that the financial statements are free from materialmisstatements, whether due to fraud or error.In preparing the financial statements, the Management is responsible for assessing the Company’s ability to continue as a goingconcern, disclosing matters in relation to going concern (if applicable) and applying the going-concern assumption unless theManagement intends to liquidate the Company, cease operations, or have no realistic alternative but to do so.The governance layer is responsible for overseeing the financial reporting process of the Company.
VI. Certified Public Accountants’ Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether these financial statements as a whole are free from materialmisstatements, whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with the Auditing Standards will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and are considered material if they, individuallyor in the aggregate, could reasonably be expected to influence the economic decisions of users made on the basis of these financialstatements.As part of our audit work in accordance with the Auditing Standards, we exercised professional judgment and maintainedprofessional skepticism throughout the audit. We also:
(I) Identified and assessed the risks of material misstatement of the financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basisfor our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.(II) Obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate inthe circumstances.(III) Evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by management.(IV) Concluded on the appropriateness of management’s use of the going concern basis of accounting and, based on the auditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to drawattention in our audit report to the related disclosures in these financial statements or, if such disclosures are inadequate, to issue aqualified opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, futureevents or conditions may cause the Company to cease to continue as a going concern.(V) Evaluated the overall presentation, structure and content of the financial statements, and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fair presentation.(VI) Obtained sufficient and appropriate audit evidence regarding the financial information of the entities or business activitieswithin the Company to express an audit opinion on the financial statements. We are responsible for the direction, supervision andperformance of the group audit, and remain solely responsible for our audit opinion.We communicated with the governance layer regarding the planned scope and timing of the audit and significant audit findings,including any significant deficiencies in internal control that we identify during our audit.We also provided those charged with governance with a statement that we comply with relevant ethical requirements regardingindependence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and related safeguards (if applicable).
From the matters communicated with those charged with governance, we determined the matters that were of most significance inthe audit of the financial statements of the period and are therefore the key audit matters. We described these matters in our auditreport unless law or regulation precludes public disclosure about the matter or when, in tiny minority circumstances, wedetermined that a matter should not be communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.II. Financial StatementsUnit of financial statements: RMB
1. Consolidated balance sheet
Prepared by: BIEM.L.FDLKK Garment Co., Ltd.
December 31, 2022
Unit: RMB
| Item | December 31, 2022 | January 01, 2022 |
| Current assets: | ||
| Monetary funds | 1,144,693,949.57 | 1,082,712,218.58 |
| Settlement reserve | ||
| Lending funds | ||
| Financial assets held for trading | 1,378,756,798.87 | 634,763,818.96 |
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 252,544,886.96 | 279,717,057.14 |
| Accounts receivable financing | ||
| Prepayments | 28,272,902.29 | 67,028,355.09 |
| Premiums receivable | ||
| Reinsurance premiums receivable | ||
| Reinsurance contract reserves receivable | ||
| Other receivables | 72,134,856.39 | 89,889,485.22 |
| Including: Interests receivable | ||
| Dividends receivable | ||
| Financial assets purchased under agreements to resell | ||
| Inventory | 745,605,174.25 | 660,214,219.41 |
| Contract assets | ||
| Assets held for sale | 137,859,613.49 | |
| Non-current assets due within one year | ||
| Other current assets | 364,286,702.97 | 830,640,713.41 |
| Total current assets | 4,124,154,884.79 | 3,644,965,867.81 |
| Non-current assets: | ||
| Loans and advances |
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | ||
| Investment in other equity instruments | 10,499,383.76 | 98,099,300.47 |
| Other non-current financial assets | ||
| Investment properties | ||
| Property, plant and equipment | 461,506,954.62 | 244,337,754.20 |
| Construction in progress | 70,114,185.76 | 148,165,548.36 |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | 332,568,088.84 | 407,448,654.74 |
| Intangible assets | 129,012,724.85 | 119,548,729.29 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 111,489,073.31 | 105,243,120.55 |
| Deferred tax assets | 110,006,149.99 | 93,314,368.55 |
| Other non-current assets | 229,534,475.56 | 1,833,508.45 |
| Total non-current assets | 1,454,731,036.69 | 1,217,990,984.61 |
| Total assets | 5,578,885,921.48 | 4,862,956,852.42 |
| Current liabilities: | ||
| Short-term loans | ||
| Borrowings from central bank | ||
| Placements from banks and other financial institutions | ||
| Financial liabilities held for trading | ||
| Derivative financial liabilities | ||
| Notes payable | 46,482,171.48 | 38,098,527.79 |
| Accounts payable | 184,779,174.92 | 126,522,502.78 |
| Prepayments | ||
| Contract liabilities | 168,876,645.17 | 140,669,127.30 |
| Financial assets sold under agreements to repurchase | ||
| Deposits from customers and interbank | ||
| Funds from securities trading agency | ||
| Funds from securities underwriting agency | ||
| Employee benefits payable | 65,774,838.19 | 64,027,461.27 |
| Taxes payable | 170,728,526.54 | 130,969,262.60 |
| Other payables | 90,368,389.42 | 55,878,486.28 |
| Including: Interests payable | ||
| Dividends payable | ||
| Service charges and commissions |
| payable | ||
| Reinsurance premiums payable | ||
| Liabilities held for sale | 1,408,760.31 | |
| Non-current liabilities due within one year | 201,658,095.27 | 197,019,114.42 |
| Other current liabilities | 335,666,660.59 | 328,630,853.34 |
| Total current liabilities | 1,265,743,261.89 | 1,081,815,335.78 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term loans | ||
| Bonds payable | 284,554,163.11 | |
| Including: Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | 141,295,857.16 | 217,323,756.45 |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provision | ||
| Deferred income | 30,000,000.00 | 30,000,000.00 |
| Deferred tax liabilities | 10,363,326.05 | 2,854,265.46 |
| Other non-current liabilities | ||
| Total non-current liabilities | 181,659,183.21 | 534,732,185.02 |
| Total liabilities | 1,447,402,445.10 | 1,616,547,520.80 |
| Owner's equity: | ||
| Share capital | 570,707,084.00 | 550,326,712.00 |
| Other equity instruments | 27,524,454.16 | |
| Including: Preference shares | ||
| Perpetual bonds | ||
| Capital reserve | 893,544,757.34 | 600,470,446.15 |
| Less: Treasury shares | ||
| Other comprehensive income | 41,433,816.28 | -842,173.72 |
| Special reserves | ||
| Surplus reserves | 285,353,542.00 | 258,110,335.93 |
| General risk reserves | ||
| Retained earnings | 2,338,994,313.31 | 1,809,851,821.97 |
| Total equity attributable to owners of the parent company | 4,130,033,512.93 | 3,245,441,596.49 |
| Equities of minority shareholders | 1,449,963.45 | 967,735.13 |
| Total owner's equity | 4,131,483,476.38 | 3,246,409,331.62 |
| Total liabilities and owner's equity | 5,578,885,921.48 | 4,862,956,852.42 |
Legal representative: Xie Bingzheng Person in charge of accounting: Tang Xinqiao Person in charge of accountingdepartment: Chen Zhihui
2. Balance sheet of the Parent Company
Unit: RMB
| Item | December 31, 2022 | January 01, 2022 |
| Current assets: | ||
| Monetary funds | 1,075,236,394.98 | 1,001,684,939.89 |
| Financial assets held for trading | 1,378,756,798.87 | 634,763,818.96 |
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 252,544,886.96 | 279,717,057.14 |
| Accounts receivable financing | ||
| Prepayments | 26,602,650.22 | 46,156,432.50 |
| Other receivables | 71,618,317.39 | 93,306,779.94 |
| Including: Interests receivable | ||
| Dividends receivable | ||
| Inventory | 1,080,676,103.09 | 921,517,571.29 |
| Contract assets | ||
| Assets held for sale | 100,000,000.00 | |
| Non-current assets due within one year | ||
| Other current assets | 394,078,391.33 | 861,560,189.31 |
| Total current assets | 4,379,513,542.84 | 3,838,706,789.03 |
| Non-current assets: | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 11,000,000.00 | 111,000,000.00 |
| Investment in other equity instruments | ||
| Other non-current financial assets | ||
| Investment properties | ||
| Property, plant and equipment | 461,506,954.62 | 244,337,754.20 |
| Construction in progress | 70,114,185.76 | 148,165,548.36 |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | 319,277,363.83 | 381,889,568.21 |
| Intangible assets | 129,012,724.85 | 119,548,729.29 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 110,805,073.31 | 99,655,978.73 |
| Deferred tax assets | 59,564,063.94 | 52,843,305.91 |
| Other non-current assets | 229,534,475.56 | 1,833,508.45 |
| Total non-current assets | 1,390,814,841.87 | 1,159,274,393.15 |
| Total assets | 5,770,328,384.71 | 4,997,981,182.18 |
| Current liabilities: | ||
| Short-term loans | ||
| Financial liabilities held for trading | ||
| Derivative financial liabilities | ||
| Notes payable | 46,482,171.48 | 38,098,527.79 |
| Accounts payable | 373,727,737.85 | 231,476,161.90 |
| Prepayments | ||
| Contract liabilities | 168,876,645.17 | 140,669,127.30 |
| Employee benefits payable | 3,344,560.06 | 3,243,444.48 |
| Taxes payable | 122,450,173.32 | 93,757,929.83 |
| Other payables | 90,191,808.97 | 54,674,918.89 |
| Including: Interests payable | ||
| Dividends payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 188,492,930.67 | 183,853,949.82 |
| Other current liabilities | 335,666,660.59 | 328,630,853.34 |
| Total current liabilities | 1,329,232,688.11 | 1,074,404,913.35 |
| Non-current liabilities: | ||
| Long-term loans | ||
| Bonds payable | 284,554,163.11 | |
| Including: Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | 140,531,323.47 | 204,320,772.36 |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provision | ||
| Deferred income | 30,000,000.00 | 30,000,000.00 |
| Deferred tax liabilities | 3,198,694.64 | 2,854,265.46 |
| Other non-current liabilities | ||
| Total non-current liabilities | 173,730,018.11 | 521,729,200.93 |
| Total liabilities | 1,502,962,706.22 | 1,596,134,114.28 |
| Owner's equity: | ||
| Share capital | 570,707,084.00 | 550,326,712.00 |
| Other equity instruments | 27,524,454.16 | |
| Including: Preference shares | ||
| Perpetual bonds | ||
| Capital reserve | 893,544,757.34 | 600,470,446.15 |
| Less: Treasury shares | ||
| Other comprehensive income | ||
| Special reserves | ||
| Surplus reserves | 285,353,542.00 | 258,110,335.93 |
| Retained earnings | 2,517,760,295.15 | 1,965,415,119.66 |
| Total owner's equity | 4,267,365,678.49 | 3,401,847,067.90 |
| Total liabilities and owner's equity | 5,770,328,384.71 | 4,997,981,182.18 |
3. Consolidated income statement
Unit: RMB
| Item | 2022 | 2021 |
| I. Total Revenue | 2,884,841,760.82 | 2,719,989,257.14 |
| Including: Revenue | 2,884,841,760.82 | 2,719,989,257.14 |
| Interest income | ||
| Insurance premiums earned | ||
| Service charge and commission income | ||
| II. Costs and Expenses | 2,001,816,372.02 | 1,960,636,804.05 |
| Including: Cost of revenue | 652,016,624.24 | 634,160,601.71 |
| Interest expense | ||
| Service charge and commission expense | ||
| Surrender value | ||
| Net benefit payments | ||
| Net insurance liability reserves | ||
| Policy dividends | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 25,394,739.63 | 23,962,477.58 |
| Selling expenses | 1,036,372,556.97 | 1,041,052,486.14 |
| Administrative expenses | 195,632,058.12 | 156,267,574.26 |
| R&D expenses | 100,182,947.69 | 83,388,128.67 |
| Finance expenses | -7,782,554.63 | 21,805,535.69 |
| Including: Interest fees | 20,263,656.64 | 39,729,487.13 |
| Interest income | 28,967,907.61 | 18,147,338.76 |
| Plus: Other income | 23,253,459.19 | 14,781,618.40 |
| Return on investment ("-" indicates loss) | 39,390,949.38 | 38,815,870.23 |
| Including: Return on investment in associates and joint ventures | ||
| Income from the derecognition of financial assets measured at amortized cost | ||
| Exchange gains ("-" indicates loss) | ||
| Gains from net exposure hedging ("-" indicates loss) | ||
| Gains from changes in fair value ("-" indicates loss) | 4,950,075.80 | 3,424,832.00 |
| Credit impairment losses ("-" indicates loss) | 2,269,925.82 | 314,860.76 |
| Asset impairment losses ("-" indicates loss) | -99,445,469.97 | -78,683,952.73 |
| Gains on disposal of assets ("-" indicates loss) | 1,862,946.66 | -253,775.79 |
| III. Operating Profit ("-" indicates loss) | 855,307,275.68 | 737,751,905.96 |
| Plus: Non-operating revenue | 3,017,693.32 | 531,942.90 |
| Less: Non-operating expenses | 2,681,429.95 | 5,613,342.65 |
| IV. Total Profit ("-" indicates total loss) | 855,643,539.05 | 732,670,506.21 |
| Less: Income tax expense | 128,044,331.11 | 108,129,572.76 |
| V. Net Profit ("-" indicates net loss) | 727,599,207.94 | 624,540,933.45 |
| i. Classified by operation sustainability | ||
| 1. Net profit from continued operation ("-" indicates net loss) | 727,599,207.94 | 624,540,933.45 |
| 2. Net profit from discontinued operation ("-" indicates net loss) | ||
| ii. Classified by attribution of ownership | ||
| 1. Net profit attributable to shareholders of the parent company | 727,597,822.61 | 624,541,483.00 |
| 2. Minority shareholders' profits and losses | 1,385.33 | -549.55 |
| VI. Net Amount of Other Comprehensive Income after Tax | 42,756,832.99 | 5,462,550.69 |
| Total other comprehensive after-tax net income attributable to owners of the parent company | 42,275,990.00 | 5,406,986.92 |
| i. Other comprehensive income not able to be reclassified into profit or loss | 42,275,990.00 | 5,406,986.92 |
| 1. Changes of remeasurement of defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred into the profit or loss under equity method | 42,275,990.00 | 5,406,986.92 |
| 3. Changes in fair value of investment in other equity instruments | ||
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| ii. Other comprehensive income reclassified into profit or loss | ||
| 1. Other comprehensive income to be transferred into profit or loss under equity method | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Credit loss provision of investment in other debt investments | ||
| 5. Reserve of cash flow hedge | ||
| 6. Converted difference in foreign currency financial statements | ||
| 7. Others | ||
| Total other comprehensive after-tax net income attributable to minority shareholders | 480,842.99 | 55,563.77 |
| VII. Total Comprehensive Income | 770,356,040.93 | 630,003,484.14 |
| Total comprehensive income attributable to owners of the parent company | 769,873,812.61 | 629,948,469.92 |
| Total comprehensive income attributable to minority shareholders | 482,228.32 | 55,014.22 |
| VIII. Earnings per Share | ||
| i. Basic earnings per share | 1.28 | 1.15 |
| ii. Diluted earnings per share | 1.28 | 1.15 |
Legal representative: Xie Bingzheng Person in charge of accounting: Tang Xinqiao Person in charge of accountingdepartment: Chen Zhihui
4. Income statement of the Parent Company
Unit: RMB
| Item | 2022 | 2021 |
| I. Revenue | 2,884,275,568.81 | 2,719,989,257.14 |
| Less: Cost of revenue | 904,955,705.51 | 908,931,832.35 |
| Taxes and surcharges | 18,428,010.59 | 18,989,718.37 |
| Selling expenses | 849,949,549.93 | 832,868,004.50 |
| Administrative expenses | 105,797,517.32 | 81,338,858.08 |
| R&D expenses | 100,182,947.69 | 83,388,128.67 |
| Finance expenses | -7,741,089.97 | 21,048,966.28 |
| Including: Interest fees | 19,336,942.44 | 38,214,760.84 |
| Interest income | 27,976,020.32 | 17,369,687.41 |
| Plus: Other income | 2,289,109.36 | 3,268,741.44 |
| Return on investment ("-" indicates loss) | 39,390,949.38 | 38,815,870.23 |
| Including: Return on investment in associates and joint ventures | ||
| Profits from derecognition of financial assets at amortized cost | ||
| Gains from net exposure hedging ("-" indicates loss) | ||
| Gains from changes in fair value ("-" indicates loss) | 4,950,075.80 | 3,424,832.00 |
| Credit impairment losses ("-" indicates loss) | 2,278,474.53 | 330,127.11 |
| Asset impairment losses ("-" indicates loss) | -99,445,469.97 | -78,683,952.73 |
| Gains on disposal of assets ("-" indicates loss) | 1,862,946.66 | -253,775.79 |
| II. Operating Profit ("-" indicates loss) | 864,029,013.50 | 740,325,591.15 |
| Plus: Non-operating revenue | 3,017,693.32 | 514,429.16 |
| Less: Non-operating expenses | 2,681,429.95 | 5,613,342.65 |
| III. Total Profit ("-" indicates total loss) | 864,365,276.87 | 735,226,677.66 |
| Less: Income tax expense | 113,564,770.11 | 102,403,424.54 |
| IV. Net Profit ("-" indicates net loss) | 750,800,506.76 | 632,823,253.12 |
| i. Net profit from continued operation ("-" indicates net loss) | 750,800,506.76 | 632,823,253.12 |
| ii. Net profit from discontinued operation ("-" indicates net loss) | ||
| V. Net Amount of Other Comprehensive Income after Tax | ||
| i. Other comprehensive income not |
| able to be reclassified into profit or loss | ||
| 1. Changes of remeasurement of defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred into the profit or loss under equity method | ||
| 3. Changes in fair value of investment in other equity instruments | ||
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| ii. Other comprehensive income reclassified into profit or loss | ||
| 1. Other comprehensive income to be transferred into profit or loss under equity method | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Credit loss provision of investment in other debt investments | ||
| 5. Reserve of cash flow hedge | ||
| 6. Converted difference in foreign currency financial statements | ||
| 7. Others | ||
| VI. Total Comprehensive Income | 750,800,506.76 | 632,823,253.12 |
| VII. Earnings per Share | ||
| i. Basic earnings per share | ||
| ii. Diluted earnings per share |
5. Consolidated cash flow statement
Unit: RMB
| Item | 2022 | 2021 |
| I. Cash Flows from Operating Activities: | ||
| Cash received from sale of goods or rendering of services | 2,912,700,151.82 | 2,753,544,575.74 |
| Net increase in deposits from customers, banks and non-bank financial institutions | ||
| Net increase in borrowings from central bank | ||
| Net increase in placements from other financial institutions | ||
| Cash received from premiums of direct insurance contracts | ||
| Net cash from reinsurance business | ||
| Net increase in policyholder deposits and investment funds | ||
| Cash received from interests, service charges and commissions | ||
| Net increase in placements from banks and other financial institutions |
| Net increase in repo service fund | ||
| Net cash from agent securities trading | ||
| Tax rebates | ||
| Cash received related to other operating activities | 76,294,211.63 | 40,540,104.87 |
| Subtotal of cash inflow from operating activities | 2,988,994,363.45 | 2,794,084,680.61 |
| Cash paid for goods purchased and services rendered | 917,778,833.13 | 796,569,983.10 |
| Net loans and advances to customers | ||
| Net increase in deposits with the central bank, banks and non-bank financial institutions | ||
| Cash paid for claims of direct insurance contracts | ||
| Net increase in placements with banks and non-bank financial institutions | ||
| Cash paid for interests, fees and commissions | ||
| Cash paid for policy dividends | ||
| Cash paid to and on behalf of employees | 442,464,522.86 | 409,595,105.86 |
| Tax payments | 364,547,362.69 | 308,402,214.51 |
| Cash paid related to other operating activities | 321,967,610.95 | 381,993,739.07 |
| Subtotal of cash outflow from operating activities | 2,046,758,329.63 | 1,896,561,042.54 |
| Net cash flows from operating activities | 942,236,033.82 | 897,523,638.07 |
| II. Cash Flows from Investing Activities: | ||
| Cash received from recovery of investment | ||
| Cash received from return on investments | 40,348,045.27 | 40,700,749.76 |
| Net cash received from the disposal of property, plant and equipment, intangible assets, and other long-lived assets | 1,400.00 | 116,729.13 |
| Net cash received from the disposal of subsidiaries and other business entities | ||
| Cash received related to other investing activities | 5,192,767,000.00 | 3,130,000,000.00 |
| Subtotal of cash inflow from investing activities | 5,233,116,445.27 | 3,170,817,478.89 |
| Cash paid for the acquisition and construction of property, plant and equipment, intangible assets, and other long-lived assets | 499,061,940.06 | 215,579,606.23 |
| Cash paid for investments | ||
| Net increase in pledged loans | ||
| Net cash paid for acquisition of subsidiaries and other business entities | ||
| Cash paid related to other investing activities | 5,417,017,365.00 | 3,139,000,000.00 |
| Subtotal of cash outflow from investing activities | 5,916,079,305.06 | 3,354,579,606.23 |
| Net cash flows from investing activities | -682,962,859.79 | -183,762,127.34 |
| III. Cash Flows from Financing Activities: | ||
| Cash received from capital contribution | ||
| Including: Proceeds received by subsidiaries from minority shareholders' investment | ||
| Cash received from borrowings | ||
| Cash received related to other financing activities | ||
| Subtotal of cash inflow from financing activities | ||
| Cash paid for repayments of borrowings | ||
| Cash paid for interest expenses and distribution of dividends or profits | 171,212,125.20 | 166,432,183.18 |
| Including: Dividend and profit paid by subsidiaries to minority shareholders | ||
| Cash paid related to other financing activities | 46,988,239.55 | 58,595,168.29 |
| Subtotal of cash outflow from financing activities | 218,200,364.75 | 225,027,351.47 |
| Net cash flows from financing activities | -218,200,364.75 | -225,027,351.47 |
| IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents | ||
| V. Net Increase in Cash and Cash Equivalents | 41,072,809.28 | 488,734,159.26 |
| Plus: Opening balance of cash and cash equivalents | 1,058,018,706.05 | 569,284,546.79 |
| VI. Closing Balance of Cash and Cash Equivalents | 1,099,091,515.33 | 1,058,018,706.05 |
6. Cash flow statement of the Parent Company
Unit: RMB
| Item | 2022 | 2021 |
| I. Cash Flows from Operating Activities: | ||
| Cash received from sale of goods or rendering of services | 2,912,410,027.13 | 2,753,005,028.87 |
| Tax rebates | ||
| Cash received related to other operating activities | 54,337,974.51 | 28,232,062.82 |
| Subtotal of cash inflow from operating activities | 2,966,748,001.64 | 2,781,237,091.69 |
| Cash paid for goods purchased and services rendered | 1,228,869,363.19 | 1,270,471,067.33 |
| Cash paid to and on behalf of employees | 66,309,429.15 | 57,528,684.66 |
| Tax payments | 293,328,255.65 | 268,948,328.65 |
| Cash paid related to other operating activities | 441,588,912.81 | 351,748,141.22 |
| Subtotal of cash outflow from operating activities | 2,030,095,960.80 | 1,948,696,221.86 |
| Net cash flows from operating activities | 936,652,040.84 | 832,540,869.83 |
| II. Cash Flows from Investing Activities: |
| Cash received from recovery of investment | ||
| Cash received from return on investments | 40,348,045.27 | 40,700,749.76 |
| Net cash received from the disposal of property, plant and equipment, intangible assets, and other long-lived assets | 1,400.00 | 116,729.13 |
| Net cash received from the disposal of subsidiaries and other business entities | ||
| Cash received related to other investing activities | 5,192,767,000.00 | 3,130,000,000.00 |
| Subtotal of cash inflow from investing activities | 5,233,116,445.27 | 3,170,817,478.89 |
| Cash paid for the acquisition and construction of property, plant and equipment, intangible assets, and other long-lived assets | 499,061,940.06 | 209,979,606.23 |
| Cash paid for investments | ||
| Net cash paid for acquisition of subsidiaries and other business entities | ||
| Cash paid related to other investing activities | 5,417,017,365.00 | 3,139,000,000.00 |
| Subtotal of cash outflow from investing activities | 5,916,079,305.06 | 3,348,979,606.23 |
| Net cash flows from investing activities | -682,962,859.79 | -178,162,127.34 |
| III. Cash Flows from Financing Activities: | ||
| Cash received from capital contribution | ||
| Cash received from borrowings | ||
| Cash received related to other financing activities | 3,798,938.99 | 3,363,413.96 |
| Subtotal of cash inflow from financing activities | 3,798,938.99 | 3,363,413.96 |
| Cash paid for repayments of borrowings | ||
| Cash paid for interest expenses and distribution of dividends or profits | 171,212,125.20 | 166,432,183.18 |
| Cash paid related to other financing activities | 33,823,074.95 | 45,244,487.92 |
| Subtotal of cash outflow from financing activities | 205,035,200.15 | 211,676,671.10 |
| Net cash flows from financing activities | -201,236,261.16 | -208,313,257.14 |
| IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents | ||
| V. Net Increase in Cash and Cash Equivalents | 52,452,919.89 | 446,065,485.35 |
| Plus: Opening balance of cash and cash equivalents | 976,991,427.36 | 530,925,942.01 |
| VI. Closing Balance of Cash and Cash Equivalents | 1,029,444,347.25 | 976,991,427.36 |
7. Consolidated statement of changes in owner’s equity
Amount of the current period
Unit: RMB
| Item | 2022 | ||||||||||||||
| Equity attributable to owners of the Parent Company | Equity of minority shareholders | Total owner’s equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General risk reserves | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Closing Balance of Previous Year | 550,326,712.00 | 27,524,454.16 | 600,470,446.15 | -842,173.72 | 258,110,335.93 | 1,809,851,821.97 | 3,245,441,596.49 | 967,735.13 | 3,246,409,331.62 | ||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Correction of previous period errors | |||||||||||||||
| Business combinations under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening Balance of Current Year | 550,326,712.00 | 27,524,454.16 | 600,470,446.15 | -842,173.72 | 258,110,335.93 | 1,809,851,821.97 | 3,245,441,596.49 | 967,735.13 | 3,246,409,331.62 | ||||||
| III. Changes in the Period ("-" Indicates Decrease) | 20,380,372.00 | -27,524,454.16 | 293,074,311.19 | 42,275,990.00 | 27,243,206.07 | 529,142,491.34 | 884,591,916.44 | 482,228.32 | 885,074,144.76 | ||||||
| (I) Total comprehensive income | 42,275,990.00 | 727,597,822.61 | 769,873,812.61 | 482,228.32 | 770,356,040.93 | ||||||||||
| (II) Capital contributed or reduced by owners | 20,380,372.00 | -27,524,454.16 | 293,074,311.19 | 285,930,229.03 | 285,930,229.03 | ||||||||||
| 1. Ordinary shares contribute | |||||||||||||||
| d by owners | |||||||||||||||
| 2. Capital contributed by owners of other equity instruments | 20,380,372.00 | -27,524,454.16 | 293,074,311.19 | 285,930,229.03 | 285,930,229.03 | ||||||||||
| 3. Share-based payments recognized as owner's equity | |||||||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | 27,243,206.07 | -198,455,331.27 | -171,212,125.20 | -171,212,125.20 | |||||||||||
| 1. Appropriation of surplus reserves | 27,243,206.07 | -27,243,206.07 | |||||||||||||
| 2. Appropriation of general risk reserves | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -171,212,125.20 | -171,212,125.20 | -171,212,125.20 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-over of owner’s equity | |||||||||||||||
| 1. Capital (or share capital) increased from capital reserves | |||||||||||||||
| 2. Capital (or share |
| capital) increased from surplus reserves | |||||||||||||||
| 3. Surplus reserve offsetting losses | |||||||||||||||
| 4. Retained earnings carried over from changes in defined benefit plans | |||||||||||||||
| 5. Retained earnings carried over from other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserves | |||||||||||||||
| 1. Appropriation for the period | |||||||||||||||
| 2. Use for the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Closing Balance of the Period | 570,707,084.00 | 893,544,757.34 | 41,433,816.28 | 285,353,542.00 | 2,338,994,313.31 | 4,130,033,512.93 | 1,449,963.45 | 4,131,483,476.38 |
Amount of last period
Unit: RMB
| Item | 2021 | ||||||||||||||
| Equity attributable to owners of the Parent Company | Equity of minority shareholders | Total owner’s equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensiv | Special reserves | Surplus reserves | General risk reserves | Retained earnings | Others | Subtotal | |||||
| Preference | Perpetual bond | Others | |||||||||||||
| shares | s | e income | |||||||||||||
| I. Closing Balance of Previous Year | 524,075,085.00 | 63,661,135.54 | 226,927,846.51 | -6,249,160.64 | 194,828,010.62 | 1,413,582,872.58 | 2,416,825,789.61 | 912,720.91 | 2,417,738,510.52 | ||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Correction of previous period errors | |||||||||||||||
| Business combinations under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening Balance of Current Year | 524,075,085.00 | 63,661,135.54 | 226,927,846.51 | -6,249,160.64 | 194,828,010.62 | 1,413,582,872.58 | 2,416,825,789.61 | 912,720.91 | 2,417,738,510.52 | ||||||
| III. Changes in the Period ("-" Indicates Decrease) | 26,251,627.00 | -36,136,681.38 | 373,542,599.64 | 5,406,986.92 | 63,282,325.31 | 396,268,949.39 | 828,615,806.88 | 55,014.22 | 828,670,821.10 | ||||||
| (I) Total comprehensive income | 5,406,986.92 | 624,541,483.00 | 629,948,469.92 | 55,014.22 | 630,003,484.14 | ||||||||||
| (II) Capital contributed or reduced by owners | 26,251,627.00 | -36,136,681.38 | 373,542,599.64 | 363,657,545.26 | 363,657,545.26 | ||||||||||
| 1. Ordinary shares contributed by owners | |||||||||||||||
| 2. Capital contributed by owners of other equity | 26,251,627.00 | -36,136,681.38 | 373,542,599.64 | 363,657,545.26 | 363,657,545.26 |
| instruments | |||||||||||||||
| 3. Share-based payments recognized as owner's equity | |||||||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | 63,282,325.31 | -228,272,533.61 | -164,990,208.30 | -164,990,208.30 | |||||||||||
| 1. Appropriation of surplus reserves | 63,282,325.31 | -63,282,325.31 | |||||||||||||
| 2. Appropriation of general risk reserves | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -164,990,208.30 | -164,990,208.30 | -164,990,208.30 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-over of owner’s equity | |||||||||||||||
| 1. Capital (or share capital) increased from capital reserves | |||||||||||||||
| 2. Capital (or share capital) increased from surplus reserves | |||||||||||||||
| 3. Surplus reserve offsetting |
| losses | |||||||||||||||
| 4. Retained earnings carried over from changes in defined benefit plans | |||||||||||||||
| 5. Retained earnings carried over from other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserves | |||||||||||||||
| 1. Appropriation for the period | |||||||||||||||
| 2. Use for the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Closing Balance of the Period | 550,326,712.00 | 27,524,454.16 | 600,470,446.15 | -842,173.72 | 258,110,335.93 | 1,809,851,821.97 | 3,245,441,596.49 | 967,735.13 | 3,246,409,331.62 |
8. Statement of changes in owner’s equity of the Parent Company
Amount of the current period
Unit: RMB
| Item | 2022 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Others | Total owner’s equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| I. Closing Balance of Previous Year | 550,326,712.00 | 27,524,454.16 | 600,470,446.15 | 258,110,335.93 | 1,965,415,119.66 | 3,401,847,067.90 | ||||||
| Plus: | ||||||||||||
| Changes in accounting policies | ||||||||||||
| Correction of previous period errors | ||||||||||||
| Others | ||||||||||||
| II. Opening Balance of Current Year | 550,326,712.00 | 27,524,454.16 | 600,470,446.15 | 258,110,335.93 | 1,965,415,119.66 | 3,401,847,067.90 | ||||||
| III. Changes in the Period ("-" Indicates Decrease) | 20,380,372.00 | -27,524,454.16 | 293,074,311.19 | 27,243,206.07 | 552,345,175.49 | 865,518,610.59 | ||||||
| (I) Total comprehensive income | 750,800,506.76 | 750,800,506.76 | ||||||||||
| (II) Capital contributed or reduced by owners | 20,380,372.00 | -27,524,454.16 | 293,074,311.19 | 285,930,229.03 | ||||||||
| 1. Ordinary shares contributed by owners | ||||||||||||
| 2. Capital contributed by owners of other equity instruments | 20,380,372.00 | -27,524,454.16 | 293,074,311.19 | 285,930,229.03 | ||||||||
| 3. Share-based payments recognized as owner's equity | ||||||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | 27,243,206.07 | -198,455,331.27 | -171,212,125.20 | |||||||||
| 1. Appropriation of surplus reserves | 27,243,206.07 | -27,243,206.07 | ||||||||||
| 2. Distribution to owners (or shareholders) | -171,212,125.20 | -171,212,125.20 | ||||||||||
| 3. Others |
| (IV) Internal carry-over of owner’s equity | ||||||||||||
| 1. Capital (or share capital) increased from capital reserves | ||||||||||||
| 2. Capital (or share capital) increased from surplus reserves | ||||||||||||
| 3. Surplus reserve offsetting losses | ||||||||||||
| 4. Retained earnings carried over from changes in defined benefit plans | ||||||||||||
| 5. Retained earnings carried over from other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserves | ||||||||||||
| 1. Appropriation for the period | ||||||||||||
| 2. Use for the period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Closing Balance of the Period | 570,707,084.00 | 893,544,757.34 | 285,353,542.00 | 2,517,760,295.15 | 4,267,365,678.49 |
Amount of last period
Unit: RMB
| Item | FY 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury | Other comprehensi | Special reserve | Surplus reserve | Retained earnin | Others | Total owner’s | |||
| Prefere | Perpet | Others | ||||||||||
| nce shares | ual bonds | shares | ve income | s | s | gs | equity | |||||
| I. Closing Balance of Previous Year | 524,075,085.00 | 63,661,135.54 | 226,927,846.51 | 194,828,010.62 | 1,560,864,400.15 | 2,570,356,477.82 | ||||||
| Plus: Changes in accounting policies | ||||||||||||
| Correction of previous period errors | ||||||||||||
| Others | ||||||||||||
| II. Opening Balance of Current Year | 524,075,085.00 | 63,661,135.54 | 226,927,846.51 | 194,828,010.62 | 1,560,864,400.15 | 2,570,356,477.82 | ||||||
| III. Changes in the Period ("-" Indicates Decrease) | 26,251,627.00 | -36,136,681.38 | 373,542,599.64 | 63,282,325.31 | 404,550,719.51 | 831,490,590.08 | ||||||
| (I) Total comprehensive income | 632,823,253.12 | 632,823,253.12 | ||||||||||
| (II) Capital contributed or reduced by owners | 26,251,627.00 | -36,136,681.38 | 373,542,599.64 | 363,657,545.26 | ||||||||
| 1. Ordinary shares contributed by owners | ||||||||||||
| 2. Capital contributed by owners of other equity instruments | 26,251,627.00 | -36,136,681.38 | 373,542,599.64 | 363,657,545.26 | ||||||||
| 3. Share-based payments recognized as owner's equity | ||||||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | 63,282,325.31 | -228,272,533.61 | -164,990,208.30 | |||||||||
| 1. Appropriation of surplus reserves | 63,282,325.31 | -63,282,325.31 | ||||||||||
| 2. Distribution to owners (or | -164,990,208. | -164,990,208. |
| shareholders) | 30 | 30 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal carry-over of owner’s equity | ||||||||||||
| 1. Capital (or share capital) increased from capital reserves | ||||||||||||
| 2. Capital (or share capital) increased from surplus reserves | ||||||||||||
| 3. Surplus reserve offsetting losses | ||||||||||||
| 4. Retained earnings carried over from changes in defined benefit plans | ||||||||||||
| 5. Retained earnings carried over from other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserves | ||||||||||||
| 1. Appropriation for the period | ||||||||||||
| 2. Use for the period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Closing Balance of the Period | 550,326,712.00 | 27,524,454.16 | 600,470,446.15 | 258,110,335.93 | 1,965,415,119.66 | 3,401,847,067.90 |
III. Basic Information of the Company
Registered address of the Company and office address of the headquarters: No. 608 East Xingye Avenue, Nancun Town, PanyuDistrict, Guangzhou City
Principal business activities: R&D and design of brand clothing, brand promotion, marketing network construction and supplychain managementDate of approval for the issue of the financial statements: April 26, 2023In the reporting period, the Company had 9 subsidiaries that were included in the consolidated scope, as detailed in “Note IXEquities in Other Entities”. Compared with the previous period, three new subsidiaries were established and added, which aredetailed in “Note VIII Changes in Consolidated Scope”.IV. Preparation Basis for Financial Statements
1. Basis of preparation
The Company has prepared the financial statements on a going concern based on actual transactions and events that are recognizedand measured in accordance with the Accounting Standards for Business Enterprises - Basic Standards as well as other specificaccounting standards, application guidelines, standard interpretations and other relevant regulations (hereinafter collectivelyreferred to as “Accounting Standards for Business Enterprises”) and in combination with provisions set out in Rules No. 15 on thePreparation of Information Disclosure Documents by Companies That Offer Securities to the Public - General Rules for FinancialStatements (2014 Revision) issued by China Securities Regulatory Commission.
2. Going concern
The Company has the ability to continue as a going concern for at least 12 months following the end of the reporting period. Thereare no material events that will affect the Company’s going concern.V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates:
The Company has set out specific accounting policies and accounting estimates for transactions and events with relation torevenue recognition, provision for inventory impairment, expected credit loss of receivables, etc. based on its production andoperation characteristics in accordance with relevant provisions of the Accounting Standards for Business Enterprises.
1. Statement of compliance with the Accounting Standards for Business EnterprisesThe financial statements of the Company conform to the requirements set out in the Accounting Standards for BusinessEnterprises and truthfully and completely reflect the financial status, operating results, changes in owner’s equity, cash flow, andother relevant information of the Company.
2. Accounting period
The accounting year of the Company is from January 1 to December 31 of each calendar year.
3. Operating cycle
The Company sets 12 months as a full operating cycle.
4. Standard currency for accounting
The Company uses RMB as the standard currency for bookkeeping.
5. Accounting treatment measures of business combinations of entities under common control andbusiness combinations of entities not under common control
1. Business combinations of entities under common control: Assets and liabilities acquired by the Company in the businesscombination are measured at the book value of the combined party’s assets and liabilities (including the goodwill incurred to theultimate controlling party from the acquisition of the combined party) in the financial statements of the ultimate controlling partyon the combination date. If there are differences between the book values of the net assets acquired and the book values of thecombination consideration paid (or the par values of the issued shares), the difference will be used to adjust capital reserves orshare premiums. Where capital reserves or share premiums are insufficient to offset, retained earnings will be adjusted.
2. Business combinations of entities not under common control: Assets paid by the Company as the consideration of businesscombination on the acquisition date or liabilities incurred to or assumed by the Company are measured at fair value, and thedifference between their fair value and book value is included in the profit and loss of the current period. If the costs of businesscombinations are higher than the fair values of identifiable net assets of the acquiree on the acquisition date, the gap between themis confirmed as goodwill. If the costs of business combinations are lower than the fair values of the identifiable net assets of theacquiree on the acquisition date, the fair values of identifiable assets and liabilities obtained as well as the fair values of the non-cash assets or equity securities issued that are used as the consideration of the combination are reassessed; if, upon reassessment,the determined fair values of the identifiable assets and liabilities are defined as reasonable, the difference between the businesscombination costs and the fair values of the identifiable net assets of the acquiree is included in the non-operating revenue of theperiod when the combination occurs.For business combinations not under common control that are achieved in stages, the business combination costs shall be the sumof the consideration paid on the acquisition date and fair values of the equities in the acquiree held before the acquisition date.Meanwhile, the equities in the acquiree held before the acquisition date shall be remeasured at the fair value on the acquisition date,and the difference between the fair value and the book value is recognized as the return on investment of the current period. Forother comprehensive income incurred from the long-term equity investment of equities in the acquiree held before the acquisitiondate as calculated under the equity model, accounting processing shall be done by adopting the same basis for directly disposingrelevant assets or liabilities of the acquiree. That is, other changes in shareholders’ equity, except for net profit and loss, other
comprehensive income and profit distribution, shall be transferred to the return on investment of the current period. For otherequity instrument investments in the acquiree held before the acquisition date, the changes in the fair value of the equityinstrument investments accumulated under other comprehensive income before the acquisition date are transferred to retainedprofits and losses.
3. Treatment of relevant expenses in business combination: Intermediary fees for auditing, legal services, evaluation, consultation,etc. and other relevant management expenses incurred for the business combination are included in the profit and loss of the periodwhen they occur; the transaction fees of the equity securities or debt securities issued as the consideration for the combination areincluded in the initial recognition amount of the equity securities or debt securities.
6. Methods for preparation of consolidated financial statements
1. Scope of consolidated financial statements
The consolidation scope of consolidated financial statements shall be subject to the basis of control, which includes not onlysubsidiaries determined based on voting rights (or similar rights) themselves or in combination with other arrangements, but alsostructured entities determined based on one or more contractual arrangements. Control refers to the power the investor ownsagainst the investee which allows the investor to enjoy the variable return by attending relevant activities of the investee and to becapable of using such power to affect the amount of return.
2. Combination procedures
The consolidated financial statements are prepared based on the financial statements of the Company and its subsidiaries and otherrelevant information.The Company unifies the accounting policies and accounting periods adopted by its subsidiaries, so that they are consistent withthose adopted by the Company. During preparation of the consolidated financial statements, the materiality principle is followed;i.e. internal transactions and equity investment projects between the parent company and the subsidiary and between subsidiariesare offset.The equities and profits and losses attributable to minority shareholders of subsidiaries are listed separately under the item of“owner's equity” in the consolidated balance sheet and under the item of “net profit” in the consolidated income statement. If theloss of a subsidiary which is shared by its minority shareholders exceeds the minority shareholders' share in the owner’s equity ofthe subsidiary at the beginning of the period, the equity of minority shareholders shall be reduced.
(1) Addition of subsidiary and business
If subsidiaries and businesses are added due to business combinations of enterprises under the same control during the reportingperiod, the opening balance of the consolidated balance sheet should be adjusted; the consolidated income statement shouldinclude the incomes, expenses and profits of these subsidiaries and businesses from the beginning to the end of the reportingperiod when the combination occurs; the consolidated cash flow statement should include cash flows of these subsidiaries andbusinesses from the beginning to the end of the reporting period when the combination occurs. Meanwhile, relevant items in the
comparative statements should be adjusted, as if the consolidated reporting entity had been existing since the time when theultimate controlling party began to have control.If subsidiaries and businesses are added due to business combinations of enterprises not under the same control during thereporting period, the opening balance of the consolidated balance sheet are not adjusted; the consolidated income statement shouldinclude the incomes, expenses and profits of these subsidiaries and businesses from the acquisition date to the end of the reportingperiod; the consolidated cash flow statement should include cash flows of these subsidiaries and businesses from the acquisitiondate to the end of the reporting period.The Company prepares consolidated financial statements based on the amount of identifiable assets, liabilities and contingentliabilities on the balance sheet date of the current period as determined on the basis of their fair values in the individual financialstatements of the subsidiary on the acquisition date. If the costs of business combinations are higher than the identifiable net assetsof the acquiree, the gap between them is confirmed as goodwill. If the costs of business combinations are lower than theidentifiable net assets of the acquiree, the gap between them, upon reassessment, is included in the profit and loss of the currentperiod.For business combinations not under common control that are achieved through multiple transactions in stages, when compilingthe consolidated financial statements, the equities in the acquiree held before the acquisition date should be remeasured at the fairvalue on the acquisition date, and the difference between the fair value and the book value is recognized as the return oninvestment of the current period. For other comprehensive income incurred from the long-term equity investment of equities in theacquiree held before the acquisition date as calculated under the equity model, accounting processing shall be done by adopting thesame basis for directly disposing relevant assets or liabilities of the acquiree. That is, other changes in shareholders’ equity, exceptfor net profit and loss, other comprehensive income and profit distribution, shall be transferred to the return on investment of thecurrent period. For other equity instrument investments in the acquiree held before the acquisition date, the changes in the fairvalue of the equity instrument investments accumulated under other comprehensive income before the acquisition date aretransferred to retained profits and losses.
(2) Disposal of subsidiaries and businesses
A. General disposal methodsWhere the Company disposes subsidiaries and businesses during the reporting period, the incomes, expenses and profits of thesesubsidiaries and businesses from the beginning of the reporting period to the disposition date are included in the consolidatedincome statement, while their cash flows from the beginning of the period to the disposition date are included in the consolidatedcash flow statement.If the Company loses control of a subsidiary due to partial disposal of equity investment or other reasons, the remaining equityshould be remeasured in the consolidated financial statements at fair value on the date of loss of control. The sum of considerationobtained from equity disposal and fair value of the remaining equity, minus the Company's share in the subsidiary's net assetsproportional to its original shareholding percentage that is continuously calculated from the acquisition date or acquisition date, isrecognized as return on investment of the reporting period when the loss of control takes place. For other comprehensive income
incurred from the equity investment in the subsidiary, accounting processing is done by adopting the same basis for directlydisposing relevant assets or liabilities of the subsidiary at the loss of control. That is, other changes in shareholders’ equity, exceptfor net profit and loss, other comprehensive income and profit distribution, shall be transferred to the return on investment of theperiod when the control is lost.B. Disposal of equities in steps until loss of controlWhere the Company loses control of a subsidiary by disposing equity investments in the subsidiary in steps, if those transactionsof equity disposal are a package deal, each transaction shall be treated as a transaction that results in loss of control of thesubsidiary in accounting processing. However, the difference between each disposal price before loss of control and theCompany's share in the subsidiary's net assets proportional to the disposed equity shall be recognized as other comprehensiveincome in the consolidated financial statements and, upon loss of control, transferred to the profit and loss of the current period.If the terms, conditions, and economic effects of transactions of disposing equity investment in the subsidiary conform to one ormore of the following circumstances, that means these multiple transactions should be treated as package deals in accountingprocessing:
(A) those transactions are reached at the same time or after taking into consideration the influence of each other;(B) those transactions together produce a complete commercial outcome;(C) the occurrence of one transaction depends on the occurrence of at least one other transaction;(D) one transaction alone does not seem to be economical, but all those transactions are economical when are considered as awhole.
(3) Purchase of minority stakes in subsidiaries
The difference between the long-term equity investment newly acquired by the Company due to the purchase of minority stakesand its share in the identifiable net assets of the subsidiary proportional to the increased shareholding ratio as continuouslycalculated from the acquisition date (or combination date) is used to adjust the capital premium or share premium under capitalreserve in the consolidated balance sheet; if the capital premium or share premium is insufficient to offset, retained earnings willbe adjusted.
(4) Partial disposal of equity investment in subsidiaries without losing control
The consideration received by the Company for disposing the long-term equity investments in a subsidiary without losing controland its share in the identifiable net assets of the subsidiary proportional to the disposed equity ratio as continuously calculatedfrom the acquisition date (or combination date) is used to adjust the capital premium or share premium under capital reserve in theconsolidated balance sheet; if the capital premium or share premium is insufficient to offset, retained earnings will be adjusted.
7. Classification of joint arrangements and accounting treatment methods
A joint arrangement is an arrangement over which two or more parties have joint control. Joint arrangements are required to beclassified as either a joint operation or a joint venture.
1. A joint operation is the joint arrangement where the Company has the rights to the assets and the obligations for the liabilities ofthe arrangement. The Company recognizes in relation to its interest in a joint operation:
(1) its assets, including its share of any assets held jointly;
(2) its liabilities, including its share of any liabilities incurred jointly;
(3) its revenue from the sale of its share of the output of the joint operation;
(4) its share of the revenue from the sale of the output by the joint operation; and
(5) its expenses, including its share of any expenses incurred jointly.
2. A joint venture is a joint arrangement where the Company only has an interest to the net assets of the arrangement. TheCompany accounts for its interest in a joint venture using the equity method.
8. Criteria for recognition of cash and cash equivalents
The Company recognizes cash on hand and deposits that can be used for payment at any time as cash when compiling the cashflow statement. Meanwhile, short-term (due within three months from the acquisition date) investments held by the Company withhigh liquidity, (which are) easy to convert to cash in a known amount, and low risk of value changes are recognized as cashequivalents. Restricted bank deposits are not recognized as cash and cash equivalents in the cash flow statement.
9. Translation of transactions and financial statements denominated in foreign currencies
1. Foreign currency transactions
Upon the occurrence of foreign currency transactions, the amount of foreign currency is accounted by translating into RMB at theapproximate spot exchange rate on the transaction date, while foreign currency monetary items and non-monetary items are treatedaccording to the following methods at the end of the reporting period:
(1) Foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. Exchange differenceresulting from the difference between the spot exchange rate on the balance sheet date and that at the initial recognition or on theprevious balance sheet date is recognized as the profit and loss of the current period.
(2) Foreign currency non-monetary items that are measured at historical cost shall still be converted at the spot exchange rate onthe transaction date, without changing the amount of the standard bookkeeping currency.
(3) Foreign currency non-monetary items that are measured at fair value are translated using the foreign exchange rate at the datewhen the fair value is recognized. The difference arising therefrom is recognized as profit and loss or other comprehensive income.
(4) Exchange gains and losses, except for those arising from special foreign-currency borrowings related to the purchase orproduction of assets eligible for capitalization, are included in the cost of the asset eligible for capitalization before the asset isready for its intended use or sale, while others are included in the profit and loss of the current period.
2. Translation of foreign-currency financial statements
(1) Assets and liabilities in the balance sheet shall be converted at the spot exchange rate on the balance sheet date; except for the"undistributed profits” item, all the other items under “owner's equity” are converted at the spot exchange rate at the time ofoccurrence.
(2) Income and expense items in the income statement shall be translated using the foreign exchange rate ruling at the date of thetransaction.
(3) Difference resulting from translation of foreign-currency financial statements by the above methods shall be included in othercomprehensive income. When disposing an overseas operation, the difference resulting from the conversion of foreign currencystatements relating to the operation is transferred from the owner's equity item to the profit and loss of the current period.
(4) The cash flow statement is converted at the spot exchange rate on the date of cash flow occurrence. The impact of exchangerate changes on cash is regarded as an adjustment item and listed separately in the cash flow statement.
10. Financial instruments
When the Company becomes a party to a financial instrument contract, the financial instrument is confirmed to be either afinancial asset or financial liability.
1. Classification, recognition, and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flow characteristics of financial assets, theCompany classifies financial assets into the following three categories: financial assets measured at the amortized cost, financialassets measured at fair value where gains and losses are recognized in other comprehensive income (hereinafter, fair value throughother comprehensive income), and financial assets measured at fair value where gains and losses are recognized in profit or loss ofthe current period (hereinafter, fair value through profit or loss).Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value through profit orloss, transaction costs are directly included in profit and loss of the current period. For other types of financial assets, relatedtransaction costs are included in their initial recognized amounts. Where the accounts receivable initially recognized by theCompany does not contain significant financing components as defined in the Accounting Standards for Business Enterprises No.14 -- Revenue or the accounts receivable does not consider financing components in contacts whose term is less than a yearpursuant to provisions of the Accounting Standards for Business Enterprises No. 14 -- Revenue, the initial measurement shall bemade according to the price of transactions that are expected to be entitled to receive consideration.
(1) Financial assets measured at amortized cost
A financial asset is classified as being subsequently measured at amortized cost if the asset is held within a business model whoseobjective is to collect contractual cash flows, and the contractual terms of the financial asset give rise to cash flows that are solelypayments of principal and interest on the principal amount outstanding. This kind of financial assets is subsequently measured atamortized cost using the effective interest method. Gains or losses arising from amortization or impairment are recognized inprofit and loss of the current period.
(2) Financial assets measured at fair value through other comprehensive income
A financial asset is classified as being subsequently measured at fair value through other comprehensive income if the asset is heldwithin a business model whose objective is to both collect contractual cash flows and sell the financial asset, and the contractualterms of the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amountoutstanding. The Company measures this kind of financial assets at fair value where gains and losses are recognized in othercomprehensive income, but the impairment losses or gains, exchange profits or losses, and interest income calculated by theeffective interest method are recognized as the profit and loss of the current period.If an equity investment is not held for trading, the Company can make an irrevocable election at initial recognition to measure it atfair value through other comprehensive income. The designation hereof is made on an individual investment basis, and therelevant investment meets the definition of an equity instrument from the perspective of the issuer. The Company recognizesrelevant dividend income from such financial assets as the profit and loss of the current period, and changes in fair value as othercomprehensive income. When such financial assets are derecognized, the accumulated gains or losses previously recognized asother comprehensive income shall be transferred from other comprehensive income to retained earnings and not recognized as theprofit and loss of the current period.
(3) Financial assets measured at fair value through profit or loss
All financial assets other than the other two preceding types are classified as financial assets measured at fair value through profitor loss. Moreover, at initial recognition, to eliminate or significantly reduce accounting mismatches that would otherwise arise, theCompany may designate a financial asset as financial asset measured at fair value through profit or loss. Such financial assets aresubsequently measured at fair value, and changes in fair value are recognized as the profit and loss of the current period.
2. Classification, recognition, and measurement of financial liabilities
At initial recognition, financial liabilities are classified into financial liabilities measured at fair value through profit or loss andother financial liabilities. For financial liabilities measured at fair value through profit or loss, transaction costs are directlyincluded in profit and loss of the current period. For other types of financial liabilities, related transaction costs are included intheir initial recognition amounts.
(1) Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss include financial liabilities held for trading (including derivativesbelonging to financial liabilities) and financial liabilities designated to be measured at fair value where changes in fair value areincluded in the profit and loss of the current period.Financial liabilities held for trading (including derivatives belong to financial liabilities) are subsequently measured at fair value,and changes in fair value, except for those related to hedge accounting, are recognized as profit and loss of the current period.For those that are designated as financial liabilities measured at fair value through profit or loss, the amount of change in fair valueattributable to changes in the credit risk of the Company is presented in other comprehensive income; cumulative gains or losses ofchange in fair value attributable to changes in the credit risk of the Company are transferred to retained earnings at thederecognition of the financial liability. Other changes in fair value shall be recognized as the profit and loss of the current period.If the accounting treatment of the credit risk changes in such financial liabilities by the above methods will create or expand the
accounting mismatch in the profit and loss, the Company shall recognize all gains or losses in such financial liabilities (includingthe amount attributable to changes in the credit risk of the Company) as the profit and loss of the current period.
(2) Other financial liabilities
Except for financial liabilities that continue to be recognized when a transfer of a financial asset does not qualify for derecognitionor continue to be recognized to the extent of continuing involvement, or financial guarantee contracts, other financial liabilitiesshall be classified into the financial liabilities measured at amortized cost, which are subsequently measured at amortized cost, andthe gains or losses resulting from derecognition or amortization shall be recognized as the profit and loss of the current period.
3. Methods for determining the fair value of financial assets and financial liabilities
If there are active markets for a financial instrument, the Company establishes its fair value by using quoted price in the activemarkets. If there is no active market, valuation techniques are used to measure fair value. During valuation, the Company adoptsthe valuation techniques that are applicable under current circumstances and supported by sufficient available data and otherinformation, selects the input values that are consistent with the characteristics of the assets or liabilities considered by the marketparticipants in the transaction of the relevant assets or liabilities, and preferentially uses the relevant observable inputs.Unobservable input values are used only when relevant observable input values are not available or are not practicable.
4. Recognition and measurement of financial asset transfer
Recognition of financial asset transfer
| Circumstance | Result of confirmation |
| Transferring substantially all of the risks and rewards of ownership of the asset | Derecognize the financial asset (recognize new asset/liability) |
Neither transferring norretaining substantially all therisks and rewards of ownershipof the asset
| Neither transferring nor retaining substantially all the risks and rewards of ownership of the asset | Give up control of the transferred asset | |
| Retain control of the transferred asset | Continue to recognize the transferred asset and liability to the extent of continuing involvement | |
| Retaining substantially all the risks and rewards of ownership of the asset | Continue to recognize the financial asset and recognize the consideration received as financial liability | |
The Company distinguishes financial asset transfer into transfer in entirety and transfer in part.
(1) If a financial asset is qualified for derecognition in its entirety, the difference between the following two shall be recognized inprofit and loss of the current period: the book value of the financial asset at the date of derecognition; and the considerationreceived, plus the cumulated amount of changes in fair value directly included in other comprehensive income (only for financialassets measured at fair value through other comprehensive income as classified in accordance with Article 18 of the AccountingStandards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments).
(2) If the transferred asset is part of a larger financial asset, when the part transferred qualifies for derecognition in its entirety, theprevious book value of the larger financial asset shall be allocated between the part that continues to be recognized and the part
that is derecognized (for this purpose, a retained serving asset should be treated as the part continuing to be recognized), on thebasis of the relative fair values of those parts on the date of the transfer. The difference between the following two shall berecognized in profit and loss of the current period: the book value allocated to the part derecognized at the date of derecognition;and the consideration received for the part derecognized (including any new asset obtained less any new liability assumed), plusthe cumulated amount of changes in fair value proportionate to the part derecognized directly included in other comprehensiveincome (only for financial assets measured at fair value through other comprehensive income as classified in accordance withArticle 18 of the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments).If the transferred financial asset does not qualify for derecognition, the Company continues to recognize the financial asset in itsentirety and the consideration received as a financial liability.
5. Derecognition of financial liabilities
The Company removes a financial liability (or a part of it) from its financial statements when the obligation specified in thecontract is discharged or canceled or expires. For the following circumstances:
(1) If the Company transfers the asset to repay a financial liability to an institution or establish a trust thereof, while the repaymentobligation still exists, the financial liability should not be derecognized.
(2) If the Company (borrower) and the lender sign an agreement under which the Company assumes a new financial liability toreplace the original financial liability (or a part of it), while contractual terms of the two are different in substance, the Companyshall derecognize the original financial liability (or a part of it) and recognize a new financial liability.If a financial liability is derecognized in whole (or in part), the difference between the book value of the derecognized portion andthe consideration paid (including the non-cash assets transferred out or the new financial liability assumed) is recognized as theprofit and loss of the current period.
6. Impairment of financial assets
(1) Methods for recognizing impairment provision
Financial assets measured at amortized cost (including receivables), investments in debt instruments measured at fair valuethrough other comprehensive income, and lease receivables are measured using the expected credit loss (ECL) approach. Inaddition, for contract assets, loan commitments and financial guarantee contracts, loss allowance and credit impairment loss arerecognized according to the above accounting policies.Expected credit loss (ECL) is the weighted average of credit losses with the respective risks of a default occurring as theweightings. Credit loss refers to the difference between the present value of all contractual cash flows discounted at the originalinterest rate and the present value of expected future cash flows, i.e. the “cash shortfall”.With the exception of purchased or originated credit-impaired financial assets, the Company assesses whether the credit risk ofrelevant financial assets has been significantly increased since initial recognition. If the credit risk has not increased significantlysince initial recognition, it is in Stage 1; the Company recognizes loss allowance based on the 12-month ECL of the financial asset.If the credit risk increases significantly since initial recognition but the financial asset is not considered credit-impaired, it is inStage 2; the Company measures loss allowance based on the lifetime ECL of the financial asset. If the credit risk of a financial
asset increases to the point that is considered credit-impaired, it is in Stage 3; the Company measures the loss allowance based onthe lifetime ECL of the financial asset. When assessing expected credit loss, the Company considers reasonable and evidence-based information, including forward-looking information, which is available at the balance sheet date without undue additionalcost or effort regarding past events, current conditions and forecasts of future economic conditions.The 12-month ECL refers to expected credit losses that result from those default events on the financial instrument that arepossible within 12 months after the reporting date (or the lifetime if the expected duration of a finical asset is less than 12 months).The 12-Month ECL constitutes a part of the lifetime ECL.For financial assets with a low credit risk, the Company assumes that their credit risk has not increased significantly since initialrecognition and elects to measure their loss allowance through 12-month ECL.For financial assets in Stage 1 and Stage 2 and those with a low credit risk, interest revenue is calculated based on the grosscarrying amount and effective interest rate without deduction for loss allowance. For financial assets in Stage 3, interest revenue iscalculated based on the amortized coast (i.e. the gross carrying amount less the loss allowance) and the effective interest rate.
(2) Credit-impaired financial assets
An asset is recognized as credit-impaired if one or more events have occurred that have a detrimental impact on the estimatedfuture cash flows of the asset. Evidences for credit-impaired asset include the following observable data:
A. significant financial difficulty of the issuer or borrower;B. a breach of contract of the borrower, such as a default or past-due payment of interest or principal;C. the lenders for economic or contractual reasons relating to the borrower’s financial difficulty granted the borrower a concessionthat would not otherwise be considered;D. it becoming probable that the borrower will enter bankruptcy or other financial reorganization;E. the disappearance of an active market for the financial asset because of financial difficulties of the issuer or borrower; orF. the purchase or origination of a financial asset at a deep discount that reflects incurred credit losses.It may not be possible to identify a single discrete event. Instead, the combined effect of several events may cause financial assetsto become credit-impaired.
(3) Purchased or originated credit-impaired financial assets
For purchased or originated credit-impaired financial assets, the Company recognizes cumulative changes in lifetime expectedlosses since initial recognition as a loss allowance on the balance sheet date. On each balance sheet date, changes in lifetimeexpected losses are included in profit and loss of the current period as impairment loss or gain. Any favorable changes for suchassets are an impairment gain even if the resulting expected cash flows of a financial asset exceed the estimated cash flows oninitial recognition as determined on the balance sheet date.
(4) Standards for judging whether credit risk has increased significantly
If the probability of default (PD) of a financial asset in the expected duration recognized on the balance sheet date is significantlyhigher than that in the expected duration recognized at the time of initial recognition, the credit risk of the financial asset has
increased significantly. Except for special circumstances, the Company determines whether credit risk has increased significantlysince initial recognition by using PD changes in the coming 12 months as reasonable estimates for PD changes in lifetime.
(5) Methods for assessing ECL of financial assets
The Company assesses ECLs of financial assets on an individual basis or at a portfolio level. Financial assets with significantlydifferent credit risks are assessed individually, such as receivables for which there are obvious signs that the debtor is veryunlikely to fulfill the repayment obligation.In addition to financial assets whose credit losses are measured on an individual level, the Company classifies financial assets intogroups based on shared credit risk characteristics and measures the expected credit losses on a collective basis.
(6) Accounting methods for impairment of financial assets
The Company calculates the expected credit losses of various financial assets on the balance sheet date. The addition or reversal ofloss allowance resulting therefrom is included in the profit and loss of the current period as impairment loss or gain.If the Company suffers actual credit losses and determines that the relevant financial asset cannot be recovered, while the asset iswritten off upon approval, the book value of the financial asset will be directly written down. If the written-down financial asset isrecovered later, it is included in the profit and loss of the current period as reversal of impairment loss.
7. Financial guarantee contract
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss itincurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debtinstrument. Financial guarantee contracts are initially recognized at fair value. Financial guarantee contracts that are not designatedas financial liabilities to be measured at fair value through profit or loss are subsequently measured at the higher of (i) the expectedcredit loss recognized on the balance sheet date and (ii) the amount initially recognized less cumulative amortization determined inaccordance with the revenue recognition principles.
8. Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not offset against each other.However, a financial asset and a financial liability shall be offset and the net amount is present in the balance sheet if the followingtwo conditions are both met:
(1) The Company has a legally enforceable right to set off the recognized amount; and
(2) The Company intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
9. Equity instruments
An equity instrument refers to a contract that can prove the Company owns the remaining equity in the assets after deducting allliabilities. The Company's issuance (including refinancing), repurchase, sales or cancellation of equity instruments are treated aschanges in equities. The Company does not recognize changes in the fair value of equity instruments. Transaction costs related toequity transactions are deducted from equities.The Company’s various distributions to holders of equity instruments (excluding share dividends) are recognized as profitdistribution to reduce owner's equity. The share dividends issued do not affect the total owner’s equity.
11. Accounts receivable
The Company measures the loss allowance of receivables without a major financing component as defined in the AccountingStandards for Business Enterprises -- Revenue (including cases where the contract containing the financial component has a termless than one year according to the above Standard) at an amount equivalent to lifetime ECL.The Company classifies accounts receivables into different groups by common credit risk characteristics such as customer type:
| Item | Basis for determining the portfolio |
| Portfolio of clothing sales business | Clothing sales business as the credit risk characteristic |
| Portfolio of related parties | Related parties within the consolidation scope |
For accounts receivables classified into portfolios, the Company prepares a comparison table between the aging of the accountsreceivables and the ECL rate and calculates ECL with a reference to historical credit loss experience and in combination withcurrent situation and forecast of future economic conditions. For details, please refer to “Note V (10) Financial instruments --Impairment of financial assets”.
12. Accounts receivable financing
Accounts receivable financing reflects bills receivable and accounts receivable that are measured at fair value while changes in fairvalue are included in other comprehensive income. For their accounting methods, please refer to “Note V (10) Financialinstruments — Financial assets measured at fair value through other comprehensive income”.
13. Other receivables
Recognition and accounting methods for ECLs of other receivablesECLs of other receivables are determined based on historical experience data and forward-looking information. The Companyuses the 12-month ECL or lifetime ECL to measure impairment loss according to whether the credit risk of other receivables hassignificantly increased since initial recognition.Other receivables are classified into groups based on common risk characteristics:
| Item | Basis for determining the portfolio |
| Margins and deposits | Deposits receivable |
| Employee reserve fund | Reserve funds receivable |
| Related-party amount within the consolidated scope | Amounts of related parties within the consolidation scope |
| Others | Other amounts receivable |
14. Inventory
1. Classification of inventory
Inventories of the Company refer to assets held for sale in the ordinary course of business, or in the process of production for suchsale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services, including rawmaterials, materials for consigned processing, stock commodities, etc.
2. Pricing methods for inventory acquisition and delivery
Inventories are initially measured at cost. The cost of inventories comprises purchase costs, processing costs, and other costs.Borrowing costs that should be included in the cost of inventories are handled in accordance with the Accounting Standards forBusiness Enterprises No. 17 - Borrowing Costs. The cost of investing in inventories by investors shall be determined according tothe value stipulated in the investment contract or agreement, unless the value thereof is not fair.Valuation method of delivered inventories: weighted average.
3. Inventory counting system
Perpetual inventory system is adopted.
4. Methods for recognition of the net realizable value of inventories and inventory write-downInventories at the end of the reporting period shall be measured at the lower of cost and net realizable value. If the net realizablevalue of inventories at the end of the reporting period is lower than the book cost, the difference is set aside as inventory write-down. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion,the estimated costs necessary to make the sale, and related taxes and fees.
(1) Basis for determining the net realizable value of inventories: For materials held for production, if the net realizable value offinished product using the material is higher than its cost, the material is still measured at cost. However, when a decline in theprice of materials indicates that the cost of the finished product exceeds net realizable value, the material is written down to netrealizable value.For inventories held to satisfy sales contracts or service contracts, their net realizable value is based on the contract price. If thesales contracts are less than the inventory quantities held, the net realizable value of the excess part is based on general sellingprices.
(2) Method of inventory write-down: Inventories are written down according to the lower of the cost and the net realizable valueitem by item. However, inventories with large quantities and low unit value are written down according to inventory category.
15. Contract assets
1. Recognition methods and standards of contract assets
Contract assets refer to the Company’s right to consideration in exchange for goods or services that the entity has transferred to acustomer when that right is conditioned on something other than the passage of time. For example, if the Company sells twoclearly distinguishable commodities to the customer and has the right to consideration as one of them has been delivered, but thereceipt of payment depends on the delivery of the other commodity, the right to consideration hereof is recognized as a contractasset.
2. Recognition and accounting methods for ECLs of contract assets
The Company always measures the loss allowance of contract assets based on lifetime ECL, regardless of whether they containsignificant financing components or not. The increase or reversal of loss allowance therefrom is included in the profit and loss ofthe current period as impairment loss or gain.The Company calculates the ECL of a contract asset at the balance sheet date. If the ECL is higher than the carrying amount of thecurrent provision for the impairment of the contract asset, the difference is recognized as impairment loss. Afterwards, theCompany remeasures the ECL on each balance sheet date, and any reversal of loss allowance is recognized as impairment gain.
16. Assets held for sale
1. Basis for classifying an asset as held for sale
The Company classifies a disposal group (or non-current asset) as held for sale if the following conditions are simultaneously met:
(1) the asset or disposal group is available for immediate sale in its present condition according to customs of similar transactions;
(2) the sale is high probable, i.e. the company has made the resolution for the sale and received a firm purchase commitment, andthe sale is expected to be completed within one year. If relevant regulations require that the sale can be made only after approval ofcompetent governing bodies of the company or competent regulatory authorities, the approval has been obtained.A firm purchase commitment refers to a legally binding purchase agreement signed between the Company and other entities,which contains important terms such as transaction price, time and sufficiently severe breach of contract penalties such that thepossibility of major adjustment or revocation of the agreement is extremely unlikely.
2. Accounting methods of assets held for sale
During initial measurement or remeasurement of the non-current assets or disposal groups classified into held-for-sale assets onthe balance sheet date, the difference between the book value and fair value less costs to sell is confirmed as the impairment lossand recognized in profit or loss of the current period, while impairment provision is set aside for the asset held for sale. In theevent of any gains for any increase in fair value less cost to sell of a non-current asset held for sale on subsequent balance sheetdates, the recognized impairment losses can be reversed but not in excess of the cumulative impairment losses that have beenrecognized since it was classified as held for sale, and the reversal amount is included in profit or loss. Impairment lossesrecognized before the asset was classified as held for sale cannot be reversed.The impairment loss recognized for a disposal group held for sale shall first reduce the book value of the goodwill in the disposalgroup, and then the book values of other non-current assets in the disposal group proportionate to their percentage in the bookvalue of the disposal group. If the impairment loss recognized for a disposal group held for sale is subsequently reversed, the bookvalues of non-current assets other than goodwill in the disposal group are increased proportionate to their percentage in thedisposal group.The Company does not depreciate (or amortize) a non-current asset while it is classified as held for sale or while it is part of adisposal group classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group shallcontinue to be recognized.
When a non-current asset or a disposal group held for sale is derecognized, the un-recognized gains or losses are included in theprofit and loss of the current period.The Company measures a non-current asset that ceases to be classified as held for sale or ceases to be included in a disposal groupclassified as held for sale at the lower of:
(1) its book value before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortization orrevaluation that would have been recognized had the asset (or disposal group) not been classified as held for sale, and
(2) its recoverable amount.
17. Debt investments
The Company determines the ECL of debt investments on each balance sheet date based on the type of counterparty and riskexposure while taking into consideration historical defaults and industry forward-looking information or external actual andexpected economic information. For recognition and accounting methods of ECLs, please refer to “Note V (10) Financialinstruments”.
18. Long-term equity investments
1. Basis of determining joint control and significant influence over the investee
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevantactivities require the unanimous consent of the parties sharing the control. When judging whether there is joint control, firstly,determine whether all participants or a group of participants collectively control the arrangement. If all participants or a group ofparticipants must act in unison to decide relevant activities of an arrangement, it is considered that all participants or the group ofparticipants collectively control the arrangement. Secondly, determine whether decisions of relevant activities of the arrangementmust be unanimously agreed by all parties sharing the collective control of the arrangement. The joint control is formed when andonly when decisions of relevant activities must be unanimously agreed by all parties sharing the collective control. If thecombination of two or more participants is needed to collectively control an arrangement, it does not constitute joint control.Protective rights enjoyed are not considered when judging whether there is joint control.Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control orjoint control of those policies. When assessing whether there is significant influence over the investee, existence and effect ofpotential voting rights that are currently exercisable or convertible, including potential voting rights held by other entities, areconsidered, including warrants, share call options, debt or equity instruments that are convertible into ordinary shares or othersimilar instruments issue by the investee. An entity is regarded as having significant influence over the investee if the externalinvestment meets the following conditions: (1) representation on the board of directors or equivalent governing body of theinvestee; (2) participation in the decision-making processes of the investee’s financial and operational policies; (3) materialtransactions between the entity and its investee; (4) designation of managerial personnel to the investee; (5) provision of essential
technical information to the investee. If an entity holds, directly or indirectly, more than 20% but less than 50% of the votingpower of the investee, it is generally considered as having significant influence over the investee.
2. Determination of initial investment cost
(1) Long-term equity investment formed by business combination
A. For long-term equity investments formed from business combination of entities under common control, if the considerationtakes the form of cash, transfer of non-cash assets, debt assumption or issuance of equity securities, the book value of the owner'sequity of the combined party in the consolidated financial statements of the ultimate controlling party on the combination dateshall be regarded as the initial investment cost of the long-term equity investment. For acquiring control of the investee undercommon control by ways of additional investment, the book value of the investee’s net assets attributable to the investor in theconsolidated financial statements of the ultimate controlling party on the combination date shall be regarded as the initialinvestment cost of the long-term equity investment. Capital surplus or share surplus is written down based on the differencebetween the initial investment cost of the long-term equity investment and the carrying amount of the investment beforecombination plus the carrying amount of consideration paid to obtain the new shares on the combination date; if it is insufficientfor offsetting, retained earnings are reduced.B. For long-term equity investments formed from business combinations of entities not under common control, the combinationcost determined on the acquisition date in accordance with the Accounting Standards for Business Enterprises No. 20 - BusinessCombinations is used as the initial investment cost of the long-term equity investment. For acquiring control of the investee notunder common control by ways of additional investment, the sum of the carrying amount of the equity investment original heldand the cost of additional investment is used as the initial investment cost upon adoption of the cost method.
(2) Except for long-term equity investments formed through business combinations, the initial investment cost of other long-termequity investments is determined as follows:
A. For long-term equity investment obtained by paying cash, the consideration actually paid is the initial investment cost. Theinitial investment cost includes expenses, taxes, and other necessary expenditures directly related to the acquisition of the long-term equity investment.B. For long-term equity investments obtained by issuing equity securities, the fair value of the equity securities issued is the initialinvestment cost.C. For long-term equity investments obtained through the exchange of non-monetary assets, the initial investment cost isdetermined pursuant to the Accounting Standards for Business Enterprises No. 7 - Exchange of non-monetary assets.D. For long-term equity investments obtained through debt restructuring, the initial investment cost is determined pursuant to theAccounting Standards for Business Enterprises No. 12 - Debt restructuring.
3. Subsequent measurement and recognition of profit and loss
(1) Cost method: If the Company can make control of the investee through the long-term equity investments, the cost method isused. When the cost method is used, additional or recovered investment will adjust the cost of the long-term equity investment.For long-term equity investments accounted using the cost method, with the exception of the price actually paid at the acquisition
of investment or cash dividends or profits included in consideration, declared but not issued yet, the return on investment of thecurrent period shall be recognized according to the cash dividends or profits declared to be issued by the investee, withoutdistinguishing whether the net profit is realized before or after the investment.
(2) Equity method: When the Company has an investment in an associate, a portion of which is held indirectly through a venturecapital organization, or a mutual fund, unit trust and similar entities including investment-linked insurance funds, the Companyelects to measure that portion of the investment in the associate at fair value through profit or loss using the equity method inaccordance with provisions of Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of FinancialInstruments, regardless of whether the venture capital organization, or the mutual fund, unit trust and similar entities includinginvestment-linked insurance funds, has significant influence over that portion of the investment. When the equity method is used,after the Company obtains the long-term equity investments, return on investment and other comprehensive income shall berespectively determined based on the share of net profit or loss and other comprehensive income realized by the investee that shallbe attributable to or assumed by the Company, and the book value of long-term equity investments shall be adjusted at the sametime. Attributable share shall be calculated based on the profit or cash dividends declared by the investee and the book value oflong-term equity investments shall be accordingly decreased. In respect to other changes of owner's equity of the investee inaddition to net profit or loss, other comprehensive income and profit distribution, the book value of long-term equity investmentsshall be adjusted and recognized as owner’s equity. When the Company confirms the limit of net loss incurred by the investee, thelimit is the extent that the book value of the long-term equity investments and other long-term equity that substantially constitutesa long-term equity in the investment target is written down to zero, unless the Company is obliged to bear additional losses. Wherethe investee records net profit in the future, the Company resumes and recognizes the profit-sharing amount after such amountmakes up the unrecognized loss-sharing amount. When confirming the share of the investee's net profit and loss, the Companyshall confirm the investee's net profit after adjustment based on the fair value of the identifiable net assets of the investee at theacquisition of the investment, and set off profit or loss of internal transactions with the associates and joint ventures and recognizeinvestment gain or loss thereupon. If losses of internal transactions between the Company and the investee belong to assetimpairment losses in accordance with the Accounting Standards for Business Enterprises No. 8 -- Impairment of assets, the fullamount is recognized. If the investee uses accounting policies and periods that differ from those of the Company, financialstatements of the investee should be adjusted in accordance with those of the Company to reflect investment gain or loss.For long-term equity investments in associates and joint ventures held before the date of initial adoption, if there is a debit balanceof equity investment, it shall be amortized over the original remaining period on a straight-line basis, and the amortization amountis included in profit or loss of the period.
(3) For the disposal of long-term equity investments, the difference between the carrying amount and actual consideration isincluded in profit or loss of the period. For long-term equity investments accounted using the equity method, with regard to anychanges in equity other than the net profit or loss of the investee, the portion originally included in owner’s equity is transferred toprofit or loss of the period at the disposal of the investment, except for other comprehensive income arising from changes in netassets or liabilities of defined benefit plans remeasured by the investee.
19. Property, plant and equipment
(1) Recognition conditions
Property, plant and equipment are tangible assets with a useful life of more than one accounting year that are held for productionor supply of goods or labor services, for rental to third parties, or for use in the organizations.
(2) Depreciation method
| Category | Depreciation method | Depreciation life | Residual value rate | Annual depreciation rate |
| Properties and buildings | Straight-line depreciation | 20-40 | 5% | 2.38%- 4.75% |
| Machinery equipment | Straight-line depreciation | 3-5 | 5% | 19.00%- 31.67% |
| Motor vehicles | Straight-line depreciation | 5 | 5% | 19.00% |
| Office equipment and others | Straight-line depreciation | 3-5 | 0-5% | 19.00%- 31.67% |
The Company reassesses the useful life, estimated net residual value and depreciation method of property, plant and equipment atthe end of each fiscal year.
20. Construction in process
Construction in progress is measured at actual cost. Borrowing costs and foreign currency translation differences associated withloans for engineering construction projects are capitalized in accordance with relevant provisions of the Accounting Standards forBusiness Enterprises No. 17 - Borrowing Costs or included in profit or loss. Construction in progress is transferred to property,plant and equipment from the date when it reaches the intended use, regardless of whether the project has completed the finalaccount. Meanwhile, adjustments will be made upon completion of the final account.
21. Borrowing costs
1. Principles for borrowing cost capitalization
Borrowing costs include interest in connection with the borrowing of funds, amortizations of discounts or premiums, incidentalexpenses, exchange differences arising from foreign-currency borrowings, etc. Borrowing costs that are directly attributable to theacquisition, construction or production of a qualifying asset should be capitalized and included in the cost of that asset. Otherborrowing costs are recognized as an expense in the period in which it incurs them.Qualifying asset refers to property, plant and equipment, investment properties, inventories and other assets that necessarily take asubstantial period of time to get ready for its intended use or sale.The Company begins capitalizing borrowing costs if all of the following conditions are met:
(1) it incurs expenditures for the asset; expenditures on a qualifying asset include only those expenditures that have resulted inpayments of cash, transfers of other assets or the assumption of interest-bearing liabilities;
(2) it incurs borrowing costs; and
(3) it undertakes activities that are necessary to prepare the asset for its intended use or sale.
2. Period for borrowing cost capitalization
Borrowing costs incurred for the acquisition, construction or production of a qualifying asset, when meeting the abovecapitalization conditions, are included in the cost of the asset before the asset reaches its intended use or sale. If acquisition orproduction activities of the asset are interrupted abnormally and the interruption period thereof lasts for more than 3 months, thecapitalization of borrowing costs should be suspended, while the borrowing costs are recognized as an expense in the period untilthe acquisition or production activities of the asset resume. Moreover, capitalization is ceased when the qualifying asset reaches itsintended use or sale. Borrowing costs incurred after the asset reaches its intended use or sale are included in the financial expensesof the period when they incur.
3. Calculation methods for the amount of borrowing costs eligible for capitalization
During the capitalization period, the amount of interests eligible for capitalization (including amortization of discount or premium)for each reporting period shall be determined in accordance with the following:
(1) To the extent that the Company borrows funds specially for the purpose of acquiring or producing a qualifying asset, theamount of interests for capitalization is determined as the actual interest expense incurred on that borrowing during the period lessany investment income obtained by depositing the unused borrowings in the bank or any investment income from temporaryinvestments.
(2) To the extent that the Company borrows funds generally and uses them for the purpose of acquiring or producing a qualifyingasset, the Company determines the amount of interests eligible for capitalization by applying a capitalization rate of the generalborrowings to the weighted average of the cumulative asset expenditure over the specific borrowing portion.
22. Right-of-use assets
Except for short-term leases or low-value asset leases, the Company, as the lessee, may recognize the right to use the leased assetduring the lease term as a right-of-use asset.
1. Basis for determining right-of-use assets
At the commencement date, the Company measures the right-of-use asset at cost, which includes:
(1) the amount of the initial measurement of the lease liability;
(2) any lease payment made at or before the commencement date, less any lease incentives received;
(3) any initial direct costs incurred;
(4) any estimate of costs to be incurred in dismantling and removing the underlying asset, restoring the site on which it is locatedor restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurredto produce inventories.
2. Depreciation and impairment of right-of-use assets
(1) The Company applies a cost model for the subsequent measurement of the right-of-use asset.
(2) The Company depreciates right-of-use assets through the straight-line method.
If it can be reasonably ascertained that the ownership of the asset leased can be obtained by the expiration of the tenancy, the assetis depreciated over its useful life; if not, the asset is depreciated over the shorter of the tenancy and the useful life of the leasedasset. If the right-of-use asset is impaired, the Company measures subsequent depreciation according to the book value less theimpairment loss.
(3) When the Company remeasures the lease liability according to the present value of the changed lease payments and adjusts thebook value of the right-of-use asset accordingly, if the book value of the right-of-use asset has been reduced to zero but the leaseliability still needs to be further reduced, the remaining amount is included in the profit and loss of the current period.
(4) Impairment test method and impairment provision method for right-of-use assets are detailed in "Note V (24) Impairment oflong-lived assets".
23. Intangible assets
(1) Pricing method, service life, and impairment test
An intangible asset is initially measured at cost. The cost of a separately acquired intangible asset comprises its purchase price,related taxes and fees, and any directly attributable cost of preparing the asset for its intended use. For intangible assets purchasedby installment, if the payment is deferred beyond normal credit terms, the asset has a financing component in nature and its cost isthe present value of the purchase price. The cost of purchasing intangible assets by investors shall be determined according to thevalue stipulated in the investment contract or agreement; if the value in the investment contract or agreement is not fair, the fairvalue of the intangible asset is used. For intangible assets obtained through the exchange of non-monetary assets, the initialinvestment cost is determined pursuant to Accounting Standards for Business Enterprises No. 7 - Exchange of non-monetary assets.For intangible assets obtained through debt restructuring, the initial investment cost is determined pursuant to AccountingStandards for Business Enterprises No. 12 - Debt restructuring. If an intangible asset is acquired in a business combination ofentities under common control, the cost of that intangible asset is book value of the combined party; if an intangible asset isacquired in a business combination of entities not under common control, the cost of that intangible asset is its fair value at theacquisition date.The Company assesses the useful life of an intangible asset at acquisition. For intangible assets with a finite useful life, theamortization begins when the asset is available for use and ceases when it is derecognized by using the straight-line method, whichis recognized in profit or loss. An intangible asset with an indefinite useful life is not amortized. Intangible assets of the Companyinclude land use rights, trademarks and software. Among them, the land use rights are amortized equally over the period of use,trademarks are amortized over 10 years, and software over 3 years.The Company reviews the useful life and amortization method of intangible assets with finite useful life at each financial year-end.If the expected useful life and amortization method of an intangible asset is different from previous estimates, the amortization
period and method should be changed accordingly. The Company reviews the useful life of intangible assets with indefinite usefullife at each accounting period. If evidence shows that the useful life of the asset is changed from indefinite to finite, its useful lifeis estimated and the accounting is handled as per the above provisions.Impairment test method and impairment provision method for intangible assets are detailed in "Note V (24) Impairment of long-lived assets".
(2) Accounting policy for expenditure on internal research and development
For internally generated intangible assets, expenditure on the research phase is recognized as profit and loss of the current periodwhen incurred. Expenditure on the development phase can be recognized as an intangible asset if and only if all the followingconditions are met:
(1) technically feasible to complete the intangible asset so that it will be available for use or sale;
(2) the intention to complete the intangible asset and use or sell it;
(3) how the intangible asset will generate probable future economic benefits; among other things, the Company can demonstratethe existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, theusefulness of the intangible asset;
(4) the availability of adequate technical, financial and other resources to complete the development and the ability to use or sellthe intangible asset;
(5) the ability to reliably measure the expenditure attributable to the intangible asset during the development.Expenditure previously recognized as an expense is not adjusted.
24. Impairment of long-lived assets
The Company performs an impairment test for long-lived assets such as long-term equity investments, investment properties,property, plant and equipment, construction in progress, intangible assets, right-of-use assets if there is any sign of impairment onthe balance sheet date. If the impairment test shows that the recoverable amount of an asset is lower than its book value, thedifference is recognized as a provision for impairment and recognized as the impairment loss. The recoverable amount isdetermined based on the higher of (1) the asset’s fair value less costs of disposal and (2) the present value of the asset’s expectedfuture cash flows. Provisions for asset impairment are calculated and recognized on an individual basis. If it is difficult to estimatethe recoverable amount of individual assets, the Company will determine the recoverable amount on the basis of the asset group towhich the asset belongs. Asset group refers to the smallest a group of assets that can independently generate cash flows.Goodwill is tested for impairment at least at each fiscal year-end. The Company performs impairment tests for goodwill. Goodwillacquired in a business combination shall, from the acquisition date, be reasonably allocated to the relevant asset group or, ifimprobable, a combination of asset groups. Carrying amount of goodwill is allocated to relevant asset group or asset groups basedon the proportion of their respective fair values in the group or groups. Where the fair value cannot be reliably measured, theallocation should be based on the proportion of their respective carrying amounts in the group or groups. When performing
impairment tests for relevant asset group or asset groups to which goodwill has been allocated, if there is an indication that theasset group or asset groups may be impaired, the asset group or asset groups not containing the goodwill should be tested beforethe asset group or asset groups containing the goodwill. The recoverable amount is calculated and compared with the relevantcarrying amount to recognize impairment loss. Then, the asset group or asset groups containing the goodwill are tested forimpairment. Their carrying amounts (including the carrying amount of the goodwill apportioned) and the recoverable amount arecompared. If the recoverable amount is lower than the carrying amount, impairment loss for goodwill is recognized.The above impairment losses, once recognized, will not be reversed in subsequent accounting periods.
25. Long-term deferred expenses
Long-term deferred expenses are expenditures that are paid in one accounting period but will be amortized over 1 year that coverthe current period and future accounting periods. They include renovation expenditures for property, plant and equipment leased inthrough operating lease. Long-term deferred expenses shall be amortized equally over the expected benefit period.
26. Contract liabilities
A contract liability is the Company’s obligation to transfer goods to a customer for which the Company has received or is due toreceive consideration from the customer. If the customer has paid contract consideration or the Company has obtained theunconditional right of collection before the Company transfers goods to the customer, the amount received or the receivable isrecognized as contract liability at the earlier of the time when the customer actual pays the amount and when the amount becomesdue.Contract assets and contract liabilities under the same contract are presented on a net basis; contract assets and contract liabilitiesunder different contracts are not offset.
27. Employee benefits
(1) Accounting treatment method for short-term benefits
Employee benefits refer to various forms of remuneration or compensation given by the Company for obtaining services providedby employees or for terminating labor relations. Benefits offered to employees’ spouses, children, dependents or to survivors orother beneficiaries of deceased employees are also considered employee benefits. Employee benefits include short-term benefits,post-employment benefits, termination benefits and other long-term benefits.Short-term employee benefits are those expected to be settled wholly before twelve months after the end of the annual reportingperiod during which employee services are rendered, but do not include post-employment benefits and termination benefits.During the accounting period when employees provide services, the actually incurred short-term benefits are recognized as aliability and included in the cost and expense of relevant assets according to beneficiaries of the services rendered.
(2) Accounting treatment method for post-employment benefits
Post-employment benefits are various forms of remuneration and benefits provided by the Company after employee retirement orupon termination of labor relations with the Company, but do not include short-term benefits and termination benefits. Post-employment benefit plan is classified as either a defined contribution plan or a defined benefit plan. Under a defined contributionplan, the Company pays fixed contributions into a fund but has no legal or constructive obligation to make further payments. Otherpost-employment benefit plans than defined contribution plans are defined benefit plans.
(1) Defined contribution plan
Defined contribution plans include basic pension insurance and unemployment insurance. The Company shall, within theaccounting period when employees provide service, contribute relevant amounts based on the contribution base and rationprescribed by the local government, which are recognized as a liability and included in profit or loss or relevant asset costs.Contributions to a defined contribution plan during the accounting period when employees provide service are recognized as aliability and included in profit or loss or relevant asset costs.
(2) Defined benefit plan
The obligation arising from the defined benefit plan is attributed to accounting periods when employees provide service throughthe benefit formula determined according to the projected unit credit method and included in profit or loss or relevant asset costs.Costs arising from the Company’s defined benefit plans contain the following components:
A. Service costs, including current service costs, past service costs and gain or loss on settlement among them, current service costrefers to the increase in the present value of the defined benefit obligation resulting from employee service in the current period.Past service cost refers to the change in the present value of the defined benefit obligation for employee service in prior periods,resulting from a plan amendment.B. Net interest on the net defined benefit liability (asset), including interest income on plan assets, interest cost on the definedbenefit obligation and interest on the effect of the asset ceiling.C. Remeasurements of the net defined benefit liability (asset).Unless other accounting standards require or permit employee benefit costs to be recognized as asset costs, the Company includesthe above items A and B in profit or loss and item C in other comprehensive income. Amounts recognized in other comprehensiveincome will not be reclassified to profit or loss in a subsequent period; however, amounts recognized in other comprehensiveincome may be transferred within equity.
(3) Accounting treatment method for termination benefits
Termination benefits refer to compensation given to employees for terminating the labor relations with the employee before theexpiration of the labor contract or for encouraging employees to accept an offer of benefits in exchange for the termination ofemployment. The Company recognizes a liability for termination benefits at the earlier of the following dates, which is included inprofit or loss: (a) when the company can no longer unilaterally withdraw the offer of those benefits; and (b) when the Companyrecognizes costs for a restructuring that involves the payment of termination benefits.
(4) Accounting treatment method for other long-term employee benefits
Other long-term employee benefits refer to all other employee benefits than short-term benefits, post-employment benefits andtermination benefits, including long-term paid absences, long-term disability benefits, and long-term profit sharing plans. For otherlong-term benefits offered by the Company to employees, if they meet the conditions of a defined contribution plan, they areaccounted in accordance with relevant provisions of defined contribution plans; the remaining are accounted in accordance withdefined benefit plans to recognize and measure their net liability or asset. At the end of the reporting period, obligations of otherlong-term benefit plans are attributed to accounting periods when employees provide service and included in profit or loss orrelevant asset costs.
28. Lease liabilities
Except for short-term leases or low-value asset leases, the Company recognizes the right to use the leased asset during the leaseterm as a right-of-use asset and recognizes the present value of unpaid lease payments as a lease liability.When calculating the present value of lease payments, the Company adopts the interest rate implicit in the lease as the discountrate; if the interest rate implicit in the lease cannot be determined, the Company’s incremental borrowing rate is used as thediscount rate.For lease liabilities, the Company calculates its interest expenses in each period of the lease term at a fixed periodic interest ratewhich is included in the profit and loss of the current period. Variable lease payments that are not included in the measurement oflease liabilities are included in the current profit and loss when they are actually incurred.After the commencement date of the lease term, when there is a change in the actual fixed payment amount, a change in theestimated payable amount of the guaranteed residual value, a change in the index or ratio used to determine the lease paymentamount, or a change in the evaluation results or actual exercise of the purchase option, renewal option or termination option, theCompany remeasures the lease liability according to the present value of the changed lease payments and adjusts the book value ofthe right-of-use asset accordingly.
29. Provision
A provision is a liability of uncertain timing or amount, and is recognized when all the following are met: (1) it is presentobligation of the Company; (2) it is probable that an outflow of resources embodying economic benefits will be required to settlethe obligation; and (3) a reliable estimate can be made of the amount of the obligation.Where some or all of the expenditure required to settle a provision is expected to be reimbursed by a third party, thereimbursement is treated as a separate asset when it is virtually certain that reimbursement will be received; the amount recognizedfor the reimbursement shall not exceed the amount of the provision. The amount recognized as a provision should be the bestestimate of the expenditure required to settle the present obligation at the end of the reporting period, while taking risks,uncertainties and time value relating to the matter into account. Where the effect of the time value of money is material, the bestestimate is the determined by discounting the relevant future cash outflows.
The Company reviews provisions on each balance sheet date. If there is conclusive evidence that the book value of the provisioncan no longer truly reflect the current best estimate, the current best estimate is used to adjust the book value of the provision.
30. Share-based payment
1. Types of share-based payment
The Company's share-based payment transactions include equity-settled share-based payment and cash-settled share-basedpayment.Equity-settled share-based payment transactions are measured at the fair value of the equity instruments granted to the employees.If the granted equity instruments vest immediately, the vested equity instruments are recognized into relevant costs or expensesbased on fair value at the grant date and capital reserve is increased accordingly. If the granted equity instruments vest conditionalupon the completion of a specified period of service or upon the achievement of a performance condition, based on the bestavailable estimate of the number of equity instruments expected to vest, services rendered in the period are recognized intorelevant costs or expenses based on fair value of the vested equities on the grant date, and capital reserve is increased accordingly.No subsequent adjustment will be made to recognized relevant costs or expenses and total equity after vesting date.For cash-settled share-based payment transactions, the Company measures the fair value of the liabilities to be assumed by theCompany as determined based on the number of shares or other equity instruments. If the shares are vested immediately, thevested shares are recognized into relevant costs or expenses based on the fair value of the liabilities assumed by the Company, andliabilities are increased accordingly. If the cash-settled share-based payment transaction vests conditional upon the completion of aspecified period of service or upon the achievement of a performance condition, services rendered in the period are recognized asthe fair value of the liability assumed by the Company based on the best available estimates of the number of share optionsexpected to vest at each balance sheet during the vesting period, and included in costs or expenses and corresponding liability. TheCompany remeasures the fair value of the liability at each balance sheet date prior to the settlement of the liability and at the dateof settlement, with any changes in fair value recognized in profit or loss for the period.
2. Accounting of modifications to share-based payment transactions, including cancellations and settlementsThe Company shall recognize, as s minimum, the services received measured at the grant date fair value of the equity instrumentsgranted, unless those equity instruments do not vest because of failure to satisfy a vesting condition (other than a market condition).This applies irrespective of any modifications to the terms and conditions on which the equity instruments were granted, or acancellation or settlement of that grant of equity instruments.If the Company cancels or settles a grant of equity instruments during the vesting period (other than a grant canceled by forfeiturewhen the vesting conditions are not satisfied), it will handle as follows:
(1) account for the cancellation or settlement as an acceleration of vesting and therefore recognize immediately the amount thatotherwise would have been recognized over the remainder of the vesting period;
(2) any payment made to the employee on the cancellation or settlement of the grant shall be accounted for as the repurchase of anequity interest, i.e. as a deduction from equity, except to the extent that the payment exceeds the fair value of the equityinstruments granted, measured at the repurchase date. Any such excess shall be recognized as an expense.
(3) if new equity instruments are granted to the employee and, on the date when those new equity instruments are granted, theCompany identifies the new equity instruments granted as replacement equity instruments for the canceled equity instruments,accounts for the granting of replacement equity instruments in the same way as a modification to the original grant of equityinstruments.
31. Other financial instruments such as preference shares and perpetual bonds
Financial instruments issued by the Company are initially recognized and measured in accordance with relevant accountingstandards for financial instruments and distinction between financial liabilities and equity instruments. Afterwards, the Companyaccounts for the interest expense or dividend distribution of the instrument based on its classification. For financial instrumentsclassified as equity instruments, interest expense or dividend distribution is recognized as profit distribution of the issuer, and theirrepurchase and redemption as changes in equity. For financial instruments classified as financial liability, interest expense ordividend distribution is allocated to borrowing costs in principle, and gains or losses from their repurchase or redemption areincluded in profit or loss.Transaction costs arising from the issuance of the financial instruments, such as service charges and commissions, are measured atamortized cost and included in their initial recognition amount if the instrument is classified as a debt instrument, and are deductedfrom equity if the instrument is classified as an equity instrument.
32. Revenue
Accounting policy for recognition and measurement of revenue
1. Accounting policy for recognition and measurement of revenue
Revenue is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets thatresult in an increase in equity, other than those relating to contributions from equity participants.The Company recognizes revenue when it satisfies a performance obligation, which is when the customer obtains control of thegood. Obtaining control of the good means being able to direct the use of the good and obtain almost all economic benefitstherefrom and to prevent others from directing the use of the good and obtaining almost all economic benefits therefrom.The transaction price is the amount of consideration in a contract to which the Company expects to be entitled in exchange fortransferring promised goods, excluding amounts collected on behalf of third parties or amounts expected to be refunded to thecustomer. If the consideration promised in a contract includes a variable amount, the Company estimates the amount ofconsideration based on the expected value or the most likely amount of the variable consideration, to the extent that it is highlyprobable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associatedwith the variable consideration is subsequently resolved. If the contract contains a significant financing component, the Company
recognizes transaction price at an amount that reflects the price that a customer would have paid for the promised goods if thecustomer has paid cash for those goods when they transfer to the customer (i.e. cash selling price). The difference between theamount of promised consideration and the cash selling price is amortized using the effective interest method during the contractualterm. However, if the period between when the Company transfers of a promised good to a customer and when the customer paysfor that good is one year or less, the Company does not consider the financing component. For contracts in which a customerpromises consideration in a form other than cash, the Company measures the non-cash consideration at fair value at the contractcommencement date. If the fair value of the non-cash consideration cannot be reasonably estimated, the Company measures thetransaction price indirectly by reference to the stand-alone selling price of the goods promised to the customer. Amounts to berefunded to the customer are used to reduce the transaction price, unless the payment to the customer is in exchange for a distinctgood that the customer transfers to the Company. If the amount of consideration payable to the customer exceeds fair value of thedistinct good that the Company receives from the customer, then such an excess is accounted as reduction of the transaction price.If the Company cannot reasonably estimate the fair value of the good received from the customer, it accounts for all of theconsideration payable to the customer as a reduction of the transaction price. If consideration payable to a customer is accountedfor as a reduction of the transaction price, the Company recognizes the reduction of the revenue when the later of either of the twofollowing events occurs: transfer of the related goods to the customer; and pay or promise to pay the consideration.If the contract contains one or more performance obligations, the Company allocates the transaction price to each performanceobligation on a relative stand-alone selling price basis at contract inception in proportion to stand-alone selling prices of thedistinct good underlying each performance obligation. Where the transaction price changes after contract inception, the Companyallocates these subsequent changes to the performance obligations in the contract on the same basis as at contract inception. Forchanges in stand-alone selling prices after contract inception, the transaction price is not re-allocated.A performance obligation is one satisfied over time if one of the following criteria is met; otherwise, it is a performance obligationsatisfied at a point in time:
(1) the customer simultaneously receives and consumes the benefits as the Company performs;
(2) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced;
(3) the Company's performance does not create an asset with an alternative use to the Company and the Company has anenforceable right to payment for performance completed to date.For performance obligations satisfied over time, the Company recognizes revenue over the period based on performance progress,unless the performance progress cannot be reasonably determined. The Company measures the progress of service provision basedon input methods. When the performance progress cannot be reasonably determined, if the costs incurred are expected to becompensated, the Company recognizes revenue based on the amount of costs incurred, until the progress of performance can bereasonably determined.For performance obligations satisfied at a point in time, the Company recognizes revenue when the customer obtains control of thepromised good. The Company considers the following indicators when judging whether the customer has obtained control of thegood:
(1) the Company has a present right to payment for the good, i.e. the customer is presently to pay for the good;
(2) the Company has transferred the legal title to the customer, i.e. the customer has legal title of the good;
(3) the Company has transferred physical possession of the good, i.e. the customer physically possesses the good;
(4) the Company has transferred significant risks and rewards of ownership of the good to the customer, i.e. the customer has theobtained significant risks and rewards of ownership of the good;
(5) the customer has accepted the good.
2. Recognition methods for the Company’s main activities of revenue generation
The Company's revenue primarily comes from clothing sales, which is divided into two models: direct operation (including jointoperation and non-joint operation) model and franchise model. The recognition methods for revenue are as follows:
For the joint operation model, the Company signs an agreement with the joint operation party (such as shopping malls, airports andgolf clubs), and the joint operation party collects all the money from the customer when delivering the goods to the customer.Under this model, the Company recognizes revenue based on the total consideration received or receivable from the customer.Under the non-joint operation model, the Company recognizes sales revenue when the goods are delivered to the customer andpayment is received.Under the franchise model, the Company recognizes sales revenue when the goods are delivered to the franchisee and receives theconfirmation receipt from the franchisee. In the event that the franchisee picks up goods by itself, the handover of the goods by theCompany to the carrier is regarded as having been confirmed by the franchisee.Different operation models are adopted for the same business, which may lead to the differences in the accounting policy forrecognition of revenue.Not applicable
33. Contract costs
Contract costs comprise incremental costs of obtaining a contract and costs to fulfill a contract.The incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer thatwould not have incurred if the contract had not been obtained (for example, a sales commission). If the incremental cost incurredby the Company for obtaining a contract is expected to be recovered, the cost of obtaining the contract is recognized as an asset.Other costs for obtaining a contract than incremental costs that are expected to be recovered are recognized as profit or loss whenthey incur.If the costs incurred in fulfilling a contract with a customer are not within the scope of standards for inventories, property, plantand equipment or intangible assets, the Company regards them as costs to fulfill a contract and recognizes them as an asset whenall of the following criteria are met:
(1) the costs relate directly to a contract or to an anticipated contract, including direct labor cost, direct material cost,manufacturing overhead (or similar expenses), costs specifically to be borne by the customer and other costs incurred solely as aresult of the contract;
(2) the costs generate or enhance resources of the Company that will be used in satisfying performance obligation in the future;
(3) the costs are expected to be recovered.
An asset recognized in accordance with incremental costs of obtaining a contract and costs incurred to fulfill a contract shall beamortized on a basis that is consistent with the transfer to the customer of the goods or services to which the asset relates.If the carrying amount of assets recognized in accordance with contract costs is higher than the difference of the following tow, theexcess portion will be reserved for impairment and recognized as impairment:
(1) the remaining amount of consideration that the Company expects to receive in exchange for the goods to which the assetrelates;
(2) the costs that relate directly to providing the goods.
The Company shall recognize in profit or loss a reversal of some or all of an impairment loss previously recognized in accordancethe above (1) and (2) when the impairment conditions on longer exist or have improved. The increased carrying amount of theasset shall not exceed the amount that would have been determined if no impairment loss had been recognized previously.
34. Government grants
1. Types of government grants
Government grants refer to monetary and non-monetary assets received from the government free of charge, including grantsrelated to assets and grants related to income.Grants related to assets are government grants obtained by the Company from the government for purchasing, constructing orotherwise acquiring long-lived assets.Grants related to income are government grants other than those related to assets.
2. Recognition principle and timing for government grants
Principle for recognizing government grants:
(1) the Company will comply with the conditions attaching to them; and
(2) the grants will be received.
Government grants are recognized when and only when the above two criteria are met.
3. Measurement of government grants
(1) Monetary government grants are measured at the amount received or receivable;
(2) Non-monetary government grants are measured at fair value; if the fair value cannot be obtained reliably, they are measured ata nominal amount (which is RMB1).
4. Accounting treatment methods of government grants
(1) Government grants related to assets are presented by deducting the grant in arriving at the carrying amount of the asset orsetting up the grant as deferred income. If the grant is presented as deferred income, it is recognized as income on a systemic andrational basis over the useful life of the asset. The government grants measured at the nominal amount are directly accounted asprofit or loss.
(2) Grants related to income are handled as follows:
A. Government grants related to income as compensation for expenses or losses incurred in future periods are recognized asdeferred income when they are obtained, and are included in profit or loss or reduce income during the periods when the relatedexpenses or losses are recognized.B. Government grants related to income as compensation for expenses or losses incurred in a previous period are recognized asincome of the period in which they are obtained or reduce relevant costs.
(3) Government grants related to both assets and income are accounted for by distinguishing different parts; if it is difficult todistinguish, they shall be, as a whole, classified as income-related government grants.
(4) Government grants related to the Company's daily activities are recognized as other profit and loss or write down relevant costsaccording to the essence of economic business. Those unrelated to the Company's daily activities are recognized as non-operatingrevenue and expenditure. If the treasury directly allocates interest subsidies to the Company, the interest subsidies will be used toset off relevant borrowing costs.
(5) Repayment of recognized government grants is handled as follows:
A. If the grant was recognized by reducing the carrying amount of relevant asset, the carrying amount of the asset is adjusted;B. If the grant was recognized as deferred income, the carrying amount of deferred income is adjusted and the excess is recognizedas profit and loss of the current period.C. For other situations, the repayment is directly included in profit or loss of the period.
35. Deferred tax assets/deferred tax liabilities
The Company determines its tax base when obtaining an asset or liability. If there is a temporary difference between the carryingamount of the asset or liability and its tax base, a deferred tax asset or liability is recognized in accordance with relevant provisions.
1. Recognition of deferred tax assets
(1) The Company recognizes a deferred tax asset to the extent that it is probable that taxable profit will be available against whichthe deductible temporary difference can be utilized, unless the deferred tax asset arises from the initial recognition of an asset orliability in a transaction that: (a) is not a business combination; and (b) at the time of the transaction, affects neither accountingprofit nor taxable profit (tax loss).
(2) The Company shall recognize a deferred tax liability for deductible temporary differences associated with investments insubsidiaries, branches and associates, and interests in joint ventures to the extent that, and only to the extent that, it is probable that:
(a) the temporary difference will reverse in the foreseeable future; and (b) taxable profit will be available against which thetemporary difference can be utilized.
(3) A deferred tax asset shall be recognized for the carry-over of unused tax losses and unused tax credits to the extent that it isprobable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized.
2. Recognition of deferred tax liabilities
(1) A deferred tax liability shall be recognized for all taxable temporary differences, except to the extent that the deferred taxliability arises from: (a) the initial recognition of goodwill; or (b) the initial recognition of an asset or liability in a transactionwhich: is not a business combination; and at the time of the transaction, affects neither accounting profit or taxable profit (tax loss).
(2) A deferred tax liability is recognized for taxable temporary differences associated with investments in subsidiaries, branchesand associates, and interests in joint ventures. However, circumstances if both of the following conditions are satisfied areexcluded: (a) the investor is able to control the timing of the reversal of the temporary difference; and (b) it is probable that thetemporary difference will not reverse in the foreseeable future.
(3) Offsetting
When the Company has a legally enforceable right of set-off and an intention to settle net, it sets off a current tax asset against acurrent tax liability and presents it in a net amount.When the Company has a legally enforceable right of set off current assets against current liabilities, it presents them on a netamount if the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority oneither: (i) the same taxable entity; or (ii) different taxable entities which intend either to settle current tax liabilities and assets on anet basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts ofdeferred tax liabilities or assets are expected to be settled or removed.
36. Leases
(1) Accounting treatment methods for operating lease
A contract is, or contains, a lease if the contract provides a customer with the right to control the use of an asset in exchange forconsideration.
1. Identifying a lease
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease ifthe contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assesswhether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses:
(1) the contract involves the use of an identified asset. An asset is typically identified by being explicitly specified in a contract orby being implicitly specified at the time that the asset is made available for use by the customer. A capacity portion of an asset isan identified asset if it is physically distinct. A capacity or other portion of an asset that is not physical distinct is not an identifiedasset, unless it represents substantially all of the capacity of the asset and thereby provides the customer with the right to obtainsubstantially all of the economic benefits from use of the asset. If the supplier has the substantive right to substitute the assetthroughout of use, the asset is not an identified asset;
(2) the right to obtain substantially all of the economic benefits from use of the identified asset;
(3) has the right to direct the use of an identified asset throughout the period of use.
2. Separating and combining components of a contract
If a contract contains multiple separate leases, the Company separates components of the contract and accounts for each separatelease individually.The right to use an underlying asset is a separate lease component if both:
(1) the lessee can benefit from use of the underlying asset either on its own or together with other resources that are readilyavailable to the lessee.
(2) the underlying asset is neither highly dependent on, nor highly interrelated with, the other underlying assets in the contract.
3. The Company as the lessee
(1) Right-of-use assets
Recognition and accounting treatment methods for right-of-use assets are detailed in "Note V (22) Right-of-use assets".
(2) Lease liabilities
Recognition and accounting treatment methods of lease liabilities are detailed in "Note V (28) Lease liabilities".
(3) Lease term
Lease term refers to the non-cancellable period for which a lessee has the right to use an underlying asset.The lease term includes periods covered by an option to extend the lease if the Company is reasonably certain to exercise thatoption. The lease term includes periods covered by an option to terminate the lease if the Company is reasonably certain not toexercise that option.The Company reassesses whether it is reasonably certain to exercise an extension option, or not to exercise a termination option,upon the occurrence of either a significant event or a significant change in circumstances.
(4) Lease modifications
The Company accounts for a lease modification as a separate lease if both of the following criteria are met:
A. the modification increases the scope of the lease by adding the right to use one or more underlying assets; andB. the consideration for the lease increase by an amount commensurate with the stand-alone price for the increase in scope and anyappropriate adjustments to that stand-alone price.
(5) Short-term leases and low-value asset leases
Short-term lease is a lease that, at the commencement date, has a lease term of 12 months or less. Low-value asset lease refers toleases whose underlying asset is of low value when new. If the Company subleases an asset, or expects to sublease an asset, thehead lease does not qualify as a lease of a low-value asset.The Company elects not to recognize short-term leases or low-value asset leases as the right-of-use assets and lease liabilities, butrecognizes the lease payments associated with those leases as an expense on a straight-lien basis over the lease term, which isincluded in the profit or loss or relevant asset costs.
4. The Company as the lessor
The Company classifies each of its leases as either an operating lease or a finance lease from the lease inception date. A lease isclassified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset.
Title may or may not eventually be transferred. Other leases than the finance leases are classified as operating leases. If theCompany is the intermediate lessor, the sublease is classified as a right-of-use asset arising from the head lease.
(1) Accounting treatment methods for operating lease
Lease payments from operating leases are recognized as income on a straight-line basis over the lease term. The Companycapitalizes initial direct costs incurred in obtaining an operating lease and recognizes those costs as an expense over the lease termon the same basis as the lease income. Variable lease payments related to operating leases that are not included in lease receiptsare included in the current profit and loss when they are actually incurred.
(2) Accounting treatment methods for finance lease
The Company recognizes the finance lease receivable and derecognizes the finance lease asset on the commencement date of thelease term. The financial lease receivables are initially measured by the net investment in the lease. The net investment in the leaseis the sum of the unguaranteed residual value and the present value of the lease receipts not yet received at the beginning of thelease term, discounted at the interest rate implicit in the lease.Interest income is calculated and recognized according to the fixed periodic interest rate in each period of the lease term. Fordetails on derecognition and impairment of finance lease receivables, please refer to “Note V (10) Financial instruments”.Variable lease payments that are not included in the measurement of the net investment in the lease are included in the currentprofit and loss when they are actually incurred.At the commencement date, a manufacturer or dealer lessor shall recognize revenue at the lower of the fair value of the underlyingasset and the present value of the lease payments accruing to the lessor, discounted using a market rate of interest; it shall alsorecognize the cost of sale as the carrying amount of the underlying asset less the present value of the unguaranteed residual value.Costs arising from obtaining a finance lease are recognized as profit or loss of the period at the lease commencement date.
5. Leaseback transactions
The Company determines whether the transfer of an asset in the leaseback transaction is accounted for as a sale of that asset inaccordance with “Note V (32) Revenue”.
(1) The Company as the lessee
If the transfer of an asset arising from the leaseback is accounted for as a sale of that asset, the Company measures the right-of-useasset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of useretained, and recognizes only the amount of any gain or less that relates to the rights transferred.If the fair value of the consideration for the sale of an asset does not equal the fair value of the asset, or if the payments for thelease are not at market rates, the Company accounts any below-market terms as a prepayment of lease payments and any above-market terms as additional financing provided by the lessor to the Company. Meanwhile, fair value is used to adjust any sales gainor loss.If the transfer of an asset in the leaseback transaction is not accounted for as a sale of the asset, the Company continues torecognize the transferred asset and recognizes a financial liability equal to the transfer proceeds.
(2) The Company as the lessor
If the transfer of an asset arising from the leaseback is accounted for as a sale of that asset, the Company accounts for the purchaseof the asset in accordance with applicable standards.If the fair value of the consideration for the sale of an asset does not equal the fair value of the asset, or if the payments for thelease are not at market rates, the Company accounts any below-market terms as a prepayment of lease payments and any above-market terms as additional financing provided by the Company to the lessee. Meanwhile, market rates are used to adjust leasepayments.If the transfer of an asset in the leaseback transaction is not accounted for as a sale of the asset, the Company recognizes afinancial asset equal to the transfer proceeds.
37. Other important accounting policies and accounting estimates
1. Operation discontinuation
A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale, and meetsany of the following:
(1) represents either a separate major line of business or a geographical area of operations;
(2) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations;
(3) is a subsidiary acquired exclusively with a view to resale.
For discontinued operations presented in the current period, the Company lists the profit/loss from continuing operations and thatfrom discontinued operations separately in the income statement of the current period, and re-classifies the profit/loss fromcontinuing operations as that from discontinued operations in the income statement of the comparable period.
38. Significant changes of accounting policies and accounting estimates
(1) Significant changes of accounting policies
?Applicable □ Not applicable
(1) Implementation of the Interpretation No. 15 to Accounting Standards for Business EnterprisesIn December 2021, the Ministry of Finance issued the Interpretation No. 15 to Accounting Standards for Business Enterprises (CaiKuai [2021] No. 35) (hereinafter referred to as the “Interpretation No.”), which stipulated that contents regarding “accountingtreatment for the external sales of products or by-products before they reach intended use or produced during the research anddevelopment process” and “judgment of loss contracts” shall be implemented from January 1, 2022.The Company started to implement the provisions regarding “accounting treatment for the external sales of products or by-products before they reach intended use or produced during the research and development process” and “judgment of losscontracts” from January 1, 2022. The above changes in accounting policies have no impact on the Company’s financial statements.
(2) Implementation of the Interpretation No. 16 to Accounting Standards for Business Enterprises
In November 2022, the Ministry of Finance issued the Interpretation No. 16 to Accounting Standards for Business Enterprises(Cai Kuai [2022] No. 31) (hereinafter referred to as the “Interpretation No. 16”), which stipulated that contents regarding“accounting treatment for the dividends of financial instruments classified as equity instruments by the issuer” and “accountingtreatment for the change of cash-settled share-based payment transaction to equity-settled shared-based payment transaction” shallcome into force as of the date of issuance.The Company started to implement the provisions regarding “accounting treatment for the dividends of financial instrumentsclassified as equity instruments by the issuer” and “accounting treatment for the change of cash-settled share-based paymenttransaction to equity-settled shared-based payment transaction” as of the date of issuance. The above changes in accountingpolicies have no impact on the Company’s financial statements.
(2) Significant changes of accounting estimates
□ Applicable ?Not applicable
VI. Taxes
1. Main tax types and tax rates
| Tax | Tax basis | Tax rate |
| Value-added tax | Value added during the sale of goods or provision of taxable services | 13%, 6% |
| City construction and maintenance tax | Turnover tax payable | 7% |
| Corporate income tax | Income tax payable | 25%, 20%, 15%, 8.25%, 16.5% |
| Education surcharge | Turnover tax payable | 3% |
| Local education surcharge | Turnover tax payable | 2% |
Description of the situation if different entities apply different income tax rates
| Name of entity | Income tax rate |
| BIEM.L.FDLKK Garment Co., Ltd. | 15% |
| Guangzhou BIEM.L.FDLKK Supply Chain Management Co., Ltd. | 20% |
| Guangzhou BIEM.L.FDLKK Business Consulting Co., Ltd., Xuzhou BIEM.L.FDLKK Supply Chain Management Co., Ltd., Ningbo BIEM.L.FDLKK Supply Chain Management Co., Ltd., Ningbo BIEM.L.FDLKK Smart Technology Co., Ltd. | 25% |
| Guangzhou BIEM.L.FDLKK Ejam Equity Investment Partnership (Limited Partnership), Guangzhou Houde Zaiwu Industrial Investment Fund Partnership (Limited Partnership) | According to relevant provisions of the Enterprise Income Tax Law of the People's Republic of China and its implementation regulations and the Individual Income Tax Law of the People's Republic of China, each partner of a partnership enterprise is the taxpayer. If the partner of a partnership enterprise is a natural person, it shall pay individual income tax; if the partner is a legal persons or other organization, it shall pay enterprise income tax. |
| Hong Kong Carritt Limited, Hong Kong Plentiful Shiny Limited | According to relevant provisions of the Inland Revenue Ordinance, Hong Kong implements a Two-tiered Profits Tax regime: for corporations, the first HK$2 million of profits will be taxed at a rate of 8.25%, and the remaining profits will be taxed at 16.5%. |
2. Tax incentive
(1) BIEM.L.FDLKK Garment Co., Ltd.
BIEM.L.FDLKK Garment Co., Ltd. was certified as a high-tech enterprise on December 20, 2021 and was awarded the Certificateof High-tech Enterprise (No. GR202144002604). In accordance with relevant provisions of the Enterprise Income Tax Law of thePeople’s Republic of China promulgated in 2007 and the Administrative Measures for the Certification of High-tech Enterprises,the corporate income tax of the company is calculated at a tax rate of 15% in 2022.
(2) Guangzhou BIEM.L.FDLKK Supply Chain Management Co., Ltd.
Guangzhou BIEM.L.FDLKK Supply Chain Management Co., Ltd. is a small and low-profit enterprise. According to provisions ofCai Shui [2019] No. 013, for small and low-profit enterprises, with regard to the portion of the annual taxable income less thanRMB1 million, the taxable income is calculated at a reduced rate of 25% with a corporate income tax rate of 20%; for the portionof more than RMB1 million and less than RMB3 million, the taxable income is calculated at a reduced rate of 50% with acorporate income rate of 20% from January 1, 2019 to December 31, 2021. The Ministry of Finance and the State Administrationof Taxation jointly released the Announcement on the Implementation of Preferential Income Tax Policies for Small and Low-profit Enterprises and Individual Industrial and Commercial Households (MOF and SAT Doc [2021] No. 012), for the portion ofthe annual taxable income of small and low-profit enterprises less than RMB1 million, the corporate income tax is further halvedon the basis of the preferential tax policies as stipulated in Article 2 of the Notice of the Ministry of Finance and the StateAdministration of Taxation on Implementing Inclusive Tax Reduction and Exemption Policies for Small and Micro Enterprises(Cai Shui [2019] No. 013) from January 1, 2021 to December 31, 2022. Pursuant to relevant provisions of the Announcement ofthe State Administration of Taxation on the Further Implementation of Preferential Income Tax Policies for Small and Low-profitEnterprises (MOF and SAT Doc [2022] No. 013), for the portion of annual taxable income of small and low-profit enterprisesmore than RMB1 million and less than RMB3 million, the taxable income is calculated at a reduced rate of 25% with a corporateincome rate of 20% from January 1, 2022 to December 31, 2024.VII. Notes to Consolidated Financial Statements
1. Monetary funds
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 41,726.00 | 142,548.00 |
| Bank deposits | 1,115,272,239.90 | 1,069,235,185.83 |
| Other monetary funds | 29,379,983.67 | 13,334,484.75 |
| Total | 1,144,693,949.57 | 1,082,712,218.58 |
| Total amount of funds with use restrictions due to mortgage, pledge or freezing | 28,568,760.06 | 13,334,484.75 |
Other descriptions:
— Other monetary funds at the end of the reporting period include the balance of the securities account, and the security depositsfor issuing bank acceptance bills and project performance guarantees.— All bank deposits are in bank accounts opened in banks and other relevant financial institutions in the name of the Company orsubsidiaries included in the consolidated scope of financial statements.— As of December 31, 2022, except for other monetary funds whose use is restricted with a total amount of RMB28,568,760.06,the Company had no funds whose use is restricted due to mortgage, pledge or freezing or which are deposited overseas or have thepotential risk of recovery.
2. Financial assets held for trading
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets measured at fair value through profit or loss | 1,378,756,798.87 | 634,763,818.96 |
| Including: | ||
| Wealth management products | 1,377,804,000.91 | 633,424,832.00 |
| Others | 952,797.96 | 1,338,986.96 |
| Including: | ||
| Total | 1,378,756,798.87 | 634,763,818.96 |
Other descriptions:
— The closing balance of the financial assets held for trading increased by RMB743,992,979.91 or 117.21% compared with theopening balance in 2022, mainly owing to the increase in the undue wealth management products at the end of the reporting period.
3. Accounts receivable
(1) Accounts receivable disclosure by category
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Provision ratio | Amount | Percentage | Amount | Provision ratio | |||
| Accounts receivable for which bad debt provision is set aside individually | 618,282.56 | 0.23% | 618,282.56 | 100.00% | 618,282.56 | 0.21% | 618,282.56 | 100.00% | ||
| Including: | ||||||||||
| Accounts receivable for which bad debt provision is set aside in | 266,504,592.75 | 99.77% | 13,959,705.79 | 5.24% | 252,544,886.96 | 295,013,683.59 | 99.79% | 15,296,626.45 | 5.19% | 279,717,057.14 |
| portfolios | ||||||||||
| Including: | ||||||||||
| Clothing sales business | 266,504,592.75 | 99.77% | 13,959,705.79 | 5.24% | 252,544,886.96 | 295,013,683.59 | 99.79% | 15,296,626.45 | 5.19% | 279,717,057.14 |
| Total | 267,122,875.31 | 100.00% | 14,577,988.35 | 5.46% | 252,544,886.96 | 295,631,966.15 | 100.00% | 15,914,909.01 | 5.38% | 279,717,057.14 |
Bad debt provision individually:
Unit: RMB
| Name | Closing balance | |||
| Book balance | Bad debt provision | Ratio of provision | Reason for provision | |
| Jiangmen Yihua Department Store Co., Ltd. | 618,282.56 | 618,282.56 | 100.00% | It is expected that the amount cannot be recovered. |
| Total | 618,282.56 | 618,282.56 | ||
Bad debt provision by portfolio:
Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Ratio of provision | |
| Within 1 year | 265,915,533.62 | 13,370,646.66 | 5.03% |
| 1-2 years | 69,370.41 | 69,370.41 | 100.00% |
| 2-3 years | 178,697.20 | 178,697.20 | 100.00% |
| Over 3 years | 340,991.52 | 340,991.52 | 100.00% |
| Total | 266,504,592.75 | 13,959,705.79 | |
Reason for determining the portfolio:
If the bad debt provision of accounts receivable is set aside according to the general model of expected credit loss, please refer tothe disclosure method of bad debt provision for other receivables:
□ Applicable ?Not applicable
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 265,915,533.62 |
| 1 to 2 years | 69,370.41 |
| 2 to 3 years | 796,979.76 |
| Over 3 years | 340,991.52 |
| 3 to 4 years | 0.00 |
| 4 to 5 years | 0.00 |
| Over 5 years | 340,991.52 |
| Total | 267,122,875.31 |
(2) Bad debt provision set aside, recovered or transferred back in the reporting periodBad debt provision of the reporting period:
Unit: RMB
| Category | Opening balance | Amount of change in the reporting period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Bad debt provision for accounts receivable | 15,914,909.01 | 1,336,920.66 | 14,577,988.35 | |||
| Total | 15,914,909.01 | 1,336,920.66 | 14,577,988.35 | |||
(3) Accounts receivable actually written off in the reporting period
There were no accounts receivables actually written off as of December 31, 2022.
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
| Name of institution | Balance of accounts receivable at the end of the period | Percentage in total balance of accounts receivable at the end of the period | Balance of bad debt provision at the end of the period |
| Institution 1 | 13,310,289.52 | 4.98% | 665,808.17 |
| Institution 2 | 6,486,000.20 | 2.43% | 324,303.25 |
| Institution 3 | 6,484,230.10 | 2.43% | 330,568.41 |
| Institution 4 | 6,098,782.00 | 2.28% | 304,939.10 |
| Institution 5 | 6,020,461.66 | 2.25% | 301,023.08 |
| Total | 38,399,763.48 | 14.37% |
(5) Amounts of assets or liabilities that are formed by the transfer of accounts receivable and theCompany's continuing involvementThere were no assets or liabilities formed by the transfer of accounts receivable and the Company's continuing involvement as ofDecember 31, 2022.
(6) Accounts receivable derecognized due to transfer of financial assets
There were no accounts receivables derecognized due to the transfer of financial assets as of December 31, 2022.
4. Prepayments
(1) Prepayments by aging
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 27,905,016.96 | 98.70% | 66,490,875.59 | 99.20% |
| 1 to 2 years | 124,827.46 | 0.44% | 426,940.68 | 0.64% |
| 2 to 3 years | 226,557.87 | 0.80% | 110,538.82 | 0.16% |
| Over 3 years | 16,500.00 | 0.06% | ||
| Total | 28,272,902.29 | 67,028,355.09 | ||
Explanation on the reason of untimely settlement of prepayments with significant amount whose age exceeds one year:
— The closing balance of prepayments decreased by RMB38,755,452.80 or 57.82% compared with the opening balance in 2022,mainly owing to the decrease in the prepayments for production goods payments.
(2) Top five payees in closing balance of prepayments
Unit: RMB
| Name of institution | Closing balance | Percentage in total closing balance of prepayments (%) |
| Institution 1 | 4,279,580.01 | 15.14 |
| Institution 2 | 4,117,957.46 | 14.57 |
| Institution 3 | 2,967,096.92 | 10.49 |
| Institution 4 | 1,675,674.98 | 5.93 |
| Institution 5 | 1,586,153.33 | 5.61 |
| Total | 14,626,462.70 | 51.74 |
5. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Other receivables | 72,134,856.39 | 89,889,485.22 |
| Total | 72,134,856.39 | 89,889,485.22 |
(1) Other receivables
1) Classification of other receivables by nature
Unit: RMB
| Nature of the receivable | Book balance at the end of the period | Book balance at the beginning of the period |
| Margins and deposits | 70,209,600.11 | 88,691,812.02 |
| Employee reserve fund | 2,459,964.38 | 3,069,483.92 |
| Other amounts | 3,261,863.29 | 2,857,765.83 |
| Total | 75,931,427.78 | 94,619,061.77 |
2) Bad debt provision
Unit: RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| 12-month ECL | Lifetime ECL (without credit impairment) | Lifetime ECL (with credit impairment) | ||
| Balance as at January 1, 2022 | 4,729,576.55 | 4,729,576.55 | ||
| Balance as at January 1, 2022 incurred in the period | ||||
| Transferred-back in the | 933,005.16 | 933,005.16 |
| reporting period | ||||
| Balance as at December 31, 2022 | 3,796,571.39 | 3,796,571.39 |
Description of significant changes to the book balance of provision in the current period
□ Applicable ?Not applicable
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 75,931,427.78 |
| Total | 75,931,427.78 |
3) Bad debt provision set aside, recovered or transferred back in the reporting periodBad debt provision of the reporting period:
Unit: RMB
| Category | Opening balance | Amount of change in the reporting period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Bad debt provision by portfolio | 4,729,576.55 | 933,005.16 | 3,796,571.39 | |||
| Total | 4,729,576.55 | 933,005.16 | 3,796,571.39 | |||
4) Top five debtors in closing balance of other receivables
Unit: RMB
| Name of institution | Nature of the amount | Closing balance | Aging | Percentage in total balance of other receivables at the end of the period | Balance of bad debt provision at the end of the period |
| Institution 1 | Margins and deposits | 7,051,755.00 | Within 1 year | 9.29% | 352,587.75 |
| Institution 2 | Margins and deposits | 6,763,619.00 | Within 1 year | 8.91% | 338,180.95 |
| Institution 3 | Margins and deposits | 6,553,074.00 | Within 1 year | 8.63% | 327,653.70 |
| Institution 4 | Margins and deposits | 3,150,000.00 | Within 1 year | 4.15% | 157,500.00 |
| Institution 5 | Margins and deposits | 3,133,020.00 | Within 1 year | 4.13% | 156,651.00 |
| Total | 26,651,468.00 | 35.11% | 1,332,573.40 |
5) Receivables involving government grants
There were no receivables involving government grants as of December 31, 2022.
6) Other receivables derecognized due to the transfer of financial assets
There were no other receivables derecognized due to the transfer of financial assets as of December 31, 2022.
7) Amount of assets or liabilities that are formed by the transfer of other receivables and the Company'scontinuing involvementThere were no assets or liabilities formed by the transfer of other receivables and the Company's continuing involvement as ofDecember 31, 2022.
6. Inventory
Whether the Company needs to comply with requirements for disclosure in the real estate industryNo
(1) Classification of inventories
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment of inventories or provision for contract performance costs | Book value | Book balance | Provision for impairment of inventories or provision for contract performance costs | Book value | |
| Raw materials | 17,007,872.37 | 17,007,872.37 | 18,331,168.60 | 18,331,168.60 | ||
| Commodity stocks | 851,125,039.52 | 146,639,053.96 | 704,485,985.56 | 735,027,540.76 | 106,428,861.75 | 628,598,679.01 |
| Materials for consigned processing | 24,111,316.32 | 24,111,316.32 | 13,284,371.80 | 13,284,371.80 | ||
| Total | 892,244,228.21 | 146,639,053.96 | 745,605,174.25 | 766,643,081.16 | 106,428,861.75 | 660,214,219.41 |
(2) Provision for impairment of inventories and contract performance costs
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Provision | Others | Reversal or written off | Others | |||
| Commodity stocks | 106,428,861.75 | 99,445,469.97 | 54,287,595.11 | 4,947,682.65 | 146,639,053.96 | |
| Total | 106,428,861.75 | 99,445,469.97 | 54,287,595.11 | 4,947,682.65 | 146,639,053.96 | |
7. Assets held for sale
Unit: RMB
| Item | Book balance at the end of the period | Impairment provision | Book value at the end of the period | Fair value | Estimated disposal fee | Estimated disposal time |
| Bank deposits | 189,613.49 | 189,613.49 | 189,613.49 | June 30, 2023 | ||
| Investment in other equity instruments | 137,670,000.00 | 137,670,000.00 | 137,670,000.00 | June 30, 2023 | ||
| Total | 137,859,613.49 | 137,859,613.49 | 137,859,613.49 |
Other descriptions:
In November 2022, the Company signed the Partnership Share Transfer Agreement with 19 transferees including BeijingQianchenhui Trading Co., Ltd., Liang Xiaofen, and Yue Minglei (hereinafter referred to as "Transferees"), according to which theCompany will transfer the 99.01% equities it holds in Guangzhou BIEM.L.FDLKK Ejam Equity Investment Partnership (LimitedPartnership) to the Transferees at a price of RMB137.67 million. The Transferees shall pay the transfer price to an accountdesignated by the Company in three installments before June 30, 2023. After the completion of the transfer, the Company will nolonger hold any shares in the partnership.
8. Other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Return cost receivable | 93,748,131.49 | 99,103,788.91 |
| Structured deposit | 200,421,095.89 | 704,879,722.24 |
| Large-denomination Certificate of Deposit | 20,117,555.56 | |
| Input tax credits and input tax creditable within subsequent periods | 70,093,337.22 | 6,539,646.70 |
| Prepaid corporate income tax | 24,138.37 | |
| Total | 364,286,702.97 | 830,640,713.41 |
Other descriptions:
— The closing balance of other current assets decreased by RMB466,354,010.44 or 56.14% compared with the opening balance in2022, mainly owing to the decrease in the undue structured deposits at the end of the reporting period.— Return cost receivable is the adjustment to the clothing selling costs of franchise stores made by the Company based on thereturn and exchange policies and estimated return and exchange rate.
9. Investment in other equity instruments
Unit: RMB
| Item | Closing balance | Opening balance |
| Shenzhen Youanmi Technology Co., Ltd. | 10,499,383.76 | 8,999,300.47 |
| Fast Fashion (Guangzhou) Co., Ltd. | 89,100,000.00 | |
| Total | 10,499,383.76 | 98,099,300.47 |
Disclosure of investments in equity instruments not held for trading in the reporting period item by item
Unit: RMB
| Project | Recognized dividend income | Cumulative gain | Cumulative loss | Amount of retained earnings transferred from other comprehensive income | Reason for designation as measured at fair value through other comprehensive income | Reason for transferring from other comprehensive income to retained earnings |
| Shenzhen Youanmi Technology Co., Ltd. | 499,383.76 | Long-term holding for strategic purposes | Not applicable |
Other descriptions:
— The closing balance of investments in other equity instruments decreased by RMB87,599,916.71 or 89.30% compared with theopening balance in 2022, mainly owing to the reclassification of the investment in Fast Fashion (Guangzhou) Co., Ltd. frominvestment in other equity instruments to assets held for sale.
10. Property, plant and equipment
Unit: RMB
| Item | Closing balance | Opening balance |
| Property, plant and equipment | 461,506,954.62 | 244,337,754.20 |
| Total | 461,506,954.62 | 244,337,754.20 |
(1) Information on property, plant and equipment
Unit: RMB
| Item | Properties and buildings | Machinery equipment | Motor vehicles | Office equipment | Total |
| I. Original Book Value | |||||
| 1. Opening balance | 247,768,643.17 | 5,359,322.50 | 5,357,788.54 | 40,892,792.81 | 299,378,547.02 |
| 2. Increase in the current period | 232,666,030.17 | 573,605.33 | 9,041,759.66 | 242,281,395.16 | |
| (1) Procurement | 573,605.33 | 9,041,759.66 | 9,615,364.99 | ||
| (2) Transfer from construction in progress | 232,666,030.17 | 232,666,030.17 | |||
| (3) Increase in business combination | |||||
| 3. Decrease in the current period | 568.00 | 1,497,206.19 | 1,497,774.19 | ||
| (1) Disposal or scrap | 568.00 | 1,497,206.19 | 1,497,774.19 |
| 4. Closing balance | 480,434,673.34 | 5,359,322.50 | 5,930,825.87 | 48,437,346.28 | 540,162,167.99 |
| II. Accumulated depreciation | |||||
| 1. Opening balance | 23,427,449.90 | 1,401,164.82 | 3,594,925.08 | 26,617,253.02 | 55,040,792.82 |
| 2. Increase in the current period | 14,495,936.04 | 1,003,084.67 | 401,491.44 | 8,957,565.34 | 24,858,077.49 |
| (1) Provision | 14,495,936.04 | 1,003,084.67 | 401,491.44 | 8,957,565.34 | 24,858,077.49 |
| 3. Decrease in the current period | 539.60 | 1,243,117.34 | 1,243,656.94 | ||
| (1) Disposal or scrap | 539.60 | 1,243,117.34 | 1,243,656.94 | ||
| 4. Closing balance | 37,923,385.94 | 2,404,249.49 | 3,995,876.92 | 34,331,701.02 | 78,655,213.37 |
| III. Impairment Provision | |||||
| 1. Opening balance | |||||
| 2. Increase in the current period | |||||
| (1) Provision | |||||
| 3. Decrease in the current period | |||||
| (1) Disposal or scrap | |||||
| 4. Closing balance | |||||
| IV. Book Value | |||||
| 1. Book value at the end of the period | 442,511,287.40 | 2,955,073.01 | 1,934,948.95 | 14,105,645.26 | 461,506,954.62 |
| 2. Book value at the beginning of the period | 224,341,193.27 | 3,958,157.68 | 1,762,863.46 | 14,275,539.79 | 244,337,754.20 |
(2) Property, plant and equipment that the certificate of title has not been issued
Unit: RMB
| Item | Book value | Reasons for the certificate of title having not been issued |
| Intelligent storage center | 228,097,921.03 | Materials for handling the title are under preparations. |
11. Construction in process
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction in process | 70,114,185.76 | 148,165,548.36 |
| Total | 70,114,185.76 | 148,165,548.36 |
(1) Information on construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Intelligent storage center | 130,966,928.76 | 130,966,928.76 | ||||
| Supply chain park | 70,114,185.76 | 70,114,185.76 | 17,198,619.60 | 17,198,619.60 | ||
| Total | 70,114,185.76 | 70,114,185.76 | 148,165,548.36 | 148,165,548.36 | ||
(2) Changes of significant construction in progress in the current period
Unit: RMB
| Project | Budget number | Opening balance | Increase in the current period | Amount of property, plant and equipment transferred in the current period | Decrease in the current period | Closing balance | Proportion of the cumulative construction input in budget | Construction progress | Accumulative amount of interest capitalization | Including: Amount of interest capitalization in the period | Interest capitalization rate in the current period | Source of fund |
| Intelligent storage center | 224,120,000.00 | 130,966,928.76 | 97,130,992.27 | 228,097,921.03 | 101.77% | 100.00% | Proceeds raised | |||||
| Supply chain park | 149,607,224.00 | 17,198,619.60 | 52,915,566.16 | 70,114,185.76 | 46.87% | 46.87% | Proceeds raised | |||||
| Others | 4,568,109.14 | 4,568,109.14 | Proceeds raised | |||||||||
| Total | 373,727,224.00 | 148,165,548.36 | 154,614,667.57 | 232,666,030.17 | 70,114,185.76 |
(3) Provision for the impairment of construction in progress in the current periodThe Company did not have any circumstance under which it needs to make impairment provision for construction in progress as ofDecember 31, 2022.
12. Right-of-use assets
Unit: RMB
| Item | Properties and buildings | Total |
| I. Original Book Value | ||
| 1. Opening balance | 594,126,412.80 | 594,126,412.80 |
| 2. Increase in the current period | 185,049,737.10 | 185,049,737.10 |
| (1) New lease | 111,612,163.19 | 111,612,163.19 |
| (2) Modification | 73,437,573.91 | 73,437,573.91 |
| 3. Decrease in the current period | 174,891,701.13 | 174,891,701.13 |
| (1) Modification | 120,551,156.45 | 120,551,156.45 |
| (2) Termination | 54,340,544.68 | 54,340,544.68 |
| 4. Closing balance | 604,284,448.77 | 604,284,448.77 |
| II. Accumulated depreciation | ||
| 1. Opening balance | 186,677,758.06 | 186,677,758.06 |
| 2. Increase in the current period | 221,259,434.18 | 221,259,434.18 |
| (1) Provision | 221,259,434.18 | 221,259,434.18 |
| 3. Decrease in the current period | 136,220,832.31 | 136,220,832.31 |
| (1) Disposal | 30,762,994.81 | 30,762,994.81 |
| (2) Modification | 105,457,837.50 | 105,457,837.50 |
| 4. Closing balance | 271,716,359.93 | 271,716,359.93 |
| III. Impairment Provision | ||
| 1. Opening balance | ||
| 2. Increase in the current period | ||
| (1) Provision | ||
| 3. Decrease in the current period | ||
| (1) Disposal | ||
| 4. Closing balance | ||
| IV. Book Value | ||
| 1. Book value at the end of the period | 332,568,088.84 | 332,568,088.84 |
| 2. Book value at the beginning of the period | 407,448,654.74 | 407,448,654.74 |
Other descriptions:
13. Intangible assets
(1) Information on intangible assets
Unit: RMB
| Item | Land use right | Patent right | Non-patented technology | Software | Trademark | Total |
| I. Original Book Value | ||||||
| 1. Opening balance | 120,559,562.12 | 33,194,690.88 | 436,252.84 | 154,190,505.84 | ||
| 2. Increase in the current period | 361,381.32 | 25,553,748.11 | 25,915,129.43 | |||
| (1) Purchase | 361,381.32 | 25,553,748.11 | 25,915,129.43 | |||
| (2) Internal R&D | ||||||
| (3) Increase in business combination | ||||||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Closing balance | 120,920,943.44 | 58,748,438.99 | 436,252.84 | 180,105,635.27 | ||
| II. Accumulated Amortization | ||||||
| 1. Opening balance | 17,234,171.14 | 17,151,493.23 | 256,112.18 | 34,641,776.55 | ||
| 2. Increase in the current period | 2,700,033.62 | 13,718,754.97 | 32,345.28 | 16,451,133.87 | ||
| (1) Provision | 2,700,033.62 | 13,718,754.97 | 32,345.28 | 16,451,133.87 | ||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Closing balance | 19,934,204.76 | 30,870,248.20 | 288,457.46 | 51,092,910.42 | ||
| III. Impairment |
| Provision | ||||||
| 1. Opening balance | ||||||
| 2. Increase in the current period | ||||||
| (1) Provision | ||||||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Closing balance | ||||||
| IV. Book Value | ||||||
| 1. Book value at the end of the period | 100,986,738.68 | 27,878,190.79 | 147,795.38 | 129,012,724.85 | ||
| 2. Book value at the beginning of the period | 103,325,390.98 | 16,043,197.65 | 180,140.66 | 119,548,729.29 |
Percentage of the intangible assets generated through internal R&D of the Company in the balance of intangible assets at the endof the reporting period
14. Long-term deferred expenses
Unit: RMB
| Item | Opening balance | Increase in the current period | Amortized amount of the current period | Other decreases | Closing balance |
| Store decoration fee | 96,169,898.18 | 72,932,809.26 | 63,241,285.65 | 105,861,421.79 | |
| Warehouse decoration fee | 161,267.39 | 194,924.79 | 171,360.35 | 184,831.83 | |
| Advertising fee | 6,958,837.82 | 5,671,118.53 | 1,287,719.29 | ||
| Software rental fee | 1,859,057.85 | 4,704,277.27 | 2,408,234.72 | 4,155,100.40 | |
| Others | 94,059.31 | 94,059.31 | 0.00 | ||
| Total | 105,243,120.55 | 77,832,011.32 | 71,586,058.56 | 111,489,073.31 |
15. Deferred tax assets/deferred tax liabilities
(1) Deferred tax assets that are not offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for asset impairment | 164,926,600.08 | 24,739,040.01 | 127,073,347.31 | 19,068,898.59 |
| Deductible loss | 3,819,736.80 | 954,934.20 | ||
| Gross profits temporarily unrecognized due to expected goods exchange | 225,955,017.74 | 33,893,252.66 | 215,096,618.75 | 32,264,492.81 |
| Unrealized profit in internal transaction | 336,279,740.32 | 50,441,961.05 | 261,303,351.88 | 39,195,502.78 |
| Tax-accounting difference for right-of-use assets | 6,212,641.81 | 931,896.27 | 10,806,767.10 | 1,681,921.28 |
| Changes in fair value of investments in other equity instruments | 990,792.60 | 148,618.89 | ||
| Total | 733,373,999.95 | 110,006,149.99 | 619,090,614.44 | 93,314,368.55 |
(2) Deferred tax liabilities that are not offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Depreciation of property, plant and equipment | 16,374,555.16 | 2,456,183.27 | 15,603,604.41 | 2,340,540.66 |
| Valuation of financial instruments and derivatives measured at fair value through profit or loss | 4,950,075.80 | 742,511.37 | 3,424,832.00 | 513,724.80 |
| Changes in fair value of investments in other equity instruments | 47,597,748.16 | 7,164,631.41 | ||
| Total | 68,922,379.12 | 10,363,326.05 | 19,028,436.41 | 2,854,265.46 |
(3) Presentation of deferred tax assets or liabilities by the net amount after offset
Unit: RMB
| Item | Offset amount of the deferred tax assets and liabilities at the end of the reporting period | Balance of the deferred tax assets or liabilities after offset at the end of the reporting period | Offset amount of the deferred tax assets and liabilities at the beginning of the reporting period | Balance of the deferred tax assets or liabilities after offset at the beginning of the reporting period |
| Deferred tax assets | 110,006,149.99 | 93,314,368.55 | ||
| Deferred tax liabilities | 10,363,326.05 | 2,854,265.46 |
(4) Breakdown of unconfirmed deferred tax assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible loss | 16,462,420.50 | |
| Provision for asset impairment | 87,013.62 | |
| Tax-accounting difference for right-of-use assets | 29,911.12 | |
| Total | 16,579,345.24 |
(5) Deductible losses of the unconfirmed deferred income tax assets due in the next year
Unit: RMB
| Year | Closing balance | Opening balance | Remarks |
| 2024 | 3,356,199.81 | ||
| 2027 | 13,106,220.69 | ||
| Total | 16,462,420.50 |
16. Other non-current assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Prepayment for construction work | 1,130,640.00 | 1,130,640.00 | ||||
| Prepayment for acquisition of long-lived assets | 209,392,920.00 | 209,392,920.00 | 702,868.45 | 702,868.45 | ||
| Large-denomination Certificate of Deposit | 20,141,555.56 | 20,141,555.56 | ||||
| Total | 229,534,475.56 | 229,534,475.56 | 1,833,508.45 | 1,833,508.45 | ||
Other descriptions:
— The closing balance of other non-current assets increased by RMB227,700,967.11 or 12,418.87% compared with the openingbalance in 2022, mainly owing to the fact that payment has been made for the land plot in Hualong Town, Panyu District,Guangzhou City but title has not been obtained.
17. Notes payable
Unit: RMB
| Category | Closing balance | Opening balance |
| Bank acceptance bills | 46,482,171.48 | 38,098,527.79 |
| Total | 46,482,171.48 | 38,098,527.79 |
The total amount of the notes payable due but unpaid at the end of the reporting period was RMB0.00.
18. Accounts payable
(1) List of accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Accounts payable | 184,779,174.92 | 126,522,502.78 |
| Total | 184,779,174.92 | 126,522,502.78 |
(2) Significant accounts payable with aging over one year
Unit: RMB
| Item | Closing balance | Reason for unsettlement or not carry-over |
Other descriptions:
The Company had no significant accounts payable with aging over one year in the reporting period.
19. Contract liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Product sales | 168,876,645.17 | 140,669,127.30 |
| Total | 168,876,645.17 | 140,669,127.30 |
20. Employee benefits payable
(1) List of employee benefits payable
Unit: RMB
| Item | Opening balance | Increase in the period | Decrease in the period | Closing balance |
| I. Short-term benefits | 64,027,461.27 | 417,211,870.95 | 415,464,494.03 | 65,774,838.19 |
| II. Post-employment benefits - defined contribution plans | 25,031,227.29 | 25,031,227.29 | ||
| III. Termination benefits | 959,102.50 | 959,102.50 | ||
| Total | 64,027,461.27 | 443,202,200.74 | 441,454,823.82 | 65,774,838.19 |
(2) List of short-term benefits
Unit: RMB
| Item | Opening balance | Increase in the period | Decrease in the period | Closing balance |
| 1. Salary, bonus and subsidy | 64,027,461.27 | 381,566,329.23 | 379,818,952.31 | 65,774,838.19 |
| 2. Employee welfare | 8,987,037.71 | 8,987,037.71 | ||
| 3. Social insurance | 15,837,512.96 | 15,837,512.96 |
| premiums | ||||
| Including: Medical insurance | 14,924,096.07 | 14,924,096.07 | ||
| Employment injury insurance | 531,779.75 | 531,779.75 | ||
| Maternity insurance | 381,637.14 | 381,637.14 | ||
| 4. Housing provident fund | 9,126,546.92 | 9,126,546.92 | ||
| 5. Labor union fee and staff education fee | 1,694,444.13 | 1,694,444.13 | ||
| Total | 64,027,461.27 | 417,211,870.95 | 415,464,494.03 | 65,774,838.19 |
(3) List of defined contribution plans
Unit: RMB
| Item | Opening balance | Increase in the period | Decrease in the period | Closing balance |
| 1. Basic endowment insurance | 24,280,166.75 | 24,280,166.75 | ||
| 2. Unemployment insurance | 751,060.54 | 751,060.54 | ||
| Total | 25,031,227.29 | 25,031,227.29 |
21. Taxes payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Value-added tax | 76,811,192.18 | 36,201,763.85 |
| Corporate income tax | 90,371,162.30 | 91,276,509.31 |
| City construction and maintenance tax | 949,795.14 | 1,329,110.07 |
| Education surcharge | 678,510.59 | 949,697.81 |
| Others | 1,917,866.33 | 1,212,181.56 |
| Total | 170,728,526.54 | 130,969,262.60 |
Other descriptions:
— The closing balance of taxes payable increased by RMB39,759,263.94 or 30.36% compared with the opening balance in 2022,mainly owing to the increase in the balance of VAT payable by the Company.
22. Other payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Other payables | 90,368,389.42 | 55,878,486.28 |
| Total | 90,368,389.42 | 55,878,486.28 |
(1) Other payables
1) List of other payables by amount nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Margins and deposits | 45,635,965.30 | 34,064,534.19 |
| Fees payable | 30,783,066.13 | 21,016,130.22 |
| Others | 13,949,357.99 | 797,821.87 |
| Total | 90,368,389.42 | 55,878,486.28 |
2) Significant other payables with aging over one year
Unit: RMB
| Item | Closing balance | Reason for unsettlement or not carry-over |
Other descriptions:
– The Company had no significant other payables with aging over one year in the reporting period.
23. Liabilities held for sale
Unit: RMB
| Item | Closing balance | Opening balance |
| Other payables | 1,408,760.31 | |
| Total | 1,408,760.31 |
Other descriptions:
— For details on liabilities held for sale, please refer to “Note VII (7) Assets held for sale”.
24. Non-current liabilities due within one year
Unit: RMB
| Item | Closing balance | Opening balance |
| Lease liabilities due within one year | 201,658,095.27 | 197,019,114.42 |
| Total | 201,658,095.27 | 197,019,114.42 |
25. Other current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Refunds payable | 319,703,149.23 | 314,200,407.66 |
| Output tax pending carryforward | 15,963,511.36 | 14,430,445.68 |
| Total | 335,666,660.59 | 328,630,853.34 |
Other descriptions:
— Refunds payable is the adjustment to the clothing selling income of franchise stores made by the Company based on the returnand exchange policies and estimated return and exchange rate.
26. Bonds payable
(1) Bonds payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Convertible bonds | 284,554,163.11 | |
| Total | 284,554,163.11 |
(2) Changes in bonds payable (excluding other financial instruments such as preference shares andperpetual bonds that are classified as financial liabilities)
Unit: RMB
| Name of bond | Par value | Date of issuance | Term of bond | Amount issued | Opening balance | Issuance in the period | Interest accrued at par value | Amortization of premiums and discounts | Repayment in the period | Conversion to shares in the period | Closing balance |
| BYZZ | 689,000,000.00 | June 15, 2020 | 6 years | 689,000,000.00 | 284,554,163.11 | 231,560.02 | -13,082,161.23 | 307,084.36 | 297,560,800.00 | ||
| Total | —— | 689,000,000.00 | 284,554,163.11 | 231,560.02 | -13,082,161.23 | 307,084.36 | 297,560,800.00 | ||||
(3) Conversion conditions and time of the Company’s convertible bonds
The China Securities Regulatory Commission issued the Reply on Approving the Public Listing of Convertible Bonds byBIEM.L.FDLKK Garment Co., Ltd. (CSRC Approval [2020] No. 638) in June 2020, according to which the Company issued 6.89million convertible bonds to the general public (“BYZZ”). The par value of each bond is RMB100.00 and total offered amount isRMB689 million, with a term of six years.In accordance with relevant provisions of the Prospectus for the Public Offering of Convertible Bonds by BIEM.L.FDLKKGarment Co., Ltd., the convertible bonds may be converted into shares of the Company from the first trading day after six monthsupon the end date of bond issuance (June 19, 2020) to the maturity date of the bond, namely from December 21, 2020 to June 14,2026. The initial conversion price was RMB14.90/share.The Company implemented its 2020 profit distribution plan on July 7, 2021. Pursuant to relevant terms regarding share conversionprice of the convertible bonds, the conversion price of “BYZZ” was adjusted from RMB14.90/share to RMB14.60/share.The Company convened the 9th meeting of the Fourth Board of Directors on January 24, 2022, which deliberated and approvedthe Proposal on Early Call of “BYZZ”. The Company decided to exercise the conditional call option and redeem all “BYZZ”bonds that are registered in the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited and notconverted into shares after the closing of the market as of the redemption registration date at a price of bond par value plus accrued
interest of the current period. As at the market closing on February 22, 2022, still 3,058 “BYZZ” convertible bonds were notconverted to shares, so the Company redeemed 3,058 bonds. At a call price of RMB100.42 per bond (face value plus accruedinterest in the period; the interest rate of the period was 0.6% and the accrued interest included tax; the call price after taxdeduction was subject to the price approved by China Securities Depository and Clearing Corporation Limited), the Company paidtotally RMB307,084.36 for the redemption. The total face value of the redeemed “BYZZ” convertible bonds is RMB305,800.00,accounting for 0.04% of the total bonds issued. Upon completion, all the convertible bonds have been redeemed and the “BYZZ”convertible bonds were delisted as they were no longer qualified for listing.
27. Lease liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Lease liabilities | 141,295,857.16 | 217,323,756.45 |
| Total | 141,295,857.16 | 217,323,756.45 |
Other descriptions:
— The closing balance of lease liabilities decreased by RMB76,027,899.29 or 34.98% compared with the opening balance in 2022,mainly owing to the payment of rent in accordance with agreement.
28. Deferred income
Unit: RMB
| Item | Opening balance | Increase in the period | Decrease in the period | Closing balance | Reason |
| Government grants | 30,000,000.00 | 30,000,000.00 | Related to asset | ||
| Total | 30,000,000.00 | 30,000,000.00 | -- |
Items involving government grants:
Unit: RMB
| Liability item | Opening balance | Increase in the period | Amount included in non-operating revenue in the current period | Amount included in other income in the current period | Amount of offsetting costs in the period | Other changes | Closing balance | Related to asset/income |
| Support funds for the construction of intelligent storage center | 30,000,000.00 | 30,000,000.00 | Related to asset |
29. Share capital
Unit: RMB
| Opening balance | Increase and decrease of this change (+ and -) | Closing balance | |||||
| New shares issued | Bonus shares | Shares transferred from surplus reserve | Others | Subtotal | |||
| Total number of shares | 550,326,712.00 | 20,380,372.00 | 20,380,372.00 | 570,707,084.00 | |||
Other descriptions:
— The increase under “others”: As stated in Note VII (26) of this financial report, the Company issued convertible bonds. As ofDecember 31, 2022, a total of 46,637,374.00 shares had been converted from “BYZZ” convertible bonds, of which 20,380,372.00shares were converted in 2022.
30. Other equity instruments
(1) Basic information on other financial instruments in issue at the end of the reporting period, such as preference sharesand perpetual bondsFor details, please refer to “Note VII (26) Bonds payable”.
(2) Changes in other financial instruments in issue at the end of the reporting period, such as preference shares andperpetual bonds
Unit: RMB
| Financial instruments in issue | Beginning of the period | Increase in the period | Decrease in the period | End of the period | ||||
| Number | Book value | Number | Book value | Number | Book value | Number | Book value | |
| BYZZ | 2,978,666.00 | 27,524,454.16 | 2,978,666.00 | 27,524,454.16 | ||||
| Total | 2,978,666.00 | 27,524,454.16 | 2,978,666.00 | 27,524,454.16 | ||||
Description of increase/decrease of other equity instruments in the reporting period, reasons of change, and accounting basis:
— Other equity instruments decreased by RMB27,524,454.16 in the reporting period, owing to the conversion and redemption ofconvertible bonds.
31. Capital reserve
Unit: RMB
| Item | Opening balance | Increase in the period | Decrease in the period | Closing balance |
| Capital premium (share premium) | 600,470,446.15 | 293,074,311.19 | 893,544,757.34 | |
| Total | 600,470,446.15 | 293,074,311.19 | 893,544,757.34 |
Other descriptions, including increase/decrease in the reporting period and reasons of change:
— Capital reserve increased by RMB293,074,311.19 in the reporting period, owing to the conversion of convertible bonds intoshares.
32. Other comprehensive income
Unit: RMB
| Item | Opening balance | Amount incurred in the current period | Closing balance | |||||
| Amount in the period before income tax | Less: Amount previously included in other comprehensive income and transferred to profit or loss in the period | Less: Amount previously included in other comprehensive income and transferred to retained earnings in the period | Less: Income tax expense | Amount attributable to the Parent Company after tax | Amount attributable to minority shareholders after tax | |||
| I. Other comprehensive income that cannot be reclassified into profit or loss | -842,173.72 | 50,070,083.29 | 7,313,250.30 | 42,275,990.00 | 480,842.99 | 41,433,816.28 | ||
| Changes in fair value of investments in other equity instruments | -842,173.72 | 50,070,083.29 | 7,313,250.30 | 42,275,990.00 | 480,842.99 | 41,433,816.28 | ||
| Total of other comprehensive income | -842,173.72 | 50,070,083.29 | 7,313,250.30 | 42,275,990.00 | 480,842.99 | 41,433,816.28 | ||
33. Surplus reserve
Unit: RMB
| Item | Opening balance | Increase in the period | Decrease in the period | Closing balance |
| Statutory surplus reserve | 258,110,335.93 | 27,243,206.07 | 285,353,542.00 | |
| Total | 258,110,335.93 | 27,243,206.07 | 285,353,542.00 |
Explanation of surplus reserve, including increase/decrease in the reporting period and reasons of change:
The Articles of Association of the Company stipulates that when distributing the after-tax profits of the year, 10% of the net profitshall be appropriated and included in the Company’s statutory surplus reserve. The appropriation may stop if the accumulated
amount of statutory surplus reserve reaches 50% of the Company’s registered capital. As of the reporting period, the accumulatedamount of the statutory surplus reserve accounted for 50% of the Company’s registered capital.
34. Retained earnings
Unit: RMB
| Item | Current period | Prior period |
| Retained earnings at the end of the last period before adjustment | 1,809,851,821.97 | 1,413,582,872.58 |
| Retained earnings at the beginning of the period after adjustment | 1,809,851,821.97 | 1,413,582,872.58 |
| Plus: Net profit attributable to owners of the parent company in the current period | 727,597,822.61 | 624,541,483.00 |
| Less: Appropriated statutory surplus reserve | 27,243,206.07 | 63,282,325.31 |
| Dividends on ordinary shares payable | 171,212,125.20 | 164,990,208.30 |
| Retained earnings at the end of the period | 2,338,994,313.31 | 1,809,851,821.97 |
Details on adjustments of retained earnings at the beginning of the period:
(1) Due to retrospective adjustments according to the Accounting Standards for Business Enterprises and its related newprovisions, retained earnings at the beginning of the period were impacted by RMBXX.
(2) Due to the changes in accounting policies, retained earnings at the beginning of the period were impacted by RMBXX.
(3) Due to the correction of material accounting errors, retained earnings at the beginning of the period were impacted byRMBXX.
(4) Due to the changes in the consolidated scope arising from business combinations under same control, retained earnings at thebeginning of the period were impacted by RMBXX.
(5) Other adjustments affected retained earnings at the beginning of the period by RMBXX.
35. Revenue and cost of revenue
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal business | 2,884,781,739.39 | 652,016,624.24 | 2,719,943,987.32 | 634,160,601.71 |
| Other businesses | 60,021.43 | 45,269.82 | ||
| Total | 2,884,841,760.82 | 652,016,624.24 | 2,719,989,257.14 | 634,160,601.71 |
Whether lower of the audited net profits before and after deducting the non-recurring profit and loss is negative
□ Yes ?No
36. Taxes and surcharges
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| City construction and maintenance tax | 12,740,072.20 | 12,273,316.92 |
| Education surcharge | 5,592,988.09 | 5,319,074.54 |
| Local education surcharge | 3,728,658.77 | 3,546,047.89 |
| Other taxes and fees | 3,333,020.57 | 2,824,038.23 |
| Total | 25,394,739.63 | 23,962,477.58 |
Other descriptions:
37. Selling expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Store operating expenses | 287,914,059.48 | 359,724,699.13 |
| Employee benefits | 296,637,808.88 | 292,614,931.34 |
| Depreciation of right-of-use assets | 208,991,072.66 | 175,539,936.53 |
| Decoration and renovation expenses | 107,756,159.43 | 84,303,737.40 |
| Advertising fee | 73,427,178.68 | 78,889,887.30 |
| Office and business travel expenses | 20,388,057.96 | 20,281,804.02 |
| Transportation expenses | 12,078,098.60 | 10,068,692.80 |
| E-commerce service fee | 13,620,502.48 | 8,659,135.65 |
| Others | 15,559,618.80 | 10,969,661.97 |
| Total | 1,036,372,556.97 | 1,041,052,486.14 |
Other descriptions:
38. Administrative expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Employee benefits | 91,012,576.06 | 74,442,596.47 |
| Depreciation and amortization | 31,472,795.36 | 26,494,225.47 |
| Agency fee | 20,301,049.83 | 13,936,114.88 |
| Depreciation of right-of-use assets | 12,268,361.52 | 12,445,016.24 |
| Office and business travel expenses | 11,824,852.70 | 11,700,066.13 |
| Office premise usage fee | 11,385,132.57 | 9,838,670.93 |
| Others | 17,367,290.08 | 7,410,884.14 |
| Total | 195,632,058.12 | 156,267,574.26 |
Other descriptions:
39. R&D expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Employee benefits | 57,266,965.80 | 54,175,698.63 |
| New product R&D | 34,430,518.96 | 22,525,478.10 |
| Depreciation and amortization | 5,577,286.66 | 3,769,157.59 |
| Office and business travel expenses | 2,805,176.26 | 2,616,395.96 |
| Others | 103,000.01 | 301,398.39 |
| Total | 100,182,947.69 | 83,388,128.67 |
Other descriptions:
40. Finance expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Interest expense of convertible bonds | 1,705,282.26 | 18,670,744.11 |
| Interest expense of lease liabilities | 18,558,374.38 | 21,058,743.02 |
| Less: Interest income | 28,967,907.61 | 18,147,338.76 |
| Exchange profit and loss | 694,332.80 | |
| Others | 227,363.54 | 223,387.32 |
| Total | -7,782,554.63 | 21,805,535.69 |
Other descriptions:
— Interest income in 2022 increased by RMB10,820,568.85 or 59.63% compared with 2021, owing to the increase of interestsaccrued by the purchased large-denomination Certificate of Deposit.
41. Other income
Unit: RMB
| Sources of other income | Amount incurred in the current period | Amount incurred in the prior period |
| Government grants | 23,247,374.45 | 14,577,835.79 |
| Others | 6,084.74 | 203,782.61 |
| Total | 23,253,459.19 | 14,781,618.40 |
42. Return on investment
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Gain from debt restructuring | 104,009.33 | |
| Income from wealth management products | 39,121,856.42 | 38,711,860.90 |
| Others | 269,092.96 | |
| Total | 39,390,949.38 | 38,815,870.23 |
Other descriptions:
43. Income from changes in fair value
Unit: RMB
| Source of income from changes in fair value | Amount incurred in the current period | Amount incurred in the prior period |
| Financial assets held for trading - wealth management products | 4,950,075.80 | 3,424,832.00 |
| Total | 4,950,075.80 | 3,424,832.00 |
Other descriptions:
44. Credit impairment loss
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Bad debt loss | 2,269,925.82 | 314,860.76 |
| Total | 2,269,925.82 | 314,860.76 |
Other descriptions:
45. Asset impairment loss
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| II. Impairment loss of inventories and contract performance costs | -99,445,469.97 | -78,683,952.73 |
| Total | -99,445,469.97 | -78,683,952.73 |
Other descriptions:
46. Gains on disposal of assets
Unit: RMB
| Source | Amount incurred in the current period | Amount incurred in the prior period |
| Gains or losses from the disposal of non-current asset | 1,862,946.66 | -253,775.79 |
| Total | 1,862,946.66 | -253,775.79 |
47. Non-operating revenue
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount recognized as profit or loss of the current period |
| Others | 3,017,693.32 | 531,942.90 | 3,017,693.32 |
| Total | 3,017,693.32 | 531,942.90 | 3,017,693.32 |
48. Non-operating expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount recognized as profit or loss of the current period |
| External donations | 2,200,000.00 | 5,175,531.18 | 2,200,000.00 |
| Loss from retirement of non-current assets | 105,044.25 | 157,289.86 | 105,044.25 |
| Loss of deposit for early termination of lease | 101,400.00 | ||
| Others | 376,385.70 | 179,121.61 | 376,385.70 |
| Total | 2,681,429.95 | 5,613,342.65 | 2,681,429.95 |
Other descriptions:
49. Income tax expenses
(1) List of income tax expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Current income tax expense | 144,540,302.26 | 134,891,825.25 |
| Deferred income tax expense | -16,495,971.15 | -26,762,252.49 |
| Total | 128,044,331.11 | 108,129,572.76 |
(2) Adjustment process of accounting profits and income tax expenses
Unit: RMB
| Item | Amount incurred in the current period |
| Total profit | 855,643,539.05 |
| Income tax expenses calculated at the statutory/applicable tax rate | 128,346,530.86 |
| Impacts of different tax rates applied to subsidiaries | 6,919,446.33 |
| Impacts of adjustments to income taxes during the prior period | 3,052,398.87 |
| Impacts of non-deductible costs, expenses and losses | 1,555,048.57 |
| Impacts of deductible temporary differences or deductible losses of deferred tax assets not confirmed in the current period | 2,970,934.74 |
| Impact of above-rate deduction of R&D expenses | -14,800,028.26 |
| Income tax expenses | 128,044,331.11 |
Other descriptions:
50. Other comprehensive income
For details, please refer to “Note VII (32)”.
51. Items of the cash flow statement
(1) Cash received related to other operating activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Government grants | 23,247,374.45 | 14,577,835.79 |
| Interest income | 23,103,647.72 | 6,788,310.98 |
| Operation-related security deposits | 26,919,411.40 | 18,438,232.59 |
| Others | 3,023,778.06 | 735,725.51 |
| Total | 76,294,211.63 | 40,540,104.87 |
Description of cash received related to other operating activities:
(2) Cash paid related to other operating activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Margins and deposits | 25,865,768.38 | 16,301,529.53 |
| Period expense for cash payments | 290,967,567.26 | 356,681,090.61 |
| Deposits for bank acceptance bills | 2,934,275.31 | 3,835,587.75 |
| External donations | 2,200,000.00 | 5,175,531.18 |
| Total | 321,967,610.95 | 381,993,739.07 |
Description of cash paid related to other operating activities:
(3) Cash received related to other investing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Structured deposits and wealth management products | 5,150,000,000.00 | 3,130,000,000.00 |
| Security deposits | 29,000,000.00 | |
| Down payment for equity transfer | 13,767,000.00 | |
| Total | 5,192,767,000.00 | 3,130,000,000.00 |
Description of cash received related to other investing activities:
(4) Cash paid related to other investing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Structured deposits, time deposits and wealth management products | 5,410,000,000.00 | 3,110,000,000.00 |
| Security deposits | 7,017,365.00 | 29,000,000.00 |
| Total | 5,417,017,365.00 | 3,139,000,000.00 |
Description of cash paid related to other investing activities:
(5) Cash paid related to other financing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Rental fees | 46,659,023.21 | 58,595,168.29 |
| Others | 329,216.34 | |
| Total | 46,988,239.55 | 58,595,168.29 |
Description of cash paid related to other financing activities:
52. Supplementary information to cash flow statement
(1) Supplementary information to cash flow statement
Unit: RMB
| Supplementary information | Amount of the current period | Amount of the prior period |
| 1. Reconciliation of net profit to cash flows from operating activities | ||
| Net profit | 727,599,207.94 | 624,540,933.45 |
| Plus: Provisions for asset impairment | 97,175,544.15 | 78,369,091.97 |
| Depreciation of property, plant and equipment, oil and gas assets and productive biological assets | 24,858,077.49 | 23,446,859.64 |
| Depreciation of right-of-use assets | 221,259,434.18 | 187,984,952.77 |
| Intangible asset amortization | 16,451,133.87 | 10,178,688.43 |
| Amortization of long-term deferred expenses | 71,586,058.56 | 71,980,366.17 |
| Losses from disposal of property, plant and equipment, intangible assets and other long-lived assets ("-" indicates income) | -1,862,946.66 | 253,775.79 |
| Losses from property, plant and equipment write-off ("-" indicates income) | 105,044.25 | 157,289.86 |
| Losses from changes in fair value ("-" indicates income) | -4,950,075.80 | -3,424,832.00 |
| Finance expenses ("-" indicates income) | 20,263,656.64 | 39,729,487.13 |
| Investment losses ("-" indicates income) | -39,390,949.38 | -38,815,870.23 |
| Decrease in deferred tax assets ("-" indicates increase) | -16,840,400.33 | -27,363,238.95 |
| Increase in deferred tax liabilities ("-" indicates decrease) | 344,429.18 | 600,986.46 |
| Decrease in inventories ("-" indicates increase) | -184,836,424.81 | -131,218,395.92 |
| Decrease in operating receivables ("-" indicates increase) | 3,898,472.45 | -17,729,808.30 |
| Increase in operating payables ("-" indicates decrease) | 6,575,772.09 | 78,833,351.80 |
| Others | ||
| Net cash flows from operating activities | 942,236,033.82 | 897,523,638.07 |
| 2. Significant investment and financing activities not involving cash | ||
| Conversion of debt to capital | ||
| Convertible corporate bonds due within one year | ||
| Property, plant and equipment acquired under finance lease | ||
| Right-of-use assets added in the period | 185,049,737.10 | 123,036,592.73 |
| 3. Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 1,099,091,515.33 | 1,058,018,706.05 |
| Less: Opening balance of cash | 1,058,018,706.05 | 569,284,546.79 |
| Plus: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 41,072,809.28 | 488,734,159.26 |
(2) Composition of cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 1,099,091,515.33 | 1,058,018,706.05 |
| Including: Cash on hand | 41,726.00 | 142,548.00 |
| Bank deposits always available for payment | 1,098,238,565.72 | 1,057,876,158.05 |
| Other monetary funds always available for payment | 811,223.61 | |
| III. Closing balance of cash and cash equivalents | 1,099,091,515.33 | 1,058,018,706.05 |
Other descriptions:
—The balance of cash and cash equivalents at the end of the period has deducted interests receivable from bank deposits atRMB17,223,287.67, security deposits for project performance guarantees at RMB12,300,000.00, and security deposits for bankacceptance bills at RMB16,268,760.06.
53. Assets with restricted right to use or ownership
Unit: RMB
| Item | Book value at the end of the period | Reason for restriction |
| Monetary funds | 28,568,760.06 | Security deposits for bank acceptance bills and project performance guarantees |
| Total | 28,568,760.06 |
Other descriptions:
54. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
| Item | Balance of foreign currency at the end of the period | Conversion rate | Balance of converted RMB at the end of the period |
| Monetary funds | |||
| Including: USD | |||
| EUR | |||
| HKD | |||
| Accounts payable | |||
| Including: USD | 273,821.99 | 6.9646 | 1,907,060.61 |
| Accounts receivable | |||
| Including: USD | |||
| EUR | |||
| HKD | |||
| Other receivables | |||
| Including: EUR | 950,000.00 | 7.4229 | 7,051,755.00 |
| Long-term loans | |||
| Including: USD | |||
| EUR | |||
| HKD | |||
Other descriptions:
(2) For overseas business entities, especially important ones, disclose their main overseas businessaddress, standard currency for accounting and selection basis. If there are changes in the standardcurrency for accounting, reasons shall be also provided
□ Applicable ?Not applicable
55. Government grants
(1) Basic information on government grants
Unit: RMB
| Category | Amount | Accounting subject | Amount recognized as profit or loss for the current period |
| Financial support fund | 17,480,949.00 | Other income | 17,480,949.00 |
| Special fund for the development of medium, small and micro enterprises | 2,425,000.00 | Other income | 2,425,000.00 |
| Subsidies for the industrial Internet project and the informatization and industrialization integration project | 2,000,000.00 | Other income | 2,000,000.00 |
| Support fund appropriated by the financial department to the Zero Balance Account | 820,181.00 | Other income | 820,181.00 |
| One-off subsidy for job retention and increase | 381,750.00 | Other income | 381,750.00 |
| Subsidy for job stabilization | 139,494.45 | Other income | 139,494.45 |
| Total | 23,247,374.45 | 23,247,374.45 |
(2) Return of government grants
□ Applicable ?Not applicable
Other descriptions:
VIII. Changes in the Consolidated Scope
1. Disposal of subsidiaries
Whether there is situation that one disposal of investment in a subsidiary leads to a loss of control
□ Yes ?No
Whether there is situation that the disposal of investment in a subsidiary is achieved in stages through multiple transactions whilethe control is lost in the reporting period
□ Yes ?No
2. Changes in the scope of consolidation due to other reasons
Description of changes in the scope of consolidation due to other reasons (establishment or liquidation of subsidiaries, etc.) andrelated situations:
Newly established holding subsidiary/second-tier subsidiary
| Name of company | Reason of change | Date of establishment | Period of consolidation | Nature of company |
| Guangzhou Houde Zaiwu Industrial Investment Fund Partnership (Limited Partnership) | Newly established in the period | December 07, 2022 | 2022 | Holding subsidiary |
| Hong Kong Carritt Limited | Newly established in the period | December 30, 2022 | 2022 | Holding second-tier subsidiary |
| Hong Kong Plentiful Shiny Limited | Newly established in the period | December 30, 2022 | 2022 | Holding second-tier subsidiary |
IX. Equities in Other Entities
1. Equities in subsidiaries
(1) Composition of the enterprise group
| Name of subsidiary | Main business address | Registered address | Principal business | Shareholding percentage | Obtaining method | |
| Direct | Indirect | |||||
| Guangzhou BIEM.L.FDLKK Supply Chain Management Co., Ltd. | Guangzhou | Guangzhou | Rental and business services | 100.00% | Investment and establishment | |
| Guangzhou BIEM.L.FDLKK Business Consulting Co., Ltd. | Guangzhou | Guangzhou | Rental and business services | 100.00% | Investment and establishment | |
| Ningbo BIEM.L.FDLKK Supply Chain Management Co., Ltd. | Ningbo | Ningbo | Supply chain management and business services | 100.00% | Investment and establishment | |
| Xuzhou BIEM.L.FDLKK Supply Chain Management Co., Ltd. | Xuzhou | Xuzhou | Supply chain management and business services | 100.00% | Investment and establishment | |
| Ningbo BIEM.L.FDLKK Smart Technology Co., Ltd. | Ningbo | Ningbo | Supply chain management and business services | 100.00% | Investment and establishment | |
| Guangzhou | Guangzhou | Guangzhou | Finance | 99.01% | Investment and | |
| BIEM.L.FDLKK Ejam Equity Investment Partnership (Limited Partnership) | industry | establishment | ||||
| Guangzhou Houde Zaiwu Industrial Investment Fund Partnership (Limited Partnership) | Guangzhou | Guangzhou | Finance industry | 99.85% | Investment and establishment | |
| Hong Kong Carritt Limited | Hong Kong | Hong Kong | Finance industry | 99.85% | Investment and establishment | |
| Hong Kong Plentiful Shiny Limited | Hong Kong | Hong Kong | Finance industry | 99.85% | Investment and establishment |
Description of the difference between the percentage of shares held in a subsidiary and the percentage of voting rights:
Basis for holding 50% or less than of the voting rights but controlling the investee, or holding 50% or more of the voting rights butnot controlling the investee:
(2) Important non-wholly-owned subsidiaries
Unit: RMB
| Name of subsidiary | Shareholding percentage of minority shareholders | Profit and loss attributable to minority shareholders in the period | Dividends declared to minority shareholders in the period | Closing balance of equity of minority shareholders |
| Guangzhou BIEM.L.FDLKK Ejam Equity Investment Partnership (Limited Partnership) | 0.99% | 1,385.33 | 1,449,963.45 |
(3) Main financial information of important non-wholly-owned subsidiaries
Unit: RMB
| Name of subsidiary | 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 | |
| Guangzhou BIEM.L.FDLKK Ejam Equity Investment Partnership (Limited Partnership) | 10,189,613.49 | 137,670,000.00 | 147,859,613.49 | 1,408,760.31 | 1,408,760.31 | 822,722.25 | 98,099,300.47 | 98,922,022.72 | 1,181,101.00 | 1,181,101.00 | ||
Unit: RMB
| Name of subsidiary | Amount incurred in the current period | Amount incurred in the prior period | ||||||
| Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Guangzhou BIEM.L.FDLKK Ejam Equity Investment Partnership (Limited Partnership) | 139,931.46 | 48,709,931.46 | -719,033.07 | -55,510.43 | 5,258,421.37 | -53,510.43 | ||
Other descriptions:
X. Risks Associated with Financial InstrumentsThe Company may face various risks related to financial instruments in the course of operations, mainly including credit risks,market risks and liquidity risks. The management of the Company is fully responsible for determining risk management objectivesand policies, and assumes ultimate responsibility for the risk management objectives and policies. The overall goal of riskmanagement is to develop risk management policies that minimize risks without unduly affecting the Company's competitivenessand resilience. The goal and policies of the Company's risk management are to strike a proper balance between risks and gains andto minimize the negative impact of risks on the business performance of the Company while maximizing the interests ofshareholders and other equity investors. Based on this risk management goal, the basic strategy of the Company’s riskmanagement is to determine and analyze all kinds of risks faced by the Company, clarify the minimum of risk acceptance andconduct risk management, and monitor risks of all kinds in a timely and reliable manner to control risks within the limits.(I) Credit riskCredit risk refers to the risk of financial losses of one party caused by the failure of the other party to perform its obligations. Toreduce credit risk, the Company has established relevant internal control policies responsible for determining credit limits,conducting credit approvals, including external credit ratings and, in some cases, bank credit certificates (when such information isavailable), and performing other monitoring procedures to ensure that necessary action is taken to recover overdue claims.Therefore, the management of the Company believes that the credit risk assumed by the Company has been greatly reduced.The Company's credit risk mainly arises from bank deposits, financial assets held for trading, accounts receivable, otherreceivables, etc. The credit risk of these financial assets originates from the default of the counterparty, and the maximum riskexposure is equal to the book value of these instruments.
1. Liquid funds of the Company are deposited in banks with high credit ratings, so the credit risk of liquid funds is low.
2. The Company has set aside bad debt provision according to accounting policies on the balance sheet date.(II) Liquidity riskLiquidity risk refers to the risk of capital shortage when an enterprise fulfills its obligation to settle accounts by delivering cash orother financial assets. The Company has formulated an internal control system related to cash management, regularly prepares
rolling fund budgets, and monitors short-term and long-term liquidity needs in real time. The goal is to use bank loans, commercialcredits and other means to maintain a balance between financing continuity and flexibility.XI. Disclosure of Fair Value
1. Closing fair values of assets and liabilities measured at fair value
Unit: RMB
| Item | Closing fair value | |||
| Fair value measurement with Level 1 inputs | Fair value measurement with Level 2 inputs | Fair value measurement with Level 3 inputs | Total | |
| I. Recurring Fair Value Measurement | -- | -- | -- | -- |
| (I) Financial assets held for trading | 952,797.96 | 1,377,804,000.91 | 1,378,756,798.87 | |
| 1. Financial assets measured at fair value through profit or loss | 952,797.96 | 1,377,804,000.91 | 1,378,756,798.87 | |
| (1) Wealth management products of banks | 1,377,804,000.91 | 1,377,804,000.91 | ||
| (2) Others | 952,797.96 | 952,797.96 | ||
| (II) Assets held for sale | 137,670,000.00 | 137,670,000.00 | ||
| (III) Investment in other equity instruments | 10,499,383.76 | 10,499,383.76 | ||
| Total recurring assets measured at fair value | 952,797.96 | 1,377,804,000.91 | 148,169,383.76 | 1,526,926,182.63 |
| II. Non-recurring Fair Value Measurement | -- | -- | -- | -- |
2. Basis for determining the market price of recurring and non-recurring fair value measurements withLevel 1 inputs
If there is an active market for a financial instrument, the Company establishes its fair value by using quoted price in the activemarket.
3. Qualitative and quantitative information on important parameters and valuation techniques used forrecurring and non-recurring fair value measurements with Level 2 inputs
The fair value of wealth management products of banks with recurring and non-recurring measurements with level 2 inputs isdetermined based on the expected rate of return of the product.
4. Qualitative and quantitative information on important parameters and valuation techniques used forrecurring and non-recurring fair value measurements with Level 3 inputs
If there is no active market, the Company establishes fair value by using valuation techniques. Valuation models mainly includethe discounted cash flow model and market comparable company model. Important parameters of valuation techniques mainlyinclude risk-free interest rate, benchmark interest rate, exchange rate, credit spread, liquidity premium, EBITDA multiplier, etc.Fair values of the equity investments in Shenzhen Youanmi Technology Co., Ltd. and Fast Fashion (Guangzhou) Co., Ltd. aremeasured through the latest financing price method.
5. Adjustment and sensitivity analysis of unobservable parameters between the opening and closingvalues of recurring fair value measurements with Level 3 inputsNone
6. For recurring fair value measurements with change of levels in the period, reasons for such change andpolicies for determining the time of changeThere was no change of levels for recurring fair value measurements during the reporting period.
7. Changes in valuation techniques within the reporting period and reasons for such changes
None
8. Fair values of financial assets and financial liabilities not measured at fair value
Financial assets and financial liabilities of the Company not measured at fair value mainly comprise monetary funds, accountsreceivable, other receivables, notes payable, accounts payable, other payables, etc. For such assets and liabilities, their carryingamount is very close to their fair value.XII. Related Parties and Related Party Transactions
1. Information on the Parent Company of the Company
(I) Actual controller of the Company
| Name | Relationship with related party | Shareholding percentage in the Company (%) | Percentage of voting rights in the Company (%) |
| Xie Bingzheng | Shareholder | 37.88 | 37.88 |
| Feng Lingling | Shareholder | 3.44 | 3.44 |
Xie Bingzheng and Feng Lingling, who are a couple, directly hold 41.32% of the Company’s equities; Xie Bingzheng and FengLingling are the actual controllers of the Company.
2. Information on subsidiaries of the Company
For detailed information on the subsidiaries of the Company, please refer to “Note IX. 1. Equities in subsidiaries”.
3. Information on other related parties
| Name of other related party | Relationship between other related party and the Company |
| Hongzhou Xindu Trading Co., Ltd. | A company controlled by the relative of the Company's actual controller |
| Hongzhou Gejiu Xuecheng Garment Co., Ltd. | A company controlled by the relative of the Company's actual controller |
| Guangzhou Yixiang Garment Co., Ltd. | A company controlled by the relative of the Company's actual controller |
Other descriptions:
4. Information on related party transactions
(1) Related party transactions for procurement and sale of goods, and provision and acceptance of laborservicesPurchase of goods/acceptance of labor services
Unit: RMB
| Related party | Content of related party transaction | Amount incurred in the current period | Approved transaction limit | Whether to outstrip the transaction limit | Amount incurred in the prior period |
| Guangzhou Yixiang Garment Co., Ltd. | Procurement of goods and services | 58,305,897.15 | 80,000,000.00 | No | 34,420,367.36 |
Table of sale of goods/provision of labor services
Unit: RMB
| Related party | Content of related party transaction | Amount incurred in the current period | Amount incurred in the prior period |
| Hongzhou Xindu Trading Co., Ltd. | Garment | 1,287,126.22 | |
| Hongzhou Gejiu Xuecheng Garment Co., Ltd. | Garment | 10,055,099.65 | 7,258,812.08 |
Explanation of the related party transactions for procurement and sale of goods, and provision and acceptance of labor services
(2) Remuneration of key managers
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Remuneration of key managers | 6,668,808.78 | 5,447,666.46 |
5. Receivables from and payables to related parties
(1) Receivables
Unit: RMB
| Item | Related party | Closing balance | Opening balance | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Prepayments | Guangzhou | 13,196.25 | 642,690.33 | ||
| Yixiang Garment Co., Ltd. | |||||
| Accounts receivable | Hongzhou Gejiu Xuecheng Garment Co., Ltd. | 1,622,887.40 |
(2) Payables
Unit: RMB
| Item | Related party | Book balance at the end of the period | Book balance at the beginning of the period |
| Accounts payable | Guangzhou Yixiang Garment Co., Ltd. | 7,262,017.61 | 908,712.66 |
| Contract liabilities | Hongzhou Gejiu Xuecheng Garment Co., Ltd. | 165,369.78 | 1,568,366.50 |
| Other payables | Hongzhou Gejiu Xuecheng Garment Co., Ltd. | 925,029.40 | 206,668.66 |
XIII. Share-based Payment
1. Overall information on share-based payment
□ Applicable ?Not applicable
2. Equity-settled share-based payment
□ Applicable ?Not applicable
3. Cash-settled share-based payment
□ Applicable ?Not applicable
4. Revision and termination of share-based payment
Not applicable
5. Others
Not applicableXIV. Commitments and Contingencies
1. Significant commitments
Significant commitments on the balance sheet dateAs of December 31, 2022, significant capital expenditure commitments that the Company has signed but does not need to presenton the balance sheet for now are as follows:
Unit: RMB
| Item | December 31, 2022 |
| Properties and buildings | 60,549,923.28 |
| Total | 60,549,923.28 |
2. Contingencies
(1) Significant contingent matters on the balance sheet date
There were no significant contingent matters that need to be disclosed as of December 31, 2022.
(2) Explanation also necessary if the Company has no significant contingent matters to be disclosedThe Company had no significant contingent matters that needed to be disclosed.XV. Events after Balance Sheet Date
1. Profit distribution
Unit: RMB
| Profits or dividends proposed to be distributed | 171,212,125.20 |
| Profits or dividends distributed after deliberation, approval and announcement | 171,212,125.20 |
| Profit distribution plan | The Company convened a Board meeting on April 26, 2023, which deliberated and approved the Proposal on 2020 Profit Distribution Plan. According to the proposal, the Company plans to distribute a cash dividend of RMB3.0 (tax inclusive) for every 10 shares to all shareholders based on a total share capital of 570,707,084 shares as at December 31, 2022, with a total amount of RMB171,212,125.20; no bonus shares will be issued and no capital reserve will be converted into share capital; the remaining undistributed profits will be carried forward to the next year. Where there are any changes to the Company's total share capital after the announcement of the profit distribution proposal and before the equity registration date for actual implementation, the Company will maintain the same distribution ratio per share and adjusts the total distribution amount accordingly. The profit distribution proposal can be implemented only after being approved by the general meeting of shareholders. |
2. Explanation on events after the balance sheet date
(I) Profit distributionThe Company convened a Board meeting on April 26, 2023, which deliberated and approved the Proposal on 2022 ProfitDistribution Plan. According to the proposal, the Company plans to distribute a cash dividend of RMB3.0 (tax inclusive) for every10 shares to all shareholders based on a total share capital of 570,707,084 shares as at December 31, 2022, with a total amount ofRMB171,212,125.20; no bonus shares will be issued and no capital reserve will be converted into share capital; the remainingundistributed profits will be carried forward to the next year. Where there are any changes to the Company's total share capital
after the announcement of the profit distribution proposal and before the equity registration date for actual implementation, theCompany will maintain the same distribution ratio per share and adjusts the total distribution amount accordingly. The profitdistribution proposal can be implemented only after being approved by the general meeting of shareholders.(II) Foreign investment and acquisition of overseas assets of the CompanyThe Company issued the Announcement on Foreign Investment and Acquisition of Overseas Assets (Announcement No.: 2023-009)on April 4, 2023.According to the announcement, Guangzhou Houde Zaiwu Industrial Investment Fund Partnership (Limited Partnership), apartnership company in which the Company holds 99.86% of equities, invested �57 million and �38 million, respectively, to HongKong Carritt Limited (hereinafter referred to as “Carritt”) and Hong Kong Plentiful Shiny Limited (hereinafter referred to as“Plentiful Shiny”). Afterwards, Carritt acquired the 100% equities of Cerruti Investment Pte. Ltd. (hereinafter referred to as“Cerruti Singapore”), a Singaporean company held by Trinity Fashions Limited (hereinafter referred to as “Trinity Fashions”), andthe 100% equities of Cerruti 1881 (hereinafter referred to as “Cerruti France”), a French company held by Toga InvestmentsFrance (hereinafter referred to as “Toga Investment”), at a total price of �57 million; Plentiful Shiny acquired all the equities ofLiFung Trinity Management (Singapore) Pte. Ltd. (hereinafter referred to as “K&C Singapore”), a Singaporean company held byTrinity Services Holdings Limited (hereinafter referred to as “Trinity Services Holdings”), at a price of �38 million. As a result,the Company indirectly acquired the global trademark ownership of the luxury brands “CERRUTI 1881” and “KENT&CURWEN”owned by the aforementioned target companies (hereinafter referred to as the “Acquisition”).As of the reporting date, Carritt and Plentiful Shiny have signed the equity acquisition agreements with the respectivecounterparties and the parties are currently handling relevant procedures of this Acquisition.XVI. Other Significant Matters
1. Segment information
(1) Other explanations
The Company has no distinguishable business segment or regional segment that independently assumes risks and awards differentfrom other segments.
2. Leases
Information disclosure on the lessees
(1) Information of the lessee
| Item | Amount (RMB) |
| Interest expense of lease liabilities | 18,558,374.38 |
| Expenses of short-term leases included in relevant asset cost or profit or loss through the simplified treatment method | |
| Expenses of low-value asset leases included in relevant asset cost or profit or loss through the simplified treatment method (except for the short-term lease expenses of low-value assets) | 2,051,155.78 |
| Item | Amount (RMB) |
| Variable lease payments that are not included in the measurement of lease liabilities but profit or loss | 206,257,916.13 |
| Including: Proportion from leaseback transactions | |
| Income from sublease of right-of-use assets | |
| Total cash outflow related to leases | 46,611,163.91 |
| Gain or loss from leaseback transactions | |
| Cash inflow from leaseback transactions | |
| Cash outflow from leaseback transactions | |
| Others |
3. Others
The Company had no other significant matters that need to be disclosed during the reporting period.XVII. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts receivable
(1) Accounts receivable disclosure by category
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Provision ratio | Amount | Percentage | Amount | Provision ratio | |||
| Accounts receivable for which bad debt provision is set aside individually | 618,282.56 | 0.23% | 618,282.56 | 100.00% | 618,282.56 | 0.21% | 618,282.56 | 100.00% | ||
| Including: | ||||||||||
| Accounts receivable for which bad debt provision is set aside in portfolios | 266,504,592.75 | 99.77% | 13,959,705.79 | 5.24% | 252,544,886.96 | 295,013,683.59 | 99.79% | 15,296,626.45 | 5.19% | 279,717,057.14 |
| Including: | ||||||||||
| Clothing sales business | 266,504,592.75 | 99.77% | 13,959,705.79 | 5.24% | 252,544,886.96 | 295,013,683.59 | 99.79% | 15,296,626.45 | 5.19% | 279,717,057.14 |
| Total | 267,122,875.31 | 100.00% | 14,577,988.35 | 5.46% | 252,544,88 | 295,631,966.15 | 100.00% | 15,914,909.01 | 5.38% | 279,717,05 |
| 6.96 | 7.14 |
Bad debt provision individually:
Unit: RMB
| Name | Closing balance | |||
| Book balance | Bad debt provision | Ratio of provision | Reason for provision | |
| Jiangmen Yihua Department Store Co., Ltd. | 618,282.56 | 618,282.56 | 100.00% | It is expected that the amount cannot be recovered. |
| Total | 618,282.56 | 618,282.56 | ||
Bad debt provision by portfolio:
Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Ratio of provision | |
| Within 1 year | 265,915,533.62 | 13,370,646.66 | 5.03% |
| 1-2 years | 69,370.41 | 69,370.41 | 100.00% |
| 2-3 years | 178,697.20 | 178,697.20 | 100.00% |
| Over 3 years | 340,991.52 | 340,991.52 | 100.00% |
| Total | 266,504,592.75 | 13,959,705.79 | |
Description of reason for the portfolio:
If the bad debt provision of accounts receivables is set aside according to the general model of expected credit loss, please refer tothe disclosure method of bad debt provision for other receivables:
□ Applicable ?Not applicable
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 265,915,533.62 |
| 1 to 2 years | 69,370.41 |
| 2 to 3 years | 796,979.76 |
| Over 3 years | 340,991.52 |
| Over 5 years | 340,991.52 |
| Total | 267,122,875.31 |
(2) Bad debt provision set aside, recovered or transferred back in the reporting periodBad debt provision of the reporting period:
Unit: RMB
| Category | Opening balance | Amount of change in the period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Bad debt provision for accounts receivable | 15,914,909.01 | 1,336,920.66 | 14,577,988.35 | |||
| Total | 15,914,909.01 | 1,336,920.66 | 14,577,988.35 | |||
Bad debt provisions with recovered or transferred-back amount being important:
Unit: RMB
| Name of institution | Recovered or transferred-back amount | Method of recovery |
(3) Accounts receivable actually written off in the reporting period
Unit: RMB
| Item | Write-off amount |
Write-offs of important accounts receivable:
Unit: RMB
| Name of institution | Nature of accounts receivable | Write-off amount | Write-off reason | Write-off procedures | Whether the amount is incurred by related party transaction |
Description on the write-offs of accounts receivables:
There were no accounts receivables actually written off as of December 31, 2022.
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
| Name of institution | Balance of accounts receivable at the end of the period | Percentage in total balance of accounts receivable at the end of the period | Balance of bad debt provision at the end of the period |
| Institution 1 | 13,310,289.52 | 4.98% | 665,808.17 |
| Institution 2 | 6,486,000.20 | 2.43% | 324,303.25 |
| Institution 3 | 6,484,230.10 | 2.43% | 330,568.41 |
| Institution 4 | 6,098,782.00 | 2.28% | 304,939.10 |
| Institution 5 | 6,020,461.66 | 2.25% | 301,023.08 |
| Total | 38,399,763.48 | 14.37% |
(5) Amounts of assets or liabilities that are formed by the transfer of accounts receivable and theCompany's continuing involvementThere were no assets or liabilities formed by the transfer of accounts receivable and the Company's continuing involvement as ofDecember 31, 2022.
(6) Accounts receivable derecognized due to transfer of financial assets
There were no accounts receivables derecognized due to the transfer of financial assets as of December 31, 2022.
2. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Other receivables | 71,618,317.39 | 93,306,779.94 |
| Total | 71,618,317.39 | 93,306,779.94 |
(1) Other receivables
1) Classification of other receivables by nature
Unit: RMB
| Nature of the receivable | Closing book balance | Opening book balance |
| Margins and deposits | 70,199,100.11 | 88,690,812.02 |
| Related-party amount within the consolidated scope | 1,146,219.87 | 4,945,158.86 |
| Employee reserve fund | 2,459,964.38 | 3,069,483.92 |
| Others | 1,522,090.80 | 1,251,936.78 |
| Total | 75,327,375.16 | 97,957,391.58 |
2) Bad debt provision
Unit: RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| 12-month ECL | Lifetime ECL (without credit impairment) | Lifetime ECL (with credit impairment) | ||
| Balance as at January 1, 2022 | 4,650,611.64 | 4,650,611.64 | ||
| Balance as at January 1, 2022 incurred in the period | ||||
| Transferred-back in the reporting period | 941,553.87 | 941,553.87 | ||
| Balance as at December 31, 2022 | 3,709,057.77 | 3,709,057.77 |
Description of significant changes to the book balance of provision in the current period
□ Applicable ?Not applicable
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 75,327,375.16 |
| Total | 75,327,375.16 |
3) Bad debt provision set aside, recovered or transferred back in the reporting period
Bad debt provision of the reporting period:
Unit: RMB
| Category | Opening balance | Amount of change in the period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Bad debt provision by portfolio | 4,650,611.64 | 941,553.87 | 3,709,057.77 | |||
| Total | 4,650,611.64 | 941,553.87 | 3,709,057.77 | |||
4) Other receivables actually written off in the reporting period
Unit: RMB
| Item | Write-off amount |
Description of write-offs of important other receivables:
Unit: RMB
| Name of institution | Nature of other receivables | Write-off amount | Write-off reason | Write-off procedures | Whether the amount is incurred by related party transaction |
Description on the write-offs of other receivables:
No other receivables were written off during the reporting period.
5) Top five debtors in closing balance of other receivables
Unit: RMB
| Name of institution | Nature of the amount | Closing balance | Aging | Percentage in total balance of other receivables at the end of the period | Balance of bad debt provision at the end of the period |
| Institution 1 | Margins and deposits | 7,051,755.00 | Within 1 year | 9.36% | 352,587.75 |
| Institution 2 | Margins and deposits | 6,763,619.00 | Within 1 year | 8.98% | 338,180.95 |
| Institution 3 | Margins and deposits | 6,553,074.00 | Within 1 year | 8.70% | 327,653.70 |
| Institution 4 | Margins and deposits | 3,150,000.00 | Within 1 year | 4.18% | 157,500.00 |
| Institution 5 | Margins and deposits | 3,133,020.00 | Within 1 year | 4.16% | 156,651.00 |
| Total | 26,651,468.00 | 35.38% | 1,332,573.40 |
6) Receivables involving government grants
There were no receivables involving government grants as of December 31, 2022.
7) Other receivables derecognized due to the transfer of financial assets
There were no other receivables derecognized due to the transfer of financial assets as of December 31, 2022.
8) Amount of assets or liabilities that are formed by the transfer of other receivables and the Company's continuinginvolvementThere were no assets or liabilities formed by the transfer of other receivables and the Company's continuing involvement as ofDecember 31, 2022.
3. Long-term equity investments
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Investment in subsidiaries | 11,000,000.00 | 11,000,000.00 | 111,000,000.00 | 111,000,000.00 | ||
| Total | 11,000,000.00 | 11,000,000.00 | 111,000,000.00 | 111,000,000.00 | ||
(1) Investment in subsidiaries
Unit: RMB
| Investee | Opening balance (book value) | Increase/decrease in the period | Closing balance (book value) | Closing balance of impairment provision | |||
| Increase in investment | Decrease in investment | Impairment provision | Others | ||||
| Guangzhou BIEM.L.FDLKK Business Consulting Co., Ltd. | 1,000,000.00 | 1,000,000.00 | |||||
| Guangzhou BIEM.L.FDLKK Supply Chain Management Co., Ltd. | 5,000,000.00 | 5,000,000.00 | |||||
| Guangzhou BIEM.L.FDLKK Ejam Equity Investment Partnership (Limited Partnership) | 100,000,000.00 | 100000000.001 | |||||
| Xuzhou BIEM.L.FDLKK Supply Chain Management Co., Ltd. | 5,000,000.00 | 5,000,000.00 | |||||
| Total | 111,000,000.00 | 100,000,000.00 | 11,000,000.00 | ||||
Note 1: The closing balance of the long-term equity investments of the parent company decreased by RMB100,000,000.00 or
909.09% compared with the opening balance in 2022, mainly owing to the reclassification of the investment in GuangzhouBIEM.L.FDLKK Ejam Equity Investment Partnership (Limited Partnership) from long-term equity investments to assets held forsale.
4. Revenue and cost of revenue
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal business | 2,884,215,547.38 | 904,955,705.51 | 2,719,943,987.32 | 908,931,832.35 |
| Other businesses | 60,021.43 | 45,269.82 | ||
| Total | 2,884,275,568.81 | 904,955,705.51 | 2,719,989,257.14 | 908,931,832.35 |
5. Return on investment
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Gain from debt restructuring | 104,009.33 | |
| Income from wealth management products | 39,121,856.42 | 38,711,860.90 |
| Others | 269,092.96 | |
| Total | 39,390,949.38 | 38,815,870.23 |
XVIII. Supplementary Information
1. Table of non-recurring profit and loss items of the reporting period
?Applicable □Not applicable
Unit: RMB
| Item | Amount | Description |
| Gains or losses from the disposal of non-current asset | 1,757,902.41 |
Governmental grants reckoned intocurrent profits/losses (not includinggrants enjoyed in quota or rationaccording to national standards, whichare closely relevant to the Company’snormal business)
| 23,247,374.45 | ||
| Gains or losses from changes in fair value of financial assets and financial liabilities held for trading, and investment income from the disposal of financial assets and financial liabilities held for trading and available-for-sale financial assets, excluding the effective hedging business related to the normal operation of the Company | 5,219,168.76 | |
| Other non-operating revenue and expenses except for the aforementioned items | 441,307.62 | |
| Other profit and loss items that qualify the definition of non-recurring profit and | 39,121,856.42 |
| loss | ||
| Less: Influence of income tax | 12,768,681.37 | |
| Total | 57,018,928.29 | -- |
Details of other profit and loss items that qualify the definition of non-recurring profit and loss:
?Applicable □ Not applicableDuring the reporting period, the Company had RMB39,121,856.42 of other profit and loss items that qualify the definition of non-recurring profit and loss, which were the income from wealth management products.Descriptions where the Company defines any non-recurring profit and loss items listed in the No. 1 Explanatory Announcement onInformation Disclosure of Companies Offering Securities to the Public—Non-recurring Profit and Loss as recurring profit and lossitems during the reporting period
□ Applicable ?Not applicable
2. Return on equity and earnings per share
| Profit in the reporting period | Weighted average return on equity | Earnings per share | |
| Basic earnings per share (RMB/share) | Diluted earnings per share (RMB/share) | ||
| Net profit attributable to the ordinary shareholders of the Company | 19.35% | 1.28 | 1.28 |
| Net profit attributable to the ordinary shareholders of the Company after excluding non-recurring profit and loss | 17.83% | 1.18 | 1.18 |
3. Difference in accounting data under domestic and international accounting standards
(1) Net profit and net asset differences under International Financial Reporting Standards (IFRS) andChinese Accounting Standards (CAS)
□ Applicable ?Not applicable
(2) Net profit and net asset differences under foreign accounting standards and Chinese AccountingStandards (CAS)
□ Applicable ?Not applicable
(3) Explanation of reasons for the differences between accounting data disclosed under domestic andoverseas accounting standards. If differences are adjusted based on data audited by overseas auditinstitutions, the name of the institution should be noted
4. Others
BIEM.L.FDLKK Garment Co., Ltd.
Chairman: Xie Bingzheng
April 26, 2023